10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from                to

Commission File Number 1-14788

Capital Trust, Inc.

(Exact name of registrant as specified in its charter)

Maryland	94-6181186
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
410 Park Avenue, 14th Floor, New York, NY	10022
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (212) 655-0220

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
class A common stock, $0.01 par value (“class A common stock”)	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes  o  No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.   Yes o   No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10‑K.  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o Accelerated filer  x Non-accelerated filer  o Smaller reporting company  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   Yes o   No x

MARKET VALUE

The aggregate market value of the outstanding class A common stock held by non-affiliates of the registrant was approximately $296,277,924 as of June 30, 2008 (the last business day of the registrant’s most recently completed second fiscal quarter) based on the closing sale price on the New York Stock Exchange on that date.

OUTSTANDING STOCK

As of February 28, 2009 there were 21,846,545 outstanding shares of class A common stock. The class A common stock is listed on the New York Stock Exchange (trading symbol “CT”).

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates information by reference from the registrant’s definitive proxy statement to be filed with the Commission within 120 days after the close of the registrant’s fiscal year.

CAPITAL TRUST, INC.

PART I		1
Item 1.	Business	1
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	31
Item 2.	Properties	31
Item 3.	Legal Proceedings	31
Item 4.	Submission of Matters to a Vote of Security Holders	31
PART II		32
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	32
Item 6.	Selected Financial Data	34
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	35
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	63
Item 8.	Financial Statements and Supplementary Data	65
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	65
Item 9A.	Controls and Procedures	65
Item 9B.	Other Information	65
PART III		66
Item 10.	Directors, Executive Officers and Corporate Governance	66
Item 11.	Executive Compensation	66
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	66
Item 13.	Certain Relationships and Related Transactions, and Director Independence	66
Item 14.	Principal Accounting Fees and Services	66
PART IV		67
Item 15.	Exhibits, Financial Statement Schedules	67
Signatures		77
Index to Consolidated Financial Statements		F-1

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PART I

Item 1. Business

References herein to “we,” “us” or “our” refer to Capital Trust, Inc. and its subsidiaries unless the context specifically requires otherwise.

Overview

We are a fully integrated, self-managed, real estate finance and investment management company that specializes in credit sensitive financial products. To date, our investment programs have focused on loans and securities backed by commercial real estate assets. We invest for our own account directly on our balance sheet and for third parties through a series of investment management vehicles. From the inception of our finance business in 1997 through December 31, 2008, we have completed over $11.0 billion of investments in the commercial real estate debt arena. We conduct our operations as a real estate investment trust, or REIT, for federal income tax purposes and we are headquartered in New York City.

Operating Segments

Segment revenue and profit information is presented in Note 20 to the consolidated financial statements.

Current Market Conditions

During 2008, the general economic environment deteriorated precipitously, leaving the U.S economy and many economies around the world in a state of severe economic recession. In addition, the global capital markets continued to be in a severe state of crisis. The impact on commercial real estate has been a combination of: (i) decreased, and expected further decreases, in property level cash flows and (ii) lack of capital, both debt and equity, to allow for markets to function in an orderly manner. Transaction volume has declined significantly, credit spreads for all forms of mortgage debt reached all-time highs, issuance levels of commercial mortgage backed securities, or CMBS, ground to a halt, and other forms of financing from the debt markets have been dramatically curtailed. Financial institutions still hold significant inventories of unsold loans and CMBS, creating a further overhang on the markets. These factors have combined to create significant decreases in property values and have and will continue to impact the performance of our existing portfolio of assets. Furthermore, the volatility in the capital markets has caused severe stress to all financial institutions and our business is dependent upon these counterparties for, among other things, financing and interest rate derivatives.

Restructuring of Our Debt Obligations

On March 16, 2009, we consummated a restructuring of substantially all of our recourse debt obligations with certain of our secured and unsecured creditors pursuant to the amended terms of our secured credit facilities, our senior unsecured credit agreement, and certain of our trust preferred securities.

Secured Credit Facilities

In connection with the restructuring, we amended our secured, recourse credit facilities with: (i) JPMorgan Chase Bank, N.A., JPMorgan Chase Funding Inc. and J.P. Morgan Securities Inc., or collectively JPMorgan, (ii) Morgan Stanley Bank, N.A., or Morgan Stanley, and (iii) Citigroup Financial Products Inc. and Citigroup Global Markets Inc., or collectively Citigroup. We collectively refer to JPMorgan, Morgan Stanley and Citigroup as the participating secured lenders. Further, as part of the restructuring, we also entered into an agreement to terminate our secured, recourse facility with Goldman Sachs Mortgage Company, or Goldman Sachs. We had previously, on February 25, 2009, terminated our secured financing with UBS Real Estate Securities Inc., or UBS.

Specifically, on March 16, 2009, we entered into separate amendments to the respective master repurchase agreements with JPMorgan, Morgan Stanley and Citigroup. Pursuant to the terms of each such agreement, we repaid the balance outstanding with each participating secured lender by an amount equal to three percent (3%) of the current outstanding principal amount due under its existing secured, recourse credit facility, $17.7 million in the aggregate, and further amended the terms of each such facility, without any change to the collateral pool securing the debt owed to each participating secured lender, to provide the following:

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· Maturity dates were modified to one year from the March 16, 2009 effective date of each respective agreement, which maturity date may be extended further for two one-year periods. The first one-year extension option is exercisable by us so long as the outstanding balance as of the first extension date is less than or equal to a certain amount, which is a reduction of twenty percent (20%), including the upfront payment described above, of the outstanding principal amount from the date of the amendment, and no other defaults or events of default have occurred and are continuing, or would be caused by such extension. The second one-year extension option is exercisable by each participating secured lender in its sole discretion.

· We agreed to pay each participating secured lender periodic amortization as follows: (i) mandatory payments, payable monthly in arrears, in an amount equal to sixty-five (65%) (subject to adjustment in the second year) of the net interest income generated by each such lender’s collateral pool, and (ii) one hundred percent (100%) of the principal proceeds received from the repayment of assets in each such lender’s collateral pool. In addition, under the terms of the amendment with Citigroup, we agreed to pay Citigroup an additional quarterly amortization payment equal to the lesser of: (x) Citigroup’s then outstanding senior secured credit facility balance or (y) the product of (i) the total cash paid (including both principal and interest) during the period to our senior unsecured credit facility in excess of an amount equivalent to LIBOR plus 1.75% based upon a $100.0 million facility amount, and (ii) a fraction, the numerator of which is Citigroup’s then outstanding senior secured credit facility balance and the denominator is the total outstanding secured indebtedness of the participating secured lenders.

· We further agreed to amortize each participating secured lender’s secured debt at the end of each calendar quarter on a pro rata basis until we have repaid our secured, recourse credit facilities and thereafter our senior unsecured credit facility in an amount equal to any unrestricted cash in excess of the sum of (i) $25.0 million, and (ii) any unfunded loan and co-investment commitments.

· Each participating secured lender was relieved of its obligation to make future advances with respect to unfunded commitments arising under investments in its collateral pool.

· We received the right to sell or refinance collateral assets as long as we apply one hundred percent (100%) of the proceeds to pay down the related secured credit facility balance subject to minimum release price mechanics.

· We eliminated the cash margin call provisions and amended the mark-to-market provisions so that future changes in collateral value will be determined based upon changes in the performance of the underlying real estate collateral in lieu of the previous provisions which were based on market spreads. Beginning six months after the date of execution of the agreements, each collateral pool will be valued monthly on this basis. If the ratio of a participating secured lender’s total outstanding secured credit facility balance to total collateral value exceeds 1.15x the ratio calculated as of the effective date of the amended agreements, we will be required to liquidate collateral in order to return to compliance with the prescribed loan to collateral value ratio or post other collateral to bring the ratio back into compliance.

In each master repurchase agreement amendment and the amendment to our senior unsecured credit agreement described in greater detail below, which we collectively refer to as our restructured debt obligations, we also replaced all existing financial covenants with the following uniform covenants which:

· prohibit new balance sheet investments except, subject to certain limitations, co-investments in our investment management vehicles or protective investments to defend existing collateral assets on our balance sheet;

· prohibit the incurrence of any additional indebtedness except in limited circumstances;

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· limit the total cash compensation to all employees and, specifically with respect to our chief executive officer, chief operating officer and chief financial officer, freeze their base salaries at 2008 levels, and require cash bonuses to any of them to be approved by a committee comprised of one representative designated by the secured lenders, the administrative agent under the senior unsecured credit facility and the chairman of our board of directors;

· prohibit the payment of cash dividends to our common shareholders except to the minimum extent necessary to maintain our REIT status;

· require us to maintain a minimum amount of liquidity, as defined, of $7.0 million in 2009 and $5.0 million thereafter;

· trigger an event of default if both our chief executive officer and chief operating officer cease their current employment with us during the term of the agreement and we fail to hire a replacement acceptable to the lenders; and

· trigger an event of default, if any event or condition occurs which causes any obligation or liability of more than $1.0 million to become due prior to its scheduled maturity or any monetary default under our restructured debt obligations if the amount of such obligation is at least $1.0 million.

Pursuant to the restructuring, the interest rates on our secured borrowings will remain the same as those in effect as of December 31, 2008. In exchange for maintenance of these historic rates, on March 16, 2009 we issued, or irrevocably committed to issue as of such date, JPMorgan, Morgan Stanley and Citigroup warrants to purchase 3,479,691 shares of our class A common stock at an exercise price of $1.79 per share, which is equal to the closing bid price on the New York Stock Exchange on March 13, 2009. The warrants will become exercisable on March 16, 2012 and expire on March 16, 2019, and may be exercised through a cashless exercise.

The warrants were issued, or irrevocably committed to be issued, in reliance upon the exemption provided in Section 4(2) of the Securities Act of 1933, as amended, and the safe harbor of Rule 506 under Regulation D. Any certificates representing such securities will contain restrictive legends preventing sale, transfer or other disposition, unless registered under the Securities Act of 1933. No form of general solicitation or general advertising was conducted in connection with the issuance.

The foregoing descriptions of the amendments to the secured credit facilities with the participating secured lenders, the amendment to the senior unsecured credit facility and the warrant agreement with respect to the warrants are qualified in their entirety by reference to Exhibits 10.49b, 10.46d and 10.69, respectively, to this Form 10-K.

On March 16, 2009, we also entered into an agreement to terminate the master repurchase agreement with Goldman Sachs, pursuant to which we satisfied the indebtedness due under the Goldman Sachs secured credit facility. Specifically, we: (i) pre-funded certain required advances of approximately $2.4 million under one loan in the collateral pool, (ii) paid Goldman Sachs $2.6 million to effect a full release to us of another loan, and (iii) transferred all of the other assets that served as collateral for Goldman Sachs to Goldman Sachs for a purchase price of $85.7 million as payment in full for the balance remaining under the secured credit facility. Goldman Sachs agreed to release us from any further obligation under the secured credit facility. The foregoing description is qualified in its entirety by reference to Exhibit 10.47e to this Form 10-K.

Previously, on February 25, 2009, we entered into a satisfaction, termination and release agreement with UBS pursuant to which the parties terminated their right, title, interest in, to and under a master repurchase agreement. We consented to the transfer to UBS, and UBS unconditionally accepted and retained all of our rights, title and interest in a loan financed under the master repurchase agreement in complete satisfaction of all of our obligations, including all amounts due thereunder. The foregoing description is qualified in its entirety by reference to Exhibit 10.71 to this Form 10-K.

We are currently in negotiations with Lehman Brothers to resolve the $18.0 million outstanding balance under our secured, recourse credit facility with such firm, which finances a single asset.

Senior Unsecured Credit Agreement

On March 16, 2009, we entered into an amended and restated senior unsecured credit agreement governing our $100.0 million term loan from WestLB AG, New York Branch, participant and administrative agent, Fortis Capital Corp., Wells Fargo Bank, N.A., JPMorgan Chase Bank, N.A., Morgan Stanley Bank, N.A. and Deutsche Bank Trust Company Americas, which we collectively refer to as the senior unsecured lenders. Pursuant to the amended and restated senior unsecured credit agreement, we and the senior unsecured lenders agreed to:

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· Extend the maturity date of the senior unsecured credit agreement to be co-terminus with the maturity date of the secured credit facilities with the participating secured lenders (as they may be further extended until March 16, 2012, as described above);

· Increase the cash interest rate under the senior unsecured credit agreement to LIBOR plus 3.0% per annum (from LIBOR plus 1.75%), plus an accrual rate of 7.20% per annum less the cash interest rate;

· Initiate quarterly amortization equal to the greater of: (i) $5.0 million per annum and (ii) 25% of the annual cash flow received from our currently unencumbered collateralized debt obligation interests;

· Pledge our unencumbered collateralized debt obligation interests and provide a negative pledge with respect to certain other assets; and

· Replace all existing financial covenants with substantially identical covenants and default provisions to those described above in the participating secured credit facilities.

The foregoing description is qualified in its entirety by reference to the amended and restated credit agreement filed as Exhibit 10.70 to this Form 10-K.

Trust Preferred Securities

On March 16, 2009, we reached an agreement with Taberna Preferred Funding V, Ltd., Taberna Preferred Funding VI, Ltd., Taberna Preferred Funding VIII, Ltd. and Taberna Preferred Funding IX, Ltd., or collectively Taberna, to issue new junior subordinated notes in exchange for $50.0 million face amount of trust preferred securities issued through our statutory trust subsidiary CT Preferred Trust I held by affiliates of Taberna, which we refer to as the Trust I Securities, and $53.1 million face amount of trust preferred securities issued through our statutory trust subsidiary CT Preferred Trust II held by affiliates of Taberna, which we refer to as the Trust II Securities. We refer to the Trust I Securities and the Trust II Securities together as the Trust Securities. The Trust Securities were backed by and recorded as junior subordinated debentures issued by us with terms that mirror the Trust Securities.

Pursuant to the exchange agreement dated March 16, 2009, by and among us and Taberna, we issued $118.6 million aggregate principal amount of new junior subordinated notes due on April 30, 2036 (an amount equal to 115% of the current aggregate face amount of the Trust Securities being exchanged). The interest rate payable under the new subordinated notes is 1% per annum from March 16, 2009, through and including April 29, 2012, which we refer to as the modification period. After the modification period, the interest rate will revert to a blended rate equal to that which was previously payable under the notes underlying the Trust Securities, a fixed rate of 7.23% per annum through and including April 29, 2016 and thereafter a floating rate, reset quarterly, equal to three month LIBOR plus 2.44% until maturity. The new junior subordinated notes will be contractually senior to the remaining trust preferred securities, will mature on April 12, 2036 and will be freely redeemable by us at par at any time. The new junior subordinated notes contain a covenant that through April 30, 2012, subject to certain exceptions, we may not declare or pay dividends or distributions on, or redeem, purchase or acquire any of our equity interests (other than remaining trust preferred securities not exchanged) except to the extent necessary to maintain our status as a REIT. Except for the foregoing, the new junior subordinated notes contain substantially similar provisions as the Trust Securities. The foregoing description is qualified in its entirety by reference to the Exchange Agreement filed as Exhibit 10.72 to this Form 10-K.

As part of the agreement with Taberna, we also agreed to pay $750,000 to cover third party fees and costs incurred in connection with the exchange transaction.

Current Period Financial Statement Impact:

While the restructuring of our debt obligations was finalized subsequent to December 31, 2008 and the amendments to the respective agreements and termination of our facility with UBS were executed in the first quarter of 2009, certain elements of the transaction require us to amend the presentation of certain items in our consolidated financial statements for the fiscal year ended December 31, 2008. Specifically, the aggregate $140.4 million (face value) of loans sold to Goldman Sachs and UBS have been reclassified under the consolidated balance sheet classification, loans held-for-sale, and a valuation allowance of $48.3 million, reflecting the difference between the carrying value of the loans and the sale price, was recorded on the consolidated statement of operations.

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Developments during Fiscal Year 2008

During the year ended December 31, 2008, we originated $553.2 million (on a gross basis) of new investments in 27 separate transactions. Of this total, we closed $55.0 million directly for our balance sheet and $498.2 million for our managed funds and accounts, which we refer to as investment management vehicles.

Primarily as a result of principal repayments, our balance sheet portfolio of interest earning assets comprised of loans and CMBS, decreased from $3.1 billion (160 separate investments) at year end 2007 to $2.6 billion (150 separate investments) at year end 2008. At year end, we held 73 loans with an aggregate book value of $1.8 billion and our CMBS portfolio was comprised of 77 bonds with an aggregate book value of $852 million. In addition to interest earning assets, our balance sheet assets include loans held-for-sale and our equity investments in unconsolidated subsidiaries, primarily comprised of our co-investments in our investment management vehicles.

In 2008, our overall portfolio migrated in the following manner:

· New investments in interest earning assets of $47.8 million, net of related purchase discounts.

· Total fundings under existing loan commitments of $89.8 million, which resulted in remaining unfunded loan commitments of $54.2 million as of year end.

· Total principal payments received on interest earning assets, including receipts from asset sales, of $420.4 million.

· An aggregate provision for possible credit losses of $57.6 million was taken against five loans with a total principal balance of $82.1 million, and a $10.0 million loan against which we previously recorded a $4.0 provision was written-off as uncollectable. In addition, we foreclosed on one loan with a book balance of $11.9 million and have taken a $2.0 million impairment on that asset.

· Ratings activity on our CMBS portfolio included a total of 13 securities which received ratings downgrades and 6 securities which received ratings upgrades. We recorded a $900,000 other-than-temporary impairment on one CMBS investment with a net book value of $3.5 million.

· Maturity dates were extended on 5 loans with an aggregate principal balance of $61.8 million.

On the capital raising front, we raised $125.5 million of new balance sheet equity capital in 2008 through the following transactions:

· In March 2008, we closed a public offering of 4,000,000 shares of class A common stock, from which we received net proceeds of approximately $112.6 million.

· During 2008, we issued 488,563 shares of class A common stock under our dividend reinvestment and direct stock purchase plans, from which we received net proceeds of approximately $12.9 million.

In 2008, we renewed or obtained new financing commitments as follows:

· In March 2008, we exercised the term-out option under our senior unsecured credit facility with WestLB, extending the maturity date of the $100 million principal balance outstanding for one year as a non-revolving term loan.

· In May 2008, we entered into a new $18.0 million loan and security agreement with Lehman Brothers.

· In June 2008, we amended our master repurchase agreements with the former Bear Stearns entities by extending the termination date of each obligation to October 2008.

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· In July 2008, we extended the availability period under our $250.0 million master repurchase agreement with Citigroup to July 2009.

· In July 2008, we extended the purchase period of our $300.0 million master repurchase agreement with Morgan Stanley to July 2009.

· In October 2008, we combined the JP Morgan and Bear Stearns repurchase facilities and extended the resultant $355 million facility for two years.

As described above, in 2008, we continued to expand our investment management business by raising a new private equity vehicle, CT High Grade Partners II, LLC, or CT High Grade II, and obtaining additional equity commitments in our other actively investing vehicle, CT Opportunity Partners I, LP., or CTOPI. During 2008, excluding incentive management fees, revenues from our investment management business grew to $12.9 million, an increase of 270% from 2007 levels.

· CT High Grade II held its initial closing in June 2008 with $667 million of commitments from two institutional investors. The fund targets senior debt opportunities in the commercial real estate debt sector and does not employ leverage. We earn a 0.40% per annum management fee on invested capital.

· CTOPI is a multi-investor private equity fund designed to invest in commercial real estate debt and equity, specifically taking advantage of the current dislocation in the commercial real estate capital markets. On July 14, 2008, CTOPI held its final closing completing its capital raise with $540 million of total equity commitments. We have committed to invest $25 million in the vehicle and entities controlled by our chairman have committed to invest $20 million. The fund’s investment period expires in December 2010, and we earn base management fees as the investment manager to CTOPI (equal to 1.60% per annum of total equity commitments during the investment period and of invested capital thereafter). In addition, we earn gross incentive management fees of 20% of profits after a 9% preferred return and a 100% return of capital.

· CT High Grade MezzanineSM closed in November 2006, with a single, related party investor committing $250 million. This separate account targets lower risk subordinate debt investments and does not utilize leverage and we earn management fees of 0.25% per annum on invested assets. In July 2007, we upsized the account by $100 million to $350 million and extended the investment period to July 2008.

· CT Large Loan 2006, Inc. closed in May 2006 with total equity commitments of $325 million from eight third party investors. The fund employs leverage and we earn management fees of 0.75% per annum of invested assets (capped at 1.5% on invested equity). The investment period ended in May 2008.

· CTX Fund I, L.P., or CTX Fund, is a single investor fund designed to invest in collateralized debt obligations, or CDOs, sponsored, but not issued, by us. We do not earn fees on the CTX Fund, however, we earn CDO management fees from the CDOs in which the CTX Fund invests. We sponsored one such CDO in 2007, a $500 million CDO secured primarily by credit default swaps referencing CMBS.

· CT Mezzanine Partners III, Inc., or Fund III, is a vehicle we co-sponsored with a joint venture partner that had an investment period that ran from 2003 to 2005. The fund is currently liquidating in the ordinary course. We have a co-investment in the fund, earn 100% of base management fees and we split incentive management fees with our partner, who receives 37.5% of Fund III’s incentive management fees.

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Platform

Our platform consists of 33 full time professionals with extensive real estate credit, capital markets and structured finance expertise. Our senior management team has, on average, over 20 years of industry experience. Founded in 1997, our business has been built on long-standing relationships with borrowers, brokers and our origination partners. This extensive network produces a pipeline of investment opportunities from which we select only those transactions that we believe exhibit a compelling risk/return profile. Once a transaction that meets our parameters is identified, we apply a disciplined process founded on four elements:

· intense credit underwriting;

· creative financial structuring;

· efficient capitalization; and

· aggressive asset management.

The first element, and the foundation of our platform, is our credit underwriting. For each prospective investment, an in-house underwriting team is assigned to perform an intense ground-up analysis of all aspects of credit risk. Our underwriting process is embodied in our proprietary credit policies and procedures that detail the due diligence steps from initial client contact through closing. We have developed the capability to apply this methodology to a high volume of investment opportunities, including CMBS transactions with a large number of underlying loans, through the combination of personnel, procedures and technology. On all levels, input is received from our finance, capital markets, credit and legal teams, as well as from various third parties, including our credit providers.

Creative financial structuring is the second critical element. In our direct investment programs, we strive to design a customized structure for each investment that provides us with the necessary credit, yield and protective structural features while meeting the varying, and often complex, needs of our clients. We believe our demonstrated ability to structure creative solutions gives us a distinct competitive advantage in the marketplace. In the structured products arena, our broad capital markets expertise enables us to better analyze the risks and opportunities embedded in complex vehicles such as CMBS and synthetic securities.

Efficient capitalization is the third integral element of our platform. We utilize multiple debt and equity products to capitalize our balance sheet and investment management business. As such, we seek to maintain adequate liquidity to defend the balance sheet and investment management vehicles against reasonable capital market and real estate market volatility.

The final element of our platform is aggressive asset management. We pride ourselves on our active style of managing our portfolios. From the closing of an investment through its final repayment, our dedicated asset management team is in constant contact with our borrowers and servicers, monitoring performance of our collateral and enforcing our rights as necessary. We are rated/approved as a special servicer by all three rating agencies, allowing us to exercise a substantial level of control in certain structured transactions, such as CMBS.

Business Model

As depicted below, our business model is designed to produce a unique mix of net interest income from our balance sheet investments and fee income from our investment management operations.

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We operate our business to qualify as a REIT for federal income tax purposes. We manage our balance sheet investments to produce a portfolio that meets the asset and income tests necessary to maintain our REIT qualification and conduct our investment management business through our wholly-owned subsidiary, CT Investment Management Co., LLC, which is subject to federal, state and city income tax.

Investment Strategies

Since 1997, our investment programs have focused on various strategies designed to take advantage of opportunities that have developed in the commercial real estate finance sector.

Depending on our assessment of relative value, our real estate investments may take a variety of forms including, but not limited to:

· Mortgage Loans—These are secured property loans evidenced by a first mortgage which is senior to any mezzanine financing and the owner’s equity. These loans may finance stabilized properties, may serve as bridge loans providing required interim financing to property owners or may provide construction and development financing. Our mortgage loans vary in duration and typically require a balloon payment of principal at maturity. These investments may include pari passu participations in mortgage loans. We may also originate and fund first mortgage loans in which we intend to sell the senior tranche, thereby creating what we refer to as a subordinate mortgage interest.

· Subordinate Mortgage Interests—Sometimes known as B Notes, these are loans evidenced by a junior participation in a first mortgage, with the senior participation known as an A Note. Although sometimes evidenced by its own promissory note, subordinate mortgage interests have the same borrower and benefit from the same underlying obligation and collateral as the A Note lender. The subordinate mortgage interest is subordinated to the A Note by virtue of a contractual arrangement between the A Note lender and the subordinate mortgage interest lender and in most instances is contractually limited in rights and remedies in the case of default. In some cases, there may be multiple senior and/or junior interests in a single mortgage loan.

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· Mezzanine Loans—These include both property and corporate mezzanine loans. Property mezzanine loans are secured property loans that are subordinate to a first mortgage loan, but senior to the owner’s equity. A mezzanine property loan is evidenced by its own promissory note and is typically made to the owner of the property-owning entity, which is typically the first mortgage borrower. It is not secured by a mortgage on the property, but by a pledge of the borrower’s ownership interest in the property-owning entity. Subject to negotiated contractual restrictions, the mezzanine lender generally has the right, following foreclosure, to become the owner of the property, subject to the lien of the first mortgage. Corporate mezzanine loans, on the other hand, are investments in or loans to real estate related operating companies, including REITs. Such investments may take the form of secured debt, preferred stock and other hybrid instruments such as convertible debt. Corporate mezzanine loans may finance, among other things, operations, mergers and acquisitions, management buy-outs, recapitalizations, start-ups and stock buy-backs generally involving real estate and real estate related entities.

· CMBS—These are securities collateralized by pools of individual first mortgage loans. Cash flows from the underlying mortgages are aggregated and allocated to the different classes of securities in accordance with their seniority, typically ranging from the AAA rated through the unrated, first loss tranche. Administration and servicing of the pool is performed by a trustee and servicers, who act on behalf of all security holders in accordance with contractual agreements. Our investments generally represent the subordinated tranches in these pools ranging from the BBB rated through the unrated class. When practical, we are designated the special servicer for the CMBS trusts in which we have appropriate ownership interests, enabling us to control the resolution of matters which require lender approval. We also include select investments in CDOs in this category.

Business Plan

Our near term business strategy is to continue to manage our balance sheet investments and existing investment management vehicles through the current volatile market, though our balance sheet investment activities cannot resume until we have retired or refinanced the existing restructured obligations due our lenders. At the same time, we expect to grow our investment management business and capitalize on new opportunities in the marketplace.

Competition

We are engaged in a competitive business. In our investment activities, we compete for opportunities with numerous public and private investment vehicles, including financial institutions, specialty finance companies, mortgage banks, pension funds, opportunity funds, hedge funds, REITs and other institutional investors, as well as individuals. Many competitors are significantly larger than us, have well established operating histories and may have greater access to capital, more resources and other advantages over us. These competitors may be willing to accept lower returns on their investments or to compromise underwriting standards and, as a result, our origination volume and profit margins could be adversely affected. In our investment management business, we compete with other investment management companies in attracting third party capital for our vehicles and many of our competitors are well established, possessing substantially greater financial, marketing and other resources.

Government Regulation

Our activities in the United States, including the financing of our operations, are subject to a variety of federal and state regulations. In addition, a majority of states have ceilings on interest rates chargeable to certain customers in financing transactions. Furthermore, our international activities are also subject to local regulations.

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Employees

As of December 31, 2008, we had 33 full-time employees. Our staff is employed under a co-employment agreement with a third party human resources firm, Ambrose Employer Group, LLC. In addition, our chief operating officer and chief financial officer are employed under employment contracts. None of our employees are covered by a collective bargaining agreement and management considers the relationship with our employees to be good. In addition to our staff in New York, we contract for the services of an additional 15 dedicated professionals employed by a commercial real estate underwriting services firm in Chennai, India.

Code of Business Conduct and Ethics and Corporate Governance Documents

We have adopted a code of business conduct and ethics that applies to all of our employees and our board of directors, including our principal executive officer and principal financial and accounting officer. This code of business conduct and ethics is designed to comply with SEC regulations and New York Stock Exchange corporate governance rules related to codes of conduct and ethics and is posted on our corporate website at http://www.capitaltrust.com. In addition, our corporate governance guidelines and charters for our audit, compensation and corporate governance committees of the board of directors are also posted on our corporate website. Copies of our code of business conduct and ethics, our corporate governance guidelines and our committee charters are also available free of charge, upon request directed to Investor Relations, Capital Trust, Inc., 410 Park Avenue, 14th Floor, New York, NY 10022.

Website Access to Reports

We maintain a website at http://www.capitaltrust.com. Through our website, we make available, free of charge, our annual proxy statement, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish them to, the SEC. The SEC maintains a website that contains these reports at http://www.sec.gov.

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Item 1A. Risk Factors

FORWARD LOOKING INFORMATION

Our Annual Report on Form l0-K for the year ended December 31, 2008, our 2008 Annual Report to Shareholders, any of our Quarterly Reports on Form 10-Q or Current Reports on Form 8-K of the Company, or any other oral or written statements made in press releases or otherwise by or on behalf of Capital Trust, Inc., may contain forward looking statements within the meaning of the Section 21E of the Securities and Exchange Act of 1934, as amended, which involve certain risks and uncertainties. Forward looking statements predict or describe our future operations, business plans, business and investment strategies and portfolio management and the performance of our investments and our investment management business. These forward looking statements are identified by their use of such terms and phrases as “intends,” “intend,” “intended,” “goal,” “estimate,” “estimates,” “expects,” “expect,” “expected,” “project,” “projected,” “projections,” “plans,” “seeks,” “anticipates,” “anticipated,” “should,” “could,” “may,” “will,” “designed to,” “foreseeable future,” “believe,” “believes” and “scheduled” and similar expressions. Our actual results or outcomes may differ materially from those anticipated. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date the statement was made. We assume no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

Our actual results may differ significantly from any results expressed or implied by these forward looking statements. Some, but not all, of the factors that might cause such a difference include, but are not limited to:

· the effects of the recent turmoil in the financial markets and general economic recession upon our ability to invest and manage our investments;

· the general political, economic and competitive conditions in the United States and foreign jurisdictions where we invest;

· the level and volatility of prevailing interest rates and credit spreads, magnified by the current turmoil in the credit markets;

· adverse changes in the real estate and real estate capital markets;

· difficulty in obtaining financing or raising capital, especially in the current constrained financial markets;

· the deterioration of performance and thereby credit quality of property securing our investments, borrowers and, in general, the risks associated with the ownership and operation of real estate that may cause cash flow deterioration to us and potentially principal losses on our investments;

· a compression of the yield on our investments and the cost of our liabilities, as well as the level of leverage available to us;

· adverse developments in the availability of desirable loan and investment opportunities whether they are due to competition, regulation or otherwise;

· events, contemplated or otherwise, such as natural disasters including hurricanes and earthquakes, acts of war and/or terrorism (such as the events of September 11, 2001) and others that may cause unanticipated and uninsured performance declines and/or losses to us or the owners and operators of the real estate securing our investment;

· the cost of operating our platform, including, but not limited to, the cost of operating a real estate investment platform and the cost of operating as a publicly traded company;

· authoritative generally accepted accounting principles or policy changes from such standard-setting bodies as the Financial Accounting Standards Board, the Securities and Exchange Commission, Internal Revenue Service, the New York Stock Exchange, and other authorities that we are subject to, as well as their counterparts in any foreign jurisdictions where we might do business; and

· the risk factors set forth below, including those related to the restructuring of our debt obligations.

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Risks Related to Our Investment Activities

Our efforts to stabilize our business with the restructuring of our debt obligations may not be successful as our balance sheet portfolio is subject to the risk of further deterioration and ongoing turmoil in the financial markets.

We have previously invested on a leveraged basis, which magnifies the consequences of a deterioration in the performance of our portfolio of investments. Even with the restructuring of our debt obligations, we may not be able to satisfy our obligations to our lenders and maintain the stability we intend from our restructuring. The impact of the economic recession on the commercial real estate sector in general, and our portfolio in particular, cannot be predicted and we expect to experience defaults by borrowers and other impairments to our investments. These events may trigger defaults under our restructured debt obligations that may result in the exercise of remedies that cause severe losses in the book value of our investments. Therefore, an investment in our class A common stock is subject to a high degree of risk.

Our restructured debt obligations with our lenders prohibit new balance sheet investment activities, which prevents us from growing our balance sheet portfolio.

Following a series of negotiations that were precipitated by our decision to conserve our cash resources and not meet further margin calls made by our secured lenders, we have restructured our debt obligations with our participating secured and unsecured lenders, a development that has consequences to our business. Under the terms of the restructured debt obligations, we are prohibited from acquiring or originating new investments. This restriction precludes us from growing our balance sheet portfolio at a time when investment opportunities that provide attractive risk-adjusted returns may otherwise be available to us. Our interest earning investments will continue to be reduced which will negatively impact our net investment income. There can be no assurance that we will be able to retire completely or refinance our restructured debt obligations so that we can resume our balance sheet investment activities.

Our liquidity will be impacted by our restructured debt obligations.

Our restructured debt obligations further reduce our current liquidity as a result of up front payments and ongoing required amortization and additional interest payments. The reduction in liquidity may impair our ability to meet our obligations and, given the covenants contained in our restructured debt obligations, our ability to improve our liquidity position will be constrained. In addition, we must maintain a minimum of $7.0 million in liquidity during 2009 and $5.0 million thereafter, a requirement that may limit our ability to make commitments to investment management vehicles and, ultimately, that we may not be able to achieve.

The U.S. and other financial markets have been in turmoil and the U.S. and other economies in which we operate are in the midst of an economic recession which can be expected to negatively impact our operations.

The U.S. and other financial markets have been experiencing extreme dislocations and a severe contraction in available liquidity globally as important segments of the credit markets are frozen as lenders are unwilling or unable to originate new credit. Global financial markets have been disrupted by, among other things, volatility in security prices, credit rating downgrades, the failure and near failure of a number of large financial institutions and declining valuations, and this disruption has been acute in real estate related markets. This disruption has lead to a decline in business and consumer confidence and increased unemployment and has precipitated an economic recession around the globe. As a consequence, owners and operators of commercial real estate that secure or back our investment may experience distress and real estate values in the U.S. or elsewhere may decline. We are unable to predict the likely duration or severity of the current disruption in financial markets and adverse economic conditions which could materially and adversely affect our business, financial condition and results of operations, including leading to significant impairment to our assets and our ability to generate income.

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Our existing loans and investments expose us to a high degree of risk associated with investing in real estate assets.

Real estate historically has experienced significant fluctuations and cycles in performance that may result in reductions in the value of our real estate related investments. The performance and value of our loans and investments once originated or acquired by us depends upon many factors beyond our control. The ultimate performance and value of our investments is subject to the varying degrees of risk generally incident to the ownership and operation of the properties which collateralize or support our investments. The ultimate performance and value of our loans and investments depends upon, in large part, the commercial property owner’s ability to operate the property so that it produces sufficient cash flows necessary either to pay the interest and principal due to us on our loans and investments or pay us as an equity advisor. Revenues and cash flows may be adversely affected by:

· changes in national economic conditions;

· changes in local real estate market conditions due to changes in national or local economic conditions or changes in local property market characteristics;

· the extent of the impact of the current turmoil in the financial markets, including the lack of available debt financing for commercial real estate;

· tenant bankruptcies;

· competition from other properties offering the same or similar services;

· changes in interest rates and in the state of the debt and equity capital markets;

· the ongoing need for capital improvements, particularly in older building structures;

· changes in real estate tax rates and other operating expenses;

· adverse changes in governmental rules and fiscal policies, civil unrest, acts of God, including earthquakes, hurricanes and other natural disasters, and acts of war or terrorism, which may decrease the availability of or increase the cost of insurance or result in uninsured losses;

· adverse changes in zoning laws;

· the impact of present or future environmental legislation and compliance with environmental laws;

· the impact of lawsuits which could cause us to incur significant legal expenses and divert management’s time and attention from our day-to-day operations; and

· other factors that are beyond our control and the control of the commercial property owners.

In the event that any of the properties underlying or collateralizing our loans or investments experiences any of the foregoing events or occurrences, the value of, and return on, such investments, our profitability and the market price of our class A common stock would be negatively impacted. In addition, our restructured debt obligations contain covenants which limit the amount of protective investments we may make to preserve value in collateral securing our investments.

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A prolonged economic slowdown, a lengthy or severe recession, a credit crisis, or declining real estate values could harm our operations or may adversely affect our liquidity.

We believe the risks associated with our business are more severe during periods of economic slowdown or recession like those we are currently experiencing, particularly if these periods are accompanied by declining real estate values. The recent dislocation of the global credit markets and anticipated collateral consequences to commercial activity of businesses unable to finance their operations as required may lead to a weakening of general economic conditions and precipitate declines in real estate values and otherwise exacerbate troubled borrowers’ ability to repay loans in our portfolio or backing our CMBS. Declining real estate values would likely reduce the level of new mortgage loan originations, since borrowers often use increases in the value of their existing properties to support the purchase of or investment in additional properties, which in turn could lead to fewer opportunities for our investment. Borrowers may also be less able to pay principal and interest on our loans as the real estate economy weakens. Continued weakened economic conditions could negatively affect occupancy levels and rental rates in the markets in which the collateral supporting our investments are located, which, in turn, may have a material adverse impact on our cash flows and operating results of our borrowers. Further, declining real estate values significantly increase the likelihood that we will incur losses on our loans in the event of default because the value of our collateral may be insufficient to cover our basis in the loan. Any sustained period of increased payment delinquencies, foreclosures or losses could adversely affect both our net interest income from loans in our portfolio as well as our ability to operate our investment management business, which would significantly harm our revenues, results of operations, financial condition, liquidity, business prospects and our share price.

We are exposed to the risks involved with making subordinated investments.

Our subordinated investments involve the risks attendant to investments consisting of subordinated loans and similar positions. In many cases, management of our investments and our remedies with respect thereto, including the ability to foreclose on or direct decisions with respect to the collateral securing such investments, is subject to the rights of senior lenders and the rights set forth in inter-creditor or servicing agreements. Our interests and those of the senior lenders and other interested parties may not be aligned.

We may not be able to obtain the level of leverage necessary to optimize or achieve our target rate of returns.

Our return on investment depends, in part, upon our ability to grow our balance sheet portfolio of invested assets and those of our investment management vehicles through the use of leverage at a cost of debt that is lower than the yield earned on our investments. Under the terms of the restructured debt obligations, we are required to cease our balance sheet investment activities and may not incur any further indebtedness unless used to retire the debt due our lenders. As a result, we are precluded from carrying out our historical leveraged investment strategy for our balance sheet.

We have historically obtained leverage through the issuance of CDOs, repurchase agreements and other borrowings. Our failure to obtain and/or maintain leverage at desired levels, or to obtain leverage on attractive terms, would have an adverse effect on our performance or that of our investment management vehicles. Moreover, we are dependent upon a limited universe of lenders to provide financing under repurchase agreements, and there can be no assurance that these agreements will be renewed or extended at expiration. Our ability to obtain financing through the CDO market, which has been closed since 2007, is subject to conditions in the financial markets which are impacted by factors beyond our control that may at times be adverse and reduce the level of investor demand for such securities. In particular, recent turmoil in the credit markets has severely impeded the ability of borrowers, even well capitalized borrowers, to obtain credit from lenders operating in virtually frozen credit markets, and it can be expected that this development will negatively impact our ability to finance our assets. At this time, we are unable to refinance our restructured debt obligations with our lenders. There can be no assurance that U.S. and non-U.S. government efforts to improve conditions in the credit markets will be successful in the short term or at all, and the amount of leverage available from our investment management vehicles’ lenders may be significantly reduced or, in certain cases, even eliminated.

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We are obligated to fund unfunded commitments under our loan agreements.

We are required to fund unfunded obligations to our borrowers. Historically, prior to our restructuring, we relied upon our lenders to fund a portion of these commitments. Going forward, we can rely only on our immediately available liquidity to meet these commitments. If we do not have the liquidity in excess of the minimum amounts required under our restructured debt obligations, and the lenders do not consent to our obtaining additional financing, if available, we would default on these commitments and potentially lose value in these investments and expose ourselves to litigation.

We are subject to counterparty risk associated with our debt obligations and interest rate swaps.

Our counterparties for these critical financial relationships include both domestic and international financial institutions. Many of them have been severely impacted by the credit market turmoil and have been experiencing financial pressures. In some cases, our counterparties have filed bankruptcy.

We are subject to the general risk of a leveraged investment strategy and the specific risks of our restructured indebtedness.

Our restructured secured debt obligations are secured by our investments, which are subject to being revalued by our credit providers. If the value of the underlying property collateralizing our investments declines, we may be required to liquidate our investments, the impact of which could be magnified if such a liquidation is at a commercially inopportune time, such as the market environment we are currently experiencing. In addition, the occurrence of any event or condition which causes any obligation or liability of more than $1.0 million to become due prior to its scheduled maturity or any monetary default under our restructured debt obligations if the amount of such obligation is at least $1.0 million could constitute a cross-default under our restructured debt obligations. If a cross-default occurs, the maturity of almost all of our indebtedness could be accelerated and become immediately due and payable.

We may guarantee some of our leverage and contingent obligations.

We guarantee the performance of our obligations, including, but not limited to, our repurchase agreements, derivative agreements, obligations to co-invest in our investment management vehicles and unsecured indebtedness. The non-performance of such obligations may cause losses to us in excess of the capital we initially may have invested or committed under such obligations and there is no assurance that we will have sufficient capital to cover any such losses.

Our secured and unsecured credit agreements may impose restrictions on our operation of the business.

Under our secured and unsecured indebtedness, such as our credit and derivative agreements, we make certain representations, warranties and affirmative and negative covenants that restrict our ability to operate while still utilizing those sources of credit. Currently, our restructured debt obligations prohibit us from acquiring or originating new balance sheet investments except, subject to certain limitations, co-investments in our investment management vehicles or protective investments to defend existing collateral assets on our balance sheet, and from incurring additional indebtedness unless used to pay down such obligations. In addition, such representations, warranties and covenants include, but are not limited to covenants which:

· limit the total cash compensation to all employees and, specifically with respect to our chief executive officer, chief operating officer and chief financial officer, freeze their base salaries at 2008 levels, and require cash bonuses to any of them to be approved by a committee comprised of one representative designated by the secured lenders, the administrative agent under the senior unsecured credit facility and the chairman of our board of directors;

· prohibit the payment of cash dividends to our common shareholders except to the minimum extent necessary to maintain our REIT status;

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· require us to maintain a minimum amount of liquidity, as defined, of $7.0 million in 2009 and $5.0 million thereafter;

· trigger an event of default if both our chief executive officer and chief operating officer cease their current employment with us during the term of the agreement and we fail to hire a replacement acceptable to the lenders; and

· trigger an event of default, if any event or condition occurs which causes any obligation or liability of more than $1.0 million to become due prior to its scheduled maturity or any monetary default under our restructured debt obligations if the amount of such obligation is at least $1.0 million.

Our success depends on the availability of attractive investments and our ability to identify, structure, consummate, leverage, manage and realize returns on attractive investments.

Our operating results are dependent upon the availability of, as well as our ability to identify, structure, consummate, leverage, manage and realize returns on, credit sensitive investment opportunitiesfor our managed vehicles and our balance sheet assuming we are able to resume balance sheet investment activity. In general, the availability of desirable investment opportunities and, consequently, our balance sheet returns and our investment management vehicles’ returns, will be affected by the level and volatility of interest rates, conditions in the financial markets, general economic conditions, the demand for credit sensitive investment opportunities and the supply of capital for such investment opportunities. We cannot make any assurances that we will be successful in identifying and consummating investments which satisfy our rate of return objectives or that such investments, once consummated, will perform as anticipated. In addition, if we are not successful in investing for our investment management vehicles, the potential revenues we earn from management fees and co-investment returns will be reduced. We may expend significant time and resources in identifying and pursuing targeted investments, some of which may not be consummated.

The real estate investment business is highly competitive. Our success depends on our ability to compete with other providers of capital for real estate investments.

Our business is highly competitive. Competition may cause us to accept economic or structural features in our investments that we would not have otherwise accepted and it may cause us to search for investments in markets outside of our traditional product expertise. We compete for attractive investments with traditional lending sources, such as insurance companies and banks, as well as other REITs, specialty finance companies and private equity vehicles with similar investment objectives, which may make it more difficult for us to consummate our target investments. Many of our competitors have greater financial resources and lower costs of capital than we do, which provides them with greater operating flexibility and a competitive advantage relative to us.

Our loans and investments may be subject to fluctuations in interest rates which may not be adequately protected, or protected at all, by our hedging strategies.

Our current balance sheet investments include loans with both floating interest rates and fixed interest rates. Floating rate investments earn interest at rates that adjust from time to time (typically monthly) based upon an index (typically one month LIBOR). These floating rate loans are insulated from changes in value specifically due to changes in interest rates, however, the coupons they earn fluctuate based upon interest rates (again, typically one month LIBOR) and, in a declining and/or low interest rate environment, these loans will earn lower rates of interest and this will impact our operating performance. Fixed interest rate investments, however, do not have adjusting interest rates and, as prevailing interest rates change, the relative value of the fixed cash flows from these investments will cause potentially significant changes in value. We may employ various hedging strategies to limit the effects of changes in interest rates (and in some cases credit spreads), including engaging in interest rate swaps, caps, floors and other interest rate derivative products. We believe that no strategy can completely insulate us or our investment management vehicles from the risks associated with interest rate changes and there is a risk that they may provide no protection at all and potentially compound the impact of changes in interest rates. Hedging transactions involve certain additional risks such as counterparty risk, the legal enforceability of hedging contracts, the early repayment of hedged transactions and the risk that unanticipated and significant changes in interest rates may cause a significant loss of basis in the contract and a change in current period expense. We cannot make assurances that we will be able to enter into hedging transactions or that such hedging transactions will adequately protect us or our investment management vehicles against the foregoing risks.

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Accounting for derivatives under GAAP is extremely complicated. Any failure by us to account for our derivatives properly in accordance with GAAP in our consolidated financial statements could adversely affect our earnings. In particular, cash flow hedges which are not perfectly correlated (and appropriately designated and/or documented as such) with a variable rate financing will impact our reported income as gains, and losses on the ineffective portion of such hedges.

Our use of leverage may create a mismatch with the duration and index of the investments that we are financing.

We attempt to structure our leverage to minimize the difference between the term of our investments and the leverage we use to finance such an investment. In the event that our leverage is shorter term than the financed investment, we may not be able to extend or find appropriate replacement leverage. In the event that our leverage is longer term than the financed investment, we may not be able to repay such leverage or replace the financed investment with an optimal substitute or at all, which will negatively impact our desired leveraged returns. Our attempts to mitigate such risk are subject to factors outside of our control, such as the availability to us of favorable financing and hedging options, which is subject to a variety of factors, of which duration and term matching are only two such factors.

Our loans and investments are illiquid, which will constrain our ability to vary our portfolio of investments.

Our real estate investments and structured financial product investments are relatively illiquid and some are highly illiquid. Such illiquidity may limit our ability to vary our portfolio or our investment management vehicles’ portfolios of investments in response to changes in economic and other conditions. Illiquidity may result from the absence of an established market for investments as well as the legal or contractual restrictions on their resale. In addition, illiquidity may result from the decline in value of a property securing these investments. We cannot make assurances that the fair market value of any of the real property serving as security will not decrease in the future, leaving our or our investment management vehicles’ investments under-collateralized or not collateralized at all, which could impair the liquidity and value, as well as our return on such investments.

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We may not have control over certain of our loans and investments.

Our ability to manage our portfolio of loans and investments may be limited by the form in which they are made. In certain situations, we or our investment management vehicles may:

· acquire investments subject to rights of senior classes and servicers under inter-creditor or servicing agreements;

· acquire only a participation in an underlying investment;

· co-invest with third parties through partnerships, joint ventures or other entities, thereby acquiring non-controlling interests; or

· rely on independent third party management or strategic partners with respect to the management of an asset.

Therefore, we may not be able to exercise control over the loan or investment. Such financial assets may involve risks not present in investments where senior creditors, servicers or third party controlling investors are not involved. Our rights to control the process following a borrower default may be subject to the rights of senior creditors or servicers whose interests may not be aligned with ours. A third party partner or co-venturer may have financial difficulties resulting in a negative impact on such asset, may have economic or business interests or goals which are inconsistent with ours and those of our investment management vehicles, or may be in a position to take action contrary to our or our investment management vehicles’ investment objectives. In addition, we and our investment management vehicles may, in certain circumstances, be liable for the actions of our third party partners or co-venturers.

We may not achieve our targeted rate of return on our investments.

We originate or acquire investments based on our estimates or projections of overall rates of return on such investments, which in turn are based upon, among other considerations, assumptions regarding the performance of assets, the amount and terms of available financing to obtain desired leverage and the manner and timing of dispositions, including possible asset recovery and remediation strategies, all of which are subject to significant uncertainty. In addition, events or conditions that we have not anticipated may occur, such as the recent volatility of the financial markets, and may have a significant effect on the actual rate of return received on an investment.

As we acquire or originate investments when permitted for our balance sheet portfolio, whether as new additions or as replacements for maturing investments, there can be no assurance that we will be able to originate or acquire investments that produce rates of return comparable to rates on our existing investments.

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Investor demand for commercial real estate CDOs has been effectively eliminated.

In recent years, we have relied to a substantial extent on CDO financings to obtain match funded financing for our investments. Until the market for commercial real estate CDOs recovers, we may be unable to utilize CDOs to finance our investments and we may need to utilize less favorable sources of financing to finance our investments on a long-term basis. There can be no assurance as to when demand for commercial real estate CDOs will return or the terms of such securities investors will demand or whether we will be able to issue CDOs to finance our investments on terms beneficial to us.

We may not be able to find suitable replacement investments for CDOs with reinvestment periods.

Some of our CDOs have periods where principal proceeds received from assets securing the CDO can be reinvested only for a defined period of time, commonly referred to as a reinvestment period. Our ability to find suitable investments during the reinvestment period that meet the criteria set forth in the CDO documentation and by rating agencies may determine the success of our CDO investments. Our potential inability to find suitable investments may cause, among other things, lower returns, interest deficiencies, hyper-amortization of the senior CDO liabilities and may cause us to reduce the life of our CDOs and accelerate the amortization of certain fees and expenses.

The use of CDO financings may have a negative impact on our cash flow.

The terms of CDOs generally provide that the principal amount of investments must exceed the principal balance of the related bonds by a certain amount and that interest income exceeds interest expense by a certain amount. Certain of our CDOs provide that, if defaults, losses, or rating agency downgrades cause a decline in collateral value or cash flow levels, the cash flow otherwise payable to our retained subordinated classes may be redirected to repay classes of CDOs senior to ours until the tests are brought in compliance. In certain instances, we have breached these tests and cash flow has been redirected and there can be no assurances that this will not occur on all of our CDOs. Once breached there is no certainty about when or if the cash flow redirection will remedy the tests’ failure or that cash flow will be restored to our subordinated classes.

We may be required to repurchase loans that we have sold or to indemnify holders of our CDOs.

If any of the loans we originate or acquire and sell or securitize through CDOs do not comply with representations and warranties that we make about certain characteristics of the loans, the borrowers and the underlying properties, we may be required to repurchase those loans or replace them with substitute loans. In addition, in the case of loans that we have sold instead of retained, we may be required to indemnify persons for losses or expenses incurred as a result of a breach of a representation or warranty. Repurchased loans typically require a significant allocation of working capital to carry on our books, and our ability to borrow against such assets is limited. Any significant repurchases or indemnification payments could adversely affect our financial condition and operating results.

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The commercial mortgage and mezzanine loans we originate or acquire and the commercial mortgage loans underlying the commercial mortgage backed securities in which we invest are subject to delinquency, foreclosure and loss, which could result in losses to us.

Our commercial mortgage and mezzanine loans are secured by commercial property and are subject to risks of delinquency and foreclosure, and risks of loss that are greater than similar risks associated with loans made on the security of single-family residential property. The ability of a borrower to repay a loan secured by an income-producing property typically is dependent primarily upon the successful operation of the property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower’s ability to repay the loan may be impaired. Net operating income of an income-producing property can be affected by, among other things, tenant mix, success of tenant businesses, property management decisions, property location and condition, competition from comparable types of properties, changes in laws that increase operating expenses or limit rents that may be charged, any need to address environmental contamination at the property, changes in national, regional or local economic conditions and/or specific industry segments, declines in regional or local real estate values, declines in regional or local rental or occupancy rates, increases in interest rates, real estate tax rates and other operating expenses, and changes in governmental rules, regulations and fiscal policies, including environmental legislation, acts of God, terrorism, social unrest and civil disturbances.

Our investments in subordinated commercial mortgage backed securities and similar investments are subject to losses.

In general, losses on an asset securing a mortgage loan included in a securitization will be borne first by the equity holder of the property and then by the most junior security holder, referred to as the “first loss” position. In the event of default and the exhaustion of any equity support and any classes of securities junior to those in which we invest (and in some cases we may be invested in the junior most classes of securitizations), we may not be able to recover all of our investment in the securities we purchase. In addition, if the underlying mortgage portfolio has been overvalued by the originator, or if the values subsequently decline and, as a result, less collateral is available to satisfy interest and principal payments due on the related mortgage backed securities, the securities in which we invest may incur significant losses. Subordinate interests generally are not actively traded and are relatively illiquid investments and recent volatility in CMBS trading markets has caused the value of these investments to decline.

The prices of lower credit quality CMBS are generally less sensitive to interest rate changes than more highly rated investments, but more sensitive to adverse economic downturns and underlying borrower developments. A projection of an economic downturn, for example, could cause a decline in the price of lower credit quality CMBS because the ability of borrowers to make principal and interest payments on the mortgages underlying the mortgage backed securities may be impaired. In such event, existing credit support in the securitization structure may be insufficient to protect us against the loss of our principal on these securities.

We may have difficulty or be unable to sell some of our loans and commercial mortgage backed securities.

A prolonged period of frozen capital markets and an out of favor real estate sector may prevent us from selling our loans and CMBS. Given the terms of our recent restructuring, we may be forced to sell assets in order to meet required debt reduction levels. If the market for real estate loans and CMBS remains in its current state, this may be difficult or impossible, causing further losses or events of default.

The impact of the events of September 11, 2001 and the effect thereon on terrorism insurance expose us to certain risks.

The terrorist attacks on September 11, 2001 disrupted the U.S. financial markets, including the real estate capital markets, and negatively impacted the U.S. economy in general. Any future terrorist attacks, the anticipation of any such attacks, and the consequences of any military or other response by the U.S. and its allies may have a further adverse impact on the U.S. financial markets and the economy generally. We cannot predict the severity of the effect that such future events would have on the U.S. financial markets, the economy or our business.

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In addition, the events of September 11, 2001 created significant uncertainty regarding the ability of real estate owners of high profile assets to obtain insurance coverage protecting against terrorist attacks at commercially reasonable rates, if at all. The Terrorism Risk Insurance Act of 2002, or TRIA, was extended in December 2007. Coverage under the new law, the Terrorism Risk Insurance Program Reauthorization Act, or TRIPRA, now expires in 2014. There is no assurance that TRIPRA will be extended beyond 2014. The absence of affordable insurance coverage may adversely affect the general real estate lending market, lending volume and the market’s overall liquidity and may reduce the number of suitable investment opportunities available to us and the pace at which we are able to make investments. If the properties that we invest in are unable to obtain affordable insurance coverage, the value of those investments could decline and in the event of an uninsured loss, we could lose all or a portion of our investment.

The economic impact of any future terrorist attacks could also adversely affect the credit quality of some of our loans and investments. Some of our loans and investments will be more susceptible to such adverse effects than others. We may suffer losses as a result of the adverse impact of any future attacks and these losses may adversely impact our results of operations.

Our non-U.S. investments will expose us to certain risks.

We make investments in foreign countries. Investing in foreign countries involves certain additional risks that may not exist when investing in the United States. The risks involved in foreign investments include:

· exposure to local economic conditions, local interest rates, foreign exchange restrictions and restrictions on the withdrawal of foreign investment and earnings, investment restrictions or requirements, expropriations of property and changes in foreign taxation structures;

· potential adverse changes in the diplomatic relations of foreign countries with the United States and government policies against investments by foreigners;

· changes in foreign regulations;

· hostility from local populations, potential instability of foreign governments and risks of insurrections, terrorist attacks, war or other military action;

· fluctuations in foreign currency exchange rates;

· changes in social, political, legal, taxation and other conditions affecting our international investment;

· logistical barriers to our timely receiving the financial information relating to our international investments that may need to be included in our periodic reporting obligations as a public company; and

· lack of uniform accounting standards (including availability of information in accordance with U.S. generally accepted accounting principles).

Unfavorable legal, regulatory, economic or political changes such as those described above could adversely affect our financial condition and results of operations.

We may from time to time invest a portion of our assets in non-U.S. investments or in instruments denominated in non-U.S. currencies, the prices of which will be determined with reference to currencies other than the U.S. dollar. We may hedge our foreign currency exposure. To the extent unhedged, the value of our non-U.S. assets will fluctuate with U.S. dollar exchange rates as well as the price changes of our investments in the various local markets and currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation and political developments. An increase in the value of the U.S. dollar compared to the other currencies in which we make our investments will reduce the effect of increases and magnify the effect of decreases in the prices of our securities in their local markets. We could realize a net loss on an investment, even if there were a gain on the underlying investment before currency losses were taken into account. We may seek to hedge currency risks by investing in currencies, currency futures contracts and options on currency futures contracts, forward currency exchange contracts, swaps, options or any combination thereof (whether or not exchange traded), but there can be no assurance that these strategies will be effective, and such techniques entail costs and additional risks.

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There are increased risks involved with construction lending activities.

We originate loans for the construction of commercial and residential use properties. Construction lending generally is considered to involve a higher degree of risk than other types of lending due to a variety of factors, including generally larger loan balances, the dependency on successful completion of a project, the dependency upon the successful operation of the project (such as achieving satisfactory occupancy and rental rates) for repayment, the difficulties in estimating construction costs and loan terms which often do not require full amortization of the loan over its term and, instead, provide for a balloon payment at stated maturity.

Some of our investments and investment opportunities may be in synthetic form.

Synthetic investments are contracts between parties whereby payments are exchanged based upon the performance of an underlying obligation. In addition to the risks associated with the performance of the obligation, these synthetic interests carry the risk of the counterparty not performing its contractual obligations. Market standards, GAAP accounting methodology and tax regulations related to these investments are evolving, and we cannot be certain that their evolution will not adversely impact the value or sustainability of these investments. Furthermore, our ability to invest in synthetic investments, other than through taxable REIT subsidiaries, may be severely limited by the REIT qualification requirements because synthetic investment contracts generally are not qualifying assets and do not produce qualifying income for purposes of the REIT asset and income tests.

Risks Related to Our Investment Management Business and Management of CDOs

Our recent balance sheet restructuring may adversely impact our investment management business.

In large part, our ability to raise capital and garner other investment management and advisory business is dependent upon our reputation as a balance sheet manager and credit underwriter, as well as the ability to demonstrate that we have the resources to execute mandates. Our recent restructuring will likely negatively impact our abilities in this regard.

We are subject to risks and uncertainties associated with operating our investment management business, and we may not achieve the investment returns that we expect. 

We will encounter risks and difficulties as we operate our investment management business. In order to achieve our goals as an investment manager, we must:

· manage our investment management vehicles successfully by investing their capital in suitable investments that meet their respective investment criteria;

· actively manage the assets in our portfolios in order to realize targeted performance;

· create incentives for our management and professional staff to develop and operate the investment management business; and

· structure, sponsor and capitalize future investment management vehicles that provide investors with attractive investment opportunities.

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If we do not successfully operate our investment management business to achieve the investment returns that we or the market anticipates, our results of operations may be adversely impacted.

We may expand our investment management business to involve other investment classes where we do not have prior investment experience. We may find it difficult to attract third party investors without a performance track record involving such investments. Even if we attract third party capital, there can be no assurance that we will be successful in deploying the capital to achieve targeted returns on the investments.

We face substantial competition from established participants in the private equity market as we offer investment management vehicles to third party investors.

We face significant competition from large financial and other institutions that have proven track records in marketing and managing vehicles and otherwise have a competitive advantage over us because they have access to pre-existing third party investor networks into which they can channel competing investment opportunities. If our competitors offer investment products that are competitive with products offered by us, we will find it more difficult to attract investors and to capitalize our investment management vehicles.

Our investment management vehicles are subject to the risk of defaults by third party investors on their capital commitments.

The capital commitments made by third party investors to our investment management vehicles represent unsecured promises by those investors to contribute cash to the investment management vehicles from time to time as investments are made by the investment management vehicles. Accordingly, we are subject to general credit risks that the investors may default on their capital commitments. If defaults occur, we may not be able to close loans and investments we have identified and negotiated which could materially and adversely affect the investment management vehicles’ investment program or make us liable for breach of contract, in either case to the detriment of our franchise in the private equity market.

CTIMCO’s role as collateral manager for our CDOs and investment manager for our funds may expose us to liabilities to investors.

We are subject to potential liabilities to investors as a result of CTIMCO’s role as collateral manager for our CDOs and our investment management business generally. In serving in such roles, we could be subject to claims by CDO investors and investors in our funds that we did not act in accordance with our duties under our CDO and investment fund documentation or that we were negligent in taking or refraining from taking actions with respect to the underlying collateral in our CDOs or in making investments. In particular, the discretion that we exercise in managing the collateral for our CDOs and the investments in our investment management business could result in liability due to the current negative conditions in the commercial real estate market and the inherent uncertainties surrounding the course of action that will result in the best long term results with respect to such collateral and investments. This risk could be increased due to the affiliated nature of our roles. If we were found liable for our actions as collateral manager or investment manager and we were required to pay significant damages to our CDO and investment advisory investors, our financial condition could be materially adversely effected.

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Risks Related to Our Company

We are dependent upon our senior management team to develop and operate our business.

Our ability to develop and operate our business depends to a substantial extent upon the experience, relationships and expertise of our senior management and key employees. We cannot assure you that these individuals will remain in our employ. The employment agreements with our chief executive officer, John R. Klopp, and our chief credit officer, Thomas C. Ruffing, were scheduled to expire on December 31, 2008, unless further extended, but prior to that date we entered in agreements with them committing the parties to determine whether or not to extend or renew their respective employment agreements and, if so extended or renewed, to execute amended employment agreements reflecting such change in the first quarter of 2009. The employment agreement with our chief operating officer, Stephen D. Plavin, would have expired on December 28, 2008, had we not exercised our option to extend for an additional twelve months. The employment agreement with our chief financial officer, Geoffrey G. Jervis, expires on December 31, 2009 (subject to our option to extend for an additional twelve months), unless further extended. There can be no assurance that Messrs. Klopp and Ruffing will enter into amended employment agreements extending their employment with us. In addition, the departure of both Mr. Klopp and Mr. Plavin from their employment with us constitutes an event of default under our restructured debt obligations unless a suitable replacement acceptable to the lenders is hired by us.

Our ability to compensate our employees is limited by our restructured debt obligations.

Our restructured debt obligations limit the aggregate cash compensation we are able to pay our employees (excluding our chief executive officer, chief operating officer and chief financial officer), to 2008 aggregate compensation levels. In the case of our chief executive officer, chief operating officer and chief financial officer, salaries are frozen at 2008 levels and cash bonus compensation must be approved by our lenders. This may impact our ability to retain our employees or attract new employees.

There may be conflicts between the interests of our investment management vehicles and us.

We are subject to a number of potential conflicts between our interests and the interests of our investment management vehicles. We are subject to potential conflicts of interest in the allocation of investment opportunities between our balance sheet once our balance sheet investment activity resumes and our investment management vehicles. In addition, we may make investments that are senior or junior to, participations in, or have rights and interests different from or adverse to, the investments made by our investment management vehicles. Our interests in such investments may conflict with the interests of our investment management vehicles in related investments at the time of origination or in the event of a default or restructuring of the investment. Finally, our officers and employees may have conflicts in allocating their time and services among us and our investment management vehicles.

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We must manage our portfolio in a manner that allows us to rely on an exclusion from registration under the Investment Company Act of 1940 in order to avoid the consequences of regulation under that Act.

We rely on an exclusion from registration as an investment company afforded by Section 3(c)(5)(C) of the Investment Company Act of 1940. Under this exclusion, we are required to maintain, on the basis of positions taken by the SEC staff in interpretive and no-action letters, a minimum of 55% of the value of the total assets of our portfolio in “mortgages and other liens on and interests in real estate,” which we refer to as “Qualifying Interests,” and a minimum of 80% in Qualifying Interests and real estate related assets. Because registration as an investment company would significantly affect our ability to engage in certain transactions or to organize ourselves in the manner we are currently organized, we intend to maintain our qualification for this exclusion from registration. In the past, when required due to the mix of assets in our balance sheet portfolio, we have purchased all of the outstanding interests in pools of whole residential mortgage loans, which we treat as Qualifying Interests based on SEC staff positions. Investments in such pools of whole residential mortgage loans may not represent an optimum use of our investable capital when compared to the available investments we target pursuant to our investment strategy. These investments present additional risks to us, and these risks are compounded by our inexperience with such investments. We continue to analyze our investments and may acquire other pools of whole loan residential mortgage backed securities when and if required for compliance purposes.

We treat our investments in CMBS, B Notes and mezzanine loans as Qualifying Interests for purposes of determining our eligibility for the exclusion provided by Section 3(c)(5)(C) to the extent such treatment is consistent with guidance provided by the SEC or its staff. In the absence of such guidance that otherwise supports the treatment of these investments as Qualifying Interests, we will treat them, for purposes of determining our eligibility for the exclusion provided by Section 3(c)(5)(C), as real estate related assets or miscellaneous assets, as appropriate.

If our portfolio does not comply with the requirements of the exclusion we rely upon, we could be forced to alter our portfolio by selling or otherwise disposing of a substantial portion of the assets that are not Qualifying Interests or by acquiring a significant position in assets that are Qualifying Interests. Altering our portfolio in this manner may have an adverse effect on our investments if we are forced to dispose of or acquire assets in an unfavorable market and may adversely affect our stock price.

If it were established that we were an unregistered investment company, there would be a risk that we would be subject to monetary penalties and injunctive relief in an action brought by the SEC, that we would be unable to enforce contracts with third parties and that third parties could seek to obtain rescission of transactions undertaken during the period it was established that we were an unregistered investment company and limitations on corporate leverage that would have an adverse impact on our investment returns.

Risks Relating to Our Class A Common Stock

Sales or other dilution of our equity may adversely affect the market price of our class A common stock.

In connection with restructuring our debt obligations, we issued, or irrevocably committed to issue, warrants to purchase 3,479,691 shares of our class A common stock, which represents approximately 16% of our outstanding class A common stock as of March 16, 2009. The market price of our class A common stock could decline as a result of sales of a large number of shares of class A common stock acquired upon exercise of the warrants in the market. If the warrants are exercised, the issuance of additional shares of class A common stock would dilute the ownership interest of our existing shareholders.

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Because a limited number of shareholders, including members of our management team, own a substantial number of our shares, they may make decisions or take actions that may be detrimental to your interests.

Our executive officers and directors, along with vehicles for the benefit of their families, collectively own and control 2,602,476 shares of our class A common stock representing approximately 11.9% of our outstanding class A common stock as of February 28, 2009. W. R. Berkley Corporation, or WRBC, which employs one of our directors, owns 3,843,413 shares of our class A common stock, which represents 17.6% of our outstanding class A common stock as of February 28, 2009. By virtue of their voting power, these shareholders have the power to significantly influence our affairs and are able to influence the outcome of matters required to be submitted to shareholders for approval, including the election of our directors, amendments to our charter, mergers, sales of assets and other acquisitions or sales. The influence exerted by these shareholders over our affairs might not be consistent with the interests of some or all of our other shareholders. In addition, the concentration of ownership in our officers or directors or shareholders associated with them may have the effect of delaying or preventing a change in control of our company, including transactions in which you might otherwise receive a premium for your class A common stock, and might negatively affect the market price of our class A common stock.

Some provisions of our charter and bylaws and Maryland law may deter takeover attempts, which may limit the opportunity of our shareholders to sell their shares at a favorable price.

Some of the provisions of our charter and bylaws and Maryland law discussed below could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our shareholders by providing them with the opportunity to sell their shares at a premium to the then current market price.

Issuance of Preferred Stock Without Shareholder Approval. Our charter authorizes our board of directors to authorize the issuance of up to 100,000,000 shares of preferred stock and up to 100,000,000 shares of class A common stock. Our charter also authorizes our board of directors, without shareholder approval, to classify or reclassify any unissued shares of our class A common stock and preferred stock into other classes or series of stock and to amend our charter to increase or decrease the aggregate number of shares of stock of any class or series that may be issued. Our board of directors, therefore, can exercise its power to reclassify our stock to increase the number of shares of preferred stock we may issue without shareholder approval. Preferred stock may be issued in one or more series, the terms of which may be determined without further action by shareholders. These terms may include preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption. The issuance of any preferred stock, however, could materially adversely affect the rights of holders of our class A common stock and, therefore, could reduce the value of the class A common stock. In addition, specific rights granted to future holders of our preferred stock could be used to restrict our ability to merge with, or sell assets to, a third party. The power of our board of directors to issue preferred stock could make it more difficult, delay, discourage, prevent or make it more costly to acquire or effect a change in control, thereby preserving the current shareholders’ control.

Advance Notice Bylaw. Our bylaws contain advance notice procedures for the introduction of business and the nomination of directors. These provisions could discourage proxy contests and make it more difficult for you and other shareholders to elect shareholder-nominated directors and to propose and approve shareholder proposals opposed by management.

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Maryland Takeover Statutes. We are subject to the Maryland Business Combination Act which could delay or prevent an unsolicited takeover of us. The statute substantially restricts the ability of third parties who acquire, or seek to acquire, control of us to complete mergers and other business combinations without the approval of our board of directors even if such transaction would be beneficial to shareholders. “Business combinations” between such a third party acquirer or its affiliate and us are prohibited for five years after the most recent date on which the acquirer or its affiliate becomes an “interested shareholder.” An “interested shareholder” is defined as any person who beneficially owns 10 percent or more of our shareholder voting power or an affiliate or associate of ours who, at any time within the two-year period prior to the date interested shareholder status is determined, was the beneficial owner of 10 percent or more of our shareholder voting power. If our board of directors approved in advance the transaction that would otherwise give rise to the acquirer or its affiliate attaining such status, such as the issuance of shares of our class A common stock to WRBC, the acquirer or its affiliate would not become an interested shareholder and, as a result, it could enter into a business combination with us. Our board of directors could choose not to negotiate with an acquirer if the board determined in its business judgment that considering such an acquisition was not in our strategic interests. Even after the lapse of the five-year prohibition period, any business combination with an interested shareholder must be recommended by our board of directors and approved by the affirmative vote of at least:

· 80% of the votes entitled to be cast by shareholders; and

· two-thirds of the votes entitled to be cast by shareholders other than the interested shareholder and affiliates and associates thereof.

The super-majority vote requirements do not apply if the transaction complies with a minimum price requirement prescribed by the statute.

The statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors prior to the time that an interested shareholder becomes an interested shareholder. Our board of directors has exempted any business combination involving family partnerships controlled separately by John R. Klopp and Craig M. Hatkoff, and a limited liability company indirectly controlled by a trust for the benefit of Samuel Zell and his family. As a result, these persons and WRBC may enter into business combinations with us without compliance with the super-majority vote requirements and the other provisions of the statute.

We are subject to the Maryland Control Share Acquisition Act. With certain exceptions, the Maryland General Corporation Law provides that “control shares” of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares owned by the acquiring person or by our officers or by our directors who are our employees, and may be redeemed by us. “Control shares” are voting shares which, if aggregated with all other shares owned or voted by the acquirer, would entitle the acquirer to exercise voting power in electing directors within one of the specified ranges of voting power. A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions, including an undertaking to pay expenses, may compel our board to call a special meeting of shareholders to be held within 50 days of demand to consider the voting rights of the “control shares” in question. If no request for a meeting is made, we may present the question at any shareholders’ meeting.

If voting rights are not approved at the shareholders’ meeting or if the acquiring person does not deliver the statement required by Maryland law, then, subject to certain conditions and limitations, we may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. If voting rights for control shares are approved at a shareholders’ meeting and the acquirer may then vote a majority of the shares entitled to vote, then all other shareholders may exercise appraisal rights. The fair value of the shares for purposes of these appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition. The control share acquisition statute does not apply to shares acquired in a merger, consolidation or share exchange if we are not a party to the transaction, nor does it apply to acquisitions approved or exempted by our charter or bylaws. Our bylaws contain a provision exempting certain holders identified in our bylaws from this statute, including WRBC, family partnerships controlled separately by John R. Klopp and Craig M. Hatkoff, and a limited liability company indirectly controlled by a trust for the benefit of Samuel Zell and his family.

We are also subject to the Maryland Unsolicited Takeovers Act which permits our board of directors, among other things and notwithstanding any provision in our charter or bylaws, to elect on our behalf to stagger the terms of directors and to increase the shareholder vote required to remove a director. Such an election would significantly restrict the ability of third parties to wage a proxy fight for control of our board of directors as a means of advancing a takeover offer. If an acquirer was discouraged from offering to acquire us, or prevented from successfully completing a hostile acquisition, you could lose the opportunity to sell your shares at a favorable price.

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The price of our class A common stock may be impacted by many factors.

As with any public company, a number of factors may impact the trading price of our class A common stock, many of which are beyond our control. These factors include, in addition to other risk factors mentioned in this section:

· the level of institutional interest in us;

· the perception of REITs generally and REITs with portfolios similar to ours, in particular, by market professionals;

· the attractiveness of securities of REITs in comparison to other companies;

· the market’s perception of our ability to successfully manage our portfolio and our recent restructuring; and;

· the general economic environment and the commercial real estate property and capital markets.

Our restructured debt obligations restrict us from paying cash dividends, which reduces the attractiveness of an investment in our class A common stock.

The restrictions on our inability to pay cash dividends, except in a limited manner, will reduce the current dividend yield on our class A common stock and this can negatively impact the price of our class A common stock as investors seeking current income pursue alternative investments.

Your ability to sell a substantial number of shares of our class A common stock may be restricted by the low trading volume historically experienced by our class A common stock.

Although our class A common stock is listed on the New York Stock Exchange, the daily trading volume of our shares of class A common stock has historically been lower than the trading volume for certain other companies. As a result, the ability of a holder to sell a substantial number of shares of our class A common stock in a timely manner without causing a substantial decline in the market value of the shares, especially by means of a large block trade, may be restricted by the limited trading volume of the shares of our class A common stock.

Risks Related to our REIT Status and Certain Other Tax Items

Our charter does not permit any individual to own more than 9.9% of our class A common stock, and attempts to acquire our class A common stock in excess of the 9.9% limit would be void without the prior approval of our board of directors.

For the purpose of preserving our qualification as a REIT for federal income tax purposes, our charter prohibits direct or constructive ownership by any individual of more than a certain percentage, currently 9.9%, of the lesser of the total number or value of the outstanding shares of our class A common stock as a means of preventing ownership of more than 50% of our class A common stock by five or fewer individuals. The charter’s constructive ownership rules are complex and may cause the outstanding class A common stock owned by a group of related individuals or entities to be deemed to be constructively owned by one individual. As a result, the acquisition of less than 9.9% of our outstanding class A common stock by an individual or entity could cause an individual to own constructively in excess of 9.9% of our outstanding class A common stock, and thus be subject to the charter’s ownership limit. There can be no assurance that our board of directors, as permitted in the charter, will increase, or will not decrease, this ownership limit in the future. Any attempt to own or transfer shares of our class A common stock in excess of the ownership limit without the consent of our board of directors will be void, and will result in the shares being transferred by operation of the charter to a charitable trust, and the person who acquired such excess shares will not be entitled to any distributions thereon or to vote such excess shares.

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The 9.9% ownership limit may have the effect of precluding a change in control of us by a third party without the consent of our board of directors, even if such change in control would be in the interest of our shareholders or would result in a premium to the price of our class A common stock (and even if such change in control would not reasonably jeopardize our REIT status). The ownership limit exemptions and the reset limits granted to date would limit our board of directors’ ability to reset limits in the future and at the same time maintain compliance with the REIT qualification requirement prohibiting ownership of more than 50% of our class A common stock by five or fewer individuals.

There are no assurances that we will be able to pay dividends in the future.

We expect in the future when we generate taxable income to pay quarterly dividends and to make distributions to our shareholders in amounts so that all or substantially all of our taxable income in each year, subject to certain adjustments, is distributed. This, along with our compliance with other requirements, should enable us to qualify for the tax benefits accorded to a REIT under the Internal Revenue Code. All distributions will be made at the discretion of our board of directors and will depend on our earnings, our financial condition, maintenance of our REIT status and such other factors as our board of directors may deem relevant from time to time. There are no assurances that we will be able to pay dividends in the future. In addition, some of our distributions may include a return of capital, which would reduce the amount of capital available to operate our business. There have been recent changes to the Internal Revenue Code that would allow us to pay required dividends in the form of additional shares of common stock equal in value up to 90% of the required dividend. We expect that as we undertake efforts to conserve cash and enhance our liquidity and comply with our restructured debt obligationscovenants, future required dividends on our class A common stock will be paid in the form of class A common stock to the fullest extent permitted. There can be no assurance as to when we will no longer be subject to debt obligation covenants or will cease our efforts to conserve cash and enhance liquidity to an extent we believe positions us to resume the payment of dividends completely or substantially in cash.

We will be dependent on external sources of capital to finance our growth.

As with other REITs, but unlike corporations generally, our ability to finance our growth must largely be funded by external sources of capital because we generally will have to distribute to our shareholders 90% of our taxable income in order to qualify as a REIT, including taxable income where we do not receive corresponding cash. Our access to external capital will depend upon a number of factors, including general market conditions, the market’s perception of our growth potential, our current and potential future earnings, cash distributions and the market price of our class A common stock.

If we do not maintain our qualification as a REIT, we will be subject to tax as a regular corporation and face a substantial tax liability. Our taxable REIT subsidiaries will be subject to income tax.

We expect to continue to operate so as to qualify as a REIT under the Internal Revenue Code. However, qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which only a limited number of judicial or administrative interpretations exist. Notwithstanding the availability of cure provisions in the tax code, various compliance requirements could be failed and could jeopardize our REIT status. Furthermore, new tax legislation, administrative guidance or court decisions, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to qualify as a REIT. If we fail to qualify as a REIT in any tax year, then:

· we would be taxed as a regular domestic corporation, which under current laws, among other things, means being unable to deduct distributions to shareholders in computing taxable income and being subject to federal income tax on our taxable income at regular corporate rates;

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· any resulting tax liability could be substantial, could have a material adverse effect on our book value and would reduce the amount of cash available for distribution to shareholders;

· unless we were entitled to relief under applicable statutory provisions, we would be required to pay taxes, and thus, our cash available for distribution to shareholders would be reduced for each of the years during which we did not qualify as a REIT; and

· we generally would not be eligible to requalify as a REIT for four full taxable years.

Fee income from our investment management business is expected to be realized by one of our taxable REIT subsidiaries, and, accordingly, will be subject to income tax.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities and limit our expansion opportunities.

In order to qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, our sources of income, the nature of our investments in commercial real estate and related assets, the amounts we distribute to our shareholders and the ownership of our stock. We may also be required to make distributions to shareholders at disadvantageous times or when we do not have funds readily available for distribution. Thus, compliance with REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

Complying with REIT requirements may force us to liquidate or restructure otherwise attractive investments.

In order to qualify as a REIT, we must also ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets. The remainder of our investments in securities cannot include more than 10% of the outstanding voting securities of any one issuer or 10% of the total value of the outstanding securities of any one issuer unless we and such issuer jointly elect for such issuer to be treated as a “taxable REIT subsidiary” under the Internal Revenue Code. The total value of all of our investments in taxable REIT subsidiaries cannot exceed 20% of the value of our total assets. In addition, no more than 5% of the value of our assets can consist of the securities of any one issuer. If we fail to comply with these requirements, we must dispose of a portion of our assets within 30 days after the end of the calendar quarter in order to avoid losing our REIT status and suffering adverse tax consequences.

Complying with REIT requirements may force us to borrow to make distributions to shareholders.

From time to time, our taxable income may be greater than our cash flow available for distribution to shareholders. If we do not have other funds available in these situations, we may be unable to distribute substantially all of our taxable income as required by the REIT provisions of the Internal Revenue Code. Thus, we could be required to borrow funds, sell a portion of our assets at disadvantageous prices or find another alternative. These options could increase our costs or reduce our equity. Our restructured debt obligations may cause us to recognize taxable income without any corresponding cash income and we may be required to distribute additional dividends in cash and/or class A common stock.

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Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our principal executive and administrative offices are located in approximately 15,000 square feet of office space leased at 410 Park Avenue, New York, New York 10022. Our telephone number is (212) 655-0220 and our website address is http://www.capitaltrust.com. Our lease for office space expires in October 2018.

Item 3. Legal Proceedings

We are not party to any material litigation or legal proceedings, or, to the best of our knowledge, any threatened litigation or legal proceedings, which, in our opinion, individually or in the aggregate, would have a material adverse effect on our results of operations or financial condition.

Item 4. Submission of Matters to a Vote of Security Holders

We did not submit any matters to a vote of security holders during the fourth quarter of 2008.

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PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our class A common stock is listed for trading on the New York Stock Exchange, or NYSE, under the symbol “CT.” The table below sets forth, for the calendar quarters indicated, the reported high and low sale prices for the class A common stock as reported on the NYSE composite transaction tape and the per share cash dividends declared on the class A common stock.

	High	Low	Dividend
2008
Fourth quarter	$13.17	$3.42		$0.00
Third quarter	19.76	9.78		0.60
Second quarter	29.98	18.71		0.80
First quarter	30.38	24.30		0.80
2007
Fourth quarter	$38.17	$26.91		$2.70	(1)
Third quarter	37.37	30.65		0.80
Second quarter	47.39	34.14		0.80
First quarter	55.27	43.70		0.80
2006
Fourth quarter	$50.62	$39.70		$1.40	(2)
Third quarter	42.97	33.89		0.75
Second quarter	35.62	29.69		0.70
First quarter	34.32	29.60		0.60
(1) Comprised of a regular quarterly dividend of $0.80 per share and a special dividend of $1.90 per share.
(2) Comprised of a regular quarterly dividend of $0.75 per share and a special dividend of $0.65 per share.

The last reported sale price of the class A common stock on February 28, 2009 as reported on the NYSE composite transaction tape was $1.67. As of February 28, 2009, there were 498 holders of record of the class A common stock. By including persons holding shares in broker accounts under street names, however, we estimate our shareholder base to be approximately 9,858

We generally intend to distribute each year substantially all of our taxable income (which does not necessarily equal net income as calculated in accordance with generally accepted accounting principles) to our shareholders so as to comply with the REIT provisions of the Internal Revenue Code. If necessary for REIT qualification purposes, we may need to distribute any taxable income remaining after giving effect to the distribution of the final regular quarterly dividend each year, together with the first regular quarterly dividend payment of the following taxable year or, at our discretion, in a separate dividend distributed prior thereto. We refer to these dividends as special dividends. As required by covenants in our restructured debt obligations, our cash dividend distributions are restricted to the minimum amount necessary to maintain our status as a REIT. Moreover, such covenants, taking into consideration the recent IRS ruling, “Revenue Procedure 2008-68”, which allow REITs to distribute up to 90% of their dividends in the form of stock for tax years ending on or before December 31, 2009, require us to make any distribution in stock to the extent permitted.

In addition to the foregoing restrictions, our dividend policy remains subject to revision at the discretion of our board of directors. All distributions will be made at the discretion of our board of directors and will depend upon our taxable income, our financial condition, our maintenance of REIT status and other factors that our board of directors deems relevant. In accordance with Internal Revenue Service guidance, we are required to report the amount of excess inclusion income earned by the Company. In 2008, we calculated excess inclusion income to be de minimis.

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Issuer Purchases of Equity Securities

The following table provides information regarding purchases of shares of our common stock made by or on our behalf during the three months ended December 31, 2008.

Period	(a) Total Number of Shares Purchased(1)		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
October 1-31, 2008		—		$—		—		—
November 1-30, 2008		—		—		—		—
December 1-31, 2008		6,240		3.60		—		—
Total		6,240		$3.60		—		—

(1)    All purchases were made pursuant to elections by incentive plan participants to satisfy tax withholding obligations through the surrender of shares equal in value to the amount of the withholding obligation incurred upon the vesting of restricted stock.

Equity Compensation Plan Information

The following table summarizes information, as of December 31, 2008, relating to our equity compensation plans pursuant to which shares of our common stock or other equity securities may be granted from time to time.

Plan category	(a) Number of securities to be issued upon exercise of outstanding options		(b) Weighted average exercise price of outstanding options		(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders(1)		170,477		$15.62		577,376
Equity compensation plans not approved by security holders (2)		—		—		—
Total		170,477		$15.62		577,376

(1)

The number of securities remaining for future issuance consists of 577,376 shares issuable under our 2007 long-term incentive plan which was approved by our shareholders. Awards under the plan may include restricted stock, unrestricted stock, stock options, stock units, stock appreciation rights, performance shares, performance units, deferred share units or other equity-based awards, as the board of directors may determine.

(2)

All of our equity compensation plans have been approved by security holders.

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Item 6. Selected Financial Data

The following table sets forth selected consolidated financial data, which was derived from our historical consolidated financial statements included in our Annual Reports on Form 10-K, for the years ended 2004 through 2008.

Certain reclassifications have been made to all periods presented prior to 2005 to reflect the application of Financial Accounting Standards Board Interpretation No. 46(R) on January 1, 2004.

You should read the following information together with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the notes thereto included in “Item 8. Financial Statements and Supplementary Data.”

	Years ended December 31,
	2008			2007			2006			2005			2004
	(in thousands, except for per share data)
STATEMENT OF OPERATIONS DATA:
REVENUES:
Interest and related income	$	196,215		$	254,505		$	176,758		$	86,753		$	46,639
Management fees		13,308			10,330			4,407			13,124			7,863
Total revenues		209,523			264,835			181,165			99,877			54,502
OPERATING EXPENSES:
Interest expense		129,665			162,377			104,607			37,229			20,141
General and administrative expenses		24,957			29,956			23,075			21,939			15,229
Depreciation and amortization		179			1,810			3,049			1,114			1,100
Impairments		2,917			—			—			—			5,886
Provision for/(recapture of) possible credit losses		63,577			—			—			—			(6,672	)
Valuation allowance on loans held-for-sale		48,259			—			—			—			—
Total operating expenses		269,554			194,143			130,731			60,282			35,684
Gain on sale of investments		374			15,077			—			4,951			300
Gain on extinguishment of debt		6,000			—			—			—			—
(Loss)/income from equity investments		(1,988	)		(2,109	)		898			(222	)		2,407
(Loss)/income before income taxes		(55,645	)		83,660			51,332			44,324			21,525
Provision/(benefit) for income taxes		1,893			(706	)		(2,735	)		213			(451	)
NET (LOSS)/INCOME ALLOCABLE TO COMMON STOCK:	$	(57,538	)	$	84,366		$	54,067		$	44,111		$	21,976
PER SHARE INFORMATION:
Net (loss)/income per share of common stock:
Basic	$	(2.73	)	$	4.80		$	3.43		$	2.91		$	2.17
Diluted	$	(2.73	)	$	4.77		$	3.40		$	2.88		$	2.14
Dividends declared per share of common stock	$	2.20		$	5.10		$	3.45		$	2.45		$	1.85
Weighted average shares of common stock outstanding:
Basic		21,099			17,570			15,755			15,181			10,141
Diluted		21,099			17,690			15,923			15,336			10,277

	Years ended December 31,
	2008		2007		2006		2005		2004
BALANCE SHEET DATA:
Total assets	$	2,838,627	$	3,211,482	$	2,648,564	$	1,557,642	$	877,766
Total liabilities		2,437,183		2,803,245		2,222,292		1,218,792		561,269
Shareholders’ equity		401,444		408,237		426,272		338,850		316,497

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

References herein to “we,” “us” or “our” refer to Capital Trust, Inc. and its subsidiaries unless the context specifically requires otherwise.

Introduction

Our business model is designed to produce a mix of net interest margin from our balance sheet investments and fee income plus co-investment income from our investment management operations. In managing our operations, we focus on originating investments, managing our portfolios and capitalizing our businesses.

Current Market Conditions

During 2008, the general economic environment deteriorated precipitously, leaving the U.S economy and many economies around the world in a state of severe economic recession. In addition, the global capital markets continued to be in a severe state of crisis. The impact on commercial real estate has been a combination of: (i) decreased, and expected further decreases, in property level cash flows and (ii) lack of capital, both debt and equity, to allow for markets to function in an orderly manner. Transaction volume has declined significantly, credit spreads for all forms of mortgage debt reached all-time highs, issuance levels of commercial mortgage backed securities, or CMBS, ground to a halt, and other forms of financing from the debt markets have been dramatically curtailed. Financial institutions still hold significant inventories of unsold loans and CMBS, creating a further overhang on the markets. These factors have combined to create significant decreases in property values and have and will continue to impact the performance of our existing portfolio of assets. Furthermore, the volatility in the capital markets has caused severe stress to all financial institutions and our business is dependent upon these counterparties for, among other things, financing and interest rate derivatives.

Restructuring of Our Debt Obligations

On March 16, 2009, we consummated a restructuring of substantially all of our recourse debt obligations with certain of our secured and unsecured creditors pursuant to the amended terms of our secured credit facilities, our senior unsecured credit agreement, and certain of our trust preferred securities.

Secured Credit Facilities

In connection with the restructuring, we amended our secured, recourse credit facilities with: (i) JPMorgan Chase Bank, N.A., JPMorgan Chase Funding Inc. and J.P. Morgan Securities Inc., or collectively JPMorgan, (ii) Morgan Stanley Bank, N.A., or Morgan Stanley, and (iii) Citigroup Financial Products Inc. and Citigroup Global Markets Inc., or collectively Citigroup. We collectively refer to JPMorgan, Morgan Stanley and Citigroup as the participating secured lenders. Further, as part of the restructuring, we also entered into an agreement to terminate our secured, recourse facility with Goldman Sachs Mortgage Company, or Goldman Sachs. We had previously, on February 25, 2009, terminated our secured financing with UBS Real Estate Securities Inc., or UBS.

Specifically, on March 16, 2009, we entered into separate amendments to the respective master repurchase agreements with JPMorgan, Morgan Stanley and Citigroup. Pursuant to the terms of each such agreement, we repaid the balance outstanding with each participating secured lender by an amount equal to three percent (3%) of the current outstanding principal amount due under its existing secured, recourse credit facility, $17.7 million in the aggregate, and further amended the terms of each such facility, without any change to the collateral pool securing the debt owed to each participating secured lender, to provide the following:

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· Maturity dates were modified to one year from the March 16, 2009 effective date of each respective agreement, which maturity dates may be extended further for two one-year periods. The first one-year extension option is exercisable by us so long as the outstanding balance as of the first extension date is less than or equal to a certain amount, which is a reduction of twenty percent (20%), including the upfront payment described above, of the outstanding principal amount from the date of the amendments, and no other defaults or events of default have occurred and are continuing, or would be caused by such extension. The second one-year extension option is exercisable by each participating secured lender in its sole discretion.

· We agreed to pay each participating secured lender periodic amortization as follows: (i) mandatory payments, payable monthly in arrears, in an amount equal to sixty-five (65%) (subject to adjustment in the second year) of the net interest income generated by each such lender’s collateral pool, and (ii) one hundred percent (100%) of the principal proceeds received from the repayment of assets in each such lender’s collateral pool. In addition, under the terms of the amendment with Citigroup, we agreed to pay Citigroup an additional quarterly amortization payment equal to the lesser of: (x) Citigroup’s then outstanding senior secured credit facility balance or (y) the product of (i) the total cash paid (including both principal and interest) during the period to our senior unsecured credit facility in excess of an amount equivalent to LIBOR plus 1.75% based upon a $100.0 million facility amount, and (ii) a fraction, the numerator of which is Citigroup’s then outstanding senior secured credit facility balance and the denominator is the total outstanding secured indebtedness of the participating secured lenders.

· We further agreed to amortize each participating secured lender’s secured debt at the end of each calendar quarter on a pro rata basis until we have repaid our secured, recourse credit facilities and thereafter our senior unsecured credit facility in an amount equal to any unrestricted cash in excess of the sum of (i) $25.0 million, and (ii) any unfunded loan and co-investment commitments.

· Each participating secured lender was relieved of its obligation to make future advances with respect to unfunded commitments arising under investments in its collateral pool.

· We received the right to sell or refinance collateral assets as long as we apply one hundred percent (100%) of the proceeds to pay down the related secured credit facility balance subject to minimum release price mechanics.

· We eliminated the cash margin call provisions and amended the mark-to-market provisions so that future changes in collateral value will be determined based upon changes in the performance of the underlying real estate collateral in lieu of the previous provisions which were based on market spreads. Beginning six months after the date of execution of the agreements, each collateral pool will be valued monthly on this basis. If the ratio of a participating secured lender’s total outstanding secured credit facility balance to total collateral value exceeds 1.15x the ratio calculated as of the effective date of the amended agreements, we will be required to liquidate collateral in order to return to compliance with the prescribed loan to collateral value ratio or post other collateral to bring the ratio back into compliance.

In each master repurchase agreement amendment and the amendment to our senior unsecured credit agreement described in greater detail below, which we collectively refer to as our restructured debt obligations, we also replaced all existing financial covenants with the following uniform covenants which:

· prohibit new balance sheet investments except, subject to certain limitations, co-investments in our investment management vehicles or protective investments to defend existing collateral assets on our balance sheet;

· prohibit the incurrence of any additional indebtedness except in limited circumstances;

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· limit the total cash compensation to all employees and, specifically with respect to our chief executive officer, chief operating officer and chief financial officer, freeze their base salaries at 2008 levels, and require cash bonuses to any of them to be approved by a committee comprised of one representative designated by the secured lenders, the administrative agent under the senior unsecured credit facility and the chairman of our board of directors;

· prohibit the payment of cash dividends to our common shareholders except to the minimum extent necessary to maintain our REIT status;

· require us to maintain a minimum amount of liquidity, as defined, of $7.0 million in 2009 and $5.0 million thereafter;

· trigger an event of default if both our chief executive officer and chief operating officer cease their current employment with us during the term of the agreement and we fail to hire a replacement acceptable to the lenders; and

· trigger an event of default, if any event or condition occurs which causes any obligation or liability of more than $1.0 million to become due prior to its scheduled maturity or any monetary default under our restructured debt obligations if the amount of such obligation is at least $1.0 million.

Pursuant to the restructuring, the interest rates on our secured borrowings will remain the same as those in effect as of December 31, 2008. In exchange for maintenance of these historic rates, on March 16, 2009 we issued, or irrevocably committed to issue as of such date, JPMorgan, Morgan Stanley and Citigroup warrants to purchase 3,479,691 shares of our class A common stock at an exercise price of $1.79 per share, which is equal to the closing bid price on the New York Stock Exchange on March 13, 2009. The warrants will become exercisable on March 16, 2012 and expire on March 16, 2019, and may be exercised through a cashless exercise.

The warrants were issued, or irrevocably committed to be issued, in reliance upon the exemption provided in Section 4(2) of the Securities Act of 1933, as amended, and the safe harbor of Rule 506 under Regulation D. Any certificates representing such securities will contain restrictive legends preventing sale, transfer or other disposition, unless registered under the Securities Act of 1933. No form of general solicitation or general advertising was conducted in connection with the issuance.

The foregoing descriptions of the amendments to the secured credit facilities with the participating secured lenders, the amendment to the senior unsecured credit facility and the warrant agreement with respect to the warrants are qualified in their entirety by reference to Exhibits 10.49b, 10.46d and 10.69, respectively, to this Form 10-K.

On March 16, 2009, we also entered into an agreement to terminate the master repurchase agreement with Goldman Sachs, pursuant to which we satisfied the indebtedness due under the Goldman Sachs secured credit facility. Specifically, we: (i) pre-funded certain required advances of approximately $2.4 million under one loan in the collateral pool, (ii) paid Goldman Sachs $2.6 million to effect a full release to us of another loan, and (iii) transferred all of the other assets that served as collateral for Goldman Sachs to Goldman Sachs for a purchase price of $85.7 million as payment in full for the balance remaining under the secured credit facility. Goldman Sachs agreed to release us from any further obligation under the secured credit facility. The foregoing description is qualified in its entirety by reference to Exhibit 10.47e to this Form 10-K.

Previously, on February 25, 2009, we entered into a satisfaction, termination and release agreement with UBS pursuant to which the parties terminated their right, title, interest in, to and under a master repurchase agreement. We consented to the transfer to UBS, and UBS unconditionally accepted and retained all of our rights, title and interest in a loan financed under the master repurchase agreement in complete satisfaction of all of our obligations, including all amounts due thereunder. The foregoing description is qualified in its entirety by reference to Exhibit 10.71 to this Form 10-K.

We are currently in negotiations with Lehman Brothers to resolve the $18.0 million outstanding balance under our secured, recourse credit facility with such firm, which finances a single asset.

Senior Unsecured Credit Agreement

On March 16, 2009, we entered into an amended and restated senior unsecured credit agreement governing our $100.0 million term loan from WestLB AG, New York Branch, participant and administrative agent, Fortis Capital Corp., Wells Fargo Bank, N.A., JPMorgan Chase Bank, N.A., Morgan Stanley Bank, N.A. and Deutsche Bank Trust Company Americas, which we collectively refer to as the senior unsecured lenders. Pursuant to the amended and restated senior unsecured credit agreement, we and the senior unsecured lenders agreed to:

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· Extend the maturity date of the senior unsecured credit agreement to be co-terminus with the maturity date of the secured credit facilities with the participating secured lenders (as they may be further extended until March 16, 2012, as described above);

· Increase the cash interest rate under the senior unsecured credit agreement to LIBOR plus 3.0% per annum (from LIBOR plus 1.75%), plus an accrual rate of 7.20% per annum less the cash interest rate;

· Initiate quarterly amortization equal to the greater of: (i) $5.0 million per annum and (ii) 25% of the annual cash flow received from our currently unencumbered collateralized debt obligation interests;

· Pledge our unencumbered collateralized debt obligation interests and provide a negative pledge with respect to certain other assets; and

· Replace all existing financial covenants with substantially identical covenants and default provisions to those described above in the participating secured credit facilities.

The foregoing description is qualified in its entirety by reference to the amended and restated credit agreement filed as Exhibit 10.70 to this Form 10-K.

Trust Preferred Securities

On March 16, 2009, we reached an agreement with Taberna Preferred Funding V, Ltd., Taberna Preferred Funding VI, Ltd., Taberna Preferred Funding VIII, Ltd. and Taberna Preferred Funding IX, Ltd., or collectively Taberna, to issue new junior subordinated notes in exchange for $50.0 million face amount of trust preferred securities issued through our statutory trust subsidiary CT Preferred Trust I held by affiliates of Taberna, which we refer to as the Trust I Securities, and $53.1 million face amount of trust preferred securities issued through our statutory trust subsidiary CT Preferred Trust II held by affiliates of Taberna, which we refer to as the Trust II Securities. We refer to the Trust I Securities and the Trust II Securities together as the Trust Securities. The Trust Securities were backed by and recorded as junior subordinated debentures issued by us with terms that mirror the Trust Securities.

Pursuant to the exchange agreement dated March 16, 2009, by and among us and Taberna, we issued $118.6 million aggregate principal amount of new junior subordinated notes due on April 30, 2036 (an amount equal to 115% of the current aggregate face amount of the Trust Securities being exchanged). The interest rate payable under the new subordinated notes is 1% per annum from March 16, 2009, through and including April 29, 2012, which we refer to as the modification period. After the modification period, the interest rate will revert to a blended rate equal to that which was previously payable under the notes underlying the Trust Securities, a fixed rate of 7.23% per annum through and including April 29, 2016 and thereafter a floating rate, reset quarterly, equal to three month LIBOR plus 2.44% until maturity. The new junior subordinated notes will be contractually senior to the remaining trust preferred securities, will mature on April 12, 2036 and will be freely redeemable by us at par at any time. The new junior subordinated notes contain a covenant that through April 30, 2012, subject to certain exceptions, we may not declare or pay dividends or distributions on, or redeem, purchase or acquire any of our equity interests (other than remaining trust preferred securities not exchanged) except to the extent necessary to maintain our status as a REIT. Except for the foregoing, the new junior subordinated notes contain substantially similar provisions as the Trust Securities. The foregoing description is qualified in its entirety by reference to the Exchange Agreement filed as Exhibit 10.72 to this Form 10-K.

As part of the agreement with Taberna, we also agreed to pay $750,000 to cover third party fees and costs incurred in connection with the exchange transaction.

Current Period Financial Statement Impact

While the restructuring of our debt obligations was finalized subsequent to December 31, 2008 and the amendments to the respective agreements and termination of our facility with UBS were executed in the first quarter of 2009, certain elements of the transaction require us to amend the presentation of certain items in our consolidated financial statements for the fiscal year ended December 31, 2008. Specifically, the aggregate $140.4 million (face value) of loans sold to Goldman Sachs and UBS have been reclassified under the consolidated balance sheet classification, loans held-for-sale, and a valuation allowance of $48.3 million, reflecting the difference between the carrying value of the loans and the sale price, was recorded on the consolidated statement of operations.

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Originations

We have historically allocated opportunities between our balance sheet and investment management vehicles based upon our assessment of the availability and relative cost of capital, the risk and return profiles of each investment and applicable regulatory requirements. The restructuring of our obligations due our secured and unsecured lenders has consequences for our historical business in that the new covenants we agreed to require us to effectively cease our balance sheet investment activities and not to incur any further indebtedness unless used to retire the debt due our lenders. Going forward, until these covenants are eliminated through the repayment or refinancing of the restructured debt obligations, we will continue to carry out investment activities for our investment management vehicles, consistent with our previous strategies and investment mandates for each respective vehicle.

Notwithstanding the combined capabilities of our platform in 2008, we decided to continue a defensive posture with respect to investment originations in light of the continued market volatility. The table below summarizes our gross originations and the allocation of opportunities between our balance sheet and the investment management business for the years ended December 31, 2008 and December 31, 2007.

Originations(1)
(in millions)	Year ended December 31, 2008	Year ended December 31, 2007
Balance sheet(2)	$48	$1,454
Investment management	426	1,011
Total originations	$474	$2,465

(1)	Includes total commitments, both funded and unfunded, net of any related purchase discounts.
(2)	Includes $0 and $315 million of participations sold recorded on our balance sheet relating to participations that we sold to CT Large Loan 2006, Inc. for the years ended December 31, 2008 and December 31, 2007, respectively.

Our balance sheet investments include CMBS and commercial real estate debt and related instruments, or Loans, which we collectively refer to as our Interest Earning Assets.

Originations of Interest Earning Assets for our balance sheet for the years ended December 31, 2008 and December 31, 2007 are detailed in the table below:

Balance Sheet Originations
(in millions)	Year ended December 31, 2008			Year ended December 31, 2007
	Originations(1)	Yield(2)	Rating / LTV(3)	Originations(1)	Yield(2)	Rating / LTV(3)
CMBS	$1	41.39%	BB+	$111	8.92%	BB
Loans(4)	47	9.16%	53.3%	1,343	7.67%	64.4%
Total / Weighted Average	$48	9.70%		$1,454	7.77%

(1)	Includes total commitments, both funded and unfunded.
(2)	Yield on floating rate originations assumes LIBOR at December 31, 2008 and December 31, 2007, of 0.44% and 4.60%, respectively.
(3)	Weighted average ratings at origination are based on the lowest rating published by Fitch Ratings, Standard & Poor’s or Moody’s Investors Service for each security and exclude $36.4 million of unrated equity investments in collateralized debt obligations originated in 2007. No unrated securities were originated in 2008. Loan to Value (LTV) is based on third party appraisals received by us when each loan was originated.
(4)	Includes $0 and $315 million of participations sold recorded on our balance sheet relating to participations that we sold to CT Large Loan 2006, Inc. for the year ended December 31, 2008 and the year ended December 31, 2007, respectively.

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The table below shows our Interest Earning Assets as of December 31, 2008 and December 31, 2007. In any period, the ending balance of Interest Earning Assets will be impacted not only by new balance sheet originations, but also by repayments, advances, sales and losses, if any.

Interest Earning Assets
(in millions)	December 31, 2008		December 31, 2007
	Book Value	Yield(1)	Book Value	Yield(1)
CMBS	$852	6.87%	$877	7.35%
Loans	1,791	4.09%	2,258	7.80%
Total / Weighted Average	$2,643	4.99%	$3,135	7.67%

(1)    Yield on floating rate assets assumes LIBOR at December 31, 2008 and December 31, 2007, of 0.44% and 4.60%, respectively. For $37.9 million face value ($37.5 million book value) of CMBS investments, calculations use an effective rate based on cash received.

In some cases our loan originations are not fully funded at closing, creating an obligation for us to make future fundings, which we refer to as Unfunded Loan Commitments. Typically, Unfunded Loan Commitments are part of construction and transitional loans. As of December 31, 2008, we had nine Unfunded Loan Commitments totaling $54.2 million. Of the total gross Unfunded Loan Commitments, $44.0 million will only be funded when and/or if the borrower meets certain performance hurdles with respect to the underlying collateral. As a result of the restructuring of our debt obligations described in Note 22 to the consolidated financial statements, one loan with an Unfunded Loan Commitment of $30.6 million as of December 31, 2008 was sold on March 16, 2009, in conjunction with the termination of one of our repurchase agreements. After giving effect to the settlement of this transaction, we have Unfunded Loan Commitments of $23.6 million. Although generally provided for in the terms of our restructured debt obligations, our ability to fund these remaining Unfunded Loan Commitments will be contingent upon our having sufficient liquidity available to us after required payments to our creditors. In the past, we were able to rely on our lenders to fund a portion of these commitments, and, subject to the recent restructuring, we no longer have that ability.

In addition to our investments in Interest Earning Assets, we have two equity investments in unconsolidated subsidiaries as of December 31, 2008. These represent our equity co-investments in private equity funds that we manage, CT Mezzanine Partners III, Inc., or Fund III, and CT Opportunity Partners I, LP, or CTOPI. The table below details the carrying value of those investments, as well as related capitalized costs.

Equity Investments
(in thousands)	December 31,	December 31,
	2008	2007
Fund III	$597	$923
CTOPI	1,782	(60	)
Capitalized costs/other	4	114
Total	$2,383	$977

Asset Management

We actively manage our balance sheet portfolio and the assets held by our investment management vehicles. While our investments are primarily in the form of debt, which generally means that we have limited influence over the operations of the collateral securing our portfolios, we are aggressive in exercising the rights afforded to us as a lender. These rights may include collateral level budget approvals, lease approvals, loan covenant enforcement, escrow/reserve management/collection, collateral release approvals and other rights that we may negotiate.

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During the fourth quarter of 2008, one loan with an outstanding balance of $45.0 million was fully repaid. In addition, four loans with an aggregate outstanding balance of $60.1 million as of year end were extended on modified terms at current market interest rates on existing principal balances, and twelve loans with an aggregate outstanding balance of $344.5 million were extended pursuant to the terms of their corresponding loan agreements.

The table below details our loss experience with balance sheet Interest Earning Assets for the years ended December 31, 2008 and December 31, 2007, and the percentage of non-performing loans as of December 31, 2008 and December 31, 2007. Non-performing loans include loans which are on non-accrual status as well as those where we have foreclosed upon the underlying collateral and therefore own an equity interest in real estate. Commencing in the fourth quarter of 2008, we classified certain of our loans as Watch List Loans. These investments are currently performing loans that we actively monitor and manage to mitigate the risk of potential future non-performance.

Portfolio Performance(1)
(in millions, except for number of investments)	December 31, 2008			December 31, 2007
Interest earning assets		$2,643			$3,135
Losses
Principal balance		$10			$—
Percentage of interest earning assets		0.4	%		—
Non performing loans
Non-accrual loans, net(2)		$24			$6
Number of investments		5			1
Percentage of interest earning assets		0.9	%		0.2	%
Real estate owned, net(3)		$10			$—
Number of investments		1			—
Percentage of interest earning assets		0.4	%		—
Watch List Loans
Principal balance		$377			N/A
Percentage of interest earning assets		14.3	%		N/A

(1)	Portfolio statistics exclude loans classified as held-for-sale.
(2)	As of December 31, 2008, includes five loans with an aggregate principal balance of $82 million, against which we have recorded a $58 million reserve. As of December 31, 2007, includes one loan with a principal balance of $10 million, against which we recorded a $4 million reserve.
(3)	As of December 31, 2008, includes one loan which has been transferred to Real estate held-for-sale with a gross asset balance of $12 million, against which we have recorded a $2 million impairment.

As of December 31, 2008, we had five loans with an aggregate net book value of $24.5 million ($82.1 million principal balance, net of $57.6 million of reserves) that were classified as non-accrual. These include two loans with an aggregate principal balance of $20.0 million which are current in their interest payments, against which we have recorded a $7.6 million reserve, as well as three loans which are delinquent on contractual payments with an aggregate principal balance of $62.0 million, against which we have recorded a $50.0 million reserve. We also had 15 loans with an aggregate principal balance of $376.8 million on Watch List status.

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During the fourth quarter of 2008, the Company and its co-lender foreclosed on a loan secured by a multifamily property, and took title to the collateral securing the original loan. At the time the foreclosure occurred, the loan had a book balance of $11.9 million which was reclassified as Real estate held-for-sale (also referred to as Real Estate Owned) on our consolidated balance sheet as of December 31, 2008 to reflect our ownership interest in the property. We have recorded a $2.0 million impairment to reflect the property at fair value.

As of December 31, 2007, we had one non-performing loan which was on non-accrual status with a principal balance of $10.0 million, against which we had recorded a $4.0 million reserve. During the second quarter of 2008, this loan was deemed unrecoverable and we wrote off the entire $10.0 million principal balance and reversed the pre-existing reserve. Simultaneously, $6.0 million of non-recourse financing on the asset was forgiven by the lender.

In addition to our investments in loans receivable, which are a component of our interest earning assets, we also held four investments in loans which were classified as held-for-sale as of December 31, 2008. These loans had an aggregate carrying value of $92.2 million, net of a valuation allowance of $48.3 million as of December 31, 2008. These loans were classified as held-for-sale as a result of the restructuring of our debt obligations, as discussed in Note 22 to the consolidated financial statements.

We actively manage our CMBS investments using a combination of quantitative tools and loan/property level analysis in order to monitor the performance of the securities and their collateral versus our original expectations. Securities are analyzed on a monthly basis for delinquency, transfers to special servicing, and changes to the servicer’s watch list population. Realized losses on underlying loans are tracked on a monthly basis and compared to our original loss expectations. On a periodic basis, individual loans of concern are also re-underwritten. Updated collateral loss projections are then compared to our original loss expectations to determine how each investment is performing. Based on our review of the portfolio, under the guidance of EITF 99-20, “Recognition of Interest Income and Impairment of Purchased and Retained Beneficial Interests in Securitized Financial Assets”, as amended by FASB Staff Position EITF 99-20-1, “Amendments to the Impairment Guidance of EITF Issue No. 99-20”, we concluded that a $900,000 other-than-temporary impairment was warranted on one of our CMBS investments, which had a net book value of $3.5 million as of December 31, 2008.

At year end, there were significant differences between the estimated fair value and the book value of some of our CMBS investments. We believe these differences to be related to the disruption in the capital markets and the general negative bias against structured financial products and not reflective of a change in cash flow expectations from these securities. Accordingly, we have recorded no additional other-than-temporary impairments on our CMBS portfolio.

The ratings performance of our CMBS portfolio over the years ended December 31, 2008 and December 31, 2007 is detailed below:

CMBS Rating Activity(1)
	Year ended December 31, 2008	Year ended December 31, 2007
Securities Upgraded	6	20
Securities Downgraded	13	3

(1)    Represents activity from any of Fitch Ratings, Standard & Poor’s and/or Moody’s Investors Service.

Three trends in asset performance that we foresee into 2009 that are likely to lead to further downgrades are (i) borrowers faced with maturities will have a more difficult time refinancing their properties in light of the volatility and lack of liquidity in the financial markets, (ii) real estate fundamentals will weaken as the U.S. economy continues to deteriorate and (iii) capitalization rates for commercial real estate will continue to increase with corresponding reductions in values. These trends may result in negotiated extensions or modifications of the terms of our investments or the exercise of foreclosure and other remedies, the effect of which on the performance and value of our investments cannot be predicted.

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Capitalization

While our balance sheet investment activities are currently prohibited by our restructured debt obligations, if they are resumed, such activities, as well as those of our investment management business, are capital intensive and the availability and cost of capital is a critical component of our business. We capitalize our business with a combination of debt and equity. Our debt sources, which we collectively refer to as Interest Bearing Liabilities, currently include repurchase agreements and secured debt, CDOs, a senior unsecured credit facility and junior subordinated debentures (which we also refer to as trust preferred securities). Our equity capital is currently comprised entirely of common equity.

Subsequent to December 31, 2008, certain of our Interest Bearing Liabilities including repurchase agreements and secured debt, our senior unsecured credit facility and our junior subordinated debentures were restructured, terminated, or otherwise satisfied pursuant to the transactions described in Note 22 to the consolidated financial statements. In addition, we are subject to certain covenants under our restructured debt obligations which, among other things, restrict our ability to incur additional indebtedness for the foreseeable future.

The table below shows our capitalization mix as of December 31, 2008 and December 31, 2007:

Capital Structure(1)
(in millions)	December 31, 2008		December 31, 2007
Repurchase obligations and secured debt	$699		$912
Collateralized debt obligations	1,156		1,192
Senior unsecured credit facility	100		75
Junior subordinated debentures	129		129
Total interest bearing liabilities	$2,084		$2,308
Weighted average effective cost of debt(2)	3.48	%	5.75	%
Shareholders’ equity	$401		$408
Ratio of interest bearing liabilities to shareholders’ equity	5.2:1		5.7:1

(1)	Excludes participations sold.
(2)	Floating rate debt obligations assume LIBOR at December 31, 2008 and December 31, 2007, of 0.44% and 4.60%, respectively. Includes the effective cost of interest rate swaps of 1.01% and 0.09% as of December 31, 2008 and December 31, 2007, respectively.

A summary of selected structural features of our debt as of December 31, 2008 and December 31, 2007 is detailed in the table below:

Interest Bearing Liabilities
	December 31, 2008	December 31, 2007
Weighted average life	4.2 yrs.	4.1 yrs.
% Recourse	44.5%	48.1%
% Subject to mark-to-market provisions	33.5%	39.5%

Our CDO liabilities as of December 31, 2008 and December 31, 2007 are described below:

Collateralized Debt Obligations
(in millions)			December 31, 2008				December 31, 2007
	Issuance Date	Type		Book Value	All-in Cost(1)			Book Value	All-in Cost(1)
CDO I(2)	7/20/04	Static		$252	1.52	%		$253	5.67	%
CDO II (2)	3/15/05	Reinvesting		299	1.18			299	5.32
CDO III	8/04/05	Static		257	5.27			261	5.37
CDO IV(2)	3/15/06	Static		348	1.15			379	5.11
Total				$1,156	2.15	%		$1,192	5.34	%

(1)	Includes amortization of premiums/discounts and issuance costs.
(2)	Floating rate CDO liabilities assume LIBOR at December 31, 2008 and December 31, 2007, of 0.44% and 4.60%, respectively.

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The table below summarizes our repurchase agreements and secured debt liabilities as of December 31, 2008 and December 31, 2007:

Repurchase Agreements and Secured Debt
($ in millions)	December 31, 2008	December 31, 2007
Repurchase facility and secured debt amounts	$1,114	$1,600
Counterparties	6	7
Outstanding repurchase borrowings and secured debt	$699	$912
All-in cost	L + 1.66%	L + 1.20%

The most subordinated components of our debt capital structure are junior subordinated debentures that back trust preferred securities issued to third parties. These securities represent long-term, subordinated, unsecured financing and generally carry limited operational covenants. As of December 31, 2008, we had issued $129 million of junior subordinated debentures that back $125 million of trust preferred securities sold to third parties in two separate issuances. On a combined basis, the junior subordinated debentures provide us with financing at 7.20% and an all-in effective rate of 7.35%.

On March 16, 2009 we issued new junior subordinate debentures to holders of a majority of our trust preferred securities reflecting modified terms, as detailed in Note 22 to the consolidated financial statements.

Our capital raising activities included the issuance of common stock in the first quarter of 2008. On March 28, 2008, we issued 4,000,000 shares of class A common stock in a public offering underwritten by Morgan Stanley & Co. Inc. Gross proceeds were $28.75 per share and total net proceeds were $113 million. Changes in the number of shares also resulted from option exercises, restricted stock grants and vesting, stock unit grants, and the issuance of shares under our dividend reinvestment plan and direct stock purchase plan.

Shareholders’ Equity
	December 31, 2008	December 31, 2007
Book value (in millions)	$401	$408
Shares
Class A common stock	21,740,152	17,165,528
Restricted stock	331,197	423,931
Stock units	215,451	94,587
Options(1)	―	84,743
Total	22,286,800	17,768,789
Book value per share	$18.01	$22.97

(1)    Dilutive shares issuable upon the exercise of outstanding options assuming a December 31, 2008 and December 31, 2007 stock price, respectively, and the treasury stock method.

As of December 31, 2008, we had 22,071,349 of our class A common stock and restricted stock outstanding.

Other Balance Sheet Items

Participations sold represent participations in loans that we originated and sold to CT Large Loan 2006, Inc. and third parties. We present these sold interests as both assets and liabilities (in equal amounts) in conformity with GAAP on the basis that these arrangements do not qualify as sales under FASB Statement of Financial Accounting Standards No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities”, or FAS 140. As of December 31, 2008, we had five such participations sold with a total book balance of $292.7 million at a weighted average yield of LIBOR plus 3.27% (3.71% at December 31, 2008). As of December 31, 2007, we had seven such participations sold with a total book balance of $408.4 million at a weighted average yield of LIBOR plus 3.41% (8.01% at December 31, 2008). The income earned on the loans is recorded as interest income and an identical amount is recorded as interest expense on the consolidated statements of operations.

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In 2007, the Company sub-participated a $73.4 million participation in a loan to CT Large Loan 2006, Inc. The Company recorded the sub-participation as a secured borrowing as it did not meet at least one of the criteria under FAS No. 140. In July 2008, the Company and CT Large Loan 2006, Inc. agreed to terminate the sub-participation agreement and release themselves from any further obligation to each other with respect to such sub-participation agreement. As a result of this transaction, loans receivable and participations sold decreased by $73.4 million during the third quarter of 2008.

Interest Rate Exposure

We endeavor to manage a book of assets and liabilities that are generally matched with respect to interest rates, typically financing floating rate assets with floating rate liabilities and fixed rate assets with fixed rate liabilities. In some cases, we finance fixed rate assets with floating rate liabilities and, in those cases, we may use interest rate derivatives, such as swaps, to effectively convert the floating rate debt to fixed rate debt. In such instances, the equity we have invested in fixed rate assets is not typically swapped, leaving a portion of our equity capital exposed to changes in value of the fixed rate assets due to interest rate fluctuations. The balance of our assets earn interest at floating rates and are financed with floating rate liabilities, leaving a portion of our equity capital exposed to cash flow variability from fluctuations in rates. Generally, these assets and liabilities earn interest at rates indexed to one month LIBOR.

Our counterparties in these transactions are large financial institutions and we are dependent upon the health of these counterparties and a functioning interest rate derivative market in order to effectively execute our hedging strategy.

The table below details our interest rate exposure as of December 31, 2008 and December 31, 2007:

Interest Rate Exposure
(in millions)	December 31, 2008			December 31, 2007
Value exposure to interest rates(1)
Fixed rate assets		$880			$948
Fixed rate liabilities		(395	)		(403	)
Interest rate swaps		(466	)		(513	)
Net fixed rate exposure		$19			$32
Weighted average life (fixed rate assets)	4.9 yrs			5.6 yrs
Weighted average coupon (fixed rate assets)		6.90	%		7.10	%
Cash flow exposure to interest rates(1)
Floating rate assets		$1,949			$2,235
Floating rate debt less cash		(1,931	)		(2,286	)
Interest rate swaps		466			513
Net floating rate exposure		$484			$462
Weighted average life (floating rate assets)	2.9 yrs			3.4 yrs
Weighted average coupon (floating rate assets) (2)		3.52	%		7.65	%
Net income impact from 100 bps change in LIBOR		$4.8			$4.7

(1)	All values are in terms of face or notional amounts, and include loans classified as held-for-sale.
(2)	Weighted average coupon assumes LIBOR at December 31, 2008 and December 31, 2007 of 0.44% and 4.60%, respectively. For $37.9 million face value ($37.5 million book value) of CMBS investments, calculations use an effective rate based on cash received.

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Investment Management Overview

In addition to our balance sheet investment activities, we act as an investment manager for third parties. We have developed our investment management business to leverage our platform, generate fee revenue from investing third party capital and, in certain instances, earn co-investment income. Our active investment management mandates are described below:

· CT High Grade II, held its initial closing in June 2008 with $667 million of commitments from two institutional investors. The fund targets senior debt opportunities in the commercial real estate debt sector and does not employ leverage. We earn a 0.40% per annum management fee on invested capital.

· CTOPI is a multi-investor private equity fund designed to invest in commercial real estate debt and equity, specifically taking advantage of the current dislocation in the commercial real estate capital markets. On July 14, 2008, CTOPI held its final closing completing its capital raise with $540 million total equity commitments. We have committed to invest $25 million in the vehicle and entities controlled by our chairman have committed to invest $20 million. The fund’s investment period expires in December 2010, and we earn base management fees as the investment manager to CTOPI (1.60% per annum of total equity commitments during the investment period and of invested capital thereafter). In addition, we earn gross incentive management fees of 20% of profits after a 9% preferred return and a 100% return of capital.

· CT High Grade closed in November 2006, with a single, related party investor committing $250 million. This separate account targets lower risk subordinate debt investments and does not utilize leverage and we earn management fees of 0.25% per annum on invested assets. In July 2007, we upsized the account by $100 million to $350 million and extended the investment period to July 2008.

· CT Large Loan closed in May 2006 with total equity commitments of $325 million from eight third party investors. The fund employs leverage and we earn management fees of 0.75% per annum of invested assets (capped at 1.5% on invested equity). The investment period ended in May 2008.

· CTX Fund I, L.P., or CTX Fund, is a single investor fund designed to invest in collateralized debt obligations, or CDOs, sponsored, but not issued, by us. We do not earn fees on the CTX Fund, however, we earn CDO management fees from the CDOs in which the CTX Fund invests. We sponsored one such CDO in 2007, a $500 million CDO secured primarily by credit default swaps referencing CMBS.

· Fund III is a vehicle we co-sponsored with a joint venture partner that had an investment period that ran from 2003 to 2005. The fund is currently liquidating in the ordinary course. We have a co-investment in the fund, earn 100% of base management fees and we split incentive management fees with our partner, who receives 37.5% of Fund III’s incentive management fees.

As of December 31, 2008, we managed five private equity funds and one separate account through our wholly-owned, taxable, investment management subsidiary, CT Investment Management Co., LLC, or CTIMCO.

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Investment Management Mandates, as of December 31, 2008
(in millions)							Incentive Management Fee
		Total	Total Capital	Co-		Base	Company	Employee
	Type	Investments(1)	Commitments	Investment %		Management Fee	%	%
Investing:
CT High Grade II	Fund	$148	$667	—		0.40% (Assets)	N/A	N/A
CTOPI	Fund	286	540	4.63%	(2)	1.60% (Equity)	100%(3)	100%(4)
Liquidating:
CT High Grade	Fund	344	350	—		0.25% (Assets)	N/A	N/A
CT Large Loan	Fund	275	325	—	(5)	0.75% (Assets)(6)	N/A	N/A
CTX Fund	Fund	8	10(7)	—	(5)	0.75% (Assets)(8)	100%(8)	0%(8)
Fund III	Sep. Acc.	44	425	4.71%		1.42% (Equity)	57%(9)	43%(4)

(1)	Represents total investments, on a cash basis, as of period-end
(2)	We have committed to invest $25 million in CTOPI.
(3)	CTIMCO earns gross incentive management fees of 20% of profits after a 9% preferred return on capital and a 100% return of capital, subject to a catch-up.
(4)	Portions of the Fund III incentive management fees received by us have been allocated to our employees as long-term performance awards. We have not allocated any of the CTOPI incentive management fee to employees as of December 31, 2008.
(5)	We co-invest on a pari passu, asset by asset basis with CT Large Loan and CTX Fund.
(6)	Capped at 1.5% of equity.
(7)	In 2008, we reduced the total capital commitment in the CTX Fund to $10 million.
(8)	CTIMCO serves as collateral manager of the CDOs in which the CTX Fund invests and CTIMCO earns base and incentive management fees as CDO collateral manager. As of December 31, 2008 we manage one such $500 million CDO and earn base management fees of 0.15% of assets and have the potential to earn incentive management fees.
(9)	CTIMCO earns gross incentive management fees of 20% of profits after a 10% preferred return on capital and a 100% return of capital, subject to a catch-up.

We expect to continue to grow our investment management business, sponsoring additional investment management vehicles consistent with the strategy of developing mandates that are complementary to our balance sheet activities.

Taxes

We account for our operations using accounting principles generally accepted in the United States, or GAAP. The accompanying consolidated financial statements are presented using the methods prescribed in GAAP. Below, we reconcile the differences between our GAAP reporting and the equivalent amounts prepared on an income tax basis.

Our operations are conducted in two separate taxable entities, Capital Trust, Inc. (a real estate investment trust, or REIT) and CTIMCO (a wholly owned taxable REIT subsidiary, or TRS, of the REIT). From a GAAP standpoint, these two entities are consolidated, and our GAAP results reflect the combination of the two operations. The chart below shows consolidated GAAP net loss, as well as the contributions from each of the REIT and the TRS on a GAAP presentation basis:

GAAP Net Income Detail
(in thousands)	Year Ended December 31, 2008
REIT GAAP net loss	($57,281)
TRS GAAP net loss	(257)
Consolidated GAAP net loss	($57,538)

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REIT (Capital Trust, Inc.)

We have made a tax election to be treated as a REIT. The primary benefit from this election is that we are able to deduct from the calculation of taxable income (shown as REIT Taxable Income in the chart below), dividends paid to our shareholders, effectively eliminating corporate taxes on the operations of the REIT. In order to qualify as a REIT, our activities must focus on real estate investments and we must meet certain asset, income, ownership and distribution requirements. If we fail to maintain qualification as a REIT, we may be subject to material penalties and potentially subject to past and future taxes. The chart below reconciles the differences between GAAP loss and taxable income for the REIT:

REIT GAAP to Tax Reconciliation
(in thousands)	Year Ended  December 31,  2008
REIT GAAP net loss	($57,281	)
GAAP to tax differences:
Gains, losses and reserves on investments(1)	64,379
Equity investments(2)	1,949
General and administrative(3)	553
Deferred income	(3,576	)
Other	256
Subtotal	63,561
REIT taxable income (pre-dividend)	$6,280

(1)	Gains, losses and reserves not recognized for tax in 2008.
(2)	GAAP to tax differences relating to our investments in CTOPI and Fund III.
(3)	Primarily differences associated with stock based compensation to our directors and employees.

For tax year 2008, we do not expect to pay any taxes at the REIT, as we have paid dividends to our shareholders at least equal to REIT taxable income (pre-dividend).

TRS (CTIMCO)

CTIMCO is a wholly owned subsidiary of ours that operates our investment management business (including the management of Capital Trust, Inc.) and holds certain of our assets. As a TRS, CTIMCO is subject to corporate taxation.

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The chart below reconciles GAAP loss to taxable income for the TRS:

TRS GAAP to Tax Reconciliation
(in thousands)	Year Ended December 31, 2008
TRS GAAP net loss	($257	)
TRS provision for income taxes	1,893
TRS GAAP net income (pre GAAP tax provision)	1,636
GAAP to tax differences:
General and administrative(1)	845
Intangible assets	(2,212	)
Other	136
Subtotal	(1,231	)
TRS taxable income (pre-NOL)	$405

(1) Primarily differences associated with stock based compensation to our employees.

For tax year 2008, we do not expect to pay any significant taxes at the TRS, as the TRS is expected to be able to utilize net operating loss, or NOL, carryforwards to offset its taxable income.

GAAP Tax Provision

During 2008, in our GAAP-basis consolidated financial statements, we recorded a tax provision of $1.9 million, which is primarily due to GAAP to tax differences related to stock-based compensation to our employees.

Dividends

In 2008, we paid dividends of $2.20 per share to holders of our class A common stock.

See Part II, Item 5 for details on dividend taxation.

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Results of Operations

Comparison of Results of Operations: Year Ended December 31, 2008 vs. December 31, 2007
(in thousands, except per share data)
	2008			2007			$ Change			% Change
Income from loans and other investments:
Interest and related income	$	194,649		$	253,422		$	(58,773	)		(23.2	%)
Interest and related expenses		129,665			162,377			(32,712	)		(20.1	)
Income from loans and other investments, net		64,984			91,045			(26,061	)		(28.6	)
Other revenues:
Management fees		12,941			3,499			9,442			269.8
Incentive management fees		—			6,208			(6,208	)		(100.0	)
Servicing fees		367			623			(256	)		(41.1	)
Other interest income		1,566			1,083			483			44.6
Total other revenues		14,874			11,413			3,461			30.3
Other expenses:
General and administrative		24,957			29,956			(4,999	)		(16.7	)
Depreciation and amortization		179			1,810			(1,631	)		(90.1	)
Total other expenses		25,136			31,766			(6,630	)		(20.9	)
Gain on extinguishment of debt		6,000			—			6,000			N/A
Impairments		(2,917	)		—			(2,917	)		N/A
Provision for possible credit losses		(63,577	)		—			(63,577	)		N/A
Valuation allowance on loans held-for-sale		(48,259	)		—			(48,259	)		N/A
Gain on sale of investments		374			15,077			(14,703	)		(97.5	)
Loss from equity investments		(1,988	)		(2,109	)		121			(5.7	)
Provision/(benefit) for income taxes		1,893			(706	)		2,599			(368.1	)
Net (loss)/income	$	(57,538	)	$	84,366		$	(141,904	)		(168.2	%)
Net (loss)/income per share - diluted	$	(2.73	)	$	4.77		$	(7.50	)		(157.2	%)
Dividend per share	$	2.20		$	5.10		$	(2.90	)		(56.9	%)
Average LIBOR		2.69	%		5.25	%		(2.6	%)		(48.8	%)

Income from loans and other investments, net

A decrease in the principal balance of Interest Earning Assets and loans classified as held-for sale ($298.5 million or 11% from December 31, 2007 to December 31, 2008) along with a 49% decrease in average LIBOR, drove a $58.8 million (23%) decrease in interest income between 2007 and 2008. These same factors, combined with generally lower levels of leverage in 2008, resulted in a $32.7 million (20%) decrease in interest expense for the same period. On a net basis, net interest income decreased by $26.1 million (29%).

Management fees

Base management fees from our investment management business increased in 2008 by $9.4 million (270%) due primarily to fees associated with our two newest investment management vehicles, CTOPI and CT High Grade II.

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Incentive management fees

We received no incentive management fees in 2008. In 2007, incentive fees received from Fund III totaled $5.2 million composed primarily of a catch-up payment from incentive management fees earned but not paid from the inception of Fund III in 2003 through 2007. We also received a final incentive management fee distribution from Fund II of $962,000 in March 2007, as Fund II’s final remaining investment repaid and Fund II was liquidated.

Servicing fees

Servicing fee income for 2008 was $367,000, compared with $623,000 in 2007. In December 2008, we conveyed our interest in our healthcare origination platform to its original owner and expensed the unamortized intangible assets related to that transaction, which resulted in the majority of the $256,000 decline from 2007.

General and administrative expenses

General and administrative expenses include compensation and benefits for our employees, operating expenses and professional fees. Total general and administrative expenses decreased 17% between 2008 and 2007 as a result of lower compensation costs and the payment of $2.6 million in 2007 of employee performance compensation associated with our receipt of Fund II and Fund III incentive management fees. The decrease in compensation costs more than offset the modest increases in operating expenses. Net of the impact of incentive management fees, general and administrative expenses decreased $2.5 million (9%) from 2007.

Depreciation and amortization

Depreciation and amortization decreased by $1.6 million between 2007 and 2008 due primarily to the expensing of $1.3 million of capitalized costs related to the liquidation of Fund II and the expensing of capitalized costs from Fund III and Bracor Investimentos Imobiliarios Ltda., or Bracor, all in 2007. Net of these one-time transactions, depreciation and amortization remained flat from 2007 to 2008.

Gain on extinguishment of debt

$6.0 million of debt forgiveness by a creditor was recorded as a gain on extinguishment of debt in 2008. We recorded no such gains for the year ended December 31, 2007.

Impairments

In 2008, we recorded an other-than-temporary impairment of $900,000 on one of our CMBS investments due to an adverse change in our expectation of future cash flows from that security. We also recorded a $2.0 million impairment on our Real estate held-for-sale to reflect potential losses to our position upon a sale of the property.

Provision for possible credit losses

During 2008, we recorded an aggregate $63.6 million provision for possible credit loss against four loans that we classified as non-performing. One of the loans, against which we had recorded a $6.0 million provision in the first quarter of 2008, was written-off during the second quarter and the $6.0 million liability collateralized by the loan was forgiven by the creditor.

In the second quarter of 2007, we recorded a $4.0 million recovery related to the successful resolution of a non-performing loan. We received net proceeds of $10.9 million that resulted in the following: (a) reduced the carrying value of the loan from $2.6 million to zero (b) recorded a $4.0 million recovery of a provision for losses and (c) recorded $4.3 million of interest income. In the fourth quarter of 2007 we recorded a $4.0 million provision for loss against one second mortgage loan with a principal balance of $10.0 million. This resulted in a net zero provision for possible credit losses on the 2007 consolidated statement of operations.

Valuation allowance on loans held-for-sale

As of December 31, 2008, we recorded a $48.3 million valuation allowance against our four loans classified as held-for-sale to reflect these assets at fair value. No loans were classified as held-for-sale as of December 31, 2007.

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Gain on sale of investments

As of December 31, 2007, we had one CMBS investment that we designated and accounted for as available-for-sale with a face value of $7.7 million. The security earned interest at a weighted average coupon of 8.34% at December 31, 2007. During the second quarter of 2008 the security was sold for a gain of $374,000. In the fourth quarter of 2007, we sold our investment in Bracor and realized a gain of $15.1 million that included a $2.5 million currency translation adjustment. Our ownership interest was purchased by four investors on the same terms, including W. R. Berkley Corporation, or WRBC. WRBC beneficially owns approximately 17.6% of our outstanding class A common stock as of February 28, 2009 and a member of our board of directors is an employee of WRBC.

Loss from equity investments

The loss from equity investments for 2008 resulted primarily from our share of operating losses at CTOPI and Fund III. Our loss from CTOPI for 2008 was $1.6 million, which primarily represents net unrealized losses due to the fair value adjustments on CTOPI investments, and our loss from Fund III was $326,000. Our loss from equity investments in 2007 was derived primarily from the operations of Bracor, Fund II and Fund III. In 2007, our Bracor investment generated a net loss of $1.2 million. In 2007, our Fund II investment generated a net loss of $690,000 which included an operating loss $306,000 and the amortization of $384,000 of capitalized costs passed through to us from the general partner of Fund II. In 2007, our Fund III investment generated a net loss of $119,000.

Provision/(benefit) for income taxes

In 2008, we recorded an income tax provision of $1.9 million. The income tax provision was a result of changes to our deferred tax asset resulting from GAAP to tax differences relating to restricted stock compensation and net operating losses, partially offset by a refund due to the overpayment of taxes. In 2007, we recorded an income tax benefit of $706,000, a result of changes to our deferred tax asset of $50,000 and the reversal of tax liability reserves at Capital Trust, Inc. and CTIMCO of $254,000 and $402,000, respectively.

Net (loss) income

Net income decreased by $141.9 million from 2007 to 2008, based in large part upon an increase of $63.6 million in provision for possible credit losses, a $48.3 million valuation allowance on loans held-for-sale and a $26.1 million decrease in net interest income, partially offset by a $9.4 million increase in management fees and a $6.0 million gain on the forgiveness of debt. In 2007, we also recorded $8.3 million of income from the successful resolution of a non-performing loan and a $15.1 million gain from the sale of our investment in Bracor. On a diluted per share basis, net (loss)/income was ($2.73) and $4.77 in 2008 and 2007, respectively.

Dividends

Our regular dividends for 2008 and 2007 were $2.20 per share and $3.20 per share, respectively. In 2007 we also paid a special dividend of $1.90 per share. Total dividends per share in 2008 and 2007 were $2.20 and $5.10, respectively, representing a decrease of $2.90 per share.

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Comparison of Results of Operations: Year Ended December 31, 2007 vs. December 31, 2006
(in thousands, except per share data)
	2007			2006			$ Change			% Change
Income from loans and other investments:
Interest and related income	$	253,422		$	175,404		$	78,018			44.5	%
Interest and related expenses		162,377			104,607			57,770			55.2
Income from loans and other investments, net		91,045			70,797			20,248			28.6
Other revenues:
Management fees		3,499			2,650			849			32.0
Incentive management fees		6,208			1,652			4,556			275.8
Servicing fees		623			105			518			493.3
Other interest income		1,083			1,354			(271	)		(20.0	)
Total other revenues		11,413			5,761			5,652			98.1
Other expenses:
General and administrative		29,956			23,075			6,881			29.8
Depreciation and amortization		1,810			3,049			(1,239	)		(40.6	)
Total other expenses		31,766			26,124			5,642			21.6
(Provision)/recovery for possible credit losses		—			—			—			N/A
Gain on sale of investments		15,077			—			15,077			N/A
(Loss)/income from equity investments		(2,109	)		898			(3,007	)		(334.9	)
Income tax benefit		(706	)		(2,735	)		2,029			(74.2	)
Net income	$	84,366		$	54,067		$	30,299			56.0	%
Net income per share - diluted	$	4.77		$	3.40		$	1.37			40.3	%
Dividend per share	$	5.10		$	3.45		$	1.65			47.8	%
Average LIBOR		5.25	%		5.10	%		0.15	%		2.9	%

Income from loans and other investments

Growth in Interest Earning Assets ($570 million or 22% from December 31, 2006 to December 31, 2007) and $4.3 million of interest revenue from the successful resolution of a non-performing loan, along with an increase in average LIBOR, drove a $78.0 million (45%) increase in interest income between 2006 and 2007. These same factors, combined with generally higher levels of leverage, resulted in a $57.8 million (55%) increase in interest expense for the same period. On a net basis, net interest income increased by $20.2 million (29%), which was the primary driver of net income growth.

Management fees

Base management fees from our investment management business increased in 2007 by $849,000 (32%) as base management fees from CT Large Loan, CT High Grade, CTX Fund and CTOPI offset the decrease in these fees at CT Mezzanine Partners II, LP, or Fund II, and Fund III as these vehicles liquidated in the normal course. Fund II paid its final base management fee to us during the first quarter of 2007.

Incentive management fees

Incentive management fees increased substantially during 2007, primarily due to incentive fees received from Fund III. Total incentive management fees from Fund III totaled $5.2 million in 2007 composed primarily of a catch up payment from incentive management fees earned but not paid from the inception of Fund III in 2003 through 2007. We received a final incentive management fee distribution from Fund II of $962,000 in March 2007 as the Fund II’s last investment repaid and Fund II was liquidated. In 2006, we received $1.7 million of Fund II incentive management fees.

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Servicing fees

Servicing fee income for 2007 was $623,000, compared with $105,000 in 2006 as we recognized revenue relating to the servicing contracts acquired as part of our purchase of a healthcare origination platform in June 2007.

General and administrative expenses

General and administrative expenses include compensation and benefits for our employees, operating expenses and professional fees. Total general and administrative expenses increased 30% between 2007 and 2006 primarily as a result of the payment of $2.6 million in 2007 of employee performance compensation associated with our receipt of Fund II and Fund III incentive management fees. Net of the impact of incentive management fees, general and administrative expenses increased $4.3 million (19%) from 2006 primarily as a result of the additional employee compensation expense associated with our acquisition of a healthcare lending platform in 2007.

Depreciation and amortization

Depreciation and amortization decreased by $1.2 million between 2006 and 2007 due primarily to the write-off of $1.8 million of capitalized costs in the third quarter of 2006, as we expensed all of the capitalized costs relating to an investment management joint venture. This was partially offset by the write-off of $1.3 million of capitalized costs related to the liquidation of Fund II in the first quarter of 2007. Net of the Fund II and investment management write-offs, depreciation and amortization in 2007 decreased $739,000 to $510,000 from $1.2 million in 2006.

(Provision)/recovery for possible credit losses

In the second quarter of 2007 we recorded a $4.0 million recovery related to the successful resolution of a non-performing loan. We received net proceeds of $10.9 million that resulted in the following: (a) reduced the carrying value of the loan from $2.6 million to zero (b) recorded a $4.0 million recovery of a provision for losses and (c) recorded $4.3 million of interest income. In the fourth quarter of 2007 we recorded a $4.0 million provision for loss against one second mortgage loan with a principal balance of $10.0 million.

Gain on sale of investments

In the fourth quarter of 2007 we sold our investment in Bracor and realized a gain of $15.1 million that included a $2.5 million currency translation adjustment. Our ownership interest was purchased by four investors on the same terms, including WRBC. WRBC beneficially owns approximately 17.8% of our outstanding class A common stock as of March 4, 2008 and a member of our board of directors is an employee of WRBC. We did not sell any of our equity investments in 2006.

(Loss)/income from equity investments

Our loss from equity investments was derived primarily from our recording our share of losses from the operations of Bracor, Fund II and Fund III. In 2007 and 2006, our Bracor investment generated a net loss of $1.2 million and $132,000, respectively. In 2007, our Fund II investment generated a net loss of $690,000 which included an operating loss $306,000 and the amortization of $384,000 of capitalized costs passed through to us from the general partner of Fund II. In 2007, our Fund III investment generated a net loss of $119,000. During 2006, income from equity investments was primarily comprised of co-investment income from Fund II and Fund III.

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Income tax benefit

We did not pay any taxes at the REIT level in either 2007 or 2006. However, CTIMCO, our investment management subsidiary, is a taxable REIT subsidiary and subject to taxes on its earnings. In 2007, CTIMCO recorded an operating loss before income taxes of $2.0 million, which resulted in an income tax benefit of $833,000, $783,000 of which we reserved and $50,000 of which we recorded. In 2006, CTIMCO recorded an operating loss before income taxes of $6.7 million, which resulted in an income tax benefit of $2.7 million, none of which we reserved and the entire $2.7 million of which we recorded. In addition to the benefit we recorded in 2007 as a result of operations at CTIMCO, we reversed tax liability reserves at Capital Trust, Inc. and CTIMCO of $254,000 and $402,000, respectively.

Net income

Net income grew by $30.3 million (56%) from 2006 to 2007, based in large part upon increased net interest income generated by a higher level of Interest Earning Assets, $8.3 million of income from the successful resolution of a non-performing loan, and a $15.1 million gain from the sale of our investment in Bracor. On a diluted per share basis, net income was $4.77 and $3.40 in 2007 and 2006, respectively, representing an increase of 40%.

Dividends

Our regular dividends for 2007 and 2006 were $3.20 per share and $2.80 per share, respectively, representing growth of 14% in recurring income from our operations. In both 2007 and 2006, we also paid a special dividend of $1.90 per share and $0.65 per share, respectively. Total dividends per share in 2007 and 2006 were $5.10 and $3.45, respectively, representing as increase of $1.65, or 48%.

Liquidity and Capital Resources

Sources of liquidity as of December 31, 2008 include unrestricted cash ($45.4 million), restricted cash ($18.8 million available for reinvestment in CDO II), operating income as well as principal payments and disposition proceeds from loans and CMBS. Uses of liquidity include loan fundings ($54.2 million of unfunded commitments), capital contributions to our managed funds ($21.5 million of unfunded commitments), REIT dividends and debt repayments.

Going forward, our liquidity and capital resources outlook will be significantly impacted by the restructuring of our debt obligations as detailed in Note 22 to the consolidated financial statements.

Cash Flows

We experienced a net increase in cash of $19.6 million for the year ended December 31, 2008, compared to a net decrease of $313,000 for the year ended December 31, 2007.

Cash provided by operating activities during the year ended December 31, 2008 was $54.1 million, compared to cash provided by operating activities of $86.7 million during the same period of 2007. The change was primarily due to lower levels of income from loans and other investments, net.

For the year ended December 31, 2008, cash provided by investing activities was $154.6 million, compared to $358.3 million used in investing activities during the same period in 2007. The change was primarily due to a decrease in originations, acquisitions, and additional fundings of $1.0 billion during the year ended December 31, 2008 compared to the year ended December 31, 2007, offset by a decrease in principal repayments of $493 million for the same periods. In 2007 we also received $44 million in proceeds from our investment in Bracor.

For the year ended December 31, 2008, cash used by financing activities was $189.1 million, compared to $271.2 million provided by financing activities during the same period in 2007. The change was primarily due to dramatic changes in proceeds from and repayments of repurchase obligations, proceeds from the sale of class A common stock during 2008 and the issuance of junior subordinated debentures and activity on other debt in the year ended December 31, 2007, and is indicative of our overall deleveraging in 2008.

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Capitalization

Our authorized capital stock consists of 100,000,000 shares of $0.01 par value class A common stock, of which 22,071,349 shares were issued and outstanding as of December 31, 2008 and 100,000,000 shares of preferred stock, none of which were outstanding as of December 31, 2008.

On January 15, 2008, we issued 53,192 shares of class A common stock under our dividend reinvestment plan. Net proceeds totaled approximately $1.5 million.

On March 4, 2008, we declared a dividend of $0.80 per share of class A common stock applicable to the three-month period ended March 31, 2008, which was paid on April 15, 2008 to shareholders of record on March 31, 2008.

On March 28, 2008, we closed a public offering of 4,000,000 shares of class A common stock. We received net proceeds of approximately $113.0 million. Morgan Stanley & Co. Incorporated acted as the sole underwriter of the offering.

On April 15, 2008, we issued 28,426 shares of class A common stock under our dividend reinvestment plan. Net proceeds totaled approximately $799,000.

In June 2008, we issued 401,577 shares of class A common stock under our direct stock purchase plan. Net proceeds totaled approximately $10.5 million.

On June 16, 2008, we declared a dividend of $0.80 per share of class A common stock applicable to the three-month period ended June 30, 2008, which was paid on July 16, 2008 to shareholders of record on June 30, 2008.

On September 16, 2008, we declared a dividend of $0.60 per share of class A common stock applicable to the three-month period ended September 30, 2008, which was paid on October 15, 2008 to shareholders of record on September 30, 2008.

On October 15, 2008, we issued 5,368 shares of class A common stock under our dividend reinvestment plan. Net proceeds totaled approximately $47,000.

Subsequent to December 31, 2008, in connection with the restructuring of our debt obligations detailed in Note 22 to the consolidated financial statements, we issued, or irrevocably committed to issue, 3,479,691 warrants to purchase our class A common stock.

Repurchase Obligations and Secured Debt

As of December 31, 2008, we were party to four master repurchase agreements with four counterparties, and aggregate total outstanding borrowings of $671.3 million. We were also a party to an asset specific repurchase obligation and a secured loan agreement. As of December 31, 2008, these asset specific borrowings totaled $27.7 million. Our total borrowings as of December 31, 2008 under master repurchase agreements, asset specific repurchase arrangements and our secured loan agreement were $699.1 million. Loans and CMBS with a carrying value of $1.2 billion are pledged as collateral for our repurchase agreements.

The terms of these agreements are described in Note 9 to the consolidated financial statements. Subsequent to December 31, 2008, certain of our repurchase obligations and secured debt have been restructured, terminated or otherwise satisfied pursuant to the restructuring of our debt obligations as detailed in Note 22 to the consolidated financial statements.

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Collateralized Debt Obligations

As of December 31, 2008, we had CDOs outstanding from four separate issuances with a total face value of $1.2 billion. Our CDOs are financing vehicles for our assets and, as such, are consolidated on our balance sheet representing the amortized sales price of the securities we sold to third parties. Our one reinvesting CDO provides us with $298.9 million of debt financing at a cash cost of LIBOR plus 0.49% (0.93% at December 31, 2008) and an all-in effective interest rate (including the amortization of issuance costs) of LIBOR plus 0.74% (1.18% at December 31, 2008). Our three static CDOs provide us with $857.1 million of financing with a cash cost of 2.30% and an all-in effective interest rate of 2.50% at December 31, 2008. On a combined basis, our CDOs provide us with $1.2 billion of non-recourse, non-mark-to-market, index matched financing at a weighted average cash cost of 0.53% over the applicable indices (1.95% at December 31, 2008) and a weighted average all-in cost of 0.73% over the applicable indices (2.15% at December 31, 2008).Additional liquidity will be generated when assets that are currently pledged under repurchase obligations are contributed to our reinvesting CDO as the difference between the repurchase price under our repurchase agreements is generally less than the leverage available to us in our CDOs. As of December 31, 2008, we had additional liquidity of $18.8 million in our CDOs in the form of restricted cash.

CDO I and CDO II each have interest coverage and overcollateralization tests, which if breached provide for hyper-amortization of the senior notes sold by a redirection of cash flow that would otherwise have been paid to the subordinate classes, some of which are owned by the Company. If such tests are in breach for six consecutive months, the reinvesting feature of the CDO is suspended. The hyper-amortization would cease once the test is back in compliance. The overcollateralization tests are a function of impairments to the CDO collateral. Furthermore, all four of our CDOs provide for the re-classification of interest proceeds from impaired collateral as principal proceeds. Subsequent to December 31, 2008, we were informed by our CDO trustee of impairments due to rating agency downgrades of certain of the CMBS collateral interests in all of our CDOs. The impairments resulted in a breach of the CDO II overcollateralization test and the reclassification of interest proceeds from certain CMBS collateral as principal proceeds in all four of our CDOs.

Senior Unsecured Credit Facility

In March 2007, we closed a $50.0 million senior unsecured revolving credit facility with WestLB AG, which was amended in September 2007 to increase the size to $100.0 million and add new lenders to the syndicate. In March 2008, we exercised our term-out option under the agreement, extending the maturity date of the $100.0 million principal balance outstanding to March 2009 as a non-revolving term loan. The loan bears interest at a cost of LIBOR plus 1.75% (LIBOR plus 2.07% on an all-in basis).

Subsequent to December 31, 2008, our senior unsecured credit facility has been restructured, as discussed in Note 22 to the consolidated financial statements.

Junior Subordinated Debentures

As of December 31, 2008, we had a total of $129 million of junior subordinated debentures outstanding (securing $125 million of trust preferred securities sold to third parties). Junior subordinated debentures are comprised of two issuances of debentures, $77 million of debentures (securing $75 million of trust preferred securities) issued in March 2007 and $52 million of debentures (securing $50 million of trust preferred securities) issued in 2006. On a combined basis the securities provide us with $125 million of financing at a cash cost of 7.20% and an all-in effective rate of 7.35%.

On March 16, 2009 we issued new junior subordinate debentures to holders of a majority of our trust preferred securities reflecting modified terms in exchange for the securities held by them, as detailed in Note 22 to the consolidated financial statements.

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The following table sets forth information about certain of our contractual obligations as of December 31, 2008:

Contractual Obligations(1)(2)
(in millions)
	Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-term debt obligations
Repurchase obligations and secured debt		$699		$271		$410		$18		$—
Collateralized debt obligations		1,155		—		—		—		1,155
Senior unsecured credit facility		100		100		—		—		—
Junior subordinated debentures		129		—		—		—		129
Total long-term debt obligations		2,083		371		410		18		1,284
Unfunded commitments
Loans		54		—		15		39		—
Equity investments		22		—		22		—		—
Total unfunded commitments		76		—		37		39		—
Operating lease obligations		14		1		3		3		7
Total		$2,173		$372		$450		$60		$1,291

(1)	We are also subject to interest rate swaps for which we cannot estimate future payments due.
(2)	Contractual obligations detailed above are as of December 31, 2008, and do not give effect to the subsequent events described in Note 22 to the consolidated financial statements.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Our accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements. Actual results could differ from these estimates. During 2008, management reviewed and evaluated its critical accounting policies and believes them to be appropriate. Our accounting policies are described in Note 2 to our consolidated financial statements. The following is a summary of our accounting policies that we believe are the most affected by management judgments, estimates and assumptions:

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Principles of Consolidation

The accompanying consolidated financial statements include, on a consolidated basis, our accounts, the accounts of our wholly-owned subsidiaries and our interests in variable interest entities in which we are the primary beneficiary. All significant intercompany balances and transactions have been eliminated in consolidation. Our interests in CT Preferred Trust I and CT Preferred Trust II, the issuers of trust securities backed by our junior subordinated debentures, are accounted for using the equity method and their assets and liabilities are not consolidated into our financial statements due to our determination that CT Preferred Trust I and CT Preferred Trust II are variable interest entities in which we are not the primary beneficiary under Financial Accounting Standards Board, or FASB, Interpretation No. 46(R) “Consolidation of Variable Interest Entities”, or FIN 46(R). We account for our co-investment interest in the private equity funds we manage, CT Mezzanine Partners III, Inc., or Fund III, and CT Opportunity Partners I, LP, or CTOPI, under the equity method of accounting. We also accounted for our investment in Bracor Investimentos Imobiliarios Ltda., or Bracor, under the equity method of accounting until we sold our investment in December 2007. As such, we report a percentage of the earnings or losses of the companies in which we have such investments equal to our ownership percentage on a single line item in the consolidated statements of operations as income/(loss) from equity investments. CTOPI is an investment company (under the American Institute of Certified Public Accountants Investment Company Guide) and therefore it maintains its financial records at fair value. We have applied such accounting relative to our investment in CTOPI pursuant to the Emerging Issues Task Force, or EITF, Issue No. 85-12 “Retention of Specialized Accounting for Investments in Consolidation.”

Revenue Recognition

Interest income from our loans receivable is recognized over the life of the investment using the effective interest method and is recorded on the accrual basis. Fees, premiums, discounts and direct costs in connection with these investments are deferred until the loan is advanced and are then recognized over the term of the loan as an adjustment to yield. Fees on commitments that expire unused are recognized at expiration. For loans where we have unfunded commitments, we amortize the appropriate items on a straight line basis. Income recognition is generally suspended for loans at the earlier of the date at which payments become 90 days past due or when, in the opinion of management, a full recovery of income and principal becomes doubtful. Income recognition is resumed when the loan becomes contractually current and performance is demonstrated to be resumed.

Fees from special servicing and asset management services are recognized as services are rendered. We account for incentive fees we earn from our investment management business in accordance with Method 1 of EITF D-96, “Accounting for Management Fees Based on a Formula”. Under Method 1, no incentive income is recorded until all contingencies have been eliminated.

Commercial Mortgage Backed Securities

We classify our commercial mortgage backed securities, or CMBS, pursuant to FASB Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, or FAS 115, on the date of acquisition of the investment. On August 4, 2005, we decided to change the accounting classification of our CMBS investments from available-for-sale to held-to-maturity. Held-to-maturity investments are stated at cost adjusted for the amortization of any premiums or discounts, which are amortized through the consolidated statements of operations using the effective interest method. Other than in the instance of an other-than-temporary impairment (as discussed below), these held-to-maturity investments are shown in our financial statements at their adjusted values pursuant to the methodology described above.

We may also invest in CMBS and certain other securities which may be classified as available-for-sale. Available-for-sale securities are carried at estimated fair value with the net unrealized gains or losses reported as a component of accumulated other comprehensive income/(loss) in shareholders’ equity. Many of these investments are relatively illiquid and management must estimate their values. In making these estimates, management utilizes market prices provided by dealers who make markets in these securities, but may, under certain circumstances, adjust these valuations based on management’s judgment. Changes in the valuations do not affect our reported income or cash flows, but impact shareholders’ equity and, accordingly, book value per share.

We account for CMBS under EITF 99-20, “Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets”, as amended by FASB Staff Position EITF 99-20-1, “Amendments to the Impairment Guidance of EITF Issue No. 99-20”, or EITF 99-20. Under EITF 99-20, income is recognized using a level yield with any purchase premium or discount accreted through income over the life of the security. This yield is calculated using estimated cash flows which are based on a number of assumptions on the underlying loans. Examples include, among other things, the rate and timing of principal payments, including prepayments, repurchases, defaults and liquidations, the pass-through or coupon rate and interest rates. Additional factors that may affect our reported interest income on our CMBS include interest payment shortfalls due to delinquencies on the underlying mortgage loans and the timing and magnitude of credit losses on the mortgage loans underlying the securities that are impacted by, among other things, the general condition of the real estate market, including competition for tenants and their related credit quality, and changes in market rental rates. These uncertainties and contingencies are difficult to predict and are subject to future events that may alter the assumptions.

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Further, under the guidance of EITF 99-20, when, based on current information and events, it is probable that there has been an adverse change in estimated cash flows from those originally estimated, an other-than-temporary impairment is deemed to have occurred. A change in estimated cash flows is considered adverse under the guidance of EITF 99-20 if the present value of the revised cash flows (taking into consideration both the timing and amount of estimated future cash flows) using the current expected yield is less than the present value of the originally estimated remaining cash flows, adjusted for cash receipts during the intervening period. Should an other-than-temporary impairment be deemed to have occurred, the security is written down to fair value with the resulting charge included in the statement of operations and a new cost basis established. The revised yield is then applied prospectively to recognize interest income. Management must also assess whether unrealized losses on securities reflect a decline in value that is other-than-temporary, and, accordingly, write down the impaired security to its fair value, through a charge to income.

From time to time we purchase CMBS and other investments in which we have a level of control over the issuing entity; we refer to these investments as controlling class investments. The presentation of controlling class investments in our consolidated financial statements is governed in part by FIN 46(R), which could require that certain controlling class investments be presented on a consolidated basis. Based upon the specific circumstances of certain of our CMBS investments that are controlling class investments and our interpretation of FIN 46(R), specifically the exemption for qualifying special purpose entities as defined under FASB Statements of Financial Accounting Standard No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”, or FAS 140, we have concluded that the entities that have issued the controlling class investments should not be presented on a consolidated basis. In 2008, the FASB issued Staff Position No. FAS 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities”, or FSP 140-4, which requires additional disclosures for certain of our investments effective as of December 15, 2008. These disclosures are included in Note 3 to the consolidated financial statements.

Loans Receivable, Provision for Possible Credit Losses, Loans Held-for-Sale and Related Allowance

We purchase and originate commercial real estate debt and related instruments, or Loans, generally to be held as long-term investments at amortized cost. Management must periodically evaluate each of these Loans for possible impairment. Impairment is indicated when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the Loan. If a Loan were determined to be permanently impaired, we would write down the Loan through a charge to the provision for possible credit losses. Given the nature of our Loan portfolio and the underlying commercial real estate collateral, significant judgment on the part of management is required in determining permanent impairment and the resulting charge to the provision, which includes but is not limited to making assumptions regarding the value of the real estate that secures the loan. Each Loan in our portfolio is evaluated at least quarterly using our loan risk rating system which considers loan-to-value, debt yield, cash flow stability, exit plan, loan sponsorship, loan structure and other factors deemed necessary by management to assess the likelihood of delinquency or default. If we believe there is a potential for delinquency or default, a downside analysis is prepared to estimate the value of the collateral underlying our Loan, and a provision is recorded taking into consideration both the likelihood of delinquency or default and the estimated value of the underlying collateral. Actual losses, if any, could ultimately differ from these estimates.

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Loans held-for-sale are carried at the lower of our amortized cost basis and market value. A reduction in market value of loans held-for-sale is recorded as a charge to the Company’s consolidated statement of operations under the valuation allowance on loans held-for-sale.

Repurchase Obligations

In certain circumstances, we have financed the purchase of investments from a counterparty through a repurchase agreement with that same counterparty. We currently record these investments in the same manner as other investments financed with repurchase agreements, with the investment recorded as an asset and the related borrowing under any repurchase agreement as a liability on our consolidated balance sheets. Interest income earned on the investments and interest expense incurred on the repurchase obligations are reported separately on the consolidated statements of operations. In February 2008, the FASB issued FASB Staff Position 140-3, “Accounting for Transfers of Financial Assets and Repurchase Financing Transactions”, or FSP 140-3, which provides guidance on accounting for transfers of financial assets and repurchase financings. FSP 140-3 presumes that an initial transfer of a financial asset and a repurchase financing shall not be evaluated as a linked transaction and shall be evaluated separately under FAS 140. If the linked transaction does not meet the requirements for sale accounting, the linked transaction shall generally be accounted for as a forward contract, as opposed to the current presentation, where the purchased asset and the repurchase liability are reflected separately on the balance sheet.

FSP 140-3 is effective on a prospective basis for fiscal years beginning after November 15, 2008, with earlier application not permitted. Given that FSP 140-3 is to be applied prospectively, the adoption of FSP 140-3 did not have a material impact on our consolidated financial statements with respect to our existing transactions. New transactions entered into after December 31, 2008, which are subject to FSP 140-3 may be presented differently on our consolidated financial statements.

Interest Rate Derivative Financial Instruments

In the normal course of business, we use interest rate derivative financial instruments to manage, or hedge, cash flow variability caused by interest rate fluctuations. Specifically, we currently use interest rate swaps to effectively convert variable rate liabilities that are financing fixed rate assets, to fixed rate liabilities. The differential to be paid or received on these agreements is recognized on the accrual basis as an adjustment to the interest expense related to the attendant liability. The interest rate swap agreements are generally accounted for on a held-to-maturity basis, and, in cases where they are terminated early, any gain or loss is generally amortized over the remaining life of the hedged item. These swap agreements must be effective in reducing the variability of cash flows of the hedged items in order to qualify for the aforementioned hedge accounting treatment. Changes in value of effective cash flow hedges are reflected in our consolidated financial statements through accumulated other comprehensive income/(loss) and do not affect our net income. To the extent a derivative does not qualify for hedge accounting, and is deemed a non-hedge derivative, the changes in its value are included in net income.

To determine the fair value of derivative instruments, we use third parties to periodically value our interests.

Income Taxes

Our financial results generally do not reflect provisions for current or deferred income taxes on our REIT taxable income. Management believes that we operate in a manner that will continue to allow us to be taxed as a REIT and, as a result, do not expect to pay substantial corporate level taxes (other than taxes payable by our taxable REIT subsidiaries which are accounted for in accordance with FASB Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes”, or FAS 109). Many of these requirements, however, are highly technical and complex. If we were to fail to meet these requirements, we may be subject to federal, state and local income tax on current and past income, and we may also be subject to penalties.

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In September 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109”, or FIN 48. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FAS 109. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This interpretation was effective January 1, 2007. The adoption of FIN 48 did not have a material impact on our financial results.

Accounting for Stock-Based Compensation

We account for stock-based compensation in accordance with FASB Statement of Financial Accounting Standards No. 123(R) “Share Based Payment,” or FAS 123(R). Upon adoption of FAS 123(R), as of January 1, 2006, we have elected to utilize the modified prospective method, and there was no impact from this adoption. Compensation expense for time vesting of stock-based compensation grants is recognized on the accelerated attribution method and compensation expense for performance vesting of stock-based compensation grants is recognized on a straight line basis. Compensation expense relating to stock-based compensation is recognized in net income using a fair value measurement method.

New Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements”, or FAS 157. FAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. FAS 157 applies to reporting periods beginning after November 15, 2007. As discussed above, we report the changes in the value of effective cash flow hedges and our available for sale securities through accumulated other comprehensive income/(loss). We adopted FAS 157 as of January 1, 2008. As a result of the adoption of FAS 157, the fair value of our interest rate hedge liabilities decreased by $961,000 due to the valuation adjustment related to our credit.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”, or FAS 159. FAS 159 permits entities to choose to measure many financial instruments, and certain other items, at fair value. FAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. FAS 159 applies to reporting periods beginning after November 15, 2007. We adopted FAS 159 as of January 1, 2008. Adoption of FAS 159 had no impact on the consolidated financial statements as we did not elect to measure any financial instruments at fair value.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133”, or FAS 161. The use and complexity of derivative instruments and hedging activities have increased significantly over the past several years. Constituents have expressed concerns that the existing disclosure requirements in FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities”, do not provide adequate information about how derivative and hedging activities affect an entity’s financial position, financial performance, and cash flows. Accordingly, FAS 161 requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. FAS 161 encourages, but does not require, comparative disclosures for earlier periods at initial adoption. We do not expect the adoption of FAS 161 to have a material impact on our consolidated financial statements.

62

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The principal objective of our asset/liability management activities is to maximize net interest income while minimizing levels of interest rate risk. Net interest income and interest expense are subject to the risk of interest rate fluctuations. In certain instances, to mitigate the impact of fluctuations in interest rates, we use interest rate swaps to effectively convert variable rate liabilities to fixed rate liabilities for proper matching with fixed rate assets. Each derivative used as a hedge is matched with an asset or liability with which it is expected to have a high correlation. The swap agreements are generally held-to-maturity and we do not use interest rate derivative financial instruments for trading purposes. The differential to be paid or received on these agreements is recognized as an adjustment to the interest expense related to debt and is recognized on the accrual basis.

Our loans and investments, including our fund investments, are also subject to credit risk. The ultimate performance and value of our loans and investments depends upon the owner’s ability to operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, our asset management team continuously reviews the investment portfolio and in certain instances is in constant contact with our borrowers, monitoring performance of the collateral and enforcing our rights as necessary.

63

The following table provides information about our financial instruments that are sensitive to changes in interest rates as of December 31, 2008. For financial assets and debt obligations, the table presents cash flows (in certain cases, face adjusted for expected losses) to the expected maturity and weighted average interest rates. For interest rate swaps, the table presents notional amounts and weighted average fixed pay and variable receive interest rates by contractual maturity dates. Notional amounts are used to calculate the contractual cash flows to be exchanged under the contract. Weighted average variable rates are based on rates in effect as of the reporting date.

	Expected Maturity/Repayment Dates
	2009	2010	2011	2012	2013	Thereafter	Total	Fair Value
	(in thousands)
Assets:
CMBS
Fixed rate	$43,665	$17,803	$96,927	$106,555	$178,437	$262,552	$705,939	$493,283
Interest rate(1)	6.59%	7.28%	7.38%	7.03%	6.85%	6.13%	6.68%
Variable rate	$9,054	$29,997	$18,023	$78,054	$29,873	$9,784	$174,785	$89,195
Interest rate(1)(2)	4.34%	2.29%	2.03%	3.78%	—	2.52%	2.65%
Loans receivable
Fixed rate	$17,215	$1,283	$27,831	$1,160	$1,246	$121,626	$170,361	$162,103
Interest rate(1)	8.52%	8.05%	8.46%	7.79%	7.78%	7.59%	7.83%
Variable rate	$51,990	$138,138	$847,565	$577,597	$847	$11,358	$1,627,495	$1,427,826
Interest rate(1)	4.27%	4.07%	3.18%	3.77%	2.40%	2.40%	3.49%
Loans held-for-sale
Variable rate	$—	$—	$—	$140,719	$—	$—	$140,719	$92,175
Interest rate(1)	—	—	—	2.54%	—	—	2.54%
Debt Obligations:
Repurchase obligations and secured debt
Variable rate	$210,671	$424,553	$—	$—	$63,830	$—	$699,054	$699,054
Interest rate(1)	2.26%	1.88%	—	—	1.78%	—	1.99%
CDOs
Fixed rate	$7,677	$5,136	$42,200	$57,804	$111,589	$45,100	$269,506	$121,328
Interest rate(1)	5.41%	5.49%	5.16%	5.16%	5.19%	5.95%	5.32%
Variable rate	$48,775	$140,287	$238,758	$218,501	$50,646	$188,031	$884,998	$319,917
Interest rate(1)	0.79%	0.76%	0.84%	1.00%	0.89%	1.09%	0.92%
Senior unsecured credit facility
Fixed rate	$100,000	$—	$—	$—	$—	$—	$100,000	$94,155
Interest rate(1)	2.19%	—	—	—	—	—	2.19%
Junior subordinated debt
Fixed rate	$—	$—	$—	$—	$—	$128,875	$128,875	$80,099
Interest rate(1)	—	—	—	—	—	7.20%	7.20%
Participations sold
Variable rate	$—	$—	$91,220	$201,515	$—	$—	$292,735	$258,416
Interest rate(1)	—	—	2.30%	4.34%	—	—	3.70%
Derivative Financial Instruments:
Interest rate swaps
Notional amounts	$48,733	$13,383	$46,400	$81,887	$39,947	$235,529	$465,879	$(47,974)
Fixed pay rate(1)	4.77%	5.06%	4.65%	4.98%	4.97%	5.06%	4.97%
Variable receive rate(1)	0.51%	0.52%	0.60%	0.51%	0.51%	0.57%	0.55%

(1)	Represents weighted average rates where applicable. Expected repayment dates and amounts are as of December 31, 2008, and do not give effect to the subsequent events described in Note 22.
(2)	For $37.9 million face value ($37.5 million book value) of CMBS investments, calculations use an effective rate based on cash received.

64

Item 8. Financial Statements and Supplementary Data

The financial statements required by this item and the reports of the independent accountants thereon required by Item 14(a)(2) appear on pages F-2 to F-45. See accompanying Index to the Consolidated Financial Statements on page F-1. The supplementary financial data required by Item 302 of Regulation S-K appears in Note 21 to the consolidated financial statements.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this annual report on Form 10-K was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (a) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act is timely recorded, processed, summarized and reported and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Management’s Report on Internal Control over Financial Reporting, which appears on page F-3, is incorporated herein by reference.

Attestation Report of Registered Public Accounting Firm

The effectiveness of our internal control over financial reporting as of December 31, 2008 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which appears on page F-2, and is incorporated herein by reference.

Changes in Internal Controls

There have been no significant changes in our “internal control over financial reporting” (as defined in rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended December 31, 2008 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Item 9B. Other Information

None.

65

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by Items 401, 405, 406 and 407(c)(3), (d)(4) and (d)(5) of Regulation S-K is incorporated herein by reference to the Company’s definitive proxy statement to be filed not later than April 30, 2009 with the Securities and Exchange Commission pursuant to Regulation 14A under the Exchange Act.

Item 11. Executive Compensation

The information required by Item 402 and paragraph (e)(4) and (e)(5) of Item 407 of Regulation S-K is incorporated herein by reference to the Company’s definitive proxy statement to be filed not later than April 30, 2009 with the Securities and Exchange Commission pursuant to Regulation 14A under the Exchange Act.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by Items 201(d) and 403 of Regulation S-K is incorporated herein by reference to the Company’s definitive proxy statement to be filed not later than April 30, 2009 with the Securities and Exchange Commission pursuant to Regulation 14A under the Exchange Act.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Items 404 and 407(a) of Regulation S-K is incorporated herein by reference to the Company’s definitive proxy statement to be filed not later than April 30, 2009 with the Securities and Exchange Commission pursuant to Regulation 14A under the Exchange Act.

Item 14. Principal Accounting Fees and Services

The information required by Item 9(e) of Schedule 14A is incorporated herein by reference to the Company’s definitive proxy statement to be filed not later than April 30, 2009 with the Securities and Exchange Commission pursuant to Regulation 14A under the Exchange Act.

66

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a) (1)	Financial Statements
	See the accompanying Index to Financial Statement Schedule on page F-1.
(a) (2)	Consolidated Financial Statement Schedules
	See the accompanying Index to Financial Statement Schedule on page F-1.
(a) (3)	Exhibits

67

EXHIBIT INDEX

Exhibit Number	Description
3.1.a	Charter of the Capital Trust, Inc. (filed as Exhibit 3.1.a to Capital Trust, Inc.’s Current Report on Form 8-K (File No. 1-14788) filed on April 2, 2003 and incorporated herein by reference).
3.1.b	Certificate of Notice (filed as Exhibit 3.1 to Capital Trust, Inc.’s Current Report on Form 8-K (File No. 1-14788) filed on February 27, 2007 and incorporated herein by reference).
3.2.a	Amended and Restated By-Laws of Capital Trust, Inc. (filed as Exhibit 3.2 to Capital Trust, Inc.’s Current Report on Form 8-K (File No. 1-14788) filed on January 29, 1999 and incorporated herein by reference).
3.2.b	Second Amended and Restated By-Laws of Capital Trust, Inc. (filed as Exhibit 3.2 to Capital Trust, Inc.’s Current Report on Form 8-K (File No. 1-4788) filed on February 27, 2007 and incorporated herein by reference).
3.3	First Amendment to Amended and Restated Bylaws of Capital Trust, Inc. (filed as Exhibit 3.2 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on August 16, 2004 and incorporated herein by reference).
+ 10.1	Capital Trust, Inc. Second Amended and Restated 1997 Long-Term Incentive Stock Plan (the “1997 Plan”) (filed as Exhibit 10.1 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2005 and incorporated herein by reference).
+ 10.2	Capital Trust, Inc. Amended and Restated 1997 Non-Employee Director Stock Plan (filed as Exhibit 10.2 to Capital Trust, Inc.’s Current Report on Form 8-K (File No. 1-14788) filed on January 29, 1999 and incorporated herein by reference) (the “1997 Director Plan”).
+ 10.3	Capital Trust, Inc. 1998 Employee Stock Purchase Plan (filed as Exhibit 10.3 to Capital Trust, Inc.’s Current Report on Form 8-K (File No. 1-14788) filed on January 29, 1999 and incorporated herein by reference).
+ 10.4	Capital Trust, Inc. 1998 Non-Employee Stock Purchase Plan (filed as Exhibit 10.4 to Capital Trust, Inc.’s Current Report on Form 8-K (File No. 1-14788) filed on January 29, 1999 and incorporated herein by reference).
+ 10.5	Capital Trust, Inc. Amended and Restated 2004 Long-Term Incentive Plan (the “2004 Plan”) (filed as Exhibit 10.5 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2005 and incorporated herein by reference).
+ 10.6	2007 Amendment to the 2004 Plan (filed as Exhibit 10.6 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 5, 2008 and incorporated herein by reference).
+ 10.7	Form of Award Agreement granting Restricted Shares and Performance Units under the 2004 Plan (filed as Exhibit 99.1 to Capital Trust, Inc.’s Current Report on Form 8-K (File No. 1-14788) filed on February 10, 2005 and incorporated herein by reference).
+ 10.8	Form of Award Agreement granting Performance Units under the 2004 Plan (filed as Exhibit 10.7 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2005 and incorporated herein by reference).
+ 10.9	Form of Award Agreement granting Performance Units under the 2004 Plan (filed as Exhibit 10.8 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2005 and incorporated herein by reference).

68

EXHIBIT INDEX

Exhibit Number	Description
+ 10.10	Form of Award Agreement granting Performance Units under the 2004 Plan (filed as Exhibit 10.9 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2005 and incorporated herein by reference).
+ 10.11	Form of Stock Option Award Agreement under the 2004 Plan (filed as Exhibit 10.10 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2005 and incorporated herein by reference).
+ 10.12	Form of Restricted Share Award Agreement under the 2004 Plan (filed as Exhibit 10.11 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2005 and incorporated herein by reference).
+ 10.13	Deferral and Distribution Election Form for Restricted Share Award Agreement under the 2004 Plan (filed as Exhibit 10.12 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2005 and incorporated herein by reference).
+ 10.14	Form of Restricted Share Unit Award Agreement under the 2004 Plan (filed as Exhibit 10.13 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2005 and incorporated herein by reference).
+ 10.15	Deferral and Distribution Election Form for Restricted Share Unit Award Agreement under the 2004 Plan (filed as Exhibit 10.14 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2005 and incorporated herein by reference).
+ 10.16	Deferred Share Unit Program Election Forms under the 2004 Plan (filed as Exhibit 10.15 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2005 and incorporated herein by reference).
+ 10.17	Director Retainer Deferral Election Form for Stock Units under the 1997 Plan. (filed as Exhibit 10.16 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2005 and incorporated herein by reference).
+10.18	Form of Award Agreement granting Performance Awards under the Company’s Amended and Restated 2004 Long-Term Incentive Plan (filed as Exhibit 10.1 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on May 4, 2005 and incorporated herein by reference).
+10.19	Capital Trust, Inc. 2007 Long-Term Incentive Plan (the “2007 Plan”) (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-14788) filed on June 12, 2007 and incorporated herein by reference).
+10.20	2007 Amendment to the 2007 Plan (filed as Exhibit 10.20 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 5, 2008 and incorporated herein by reference).
+10.21	Form of Award Agreement granting Restricted Shares and Performance Units under the 2007 Plan (filed as Exhibit 10.3 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on November 7, 2007 and incorporated herein by reference).

69

EXHIBIT INDEX

Exhibit Number	Description
+10.22	Form of Restricted Share Award Agreement under the 2007 Plan (filed as Exhibit 10.4 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on November 7, 2007 and incorporated herein by reference).
+10.23	Form of Performance Unit and Performance Share Award Agreement under the 2007 Plan (filed as Exhibit 10.5 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on November 7, 2007 and incorporated herein by reference).
+10.24	Form of Stock Option Award Agreement under the 2007 Plan (filed as Exhibit 10.6 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on November 7, 2007 and incorporated herein by reference).
+10.25	Form of SAR Award Agreement under the 2007 Plan (filed as Exhibit 10.7 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on November 7, 2007 and incorporated herein by reference).
+10.26	Form of Restricted Share Unit Award Agreement under the 2007 Plan (filed as Exhibit 10.8 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on November 7, 2007 and incorporated herein by reference).
+10.27	Deferral Election Agreement for Deferred Share Units under the 2007 Plan (filed as Exhibit 10.9 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on November 7, 2007 and incorporated herein by reference).
+10.28	Deferral Election Agreement for Selected Plan Awards, dated as of December 24, 2007, by and between Capital Trust, Inc. and John R. Klopp (filed as Exhibit 10.28 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 5, 2008 and incorporated herein by reference).
+10.29	Deferral Election Agreement for Selected Plan Awards, dated as of December 24, 2007, by and between Capital Trust, Inc. and Geoffrey G. Jervis (filed as Exhibit 10.29 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 5, 2008 and incorporated herein by reference).
+10.30	Deferral Election Agreement for Selected Plan Awards, dated as of December 24, 2007, by and between Capital Trust, Inc. and Geoffrey G. Jervis (filed as Exhibit 10.30 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 5, 2008 and incorporated herein by reference).
+10.31	Deferral Election Agreement for Selected Plan Awards, dated as of December 24, 2007, by and between Capital Trust, Inc. and Geoffrey G. Jervis (filed as Exhibit 10.31 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 5, 2008 and incorporated herein by reference).
+10.32	Deferral Election Agreement for Selected Plan Awards, dated as of December 24, 2007, by and between Capital Trust, Inc. and Stephan D. Plavin (filed as Exhibit 10.32 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 5, 2008 and incorporated herein by reference).

70

EXHIBIT INDEX

Exhibit Number	Description
+10.33	Deferral Election Agreement for Selected Plan Awards, dated as of December 24, 2007, by and between Capital Trust, Inc. and Thomas C. Ruffing (filed as Exhibit 10.33 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 5, 2008 and incorporated herein by reference).
+10.34.a	Employment Agreement, dated as of February 24, 2004, by and between Capital Trust, Inc. and CT Investment Management Co., LLC and John R. Klopp (filed as Exhibit 10.1 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on May 12, 2004 and incorporated herein by reference).
•+10.34.b	Letter Agreement, dated as of December 31, 2008, by and among Capital Trust, Inc., CT Investment Management Co., LLC and John R. Klopp.
•+ 10.35	Amended and Restated Employment Agreement, dated as of January 1, 2009, by and between Capital Trust, Inc. and Stephen D. Plavin.
+ 10.36.a	Employment Agreement, dated as of September 29, 2006, by and among Capital Trust, Inc., CT Investment Management Co., LLC and Geoffrey G. Jervis (filed as Exhibit 10.3 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on October 30, 2006 and incorporated herein by reference).
•+ 10.36.b	Letter Agreement, dated as of December 31, 2008, by and among Capital Trust, Inc., CT Investment Management Co., LLC and Geoffrey Jervis.
+ 10.37.a	Employment Agreement, dated as of August 4, 2006, by and among Capital Trust, Inc., CT Investment Management Co., LLC and Thomas C. Ruffing (filed as Exhibit 10.2 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on August 8, 2006 and incorporated herein by reference).
•+ 10.37.b	Letter Agreement, dated as of December 31, 2008, by and among Capital Trust, Inc., CT Investment Management Co., and Thomas Ruffing.
+10.38	Termination Agreement, dated as of December 29, 2000, by and between Capital Trust, Inc. and Craig M. Hatkoff (filed as Exhibit 10.9 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on April 2, 2001 and incorporated herein by reference).
+ 10.39	Transition Agreement dated May 26, 2005, by and between the Company and Brian H. Oswald (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-14788) filed on May 27, 2005 and incorporated herein by reference).
+ 10.40	Consulting Services Agreement, dated as of January 1, 2003, by and between CT Investment Management Co., LLC and Craig M. Hatkoff. (filed as Exhibit 10.1 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on November 6, 2003 and incorporated herein by reference).

71

EXHIBIT INDEX

Exhibit Number	Description
+10.41	Summary of Non-Employee Director Compensation (filed as Exhibit 10.51 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on February 28, 2007 and incorporated herein by reference).
+10.42	Summary of Non-Employee Director Compensation (filed as Exhibit 10.51 to the Company’s Annual Report on Form 10-K (File No. 1-14788) filed on February 28, 2007 and incorporated herein by reference).
10.43	Agreement of Lease dated as of May 3, 2000, between 410 Park Avenue Associates, L.P., owner, and Capital Trust, Inc., tenant (filed as Exhibit 10.11 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on April 2, 2001 and incorporated herein by reference).
10.44	Additional Space, Lease Extension and First Lease Modification Agreement, dated as of May 23, 2007, by and between 410 Park Avenue Associates, L.P. and Capital Trust, Inc. (filed as Exhibit 10.74 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 5, 2008 and incorporated herein by reference).
10.45.a	Amended and Restated Master Loan and Security Agreement, dated as of June 27, 2003, between Capital Trust, Inc., CT Mezzanine Partners I LLC and Morgan Stanley Mortgage Capital Inc. (filed as Exhibit 10.4 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on November 6, 2003 and incorporated herein by reference).
10.45.b	Joinder and Amendment, dated as of July 20, 2004, among Capital Trust, Inc., CT Mezzanine Partners I LLC, CT RE CDO 2004-1 Sub, LLC and Morgan Stanley Mortgage Capital Inc. (filed as Exhibit 10.21.b to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2005 and incorporated herein by reference).
10.46.a	Master Repurchase Agreement, dated as of July 29, 2005, by and among the Company, CT RE CDO 2004-1 Sub, LLC, CT RE CDO 2005-1 Sub, LLC and Morgan Stanley Bank (filed as Exhibit 10.2 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on November 1, 2005 and incorporated herein by reference).
10.46.b	Amendment No. 1 to the Master Repurchase Agreement, dated as of November 4, 2005, by and among Capital Trust, Inc., CT RE CDO 2004-1 Sub, LLC, CT RE CDO 2005-1 Sub, LLC and Morgan Stanley Bank (filed as Exhibit 10.1 to Capital Trust, Inc.’s Current Report on Form 8-K (File No. 1-14788) filed on November 9, 2005 and incorporated herein by reference).
*10.46.c	Amendment No. 5 to Master Repurchase Agreement, dated as of February 14, 2007, by and among Capital Trust, Inc., CT RE CDO 2004-1 SUB, LLC, CT RE CDO 2005-1 SUB, LLC and Morgan Stanley Bank (filed as Exhibit 10.4 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on May 1, 2007 and incorporated herein by reference).

•10.46.d Amendment No. 10 to Master Repurchase Agreement, dated as of March 16, 2009, by and among Capital Trust, Inc., CT RE CDO 2004-1 SUB, LLC, CT RE CDO 2005-1 SUB, LLC, CT XLC Holding, LLC and Morgan Stanley Bank, N.A.

10.47.a Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, by and between Goldman Sachs Mortgage Company and Capital Trust, Inc. (filed as Exhibit 10.1.a to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on October 30, 2006 and incorporated herein by reference).

72

EXHIBIT INDEX

Exhibit Number	Description
10.47.b	Annex I to Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, by and between Goldman Sachs Mortgage Company and Capital Trust, Inc. (filed as Exhibit 10.1.b to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on October 30, 2006 and incorporated herein by reference).
10.47.c	Letter, dated as of August 15, 2006, by and between Goldman Sachs Mortgage Company and Capital Trust, Inc. (filed as Exhibit 10.1.c to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on October 30, 2006 and incorporated herein by reference).

10.47d Amended and Restated Annex I to Amended and Restated Master Repurchase Agreement, dated as of October 30, 2007, by and between Goldman Sachs Mortgage Company and Capital Trust, Inc.

•10.47e Agreement, dated as of March 16, 2009, by Capital Trust, Inc. and Goldman Sachs Mortgage Company.

•10.47f Termination of Master Repurchase Agreement, dated as of March 16, 2009, between Capital Trust, Inc. and Goldman Sachs Mortgage Company.

10.48

Master Repurchase Agreement, dated as of March 4, 2005, by and among Capital Trust, Inc., Bank of America, N.A. and Banc of America Securities LLC. (filed as Exhibit 10.25 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2005 and incorporated herein by reference).

•10.49a

Master Repurchase Agreement, dated as of October 24, 2008, by and among Capital Trust, Inc., CT BSI Funding Corp. and JPMorgan Chase Bank, N.A. (reflecting JPMorgan Chase Bank, N.A. as successor to Bear, Stearns Funding, Inc. under the Amended and Restated Master Repurchase Agreement, dated as of February 15, 2006, by and among Bear, Stearns Funding, Inc., Capital Trust, Inc. and CT BSI Funding Corp., as amended by that certain Amendment No. 1, dated as of February 7, 2007, and as amended by that certain Amendment No. 2, dated as of June 30, 2008).

•10.49b Amendment No. 1 to Master Repurchase Agreement, dated as of March 16, 2009, by and among CT BSI Funding Corp., Capital Trust, Inc., and JPMorgan Chase Bank, N.A.

•10.50a Master Repurchase Agreement, dated as of November 21, 2008, by and among Capital Trust, Inc., CT BSI Funding Corp. and JPMorgan Chase Funding Inc. (reflecting JPMorgan Chase Bank, N.A. as successor to Bear, Stearns International Limited under the Amended and Restated Master Repurchase Agreement, dated as of February 15, 2006, by and among Bear, Stearns International Limited, Capital Trust, Inc. and CT BSI Funding Corp., as amended by that certain Amendment No. 1, dated as of February 7, 2007, and as amended by that certain Amendment No. 2, dated as of June 30, 2008).

•10.50b Amendment No. 1 to Master Repurchase Agreement, dated as of March 16, 2009, by and among Capital Trust, Inc., CT BSI Funding Corp. and JP Morgan Chase Funding Inc.

10.51	Limited Liability Company Agreement of CT MP II LLC, by and among Travelers General Real Estate Mezzanine Investments II, LLC and CT-F2-GP, LLC, dated as of March 8, 2000 (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No. 1-14788) filed on March 23, 2000 and incorporated herein by reference).
10.52	Venture Agreement amongst Travelers Limited Real Estate Mezzanine Investments I, LLC, Travelers General Real Estate Mezzanine Investments II, LLC, Travelers Limited Real Estate Mezzanine Investments II, LLC, CT-F1, LLC, CT-F2-GP, LLC, CT-F2-LP, LLC, CT Investment Management Co., LLC and Capital Trust, Inc., dated as of March 8, 2000 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 1-14788) filed on March 23, 2000 and incorporated herein by reference).
10.53	Guaranty of Payment, by Capital Trust, Inc. in favor of Travelers Limited Real Estate Mezzanine Investments I, LLC, Travelers General Real Estate Mezzanine Investments II, LLC and Travelers Limited Real Estate Mezzanine Investments II, LLC, dated as of March 8, 2000 (filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K (File No. 1-14788) filed on March 23, 2000 and incorporated herein by reference).

73

EXHIBIT INDEX

Exhibit Number	Description
10.54	Guaranty of Payment, by The Travelers Insurance Company in favor of Capital Trust, Inc., CT-F1, LLC, CT-F2-GP, LLC, CT-F2-LP, LLC and CT Investment Management Co., LLC, dated as of March 8, 2000 (filed as Exhibit 10.8 to the Company’s Current Report on Form 8-K (File No. 1-14788) filed on March 23, 2000 and incorporated herein by reference).
10.55	Amended and Restated Investment Management Agreement, dated as of April 9, 2001, by and among CT Investment Management Co. LLC, CT MP II LLC and CT Mezzanine Partners II LP (filed as Exhibit 10.37 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 10, 2006 and incorporated herein by reference).
10.56	Registration Rights Agreement, dated as of July 28, 1998, among Capital Trust, Vornado Realty L.P., EOP Limited Partnership, Mellon Bank N.A., as trustee for General Motors Hourly-Rate Employees Pension Trust, and Mellon Bank N.A., as trustee for General Motors Salaried Employees Pension Trust (filed as Exhibit 10.2 to Capital Trust’s Current Report on Form 8-K (File No. 1-8063) filed on August 6, 1998 and incorporated herein by reference).
10.57	Registration Rights Agreement, dated as of February 7, 2003, by and between Capital Trust, Inc. and Stichting Pensioenfonds ABP (filed as Exhibit 10.24 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on March 28, 2003 and incorporated herein by reference).
10.58	Registration Rights Agreement, dated as of June 18, 2003, by and among Capital Trust, Inc. and the parties named therein (filed as Exhibit 10.2 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on May 12, 2004 and incorporated herein by reference).
10.59	Securities Purchase Agreement, dated as of May 11, 2004, by and among Capital Trust, Inc. W. R. Berkley Corporation and certain shareholders of Capital Trust, Inc. (filed as Exhibit 10.1 to Capital Trust, Inc.’s Current Report on Form 8-K (File No. 1-14788) filed on May 11, 2004 and incorporated herein by reference).
10.60	Registration Rights Agreement dated as of May 11, 2004, by and among Capital Trust, Inc. and W. R. Berkley Corporation (filed as Exhibit 10.2 to Capital Trust, Inc.’s Current Report on Form 8-K (File No. 1-14788) filed on May 11, 2004 and incorporated herein by reference).

•10.61 Junior Subordinated Indenture, dated as of March 16, 2009, between Capital Trust, Inc. and The Bank of New York Mellon Trust Company, National Association, as Trustee.

10.62 Amended and Restated Trust Agreement, dated February 10, 2006, by and among Capital Trust, Inc., JP Morgan Chase Bank, N.A., Chase Bank USA, N.A. and the Administrative Trustees named therein (filed as Exhibit 10.2 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on May 4, 2006 and incorporated herein by reference).

74

EXHIBIT INDEX

Exhibit Number	Description
10.63	Investment Management Agreement, dated as of November 9, 2006, by and between Berkley Insurance Company and CT High Grade Mezzanine Manager, LLC (filed as Exhibit 10.48 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on February 28, 2007 and incorporated herein by reference).
10.64	Investment Management Agreement, dated as of November 9, 2006, by and between Berkley Regional Insurance Company and CT High Grade Mezzanine Manager, LLC (filed as Exhibit 10.49 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on February 28, 2007 and incorporated herein by reference).
10.65	Investment Management Agreement, dated as of November 9, 2006, by and between Admiral Insurance Company and CT High Grade Mezzanine Manager, LLC (filed as Exhibit 10.50 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on February 28, 2007 and incorporated herein by reference).
10.66	Junior Subordinated Indenture, dated as of March 29, 2007, by and between Capital Trust, Inc. and The Bank of New York Trust Company, National Association (filed as Exhibit 10.1 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on May 1, 2007 and incorporated herein by reference).
10.67	Amended and Restated Trust Agreement, dated as of March 29, 2007, by and among Capital Trust, Inc., The Bank of New York Trust Company, National Association, The Bank of New York (Delaware) and the Administrative Trustees named therein. (filed as Exhibit 10.2 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on May 1, 2007 and incorporated herein by reference).

10.68	Master Repurchase Agreement, dated as of July 30, 2007, by and among Capital Trust, Inc., Citigroup Global Markets, Inc. and Citigroup Financial Products Inc. (filed as Exhibit 10.1 to Capital Trust, Inc.’s Quarterly Report on Form 10-Q (File No. 1-14788) filed on November 7, 2007 and incorporated herein by reference).
•10.69	Amendment No. 3 to Master Repurchase Agreement, dated as of March 16, 2009, by and between Capital Trust, Inc., and Citigroup Global Markets, Inc. and Citigroup Financial Products Inc.
•10.70	Amended and Restated Credit Agreement, dated as of March 16, 2009, among Capital Trust, Inc., the lenders party thereto and WestLB AG, New York Branch.
•10.71	Satisfaction, Termination and Release Agreement, dated as of February 25, 2009, between UBS Real Estate Securities Inc. and Capital Trust, Inc.
•10.72	Exchange Agreement, dated as of March 16, 2009, by and among Capital Trust, Inc., Taberna Preferred Funding V, Ltd., Taberna Preferred Funding VI, Ltd., Taberna Preferred Funding VIII, Ltd. and Taberna Preferred Funding IX, Ltd.
•10.73	Pledge and Security Agreement, dated as of March 16, 2009, by and between Capital Trust, Inc., and WestLB AG, New York Branch.

11.1	Statements regarding Computation of Earnings per Share (Data required by Statement of Financial Accounting Standard No. 128, Earnings per Share, is provided in Note 12 to the consolidated financial statements contained in this report).
14.1	Capital Trust, Inc. Code of Business Conduct and Ethics (filed as Exhibit 14.1 to Capital Trust, Inc.’s Annual Report on Form 10-K (File No. 1-14788) filed on February 28, 2007 and incorporated herein by reference).

75

EXHIBIT INDEX

Exhibit Number	Description
• 21.1	Subsidiaries of Capital Trust, Inc.
• 23.1	Consent of Ernst & Young LLP
• 31.1	Certification of Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
• 31.2	Certification of Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
• 32.1	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
• 32.2	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

+ Represents a management contract or compensatory plan or arrangement.

• Filed herewith.

* Portions of this exhibit has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under Rule 24b-2 of the Securities and Exchange Act of 1934, as amended.

76

SIGNATURES

Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

March 16, 2009	/s/ John R. Klopp
Date	John R. Klopp
	Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

March 16, 2009	/s/ Samuel Zell
Date	Samuel Zell
	Chairman of the Board of Directors
March 16, 2009	/s/ John R. Klopp
Date	John R. Klopp
	Chief Executive Officer and Director
March 16, 2009	/s/ Geoffrey G. Jervis
Date	Geoffrey G. Jervis
	Chief Financial Officer
March 16, 2009	/s/ Thomas E. Dobrowski
Date	Thomas E. Dobrowski, Director
March 16, 2009	/s/ Martin L. Edelman
Date	Martin L. Edelman, Director
March 16, 2009	/s/ Craig M. Hatkoff
Date	Craig M. Hatkoff, Director
March 16, 2009	/s/ Edward S. Hyman
Date	Edward S. Hyman, Director
March 16, 2009	/s/ Henry N. Nassau
Date	Henry N. Nassau, Director
March 16, 2009	/s/ Joshua A. Polan
Date	Joshua A. Polan, Director
March 16, 2009	/s/ Lynne B. Sagalyn
Date	Lynne B. Sagalyn, Director

77

Index to Consolidated Financial Statements and Schedules

Report of Independent Registered Public Accounting Firm	F-2
Management’s Report of Internal Control over Financial Reporting	F-3
Management’s Responsibility for Financial Statements	F-4
Report of Independent Registered Public Accounting Firm	F-5
Audited Financial Statements
Consolidated Balance Sheets as of December 31, 2008 and 2007	F-6
Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006	F-7
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2008, 2007 and 2006	F-8
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006	F-9
Notes to Consolidated Financial Statements	F-10
Schedule IV—Mortgage Loans on Real Estate	S-1

Schedules other than those listed are ommited as they are not applicable or the required or equivalent information has been included in the consolidated financial statements or notes thereto.

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Capital Trust, Inc.

We have audited Capital Trust, Inc.’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Capital Trust, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Capital Trust, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based onthe COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Capital Trust, Inc. as of December 31, 2008 and 2007, and the related consolidated statements of operations, changes in shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2008 of Capital Trust, Inc. and our report dated March 16, 2009 expressed an unqualified opinion thereon.

	/s/ Ernst & Young LLP
New York, NY
March 16, 2009

F-2

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting, and for performing an assessment of the effectiveness of internal control over financial reporting as of December 31, 2008. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s system of internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management performed an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008 based upon criteria in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (‘‘COSO’’). Based on our assessment, management determined that the Company’s internal control over financial reporting was effective as of December 31, 2008 based on the criteria in Internal Control-Integrated Framework issued by COSO.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2008 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which appears herein.

Dated: March 16, 2009

John R. Klopp	Geoffrey G. Jervis
Chief Executive Officer	Chief Financial Officer

F-3

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL

STATEMENTS

Capital Trust, Inc.’s management is responsible for the integrity and objectivity of all financial information included in this Annual Report. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The financial statements include amounts that are based on the best estimates and judgments of management. All financial information in this Annual Report is consistent with that in the consolidated financial statements.

Ernst & Young LLP, an independent registered public accounting firm, has audited these consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and have expressed herein their unqualified opinion on those financial statements.

The Audit Committee of the Board of Directors, which oversees Capital Trust, Inc.’s financial reporting process on behalf of the Board of Directors, is composed entirely of independent directors (as defined by the New York Stock Exchange). The Audit Committee meets periodically with management, the independent accountants, and the internal auditors to review matters relating to the Company’s financial statements and financial reporting process, annual financial statement audit, engagement of independent accountants, internal audit function, system of internal controls, and legal compliance and ethics programs as established by Capital Trust, Inc.’s management and the Board of Directors. The internal auditors and the independent accountants periodically meet alone with the Audit Committee and have access to the Audit Committee at any time.

Dated: March 16, 2009

John R. Klopp	Geoffrey G. Jervis
Chief Executive Officer	Chief Financial Officer

F-4

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Capital Trust, Inc.

We have audited the accompanying consolidated balance sheets of Capital Trust, Inc. and Subsidiaries (the “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of operations, changes in shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedule listed in the Index to Consolidated Financial Statements and Schedules. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 16, 2009 expressed an unqualified opinion thereon.

	/s/ Ernst & Young LLP
New York, New York
March 16, 2009

F-5

Capital Trust, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2008 and 2007
(in thousands except share data)
Assets	2008			2007
Cash and cash equivalents	$	45,382		$	25,829
Restricted cash		18,821			5,696
Commercial mortgage backed securities		852,211			876,864
Loans receivable, net		1,791,332			2,257,563
Loans held-for-sale, net		92,175			—
Equity investment in unconsolidated subsidiaries		2,383			977
Real estate held-for-sale		9,897			—
Deposits and other receivables		1,421			3,927
Accrued interest receivable		6,351			15,091
Deferred income taxes		1,706			3,659
Prepaid expenses and other assets		16,948			21,876
Total assets	$	2,838,627		$	3,211,482
Liabilities & Shareholders' Equity
Liabilities:
Accounts payable and accrued expenses	$	10,918		$	65,682
Repurchase obligations		699,054			911,857
Collateralized debt obligations		1,156,035			1,192,299
Senior unsecured credit facility		100,000			75,000
Junior subordinated debentures		128,875			128,875
Participations sold		292,669			408,351
Interest rate hedge liabilities		47,974			18,686
Deferred origination fees and other revenue		1,658			2,495
Total liabilities		2,437,183			2,803,245
Shareholders' equity:
Class A common stock $0.01 par value 100,000 shares authorized, 21,740 and 17,166 shares issued and outstanding as of December 31, 2008 and December 31, 2007, respectively ("class A common stock")		217			172
Restricted class A common stock $0.01 par value, 331 and 424 shares issued and outstanding as of December 31, 2008 and December 31, 2007, respectively ("restricted class A common stock" and together with class A common stock, "common stock")		3			4
Additional paid-in capital		557,435			426,113
Accumulated other comprehensive loss		(41,009	)		(8,684	)
Accumulated deficit		(115,202	)		(9,368	)
Total shareholders' equity		401,444			408,237
Total liabilities and shareholders' equity	$	2,838,627		$	3,211,482
See accompanying notes to consolidated financial statements.

F-6

Capital Trust, Inc. and Subsidiaries
Consolidated Statements of Operations
For the Years Ended December 31, 2008, 2007 and 2006
(in thousands, except share and per share data)
	2008			2007			2006
Income from loans and other investments:
Interest and related income	$	194,649		$	253,422		$	175,404
Less: Interest and related expenses		129,665			162,377			104,607
Income from loans and other investments, net		64,984			91,045			70,797
Other revenues:
Management fees		12,941			3,499			2,650
Incentive management fees		—			6,208			1,652
Servicing fees		367			623			105
Other interest income		1,566			1,083			1,354
Total other revenues		14,874			11,413			5,761
Other expenses:
General and administrative		24,957			29,956			23,075
Depreciation and amortization		179			1,810			3,049
Total other expenses		25,136			31,766			26,124
Gain on extinguishment of debt		6,000			—			—
Impairments		(2,917	)		—			—
Provision for possible credit losses		(63,577	)		—			—
Valuation allowance on loans held-for-sale		(48,259	)		—			—
Gain on sale of investments		374			15,077			—
(Loss)/income from equity investments		(1,988	)		(2,109	)		898
(Loss)/income before income taxes		(55,645	)		83,660			51,332
Provision/(benefit) for income taxes		1,893			(706	)		(2,735	)
Net (loss)/income	$	(57,538	)	$	84,366		$	54,067
Per share information:
Net (loss)/earnings per share of common stock:
Basic	$	(2.73	)	$	4.80		$	3.43
Diluted	$	(2.73	)	$	4.77		$	3.40
Weighted average shares of common stock outstanding:
Basic		21,098,935			17,569,690			15,754,655
Diluted		21,098,935			17,690,266			15,923,397
Dividends declared per share of common stock	$	2.20		$	5.10		$	3.45
See accompanying notes to consolidated financial statements.

F-7

Capital Trust, Inc. and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity
For the Years Ended December 31, 2008, 2007 and 2006
(in thousands)
	Comprehensive  Income			Class A  Common  Stock		Restricted  Class A  Common  Stock			Additional  Paid-In  Capital			Accumulated Other  Comprehensive  Income/(Loss)			Accumulated  Deficit			Total
Balance at December 31, 2005				$	149	$	4		$	326,299		$	14,879		$	(2,481	)	$	338,850
Net income	$	54,067			—		—			—			—			54,067			54,067
Unrealized loss on derivative financial instruments		(1,401	)		—		—			—			(1,401	)		—			(1,401	)
Unrealized loss on available for sale security		(54	)		—		—			—			(54	)		—			(54	)
Amortization of unrealized gain on securities		(1,640	)		—		—			—			(1,640	)		—			(1,640	)
Currency translation adjustments		2			—		—			—			2			—			2
Deferred gain on settlement of swap		1,186			—		—			—			1,186			—			1,186
Amortization of deferred gain on settlement of swap		(255	)		—		—			—			(255	)		—			(255	)
Shares of class A common stock issued in public offering		—			20		—			86,589			—			—			86,609
Sale of shares of class A common stock under stock option agreement		—			—		—			662			—			—			662
Reimbursement of offering expenses		—			—		—			124			—			—			124
Restricted class A common stock earned		—			—		—			4,013			—			—			4,013
Restricted class A common stock forfeited upon resignation of holder		—			—		—			(45	)		—			—			(45	)
Issuance of restricted Class A common stock		—			—		1			(1	)		—			—			—
Dividends declared on common stock		—			—		—			—			—			(55,846	)		(55,846	)
Balance at December 31, 2006	$	51,905			169		5			417,641			12,717			(4,260	)		426,272
Net income	$	84,366			—		—			—			—			84,366			84,366
Unrealized loss on derivative financial instruments		(19,559	)		—		—			—			(19,559	)		—			(19,559	)
Unrealized gain on securities		259			—		—			—			259			—			259
Amortization of unrealized gain on securities		(1,684	)		—		—			—			(1,684	)		—			(1,684	)
Deferred loss on settlement of swaps		(153	)		—		—			—			(153	)		—			(153	)
Amortization of deferred gains and losses on settlement of swaps		(262	)		—		—			—			(262	)		—			(262	)
Currency translation adjustment		2,451			—		—			—			2,451			—			2,451
Reclassification to gain on sale of investments:
Currency translation adjustment		(2,453	)		—		—			—			(2,453	)					(2,453	)
Issuance of stock relating to business purchase		—			—		—			707			—			—			707
Sale of shares of class A common stock under stock option agreement		—			—		—			3,159			—			—			3,159
Restricted class A common stock earned		—			3		(1	)		4,606			—			—			4,608
Dividends declared on common stock		—			—		—			—			—			(89,474	)		(89,474	)
Balance at December 31, 2007	$	62,965			172		4			426,113			(8,684	)		(9,368	)		408,237
Net loss	$	(57,538	)		—		—			—			—			(57,538	)		(57,538	)
Unrealized loss on derivative financial instruments		(29,640	)		—		—			—			(29,640	)		—			(29,640	)
Unrealized loss on securities		(205	)		—		—			—			(205	)		—			(205	)
Amortization of unrealized gain on securities		(1,705	)		—		—			—			(1,705	)		—			(1,705	)
Deferred loss on settlement of swaps		(611	)		—		—			—			(611	)		—			(611	)
Amortization of deferred gains and losses on settlement of swaps		(164	)		—		—			—			(164	)		—			(164	)
Shares of class A common stock issued in public offering		—			40		—			112,567			—			—			112,607
Sale of class A common stock under dividend reinvestment plan and stock purchase plan		—			4		—			12,882			—			—			12,886
Sale of shares of class A common stock under stock option agreement		—			—		—			180			—			—			180
Restricted class A common stock earned, net of shares deferred		—			1		(1	)		3,419			—			—			3,419
Deferred directors' compensation		—			—		—			2,274			—			—			2,274
Dividends declared on common stock		—			—		—			—			—			(48,296	)		(48,296	)
Balance at December 31, 2008	$	(89,863	)	$	217	$	3		$	557,435		$	(41,009	)	$	(115,202	)	$	401,444

See accompanying notes to consolidated financial statements.

F-8

Capital Trust, Inc. and Subsidiaries
Consolidated Statement of Cash Flows
For the Years Ended December 31, 2008, 2007 and 2006
(in thousands)
	2008			2007			2006
Cash flows from operating activities:
Net (loss)/income	$	(57,538	)	$	84,366		$	54,067
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation and amortization		179			1,810			3,048
Gain on extinguishment of debt		(6,000	)		—			—
Provision for possible credit losses		63,577			4,000			—
Valuation allowance on loans held-for-sale		48,259			—			—
Impairments		2,917			—			—
Gain on sale of investment		(374	)		(15,077	)		—
Deferred directors compensation		525			525			210
Loss from equity investments		1,988			2,109			(898	)
Distributions of income from unconsolidated subsidiaries		—			56			1,373
Employee stock-based compensation		3,478			4,606			3,968
Settlement of interest rate hedges		(352	)		—			—
Amortization of premiums and discounts on loans, CMBS, and debt, net		(11,505	)		(2,685	)		(2,029	)
Amortization of deferred gains on interest rate hedges		(164	)		(262	)		(255	)
Amortization of deferred financing costs		5,168			5,247			3,504
Changes in assets and liabilities, net:
Deposits and other receivables		3,551			1,772			2,568
Accrued interest receivable		4,341			(204	)		(5,451	)
Deferred income taxes		1,953			(50	)		370
Prepaid expenses and other assets		180			(1,333	)		(784	)
Deferred origination fees and other revenue		(589	)		(2,129	)		4,397
Accounts payable and accrued expenses		(5,524	)		3,983			736
Net cash provided by operating activities		54,070			86,734			64,824
Cash flows from investing activities:
Purchases of commercial mortgage-backed securities		(660	)		(110,550	)		(392,732	)
Principal collections on and proceeds from commercial mortgage-backed securities		30,552			44,761			69,375
Origination and purchase of loans receivable		(129,471	)		(1,058,968	)		(1,423,917	)
Principal collections on loans receivable		270,802			749,145			582,519
Contributions to unconsolidated subsidiaries		(3,473	)		(24,122	)		(5,845	)
Return of capital distributions from unconsolidated subsidiaries		—			2,314			5,240
Proceeds from sale of equity investment		—			43,638			—
Purchase of total return swaps		—			—			(4,138	)
Proceeds from total return swaps		—			1,815			6,323
Purchase of equipment and leasehold improvements		(35	)		(342	)		—
Payments for business purchased		—			(1,853	)		—
Payment of capitalized costs		—			(126	)		—
Increase in restricted cash		(13,125	)		(3,989	)		(443	)
Net cash provided by/(used in) investing activities		154,590			(358,277	)		(1,163,618	)
Cash flows from financing activities:
Borrowings under repurchase obligations		185,133			1,503,568			1,508,970
Repayments under repurchase obligations		(391,936	)		(1,296,154	)		(1,174,277	)
Borrowings under credit facilities		25,000			150,000			—
Repayments under credit facilities		—			(75,000	)		—
Issuance of junior subordinated debentures		—			77,325			51,550
Purchase of common equity in CT Preferred Trust I & CT Preferred Trust II		—			(2,325	)		(1,550	)
Proceeds from issuance of collateralized debt obligations		—			—			429,398
Repayment of collateralized debt obligations		(35,945	)		(19,892	)		(40,643	)
Proceeds from participations sold		—			—			287,102
Settlement of interest rate hedges		(611	)		(153	)		1,186
Payment of deferred financing costs		(577	)		(2,936	)		(5,483	)
Sale of class A common stock upon stock option exercise		121			3,251			662
Dividends paid on common stock		(95,786	)		(66,362	)		(43,686	)
Proceeds from sale of shares of class A common stock		112,608			—			86,609
Proceeds from dividend reinvestment plan and stock purchase plan		12,886			—			—
(Payment)/reimbursement of offering expenses		—			(92	)		124
Net cash (used in)/provided by financing activities		(189,107	)		271,230			1,099,962
Net increase/(decrease) in cash and cash equivalents		19,553			(313	)		1,168
Cash and cash equivalents at beginning of period		25,829			26,142			24,974
Cash and cash equivalents at end of period	$	45,382		$	25,829		$	26,142
See accompanying notes to consolidated financial statements.

F-9

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1. Organization

References herein to “we,” “us” or “our” refer to Capital Trust, Inc. and its subsidiaries unless the context specifically requires otherwise.

We are a fully integrated, self-managed finance and investment management company that specializes in credit-sensitive structured financial products. To date, our investment programs have focused on loans and securities backed by commercial real estate assets. We invest for our own account directly on our balance sheet and for third parties through a series of investment management vehicles. From the commencement of our finance business in 1997 through December 31, 2008, we have completed over $11.0 billion of investments in the commercial real estate debt arena. We conduct our operations as a real estate investment trust, or REIT, for federal income tax purposes and we are headquartered in New York City.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include, on a consolidated basis, our accounts, the accounts of our wholly-owned subsidiaries and our interests in variable interest entities in which we are the primary beneficiary, prepared in accordance with accounting principles generally accepted in the United States, or GAAP. All significant intercompany balances and transactions have been eliminated in consolidation. Our interests in CT Preferred Trust I and CT Preferred Trust II, the issuers of trust securities backed by our junior subordinated debentures, are accounted for using the equity method and their assets and liabilities are not consolidated into our financial statements due to our determination that CT Preferred Trust I and CT Preferred Trust II are variable interest entities in which we are not the primary beneficiary under Financial Accounting Standards Board, or FASB, Interpretation No. 46(R) “Consolidation of Variable Interest Entities”, or FIN 46(R). We account for our co-investment interest in the private equity funds we manage, CT Mezzanine Partners III, Inc., or Fund III, and CT Opportunity Partners I, LP, or CTOPI, under the equity method of accounting. We also accounted for our investment in Bracor Investimentos Imobiliarios Ltda., or Bracor, under the equity method of accounting until we sold our investment in December 2007. As such, we report a percentage of the earnings or losses of the companies in which we have such investments equal to our ownership percentage on a single line item in the consolidated statement of operations as income/(loss) from equity investments. CTOPI is an investment company (under the American Institute of Certified Public Accountants Audit and Accounting Guide for Investment Companies) and therefore it maintains its financial records at fair value. We have applied such accounting relative to our investment in CTOPI pursuant to the Emerging Issues Task Force, or EITF, Issue No. 85-12 “Retention of Specialized Accounting for Investments in Consolidation.”

Revenue Recognition

Interest income from our loans receivable is recognized over the life of the investment using the effective interest method and is recorded on the accrual basis. Fees, premiums, discounts and direct costs in connection with these investments are deferred until the loan is advanced and are then recognized over the term of the loan as an adjustment to yield. Fees on commitments that expire unused are recognized at expiration. For loans where we have unfunded commitments, we amortize the appropriate items on a straight line basis. Income recognition is generally suspended for loans at the earlier of the date at which payments become 90 days past due or when, in the opinion of management, a full recovery of income and principal becomes doubtful. Income recognition is resumed when the loan becomes contractually current and performance is demonstrated to be resumed.

Fees from special servicing and asset management services are recognized as services are rendered. We account for incentive fees we earn from our investment management business in accordance with Method 1 of EITF D-96, “Accounting for Management Fees Based on a Formula”. Under Method 1, no incentive income is recorded until all contingencies have been eliminated.

F-10

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Cash and Cash Equivalents

We classify highly liquid investments with original maturities of three months or less from the date of purchase as cash equivalents. The Company places its cash and cash equivalents with high credit quality institutions to minimize credit risk exposure. As of, and for the periods ended, December 31, 2008 and December 31, 2007, we had bank balances in excess of federally insured amounts. We have not experienced any losses on our demand deposits, commercial paper or money market investments.

Restricted Cash

Restricted cash as of December 31, 2008 was comprised of $18.8 million that is on deposit with the trustee for our collateralized debt obligations, or CDOs, and is expected to be used to pay contractual interest and principal and to purchase replacement collateral for our reinvesting CDO during the duration of its reinvestment period. Restricted cash as of December 31, 2007 was $5.7 million.

Commercial Mortgage Backed Securities

We classify our commercial mortgage backed securities, or CMBS, pursuant to FASB Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, or FAS 115, on the date of acquisition of the investment. On August 4, 2005, we decided to change the accounting classification of our CMBS investments from available-for-sale to held-to-maturity. Held-to-maturity investments are stated at cost adjusted for the amortization of any premiums or discounts, which are amortized through the consolidated statements of operations using the effective interest method. Other than in the instance of an other-than-temporary impairment (as discussed below), these held-to-maturity investments are shown in our consolidated financial statements at their adjusted values pursuant to the methodology described above.

We may also invest in CMBS and certain other securities which may be classified as available-for-sale. Available-for-sale securities are carried at estimated fair value with the net unrealized gains or losses reported as a component of accumulated other comprehensive income/(loss) in shareholders’ equity. Many of these investments are relatively illiquid and management must estimate their values. In making these estimates, management utilizes market prices provided by dealers who make markets in these securities, but may, under certain circumstances, adjust these valuations based on management’s judgment. Changes in the valuations do not affect our reported income or cash flows, but impact shareholders’ equity and, accordingly, book value per share.

We account for CMBS under EITF 99-20, “Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets”, as amended by FASB Staff Position EITF 99-20-1, “Amendments to the Impairment Guidance of EITF Issue No. 99-20”, or EITF 99-20. Under EITF 99-20, income is recognized using a level yield with any purchase premium or discount accreted through income over the life of the security. This yield is calculated using estimated cash flows which are based on a number of assumptions on the underlying loans. Examples include, among other things, the rate and timing of principal payments, including prepayments, repurchases, defaults and liquidations, the pass-through or coupon rate and interest rates. Additional factors that may affect our reported interest income on our CMBS include interest payment shortfalls due to delinquencies on the underlying mortgage loans and the timing and magnitude of credit losses on the mortgage loans underlying the securities that are impacted by, among other things, the general condition of the real estate market, including competition for tenants and their related credit quality, and changes in market rental rates. These uncertainties and contingencies are difficult to predict and are subject to future events that may alter the assumptions.

F-11

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Further, under the guidance of EITF 99-20, when, based on current information and events, it is probable that there has been an adverse change in estimated cash flows from those originally estimated, an other-than-temporary impairment is deemed to have occurred. A change in estimated cash flows is considered adverse under the guidance of EITF 99-20 if the present value of the revised cash flows (taking into consideration both the timing and amount of estimated future cash flows) using the current expected yield is less than the present value of the originally estimated remaining cash flows, adjusted for cash receipts during the intervening period. Should an other-than-temporary impairment be deemed to have occurred, the security is written down to fair value with the resulting charge included in the statement of operations and a new cost basis established. The revised yield is then applied prospectively to recognize interest income. Management must also assess whether unrealized losses on securities reflect a decline in value that is other-than-temporary, and, accordingly, write down the impaired security to its fair value, through a charge to income.

From time to time we purchase CMBS and other investments in which we have a level of control over the issuing entity; we refer to these investments as controlling class investments. The presentation of controlling class investments in our consolidated financial statements is governed in part by FIN 46(R), which could require that certain controlling class investments be presented on a consolidated basis. Based upon the specific circumstances of certain of our CMBS investments that are controlling class investments and our interpretation of FIN 46(R), specifically the exemption for qualifying special purpose entities as defined under FASB Statements of Financial Accounting Standard No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”, or FAS 140, we have concluded that the entities that have issued the controlling class investments should not be presented on a consolidated basis. In 2008, the FASB issued Staff Position No. FAS 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities”, or FSP 140-4, which requires additional disclosures for certain of our investments effective as of December 15, 2008. These disclosures are included in Note 3 to the consolidated financial statements.

Loans Receivable, Provision for Possible Credit Losses, Loans Held-for-Sale and Related Allowance

We purchase and originate commercial real estate debt and related instruments, or Loans, generally to be held as long-term investments at amortized cost. Management must periodically evaluate each of these Loans for possible impairment. Impairment is indicated when it is deemed probable that we will not be able to collect all amounts due according to the contractual terms of the Loan. If a Loan were determined to be permanently impaired, we would write down the Loan through a charge to the provision for possible credit losses. Given the nature of our Loan portfolio and the underlying commercial real estate collateral, significant judgment on the part of management is required in determining permanent impairment and the resulting charge to the provision, which includes but is not limited to making assumptions regarding the value of the real estate that secures the loan. Each Loan in our portfolio is evaluated at least quarterly using our loan risk rating system which considers loan-to-value, debt yield, cash flow stability, exit plan, loan sponsorship, loan structure and other factors deemed necessary by management to assess the likelihood of delinquency or default. If we believe there is a potential for delinquency or default, a downside analysis is prepared to estimate the value of the collateral underlying our Loan, and a provision is recorded taking into consideration both the likelihood of delinquency or default and the estimated value of the underlying collateral. Actual losses, if any, could ultimately differ from these estimates.

Loans held-for-sale are carried at the lower of our amortized cost basis and market value. A reduction in market value of loans held-for-sale is recorded as a charge to the Company’s consolidated statement of operations under the valuation allowance on loans held-for-sale.

Deferred Financing Costs

The deferred financing costs which are included in prepaid expenses and other assets on our consolidated balance sheets include issuance costs related to our debt and are amortized using the effective interest method or a method that approximates the effective interest method.

F-12

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Repurchase Obligations

In certain circumstances, we have financed the purchase of investments from a counterparty through a repurchase agreement with that same counterparty. We currently record these investments in the same manner as other investments financed with repurchase agreements, with the investment recorded as an asset and the related borrowing under any repurchase agreement as a liability on our consolidated balance sheets. Interest income earned on the investments and interest expense incurred on the repurchase obligations are reported separately on the consolidated statements of operations. In February 2008, the FASB issued FASB Staff Position 140-3, “Accounting for Transfers of Financial Assets and Repurchase Financing Transactions”, or FSP 140-3, which provides guidance on accounting for transfers of financial assets and repurchase financings. FSP 140-3 presumes that an initial transfer of a financial asset and a repurchase financing shall not be evaluated as a linked transaction and shall be evaluated separately under FAS 140. If the linked transaction does not meet the requirements for sale accounting, the linked transaction shall generally be accounted for as a forward contract, as opposed to the current presentation, where the purchased asset and the repurchase liability are reflected separately on the balance sheet.

FSP 140-3 is effective on a prospective basis for fiscal years beginning after November 15, 2008, with earlier application not permitted. Given that FSP 140-3 is to be applied prospectively, the adoption of FSP 140-3 did not have a material impact on our consolidated financial statements with respect to our existing transactions. New transactions entered into after December 31, 2008 that are subject to FSP 140-3 may be presented differently on our consolidated financial statements.

Interest Rate Derivative Financial Instruments

In the normal course of business, we use interest rate derivative financial instruments to manage, or hedge, cash flow variability caused by interest rate fluctuations. Specifically, we currently use interest rate swaps to effectively convert variable rate liabilities that are financing fixed rate assets, to fixed rate liabilities. The differential to be paid or received on these agreements is recognized on the accrual basis as an adjustment to the interest expense related to the attendant liability. The interest rate swap agreements are generally accounted for on a held-to-maturity basis, and, in cases where they are terminated early, any gain or loss is generally amortized over the remaining life of the hedged item. These swap agreements must be effective in reducing the variability of cash flows of the hedged items in order to qualify for the aforementioned hedge accounting treatment. Changes in value of effective cash flow hedges are reflected in our consolidated financial statements through accumulated other comprehensive income/(loss) and do not affect our net income. To the extent a derivative does not qualify for hedge accounting, and is deemed a non-hedge derivative, the changes in its value are included in net income.

To determine the fair value of derivative instruments, we use third parties to periodically value our interests.

Income Taxes

Our financial results generally do not reflect provisions for current or deferred income taxes on our REIT taxable income. Management believes that we operate in a manner that will continue to allow us to be taxed as a REIT and, as a result, do not expect to pay substantial corporate level taxes (other than taxes payable by our taxable REIT subsidiaries which are accounted for in accordance with FASB Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes”, or FAS 109). Many of these requirements, however, are highly technical and complex. If we were to fail to meet these requirements, we may be subject to federal, state and local income tax on current and past income, and we may also be subject to penalties.

In September 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109”, or FIN 48. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FAS 109. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This interpretation was effective January 1, 2007. The adoption of FIN 48 did not have a material impact on our financial results.

F-13

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Accounting for Stock-Based Compensation

We account for stock-based compensation in accordance with FASB Statement of Financial Accounting Standards No. 123(R) “Share Based Payment,” or FAS 123(R). Upon adoption of FAS 123(R), as of January 1, 2006, we have elected to utilize the modified prospective method, and there was no impact from this adoption. Compensation expense for the time vesting of stock-based compensation grants is recognized on the accelerated attribution method and compensation expense for performance vesting of stock-based compensation grants is recognized on a straight line basis. Compensation expense relating to stock-based compensation is recognized in net income using a fair value measurement method.

Comprehensive Income

We comply with the provisions of the FASB Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive Income”, or FAS 130, in reporting comprehensive income and its components in the full set of general purpose financial statements. Total comprehensive income/(loss) was ($41.6) million, $63.0 million and $51.9 million, for the periods ended December 31, 2008, 2007 and 2006, respectively. The primary components of comprehensive income/(loss) other than net income/(loss) are the unrealized gain/(loss) on derivative financial instruments and the amortization of unrealized gain/(loss) on CMBS which were previously classified as available-for-sale. As of December 31, 2008, accumulated other comprehensive loss was $41.0 million, comprised of net unrealized gains on CMBS of $6.6 million, net unrealized losses on cash flow swaps of $48.0 million, and $400,000 of deferred realized gains on the settlement of cash flow swaps.

Earnings per Share of Common Stock

Earnings per share of common stock are presented based on the requirements of the FASB Statement of Financial Accounting Standards No. 128, “Earnings per Share”, or FAS 128. Basic EPS is computed based on the net earnings applicable to common stock and stock units divided by the weighted average number of shares of common stock and stock units outstanding during the period. Diluted EPS is based on the net earnings allocable to common stock and stock units, divided by the weighted average number of shares of common stock and stock units and potentially dilutive common stock options.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may ultimately differ from those estimates.

Reclassifications

Certain reclassifications have been made in the presentation of the prior periods consolidated financial statements to conform to the December 31, 2008 presentation.

Segment Reporting

We operate in two reportable segments. We have an internal information system that produces performance and asset data for the two segments along service lines.

F-14

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The “Balance Sheet Investment” segment includes our portfolio of interest earning assets (including our co-investments in investment management vehicles) and the financing thereof.

The “Investment Management” segment includes the investment management activities of our wholly-owned investment management subsidiary, CT Investment Management Co. LLC, or CTIMCO, and its subsidiaries. CTIMCO is a taxable REIT subsidiary and serves as the investment manager of Capital Trust, Inc., all of our investment management vehicles and all of our CDOs and serves as senior servicer and special servicer on certain of our investments and for third parties. In addition, CTIMCO owns certain of the assets included on the accompanying consolidated balance sheets.

Goodwill

Goodwill represents the excess of acquisition costs over the fair value of net assets of businesses acquired. Under the guidance of FASB Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”, or FAS 142, goodwill is reviewed, at least annually, in the fourth quarter to determine if there is an impairment at a reporting unit level, or more frequently if an indication of impairment exists. No impairment charges for goodwill were recorded during the year ended December 31, 2008.

New Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements”, or FAS 157. FAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. FAS 157 applies to reporting periods beginning after November 15, 2007. As discussed above, we report the changes in the value of effective cash flow hedges and our available for sale securities through accumulated other comprehensive income/(loss). We adopted FAS 157 as of January 1, 2008. As a result of the adoption of FAS 157, the fair value of our interest rate hedge liabilities decreased by $961,000 due to the valuation adjustment related to our credit.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”, or FAS 159. FAS 159 permits entities to choose to measure many financial instruments, and certain other items, at fair value. FAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. FAS 159 applies to reporting periods beginning after November 15, 2007. We adopted FAS 159 as of January 1, 2008. Adoption of FAS 159 had no impact on the consolidated financial statements as we did not elect to measure any financial instruments at fair value.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133”, or FAS 161. The use and complexity of derivative instruments and hedging activities have increased significantly over the past several years. Constituents have expressed concerns that the existing disclosure requirements in FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities”, do not provide adequate information about how derivative and hedging activities affect an entity’s financial position, financial performance, and cash flows. Accordingly, FAS 161 requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. FAS 161 encourages, but does not require, comparative disclosures for earlier periods at initial adoption. We do not expect the adoption of FAS 161 to have a material impact on our consolidated financial statements.

F-15

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

3. Commercial Mortgage Backed Securities

Activity relating to our CMBS investments for the year ended December 31, 2008 was as follows (in thousands):

		Gross Book Value			Other-Than-Temporary Impairment			Net Book Value
December 31, 2007		$	878,190		$	(1,326	)	$	876,864
Originations			660			—			660
Principal paydowns			(7,794	)		—			(7,794	)
Satisfactions (1)			(22,920	)		—			(22,920	)
Discount/premium amortization & other (2)			6,317			—			6,317
Other-than-temporary impairments			—			(917	)		(917	)
December 31, 2008		$	854,453		$	(2,243	)	$	852,210
(1)	Includes final maturities and full repayments, as well as one security which was sold for $7.7 million at a gain of approximately $374,000.
(2)	Includes market-to-market adjustments on any available for sale securities, the impact of premium and discount amortization and losses, if any.

The following table details overall statistics for our CMBS investments as of December 31, 2008 and December 31, 2007:

	December 31, 2008	December 31, 2007
Number of securities	77	79
Number of issues	55	56
Rating (1) (2)	BB	BB+
Coupon (1) (3)	6.23%	6.97%
Yield (1) (3)	6.87%	7.35%
Maturity (years) (1) (4)	4.6	5.4

(1)	Represents a weighted average as of December 31, 2008 and December 31, 2007, respectively.
(2)	Weighted average ratings are based on the lowest rating published by Fitch Ratings, Standard & Poor’s or Moody’s Investors Service for each security and exclude $37.9 million face value ($37.5 million book value) of unrated equity investments in collateralized debt obligations.
(3)	Calculations based on LIBOR of 0.44% and 4.60% as of December 31, 2008 and December 31, 2007, respectively. For $37.9 million face value ($37.5 million book value) of CMBS investments, calculations use an effective rate based on cash received.
(4)	Weighted average life is based on the timing and amount of future expected principal payments through the maturity of each respective investment assuming all extension options are executed.

F-16

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The tables below detail the ratings, vintage, property type and geographic distribution of the collateral securing our CMBS as of December 31, 2008 and December 31, 2007 (in thousands):

	December 31, 2008					December 31, 2007
Ratings	Book Value		Percentage			Book Value		Percentage
AAA	$	163,263		19	%	$	106,732		12	%
AA		24,879		3			49,650		6
A		157,705		19			194,455		22
BBB		205,991		23			238,768		27
BB		142,033		17			158,116		18
B		62,860		7			62,154		7
CCC		4,488		1			6,790		1
CC		5,144		1			—		—
D		48,376		6			23,842		3
NR		37,472		4			36,357		4
Total	$	852,211		100	%	$	876,864		100	%
Vintage	Book Value		Percentage			Book Value		Percentage
2007	$	110,421		13	%	$	109,619		13	%
2006		48,897		6			48,803		6
2005		62,012		7			61,627		7
2004		88,159		10			96,475		11
2003		29,725		3			29,367		3
2002		19,954		2			19,558		2
2001		19,105		2			18,984		2
2000		40,602		5			41,463		5
1999		30,320		4			30,231		3
1998		303,875		36			311,620		36
1997		73,356		9			75,650		8
1996		25,785		3			33,467		4
Total	$	852,211		100	%	$	876,864		100	%
Property Type	Book Value		Percentage			Book Value		Percentage
Retail	$	271,067		32	%	$	244,788		28	%
Office		190,975		22			198,056		23
Hotel		137,062		16			170,914		19
Multifamily		95,448		11			124,067		14
Other		68,743		9			65,126		8
Healthcare		44,251		5			38,990		4
Industrial		44,665		5			34,923		4
Total	$	852,211		100	%	$	876,864		100	%
Geographic Location	Book Value		Percentage			Book Value		Percentage
Southeast	$	232,391		27	%	$	224,774		26	%
Northeast		195,674		23			238,682		27
West		145,043		17			146,213		17
Southwest		128,389		15			118,311		13
Midwest		115,845		14			116,462		13
Northwest		19,410		2			22,329		3
Other		15,459		2			10,093		1
Total	$	852,211		100	%	$	876,864		100	%

F-17

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

As detailed in Note 2, on August 4, 2005, pursuant to the provisions of FAS 115, we decided to change the accounting classification of our then portfolio of CMBS investments from available-for-sale to held-to-maturity.

While we typically account for our CMBS investments on a held-to-maturity basis, under certain circumstances we will account for CMBS on an available-for-sale basis. As of December 31, 2007, we had one CMBS investment that we designated and accounted for on an available-for-sale basis with a face value of $7.7 million. The security earned interest at a coupon of 8.34% as of December 31, 2007. During the second quarter of 2008 we sold the security for gross proceeds of $7.7 million and recorded a gain of $374,000. Consequently, we have no securities classified as available-for-sale as of December 31, 2008.

Quarterly, we reevaluate our CMBS portfolio to determine if there has been an other-than-temporary impairment based upon our assessment of future cash flow receipts. As a result of this evaluation, under the guidance of EITF 99-20, we believe that there has been an adverse change in estimated cash flows for one of the securities in our CMBS portfolio and, therefore, recognized an other-than-temporary impairment of $900,000 as of December 31, 2008. Significant judgment of management is required in this analysis that includes, but is not limited to, making assumptions regarding the collectability of principal and interest, net of related expenses, on the underlying loans. The Company utilized Level 3 inputs to determine the other-than-temporary impairment on its CMBS, as defined under FAS 157.

Certain of our CMBS investments are carried at values in excess of their market values. This difference can be caused by, among other things, changes in interest rates, changes in credit spreads, realized/unrealized losses in the underlying securities and general market conditions. As of December 31, 2008, 71 CMBS investments with an aggregate carrying value of $816.5 million were carried at values in excess of their market values. Market value for these CMBS investments was $541.4 million as of December 31, 2008. In total, we had 77 CMBS investments with an aggregate carrying value of $852.2 million that have an estimated market value of $582.5 million (this valuation does not include the value of interest rate swaps entered into in conjunction with the purchase/financing of these investments). We determine fair values using third party dealer assessments of value, supplemented in certain cases with our own internal estimations of fair value. We regularly examine our CMBS portfolio and have determined that, despite these changes in fair value, our expectations of estimated future cash flows have only changed adversely for one security in our CMBS portfolio since our last financial report. As noted above, we have therefore recognized an other-than-temporary impairment of $900,000 for this asset.

Our estimation of cash flows expected to be generated by our CMBS portfolio is based upon an internal review of the underlying mortgage loans securing our investments both on an absolute basis and compared to our initial underwriting for each investment. Our efforts are supplemented by third party research reports, third party market assessments and our dialogue with market participants. Our assessment of cash flows combined with our ability and intent to hold our CMBS investments to maturity (at which point we expect to recover book value plus amortized discounts/premiums, which may be at maturity), is the basis for our conclusion that these investments are not impaired despite the differences between estimated fair value and book value. We attribute the difference between book value and estimated fair value to the current market dislocation and a general negative bias against structured financial products such as CMBS and CDOs.

F-18

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The following table shows the gross unrealized losses and fair value of our CMBS with unrealized losses as of December 31, 2008 that are not deemed to be other-than-temporarily impaired (in millions):

	Less Than 12 Months					Greater Than 12 Months					Total
	Estimated Fair Value		Gross Unrealized Loss			Estimated Fair Value		Gross Unrealized Loss			Estimated Fair Value		Gross Unrealized Loss
Floating Rate	$	0.2	$	(0.6	)	$	89.0	$	(82.0	)	$	89.2	$	(82.6	)
Fixed Rate		183.8		(36.1	)		268.4		(156.4	)		452.2		(192.5	)
Total	$	184.0	$	(36.7	)	$	357.4	$	(238.4	)	$	541.4	$	(275.1	)

Our CMBS portfolio includes investments in three entities that are or could potentially be construed to be variable interest entities (or VIEs) as defined in FIN 46(R). In each of these three cases, we own less than 50% of the variable interest, are not the primary beneficiary as defined in FIN 46(R) and, therefore, do not consolidate the operations of the entity in our consolidated financial statements.

As of December 31, 2008, the aggregate carrying value of these three assets recorded on our balance sheet under CMBS was $75.8 million. These entities have direct and synthetic exposure to real estate debt and securities in the aggregate amount of $1.7 billion that is financed by the issuance of CDOs to third parties. We have limited involvement in the operation of these entities and have not provided, nor are obligated to provide any financial support to any of these entities. One of the above mentioned three entities was sponsored by the Company.

F-19

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

4. Loans Receivable

Activity relating to our loans receivable for the year ended December 31, 2008 was as follows (in thousands):

	Gross Book Value	Provision for Possible Credit Losses	Net Book Value
December 31, 2007	$2,261,563	($4,000)	$2,257,563
Originations	47,128	—	47,128
Additional fundings (1)	89,773	—	89,773
Satisfactions (2)	(178,043)	—	(178,043)
Loans sold (3)	(134,444)	—	(134,444)
Principal paydowns	(77,233)	—	(77,233)
Discount/premium amortization & other(4)	(9,150)	—	(9,150)
Provision for possible credit losses	—	(63,577)	(63,577)
Realized loan losses	(10,000)	10,000	—
Reclassification to loans held-for-sale	(140,685)	—	(140,685)
December 31, 2008	$1,848,909	($57,577)	$1,791,332

(1)	Additional fundings includes capitalized interest of $7.4 million for the year ended December 31, 2008.
(2)	Includes final maturities and full repayments.
(3)	Includes loan participations sold to both related and unrelated parties. During the year ended December 31, 2008, two such participating interests were sold for an aggregate $134.4 million. Both loans were sold at cost with no gain or loss recognized.
(4)	Includes the impact of premium and discount amortization and losses, if any, as well as transfers to Real estate held-for-sale.

The following table details overall statistics for our loans receivable portfolio as of December 31, 2008 and December 31, 2007:

	December 31, 2008	December 31, 2007
Number of investments	73	81
Coupon (1) (2)	3.90%	7.69%
Yield (1) (2)	4.09%	7.80%
Maturity (years) (1) (3)	3.3	3.9

(1)	Represents a weighted average as of December 31, 2008 and December 31, 2007, respectively.
(2)	Calculations based on LIBOR of 0.44% as of December 31, 2008 and LIBOR of 4.60% as of December 31, 2007.
(3)	Represents the maturity of the investment assuming all extension options are executed.

F-20

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The tables below detail the property type and geographic distribution of the properties securing our loans receivable as of December 31, 2008 (in thousands).

	December 31, 2008				December 31, 2007
Property Type	Book Value		Percentage		Book Value		Percentage
Office	$	661,761		37%	$	963,558		42%
Hotel		688,332		38		712,145		31
Healthcare		147,397		8		147,883		7
Multifamily		123,492		7		174,490		8
Retail		67,385		4		85,072		4
Other		102,965		6		174,415		8
Total	$	1,791,332		100%	$	2,257,563		100%
Geographic Location	Book Value		Percentage		Book Value		Percentage
Northeast	$	560,071		31%	$	993,069		44%
Southeast		387,500		22		318,463		14
Southwest		295,490		16		394,359		17
West		235,386		13		265,899		12
Northwest		91,600		5		111,002		5
Midwest		28,408		2		48,497		2
International		122,387		7		67,205		3
Diversified		70,490		4		59,069		3
Total	$	1,791,332		100%	$	2,257,563		100%

Quarterly, management reevaluates the provision for possible credit losses based upon our current portfolio of loans. Each loan in our portfolio is evaluated using our loan risk rating system which considers loan-to-value, debt yield, cash flow stability, exit plan, loan sponsorship, loan structure and other factors necessary to assess the likelihood of delinquency or default. If we believe that there is a potential for delinquency or default, a downside analysis is prepared to estimate the value of the collateral underlying our loan, and a provision is recorded taking into consideration both the likelihood of delinquency or default and the estimated value of the underlying collateral.

As of December 31, 2008, we had five loans with an aggregate net book balance of $24.5 million ($82.1 million principal balance, net of $57.6 million of reserves) that were classified as non-accrual. These include two loans with an aggregate principal balance of $20.0 million which are making current interest payments, against which we have recorded a $7.6 million reserve, as well as three loans which are delinquent on interest payments with an aggregate principal balance of $62.0 million against which we have recorded a $50.0 million reserve.

During the fourth quarter of 2008, the Company and its co-lender foreclosed on a loan secured by a multifamily property, and took title to the collateral securing the original loan. At the time the foreclosure occurred, the loan had a book balance of $11.9 million which was reclassified as Real estate held-for-sale on the consolidated balance sheet as of December 31, 2008 to reflect our ownership interest in the property. We have recorded a $2.0 million impairment to reflect the property at fair value, less expected sales costs. The Company utilized Level 3 inputs to determine the impairment on Real estate held-for-sale, as defined under FAS 157.

As of December 31, 2007, we had one non-performing loan which was on non-accrual status with a principal balance of $10.0 million, against which we had recorded a $4.0 million reserve. During the second quarter of 2008, this loan was deemed unrecoverable and we wrote-off the entire $10.0 million principal balance and reversed the pre-existing reserve. Simultaneously, $6.0 million of non-recourse financing on the asset was forgiven by the lender.

F-21

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

In some cases our loan originations are not fully funded at closing, creating an obligation for us to make future fundings, which we refer to as Unfunded Loan Commitments. Typically, Unfunded Loan Commitments are part of construction and transitional loans. As of December 31, 2008, our nine Unfunded Loan Commitments totaled $54.2 million. Of the total gross Unfunded Loan Commitments, $44.0 million will only be funded when and/or if the borrower meets certain performance hurdles with respect to the underlying collateral. As a result of the restructuring of our debt obligations described in Note 22 to the consolidated financial statements, one loan with an Unfunded Loan Commitment of $30.6 million has been sold subsequent to December 31, 2008, in conjunction with the termination of one of our repurchase agreements. After giving effect to the settlement of this transaction, we have Unfunded Loan Commitments of $23.6 million.

As of December 31, 2007, our eleven Unfunded Loan Commitments totaled $177.0 million.

There are no loans to a single borrower or to related groups of borrowers that exceeded 10% of total assets. Approximately 21% of all performing loans are secured by properties in New York state.

5. Loans Held-for-Sale

As of December 31, 2008, we have four loans with an aggregate gross carrying value of $140.4 million and a net carrying value of $92.2 million classified as held-for-sale.

The following table details overall statistics for our loans held-for-sale as of December 31, 2008 and December 31, 2007:

	December 31, 2008	December 31, 2007
Number of investments	4	―
Coupon (1) (2)	2.54%	N/A
Yield (1) (2)	2.62%	N/A
Maturity (years) (1) (3)	3.2	N/A

(1)	Represents a weighted average as of December 31, 2008 based on gross carrying value, before any valuation allowance.
(2)	Calculations based on LIBOR of 0.44% as of December 31, 2008.
(3)	Represents the maturity of the investment assuming all extension options are executed.

Loans held-for-sale are carried at the lower of our amortized cost basis and market value. As of December 31, 2008, we recorded a valuation allowance of $48.3 million against these loans. The Company determined the valuation allowance on loans held-for-sale based upon the transactions which have occurred subsequent to December 31, 2008, as described in Note 22. Although not a quoted market price, the Company believes this determination is analogous to a Level 1 input, as defined under FAS 157.

6. Total Return Swaps

Total return swaps are derivative contracts in which one party agrees to make payments that replicate the total return of a defined underlying asset, typically in return for another party agreeing to bear the risk of performance of the defined underlying asset. Under total return swaps, we bear the risk of performance of the underlying asset and receive payments from our counterparty as compensation. In effect, these total return swaps allow us to receive the leveraged economic benefits of asset ownership without our acquiring, or our counterparty selling, the actual underlying asset. Our total return swaps reference commercial real estate loans and contain a put provision whereby our counterparty has the right to require us to buy the entire reference loan at its par value under certain reference loan performance scenarios. The put obligation imbedded in these arrangements constitutes a recourse obligation for us to perform under the terms of the contract.

F-22

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Activity relating to our total return swaps for the year ended December 31, 2008 was as follows (in thousands):

						Weighted Average
	Fair Market Value (Book Value)	Cash Collateral		Reference/Loan Participation	Number of Investments	Yield	Maturity (Years)
December 31, 2007	—		—	$20,000	1	—	—
Originations	—		—	—	—	—	—
Repayments	—		—	20,000	1	—	—
December 31, 2008	$ —		$ —	$ —	—	—	—

The total return swaps are treated as non-hedge derivatives for accounting purposes and, as such, changes in their market value are recorded through the consolidated statements of operations. As of December 31, 2008, the reference/loan participation was satisfied.

7. Equity Investment in Unconsolidated Subsidiaries

Our equity investments in unconsolidated subsidiaries consist primarily of our co-investments in investment management vehicles that we sponsor and manage. As of December 31, 2008, we had co-investments in two such vehicles, Fund III, in which we have a 4.7% investment, and CTOPI, in which we have a 4.6% investment. In addition to our co-investments, we record capitalized costs associated with these vehicles in equity investments in unconsolidated subsidiaries. Activity relating to our equity investment in unconsolidated subsidiaries for the year ended December 31, 2008 was as follows (in thousands):

	Fund III			CTOPI			Other			Total
Equity Investment
Beginning balance	$	923		$	(60	)	$	35		$	898
Contributions		—			3,473			—			3,473
Loss from equity investments		(326	)		(1,631	)		(31	)		(1,988	)
Ending balance	$	597		$	1,782		$	4		$	2,383
Capitalized Costs
Beginning balance	$	79		$	—		$	—		$	79
Amortization of capitalized costs		(79	)		—			—			(79	)
Ending balance	$	—		$	—		$	—		$	—
Total balance	$	597		$	1,782		$	4		$	2,383

In accordance with the management agreements with Fund III and CTOPI, CTIMCO may earn incentive compensation when certain returns are achieved for the shareholders/partners of Fund III and CTOPI, which will be accrued if and when earned. During the years ended December 31, 2008 and December 31, 2007 we recorded $0 and $5.2 million of incentive compensation from these investments, respectively.

F-23

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Activity relating to our equity investment in unconsolidated subsidiaries for the year ended December 31, 2007 was as follows (in thousands):

	Fund II			Fund III			Bracor			CTOPI			Other			Total
Equity Investment
Beginning balance	$	635		$	2,929		$	5,675	(1)	$	—		$	573		$	9,812
Contributions		—			—			24,122			—			—			24,122
Loss from equity investments		(152	)		(119	)		(1,237	)		(60	)		(538	)		(2,106	)
Sales proceeds		—			—			(43,637	)		—			—			(43,637	)
Gain on sales		—			—			15,077			—			—			15,077
Distributions		(483	)		(1,887	)		—			—			—			(2,370	)
Ending balance	$	—		$	923		$	—		$	(60	)	$	35		$	898
Capitalized Costs
Beginning balance	$	1,264		$	368		$	41		$	—		$	—		$	1,673
Capitalized costs		—			—			(41	)		—			—			(41	)
Amortization of capitalized costs		(1,264	)		(289	)		—			—			—			(1,553	)
Ending balance	$	—		$	79		$	—		$	—		$	—		$	79
Total balance	$	—		$	1,002		$	—		$	(60	)	$	35		$	977

(1)    Includes $258,000 of additional basis that represents a difference between our share of net assets at Bracor and our carrying value.

8.Prepaid Expenses and Other Assets

Prepaid expenses and other assets consists of the following as of December 31, 2008 and December 31, 2007 (in thousands):

	December 31, 2008		December 31, 2007
Deferred financing costs, net	$	8,342	$	12,934
Common equity - CT Preferred Trust		3,875		3,875
Goodwill		2,235		2,235
Prepaid rent/security deposit		928		925
Prepaid expenses		1,044		1,355
Other assets		524		552
	$	16,948	$	21,876

Deferred financing costs include costs related to our debt obligations and are amortized using the effective interest method or a method that approximates the effective interest method, as applicable, over the life of the related debt obligations. As of December 31, 2008 deferred financing costs were $8.3 million, net of accumulated amortization.

Our ownership interests in CT Preferred Trust I and CT Preferred Trust II, the statutory trust issuers of trust securities backed by our junior subordinated debentures, are accounted for using the equity method due to our determination that they are variable interest entities in which we are not the primary beneficiary under FIN 46(R).

F-24

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

In June, 2007, we purchased a healthcare loan origination platform for $2.6 million ($1.9 million in cash and $700,000 in common stock) and recorded $2.2 million of goodwill in connection with the acquisition. In December, 2008, we transferred the ownership interest in the healthcare loan origination platform back to its original owners.Under the guidance of FASB Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”, or FAS 142, we determined the applicable reporting unit for goodwill to be our investment management segment. As of December 31, 2008, we reviewed goodwill and determined that no impairment exists at the reporting unit.

9. Debt Obligations

Subsequent to December 31, 2008, certain of our debt obligations have been restructured, terminated or otherwise satisfied, as discussed in Note 22.

As of December 31, 2008 and December 31, 2007, we had $2.1 billion and $2.3 billion of total debt outstanding, respectively. The balances of each category of debt, their respective coupons and all-in effective costs, including the amortization of fees and expenses were as follows (in thousands):

Debt Obligation	December 31, 2008 Book Balance		December 31, 2007 Book Balance		Coupon(1)(2)			All-In Cost(1)(2)			Maturity Date(2)(3)	Facility Amount(2)
Repurchase obligations and secured debt
JPMorgan	$	336,271	$	582,664		1.93	%		1.99	%	October 23, 2010	$	336,271
Morgan Stanley(4)		182,937		142,495		2.33			2.35		August 6, 2009		300,000
Goldman Sachs		88,282		92,796		1.66			2.13		June 29, 2009		200,000
Citigroup(5)		63,830		55,708		1.77			2.01		February 7, 2011		250,000
Lehman Brothers		18,014		6,000		1.94			1.94		June 11, 2013		18,014
UBS		9,720		10,944		1.69			1.73		October 29, 2010		9,720
Bank of America		—		21,250		—			—		N/A		—
Total repurchase obligations and secured debt	$	699,054	$	911,857		1.98	%		2.10	%	June 2, 2010	$	1,114,005
Collateralized Debt Obligations (CDOs)
CDO I	$	252,045	$	252,778		1.05	%		1.52	%	April 20, 2011	$	252,045
CDO II		298,913		298,913		0.93			1.18		April 17, 2012		298,913
CDO III		257,515		261,654		5.24			5.27		December 10, 2012		255,984
CDO IV(6)		347,562		378,954		1.04			1.15		November 30, 2012		347,562
Total CDO's	$	1,156,035	$	1,192,299		1.95	%		2.15	%	May 29, 2012	$	1,154,504
Senior unsecured credit facility - WestLB	$	100,000	$	75,000		2.19	%		2.51	%	March 21, 2009	$	100,000
Junior subordinated debentures(7)	$	128,875	$	128,875		7.20	%		7.35	%	December 5, 2036	$	128,875
Total/Weighted Average	$	2,083,964	$	2,308,031		2.29	%		3.48	%(8)	February 7, 2013	$	2,497,384

___________________________________________

(1) Floating rate debt obligations assume LIBOR at December 31, 2008 of 0.44%.

(2) Information is as of December 31, 2008 and does not give effect to the subsequent events described in Note 22.

(3) Maturity dates for CDOs represent a weighted average of expected principal repayments to the respective bondholders.

(4) Comprised of $155 million in obligations maturing in July 2009 and $28 million in obligations maturing in December 2009.

(5) Comprised of $36 million in obligations maturing in July 2010 and $28 million in obligations maturing in October 2011.

(6) Comprised of $334 million of floating rate notes sold and $14 million of fixed rate notes sold at December 31, 2008.

(7) Comprised of $77 million of trust preferred securities maturing in April 2037 and $52 million of trust preferred securities maturing in April 2036.

(8) Includes the effective cost of interest rate swaps of 1.01% as of December 31, 2008.

F-25

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Repurchase Obligations and Secured Debt

Our total borrowings as of December 31, 2008 under master repurchase agreements, asset specific repurchase arrangements and our loan and security agreement were $699.1 million. Loans and CMBS with a carrying value of $1.2 billion are pledged as collateral for our repurchase agreements.

In April 2008, we terminated the $6.0 million loan-specific repurchase agreement with Lehman Brothers related to the SunCal loan, eliminating our obligation thereunder. According to the termination agreement, Lehman Brothers retained possession of the loan and we extinguished the debt for no further consideration. As a result of this transaction we recorded a $6.0 million gain on extinguishment of debt on the consolidated statements of operations.

In May 2008, we entered into a new loan and security agreement with Lehman Brothers. The agreement provides for an $18.0 million loan to us with a maturity date in September 2013. The loan is designed to finance an individual asset on a recourse basis at LIBOR plus 1.50%.

In June 2008, we amended our master repurchase agreements with the former Bear Stearns entities by extending the termination date of each obligation to October 2008, making them concurrent with the existing termination date under our master repurchase agreement with JPMorgan. Furthermore, in October 2008, we extended $355 million of master repurchase agreements with JP Morgan (and the legacy Bear Stearns subsidiaries) to October 23, 2010. The weighted average advance rate under the agreements is 79% and pricing is LIBOR plus 1.49% on a blended basis. In connection with the extension, we eliminated the excess availability under these agreements and agreed to reduce the outstanding borrowings by $30 million in return for cushion from future margin calls.

In June 2008, we terminated our master repurchase agreement with Bank of America, which was originally designed to finance, on a recourse basis, assets designated for our second CDO. We had no obligations outstanding under the agreement at the time of termination and the termination eliminated the payment of unused fees associated with the line.

In July 2008, we extended the availability period under our $250 million master repurchase agreement with Citigroup to July 28, 2009. As part of the extension agreement, the repurchase dates for certain outstanding borrowings were extended to July 29, 2010 with the remainder retaining their October 11, 2011 final maturities. The weighted average maturity of our repurchase obligations with Citigroup is February 7, 2011.

In July 2008, we extended the purchase period of our $300 million master repurchase agreement with Morgan Stanley to July 29, 2009. We also terminated an un-utilized $50 million master repurchase facility with Morgan Stanley which was originally designed to warehouse finance CDO-eligible assets. The weighted average maturity of our repurchase obligations with Morgan Stanley is August 6, 2009.

Subsequent to December 31, 2008, certain of our repurchase obligations and secured debt have been restructured, terminated or otherwise satisfied, as discussed in Note 22.

Collateralized Debt Obligations

As of December 31, 2008, we had CDOs outstanding from four separate issuances with a total face value of $1.2 billion. Our CDOs are financing vehicles for our assets and, as such, are consolidated on our balance sheet representing the amortized sales price of the securities we sold to third parties. Our one reinvesting CDO provides us with $298.9 million of debt financing at a cash cost of LIBOR plus 0.49% (0.93% at December 31, 2008) and an all-in effective interest rate (including the amortization of issuance costs) of LIBOR plus 0.74% (1.18% at December 31, 2008). Our three static CDOs provide us with $857.1 million of financing with a cash cost of 2.30% and an all-in effective interest rate of 2.50% at December 31, 2008. On a combined basis, our CDOs provide us with $1.2 billion of non-recourse, non-mark-to-market, index matched financing at a weighted average cash cost of 0.53% over the applicable indices (1.95% at December 31, 2008) and a weighted average all-in cost of 0.73% over the applicable indices (2.15% at December 31, 2008). During the year, we received two upgrades to classes of our second CDO, CT CDO II and four downgrades to classes of our third CDO, CT CDO III.

F-26

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

CDO I and CDO II each have interest coverage and overcollateralization tests, which if breached provide for hyper-amortization of the senior notes sold by a redirection of cash flow that would otherwise have been paid to the subordinate classes, some of which are owned by the Company. If such tests are in breach for six consecutive months, the reinvesting feature of the CDO is suspended. The hyper-amortization would cease once the test is back in compliance. The overcollateralization tests are a function of impairments to the CDO collateral. Furthermore, all four of our CDOs provide for the re-classification of interest proceeds from impaired collateral as principal proceeds. Subsequent to December 31, 2008, we were informed by our CDO trustee of impairments due to rating agency downgrades of certain of the CMBS collateral interests in all of our CDOs. The impairments resulted in a breach of the CDO II overcollateralization test and the reclassification of interest proceeds from certain CMBS collateral as principal proceeds in all four of our CDOs.

Senior Unsecured Credit Facility

In March 2007, we closed a $50.0 million senior unsecured revolving credit facility with WestLB AG, which was amended in September 2007 to increase the size to $100.0 million and add new lenders to the syndicate. In March 2008, we exercised our term-out option under the agreement, extending the maturity date of the $100 million principal balance outstanding to March 2009 as a non-revolving term loan. The loan bears interest at a cost of LIBOR plus 1.75% (LIBOR plus 2.07% on an all-in basis).

Subsequent to December 31, 2008, our senior unsecured credit facility has been restructured as described in Note 22.

Junior Subordinated Debentures

As of December 31, 2008, we had a total of $128.9 million of junior subordinated debentures outstanding (securing $125 million of trust preferred securities sold to third parties). Junior subordinated debentures are comprised of two issuances of debentures, $77 million of debentures (securing $75 million of trust preferred securities) issued in March 2007 and $52 million of debentures (securing $50 million of trust preferred securities) issued in 2006. On a combined basis the securities provide us with $125 million of financing at a cash cost of 7.20% and an all-in effective rate of 7.35%.

Our interests in the two statutory trust issuers, CT Preferred Trust I and CT Preferred Trust II, are accounted for using the equity method and the assets and liabilities are not consolidated into our financial statements due to our determination that CT Preferred Trust I and CT Preferred Trust II are variable interest entities under FIN 46(R) and that we are not the primary beneficiary of the entities. Interest on the junior subordinated debentures is included in interest and related expenses on our consolidated statements of operations while the junior subordinated debentures are presented as a separate item in our consolidated balance sheet.

On March 16, 2009 we issued new junior subordinated debentures to holders of a majority of our trust preferred securities at modified terms in exchange for their securities, as detailed in Note 22 to the consolidated financial statements.

10. Participations Sold

Participations sold represent interests in certain loans that we originated and subsequently sold to CT Large Loan 2006, Inc. (a fund that we manage) and third parties. We present these sold interests as both assets and liabilities (in equal amounts) in conformity with GAAP on the basis that these arrangements do not qualify as sales under FAS 140. As of December 31, 2008, we had five such participations sold with a total book balance of $292.7 million at a weighted average coupon of LIBOR plus 3.27% (3.71% at December 31, 2008) and a weighted average yield of LIBOR plus 3.27% (3.71% at December 31, 2008). The income earned on the loans is recorded as interest income and an identical amount is recorded as interest expense on the consolidated statements of operations.

In 2007, the Company sub-participated a $73.4 million participation in a loan to CT Large Loan 2006, Inc. The Company recorded the sub-participation as a secured borrowing as it did not meet at least one of the criteria under FAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. In July 2008, the Company and CT Large Loan 2006, Inc. agreed to terminate the sub-participation agreement and release themselves from any further obligation to each other with respect to such sub-participation agreement. As a result of this transaction, loans receivable and participations sold decreased by $73.4 million during the third quarter of 2008.

F-27

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

As of December 31, 2007, we had seven such participations sold with a total book balance of $408.4 million at a weighted average coupon of LIBOR plus 3.38% (7.98% at December 31, 2007) and a weighted average yield of LIBOR plus 3.41% (8.01% at December 31, 2007).

11. Derivative Financial Instruments

To manage interest rate risk, we typically employ interest rate swaps or other arrangements, to convert a portion of our floating rate debt to fixed rate debt in order to index match our assets and liabilities. The net payments due under these swap contracts are recognized as interest expense over the life of the contracts.

The following table summarizes the notional and fair values of our derivative financial instruments as of December 31, 2008. The notional value provides an indication of the extent of our involvement in the instruments at that time, but does not represent exposure to credit or interest rate risk (in thousands):

Hedge	Type	Counterparty	Notional Amount		Interest Rate			Maturity	Fair Value
Swap	Cash Flow Hedge	Swiss RE Financial	$	279,681		5.10	%	2015	(	$29,383	)
Swap	Cash Flow Hedge	Bank of America		73,626		4.58		2014		(4,526	)
Swap	Cash Flow Hedge	Morgan Stanley		18,439		3.95		2011		(1,053	)
Swap	Cash Flow Hedge	JP Morgan Chase		18,091		5.14		2014		(2,867	)
Swap	Cash Flow Hedge	JP Morgan Chase		16,894		4.83		2014		(2,550	)
Swap	Cash Flow Hedge	JP Morgan Chase		16,377		5.52		2018		(3,827	)
Swap	Cash Flow Hedge	JP Morgan Chase		12,310		5.02		2009		(302	)
Swap	Cash Flow Hedge	Bank of America		11,365		5.05		2016		(1,366	)
Swap	Cash Flow Hedge	JP Morgan Chase		7,062		5.11		2016		(706	)
Swap	Cash Flow Hedge	Bank of America		5,104		4.12		2016		(430	)
Swap	Cash Flow Hedge	JP Morgan Chase		3,293		5.45		2015		(663	)
Swap	Cash Flow Hedge	JP Morgan Chase		2,856		5.08		2011		(241	)
Swap	Cash Flow Hedge	Morgan Stanley		780		5.31		2011		(60	)
Total/Weighted Average			$	465,878		4.97	%	2015	(	$47,974	)

As of December 31, 2008, the derivative financial instruments were reported at their fair value of $48.0 million as interest rate hedge liabilities. Income and expense associated with these instruments is recorded as interest expense on our consolidated statements of operations. The amount of hedge ineffectiveness was not material during any of the periods presented.

Our counterparties in these transactions are financial institutions and we are dependent upon the health of these counterparties and a functioning interest rate derivative market in order to effectively execute our hedging strategy.

F-28

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The following table details the fair value measurements of our derivative financial instruments as of December 31, 2008 in accordance with FAS 157 (in thousands):

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in					Significant
				Active Markets for		Significant Other			Unobservable
	Fair Value at			Identical Assets		Observable Inputs			Inputs
Description	December 31, 2008			(Level 1)		(Level 2)			(Level 3)
Interest rate hedge liabilities	$	(47,974	)	$	—	$	(47,974	)	$	—
Total	$	(47,974	)	$	—	$	(47,974	)	$	—

12. Shareholders’ Equity

Authorized Capital

We have the authority to issue up to 200,000,000 shares of stock, consisting of (i) 100,000,000 shares of class A common stock and (ii) 100,000,000 shares of preferred stock. The board of directors is generally authorized to issue additional shares of authorized stock without shareholder approval.

Common Stock

Class A common stock are voting shares entitled to vote on all matters presented to a vote of shareholders, except as provided by law or subject to the voting rights of any outstanding preferred stock. Holders of record of shares of class A common stock on the record date fixed by our board of directors are entitled to receive such dividends as may be declared by the board of directors subject to the rights of the holders of any outstanding preferred stock. A total of 22,071,349 shares of common stock were issued and outstanding as of December 31, 2008.

We did not repurchase any of our common stock during the years ended December 31, 2008 and December 31, 2007 other than the 10,103 shares we acquired pursuant to elections by incentive plan participants to satisfy tax withholding obligations through the surrender of shares equal in value to the amount of the withholding obligation incurred upon the vesting of restricted stock.

Subsequent to December 31, 2008, in connection with the restructuring of our debt obligations described in Note 22, we issued, or irrevocably committed to issue, 3,479,691 million warrants to purchase our class A common stock.

Preferred Stock

We have 100,000,000 shares of preferred stock authorized and have not issued any shares of preferred stock since we repurchased all of the previously issued and outstanding preferred stock in 2001.

F-29

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Dividends

We generally intend to distribute each year substantially all of our taxable income (which does not necessarily equal net income as calculated in accordance with generally accepted accounting principles) to our shareholders so as to comply with the REIT provisions of the Internal Revenue Code. If necessary for REIT qualification purposes, we may need to distribute any taxable income remaining after giving effect to the distribution of the final regular quarterly dividend each year, together with the first regular quarterly dividend payment of the following taxable year or, at our discretion, in a separate dividend distributed prior thereto. We refer to these dividends as special dividends. As required by covenants in our restructured debt obligations, our cash dividend distributions are restricted to the minimum amount necessary to maintain our status as a REIT. Moreover, such covenants, taking into consideration the recent IRS ruling, “Revenue Procedure 2008-68”, which allow REITs to distribute up to 90% of their dividends in the form of stock for tax years ending on or before December 31, 2009, require us to make any distribution in stock to the extent permitted.

In addition to the foregoing restrictions, our dividend policy remains subject to revision at the discretion of our board of directors. All distributions will be made at the discretion of our board of directors and will depend upon our taxable income, our financial condition, our maintenance of REIT status and other factors as our board of directors deems relevant. Of the total $2.20 of dividends declared in 2008, $0.28 represents ordinary income, $0.01 represents qualified dividends, and $1.91 represents a return of capital. All dividends declared in 2007 were ordinary income.

Earnings Per Share

The following table sets forth the calculation of Basic and Diluted EPS for the years ended December 31, 2008 and 2007 (in thousands, except share and per share data):

	Year ended December 31, 2008								Year ended December 31, 2007
	Net Loss			Shares		Per Share Amount			Net Income		Shares		Per Share Amount
Basic EPS:
Net (loss)/earnings allocable to common stock	$	(57,538	)		21,098,935	$	(2.73	)	$	84,366		17,569,690	$	4.80
Effect of Dilutive Securities:
Options outstanding for the purchase of common stock		—			—					—		120,576
Diluted EPS:
Net (loss)/earnings per share of common stock and assumed conversions	$	(57,538	)		21,098,935	$	(2.73	)	$	84,366		17,690,266	$	4.77

F-30

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The following table sets forth the calculation of Basic and Diluted EPS for the year ended December 31, 2006 (in thousands, except share and per share data):

	Year ended December 31, 2006
	Net Income	Shares	Per Share Amount
Basic EPS:
Net earnings allocable to common stock	$54,067	15,754,655	$3.43
Effect of Dilutive Securities:
Options outstanding for the purchase of common stock	—	168,742
Diluted EPS:
Net earnings per share of common stock and assumed conversions	$54,067	15,923,397	$3.40

13. General and Administrative Expenses

General and administrative expenses for the years ended December 31, 2008, 2007 and 2006 consisted of (in thousands):

	Years ended December 31,
	2008	2007	2006
Salaries and benefits	$12,603	$14,480	$11,450
Employee stock based compensation	3,478	4,606	3,961
Operating and other costs	3,501	3,212	2,487
Professional services	5,297	5,094	4,779
Employee promote compensation	78	2,564	398
Total	$24,957	$29,956	$23,075

F-31

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

14. Income Taxes

We made an election to be taxed as a REIT under Section 856(c) of the Internal Revenue Code of 1986, as amended, commencing with the tax year ending December 31, 2003. As a REIT, we generally are not subject to federal, state, and local income taxes except for the operations of our taxable REIT subsidiary, CTIMCO. To maintain qualification as a REIT, we must distribute at least 90% of our REIT taxable income to our shareholders and meet certain other requirements. If we fail to qualify as a REIT, we may be subject to material penalties such as federal, state and local income tax on our taxable income at regular corporate rates. As of December 31, 2008 and 2007, we were in compliance with all REIT requirements.

In 2008 and 2007, CTIMCO paid no federal taxes and paid small amounts of state and local taxes. As of December 31, 2008, we have net operating losses, or NOLs, available to be carried forward and utilized in future periods.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax reporting purposes.

The significant components of deferred tax assets and liabilities were as follows:

	Years ended December 31,
	2008			2007
NOL carryforwards	$	2,431		$	1,722
Stock-based compensation expense		321			4,125
Intangible assets		(1,025	)		—
Other		482			716
Deferred tax asset		2,209			6,563
Valuation allowance		(503	)		(2,904	)
Net deferred tax asset	$	1,706		$	3,659

15. Employee Benefit Plans

Employee 401(k) and Profit Sharing Plan

We sponsor a 401(k) and profit sharing plan that allows eligible employees to contribute up to 15% of their salary into the plan on a pre-tax basis, subject to annual limits. We have committed to make contributions to the plan equal to 3% of all eligible employees’ compensation subject to annual limits and may make additional contributions based upon earnings. Our contribution expense for the years ended December 31, 2008, 2007 and 2006, was $228,000, $198,000, and $118,000, respectively.

Equity Incentive Plans

We had four benefit plans in effect as of December 31, 2008: (1) the second amended and restated 1997 long-term incentive stock plan, or 1997 Employee Plan, (2) the amended and restated 1997 non-employee director stock plan, or 1997 Director Plan, (3) the amended and restated 2004 long-term incentive plan, or 2004 Plan, and (4) the 2007 long-term incentive plan, or 2007 Plan. The 1997 plans expired in 2007 and no new awards may be issued under them and no further grants will be made under the 2004 Plan. Under the 2007 Plan, a maximum of 700,000 shares of class A common stock may be issued. As of December 31, 2008, there were 577,367 shares available under the 2007 Plan.

F-32

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Activity under these four plans for the year ended December 31, 2008 is summarized in the table below in share and share equivalents:

Benefit Type	1997 Employee Plan		1997 Director Plan		2004 Plan		2007 Plan	Total
Options(1)
Beginning Balance		223,811		16,667		—	—	240,478
Expired		(53,334)		(16,667)		—	—	(70,001)
Ending Balance		170,477		—		—	—	170,477
Restricted Stock(2)
Beginning Balance		—		—		423,931	—	423,931
Granted		—		—		—	44,550	44,550
Vested		—		—		(133,384)	—	(133,384)
Forfeited		—		—		(910)	(2,990)	(3,900)
Ending Balance		—		—		289,637	41,560	331,197
Stock Units(3)
Beginning Balance		—		80,017		—	14,570	94,587
Granted/deferred		—		—		—	120,864	120,864
Ending Balance		—		80,017		—	135,434	215,451
Total Outstanding Shares		170,477		80,017		289,637	176,994	717,125

____________________________

(1) All options are fully vested as of December 31, 2008.

(2) Comprised of both performance based awards that vest upon the attainment of certain common equity return thresholds and time based awards that vest based upon an employee’s continued employment on vesting dates.

(3) Stock units are granted to certain members of our board of directors in lieu of cash compensation for services and in lieu of dividends earned on previously granted stock units.

The following table summarizes the outstanding options as of December 31, 2008:

Exercise Price per Share	Options Outstanding				Weighted Average Exercise Price per Share				Weighted Average Remaining Life (in Years)
	1997 Employee		1997 Director		1997 Employee		1997 Director		1997 Employee		1997 Director
	Plan		Plan		Plan		Plan		Plan		Plan
$10.00 - $15.00		43,530		—	$	13.41	$	—		2.26		—
$15.00 - $20.00		126,947		—		16.38		—		2.77		—
Total/Weighted Average		170,477		—	$	15.62	$	—		2.64		—

In addition to the equity interests detailed above, we have granted percentage interests in the incentive compensation received by us from the private equity funds. As of December 31, 2008, we had granted, net of forfeitures, 43% of the Fund III incentive compensation received by us.

F-33

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

A summary of the unvested restricted shares as of and for the year ended December 31, 2008 was as follows:

	Restricted Shares
	Shares	Grant Date Fair Value
Unvested at January 1, 2008	423,931	$30.96
Granted	44,550	27.44
Vested	(133,384)	various
Forfeited	(3,900)	various
Unvested at December 31, 2008	331,197	$30.61

A summary of the unvested restricted shares as of and for the year ended December 31, 2007 was as follows:

	Restricted Shares
	Shares	Grant Date Fair Value
Unvested at January 1, 2007	480,967	$29.56
Granted	23,015	51.25
Vested	(80,051)	28.38
Forfeited	—	—
Unvested at December 31, 2007	423,931	$30.96

The total fair value of restricted shares which vested during the years ended December 31, 2008 and 2007 was $2.2 million and $3.3 million, respectively.

16. Fair Values of Financial Instruments

The FASB Statement of Financial Accounting Standards No. 107, “Disclosures about Fair Value of Financial Instruments”, or FAS 107, requires disclosure of fair value information about financial instruments, whether or not recognized in the statement of financial position, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based upon estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and the estimated future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. FAS 107 excludes certain financial instruments and all non-financial instruments from our disclosure requirements. Accordingly, the aggregate fair value amounts do not represent the underlying value of the Company.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and cash equivalents: The carrying amount of cash on hand and money market funds is considered to be a reasonable estimate of fair value.

Commercial mortgage backed securities: These investments are presented on a held-to-maturity basis and not at fair value. The fair values were obtained from a securities dealer or are based on cash flow or other valuation models for securities where management considers the market to be severely dislocated and not indicative of fair value.

F-34

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Loans receivable, net: These instruments are presented at the lower of cost or market value and not at fair value. The fair values were estimated by using current institutional purchaser yield requirements for loans with similar credit characteristics.

Loans held-for-sale: Loans which have been reclassified as held-for-sale are carried at fair value.

Interest rate swap agreements: These instruments are presented at fair value. The fair value was obtained from a third party valuation.

Repurchase obligations: The repurchase obligations bear interest at rates that may or may not be available in the market currently. Given, most importantly, the short term nature of these investments, the carrying value is a reasonable estimate of fair value.

Collateralized debt obligations: These obligations are presented on the basis of proceeds received at issuance and not at fair value.The fair value was estimated based upon the amount at which similar placed financial instruments would be valued today.

Senior unsecured credit facility: This instrument is presented on the basis of total cash proceeds borrowed, and not at fair value. The fair value was estimated based on the interest rate that is currently available in the market for similar credit facilities.

Junior subordinated debentures: These instruments bear interest at fixed rates. The fair value was obtained by calculating the present value based on current market interest rates.

 The carrying amounts of all other assets and liabilities approximate the fair value except as follows (in thousands):

	December 31, 2008						December 31, 2007
	Carrying Amount		Face Value		Fair Value		Carrying Amount		Face Value		Fair Value
Financial assets:
CMBS	$	852,211	$	883,958	$	582,478	$	876,864	$	916,410	$	830,411
Loans receivable		1,791,332		1,855,432		1,589,929		2,257,563		2,266,184		2,226,445
Financial liabilities:
Repurchase obligations		699,054		699,054		699,054		911,857		911,857		911,857
CDOs		1,156,035		1,154,504		441,245		1,192,299		1,190,448		1,067,513
Sr. unsecured credit facility		100,000		100,000		94,155		75,000		75,000		75,000
Jr. subordinated debentures		128,875		128,875		80,099		128,875		128,875		98,863
Participations sold		292,669		292,734		258,416		408,351		408,434		396,900

17. Supplemental Disclosures for Consolidated Statements of Cash Flows

Interest paid on our outstanding debt for 2008, 2007 and 2006 was $110.8 million, $161.2 million and $102.0 million, respectively. Income taxes recovered by us in 2008, 2007 and 2006 were $702,000, $1.5 million and $583,000, respectively. Non-cash investing and financing activity of $(115.7) million and $198.9 million for 2008 and 2007, respectively, resulted from paydowns on the loans we classify as participations sold.

18. Transactions with Related Parties

On November 9, 2006, we commenced our CT High Grade MezzanineSM investment management initiative and entered into three separate account agreements with affiliates of W. R. Berkley Corporation, or WRBC, for an aggregate of $250 million. On July 25, 2007, we amended the agreements to increase the aggregate commitment of the WRBC affiliates to $350 million. Pursuant to these agreements, we invest, on a discretionary basis, capital on behalf of WRBC in low risk commercial real estate mortgages, mezzanine loans and participations therein. The separate accounts are entirely funded with committed capital from WRBC and are managed by a subsidiary of CTIMCO. CTIMCO earns a management fee equal to 0.25% per annum on invested assets.

F-35

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

On April 27, 2007, we purchased a $20 million subordinated interest in a mortgage from a dealer. Proceeds from the mortgage financing provide for the construction and leasing of an office building in Washington, D.C. that is owned by a joint venture. WRBC has a substantial economic interest in one of the joint venture partners.

WRBC beneficially owned approximately 17.6% of our outstanding class A common stock as of February 28, 2009, and a member of our board of directors is an employee of WRBC.

On March 28, 2008 we announced the closing of our public offering of 4,000,000 shares of our class A common stock. We received net proceeds of approximately $113 million. Morgan Stanley & Co. Incorporated acted as the sole underwriter of the offering. Affiliates of Samuel Zell, our chairman of the board, and WRBC purchased a number of shares in the offering sufficient to maintain their pro rata ownership interests in the company.

Until 2007, we paid Equity Group Investments, L.L.C. and Equity Risk Services, Inc., affiliates under common control of the chairman of the board of directors, for certain corporate services provided to us. These services include consulting on insurance matters, risk management, and investor relations. During the year ended December 31, 2006 we incurred $45,000 of expenses in connection with these services. In July 2008, CTOPI, a private equity fund that we manage, held its final closing completing capital raise with $540 million total equity commitments. EGI-Private Equity II, L.L.C., an affiliate under common control of the chairman of the board of directors, owns a 3.7% limited partner interest in CTOPI. In 2008 we recorded $8.9 million in fees from CTOPI, $351,000 of which were attributable to EGI Private Equity II, L.L.C.

During the year ended December 31, 2008, CTOPI purchased $37.1 million face value of our CDO debt in the open market for $21.1 million.

Affiliates of Samuel Zell own interests in Fund III and CTOPI, two investment management vehicles that we manage and within which we also have ownership interests.

We believe that the terms of the foregoing transactions are no less favorable than could be obtained by us from unrelated parties on an arm’s length basis.

19. Commitments and Contingencies

Leases

We lease our corporate office under operating lease expiring in 2018. Minimum annual rental payments at December 31, 2008 are as follows (in thousands):

Years ending December 31,
2009	$1,377
2010	1,377
2011	1,377
2012	1,377
2013	1,423
Thereafter	7,020
	$13,951

GAAP rent expense for office space amounted to $1.6 million, $1.4 million and $990,000 for the years ended December 31, 2008, 2007 and 2006, respectively.

F-36

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Future Distribution Requirements

In 1999, we acquired a portfolio of CMBS from a dealer at a discount. For purposes of GAAP income recognition, we amortize the discount as interest income over the expected life of the securities using the effective interest method, as we do for all of our securities purchased at a discount. For income tax purposes, specifically with respect to this portfolio, we elected to defer the recognition of the purchase discount until we receive principal as the securities are sold, amortize or mature. In the future, assuming principal collection as anticipated, as these securities mature, we will recognize the purchase discount as income for tax purposes and, as a REIT, those amounts will be factored into our distribution requirements. For the securities not in our CDOs, we will receive cash payments as these securities are sold, amortize or mature. For the securities in our CDOs, the cash flow waterfalls are designed to repay senior indebtedness with principal repayments, resulting in a situation where we may not receive cash as these securities are sold, amortize or mature. In these cases, we may have a distribution requirement without receipt of the cash to service the requirement, requiring us to fund these distribution requirements from other sources of liquidity. As of December 31, 2008, the securities in question have a face value of $189.1 million and were purchased at a discount of $58.3 million. $184.1 million of these securities are in our CDOs and these securities were purchased at a discount of $56.0 million. Our current expectation is for the securities in the entire portfolio to mature between 2011 and 2021 and for us to recognize, for tax purposes, income of $7.9 million, $4.5 million, $9.5 million, $3.7 million, $28.5 million, $178,000, and $22,000 for the years 2009-2015, respectively.

Litigation

In the normal course of business, we are subject to various legal proceedings and claims, the resolution of which, in management’s opinion, will not have a material adverse effect on our consolidated financial position or our results of operations.

Employment Agreements

As of December 31, 2008, the employment agreements with John R. Klopp, who serves as our chief executive officer and president, and Thomas C. Ruffing, who serves as our chief credit officer and head of asset management, both expired. These officers currently remain at-will employees of the Company. The two employment agreements in effect as of December 31, 2008 are summarized below.

Effective December 28, 2005, we entered into an employment agreement with Stephen D. Plavin, pursuant to which Mr. Plavin will serve as our chief operating officer through December 31, 2008 (subject to our option to extend the agreement for an additional twelve months, which we have exercised). Pursuant to the employment agreement, Mr. Plavin receives a base salary and is eligible to receive annual performance compensation awards of cash. The agreement is subject to termination under certain circumstances and provides for severance payments under certain of these circumstances and contains provisions relating to non-competition during the term of employment, protection of our confidential information and intellectual property, and non-solicitation of our employees.

Effective September 29, 2006, we entered into an employment agreement with Geoffrey G. Jervis, pursuant to which Mr. Jervis will serve as our chief financial officer through December 31, 2009 (subject to our option to extend the agreement for an additional twelve months). Pursuant to the employment agreement, Mr. Jervis receives a base salary and is eligible to receive annual performance compensation awards of cash. The agreement is subject to termination under certain circumstances and provides for severance payments under certain of these circumstances and contains provisions relating to non-competition during the term of employment, protection of our confidential information and intellectual property, and non-solicitation of our employees.

F-37

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

Restructured Debt Obligations

Pursuant to the terms of our restructured debt obligations, as detailed in Note 22, we are required to make certain principal payments to our creditors during the first year following the debt restructuring in order to exercise a one-year extension option. By March 16, 2010, payments must be made to our secured creditors participating in the restructure plan equal to approximately 17% (or $100.5 million) of the respective outstanding balances as of March 16, 2009, and a minimum of $5.0 million must be repaid under our senior unsecured credit facility.

20. Segment Reporting

We have two reportable segments. We have an internal information system that produces performance and asset data for our two segments along service lines.

The Balance Sheet Investment segment includes all of our activities related to direct loan and investment activities (including direct investments in Funds) and the financing thereof.

The Investment Management segment includes all of our activities related to investment management services provided to us and third party funds under management and includes our taxable REIT subsidiary, CT Investment Management Co., LLC and its subsidiaries.

F-38

The following table details each segment’s contribution to our overall profitability and the identified assets attributable to each such segment for the year ended, and as of, December 31, 2008 (in thousands):

	Balance Sheet			Investment			Inter-Segment
	Investment			Management			Activities			Total
Income from loans and other
investments:
Interest and related income	$	194,649		$	—		$	—		$	194,649
Less: Interest and related expenses		129,665			—			—			129,665
Income from loans and other investments, net		64,984			—			—			64,984
Other revenues:
Management fees		—			20,045			(7,104	)		12,941
Servicing fees		—			367			—			367
Other interest income		1,646			28			(108	)		1,566
Total other revenues		1,646			20,440			(7,212	)		14,874
Other expenses
General and administrative		11,232			20,829			(7,104	)		24,957
Other interest expense		—			108			(108	)		—
Depreciation and amortization		—			179			—			179
Total other expenses		11,232			21,116			(7,212	)		25,136
Gain on extinguishment of debt		6,000			—			—			6,000
Impairments		(2,917	)		—			—			(2,917	)
Provision for possible credit losses		(63,577	)		—			—			(63,577	)
Valuation allowance on loans held-for-sale		(48,259	)		—			—			(48,259	)
Gain on sale of investments		374			—			—			374
Loss from equity investments		(1,924	)		(64	)		—			(1,988	)
Loss before income taxes		(54,905	)		(740	)		—			(55,645	)
Provision for income taxes		—			1,893			—			1,893
Net loss	$	(54,905	)	$	(2,633	)	$	—		$	(57,538	)
Total assets	$	2,830,172		$	9,818		$	(1,363	)	$	2,838,627

All revenues were generated from external sources within the United States. The Investment Management segment earned fees of $7.1 million for management of the Balance Sheet Investment segment and was charged $108,000 for inter-segment interest for the year ended December 31, 2008, which is reflected as offsetting adjustments to other revenues and other expenses in the Inter-Segment Activities column in the table above.

F-39

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The following table details each segment’s contribution to our overall profitability and the identified assets attributable to each such segment for the year ended, and as of, December 31, 2007 (in thousands):

	Balance Sheet			Investment			Inter-Segment
	Investment			Management			Activities			Total
Income from loans and other
investments:
Interest and related income	$	253,422		$	—		$	—		$	253,422
Less: Interest and related expenses		162,377			—			—			162,377
Income from loans and other investments, net		91,045			—			—			91,045
Other revenues:
Management fees		—			16,282			(12,783	)		3,499
Incentive management fees		—			6,208			—			6,208
Servicing fees		—			623			—			623
Other interest income		1,548			65			(530	)		1,083
Total other revenues		1,548			23,178			(13,313	)		11,413
Other expenses
General and administrative		17,058			25,681			(12,783	)		29,956
Other interest expense		—			530			(530	)		—
Depreciation and amortization		1,430			380			—			1,810
Total other expenses		18,488			26,591			(13,313	)		31,766
Provision for possible credit losses		—			—			—			—
Gain on sale of investments		15,077			—			—			15,077
Loss from equity investments		(1,570	)		(539	)		—			(2,109	)
Income/(loss) before income taxes		87,612			(3,952	)		—			83,660
Income taxe benefit		(254	)		(452	)		—			(706	)
Net income/(loss) common stock	$	87,866		$	(3,500	)	$	—		$	84,366
Total assets	$	3,212,069		$	7,837		$	(8,424	)	$	3,211,482

All revenues, except for $4.3 million included in interest and related income and $15.1 million included in gain on sale of investments,were generated from external sources within the United States. The Investment Management segment earned fees of $12.8 million for management of the Balance Sheet Investment segment and was charged $530,000 for inter-segment interest for the year ended December 31, 2007, which is reflected as offsetting adjustments to other revenues and other expenses in the Inter-Segment Activities column in the table above.

F-40

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The following table details each segment’s contribution to our overall profitability and the identified assets attributable to each such segment for the year ended, and as of, December 31, 2006 (in thousands):

	Balance Sheet		Investment			Inter-Segment
	Investment		Management			Activities			Total
Income from loans and other
investments:
Interest and related income	$	175,404	$	—		$	—		$	175,404
Less: Interest and related expenses		104,607		—			—			104,607
Income from loans and other investments, net		70,797		—			—			70,797
Other revenues:
Management fees		—		10,387			(7,737	)		2,650
Incentive management fees		—		1,652			—			1,652
Servicing fees		40		65			—			105
Other interest income		1,426		43			(115	)		1,354
Total other revenues		1,466		12,147			(7,852	)		5,761
Other expenses
General and administrative		12,458		18,354			(7,737	)		23,075
Other interest expense		—		115			(115	)		—
Depreciation and amortization		2,792		257			—			3,049
Total other expenses		15,250		18,726			(7,852	)		26,124
Income/(loss) from equity investments		1,016		(118	)		—			898
Income before income taxes		58,029		(6,697	)		—			51,332
Income tax benefit		—		(2,735	)		—			(2,735	)
Net income	$	58,029	$	(3,962	)	$	—		$	54,067
Total assets	$	2,649,866	$	4,720		$	(6,022	)	$	2,648,564

All revenues were generated from external sources within the United States. The Investment Management segment earned fees of $7.7 million for management of the Balance Sheet Investment segment and $115,000 for inter-segment interest for the year ended December 31, 2006, which is reflected as offsetting adjustments to other revenues and other expenses in the Inter-Segment Activities column in the table above.

F-41

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

21. Summary of Quarterly Results of Operations (Unaudited)

The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 2008, 2007 and 2006 (in thousands except per share data):

	March 31		June 30			September 30		December 31
2008
Revenues	$	59,117	$	53,866		$	48,217	$	48,323
Net income	$	14,773	$	(34,818	)	$	13,667	$	(51,160	)
Net income per share of common stock:
Basic	$	0.82	$	(1.59	)	$	0.61	$	(2.57	)
Diluted	$	0.82	$	(1.59	)	$	0.61	$	(2.57	)
2007
Revenues	$	59,538	$	69,696		$	66,173	$	69,428
Net income	$	14,849	$	25,382		$	15,497	$	28,638
Net income per share of common stock:
Basic	$	0.85	$	1.45		$	0.88	$	1.63
Diluted	$	0.84	$	1.43		$	0.87	$	1.62
2006
Revenues	$	32,600	$	47,050		$	47,199	$	54,316
Net income	$	10,949	$	14,192		$	13,437	$	15,489
Net income per share of common stock:
Basic	$	0.72	$	0.93		$	0.88	$	0.92
Diluted	$	0.71	$	0.91		$	0.86	$	0.91

Basic and diluted earnings per share are computed independently for each of the periods. Accordingly, the sum of the quarterly earnings per share amounts may not agree to the total for the year.

22. Subsequent Events

1. Restructuring of Our Debt Obligations

On March 16, 2009, we consummated a restructuring of substantially all of our recourse debt obligations with certain of our secured and unsecured creditors pursuant to the amended terms of our secured credit facilities, our senior unsecured credit agreement, and certain of our trust preferred securities.

Secured Credit Facilities

In connection with the restructuring, we amended our secured, recourse credit facilities with: (i) JPMorgan Chase Bank, N.A., JPMorgan Chase Funding Inc. and J.P. Morgan Securities Inc., or collectively JPMorgan, (ii) Morgan Stanley Bank, N.A., or Morgan Stanley, and (iii) Citigroup Financial Products Inc. and Citigroup Global Markets Inc., or collectively Citigroup. We collectively refer to JPMorgan, Morgan Stanley and Citigroup as the participating secured lenders. Further, as part of the restructuring, we also entered into an agreement to terminate our secured, recourse facility with Goldman Sachs Mortgage Company, or Goldman Sachs. We had previously, on February 25, 2009, terminated our secured financing with UBS Real Estate Securities Inc., or UBS.

Specifically, on March 16, 2009, we entered into separate amendments to the respective master repurchase agreements with JPMorgan, Morgan Stanley and Citigroup. Pursuant to the terms of each such agreement, we repaid the balance outstanding with each participating secured lender by an amount equal to three percent (3%) of the current outstanding principal amount due under its existing secured, recourse credit facility, $17.7 million in the aggregate, and further amended the terms of each such facility, without any change to the collateral pool securing the debt owed to each participating secured lender, to provide the following:

F-42

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

· Maturity dates were modified to one year from the March 16, 2009 effective date of each respective agreement, which maturity dates may be extended further for two one-year periods. The first one-year extension option is exercisable by us so long as the outstanding balance as of the first extension date is less than or equal to a certain amount, which is a reduction of twenty percent (20%), including the upfront payment described above, of the outstanding principal amount from the date of the amendments, and no other defaults or events of default have occurred and are continuing, or would be caused by such extension. The second one-year extension option is exercisable by each participating secured lender in its sole discretion.

· We agreed to pay each participating secured lender periodic amortization as follows: (i) mandatory payments, payable monthly in arrears, in an amount equal to sixty-five (65%) (subject to adjustment in the second year) of the net interest income generated by each such lender’s collateral pool, and (ii) one hundred percent (100%) of the principal proceeds received from the repayment of assets in each such lender’s collateral pool. In addition, under the terms of the amendment with Citigroup, we agreed to pay Citigroup an additional quarterly amortization payment equal to the lesser of: (x) Citigroup’s then outstanding senior secured credit facility balance or (y) the product of (i) the total cash paid (including both principal and interest) during the period to our senior unsecured credit facility in excess of an amount equivalent to LIBOR plus 1.75% based upon a $100.0 million facility amount, and (ii) a fraction, the numerator of which is Citigroup’s then outstanding senior secured credit facility balance and the denominator is the total outstanding secured indebtedness of the participating secured lenders.

· We further agreed to amortize each participating secured lender’s secured debt at the end of each calendar quarter on a pro rata basis until we have repaid our secured, recourse credit facilities and thereafter our senior unsecured credit facility in an amount equal to any unrestricted cash in excess of the sum of (i) $25.0 million, and (ii) any unfunded loan and co-investment commitments.

· Each participating secured lender was relieved of its obligation to make future advances with respect to unfunded commitments arising under investments in its collateral pool.

· We received the right to sell or refinance collateral assets as long as we apply one hundred percent (100%) of the proceeds to pay down the related secured credit facility balance subject to minimum release price mechanics.

· We eliminated the cash margin call provisions and amended the mark-to-market provisions so that future changes in collateral value will be determined based upon changes in the performance of the underlying real estate collateral in lieu of the previous provisions which were based on market spreads. Beginning six months after the date of execution of the agreements, each collateral pool will be valued monthly on this basis. If the ratio of a participating secured lender’s total outstanding secured credit facility balance to total collateral value exceeds 1.15x the ratio calculated as of the effective date of the amended agreements, we will be required to liquidate collateral in order to return to compliance with the prescribed loan to collateral value ratio or post other collateral to bring the ratio back into compliance.

In each master repurchase agreement amendment and the amendment to our senior unsecured credit agreement described in greater detail below, which we collectively refer to as our restructured debt obligations, we also replaced all existing financial covenants with the following uniform covenants which:

· prohibit new balance sheet investments except, subject to certain limitations, co-investments in our investment management vehicles or protective investments to defend existing collateral assets on our balance sheet;

· prohibit the incurrence of any additional indebtedness except in limited circumstances;

 

· limit the total cash compensation to all employees and, specifically with respect to our chief executive officer, chief operating officer and chief financial officer, freeze their base salaries at 2008 levels, and require cash bonuses to any of them to be approved by a committee comprised of one representative designated by the secured lenders, the administrative agent under the senior unsecured credit facility and the chairman of our board of directors;

F-43

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

· prohibit the payment of cash dividends to our common shareholders except to the minimum extent necessary to maintain our REIT status;

· require us to maintain a minimum amount of liquidity, as defined, of $7.0 million in 2009 and $5.0 million thereafter;

· trigger an event of default if both our chief executive officer and chief operating officer cease their current employment with us during the term of the agreement and we fail to hire a replacement acceptable to the lenders; and

· trigger an event of default, if any event or condition occurs which causes any obligation or liability of more than $1.0 million to become due prior to its scheduled maturity or any monetary default under our restructured debt obligations if the amount of such obligation is at least $1.0 million.

Pursuant to the restructuring, the interest rates on our secured borrowings will remain the same as those in effect as of December 31, 2008. In exchange for maintenance of these historic rates, on March 16, 2009 we issued, or irrevocably committed to issue as of such date, JPMorgan, Morgan Stanley and Citigroup warrants to purchase 3,479,691 shares of our class A common stock at an exercise price of $1.79 per share, which is equal to the closing bid price on the New York Stock Exchange on March 13, 2009. The warrants will become exercisable on March 16, 2012 and expire on March 16, 2019, and may be exercised through a cashless exercise.

The warrants were issued, or irrevocably committed to be issued, in reliance upon the exemption provided in Section 4(2) of the Securities Act of 1933, as amended, and the safe harbor of Rule 506 under Regulation D. Any certificates representing such securities will contain restrictive legends preventing sale, transfer or other disposition, unless registered under the Securities Act of 1933. No form of general solicitation or general advertising was conducted in connection with the issuance.

On March 16, 2009, we also entered into an agreement to terminate the master repurchase agreement with Goldman Sachs, pursuant to which we satisfied the indebtedness due under the Goldman Sachs secured credit facility. Specifically, we: (i) pre-funded certain required advances of approximately $2.4 million under one loan in the collateral pool, (ii) paid Goldman Sachs $2.6 million to effect a full release to us of another loan, and (iii) transferred all of the other assets that served as collateral for Goldman Sachs to Goldman Sachs for a purchase price of $85.7 million as payment in full for the balance remaining under the secured credit facility. Goldman Sachs agreed to release us from any further obligation under the secured credit facility.

Previously, on February 25, 2009, we entered into a satisfaction, termination and release agreement with UBS pursuant to which the parties terminated their right, title, interest in, to and under a master repurchase agreement. We consented to the transfer to UBS, and UBS unconditionally accepted and retained all of our rights, title and interest in a loan financed under the master repurchase agreement in complete satisfaction of all of our obligations, including all amounts due thereunder.

We are currently in negotiations with Lehman Brothers to resolve the $18.0 million outstanding balance under our secured, recourse credit facility with such firm, which finances a single asset.

Senior Unsecured Credit Agreement

On March 16, 2009, we entered into an amended and restated senior unsecured credit agreement governing our $100.0 million term loan from WestLB AG, New York Branch, participant and administrative agent, Fortis Capital Corp., Wells Fargo Bank, N.A., JPMorgan Chase Bank, N.A., Morgan Stanley Bank, N.A. and Deutsche Bank Trust Company Americas, which we collectively refer to as the senior unsecured lenders. Pursuant to the amended and restated senior unsecured credit agreement, we and the senior unsecured lenders agreed to:

F-44

Capital Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

· Extend the maturity date of the senior unsecured credit agreement to be co-terminus with the maturity date of the secured credit facilities with the participating secured lenders (as they may be further extended until March 16, 2012, as described above);

· Increase the cash interest rate under the senior unsecured credit agreement to LIBOR plus 3.0% per annum (from LIBOR plus 1.75%), plus an accrual rate of 7.20% per annum less the cash interest rate;

· Initiate quarterly amortization equal to the greater of: (i) $5.0 million per annum and (ii) 25% of the annual cash flow received from our currently unencumbered collateralized debt obligation interests;

· Pledge our unencumbered collateralized debt obligation interests and provide a negative pledge with respect to certain other assets; and

· Replace all existing financial covenants with substantially identical covenants and default provisions to those described above in the participating secured credit facilities.

Trust Preferred Securities

On March 16, 2009, we reached an agreement with Taberna Preferred Funding V, Ltd., Taberna Preferred Funding VI, Ltd., Taberna Preferred Funding VIII, Ltd. and Taberna Preferred Funding IX, Ltd., or collectively Taberna, to issue new junior subordinated notes in exchange for $50.0 million face amount of trust preferred securities issued through our statutory trust subsidiary CT Preferred Trust I held by affiliates of Taberna, which we refer to as the Trust I Securities, and $53.1 million face amount of trust preferred securities issued through our statutory trust subsidiary CT Preferred Trust II held by affiliates of Taberna, which we refer to as the Trust II Securities. We refer to the Trust I Securities and the Trust II Securities together as the Trust Securities. The Trust Securities were backed by and recorded as junior subordinated debentures issued by us with terms that mirror the Trust Securities.

Pursuant to the exchange agreement dated March 16, 2009, by and among us and Taberna, we issued $118.6 million aggregate principal amount of new junior subordinated notes due on April 30, 2036 (an amount equal to 115% of the current aggregate face amount of the Trust Securities being exchanged). The interest rate payable under the new subordinated notes is 1% per annum from March 16, 2009, through and including April 29, 2012, which we refer to as the modification period. After the modification period, the interest rate will revert to a blended rate equal to that which was previously payable under the notes underlying the Trust Securities, a fixed rate of 7.23% per annum through and including April 29, 2016 and thereafter a floating rate, reset quarterly, equal to three month LIBOR plus 2.44% until maturity. The new junior subordinated notes will be contractually senior to the remaining trust preferred securities, will mature on April 12, 2036 and will be freely redeemable by us at par at any time. The new junior subordinated notes contain a covenant that through April 30, 2012, subject to certain exceptions, we may not declare or pay dividends or distributions on, or redeem, purchase or acquire any of our equity interests (other than remaining trust preferred securities not exchanged) except to the extent necessary to maintain our status as a REIT. Except for the foregoing, the new junior subordinated notes contain substantially similar provisions as the Trust Securities.

As part of the agreement with Taberna, we also agreed to pay $750,000 to cover third party fees and costs incurred in connection with the exchange transaction.

Current Period Financial Statement Impact

While the restructuring of our debt obligations was finalized subsequent to December 31, 2008 and the amendments to the respective agreements and termination of our facility with UBS were executed in the first quarter of 2009, certain elements of the transaction require us to amend the presentation of certain items in our consolidated financial statements for the fiscal year ended December 31, 2008. Specifically, the aggregate $140.4 million (face value) of loans sold to Goldman Sachs and UBS have been reclassified under the consolidated balance sheet classification, loans held-for-sale, and a valuation allowance of $48.3 million, reflecting the difference between the carrying value of the loans and the sale price, was recorded on the consolidated statement of operations.

2.  CDO Collateral Impairment

In March 2009, we were informed by our CDO trustee of impairments due to rating agency downgrades of certain of the CMBS collateral interests in all of our CDOs. The impairments resulted in a breach of the CDO II overcollateralization test and the reclassification of interest proceeds from certain CMBS collateral as principal proceeds in all four of our CDOs.

F-45

Capital Trust, Inc. and Subsidiaries

Schedule IV—Mortgage Loans on Real Estate

As of December 31, 2008

(in thousands)

Type of Loan/Borrower(1)	Decription/ Location	Interest Payment Rates	Final Maturity Date	Periodic Payment Terms(2)	Prior Liens(3)	Face Amount of Loans(4)	Carrying Amount of Loans
Mortgage Loans:
Borrower A	Office/ Florida	LIBOR + 2.75%	1/21/2011	I/O	$—	$89,058	$89,058
Borrower B	Assisted Living/ Florida	LIBOR + 4.50%	4/20/2012	I/O	—	61,542	61,449
All other mortgage loans individually less than 3%					476,610	367,092	330,338
Total mortgage loans:					476,610	517,692	480,845
Mezzanine Loans:
Borrower C	Healthcare/ Various	LIBOR + 12.65%	5/9/2011	I/O	1,275,430	85,948	85,948
Borrower D	Hotel/ Various	LIBOR + 3.65%	5/9/2012	I/O	1,782,388	152,289	152,300
Borrower E	Hotel/ Various	LIBOR + 4.00%	5/9/2012	I/O	2,595,300	125,000	125,016
All other mezzanine loans individually less than 3%					12,415,964	539,416	473,717
Total mezzanine loans:					18,069,082	902,653	836,981
Subordinate Morgage Interests:
Borrower F	Hotel/ Various	LIBOR + 1.60%	11/7/2011	I/O	220,000	65,000	65,000
All other subordinate mortgage interests individually less than 3%					3,522,898	510,774	500,681
Total subordinate morgage interests:					3,742,898	575,774	565,681
Total loans:					$22,288,590	$1,996,119	$1,883,507

____________________________

(1) All amounts include both loans receivable and loan held-for-sale.

(2)I/O = interest only.

(3)Represents only third party liens.

(4)Does not include Unfunded Commitments.

S-1

EX-10.34B

Exhibit 10.34.b

The undersigned agree this 31st day of December, 2008 that to the extent the undersigned agree to extend or renew the employment agreement between us dated February 24, 2004 beyond December 31, 2008, such agreement shall be amended effective January 1, 2009 in the same manner (to the extent applicable) that changes are reflected in redlining and strike-out on the form of amended and restated employment agreement (with Stephen Plavin) that is attached hereto as Exhibit A. In the first quarter of 2009, we shall decide whether to extend or renew the employment agreement and if so extended or renewed we shall execute an amended and restated employment agreement in order to clarify all of the forgoing changes being made by this letter agreement.

CT INVESTMENT MANAGEMENT CO., LLC
	By:	/s/ Geoffrey Jervis
	Name:	Geoffrey Jervis
	Title:	Chief Financial Officer

CAPITAL TRUST INC.
	By:	/s/ Geoffrey Jervis
	Name:	Geoffrey Jervis
	Title:	Chief Financial Officer

/s/  John R. Klopp

 John R. Klopp

410 Park Avenue • 14th Floor New York, New York 10022 • 212.655.0220 • Fax 212.655.0044 • NYSE Symbol: CT

EX-10.35

Exhibit 10.35

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

I, Stephen D. Plavin, agree to the terms and conditions of employment with Capital Trust, Inc. (the “Company”) set forth in this Employment Agreement (this “Agreement”) dated as of December 28, 2005 (“Original Effective Date”), and amended and restated as of January 1, 2009 (“Effective Date”).

1.           Term of Employment.

(a)           Term.  My employment under this restated Agreement shall commence effective as of the Effective Date and shall end on December 31, 2009 (as extended, if at all pursuant to Section 1(b) hereof, “Expiration Date”) or such earlier date on which my employment is terminated under Section 5 of this Agreement (the period from the Effective Date through the Expiration Date, or such earlier termination as provided for herein being referred to herein as the “Term”).  If the Company continues to employ me beyond the Expiration Date without entering into a written agreement extending the term of this Agreement, except as provided in a new written employment agreement between the Company and me, I shall continue to receive the base salary in effect as of the Expiration Date for as long as I remain employed by the Company, but all other obligations and rights under this Agreement shall prospectively lapse as of the Expiration Date, except my right to payment of compensation accrued or earned prior to the Expiration Date or any other rights which by their terms extend beyond the Expiration Date, including the Company’s ongoing indemnification obligation under Section 4, any post-termination payment provisions under Section 5(a), my confidentiality and other obligations under Section 6, and our mutual arbitration obligations under Section 8, and I thereafter shall be an at-will employee of the Company.

2.           Nature of Duties.  I shall be the Company’s Chief Operating Officer and shall have all of the customary powers and duties associated with that position.  I shall manage the origination, closing, and asset management for all of the Company’s (including controlled affiliates and subsidiaries acquired or established during the term of the Agreement) subordinate real estate loan and securities investment activities.  All of the employees engaged in such activities shall (directly or indirectly) report to me.  I shall report directly to the Company’s Chief Executive Officer (“CEO”), and shall devote my full business time and effort to the performance of my duties for the Company.  I shall be subject to the Company’s policies, procedures and approval practices, as generally in effect from time to time and made known to me, to the extent consistent with this Agreement.  I shall not, while employed by the Company, engage in, accept employment from or provide services to any other person, firm, corporation, governmental agency or other entity; provided, however, that subject to Section 6(c) hereof, I may (a) devote a reasonable amount of time to civic activities and (b) maintain not more than two outside board positions with companies which do not compete with the Company, subject to the prior consent of the Company’s Board of Directors (“Board”), which consent shall not be unreasonably withheld, provided that such activities do not conflict with or detract from my diligent performance of my duties hereunder.

3.           Place of Performance.  I shall be based in New York City, except for required travel on the Company’s business.

4.           Compensation and Related Matters.

(a)           Base Salary.  The Company shall pay me base salary at an annual rate of $500,000 for the calendar year 2009, subject to future upward adjustments at the discretion of the Board.  My base salary shall be paid in conformity with the Company’s salary payment practices generally applicable to senior Company executives (which shall be not less often than monthly).

(b)           Annual Bonuses; Annual Long Term Equity Incentive Grants.  The Company shall pay me annual bonuses and grant me annual long term equity incentives, determined as follows:

(i)              Intentionally left blank.

(ii)              For each calendar year of the Term commencing with January 1, 2009, I shall receive pursuant to Section 10(b) of the Company’s 2007 Long Term Incentive Plan (the “LTIP”), a Performance Compensation Award grant that provides for an annual cash bonus opportunity for that calendar year ranging from 100% of my base salary at threshold performance to 200% of my base salary at maximum performance (with a target of 150% of my base salary at target performance) achieved in respect of Annual Performance Measures (as defined below) established for the calendar year as the Performance Period.  Before March 31 of each such calendar year, the Performance Measures containing threshold, target and maximum performance criteria shall be set by the Compensation Committee of the Board (the “Compensation Committee”), but only after consultation with me in advance and only when the performance measures are substantially uncertain to be satisfied (the “Annual Performance Measures”).  Any cash bonus earned pursuant to such Performance Compensation Award shall be paid as promptly as practicable following the end of each calendar year during the Term, but not later than the March 15th immediately following the end of the calendar year to which the bonus relates..

(iii)              I shall be eligible for such other bonuses and other incentive compensation under bonus and incentive stock plans (including plans that provide for performance compensation tied to carried interest and incentive investment management fees from funds under management) generally available to other senior Company executives as the Compensation Committee determines in its sole discretion.  The Company shall pay such bonuses or incentive compensation as promptly as practicable following the end of each calendar year during the Term, but not later than the March 15th immediately following such calendar year to which the bonus relates.

(c)           Additional, Restricted Stock, and Incentive Plans.

(i)              As of the Original Effective Date, pursuant to the 2004 Long Term Incentive Plan, the Company granted to me 90,000 Restricted Shares of Class A common stock of the Company (the “Initial Grant”).

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(ii)              If the Company exercises its option to extend the Expiration Date to December 31, 2009 under Section 1(b), above, the Company shall grant to me on or about January 1, 2009, pursuant to the LTIP, an additional 30,000 Restricted Shares of Class A common stock of the Company (the “Additional Grant”).  The Additional Grant shall (unless my employment has terminated or as otherwise provided for herein) vest as follows:  (I) 50% of the shares shall vest on December 31, 2009, and (II) 50% of the shares shall be structured as a “Performance Compensation Award” pursuant to Section 10(b) of the LTIP, and shall vest on December 31, 2009, subject to satisfaction of the Grant Performance Hurdle, measured for the one-year period commencing on January 1, 2009 and ending on December 31, 2009.  For the purpose of calculating whether the Grant Performance Hurdle has been achieved, the starting and ending share price shall be determined based on the average closing price of the Class A common stock of the Company for the ten trading day periods which end on 1/1/09 and 12/31/09. All dividends that are earned and accrue with respect to all vested and unvested Restricted Shares issued pursuant to the Additional Grant shall be paid to me upon issuance.

(d)           Performance Compensation Award.  As of the Original Effective Date, pursuant to the LTIP, the Company granted to me a Performance Compensation Award that provides for cash payments to me equal to 2% of any payments received by the Company as incentive management fees paid by CT Mezzanine Partners III, Inc. (“Fund III”) (representing 5% of the fees allocated to employees of the Company).  The Performance Compensation Award shall (unless otherwise provided for herein) vest as follows: 65% shall be vested as of the Effective Date and the remaining 35% shall be vested upon the Company’s receipt of the incentive management fees.

(e)           Standard Benefits.  During my employment, I shall be entitled to participate in all employee benefit plans and programs, including paid vacations, to the same extent generally available to other senior Company executives, in accordance with the terms of those plans and programs, including, without limitation, continued coverage for me under the term life insurance policy as in effect immediately prior to the Effective Date. Where applicable, I shall apply for all reimbursements hereunder for a particular calendar year not later than forty-five (45) days after it ends, and payment shall occur not later than March 15 immediately following the end of the calendar year to which the reimburseable expense relates.

(f)           Indemnification.  The Company shall extend to me the same indemnification arrangements as are generally provided to other senior Company executives, including after the termination of my employment.  Notwithstanding the foregoing, during the Term, the Company shall continue in effect, at a minimum, the same level of indemnification and the same level of Directors and Officers insurance coverage as were in effect immediately prior to the Effective Date.

(g)           Expenses.  I shall be entitled to receive prompt reimbursement, which the Company shall make within two and one-half months after I submit adequate documentation, for all reasonable and customary travel and business expenses I incur in connection with my employment but I must incur and account for those expenses in accordance with the policies and procedures established by the Company. In any event, I shall apply for all reimbursements hereunder for a particular calendar year not later than forty-five (45) days after it ends, and payment shall occur not later than March 15 immediately following the end of the calendar year to which the reimbursable expense relates.

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(h)           Sarbanes-Oxley Act Loan Prohibition.  To the extent that any Company benefit, program, practice, arrangement, or this Agreement would or might otherwise result in my receipt of an illegal loan (“Loan”), the Company shall use reasonable efforts to provide me with a substitute for the Loan that is lawful and of at least equal value to me.

5.           Separation From Service.

(a)           Rights and Duties.  If I experience a Separation from Service (as defined in Section 5(b) below, I shall be entitled to the amounts or benefits shown on the applicable row of the following table, subject to the balance of this Section 5 and to the terms and conditions set forth in Section 13, below.  The Company and I shall have no further obligations to each other, except the Company’s ongoing indemnification obligation under Section 4, my confidentiality and other obligations under Section 6, and our mutual arbitration obligations under Section 8, or as set forth in any written agreement I subsequently enter into with the Company.

DISCHARGE FOR CAUSE

Payment or provision when due of (1) any unpaid base salary, expense reimbursements, and vacation days accrued prior to termination of employment, and (2) other unpaid vested amounts or benefits under Company compensation, incentive, and benefit plans (including, without limitation vested interests I may have with respect to Fund II and Fund III or any previous grant of equity).  In addition, I may continue to exercise my vested options for up to the earlier of (a) the expiration date of such options or (b) the date 90 days following my termination.

DISABILITY

Same as for “Discharge for Cause” EXCEPT that (I) I shall be entitled to receive a lump sum payment equal to six months of  my base salary, less any payments I receive under any state-mandated or other disability insurance policy for six months , (II) I shall be entitled to receive a pro-rated bonus determined for the year in which my disability became effective hereunder, and calculated at “target,” which shall be paid as promptly as practicable following my Separation from Service, but not later than the March 15th immediately following the calendar year of my Separation from Service.  (III) the Company shall pay the COBRA premiums associated with continuing medical insurance coverage for my benefit and the benefit of my spouse and dependent children for one year following my disability effective date, and (IV) I will continue to vest for one year following my disability effective date in all awards previously granted to me, and in determining the Grant Performance Hurdle for any remaining performance vesting period, I will be credited with the shareholder return for the full year preceding the year of my disability effective date.  In addition, I may continue to exercise my options that vested on or before my Separation from Service for up to one year following my Separation from Service, or if later, up until the expiration date of such options.

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DISCHARGE OTHER THAN FOR CAUSE OR DISABILITY	Same as for “Discharge for Cause” EXCEPT that, in exchange for my execution of a release in accordance with this section, (1) I shall be entitled to receive a lump-sum payment equal to the greater of (x) the sum of my base salary and cash bonus payable  through December 31, 2009 (with the cash bonus based on target and assuming the satisfaction of all Annual Performance Measures or (y) 1.5 times the sum of (I) my base salary then payable and (II) the highest annual bonus paid to me during the Term, (2) all restricted stock grants made prior thereto and the Initial Grant shall immediately vest in full, (3) the Performance Compensation Award described in Section 4(d), above, shall immediately vest in full, (4) I may continue to exercise my options that vested on or before my Separation from Service for up to one year following my discharge or, if later, up until the expiration date of such options, and (5) the Company shall pay the COBRA premiums associated with continuing medical insurance coverage for my benefit and the benefit of my spouse and dependent children for 18 months following my date of discharge or such earlier time I shall obtain comparable coverage through another employer. All payments made pursuant to this provision shall be made as promptly as practicable following my Separation from Service, but not later than the March 15th immediately following the year of my Separation from Service. In addition, if the Company exercises its option to extend the Expiration Date to December 31, 2010 under Section 1(b), above, and I am discharged other than for Cause or Disability between January 1, 2010 and December 31, 2010, the Additional Grant shall immediately vest in full.
RESIGNATION WITHOUT GOOD REASON	Same as for “Discharge for Cause.”
RESIGNATION WITH GOOD REASON	Same as for “Discharge Other Than for Cause or Disability.”

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DEATH Same as for “Discharge for Cause” EXCEPT that (1) my legal representative shall be entitled to receive any death benefits payable under the life insurance maintained on my behalf by the Company as well as any earned but as of yet unpaid bonus amounts from the year preceding the date of my death, (2) any equity and performance compensation awards I have shall continue to vest for one year following the date of my death, and in determining the Grant Performance Hurdle for any remaining performance vesting period, my estate will be credited with the shareholder return for the full year preceding the year of my death, (3) the Company shall pay the COBRA premiums associated with continuing medical insurance coverage for the benefit of my spouse and dependent children for one year following my date of death, and (4) my options that vested on or before my death may continue to be exercised for up to one year following my death, or if later, up until the expiration date of such options.

(b)           Separation from Service.  As determined by the Company in accordance with Treas. Reg. §1.409A-1(h), a Separation from Service shall occur when the facts and circumstances indicate that the Company and I reasonably anticipate that either (i) no further services will be performed for the Company after a certain date, or (ii) that the level of bona fide services I will perform for the Company after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by me (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Company if I have been providing services to the Company for less than 36 months).

If I am on military leave, sick leave, or other bona fide leave of absence, the employment relationship between the Company and I shall be treated as continuing intact, provided that the period of such leave does not exceed six months, or if longer, so long as I retain a right to reemployment with the Company under an applicable statute or by contract. If the period of a military leave, sick leave, or other bona fide leave of absence exceeds 6 months and the I do not retain a right to reemployment under an applicable statute or by contract, the employment relationship shall be considered to be terminated for purposes of this Agreement as of the first day immediately following the end of such 6-month period. In applying the provisions of this paragraph, a leave of absence shall be considered a bona fide leave of absence only if there is a reasonable expectation that I will return to perform services for the Company. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 6 months, where such impairment causes me to be unable to perform the duties of my position of employment or any substantially similar position of employment, a 29-month period of absence may be substituted for such 6-month period.

(c)           Discharge for Cause. The Company may terminate my employment at any time if the Board has Cause to terminate me. “Cause” shall include, but not be limited to:

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(i)              Fraud and Dishonesty.  My commission of a willful act of fraud, embezzlement or misappropriation of any money or properties of the Company or its affiliates (other than an insubstantial and unintentional misappropriation that has been remedied within 10 days after the Company provides me with notice of such misappropriation).

(ii)              Criminal Act.  My conviction of a felony or any material violation of any federal or state securities law (whether by plea of nolo contendere or otherwise) or my being enjoined from violating any federal or state securities law or being determined to have violated any such law.

(iii)              Reckless Conduct.  My engaging in willful or reckless misconduct in connection with any property or activity, the purpose or effect of which materially and adversely affects the Company and/or its subsidiaries and affiliates, and/or their predecessors and successors (collectively, the “Group”).

(iv)              Substance Abuse.  My repeated and intemperate use of alcohol or illegal drugs after written notice from the Board that such use, if continued, would result in the termination of my employment hereunder.

(v)              Breach of Agreement.  My failure to cure my material breach of any of my obligations under this Agreement (other than by reason of physical or mental illness, injury, or condition) after having received 10 days’ notice from the Board of the breach.

(vi)              Barred from Office.  My becoming barred or prohibited by the SEC from holding my position with the Company.

(vii)              Material Breach of Company Policy or Code of Ethics.  My material breach of any Company policy (provided that I have been provided with a copy of or access to, or am otherwise aware of, the policy) or of the Company’s Code of Ethics.

(viii)              Failure to Perform Duties.  My continued failure or refusal to perform any material duty or responsibility under this Agreement (other than by reason of physical or mental illness, injury, or condition) after having received 10 days’ notice from the Board.

(d)           Termination for Disability.  Except as prohibited by applicable law, the Company may terminate my employment on account of Disability, or may transfer me to inactive employment status, which shall have the same effect under this Agreement as a termination for Disability.  “Disability” means a physical or mental illness, injury, or condition that prevents me from performing substantially all of my duties under this Agreement for at least 120 consecutive calendar days or for at least 180 calendar days, whether or not consecutive, in any 365 calendar day period, and can or is likely to do so, as certified by a physician selected by the Board.

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(e)           Discharge Other Than for Cause or Disability.  The Company may terminate my employment at any time for any reason, and without advance notice.  If I am terminated by the Company other than for Cause under Section 5(b) or Disability under Section 5(c), I will only receive the special benefits provided for a Discharge other than for Cause or Disability under Section 5(a) if I sign a separation agreement and general release in the form attached hereto as Schedule A and do not thereafter revoke the release.

(f)           Resignation.  If I resign other than for Good Reason, the Company may accept my resignation effective on the date set forth in my notice or any earlier date. If I resign other than for Good Reason, I agree that the Restricted Period (as defined in Section 6(b)) shall begin on the date of my resignation.  If I resign for Good Reason, my employment will end on my last date of work and I will receive the benefits to which I am entitled under Section 5(a), but only if I sign the separation agreement and general release described in Section 5(d), above, and I do not thereafter revoke the release.  “Good Reason” means that, without my express written consent and through no fault of my own, one or more of the following events occurred after my execution of this Agreement:

(i)              Demotion.  I am assigned any duties, responsibilities or title materially inconsistent with my rights under this Agreement.

(ii)              Compensation Reduction.  My “base compensation” (within the meaning of Code Section 409A) provided for under this Agreement is materially reduced (other than any reduction resulting from the good faith application by the Compensation Committee of performance factors under the LTIP).

(iii)              Relocation.  The Company requires me, without my consent, to be based at any office or location outside of a 40-mile radius of midtown Manhattan, New York, New York.

(iv)              Breach of Promise.  The Company fails to cure its material breach of this Agreement within thirty business days after I give it written notice thereof.

(v)              Discontinuance of Benefits.  The Company stops providing me with compensation and benefits that, in the aggregate, are substantially as valuable to me as those I enjoyed immediately prior to the Effective Date other than a result of across-the-board benefit reductions affecting all executives of similar status employed by the Company and any entity in control of the Company.

(vi)              Change of Control.  The Company is involved in:

(1)           a merger or acquisition in which 50% or more of the Company’s voting stock outstanding after the merger or acquisition is held by holders different from those who held the Company’s voting stock immediately prior to such merger or acquisition;

(2)           the sale, transfer or other disposition of all or substantially all of the assets of the Company in liquidation or dissolution of the Company;

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(3)           a transfer of all or substantially all of the Company’s assets pursuant to a partnership or joint venture agreement or similar arrangement where the Company’s resulting interest is or becomes less than 50%;

(4)           on or after the Effective Date, a change in ownership of the Company through an action or series of transactions, such that any person is or becomes the beneficial owner, directly or indirectly, of 50% or more of the Company’s voting stock; or

(5)           a change occurs in the composition of the Board during any one-year period such that the individuals who, as of the beginning of such two-year period, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board subsequent to the beginning of the two-year period, whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; and provided further, however, that any such individual whose initial assumption of office occurs as a result of or in connection with a solicitation subject to Rule 14a-12(c) of Regulation 14A promulgated under the Exchange Act of 1934, as amended, or other actual or threatened solicitation of proxies or consents by or on behalf of an entity other than the Board shall not be so considered as a member of the Incumbent Board.

(vii)              Notice of Prospective Action.  I am officially notified (or it is officially announced) that the Company will take any of the actions listed above during the term of this Agreement.

However, an event that is or would constitute Good Reason shall cease to be Good Reason if: (1) I do not give the Company written notice of my intent to terminate my employment within 45 days after the event occurs; (2) the Company reverses the action or cures the default that constitutes Good Reason within 30 days after I notify it in writing that Good Reason exists before I terminate employment; or (3) I was a primary instigator of the Good Reason event and the circumstances make it inappropriate for me to receive Good Reason resignation benefits under this Agreement.

(g)           Death.  If I die while employed under this Agreement, the payments required by Section 5(a) in the event of my death shall be made.

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6.           Confidentiality and Other Obligations.

(a)           Confidential Information. During the term of my employment, in exchange for my promises to use such information solely for the Company’s benefit, the Company has provided and will continue to provide me with Confidential Information concerning, among other things, its business, operations, clients, investors, and business partners. “Confidential Information” refers to information not generally known by others in the form in which it is used by the Company, and which gives the Company a competitive advantage over other companies which do not have access to this information, including secret, confidential, or proprietary information or trade secrets of the Company and its subsidiaries and affiliates, conveyed orally or reduced to a tangible form in any medium, including information concerning the operations, future plans, customers, business models, strategies, and business methods of the Company and its subsidiaries and affiliates, as well as information about the Company’s active and prospective investors, clients and business partners and their respective investment preferences, risk tolerances, portfolio allocations and amounts, cash flow requirements, contact information, and other information about how to best serve their needs and preferences. “Confidential Information” does not include information that (i) I knew prior to my employment with the Company, (ii) subsequently came into my possession other than through my work for the Company and not as a result of a breach of any duty owed to the Company, or (iii) is generally known within the relevant industry.

(b)           Promise Not to Disclose. I promise never to use or disclose any Confidential Information before it has become generally known within the relevant industry through no fault of my own. I agree that this promise shall never expire.

(c)           Promise Not to Solicit.  Because my position enables me to learn Confidential Information regarding the investors in the Company and its funds and how best to serve them, I further agree that, during the “Restricted Period” (as defined below) (1) as to any investor in the Company (or in any investment fund or vehicle owned, managed, or established by the Company) with whom I had dealings or about whom I acquired proprietary information during my employment, I will not solicit or attempt to solicit (or assist others to solicit) the investor to invest in or do business with any person, entity, or investment fund or vehicle other than the Company (or its funds or vehicles); and (2) I will not solicit or attempt to solicit (or assist others to solicit) for employment any person who is, or within the preceding six months was, an officer, manager, employee, or consultant of the Company. I agree that the restrictions set forth in this paragraph should not prohibit me from engaging in my livelihood and do not foreclose my working with investors not identified in this paragraph.

The “Restricted Period” shall mean the period of my employment with the Company and:

(i)          Eighteen (18) months after my termination for Cause under Section 5(b), resignation without Good Reason under Section 5(e), or resignation with Good Reason under Section 5(e)(vi); and

(ii)         Six (6) months after my resignation with Good Reason under Section 5(e)(i) through (v).

(d)           Promise Not to Engage in Certain Employment.  I agree that, during the Restricted Period, I will not, without the prior written consent of the Board, accept any employment, provide any services, advice or information; or assist or engage in any activity (whether as an employee, consultant, or in any other capacity, whether paid or unpaid) with (1) any specialty finance firm or investment management company focused on commercial real estate-related debt instruments  or (2) any business that, as of the date of my termination, directly competes with the Company.

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(e)           Return of Information.  When my employment with the Company ends, I will promptly deliver to the Company, or, at its written instruction, destroy, all documents, data, drawings, manuals, letters, notes, reports, electronic mail, recordings, and copies thereof, of or pertaining to it or any other Group member in my possession or control. In addition, during my employment with the Company or the Group and thereafter, I agree to meet with Company personnel and, based on knowledge or insights I gained during my employment with the Company and the Group, answer any question they may have related to the Company or the Group.

(f)           Intellectual Property.  Intellectual property (including such things as all ideas, concepts, inventions, plans, developments, software, data, configurations, materials (whether written or machine-readable), designs, drawings, illustrations, and photographs, that may be protectable, in whole or in part, under any patent, copyright, trademark, trade secret, or other intellectual property law), developed, created, conceived, made, or reduced to practice during my Company employment (except intellectual property that has no relation to the Group or any Group customer that I developed, etc., purely on my own time and at my own expense), shall be the sole and exclusive property of the Company, and I hereby assign all my rights, title, and interest in any such intellectual property to the Company.

(g)           Enforcement of This Section.  This section shall survive the termination of this Agreement for any reason.  I acknowledge that (a) my services are of a special, unique, and extraordinary character and it would be very difficult or impossible to replace them, (b) this section’s terms are reasonable and necessary to protect the Company’s legitimate interests, (c) this section’s restrictions will not prevent me from earning or seeking a livelihood, (d) this section’s restrictions shall apply wherever permitted by law, and (e) my violation of any of this section’s terms would irreparably harm the Company. Accordingly, I agree that, if I violate any of the provisions of this section, the Company or any Group member may be entitled to seek, in addition to other remedies available to it, an injunction to be issued by any court of competent jurisdiction restraining me from committing or continuing any such violation.

7.           Notice.

(a)           To the Company.  I will send all communications to the Company in writing, by mail, hand delivery or facsimile, addressed as follows (or in any other manner the Company notifies me to use):

Capital Trust, Inc.

Attention: Mr. John R. Klopp

410 Park Avenue, 14th Floor

New York, New York 10022

Fax: (212) 655-0044

Tel.: (212) 655-0220

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With copy to: Martin L. Edelman, Esq.

Michael L. Zuppone, Esq.

Paul, Hastings, Janofsky & Walker LLP

75 East 55th Street

New York, New York 10022-3205

(b)           To Me.  All communications from the Company to me relating to this Agreement must be sent to me in writing at my Company office or in any other manner I notify the Company to use.

With copy to: Stephan Bachelder, Esq.

22 Free Street, Suite 201

Portland, Maine 04101-3900

Tel: (207) 761-8100

(c)           Time Notice Deemed Given.  Notice shall be deemed to have been given when delivered or, if earlier (1) when mailed by United States certified or registered mail, return receipt requested, postage prepaid, or (2) faxed with confirmation of delivery, in either case, addressed as required in this section.

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8.           Registration Rights and Related Assistance.  During the Term and for so long thereafter as I or my estate directly or indirectly own class A common stock, stock options or equity-based awards issued by the Company, and for so long as the Company’s common stock is publicly traded, (A) the Company shall file with the Securities and Exchange Commission and thereafter maintain the effectiveness of one or more registration statements on Form S-8 (or any successor form) registering under the Securities Act of 1933, as amended (the “1933 Act”), the offer and sale of shares by the Company to me pursuant to stock options or other equity-based awards granted to me under this Agreement, Company compensation plans or otherwise and (B) to the extent that I (or my estate) determine to engage in an exempt sale of any common stock or other securities of the Company, the Company shall take all commercially reasonable steps to cooperate with and assist me (or my estate) in connection with such sale.

9.           Arbitration of Disputes.  Except for the Company’s right to seek injunctive relief in accordance with Section 6(g), above, all disputes between the Company and me are to be resolved by final and binding arbitration in accordance with the separate Arbitration Agreement attached as Schedule B to this Agreement. This section shall remain in effect after the termination of this Agreement.

10.           Amendment.  No provisions of this Agreement may be modified, waived, or discharged except by a written document signed by a duly authorized Company officer and me. Thus, for example, promotions, commendations, and/or bonuses shall not, by themselves, modify, amend, or extend this Agreement. A waiver of any conditions or provisions of this Agreement in a given instance shall not be deemed a waiver of such conditions or provisions at any other time.

11.           Interpretation; Exclusive Forum.  The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the state of New York (excluding any that mandate the use of another jurisdiction’s laws). Any litigation, arbitration, or similar proceeding with respect to such matters only may be brought within that state, and all parties to this Agreement consent to that state’s jurisdiction and agree that venue anywhere in that state would be proper.

12.           Successors.  This Agreement shall be binding upon, and shall inure to the benefit of, me and my estate, but I may not assign or pledge this Agreement or any rights arising under it, except to the extent permitted under the terms of the benefit and compensation plans in which I participate.

13.           Taxes.

(a)           Generally.  I am solely responsible for the payment of any tax liabilities (including any taxes and penalties arising under Section 409A of the Internal Revenue Code (the “Code”) that may result from any payments or benefits that I receive pursuant to this Agreement.  The Company shall not have any obligation to pay, mitigate, or protect me from any such tax liabilities.

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(b)           Section 409A Six-month Delay Rule.  If, at the time of my Separation from Service I am a "specified employee" (within the meaning of Code Section 409A and Treas. Reg. §1.409A-3(i)(2)), the Company will not pay or provide any "Specified Benefits" (as defined herein) until after the end of the sixth calendar month beginning after my separation from service (the "409A Suspension Period"). For purposes of this Agreement, "Specified Benefits" are any amounts or benefits that would be subject to Section 409A penalties if the Company were to pay them, pursuant to this Agreement, on account of my separation from service. Within 14 calendar days after the end of the 409A Suspension Period, I shall be paid a lump sum payment in cash equal to any Specified Benefits delayed because of the preceding sentence, without interest. Thereafter, I shall receive any remaining payments or other benefits as if there had not been an earlier delay.

Interpretation and Amendments.  This Agreement is intended to comply withor be exempt fromCode Section 409A, and the Company shall have complete discretion to interpret and construe this Agreement and any associated documents in any manner that establishes an exemption from (or otherwise conforms them to) the requirements of Section 409A.  If, for any reason including imprecision in drafting, any Agreement provision does not accurately reflect its intended establishment of an exemption from or compliance with Code Section 409A, as demonstrated by consistent interpretations or other evidence of intent, the provision shall be considered ambiguous and shall be interpreted by the Company in a fashion consistent herewith, as determined in the sole and absolute discretion of the Company. 

(c)           Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

14.           Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute the same instrument.

15.           Entire Agreement.  All oral or written agreements or representations, express or implied, with respect to the subject matter of this Agreement are set forth in this Agreement.  Notwithstanding the foregoing, I agree to comply with the Company’s policies and Code of Ethics.

[SIGNATURE PAGE FOLLOWS]

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I ACKNOWLEDGE THAT ALL UNDERSTANDINGS AND AGREEMENTS BETWEEN THE COMPANY AND ME RELATING TO THE SUBJECTS COVERED IN THIS AGREEMENT ARE CONTAINED IN IT AND THAT I HAVE ENTERED INTO THIS AGREEMENT VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS BY THE COMPANY OTHER THAN THOSE CONTAINED IN THIS AGREEMENT ITSELF.

I FURTHER ACKNOWLEDGE THAT I HAVE CAREFULLY READ THIS AGREEMENT, THAT I UNDERSTAND ALL OF IT, AND THAT I HAVE BEEN GIVEN THE OPPORTUNITY TO DISCUSS THIS AGREEMENT WITH MY PRIVATE LEGAL COUNSEL AND HAVE AVAILED MYSELF OF THAT OPPORTUNITY TO THE EXTENT I WISHED TO DO SO. I UNDERSTAND THAT BY SIGNING THIS AGREEMENT I AM GIVING UP MY RIGHT TO A JURY TRIAL.

	CAPITAL TRUST, INC.
Dated:  ______________	By:	/s/ John R. Klopp
	Name:	John R. Klopp
	Title:	Chief Executive Officer

Dated:  ______________	/s/ Stephen D. Plavin
	STEPHEN D. PLAVIN

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SCHEDULE A

SEPARATION AGREEMENT AND GENERAL RELEASE

This SEPARATION AGREEMENT AND GENERAL RELEASE (“Release”) made this ___ day of _________, ____ by and between Capital Trust, Inc. (the “Company”) and Stephen D. Plavin (“Executive”):

In exchange for the mutual promises exchanged herein and other good and valid consideration, the receipt of which is hereby acknowledged, the parties agree as follows:

1. Employment Termination

Executive agrees that his employment with the Company has ended or will end on [date].  Executive will be entitled to those separation and other benefits as set forth in his Employment Agreement with the Company dated as of [date].

2. ClaimsReleased

In exchange for the benefits provided herein, Executive irrevocably and unconditionally releases the Company, its current or former parents, subsidiaries, or affiliates, their past, present, or future employees or agents, their successors, their benefit plans and the administrators of such plans (collectively, the “Released Parties”), from all known or unknown claims that Executive presently may have arising out of his employment with, or separation from, the Company, other than claims (i) seeking enforcement of this Release, (ii) for vested awards or benefits under the Company’s employee benefit plans, including the 2004 Long-Term Incentive Plan and the Long-Term Incentive Plan, and (iii) to indemnification and coverage under the Company’s directors and officers’ insurance policies (“Claims”).  The Claims Executive is releasing include, without limitation, claims under the Age Discrimination in Employment Act of 1967 (“ADEA”), Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Employee Retirement Income Security Act of 1974, the Fair Labor Standards Act, the Family and Medical Leave Act, the New York State Human Rights Law; the New York City Human Rights Law; or any other federal, state, or local common law, statute, regulation, or law of any other type.  Executive acknowledges that he is releasing Claims he knows he has and Claims he may not know he has, and understands the significance of doing so.

3. Pursuit of Released Claims

Executive agrees to withdraw with prejudice all complaints or charges, if any, he has filed against any Released Party with any agency or court.  Executive agrees that he will never file any lawsuit or complaint against them based on the Claims purportedly released in this Release.  Executive promises never to seek any damages, remedies, or other relief for himself personally (any right to which he hereby waives) by filing or prosecuting a charge with any administrative agency with respect to any Claim purportedly released by this Release.  Executive promises to request any administrative agency or other body assuming jurisdiction of any such lawsuit, complaint, or charge to withdraw from the matter or dismiss the matter with prejudice.

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4. Nonadmission of Liability

Executive agrees that this Release is not an admission of guilt or wrongdoing by the Released Parties and acknowledges that the Released Parties do not believe or admit that they have done anything wrong.

5. Confidentiality and Non-Disparagement

Executive agrees to keep the fact and terms of this Release in strict confidence.  Executive agrees not to disclose this document, its contents or subject matter to any person other than his immediate family, attorney, accountant or income tax preparer, or otherwise as required by law.  Executive agrees that he will not denigrate, disparage, defame, impugn, or otherwise damage or assail the reputation or integrity of the Company or any Released Party.

6. Consideration of Release

Executive acknowledges that, before signing this Release, he was given at least 21 calendar days to consider this Release.  Executive waives any right he might have to additional time beyond this consideration period within which to consider this Release.  Executive acknowledges that: (a) he took advantage of that time to consider this Release before signing it; (b) he carefully read this Release; (c) he fully understands what this Release means; (d) he is entering into it voluntarily; (e) he is receiving valuable consideration in exchange for his execution of this Release that he would not otherwise be entitled to receive; and (f) the Company, in writing, encouraged him to discuss this Release with his attorney (at his own expense) before signing it, and that he did so to the extent he deemed appropriate.  Executive may revoke his release of claims under the ADEA within seven (7) days after he signs this Release, in which case he will not be entitled to receive all of the benefits set forth herein.

7. Miscellaneous

This Release sets forth the entire agreement between Executive and the Company pertaining to the subject matter of this Release.  This Release may not be modified or canceled in any manner except by a writing signed by both Executive and an authorized Company official.  Executive acknowledge that the Company has made no representations or promises to him other than those in this Release.  If any provision in this Release is found to be unenforceable, all other provisions will remain fully enforceable.  It is not necessary that the Company sign this Release for it to become binding on both Executive and the Company.  This Release binds Executive’s heirs, administrators, representatives, executors, successors, and assigns, and will inure to the benefit of the Released Parties and their heirs, administrators, representatives, executors, successors, and assigns.  This Release shall be construed as a whole according to its fair meaning; it shall not be construed strictly for or against Executive or the Released Parties.  Unless the context indicates otherwise, the term "or" shall be deemed to include the term "and" and the singular or plural number shall be deemed to include the other.  Disputes under this Release are to be resolved in accordance with the existing arbitration agreement between the parties.  Except to the extent governed by federal law, this Release shall be governed by the statutes and common law of the State of New York (excluding any that mandate the use of another jurisdiction's laws).  Section headings in this Agreement are included for convenience of reference only and shall not be a part of this Agreement for any other purpose.

A-2

TAKE THIS RELEASE HOME, READ IT, AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS BEFORE SIGNING IT.  THIS RELEASE INCLUDES A RELEASE OF KNOWN AND UNKNOWN CLAIMS.

	CAPITAL TRUST, INC.
Date:  ______________	By:
	Name:
	Title:

Date:  ______________
	STEPHEN D. PLAVIN

A-3

SCHEDULE B

MUTUAL AGREEMENT TO ARBITRATE CLAIMS

I recognize that differences may arise between Capital Trust, Inc. (the “Company”) and me during or following my employment with the Company, and that those differences may or may not be related to my employment.  I understand and agree that by entering into this Agreement to Arbitrate Claims (“Agreement”), I anticipate gaining the benefits of a speedy, impartial dispute-resolution procedure.

Except as provided in this Agreement, the Federal Arbitration Act shall govern the interpretation, enforcement and all proceedings pursuant to this Agreement.  To the extent that the Federal Arbitration Act either is inapplicable, or held not to require arbitration of a particular claim or claims, New York law pertaining to agreements to arbitrate shall apply.

I understand that any reference in this Agreement to the Company will be a reference also to all of its subsidiary and affiliated entities, all benefit plans, the benefit plans’ sponsors, fiduciaries, administrators, and affiliates, and all successors and assigns of any of them.

Claims Covered by the Agreement

The Company and I mutually consent to the resolution by arbitration of all claims or controversies (“claims”), past, present or future, which arise, directly or indirectly, out of my employment (or its termination) or the business of the Company, that the Company may have against me or that I may have against the Company or against its officers, directors, employees or agents in their capacity as such or otherwise.  The claims covered by this Agreement include, but are not limited to, claims for wages or other compensation due; claims for breach of any contract or covenant (express or implied); tort claims; claims for discrimination (including, but not limited to, race, sex, sexual orientation, religion, national origin, age, marital status, or medical condition, handicap or disability); and claims for violation of any federal, state, or other governmental law, statute, regulation, or ordinance, except claims excluded elsewhere in this Agreement.

Except as otherwise provided in this Agreement, both the Company and I agree that neither of us shall initiate or prosecute any lawsuit or administrative action (other than an administrative charge of discrimination to the EEOC or similar fair employment practices agency, or an administrative charge within the jurisdiction of the National Labor Relations Board or U.S. Department of Labor), in any way related to any claim covered by this Agreement.

Claims Not Covered by the Agreement

This Agreement does not cover claims for workers’ compensation or unemployment compensation benefits; or any claim as to which final and binding arbitration cannot be required as a matter of law.

Claims, either by the Company or by me, seeking injunctive relief for alleged violations of intellectual property rights and non-disclosure and non-solicitation covenants also are not covered by this Agreement (although all other aspects of such claims, including any claims for damages, are covered by this Agreement).

B-1

Required Notice of All Claims and Statute of Limitations

The Company and I agree that the aggrieved party must give written notice of any claim to the other party no later than the applicable Statute of Limitations as may be prescribed by law.

Written notice to the Company, or its officers, directors, employees or agents, shall be sent to the addresses set forth in my Employment Agreement.  I will be given written notice at the last address recorded in my personnel file.

The written notice shall identify and describe the nature of all claims asserted and the facts upon which such claims are based.  The notice shall be sent to the other party by certified or registered mail, return receipt requested.

Representation

Any party may be represented by an attorney or other representative selected by the party.

Discovery

Each party shall have the right to take the deposition of three (3) individuals and any expert witness designated by another party.  Each party also shall have the right to make requests for production of documents to any party.  The subpoena right specified below shall be applicable to discovery pursuant to this paragraph.  Additional discovery may be had where the arbitrator selected pursuant to this Agreement so orders, upon an appropriate showing of justification.

Designation of Witnesses

At least 30 days before the arbitration, the parties must exchange lists of witnesses, including any expert, and copies of all exhibits intended to be used at the arbitration.

Subpoenas

Each party shall have the right to subpoena witnesses and documents for the arbitration.

Arbitration Procedures

The arbitration will be held under the auspices of the American Arbitration Association (“AAA”).

The Company and I agree that, except as provided in this Agreement, the arbitration shall be in accordance with the AAA’s National Rules for Resolution of Employment Disputes (or other then-current employment arbitration procedures).  The arbitrator shall be either a retired judge, or an attorney licensed to practice law in the state in which the arbitration is convened and with demonstrated experience and expertise in executive compensation matters (the “Arbitrator”).  The arbitration shall take place in or near the city in which I am or was last employed by the Company.

B-2

The Arbitrator shall be selected as follows.  The sponsoring organization shall give each party a list of 11 arbitrators drawn from its panel of employment dispute arbitrators.  Each party may strike all names on the list it deems unacceptable.  If only one common name remains on the lists of all parties, that individual shall be designated as the Arbitrator.  If more than one common name remains on the lists of all parties, the parties shall strike names alternately from the list of common names until only one remains.  The party who did not initiate the claim shall strike first.  If no common name exists on the lists of all parties, the sponsoring organization shall furnish an additional list and the process shall be repeated.  If no arbitrator has been selected after two lists have been distributed, then the parties shall strike alternately from a third list, with the party initiating the claim striking first, until only one name remains.  That person shall be designated as the Arbitrator.

The Arbitrator shall apply the substantive law (and the law of remedies, if applicable) of the state in which the claim arose, or federal law, or both, as applicable to the claim(s) asserted.  If the parties’ dispute concerns a contract in which the parties have included a choice of law provision, the Arbitrator shall apply the law as designated by the parties.  The Arbitrator is without jurisdiction to apply any different substantive law, or law of remedies.  The Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement, including but not limited to any claim that all or any part of this Agreement is void or voidable.  The arbitration shall be final and binding upon the parties, except as provided in this Agreement.

The Arbitrator shall have jurisdiction to hear and rule on pre-hearing disputes and is authorized to hold pre-hearing conferences by telephone or in person, as the Arbitrator deems necessary.  The Arbitrator shall have the authority to entertain a motion to dismiss and/or a motion for summary judgment by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure.

Either party may obtain a court reporter to provide a stenographic record of proceedings.

Either party, upon request at the close of hearing, shall be given leave to file a post-hearing brief.  The time for filing such a brief shall be set by the Arbitrator.

The Arbitrator shall render a written award and opinion in the form setting forth his/her findings and conclusions.

Either party shall have the right, within 20 days of issuance of the Arbitrator’s opinion, to file with the Arbitrator a motion to reconsider (accompanied by a supporting brief), and the other party shall have 20 days from the date of the motion to respond.  The Arbitrator thereupon shall reconsider the issues raised by the motion and, promptly, either confirm or change the decision, which (except as provided by this Agreement) shall then be final and conclusive upon the parties.

B-3

Arbitration Fees and Costs

The Company will be responsible for paying any filing fee and the fees and costs of the Arbitrator and the arbitration; provided, however, that if I am the party initiating the claim, I am responsible for contributing an amount equal to the filing fee to initiate a claim in the court of general jurisdiction in the state in which I am (or was last) employed by the Company.  Each party shall pay for its own costs and attorneys’ fees, if any.  However, if any party prevails on a statutory claim which affords the prevailing party attorneys’ fees, or if there is a written agreement providing for fees, the Arbitrator may award reasonable fees to the prevailing party, under the standards for fee shifting provided by law.

Judicial Review

Either party may bring an action in any court of competent jurisdiction to compel arbitration under this Agreement and to enforce an arbitration award.

Interstate Commerce

I understand and agree that the Company is engaged in transactions involving interstate commerce and that the Federal Arbitration Act applies to this Agreement.

Requirements for Modification or Revocation

This Agreement to arbitrate shall survive the termination of my employment.  It can only be revoked or modified by a writing signed by the parties which specifically states an intent to revoke or modify this Agreement.

Sole and Entire Agreement

This is the complete agreement of the parties on the subject of arbitration of disputes.  This Agreement supersedes any prior or contemporaneous oral or written understandings on the subject.  No party is relying on any representations, oral or written, on the subject of the effect, enforceability or meaning of this Agreement, except as specifically set forth in this Agreement.

Severability

If any provisions of this Agreement are adjudged to be void or otherwise unenforceable, in whole or in part, such adjudication shall not affect the validity of the remainder of the Agreement, as the parties hereto intend to create a binding agreement to arbitrate regardless of the unenforceability of any particular term or terms.

Consideration

The promises by the Company and by me to arbitrate differences, rather than litigate them before courts or other bodies, provide consideration for each other.

B-4

Voluntary Agreement

I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THIS AGREEMENT, THAT I UNDERSTAND ITS TERMS, THAT ALL UNDERSTANDINGS AND AGREEMENTS BETWEEN THE COMPANY AND ME RELATING TO THE SUBJECTS COVERED IN THE AGREEMENT ARE CONTAINED IN IT, AND THAT I HAVE ENTERED INTO THE AGREEMENT VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS BY THE COMPANY OTHER THAN THOSE CONTAINED IN THIS AGREEMENT ITSELF.

I UNDERSTAND THAT BY SIGNING THIS AGREEMENT I AM GIVING UP MY RIGHT TO A JURY TRIAL.  Employee initials: _____________ 

I FURTHER ACKNOWLEDGE THAT I HAVE BEEN GIVEN THE OPPORTUNITY TO DISCUSS THIS AGREEMENT WITH MY PRIVATE LEGAL COUNSEL AND HAVE AVAILED MYSELF OF THAT OPPORTUNITY TO THE EXTENT I WISH TO DO SO.

	CAPITAL TRUST, INC.
Dated:  December 31, 2008	By:	/s/ John R. Klopp
	Name:	John R. Klopp
	Title:	Chief Executive Officer

Dated:  December 31, 2008	/s/ Stephen D. Plavin
	STEPHEN D. PLAVIN

B-5

EX-10.36B

Exhibit 10.36.b

The undersigned agree this 31st day of December, 2008 that the employment agreement between us dated September 29, 2006 shall be amended effective January 1, 2009 in the same manner (to the extent applicable) that changes are reflected in redlining and strike-out on the attached restatement of the employment agreement (with Stephen Plavin) that is attached hereto as Exhibit A. In January 2009, we shall execute an amended and restated employment agreement in order to clarify all changes being made. 

CT INVESTMENT MANAGEMENT CO., LLC
	By:	/s/ John R. Klopp
	Name:	John R. Klopp
	Title:	Chief Executive Officer

CAPITAL TRUST INC.
	By:	/s/ John R. Klopp
	Name:	John R. Klopp
	Title:	Chief Executive Officer

/s/ Geoffrey Jervis

Geoffrey Jervis

410 Park Avenue • 14th Floor New York, New York 10022 • 212.655.0220 • Fax 212.655.0044 • NYSE Symbol: CT

EX-10.37B

Exhibit 10.37.b

The undersigned agree this 31st day of December, 2008 that to the extent the undersigned agree to extend or renew the employment agreement between us dated August 4, 2006 beyond December 31, 2008, such agreement shall be amended effective January 1, 2009 in the same manner (to the extent applicable) that changes are reflected in redlining and strike-out on the form of amended and restated employment agreement (with Stephen Plavin) that is attached hereto as Exhibit A. In the first quarter of 2009, we shall decide whether to extend or renew the employment agreement and if so extended or renewed we shall execute an amended and restated employment agreement in order to clarify all of the forgoing changes being made by this letter agreement.

CT INVESTMENT MANAGEMENT CO., LLC
	By:	/s/ John R. Klopp
	Name:	John R. Klopp
	Title:	Chief Executive Officer

CAPITAL TRUST INC.
	By:	/s/ John R. Klopp
	Name:	John R. Klopp
	Title:	Chief Executive Officer

/s/ Thomas Ruffing

Thomas Ruffing

410 Park Avenue • 14th Floor New York, New York 10022 • 212.655.0220 • Fax 212.655.0044 • NYSE Symbol: CT

EX-10.46D

AMENDMENT NO. 10 TO MASTER REPURCHASE AGREEMENT

AMENDMENT NO. 10, dated as of March 16, 2009 (this “Amendment”), to that certain Master Repurchase Agreement, dated as of July 29, 2005 (as amended, restated, supplemented or otherwise modified and in effect prior to the date hereof, the “Existing Repurchase Agreement,” and as amended hereby and as further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Repurchase Agreement”), by and among CAPITAL TRUST, INC. (“CT”), CT RE CDO 2004-1 SUB, LLC (“CDO 2004-1”), CT RE CDO 2005-1 SUB, LLC (“CDO 2005-1”) and CT XLC HOLDING, LLC (“CT XLC”), as sellers (collectively, the “Sellers”) and MORGAN STANLEY BANK, N.A., as buyer (“Buyer”).  Capitalized terms used but not otherwise defined herein shall have the meanings specified therefor in the Repurchase Agreement.

RECITALS

WHEREAS, Sellers and Buyer are parties to the Existing Repurchase Agreement;

WHEREAS, CT is party to that certain Master Repurchase Agreement, dated as of October 24, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMorgan-A Repurchase Agreement”), by and among CT BSI FUNDING CORP. (“CT BSI”) and CT, as sellers (in such capacity, collectively, the “JPM-A Sellers”) and JPMORGAN CHASE BANK, N.A., as buyer (“JPMorgan”);

WHEREAS, CT is party to that certain Master Repurchase Agreement, dated as of November 21, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMorgan-B Repurchase Agreement”; together with the JPMorgan-A Repurchase Agreement, collectively, the “JPMorgan Repurchase Agreements”), by and among CT BSI and CT, as sellers (in such capacity, collectively, the “JPM-B Sellers”; together with the JPM-A Sellers, collectively, the “JPM Sellers”) and JPMORGAN CHASE FUNDING INC., as buyer (“JPMorgan Funding”; and together with JPMorgan, collectively, the “JPM Parties”);

WHEREAS, CT is party to that certain Master Repurchase Agreement, dated as of July 30, 2007 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Citigroup Repurchase Agreement,” and together with the Repurchase Agreement and the JPMorgan Repurchase Agreements, the “Senior Secured Facilities”), by and among CT, as seller (the “Citigroup Seller”; and together with Sellers and the JPMorgan Sellers, the “CT Parties”) and CITIGROUP GLOBAL MARKETS INC. and CITIGROUP FINANCIAL PRODUCTS INC., as buyers (collectively, “Citigroup”, and together with Buyer and the JPM Parties, the “Secured Plan Participants”); and

WHEREAS, Sellers and Buyer have agreed, subject to the terms and conditions hereof, that the Existing Repurchase Agreement shall be amended as set forth in this Amendment.

NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, Sellers and Buyer agree as follows:

SECTION 1. Amendments to Master Repurchase Agreement.

(a)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definitions of “Asset Value”, “Aggregate Margin Maintenance Asset Value”, “Aggregate Margin Maintenance Asset Value Deficiency”, “Installment Date”, “Excluded Transaction Assets”, “Margin Maintenance Asset Value” and “Maximum Concentration Amount” in their entirety.

(b)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Maximum Purchase Amount” in its entirety and inserting in lieu thereof the following:

“Maximum Purchase Amount” shall mean, initially, $181,349,964.18, and such “Maximum Purchase Amount” shall be reduced by any payment or prepayment to Buyer on account of the Repurchase Price (excluding payments of Price Differential and Late Fees) of any Transaction Asset.

(c)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Income” in its entirety and inserting in lieu thereof the following:

“Income” shall mean, with respect to any Transaction Asset at any time, any Principal Income thereof and all Interest Income thereon.

(d)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by adding at the end of the definition of “Subsidiary” the following:

“Notwithstanding the foregoing, Subsidiary shall not include investment funds managed by Seller or subsidiaries of same or investment funds of which Seller controls the general partner or managing member thereof or subsidiaries of same (except for those investment funds or subsidiaries of same of which Seller directly or indirectly owns at least a majority of the securities or other ownership interests therein).”

(e)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Termination Date” in its entirety and inserting in lieu thereof the following:

“Termination Date” shall mean March 16, 2010 or such earlier date on which this Agreement shall terminate in accordance with the provisions thereof or hereof or by operation of law; provided, however, that if the applicable conditions set forth in Section 4.01(a) of this Agreement shall have been satisfied, the Termination Date shall be extended to the applicable date set forth in Section 4.01(a) of this Agreement.

(f)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Transaction Documents” in its entirety and inserting in lieu thereof the following:

“Transaction Documents” shall mean, collectively, this Agreement, the related Confirmations, the Servicing Agreement, the Lockbox Account Control Agreement, the Warrant and the Custodial Agreement.

(g)           Section 2.01 of the Existing Repurchase Agreement is hereby amended by inserting the following new definitions in proper alphabetical order:

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“Additional Restricted Cash” shall mean, to the extent otherwise constituting Unrestricted Cash, any cash or Cash Equivalent of CT and its Subsidiaries (i) that is required to be trapped pursuant to the other Senior Secured Facilities or the terms of any other loan agreement, repurchase agreement, or other extension of credit, (ii) that is received in anticipation of a disbursement by CT or any of its Subsidiaries to a Person other than CT or any Subsidiary within one (1) Business Day, (iii) that is provided as cash collateral to support letters of credit and bank guarantees, customs and other import duties in the ordinary course of business of CT or any of its Subsidiaries or (iv) that, if distributed or paid, would result in the insolvency of CT.

“Amendment No. 10” shall mean that certain Amendment No. 10 to this Agreement, dated as of March 16, 2009, among Sellers and Buyer.

“Amendment No. 10 Effective Date” shall mean the “Amendment Effective Date”, as defined in Section 2 of Amendment No. 10.

“Bonds” shall mean all Transaction Assets designated as “bonds” in Exhibit G.

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

“Citigroup Repurchase Agreement” shall have the meaning specified in Amendment No. 10.

“Collateral” shall have the meaning specified therefor in Section 5.01(d).

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“Collateral Value” shall mean, as of any date of determination, in respect of any Transaction Asset, (a) in the case of Bonds, as determined by Buyer in its sole discretion exercised in good faith and (b) in the case of Transaction Assets other than  Bonds, the Initial Value of such Transaction Assets, adjusted by taking into account credit risk (including, without limitation, information relating to the sponsor or tenant for such Transaction Asset or other information relating to the likelihood of payment of such Transaction Asset; any alleged violation of Environmental Laws; any bankruptcy filings, casualty loss, or condemnation affecting or impacting the applicable Underlying Property or Mortgaged Property; any bankruptcy filing or other act of insolvency with respect to any co-participant or any other Person having an interest in such Transaction Asset or any related Underlying Property or Mortgaged Property that is senior to, or pari passu with, the rights of Buyer in such Transaction Asset; any payment of principal and/or interest are more than 60 days past due under any mortgage note affecting the Mortgaged Property or Mortgaged Properties or such Transaction Asset (without giving effect to any waiver by the lender thereunder); any modification of the Underlying Property or Mortgaged Property or to the related loan documents (or any financing senior thereto); any market comparables for the Mortgaged Property or Mortgaged Properties) applicable to such Transaction Asset; but excluding market risk (e.g., interest rate risk) applicable to the Transaction Asset; provided, however, that Buyer may take into account any performance assumptions with respect to such Transaction Asset (including, without limitation: the sponsorship thereof; projections as to default probabilities and estimated losses; changes in the cash flow generated by the Underlying Property or Mortgaged Property; the ultimate collectibility of the Transaction Asset if held to maturity; for assets held or to be held by the Custodian, the failure to deliver the Transaction Asset Documents to the Custodian in accordance with the terms of this Agreement and the Custodial Agreement; whether the Transaction Asset has been released from the possession of the Custodian under the Custodial Agreement to a Seller for a period in excess of twenty (20) calendar days without the consent of Buyer; and a breach of any of the representations and warranties regarding the Transaction Asset contained in Section 7.09), in each case in its sole discretion exercised in good faith; and provided further, that the Collateral Value, without giving effect to such increase, shall in no event exceed one hundred percent (100%) of the outstanding principal balance of the related Transaction Asset.

“CT Cash Account” shall mean one or more deposit accounts established by CT with Merrill Lynch, Pierce, Fenner & Smith Incorporated or Bank of America, N.A.

“Defaulted Collateral Asset” shall mean a Transaction Asset with respect to which (a) a monetary default has occurred or (b) an acceleration or foreclosure (including, in the case of Subordinate Mortgage Loans, Whole Loans, Mezzanine Loans or B Notes, a foreclosure of the Underlying Property or Mortgaged Property) has been declared or commenced, and, in either case, such Transaction has not been returned to performing status within 90 days; provided that Defaulted Collateral Assets shall not include (a) any Bonds, and (b) any Transaction Asset with a Collateral Value or allocated borrowing of zero.

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“Environmental Laws” shall mean any and all foreign, Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Authority or requirements of law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as now or may at any time hereafter be in effect.

“Excess Cash” shall mean an amount, if any, by which Unrestricted Cash exceeds the sum of (a) $25,000,000 and (b) the aggregate amount of Unfunded Commitments.

“Filings” shall have the meaning specified therefor in Section 5.01(e).

“Future Advances” shall mean CT’s commitment to make future advances on Transaction Assets and assets under other Senior Secured Facilities, as detailed in Exhibit G.

“Initial Advance Rate” shall mean, with respect to each Transaction Asset, a rate as specified therefor on Exhibit G hereto.

“Initial LTCV” shall mean the LTCV, calculated as of the Amendment No. 10 Effective Date.

“Initial Mark” shall mean, with respect to each Transaction Asset, a percentage as specified therefor on Exhibit G hereto.

“Initial Value” shall mean, with respect to each Transaction Asset, a value equal to the product of (i) the “Face Amount” for such Transaction Asset as specified therefor on Exhibit G hereto and (ii) the Initial Mark for such Transaction Asset.

“Interest Allocation Percentage” shall mean, initially, 65%, or, if the Termination Date is extended pursuant to Section 4.01 and beginning on the first day after the original Termination Date, such other percentage as agreed to in good faith among Sellers and the Secured Plan Participants, in each case, in their commercially reasonable discretion.

“Interest Income” shall mean, with respect to any Transaction Asset at any time, all interest, dividends or other distributions thereon.

“JPMorgan Account” shall mean the Sellers’ account held with JPMorgan Chase Bank, N.A.

“JPMorgan Repurchase Agreements” shall have the meaning specified therefor in Amendment No. 10.

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“Lehman Facility” shall mean that certain Amended and Restated Loan and Security Agreement, dated as of September 10, 2008, between CT, as borrower, and Lehman Commercial Paper Inc. as lender.

“Liquidity” shall mean, on any date of determination, the sum of (A) the consolidated amount of Unrestricted Cash of CT and its Subsidiaries on such date, and (B) the incremental amount of borrowings CT and its Subsidiaries are, as of such date, permitted to borrow pursuant to the terms of existing committed Indebtedness of CT or its Subsidiaries in effect on such date, as to which all conditions precedent have been satisfied and which borrowings do not require the discretionary consent of the applicable lender, counterparty, credit provider or any other Person.

“Lockbox Account” shall mean a Collections Account, subject to a Lockbox Account Control Agreement.

“Lockbox Account Control Agreement” shall mean an account control agreement between a depository bank (acceptable to Buyer in its sole discretion), Sellers and Buyer in respect of the Lockbox Account in form and substance acceptable to Buyer in its sole and absolute discretion.

“LTCV” shall mean, as of any date of determination, the ratio (expressed as a percentage) of the aggregate MRA Obligations to the aggregate Collateral Value of all Transaction Assets.

“Maximum Outstanding Amount” shall mean, for all Transactions, an amount equal to $145,079,971.34; provided that solely for purposes of Section 4.01, the Maximum Outstanding Amount may be adjusted pursuant to Section 4.07(e).

“MRA Obligations” shall mean the aggregate amount of each Seller’s obligations under the Transaction Documents and the Transactions entered into under this Agreement, including, without limitation, each Seller’s obligation to repurchase Transaction Assets at the Repurchase Price, or if such obligation were to be recharacterized as a loan, to repay such loan, and to pay any and all other amounts owing under this Agreement and the other Transaction Documents.

“Minimum Release Price” shall mean, for any Transaction Asset, an amount equal to the greater of (a) the lesser of (i) the Initial Value of such Transaction Asset, (ii) the Collateral Value for such Transaction Asset as of the date that CT notifies Buyer of its intent to sell, dispose, transfer or refinance such Transaction Asset pursuant to a Permitted Disposition, and (iii) 110% of the Repurchase Price of such Transaction Asset and (b) the Repurchase Price.

“Net Proceeds” shall mean, with respect to any Permitted Disposition or the incurrence or issuance of any Indebtedness permitted under Section 8.19 hereof, the aggregate amount of cash received by or on behalf of such Person for its own account in connection with any such transaction, after deducting therefrom only:

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(a)           reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder’s fees and other similar fees, costs and commissions that, in each case, are actually paid at the time of receipt of such cash to a Person that is not a Subsidiary or Affiliate of any of the Sellers or any of their respective Subsidiaries or Affiliates;

(b)           the amount of taxes payable in connection with or as a result of such transaction that, in each case, are actually paid at the time of receipt of such cash to the applicable taxation authority or other Governmental Authority or, so long as such Person is not otherwise indemnified therefor, are reserved for in accordance with GAAP, as in effect at the time of receipt of such cash, based upon such Person’s reasonable estimate of such taxes, and paid to the applicable taxation authority or other Governmental Authority within 90 days after the date of receipt of such cash; and

(c)           in the case of any Permitted Disposition, the outstanding principal amount of, the premium or penalty, if any, on, and any accrued and unpaid interest on, any Indebtedness (other than Indebtedness under or in respect of the Transaction Documents) that is secured by a Lien on the property and assets subject to such Permitted Disposition and is required to be repaid under the terms of such Indebtedness as a result of such Permitted Disposition, in each case, to the extent that the amounts so deducted are actually paid at the time of receipt of such cash to a Person that is not an Affiliate of any of the Sellers or any of their Affiliates;

provided that, any and all amounts so deducted by any such Person pursuant to clauses (a) through (c) of this definition shall be properly attributable to such transaction or to the property or asset that is the subject thereof; provided, further, that if, at the time any of the taxes referred to in clause (b) are actually paid or otherwise satisfied, and the reserve therefor exceeds the amount paid or otherwise satisfied, then the amount of such excess reserve shall constitute “Net Proceeds” on and as of the date of such payment or other satisfaction for all purposes of this Agreement.

“Permitted Disposition” shall mean the sale, transfer, disposition or refinancing of any Transaction Asset by CT in accordance with Section 8.10; provided that (a) the Net Proceeds from such sale, transfer, disposition or refinancing shall be no less than the Minimum Release Price for such Transaction Asset; (b) 100% of the Net Proceeds from such Permitted Disposition is applied pursuant to Section 4.07(a) hereof; (c) any sale, transfer or disposition of Transaction Assets be made to a bona fide third party or, with Buyer’s prior written approval, to an Affiliate of CT; and (d) no Transaction Asset may be refinanced without the prior written approval of Buyer.

“Principal Income” shall mean, with respect to any Transaction Asset at any time, any principal thereon.

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“Secured Plan Facilities Obligations” shall mean the sum of the MRA Obligations and the aggregate amount of all obligations owed by CT or any Subsidiary of CT under the JPMorgan Repurchase Agreements and the Citigroup Repurchase Agreement.

“Secured Plan Participants” shall have the meaning specified therefor in the recitals to Amendment No. 10.

“Senior Secured Facilities” shall have the meaning specified therefor in the recitals to Amendment No. 10.

“Senior Unsecured Facility” shall mean that certain Credit Agreement, dated as of March 22, 2007, by and among CT as borrower, WestLB AG, New York Branch, as administrative agent, and the lenders party thereto, as the same may be amended, restated, supplemented or otherwise modified and in effect from time to time.

“Senior Unsecured Facility MS Indebtedness” shall mean all Indebtedness from time to time owed by any of the Sellers or any Affiliate of a Seller to Buyer or any Affiliate of Buyer under the Senior Unsecured Facility.

“Servicing Rights” shall mean rights of any Person, to administer, service or subservice, the Transaction Assets or to possess related Servicing Records.

“Unfunded Commitments” shall mean, as of any date, an amount equal to the sum of CT’s unfunded commitments to make Future Advances and meet future capital calls for CT Opportunity Partners I, LP as of such date.

“Unrestricted Cash” shall mean (a) cash and Cash Equivalents that would not appear in the consolidated financial statements of CT, prepared in accordance with GAAP, as a line item on the balance sheet as “restricted cash” or similar caption minus (b) any Additional Restricted Cash.

“Unsecured Lenders” shall mean the lenders party to the Senior Unsecured Facility.

“Valuation Test Date” shall have the meaning specified in Section 3.04.

“Valuation Test Failure” shall have the meaning specified in Section 3.04.

“Valuation Test Period” shall have the meaning specified in Section 3.04.

“Warrant” shall mean that certain Warrant, dated as of March 16, 2009, made by CT in favor of Morgan Stanley Asset Funding Inc.

(h)           Section 3.03(a)(i) of the Existing Repurchase Agreement is hereby amended by deleting the phrase “and to be included in the Aggregate Margin Maintenance Asset Value” therein in its entirety.

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(i)          Sections 3.03(a)(ii), 3.03(b), 8.06(c) and 12.13 of the Existing Repurchase Agreement are hereby amended by deleting each use of the term “Asset Value” therein in its entirety and inserting in lieu thereof the term “Collateral Value.”

(j)           Section 3.04 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“3.04      Margin Maintenance.

On a monthly basis, on the first Business Day of each month beginning on September 1, 2009 (each such date, a “Valuation Test Date”), Buyer will determine the Collateral Value of each Transaction Asset.  If on any Valuation Test Date, the LTCV exceeds 1.15 times the Initial LTCV (a “Valuation Test Failure”), Sellers shall, within five (5) Business Days following such Valuation Test Date, make a prepayment in reduction of the Repurchase Price of such Transaction Asset, such that after giving effect to such prepayment, the LTCV, as re-determined by Buyer, shall not exceed 1.15 times the Initial LTCV.  All prepayments in reduction of such Repurchase Price shall be applied by Buyer in its sole discretion.  If Sellers are not able to cure a Valuation Test Failure within five (5) Business Days after the applicable Valuation Test Date, then Sellers shall cooperate with Buyer to select one or more Transactions Assets to liquidate and will use commercially reasonable efforts, taking into account the rights and interests of Buyer, to expeditiously commence the liquidation process for same.  If the Valuation Test Failure is not cured within 60 days from the initial failure, an Event of Default will occur; provided that if Sellers provide Buyer with a copy of an executed asset sale or refinancing agreement, acceptable to Buyer in its sole discretion, prior to the end of such 60-day period in respect of the selected Transaction Assets, Buyer may, at its option, grant a one-time 15-day extension to cure such Valuation Test Failure (such 60-day period and any 15-day extension, a “Valuation Test Period”).  Notwithstanding the above, in the event that a Transaction Asset becomes a Defaulted Collateral Asset, a Valuation Test will be performed at that time, and the provisions of this Section 3.04 shall apply.”

(k)           Section 3.05 of the Existing Repurchase Agreement is hereby amended by deleting subsection (b) in its entirety and inserting in lieu thereof the following:

“(b)        Reserved.”

(l)           Section 4.01 of the Existing Repurchase Agreement is hereby amended by deleting subsection (a) thereof in its entirety and inserting in lieu thereof the following new subsection (a):

“(a)         Sellers hereby promise to pay in full on the Termination Date, in accordance with the provisions of the definition of Termination Date, the aggregate Repurchase Price with respect to all Transaction Assets then held by Buyer.

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(i)           Notwithstanding the foregoing, Sellers may, in their sole discretion by notice to Buyer between 90 and 20 days prior to the originally scheduled Termination Date, extend the Termination Date with respect to all of the Transactions until the first (1st) anniversary of the originally scheduled Termination Date (all of the other terms and conditions of such Transactions remaining the same) provided that the following conditions precedent are satisfied as of the date of the effectiveness of such extension: (1) the MRA Obligations as of the date of such extension are less than or equal to the Maximum Outstanding Amount, (2) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (3) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that, if conditions (1) through (3) are met and if any extension request is made during a Valuation Test Period, such extension shall be provisionally granted until the end of such Valuation Test Period, and such extension shall be granted only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

(ii)           Notwithstanding the foregoing, if the initial Termination Date shall have been extended pursuant to Section 4.01(a)(i), Sellers may request, between 90 and 20 days prior to the extended Termination Date, and subject to the written approval of Buyer in its sole and absolute discretion given no later than ten (10) days prior to the extended Termination Date (any failure by Buyer to deliver such notice of its approval to an extension to Seller shall be deemed a denial of Seller’s request to extend the Termination Date) provided that in any event, the following conditions precedent are satisfied as of the date of the effectiveness of such second extension: (1) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (2) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that if conditions (1) and (2) or any other conditions then required by Buyer in its sole discretion (including, without limitation, requirements of additional payments, prepayments, revaluations of Collateral Value for any Transaction Asset or delivery of additional documents) are met and if any extension request is made during a Valuation Test Period, such extension may be provisionally granted by Buyer, in its sole and absolute discretion, until the end of such Valuation Test Period, and such extension may be granted by Buyer, in its sole and absolute discretion, only if no Valuation Test Failure exists as of the end of such Valuation Test Period.”

(m)           Section 4.07 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“Section 4.07 Income Payments; Excess Cash.

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(a)           Principal Income.  Sellers shall cause (1) all Principal Income in respect of the Transaction Assets and (2) 100% of all Net Proceeds in respect of Permitted Dispositions of Transaction Assets, in each case, to be deposited directly in the Lockbox Account.  Such Principal Income shall be applied within one (1) Business Day following receipt by Buyer as follows: (i) first, to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Transaction Assets, (ii) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (iii) third, to make a payment to Buyer on account of the Repurchase Price of the Transaction Assets in respect of which such Principal Income is received until the Repurchase Price for each such Transaction Asset has been reduced to zero; (iv) fourth, to make a payment to Buyer on account of the Repurchase Price of all Transaction Assets until the Repurchase Price for all Transaction Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Transaction Assets with respect to which the Repurchase Price has not been reduced to zero; and (v) fifth, to remit to the applicable Seller the remainder.

(b)           Interest Income.  Sellers shall cause all Interest Income in respect of the Transaction Assets to be deposited directly in the Lockbox Account.  Such Interest Income shall be applied monthly by Buyer as follows:

(i) so long as no Event of Default shall have occurred and be continuing, (1) first, to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Transaction Assets, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a payment to Buyer on account of the Repurchase Price of all Transaction Assets, each such payment to be allocated in Buyer’s sole discretion among those Transaction Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to the product of the Interest Allocation Percentage multiplied by the difference between (x) the total Interest Income received by Sellers during such month and (y) the Price Differential otherwise actually paid by Sellers to Buyer during such month, and (4) fourth, to remit to the applicable Seller the remainder; and

(ii) if an Event of Default shall have occurred and be continuing, subject to Section 5.06 hereof, (1) first, to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Transaction Assets, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a payment to Buyer on account of the Repurchase Price of all Transaction Assets until the Repurchase Price for all Transaction Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Transaction Assets with respect to which the Repurchase Price has not been reduced to zero; and (4) fourth, to remit to the applicable Seller the remainder.

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(c)           Control Rights.  So long as no Event of Default shall have occurred and be continuing, and subject to the terms of the Transaction Documents and Section 8.25 hereof, each Seller shall retain the right to take all actions under the Transaction Documents and to retain all contact with the relevant Transaction Asset Obligor.

(d)           Excess Cash.  At the end of each calendar quarter, CT shall make a payment to Buyer on account of the Repurchase Price of all Transaction Assets until the Repurchase Price for all Transaction Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Transaction Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to (i) Excess Cash as of the last day of such calendar quarter, multiplied by Buyer’s pro rata share, based on the MRA Obligations at such date, of the aggregate Secured Plan Facilities Obligations as of such date.

(e) Future Advances.  Notwithstanding anything contained herein or in any other Transaction Document to the contrary, as of the Amendment No. 10 Effective Date, Buyer shall have no obligation to make any Future Advances and CT will fund 100% of all Future Advances.  Solely for purposes of Sections 4.01(a)(i)(1) and 4.01(a)(ii)(1) hereof, after each funding of Future Advances in respect of Transaction Assets by CT, the Maximum Outstanding Amount will be increased by an amount equal to the product of: (a) the amount of such Future Advance actually funded by CT, (b) the Initial Mark for the applicable Transaction Asset, (c) the Initial Advance Rate for such Transaction Asset and (d) 50%.”

(n)           Section 5.01(b) of the Existing Repurchase Agreement is hereby amended by inserting the following new subsection in proper numerical order and renumbering subsequent subsections accordingly:

“(vii) the Lockbox Account and all monies from time to time on deposit in the Lockbox Account,”

(o)           Section 5.01 of the Existing Repurchase Agreement is hereby amended by (i) deleting the phrase “any and all MS Indebtedness from time to time outstanding” and inserting in lieu thereof the phrase “any and all MS Indebtedness, other than the Senior Unsecured Facility MS Indebtedness, from time to time outstanding” and (ii) inserting the following new subsections in proper alphabetical order:

“(d)         Without limiting Sections 5.01(a) and (b) hereto, to secure payment of the Repurchase Obligations owing to Buyer, each Seller hereby grants to Buyer a security interest in all of Seller’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, hereinafter referred to as the “Collateral”:

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

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(ii)          the Lockbox Account and all monies from time to time on deposit in the Lockbox Account,

(iii)         the Transaction Asset Items;

(iv)         any and all replacements, substitutions, distributions on, income relating to or proceeds of any and all of the foregoing; and

(v)          each Seller’s right under each Interest Rate Protection Agreements, if any, relating to the Transaction Assets to secure the Repurchase Obligations.

(e)           Buyer’s security interest in the Collateral shall terminate only upon termination of each Seller’s obligations under this Agreement, all Interest Rate Protection Agreements and the documents delivered in connection herewith and therewith.  Upon such termination, Buyer shall deliver to each Seller such UCC termination statements and other release documents as may be commercially reasonable and return the Transaction Assets to the applicable Seller and reconvey the Transaction Asset Items to the applicable Seller and release its security interest in the Collateral.  For purposes of the grant of the security interest pursuant to this Section 5, this Agreement shall be deemed to constitute a security agreement under the Uniform Commercial Code.  Buyer shall have all of the rights and may exercise all of the remedies of a secured creditor under the Uniform Commercial Code and the other laws of the State of New York.  In furtherance of the foregoing, (a) Buyer, at Sellers’ sole cost and expense, shall cause to be filed in such locations as may be necessary to perfect and maintain perfection and priority of the security interest granted hereby, UCC financing statements and continuation statements (collectively, the “Filings”), and shall forward copies of such Filings to Sellers upon completion thereof, and (b) each Seller shall from time to time take such further actions as may be requested by Buyer to maintain and continue the perfection and priority of the security interest granted hereby (including marking its records and files to evidence the interests granted to Buyer hereunder).

(f)           Each Seller acknowledges that it has no right to service the Transaction Assets but only has rights pursuant to Section 12.14, as a party to a Servicing Agreement or any other servicing agreement with respect to the Transaction Assets.  Without limiting the generality of the foregoing and in the event that a Seller is deemed to retain any residual Servicing Rights, and for the avoidance of doubt, each Seller grants, assigns and pledges to Buyer a security interest in the Servicing Rights and proceeds related thereto and in all instances, whether now owned or hereafter acquired, now existing or hereafter created.  The foregoing provision is intended to constitute a security agreement or other arrangement or other credit enhancement related to the Agreement and Transactions hereunder as defined under Sections 101(47)(v) and 741(7)(x) of the Bankruptcy Code.”

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(p)           Section 5.02 of the Existing Repurchase Agreement is hereby amended by deleting subsection (a) thereof in its entirety and inserting in lieu thereof the following new subsection (a):

“(a)           Each Seller shall undertake, with respect to each Transaction Asset sold to Buyer and deemed to be pledged hereunder as security for a Transaction pursuant to Section 5.01(a) and the other Collateral pledged pursuant to Section 5.01(d), any and all actions deemed necessary by Buyer for the transfer by the relevant Seller to Buyer of a valid ownership interest and the granting of a precautionary first priority security interest, as the case may be, in such Transaction Asset and other Collateral.  Without limiting the generality of the foregoing, each Seller shall take such steps as are necessary for (i) the transfer of a valid ownership interest and the granting and perfection of a precautionary first priority security interest in securities and related Transaction Assets and (ii) the granting and perfection of a first priority security interest in the Collateral.”

(q)           Section 5.03 of the Existing Repurchase Agreement is hereby amended by deleting all references therein to “Transaction Assets” and inserting in lieu thereof the phrase “Transaction Assets and other Collateral.”

(r)           Section 5.06 of the Existing Repurchase Agreement is hereby amended by (i) deleting the reference to “Transaction Asset” in the first sentence thereof and inserting in lieu thereof the phrase “Transaction Asset and other Collateral,” and (ii) by deleting the last sentence thereof in its entirety and inserting in lieu thereof the following:

“For purposes hereof, proceeds shall include, but not be limited to, all principal and interest payments, all prepayments and payoffs, insurance condemnation awards, sale proceeds, real estate owned rents and any other income and all other amounts received with respect to the Transaction Assets and other Collateral.”

(s)           Section 5.07 of the Existing Repurchase Agreement is hereby amended by inserting the following at the end thereof:

“Notwithstanding anything contained herein to the contrary and without limiting the generality of any of the foregoing, if an Event of Default shall occur and be continuing, Buyer may, at its option, notify any bank or other depository institution to liquidate the applicable Collections Account and Lockbox Account maintained or held thereby and remit all funds and proceeds thereof to an account specified by Buyer, for application in accordance with this Agreement.”

(t)           Section 5.10 of the Existing Repurchase Agreement is hereby amended by deleting the reference therein to “Transaction Assets” and inserting in lieu thereof the phrase “Transaction Assets and other Collateral.”

(u)           Section 5.11 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

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“5.11       Release of Transaction Assets.  Provided that no Default or Event of Default shall exist (other than a Default or Event of Default that (a) relates solely to the Transaction Assets to be released and (b) will no longer exist after giving effect to such release) and either (x) Seller shall have paid all sums then due under the Transaction relating thereto or (y) Buyer shall have applied 100% of the Net Proceeds from a Permitted Disposition pursuant to Section 4.07(a) hereof, then upon (i) the relevant Seller’s payment in full of the Asset Specific Transaction Balance with respect to a portion of the Transaction Assets or the application of such Net Proceeds pursuant to Section 4.07(a) hereof, and (ii) receipt by Buyer of a written request from such Seller for the release of such Transaction Asset, Buyer shall as soon as practicable release (and Buyer shall reasonably cooperate with such Seller to facilitate reasonable escrow arrangements to facilitate a simultaneous release of) the related Transaction Asset Documents and the related Transaction Asset and any liens related thereto to such Seller or, to the extent necessary to facilitate future savings of mortgage tax in states that impose mortgage taxes, assign such liens as such Seller shall request, provided that any such assignments shall be without expense, recourse, representation or warranty of any kind except that Buyer shall represent and warrant that such Transaction Asset has not been previously assigned by Buyer.  At Sellers’ expense, Buyer shall with reasonable promptness, after a written request from Seller, execute any document or instrument necessary to effectuate such release or assignment.

(v)           Section 5.12 of the Existing Repurchase Agreement is hereby amended by (i) deleting all references therein to “Margin Maintenance Asset Value” and inserting in lieu thereof the term “Collateral Value” and (ii) by deleting all references therein to “Aggregate Margin Maintenance Asset Value” and inserting in lieu thereof the phrase “aggregate Collateral Value of all Transaction Assets.”

(w)           Section 6.02(b) of the Existing Repurchase Agreement is hereby amended by deleting the parenthetical “(in the case of the representations and warranties in Section 7.09, solely with respect to Eligible Transaction Assets included in the Aggregate Margin Maintenance Asset Value)” therein in its entirety and inserting in lieu thereof the following:

“(in the case of the representation and warranties in Section 7.09, solely with respect to Eligible Transaction Assets sold to Buyer in connection with such Transaction)”

(x)          Section 6.02(c) of the Existing Repurchase Agreement is hereby amended by deleting all references therein to “Aggregate Margin Maintenance Asset Value” and inserting in lieu thereof the phrase “aggregate Collateral Value of all Transaction Assets.”

(y)           Section 6.02 of the Existing Repurchase Agreement is hereby amended by inserting the following new subsection (k) in proper alphabetical order:

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“(k)         “Initial Advance Rate, Initial Mark, Initial Value.  Buyer shall have determined the Initial Advance Rate, Initial Mark, Initial Value, Purchase Price, Pricing Rate and any other information listed in Exhibit G hereto with respect to such Eligible Transaction Asset and shall have amended Exhibit G to reflect such determinations.”

(z)           Section 7.11 of the Existing Repurchase Agreement is hereby amended by deleting the phrase “relating to the Transaction Assets” therein in its entirety and inserting in lieu thereof “relating to the Transaction Assets and the Collateral”.

(aa)           Section 8.06(d) of the Existing Repurchase Agreement is hereby amended by (i) deleting all references therein to “Margin Maintenance Asset Value” and inserting in lieu thereof the term “Collateral Value” and (ii) by inserting the following new subsections in proper numerical order and renumbering subsequent subsections accordingly:

“(iii)        any default related to any Senior Secured Facility or the Senior Unsecured Facility, (iv) any proposed waiver, extension, amendment, or modification to any Senior Secured Facility or the Senior Unsecured Facility, (v) any new investments made in compliance with Section 8.18 hereof, (vi) any new Indebtedness incurred in compliance with Section 8.19 hereof,”

(bb)         Section 8.10 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“8.10       Limitation on Liens.  Each Seller will defend the Transaction Assets and the other Collateral against, and will take such other action as is necessary to remove, any Lien, security interest or claim on or to the Transaction Assets and the other Collateral, other than the security interests created, or otherwise specifically permitted in writing by Buyer under this Agreement, and each Seller will defend the right, title and interest of Buyer’s in and to any Transaction Asset and any other Collateral against the claims and demands of all persons whomsoever.  A Seller may request from time to time, subject to Buyer’s approval in Buyer’s sole determination, to sell participation interests in its interests in Transaction Assets in connection with a Permitted Disposition, the sale of which participation interests shall be arm’s length transactions and subject to such terms and conditions as Buyer in its sole discretion shall require; provided that Buyer (a) retains an interest in the tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition, subject to the terms of this Agreement or (b) shall maintain a security interest in such tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition; and provided further, that such Seller complies in all respects with the Transaction Asset Document delivery requirements contained in this Agreement and the Custodial Agreement.”

(cc)         Section 8 of the Existing Repurchase Agreement is hereby amended by

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(i)           deleting Sections 8.05, 8.11, 8.12, 8.13, 8.16 and 8.17 in their entirety and inserting in lieu thereof the following new Sections in proper numerical order:

“8.05       LTCV.  If at any time there exists a Valuation Test Failure, each Seller shall cure same in accordance with Section 3.04 hereof.

8.11         Limitation on Distributions.  No Seller shall 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 any Seller, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of any Seller, either directly or indirectly, whether in cash or property or in obligations of any Seller or any of Subsidiary of a Seller, except to the minimum extent required for a Seller to maintain its status as a real estate investment trust and, to the extent permitted, such distribution shall be made in equity in lieu of cash; provided that any Seller may make distributions to CT or any other wholly-owned Subsidiary of CT.

8.12         Reserved.

8.13         Reserved.

8.16         Reserved.

8.17         Reserved.”; and

(ii) by adding the following new sections in proper numerical order:

“8.18        No New Investments.  Without the prior written consent of Buyer, no Seller shall, nor permit any Subsidiary to, originate, acquire or invest in any new stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person except to (a) make co-investments in future funds of which CT (or its Affiliates) is the sponsor or manager, and (b) make protective investments to defend existing Transaction Assets or assets subject to another Senior Secured Facility or that are pledged as collateral security for the Senior Unsecured Facility.  With respect to co-investments, (a) no investments will be permitted in the first six (6) months following the Amendment No. 10 Effective Date, (b) the projected base management fees generated by the proposed future fund over the first 36 months must equal or exceed the co-investment commitment, and (c) the total amount of co-investment capital for all such proposed future funds may not exceed $10,000,000 without the prior written approval of Buyer.  With respect to protective investments made in respect of Transaction Assets or assets subject to another Senior Secured Facility, the amount of each investment may not exceed $5,000,000 per Transaction Asset, transaction or asset.  With respect to protective investments made in respect of assets pledged as collateral security for the Senior Unsecured Facility, the aggregate amount of such investments may not exceed $1,000,000.

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8.19          No New Indebtedness.  No Seller shall, nor permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness other than the Indebtedness already incurred as of the Amendment No. 10 Effective Date; provided, that additional Indebtedness may be incurred by Sellers or any of their Subsidiaries so long as the following conditions are satisfied: (i) to the extent that the Indebtedness is incurred in connection with a Permitted Disposition, the Net Proceeds of such Permitted Disposition are applied in accordance to Section 4.07(a), (ii) to the extent that such new Indebtedness is unsecured (and subordinate to all obligations owed by the applicable Seller under any Secured Plan Facility or the Senior Unsecured Facility) or incurred through the pledge of unencumbered assets, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account and (iii) to the extent that such new Indebtedness is recourse Indebtedness, only to the extent that it replaces existing recourse Indebtedness or is subordinate to all obligations owed to Buyer (and to the extent such new Indebtedness is not subject to clause (i) above, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account).

8.20           FY 2009 Compensation.  For all employees of CT and its Subsidiaries, other than the CEO, COO & CFO, total cash compensation (including base salary and bonus), in the aggregate shall not exceed $5.8 million.  Subject to the limitation in the preceding sentence, compensation for individual employees shall be determined by CT in its sole discretion.  For CT’s CEO, COO & CFO, (i) base salaries shall remain the same as in effect in 2008, and (ii) any cash bonus will be approved based upon performance metrics designed to create alignment with the interests of the Secured Plan Participants and the Unsecured Lenders and must be approved by unanimous consent of a committee comprised of (x) a representative selected by the Secured Plan Participants, (y) the administrative agent of the Senior Unsecured Facility and (z) a representative selected by the board of directors of CT.

8.21           Key Man Clause.  John Klopp and/or Stephen Plavin will continue their current employment with their current respective responsibilities throughout the term of this Agreement; provided that if both John Klopp and Stephen Plavin are no longer so employed, replacement(s) acceptable to Buyer in its sole and absolute discretion shall be appointed within 30 days after their departure.

8.22           Liquidity Covenant.  CT shall maintain, at all times, a minimum Liquidity of $7,000,000 in 2009 and $5,000,000 thereafter.

8.23           Additional Reporting; Budgets.  Without duplicating the reports provided under Section 8.01, Sellers will provide Buyer with (a) certified quarterly financial statements and audited annual financial statements prepared in accordance with GAAP, filed within SEC mandated time frames, (b) within thirty (30) Business Days following the end of each calendar month commencing with April 2009, unaudited monthly financial statements, (c) within ten (10) Business Days following the end of each calendar month, reports on asset level performance for each Transaction Asset, and (d) promptly, following any reasonable request therefor, reports of such other information regarding each Seller’s operations, business affairs and financial condition, or compliance with the terms of this Agreement.  Any reports provided above will include, without limitation, details of Sellers’ cash accounts at each quarter end and a schedule of each Seller’s Excess Cash, Unrestricted Cash and Unfunded Commitments.  Sellers agree to provide Buyer with an annual budget no later than 60 days after the end of each fiscal year.

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8.24           Bankruptcy.  No Seller will (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Seller or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing.

8.25           Consent Rights.  No Seller will amend, modify or otherwise agree to any change in the applicable documents for any Transaction Asset, the Underlying Property or other underlying collateral thereunder or the Mortgaged Property thereunder, without the prior written consent of Buyer.

8.26           Amendments.  No Seller shall agree to any amendment or modification to any Senior Secured Facility nor the Senior Unsecured Facility that relates to the subject matter of Amendment No. 10 or would adversely impair the interests Buyer without the prior written consent of Buyer.

8.27           Lockbox Account.  Sellers acknowledge that Buyer shall, until all MRA Obligations are satisfied and this Agreement terminates pursuant to its terms, maintain control over the Lockbox Account subject to the terms of the Lockbox Account Control Agreement.  At Sellers’ expense, Buyer may require that Sellers establish a new Lockbox Account at a depository institution selected by Buyer in its sole discretion and such new Lockbox Account shall be the “Lockbox Account” for all purposes hereunder.

8.28           Lehman Facility.  No Seller shall agree to any amendment or modification to the Lehman Facility without the prior written consent of Buyer, such consent not to be unreasonably withheld, conditioned or delayed.

8.29           Deposit Accounts.  All deposit accounts (other than (i) the Lockbox Account and (ii) any other deposit accounts specifically relating to the Transaction Assets or any asset or collateral subject to any Senior Secured Facility or the Senior Unsecured Facility) shall be established and maintained with financial institutions that are not Secured Plan Participants nor Unsecured Lenders; provided that the Sellers may maintain the JPMorgan Account so long as (w) no more than $1,000,000 may remain in the JPMorgan Account at any time, (x) no Seller may transfer any funds into the JPMorgan Account from any CT Cash Account, (y) any funds deposited in the JPMorgan Account will be transferred to a CT Cash Account within two (2) Business Days from receipt of such funds in the JPMorgan Account and (z) all funds in the JPMorgan Account will be transferred to a CT Cash Account and the JPMorgan Account will be closed on or before December 31, 2009.  For the avoidance of doubt, the Lockbox Account, any other Collection Account and any other deposit account relating to Transaction Assets may be established and maintained at any financial institution selected by Buyer in its sole discretion.”

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(dd)           Section 9 of the Existing Repurchase Agreement is hereby amended by deleting subsection (e) in its entirety and inserting in lieu thereof the following new subsection (e):

“(e)           (i) any Seller shall fail to comply with the requirements of Section 8.03(a), Section 8.04, Section 8.05, Section 8.06, Sections 8.08 through 8.22, or Sections 8.24 through 8.26 hereof, (ii) or any Seller shall otherwise fail to comply with the requirements of Section 8.03 hereof and such default shall continue unremedied for a period of ten (10) Business Days, or (iii) any Seller shall fail to observe or perform any other covenant or agreement contained in this Agreement or any other Transaction Document and such failure to observe or perform shall continue unremedied for a period of ten (10) Business Days, or”.

(ee)           Section 9 of the Existing Repurchase Agreement is hereby amended by deleting subsection (l) in its entirety and inserting in lieu thereof the following new subsection (l):

“(l)           any event or condition occurs that results in (i) any obligation or liability of any Seller under any note, indenture, loan agreement, guaranty, swap agreement or any other contract to which it is a party (other than MS Indebtedness), whether singly or in the aggregate, in excess of $1,000,000 becoming due prior to its scheduled maturity or that enables or permits (after the expiration of all grace or cure periods) the beneficiaries of, the holder or holders of, or any other party to any such indebtedness or contract, or any trustee or agent on its or their behalf, to cause any such obligation or liability to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or (ii) any monetary default under any note, indenture, loan agreement, guaranty, swap agreement or any other contract, credit facility or other obligation of a Seller (other than MS Indebtedness) if the aggregate amount of such credit facility, contract or other obligation in respect of which such monetary default shall have occurred is at least $1,000,000; provided that this Event of Default shall not apply to secured indebtedness that becomes due as a result of the sale or transfer of the property or assets securing such indebtedness, or”

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(ff)          Section 12.03(b)(ii) of the Existing Repurchase Agreement is hereby amended by deleting the phrase “with respect to Transaction Asset” in its entirety and inserting in lieu thereof “with respect to Transaction Assets and other Collateral”.

(gg)           Section 12.15 of the Existing Repurchase Agreement is hereby amended by deleting the phrase “Aggregate Margin Maintenance Asset Value under Section 3.04(a) hereof” therein in its entirety and inserting in lieu thereof the term “Collateral Value.”

(hh)         The Existing Repurchase Agreement is hereby amended by inserting Exhibit A attached hereto as a new Exhibit G in proper alphabetical order.

SECTION 2. Agreement.  Each Seller hereby agrees that, as of the date hereof, no additional Transactions shall be permitted under the Repurchase Agreement.

SECTION 3. Conditions Precedent.  This Amendment shall become effective on the date (the “Amendment Effective Date”) on which (1) all the representations and warranties made by Sellers in this Amendment are true and correct and (2) Buyer shall have received:

(a)           this Amendment, executed and delivered by a duly authorized officer of each of Sellers and Buyer;

(b)           a payment to Buyer on account of the Repurchase Price of all Transaction Assets, such payment to be allocated in Buyer’s sole discretion among the Transaction Assets, in an amount equal to $5,440,498.93;

(c)           evidence satisfactory to Buyer in its sole discretion that the Lockbox Account has been established with a depository bank acceptable to Buyer in its sole discretion;

(d)           the initial Lockbox Account Control Agreement, executed and delivered by a duly authorized officer of the parties thereto;

(e)           the Warrant, executed and delivered by a duly authorized officer of CT;

(f)           legal opinions from counsel to the Sellers dated as of the date hereof addressed to Buyers and its successors and assigns (i) as to the enforceability of the Repurchase Agreement, as amended by this Amendment, and (ii) as to each Seller’s authority to execute, deliver and perform its obligations under the Repurchase Agreement as amended hereby, in each case, in form and substance acceptable to Buyer in its reasonable discretion;

(g)           evidence, satisfactory to the Buyer in its sole discretion, of the payment in full of all obligations owed by any Seller under, and the termination of, the credit facilities identified on Schedule I hereto;

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(h)          a copy of an amendment to the Senior Unsecured Facility, executed and delivered by a duly authorized officer of the parties thereto, in form and substance acceptable to Buyer in its sole discretion; and

(i)           for the account of Buyer, payment and reimbursement for all of Buyer’s corresponding costs and expenses incurred in connection with this Amendment, all prior amendments and modifications to the Repurchase Agreement, any other documents prepared in connection herewith and therewith and the transactions contemplated hereby and thereby.

SECTION 4. Representations and Warranties.  On and as of the date first above written, each of Sellers hereby represents and warrants to Buyer that (a) it is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, (b) after giving effect to this Amendment, no Default or Event of Default under the Repurchase Agreement has occurred and is continuing, and (c) after giving effect to this Amendment, the representations and warranties contained in Section 7 of the Repurchase Agreement are true and correct in all material respects as though made on such date (except for any such representation or warranty that by its terms refers to a specific date other than the date first above written, in which case it shall be true and correct in all material respects as of such other date).

SECTION 5. General Release.  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Seller, for: (i) itself, (ii) any parent or Subsidiary thereof, and (iii) the respective partners, officers, directors, shareholders, successors and assigns of all of the foregoing persons and entities,

(a)           hereby releases and forever discharges Buyer and each of its subsidiaries, affiliates, its past, present and future officers, directors, agents, employees, partners, managers, shareholders, servants, attorneys and representatives, as well as their, successors, assigns, their respective heirs, legal representatives, legatees, predecessors-in-interest, successors and assigns, of and from any and all actions, claims, demands, damages, debts, suits, contracts, agreements, losses, liabilities, indebtedness, causes of action either at law or in equity, obligations of whatever kind or nature, accounts, defenses, and offsets against liabilities and obligations, whether known or unknown, direct or indirect, new or existing, by reason of any matter, cause or thing whatsoever occurring on or prior to the date hereof arising out of or relating to any matter or thing whatever, including without limitation, such claims and defenses as fraud, misrepresentation, breach of duty, mistake, duress, usury, claims pertaining to so-called “lender liability,” and claims pertaining to creditor’s rights, which such party ever had, now has, or might hereafter have against the other, jointly or severally, for or by reason of any matter, act, omission, cause or thing whatsoever occurring, on or prior to the date of this Amendment, that is related to, in whole or in part, directly or indirectly, the Transactions, the Repurchase Agreement, the Transaction Documents and this Amendment; and

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(b)           warrants, represents and acknowledges that it has no defenses to the payment of, nor any right to set off against, all or any of the MRA Obligations set forth in the Transaction Documents, nor any counterclaims or other rights of action against Buyer of any kind whatsoever, including, without limitation, any right to contest any of the following: the enforceability, applicability or validity of any provisions of the Transaction Documents, Buyer’s right to all proceeds of the Transaction Assets, the existence, validity, enforceability, or perfection of any security interest or mortgage in favor of Buyer, the conduct of Buyer in administering the Transaction Documents and any legal fees and expenses incurred by the Buyer under the Repurchase Agreement, the other Transaction Documents or this Amendment.

SECTION 6. Limited Effect.  Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with their respective terms; provided, however, that upon the Amendment Effective Date, all references in the Repurchase Agreement to the “Transaction Documents” shall be deemed to include, in any event, this Amendment.  Each reference to Repurchase Agreement in any of the Transaction Documents shall be deemed to be a reference to the Repurchase Agreement as amended hereby.

SECTION 7. Override Provision.  Notwithstanding any provision in the Repurchase Agreement to the contrary, which are hereby pro tanto superseded and modified or replaced mutatis mutandis to the extent of any inconsistency, the provisions in this Amendment shall apply from and after the date hereof.

SECTION 8. Counterparts.  This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.

SECTION 9. GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[SIGNATURES FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.

CAPITAL TRUST, INC.
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

CT RE CDO 2004-1 SUB, LLC
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

CT RE CDO 2005-1 SUB, LLC
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

CT XLC HOLDING, LLC
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

Signature Page to Amendment No. 10 to Master Repurchase Agreement

MORGAN STANLEY BANK, N.A.
By:	/s/ Cynthia Eckes
	Name: Cynthia Eckes
	Title: Authorized Signatory

Signature Page to Amendment No. 10 to Master Repurchase Agreement

Schedule I

Closeout Facilities

1.           Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, between Capital Trust, as seller, and Goldman Sachs Mortgage Company (“Goldman”), as buyer, as supplemented by that certain Amended and Restated Annex I to Amended and Restated Master Repurchase Agreement, dated as of October 30, 2007.

2.           Master Repurchase Agreement, dated as of October 30, 2007, between Capital Trust, as seller, and Goldman, as buyer, as supplemented by that certain Annex I to Master Repurchase Agreement, dated as of October 30, 2007.

Schedule I

EX-10.47E

AGREEMENT (this “Agreement”) dated as of March 16, 2009, by Capital Trust, Inc. (the “Seller”) and Goldman Sachs Mortgage Company (“Buyer”), each a “Party”, and, collectively, the “Parties”.

Reference is made to the Amended and Restated Master Repurchase Agreement between Buyer and the Seller, dated as of August 15, 2006 as supplemented by that certain Amended and Restated Annex I, dated as of October 30, 2007 (as amended, supplemented or modified, and together with all schedules, annexes and exhibits thereto, and all confirmations exchanged pursuant to the Transactions entered into in connection therewith, the “Repurchase Agreement”). All capitalized terms not otherwise defined herein have the meaning set forth in the Repurchase Agreement.

NOW, THEREFORE, in consideration of the foregoing, the Parties have agreed as follows:

1.           Additional Payments.  On the date hereof (the “Termination Date”), Seller shall pay to Buyer an amount equal to the sum of $2,641,632.12 and the TCAL Future Funding Amount (as defined below) (the “Paydown Amount”), which amount shall be applied to reduce the Repurchase Price (excluding accrued and unpaid Price Differential) under the Repurchase Agreement. The “TCAL Future Funding Amount” means an amount equal to $1,811,508.90.

2.           Purchase of Purchased Loans.

(a)           On the Termination Date, (i) Buyer and Seller agree that the Repurchase Date for all Transactions under the Repurchase Agreement shall be deemed to occur, (ii) the Repurchase Price (including accrued and unpaid Price Differential) shall be due and payable by Seller to Buyer, and, subject to receipt of the amount of $83,828,683.39, plus accrued and unpaid Price Differential to but excluding the Termination Date net of accrued and unpaid interest on the Closeout Loans (the “Closeout Repurchase Price”) (subject to the netting described below) (which Buyer agrees shall satisfy in full the obligation of Seller to pay the Repurchase Price (including accrued and unpaid Price Differential) pursuant to the Repurchase Agreement), Buyer shall be obligated to transfer the Purchased Loans to Seller pursuant to the Repurchase Agreement, (iii) the Seller shall sell and transfer to Buyer, free and clear of all liens, claims, encumbrances, obligations, liabilities or any similar interests whatsoever, and Buyer agrees to purchase, the Purchased Loans other than the Excluded Purchased Loan (as defined below) (the “Closeout Loans”) at a purchase price equal to the Closeout Purchase Price (as defined below) and (iv) upon consummation of the transactions described in the foregoing clauses (i), (ii) and (iii), the Repurchase Agreement and the other Transaction Documents shall terminate and be of no further force and effect.  “Excluded Purchased Loan” means the Woodfin Chase Purchased Loan.

(b)           The transactions contemplated by clauses (i), (ii) and (iii) of the prior sentence, the payment of the Paydown Amount in accordance with Section 1 above and the termination of the Repurchase Agreement and the other Transaction Documents shall be confirmed by such form of confirmation or trade ticket as Buyer customarily uses, provided, that, Buyer’s delivery of such confirmation or trade ticket shall not be a condition precedent to the effectiveness of the terminations and releases contained herein.  The Closeout Purchase Price (as defined below) due from Buyer to Seller shall be adjusted, paid and netted (as applicable) against the payment of the Closeout Repurchase Price payable by Seller to Buyer and the obligation of Buyer to transfer the Purchased Loans to Seller shall be netted against the obligation of Seller to transfer the Closeout Loans to Buyer.  The “Closeout Purchase Price” means $83,828,683.39.

3.           Representations and Warranties.  Each of Seller and Buyer represents and warrants that (i) this Agreement has been duly authorized, executed and delivered, (ii) the transactions contemplated hereby have been duly authorized by all necessary action, do not violate any agreement, document or law or regulation or require any consent or filing with any person or entity, and (iii) this Agreement constitutes the legal, valid, and binding obligations of such Party, enforceable against such Party in accordance with its terms. Buyer and Seller each acknowledge and agree that the transactions hereunder constitute “reasonably equivalent value” and “fair consideration” (as such terms are used in connection with any applicable fraudulent conveyance, fraudulent transfer or other similar laws) and are made in good faith.

4.           Releases.  On the Termination Date, upon consummation of the termination of the Transactions, the Repurchase Agreement and the other Transaction Documents pursuant to this Agreement and the sale of the Closeout Loans in accordance with this Agreement each Party hereby releases, acquits and forever discharges each other Party, and each of their respective subsidiaries, affiliates, officers, directors, agents, employees, partners, members, managers, servants, attorneys and representatives, as well as the heirs, personal representatives, predecessors-in-interest, successors and assigns from any and all claims, demands, debts, actions, causes of action, suits, contracts, agreements, obligations, liabilities, accounts, defenses, offsets against the liabilities and obligations arising under or related to the Repurchase Agreement and the other Transaction Documents and the Transactions contemplated therein or related thereto, including, without limitation, all such claims, defenses and liabilities of any kind or character whatsoever, whether known or unknown, suspected or unsuspected, in contract, in tort or statutory, at law or in equity, including, without limitation, such claims and defenses as fraud, misrepresentation, breach of duty, mistake, duress, usury, claims pertaining to so-called “lender liability,” and claims pertaining to creditor’s rights, which such Party ever had, now has, or might hereafter have against the other, jointly or severally, for or by reason of any matter, act, omission, cause or thing whatsoever occurring, on or prior to or subsequent to the date of this Agreement, that is related to, in whole or in part, directly or indirectly the Repurchase Agreement, the other Transaction Documents and/or any of the Transactions; provided, however, that nothing in this Agreement or these releases shall be deemed to release any obligation of Buyer or Seller, as the case may be, arising under this Agreement or the transactions contemplated hereunder.  In connection with the releases granted herein, each of the Parties hereby waives all rights conferred by the provisions of California Civil Code Section 1542 and/or any similar state or federal law.  California Civil Code Section 1542 provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

The Parties understand and acknowledge the significance and consequence of their waiver of Section 1542 of the California Civil Code, as well as any other federal or state statute or common law principle of similar effect, and acknowledge that this waiver is a material inducement to and consideration for each other Party’s execution of this Agreement.

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5.           Safe Harbor Rights.  Seller acknowledges and agrees that (i) this Agreement and the Repurchase Agreement constitute a “repurchase agreement” within the meaning of section 101(47) of the United States Bankruptcy Code (the “Code”), and a “securities contract” within the meaning of section 741(7) of the Code, (ii) the exercise by Buyer of rights hereunder and as set forth in the Repurchase Agreement are rights described in and protected by sections 362(b)(6), 362(b)(7), 362(b)(27), 555, 559 and 561 of the Code, (iii) Buyer is entitled to all rights and protections applicable to “repurchase agreements” and “securities contracts” under the Code, including, without limitation, the rights and protections described in the Code sections referenced in (ii) of this Section 5, the rights and protections afforded under sections 546(e), 546(f), 546(j), 548(d)(2)(B), 548(d)(2)(C) of the Code, and the rights and protections applicable to setoffs or netting described in sections 362(b)(6), 362(b)(7), 555, 559 and 561 of the Code.

6.           Miscellaneous.  This Agreement embodies the entire agreement and understanding of the Parties with respect to the subject matter of this Agreement, and supersedes all prior or contemporaneous agreements or understandings, whether written or oral, between or among the Parties with respect to that subject matter.  This Agreement may be amended, and the terms hereof may be waived, only by a written instrument signed by each of the Parties, or, in the case of a waiver, by the Party waiving compliance. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.  This Agreement may be executed and delivered by facsimile or PDF.  Any facsimile or PDF signatures shall have the same legal effect as manual signatures.  The Seller shall not have any right to transfer or delegate (whether by way of security or otherwise) this Agreement or any right, title, interest, power, privilege, remedy, obligation or duty in, to or under this Agreement, in whole or in part, without the prior written consent of Buyer.  Buyer may transfer or delegate (whether by way of security or otherwise) this Agreement or any right, title, interest, power, privilege, remedy, obligation or duty in, to or under this Agreement, in whole or in part, to an affiliate of Buyer or any entity sponsored or organized by, or on behalf of or for the benefit of, Buyer without the consent of the Seller.

This Agreement shall be governed by and construed in accordance with the laws of the State of New York (without reference to its conflicts of laws principles) and the Parties agree to submit to the non-exclusive jurisdiction of the federal and state courts in the borough of Manhattan in New York, New York in relation to any dispute arising out of or in connection with this Agreement.

[SIGNATURES COMMENCE ON NEXT PAGE]

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above written.

GOLDMAN SACH MORTGAGE COMPANY, a New York limited partnership
By: Goldman Sachs Real Estate Funding Corp., its general partner
By:	/s/ Mark Buono
	Name: Mark Buono
	Title: Vice President

CAPITAL TRUST, INC., a Maryland corporation
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

EX-10.47D

Exhibit 10.47.d

AMENDED AND RESTATED

ANNEX I

to

AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

between

GOLDMAN SACHS MORTGAGE COMPANY,

as Buyer

and

CAPITAL TRUST, INC.,

as Seller

TABLE OF CONTENTS

Page

1.	APPLICABILITY; OTHER APPLICABLE ANNEXES	1
2.	ADDITIONAL AND SUBSTITUTE DEFINITIONS	1
3.	INITIATION; CONFIRMATION; TERMINATION; FEES	20
4.	MANDATORY PAYMENT OR DELIVERY OF ADDITIONAL ASSETS	28
5.	INCOME PAYMENTS AND PRINCIPAL PAYMENTS	29
6.	CAUTIONARY SECURITY INTEREST	31
7.	PAYMENT, TRANSFER AND CUSTODY	32
8.	CERTAIN RIGHTS OF BUYER WITH RESPECT TO THE PURCHASED LOANS	39
9.	SUBSTITUTION	39
10.	REPRESENTATIONS	40
11.	NEGATIVE COVENANTS OF SELLER	43
12.	AFFIRMATIVE COVENANTS OF SELLER	44
13.	INTENTIONALLY OMITTED	48
14.	EVENTS OF DEFAULT; REMEDIES	48
15.	SINGLE AGREEMENT	53
16.	NOTICES AND OTHER COMMUNICATIONS	53
17.	NON-ASSIGNABILITY	53
18.	GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL	54
19.	NO RELIANCE; DISCLAIMERS	55
20.	INDEMNITY AND EXPENSES	56
21.	DUE DILIGENCE	57
22.	SERVICING	57
23.	TREATMENT FOR TAX PURPOSES	58
24.	INTENT	59
25.	INTENTIONALLY OMITTED	59
26.	MISCELLANEOUS	59

SCHEDULE 1	Purchase Percentages and Applicable Spreads	1-1
SCHEDULE 2	Intentionally Omitted	2-1
SCHEDULE 3	Purchased Loan Information	3-1
SCHEDULE 4	Approved Appraisers	4-1

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SCHEDULE 5	Approved Engineers	5-1
SCHEDULE 6	Approved Environmental Consultants	6-1
SCHEDULE 7-A	Form of UCC Financing Statement	7-A-1
SCHEDULE 7-B	Form of UCC Financing Statement Amendment	7-B-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 the Purchased Loans

EXHIBIT VI Form of Blocked Account Agreement

EXHIBIT VII Form of Direction Letter

EXHIBIT VIII Form of Bailee Agreement

EXHIBIT IX Eligibility Criteria

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Supplemental Terms and Conditions

This Amended and Restated Annex I dated as of October 30, 2007 (this “Annex I”) forms a part of the Amended and Restated Master Repurchase Agreement dated as of August 15, 2006 between Capital Trust, Inc., as seller, and Goldman Sachs Mortgage Company, as buyer (the “Master Repurchase Agreement” and, together with this Annex I, the “Agreement”), which amends and restates that certain Master Repurchase Agreement dated as of May 28, 2003, as such agreement was amended from time to time, between Seller and Buyer (the “Original Agreement”).  Capitalized terms used in this Annex I without definition shall have the respective meanings assigned to such terms in the Master Repurchase Agreement.  This Annex I is intended to supplement the Master Repurchase Agreement and shall, wherever possible, be interpreted so as to be consistent with the Master Repurchase 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 Master Repurchase Agreement, on the other, the provisions of this Annex I shall govern and control.  All references in the Master Repurchase Agreement and in this Annex I to “the Agreement” shall be deemed to mean and refer to the Master Repurchase 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 Master Repurchase Agreement (“Applicability”) is hereby deleted in its entirety and replaced with the following provisions of this Section 1:

Seller and Buyer entered into the Original Agreement pursuant to which Buyer and Seller agreed to enter into Transactions from time to time.  The parties have agreed to amend and restate the Original Agreement as set forth herein.

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 Master Repurchase Agreement (“Definitions”) are hereby deleted in their entirety:

(i)            “Additional Purchased Securities”;

(ii)           “Buyer’s Margin Amount”;

(iii)          “Buyer’s Margin Percentage”;

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(iv)           “Margin Notice Deadline”;

(v)            “Prime Rate”;

(vi)           “Purchased Securities”;

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

(viii)         “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 Master Repurchase 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 the consent by such party to 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 its inability to pay its debts generally 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(c) 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 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 (v) 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 with Buyer in its 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 in its commercially reasonable judgment).

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“Price Differential” shall mean, with respect to any Transaction as of any date, the aggregate amount obtained by daily application of the Pricing Rate for such Transaction to the Repurchase Price thereof (excluding any amount attributable to Price Differential in the definition thereof), calculated on a 365 day per year basis for the actual number of days during the period commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the date of determination (such aggregate amount to be reduced by any amount of such Price Differential paid by Seller to Buyer, prior to such date, with respect to such Transaction).

“Pricing Rate” shall mean, for any Purchased Loan and any Pricing Rate Period, an annual rate equal to the LIBO 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) and 3(k) of this Annex I.

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

“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 dollars) equal to the product obtained by multiplying (i) the Market Value of such Purchased Loan (or the par amount of such Purchased Loan, if lower than the Market Value) by (ii) the Purchase Percentage for the related Loan Type.

“Repurchase Date” shall mean, with respect to any Purchased Loan, 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; such price will be determined in each case as the sum of the Purchase Price of such Purchased Loan and the accrued and unpaid Price Differential with respect to such Purchased Loan as of the date of such determination, minus all Income and other cash actually received by Buyer in respect of such Transaction and applied towards the Repurchase Price and/or Price Differential pursuant to Sections 3(i), 3(j), 4(a), 4(c), 5(b), 5(c), 5(d) and 5(e) of this Annex I.

(c)           In addition to the terms defined in Paragraph 2 of the Master Repurchase 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, servicing practices 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 that are similar to such Purchased Loan.

“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.

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

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

“Alternate-Funded Repurchase Agreement” shall mean the Repurchase Agreement, dated as of October 30, 2007, between Seller and Buyer, as amended, supplemented or modified from time to time.

“Alternative Rate” shall have the meaning specified in Section 3(e) 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.

“Applicable Spread” shall mean, (i)(a) with respect to a Purchased Loan (other than Extended Loans), so long as no Seller Event of Default shall have occurred and be continuing, the per annum rate specified in Schedule 1A attached hereto (and, in the case of a Purchased Loan that has been, or is to be, pledged to the trustee under the CDO Indenture or the CDO II Indenture, the per annum rate specified in Schedule 1B attached hereto) as being the “Applicable Spread” for the Purchased Loans in such Loan Type and (b) with respect to an Extended Loan, so long as no Event of Default shall have occurred and be continuing, a per annum rate specified in Schedule 1A attached hereto as being the “Applicable Spread” for such Extended Loan (or such other spread notified in writing  by Buyer to Seller as provided in Section 3(t)), and (ii) in each case, after the occurrence and during the continuance of a Seller 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 listed on Schedule 4 attached hereto, as such schedule may be amended from time to time by Seller or Buyer upon approval 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 Institutions Reform, Recovery and Enforcement Act of 1989 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 Seller to 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 that 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.

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“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 Paul, Hastings, Janofsky & Walker LLP or such other third party as Buyer may approve in its sole discretion.

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

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

“Blocked Account Agreement” shall mean the Amended and Restated 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), dated as of the date hereof and executed by Buyer, Seller and the Depository Bank (and any successor thereto or replacement thereof executed by Buyer, Seller and the Depository Bank).

“Business Day” shall meanany day other than (i) a Saturday or Sunday and (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.

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

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

“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.

“CDO Asset” shall mean each Purchased Loan that has a Rating Agency Stressed LTV (as defined in the CDO Indenture) that is less than 125% and a Rating Agency Stressed DSCR (as defined in the CDO Indenture) greater than .80x.

“CDO II Asset” shall mean each Purchased Loan that has a Rating Agency Stressed LTV (as defined in the CDO II Indenture) that is not greater than 95% and a Rating Agency Stressed DSCR (as defined in the CDO II Indenture) not less than 1.05x.

“CDO Indenture” shall mean the Indenture dated as of July 20, 2004, among Capital Trust RE CDO 2004-1 Ltd. and Capital Trust RE CDO 2004-1 Corp., as co-issuers, and LaSalle Bank National Association, as trustee.

“CDO II Indenture” shall mean the Indenture for CT RE CDO 2005-1.

“CDO Purchased Loan” shall mean any Purchased Loan that meets the requirements of Exhibit IX and is intended to be, or is, pledged to the trustee under the CDO Indenture or the CDO II Indenture.

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“Change of Control” shall mean the occurrence of any of the following events:

(i)           a majority of the members of the board of directors of Seller changes during any twelve (12) month period after the date hereof; or

(ii)           a merger, consolidation or other transaction in which a Person which is not an Affiliate acquires in excess of 50% of the voting common equity of Seller.

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

“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, that (i) arise out of Seller’s conduct or (ii) (A) are required to be paid by the lender under the applicable Purchased Loan Documents and (B) do not arise out of the gross negligence or willful misconduct of the Buyer.

“Custodial Agreement” shall mean, with respect to Transactions involving Purchased Loans, the Amended and Restated Custodial Agreement, dated as of the date hereof, by and among Custodian, Seller and Buyer.

“Custodial Delivery Certificate” shall mean the custodial 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 Deutsche Bank Trust Company Americas 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).

“Debt Yield” shall mean, with respect to any Eligible Property or Properties directly or indirectly securing a New Loan, the quotient (expressed as a percentage) of (i) net operating income for the trailing twelve-month period for the most recently ended fiscal quarter divided by (ii) the total amount of indebtedness secured directly or indirectly by such Eligible Property or Properties that are senior to or pari passu with the New Loan.

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

“Defaulted Loan” shall mean any Purchased Loan as to which (i) there is a breach beyond any applicable cure period of a representation, warranty or covenant by the related borrower or obligor under the applicable Purchased Loan Documents or by Seller under Exhibit V, (ii) there is a 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 default continues, (iii) there is any other “Event of Default” under the related Purchased Loan Documents, (iv) to the extent that the related Transaction is deemed to be a loan under federal, state or local law, Buyer ceases to have a first priority perfected security interest or (v) 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.

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“Depository Bank” shall mean PNC Bank, N.A. or any successor Depository Bank appointed by Seller with the prior written consent of Buyer (which consent shall not be unreasonably withheld, delayed or conditioned) 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 payable by Seller to Buyer in respect of Buyer’s legal and other expenses incurred in connection with its review of the Diligence Materials, which fees shall not exceed (i) $10,000 for non-table funded Purchased Loans and $15,000 for table funded Purchased Loans and (ii) with respect to expenses not related to its review of the Diligence Materials but otherwise related to asset funding, an aggregate of $35,000 annually.

“Diligence Materials” shall mean, with respect to any New Loan, the related Preliminary Due Diligence Package together with the related Supplemental Due Diligence Package.

“Disqualified Transferee” shall mean any one of the following:

(a)           iStar Financial and its Affiliates;

(b)           Anthracite Carbon Fund, together with any successor funds, to the extent such funds are in the same business as their predecessor fund and its Affiliates;

(c)           DB Realty Mezzanine Investment Fund I LLC and DB Realty Mezzanine Investment Fund II LLC, together with any successor funds, to the extent such funds are in the same business as their predecessor fund;

(d)           Brascan and its Affiliates;

(e)           Fortress/Draw Bridge and its Affiliates;

(f)           Whitehall;

(g)           Five Mile Capital and its Affiliates;

(h)           Fillmore Capital and its Affiliates;

(i)           Resource America and its Affiliates;

(j)           Northstar and its Affiliates;

(k)           Guggenheim and its Affiliates; and

(l)           SL Green/Gramercy Capital and their Affiliates.

“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.

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“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 Seller 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 on a consolidated basis 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, excluding (d) any non-cash reserve activity.

“Eligible Loans” shall mean any of the following types of loans listed in (i) through (v) below, (u) acceptable to Buyer in the exercise of its sole and absolute discretion, (v) secured directly or indirectly by an Eligible Property, (w) having a remaining term (after giving effect to the exercise of any extension options) not to exceed seven (7) years, (x) as to which the applicable representations and warranties set forth in Exhibit V are true and correct as of the applicable Purchase Date, (y) with respect to any proposed CDO Purchased Loan, as to which the eligibility criteria set forth in Exhibit IX are met as of the applicable Purchase Date, and (z) has a maximum LTV of 85% (unless provided below or is approved by Buyer on a case by case basis).

(i)           performing Mezzanine Loans which are secured by pledges of the equity ownership interests in entities that directly or indirectly own Eligible Properties (the “Mezzanine Loans”).

(ii)           senior participation interests (or a senior promissory note that is, in effect, similar in nature to a senior participation interest) in performing Mortgage Loans secured by first liens on Eligible Properties that also may secure a junior promissory note (or junior interest) in such loan (the “Senior First Mortgage B Notes”).

(iii)           junior participation interests (or a junior promissory note that is, in effect, similar in nature to a junior participation interest) in performing Mortgage Loans secured by first liens on Eligible Properties that also secure a senior promissory note (or senior interest) in such loan (the “Junior First Mortgage B Notes”).

(iv)           any other performing loan, participation interest, or other junior mezzanine or subordinate investment which has a maximum LTV of 90% and which does not otherwise conform to the criteria set forth in clauses (i) through (iii) above that Buyer elects in its sole discretion to purchase (the “Other Mezzanine Investments”).

(v)           any performing Stabilized Mortgage Loans with a maximum LTV of 85% or any performing Transitional Mortgage Loans with a maximum LTV of 80%, in each case secured by first liens on Eligible Properties.

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“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 Buyer shall determine in its sole and absolute discretion, on a case-by-case basis, whether any healthcare related property, such as assisted living, nursing homes, acute care, rehabilitation centers, diagnostic centers and psychiatric centers, qualifies as an Eligible Property.

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

“ERISA Affiliate” shall mean any corporation or trade or business (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 mean a Buyer Event of Default or a Seller Event of Default, as applicable.

“Extended Loan” shall have the meaning specified in Section 3(t) of this Annex I.

“Facility Amount” shall mean, as of any date of determination, $200,000,000 less the Alternate-Funded Aggregate Repurchase Price outstanding under the Alternate-Funded Repurchase Agreement as of such date.

“Facility Termination Date” shall mean June 29, 2009 unless extended pursuant to Section 3(r) 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 on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations at approximately 10:00 a.m. (New York time) on such day or such transactions received by Buyer from three Federal funds brokers of recognized standing selected by Buyer in its sole discretion.

“Fee Letter” shall mean that certain letter agreement, dated as of August 15, 2006, between Buyer 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.

“Final Approval” shall have the meaning specified in Section 3(c) of this Annex I.

“Financial Covenant Compliance Certificate” shall mean an Officer’s Certificate to be delivered, subject to Section 3(e)(2) of this Annex I, by Seller within forty-five (45) days after the end of each fiscal quarter confirming that as of the fiscal quarter most recently ended, Seller’s (i) Fixed Charge Ratio is greater than or equal to 1.2:1, (ii) Debt to Equity Ratio is less than 5:1, and (iii) Modified Debt to Equity Ratio is less than 10:1.

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

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

“Fitch” shall mean Fitch Inc.

“Fixed Charge Ratio” shall mean, with respect to any period, the ratio of (a) EBITDA for such period to (b) the sum of (i) interest expense and (ii) preferred dividends (specifically excluding any convertible trust preferred dividends) paid by Seller during such period.

“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.

“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:  (i) 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); (ii) obligations of such Person to pay the deferred purchase or acquisition price of property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within ninety (90) days of the date the respective goods are delivered or the respective services are rendered; (iii) 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; (iv) 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; (v) Capital Lease Obligations of such Person; (vi) obligations of such Person under repurchase agreements or like arrangements; (vii) Indebtedness of others Guaranteed by such Person; (viii) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; and (ix) Indebtedness of general partnerships of which such Person is a general partner.

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“Indemnified Amounts” and “Indemnified Parties” shall have the respective meanings specified in Section 20(a) of this Annex I.

“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.

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

LIBOR

   1 – Reserve Requirement   

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

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

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

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 LIBO Rate.

“Loan Type” shall mean, with respect to any Purchased Loan, the applicable loan type 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 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 or claims on the related Eligible Property or Properties.

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

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

“Material Adverse Effect” shall mean 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 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 value of the Purchased Loans.

“Mezzanine Loan” shall mean any loan 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.

“Modified Debt” shall mean, with respect to Seller, as of any date of determination, the aggregate Indebtedness of Seller as of such date less (i) the amount of any nonspecific balance sheet reserves maintained in accordance with GAAP as of such date, (ii) the amount of liabilities resulting from the sale of participation interests, provided that the related asset in which a participation has been sold is reduced by the value of the participation interest, (iii) liabilities resulting from the consolidation of Indebtedness associated with any securitization where neither Seller nor any of its affiliates was an issuer and where Seller has no recourse obligation for the Indebtedness, and (iv) liabilities resulting from the consolidation of vehicles managed by Seller or a Subsidiary of Seller in connection with a securitization where Seller has less than a 50% equity interest.

“Modified Debt to Equity Ratio” shall mean the ratio of Modified Debt to Tangible Net Worth.

“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) an Officer’s Certificate with respect to all Purchased Loans sold to Buyer as at the end of such month, (b) a written report of any developments or events that are reasonably likely to have a Material Adverse Effect, (c) a written report of any and all written modifications to any Purchased Loan Documents, (d) a written report of any delinquency and loss experience with respect to any Purchased Loan and (e) such other internally prepared reports as mutually agreed by Seller and Buyer which reconciliation, Officer’s Certificate and reports 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 Investors 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.

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“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 or Other Mezzanine Investment, 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 sell to Buyer pursuant to a Transaction.

“Officer’s Certificate” shall mean, as to any Person, a certificate of the chief executive officer, the chief financial officer, the president, any vice president or the secretary of such Person.

“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.

“Permitted Transferee” shall mean any of the following which is not a Disqualified Transferee:

(i)           any Affiliate of Buyer; or

(ii)          any Person that is an insurance company, bank, savings and loan association, trust company, commercial credit corporation, pension plan, pension fund or pension fund advisory firm, mutual fund or other investment company, governmental entity or plan, or a financial institution substantially similar to any of the foregoing and being experienced in making commercial loans and which holds at least $600,000,000 of real estate or other assets (including, without limitation, loans secured directly or indirectly by real estate assets) located in the United States (or any entity wholly-owned by any one or more institutions meeting the foregoing criteria).

“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 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.

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

“Preliminary Approval” shall have the meaning specified in Section 3(b) of this Annex I.

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

(i)           a summary memorandum, among other things, outlining the proposed transaction, including potential transaction benefits and all material underwriting risks, all 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 debt service 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)        [Reserved];

(viii)       [Reserved];

(ix)          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;

(x)           analyses and reports with respect to such other matters concerning the New Loan as Buyer may in its sole discretion require;

(xi)          documents evidencing such New Loan, or current drafts thereof, including, without limitation, underlying debt and security documents, guaranties, underlying borrower’s organizational documents, warrant agreements, loan and collateral pledge agreements, and intercreditor agreements, as applicable;

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

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(xiii)        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 (ix), 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; and

(xiv)        insurance documentation as shall be satisfactory to Buyer (which shall evidence terrorism insurance coverage and such other customary insurance coverage satisfactory to Buyer in its sole discretion).

“Pricing Rate Determination Date” shall mean, with respect to any Pricing Rate Period, the second (2nd) London Banking Day preceding the first day of the Pricing Rate Period.  For purposes of this definition, “London Banking Day” shall mean a day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in London, England.

“Pricing Rate Period” shall mean (i) 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, and (ii) 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; 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 Loan, any payment or prepayment of principal received in respect thereof (including casualty or condemnation proceeds to the extent such proceeds are not 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 to be principal.

“Purchase Percentage” shall mean, (i) with respect to any Purchased Loan (other than an Extended Loan), the “Purchase Percentage” specified in Schedule 1A attached hereto (and, in the case of a Purchased Loan that has been, or is to be, pledged to the trustee under the CDO Indenture or the CDO II Indenture, the Purchase Percentage specified in Schedule 1B attached hereto) for the related Loan Type (or as otherwise specified in the applicable Confirmation) and (ii) with respect to any Extended Loan, the “Purchase Percentage” specified in Schedule 1A for an Extended Loan (or as otherwise notified in writing by Buyer to Seller as provided in Section 3(t) of this Annex I).

“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.

“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(a) of this Annex I.

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

“Quarterly Report” shall mean, for each fiscal quarter during which the Agreement shall be in effect, Seller’s or Servicer’s, as applicable, 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), in each case, to the extent received by Seller, 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 sixty (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 one or more banks selected by Buyer, 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 sole Reference Bank shall be JPMorgan Chase Bank.  If any Reference Bank is unwilling or unable to act as such or if Buyer shall terminate the appointment of any Reference Bank or if any Reference Bank is 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 one or more 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 first (1st) calendar day of each month, or the next succeeding Business Day, if such calendar day shall not be a Business Day.

“Repurchase Assets” shall have the meaning specified in Section 6(a).

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

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

“Reset Date” shall mean, with respect to any Pricing Rate Period, the second (2nd) 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”.

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“Seller” shall mean Capital Trust, Inc., a Maryland corporation and its permitted successors and assigns.

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

“Servicer” shall have the meaning specified in Section 22(a) of this Annex I.

“Servicing Agreement” shall have the meaning specified in Section 22(b) of this Annex I.

“Servicing Fee” shall mean the “Servicing Fees” as defined in the Servicing Agreement payable to the Servicer thereunder.

“Servicing Records” shall have 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 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 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;

(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;

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(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 other 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 or Other Mezzanine Investment) 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).

“Stabilized” shall refer to a Mortgage Loan that has a Debt Yield (as calculated by Buyer) of greater than 10%.

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

“Supplemental Due Diligence Package” shall mean, (i) 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 New Loan and (ii) with respect to any Extended Loan, information or deliveries concerning such Extended Loan that Buyer shall reasonably request, including, without limitation, such information or documents as may be necessary for Buyer to recalculate the LTV of such Extended Loan and/or the debt service coverage ratio for such Extended 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, as of any date of determination, (a) all amounts which would be included under capital (it being agreed that any convertible trust preferred securities and any unfunded commitments or capital which can be drawn will be included as capital) on the balance sheet of Seller at such date, determined in accordance with GAAP as of such date, less (b)(i) amounts owing to Seller from Affiliates and (ii) intangible assets of the Seller as of such date.

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“Table Funded Trust Receipt” shall have the meaning given to such term in the Custodial Agreement.

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

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

“Total Indebtedness” shall mean, with respect to Seller, as of any date of determination, the aggregate Indebtedness of Seller as of such date less (i) the amount of any nonspecific balance sheet reserves maintained in accordance with GAAP as of such date, (ii) the amount of liabilities resulting from the sale of participation interests, provided that the related asset in which a participation has been sold is reduced by the value of the participation interest, (iii) liabilities resulting from the consolidation of Indebtedness associated with any securitization where Seller has no recourse obligation for the Indebtedness and (iv) liabilities resulting from the consolidation of vehicles managed by Seller or a Subsidiary of Seller in connection with a securitization where Seller has less than a 50% equity interest.

“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 Fee Letter, the Blocked Account Agreement, the Custodial Agreement, the Servicing Agreement, the Transfer Documents, all Confirmations executed pursuant to this Annex I in connection with specific Transactions and all other documents executed in connection herewith and therewith.

“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.

“Transitional” shall refer to a Mortgage Loan that has a Debt Yield (as calculated by Buyer) of less than or equal to 10% but greater than or equal to 5%.

“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.

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“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, with respect to perfection or the effect of perfection or non-perfection, “UCC” 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 reasonable inquiries and the exercise of reasonable care and diligence 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)), to a reasonable institutional mortgage or mezzanine loan buyer in determining whether to originate or acquire the Eligible Loan in question.

3.           INITIATION; CONFIRMATION; TERMINATION; FEES

Paragraph 3 of the Master Repurchase Agreement (“Initiation; Confirmation; Termination”) is hereby deleted in its entirety and replaced 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 New Loan if, immediately after the purchase of such New Loan, the aggregate Repurchase Price (including such New Loan and excluding the Price Differential with respect to the Purchased Loans as of the date of determination) 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 reimburse Buyer promptly 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 or whether to reject any or all of the New Loans proposed to be sold to Buyer by Seller.

(b)           Upon Buyer’s receipt of a Preliminary Due Diligence Package with respect to a New Loan, Buyer shall have the right, within two (2) Business Days, to request a Supplemental Due Diligence Package to evaluate such New Loan.  Upon Buyer’s receipt of such Supplemental Due Diligence Package or Buyer’s waiver thereof, Buyer shall within three (3) 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 three (3) 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 in the Supplemental Due Diligence Package) as a condition precedent to Buyer’s Final Approval and issuance of a Confirmation, all in a manner reasonably satisfactory to Buyer and pursuant to documentation reasonably satisfactory to Buyer:

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(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, each as listed on Schedules 5 and 6, respectively, as such schedules may be amended from time to time by Seller or Buyer upon approval by Buyer in its reasonable discretion.

(iii)           Appraisal.  If obtained by Seller, Buyer shall have received either an Appraisal 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 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), 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 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)           Opinions of Counsel.  Buyer shall have received copies of all legal opinions with respect to the New Loan (which shall include a non-consolidation opinion, if applicable) that shall be in form and substance reasonably satisfactory to Buyer.

(vi)           Title Policy.

(a)            With respect to any New Loan that is a Mortgage Loan, Seller shall have delivered to Buyer (1) an unconditional commitment from the title company 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.

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(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 from the title company 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 or Other Mezzanine Investment, (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, (i) 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 (or similar) 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) insure Seller’s security interest in the equity interests pledged and (z) be assignable by its terms with a transfer of the Mezzanine Loan or Other Mezzanine Investment, as applicable.

(vii)           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:  (a) certificates of occupancy issued by the appropriate Governmental Authority and either letters certifying that the related Eligible Property or Properties are 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 (b) abstracts of all leases in effect at the Mortgaged Property delivered in connection with the New Loan.

(viii)           First Mortgage B-Notes.  In the case of a First Mortgage B-Note, in addition to the delivery of the items in clauses (iv), (v) and (vi), Buyer shall have received all documentation specified in clauses (i) through (v) and (vii) 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.

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

Within three (3) Business Days of Seller’s delivery of the documents and materials contemplated in clauses (i) through (ix) 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 three (3) 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.

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(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 (and, in this connection, shall set forth (a) the name of the borrower with respect to the New Loan, (b) the loan agreement (including the date) or other document or instrument pursuant to which the related New Loan is made or governed, and (c) the initial or then outstanding principal amount of the related New Loan), shall identify Buyer and Seller, and shall set forth (i) the Purchase Date, (ii) the Purchase Price for such New Loan (which based on Buyer’s diligence may be different than the Purchase Price set forth in the Preliminary Approval delivered to Seller), (iii) the Repurchase Date, (iv) the Pricing Rate applicable to such New Loan (including the Applicable Spread) and (v) any additional terms or conditions not inconsistent with the Agreement reasonably and in good faith requested by Buyer which do not have the effect of materially changing the terms and conditions of the Agreement.  Each Confirmation shall be deemed to be 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 that 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)), which shall be not more than two (2) Business Days following the issuance of such Confirmation of a Transaction by Buyer in accordance with this Section 3, 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:

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

(2)           Seller shall have delivered to Buyer a true and accurate Financial Covenant Compliance Certificate with respect to Seller’s most recently ended fiscal quarter;

(3)           Seller shall have delivered to Buyer an Officer’s Certificate of 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 (i) such representations which by their terms speak as of a specified date and (ii) to the extent such representations and warranties have been previously qualified and such qualifications have been accepted by Buyer), (B) Seller is in compliance with all governmental licenses and authorizations, (C) Seller is qualified to do business, validly existing and, to the extent determinable, in good standing, in all required jurisdictions, (D) the facts set forth in the Diligence Materials related to the collateral for the Purchased Loan are, to the best knowledge of Seller after diligent inquiry, true and correct (or shall fully explain all adverse changes from the information previously supplied to Buyer), (E) there has been no change in the organizational and authority documents provided to Buyer pursuant to Section 7(d)(ii) of this Annex I since the date of the most recent certification thereof to Buyer, and (F) there has been no Material Adverse Effect since the last Purchase Date.  If requested by Buyer, Seller shall also deliver an Officer’s Certificate covering such matters as Buyer may request;

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(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 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 senior 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)           Buyer shall have received true and complete copies of fully executed originals of all Transfer Documents;

(9)           Buyer shall have determined that after giving effect to the proposed Transaction, the Repurchase Price (exclusive of accrued and unpaid Price Differential) of no single Purchased Loan exceeds 30% of the Facility Amount (unless waived by Buyer in its sole discretion);

(10)           no Purchased Loan shall be a Defaulted Loan;

(11)           Buyer shall have received an opinion of counsel of Seller, 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;

(12)           no event shall have occurred or circumstance shall exist which has a Material Adverse Effect; and

(13)           there shall not have occurred (i) a material adverse change in the financial condition of Buyer which affects (or can reasonably be expected to affect) materially and adversely the ability of Buyer to fund its obligations under the Agreement; (ii) a material change in financial markets, an outbreak or escalation of hostilities that makes it impractical or financially disadvantageous to provide funding at such time on the terms and in the manner contemplated in the Agreement, or a material change in national or international political, financial or economic conditions; (iii) a general suspension of trading on major stock exchanges; or (iv) a material disruption in or moratorium on commercial banking activities or securities settlement services.

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(f)           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.

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

(i)           no Seller 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, Sections 3(n), 3(o) and 3(p) of this 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(a) 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(n), 3(o) and 3(p) of this Annex I, if any) to an account of Buyer.

(i)           So long as no Default or Seller 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 from Seller to Buyer; 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).

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(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 such costs (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)           Concurrently with its execution and delivery of the Agreement and on such other dates specified in the Fee Letter, Seller shall pay Buyer the amounts specified in the Fee Letter.

(l)           If prior to the first day of any Pricing Rate Period with respect to any Transaction, (i) 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 LIBO Rate for such Pricing Rate Period, or (ii) the LIBO Rate determined or to be determined for such Pricing Rate Period will not adequately and fairly reflect the cost to Buyer (as reasonably determined and certified to Seller by Buyer) of making or maintaining Transactions during such Pricing Rate Period, Buyer shall give telecopy or telephonic notice thereof to Seller as soon as practicable thereafter.  If such notice is given, the Pricing Rate with respect to such Transaction for such Pricing Rate Period, and for any subsequent Pricing Rate Periods until such notice has been withdrawn by Buyer, shall be a per annum rate equal to the sum of (i) the Federal Funds Rate, (ii) 0.25% and (iii) the Applicable Spread (the “Alternative Rate”).

(m)           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 which 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).

(n)           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) that Buyer actually sustains or incurs as a consequence of (i) a 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’s depositing funds or employing funds at a rate calculated other than by reference to LIBOR ) or (iii) a default by Seller in selling Eligible Loans to Buyer after Seller has notified Buyer of a proposed Transaction and Buyer has given a Final Approval 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.

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(o)           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 LIBO 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.  A certificate as to the calculation of any additional amounts payable pursuant to this Section 3(o) 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 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 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 has 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.

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(q)           If any of the events described in Section 3(l), Section 3(m), Section 3(o) or Section 3(p) 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(q) 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.

(r)           The facility under the Agreement shall terminate on June 29, 2009; provided that Seller may make a written request not later than 45 days prior to such Facility Termination Date for extension of the term thereof for a period to be agreed by Buyer and Seller, which extension request shall be subject to Buyer’s approval in its sole and absolute discretion.  Buyer’s failure to respond to Seller’s written request within 15 days of such request shall be deemed an automatic denial to Seller’s request to extend the term of the facility hereunder.

(s)           From and after the Facility Termination Date, 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 Repurchase Price for each such Purchased Loan, together with all Costs and other amounts due and payable to Buyer hereunder.  Following the Facility Termination Date, Buyer shall not be obligated to transfer any Purchase Loans to Seller until payment in full to Buyer of all amounts due 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 a Seller Event of Default is not then continuing and the transfer of such Purchased Loans would not result in a Margin Deficit.

(t)           If, (i) on the date that is thirty (30) days prior to the one year anniversary of the Purchase Date of any CDO Purchased Loan, Seller has not exercised its right to terminate the related Transaction pursuant to Section 3(g) hereof and repurchase such CDO Purchased Loan or (ii) under the terms of the CDO Indenture or the CDO II Indenture, as applicable, the issuer thereunder is no longer permitted to purchase Collateral Interests or Substitute Collateral Interests (each as defined in the CDO Indenture or the CDO II Indenture, as applicable), then Buyer shall be entitled to undertake a due diligence investigation with respect to such CDO Purchased Loan and to request additional Diligence Materials with respect to such CDO Purchased Loan.  Seller agrees to pay as and when billed by Buyer all the Due Diligence Fees, testing and review costs and expenses incurred by Buyer in connection with the evaluation of any such CDO Purchased Loan.  In the event Seller has not exercised its right to terminate a Transaction and repurchase a CDO Purchased Loan on demand pursuant to Section 3(g) prior to the one year anniversary of the Purchase Date of such CDO Purchased Loan (an “Extended Loan”), then from and after the one year anniversary of such Purchase Date until the Repurchase Date with respect to such Extended Loan, the Purchase Percentage and Applicable Spread with respect thereto shall be as set forth on Schedule 1A attached hereto (or as otherwise notified in writing by Buyer to Seller).  Seller acknowledges and confirms that the redetermination of the Purchase Price by Buyer of an Extended Loan may result in a Margin Deficit.  If a Margin Deficit shall result, Seller agrees that it shall comply with the provisions of Section 4(a) of this Annex I.

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4.           MANDATORY PAYMENT OR DELIVERY OF ADDITIONAL ASSETS  

Paragraphs 4 (a) through (f) of the Master Repurchase Agreement (“Margin Maintenance”) are hereby 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 Purchased 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 pro rata) 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 Purchased 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(a).

(b)           If at any time a Purchased Loan becomes a Defaulted Loan, Buyer may, in its sole discretion and without regard to any determination of the Market Value of such Defaulted Loan, notify Seller that such Purchased Loan has become a Defaulted Loan and require that the related Repurchase Price be paid in whole or in part, in the sole discretion of Buyer.  Not later than one (1) Business Day after the receipt of such notice, Seller shall prepay in whole or in part, as applicable, the related Repurchase Price of such Defaulted Loan.  Buyer may, in its sole discretion, determine and re-determine the amount to be prepaid irrespective of whether or not any statement of fact contained in any Officer’s Certificate delivered pursuant to Section 3(e)(3) or (ii) any representation of Seller set forth in Section 10(a)(xix) was true to Seller’s actual knowledge.

(c)           If at any time the aggregate Repurchase Price of the Purchased 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 3:00 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.  

(d)           To the extent Seller has an obligation to advance additional funds under one or more Purchased Loans, provided a Margin Deficit does not then exist, Buyer agrees to transfer to Seller cash in an amount equal to the product of (i) the amount being advanced by Seller and (ii) the Purchase Percentage for the related Purchased Loan or such lesser amount determined by Buyer, such that after giving effect to the cash transfer, a Margin Deficit would not result.  The transfer of cash under this Section 4(d) shall be accounted for as a Margin Excess Advance.

5.           INCOME PAYMENTS AND PRINCIPAL PAYMENTS

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

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(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”) and deliver to Buyer a Blocked Account Agreement.  Seller shall cause all Income with respect to the Purchased Loans or other assets (if cash) delivered under Section 4(a) to be deposited in the Blocked Account no later than the next Business Day following its collection and receipt thereof.  In furtherance of the foregoing, 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 the form attached as Exhibit VII to this Annex I 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 or Servicer rather than directly to the Blocked Account, Seller shall (i) deliver an additional irrevocable direction letter to the applicable Person and make other commercially reasonable efforts to cause such Person to 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 Purchased Loans, which may include payments in respect of associated Hedging Transactions entered into by an underlying obligor with respect to a Purchased Loan and pledged to Seller as collateral for a Purchased Loan, shall be deposited directly into, or, if applicable, remitted directly from the applicable underlying collection account to, the Blocked Account.  So long as no Seller 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 during each Collection Period shall be remitted to Seller on a daily basis.  Upon the occurrence of a Seller Event of Default, Buyer may terminate such remittances and amounts on deposit in the Blocked Account will be applied in accordance with Section 5(d).

(b)           Seller shall pay to Buyer on each Remittance Date, an amount equal to the aggregate Price Differential which has accrued and is outstanding in respect of the Transactions as of each such Remittance Date and shall pay to Servicer its Servicing Fees and any “Servicing Expenses”, “Additional Servicing Compensation” and “Servicing Advances” (as such terms are defined in the Servicing Agreement) in accordance with the terms of the Servicing Agreement.

(c)           If Seller shall receive a Principal Payment in respect of any Purchased Loan, not later than one (1) Business Day after receipt of such Principal Payment, Seller shall (subject to the provisions of Section 3(j)) pay the Repurchase Price in respect of such Purchased Loan in an amount equal to the greater of (i) the product of the amount of such Principal Payment multiplied by the Purchase Percentage applicable to the related Purchased Loan and (ii) such greater amount, such that after giving effect to such payment of the applicable Repurchase Price, the aggregate Repurchase Price of the Purchased Loans does not exceed the Asset Base, as determined by Buyer after giving effect to such payment.

(d)           If a Seller 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 make payment in respect of any outstanding Servicing Fees and “Servicing Expenses”, “Additional Servicing Compensation” (other than “Termination Fees”) and “Servicing Advances” (as such terms are defined in the Servicing Agreement);

(ii)           second, to remit 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;

(iii)           third, to make payment to Buyer in respect of Costs and all other amounts payable by Seller and outstanding hereunder;

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(iv)           fourth, to make a payment to Buyer on account of 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

(v)           fifth, to remit to Seller the remainder.

(e)           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 (other than a breach by Buyer of the Purchased Loan Documents) such amount is required to be returned 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.

(f)           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 Master Repurchase Agreement (“Security Interest”) is hereby deleted in its entirety and replaced 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 hereby pledges to Buyer as security for the performance by Seller of its obligations under such Transaction and hereby grants to Buyer a security interest in (i) the Blocked Account, (ii) all of the Purchased Loans, including those identified in Confirmations (including, for the avoidance of doubt, all security interests, mortgages and liens on personal or real property securing 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, (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, (vi) all insurance policies and insurance proceeds relating to any Purchased Loan or the related Eligible Property, (vii) any Hedging Transactions obtained by the underlying obligor with respect to any Purchased Loan and (viii) any other property, rights, title or interests as are specified in the Trust Receipt, the Purchased Loan Schedule or exception report with respect to the foregoing in all instances, whether now owned or hereafter acquired, now existing or hereafter created (the “Repurchase Assets”).

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(b)           To the extent Buyer is deemed to have a security interest with respect to the Repurchase Assets, and with respect to the security interests granted in Section 6(c) and (d) hereof, 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 and shall have the right to apply the Repurchase Assets or proceeds therefrom to the obligations of Seller under the Transaction Documents.  In furtherance of the foregoing, (i) Buyer, at Seller’s sole cost and expense, shall cause to be filed as a protective filing with respect to the Repurchase Assets and as a UCC filing with respect to the security interests granted in Section 6(c) and (d) hereof (i) a UCC financing statement in the form of Schedule 7-A attached hereto (to be filed in the filing office indicated therein), (ii) amendments to such UCC financing statement in the form of Schedule 7-B attached hereto and having attached to each such UCC financing statement amendment a description of the Purchased Loans which identifies the Purchased Loans by setting forth (a) the name of the borrower with respect to each Purchased Loan, (b) the loan agreement (including the date) or other document, agreement or instrument pursuant to which each Purchased Loan was made or is governed, and (c) the initial or then outstanding principal amount of each Purchased Loan, and (iii) such other UCC filings, in such locations as may be necessary to perfect and maintain perfection and priority of the outright transfer and the security interest granted hereby (including under Section 22 of this Annex I) and, in each case, continuation statements and any amendments thereto (collectively, the “Filings”), and (ii) Buyer shall from time to time, at Seller’s sole cost and expense, cause to be duly filed all such further filings, instruments and documents and take all such further actions as may be necessary or desirable with respect to the perfection and priority of the outright transfer of the Repurchase Assets and the security interest granted hereunder in the Purchased Loans and the rights and remedies of Buyer with respect to the Repurchase Assets (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, Seller’s rights under 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 Seller 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)           Seller hereby pledges all of its right, title and interest in, to and under and grants a first priority lien on, and security interest in, all rights of Seller in the Alternate-Funded Repurchase Agreement, now existing or hereafter created, to Buyer to secure the payment and performance of all amounts or obligations owing by Seller to Buyer pursuant to the Agreement and the other Transaction Documents.

7.           PAYMENT, TRANSFER AND CUSTODY

Paragraph 7 of the Master Repurchase Agreement (“Payment and Transfer”) is hereby deleted in its entirety and replaced 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.  The power of attorney shall be binding upon Buyer and Buyer’s successors and assigns.

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(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 a true and complete copy of 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. (New York time), 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 (3rd) 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 to the extent applicable (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 and subject to clause (iii) below:

(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 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 by the Last Endorsee while doing business under another name, the signature must be in the following form:  “[Last Endorsee], [formerly known] or [doing business] 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 copy 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 copies 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] or [doing business] as [previous name]”).

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(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 copies 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 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 copies 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 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 in blank or 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.

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(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.

(V)          [Reserved.]

(W)          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.

(X)          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.

(Y)          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.

(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 and subject to clause (iii) below:

(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 of the Last Endorsee (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] or [doing business] 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.

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(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, intercreditor agreement and/or servicing 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 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 interests have been transferred to, or otherwise made subject to a first priority security interest in favor of, Seller.

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(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).

(iii)           If Seller cannot deliver, or cause to be delivered, any of the original documents and/or instruments required to be delivered as originals under clauses (b)(i) or (b)(ii) above, as the case may be, 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, (1) use its 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 to which Buyer may consent (such consent not to be unreasonably withheld), so long as Seller is, as certified in writing to Buyer not less frequently than monthly, in good faith attempting to obtain the original), (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 and (3) thereafter have no further obligation to deliver the related original document.

(iv)           With respect to each Purchased Loan which is of the type described in clause (iv) of the definition of Eligible Loan, any of the documentation referred to above in Section 7(b)(i) and (ii) which is reasonably determined by the Buyer to be necessary to effectuate the sale, transfer, conveyance and assignment of such Purchased Loan.

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

(C)          the Fee Letter, duly executed and delivered by Seller and Buyer;

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

(E)          the Servicing Agreement, duly executed and delivered by Seller, Buyer and Servicer.

(ii)           Organizational Documents.  Certified copies of Seller’s organizational documents and resolutions or other documents evidencing the authority of Seller 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 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 Seller in form and substance satisfactory to Buyer as to authority, enforceability of the Transaction Documents to which it is a party, perfection and such other matters as may be reasonably requested by Buyer; and

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

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

Paragraph 8 of the Master Repurchase Agreement (“Segregation of Purchased Securities”) is hereby deleted in its entirety and replaced 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.  Any such repurchase transaction and any pledge, repledge, hypothecation or rehypothecation in connection with a Financing Transaction may be to any Person other than a Disqualified Transferee; provided that Buyer, other than in connection with a Financing Transaction, may assign or participate its rights’ under the Transaction Documents or any Transaction only in accordance with Section 17 of this Annex I, unless an Event of Default shall have occurred and be continuing or the prior written consent of Seller has been obtained by Buyer.

(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 be released only in accordance with the terms and conditions of the Custodial Agreement.

9.           SUBSTITUTION

Paragraph 9 of the Master Repurchase Agreement (“Substitution”) is hereby deleted in its entirety and replaced by the following provisions of this Section 9:

(a)           In the case of any Transaction for which the Repurchase Date is other than the Business Day immediately following the Purchase Date, Seller shall have the right, subject to the proviso to this sentence, upon notice to Buyer, which notice shall be given at or prior to 10:00 a.m. (New York time) on such Business Day, to substitute substantially the same Eligible Loans for any Purchased Loans, provided, however, that Buyer may elect, by the close of business on the Business Day notice is received, or by the close of the next Business Day if notice is given after 10:00 a.m. (New York time) on such day, not to accept such substitution in its sole and absolute discretion.  In the event such substitution is accepted by Buyer, such substitution shall be made by Seller’s transfer to Buyer of such other Eligible Loans and Buyer’s transfer to Seller of such Purchased Loans, and after substitution, the substituted Eligible Loans shall be deemed to be Purchased Loans subject to the terms of the Agreement (including but not limited to the margin provisions of Section 4 of this Annex I).  Each such substitution shall be deemed to be a representation and warranty by Seller that each substitute loan is an Eligible Loan and that after giving effect to such substitution, the aggregate Repurchase Price of the Purchased Loans shall not exceed the aggregate Asset Base.  In the event Buyer elects not to accept such substitution, Buyer shall offer Seller the right to terminate the Transaction.

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(b)           In the event Seller exercises its right to substitute or terminate under sub-paragraph (a), Seller shall be obligated to pay to Buyer, by the close of the Business Day of such substitution or termination, as the case may be, an amount equal to (A) Buyer’s actual out-of-pocket cost (including all fees (including reasonable attorneys fees), expenses and commissions) of (i) entering into replacement transactions; (ii) entering into or terminating hedge transactions; and/or (iii) terminating transactions or substituting mortgage loans in like transactions with third parties in connection with or as a result of such substitution or termination, and (B) to the extent Buyer determines not to enter replacement transactions, the loss incurred by Buyer directly arising or resulting from such substitution or termination.  The foregoing amounts shall be solely determined and calculated by Buyer in good faith.

10.           REPRESENTATIONS  

Paragraph 10 of the Master Repurchase Agreement (“Representations”) is hereby supplemented by the following provisions of this Section 10:

(a)           Seller represents and warrants to Buyer that as of the Purchase Date 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 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, (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 or (z) violate or conflict with contractual provisions of, or cause an event of default under, any indenture, loan agreement, mortgage, contract or other material agreement to which Seller is a party or by which Seller may be bound.  Seller has all necessary licenses, permits and other consents from Governmental Authorities necessary to acquire, own and sell the Purchased Loans and for the performance of its obligations under the Transaction Documents 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.

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(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 to Buyer (including any “adverse claim” as defined in Section 8-102(a)(1) of the UCC), and are not subject to any rights of set-off, any prior sale, transfer, assignment, or participation by Seller or any agreement by Seller to assign, convey, transfer or participate in such Purchased Loans, 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 that the related Transaction is recharacterized as a secured financing of the Purchased Loans and with respect to the security interests granted in Section 6, the provisions of the Agreement are effective to create in favor of Buyer a valid security interest in all right, title and interest of Seller in, to and under the Repurchase Assets and the other collateral specified in Section 6(c) and (d), Buyer shall have a valid, perfected and enforceable first priority security interest in the Repurchase Assets and such other collateral, subject to no lien or rights of others other than as granted herein.

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

(viii)           Representations and Warranties Regarding Purchased Loans; Delivery of Purchased Loan File.  Each Purchased Loan sold hereunder and each pool of Purchased Loans sold in a Transaction hereunder, as of the applicable Purchase Date for the Transaction in question, (A) conforms to the applicable representations and warranties set forth in Exhibit V attached hereto and (B) with the respect to a CDO Purchased Loan, meets the criteria set forth in Exhibit IX hereto, except, in each case, as has 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 Purchased 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.

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(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, and is not 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 true and correct 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 Loans.

(xii)           Federal Regulations.  Seller is not required to register as an “investment company” and is not a company “controlled by an investment company,” in each case within the meaning of the Investment Company Act of 1940, 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 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 that are 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 (to the extent applicable).  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.

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

(xix)           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.

(xx)           CDO Indenture and CDO II Indenture.  Seller has delivered to Buyer a true, complete and correct copy of the CDO Indenture and the CDO II Indenture.

(xxi)           Location of Books and Records.  The location where Seller keeps its books and records at its chief executive office at 410 Park Avenue, 14th Floor, New York, New York  10022.

(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 Master Repurchase 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 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 Repurchase Assets or 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)           terminate any of the organizational documents of Seller;

(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;

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

(i)           after the occurrence and during the continuation of any Seller 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 or 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 4975of the Code or substantially similar provisions under any other federal, state or local laws, rules or regulations;

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

(m)           seek its dissolution, liquidation or winding up, in whole or in part.

12.           AFFIRMATIVE COVENANTS OF SELLER  

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

(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 a material adverse affect on the Market Value of a Purchased Loan; and

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(v)           promptly, and in any event within ten (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 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 the following financial and reporting information:

(i)           the Monthly Statement;

(ii)           the Quarterly Report, together with all operating statements and occupancy information that Seller or Servicer has received relating to the Purchased Loans for the related fiscal quarter;

(iii)           the Financial Covenant Compliance Certificate;

(iv)           as soon as available and in any event within forty-five (45) 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 of 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);

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(v)           as soon as available and in any event within ninety (90) days after the end of each fiscal year of Seller, the consolidated balance sheets of Seller, which shall incorporate its consolidated Subsidiaries, 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, 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;

(vi)           within forty-five (45) days following the end of each quarter, or within ninety (90) 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 quarter 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 Seller Event of Default and no event or circumstance has occurred that is reasonably likely to result in a Material Adverse Effect;

(vii)           within fifteen (15) Business Days after Buyer’s request, such further information with respect to the operation of any Mortgaged Property, Purchased Loan, the financial affairs of 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 Multiemployer Plan, Seller shall be required to provide only such information as may be obtained through its good faith efforts;

(viii)           within sixty (60) Business Days after the end of each calendar year, such information as may be requested by Buyer, its successors and assigns, and transferees, in connection with the Purchased Loans, and that is 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

(ix)           such other reports as Buyer shall reasonably request.

(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.

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(j)           Seller shall advise Buyer in writing of the opening of any new chief executive office of Seller 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 Loans are held not less than the later of fifteen (15) Business Days prior to taking any such action or ninety (90) days before any financing 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 corporation, organized solely and in good standing under the law of the State of Maryland 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 unless Seller shall have notified Buyer in writing at least thirty (30) days prior to any intent not to so maintain its existence and, in connection with a merger, (i) the surviving or resulting entity shall be a corporation or partnership organized under the laws of the United States or any state thereof, (ii) such entity shall expressly assume by written agreement, in form and substance satisfactory to Buyer in Buyer’s sole discretion, the performance of all of Seller’s duties and obligations hereunder and the Transaction Documents, and (iii) such entity shall be at least as creditworthy as Seller, as determined by Buyer in Buyer’s sole and absolute discretion; and provided, further, that after giving effect thereto, no Default or Event of Default would exist hereunder.

(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).

(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.

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(r)           In the event that Seller has entered into or shall enter into or amend a repurchase agreement, warehouse facility, credit facility or other similar arrangement involving assets substantially similar to the Eligible Loans with any Person which by its terms provides more favorable terms with respect to any financial covenants, including, without limitation, covenants covering the same or similar subject matter set forth in the Financial Covenant Compliance Certificates required to be delivered hereunder, the applicable terms of this Agreement shall be deemed automatically to include such more favorable terms so long as no Seller Event of Default has occurred and is continuing.

(s)           Seller shall promptly deliver to Buyer true, correct and complete copies of any material amendment, waiver or other modification to the CDO Indenture or the CDO II Indenture.

13.           INTENTIONALLY OMITTED

14.           EVENTS OF DEFAULT; REMEDIES

Paragraph 11 (“Events of Default”) of the Master Repurchase Agreement is hereby amended by the deletion of clauses (i), (ii), (iii), (iv) and (vi) in the first paragraph thereof, by the deletion in their entirety of Paragraphs 11(a) through (g) thereof and by the addition of the provisions (a) through (c) of this Section 14 set forth below:

(a)           Together with clause (v) and clause (vii) of the first paragraph of Paragraph 11 of the Master Repurchase Agreement (such clauses to be read with the phrase “or Buyer” deleted from each of them), the following shall constitute an event of default by Seller hereunder (each, a “Seller 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);

(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 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 Section 6 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(a) 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 from Buyer; 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)           failure by Seller in the due performance or observance of any term, covenant or agreement contained in Section 11(j) or Section 12(p) of this Annex I;

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(vii)           a Change of Control shall have occurred with respect to Seller;

(viii)           any representation made by Seller or Buyer (other than the representations and warranties set forth in Exhibit V hereto, which shall be considered, except as set forth below, solely for the purpose of determining the Market Value of the Purchased Loans) shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated (and, if susceptible to cure, the breach of such representation shall not have been cured within ten (10) Business Days of written notice of breach thereof); 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 a Seller 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 (or if the breach of such representations and warranties is susceptible to cure, Seller effects a cure within such 10-Business Day period);  provided, however, that if Seller shall have made any such representation (including the representations set forth in Exhibit V) with knowledge that it was materially incorrect or untrue at the time made, such misrepresentation shall constitute a Seller Event of Default;

(ix)           a final judgment by any competent court in the United States of America for the payment of money in an amount greater than $5,000,000 shall have been rendered against Seller, and remain undischarged or unpaid for a period of thirty (30) days, during which period execution of such judgment is not effectively stayed;

(x)           Seller 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, which default (A) involves the failure to pay a matured obligation in excess of $10,000,000, or (B) involves 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 any such default, failure to perform or breach shall not constitute a Seller Event of Default if Seller 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)           Seller fails to maintain a Fixed Charge Ratio of at least 1.2:1, a Debt to Equity Ratio of less than 5:1 and a Modified Debt to Equity Ratio of less than 10:1 as of the end of any fiscal quarter;

(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 “Seller 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; or

(xiii)           an “event of default” by Seller (as defined in the agreements relating to a facility described in clause (A) or (B) of this clause (xiii)) beyond any applicable notice and cure period shall have occurred under (A) any repurchase facility or loan facility entered into by Seller and Buyer or any Affiliate of Buyer or (B) any facility with Buyer or any Affiliate of Buyer in which Seller is a guarantor.

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(b)           If a Seller Event of Default shall occur and be continuing, 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 with respect to Seller), 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 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 a Seller 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 to 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 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 to be 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 the 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 (including interest that would be payable as post-petition interest in connection with any bankruptcy or similar proceeding) irrespective of whether such obligations are direct or indirect, absolute or contingent, matured or unmatured, and (z) the balance, if any, to Seller.

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(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 a Seller 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 (A) all reasonable expenses, including reasonable legal fees and expenses, actually incurred by Buyer in connection with or as a consequence of a Seller Event of Default, (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 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 a Seller Event of Default.

(vi)           Buyer may exercise any or all of the remedies available to Buyer immediately upon the occurrence of a Seller 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 to the credit or for the account of Seller against any and all of such obligations, 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.

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(x)           Buyer shall at any time have the right, in each case until such time as Buyer determines otherwise, to retain, to suspect payment or performance of, or to decline to remit, any amount or property that Buyer would otherwise be obligated to pay, remit or deliver to Seller hereunder if a Seller Event of Default has occurred.

Notwithstanding anything to the contrary in the Agreement, Buyer shall not be required, prior to exercising any remedy in respect of any Seller Event of Default, to give notice otherwise required hereunder, if Buyer reasonably believes that (A) the Purchased Loans then held by Buyer threaten to decline speedily in value or are of a type customarily sold in a recognized market or (B) any delay occasioned by the giving of such notice will jeopardize Buyer’s ability to recover, by sale or otherwise, all or part of the then-outstanding amount of the Repurchase Price or of any other amounts owed to Buyer in connection therewith.

(c)           The following shall constitute an event of default of Buyer hereunder (each a “Buyer Event of Default”):

(i)           Buyer fails, after one (1) Business Day’s notice, to comply with Section 4(c) of this Annex I;

(ii)           Buyer admits to its inability to, or its intention not to, perform any of its obligations hereunder, other than in accordance with its rights hereunder;

(iii)           provided that Buyer has received the applicable Repurchase Price, the failure of Buyer to transfer a Purchased Loan or Purchased Loans on the applicable Repurchase Date;

(iv)           any representation made by Buyer herein shall prove to have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated; or

(v)           if 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 “Buyer Event of Default”, and such breach or failure to perform is not remedied within ten (10) days or, if such breach is not curable by the payment of a sum of money, thirty (30) days after notice thereof to Buyer from Seller.

(d)           If a Buyer Event of Default occurs and is continuing, 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.

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(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).

15.           SINGLE AGREEMENT

Clause (ii) of Paragraph 12 of the Master Repurchase Agreement (“Single Agreement”) is hereby deleted in its entirety.

16.           NOTICES AND OTHER COMMUNICATIONS

Paragraph 13 of the Master Repurchase Agreement (“Notices and Other Communications”) is hereby deleted in its entirety and replaced 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:  (w) in the case of hand delivery, at the time of delivery; (x) in the case of registered or certified mail, when delivered or the first attempted delivery on a Business Day; (y) in the case of expedited prepaid delivery upon the first attempted delivery on a Business Day; or (z) in the case telecopier, upon receipt of answerback confirmation, provided that such telecopied notice is also delivered as required in this Section 16.  A party receiving a notice which does not comply with the technical requirements for notice under this Section 16 may elect to waive any deficiencies and treat such notice as having been properly given.

17.           NON-ASSIGNABILITY

Paragraph 15 of the Master Repurchase Agreement (“Nonassignability; Termination”) is hereby deleted in its entirety and replaced 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 (other than pursuant to a Financing Transaction) its rights and obligations under the Transaction Documents and under any Transaction without the prior written consent of Seller only to a Permitted Transferee, which assignment or participation shall be at the sole cost and expense of Buyer.  Buyer may assign its rights and interests in any Hedging Transaction 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.

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As long as a Seller Event of Default shall have occurred and be continuing, Buyer may assign or participate its rights and obligations under the Transaction Documents and/or any Transaction (including in connection with any Financing Transaction) to any Person.

(b)           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.

(c)           With respect to any issuance by Buyer of a participation in any Transaction, (i) Buyer shall act as exclusive 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 Master Repurchase Agreement (“Governing Law”) that reads “without giving effect to the conflict of law principles thereof” is hereby supplemented by adding to the end thereof the words “except for Section 5-1401 of the General Obligations Law of the State of New York.”  Paragraph 18 of the Master Repurchase Agreement (“Use of Employee Plan Assets”) is hereby deleted in its entirety.  Paragraph 17 of the Master Repurchase Agreement (“No Waivers, Etc.”) is hereby deleted in its entirety and replaced 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.

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(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.

19.           NO RELIANCE; DISCLAIMERS

(a)           Each party 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.

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(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.

(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 determinations 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 determinations 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 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 that its obligations hereunder are recourse obligations of Seller.

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(b)           Other than as provided in Section 17(a) hereof, 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 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 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(a) 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, Midland Loan Services, Inc. or, with the consent of Buyer (which consent shall not unreasonably be withheld), an Affiliate of Seller (“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) a Seller Event of Default, (ii) the date on which the aggregate Repurchase Price for the Purchased Loans together, without duplication,  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.  Seller shall service and shall cause the Servicer to service the Purchased Loans in accordance with Accepted Servicing Practices.

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(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 a Seller 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 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 approval shall not be unreasonably withheld.  If the Purchased Loans are serviced by a sub-servicer, Seller shall irrevocably assign all rights, title and interest in the Servicing Agreements 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 Loan 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 Seller is, and, so long as no Seller 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.

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24.           INTENT

Paragraph 19 of the Master Repurchase Agreement (“Intent”) is hereby deleted in its entirety and replaced by the following provisions of this Section 24:

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 (except in so far as the type of asset subject to the Transaction would render such definition inapplicable).

25.           INTENTIONALLY OMITTED

26.           MISCELLANEOUS

Paragraph 20 of the Master Repurchase Agreement (“Disclosure Relating to Certain Federal Protections”) is hereby deleted in its 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)           Each party understands that the Agreement is a legally binding agreement that may affect such party’s rights.  Each party represents to the other that such party 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.

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(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.

(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.

[SIGNATURES COMMENCE ON NEXT PAGE]

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IN WITNESS WHEREOF, the parties have executed this Annex I as of the 30th day of October 2007.

BUYER:
GOLDMAN SACHS MORTGAGE COMPANY, a New York limited partnership
By:	Goldman Sachs Real Estate Funding Corp., its general partner
	By:	/s/ Mark Buono
		Name:	Mark Buono
		Title:	Vice President
SELLER:
CAPITAL TRUST, INC., a Maryland corporation
By:	/s/ Geoffrey G. Jervis
	Name:	Geoffrey G. Jervis
	Title:	Chief Financial Officer

SCHEDULE 1A

Purchase Percentages and Applicable Spreads

Loan Type:  Senior First Mortgage B Notes, Junior First Mortgage B Notes, Mezzanine Loans And Participation Interests Therein

LTV	Purchase Percentage	Spread
Less than or equal to 55% LTV	≤ 85% max	80 bps
Greater than 55% to and less than or equal to 60% LTV	≤ 80% max	100 bps
Greater than 60% and less than or equal to 70% LTV	≤ 60%	125 bps
	≤ 70%	140 bps
	≤ 80% max	160 bps
Greater than 70% and less than or equal to 75% LTV	≤ 55%	140 bps
	≤ 65%	150 bps
	≤ 75% max	160 bps
Greater than 75% and less than or equal to 80% LTV	≤ 55%	150 bps
	≤ 65%	160 bps
	≤ 75% max	170 bps
Greater than 80% and less than or equal to 85% LTV	≤ 55%	165 bps
	≤ 60%	180 bps
	≤ 70% max	190 bps
Greater than 85% and less than or equal to 90% LTV	≤ 50%	170 bps
	≤ 65%	185 bps
	≤ 70% max	195 bps

Loan Type: Transitional and Stabilized Mortgage Loans

LTV	Purchase Percentage	Spread
Greater than 9% NOI &	≤ 90%	85 bps
LTV less than or equal to 80%
Greater than 9% NOI & LTV greater than 80% and less than or equal to 85%	≤ 85%	85 bps
Less than 9% NOI & LTV less than or equal to 80%	≤ 85%	120 bps
Less than 9% NOI & LTV greater than 80% and less than or equal to 85%	≤ 80%	120 bps

Schedule 1-1

SCHEDULE 1B

Purchase Percentages and Applicable Spreads for CDO Assets and CDO II Assets

Loan Type:	Purchase Percentage*	Applicable Spread (basis points)*
Mezzanine Loans	75%	175 bps
First Mortgage Loans	75%	175 bps
Second Mortgage Loans	75%	175 bps
Senior First Mortgage B Notes	75%	175 bps
Junior First Mortgage B Notes	75%	175 bps

*The Purchase Percentage and Applicable Spread for CDO II Assets shall equal 85% and LIBOR + 100 bps, respectively.

Schedule 1-2

SCHEDULE 2

[Intentionally Omitted]

Schedule 2-1

SCHEDULE 3

Purchased Loan Information

(a)           Loan Number/Loan Type

(b)           Obligor Name

(c)           Property Address

(d)           Original Balance

(e)           Original Coupon

(f)           Outstanding Balance

(g)           Maturity Date

(h)           Table Funding (Yes/No)

(i)           If Participation, the name of the lead lender under the Purchased Loan

(j)           Such information as Buyer and Custodian shall agree and that Buyer shall set forth in writing,on a case-by-case basis.

Schedule 3-1

SCHEDULE 4

APPROVED APPRAISERS

1.           KTR Appraisal Services

2.           Cushman & Wakefield, Inc.

3.           Grubb & Ellis

4.           CB Richard Ellis

5.           The Weitzman Group

6.           Greenwich Group

7.           Joseph Blake

8.           HVS International

9.           PWC

Schedule 4-1

SCHEDULE 5

APPROVED ENGINEERS

1.           KTR Realty Services

2.           Merritt & Harris, Inc.

3.           C.A. Rich, Inc.

4.           IVI

5.           Dames & Moore

6.           Law Environmental

7.           Eckland

8.           EM&CA

9.           Aqua Terra

10.         ATC (BCM Engineers)

11.         Horn Chandler & Thomas

12.         National Assessment Corporation

13.         EMG

14.         Property Solutions Inc.

15.         Aaron & Wright

16.         PSI

Schedule 5-1

SCHEDULE 6

APPROVED ENVIRONMENTAL CONSULTANTS

1.           Acqua Terra

2.           Law Environmental

3.           KTR Realty Services

4.           EMG

5.           Clayton

6.           Dames & Moore

7.           Brown & Root

8.           C.A. Rich, Inc.

9.           Eckland

10.         EM&CA

11.         ATC (BCM Engineers)

12.         IVI

13.         Aaron & Wright

14.         Certified Environmental Inc.

15.         Environ Business, Inc.

16.         Property Solutions, Inc.

17.         National Assessment Corporation

18.         Hillman Environmental Group

19.         Front Royal

20.         PSI

Schedule 6-1

SCHEDULE 7-A

FORM OF UCC FINANCING STATEMENT

Debtor:	Secured Party:
Capital Trust, Inc. 410 Park Avenue, 14th Floor New York, New York 1002	Goldman Sachs Mortgage Company 85 Broad Street New York, New York 10004

ATTACHMENT A TO UCC FINANCING STATEMENT

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

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

(i) the Blocked Account;

(ii) all of the Purchased Loans (including those identified on Schedule I hereto), including, for the avoidance of doubt, all security interests, mortgages and liens on personal or real property securing 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;

(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;

(vi) all insurance policies and insurance proceeds relating to any Purchased Loan or the related Eligible Property;

(vii) any Hedging Transactions obtained by the underlying obligor with respect to any Purchased Loan; and

(viii) any other property, rights, title or interests as are specified in the Trust Receipt, the Purchased Loan Schedule or exception report with respect to the foregoing in all instances, whether now owned or hereafter acquired, now existing or hereafter created.

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

“Annex I” shall mean the Amended and Restated Annex I to the Master Repurchase Agreement, as the same may be amended, restated or otherwise modified from time to time.

“Appraisal” shall mean an appraisal of any Eligible Property prepared by a licensed appraiser listed on Schedule 4 attached to Annex I, as such schedule may be amended from time to time by Seller or Buyer upon approval 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 Institutions Reform, Recovery and Enforcement Act of 1989 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.

Schedule 7-A-1

“Bailee” shall mean Paul, Hastings, Janofsky & Walker LLP or such other third party as Buyer may approve in its sole discretion.

“Bailee Agreement” shall mean the Bailee Agreement among Seller, Buyer and Bailee in the form of Exhibit VIII to Annex I.

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

“Blocked Account Agreement” shall mean the Amended and Restated Blocked Account Agreement, in the form attached to Annex I as Exhibit VI (or such other form as shall have been approved by Buyer, such approval not to be unreasonably withheld, delayed or conditioned), dated as of October 30, 2007 and executed by Buyer, Seller and the Depository Bank (and any successor thereto or replacement thereof executed by Buyer, Seller and the Depository Bank).

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

“CDO Indenture” shall mean the Indenture dated as of July 20, 2004, among Capital Trust RE CDO 2004-1 Ltd. and Capital Trust RE CDO 2004-1 Corp., as co-issuers, and LaSalle Bank National Association, as trustee.

“CDO II Indenture” shall mean the Indenture for CT RE CDO 2005-1.

“CDO Purchased Loan” shall mean any Purchased Loan that meets the requirements of Exhibit IX to Annex I and is intended to be, or is, pledged to the trustee under the CDO Indenture or the CDO II Indenture.

“Custodial Agreement” shall mean, with respect to Transactions involving Purchased Loans, the Amended and Restated Custodial Agreement, dated as of the date hereof, by and among Custodian, Seller and Buyer.

“Custodial Delivery Certificate” shall mean the custodial delivery certificate, a form of which is attached to Annex I 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 Annex I.

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

“Debt Yield” shall mean, with respect to any Eligible Property or Eligible Properties directly or indirectly securing a New Loan, the quotient (expressed as a percentage) of (i) net operating income for the trailing twelve-month period for the most recently ended fiscal quarter divided by (ii) the total amount of indebtedness secured directly or indirectly by such Eligible Property or Eligible Properties that are senior to or pari passu with the New Loan.

“Depository Bank” shall mean PNC Bank, N.A. or any successor Depository Bank appointed by Seller with the prior written consent of Buyer (which consent shall not be unreasonably withheld, delayed or conditioned) which delivers a deposit account agreement in the form of the Blocked Account Agreement or another form reasonably acceptable to Buyer.

Schedule 7-A-2

“Eligible Loans” shall mean any of the following types of loans listed in (i) through (v) below, (u) acceptable to Buyer in the exercise of its sole and absolute discretion, (v) secured directly or indirectly by an Eligible Property, (w) having a remaining term (after giving effect to the exercise of any extension options) not to exceed seven (7) years, (x) as to which the applicable representations and warranties set forth in Exhibit V to Annex I are true and correct as of the applicable Purchase Date, (y) with respect to any proposed CDO Purchased Loan, as to which the eligibility criteria set forth in Exhibit IX to Annex I are met as of the applicable Purchase Date, and (z) has a maximum LTV of 85% (unless provided below or is approved by Buyer on a case by case basis).

(i)           performing Mezzanine Loans which are secured by pledges of the equity ownership interests in entities that directly or indirectly own Eligible Properties (the “Mezzanine Loans”).

(ii)          senior participation interests (or a senior promissory note that is, in effect, similar in nature to a senior participation interest) in performing Mortgage Loans secured by first liens on Eligible Properties that also may secure a junior promissory note (or junior interest) in such loan.

(iii)          junior participation interests (or a junior promissory note that is, in effect, similar in nature to a junior participation interest) in performing Mortgage Loans secured by first liens on Eligible Properties that also secure a senior promissory note (or senior interest) in such loan.

(iv)          any other performing loan, participation interest, or other junior mezzanine or subordinate investment which has a maximum LTV of 90% and which does not otherwise conform to the criteria set forth in clauses (i) through (iii) above that Buyer elects in its sole discretion to purchase.

(v)          any performing Stabilized Mortgage Loans with a maximum LTV of 85% or any performing Transitional Mortgage Loans with a maximum LTV of 80%, in each case secured by first liens on Eligible Properties.

“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 Buyer shall determine in its sole and absolute discretion, on a case-by-case basis, whether any healthcare related property, such as assisted living, nursing homes, acute care, rehabilitation centers, diagnostic centers and psychiatric centers, qualifies as an Eligible Property.

“Fitch” shall mean Fitch Inc.

“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.

Schedule 7-A-3

“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).

“LTV” shall mean, with respect to any Eligible Property or Eligible 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 Eligible Properties to the aggregate value of such Eligible Property or Eligible 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 or claims on the related Eligible Property or Eligible Properties.

“Master Repurchase Agreement” shall mean that certain Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, between Capital Trust, Inc., as seller, and Goldman Sachs Mortgage Company, as buyer, as the same may be amended, restated or otherwise modified from time to time, including by that certain Amended and Restated Annex I, dated as of October 30, 2007.

“Mezzanine Loan” shall mean any loan 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.

“Moody’s” shall mean Moody’s Investors 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.

“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 or Other Mezzanine Investment, 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.

“New Loan” shall mean an Eligible Loan that Seller proposes to sell to Buyer pursuant to a Transaction.

“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.

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

Schedule 7-A-4

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

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

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

“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(a) of Annex I.

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

“Seller” shall mean Capital Trust, Inc., a Maryland corporation and its permitted successors and assigns.

“Stabilized” shall refer to a Mortgage Loan that has a Debt Yield (as calculated by Buyer) of greater than 10%.

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

“Transaction” shall mean each such transaction involving the transfer of an Eligible Loan from Seller to Buyer.

“Transitional” shall refer to a Mortgage Loan that has a Debt Yield (as calculated by Buyer) of less than or equal to 10% but greater than or equal to 5%.

“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, with respect to perfection or the effect of perfection or non-perfection, “UCC” 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.

Schedule 7-A-5

SCHEDULE I

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

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

Schedule 7-A-6

SCHEDULE 7-B

FORM OF UCC FINANCING STATEMENT AMENDMENT

Debtor:	Secured Party:
Capital Trust, Inc. 410 Park Avenue, 14th Floor New York, New York 1002	Goldman Sachs Mortgage Company 85 Broad Street New York, New York 10004

ATTACHMENT A TO UCC FINANCING STATEMENT AMENDMENT

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

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

(i) the Blocked Account;

(ii) all of the Purchased Loans (including those identified on Schedule I hereto), including, for the avoidance of doubt, all security interests, mortgages and liens on personal or real property securing 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;

(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;

(vi) all insurance policies and insurance proceeds relating to any Purchased Loan or the related Eligible Property;

(vii) any Hedging Transactions obtained by the underlying obligor with respect to any Purchased Loan; and

(viii) any other property, rights, title or interests as are specified in the Trust Receipt, the Purchased Loan Schedule or exception report with respect to the foregoing in all instances, whether now owned or hereafter acquired, now existing or hereafter created.

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

“Annex I” shall mean the Amended and Restated Annex I to the Master Repurchase Agreement, as the same may be amended, restated or otherwise modified from time to time.

Schedule 7-B-1

“Appraisal” shall mean an appraisal of any Eligible Property prepared by a licensed appraiser listed on Schedule 4 attached to Annex I, as such schedule may be amended from time to time by Seller or Buyer upon approval 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 Institutions Reform, Recovery and Enforcement Act of 1989 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.

“Bailee” shall mean Paul, Hastings, Janofsky & Walker LLP or such other third party as Buyer may approve in its sole discretion.

“Bailee Agreement” shall mean the Bailee Agreement among Seller, Buyer and Bailee in the form of Exhibit VIII to Annex I.

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

“Blocked Account Agreement” shall mean the Amended and Restated Blocked Account Agreement, in the form attached to Annex I as Exhibit VI (or such other form as shall have been approved by Buyer, such approval not to be unreasonably withheld, delayed or conditioned), dated as of October 30, 2007 and executed by Buyer, Seller and the Depository Bank (and any successor thereto or replacement thereof executed by Buyer, Seller and the Depository Bank).

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

“CDO Indenture” shall mean the Indenture dated as of July 20, 2004, among Capital Trust RE CDO 2004-1 Ltd. and Capital Trust RE CDO 2004-1 Corp., as co-issuers, and LaSalle Bank National Association, as trustee.

“CDO II Indenture” shall mean the Indenture for CT RE CDO 2005-1.

“CDO Purchased Loan” shall mean any Purchased Loan that meets the requirements of Exhibit IX to Annex I and is intended to be, or is, pledged to the trustee under the CDO Indenture or the CDO II Indenture.

“Custodial Agreement” shall mean, with respect to Transactions involving Purchased Loans, the Amended and Restated Custodial Agreement, dated as of the date hereof, by and among Custodian, Seller and Buyer.

“Custodial Delivery Certificate” shall mean the custodial delivery certificate, a form of which is attached to Annex I 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 Annex I.

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

“Debt Yield” shall mean, with respect to any Eligible Property or Eligible Properties directly or indirectly securing a New Loan, the quotient (expressed as a percentage) of (i) net operating income for the trailing twelve-month period for the most recently ended fiscal quarter divided by (ii) the total amount of indebtedness secured directly or indirectly by such Eligible Property or Eligible Properties that are senior to or pari passu with the New Loan.

“Depository Bank” shall mean PNC Bank, N.A. or any successor Depository Bank appointed by Seller with the prior written consent of Buyer (which consent shall not be unreasonably withheld, delayed or conditioned) which delivers a deposit account agreement in the form of the Blocked Account Agreement or another form reasonably acceptable to Buyer.

Schedule 7-B-2

“Eligible Loans” shall mean any of the following types of loans listed in (i) through (v) below, (u) acceptable to Buyer in the exercise of its sole and absolute discretion, (v) secured directly or indirectly by an Eligible Property, (w) having a remaining term (after giving effect to the exercise of any extension options) not to exceed seven (7) years, (x) as to which the applicable representations and warranties set forth in Exhibit V to Annex I are true and correct as of the applicable Purchase Date, (y) with respect to any proposed CDO Purchased Loan, as to which the eligibility criteria set forth in Exhibit IX to Annex I are met as of the applicable Purchase Date, and (z) has a maximum LTV of 85% (unless provided below or is approved by Buyer on a case by case basis).

(i)          performing Mezzanine Loans which are secured by pledges of the equity ownership interests in entities that directly or indirectly own Eligible Properties (the “Mezzanine Loans”).

(ii)         senior participation interests (or a senior promissory note that is, in effect, similar in nature to a senior participation interest) in performing Mortgage Loans secured by first liens on Eligible Properties that also may secure a junior promissory note (or junior interest) in such loan.

(iii)        junior participation interests (or a junior promissory note that is, in effect, similar in nature to a junior participation interest) in performing Mortgage Loans secured by first liens on Eligible Properties that also secure a senior promissory note (or senior interest) in such loan.

(iv)        any other performing loan, participation interest, or other junior mezzanine or subordinate investment which has a maximum LTV of 90% and which does not otherwise conform to the criteria set forth in clauses (i) through (iii) above that Buyer elects in its sole discretion to purchase.

(v)         any performing Stabilized Mortgage Loans with a maximum LTV of 85% or any performing Transitional Mortgage Loans with a maximum LTV of 80%, in each case secured by first liens on Eligible Properties.

“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 Buyer shall determine in its sole and absolute discretion, on a case-by-case basis, whether any healthcare related property, such as assisted living, nursing homes, acute care, rehabilitation centers, diagnostic centers and psychiatric centers, qualifies as an Eligible Property.

“Fitch” shall mean Fitch Inc.

“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.

Schedule 7-B-3

“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).

“LTV” shall mean, with respect to any Eligible Property or Eligible 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 Eligible Properties to the aggregate value of such Eligible Property or Eligible 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 or claims on the related Eligible Property or Eligible Properties.

“Master Repurchase Agreement” shall mean that certain Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, between Capital Trust, Inc., as seller, and Goldman Sachs Mortgage Company, as buyer, as the same may be amended, restated or otherwise modified from time to time, including by that certain Amended and Restated Annex I, dated as of October 30, 2007.

“Mezzanine Loan” shall mean any loan 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.

“Moody’s” shall mean Moody’s Investors 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.

“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 or Other Mezzanine Investment, 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.

“New Loan” shall mean an Eligible Loan that Seller proposes to sell to Buyer pursuant to a Transaction.

“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.

Schedule 7-B-4

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

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

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

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

“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(a) of Annex I.

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

“Seller” shall mean Capital Trust, Inc., a Maryland corporation and its permitted successors and assigns.

“Stabilized” shall refer to a Mortgage Loan that has a Debt Yield (as calculated by Buyer) of greater than 10%.

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

“Transaction” shall mean each such transaction involving the transfer of an Eligible Loan from Seller to Buyer.

“Transitional” shall refer to a Mortgage Loan that has a Debt Yield (as calculated by Buyer) of less than or equal to 10% but greater than or equal to 5%.

“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, with respect to perfection or the effect of perfection or non-perfection, “UCC” 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.

Schedule 7-B-5

SCHEDULE I

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

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

Schedule 7-B-6

EXHIBIT I

CONFIRMATION STATEMENT

GOLDMAN SACHS MORTGAGE COMPANY

Ladies and Gentlemen:

Goldman Sachs Mortgage Company is pleased to deliver our written CONFIRMATION of our agreement (subject to satisfaction of the Transaction Conditions Precedent) to enter into the Transaction pursuant to which Goldman Sachs Mortgage Company shall purchase from you the Purchased Loan identified in Schedule I attached hereto, pursuant to the Amended and Restated Master Repurchase Agreement between Goldman Sachs Mortgage Company (the “Buyer”) and Capital Trust, Inc. (“Seller”), dated as of August 15, 2006 (as amended from time to time, including by the Amended and Restated Annex I dated as of October 30, 2007, the “Agreement”; capitalized terms used herein without definition have the meanings given in the Agreement), as follows below and on the attached Schedule 1:

Purchase Date:	__________, 200_
Purchased Loans:	As identified on attached Schedule 1
Aggregate Principal Amount of Purchased Loans:	As identified on attached Schedule 1
Repurchase Date:	__________, 200_
Purchase Price:	$
Pricing Rate:	One-month LIBOR plus ______%
Purchase Percentage:
CDO Purchased Loan:	Yes _____            No_____
Governing Agreements:	As identified on attached Schedule 1
Name and address for communications:	Buyer:         Goldman Sachs Mortgage Company One New York Plaza 46th Floor New York, New York  10004 Attention:  Mr. Anthony Preisano Telephone:  (212) 855-0393 Fax:  (212) 902-1691 with a copy to: Cleary Gottlieb Steen & Hamilton LLP One Liberty Plaza New York, New York  10006 Attention:  Kimberly Brown Blacklow Telephone:  (212) 225-2018 Fax:  (212) 902-1691

Exhibit I-1

Seller:

Capital Trust, Inc.

410 Park Avenue, 14th Floor

New York, New York  10022

Attention:  Geoffrey G. Jervis

Telephone:  212-655-0247

Fax:  212-655-0044

with a copy to:

Paul Hastings Janofsky & Walker LLP

75 East 55th Street

New York, New York  10022

Attention:  Robert J. Grados

Telephone:  212-318-6923

Fax:  212-230-7830

GOLDMAN SACHS MORTGAGE COMPANY, a New York limited partnership
By:	Goldman Sachs Real Estate Funding Corp., its general partner
	By:
		Name:
		Title:

AGREED AND ACKNOWLEDGED:
CAPITAL TRUST, INC., a Maryland corporation
By:
	Name:
	Title:

Exhibit I-2

Schedule 1 to Confirmation Statement

Purchased Loan:	[Loan Type] dated as of [______] in the original principal amount of $[___], made by [____] to [____] under and pursuant to that certain [loan agreement/participation agreement/ applicable document].
Aggregate Principal Amount:

Exhibit I-3

EXHIBIT II

AUTHORIZED REPRESENTATIVES OF SELLER

Name	Specimen Signature
John R. Klopp	/s/ John. R. Klopp
Stephen D. Plavin	/s/ Stephen D. Plavin
Geoffrey G. Jervis	/s/ Geoffrey G. Jervis
Douglas Armer	/s/ Douglas Armer
Thomas C. Ruffing	/s/ Thomas C. Ruffing

Exhibit II-1

EXHIBIT III

FORM OF CUSTODIAL DELIVERY CERTIFICATE

On this _____ day of _____________ 200_, CAPITAL TRUST, INC. (“Seller”), under that certain Amended and Restated Custodial Agreement, dated as of October 30, 2007 (the “Custodial Agreement”), among Seller, DEUTSCHE BANK TRUST COMPANY AMERICAS, as Custodian, and GOLDMAN SACHS MORTGAGE COMPANY, as Buyer, does hereby deliver to, and instruct, the Custodian to hold, in its capacity as Custodian for the benefit of Buyer, the documents comprising the Purchased Loan File and listed on Attachment A hereto with respect to each Purchased Loan to be purchased by Buyer, which Purchased Loans are listed on the Purchased Loan Schedule attached hereto as Attachment B and which Purchased Loans shall be subject to the terms of the Custodial Agreement as of the date hereof.

With respect to the Purchased Loan Files delivered herewith, for purposes of issuing the Trust Receipt, the Custodian shall review the Purchased Loan Files to confirm receipt of each of the documents identified on Attachment A.

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

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

CAPITAL TRUST, INC.
By:
	Name:
	Title:

Exhibit III-1

Attachment A

Purchased Loan File

Exhibit III-2

Attachment B

Purchased Loan Schedule

(a)          Loan Number/Loan Type

(b)          Obligor Name

(c)          Property Address

(d)          Original Balance

(e)          Original Coupon

(f)           Outstanding Balance

(g)          Maturity Date

(h)          Table Funding (Yes/No)

(i)           If Participation, the name of the lead lender under the Purchased Loan

(j)           Such information as Buyer and Custodian shall agree and that Buyer shall set forth in writing,on a case-by-case basis.

Exhibit III-3

EXHIBIT IV-1

FORM OF POWER OF ATTORNEY TO BUYER

“Know All Men by These Presents, that Capital Trust, Inc. (“Seller”), does hereby appoint Goldman Sachs Mortgage Company (“Buyer”), in connection with the Repurchase Agreement (defined below) its attorney-in-fact to act in Seller’s name, place and stead in any way which Seller could do with respect to (i) the completion of the endorsements of the Mortgage Notes, the promissory notes, participation certificates and membership or other equity interests, in each case related to the Purchased Loans and the Assignments of Mortgages, (ii) the recordation of the Assignments of Mortgages and (iii) the enforcement of Seller’s rights under the Purchased Loans purchased by Buyer pursuant to the Amended and Restated Master Repurchase Agreement dated as of August 15, 2006, as amended from time to time, including by the Amended and Restated Annex I dated as of October 30, 2007, between Seller and Buyer (the “Repurchase Agreement”) and to take such other steps as may be necessary or desirable to enforce Buyer’s rights against such Purchased Loans, the related Purchased Loan Files, the Servicing Records and the Hedging Transactions to the extent that Seller is permitted by law to act through an agent. Capitalized terms used herein and not otherwise defined shall have the meanings given such terms in the Repurchase Agreement.

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

IN WITNESS WHEREOF Seller has caused this Power of Attorney to be executed and the Seller’s seal to be affixed this 30th day of October, 2007.

CAPITAL TRUST, INC.
By:
	Name:
	Title:

Exhibit IV-1-1

STATE OF NEW YORK	)
COUNTY OF NEW YORK	)

On this _____ of ____________, before me, the undersigned, a Notary Public in and for said state, personally appeared _______________________________, personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument.

	Notary Public
(Seal)

Exhibit IV-1-2

EXHIBIT IV-2

FORM OF POWER OF ATTORNEY TO SELLER

Know All Men by These Presents, that Goldman Sachs Mortgage Company (“Buyer”) does hereby appoint Capital Trust, Inc. (“Seller”), its attorney-in-fact to act in Buyer’s name, place and stead in any way which Buyer could with respect to modifications described below, to mortgage loan documents with respect to Purchased Loans sold by Seller to Buyer under that certain Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006  (as amended from time to time, including by the Amended and Restated Annex I dated as of October 30, 2007, the “Repurchase Agreement”).  Capitalized terms used herein and not otherwise defined shall have the meanings given such terms in the Repurchase Agreement.

Seller is permitted to administer and service the Purchased Loans without the consent of Buyer, any assignee or any other Person, pursuant to this power of attorney delivered by Buyer, which power of attorney shall not be revoked by Buyer unless a Seller Event of Default under the Repurchase Agreement has occurred and is then continuing.  Notwithstanding the foregoing, Seller shall not consent or assent to a Significant Modification to 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.  All waivers or material actions entered into or taken in respect of the Purchased Loans pursuant to this power of attorney shall be in writing.  Seller shall notify Buyer and the Custodian, in writing, of any waiver or other action entered into or taken thereby in respect of any such Purchased Loan pursuant to this power of attorney, and shall deliver to Custodian (with a copy to Buyer) for deposit in the related Purchased Loan File, an original counterpart of the agreement, if any, relating to such waiver or other action, within three (3) Business Days following the execution thereof.  Actions taken under the foregoing power of attorney shall be binding upon each holder of the Purchased Loans.

“Purchased Loan” shall mean any loan or other mezzanine investment sold by Seller to Buyer and any additional assets delivered by Seller to Buyer pursuant to the Repurchase Agreement.

“Significant Modification” shall mean 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,

Exhibit IV-2-1

(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 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 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,

(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, or

(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.

Exhibit IV-2-2

THIS POWER OF ATTORNEY MAY BE REVOKED BY BUYER BY DELIVERY OF WRITTEN NOTICE TO SELLER DURING THE CONTINUANCE OF ANY EVENT OF DEFAULT UNDER THE REPURCHASE AGREEMENT.  IF THIS POWER OF ATTORNEY HAS NOT BEEN REVOKED AND IF REQUESTED BY SELLER, BUYER WILL PROMPTLY CONFIRM IN WRITING TO SELLER, AND ANY OTHER PERSON OR ENTITY REASONABLY DESIGNATED BY SELLER, THAT THIS POWER OF ATTORNEY HAS NOT BEEN REVOKED AND IS IN FULL FORCE AND EFFECT.

IN WITNESS WHEREOF Seller has caused this Power of Attorney to be executed and the Buyer’s seal to be affixed this 30th day of October, 2007.

GOLDMAN SACHS MORTGAGE COMPANY, a New York limited partnership
By:	Goldman Sachs Real Estate Funding Corp., its general partner
	By:
		Name:
		Title:

Exhibit IV-2-3

EXHIBIT V

REPRESENTATIONS AND WARRANTIES

REGARDING THE PURCHASED LOANS

With respect to each Purchased Loan, Seller represents and warrants on each Purchase Date as follows, other than as set forth on the exception report provided to Buyer in accordance with the Agreement:

1.            Ownership of Purchased Loans.  Immediately prior to the transfer to Buyer of the Purchased Loan, Seller had good title to, and was the sole owner of, the Purchased Loan.  Seller has full right, power and authority to transfer and assign the Purchased Loans to or at the direction of Buyer and has validly and effectively conveyed (or caused to be conveyed) to Buyer or its designee all of Seller’s legal and beneficial interest in and to the Purchased Loan free and clear of any and all pledges, liens, charges, security interests and/or other encumbrances.  The sale of the Purchased Loan to Buyer or its designee does not require Seller to obtain any approval or consent that has not been obtained.  No Purchased loan sold to Buyer hereunder was acquired by Seller from an Affiliate of Seller unless otherwise approved by Buyer in writing.

2.            Additional Representations: As to each Purchased Loan that is a Mortgage Loan or a First Mortgage B-Note and to the extent applicable, each Mezzanine Loan and Other Mezzanine Investment and the related Mortgaged Properties on a Purchase Date and each date on which Market Value is determined, Seller shall be deemed to make the following representations and warranties to Buyer as of such date:

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

(b)          Payment Record.  The Purchased Loan has not been since the date of origination, and currently is not, thirty (30) or more days delinquent, and the underlying obligor is not in default thereunder beyond any applicable grace period for the payment of any obligation to pay principal and interest, taxes, insurance premiums and required reserves.

(c)          Purchased Loan Document Status.  (i) The Purchased Loan Documents have been, to the extent necessary, duly and properly executed, and the Purchased Loan Documents, to the extent applicable, are legal, valid and binding obligations of the underlying obligor, and their terms are enforceable against the underlying obligor, subject only to bankruptcy, insolvency, moratorium, fraudulent transfer, fraudulent conveyance and similar laws affecting rights of creditors generally and to the application of general principles of equity;  (ii) the Purchased Loan Documents contain customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against each related Mortgaged Property of the material benefits of the security, including realization by judicial or, if applicable, non-judicial foreclosure, and there is no exemption available to the underlying obligor which would materially interfere with such right to foreclosure; and (iii) there is no valid defense, counterclaim or right of offset or rescission available to the related underlying obligor with respect to any Purchased Loan Document.

Exhibit V-1

(d)          Title Insurance.  Each Mortgaged Property is covered by an American Land Title Association (or an equivalent form thereof as adopted in the applicable jurisdiction) owner’s and lender’s title insurance policy (the “Title Policy”) in the original principal amount of the related Purchased Loan after all advances of principal.  Each lender’s Title Policy insures that the related Mortgage is a valid first or second, as applicable, priority lien on such Mortgaged Property, subject only to (i) the lien of current real property taxes, ground rents, water charges, sewer rents and assessments not yet due and payable; (ii) covenants, conditions and restrictions, rights of way, easements and other matters of public record, none of which, individually or in the aggregate, in the reasonable judgment of Seller, materially interferes with the current use of the related Mortgaged Property or the security intended to be provided by such Mortgage or with the underlying obligor’s ability to pay its obligations when they become due or the value of the related Mortgaged Property; (iii) the exceptions (general and specific) set forth in such policy, none of which, individually or in the aggregate, in the reasonable judgment of Seller, materially interferes with the current use of the related Mortgaged Property or security intended to be provided by such Mortgage, with the underlying obligor’s ability to pay its obligations when they become due or the value of the related Mortgaged Property; and (iv) in the event such Title Policy has yet to be issued, an escrow letter or a marked up title insurance commitment on which the required premium has been paid exists which evidences that such Title Policy will be issued.  Each Title Policy (or, if it has yet to be issued, the coverage to be provided thereby) is in full force and effect, all premiums thereon have been paid and, to Seller’s knowledge, no material claims have been made thereunder and no claims have been paid thereunder.  No holder of the related Mortgage has done, by act or omission, anything that would materially impair the coverage under such Title Policy.  Immediately following the transfer and assignment of the related Purchased Loan to Buyer, such Title Policy (or, if it has yet to be issued, the coverage to be provided thereby) will inure to the benefit of Buyer as its interest may appear without the consent of or notice to the insurer.  In the case of a Mezzanine Loan, if obtained, an Eagle 9 UCC Title Policy (“UCC Policy”) insures Seller’s security interest in the equity interest pledged thereunder. Each UCC Policy insures that Seller has a first priority perfected security interest in the pledged equity interests and provides coverage in an amount equal to the original principal amount of the related Purchased Loan and immediately following the transfer and assignment of the related Purchased Loan to Buyer, such UCC Policy (or, if it has yet to be issued, the coverage to be provided thereby) will inure to the benefit of Buyer as its interest may appear without the consent of or notice to the insurer.

(e)          No Mechanics’ Liens.  There are no mechanics’, materialman’s or other similar liens or claims which have been filed for work, labor or materials affecting the Mortgaged Property which are or may be liens prior to, or equal or coordinate with, the lien of the Mortgage, unless such lien is insured against under the related title insurance policy.

(f)          Insurance.  Each Mortgaged Property, including any buildings or other improvements thereon, is, and is required pursuant to the related Mortgage to be, insured by (a) a fire and extended perils insurance policy issued by an insurer meeting the requirements of such Purchased Loan providing coverage against loss or damage sustained by reason of fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, terrorism, aircraft, vehicles and smoke, and, to the extent required as of the date of origination by the originator of such Purchased Loan consistent with its normal commercial mortgage lending practices, against other risks, insured against by persons operating like properties in the locality of the Mortgaged Property in an amount not less than the replacement cost of the Mortgaged Property; (b) a business interruption or rental loss insurance policy, in an amount generally required by institutional lenders for similar properties (including coverage for terrorism); (c) a flood insurance policy (if any portion of the Mortgaged Property is located in an area identified by the Federal Emergency Management Agency as having special flood hazards) and (d) a comprehensive general liability insurance policy in amounts as are generally required by commercial mortgage lenders.  Such insurance policy contains a standard mortgagee clause that names Seller as an additional insured and that requires at least thirty days’ (in the case of termination or cancellation other than for nonpayment of premiums) and at least ten days’ (in the case of termination or cancellation for nonpayment of premiums) prior notice to the holder of the Mortgage, and no such notice has been received, including any notice of nonpayment of premiums, that has not been cured.  The Purchased Loan Documents obligate the underlying obligor to maintain or cause to be maintained all such insurance and, at the underlying obligor’s failure to do so, authorize the holder of the Mortgage to maintain such insurance at the underlying obligor’s cost and expense and to seek reimbursement therefor from such underlying obligor.

Exhibit V-2

(g)          Condition of the Property; Condemnation.  No building or other improvement on any Mortgaged Property has been affected in any material manner or suffered any material loss as a result of any fire, wind, explosion, accident, riot, war, or act of God or the public enemy, and each Mortgaged Property is free of any material damage that would affect materially and adversely the value of the Mortgaged Property as security for the Purchased Loan and is in good repair.  Seller has neither received notice, nor is otherwise aware, of any proceedings pending for the total condemnation of any Mortgaged Property or a partial condemnation of any portion material to the related underlying obligor’s ability to perform its obligations under the related Purchased Loan.

(h)          Encroachments; Zoning.  None of the improvements located on any Mortgaged Property lies outside of the boundaries and building restriction lines of the Mortgaged Property, and no improvements on adjoining properties materially encroach upon the Mortgaged Property except those which are insured against by the title insurance policy (including endorsements thereto) issued in connection with the Purchased Loan and all improvements on the Mortgaged Property comply with the applicable zoning laws and/or set-back ordinances in force when improvements were added.

(i)          Compliance with Usury Laws.  The Purchased Loan, and all parties involved in the origination and servicing of the Purchased Loan, complied as of the date of origination with, or is exempt from, applicable state or federal laws, regulations and other requirements pertaining to usury.  Any and all other requirements of any federal, state or local laws, including, without limitation, truth-in-lending, real estate settlement procedures, equal credit opportunity or disclosure laws, applicable to the Purchased Loan have been complied with.

(j)          Mortgage Status; Waivers and Modifications.  Since the date of origination of the Purchased Loan, the terms of the Purchased Loan have not been impaired, waived, altered, satisfied, canceled, subordinated or modified in any respect (except with respect to modifications the economic terms of which are reflected in the Purchased Loan Schedule and which are evidenced by documents in the Purchased Loan File delivered to the Custodian) and no portion of the Mortgaged Property has been released from the lien of the Mortgage or other Purchased Loan Document in any manner.

(k)          Mortgage Recording Taxes.  All applicable Mortgage recording taxes and other filing fees have been paid in full or deposited with the issuer of the title insurance policy issued in connection with the Mortgage Loan for payment upon recordation of the relevant documents.

(l)          Assignment of Leases.  Each Assignment of Leases, if any, creates a valid assignment of, or a valid first or second priority, as applicable, security interest in the related underlying obligor’s interest in all leases, sub-leases, licenses or other agreements pursuant to which any Person is entitle to occupy, use or possess all of any portion of the related Mortgage, subject only to a license granted to the relevant underlying obligor to exercise certain rights and to perform certain obligations of the lessor under such leases, including the right to operate the related Mortgage Property, subject only to those exceptions described in clause (e) above.  No person other than the relevant underlying obligor owns any interest in any payments due under such leases that is superior to or of equal priority with the mortgagee’s interest therein, subject only to those exceptions described in clause (d) above.

(m)          Underlying Representations and Warranties.  Seller has taken no action, nor has the underlying obligor taken any action, that would cause the representations and warranties made by the underlying obligor in any of the Purchased Loan Documents not to be true.

Exhibit V-3

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

(o)          Inspections.  Seller or its representative has inspected or caused to be inspected each Mortgaged Property within six (6) months preceding the related Purchase Date.  The Purchased Loan File for Mortgaged Property constituting real property includes a property survey, certified to Seller, its successors and assigns, and the title insurance company, reciting that it is in accordance with most recent minimum standards for title surveys as determined by the ALTA, with the signature and seal of a licensed engineer or surveyor affixed thereto.

(p)          Contingent Interest; Convertible Notes.  The Purchased Loan does not have a shared appreciation feature, other contingent interest feature or negative amortization.  The indebtedness evidenced by the Mortgage Note is not convertible to an ownership interest in the Mortgaged Property or the Mortgage, and Seller has not financed, nor does it own, directly or indirectly, any equity of any form in the Mortgaged Property or the underlying obligor.  The Mortgage Note or Mezzanine Note, as applicable, does not by its terms provide for the capitalization or forbearance of interest.

(q)          Cross-Collateralization; Cross-Default.  The Purchased Loan is not cross-collateralized or cross-defaulted with any other loan other than another Purchased Loan, is a whole loan and contains no equity participation by the lender.

(r)          Fraud.  No fraudulent acts were committed by Seller in connection with the origination process of the Purchased Loan.

(s)          Taxes and Assessments.  All taxes, water charges, sewer rates, governmental assessments, insurance premiums, leasehold payments and any other outstanding fees or charges that prior to the date of origination of the Purchased Loan became due and owing in respect of the related Mortgaged Property have been paid, or an escrow of funds in an amount sufficient to cover such payments has been established or are insured against by the title insurance policy issued in connection with the origination of the Purchased Loan.

(t)          No Material Default.  No loan is a Defaulted Loan and there is no material default, breach, violation or event of acceleration existing under any of the Purchased Loan Documents and Seller has not received actual notice of any event (other than payments due but not yet delinquent) which, with the passage of time or with notice and the expiration of any grace or cure period, would and does constitute a default, breach, violation or event of acceleration; no waiver of the foregoing exists and no person other than the holder of the Mortgage Note or Mezzanine Note, as the case may be, may declare any of the foregoing.

(u)          Environmental Conditions.  With respect to each Mortgaged Property, an environmental site assessment was conducted by a licensed qualified engineer.  Seller has reviewed each such report and update.  Where such environmental report disclosed the existence of a material and adverse environmental condition or circumstance affecting any Mortgaged Property, (i) a party not related to the underlying obligor was identified as the responsible party for such condition or circumstance, (ii) the related underlying obligor was required either to provide additional security and/or to obtain an operations and maintenance plan or (iii) the related underlying obligor provided evidence that applicable federal, state or local governmental authorities would not take any action, or require the taking of any action, in respect of such condition or circumstance.  The related Purchased Loan Documents contain provisions pursuant to which the related underlying obligor or a principal of such underlying obligor has agreed to indemnify the mortgagee for damages resulting from violations of any applicable environmental laws.  Seller, having made no independent inquiry other than reviewing the environmental reports and updates referenced herein and without other investigation or inquiry, has no knowledge of any material and adverse environmental condition or circumstance affecting any Mortgaged Property that was not disclosed in the related report and/or update.  Each Mortgage requires the related Mortgagor to comply with all applicable federal, state and local environmental laws and regulations in all material respects.  Seller has not received any actual notice of a material violation of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or any applicable federal, state or local environmental law with respect to any Mortgaged Property that was not disclosed in the related report and/or update.  Seller has not taken any actions which would cause any Mortgaged Property not to be in compliance with all federal, state and local laws pertaining to environmental hazards.

Exhibit V-4

(v)          Acceleration.  The Purchased Loan Documents contain provisions for the acceleration of the payment of the unpaid principal balance of the Purchased Loan if (A) the underlying obligor voluntarily transfers or encumbers all or any portion of any related Mortgaged Property; or (B) any direct or indirect interest in underlying obligor is voluntarily transferred or assigned, other than, in each case, as permitted under the terms and conditions of the Purchased Loan Documents.

(w)          Actions Concerning Purchased Loans.  There is no pending action, suit or proceeding, arbitration or governmental investigation against the underlying obligor or any Mortgaged Property an adverse outcome of which is reasonably likely to result in a Material Adverse Effect.

(x)          Servicing.  The servicing and collection practices used by Seller, and the origination practices of Seller, to the extent applicable, have been in all respects legal, proper and prudent and have met customary industry standards.

(y)          Assignability.  In connection with the assignment, transfer or conveyance of any individual Mortgage, the Mortgage Note and Mortgage contain no provision limiting the right or ability of Seller to assign, transfer and convey the Mortgage to any person or entity.

(z)          Buyer under a Deed of Trust.  If a Mortgage is a deed of trust, a trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in the deed of trust, and no fees or expenses are or will become payable to the trustee under the deed of trust, except in connection with the sale or release of the Mortgaged Property following default or payment of the Purchased Loan.

(aa)          Insurance Proceeds.  The Mortgage provides that any insurance proceeds in respect of a casualty loss or taking will be applied either to the repair or restoration of all or part of the related Mortgaged Property, with the mortgagee or a trustee appointed by it having the right to hold and disburse such proceeds (provided that such proceeds exceed the threshold amount described in the loan documents) as the repair or restoration progresses, or to the payment of the outstanding principal balance of the Purchased Loan together with any accrued interest thereon, except to the extent of any excess proceeds after restoration.

(bb)          Flood Zone.  No Mortgaged Property is located in a special flood hazard area as defined by the Federal Emergency Management Agency or if it is, flood insurance is required and has been received under the Mortgage.

(cc)          Ground Lease.  No Mortgage is secured in whole or in part by the interest of a borrower as a lessee under a ground lease.

(dd)          Certificate of Occupancy.  Certificates of occupancy and building permits, as applicable, have been issued with respect to Mortgaged Property.

Exhibit V-5

(ee)          Escrow Deposits.  Any escrow accounts for taxes or other reserves required to be funded on the date of origination of the Purchased Loan pursuant to the Purchased Loan Documents have been funded and all such escrow accounts required to have been funded as of the Purchase Date (taking into account any applicable notice and grace period) have been funded.

(ff)          Valid Assignment of Mortgage.  The related Assignment of Mortgage constitutes a legal, valid and binding assignment of such Mortgage to Buyer, and the related reassignment of Assignment of Leases, rents and profits, if any, constitutes a legal, valid and binding assignment thereof to Buyer.

(gg)          Related Collateral.  The related Mortgage Note, Mezzanine Note or B-Note, as applicable, is not, and has not been since the date of origination of the Purchased Loan, secured by any collateral except the lien of the related Mortgage, any related Assignment of Leases, any related security agreement and escrow agreement or other applicable Purchased Loan Document; and the related Mortgaged Property or Properties or other securities, as applicable, do not secure any loan other than the Purchased Loan being sold to Buyer hereunder (except for Purchased Loans, if any, which are cross-collateralized with other Purchased Loans being conveyed to Buyer hereunder and identified on the Purchased Loan Schedule).

(hh)          Licenses and Permits.  As of the date of origination of the Purchased Loan, the related underlying obligor was in possession of all material licenses, permits and franchises required by applicable law for the ownership and operation of the related Mortgaged Property as it was then operated.

(ii)          Improvements; Origination.  The Purchased Loan is directly (or in the case of an participation interest, indirectly) secured by a first or second lien on one or more parcels of real estate upon which is located one or more multifamily or commercial structures; and the Purchased Loan was originated by a savings and loan association, savings bank, commercial bank, credit union, insurance company, or similar institution which is supervised and examined by a Federal or State authority, or by a mortgagee approved by the Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of the National Housing Act.

(jj)          Tenants.  As to each Purchased Loan secured by Mortgaged Property which is leased to tenants:

(i)          the Mortgaged Property is not subject to any leases other than the leases described in the rent roll contained in the Purchased Loan Documents (hereinafter referred to as the “Leases”), and such rent roll is accurate and complete in all material respects, including description of the rent and term and any extraordinary rights of tenants (such as option, rights of first refusal and rights of termination).  No Person has any possessory interest in the Mortgaged Property or right to occupy the same except under and pursuant to the provisions of the Leases.  Each Lease of all or any portion of the Mortgaged Property is subordinate to the Mortgage, unless otherwise approved by Buyer;

(ii)          each such commercial tenant is conducting business, and each such residential tenant is residing, only in that portion of the Mortgaged Property covered by its lease; (B) no leases contain any option to purchase, any right of first refusal to lease or purchase, any right to terminate the lease or vacate the premises prior to expiration of the lease term, or any other similar provisions which adversely affect the Mortgaged Property or which might adversely affect the rights of any holder of the Purchased Loan;

(iii)          no Lease contains a non-disturbance or similar recognition agreement;

Exhibit V-6

(iv)          (A) except as otherwise disclosed to Buyer in writing, there are no prior recorded assignments of the Leases or of any portion of the rents, additional rents, charges, issues or profits due and payable or to become due and payable thereunder (hereinafter collectively referred to as the “Rents”) which are now outstanding and have priority over the assignment of leases contained in the Purchased Loan Documents and given in connection with the Purchased Loan; (B) except as may be disclosed in the rent roll contained in the Purchased Documents, no tenant is more than twenty-nine (29) days delinquent in the payment of rent nor in default under any material provision of its Lease, all material conditions and obligations on the underlying obligor’s part to be fulfilled under the terms of any Lease of the Mortgaged Property have been satisfied or fully performed, and all Leases are in full force and effect; and (C)  each Lease provides for payment of rent by check on a monthly basis; no tenant has advanced more than one (1) month’s payment under any Lease; and no Person affiliated with the underlying obligor is a tenant under any Lease; and

(v)          the underlying obligor is the owner and holder of the landlord’s interest under any leases, and the related Mortgage and assignment of leases, rents and profits, if any, provides for the appointment of a receiver for rents or allows the mortgagee to enter into possession to collect rent or provide for rents to be paid directly to mortgagee in the event of a default, subject to the exceptions described in clause (e) of this Exhibit V.

(kk)          Bankruptcy.  Seller has not been served with notice that any underlying obligor is a debtor in any state or federal bankruptcy or insolvency proceeding.

(ll)          Access; Separate Tax Parcels.  At the time of origination, (i) all amenities, access routes or other items crucial to the related appraised value of the Mortgaged Property were under the direct control of the underlying obligor or, subject to easements for the benefit of the underlying obligor, are public property; and (ii) the Mortgaged Property was contiguous to a physically open, dedicated all-weather public street, had all necessary permits and approvals for ingress and egress, was adequately serviced by public water, sewer systems and utilities and was on a separate Tax parcel, separate and apart from any other property owned by the underlying obligor or any other person.  The Mortgaged Property has all necessary access by public roads or by easements which in each case are not terminable and are not subordinated to any mortgage other the related Mortgage.

(mm)       Appraisal.  The Purchased Loan File contains an Appraisal that is signed by a licensed appraiser, duly appointed by Seller, who, to Seller’s knowledge, had no interest, direct or indirect, in the Mortgaged Property or in any loan made on the security thereof, and whose compensation is not affected by the approval or disapproval of the Purchased Loan, and the Appraisal and appraiser both satisfy the requirements of Title XI of the Federal Institutions Reform, Recovery, and Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the date the Purchased Loan was originated.

(nn)          Junior Liens.  The Purchased Loan does not permit the related Mortgaged Property to be encumbered by any lien junior to or of equal priority with the lien of the related Mortgage without the prior written consent of the holder thereof or the satisfaction of debt service coverage or similar criteria specified therein.  To Seller’s knowledge, except as disclosed, the related Mortgaged Property is not encumbered by any lien junior to the lien of the related Mortgage.  The Purchased Loan contains a “due on sale” clause that provides for the acceleration of the payment of the unpaid principal balance of the Purchased Loan if, without the prior written consent of the holder of the Purchased Loan, the related Mortgaged Property is transferred or sold.

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

Exhibit V-7

(pp)          Operating or Financial Statement.  The related Purchased Loan Documents require the related borrower to furnish to the mortgagee at least annually an operating statement with respect to the related Mortgaged Property.

(qq)          No Advances of Funds.  No party to the Purchased Loan Documents has advanced funds on account of any default under the Purchased Loan or under the underlying real property mortgage documents.

(rr)          Perfection of Security Interests.  A Uniform Commercial Code financing statement has been filed and/or recorded in all places necessary to perfect a valid security interest in such personal property, and such security interest is a first or second priority security interest, subject to any prior purchase money security interest in such personal property and any personal property leases applicable to such personal property.  The pledge of ownership interests securing any Purchased Loan that is a Mezzanine Loan relates to direct or indirect equity or ownership interests in the underlying real property owner and has been fully perfected in favor of Seller as mezzanine lender.  To the extent the pledged ownership interests have not been certificated pursuant to the terms of any Purchased Loan that is a Mezzanine Loan, the terms of such Mezzanine Loan and the related organizational documents of the underlying real property owner prohibit the subsequent certification thereof.

(ss)          Lockbox.  The lockbox administrator with respect to the related Purchased Loan, if any, is not an Affiliate of Seller.

(tt)          No Plan Assets.  The borrower under the Purchased Loan does not, and would not be deemed to, hold Plan Assets at any time.

Exhibit V-8

EXHIBIT VI

FORM OF AMENDED AND RESTATED BLOCKED ACCOUNT AGREEMENT

Amended and Restated Blocked Account Agreement

October        , 2007

PNC Bank, National Association

Treasury Management

Two PNC Plaza, 31st Floor

620 Liberty Avenue

Pittsburgh, PA 15222

Attn: Jacqueline Rizzo

Re: Blocked Account established by Capital Trust, Inc. (“Seller”) and Midland Loan Services, Inc. (“Servicer”) pursuant to the Amended and Restated Master Repurchase Agreement dated as of August 15, 2006 and the Master Repurchase Agreement dated as of October 30, 2007 (each as amended, supplemented or otherwise modified from time to time, the “Repurchase Agreement”) among the Seller and Goldman Sachs Mortgage Company (“Buyer”)

Ladies and Gentlemen:

We refer to the collection account established by the Seller and the Buyer, pursuant to the Repurchase Agreement, at PNC Bank, National Association (“Depository Bank”), entitled “Goldman Sachs Mortgage Company, as Buyer under that certain Amended and Restated Master Repurchase Agreement, dated August 15, 2006” Account No. 1015527379, ABA # 043000096, PNC Bank, Pittsburgh, PA, (the “Blocked Account”).  This Blocked Account Agreement amends and restates that certain Amended and Restated Blocked Account Agreement between the parties dated August 15, 2006.  Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Repurchase Agreement.  In the event of a conflict between the terms of the Repurchase Agreement or any Transaction entered into thereunder and this Blocked Account Agreement, the Repurchase Agreement shall prevail.  Notwithstanding the previous sentence, this Blocked Account Agreement will govern and control the performance of Depository Bank.

1.           Seller shall, and shall cause Servicer, from time to time, to deposit or cause to be deposited directly into, or if applicable, remitted directly from the applicable underlying collection account to, the Blocked Account all Income (including Principal Payments) with respect to the Purchased Loans, which may include payments in respect of associated Hedging Transactions pledged to Buyer and related to the Purchased Loans.  Buyer has established a repurchase arrangement with Seller.  By its execution of this letter, Seller acknowledges that it has transferred all of Seller’s right, title and interest in and to the Blocked Account and any funds from time to time on deposit therein, that such funds are received by Depository Bank for Buyer and are for application against Seller’s liabilities to Buyer under the Repurchase Agreement.

Exhibit VI-1

2.           Funds in the Blocked Account shall be remitted in accordance with the most recent instructions originated by Buyer without the further consent of Seller (the “Distribution Instructions”), which Buyer agrees, for the benefit of Seller only, shall be in compliance with the provisions of the Repurchase Agreement.  Until Depository Bank shall receive contrary instructions from Buyer, on each Business Day, Depository Bank shall remit funds on deposit in the Blocked Account to the account of Seller as set forth in Schedule A hereto.

3.           Buyer shall deliver the Distribution Instructions to Depository Bank, Seller and Servicer by facsimile by no later than 12:00 p.m. (New York City time) on the Business Day prior to each Remittance Date.

4.           Depository Bank may rely upon any Distribution Instructions originated by Buyer, and Depository Bank shall not have any liability to Buyer for actions taken in reliance on such Distribution Instructions.  All distributions made by the Servicer pursuant to this Section 4 shall be (subject to any decree of any court of competent jurisdiction) final, and Servicer shall have no duty to inquire as to the application by Buyer of any amounts distributed to it.

5.           The Blocked Account shall be an interest bearing account.  All income and gains from the investment of funds in the Blocked Account shall be retained in the Blocked Account until disbursed in accordance with Section 2 hereof.  As between Seller and Buyer, Seller shall treat all income, gains and losses from the investment of amounts in the Blocked Account as its income or loss for federal, state and local income tax purposes.

6.           The Blocked Account shall be subject to the sole control of Buyer and, neither Seller nor Servicer shall have any right of withdrawal from the Blocked Account or any right to deliver instructions to Depository Bank in respect of the Blocked Account.Depositary Bank shall accept Distribution Instructions only from Buyer at all times and shall comply with all instructions of Buyer without any further consent of Seller or Servicer being required.

7.           The undersigned parties agree:  (a) that Depository Bank will not exercise any right of set off, banker’s lien or any similar right in connection with such funds, provided that Depository Bank may set off against the Blocked Account for fees and expenses payable hereunder, for returned deposit items and for adjustments and corrections in respect of transactions in the Blocked Account, including, without limitation, returned checks and other deposits with respect to which Depository Bank fails to receive final payment or settlement; (b) that Depository Bank shall not withdraw, transfer or otherwise dispose of funds from the Blocked Account or permit any other person or entity to withdraw, transfer or otherwise dispose of funds in the Blocked Account except in accordance with the terms of Section 2 hereof, the Distribution Instructions originated by Buyer, and the terms of this Section 7; (c) that for the purposes of the Uniform Commercial Code as in effect from time to time in the State of New York (the “UCC”), the Blocked Account is a “deposit account”, as defined in Article 9 of the UCC; and (d) upon receipt of written notice of any lien, encumbrance or adverse claim against the Blocked Account or any funds credited thereto, Depository Bank will make reasonable efforts promptly to notify Seller, Buyer and Servicer thereof.  The undersigned further agree that if there are insufficient collected funds in the Blocked Account to cover the amount of any returned check or other adjustment or correction to be debited thereto, Seller shall repay Depository Bank the amount of such debit immediately upon demand.  If Seller fails to so repay Depository Bank, then, only after the occurrence and continuance of a Seller Event of Default under the Repurchase Agreement, Buyer shall repay Depository Bank for such debit immediately upon demand to the extent that Buyer received the proceeds of the check or other deposit or credit to which the debit relates.

Exhibit VI-2

8.           In the event of a conflict between this Blocked Account Agreement and any other agreement between Depository Bank and Seller, the terms of this Blocked Account Agreement will prevail.

9.           This Blocked Account Agreement shall continue in effect until Buyer has notified Depository Bank in writing that this Blocked Account Agreement is terminated.  Notwithstanding the foregoing, Depository Bank may terminate this Blocked Account Agreement upon thirty (30) days written notice to the other parties; provided that it may terminate this Blocked Account Agreement immediately upon prior written notice to the Buyer and Seller, in the event Depository Bank has a reasonable basis to suspect fraud or other illegal activity in connection with the Blocked Account or this Blocked Account Agreement. In the event of immediate termination by Depository Bank, Depository Bank shall transfer all funds in the Blocked Account to Buyer or to its designee, as directed in writing by Buyer.

10.           This Blocked Account Agreement and the instructions and notices required or permitted to be executed and delivered hereunder set forth the entire agreement of the parties with respect to the subject matter hereof and supersede any prior agreement and contemporaneous oral agreements of the parties concerning its subject matter.

11.           No amendment, modification or (except as otherwise specified in Section 9 above) termination of this Blocked Account Agreement, nor any assignment of any rights hereunder (except to the extent contemplated under Section 13 below), shall be binding on any party hereto unless it is in writing and is signed by each of the parties hereto, and any attempt to so amend, modify, terminate or assign except pursuant to such a writing shall be null and void.  No waiver of any rights hereunder shall be binding on any party hereto unless such waiver is in writing and signed by the party against whom enforcement is sought.

12.           If any term or provision set forth in this Blocked Account Agreement shall be invalid or unenforceable, the remainder of this Blocked Account Agreement, other than those provisions held invalid or unenforceable, shall be construed in all respects as if such invalid of unenforceable term or provision were omitted.

13.           The terms of this Blocked Account Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective corporate successors.  This Blocked Account Agreement may be assigned by Buyer, Seller and Servicer to any assignee of Buyer, Seller or Servicer, respectively, permitted under the Repurchase Agreement, provided that written notice thereof is given by the applicable assignor to Depository Bank.

14.           This Blocked Account Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Blocked Account Agreement by signing and delivering one or more counterparts.

15.           This Blocked Account Agreement shall be governed by and construed in accordance with the law of the State of New York.  The parties agree that New York is the “bank’s jurisdiction” for purposes of the UCC.

16.           Depository Bank may rely, and Depository Bank shall be protected in acting, or refraining from acting, upon any notice (including but not limited to electronically confirmed facsimiles of such notice) believed by Depository Bank to be genuine and to have been given by the proper party or parties.

Exhibit VI-3

17.           Depository Bank’s duties and obligations shall be determined solely by the provisions of this Blocked Account Agreement, and Depository Bank shall not be liable except for the performance of its duties and obligations as are set forth herein.  Depository Bank shall have no obligation to review, or confirm that any actions taken pursuant to this Agreement comply with, any other agreement or document.  Depository Bank shall have no liability to any party to this Blocked Account Agreement or to any other party arising out of or in connection with this Blocked Account Agreement other than for its gross negligence or willful misconduct.  Substantial compliance by Depository Bank with its standard procedures for the services Depository Bank is providing hereunder shall be deemed to be the exercise by it of ordinary care.  In no event shall Depository Bank be liable for any lost profits or for any indirect, special, consequential or punitive damages even if advised of the possibility or likelihood of such damages.

18.           Seller agrees to indemnify, defend and hold harmless Depository Bank and its affiliates and parent(s) and its and their respective officers, directors, employees, representatives and agents (each an “Indemnified Party”) from and against all liabilities, losses, claims, damages, demands, costs and expenses of every kind (“Losses”) including, without limitation, Losses incurred as a result of items being deposited in the Blocked Account and being unpaid for any reason, reasonable attorney’s fees and the reasonable charges of Depository Bank’s in-house counsel, incurred or sustained by any Indemnified Party arising out of Depository Bank’s performance of the services contemplated by this Blocked Account Agreement, except to the extent such Losses are the direct result of the gross negligence or willful misconduct of Depository Bank.

19.           If at any time Depository Bank is served with legal process, which it in good faith believes prohibits the disbursement of the funds deposited in the Blocked Account, then Depository Bank shall have the right (i) to place a hold on the funds in the Blocked Account until such time as it receives an appropriate court order or other assurance satisfactory to it as to the disposition of the funds in the Blocked Account, or (ii) to commence, at Seller’s expense, an interpleader action in any competent Federal or State Court located in the Commonwealth of Pennsylvania, and otherwise to take no further action except in accordance with joint written instructions from Seller and Buyer or in accordance with the final order of a competent court, served on Depository Bank.

20.           All bank statements in respect of the Blocked Account shall be sent to Buyer and Seller as follows:

Seller:

Capital Trust, Inc.

410 Park Avenue, 14th Floor

New York, New York 10022

Attn:  Mr. Geoffrey G. Jervis, Chief Financial Officer

Buyer:

Goldman Sachs Mortgage Company

One New York Plaza

46th Floor

New York, New York  10004

Attn:  Anthony Preisano

Exhibit VI-4

All notices to Depository Bank are to be sent to:

PNC Bank, National Association

Treasury Management

Two PNC Plaza, 31st Floor

620 Liberty Avenue

Pittsburgh, PA 15222

Attn:  Risk Manager and Jacqueline Rizzo

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

Exhibit VI-5

Kindly acknowledge your agreement with the terms of this agreement by signing the enclosed copy of this letter and returning it to the undersigned.

Very truly yours,
GOLDMAN SACHS MORTGAGE COMPANY, a New York limited partnership
By:	Goldman Sachs Real Estate Funding Corp., its general partner
	By:
		Title:

Agreed and acknowledged:
PNC BANK, NATIONAL ASSOCIATION, a national banking association, as Depository Bank
By:
	Title:

CAPITAL TRUST, INC., a Maryland corporation, as Seller
By:
	Title:

MIDLAND LOAN SERVICES, INC., a Delaware corporation, as Servicer
By:
	Title:

Exhibit VI-6

SCHEDULE A

(Seller’s Account Information)

JP Morgan Chase Bank

380 Madison Avenue

11th Floor

New York, New York  10017-2591

ABA #:  021-000021

Account #:  230254632

Account Name:  Capital Trust, Inc.

Attention:  Geoffrey G. Jervis  (212) 655-0247

Exhibit VI-7

EXHIBIT VII

FORM OF DIRECTION LETTER

Exhibit VII-1

EXHIBIT VIII

FORM OF BAILEE AGREEENT

[CAPITAL TRUST, INC.

NAME AND ADDRESS]

_______________ __, 20__

Paul, Hastings, Janofsky & Walker LLP

75 East 55th Street

New York, New York  10022

Re: Bailee Agreement (this “Bailee Agreement”) in connection with the sale of ______________ by Capital Trust, Inc. (the “Seller”) to Goldman Sachs Mortgage Company (the “Buyer”)

Gentlemen and Mesdames:

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

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

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

3.           The Bailee shall issue and deliver to the Buyer and the Custodian (as defined in Section 5 below) on or prior to the Funding Date by facsimile (a) in the name of the Buyer, an initial trust receipt and certification in the form of Attachment 2 attached hereto (the “Trust Receipt”), which Trust Receipt shall state that the Bailee has received the documents comprising the Purchased Loan File as set forth in the Custodial Delivery Certificate (as defined in that certain Amended and Restated Custodial Agreement dated as of October 30, 2007, among Seller, Buyer and Custodian, in addition to such other documents required to be delivered to Buyer and/or Custodian pursuant to the Amended and Restated Master Repurchase Agreement dated as of August 15, 2006, between Seller and Buyer (as amended and restated from time to time, including by the Amended and Restated Annex I dated as of October 30, 2007, the “Repurchase Agreement”).

Exhibit VIII-1

4.           On the applicable Funding Date, in the event that the Buyer fails to purchase any New Loan from the Seller that is identified in the related Custodial Delivery Certificate, the Buyer shall deliver by facsimile to the Bailee at (212) 655-0044 to the attention of Robert Grados, Esq., an authorization (the “Facsimile Authorization”) to release the Purchased Loan Files with respect to the Purchased Loans identified therein to the Seller.  Upon receipt of such Facsimile Authorization, the Bailee shall release the Purchased Loan Files to the Seller in accordance with the Seller’s instructions.

5.           Following the Funding Date, the Bailee shall forward the Purchased Loan Files to Deutsche Bank Trust Company Americas, 1761 St. Andrew Place, Santa Ana, California 92705, Attention: Mortgage Custody-QT020C (the “Custodian”) by insured overnight courier for receipt by the Custodian no later than 1:00 p.m. on the third Business Day following the applicable Funding Date (the “Delivery Date”).

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

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

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

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

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

Exhibit VIII-2

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

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

12.           This Bailee Agreement may not be modified, amended or altered, except by written instrument, executed by all of the parties hereto.

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

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

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

16.           Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Repurchase Agreement.

[signatures begin on next page]

Exhibit VIII-3

Very truly yours,

CAPITAL TRUST, INC., a Maryland corporation

By:

Name: 

Title: 

ACCEPTED AND AGREED:

PAUL, HASTINGS, JANOFSKY & WALKER LLP,
Bailee

By:

Name: 

Title: 

ACCEPTED AND AGREED:
GOLDMAN SACHS MORTGAGE COMPANY, Buyer
By:	Goldman Sachs Real Estate Funding Corp., its general partner
By:
Name:
Title:

Exhibit VIII-4

Attachment 1 to Bailee Agreement

CUSTODIAL DELIVERY CERTIFICATE

Exhibit VIII-5

Attachment 2 to Bailee Agreement

TRUST RECEIPT

Exhibit VIII-6

EXHIBIT IX

ELIGIBILITY CRITERIA

1.           Terms used, but not defined in this Exhibit IX shall have the meaning set forth in Section 2 of this Annex I.  The following capitalized terms shall have the respective meanings set forth below:

“Credit Risk Interest” shall mean a Purchased Loan that, in the Buyer’s reasonable business judgment, has a significant risk of declining in credit quality or over time may become an Impaired Interest.

“Impaired Interest” shall mean a Purchased Loan with respect to which foreclosure or default (whether or not declared) has occurred.

2.           Each Purchased Loan satisfies the following criteria as of the applicable Purchase Date:

(a)           the obligor of such Purchased Loan is incorporated or organized under the laws of the United States;

(b)           payments of interest on such Purchased Loan are not subject to withholding tax unless the issuer thereof or the obligor thereon is required to make “gross-up” payments sufficient to cover any withholding tax imposed at any time on payments made to the Issuer with respect thereto;

(c)            it is eligible under its underlying instruments to be purchased by the Issuer (as defined in the CDO Indenture or the CDO II Indenture, as applicable) and pledged to the Trustee (as defined in the CDO Indenture or the CDO II Indenture, as applicable);

(d)           it provides for the payment of principal at not less than par upon maturity, redemption or acceleration;

(e)           it is not an interest that is an Impaired Interest or a Credit Risk Interest;

(f)           it does not have a principal balance greater than $35,000,000;

(g)           the maturity date of such Purchased Loan (including any extension option) is not later than August 2013;

(h)           the principal balance of such Purchased Loan has not been reduced by a realized loss, appraisal event, or similar item since initial issuance; and

(i)           it qualifies as either a CDO Asset or a CDO II Asset.

Exhibit IX-1

ANNEX II

1. Names and Addresses for Communications Between Parties:

BUYER

Goldman Sachs Mortgage Company

One New York Plaza

46th Floor

New York, New York  10004

Attn:  Mr. Anthony Preisano

Telephone: (212) 855-0393

Fax:  (212) 902-1691

with a copy to:

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, New York  10006

Attn:  Kimberly B. Blacklow

Telephone: (212) 225-2018

Fax:  (212) 225-3999

SELLER

Capital Trust, Inc.

410 Park Avenue, 14th Floor

New York, New York  10022

Attn:  Geoffrey G. Jervis

Telephone:  (212) 655-0247

Fax:  (212) 655-0044

with a copy to:

Paul Hastings Janofsky & Walker, LLP

75 East 55th Street

New York, New York  10022

Attn:  Robert J. Grados, Esq.

Telephone:  (212) 318-6923

Fax:  (212) 230-7830

2. Payments to Buyer:  Payments to Buyer under the Agreement shall be made by transfer, via wire transfer, to the following account of the Buyer: Citibank, N.A., ABA #: 021000089, Account #:  40711421, Account Name: Goldman Sachs Mortgage Company, Ref: Capital Trust, Inc.,  Attention:  John Makrinos and Mike Forbes.  Buyer may consider on a case-by-case-basis in its sole and absolute discretion alternative funding arrangements.

3. Payments to Seller: Payments to Seller under the Agreement shall be made by transfer, via wire transfer, to the following account of the Seller: JP Morgan Chase Bank, 380 Madison Avenue, 11th Floor, New York, NY  10017-2591,  ABA #: 021-000021, Account #:230254632, Account Name: Capital Trust, Inc., Attention: Geoffrey G. Jervis, (212) 655-0247 or to such other account designated by Seller to Buyer in a written notice, provided that such written notice is countersigned by two (2) authorized representatives of Seller.

Annex II-1

EX-10.47F

TERMINATION AGREEMENT

TERMINATION OF MASTER REPURCHASE AGREEMENT, dated as of March 16, 2009  (this “Termination”), between CAPITAL TRUST, INC., a Maryland corporation(the “Seller”) and GOLDMAN SACHS MORTGAGE COMPANY, a New York limited partnership (the “Buyer”).

WHEREAS, Seller and Buyer are parties to that certain Master Repurchase Agreement, dated as of October 30, 2007 as supplemented by that certain Annex I, dated as of October 30, 2007 (the “Alternate-Funded Master Repurchase Agreement”).  Seller and Buyer desire to terminate the Alternate-Funded Master Repurchase Agreement, which Alternate-Funded Master Repurchase Agreement was entered into in connection with that certain Amended and Restated Master Repurchase Agreement between Seller and Buyer, dated as of August 15, 2006 as supplemented by that certain Amended and Restated Annex I, dated as of October 30, 2007 (as amended, supplemented or modified, and together with all schedules, annexes and exhibits thereto, and all confirmations exchanged pursuant to the Transactions entered into in connection therewith, the "Master Repurchase Agreement"), which Master Repurchase Agreement has been terminated as of the date hereof.

NOW, THEREFORE, in consideration of the mutual promises herein contained, the parties hereto agree that, to the full extent of their respective interests therein, the Alternate-Funded Master Repurchase Agreement and any other agreement, document or instrument executed and delivered in connection with the Alternate-Funded Master Repurchase Agreement shall each be deemed terminated effective as of the date hereof and shall be of no further force or effect.

This Termination may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.

[Remainder of this page intentionally left blank]

IN WITNESS WHEREOF, the parties hereto have caused this Termination to be duly executed and delivered as of the day and year first above written.

CAPITAL TRUST, INC., as Seller
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

GOLDMAN SACHS MORTGAGE COMPANY, as Buyer
By:	Goldman Sachs Real Estate Funding Corp., its general partner
	By:	/s/ Mark Buono
		Name: Mark Buono
		Title: Vice President

EX-10.49A

  
    Unassociated Document
    
    
    
    
    
  

EX-10.49B

AMENDMENT NO. 1 TO MASTER REPURCHASE AGREEMENT

AMENDMENT NO. 1, dated as of March 16, 2009 (this “Amendment”), to that certain Master Repurchase Agreement, dated as of October 24, 2008 (as amended, restated, supplemented or otherwise modified and in effect prior to the date hereof, the “Existing Repurchase Agreement,” and as amended hereby and as further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Repurchase Agreement”), by and among CT BSI FUNDING CORP. (“CT BSI”) and CAPITAL TRUST, INC. (“Capital Trust”), as sellers (collectively, the “Sellers”), JPMORGAN CHASE BANK, N.A., as buyer (“Buyer”) and JPMORGAN CHASE BANK, N.A., as affiliated hedge counterparty (the “Affiliated Hedge Counterparty”).  Capitalized terms used but not otherwise defined herein shall have the meanings specified therefor in the Repurchase Agreement.

RECITALS

WHEREAS, Sellers and Buyer are parties to the Existing Repurchase Agreement;

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of July 29, 2005 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “MS Repurchase Agreement”), by and among Capital Trust, CT RE CDO 2004-1 SUB, LLC, CT RE CDO 2005-1 SUB, LLC and CT XLC HOLDING, LLC, as sellers (in such capacity, collectively, the “MS Sellers”) and MORGAN STANLEY BANK, as buyer (“Morgan Stanley”);

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of November 21, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMCF Repurchase Agreement”; together with the Repurchase Agreement, collectively, the “JPM Repurchase Agreements”), by and among CT BSI and Capital Trust, as sellers (in such capacity, collectively, the “JPMCF Sellers”; together with the Sellers, collectively, the “JPM Sellers”) and JPMORGAN CHASE FUNDING INC., as buyer (“JPMCF”; and together with Buyer, collectively, the “JPM Parties”);

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of July 30, 2007 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Citigroup Repurchase Agreement,” and together with the  JPMorgan Repurchase Agreements and the MS Repurchase Agreement, the “Senior Secured Facilities”), by and among Capital Trust, as seller (together with JPM Sellers and the MS Sellers, the “CT Parties”) and CITIGROUP GLOBAL MARKETS INC. and CITIGROUP FINANCIAL PRODUCTS INC., as buyers (collectively, “Citigroup”, and together with the JPM Parties and Morgan Stanley, the “Secured Plan Participants”);

WHEREAS, Sellers and Buyer have agreed, subject to the terms and conditions hereof, that the Existing Repurchase Agreement shall be amended as set forth in this Amendment.

NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, Sellers and Buyer agree as follows:

SECTION 1. Amendments to Master Repurchase Agreement.

(a)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definitions of “Buyer’s Margin Amount”, “EBITDA”, “EBITDA to Fixed Charge Ratio”, “Fixed Charges”, “Interest Expense”, “Leverage”, “Net Assets”, “Net Income”, “Margin Deadline”, “Margin Deficit”, “Margin Deficit Notice”, “Minimum Transfer Amount”, “Senior Recourse Indebtedness”, “Tangible Net Worth”, “Total Indebtedness” and “Total Non-Securitized Indebtedness” in their entirety.

(b)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Income” in its entirety and inserting in lieu thereof the following:

“Income” shall mean, with respect to any Purchased Asset at any time, any Principal Income thereof and all Interest Income thereon.

(c)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Maturity Date” in its entirety and inserting in lieu thereof the following:

“Maturity Date” shall mean March 16, 2010 or such earlier date on which this Agreement shall terminate in accordance with the provisions thereof or hereof or by operation of law; provided, however, that if the applicable conditions set forth in Article 3(m) shall have been satisfied, the Maturity Date shall be extended to the applicable date set forth in Article 3(m) of this Agreement.

(d)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Repurchase Price” in its entirety and inserting in lieu thereof the following:

“Repurchase Price” shall mean, with respect to any Purchased Asset as of any Repurchase Date or any date on which the Repurchase Price is required to be determined hereunder, the price at which such Purchased Asset is to be transferred from Buyer to a Seller; such price will be determined in each case as the sum of the (i) Purchase Price of such Purchased Asset (as increased by any other additional funds advanced in connection with such Purchased Asset); (ii) the accreted and unpaid Price Differential with respect to such Purchased Asset as of the date of such determination; (iii) any other amounts due and owing by any Seller to Buyer and its Affiliates pursuant to the terms of this Agreement as of such date; (iv) if such Repurchase Date is not a Remittance Date, any Breakage Costs payable in connection with such repurchase; (v) any amounts that would be payable to (a positive amount) a Qualified Hedge Counterparty under any related Hedging Transaction, if such Hedging Transaction were terminated on the date of determination, if such determination is in connection with any calculation of LTCV; and (vi) any amounts that would be payable to (a positive amount) an Affiliated Hedge Counterparty under any related Hedging Transaction, if such Hedging Transaction were terminated on the date of determination, if such determination is in connection with any calculation of LTCV (and not in connection with an actual repurchase of a Purchased Asset).  In addition to the forgoing, the Repurchase Price shall be increased by any other additional funds advanced in connection with such Purchased Asset and decreased by (A) the portion of any Principal Payments on such Purchased Asset that is applied pursuant to Article 5 to reduce such Repurchase Price and (B) any other amounts paid to Buyer by a Seller to reduce such Repurchase Price.

(e)           Article 2 of the Existing Repurchase Agreement is hereby amended by appending the following sentence to the definition of “Subsidiary”:

“Notwithstanding the foregoing, Subsidiary shall not include investment funds managed by a Seller or subsidiaries of same or investment funds of which a Seller controls the general partner or managing member thereof or subsidiaries of same (except for those investment funds or subsidiaries of same of which a Seller directly or indirectly owns at least a majority of the securities or other ownership interests therein).”

-2-

(f)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Transaction Documents” in its entirety and inserting in lieu thereof the following:

“Transaction Documents” shall mean, collectively, this Agreement, any applicable Annexes to this Agreement, the Custodial Agreement, the Interim Servicing Agreement, the Depository Agreement, the Warrant, all Hedging Transactions and all Confirmations and assignment documentation executed pursuant to this Agreement in connection with specific Transactions.

(g)           Article 2 of the Existing Repurchase Agreement is hereby amended by inserting the following new definitions in proper alphabetical order:

“Additional Restricted Cash” shall mean, to the extent otherwise constituting Unrestricted Cash, any cash or Cash Equivalent of Capital Trust and its Subsidiaries (i) that is required to be trapped pursuant to the other Senior Secured Facilities or the terms of any other loan agreement, repurchase agreement, or other extension of credit, (ii) that is received in anticipation of a disbursement by Capital Trust or any of its Subsidiaries to a Person other than Capital Trust or any Subsidiary within one (1) Business Day, (iii) that is provided as cash collateral to support letters of credit and bank guarantees, customs and other import duties in the ordinary course of business of Capital Trust or any of its Subsidiaries or (iv) that, if distributed or paid, would result in the insolvency of Capital Trust.

“Amendment No. 1” shall mean that certain Amendment No. 1 to this Agreement, dated as of March 16, 2009, among Sellers and Buyer.

“Amendment No. 1 Effective Date” shall mean the “Amendment Effective Date”, as defined in Section 2 of Amendment No. 1.

“Bonds” shall mean all Purchased Assets designated as “bonds” in Exhibit XV.

“Capital Trust” shall mean Capital Trust, Inc.

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

“Citigroup Repurchase Agreement” shall have the meaning specified in Amendment No. 1.

“Collateral Value” shall mean, as of any date of determination, in respect of any Purchased Asset, (a) in the case of Bonds, as determined by Buyer in its sole discretion exercised in good faith and (b) in the case of Purchased Assets other than  Bonds, the Initial Value of such Purchased Assets, adjusted by taking into account credit risk (including, without limitation, information relating to the sponsor or tenant for such Purchased Asset or other information relating to the likelihood of payment of such Purchased Asset; any alleged violation of Environmental Laws; any bankruptcy filings, casualty loss, or condemnation affecting or impacting the Underlying Mortgaged Property; any bankruptcy filing or other act of insolvency with respect to any co-participant or any other Person having an interest in such Purchased Asset or any Underlying Mortgaged Property that is senior to, or pari passu with, the rights of Buyer in such Purchased Asset; any payment of principal and/or interest are more than 60 days past due under any mortgage note affecting any Underlying Mortgaged Property or such Purchased Asset (without giving effect to any waiver by the lender thereunder); any modification of the Underlying Mortgaged Property or to the related loan documents (or any financing senior thereto); any market comparables for any Underlying Mortgaged Property) applicable to such Purchased Asset; but excluding market risk (e.g., interest rate risk) applicable to the Purchased Asset; provided, however, that Buyer may take into account any performance assumptions with respect to such Purchased Asset (including, without limitation: the sponsorship thereof; projections as to default probabilities and estimated losses; changes in the cash flow generated by the Underlying Mortgaged Property; the ultimate collectibility of the Purchased Asset if held to maturity; for assets held or to be held by the Custodian, the failure to deliver the Purchased Asset Documents to the Custodian in accordance with the terms of this Agreement and the Custodial Agreement; whether the Purchased Asset has been released from the possession of the Custodian under the Custodial Agreement to a Seller for a period in excess of twenty (20) calendar days without the consent of Buyer; and a breach of any of the representations and warranties regarding the Purchased Asset contained in Article 10(b)(x)(D) or Exhibit VI, in each case in its sole discretion exercised in good faith; and provided further, that the Collateral Value, without giving effect to such increase, shall in no event exceed one hundred percent (100%) of the outstanding principal balance of the related Purchased Asset.

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“CT Cash Account” shall mean one or more deposit accounts established by Capital Trust with Merrill Lynch, Pierce, Fenner & Smith Incorporated or Bank of America, N.A.

“Defaulted Collateral Asset” shall mean a Purchased Asset with respect to which (a) a monetary default has occurred or (b) an acceleration or foreclosure (including, in the case of Senior Mortgage Loans, Mezzanine Loans, B-Notes or Junior Interests, a foreclosure of the Underlying Mortgaged Property) has been declared or commenced, and, in either case, such Transaction has not been returned to performing status within 90 days; provided that Defaulted Collateral Assets shall not include (a) any Bonds, and (b) any Purchased Asset with a Collateral Value or allocated borrowing of zero.

“Excess Cash” shall mean an amount, if any, by which Unrestricted Cash exceeds the sum of (a) $25,000,000 and (b) the aggregate amount of Unfunded Commitments.

“Future Advances” shall mean Capital Trust’s commitment to make future advances on Purchased Assets and assets under other Senior Secured Facilities as specified therefor on Exhibit XV.

“Initial Advance Rate” shall mean, with respect to each Purchased Asset, a rate as specified therefor on Exhibit XV hereto.

“Initial LTCV” shall mean the LTCV, calculated as of the Amendment No. 1 Effective Date.

“Initial Mark” shall mean, with respect to each Purchased Asset, a percentage as specified therefor on Exhibit XV hereto.

“Initial Value” shall mean, with respect to each Purchased Asset, a value equal to the product of (i) the “Face Amount” for such Purchased Asset as specified therefor on Exhibit XV hereto and (ii) the Initial Mark for such Purchased Asset.

“Interest Allocation Percentage” shall mean, initially, 65%, or, if the Maturity Date is extended pursuant to Article 3(m) and beginning on the first day after the original Maturity Date, such other percentage as agreed to in good faith among Sellers and the Secured Plan Participants, in each case, in their commercially reasonable discretion.

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“Interest Income” shall mean, with respect to any Purchased Asset at any time, all interest, dividends or other distributions thereon.

“JPM Indebtedness” shall mean all Indebtedness from time to time owed by Seller to Buyer or any Affiliate of Buyer including, without limitation, under this Agreement, the JPMCF Repurchase Agreement, Hedging Transaction or any repurchase, loan or other agreement between Buyer, or an Affiliate of Buyer, and any of the Sellers.

“JPMorgan Account” shall mean the Sellers’ account number 230-254-632, held with JPMorgan Chase Bank, N.A.

“JPMorgan Repurchase Agreements” shall have the meaning specified therefor in Amendment No. 1.

“Lehman Facility” shall mean that certain Amended and Restated Loan and Security Agreement, dated as of September 10, 2008, between Capital Trust, as borrower, and Lehman Commercial Paper Inc. as lender.

“Liquidity” shall mean, on any date of determination, the sum of (A) the consolidated amount of Unrestricted Cash of Capital Trust and its Subsidiaries on such date, and (B) the incremental amount of borrowings Capital Trust and its Subsidiaries are, as of such date, permitted to borrow pursuant to the terms of existing committed Indebtedness of Capital Trust or its Subsidiaries in effect on such date, as to which all conditions precedent have been satisfied and which borrowings do not require the discretionary consent of the applicable lender, counterparty, credit provider or any other Person.

“LTCV” shall mean, as of any date of determination, the ratio (expressed as a percentage) of the aggregate Repurchase Price for all Purchased Assets to the aggregate Collateral Value of all Purchased Assets.

“Maximum Outstanding Amount” shall mean, for all Transactions related to the JPM Repurchase Agreements, an amount equal to $276,005,779.85; provided that solely for purposes of Article 3(m), the Maximum Outstanding Amount may be adjusted pursuant to Article 5.

“Minimum Release Price” shall mean, for any Purchased Asset, an amount equal to the greater of (a) the lesser of (i) the Initial Value of such Purchased Asset, (ii) the Collateral Value for such Purchased Asset as of the date that Capital Trust notifies Buyer of its intent to sell, dispose, transfer or refinance such Purchased Asset pursuant to a Permitted Disposition, and (iii) 110% of the Repurchase Price of such Purchased Asset and (b) the Repurchase Price.

“Net Proceeds” shall mean, with respect to any Permitted Disposition, or the incurrence or issuance of any Indebtedness permitted by Article 11(n), the aggregate amount of cash received by or on behalf of such Person for its own account in connection with any such transaction, after deducting therefrom only:

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(a)           reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder’s fees and other similar fees, costs and commissions that, in each case, are actually paid at the time of receipt of such cash to a Person that is not a Subsidiary or Affiliate of any of the Sellers or any of their respective Subsidiaries or Affiliates;

(b)           the amount of taxes payable in connection with or as a result of such transaction that, in each case, are actually paid at the time of receipt of such cash to the applicable taxation authority or other Governmental Authority or, so long as such Person is not otherwise indemnified therefor, are reserved for in accordance with GAAP, as in effect at the time of receipt of such cash, based upon such Person’s reasonable estimate of such taxes, and paid to the applicable taxation authority or other Governmental Authority within 90 days after the date of receipt of such cash; and

(c)           in the case of any Permitted Disposition, the outstanding principal amount of, the premium or penalty, if any, on, and any accrued and unpaid interest on, any Indebtedness (other than Indebtedness under or in respect of the Transaction Documents) that is secured by a Lien on the property and assets subject to such Permitted Disposition and is required to be repaid under the terms of such Indebtedness as a result of such Permitted Disposition, in each case, to the extent that the amounts so deducted are actually paid at the time of receipt of such cash to a Person that is not an Affiliate of any of the Sellers or any of their Affiliates;

provided that, any and all amounts so deducted by any such Person pursuant to clauses (a) through (c) of this definition shall be properly attributable to such transaction or to the property or asset that is the subject thereof; provided, further, that if, at the time any of the taxes referred to in clause (b) are actually paid or otherwise satisfied, and the reserve therefor exceeds the amount paid or otherwise satisfied, then the amount of such excess reserve shall constitute “Net Proceeds” on and as of the date of such payment or other satisfaction for all purposes of this Agreement.

“Permitted Disposition” shall mean the sale, transfer, disposition or refinancing of any Purchased Asset by Capital Trust in accordance with Article 11(d); provided that (a) the Net Proceeds from such sale, transfer, disposition or refinancing shall be no less than the Minimum Release Price for such Purchased Asset; (b) 100% of the Net Proceeds from such Permitted Disposition is applied pursuant to Article 5 hereof; (c) any sale, transfer or disposition of Purchased Assets be made to a bona fide third party or, with Buyer’s prior written approval, to an Affiliate of Capital Trust; and (d) no Purchased Asset may be refinanced without the prior written approval of Buyer.

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“Principal Income” shall mean, with respect to any Purchased Asset at any time, any principal thereon and all payments actually received by Buyer on account of Hedging Transactions.

“Secured Plan Facilities Obligations” shall mean the sum of the aggregate amount of all obligations owed by Capital Trust or any Affiliate of Capital Trust under the JPM Repurchase Agreements, the MS Repurchase Agreement and the Citigroup Repurchase Agreement.

“Secured Plan Participants” shall have the meaning specified therefor in the recitals to Amendment No. 1.

“Senior Secured Facilities” shall have the meaning specified therefor in the recitals to Amendment No. 1.

“Senior Unsecured Facility” shall mean that certain Credit Agreement, dated as of March 22, 2007, by and among Capital Trust as borrower, WestLB AG, New York Branch, as administrative agent, and the lenders party thereto, as the same may be amended, restated, supplemented or otherwise modified and in effect from time to time.

“Unfunded Commitments” shall mean, as of any date, an amount equal to the sum of Capital Trust’s unfunded commitments to make Future Advances and meet future capital calls for CT Opportunity Partners I, LP as of such date.

“Unrestricted Cash” shall mean (a) cash and Cash Equivalents that would not appear in the consolidated financial statements of Capital Trust, prepared in accordance with GAAP, as a line item on the balance sheet as “restricted cash” or similar caption minus (b) any Additional Restricted Cash.

“Unsecured Lenders” shall mean the lenders party to the Senior Unsecured Facility.

“Valuation Test Date” shall have the meaning specified in Article 4.

“Valuation Test Failure” shall have the meaning specified in Article 4.

“Valuation Test Period” shall have the meaning specified in Article 4.

“Warrant” shall mean that certain Warrant, dated as of March 16, 2009, made by Capital Trust in favor of JPMorgan Chase Funding, Inc.

(h)           Article 4 of the Existing Repurchase Agreement is hereby amended by deleting Article 4(a) in its entirety and inserting in lieu thereof the following:

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“(a)          On the first Business Day of each month, beginning on September 1, 2009 (each such date, a “Valuation Test Date”), Buyer will determine the Collateral Value of each Purchased Asset.  If on any Valuation Test Date, the LTCV exceeds 1.15 times the Initial LTCV (a “Valuation Test Failure”), Sellers shall, within five (5) Business Days following such Valuation Test Date, make a prepayment in reduction of the Repurchase Price of such Purchased Asset, such that after giving effect to such prepayment, the LTCV, as re-determined by Buyer, shall not exceed 1.15 times the Initial LTCV.  All prepayments in reduction of such Repurchase Price shall be applied by Buyer in its sole discretion.  If Sellers are not able to cure a Valuation Test Failure within five (5) Business Days after the applicable Valuation Test Date, then Sellers shall cooperate with Buyer to select one or more Purchased Assets to liquidate and will use commercially reasonable efforts, taking into account the rights and interests of Buyer, to expeditiously commence the liquidation process for same.  If the Valuation Test Failure is not cured within 60 days from the initial failure, an Event of Default will occur; provided that if Sellers provide Buyer with a copy of an executed asset sale or refinancing agreement, acceptable to Buyer in its sole discretion, prior to the end of such 60-day period in respect of the selected Purchased Assets, Buyer may, at its option, grant a one-time 15-day extension to cure such Valuation Test Failure (such 60-day period and any 15-day extension, a “Valuation Test Period”).  Notwithstanding the above, in the event that a Purchased Asset becomes a Defaulted Collateral Asset, a Valuation Test will be performed at that time, and the provisions of this Article 4 shall apply.”

(i)           Article 3(m) of the Existing Repurchase Agreement is hereby amended by deleting subsection (a) thereof in its entirety and inserting in lieu thereof the following new subsection (a):

“(m)         (i) Notwithstanding the definition of Maturity Date herein, Sellers may, in their sole discretion by notice to Buyer between 90 and 20 days prior to the originally scheduled Maturity Date, extend the Maturity Date with respect to all of the Transactions until the first (1st) anniversary of the originally scheduled Maturity Date (all of the other terms and conditions of such Transactions remaining the same) provided that the following conditions precedent are satisfied as of the date of the effectiveness of such extension: (1) the aggregate Repurchase Price for all Purchased Assets under the JPM Repurchase Agreements as of the date of such extension are less than or equal to the Maximum Outstanding Amount, (2) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (3) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that, if conditions (1) through (3) are met and if any extension request is made during a Valuation Test Period, such extension shall be provisionally granted until the end of such Valuation Test Period, and such extension shall be granted only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

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(ii)           Notwithstanding the foregoing, if the initial Maturity Date shall have been extended pursuant to Article 3(m)(i), Sellers may request, between 90 and 20 days prior to the extended Maturity Date, and subject to the written approval of Buyer in its sole and absolute discretion given no later than ten (10) days prior to the extended Maturity Date (any failure by Buyer to deliver such notice of its approval to an extension to Sellers shall be deemed a denial of Sellers’ request to extend the Maturity Date) provided that in any event, the following conditions precedent are satisfied as of the date of the effectiveness of such second extension: (1) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (2) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that if conditions (1) and (2) or any other conditions then required by Buyer in its sole discretion (including, without limitation, requirements of additional payments, prepayments, revaluations of Collateral Value for any Purchased Asset or delivery of additional documents) are met and if any extension request is made during a Valuation Test Period, such extension may be provisionally granted by Buyer, in its sole and absolute discretion, until the end of such Valuation Test Period, and such extension may be granted by Buyer, in its sole and absolute discretion, only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

(iii)           Notwithstanding any extension to the Maturity Date as described in this Article 3(m), if the Repurchase Date for a Transaction is extended by agreement of the Buyer and Sellers, Buyer and Sellers shall execute a new Confirmation containing the same pricing terms as the original Confirmation and the extended Repurchase Date for the Transaction.”

(j)           Article 5 of the Existing Repurchase Agreement is hereby amended by deleting the phrase “Articles 5(c) through 5(f) of this Agreement” in Article 5(a) in its entirety and inserting “Articles 5(c) and (d) of this Agreement”.

(k)           Article 5 of the Existing Repurchase Agreement is hereby amended by deleting Articles 5(c) through (f) in their entirety and inserting in lieu thereof the following:

“(c)           Principal Income.  Sellers shall cause (1) all Principal Income in respect of the Purchased Assets and (2) 100% of all Net Proceeds in respect of Permitted Dispositions of Purchased Assets, in each case, to be deposited directly in the Depository Account.  Such Principal Income shall be applied within one (1) Business Day following receipt by Buyer as follows: (i) first, pro rata, (A) to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Assets and (B) solely with respect to any Hedging Transaction with an Affiliated Hedge Counterparty related to such Purchased Asset, to such Affiliated Hedge Counterparty an amount equal to any accrued and unpaid amounts due to such Affiliated Hedge Counterparty under such Hedging Transaction related to such Purchased Asset, (ii) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (iii) third, to make a payment to Buyer on account of the Repurchase Price of the Purchased Assets in respect of which such Principal Income is received, until the Repurchase Price for each such Purchased Asset has been reduced to zero, (iv) fourth, to make a payment to Buyer on account of the Repurchase Price of all other Purchased Assets until the Repurchase Price for such other Purchased Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero; (v) fifth, to make a payment to JPMCF on account of the Repurchase Price of all other Purchased Assets related to the JPMCF Repurchase Agreement until the Repurchase Price for such Purchased Assets has been reduced to zero, each such payment to be allocated in JPMCF’s sole discretion; and (vi) sixth, to remit to the applicable Seller the remainder.

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(d)           Interest Income.  Sellers shall cause all Interest Income in respect of the Purchased Assets to be deposited directly in the Depository Account.  Such Interest Income shall be applied monthly by Buyer as follows:

(i) so long as no Event of Default shall have occurred and be continuing, (1) first, pro rata, (A) to Buyer, an amount equal to the Price Differential that has accreted and is outstanding in respect of all the Purchased Assets and (B) to any Affiliated Hedge Counterparty, any amount then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to a Purchased Asset, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a payment to Buyer on account of the Repurchase Price of all Purchased Assets, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to the product of the Interest Allocation Percentage multiplied by the difference between (x) the total Interest Income received by Sellers during such month and (y) the Price Differential otherwise actually paid by Sellers to Buyer during such month, and (4) fourth, to remit to the applicable Seller the remainder; and

(ii) if an Event of Default shall have occurred and be continuing, (1) first, pro rata, (A) to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Assets and (B) to any Affiliated Hedge Counterparty, any amounts then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to such Purchased Asset, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a payment to Buyer on account of the Repurchase Price of all Purchased Assets until the Repurchase Price for all Purchased Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero; (4) fourth, to make a payment to JPMCF on account of the Repurchase Price of all other Purchased Assets related to the JPMCF Repurchase Agreement until the Repurchase Price for such Purchased Assets has been reduced to zero, each such payment to be allocated in JPMCF’s sole discretion and (5) fifth, to remit to the applicable Seller the remainder.

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(e)           Control Rights.  So long as no Event of Default shall have occurred and be continuing, and subject to the terms of the Transaction Documents and Article 11(g) hereof, each Seller shall retain the right to take all actions under the Transaction Documents and to retain all contact with the relevant Mortgagor.

(f)           Excess Cash.  At the end of each calendar quarter, Capital Trust shall make a payment to Buyer on account of the Repurchase Price of all Purchased Assets until the Repurchase Price for all Purchased Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to (i) Excess Cash as of the last day of such calendar quarter, multiplied by (ii) the ratio of the aggregate outstanding Repurchase Price for all Purchased Assets to the aggregate Secured Plan Facilities Obligations as of such date.

(g)           Future Advances.  Notwithstanding anything contained herein or in any other Transaction Document to the contrary, as of the Amendment No. 1 Effective Date, Buyer shall have no obligation to make any Future Advances and Capital Trust will fund 100% of all Future Advances.  Solely for purposes of Article 3(m) hereof, after each funding of Future Advances in respect of Purchased Assets by Capital Trust, the Maximum Outstanding Amount will be increased by an amount equal to the product of: (a) the amount of such Future Advance actually funded by Capital Trust, (b) the Initial Mark for the applicable Purchased Asset, (c) the Initial Advance Rate for such Purchased Asset and (d) 50%.”

(l)           Article 3(b)(ii)(K) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“(K)        Buyer shall have determined, in its sole and absolute discretion, that no Valuation Test Failure shall exist, either immediately prior to or after giving effect to the requested Transaction, calculated as of the date of such Transaction;”

(m)            Article 3(b)(ii) of the Existing Repurchase Agreement is hereby amended by deleting the word “and” at the end of subparagraph (T), replacing the period at the end of subparagraph (U) with the words “; and” and inserting the following as a new Article (V):

“(V)         Buyer shall have determined the Initial Advance Rate, Initial Mark, Initial Value, Purchase Price and Purchasing Rate and any other information listed in Exhibit XV hereto with respect to such Eligible Asset and shall have amended Exhibit XV to reflect such determinations.”

(n)           Article 3(f) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

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“(f)           Each Seller shall be entitled to terminate a Transaction on demand and repurchase the Purchased Asset subject to a Transaction on any Business Day prior to the Repurchase Date (an “Early Repurchase Date”); provided, however, that no Default or Event of Default shall exist (other than a Default or Event of Default that (a) relates solely to the Purchased Assets to be released and (b) will no longer exist after giving effect to such release) and either (x) Seller shall have paid all sums then due under the Transaction relating thereto (including any sums related to Hedging Transactions with respect to such Purchased Asset) or (y) Buyer shall have applied 100% of the Net Proceeds from a Permitted Disposition pursuant to Article 5 hereof, then upon (i) the relevant Seller’s payment in full of the Repurchase Price or the application of such Net Proceeds pursuant to Article 5 hereof, and (ii) receipt by Buyer of a written request from such Seller for the release of such Purchased Asset, Buyer shall as soon as practicable release (and Buyer shall reasonably cooperate with such Seller to facilitate reasonable escrow arrangements to facilitate a simultaneous release of) the related Purchased Asset Documents and the related Purchased Asset and any liens related thereto to such Seller or, to the extent necessary to facilitate future savings of mortgage tax in states that impose mortgage taxes, assign such liens as such Seller shall request, provided that any such assignments shall be without expense, recourse, representation or warranty of any kind except that Buyer shall represent and warrant that such Purchased Asset has not been previously assigned by Buyer.  At Sellers’ expense, Buyer shall with reasonable promptness, after a written request from Seller, execute any document or instrument necessary to effectuate such release or assignment.

(o)           Article 7(c) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:  “[Reserved]”.

(p)           Article 10(b)(viii) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“No Valuation Test Failure; No Defaults.  No Valuation Test Failure exists and no Default or Event of Default has occurred or exists under or with respect to the Transaction Documents.”

(q)           Article 11(d) of the Existing Repurchase Agreement is hereby amended by appending the following proviso at the end thereof:

“; provided, however, that a Seller may request from time to time, subject to Buyer’s approval in Buyer’s sole determination, to sell participation interests in its interests in the Purchased Assets in connection with a Permitted Disposition, the sale of which participation interests shall be arm’s length transactions and subject to such terms and conditions as Buyer in its sole discretion shall require; provided further, that Buyer (i) retains an interest in the tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition, subject to the terms of this Agreement or (ii) shall maintain a security interest in such tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition; and provided further, that such Seller complies in all respects with the Purchased Asset Document delivery requirements contained in this Agreement and the Custodial Agreement;”

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(r)           Article 11(g) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“(g)         amend, modify or otherwise agree to any change in the applicable documents for any Purchased Asset, the Underlying Mortgaged Property or other underlying collateral thereunder, without the prior written consent of Buyer other than in accordance with Article 28.”

(s)           Article 11 of the Existing Repurchase Agreement is hereby amended by deleting Articles 11(l) through (p) in their entirety and inserting in lieu thereof the following new Articles 11(l) through (t):

“(l)           No Seller shall 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 any Seller, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of any Seller, either directly or indirectly, whether in cash or property or in obligations of any Seller or any of Subsidiary of a Seller, except to the minimum extent required for a Seller to maintain its status as a real estate investment trust and, to the extent permitted, such distribution shall be made in equity in lieu of cash; provided, that any Seller may make distributions to Capital Trust or any other wholly-owned Subsidiary of Capital Trust;

(m)           without the prior written consent of Buyer, no Seller shall, nor permit any Subsidiary to, originate, acquire or invest in any new stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person except to (i) make co-investments in future funds of which Capital Trust (or its Affiliates) is the sponsor or manager, and (ii) make protective investments to defend existing Purchased Assets or assets subject to another Senior Secured Facility or that are pledged as collateral security for the Senior Unsecured Facility.  With respect to co-investments, (i) no investments will be permitted in the first six (6) months following the Amendment No. 1 Effective Date, (ii) the projected base management fees generated by the proposed future fund over the first 36 months must equal or exceed the co-investment commitment, and (iii) the total amount of co-investment capital for all such proposed future funds may not exceed $10,000,000 without the prior written approval of Buyer.  With respect to protective investments made in respect of Purchased Assets or assets subject to another Senior Secured Facility, the amount of each investment may not exceed $5,000,000 per Purchased Asset, transaction or asset.  With respect to protective investments made in respect of assets pledged as collateral security for the Senior Unsecured Facility, the aggregate amount of such investments may not exceed $1,000,000;

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(n)           no Seller shall, nor permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness other than the Indebtedness already incurred as of the Amendment No. 1 Effective Date; provided, that additional Indebtedness may be incurred by Sellers or any of their Subsidiaries so long as the following conditions are satisfied: (i) to the extent that the Indebtedness is incurred in connection with a Permitted Disposition, the Net Proceeds of such Permitted Disposition are applied in accordance to Article 5, (ii) to the extent that such new Indebtedness is unsecured (and subordinate to all obligations owed by the applicable Seller under any Secured Plan Facility or the Senior Unsecured Facility) or incurred through the pledge of unencumbered assets, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account and (iii) to the extent that such new Indebtedness is recourse Indebtedness, only to the extent that it replaces existing recourse Indebtedness or is subordinate to all obligations owed to Buyer (and to the extent such Indebtedness is not subject to clause (i) above, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account);

(o)           permit, for all employees of Capital Trust and its Subsidiaries, other than the CEO, COO & CFO, total cash compensation (including base salary and bonus), in the aggregate to exceed $5.8 million.  Subject to the limitation in the preceding sentence, compensation for individual employees shall be determined by Capital Trust in its sole discretion.  For Capital Trust’s CEO, COO & CFO, (i) base salaries shall remain the same as in effect in 2008, and (ii) any cash bonus will be approved based upon performance metrics designed to create alignment with the interests of the Secured Plan Participants and the Unsecured Lenders and must be approved by unanimous consent of a committee comprised of (x) a representative selected by the Secured Plan Participants, (y) the administrative agent of the Senior Unsecured Facility and (z) a representative selected by the board of directors of Capital Trust;

(p)           permit John Klopp and Stephen Plavin to discontinue their current employment with their current respective responsibilities throughout the term of this Agreement; provided that if both John Klopp and Stephen Plavin are no longer so employed, replacement(s) acceptable to Buyer in its sole and absolute discretion shall be appointed within 30 days after their departure;

(q)           permit the Liquidity of Capital Trust, at all times, to be less than $7,000,000 in 2009 or less than $5,000,000 thereafter;

(r)           (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Seller or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

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(s)           agree to (i) any amendment or modification to any Senior Secured Facility or the Senior Unsecured Facility that relates to the subject matter of Amendment No. 1 or would materially and adversely impair the interests of the Buyer without the prior written consent of Buyer or (ii) any proposed waiver to any Senior Secured Facility or the Senior Unsecured Facility without providing prior written notice to Buyer;

(t)           agree to any amendment or modification to the Lehman Facility without the prior written consent of Buyer, such consent not to be unreasonably withheld, conditioned or delayed; and

(u)           establish and/or maintain any deposit account (other than any deposit accounts specifically relating to the Purchased Assets or any asset or collateral subject to any Senior Secured Facility or the Senior Unsecured Facility) with financial institutions that are Secured Plan Participants or Unsecured Lenders; provided that the Sellers may maintain the JPMorgan Account so long as (i) no more than $1,000,000 may remain in the JPMorgan Account at any time, (ii) no Seller may transfer any funds into the JPMorgan Account from any CT Cash Account, (iii) any funds deposited in the JPMorgan Account will be transferred to a CT Cash Account within two (2) Business Days from receipt of such funds in the JPMorgan Account and (iv) all funds in the JPMorgan Account will be transferred to a CT Cash Account and the JPMorgan Account will be closed on or before December 31, 2009.  For the avoidance of doubt, the Depository Account and Collection Account and any other deposit account relating to Purchased Assets may be established and maintained at any financial institution selected by Buyer in its sole discretion.”

(t)           Article 11 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety the final paragraph thereto and inserting in lieu thereof the following:

“Compliance with covenants (m), (o) and (q) this Article 11 must be evidenced by financial statements and by a compliance certificate furnished together therewith as further provided in Article 12(j)(ii) below, and compliance with all such covenants are subject to verification by Buyer.  All of the financial tests and covenants in this Agreement will be measured based on the consolidated position of Capital Trust, Inc. and its Subsidiaries.”

(u)           Article 12(j) of the Existing Repurchase Agreement is hereby amended by deleting the word “and” at the end of subparagraph (iii), replacing the period at the end of subparagraph (iv) with the words “; and”, renumbering the existing Article 12(j)(v) as Article 12(j)(vi) and inserting the following as a new Article 12(j)(v):

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“(v)        Without duplicating the reports provided under Articles 12(j)(i) through (iv), (A) certified quarterly financial statements and audited annual financial statements prepared in accordance with GAAP filed within SEC mandated time frames, (B) within thirty (30) Business Days following the end of each calendar month commencing with April 2009, unaudited monthly financial statements, (C) within ten (10) Business Days following the end of each calendar month, reports on asset level performance for each Purchased Asset, and (D) promptly, following any reasonable request therefor, reports of such other information regarding each Seller’s operations, business affairs and financial condition, or compliance with the terms of this Agreement.  Any reports provided above will include, without limitation, details of Sellers’ cash accounts at each quarter end and a schedule of each Seller’s Excess Cash, Unrestricted Cash and Unfunded Commitments.  Sellers agree to provide Buyer with an annual budget no later than 60 days after the end of each fiscal year.”

(v)          Article 12(t) of the Existing Repurchase Agreement is hereby amended by (i) deleting the phrase “margin call in excess of $7,500,000 that is delivered to it under any other repurchase agreement” and replacing it with the phrase “Valuation Test Failure under any other Senior Secured Facility” and (ii) deleting the phrase “knowledge of such margin call” and replacing it with the phrase “knowledge of such Valuation Test Failure”.

(w)          Article 12 of the Existing Repurchase Agreement is hereby amended by inserting the following as a new Article 12(u) and (v):

“(u)        Seller shall cure any Valuation Test Failure in accordance with Article 4 hereof.

(v)          Sellers acknowledge that Buyer shall, until all Repurchase Obligations are satisfied and this Agreement terminates pursuant to its terms, maintain control over the Depository Account subject to the terms of the Depository Agreement.  At Sellers’ expense, Buyer may require that Sellers establish a new Depository Account at a depository institution selected by Buyer in its sole discretion and such new Depository Account shall be the “Depository Account” for all purposes hereunder.”

(x)          Article 13 of the Existing Repurchase Agreement is hereby amended by deleting Article 13(a)(iii) in its entirety and inserting in lieu thereof the following new subsection (iii):

“any Seller shall fail to cure any Valuation Test Failure in accordance with Article 4 of this Agreement;”

(y)           Article 13(a) of the Existing Repurchase Agreement is hereby amended by deleting subsection (ix) and (x) in their entirety and inserting in lieu thereof the following new subsections:

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“(ix)         any event or condition occurs that results in (i) any obligation or liability of any Seller under any note, indenture, loan agreement, guaranty, swap agreement or any other contract to which it is a party (other than JPM Indebtedness), whether singly or in the aggregate, in excess of $1,000,000 becoming due prior to its scheduled maturity or that enables or permits (after the expiration of all grace or cure periods) the beneficiaries of, the holder or holders of, or any other party to any such indebtedness or contract, or any trustee or agent on its or their behalf, to cause any such obligation or liability to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or (ii) any monetary default under any note, indenture, loan agreement, guaranty, swap agreement or any other contract, credit facility or other obligation of a Seller (other than JPM Indebtedness) if the aggregate amount of such credit facility, contract or other obligation in respect of which such monetary default shall have occurred is at least $1,000,000; provided that this Event of Default shall not apply to secured indebtedness that becomes due as a result of the sale or transfer of the property or assets securing such indebtedness;

(x)           any Seller shall be in default under any JPM Indebtedness of such Seller to Buyer or any of its present or future Affiliates, 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;”

(z)           The Existing Repurchase Agreement is hereby amended by inserting Exhibit A attached hereto as a new Exhibit XV in proper alphabetical order.

SECTION 2. Other Agreements.

(a)           From and after the Amendment Effective Date (as defined below), JPMorgan Chase Bank, N.A. will be deemed to be a party to the Existing Repurchase Agreement in its capacity as the Affiliated Hedge Counterparty.  In its capacity as the Affiliated Hedge Counterparty, JPMorgan Chase Bank, N.A. shall have all the rights, powers and obligations of an Affiliated Hedge Counterparty under the Existing Repurchase Agreement as if it had executed the Existing Repurchase Agreement.  All references to the Affiliated Hedge Counterparty in the Existing Repurchase Agreement and the other Transaction Documents shall be deemed to be references to JPMorgan Chase Bank, N.A. in its capacity as the Affiliated Hedge Counterparty.

(b)           The Affiliated Hedge Counterparty acknowledges that it has received a copy of the Existing Repurchase Agreement and each other Transaction Document.

(c)           All notices and other communications provided for in the Existing Repurchase Agreement and each other Transaction Document shall be delivered to it at its address set forth below its signature to this Amendment.  All such notices and other communications shall be delivered in the manner and be effective as described in Article 16 of the Existing Repurchase Agreement.

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SECTION 3. Conditions Precedent.  This Amendment shall become effective on the date (the “Amendment Effective Date”) on which (1) all the representations and warranties made by Sellers in this Amendment are true and correct and (2) Buyer shall have received:

(a)           this Amendment, executed and delivered by a duly authorized officer of each of Sellers and Buyer;

(b)           a payment to Buyer on account of the Repurchase Price of all Purchased Assets under the JPM Repurchase Agreements, such payment to be allocated in Buyer’s sole discretion among such Purchased Assets, in an amount equal to $10,350,216.74 (the "Upfront Paydown");

(c)           the Warrant, executed and delivered by a duly authorized officer of Capital Trust;

(d)           legal opinions from counsel to the Sellers dated as of the date hereof addressed to Buyer and its successors and assigns (i) as to the enforceability of the Repurchase Agreement, as amended by this Amendment, and (ii) as to each Seller’s authority to execute, deliver and perform its obligations under the Repurchase Agreement as amended hereby, in each case, in form and substance acceptable to Buyer in its reasonable discretion;

(e)           evidence, satisfactory to the Buyer in its sole discretion, of the payment in full of all obligations owed by any Seller under, and the termination of, the credit facilities identified on Schedule I hereto;

(f)           a copy of an amendment to the Senior Unsecured Facility, executed and delivered by a duly authorized officer of the parties thereto, in form and substance acceptable to Buyer in its sole discretion; and

(g)           for the account of Buyer, payment and reimbursement for all of Buyer’s corresponding costs and expenses incurred in connection with this Amendment, all prior amendments and modifications to the Repurchase Agreement, any other documents prepared in connection herewith and therewith and the transactions contemplated hereby and thereby.

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SECTION 4. Representations and Warranties.  On and as of the date first above written, each of Sellers hereby represents and warrants to Buyer that (a) it is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, (b) after giving effect to this Amendment, no Default or Event of Default under the Repurchase Agreement has occurred and is continuing, and (c) after giving effect to this Amendment, the representations and warranties contained in Article 10 of the Repurchase Agreement are true and correct in all material respects as though made on such date (except for any such representation or warranty that by its terms refers to a specific date other than the date first above written, in which case it shall be true and correct in all material respects as of such other date).

SECTION 5. General Release.  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Seller, for: (i) itself, (ii) any parent or Subsidiary thereof, and (iii) the respective partners, officers, directors, shareholders, successors and assigns of all of the foregoing persons and entities,

(a)           hereby releases and forever discharges Buyer and each of its subsidiaries, affiliates, its past, present and future officers, directors, agents, employees, partners, managers, shareholders, servants, attorneys and representatives, as well as their, successors, assigns, their respective heirs, legal representatives, legatees, predecessors-in-interest, successors and assigns, of and from any and all actions, claims, demands, damages, debts, suits, contracts, agreements, losses, liabilities, indebtedness, causes of action either at law or in equity, obligations of whatever kind or nature, accounts, defenses, and offsets against liabilities and obligations, whether known or unknown, direct or indirect, new or existing, by reason of any matter, cause or thing whatsoever occurring on or prior to the date hereof arising out of or relating to any matter or thing whatever, including without limitation, such claims and defenses as fraud, misrepresentation, breach of duty, mistake, duress, usury, claims pertaining to so-called “lender liability,” and claims pertaining to creditor’s rights, which such party ever had, now has, or might hereafter have against the other, jointly or severally, for or by reason of any matter, act, omission, cause or thing whatsoever occurring, on or prior to the date of this Amendment, that is related to, in whole or in part, directly or indirectly, the Transactions, the Repurchase Agreement, the Transaction Documents and this Amendment; and

(b)           warrants, represents and acknowledges that it has no defenses to the payment of, nor any right to set off against, all or any of the amounts due and owing under the Transaction Documents, nor any counterclaims or other rights of action against Buyer of any kind whatsoever, including, without limitation, any right to contest any of the following: the enforceability, applicability or validity of any provisions of the Transaction Documents, Buyer’s right to all proceeds of the Purchased Assets, the existence, validity, enforceability, or perfection of any security interest or mortgage in favor of Buyer, the conduct of Buyer in administering the Transaction Documents and any legal fees and expenses incurred by the Buyer under the Repurchase Agreement, the other Transaction Documents or this Amendment.

SECTION 6. Limited Effect.  Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with their respective terms; provided, however, that upon the Amendment Effective Date, all references in the Repurchase Agreement to the “Transaction Documents” shall be deemed to include, in any event, this Amendment.  Each reference to Repurchase Agreement in any of the Transaction Documents shall be deemed to be a reference to the Repurchase Agreement as amended hereby.

SECTION 7. Override Provision.  Notwithstanding any provision in the Repurchase Agreement to the contrary, which are hereby pro tanto superseded and modified or replaced mutatis mutandis to the extent of any inconsistency, the provisions in this Amendment shall apply from and after the date hereof.

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SECTION 8. Counterparts.  This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.

SECTION 9. GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[SIGNATURES FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.

CAPITAL TRUST, INC.
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

CT BSI FUNDING CORP.
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

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JPMORGAN CHASE BANK, N.A., as Buyer
By:	/s/ Gerald M. McCrink
	Name: Gerald M. McCrink
	Title: Executive Director

JPMORGAN CHASE BANK, N.A., as Affiliated Hedge Counterparty
By:	/s/ Kunal K. Singh
	Name: Kunal K. Singh
	Title: Vice President
Address for notices: JPMORGAN CHASE BANK, N.A. 4 New York Plaza, 22nd Floor New York, New York 10004 Attention:  Ms. Nancy S. Alto Telephone:  (212) 623-7109 Telecopy:  (212) 623-7714

Schedule I

Closeout Facilities

1.           Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, between Capital Trust, as seller, and Goldman Sachs Mortgage Company (“Goldman”), as buyer, as supplemented by that certain Amended and Restated Annex I to Amended and Restated Master Repurchase Agreement, dated as of October 30, 2007.

2.           Master Repurchase Agreement, dated as of October 30, 2007, between Capital Trust, as seller, and Goldman, as buyer, as supplemented by that certain Annex I to Master Repurchase Agreement, dated as of October 30, 2007.

Schedule I

EX-10.50A

Exhibit 10.50a

MASTER REPURCHASE AGREEMENT

Dated as of November 21, 2008

among

CAPITAL TRUST, INC.

and

CT BSI FUNDING CORP.

as Sellers,

and

JPMORGAN CHASE FUNDING INC.,

as Buyer

TABLE OF CONTENTS

Page

ARTICLE 1.	APPLICABILITY	1
ARTICLE 2.	DEFINITIONS	1
ARTICLE 3.	INITIATION; CONFIRMATION; TERMINATION; FEES; EXTENSION OF MATURITY DATE	21
ARTICLE 4.	MARGIN MAINTENANCE	30
ARTICLE 5.	INCOME PAYMENTS AND PRINCIPAL PAYMENTS	30
ARTICLE 6.	SECURITY INTEREST	32
ARTICLE 7.	PAYMENT, TRANSFER AND CUSTODY	34
ARTICLE 8.	SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS	41
ARTICLE 9.	RESERVED	42
ARTICLE 10.	REPRESENTATIONS AND WARRANTIES	42
ARTICLE 11.	NEGATIVE COVENANTS OF EACH SELLER	50
ARTICLE 12.	AFFIRMATIVE COVENANTS OF EACH SELLER	52
ARTICLE 13.	EVENTS OF DEFAULT; REMEDIES	56
ARTICLE 14.	SINGLE AGREEMENT	61
ARTICLE 15.	RECORDING OF COMMUNICATIONS	61
ARTICLE 16.	NOTICES AND OTHER COMMUNICATIONS	61
ARTICLE 17.	ENTIRE AGREEMENT; SEVERABILITY	62
ARTICLE 18.	NON-ASSIGNABILITY	62
ARTICLE 19.	GOVERNING LAW	63
ARTICLE 20.	NO WAIVERS, ETC	63
ARTICLE 21.	USE OF EMPLOYEE PLAN ASSETS	63
ARTICLE 22.	INTENT	64

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TABLE OF CONTENTS

(continued)

Page

ARTICLE 23.	DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS	64
ARTICLE 24.	CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL	65
ARTICLE 25.	NO RELIANCE	66
ARTICLE 26.	INDEMNITY	66
ARTICLE 27.	DUE DILIGENCE	67
ARTICLE 28.	SERVICING	68
ARTICLE 29.	MISCELLANEOUS	69
ARTICLE 30.	JOINT AND SEVERAL LIABILITY	71

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ANNEXES, EXHIBITS AND SCHEDULES

ANNEX I Names and Addresses for Communications between Parties

EXHIBIT I Form of Confirmation

EXHIBIT II Responsible Officers of Sellers

EXHIBIT III-A Monthly Reporting Package

EXHIBIT III-B Quarterly Reporting Package

EXHIBIT III-C Annual Reporting Package

EXHIBIT IV Form of Custodial Delivery

EXHIBIT V Form of Power of Attorney

EXHIBIT VI Representations and Warranties Regarding Individual Purchased Assets

EXHIBIT VII Asset Information

EXHIBIT VIII Advance Procedures

EXHIBIT IX Form of Bailee Letter

EXHIBIT X Form of Margin Deficit Notice

EXHIBIT XI UCC Filing Jurisdictions

EXHIBIT XII Form of Servicer Notice

EXHIBIT XIII Form of Release Letter

EXHIBIT XIV Covenant Compliance Certificate

MASTER REPURCHASE AGREEMENT

MASTER REPURCHASE AGREEMENT, dated as of November 21, 2008, by and among CAPITAL TRUST, INC., a Maryland corporation and CT BSI FUNDING CORP., a Delaware corporation (each a “Seller” with respect to the Eligible Assets that it sells to Buyer and together, the “Sellers”) and JPMORGAN CHASE FUNDING INC., a corporation organized under the laws of Delaware (the “Buyer”).

ARTICLE 1.

APPLICABILITY

From time to time the parties hereto may enter into transactions in which Sellers and Buyer agree to the transfer from a Seller to Buyer all of its rights, title and interest to certain Eligible Assets (as defined herein) or other assets and, in each case, the other related Purchased Items (as defined herein) (collectively, the “Assets”) against the transfer of funds by Buyer to such Seller, with a simultaneous agreement by Buyer to transfer back to such Seller such Assets at a date certain or on demand, against the transfer of funds by such Seller to Buyer.  Each such transaction shall be referred to herein as a “Transaction” and, unless otherwise agreed in writing, shall be governed by this Agreement, including any supplemental terms or conditions contained in any exhibits identified herein as applicable hereunder.  Each individual transfer of an Eligible Asset shall constitute a distinct Transaction.  Notwithstanding any provision or agreement herein, at no time shall Buyer be obligated to purchase or effect the transfer of any Eligible Asset from a Seller to Buyer.

ARTICLE 2.

DEFINITIONS

“A-Note” shall mean the original promissory note, if any, that was executed and delivered in connection with the senior position of a Senior Mortgage Loan.

“Accelerated Repurchase Date” shall have the meaning specified in Article 13(b)(i) of this Agreement.

“Acceptable Attorney” means an attorney-at-law that has delivered at a Seller’s request a Bailee Letter, with the exception of an attorney whom Buyer has notified such Seller is not satisfactory to Buyer.

“Accepted Servicing Practices” shall mean with respect to any applicable Purchased Asset, those mortgage, B-Note/junior interest or mezzanine loan servicing practices of prudent mortgage lending institutions that service mortgage, B-Note/junior interest and/or mezzanine loans of the same type as such Purchased Asset in the state where the related underlying real estate directly or indirectly securing or supporting such Purchased Asset is located.

“Act of Insolvency” shall mean, 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.

“Advance Rate” shall mean, with respect to each Transaction and any Pricing Rate Period, the initial Advance Rate selected by Buyer for such Transaction as shown in the related Confirmation, unless otherwise agreed to by Buyer and Sellers, which in any case shall not exceed the Maximum Advance Rate.

“Affiliate” shall mean, when used with respect to any specified Person, (i) 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, or (ii) any “affiliate” of such Person, as such term is defined in the Bankruptcy Code.

“Affiliated Hedge Counterparty” shall mean JPMorgan Chase Funding Inc., or any Affiliate thereof, in its capacity as a party to any Hedging Transaction with any Seller.

“Agreement” shall mean this Master Repurchase Agreement, dated as of November 21, 2008 by and among Capital Trust, Inc., CT BSI Funding Corp. and JPMorgan Chase Funding Inc., as such agreement may be modified or supplemented from time to time.

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

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

“Annual Reporting Package” shall mean the reporting package described on Exhibit III-C.

“Applicable Spread” shall mean, with respect to a Transaction involving a Purchased Asset:

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(i)        so long as no Event of Default shall have occurred and be continuing, the incremental per annum rate (expressed as a number of “basis points”, each basis point being equivalent to 1/100 of 1%) as set forth in the related Confirmation, unless otherwise agreed to by Buyer and Sellers, and

(ii)       after the occurrence and during the continuance of an Event of Default, the applicable incremental per annum rate described in clause (i) of this definition, plus 400 basis points (4.0%).

“Asset Information” shall mean, with respect to each Purchased Asset, the information set forth in Exhibit VII attached hereto.

“Assets” shall have the meaning specified in Article 1.

“B-Note” shall mean the original promissory note, if any, that was executed and delivered in connection with the subordinate portion of a Senior Mortgage Loan.

“Bailee Letter” shall mean a letter from an Acceptable Attorney or from a Title Company, in the form attached to this Agreement as Exhibit IX, wherein such Acceptable Attorney or Title Company in possession of a Purchased Asset File (i) acknowledges receipt of such Purchased Asset File, (ii) confirms that such Acceptable Attorney, Title Company, or other Person acceptable to Buyer is holding the same as bailee of Buyer under such letter and (iii) agrees that such Acceptable Attorney or Title Company shall deliver such Purchased Asset File to the Custodian by not later than the third (3rd) Business Day following the Purchase Date for the related Purchased Asset.

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

“Breakage Costs” shall have the meaning assigned thereto in Article 3(l).

“Business Day” shall mean a day other than (i) a Saturday or Sunday, or (ii) a day in which the New York Stock Exchange or banks in the State of New York are authorized or obligated by law or executive order to be closed.  Notwithstanding the foregoing sentence, when used with respect to the determination of LIBOR, “Business Day” shall only be a day on which commercial banks are open for international business (including dealings in U.S. Dollar deposits) in London, England.

“Buyer” shall mean JPMorgan Chase Funding Inc., or any successor.

“Buyer’s Margin Amount” shall mean with respect to any Transaction and any Purchased Asset on any date, the Maximum Advance Rate available for such Purchased Asset, multiplied by the Market Value of such Purchased Asset as of the date of determination.

“Capitalized Lease Obligations” shall mean 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.

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“Closing Date” shall mean November 21, 2008.

“CMBS” shall mean pass-through certificates representing beneficial ownership interests in one or more first lien mortgage loans secured by commercial and/or multifamily properties, regardless of rating.

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

“Collateral” shall have the meaning specified in Article 6 of this Agreement.

“Collection Account” shall mean the account or accounts maintained by Servicer under the Interim Servicing Agreement, into which all Income is originally deposited by Servicer immediately upon the receipt thereof pursuant to the Interim Servicing Agreement.

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

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

“Core Property Types” shall mean the following types of properties: multi-family, mixed-use, retail, industrial, office building and hospitality, or such other types of properties that Buyer may agree to in its sole and absolute discretion.

“Covenant Compliance Certificate” shall have the meaning specified in Article 3(b)(ix) hereof.

“CRE CDO” shall mean commercial real estate collateralized debt obligations.

“Custodial Agreement” shall mean the Custodial Agreement, dated as of the date hereof, by and among the Custodian, Sellers and Buyer.

“Custodial Delivery” shall mean the form executed by Sellers in order to deliver the Purchased Asset Schedules and the Purchased Asset Files to Buyer or its designee (including the Custodian) pursuant to Article 7 of this Agreement, a form of which is attached hereto as Exhibit IV.

“Custodian” shall mean LaSalle Bank, National Association, or any successor Custodian appointed by Buyer with the consent of Sellers.

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

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

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“Defaulted Mortgage Asset” shall mean any loan (a) that is sixty (60) days or more delinquent in the payment of principal, interest, fees or other amounts payable under the terms of the related loan documents, (b) as to which an Act of Insolvency shall have occurred with respect to the Borrower or (c) as to which a material non-monetary event of default shall have occurred under any document included in the Purchased Asset File for such Purchased Asset.

“Delinquent Mortgage Asset” shall mean a loan that 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 loan documents.

“Depository” shall mean PNC Bank, National Association, or any successor Depository appointed by Buyer with the prior written consent of Sellers (such consent to not be unreasonably withheld or delayed).

“Depository Account” shall mean a segregated interest bearing account, in the name of Buyer, established at Depository pursuant to the Depository Agreement.

“Depository Agreement” shall mean that certain Depository Agreement, dated as of the date hereof, among Buyer, Sellers and Depository.

“DTC” shall mean the Depository Trust Company.

“Due Diligence Package” shall have the meaning specified in Exhibit VIII to this Agreement.

“Early Repurchase” shall mean a repurchase of a Purchased Asset as described in Article 3(f) of this Agreement.

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

“EBITDA” shall mean, for any period, the sum, without duplication, for such period of (a) Net Income of Seller for such period, (b) the sum of provisions for such period for income taxes, interest expense, and depreciation and amortization expense used in determining such Net Income, (c) amounts deducted in accordance with GAAP in respect of other such non cash expenses in determining such Net Income and (d) the amount of any aggregate net loss (or minus the amount of any gain) during such period arising from the sale, exchange or other disposition of capital assets (determined in accordance with GAAP) by Seller, excluding (i) any reporting implications of Financial Interpretations No. 45 and 46 and FASB 150 and (ii) gains and losses from investments.

“EBITDA to Fixed Charge Ratio” shall mean, determined as of any date of determination, the ratio of (x) EBITDA during the twelve (12) month period ending on the date of determination to (y) the Fixed Charges due and owing during the twelve (12) month period ending on the date of determination.

“Eligible Assets” shall mean any of the following types of assets or loans (1) that are acceptable to Buyer in its sole and absolute discretion, (2) with respect to which the representations and warranties set forth in this Agreement (including the exhibits hereto) are true and correct in all respects except to the extent expressly disclosed in a Requested Exceptions Report approved by Buyer, and (3) that are secured directly or indirectly by properties that are Core Property Types and are located in the United States of America, its territories or possessions (or elsewhere, in the sole discretion of Buyer):

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(i)        Senior Mortgage Loans;

(ii)       B-Notes/Junior Interests;

(iii)      Mezzanine Loans;

(iv)      CMBS;

(v)       CRE CDO rated BB-/Ba3 or higher, or, if issued by a Seller or an Affiliate of a Seller, rated BBB/Baa3 or higher; and

(vi)      any other asset types or classifications that are mutually acceptable to Buyer and Sellers, subject to mutual agreement on all necessary and appropriate modifications to this Agreement and each of the Transaction Documents, as determined by Buyer in its sole and absolute discretion.

Notwithstanding anything to the contrary contained in this Agreement, the following shall not be Eligible Assets for purposes of this Agreement: (i) non-performing loans; (ii) loans that are Defaulted Mortgage Assets or Delinquent Mortgage Assets; (iii) loans for which the applicable appraisal is (a) not dated within three hundred sixty-four (364) days of the proposed financing date or (b) not ordered by a financial institution or mortgage broker (and for the avoidance of doubt, such appraisal may not be ordered from the related borrower or an Affiliate of the related borrower) or (iv) assets secured directly or indirectly by loans described in the preceding clauses (i) through (iii), other than CMBS or CRE CDO.

“Eligible Loans” shall mean any Senior Mortgage Loans, B-Notes/Junior Interests or Mezzanine Loans that are also Eligible Assets.

“Environmental Law” shall mean 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.

“Environmental Site Assessment” shall have the meaning specified in Exhibit VI.

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

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

“Event of Default” shall have the meaning specified in Article 13 of this Agreement.

“Federal Funds Rate” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by Buyer from three federal funds brokers of recognized standing selected by it.

“Filings” shall have the meaning specified in Article 6(d) of this Agreement.

“Financing Lease” shall mean any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee.

“Fitch” shall mean Fitch, Inc.

“Fixed Charges” shall mean, for any period, the sum, without duplication, of (a) Interest Expense, (b) provisions for cash income taxes made and (c) scheduled payments made on account of principal on Indebtedness.

“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 (including any supra-national bodies such as the European Union or the European Central Bank).

“Hedge-Required Asset” shall mean any Eligible Asset that is a fixed rate Eligible Asset.

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“Hedging Transactions” shall mean, with respect to any or all of the Purchased Assets, 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, entered into by any Affiliated Hedge Counterparty or Qualified Hedge Counterparty with Sellers, either generally or under specific contingencies that is required by Buyer, or otherwise pursuant to this Agreement, to hedge a Hedge-Required Asset, or that Sellers have elected to pledge or transfer to Buyer pursuant to this Agreement.

“Income” shall mean, with respect to any Purchased Asset at any time, (x) any collections of principal, interest, dividends, receipts or other distributions or collections, (y) all net sale proceeds received by any Seller or any Affiliate of any Seller in connection with a sale or liquidation of such Purchased Asset and (z) all payments actually received by Buyer on account of Hedging Transactions.

“Indebtedness” shall mean, for any Person, (a) obligations created, issued or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities or the sale of property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within ninety (90) days of the date the respective goods are delivered or the respective services are rendered; (c) Indebtedness of others secured by a lien on the property of such Person, whether or not the respective Indebtedness so secured has been assumed by such Person; (d) obligations (contingent or otherwise) of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such Person; (e) obligations of such Person under repurchase agreements, sale/buy-back agreements or like arrangements; (f) Indebtedness of others guaranteed by such Person; (g) all obligations of such Person incurred in connection with the acquisition or carrying of fixed assets by such Person; (h) Indebtedness of general partnerships of which such Person is secondarily or contingently liable (other than by endorsement of instruments in the course of collection), whether by reason of any agreement to acquire such indebtedness to supply or advance sums or otherwise; (i) Capitalized Lease Obligations of such Person; (j) all net liabilities or obligations under any interest rate, interest rate swap, interest rate cap, interest rate floor, interest rate collar, or other hedging instrument or agreement; and (k) all obligations of such Person under Financing Leases.

“Indemnified Amounts” and “Indemnified Parties” shall have the meaning specified in Article 26 of this Agreement.

“Interest Expense” shall mean, for any period, the total of all interest expense with respect to all outstanding Indebtedness including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under all Hedge Transactions with respect to interest rates to the extent such net costs are allocable to such period in accordance with GAAP.

“Interim Servicing Agreement” shall mean the Interim Servicing Agreement, dated as of the date hereof, by and among the Servicer, Sellers and Buyer.

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

“Junior Certificate” shall mean the original participation certificate, if any, that was executed and delivered in connection with a Junior Interest that is a junior participation.

“Junior Interest” shall mean a performing senior, junior or pari-passu participation interest in a stabilized or transitional senior commercial, multifamily fixed or floating rate mortgage loan secured by a first lien on multifamily and commercial properties or a subordinate portion of a Senior Mortgage Loan, or a performing Mezzanine Loan, in each case evidenced by a Junior Certificate.

“Leverage” shall mean, for any Person, the aggregate amount of indebtedness for money borrowed (included purchase money mortgage loans) outstanding at any time, both secured and unsecured.

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

(i)        On each Pricing Rate Determination Date, LIBOR for the next Pricing Rate Period will be the rate for deposits in United States dollars for a one-month period that appears on BBAM page 1229a of Bloomberg, L.P. as “LIBOR” 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 BBAM page 1229a of Bloomberg, L.P. 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 1/100 of 1% and all U.S. dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one-half cent or more being rounding upwards).

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

                LIBOR                

1 − Reserve Requirement

“Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any financing lease having substantially the same economic effect as any of the foregoing), and the filing of any financing statement under the UCC or comparable law of any jurisdiction in respect of any of the foregoing.

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“Liquidity” shall mean, at any time and with respect to any Person, the amount equal to the sum of (i) funds standing to the credit of the Depository Account; plus (ii) Cash and Cash Equivalents (excluding Cash and Cash Equivalents standing to the credit of a deposit account or other account that is the subject of a “control agreement” (or the equivalent, however designated) at a time when such Person does not have the right unilaterally to direct the withdrawal of funds from such account (e.g., because a “default” or “event of default” (or the equivalent, however designated) exists)).

“Margin Deadline” shall have the meaning specified in Article 4(a).

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

“Margin Deficit Notice” shall have the meaning specified in Article 4(a).

“Market Value” shall mean, with respect to any Purchased Asset as of any relevant date, the market value for such Purchased Asset on such date as determined by Buyer in its sole and absolute discretion, exercised in good faith.  The Market Value shall, at Buyer’s option, be deemed to be zero with respect to each Purchased Asset (i) in respect of which there is a breach of a representation and warranty set forth in Exhibit VI of this Agreement, (ii) subject to Article 7(b), in respect of which the complete Purchased Asset File has not been delivered to the Custodian in accordance with the terms of the Custodial Agreement, (iii) that has been released from the possession of the Custodian under the Custodial Agreement to a 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 Purchased Asset or any related Underlying Mortgaged Property that is senior to, or pari passu with, in right of payment or priority the rights of Buyer in such Purchased Asset, (v) any Purchased Asset has become a specially serviced loan as defined in the applicable servicing agreement, and (vi) that is determined by Buyer not to be an Eligible Asset.

The Market Value of each Purchased Asset may be determined by Buyer, in its sole discretion, on each Business Day during the term of this Agreement.

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

“Materials of Environmental Concern” shall mean 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.

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“Maturity Date” shall mean October 24, 2009, or such later date as may be in effect pursuant to Article 3(m) hereof.

“Maximum Advance Rate” shall mean, with respect to each Purchased Asset, the maximum Advance Rate available to the applicable Seller as set forth in the related Confirmation, or as otherwise agreed to by Buyer and Sellers.

“Mezzanine Loan” shall mean a performing loan (or a participation therein) primarily secured by a pledge of full or partial equity ownership interests in one or more entities that own directly or indirectly multifamily or commercial properties that serve as collateral for Senior Mortgage Loans.

“Mezzanine Note” shall mean the original promissory note that was executed and delivered in connection with a particular Mezzanine Loan.

“Minimum Transfer Amount” shall mean, with respect to each Seller, $250,000; provided, however, that if a Default or an Event of Default has occurred and is continuing hereunder, the Minimum Transfer Amount shall be U.S. $0.

“Monthly Reporting Package” shall mean the reporting package described on Exhibit III-A.

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

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

“Mortgage Note” shall mean a note or other evidence of indebtedness of a Mortgagor secured by a Mortgage, including any A-Note, B-Note or Junior Certificate that is a Purchased Asset.

“Mortgagor” shall mean the obligor on a Mortgage Note and the grantor of the related Mortgage, or the obligor on a Mezzanine Note or Junior Interest.

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

“Net Assets” shall mean, for any Person, total assets (other than intangibles) at cost, before deducting depreciation, reserves for bad debts or other non-cash reserves, less total liabilities.

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

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

“Originated Asset” shall mean any Eligible Asset originated by any Seller.

“Permitted Liens” shall have the meaning specified in Article 11(e) hereof.

“Person” shall mean an individual, corporation, limited liability company, business trust, partnership, joint tenant or tenant-in-common, trust, joint stock company, joint venture, unincorporated organization, or any other entity of whatever nature, or a Governmental Authority.

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

“Plan Party” shall have the meaning set forth in Article 21(a) of this Agreement.

“Pre-Existing Asset” shall mean any Eligible Asset that is not an Originated Asset.

“Preliminary Due Diligence Package” shall mean with respect to any New Asset, a summary memorandum outlining the proposed transaction, including potential transaction benefits and all material underwriting risks, all Underwriting Issues and all other characteristics of the proposed transaction that a reasonable buyer would consider material, together with the following due diligence information relating to the New Asset to be provided by a Seller to Buyer and Buyer’s counsel pursuant to this Agreement:

(i)        With respect to each Eligible Asset that consists of an Eligible Loan:

(i)        the Asset Information and, if available, maps and photos;

(ii)       such Seller’s internal credit memoranda used for approval and underwriting;

(iii)      current rent roll and roll over schedule, if applicable;

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

(v)       copies of appraisal, environmental, engineering and any other third-party reports provided that, if same are not available to such Seller at the time of such Seller’s submission of the Preliminary Due Diligence Package to Buyer, such Seller shall deliver such items to Buyer promptly upon such Seller’s receipt of such items;

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(vi)      description of the underlying real estate directly or indirectly securing or supporting such Purchased Asset and the ownership structure of the borrower and the sponsor (including, without limitation, the board of directors, if applicable) and, to the extent that real property does not secure such Eligible Loan, the related collateral securing such Eligible Loan, if any;

(vii)     indicative debt service coverage ratios;

(viii)    indicative loan-to-value ratio;

(ix)       term sheet outlining the transaction generally;

(x)        such Seller’s relationship with the Mortgagor, if any, and Mortgagor’s financial statements; and

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

(xii)      analyses and/or reports with respect to such other matters concerning the New Asset as Buyer may approve in its sole discretion;

(xiii)     documents evidencing such New Asset, or current drafts thereof, including, without limitation, underlying debt and security documents, guaranties, the underlying borrower’s organizational documents, warrant agreements, and loan and collateral pledge agreements, as applicable, provided that, if same are not available to such Seller at the time of such Seller’s submission of the Preliminary Due Diligence Package to Buyer, such Seller shall deliver such items to Buyer promptly upon such Seller’s receipt of such items;

(xiv)     in the case of Subordinate Eligible Assets, all information described in this definition that would otherwise be provided for the Underlying Mortgage Loan if it were an Eligible Asset, and in addition, all documentation evidencing such Subordinate Eligible Asset; and

(xv)      any exceptions to the representations and warranties set forth in Exhibit VI to this Agreement.

(ii)           With respect to each Eligible Asset that consists of CMBS:

(i)         the related prospectus or offering circular;

(ii)        all structural and collateral term sheets and all other computational or other similar materials provided to such Seller in connection with its acquisition of such CMBS;

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(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 CMSA 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;

(vi)       all asset summaries and any other due diligence materials, including, without limitation, reports prepared by third parties, provided to such Seller in connection with its acquisition of such CMBS; and

(vii)      the related pooling and servicing agreement.

With respect to each Eligible Asset that consists of an CRE CDO:

(i)         the related prospectus or offering circular;

(ii)        all remittance statements or other reports issued in respect thereof during the immediately preceding 12 months (or, if less, since the date such CRE CDO was issued);

(iii)       any information or reports provided to such Seller in connection with its acquisition or ownership of the CRE CDO asset;

(iv)       the related indenture;

(v)        the most recent annual and quarterly 1934 Act reports filed with respect to the related issuer, if applicable;

(vi)       all structural and collateral term sheets and all other computational or other similar materials provided to such Seller in connection with its acquisition of such CRE CDO asset;

(vii)      all distribution date statements issued in respect thereof during the immediately preceding 12 months (or, if less, since the date such CRE CDO was issued);

(viii)     all monthly CMSA reporting packages issued in respect of such CRE CDO during the immediately preceding 12 months (or, if less, since the date such CRE CDO was issued);

(ix)        all Rating Agency pre-sale reports; and

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(x)         all asset summaries and any other due diligence materials, including, without limitation, reports prepared by third parties, provided to such Seller in connection with its acquisition of such CRE CDO.

“Pre-Purchase Due Diligence” shall have the meaning set forth in Article 3(b)(ii) hereof.

“Pre-Purchase Legal Fees” shall mean all of the reasonable and necessary out of pocket legal fees, costs and expenses incurred by Buyer in connection with the Pre-Purchase Due Diligence associated with Buyer’s decision as to whether or not to enter into a particular Transaction.

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

“Pricing Rate” shall mean, for any Pricing Rate Period, an annual rate equal to the sum of (i) the LIBO Rate and (ii) the relevant Applicable Spread, in each case, for the applicable Pricing Rate Period for the related Purchased Asset.  The Pricing Rate shall be subject to adjustment and/or conversion as provided in the Transaction Documents or the related Confirmation.

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

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

“Principal Payment” shall mean, with respect to any Purchased Asset, any payment or prepayment received by the Depository in respect thereof.

“Prohibited Investor” shall mean (1) a person or entity whose name appears on the list of Specially Designated Nationals and Blocked Persons by the Office of Foreign Asset Control (“OFAC”), (2) any foreign shell bank, and (3) any person or entity resident in or whose subscription funds are transferred from or through an account in a jurisdiction that has been designated as a non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering (“FATF”), of which the U.S. is a member and with which designation the U.S. representative to the group or organization continues to concur.  (See http://www.fatf-gati.org for FATF’s list of Non-Cooperative Countries and Territories.)

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“Purchase Date” shall mean, with respect to any Purchased Asset, the date on which Buyer purchases such Purchased Asset from a Seller hereunder.

“Purchase Price” shall mean, with respect to any Purchased Asset, the price at which such Purchased Asset is transferred by a Seller to Buyer on the applicable Purchase Date, adjusted after the Purchase Date as set forth below.  The Purchase Price as of the Purchase Date for any Purchased Asset shall be an amount (expressed in dollars) equal to the product obtained by multiplying (i) the Market Value of such Purchased Asset (or the par amount of such Purchased Asset, if lower than Market Value) by (ii) the Advance Rate for such Purchased Asset, as determined by Buyer in its sole and absolute discretion.  The Purchase Price of any Purchased Asset shall be (x) increased by any amounts disbursed by Buyer to the applicable Seller or the related borrower with respect to such Purchased Asset and (y) decreased by (i) the portion of any Principal Payments on such Purchased Asset that are applied pursuant to Article 5 hereof to reduce such Purchase Price and (ii) any other amounts paid to Buyer by a Seller to reduce such Purchase Price.

“Purchased Asset” shall mean (i) with respect to any Transaction, an Eligible Asset sold by a Seller to Buyer in such Transaction and (ii) with respect to the Transactions in general, all Eligible Assets sold by a Seller to Buyer (other than Eligible Assets that have been repurchased by a Seller).

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

“Purchased Asset File” shall mean the documents specified as the “Purchased Asset File” in Article 7(b), together with any additional documents and information required to be delivered to Buyer or its designee (including the Custodian) pursuant to this Agreement; provided that to the extent that Buyer waives, including pursuant to Article 7(b), receipt of any document in connection with the purchase of an Eligible Asset (but not if Buyer merely agrees to accept delivery of such document after the Purchase Date), such document shall not be a required component of the Purchased Asset File until such time as the Buyer determines in good faith that such document is necessary or appropriate for the servicing of the applicable Purchased Asset.

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

“Purchased Items” shall have the meaning specified in Article 6(a) of this Agreement.

“Qualified Hedge Counterparty” shall mean, with respect to any Hedging Transaction, any entity, other than an Affiliated Hedge Counterparty, that (a) qualifies as an “eligible contract participant” as such term is defined in the Commodity Exchange Act (as amended by the Commodity Futures Modernization Act of 2000), (b) the long-term debt of which is rated no less than “A+” by S&P, and “A1” by Moody’s and (c) is reasonably acceptable to Buyer; provided, that with respect to clause (c), if Buyer has approved an entity as a counterparty, it may not thereafter deem such counterparty unacceptable with respect to any previously outstanding Transaction unless clause (a) or clause (b) no longer applies with respect to such counterparty.

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“Quarterly Reporting Package” shall mean the reporting package described on Exhibit III-B.

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

“Reference Banks” shall mean banks each of which shall (i) be a leading bank engaged in transactions in Eurodollar deposits in the international Eurocurrency market and (ii) have an established place of business in London.  Initially, the Reference Banks shall be JPMorgan Chase Bank, N.A, Barclays Bank, Plc and Deutsche Bank AG.  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 its sole discretion exercised in good faith, may designate alternative banks meeting the criteria specified in clauses (i) and (ii) above.

“Release Letter” shall mean a letter substantially in the form of Exhibit XIII hereto (or such other form as may be acceptable to Buyer).

“REMIC” shall mean a real estate mortgage investment conduit, within the meaning of Section 860D(a) of the Internal Revenue Code.

“Remittance Date” shall mean the twentieth (20th) calendar day of each month, or the immediately following Business Day, if such calendar day shall not be a Business Day, or such other day as is mutually agreed to by Sellers and Buyer.

“Repurchase Date” shall mean, with respect to a Purchased Asset, the earliest to occur of (i) the Maturity Date, (ii) the date set forth in the applicable Confirmation, (iii) the Accelerated Repurchase Date, (iv) any Early Repurchase Date for such Purchased Asset; or (v) the date of the occurrence of an Event of Default.

“Repurchase Obligations” shall have the meaning assigned thereto in Article 6(a).

“Repurchase Price” shall mean, with respect to any Purchased Asset as of any Repurchase Date or any date on which the Repurchase Price is required to be determined hereunder, the price at which such Purchased Asset is to be transferred from Buyer to a Seller; such price will be determined in each case as the sum of the (i) Purchase Price of such Purchased Asset (as increased by any other additional funds advanced in connection with such Purchased Asset); (ii) the accreted and unpaid Price Differential with respect to such Purchased Asset as of the date of such determination (other than, with respect to calculations in connection with the determination of a Margin Deficit, accreted and unpaid Price Differential for the current Pricing Rate Period); (iii) any other amounts due and owing by any Seller to Buyer and its Affiliates pursuant to the terms of this Agreement as of such date; (iv) if such Repurchase Date is not a Remittance Date, any Breakage Costs payable in connection with such repurchase other than with respect to the determination of a Margin Deficit; (v) any amounts that would be payable to (a positive amount) a Qualified Hedge Counterparty under any related Hedging Transaction, if such Hedging Transaction were terminated on the date of determination, if such determination is in connection with any calculation of Margin Deficit; and (vi) any amounts that would be payable to (a positive amount) an Affiliated Hedge Counterparty under any related Hedging Transaction, if such Hedging Transaction were terminated on the date of determination, if such determination is in connection with any calculation of Margin Deficit (and not in connection with an actual repurchase of a Purchased Asset).  In addition to the forgoing, the Repurchase Price shall be increased by any other additional funds advanced in connection with such Purchased Asset and decreased by (A) the portion of any Principal Payments on such Purchased Asset that is applied pursuant to Article 5 to reduce such Repurchase Price and (B) any other amounts paid to Buyer by a Seller to reduce such Repurchase Price.

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“Requested Exceptions Report” shall have the meaning assigned thereto in Article 3(b)(ii)(E).

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

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

“Responsible Officer” shall mean any executive officer of a Seller.

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

“Seller” shall mean each of the entities identified as “Seller” in the Recitals hereto and such other sellers as may be approved by Buyer in its sole discretion from time to time.

“Senior Mortgage Loans” shall mean performing senior commercial or multifamily fixed or floating rate mortgage loans, A-Notes or senior or pari passu participation interests in those mortgage loans, in each case secured by first liens on multifamily or commercial properties.

“Senior Recourse Indebtedness” shall mean, for any period, (a) any Indebtedness of a Seller and its consolidated Subsidiaries during such period that can be subject to a margin call under any repurchase facility and (b) any Indebtedness of a Seller and its consolidated Subsidiaries during such period that has a scheduled maturity date on or before the Maturity Date.

“Servicer” shall mean Midland Loan Services, Inc.

“Servicer Notice” shall mean a notice substantially in the form of Exhibit XII hereto, as amended, supplemented or otherwise modified from time to time.

“Servicing Agreements” shall have the meaning specified in Article 28(b).

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“Servicing Records” shall have the meaning specified in Article 28(b).

“Servicing Rights” shall mean rights of any Person, to administer, service or subservice, the Purchased Assets or to possess related Servicing Records.

“Servicing Tape” shall have the meaning specified in Exhibit III-A hereto.

“Subordinate Eligible Assets” shall mean Eligible Assets described in items (ii) and (iii) of the definition of Eligible Assets.

“Subsidiary” shall mean, as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.  Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of any Seller.

“Survey” shall mean a certified ALTA/ACSM (or applicable state standards for the state in which the collateral is located) survey of the underlying real estate directly or indirectly securing or supporting such Purchased Asset prepared by a registered independent surveyor or engineer and in form and content satisfactory to Buyer and the company issuing the Title Policy for such Property.

“Tangible Net Worth” shall mean, as of a particular date (a) all amounts which would be included under capital (including any trust-preferred securities issued by a bank holding company) of a Seller and its consolidated Subsidiaries, if any, on a balance sheet of such Seller and its consolidated Subsidiaries at such date, determined in accordance with GAAP, less (b) intangible assets of such Seller and its consolidated Subsidiaries, if any.

“Target Price” shall mean, with respect to any Purchased Asset as of any date, the amount (expressed in dollars) obtained by multiplying (i) the Market Value of such Purchased Asset as of such date by (ii) the then-applicable Maximum Advance Rate for such Purchased Asset.

“Title Company” shall mean a nationally-recognized title insurance company acceptable to Buyer.

“Title Policy” shall have the meaning specified in Exhibit VI.

“Total Indebtedness” shall mean, for any period, the aggregate Indebtedness of a Seller and its consolidated Subsidiaries during such period (including, without limitation, off-balance sheet Indebtedness), less the amount of any nonspecific balance sheet reserves maintained in accordance with GAAP, provided that the calculation of Total Indebtedness will exclude (i) amounts of liabilities resulting from the sale of participation interests classified as participations sold on the liabilities side of such Seller’s balance sheet, (ii) liabilities resulting from consolidation of debt associated with securitizations where Seller has no recourse obligation for the debt and which debt was not issued by such Seller or its Subsidiaries and (iii) liabilities resulting from the consolidation of vehicles managed by such Seller or a Subsidiary of such Seller where such Seller has less than a 50% equity interest.

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“Total Non-Securitized Indebtedness” shall mean, for any period, the aggregate Indebtedness of a Seller and its consolidated Subsidiaries during such period (including, without limitation, off-balance sheet Indebtedness), less the amount of any nonspecific balance sheet reserves maintained in accordance with GAAP, provided that the calculation of Total Indebtedness will exclude (i) amounts of liabilities resulting from the sale of participation interests classified as participations sold on the liabilities side of such Seller’s balance sheet, (ii) liabilities resulting from consolidation of debt associated with securitizations where such Seller has no recourse obligation for the debt and (iii) liabilities resulting from the consolidation of vehicles managed by such Seller or a Subsidiary of such Seller where such Seller has less than a 50% equity interest.

“Transaction” shall mean a Transaction, as specified in Article 1 of this Agreement.

“Transaction Documents” shall mean, collectively, this Agreement, any applicable Annexes to this Agreement, the Custodial Agreement, the Interim Servicing Agreement, the Depository Agreement, all Hedging Transactions and all Confirmations and assignment documentation executed pursuant to this Agreement in connection with specific Transactions.

“Trust Receipt” shall mean a trust receipt issued by Custodian to Buyer confirming the Custodian’s possession of certain Purchased Asset Files that are the property of and held by Custodian for the benefit of Buyer (or any other holder of such trust receipt) or a bailment arrangement with counsel or other third party acceptable to Buyer in its sole discretion.

“UCC” shall have the meaning specified in Article 6(d) of this Agreement.

“Underlying Mortgage Loan” shall mean, with respect to any B-Note, Junior Interest, Mezzanine Loan, CMBS or CRE CDO, a mortgage loan made in respect of the related Underlying Mortgaged Property.

“Underlying Mortgaged Property” shall mean, in the case of:

(a)           a Senior Mortgage Loan, the Mortgaged Property securing such Senior Mortgage Loan, as applicable;

(b)           a Junior Interest, the Mortgaged Property securing such Junior Interest, or the Mortgaged Property securing the Mortgage Loan in which such Junior Interest represents a junior participation, as applicable;

(c)           a B-Note, the Mortgaged Property securing such B-Note;

(d)           a Mezzanine Loan, the Mortgaged Property that is owned by the Person the equity of which is pledged as collateral security for such Mezzanine Loan;

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

(f)            a CRE CDO, the Mortgaged Properties securing the mortgage loans related to such security.

“Underwriting Issues” shall mean, with respect to any Purchased Asset as to which any Seller intends to request a Transaction, all material information that has come to each Seller’s attention that, based on the making of reasonable inquiries and the exercise of reasonable care and diligence under the circumstances, would be considered a materially “negative” factor (either separately or in the aggregate with other information), or a material defect in loan documentation or closing deliveries (such as any absence of any material Purchased Asset Document(s)), to a reasonable institutional mortgage buyer in determining whether to originate or acquire the Purchased Asset in question.

All references to articles, schedules and exhibits are to articles, schedules and exhibits in or to this Agreement unless otherwise specified.  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.  All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles.  References to “good faith” in this Agreement shall mean “honesty in fact in the conduct or transaction concerned”.

ARTICLE 3.

INITIATION; CONFIRMATION; TERMINATION; FEES; EXTENSION OF MATURITY DATE

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 Buyer shall have received from each Seller payment of an amount equal to all fees and expenses payable hereunder, and all of the following items, each of which shall be satisfactory in form and substance to Buyer and its counsel:

(a)           The following Transaction Documents, as well as certain other documents, delivered to Buyer:

(i)           this Agreement, duly completed and executed by each of the parties hereto (including all exhibits hereto);

(ii)          the Custodial Agreement, duly executed and delivered by each of the parties thereto;

(iii)         the Depository Agreement, duly completed and executed by each of the parties thereto;

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(iv)         the Interim Servicing Agreement, duly completed and executed by each of the parties thereto;

(v)          any and all consents and waivers applicable to each Seller or to the Purchased Assets;

(vi)         UCC financing statements for filing in each of the UCC filing jurisdictions described on Exhibit XI hereto, each naming the Sellers as “Debtors” and Buyer as “Secured Party” and describing as “Collateral” all of the items set forth in the definition of Collateral and Purchased Items in this Agreement, together with any other documents necessary or requested by Buyer to perfect the security interests granted by each Seller in favor of Buyer under this Agreement or any other Transaction Document;

(vii)        any documents relating to any Hedging Transactions;

(viii)       an opinion or opinions of outside counsel to each Seller, reasonably acceptable to Buyer (including, but not limited to, those relating to enforceability, corporate matters and security interests);

(ix)          good standing certificates and certified copies of the charters 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 Transaction Documents and each other document to be delivered by such Seller from time to time in connection herewith (and Buyer may conclusively rely on such certificate until it receives notice in writing from such Seller to the contrary);

(x)           with respect to any Eligible Asset to be purchased hereunder on the related Purchase Date that is not serviced by a Seller, such Seller shall have provided to Buyer 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 such Seller and Servicer;

(xi)          Buyer shall have received payment from Sellers of an amount equal to the amount of actual costs and expenses, including, without limitation, the reasonable fees and expenses of counsel to Buyer, incurred by Buyer in connection with the development, preparation and execution of this Agreement, the other Transaction Documents and any other documents prepared in connection herewith or therewith;

(xii)         all such other and further documents, documentation and legal opinions as Buyer in its discretion shall reasonably require.

(b)           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:

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(i)           The applicable Seller shall give Buyer no less than one (1) Business Day’s prior written notice of each Transaction (including the initial Transaction), together with a signed, written confirmation in the form of Exhibit I attached hereto prior to each Transaction (a “Confirmation”).  Each Confirmation shall describe the Purchased Assets, shall identify Buyer and the applicable Seller and shall be executed by both Buyer and such Seller (provided, that, in instances where funds are being wired to an account other than 230-254-632 at JPMorgan Chase Funding Inc., the Confirmation shall be signed by two Responsible Officers of the applicable Seller); provided, however, that Buyer shall not be liable to such Seller if it inadvertently acts on a Confirmation that has not been signed by a Responsible Officer of such Seller, and shall set forth:

(A)           the Purchase Date;

(B)           the Purchase Price for the Purchased Asset included in the Transaction;

(C)           the Repurchase Date;

(D)           any additional terms or conditions not inconsistent with this Agreement; and

(E)           the requested Advance Rate and the related Maximum Advance Rate.

No Confirmation may be amended unless in a writing executed by Buyer and the applicable Seller.  Neither (i) changes in the Repurchase Price related to a Purchased Asset (due to the application of Principle Payments) nor (ii) periodic adjustments to the LIBO Rate related to a Purchased Asset shall require an amendment to the related Confirmation.

(ii)           Buyer shall have the right to review the Eligible Assets each Seller proposes to sell to Buyer in any Transaction and to conduct its own due diligence investigation of such Eligible Assets as Buyer determines (“Pre-Purchase Due Diligence”).  Buyer shall be entitled to make a determination, in the exercise of its sole discretion, that, in the case of a Transaction, it shall or shall not purchase any or all of the assets proposed to be sold to Buyer by each Seller.  On the Purchase Date for the Transaction, which shall be not less than one (1) Business Day following the final approval of an Eligible Asset by Buyer in accordance with Exhibit VIII hereto, the Eligible Assets shall be transferred to Buyer or the Custodian against the transfer of the Purchase Price to an account of Sellers.  Buyer shall inform the applicable Seller of its determination with respect to any such proposed Transaction solely in accordance with Exhibit VIII attached hereto.  Upon the approval by Buyer of a particular proposed Transaction, Buyer shall deliver to the applicable Seller a signed copy of the related Confirmation described in clause (i) above, on or before the scheduled date of the underlying proposed Transaction.  Prior to the approval of each proposed Transaction by Buyer:

(A)           Buyer shall have (i) determined, in its sole and absolute discretion, that the asset proposed to be sold to Buyer by a Seller in such Transaction is an Eligible Asset and (ii) obtained internal credit approval, to be granted or denied in Buyer’s sole and absolute discretion, for the inclusion of such Eligible Asset as a Purchased Asset in a Transaction, without regard for any prior credit decisions by Buyer or any Affiliate of Buyer, and with the understanding that Buyer shall have the absolute right to change any or all of its internal underwriting criteria at any time, without notice of any kind to such Seller;

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(B)           Buyer shall have fully completed all external legal due diligence;

(C)           Buyer shall have determined the Pricing Rate applicable to the Transaction (including the Applicable Spread);

(D)           no Default or Event of Default shall have occurred and be continuing under this Agreement or any other Transaction Document and no event shall have occurred which has, or would reasonably be expected to have, a Material Adverse Effect;

(E)           the applicable Seller shall have delivered to Buyer a list of all exceptions to the representations and warranties relating to the Purchased Asset and any other eligibility criteria for such Purchased Asset (the “Requested Exceptions Report”);

(F)           Buyer shall have waived all exceptions in the Requested Exceptions Report;

(G)           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 Sellers in Exhibit VI and Article 10, as applicable, shall be true, correct and complete on and as of such Purchase Date in all 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;

(H)           subject to Buyer’s right to perform one or more due diligence reviews pursuant to Article 27, Buyer shall have completed its due diligence review of the Purchased Asset File, and such other documents, records, agreements, instruments, mortgaged properties or information relating to such Purchased Asset as Buyer in its sole discretion deems appropriate to review and such review shall be satisfactory to Buyer in its sole discretion and Buyer has consented in writing to the Eligible Asset becoming a Purchased Asset; provided, that if Buyer’s diligence review of the Purchased Asset File requires the delivery of a mortgage file or the equivalent, the applicable Seller shall have the benefit of such delayed delivery provisions as are customary in pooling and servicing agreements (e.g., while a promissory note (or analogous document directly evidencing the obligation) must be delivered as a condition of closing, an ancillary document or estoppels may be delivered within a reasonable time frame thereafter);

(I)            with respect to any Eligible Asset to be purchased hereunder on the related Purchase Date that is not serviced by a Seller or an Affiliate thereof, such Seller shall have provided to Buyer 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 such Seller and the servicer named in the related Servicing Agreement;

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(J)           Sellers, regardless of whether this Agreement is executed, shall have paid to Buyer all legal fees and expenses and the reasonable costs and expenses incurred by Buyer 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 Buyer’s option, may be withheld from the sale proceeds of any Transaction hereunder;

(K)           Buyer shall have determined, in its sole and absolute discretion, that no Margin Deficit shall exist, either immediately prior to or after giving effect to the requested Transaction;

(L)            Buyer shall have received from Custodian on each Purchase Date an Asset Schedule and Exception Report (as defined in the Custodial Agreement) with respect to each Purchased Asset, dated the Purchase Date, duly completed and with exceptions acceptable to Buyer in its sole discretion in respect of Eligible Assets to be purchased hereunder on such Business Day;

(M)          Buyer shall have received from the applicable Seller a Release Letter covering each Eligible Asset to be sold to Buyer;

(N)           Buyer shall have reasonably determined that no introduction of, or a change in, any Requirement of Law or in the interpretation or administration of any Requirement of Law applicable to Buyer has made it unlawful, and no Governmental Authority shall have asserted that it is unlawful, for Buyer to enter into Transactions;

(O)           the Repurchase Date for such Transaction is not later than the Maturity Date;

(P)           each Seller shall have taken such other action as Buyer 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 Transaction Document in favor of Buyer with respect to the Purchased Assets;

(Q)           with respect to any Eligible Asset to be purchased hereunder, if such Eligible Asset was acquired by Seller, Seller shall have disclosed to Buyer the acquisition cost of such Eligible Asset (including therein reasonable supporting documentation required by Buyer, if any);

(R)           Buyer shall have received all such other and further documents, documentation and legal opinions (including, without limitation, opinions regarding the perfection of Buyer’s security interests) as Buyer in its reasonable discretion shall reasonably require;

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(S)           Buyer shall have received a copy of any documents relating to any Hedging Transaction, and each Seller shall have pledged and assigned to Buyer, pursuant to Article 6 hereunder, all of such Seller’s rights under each Hedging Transaction included within a Purchased Asset, if any;

(T)           no “Termination Event”, “Event of Default”, “Potential Event of Default” or any similar event by a Seller, however defined therein, shall have occurred and be continuing under any Hedging Transaction; and

(U)           the counterparty to each Seller in any Hedging Transaction shall be an Affiliated Hedge Counterparty or a Qualified Hedge Counterparty, and, in the case of a Qualified Hedge Counterparty, in the event that such counterparty no longer qualifies as a Qualified Hedge Counterparty, then, at the election of Buyer, such Seller shall ensure that such counterparty posts additional collateral in an amount satisfactory to Buyer under all its Hedging Transactions with such Seller, or such Seller shall immediately terminate the Hedging Transactions with such counterparty and enter into new Hedging Transactions with a Qualified Hedge Counterparty.

(c)           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 the Pricing Rate Determination Date for all of the next succeeding Pricing Rate Periods for such Transaction.  Buyer or its agent shall determine in accordance with the terms of this Agreement the Pricing Rate on each Pricing Rate Determination Date for the related Pricing Rate Period in the Buyer’s sole and absolute discretion, exercised in good faith, and notify the applicable Seller of such rate for such period each such Pricing Rate Determination Date.

(d)           Each Confirmation, together with this Agreement, shall be conclusive evidence of the terms of the Transaction(s) covered thereby.  In the event of any conflict between the terms of such Confirmation and the terms of this Agreement, other than with respect to the Advance Rate or the applicable Price Differential set forth in the related Confirmation, this Agreement shall prevail.

(e)           On the Repurchase Date (including any Early Repurchase Date) for any Transaction, termination of the Transaction will be effected by (A) payment by the applicable Seller to Buyer of an amount equal to the sum of (1) the Repurchase Price for the applicable Purchased Asset and (2) any other amounts payable under this Agreement (including, without limitation, Article 3(i)) and under any related Hedging Transactions with respect to such Purchased Asset and (B) transfer to such Seller of the Purchased Asset being repurchased and any Income in respect thereof received by Buyer (and not previously credited or transferred to, or applied to the obligations of, such Seller pursuant to Article 5 of this Agreement).

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

(i)            such Seller notifies Buyer in writing of its intent to terminate such Transaction and repurchase such Purchased Asset, setting forth the Early Repurchase Date and identifying with particularity the Purchased Asset to be repurchased on such Early Repurchase Date, no later than five (5) Business Days prior to such Early Repurchase Date;

(ii)           on such Early Repurchase Date, such Seller pays to Buyer an amount equal to the sum of (A) the Repurchase Price for the applicable Purchased Asset and (B) any other amounts payable under this Agreement (including, without limitation, Article 3(i)) and under any related Hedging Transactions with respect to such Purchased Asset against transfer to such Seller or its agent of such Purchased Assets; and

(iii)           on such Early Repurchase Date, in addition to the amounts set forth in subclause (ii) above, such Seller pays to Buyer, on account of a Purchased Asset then subject to a Transaction, an amount sufficient to reduce the Purchase Price for such Purchased Asset to an amount equal to the Target Price for such Purchased Asset.

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

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

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(i)           Upon demand by Buyer, Sellers shall indemnify Buyer and hold Buyer harmless from any loss, cost or expense (including, without limitation, attorneys’ fees and disbursements) that Buyer may sustain or incur as a consequence of (i) default by a Seller repurchasing any Purchased Asset after Seller has given a notice in accordance with Article 3(f) of an Early Repurchase, (ii) any payment of the Repurchase Price on any day other than a Remittance Date, including Breakage Costs, (iii) a default by a Seller in selling Eligible Assets after such Seller has notified Buyer of a proposed Transaction and Buyer has agreed to purchase such Eligible Assets in accordance with the provisions of this Agreement, (iv) Buyer’s enforcement of the terms of any of the Transaction Documents, (v) any actions taken to perfect or continue any lien created under any Transaction Documents, and/or (vi) Buyer entering into any of the Transaction Documents or owning any Purchased Item.  A certificate as to such costs, losses, damages and expenses, setting forth the calculations therefor shall be submitted promptly by Buyer to such Seller and shall be prima facie evidence of the information set forth therein.

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

(i)           shall subject Buyer to any tax of any kind whatsoever with respect to the Transaction Documents, any Purchased Asset or any Transaction, or change the basis of taxation of payments to Buyer in respect thereof (except for income taxes and any changes in the rate of tax on Buyer’s overall net income);

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

(iii)         shall impose on Buyer any other condition;

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

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

(l)           If a Seller repurchases Purchased Assets on a day other than the last day of a Pricing Rate Period, such Seller shall indemnify Buyer and hold Buyer harmless from any actual losses, costs and/or expenses which Buyer sustains as a direct consequence thereof (“Breakage Costs”), in each case for the remainder of the applicable Pricing Rate Period.  Buyer shall deliver to such Seller 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 Sellers absent manifest error.  This Article 3(l) shall survive termination of this Agreement and the repurchase of all Purchased Assets subject to Transactions hereunder.

(m)           (i)           Notwithstanding the definition of Maturity Date herein, provided that all of the extension conditions listed in clause (ii) below (collectively, the “Maturity Date Extension Conditions”) shall have been satisfied, Buyer shall agree to extend the Maturity Date, for a period of three hundred sixty-four (364) additional days (the “Extension Period”) by giving notice to Seller of such extension and of the new Maturity Date.  Notwithstanding anything to the contrary in this Article 3(m), in no event shall Seller be permitted to extend the Maturity Date for more than one (1) Extension Period.

(ii)           For purposes of this Article 3(m), the Maturity Date Extension Conditions shall be deemed to have been satisfied if:

(A)           Seller shall have given Buyer written notice, not less than forty-five (45) days prior but no more than one hundred and eighty (180) days prior to the originally scheduled Maturity Date, of Seller’ desire to extend the Maturity Date;

(B)           no Material Adverse Effect, Margin Deficit, Default or Event of Default under this Agreement shall have occurred and be continuing as of the date notice is given under subclause (ii) above or as of the originally scheduled Maturity Date and no “Termination Event,” “Event of Default” or “Potential Event of Default” or any similar event by Seller, however denominated, shall have occurred and be continuing under any Hedging Transaction; and

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(C)           all representations and warranties shall be true, correct, complete and accurate in all respects as of the existing Maturity Date.

(iii)           Notwithstanding any extension to the Maturity Date as described in this Article 3, if the Repurchase Date for a Transaction is extended by agreement of the Buyer and Seller, Buyer and Seller shall execute a new Confirmation containing the same pricing terms as the original Confirmation and the extended Repurchase Date for the Transaction.

ARTICLE 4.

MARGIN MAINTENANCE

(a)           If at any time the Buyer’s Margin Amount for all Purchased Assets is less than the Repurchase Price for all Purchased Assets (a “Margin Deficit”), then Buyer may by notice to Sellers in the form of Exhibit X (a “Margin Deficit Notice”) require Sellers to, at each Seller’s option, no later than one (1) Business Day following the receipt of a Margin Deficit Notice (the “Margin Deadline”) to the extent such Margin Deficit equals or exceeds the Minimum Transfer Amount, (i) repurchase some or all of the Purchased Assets at their respective Repurchase Prices or (ii) make a payment in reduction of the Repurchase Price of some or all of the Purchased Assets, or (iii) choose any combination of the foregoing, such that, after giving effect to such transfers, repurchases and payments, Buyer’s Margin Amount for all Purchased Assets shall be equal to or greater than the aggregate Repurchase Price for all Purchased Assets.

(b)           The failure of Buyer, on any one or more occasions, to exercise its rights hereunder, shall not change or alter the terms and conditions to which this Agreement is subject or limit the right of Buyer to do so at a later date.  Sellers and Buyer each agree that a failure or delay by Buyer to exercise its rights hereunder shall not limit or waive Buyer’s rights under this Agreement or otherwise existing by law or in any way create additional rights for Sellers.

ARTICLE 5.

INCOME PAYMENTS AND PRINCIPAL PAYMENTS

(a)           The Depository Account shall be established at the Depository pursuant to the Depository Agreement concurrently with the execution and delivery of this Agreement by Sellers and Buyer.  Buyer shall have sole dominion and control over the Depository Account, which shall be subject to the Depository Agreement.  All Income in respect of the Purchased Assets and any payments made to each Seller in respect of associated Hedging Transactions, as well as any interest received from the reinvestment of such Income, shall be deposited directly by Servicer into the Collection Account in accordance with the Interim Servicing Agreement (or the related Servicer Notice) and funds on deposit in the Collection Account will then be transferred to Depository by Servicer for deposit into the Depository Account in accordance with the applicable provisions of the Interim Servicing Agreement or the related Servicer Notice and shall be remitted by the Depository in accordance with the applicable provisions of Articles 5(c) through 5(f) of this Agreement.

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(b)           Immediately upon the sale to Buyer of any Purchased Asset that is serviced primarily by Servicer, the applicable Seller shall deliver to each Mortgagor, issuer of a participation, servicer and trustee with respect to each Purchased Asset or borrower under a Purchased Asset an irrevocable direction letter, instructing, as applicable, the Mortgagor, issuer of a participation, servicer or trustee with respect to such Purchased Asset or borrower to pay all amounts payable under the related Purchased Asset to Servicer pursuant to the Interim Servicing Agreement, for immediate deposit by Servicer into the Collection Account pursuant to the Interim Servicing Agreement.  If a Mortgagor, issuer of a participation, servicer or trustee with respect to the Purchased Asset or borrower forwards any Income with respect to a Purchased Asset to such Seller or any Affiliate of such Seller rather than directly to Servicer for immediate deposit into the Collection Account, such Seller shall, or shall cause such Affiliate to, (i) deliver an additional irrevocable direction letter to the applicable Mortgagor, issuer of a participation, servicer or trustee with respect to the Purchased Asset or borrower and make other best efforts to cause such Mortgagor, issuer of a participation, servicer or trustee with respect to the Purchased Asset or borrower to forward such amounts directly to the Collection Account and (ii) immediately deposit in the Collection Account any such amounts.  Funds on deposit in the Collection Account will then be transferred to Depository by Servicer for deposit into the Depository Account in accordance with the applicable provisions of the Interim Servicing Agreement or the related Servicer Notice.

(c)           So long as no Event of Default or Margin Deficit with respect to the Purchased Asset shall have occurred and be continuing, all Income received by the Depository in respect of the Purchased Asset (other than scheduled or unscheduled Principal Payments and net sale proceeds) during each Collection Period shall be applied by the Depository on the related Remittance Date in the following order of priority:

(i)           first, pro rata, (A) to Buyer, an amount equal to the Price Differential that has accreted and is outstanding as of such Remittance Date and (B) to any Affiliated Hedge Counterparty, any amount then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to a Purchased Asset;

(ii)          second, to Buyer, an amount equal to any other amounts then due and payable to Buyer or its Affiliates under any Transaction Document; and

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

(d)           So long as no Event of Default or Margin Deficit shall have occurred and be continuing, any Principal Payments shall be applied by the Depository on the Business Day following the Business Day on which such funds are deposited in the Depository Account in the following order of priority:

(i)           first, pro rata, (A) to Buyer, until the Purchase Price for such Purchased Asset has been reduced to the Target Price for such Purchased Asset as of the date of such payment (as determined by Buyer after giving effect to such Principal Payment and application of net sales proceeds, if applicable) and (B) solely with respect to any Hedging Transaction with an Affiliated Hedge Counterparty related to such Purchased Asset, to such Affiliated Hedge Counterparty an amount equal to any accrued and unpaid breakage costs under such Hedging Transaction related to such Purchased Asset;

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(ii)          second, to Buyer, an amount equal to any other amounts due and owing to Buyer or its Affiliates under any Transaction Document; and

(iii)         third, to the applicable Seller, the remainder of such Principal Payments or net sale proceeds, if applicable.

(e)           If Buyer shall have determined that a Margin Deficit shall have occurred, but no Event of Default shall have occurred and be continuing, all Income (including, without limitation, any Principal Payments or any other amounts received, without regard to their source) received by the Depository in respect of the Purchased Asset shall be applied by the Depository on the related Remittance Date in the following order of priority:

(i)           first, pro rata, (A) to Buyer, an amount equal to the Price Differential that has accreted and is outstanding in respect of all of the Purchased Assets as of such Business Day and (B) to any Affiliated Hedge Counterparty, any amounts then due and payable to such Affiliated Hedge Counterparty under any Hedging Transaction related to such Purchased Asset;

(ii)          second, to Buyer, an amount to reduce the Repurchase Price of the Purchased Asset until the Repurchase Price for the Purchased Asset has been reduced to the Buyer’s Margin Amount as of the date of such payment (as determined by Buyer after giving effect to all Principal Payments and application of net sale proceeds, if any, on such day);

(iii)         third, to Buyer, an amount equal to any other amounts due and owing to Buyer or its Affiliates under any Transaction Document; and

(iv)         fourth, to the applicable Seller, any remainder.

(f)           If an Event of Default shall have occurred and be continuing, all Income (including, without limitation, any Principal Payments or any other amounts received, without regard to their source) received by the Depository in respect of the Purchased Asset shall be applied by the Depository on the Business Day next following the Business Day on which such funds are deposited in the Depository Account in the following order of priority:

(i)           first, pro rata, (A) to Buyer, an amount equal to the Price Differential that has accreted and is outstanding in respect of all of the Purchased Assets as of such Business Day and (B) to any Affiliated Hedge Counterparty, any amounts then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to such Purchased Asset;

(ii)          second, to Buyer, on account of the Repurchase Price of the Purchased Asset until the Repurchase Price has been reduced to zero;

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(iii)         third, to Buyer, an amount equal to any other amounts due and owing to Buyer or its Affiliates under any Transaction Document; and

(iv)         fourth, to the applicable Seller, any remainder.

ARTICLE 6.

SECURITY INTEREST

(a)           Buyer and Sellers intend that the Transactions hereunder be sales to Buyer of the Purchased Assets and not loans from Buyer to Sellers secured by the Purchased Assets.  However, in order to preserve Buyer’s rights under this Agreement in the event that a court or other forum re-characterizes the Transactions hereunder as loans and as security for the performance by Sellers of all of each Seller’s obligations to Buyer under the Transaction Documents and the Transactions entered into hereunder, or in the event that a transfer of a Purchased Asset is otherwise ineffective to effect an outright transfer of such Purchased Asset to Buyer, 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 (as defined below) to Buyer to secure the payment of the Repurchase Price on all Transactions to which it is a party and all other amounts owing by Sellers to Buyer and any of its present or future Affiliates hereunder, including, without limitation, amounts owing pursuant to Article 25, and under the other Transaction Documents, including any obligations of Sellers under any Hedging Transaction entered into with any Affiliated Hedge Counterparty (including, without limitation, all amounts anticipated to be paid to Buyer by an Affiliated Hedge Counterparty as provided for in the definition of Repurchase Price) (collectively, the “Repurchase Obligations”).  All of Sellers’ right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, is hereinafter referred to as the “Purchased Items”:

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

(ii)          the Purchased Asset Documents, Servicing Agreements, Servicing Records, insurance relating to the Purchased Assets, and collection and escrow accounts and letters of credit relating to the Purchased Assets;

(iii)         all “general intangibles”, “accounts”, “chattel paper”, “investment property”, “instruments” and “deposit accounts”, each as defined in the UCC, relating to or constituting any and all of the foregoing; and

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

(b)           Without limiting Article 6(a) hereto, to secure payment of the Repurchase Obligations owing to Buyer, each Seller hereby grants to Buyer a security interest in all of Seller’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located, hereinafter referred to as the “Collateral”:

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(i)           the Depository Account and all monies from time to time on deposit in the Depository Account;

(ii)          the Purchased Items;

(iii)         any and all replacements, substitutions, distributions on, income relating to or proceeds of any and all of the foregoing; and

(iv)         each Seller’s right under each Hedging Transaction, if any, relating to the Purchased Assets to secure the Repurchase Obligations.

(c)           Buyer 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 Hedging Transactions, including, without limitation, with respect to the Purchased Assets and the Purchased Asset Files held by the Custodian pursuant to the Custodial Agreement.

(d)           Buyer’s security interest in the Collateral shall terminate only upon termination of each Seller’s obligations under this Agreement, all Hedging Transactions and the documents delivered in connection herewith and therewith.  Upon such termination, Buyer shall deliver to each Seller such UCC termination statements and other release documents as may be commercially reasonable and return the Purchased Assets to the applicable Seller and reconvey the Purchased Items to the applicable Seller and release its security interest in the Collateral.  For purposes of the grant of the security interest pursuant to this Article 6, this Agreement shall be deemed to constitute a security agreement under the New York Uniform Commercial Code (the “UCC”).  Buyer shall have all of the rights and may exercise all of the remedies of a secured creditor under the UCC and the other laws of the State of New York.  In furtherance of the foregoing, (a) Buyer, at Sellers’ sole cost and expense, shall cause to be filed in such locations as may be necessary to perfect and maintain perfection and priority of the security interest granted hereby, UCC financing statements and continuation statements (collectively, the “Filings”), and shall forward copies of such Filings to Sellers upon completion thereof, and (b) each Seller shall from time to time take such further actions as may be requested by Buyer to maintain and continue the perfection and priority of the security interest granted hereby (including marking its records and files to evidence the interests granted to Buyer hereunder).

(e)           Each Seller acknowledges that it has no right to service the Purchased Assets but only has rights as a party to the current Interim Servicing Agreement or any other servicing agreement with respect to the Purchased Assets.  Without limiting the generality of the foregoing and in the event that a Seller is deemed to retain any residual Servicing Rights, and for the avoidance of doubt, each Seller grants, assigns and pledges to Buyer a security interest in the Servicing Rights and proceeds related thereto and in all instances, whether now owned or hereafter acquired, now existing or hereafter created.  The foregoing provision is intended to constitute a security agreement or other arrangement or other credit enhancement related to the Agreement and Transactions hereunder as defined under Sections 101(47)(v) and 741(7)(x) of the Bankruptcy Code.

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ARTICLE 7.

PAYMENT, TRANSFER AND CUSTODY

(a)           On the Purchase Date for each Transaction, ownership of the Purchased Asset shall be transferred to Buyer or its designee (including the Custodian) against the simultaneous transfer of the Purchase Price in immediately available funds to an account of Sellers specified in the Confirmation relating to such Transaction.

(b)           On or before each Purchase Date, the applicable Seller shall deliver or cause to be delivered to Buyer or its designee the Custodial Delivery in the form attached hereto as Exhibit IV, provided, that notwithstanding the foregoing, upon request of such Seller, Buyer in its sole but good faith discretion may elect to permit such Seller to make such delivery by not later than the third (3rd) Business Day after the related Purchase Date, so long as such Seller causes an Acceptable Attorney, Title Company or other Person acceptable to Buyer to deliver to Buyer and the Custodian a Bailee Letter on or prior to such Purchase Date.  Subject to Article 7(c), in connection with each sale, transfer, conveyance and assignment of a Purchased Asset, on or prior to each Purchase Date with respect to such Purchased Asset, the applicable Seller shall deliver or cause to be delivered and released to the Custodian the following original documents (collectively, the “Purchased Asset File”), pertaining to each of the Purchased Assets identified in the Custodial Delivery delivered therewith, together with any other documentation in respect of such Purchased Asset requested by Buyer, in Buyer’s sole but good faith discretion:

With respect to each Purchased Asset that is a Senior Mortgage Loan (to the extent that the applicable Seller is the holder of the senior participation and is the custodian of the related loan documents):

(i)           The original Mortgage Note (and if applicable, one or more allonges) 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 Asset 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 Asset was acquired or originated by the Last Endorsee while doing business under another name, the signature must be in the following form:  “[Last Endorsee], formerly known as [previous name]”).

(ii)           An original of any guarantee executed in connection with the Mortgage Note (if any).

(iii)          The original Mortgage with evidence of recording thereon, or a copy thereof together with an officer’s certificate of such 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 underlying real estate directly or indirectly securing or supporting such Purchased Asset is located.

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(iv)          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 such 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 underlying real estate directly or indirectly securing or supporting such Purchased Asset is located.

(v)           The original assignment of mortgage in blank for each Purchased Asset, in form and substance acceptable for recording and otherwise acceptable to Buyer and signed in the name of the Last Endorsee (in the event that the Purchased Asset 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 Asset was acquired or originated while doing business under another name, the signature must be in the following form: “[Last Endorsee], formerly known as [previous name]”).

(vi)          The originals of all intervening assignments of mortgage with evidence of recording thereon, or copies thereof together with an officer’s certificate of such 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 underlying real estate directly or indirectly securing or supporting such Purchased Asset is located.

(vii)         The original attorney’s opinion of title and abstract of title or the original mortgagee title insurance policy, or if the original mortgagee title insurance policy has not been issued, the irrevocable marked commitment to issue the same.

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

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

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

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

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(xii)          An environmental indemnity agreement (if any).

(xiii)         An omnibus assignment in blank (if any).

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

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

(xvi)         A survey of the underlying real estate directly or indirectly securing or supporting such Purchased Asset (if any) as accepted by the title company for issuance of the Title Policy.

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

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

With respect to each Purchased Asset that is a Mezzanine Loan:

(i)             The original Mezzanine Note (and if applicable, one or more allonges) signed in connection with the Purchased Asset 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 Asset was acquired or originated by the Last Endorsee while doing business under another name, the signature must be in the following form:  “[Last Endorsee], formerly known as [previous name]”).

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

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

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

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

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

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(vii)          The assignment of Purchased Asset sufficient to transfer to Buyer all of Seller’s rights, title and interest in and to the Purchased Asset.

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

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

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

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

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

(xiii)         If no original stock certificate (or its equivalent) is provided, evidence (which may be an officer’s certificate confirming such circumstances) that the pledged ownership interests have been transferred to, or otherwise made subject to a first priority security interest in favor of, such Seller.

With respect to each Purchased Asset that is a B-Note/Junior Interest:

(i)            with respect to a B-Note, the original Mortgage Note and guarantee, if any, described in the second paragraph of this Article 7(b), and with respect to a B-Note or a junior participation interest, to the extent applicable, a copy of all of the documents described in clauses (iii), (iv), (vii), (viii), (ix), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xvii) and (xviii) of the second paragraph of this Article 7(b) with respect to a Purchased Asset.

(ii)           with respect to a Junior Interest, the original participation certificate, if any, together with the original of any participation agreement, intercreditor agreement and/or servicing agreement executed in connection with the Purchased Asset.

(iii)          the assignment of Purchased Asset, in blank, sufficient to transfer to Buyer all of such Seller’s rights, title and interest in and to the Purchased Asset.

With respect to each Purchased Asset that is a CMBS:

(i)           With respect to (A) any CMBS that is in physical form, the original certificate, bond or other physical form of such CMBS, which shall (1) be endorsed (either on the face thereof or pursuant to a separate allonge) by the most recent endorsee prior to such Seller, without recourse, to the order of such Seller and further reflect a complete, unbroken chain of endorsement from the originator to such Seller and (2) be accompanied by a separate allonge pursuant to which such Seller has endorsed such certificate, without recourse, in blank, or, (B) with respect to any CMBS registered with DTC, evidence of re-registration to the securities intermediary in Buyer’s name, denoting same with a “repo” code;

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(ii)           to the extent in such Seller’s possession or reasonably obtainable by such Seller, true and correct copies of the pooling and servicing agreement or indenture and all other material documents (including, without limitation, opinions of counsel) or agreements related to the creation or issuance of the CMBS or otherwise affecting the rights (including, without limitation, the security interests) of any holder thereof;

(iii)          to the extent in such Seller’s possession or reasonably obtainable by such Seller, as applicable, true and correct copies of any assignment, assumption, modification, consolidation or extension made prior to the Purchase Date in respect of any document or agreement referred to in clause (ii) above, in each case, if the document or agreement being assigned, assumed, modified, consolidated or extended is recordable, with evidence of recording thereon (unless the particular item has not been returned from the applicable recording office);

(iv)          as applicable, an original assignment of each agreement referred to in clause (iii) above, in recordable form if the agreement being assigned is a recordable document, executed in blank by such Seller;

(v)           with respect to any CMBS that is in physical form, a blank endorsement which, when properly completed and delivered, is sufficient to cause Buyer to become the registered holder of the CMBS; and

(vi)          any other documents that Buyer may reasonably request such Seller to deliver to Custodian from time to time with respect to any CMBS.

With respect to each Purchased Asset that is a CRE CDO:

(i)           With respect to any (A) CRE CDO that is in physical form, the original certificate, bond or other physical form of such CRE CDO, which shall (1) be endorsed (either on the face thereof or pursuant to a separate allonge) by the most recent endorsee prior to such Seller, without recourse, to the order of such Seller and further reflect a complete, unbroken chain of endorsement from the originator to such Seller and (2) be accompanied by a separate allonge pursuant to which such Seller has endorsed such certificate, without recourse, in blank, or, (B) with respect to any CRE CDO registered with DTC, evidence of re-registration to the securities intermediary in Buyer’s name denoting same with a “repo” code;

(ii)           to the extent in such Seller’s possession or reasonably obtainable by such Seller, true and correct copies of the indenture and all other material documents (including, without limitation, opinions of counsel) or agreements related to the creation or issuance of the CRE CDO or otherwise affecting the rights (including, without limitation, the security interests) of any holder thereof;

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(iii)          to the extent in such Seller’s possession or reasonably obtainable by such Seller, as applicable, true and correct copies of any assignment, assumption, modification, consolidation or extension made prior to the Purchase Date in respect of any document or agreement referred to in clause (ii) above, in each case, if the document or agreement being assigned, assumed, modified, consolidated or extended is recordable, with evidence of recording thereon (unless the particular item has not been returned from the applicable recording office);

(iv)          as applicable, an original assignment of each agreement referred to in clause (iii) above, in recordable form if the agreement being assigned is a recordable document, executed in blank by such Seller;

(v)           with respect to any CRE CDO that is in physical form, a blank endorsement which, when properly completed and delivered, is sufficient to cause Buyer to become the registered holder of the CRE CDO; and

(vi)          any other documents that Buyer may reasonably request such Seller to deliver to Custodian from time to time with respect to any CRE CDO.

With respect to each Purchased Asset that is of the type described in clause (viii) of the definition of Eligible Asset:  any of the documentation referred to above in this Article 7(b) or other documentation with respect to such Eligible Asset that is determined by Buyer to be necessary to effectuate the sale, transfer, conveyance and assignment of such Eligible Asset.

From time to time, the applicable Seller shall forward to the Custodian additional original documents or additional documents evidencing any assumption, modification, consolidation or extension of a Purchased Asset approved in accordance with the terms of this Agreement, and upon receipt of any such other documents, the Custodian shall hold such other documents as Buyer shall request from time to time.  With respect to any documents that have been delivered or are being delivered to recording offices for recording and have not been returned to such Seller in time to permit their delivery hereunder at the time required, in lieu of delivering such original documents, such 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.  The applicable Seller shall deliver such original documents to the Custodian promptly when they are received.  With respect to all of the Purchased Assets delivered by a Seller to Buyer or its designee (including the Custodian), such Seller shall execute an omnibus power of attorney substantially in the form of Exhibit V attached hereto irrevocably appointing Buyer its attorney-in-fact with full power to (i) complete and record each assignment of mortgage, (ii) complete the endorsement of each Mortgage Note or Mezzanine Note, (iii) take any action (including exercising voting and/or consent rights) with respect to CMBS, Junior Interests, or intercreditor or participation agreements, (iv) the preparation and filing, in form and substance satisfactory to Buyer, of such financing statements, continuation statements, and other UCC forms, as Buyer may from time to time, reasonably consider necessary to create, perfect, and preserve Buyer’s security interest in the Purchased Assets, and (v) take such other steps as may be necessary or desirable to enforce Buyer’s rights against, under or with respect to such Purchased Assets and the related Purchased Asset Files and the Servicing Records.  Buyer shall deposit the Purchased Asset Files representing the Purchased Assets, or direct that the Purchased Asset Files be deposited directly, with the Custodian.  The Purchased Asset Files shall be maintained in accordance with the Custodial Agreement.  Any Purchased Asset Files not delivered to Buyer or its designee (including the Custodian) are and shall be held in trust by the applicable Seller or its designee for the benefit of Buyer as the owner thereof.  Such Seller or its designee shall maintain a copy of the Purchased Asset File and the originals of the Purchased Asset File not delivered to Buyer or its designee.  The possession of the Purchased Asset File by the applicable Seller or its designee is at the will of Buyer for the sole purpose of servicing the related Purchased Asset, and such retention and possession by such Seller or its designee is in a custodial capacity only.  The books and records (including, without limitation, any computer records or tapes) of such Seller or its designee shall be marked appropriately to reflect clearly the sale of the related Purchased Asset to Buyer.  The applicable Seller or its designee (including the Custodian) shall release its custody of the Purchased Asset File only in accordance with written instructions from Buyer, unless such release is required as incidental to the servicing of the Purchased Assets, is in connection with a repurchase of any Purchased Asset by such Seller or as otherwise required by law.

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(c)           Upon the occurrence and during the continuation of an Event of Default, subject to the provisions of the Purchased Asset Documents, Buyer shall be entitled to exercise all voting and corporate rights with respect to the Purchased Assets without regard to the applicable Seller’s instructions (including, but not limited to, if an Act of Insolvency shall occur with respect to such Seller, to the extent such Seller controls or is entitled to control selection of any servicer, Buyer may transfer any or all of such servicing to an entity satisfactory to Buyer).  The applicable Seller shall give prior written notice to Buyer of its intention to exercise any voting or corporate rights with respect to a Purchased Asset that could materially impair the Market Value of the Purchased Asset.

(d)           Notwithstanding the provisions of Article 7(b) above requiring the execution of the Custodial Delivery and corresponding delivery of the Purchased Asset File to the Custodian on or prior to the related Purchase Date, with respect to each Transaction involving a Purchased Asset that is identified in the related Confirmation as a “Table Funded” Transaction, the applicable Seller shall, in lieu of effectuating the delivery of all or a portion of the Purchased Asset File on or prior to the related Purchase Date, (i) deliver to the Custodian by facsimile on or before the related Purchase Date for the Transaction (A) the promissory note(s), original stock certificate or participation certificate in favor of such Seller evidencing the making of the Purchased Asset, with such Seller’s endorsement of such instrument to Buyer, (B) the mortgage, security agreement or similar item creating the security interest in the related collateral and the applicable assignment document evidencing the transfer to Buyer, (C) such other components of the Purchased Asset File as Buyer may require on a case by case basis with respect to the particular Transaction, and (D) evidence satisfactory to Buyer that all documents necessary to perfect such Seller’s (and, by means of assignment to Buyer on the Purchase Date, Buyer’s) interest in the Collateral for the Purchased Asset, and (ii) not later than the third (3rd) Business Day following the Purchase Date, deliver to Buyer the Custodial Delivery and to the Custodian the entire Purchased Asset File.

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ARTICLE 8.

SALE, TRANSFER, HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS

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

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

ARTICLE 9.

RESERVED

ARTICLE 10.

REPRESENTATIONS AND WARRANTIES

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

(b)           In addition to the representations and warranties in subsection (a) above, each Seller represents and warrants to Buyer as of the date of this Agreement and will be deemed to represent and warrant to Buyer as of the Purchase Date for the purchase of any Purchased Assets by Buyer from each Seller and any Transaction thereunder and covenants that at all times while this Agreement and any Transaction thereunder is in effect, unless otherwise stated herein:

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(i)           Organization.  Seller is duly organized, validly existing and in good standing under the laws and regulations of the jurisdiction of Seller’s incorporation or organization, as the case may be, 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 failure to so qualify could not be reasonably likely to have 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 this Agreement and the other Transaction Documents.

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

(iii)         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 Transaction Documents applicable to it to which it is a party.

(iv)         Non-Contravention.  Neither the execution and delivery of the Transaction Documents, nor consummation by Seller of the transactions contemplated by the Transaction Documents (or any of them), nor compliance by Seller with the terms, conditions and provisions of the Transaction Documents (or any of them) will conflict with or result in a breach of any of the terms, conditions or provisions of (i) the organizational documents of Seller, (ii) any contractual obligation to which Seller is now a party or the rights under which have been assigned to Seller or the obligations under which have been assumed by Seller or to which the assets of Seller are subject or constitute a default thereunder, or result thereunder in the creation or imposition of any lien upon any of the assets of Seller, other than pursuant to the Transaction Documents, any judgment or order, writ, injunction, decree or demand of any court applicable to Seller, or (iv) any applicable Requirement of Law, in the case of clauses (ii)-(iv) above, to the extent that such conflict or breach would have a Material Adverse Effect upon Seller’s ability to perform its obligations hereunder.

(v)          Litigation; Requirements of Law.  As of the date hereof and as of the Purchase Date for any Transaction hereunder, there is no action, suit, proceeding, investigation, or arbitration pending or, to the best knowledge of Seller, threatened against Seller, any Affiliate of Seller or any of their respective assets, nor is there any action, suit, proceeding, investigation, or arbitration pending or threatened against Seller or any Affiliate of Seller that may result in any Material Adverse Effect.  Seller is in compliance in all material respects with all Requirements of Law.  Neither Seller nor any of its Affiliates is in default in any material respect with respect to any judgment, order, writ, injunction, decree, rule or regulation of any arbitrator or Governmental Authority.

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

(vii)        Good Title to Purchased Assets.  Immediately prior to the purchase of any Purchased Assets by Buyer from Seller, such Purchased Assets are free and clear of any lien, encumbrance or impediment to transfer (including any “adverse claim” as defined in Article 8-102(a)(1) of the UCC), and Seller is the record and beneficial owner of and has good and marketable title to and the right to sell and transfer such Purchased Assets to Buyer and, upon transfer of such Purchased Assets to Buyer, Buyer shall be the owner of such Purchased Assets free of any adverse claim.  In the event the related Transaction is recharacterized as a secured financing of the Purchased Assets, the provisions of this Agreement are effective to create in favor of the Buyer a valid security interest in all rights, title and interest of Seller in, to and under the Purchased Assets and the Buyer shall have a valid, perfected first priority security interest in the Purchased Assets (and without limitation on the foregoing, the Buyer, as entitlement holder, shall have a “security entitlement” to the Purchased Assets).

(viii)       No Decline in Market Value; No Margin Deficit; No Defaults.  Seller is not aware of any post-Transaction facts or circumstances that are reasonably likely to cause or have caused the Market Value of any Purchased Asset to decline.  No Margin Deficit exists and no Default or Event of Default has occurred or exists under or with respect to the Transaction Documents.

(ix)          Responsible Officers.  The responsible officers of Seller are listed on, and true signatures of such responsible officers are set forth on, Exhibit II attached to this Agreement.

(x)           Representations and Warranties Regarding Purchased Assets; Delivery of Purchased Asset File.

(A)          As of the date hereof, Seller has not assigned, pledged, or otherwise conveyed or encumbered any Purchased Asset to any other Person, and immediately prior to the sale of such Purchased Asset to Buyer, Seller was the sole owner of such Purchased Asset and had good and marketable title thereto, free and clear of all liens, in each case except for (1) liens to be released simultaneously with the sale to Buyer hereunder and (2) liens granted by Seller in favor of the counterparty to any Hedging Transaction, solely to the extent such liens are expressly subordinate to the rights and interests of Buyer hereunder.

(B)           The provisions of this Agreement and the related Confirmation are effective to either constitute a sale of Purchased Items to Buyer or to create in favor of Buyer a legal, valid and enforceable security interest in all right, title and interest of Seller in, to and under the Purchased Items.

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(C)           Upon receipt by the Custodian of each Mortgage Note, Mezzanine Note, B-Note or Junior Interest certificate, endorsed in blank by a duly authorized officer of Seller, either a purchase shall have been completed by Buyer of such Mezzanine Note, B-Note or Junior Interest certificate, as applicable, or Buyer shall have a valid and fully perfected first priority security interest in all right, title and interest of Seller in the Purchased Items described therein.

(D)           Each of the representations and warranties made in respect of the Purchased Assets pursuant to Exhibit VI are true, complete and correct, except to the extent disclosed in a Requested Exceptions Report.

(E)           Upon the filing of financing statements on Form UCC-1 naming Buyer as “Secured Party”, Seller as “Debtor” and describing the Purchased Items, in the jurisdiction and recording office listed on Exhibit XI 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.

(F)           Upon execution and delivery of the Depository Agreement, Buyer shall either be the owner of, or have 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 or any after-acquired property related to such Purchased Items.  Except to the extent disclosed in a Requested Exceptions Report, Seller or its designee is in possession of a complete, true and accurate Purchased Asset File with respect to each Purchased Asset, except for such documents the originals of which have been delivered to the Custodian.

(xi)           Adequate Capitalization; No Fraudulent Transfer.  Seller has, as of such Purchase Date, adequate capital for the normal obligations 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.

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(xii)          No Conflicts or Consents.  Neither the execution and delivery of this Agreement and the other Transaction 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 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 Transaction Documents.  No consent, approval, authorization, or order of any third party is required in connection with the execution and delivery by Seller of the Transaction Documents to which it is a party or to consummate the transactions contemplated hereby or thereby which has not already been obtained.

(xiii)         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, the execution, delivery and performance of any Transaction Document to which Seller is or will be a party, (ii) the legality, validity, binding effect or enforceability of any such Transaction 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).

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

(xv)          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 Assets, (ii) no agreements on the part of Seller to issue, sell or distribute the Purchased Assets, and (iii) no obligations on the part of Seller (contingent or otherwise) to purchase, redeem or otherwise acquire any securities or interest therein, except as contemplated by the Transaction Documents.

(xvi)         Federal Regulations.  Seller is not required to register as an “investment company,” or a company “controlled by an investment company,” within the meaning of the Investment Company Act of 1940, as amended.  Seller is not 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 2005, as amended.

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

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

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(xix)          Solvency.  Neither the Transaction 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 Purchased Assets subject hereto and the obligation to repurchase such Purchased Assets is not undertaken with the intent to hinder, delay or defraud any of Seller’s creditors.  As of the Purchase 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 Purchased Assets pursuant hereto and the obligation to repurchase such Purchased 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.  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.  Seller has only entered into agreements on terms that would be considered arm’s length and otherwise on terms consistent with other similar agreements with other similarly situated entities.  On the Purchase Date for each Transaction, the Buyer shall be deemed to repeat all of the foregoing representations made by it.

(xx)           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 violate, or be inconsistent with, any provision of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

(xxi)          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.

(xxii)         Financial Information.  All financial data concerning Seller and the Purchased Assets that has been delivered by or on behalf of Seller to Buyer is true, complete and correct in all material respects.  All financial data concerning Seller has been prepared fairly in accordance with GAAP.  All financial data concerning the Purchased Assets has been prepared in accordance with standard industry practices.  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 Assets, or in the results of operations of Seller, which change is reasonably likely to have a Material Adverse Effect on Seller.

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(xxiii)        Hedging Transactions.  To the actual knowledge of Seller, as of the Purchase Date for any Purchased Asset that is subject to a Hedging Transaction, each such Hedging Transaction is in full force and effect in accordance with its terms, each counterparty thereto is an Affiliated Hedge Counterparty or a Qualified Hedge Counterparty, and no “Termination Event”, “Event of Default”, “Potential Event of Default” or any similar event, however denominated, has occurred and is continuing with respect thereto.

(xxiv)        Servicing Agreements.  Seller has delivered to Buyer all Servicing Agreements pertaining to the Purchased 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.

(xxv)         No Reliance.  Seller has made its own independent decisions to enter into the Transaction Documents and 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 Buyer as to any aspect of the Transactions, including without limitation, the legal, accounting or tax treatment of such Transactions.

(xxvi)        Patriot Act.

(a)           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, 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.

(b)           Seller agrees that, from time to time upon the prior written request of Buyer, it shall (i) execute and deliver such further documents, provide such additional information and reports and perform such other acts as Buyer may reasonably request in order to insure compliance with the provisions hereof (including, without limitation, compliance with the USA Patriot Act of 2001 and to fully effectuate the purposes of this Agreement and (ii) provide such opinions of counsel concerning matters relating to this Agreement as Buyer may reasonably request; provided, however, that nothing in this Section 9(b)(xxvi) shall be construed as requiring Buyer to conduct any inquiry or decreasing Seller’s responsibility for its statements, representations, warranties or covenants hereunder.  In order to enable Buyer and its Affiliates to comply with any anti-money laundering program and related responsibilities including, but not limited to, any obligations under the USA Patriot Act of 2001 and regulations thereunder, Seller on behalf of itself and its Affiliates makes the following representations and covenants to Buyer and its Affiliates (for purposes of this Section 9(b)(xxvi), the “Seller Entities”) that neither Seller, nor, to Seller’s actual knowledge, any of its Affiliates, is a Prohibited Investor, and Seller is not acting on behalf of or for the benefit of any Prohibited Investor.  Seller agrees to promptly notify Buyer or a person appointed by Buyer to administer their anti-money laundering program, if applicable, of any change in information affecting this representation and covenant.

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(xxvii)       Environmental Matters.

(a)           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;

(b)           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;

(c)           Seller has not received any notice of violation, alleged violation, non-compliance, liability or potential liability under any Environmental Law, nor does Seller have knowledge that any such notice will be received or is being threatened;

(d)           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;

(e)           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;

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(f)           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

(g)           Each of the representations and warranties set forth in the preceding clauses (a) through (f) is true and correct with respect to each parcel of real property owned or operated by Seller.

(xxviii)      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 Buyer is a Subsidiary, or of any Subsidiary, of a bank holding company of which Buyer is a Subsidiary, of any bank at which Buyer maintains a correspondent account or of any lender which maintains a correspondent account with Buyer

(xxix)         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 in violation 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.

(xxx)          Notice Address; Jurisdiction of Organization.  On the date of this Agreement, Seller’s address for notices is as specified on Annex I.  Capital Trust Inc.’s jurisdiction of organization is Maryland and CT BSI Funding Corp.’s jurisdiction of organization is Delaware.  The location where Seller keeps its books and records, including all computer tapes and records relating to the Collateral and Purchased Items, is its notice address.  Seller may change its address for notices and for the location of its books and records by giving Buyer written notice of such change.

(xxxi)         Anti-Money Laundering Laws.  Seller either (1) is entirely exempt from or (2) has otherwise fully complied with all applicable anti-money laundering laws and regulations (collectively, the “Anti-Money Laundering Laws”), by (A) establishing an adequate anti-money laundering compliance program as required by the Anti-Money Laundering Laws, (B) conducting the requisite due diligence in connection with the origination of each Purchased Asset for purposes of the Anti-Money Laundering Laws, including with respect to the legitimacy of the related obligor (if applicable) and the origin of the assets used by such obligor to purchase the property in question, and (C) maintaining sufficient information to identify the related obligor (if applicable) for purposes of the Anti-Money Laundering Laws.

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(xxxii)        Ownership.  CT BSI Funding Corp. is and shall remain at all times a wholly owned subsidiary of Capital Trust, Inc..

ARTICLE 11.

NEGATIVE COVENANTS OF EACH SELLER

On and as of the date hereof and each Purchase Date and until this Agreement is no longer in force with respect to any Transaction, neither Seller shall, without the prior written consent of Buyer:

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

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

(c)           modify in any material respect any Servicing Agreements to which it is a party, without the consent of Buyer in its sole and absolute discretion;

(d)           create, incur or permit to exist any lien, encumbrance or security interest in or on any of the Purchased Assets, the other Collateral or Purchased Items, other than the security interest granted by Sellers pursuant to Article 6 of this Agreement;

(e)           create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for the following, hereinafter referred to as the “Permitted Liens”:

(i)           Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided, that adequate reserves with respect thereto are maintained on the books of the related borrower or its subsidiaries, as the case may be, in conformity with GAAP; and

(ii)          Liens created pursuant to the Transaction Documents;

(f)           enter into any transaction of merger or consolidation or amalgamation, that is likely to have a material adverse effect on the creditworthiness or financial condition of Seller, or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or dissolution), sell all or substantially all of its assets without the consent of Buyer in its sole and absolute discretion;

(g)           consent or assent to any amendment or supplement to, or termination of, any note, loan agreement, mortgage or guarantee relating to the Purchased Assets or other agreement or instrument relating to the Purchased Assets other than in accordance with Article 27;

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(h)           permit the organizational documents or organizational structure of either Seller to be amended without the prior written consent of Buyer in its sole and absolute discretion;

(i)            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 Buyer therein under this Agreement and the other Transaction Documents unless such right or interest becomes a Purchased Asset hereunder;

(j)            use any part of the proceeds of any Transaction hereunder for any purpose which violates, or would be inconsistent with, the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System;

(k)           enter into any Hedging Transaction with respect to any Purchased Asset with any entity that is not an Affiliated Hedge Counterparty or a Qualified Hedge Counterparty;

(l)            permit Seller to commit to or enter into (i) any Transaction hereunder, (ii) the purchase of any other asset, or (iii) incur any Senior Recourse Indebtedness that is senior to or pari passu with the obligations of Seller under this Agreement or any other Transaction Document, in the event that the ratio of Seller’s Liquidity to Senior Recourse Indebtedness is less than five percent (5.00%);

(m)          permit Seller’s EBITDA to Fixed Charge Ratio as of the last day of any fiscal quarter to be less than 1.20:1.00;

(n)           permit Seller’s ratio of Total Indebtedness to Tangible Net Worth at any time to be greater than 10.00:1.00;

(o)           permit Seller’s ratio of Total Non-Securitized Indebtedness to Tangible Net Worth at any time to be greater than 4.00:1.00; and

(p)           permit Seller’s Tangible Net Worth at any time to be less than $360,500,000.

Compliance with covenants (l) through (p) in this Article 11 must be evidenced by financial statements and by a compliance certificate furnished together therewith as further provided in Article 12(j)(ii) below, and compliance with all such covenants are subject to verification by Buyer.  All of the financial tests and covenants in this Agreement will be measured based on the consolidated position of Capital Trust, Inc. and its Subsidiaries; provided, however, that Section 11(e) shall apply only to CT BSI Funding Corp.

ARTICLE 12.

AFFIRMATIVE COVENANTS OF EACH SELLER

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

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

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

(d)           Seller shall notify Buyer and the Depository of the occurrence of any Default or Event of Default with respect to Seller as soon as possible but in no event later than the immediately succeeding Business Day after obtaining actual knowledge of such event.

(e)           Seller shall cause the special servicer rating of the special servicer with respect to all mortgage loans underlying Purchased Assets to be no lower than “average” by S&P to the extent Seller controls or is entitled to control the selection of the special servicer.  In the event the special servicer rating with respect to any Person acting as special servicer for any mortgage loans underlying Purchased Assets shall be below “average” by S&P, or if an Act of Insolvency occurs with respect to Seller, Buyer shall be entitled to transfer special servicing with respect to all Purchased Assets to an entity satisfactory to Buyer, to the extent Seller controls or is entitled to control the selection of the special servicer.

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

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

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

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(i)           At any time from time to time upon the reasonable request of Buyer, at the sole expense of Seller, Seller will promptly and duly execute and deliver such further instruments and documents and take such further actions as Buyer may request for the purposes of obtaining or preserving the full benefits of this Agreement including the first priority security interest granted hereunder and of the rights and powers herein granted (including, among other things, filing such UCC financing statements as Buyer may request).  If any amount payable under or in connection with any of the Collateral or Purchased Items shall be or become evidenced by any promissory note, other instrument or chattel paper, such note, instrument or chattel paper shall be immediately delivered to Buyer, duly endorsed in a manner satisfactory to Buyer, to be itself held as a Purchased Item and/or Collateral, as applicable, pursuant to this Agreement, and the documents delivered in connection herewith.

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

(i)           Within fifteen (15) calendar days after each month-end, a monthly reporting package substantially in the form of Exhibit III-A attached hereto (the “Monthly Reporting Package”);

(ii)          Within forty-five (45) calendar days after the last day of each of the first three fiscal quarters in any fiscal year, a quarterly reporting package substantially in the form of Exhibit III-B attached hereto (the “Quarterly Reporting Package”);

(iii)         Within ninety (90) calendar days after the last day of its fiscal year, an annual reporting package substantially in the form of Exhibit III-C attached hereto (the “Annual Reporting Package”); and

(iv)         Upon Buyer’s request:

(A)           a listing of any changes in Hedging Transactions with Qualified Hedge Counterparties, the names of the Qualified Hedge Counterparties and the material terms of such Hedging Transactions, delivered within ten (10) days after Buyer’s request; and

(B)           copies of Seller’s Federal Income Tax returns, if any, delivered within thirty (30) days after the earlier of (A) filing or (B) the last filing extension period.

(v)           Notwithstanding anything to the contrary in Article 12, if Seller fails to deliver the complete Monthly Reporting Package described in clause (j)(i) above as a result of the failure of the related borrower to deliver any information as required by the underlying loan documents, then Seller shall immediately repurchase the related Purchased Asset at the Repurchase Price; provided, however, that Seller shall have a period of seven (7) calendar days from the date of delivery of the incomplete Monthly Reporting Package to provide any missing information.

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(k)          Seller shall make a representative available to Buyer every month for attendance at a telephone conference, the date of which to be mutually agreed upon by Buyer and Seller, regarding the status of each Purchased Asset, Seller’s compliance with the requirements of Articles 11 and 12, and any other matters relating to the Transaction Documents or Transactions that Buyer wishes to discuss with Seller.

(l)           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 fairly 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.

(m)         Seller shall observe, perform and satisfy all the terms, provisions, covenants and conditions required to be observed, performed or satisfied by it, and shall pay when due all costs, fees and expenses required to be paid by it, under the Transaction Documents.  Seller shall pay and discharge all taxes, levies, liens and other charges on its assets and on the Collateral that, in each case, in any manner would create any lien or charge upon the Collateral, other than any such taxes that 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.

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

(o)          Seller shall provide Buyer and its Affiliates with reasonable access plus any such additional reports as Buyer may request.  Upon two (2) Business Days’ prior notice (unless a Default shall have occurred and is continuing, in which case, no prior notice shall be required), during normal business hours, Seller shall allow Buyer to review any operating statements, occupancy status and other property level information with respect to the underlying real estate directly or indirectly securing or supporting the Purchased Asset that either is in Seller’s possession or is available to Seller.

(p)          Seller shall:

(i)           not (a) cause or permit any change to be made in its name, organizational identification number, identity or corporate structure, or the places where the books and records pertaining to the Purchased Asset are held, (b) cause or permit the opening of any new chief executive office or the closing of any such office of Seller, or (c) change its jurisdiction of organization, unless it shall have provided Buyer thirty (30) days’ prior written notice of such change and shall have first taken all action required by Buyer for the purpose of perfecting or protecting the lien and security interest of Buyer established hereunder;

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(ii)          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

(iii)         not cause or permit any Change of Control without providing Buyer with at least ten (10) Business Days prior written notice thereof.

(q)           If the Purchased Asset is not serviced by Buyer, then, subject to the terms of the related Serving Agreement, Seller shall cause each servicer of the Purchased Asset to provide to Buyer and to the Custodian via electronic transmission, promptly upon request by Buyer a Servicing Tape for the month (or any portion thereof) prior to the date of Buyer’s request; provided that to the extent any servicer does not provide any such Servicing Tape, Seller shall prepare and provide to Buyer and the Custodian via electronic transmission a remittance report containing the servicing information that would otherwise be set forth in the Servicing Tape; provided, further, that regardless of whether Seller at any time delivers any such remittance report, Seller shall at all times use commercially reasonable efforts to cause each servicer to provide each Servicing Tape in accordance with this Article 12(q).

(r)           With respect to the Purchased Asset to be purchased hereunder, Seller shall notify Buyer in writing of the creation of any right or interest in the Purchased Asset or related Underlying Mortgaged Property that is senior to or pari passu with the rights and interests that are to be transferred to Buyer under this Agreement and the other Transaction Documents (other than those created by Buyer or Buyer’s Affiliates), and whether any such interest will be held or obtained by Seller or an Affiliate of Seller.

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

(t)           Seller shall notify Buyer in writing of any margin call in excess of $7,500,000 that is delivered to it under any other repurchase agreement, such notice to be provided to Buyer as soon as possible but in no event later than the immediately succeeding Business Day after obtaining actual knowledge of such margin call.

ARTICLE 13.

EVENTS OF DEFAULT; REMEDIES

(a)           Each of the following events shall constitute an “Event of Default” under this Agreement:

(i)            any Seller shall fail to repurchase Purchased Assets upon the applicable Repurchase Date;

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(ii)           Buyer shall fail to receive on any Remittance Date the accreted value of the Price Differential (less any amount of such Price Differential previously paid by Seller to Buyer) (including, without limitation, in the event the Income paid or distributed on or in respect of the Purchased Assets is insufficient to make such payment and Seller does not make such payment or cause such payment to be made) (except that such failure shall not be an Event of Default by any Seller if sufficient Income, including Principal Payments which would otherwise be remitted to a Seller pursuant to Article 5 of this Agreement, is on deposit in the Depository Account and the Depository fails to remit such funds to Buyer);

(iii)          any Seller shall fail to cure any Margin Deficit, to the extent such Margin Deficit equals or exceeds the Minimum Transfer Amount, in accordance with Article 4 of this Agreement;

(iv)          any Seller shall fail to make any payment not otherwise addressed under this Article 13(a) owing to Buyer that has become due, whether by acceleration or otherwise under the terms of this Agreement, which failure is not remedied within five (5) Business Days of notice thereof;

(v)           any Seller shall default in the observance or performance of any agreement contained in Article 11 of this Agreement and such default shall not be cured within ten (10) Business Days after notice by Buyer to such Seller;

(vi)          an Act of Insolvency occurs with respect to a Seller;

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

(viii)        the Custodial Agreement, the Depository Agreement or any other Transaction Document or a replacement therefor acceptable to Buyer shall for whatever reason be terminated or cease to be in full force and effect, or the enforceability thereof shall be contested by Seller;

(ix)           any Seller shall be in default under (i) any Indebtedness of such Seller, which default (1) involves the failure to pay a matured obligation in excess of $5,000,000, 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 $5,000,000; or (ii) any other material contract to which such 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 $5,000,000;

(x)           any Seller shall be in default under any Indebtedness of such Seller to Buyer or any of its present or future Affiliates, 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;

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(xi)           (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 that is not exempt from such Sections of ERISA and the Code, (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 such Seller or any ERISA Affiliate, (iii) a Reportable Event (as referenced in Section 4043(b)(3) of ERISA) 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;

(xii)          either (A) the Transaction Documents shall for any reason not cause, or shall cease to cause, Buyer to be the owner free of any adverse claim of any of the Purchased Assets, and such condition is not cured by a Seller within five (5) Business Days after notice thereof from Buyer to such Seller, or (B) if a Transaction is recharacterized as a secured financing, and the Transaction Documents with respect to any Transaction shall for any reason cease to create and maintain a valid first priority security interest in favor of Buyer in any of the Purchased Assets;

(xiii)         an “Event of Default,” “Termination Event,” “Potential Event of Default” or other default or breach, however defined therein, occurs under any Hedging Transaction on the part of a Seller, or the counterparty to such Seller on any such Hedging Transaction with a Qualified Hedge Counterparty ceases to be a Qualified Hedge Counterparty, that is otherwise not cured within any applicable cure period thereunder or, if no cure period exists thereunder, which is not cured by such Seller within five (5) Business Days after notice thereof from an Affiliated Hedge Counterparty or Qualified Hedge Counterparty to such Seller;

(xiv)         any governmental, regulatory, or self-regulatory authority shall have taken any action to remove, limit, restrict, suspend or terminate the rights, privileges, or operations of a Seller, which suspension has a Material Adverse Effect in the determination of Buyer and that is not cured by Seller, within fifteen (15) Business Days after notice thereof from Buyer to Seller;

(xv)          any condition shall exist that constitutes a Material Adverse Effect in Buyer’s sole discretion exercised in good faith and that is not cured by Seller, within three (3) Business Days after notice thereof from Buyer to Seller;

(xvi)         any representation made by a Seller to Buyer shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated (other than the representations and warranties of Seller set forth in Exhibit VI and Article 10(b)(x)(D));

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

(xviii)       if any Seller shall breach or fail to perform any of the terms, covenants, obligations or conditions of this Agreement, other than as specifically otherwise referred to in this definition of “Event of Default”, and such breach or failure to perform is not remedied within the earlier of fifteen (15) days after (a) delivery of notice thereof to such Seller by Buyer, or (b) actual knowledge on the part of such Seller of such breach or failure to perform; provided, that, if Buyer determines, in its sole discretion, that any such breach is capable of being cured and such Seller is diligently and continuously pursuing such a cure in good faith but is not able to do so on a timely basis, such Seller shall have an additional period of time, not to exceed thirty (30) additional days, within which to complete such cure.

(b)           After the occurrence and during the continuance of an Event of Default, each Seller hereby appoints Buyer as attorney-in-fact of such Seller for the purpose of carrying out the provisions of this Agreement and taking any action and executing or endorsing any instruments that Buyer may deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest.  If an Event of Default shall occur and be continuing with respect to such Seller, the following rights and remedies shall be available to Buyer:

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

(ii)           If Buyer exercises or is deemed to have exercised the option referred to in Article 13(b)(i) of this Agreement:

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

(B)           to the extent permitted by applicable law, the Repurchase Price with respect to each Transaction (determined as of the Accelerated Repurchase Date) shall be increased by the aggregate amount obtained by daily application of, on a 360 day per year basis for the actual number of days during the period from and including the Accelerated Repurchase Date to but excluding the date of payment of the Repurchase Price (as so increased), (x) the Pricing Rate for such Transaction multiplied by (y) the Repurchase Price for such Transaction (decreased by (I) any amounts actually remitted to Buyer by the Depository or each Seller from time to time pursuant to Article 5 of this Agreement and applied to such Repurchase Price, and (II) any amounts applied to the Repurchase Price pursuant to Article 13(b)(iii) of this Agreement); and

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(C)           the Custodian shall, upon the request of Buyer, deliver to Buyer all instruments, certificates and other documents then held by the Custodian relating to the Purchased Assets.

(iii)           Upon the occurrence of an Event of Default with respect to a Seller, Buyer may (A) immediately sell, at a public or private sale in a commercially reasonable manner and at such price or prices as Buyer may deem satisfactory any or all of the Purchased Assets, and/or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Assets, to give Sellers credit for such Purchased Assets in an amount equal to the Market Value of such Purchased Assets against the aggregate unpaid Repurchase Price for such Purchased Assets and any other amounts owing by Sellers under the Transaction Documents.  The proceeds of any disposition of Purchased Assets effected pursuant to this Article 13(b)(iii) shall be applied, (u) first, to the costs and expenses incurred by Buyer in connection with such Seller’s default; (v) second, to consequential damages, including, but not limited to, costs of cover and/or Hedging Transactions, if any; (w) third, to the Repurchase Price; (x) fourth, to any Breakage Costs or any other outstanding obligation of Sellers to Buyer; and (y) fifth, to return any excess to Sellers.

(iv)           The parties recognize that it may not be possible to purchase or sell all of the Purchased Assets on a particular Business Day, or in a transaction with the same purchaser, or in the same manner because the market for such Purchased Assets may not be liquid.  In view of the nature of the Purchased Assets, the parties agree that liquidation of a Transaction or the Purchased Assets does not require a public purchase or sale and that a good faith private purchase or sale shall be deemed to have been made in a commercially reasonable manner.  Accordingly, Buyer may elect, in its sole discretion, the time and manner of liquidating any Purchased Assets, and nothing contained herein shall (A) obligate Buyer to liquidate any Purchased Assets on the occurrence and during the continuance of an Event of Default or to liquidate all of the Purchased Assets in the same manner or on the same Business Day or (B) constitute a waiver of any right or remedy of Buyer.

(v)           Each Seller shall be liable to Buyer and its Affiliates and shall indemnify Buyer and its Affiliates for (A) the amount of all actual out-of-pocket expenses, including reasonable legal fees and expenses, actually incurred by Buyer in connection with or as a consequence of an Event of Default with respect to Seller and (B) all costs incurred by Buyer in connection with Hedging Transactions in the event that such Seller, from and after an Event of Default, takes any action to impede or otherwise affect Buyer’s remedies under this Agreement.

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(vi)           Buyer shall have, in addition to its rights and remedies under the Transaction Documents, all of the rights and remedies provided by applicable federal, state, foreign (where relevant), 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 each Seller.  Without limiting the generality of the foregoing, Buyer shall be entitled to set off the proceeds of the liquidation of the Purchased Assets against all of such Seller’s obligations to Buyer under this Agreement, without prejudice to Buyer’s right to recover any deficiency.

(vii)           Subject to the notice and cure periods set forth herein, Buyer may exercise any or all of the remedies available to Buyer immediately upon the occurrence of an Event of Default with respect to any Seller 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 that Buyer may have.

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

ARTICLE 14.

SINGLE AGREEMENT

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

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ARTICLE 15.

RECORDING OF COMMUNICATIONS

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

ARTICLE 16.

NOTICES AND OTHER COMMUNICATIONS

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

ARTICLE 17.

ENTIRE AGREEMENT; SEVERABILITY

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

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ARTICLE 18.

NON-ASSIGNABILITY

(a)           Subject to Article 18(b) below, Sellers may not assign any of their respective rights or obligations under this Agreement without the prior written consent of Buyer (not to be unreasonably withheld or delayed) and any attempt by a Seller to assign any of its rights or obligations under this Agreement without the prior written consent of Buyer shall be null and void.  Buyer may, without consent of either Seller, sell to one or more banks, financial institutions or other entities (“Participants”) participating interests in any Transaction, its interest in the Purchased Assets, or any other interest of Buyer under this Agreement.  Buyer may, at any time and from time to time, assign to any Person (an “Assignee” and together with Participants, each a “Transferee” and collectively, the “Transferees”) all or any part of its rights its interest in the Purchased Assets, or any other interest of Buyer under this Agreement.  Each Seller agrees to cooperate with Buyer in connection with any such assignment, transfer or sale of participating interest and to enter into such restatements of, and amendments, supplements and other modifications to, this Agreement in order to give effect to such assignment, transfer or sale.

(b)           Title to all Purchased Assets and Purchased Items shall pass to Buyer and Buyer shall have free and unrestricted use of all Purchased Assets.  Nothing in this Agreement shall preclude Buyer 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 Buyer may determine in its sole discretion; provided, however, that Buyer shall (i) transfer the Purchased Assets to the applicable 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 and (ii) credit Income and Principal Payments to the applicable Seller in accordance with Article 5 hereof.  Nothing contained in this Agreement shall obligate Buyer to segregate any Purchased Assets or Purchased Items transferred to Buyer by a Seller.

ARTICLE 19.

GOVERNING LAW

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

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ARTICLE 20.

NO WAIVERS, ETC.

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

ARTICLE 21.

USE OF EMPLOYEE PLAN ASSETS

(a)           If assets of an employee benefit plan subject to any provision of ERISA are intended to be used by either party hereto (the “Plan Party”) in a Transaction, the Plan Party shall so notify the other party prior to the Transaction.  The Plan Party shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall not be required so to proceed.

(b)           Subject to the last sentence of subparagraph (a) of this Article 21, any such Transaction shall proceed only if each Seller furnishes or has furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its financial condition.

(c)           By entering into a Transaction, pursuant to this Article 21, each Seller shall be deemed (i) to represent to Buyer that since the date of such Seller’s latest such financial statements, there has been no material adverse change in such Seller’s financial condition that such Seller has not disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial condition as they are issued, so long as it is such Seller in any outstanding Transaction involving a Plan Party.

ARTICLE 22.

INTENT

(a)           The parties recognize that each Transaction is a “repurchase agreement” as that term is defined in Section 101(47) of Title 11 of the United States Code, as amended (except insofar as the type of Assets subject to such Transaction or the term of such Transaction would render such definition inapplicable), and a “securities contract” as that term is defined in Section 741 of Title 11 of the United States Code, as amended (except insofar as the type of assets subject to such Transaction would render such definition inapplicable).

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(b)           It is understood that either party’s right to liquidate Assets delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Article 13 hereof is a contractual right to liquidate such Transaction as described in Sections 555, 559 and 561 of Title 11 of the United States Code, as amended.

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

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

(e)           It is understood that this Agreement constitutes a “master netting agreement” as defined in Section 101(38A) of Title 11 of the United States Code, as amended, and as used in Section 561 of Title 11 of the United States Code, as amended.

(f)           It is the intention of the parties that, for U.S. Federal, state and local income and franchise tax purposes and for accounting purposes, each Transaction constitute a financing, and that Sellers be (except to the extent that Buyer shall have exercised its remedies following an Event of Default) the owner of the Purchased Assets for such purposes.  Unless prohibited by applicable law, Sellers 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.

ARTICLE 23.

DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS

The parties acknowledge that they have been advised that:

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

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

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

ARTICLE 24.

CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

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

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

(c)           The parties hereby irrevocably waive, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding and irrevocably consent to the service of any summons and complaint and any other process by the mailing of copies of such process to them at their respective address specified herein.  The parties hereby agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Article 24 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 each Seller or its property in the courts of other jurisdictions.

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

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ARTICLE 25.

NO RELIANCE

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

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

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

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

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

(e)           It is not acting as a fiduciary or financial, investment or commodity trading advisor for the other party and has not given the other party (directly or indirectly through any other Person) any assurance, guarantee 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.

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ARTICLE 26.

INDEMNITY

Each Seller hereby agrees to indemnify Buyer, Buyer’s designee, Buyer’s Affiliates and each of its officers, directors, employees and agents (“Indemnified Parties”) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, taxes (including stamp, excise, sales or other taxes that may be payable or determined to be payable with respect to any of the Purchased Assets, Purchased Items or Collateral or in connection with any of the transactions contemplated by this Agreement and the documents delivered in connection herewith, other than income, withholding or other taxes imposed upon Buyer), fees, costs, expenses (including attorneys’ fees and disbursements) or disbursements (all of the foregoing, collectively “Indemnified Amounts”) that may at any time (including, without limitation, such time as this Agreement shall no longer be in effect and the Transactions shall have been repaid in full) be imposed on or asserted against any Indemnified Party in any way whatsoever arising out of or in connection with, or relating to, this Agreement or any Transactions hereunder or any action taken or omitted to be taken by any Indemnified Party under or in connection with any of the foregoing; provided, that neither Seller shall be liable for losses resulting from the gross negligence or willful misconduct of Buyer or any other Indemnified Party.  Without limiting the generality of the foregoing, each Seller agrees to hold Buyer harmless from and indemnify Buyer against all Indemnified Amounts with respect to all Purchased Assets relating to or arising out of any violation or alleged violation of any environmental law, rule or regulation or any consumer credit laws, including without limitation ERISA, the Truth in Lending Act and/or the Real Estate Settlement Procedures Act; provided, that neither Seller shall be liable for losses resulting from the gross negligence or willful misconduct of Buyer or any other Indemnified Party.  In any suit, proceeding or action brought by Buyer in connection with any Purchased Asset for any sum owing thereunder, or to enforce any provisions of any Purchased Asset, each Seller will save, indemnify and hold Buyer harmless from and against all expense (including attorneys’ fees), 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 such Seller.  Each Seller also agrees to reimburse Buyer as and when billed by Buyer for all Buyer’s reasonable costs and out-of-pocket expenses incurred in connection with Buyer’s due diligence reviews with respect to the Purchased Assets (including, without limitation, those incurred pursuant to Article 26 and Article 3 (including, without limitation, all Pre-Purchase Legal Fees, even if the underlying prospective Transaction for which they were incurred does not take place for any reason) and the enforcement or the preservation of Buyer’s rights under this Agreement, any Transaction Documents or Transaction contemplated hereby, including without limitation the fees and disbursements of its counsel.  Each Seller hereby acknowledges that the obligation of such Seller hereunder is a recourse obligation of such Seller.

ARTICLE 27.

DUE DILIGENCE

Each Seller acknowledges that Buyer 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 each Seller agrees that upon reasonable prior notice to such Seller, Buyer or its authorized representatives will be permitted during normal business hours to examine, inspect, and make copies and extracts of, the Purchased Asset Files, Servicing Records and any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession or under the control of such Seller, any other servicer or subservicer and/or the Custodian.  Each Seller agrees to reimburse Buyer for any and all reasonable out-of-pocket costs and expenses incurred by Buyer with respect to the Purchased Assets during the term of this Agreement, which shall be paid by such Seller to Buyer within five (5) days after receipt of an invoice therefor.  Each Seller also shall make available to Buyer a knowledgeable financial or accounting officer for the purpose of answering questions respecting the Purchased Asset Files and the Purchased Assets.  Without limiting the generality of the foregoing, each Seller acknowledges that Buyer may enter into Transactions with such Seller based solely upon the information provided by such Seller to Buyer and the representations, warranties and covenants contained herein, and that Buyer, at its option, has the right at any time to conduct a partial or complete due diligence review on some or all of the Purchased Assets.  Buyer may underwrite such Purchased Assets itself or engage a third party underwriter to perform such underwriting.  Each Seller agrees to cooperate with Buyer and any third party underwriter in connection with such underwriting, including, but not limited to, providing Buyer and any third party underwriter with access to any and all documents, records, agreements, instruments or information relating to such Purchased Assets in the possession, or under the control, of such Seller.  Each Seller further agrees that such Seller shall reimburse Buyer for any and all reasonable attorneys’ fees, costs and expenses incurred by Buyer in connection with continuing due diligence on Eligible Assets and Purchased Assets.

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ARTICLE 28.

SERVICING

(a)           Notwithstanding the purchase and sale of the Purchased Assets hereby, Sellers, Servicer or a third party servicer approved by Buyer shall service the Purchased Assets that are Eligible Loans (such Purchased Assets, “Serviced Assets”) for the benefit of Buyer and, if Buyer shall exercise its rights to pledge or hypothecate the Serviced Assets prior to the Repurchase Date pursuant to Article 8, for the benefit of Buyer’s assigns.  Sellers shall service or cause Servicer to service the Serviced Assets at Sellers’ sole cost and for the benefit of Buyer in accordance with Accepted Servicing Practices approved by Buyer in the exercise of its reasonable business judgment and maintained by other prudent mortgage or mezzanine lenders with respect to mortgage and/or mezzanine loans similar to the Serviced Assets, provided, however, that the obligations of Sellers to service any of the Serviced Assets shall cease, at Buyer’s option, upon the earliest of (i) an Event of Default, or (ii) the delivery by Buyer to Sellers of at least five (5) days’ prior written notice of the decision by Buyer to transfer the servicing rights of any or all of the Serviced Assets to either Servicer or another third party servicer selected by Buyer.  In either case, Sellers shall take all actions necessary to effectuate the underlying servicing transfer as expeditiously as possible.  Notwithstanding the foregoing, neither Sellers nor Servicer shall take any action or effect any modification or amendment to any Purchased Asset without first having given prior notice thereof to Buyer in each such instance and receiving the prior written consent of Buyer.

(b)           Each Seller agrees that Buyer is the owner of all servicing records, including but not limited to any and all servicing agreements and pooling and servicing agreements (including, without limitation any “Interim Servicing Agreement” with Servicer) (collectively, 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 Assets (the “Servicing Records”) so long as the Purchased Assets are subject to this Agreement.  Each Seller grants Buyer a security interest in all servicing fees and rights relating to the Purchased Assets and all Servicing Records to secure the obligation of such Seller or its designee to service in conformity with this Article 28 and any other obligation of such Seller to Buyer.  Each Seller covenants to safeguard such Servicing Records and to deliver them promptly to Buyer or its designee (including the Custodian) at Buyer’s request.

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

(d)           Neither Seller shall employ sub-servicers to service the Purchased Assets without the prior written approval of Buyer.  If the Purchased Assets are serviced by a sub-servicer, the applicable Seller shall, irrevocably assign all rights, title and interest (if any) in the Servicing Agreements in the Purchased Assets to Buyer.

(e)           Each Seller shall cause all servicers (other than Servicer) and sub-servicers engaged by such Seller to execute a Servicer Notice with Buyer acknowledging Buyer’s security interest and agreeing that each servicer and/or sub-servicer shall immediately transfer all Income with respect to the Purchased Assets to Servicer for deposit into the Collection Account, and so long as a Purchased Asset is subject to a Transaction, following notice from Buyer to such Seller of an Event of Default under this Agreement, each such servicer or sub-servicer shall take no action under this Agreement with regard to such Purchased Asset other than as specifically directed by Buyer.

(f)           The payment of servicing fees shall be subordinate to payment of amounts outstanding under any Transaction and this Agreement.

(g)           For the avoidance of doubt, no Seller retains economic rights to the servicing, other than such Seller’s rights under the Servicing Agreement or any other servicing agreement related to the Purchased Assets.  As such, each Seller expressly acknowledges that the Purchased Assets are sold to Buyer on a “servicing released” basis with such servicing retained by the Servicer.

ARTICLE 29.

MISCELLANEOUS

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

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

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

(d)           Without limiting the rights and remedies of Buyer under the Transaction Documents, each Seller shall pay Buyer’s reasonable actual out-of-pocket costs and expenses, including reasonable fees and expenses of accountants, attorneys and advisors, incurred in connection with the preparation, negotiation, execution and consummation of, and any amendment, supplement or modification to, the Transaction Documents and the Transactions thereunder, whether or not such Transaction Document (or amendment thereto) or Transaction is ultimately consummated.  Each Seller agrees to pay Buyer on demand all costs and expenses (including reasonable expenses for legal services of every kind) of any subsequent enforcement of any of the provisions hereof, or of the performance by Buyer of any obligations of any Seller in respect of the Purchased Assets, or any actual or attempted sale, or any exchange, enforcement, collection, compromise or settlement in respect of any of the Collateral or Purchased Items and for the custody, care or preservation of the Collateral or Purchased Items (including insurance costs) and defending or asserting rights and claims of Buyer in respect thereof, by litigation or otherwise.  In addition, each Seller agrees to pay Buyer on demand all reasonable costs and expenses (including reasonable expenses for legal services) incurred in connection with the maintenance of the Depository Account and registering the Collateral and Purchased Items in the name of Buyer or its nominee.  All such expenses shall be recourse obligations of each Seller to Buyer under this Agreement.

(e)           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 Buyer and its Affiliates a right of offset, to secure repayment of all amounts owing to Buyer or its Affiliates by each Seller under the Transaction Documents, upon any and all monies, securities, collateral or other property of each Seller and the proceeds therefrom, now or hereafter held or received by Buyer or its Affiliates or any entity under the control of Buyer or its Affiliates and its respective successors and assigns (including, without limitation, branches and agencies of Buyer, wherever located), for the account of each Seller, whether for safekeeping, custody, pledge, transmission, collection, or otherwise, and also upon any and all deposits (general or specified) and credits of each Seller at any time existing.  Buyer and its Affiliates are 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 Buyer or its Affiliates by any Seller thereof under the Transaction Documents or any other agreement, irrespective of whether Buyer or its Affiliates 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 Buyer and its Affiliates in the full amount of all amounts owing to Buyer and its Affiliates by such Seller under the Transaction Documents or any other agreement, and Buyer and its Affiliates shall be entitled to exercise the rights of offset provided for above.  ANY AND ALL RIGHTS TO REQUIRE BUYER OR ITS AFFILIATES TO EXERCISE THEIR RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL OR PURCHASED ITEMS THAT SECURE THE AMOUNTS OWING TO BUYER OR ITS AFFILIATES BY ANY SELLER UNDER THE TRANSACTION DOCUMENTS, PRIOR TO EXERCISING THEIR 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.

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

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

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

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

(j)           Wherever pursuant to this Agreement, Buyer exercises any right given to it to consent or not consent, or to approve or disapprove, or any arrangement or term is to be satisfactory to, Buyer in its sole discretion, Buyer shall decide to consent or not consent, or to approve or disapprove or to decide that arrangements or terms are satisfactory or not satisfactory, in its sole and absolute discretion and such decision by Buyer shall be final and conclusive.

(k)           Each Affiliated Hedge Counterparty is an intended third party beneficiary of this Agreement and the parties hereto agree that this Agreement shall not be amended or otherwise modified without the written consent of each Affiliated Hedge Counterparty, such consent not to be unreasonably withheld.

ARTICLE 30.

JOINT AND SEVERAL LIABILITY

(a)           Each Seller hereby acknowledges and agrees that each Seller shall be jointly and severally liable to Buyer to the maximum extent permitted by applicable law for all representations, warranties, covenants, obligations and indemnities of all of Sellers hereunder.

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(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 appropriate 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 Buyer, and, notwithstanding any payment or payments made by any Seller (“Paying Seller”) hereunder or any set-off or application of funds of Paying Seller by Buyer, Paying Seller shall not be entitled to be subrogated to any of the rights of Buyer against any other Seller or any collateral security or guarantee or right of offset held by Buyer, nor shall Paying Seller seek or be entitled to seek any contribution or reimbursement from the other Sellers in respect of payments made by Paying Seller hereunder, until all amounts owing to Buyer by Sellers under the Repurchase Documents are paid in full.  If any amount shall be paid to 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 Paying Seller in trust for Buyer, segregated from other funds of Paying Seller, and shall, forthwith upon receipt by Paying Seller, be turned over to Buyer in the exact form received by Paying Seller (duly indorsed by the paying Seller to Buyer, if required), to be applied against amounts owing to Buyer by Sellers under the Repurchase Documents, whether matured or unmatured, in such order as Buyer may determine.

(c)           Each Seller shall remain obligated under this Article 30 notwithstanding that, without any reservation of rights against any Seller and without notice to or further assent by any Seller, any demand by Buyer for payment of any amounts owing to Buyer by any other Seller under the Repurchase Documents may be rescinded by Buyer 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 Buyer, 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 Buyer may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by Buyer for the payment of amounts owing to Buyer by Sellers under the Repurchase Documents may be sold, exchanged, waived, surrendered or released.  Buyer 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 Buyer by Sellers under the Repurchase Documents, or any property subject thereto.  When making any demand hereunder against any Seller, Buyer may, but shall be under no obligation to, make a similar demand on any other Seller, and any failure by Buyer 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 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 Buyer against Sellers.  For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings.

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(d)           Each Seller waives any and all notice of the creation, renewal, extension or accrual of any amounts at any time owing to Buyer by any other Seller under the Repurchase Documents and notice of or proof of reliance by Buyer upon any Seller or acceptance of the obligations of any Seller under this Article 30, 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 Sellers under this Article 30; and all dealings between Sellers, on the one hand, and Buyer, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the obligations of Sellers under this Article 30.  Each Seller waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon any Seller with respect to any amounts at any time owing to Buyer by any 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 Article 30 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 Buyer by 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 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 Buyer, or (c) any other circumstance whatsoever (with or without notice to or knowledge of Sellers) which constitutes, or might be construed to constitute, an equitable or legal discharge of Sellers for any amounts owing to Buyer by Sellers under the Repurchase Documents, or of Sellers under this Agreement, in bankruptcy or in any other instance.  When pursuing its rights and remedies hereunder against any Seller, Buyer may, but shall be under no obligation to, pursue such rights and remedies as it may have against any 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 Buyer to pursue such other rights or remedies or to collect any payments from any 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 any Seller or any such other Person or any such collateral security, guarantee or right of offset, shall not relieve any 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 Buyer against any 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 each Seller under applicable federal and state laws relating to the insolvency of debtors.

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

BUYER:
JPMORGAN CHASE FUNDING INC., a Delaware corporation
By:	/s/ Gerald McCrink
	Name: Gerald McCrink
	Title:   Authorized Signatory

SELLERS:
CAPITAL TRUST, INC., a Maryland corporation
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title:   Chief Financial Officer

BUYER:
CT BSI FUNDING CORP., a Delaware corporation
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title:   Chief Financial Officer

ANNEXES, EXHIBITS AND SCHEDULES

ANNEX I Names and Addresses for Communications between Parties

EXHIBIT I Form of Confirmation

EXHIBIT II Responsible Officers of Seller

EXHIBIT III-A Monthly Reporting Package

EXHIBIT III-B Quarterly Reporting Package

EXHIBIT III-C Annual Reporting Package

EXHIBIT IV Form of Custodial Delivery

EXHIBIT V Form of Power of Attorney

EXHIBIT VI Representations and Warranties Regarding Individual Purchased Assets

EXHIBIT VII Asset Information

EXHIBIT VIII Advance Procedures

EXHIBIT IX Form of Bailee Letter

EXHIBIT X Form of Margin Deficit Notice

EXHIBIT XI UCC Filing Jurisdictions

EXHIBIT XII Form of Servicer Notice

EXHIBIT XIII Form of Release Letter

EXHIBIT XIV Covenant Compliance Certificate

ANNEX I

Names and Addresses for Communications Between Parties

Buyer:

JPMORGAN CHASE FUNDING INC.

c/o JPMorgan Chase Bank, N.A.

4 New York Plaza, 20th Floor

New York, New York 10004-2413

Attention: Ms. Nancy S Alto

Telephone: (212) 623-7109

Telecopy: (212) 623-0353

With copies to:

JPMORGAN CHASE FUNDING INC.

c/o JPMorgan Chase Bank, N.A.

270 Park Avenue, 10th Floor

New York, New York 10017-2014

Attention: Gerald McCrink/Kunal K. Singh

Telephone: (212) 834-9003/(212) 834-5467

Telecopy: (212) 834-6530/(212) 834-6593

and

Cadwalader Wickersham & Taft LLP

227 West Trade Street

Charlotte, North Carolina 28202

Attention: Stuart N. Goldstein, Esq.

Telephone: (704) 348-5258

Telecopy: (704) 348-5200

Sellers:

CAPITAL TRUST, INC.

410 Park Avenue

New York, New York 10022

Attn: Geoffrey G. Jervis

Phone: (212) 655-0247

Fax: (212) 655-0044

CT BSI FUNDING CORP.

c/o Capital Trust, Inc.

410 Park Avenue

New York, New York 10022

Attn: Geoffrey G. Jervis

Phone: (212) 655-0247

Fax: (212) 655-0044

With copies to:

Paul, Hastings, Janofsky & Walker LLP

75 E. 55th Street

New York, New York 10022

Attention: Robert J. Grados, Esq.

Telephone: (212) 318-6923

Telecopy: (212) 230-7830

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EXHIBIT I

CONFIRMATION STATEMENT

JPMORGAN CHASE FUNDING INC.

Ladies and Gentlemen:

[SELLER], is pleased to deliver our written CONFIRMATION of our agreement to enter into the Transaction pursuant to which JPMorgan Chase Funding Inc. shall purchase from us the Purchased Assets identified on the attached Schedule 1 pursuant to the Master Repurchase Agreement, dated as of November 21, 2008 (the “Agreement”), between JPMorgan Chase Funding Inc. (the “Buyer”) and Capital Trust, Inc. and CT BSI Funding Corp. (the “Sellers”) on the following terms.  Capitalized terms used herein without definition have the meanings given in the Agreement.

Original Purchase Date:	__________, 200_
Purchased Assets:	[____Name]: As identified on attached Schedule 1
Original Principal Balance of Purchased Assets:	[$   ]
Repurchase Date:
Purchase Price:	[$   ]
Market Value:	[$   ]
Pricing Rate:	one month LIBOR plus ______%
Maximum Advance Rate:

[SELLER]
By:
	Name:
	Title:

AGREED AND ACKNOWLEDGED:

JPMORGAN CHASE FUNDING INC.

By:
	Name:
	Title:

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Schedule 1 to Confirmation Statement

Purchased Assets:

Aggregate Principal Amount:

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EXHIBIT II

RESPONSIBLE OFFICERS OF SELLERS

[SEE ATTACHED]

AUTHORIZED REPRESENTATIVES OF SELLER

Name	Specimen Signature
John R. Klopp	/s/ JOHN R. KLOPP
Stephen D. Plavin	/s/ STEPHEN D. PLAVIN
Geoffrey G. Jervis	/s/ GEOFFREY G. JERVIS
Thomas C. Ruffing	/s/ THOMAS C. RUFFING
Jeremy FitzGerald	/s/ JEREMY FITZGERALD
Douglas Armer	/s/ DOUGLAS ARMER
Jay Thailer	/s/ JAY THAILER
Ryan Totaro	/s/ RYAN TOTARO
Robert Brennan	/s/ ROBERT BRENNAN
Deborah Ginsberg	/s/ DEBORAH GINSBERG
Peter H. Smith	/s/ PETER H. SMITH

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EXHIBIT III-A

MONTHLY REPORTING PACKAGE

The Monthly Reporting Package shall include, inter alia, the following:

· Any and all financial statements, rent rolls or other material information received from the borrowers related to each Purchased Asset.  To the extent that Seller fails, after diligent efforts, to obtain on a monthly basis such financial statements, rent rolls and other material information from the borrowers, Seller shall provide such information to Buyer on a quarterly basis.

· A remittance report containing servicing information, including without limitation, the amount of each periodic payment due, the amount of each periodic payment received, the date of receipt, the date due, and whether there has been any material adverse change to the real property, on a loan by loan basis and in the aggregate, with respect to the Purchased Assets serviced by any servicer (such remittance report, a “Servicing Tape”), or to the extent any servicer does not provide any such Servicing Tape, a remittance report containing the servicing information that would otherwise be set forth in the Servicing Tape.

· A listing of all Purchased Assets reflecting the payment status of each Purchased Asset and any material changes in the financial or other condition of each Purchased Asset.

· With respect to a Purchased Asset that is CMBS, B-Note or Junior Interest, the related securitization report.

· A listing of any existing Defaults.

· Trustee remittance reports.

· All other information as Buyer, from time to time, may reasonably request with respect to Seller or any Purchased Asset, obligor or Underlying Mortgaged Property.

· A certificate substantially in the form attached hereto as Exhibit XV to this Agreement (the “Covenant Compliance Certificate”), from a Responsible Officer of Seller.

EXHIBIT III-B

QUARTERLY REPORTING PACKAGE

The Quarterly Reporting Package shall include, inter alia, the following:

· Consolidated unaudited financial statements of Seller presented fairly in accordance with GAAP or, if such financial statements being delivered have been filed with the SEC pursuant to the requirements of the 1934 Act, or similar state securities laws, presented in accordance with applicable statutory and/or regulatory requirements and delivered to Buyer within the same time frame as are required to be filed in accordance with such applicable statutory or regulatory requirements, in either case accompanied by a Covenant Compliance Certificate, including a statement of operations and a statement of changes in cash flows for such quarter and statement of net assets as of the end of such quarter, and certified as being true and correct by a Covenant Compliance Certificate.

EXHIBIT III-C

ANNUAL REPORTING PACKAGE

The Annual Reporting Package shall include, inter alia, the following:

· Seller’s consolidated audited financial statements, prepared by a nationally recognized independent certified public accounting firm and presented fairly in accordance with GAAP or, if such financial statements being delivered have been filed with the SEC pursuant to the requirements of the 1934 Act, or similar state securities laws, presented in accordance with applicable statutory and/or regulatory requirements and delivered to Buyer within the same time frame as are required to be filed in accordance with such applicable statutory and/or regulatory requirements, in either case accompanied by a Covenant Compliance Certificate, including a statement of operations and a statement of changes in cash flows for such quarter and statement of net assets as of the end of such quarter accompanied by an unqualified report of the nationally recognized independent certified public accounting firm that prepared them.

EXHIBIT IV

FORM OF CUSTODIAL DELIVERY

On this ______ of ________, 200__, [SELLER], a [    ] [    ], as Seller (“Seller”) under that certain Master Repurchase Agreement, dated as of November 21, 2008 (the “Repurchase Agreement”) between JPMorgan Chase Funding Inc. (“Buyer”) [    ] and Seller, does hereby deliver to LaSalle Bank National Association (“Custodian”), as custodian under that certain Custodial Agreement, dated as of November 21, 2008 (the “Custodial Agreement”), among Buyer, Custodian and Seller, the Purchased Asset Files with respect to the Purchased Assets to be purchased by Buyer pursuant to the Repurchase Agreement, which Purchased Assets are listed on the Purchased Asset Schedule attached hereto and which Purchased Assets shall be subject to the terms of the Custodial Agreement on the date hereof.

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

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

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

[SELLER]
By:
	Name:
	Title:

Purchased Asset Schedule to Custodial Delivery

Purchased Assets

EXHIBIT V

FORM OF POWER OF ATTORNEY

“Know All Men by These Presents, that [SELLER], a [    ] [    ] (“Seller”), does hereby appoint JPMorgan Chase Funding Inc. (“Buyer”), its attorney-in-fact to act in Seller’s name, place and stead in any way that Seller could do with respect to (i) the completion of the endorsements of the Mortgage Notes and the Mezzanine Notes and the Assignments of Mortgages, (ii) the recordation of the Assignments of Mortgages and (iii) the enforcement of Seller’s rights under the Purchased Assets purchased by Buyer pursuant to the Master Repurchase Agreement dated as of November 21, 2008 (the “Repurchase Agreement”), among Buyer, [ ] and Seller, and to take such other steps as may be necessary or desirable to enforce Buyer’s rights against such Purchased Assets, the related Purchased Asset Files and the Servicing Records to the extent that Seller is permitted by law to act through an agent.

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

IN WITNESS WHEREOF Seller has caused this Power of Attorney to be executed as a deed this [   ] day of November, 2008.

[SELLER]
By:
	Name:
	Title:

EXHIBIT VI

REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET

THAT IS A WHOLE MORTGAGE LOAN, A-NOTE OR

                 SENIOR PARTICIPATION INTEREST                 

(a)           As applicable, each Purchased Asset is either a whole loan and not a participation interest in a whole loan, a senior participation interest in a whole loan, or an A-Note interest in a whole loan.  The sale of the Purchased Assets to Buyer or its designee does not require Seller to obtain any governmental or regulatory approval or consent that has not been obtained.

(b)           No Purchased Asset is 30 days or more delinquent in payment of principal and interest (without giving effect to any applicable grace period) and no Purchased Asset has been 30 days or more (without giving effect to any applicable grace period in the related Mortgage Note) past due.

(c)           Except with respect to the ARD Loans, which provide that the rate at which interest accrues thereon increases after the Anticipated Repayment Date, the Purchased Assets (exclusive of any default interest, late charges or prepayment premiums) are fixed rate mortgage loans or floating rate mortgage loans with terms to maturity, at origination or as of the most recent modification, as set forth in the Purchased Asset Schedule.

(d)           The information pertaining to each Purchased Asset set forth on the Purchased Asset Schedule is true and correct in all material respects as of the Purchase Date.

(e)           At the time of the assignment of the Purchased Assets to Buyer, Seller had good and marketable title to and was the sole owner and holder of, each Purchased Asset, free and clear of any pledge, lien, encumbrance or security interest and such assignment validly and effectively transfers and conveys all legal and beneficial ownership of the Purchased Assets to Buyer free and clear of any pledge, lien, encumbrance or security interest, subject to the rights and obligations of Seller pursuant to the Agreement.

(f)           In respect of each Purchased Asset, (A) the related Mortgagor is an entity organized under the laws of a state of the United States of America, the District of Columbia or the Commonwealth of Puerto Rico and (B) the Mortgagor is not a debtor in any bankruptcy, receivership, conservatorship, reorganization, insolvency, moratorium or similar proceeding.

(g)           Each Purchased Asset is secured by (or in the case of a Participation, the Underlying Mortgage Loan is secured by) a Mortgage that establishes and creates a valid and subsisting first priority lien on the related underlying real estate directly or indirectly securing or supporting such Purchased Asset, or leasehold interest therein, comprising real estate (the “Mortgaged Property”), free and clear of any liens, claims, encumbrances, participation interests, pledges, charges or security interests subject only to Permitted Encumbrances.  Such Mortgage, together with any separate security agreement, UCC financing statement or similar agreement, if any, establishes and creates a first priority security interest in favor of Seller in all personal property owned by the Mortgagor that is used in, and is reasonably necessary to, the operation of the related Mortgaged Property and, to the extent a security interest may be created therein and perfected by the filing of a UCC financing statement under the Uniform Commercial Code as in effect in the relevant jurisdiction, the proceeds arising from the Mortgaged Property and other collateral securing such Purchased Asset, subject only to Permitted Encumbrances.  There exists with respect to such Mortgaged Property an assignment of leases and rents provision, either as part of the related Mortgage or as a separate document or instrument, which establishes and creates a first priority security interest in and to leases and rents arising in respect of the related Mortgaged Property subject only to Permitted Encumbrances.  No person other than the related Mortgagor and the mortgagee owns any interest in any payments due under the related leases.  The related Mortgage or such assignment of leases and rents provision provides for the appointment of a receiver for rents or allows the holder of the related Mortgage to enter into possession of the related Mortgaged Property to collect rent or provides for rents to be paid directly to the holder of the related Mortgage in the event of a default beyond applicable notice and grace periods, if any, under the related Purchased Asset Documents.  As of the origination date, there are no mechanics’ or other similar liens or claims that have been filed for work, labor or materials affecting the related Mortgaged Property that are or may be prior or equal to the lien of the Mortgage, except those that are insured against pursuant to the applicable Title Insurance Policy (as defined below).  As of the Purchase Date, there are no mechanics’ or other similar liens or claims that have been filed for work, labor or materials affecting the related Mortgaged Property that are or may be prior or equal in priority to the lien of the Mortgage, except those that are insured against pursuant to the applicable Title Policy (as defined below).  No (a) Mortgaged Property secures any mortgage loan not represented on the Purchased Asset Schedule, (b) Purchased Asset is cross-defaulted with any other mortgage loan, other than a Mortgage Loan listed on the Purchased Asset Schedule, or (c) Purchased Asset is secured by property that is not a Mortgaged Property.

(h)           The related Mortgagor under each Purchased Asset has good and indefeasible fee simple or, with respect to those Purchased Assets described in clause (cc) hereof, leasehold title to the related Mortgaged Property comprising real estate subject to any Permitted Encumbrances.

(i)           Seller has received an American Land Title Association (ALTA) lender’s title insurance policy or a comparable form of lender’s title insurance policy (or escrow instructions binding on the Title Insurer (as defined below) and irrevocably obligating the Title Insurer to issue such title insurance policy, a title policy commitment or pro-forma “marked up” at the closing of the related Purchased Asset and countersigned by the Title Insurer or its authorized agent) as adopted in the applicable jurisdiction (the “Title Policy”), which was issued by a nationally recognized title insurance company (the “Title Insurer”) qualified to do business in the jurisdiction where the applicable Mortgaged Property is located, covering the portion of each Mortgaged Property comprised of real estate and insuring that the related Mortgage is a valid first lien in the original principal amount of the related Purchased Asset on the Mortgagor’s fee simple interest (or, if applicable, leasehold interest) in such Mortgaged Property comprised of real estate subject only to Permitted Encumbrances.  Such Title Policy was issued in connection with the origination of the related Purchased Asset.  No claims have been made under such Title Policy.  Such Title Policy is in full force and effect and all premiums thereon have been paid and will provide that the insured includes the owner of the Purchased Asset and its successors and/or assigns.  No holder of the related Mortgage has done, by act or omission, anything that would, and Seller has no actual knowledge of any other circumstance that would, impair the coverage under such Title Policy.

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(j)           The related Assignment of Mortgage and the related assignment of the Assignment of Leases and Rents executed in connection with each Mortgage, if any, have been recorded in the applicable jurisdiction (or, if not recorded, have been submitted for recording or are in recordable form) and constitute the legal, valid and binding assignment of such Mortgage and the related assignment of leases and rents from Seller to Buyer.  The endorsement of the related Mortgage Note by Seller constitutes the legal, valid, binding and enforceable (except as such enforcement may be limited by anti-deficiency laws or bankruptcy, receivership, conservatorship, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law)) assignment of such Mortgage Note, and together with such Assignment of Mortgage and the related assignment of assignment of leases and rents, legally and validly conveys all right, title and interest in such Purchased Asset and (except in the case of an A Note or a Participation) the Purchased Asset Documents to Buyer.

(k)           The Purchased Asset Documents for each Purchased Asset (or in the case of a Participation, the Underlying Mortgage Loan) provide that such Purchased Asset (or Underlying Mortgage Loan) is non-recourse except that the related Mortgagor and at least one individual or entity shall be fully liable for actual losses, liabilities, costs and damages arising from at least the following acts of the related Mortgagor and/or its principals: (i) fraud or material misrepresentation, (ii) misapplication or misappropriation of rents, insurance proceeds or condemnation awards, (iii) any act of actual waste, and (iv) any breach of the environmental covenants contained in the related Purchased Asset Documents.

(l)           The Purchased Asset Documents for each Purchased Asset contain enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the practical realization against the Mortgaged Property of the principal benefits of the security intended to be provided thereby, including realization by judicial or, if applicable, non judicial foreclosure, and there is no exemption available to the related Mortgagor that would interfere with such right of foreclosure except (i) any statutory right of redemption or (ii) any limitation arising under anti deficiency laws or by bankruptcy, receivership, conservatorship, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

(m)           Each of the related Mortgage Notes and Mortgages are the legal, valid and binding obligations of the related Mortgagor named on the Purchased Asset Schedule and each of the other related Purchased Asset Documents is the legal, valid and binding obligation of the parties thereto (subject to any non recourse provisions therein), enforceable in accordance with its terms, except as such enforcement may be limited by anti deficiency laws or bankruptcy, receivership, conservatorship, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law), and except that certain provisions of such Purchased Asset Documents are or may be unenforceable in whole or in part under applicable state or federal laws, but the inclusion of such provisions does not render any of the Purchased Asset Documents invalid as a whole, and such Purchased Asset Documents taken as a whole are enforceable to the extent necessary and customary for the practical realization of the principal rights and benefits afforded thereby.

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(n)           The terms of the Purchased Assets or the related Purchased Asset Documents, (including, in the case of a Participation, the documents evidencing the Underlying Mortgage Loan) have not been altered, impaired, modified or waived in any material respect, except prior to the Purchase Date by written instrument duly submitted for recordation, to the extent required, and as specifically set forth by a document in the related Purchased Asset File.

(o)           With respect to each Mortgage that is a deed of trust, a trustee, duly qualified under applicable law to serve as such, currently so serves and is named in the deed of trust or has been substituted in accordance with applicable law, and no fees or expenses are or will become payable to the trustee under the deed of trust, except in connection with a trustee’s sale after default by the Mortgagor other than de minimis fees paid in connection with the release of the related Mortgaged Property or related security for such Purchased Asset following payment of such Purchased Asset in full.

(p)           No Purchased Asset has been satisfied, canceled, subordinated, released or rescinded, in whole or in part, and the related Mortgagor has not been released, in whole or in part, from its obligations under any related Purchased Asset Document.

(q)           Except with respect to the enforceability of any provisions requiring the payment of default interest, late fees, additional interest, prepayment premiums or yield maintenance charges, neither the Purchased Asset nor any of the related Purchased Asset Documents is subject to any right of rescission, set-off, abatement, diminution, valid counterclaim or defense, including the defense of usury, nor will the operation of any of the terms of any such Purchased Asset Documents, or the exercise (in compliance with procedures permitted under applicable law) of any right thereunder, render any Purchased Asset Documents subject to any right of rescission, set-off, abatement, diminution, valid counterclaim or defense, including the defense of usury (subject to anti-deficiency or one form of action laws and to bankruptcy, receivership, conservatorship, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditor’s rights generally and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law)), and no such right of rescission, set-off, abatement, diminution, valid counterclaim or defense has been asserted with respect thereto.  None of the Purchased Asset Documents provides for a release of a portion of the Mortgaged Property from the lien of the Mortgage except upon payment or defeasance in full of all obligations under the Mortgage, provided that, notwithstanding the foregoing, certain of the Purchased Assets may allow partial release (a) upon payment or defeasance of an allocated loan amount which may be formula based, but in no event less than 125% of the allocated loan amount, or (b) in the event the portion of the Mortgaged Property being released was not given any material value in connection with the underwriting or appraisal of the related Purchased Asset.

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(r)           As of the Purchase Date, there is no payment default, giving effect to any applicable notice and/or grace period, and there is no other material default under any of the related Purchased Asset Documents, giving effect to any applicable notice and/or grace period; no such material default or breach has been waived by Seller or on its behalf or, by Seller’s predecessors in interest with respect to the Purchased Assets; and no event has occurred that, with the passing of time or giving of notice would constitute a material default or breach under the related Purchased Asset Documents.  No Purchased Asset has been accelerated and no foreclosure or power of sale proceeding has been initiated in respect of the related Mortgage.  Seller has not waived any material claims against the related Mortgagor under any non-recourse exceptions contained in the Mortgage Note.

(s)           The principal amount of the Purchased Asset stated on the Purchased Asset Schedule has been fully disbursed as of the Purchase Date (except for certain amounts that were fully disbursed by the mortgagee, but escrowed pursuant to the terms of the related Purchased Asset Documents) and there are no future advances required to be made by the mortgagee under any of the related Purchased Asset Documents.  Any requirements under the related Purchased Asset Documents regarding the completion of any on-site or off-site improvements and to disbursements of any escrow funds therefor have been or are being complied with or such escrow funds are still being held.  The value of the Mortgaged Property relative to the value reflected in the most recent appraisal thereof is not materially impaired by any improvements that have not been completed.  Seller has not, nor, have any of its agents or predecessors in interest with respect to the Purchased Assets, in respect of such Purchased Asset, directly or indirectly, advanced funds or induced, solicited or knowingly received any advance of funds by a party other than the Mortgagor other than (a) interest accruing on such Purchased Asset from the date of such disbursement of such Purchased Asset to the date which preceded by thirty (30) days the first payment date under the related Mortgage Note and (b) application and commitment fees, escrow funds, points and reimbursements for fees and expenses, incurred in connection with the origination and funding of the Purchased Asset.

(t)           No Purchased Asset has capitalized interest included in its principal balance, or provides for any shared appreciation rights or other equity participation therein and no contingent or additional interest contingent on cash flow or, except for ARD Loans, negative amortization accrues or is due thereon.

(u)           Each Purchased Asset identified in the Purchased Asset Schedule as an ARD Loan substantially fully amortizes over its stated term, which term is at least 60 months after the related Anticipated Repayment Date.  Each ARD Loan has an Anticipated Repayment Date not less than seven years following the origination of such Purchased Asset.  If the related Mortgagor elects not to prepay its ARD Loan in full on or prior to the Anticipated Repayment Date pursuant to the existing terms of the Purchased Asset or a unilateral option (as defined in Treasury Regulations under Article 1001 of the Code) in the Purchased Asset exercisable during the term of the Mortgage Loan, (i) the Purchased Asset’s interest rate will step up to an interest rate per annum as specified in the related Purchased Asset Documents; provided, however, that payment of such Excess Interest shall be deferred until the principal of such ARD Loan has been paid in full; (ii) all or a substantial portion of the Excess Cash Flow collected after the Anticipated Repayment Date shall be applied towards the prepayment of such ARD Loan and once the principal balance of an ARD Loan has been reduced to zero all Excess Cash Flow will be applied to the payment of accrued Excess Interest; and (iii) if the property manager for the related Mortgaged Property can be removed by or at the direction of the mortgagee on the basis of a debt service coverage test, the subject debt service coverage ratio shall be calculated without taking account of any increase in the related Mortgage Interest Rate on such Purchased Asset’s Anticipated Repayment Date.  No ARD Loan provides that the property manager for the related Mortgaged Property can be removed by or at the direction of the mortgagee solely because of the passage of the related Anticipated Repayment Date.

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(v)           Each Purchased Asset identified in the Purchased Asset Schedule as an ARD Loan with a hard lockbox requires that tenants at the related Mortgaged Property shall (and each Purchased Asset identified in the Purchased Asset Schedule as an ARD Loan with a springing lockbox requires that tenants at the related Mortgaged Property shall, upon the occurrence of a specified trigger event, including, but not limited to, the occurrence of the related Anticipated Repayment Date) make rent payments into a lockbox controlled by the holder of the Purchased Asset and to which the holder of the Purchased Asset has a first perfected security interest; provided however, with respect to each ARD Loan that is secured by a multi-family property with a hard lockbox, or with respect to each ARD Loan that is secured by a multi-family property with a springing lockbox, upon the occurrence of a specified trigger event, including, but not limited to, the occurrence of the related Anticipated Repayment Date, tenants either pay rents to a lockbox controlled by the holder of the Mortgage Loan or deposit rents with the property manager who will then deposit the rents into a lockbox controlled by the holder of the Purchased Asset.

(w)           The terms of the Purchased Asset Documents evidencing such Purchased Asset comply in all material respects with all applicable local, state and federal laws, and regulations and Seller has complied with all material requirements pertaining to the origination, funding and servicing of the Purchased Assets, including but not limited to, usury and any and all other material requirements of any federal, state or local law to the extent non-compliance would have a Material Adverse Effect on the Purchased Asset.

(x)           The related Mortgaged Property is, in all material respects, in compliance with, and is used and occupied in accordance with, all restrictive covenants of record applicable to such Mortgaged Property and applicable zoning laws and all inspections, licenses, permits and certificates of occupancy required by law, ordinance or regulation to be made or issued with regard to the Mortgaged Property have been obtained and are in full force and effect, except to the extent (a) any material non-compliance with applicable zoning laws is insured by an ALTA lender’s title insurance policy (or binding commitment therefor), or the equivalent as adopted in the applicable jurisdiction, or a law and ordinance insurance policy, or (b) the failure to obtain or maintain such inspections, licenses, permits or certificates of occupancy does not materially impair or materially and adversely affect the use and/or operation of the Mortgaged Property as it was used and operated as of the date of origination of the Purchased Asset or the rights of a holder of the related Purchased Asset.

(y)           All (a) taxes, water charges, sewer rents, assessments or other similar outstanding governmental charges and governmental assessments that became due and owing prior to the Purchase Date in respect of the related Mortgaged Property (excluding any related personal property), and that if left unpaid, would be, or might become, a lien on such Mortgaged Property having priority over the related Mortgage and (b) insurance premiums or ground rents that became due and owing prior to the Purchase Date in respect of the related Mortgaged Property (excluding any related personal property), have been paid, or if any such items are disputed, an escrow of funds in an amount sufficient (together with escrow payments required to be made prior to delinquency) to cover such taxes and assessments and any late charges due in connection therewith has been established.  As of the date of origination, the related Mortgaged Property consisted of one or more separate and complete tax parcels.  For purposes of this representation and warranty, the items identified herein shall not be considered due and owing until the date on which interest or penalties would be first payable thereon.

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(z)           None of the improvements that were included for the purpose of determining the appraised value of the related Mortgaged Property at the time of the origination of such Purchased Asset lies outside the boundaries and building restriction lines of such Mortgaged Property, except to the extent that they are legally nonconforming as contemplated by the representation in clause (48) below, and no improvements on adjoining properties encroach upon such Mortgaged Property, with the exception in each case of (a) immaterial encroachments that do not materially adversely affect the security intended to be provided by the related Mortgage or the use, enjoyment, value or marketability of such Mortgaged Property or (b) encroachments affirmatively covered by the related Title Policy.  With respect to each Purchased Asset, the property legally described in the survey, if any, obtained for the related Mortgaged Property for purposes of the origination thereof is the same as the property legally described in the Mortgage.

(aa)           As of the date of the applicable engineering report (which was performed within 12 months prior to the Purchase Date) related to the Mortgaged Property and, as of the Purchase Date, the related Mortgaged Property is either (i) in good repair, free and clear of any damage that would materially adversely affect the value of such Mortgaged Property as security for such Purchased Asset or the use and operation of the Mortgaged Property as it was being used or operated as of the origination date or (ii) escrows in an amount consistent with the standard utilized by Seller with respect to similar loans it holds for its own account have been established, which escrows will in all events be not less than 100% of the estimated cost of the required repairs.  The Mortgaged Property has not been damaged by fire, wind or other casualty or physical condition (including, without limitation, any soil erosion or subsidence or geological condition), which damage has not either been fully repaired or fully insured, or for which escrows in an amount consistent with the standard utilized by Seller with respect to loans it holds for its own account have not been established.

(bb)           There are no proceedings pending or threatened, for the partial or total condemnation of the relevant Mortgaged Property.

(cc)           The Purchased Assets that are identified as being secured in whole or in part by a leasehold estate (a “Ground Lease”) (except with respect to any Purchased Asset also secured by the related fee interest in the Mortgaged Property), satisfy the following conditions:

I. such Ground Lease or a memorandum thereof has been or will be duly recorded; such Ground Lease, or other agreement received by the originator of the Purchased Asset from the ground lessor, provides that the interest of the lessee thereunder may be encumbered by the related Mortgage and does not restrict the use of the related Mortgaged Property by such lessee, its successors or assigns, in a manner that would materially and adversely affect the security provided by the Mortgage; as of the date of origination of the Purchased Asset (or in the case of a Participation, the Underlying Mortgage Loan), there was no material change of record in the terms of such Ground Lease with the exception of written instruments that are part of the related Purchased Asset File and there has been no material change in the terms of such Ground Lease since the recordation of the related Purchased Asset, with the exception of written instruments that are part of the related Purchased Asset File;

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II. such Ground Lease is not subject to any liens or encumbrances superior to, or of equal priority with, the related Mortgage, other than the related fee interest and Permitted Encumbrances and such Ground Lease is, and shall remain, prior to any mortgage or other lien upon the related fee interest unless a nondisturbance agreement is obtained from the holder of any mortgage on the fee interest that is assignable to or for the benefit of the related lessee and the related mortgagee;

III. such Ground Lease provides that upon foreclosure of the related Mortgage or assignment of the Mortgagor’s interest in such Ground Lease in lieu thereof, the mortgagee under such Mortgage is entitled to become the owner of such interest upon notice to, but without the consent of, the lessor thereunder and, in the event that such mortgagee becomes the owner of such interest, such interest is further assignable by such mortgagee and its successors and assigns upon notice to such lessor, but without a need to obtain the consent of such lessor;

IV. such Ground Lease is in full force and effect and no default of tenant or ground lessor was in existence at origination, or is currently in existence under such Ground Lease, nor at origination was, or is there any condition that, but for the passage of time or the giving of notice, would result in a default under the terms of such Ground Lease; either such Ground Lease or a separate agreement contains the ground lessor’s covenant that it shall not amend, modify, cancel or terminate such Ground Lease without the prior written consent of the mortgagee under such Mortgage and any amendment, modification, cancellation or termination of the Ground Lease without the prior written consent of the related mortgagee, or its successors or assigns is not binding on such mortgagee, or its successor or assigns;

V. such Ground Lease or other agreement requires the lessor thereunder to give written notice of any material default by the lessee to the mortgagee under the related Mortgage, provided that such mortgagee has provided the lessor with notice of its lien in accordance with the provisions of such Ground Lease; and such Ground Lease or other agreement provides that no such notice of default and no termination of the Ground Lease in connection with such notice of default shall be effective against such mortgagee unless such notice of default has been given to such mortgagee and any related Ground Lease contains the ground lessor’s covenant that it will give to the related mortgagee, or its successors or assigns, any notices it sends to the Mortgagor;

VI. either (i) the related ground lessor has subordinated its interest in the related Mortgaged Property to the interest of the holder of the Purchased Asset (or in the case of a Participation, the Underlying Mortgage Loan) or (ii) such Ground Lease or other agreement provides that (A) the mortgagee under the related Mortgage is permitted a reasonable opportunity to cure any default under such Ground Lease that is curable, including reasonable time to gain possession of the interest of the lessee under the Ground Lease, after the receipt of notice of any such default before the lessor thereunder may terminate such Ground Lease; (B) in the case of any such default that is not curable by such mortgagee, or in the event of the bankruptcy or insolvency of the lessee under such Ground Lease, such mortgagee has the right, following termination of the existing Ground Lease or rejection thereof by a bankruptcy trustee or similar party, to enter into a new ground lease with the lessor on substantially the same terms as the existing Ground Lease; and (C) all rights of the Mortgagor under such Ground Lease may be exercised by or on behalf of such mortgagee under the related Mortgage upon foreclosure or assignment in lieu of foreclosure;

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VII. such Ground Lease has an original term (or an original term plus one or more optional renewal terms that under all circumstances may be exercised, and will be enforceable, by the mortgagee or its assignee) that extends not less than 20 years beyond the stated maturity date of the related Purchased Asset (or in the case of a Participation, of the Underlying Mortgage Loan);

VIII. under the terms of such Ground Lease and the related Mortgage, taken together, any related insurance proceeds will be applied either to the repair or restoration of all or part of the related Mortgaged Property, with the mortgagee under such Mortgage or a financially responsible institution acting as trustee appointed by it, or consented to by it, or by the lessor having the right to hold and disburse such proceeds as the repair or restoration progresses (except in such cases where a provision entitling another party to hold and disburse such proceeds would not be viewed as commercially unreasonable by a prudent institutional lender), or to the payment in whole or in part of the outstanding principal balance of such Purchased Asset together with any accrued and unpaid interest thereon; and

IX. such Ground Lease does not impose any restrictions on subletting that would be viewed as commercially unreasonable by Seller; such Ground Lease contains a covenant (or applicable laws provide) that the lessor thereunder is not permitted, in the absence of an uncured default, to disturb the possession, interest or quiet enjoyment of any lessee in the relevant portion of such Mortgaged Property subject to such Ground Lease for any reason, or in any manner, which would materially adversely affect the security provided by the related Mortgage.

(dd)           An Environmental Site Assessment relating to each Mortgaged Property and prepared no earlier than 12 months prior to the Purchase Date was obtained and reviewed by Seller in connection with the origination of such Purchased Asset and a copy is included in the Purchased Asset File.

(ee)           There are no adverse circumstances or conditions with respect to or affecting the Mortgaged Property that would constitute or result in a material violation of any applicable federal, state or local environmental laws, rules and regulations (collectively, “Environmental Laws”), other than with respect to a Mortgaged Property (i) for which environmental insurance is maintained, or (ii) that would require (x) any expenditure less than or equal to 5% of the outstanding principal balance of the Mortgage Loan to achieve or maintain compliance in all material respects with any Environmental Laws or (y) any expenditure greater than 5% of the outstanding principal balance of such Purchased Asset to achieve or maintain compliance in all material respects with any Environmental Laws for which, in connection with this clause (y), adequate sums, but in no event less than 125% of the estimated cost as set forth in the Environmental Site Assessment, were reserved in connection with the origination of the Purchased Asset and for which the related Mortgagor has covenanted to perform, or (iii) as to which the related Mortgagor or one of its affiliates is currently taking or required to take such actions, if any, with respect to such conditions or circumstances as have been recommended by the Environmental Site Assessment or required by the applicable Governmental Authority, or (iv) as to which another responsible party not related to the Mortgagor with assets reasonably estimated by Seller at the time of origination to be sufficient to effect all necessary or required remediation identified in a notice or other action from the applicable Governmental Authority is currently taking or required to take such actions, if any, with respect to such regulatory authority’s order or directive, or (v) as to which the conditions or circumstances identified in the Environmental Site Assessment were investigated further and based upon such additional investigation, an environmental consultant recommended no further investigation or remediation, or (vi) as to which a party with financial resources reasonably estimated to be adequate to cure the condition or circumstance that would give rise to such material violation provided a guarantee or indemnity to the related Mortgagor or to the mortgagee to cover the costs of any required investigation, testing, monitoring or remediation, or (vii) as to which the related Mortgagor or other responsible party obtained a “No Further Action” letter or other evidence reasonably acceptable to a prudent commercial mortgage lender that applicable federal, state, or local Governmental Authorities had no current intention of taking any action, and are not requiring any action, in respect of such condition or circumstance, or (viii) that would not require substantial cleanup, remedial action or other extraordinary response under any Environmental Laws reasonably estimated to cost in excess of 5% of the outstanding principal balance of such Purchased Asset;

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(ff)           Except for any hazardous materials being handled in accordance with applicable Environmental Laws, (A) there exists either (i) environmental insurance with respect to such Mortgaged Property or (ii) an amount in an escrow account pledged as security for such Purchased Asset under the relevant Purchased Asset Documents equal to no less than 125% of the amount estimated in such Environmental Site Assessment as sufficient to pay the cost of such remediation or other action in accordance with such Environmental Site Assessment or (B) one of the statements set forth in clause (A)(ii) above is true, (i) such Mortgaged Property is not being used for the treatment or disposal of hazardous materials; (ii) no hazardous materials are being used or stored or generated for off-site disposal or otherwise present at such Mortgaged Property other than hazardous materials of such types and in such quantities as are customarily used or stored or generated for off-site disposal or otherwise present in or at properties of the relevant property type; and (iii) such Mortgaged Property is not subject to any environmental hazard (including, without limitation, any situation involving hazardous materials) that under the Environmental Laws would have to be eliminated before the sale of, or that could otherwise reasonably be expected to adversely affect in more than a de minimis manner the value or marketability of, such Mortgaged Property.

(gg)          The related Mortgage or other Purchased Asset Documents contain covenants on the part of the related Mortgagor requiring its compliance with any present or future federal, state and local Environmental Laws and regulations in connection with the Mortgaged Property.  The related Mortgagor (or an affiliate thereof) has agreed to indemnify, defend and hold Seller, and its successors and assigns (or in the case of a Participation, the lender of record), harmless from and against any and all losses, liabilities, damages, penalties, fines, expenses and claims of whatever kind or nature (including attorneys’ fees and costs) imposed upon or incurred by or asserted against any such party resulting from a breach of the environmental representations, warranties or covenants given by the related Mortgagor in connection with such Purchased Asset.

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(hh)          For each of the Purchased Assets that is covered by environmental insurance, each environmental insurance policy is in an amount equal to 125% of the outstanding principal balance of the related Purchased Asset and has a term ending no sooner than the date that is five years after the maturity date (or, in the case of an ARD Loan, the final maturity date) of the related Purchased Asset.  All environmental assessments or updates that were in the possession of Seller and that relate to a Mortgaged Property as being insured by an environmental insurance policy have been delivered to or disclosed to the environmental insurance carrier issuing such policy prior to the issuance of such policy.

(ii)           As of the date of origination of the related Purchased Asset, and, as of the Purchase Date, the Mortgaged Property is covered by insurance policies providing the coverage described below and the Purchased Asset Documents permit the mortgagee to require the coverage described below.  All premiums with respect to the insurance policies insuring each Mortgaged Property have been paid in a timely manner or escrowed to the extent required by the Purchased Asset Documents, and Seller has not received any notice of cancellation or termination.  The relevant Purchased Asset File contains the insurance policy required for such Purchased Asset or a certificate of insurance for such insurance policy.  Each Mortgage requires that the related Mortgaged Property and all improvements thereon be covered by insurance policies providing (a) coverage in the amount of the lesser of full replacement cost of such Mortgaged Property and the outstanding principal balance of the related Purchased Asset (subject to customary deductibles) for fire and extended perils included within the classification “All Risk of Physical Loss” in an amount sufficient to prevent the Mortgagor from being deemed a co-insurer and to provide coverage on a full replacement cost basis of such Mortgaged Property (in some cases exclusive of foundations and footings) with an agreed amount endorsement to avoid application of any coinsurance provision; such policies contain a standard mortgagee clause naming mortgagee and its successor in interest as additional insureds or loss payee, as applicable; (b) business interruption or rental loss insurance in an amount at least equal to (i) 12 months of operations or (ii) in some cases all rents and other amounts customarily insured under this type of insurance of the Mortgaged Property; (c) flood insurance (if any portion of the improvements on the Mortgaged Property is located in an area identified by the Federal Emergency Management Agency (“FEMA”), with respect to certain Purchased Assets and the Secretary of Housing and Urban Development with respect to other Mortgage Loans, as having special flood hazards) in an amount not less than amounts prescribed by FEMA; (d) workers’ compensation, if required by law; (e) comprehensive general liability insurance in an amount equal to not less than $1,000,000; all such insurance policies contain clauses providing they are not terminable and may not be terminated without thirty (30) days prior written notice to the mortgagee (except where applicable law requires a shorter period or except for nonpayment of premiums, in which case not less than ten (10) days prior written notice to the mortgagee is required).  In addition, each Mortgage permits the related mortgagee to make premium payments to prevent the cancellation thereof and shall entitle such mortgagee to reimbursement therefor.  Any insurance proceeds in respect of a casualty, loss or taking will be applied either to the repair or restoration of all or part of the related Mortgaged Property or the payment of the outstanding principal balance of the related Purchased Asset together with any accrued interest thereon.  The related Mortgaged Property is insured by an insurance policy, issued by an insurer meeting the requirements of such Purchased Asset (or in the case of a Participation, of the Underlying Mortgage Loan) and having a claims-paying or financial strength rating of at least A:X from A.M. Best Company or “A” (or the equivalent) from S&P, Fitch or Moody’s.  An architectural or engineering consultant has performed an analysis of each of the Mortgaged Properties located in seismic zones 3 or 4 in order to evaluate the structural and seismic condition of such property, for the sole purpose of assessing the probable maximum loss (“PML”) for the Mortgaged Property in the event of an earthquake.  In such instance, the PML was based on a return period of not less than 100 years, an exposure period of 50 years and a 10% probability of exceedence.  If the resulting report concluded that the PML would exceed 20% of the amount of the replacement costs of the improvements, earthquake insurance on such Mortgaged Property was obtained by an insurer rated at least A:X by A.M. Best Company or “A” (or the equivalent) from S&P, Fitch or Moody’s.  The insurer issuing each of the foregoing insurance policies is qualified to write insurance in the jurisdiction where the related Mortgaged Property is located.

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(jj)           All amounts required to be deposited by each Mortgagor at origination under the related Purchased Asset Documents have been deposited at origination and there are no deficiencies with regard thereto.

(kk)         Whether or not a Purchased Asset was originated by Seller, with respect to each Purchased Asset originated by Seller and each Purchased Asset originated by any Person other than Seller, as of the date of origination of the related Purchased Asset, and, with respect to each Purchased Asset originated by Seller and any subsequent holder of the Purchased Asset, as of the Purchase Date, there are no actions, suits, arbitrations or governmental investigations or proceedings by or before any court or other Governmental Authority or agency now pending against or affecting the Mortgagor under any Purchased Asset or any of the Mortgaged Properties that, if determined against such Mortgagor or such Mortgaged Property, would materially and adversely affect the value of such Mortgaged Property, the security intended to be provided with respect to the related Purchased Asset, or the ability of such Mortgagor and/or the current use of such Mortgaged Property to generate net cash flow to pay principal, interest and other amounts due under the related Purchased Asset; and there are no such actions, suits or proceedings threatened against such Mortgagor.

(ll)           Each Purchased Asset complied at origination, in all material respects, with all of the terms, conditions and requirements of Seller’s underwriting standards applicable to such Purchased Asset and since origination, the Purchased Asset has been serviced in all material respects in a legal manner in conformance with Seller’s servicing standards.

(mm)       The originator of the Purchased Asset or Seller has inspected or caused to be inspected each related Mortgaged Property within the 12 months prior to the Purchase Date.

(nn)         The Purchased Asset Documents require the Mortgagor to provide the holder of the Purchased Asset with at least annual operating statements, financial statements and except for Purchased Assets for which the related Mortgaged Property is leased to a single tenant, rent rolls.

(oo)         All escrow deposits and payments required by the terms of each Purchased Asset are in the possession, or under the control of Seller (or in the case of a Participation, the servicer of the related Mortgage Loan), and all amounts required to be deposited by the applicable Mortgagor under the related Purchased Asset Documents have been deposited, and there are no deficiencies with regard thereto (subject to any applicable notice and cure period).  All of Seller’s interest in such escrows and deposits will be conveyed by Seller to Buyer hereunder.

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(pp)         Each Mortgagor with respect to a Purchased Asset (and, for each Accommodation Loan, each Mortgagee thereunder) is an entity whose organizational documents or related Purchased Asset Documents provide that it is, and at least so long as the Purchased Asset is outstanding will continue to be, a Single Purpose Entity.  For this purpose, “Single Purpose Entity” shall mean a Person, other than an individual, whose organizational documents provide that it shall engage solely in the business of owning and operating the Mortgaged Property and that does not engage in any business unrelated to such property and the financing thereof, does not have any assets other than those related to its interest in the Mortgaged Property or the financing thereof or any indebtedness other than as permitted by the related Mortgage or other Purchased Asset Documents, and the organizational documents of which require that it have its own separate books and records and its own accounts, in each case that are separate and apart from the books and records and accounts of any other Person, except as permitted by the related Mortgage or other Purchased Asset Documents.

(qq)         Each of the Purchased Assets contain a “due on sale” clause, which provides for the acceleration of the payment of the unpaid principal balance of the Purchased Asset (or in the case of an A Note or a Participation, of the related Mortgage Loan) if, without the prior written consent of the holder of the Purchased Asset (or in the case of an A Note or a Participation, of the holder of title to the Underlying Mortgage Loan), the property subject to the Mortgage, or any controlling interest therein, is directly or indirectly transferred or sold (except that it may provide for transfers by devise, descent or operation of law upon the death of a member, manager, general partner or shareholder of a Mortgagor and that it may provide for assignments subject to the Purchased Asset holder’s approval of transferee, transfers to affiliates, transfers to family members for estate planning purposes, transfers among existing members, partners or shareholders in Mortgagors or transfers of passive interests so long as the key principals or general partner retains control).  The Purchased Asset Documents contain a “due on encumbrance” clause, which provides for the acceleration of the payment of the unpaid principal balance of the Purchased Asset if the property subject to the Mortgage or any controlling interest in the Mortgagor is further pledged or encumbered, unless the prior written consent of the holder of the Purchased Asset is obtained (except that it may provide for assignments subject to the Purchased Asset holder’s approval of transferee, transfers to affiliates or transfers of passive interests so long as the key principals or general partner retains control).  The Mortgage requires the Mortgagor to pay all reasonable fees and expenses associated with securing the consent or approval of the holder of the Mortgage for a waiver of a “due on sale” or “due on encumbrance” clause or a defeasance provision.  As of the Purchase Date, Seller holds no preferred equity interest in any Mortgagor and Seller holds no mezzanine debt related to such Mortgaged Property.

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(rr)           Each Purchased Asset containing provisions for defeasance of mortgage collateral requires either (a) the prior written consent of, and compliance with the conditions set by, the holder of the Purchased Asset to any defeasance, or (b)(i) the replacement collateral consist of U.S. “government securities,” within the meaning of Treasury Regulations Article 1.860 G-2(a)(8)(i), in an amount sufficient to make all scheduled payments under the Mortgage Note when due (up to the maturity date for the related Purchased Asset, the Anticipated Repayment Date for ARD Loans or the date on which the Mortgagor may prepay the related Purchased Asset without payment of any prepayment penalty); (ii) the loan may be assumed by a Single Purpose Entity approved by the holder of the Purchased Asset; (iii) counsel provide an opinion that the trustee has a perfected security interest in such collateral prior to any other claim or interest; and (iv) such other documents and certifications as the mortgagee may reasonably require, which may include, without limitation, (A) a certification that the purpose of the defeasance is to facilitate the disposition of the mortgaged real property or any other customary commercial transaction and not to be part of an arrangement to collateralize a REMIC offering with obligations that are not real estate mortgages and (B) a certification from an independent certified public accountant that the collateral is sufficient to make all scheduled payments under the Mortgage Note when due.  Each Purchased Asset containing provisions for defeasance provides that, in addition to any cost associated with defeasance, the related Mortgagor shall pay, as of the date the mortgage collateral is defeased, all scheduled and accrued interest and principal due as well as an amount sufficient to defease in full the Purchased Asset.  In addition, if the related Purchased Asset permits defeasance, then the Mortgage Loan documents provide that the related Mortgagor shall (x) pay all reasonable fees associated with the defeasance of the Purchased Asset and all other reasonable expenses associated with the defeasance, or (y) provide all opinions required under the related Purchased Asset Documents, including a REMIC opinion, and any applicable rating agency letters confirming that no downgrade or qualification shall occur as a result of the defeasance.

(ss)          In the event that a Purchased Asset is secured by more than one Mortgaged Property, then, in connection with a release of less than all of such Mortgaged Properties, a Mortgaged Property may not be released as collateral for the related Purchased Asset unless, in connection with such release, an amount equal to not less than 125% of the Allocated Loan Amount for such Mortgaged Property is prepaid or, in the case of a defeasance, an amount equal to 125% of the Allocated Loan Amount is defeased through the deposit of replacement collateral (as contemplated in clause (34) hereof) sufficient to make all scheduled payments with respect to such defeased amount, or such release is otherwise in accordance with the terms of the Purchased Asset Documents.

(tt)           Each Mortgaged Property is owned in fee by the related Mortgagor, with the exception of (i) Mortgaged Properties that are secured in whole or in a part by a Ground Lease and (ii) out-parcels, and is used and occupied for commercial or multifamily residential purposes in accordance with applicable law.

(uu)         Any material non-conformity with applicable zoning laws constitutes a legal non-conforming use or structure that, in the event of casualty or destruction, may be restored or repaired to the full extent of the use or structure at the time of such casualty, or for which law and ordinance insurance coverage has been obtained in amounts consistent with the standards utilized by Seller.

(vv)         Neither Seller nor any affiliate thereof has any obligation to make any capital contributions to the related Mortgagor under the Purchased Asset.  The Purchased Asset was not originated for the sole purpose of financing the construction of incomplete improvements on the related Mortgaged Property.

(ww)        The following statements are true with respect to the related Mortgaged Property:  (a) the Mortgaged Property is located on or adjacent to a dedicated road or has access to an irrevocable easement permitting ingress and egress and (b) the Mortgaged Property is served by public or private utilities, water and sewer (or septic facilities) and otherwise appropriate for the use in which the Mortgaged Property is currently being utilized.

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(xx)           None of the Purchased Asset Documents contain any provision that expressly excuses the related borrower from obtaining and maintaining insurance coverage for acts of terrorism and, in circumstances where terrorism insurance is not expressly required, the mortgagee is not prohibited from requesting that the related borrower maintain such insurance, in each case, to the extent such insurance coverage is generally available for like properties in such jurisdictions at commercially reasonable rates.  Each Mortgaged Property is insured by an “all-risk” casualty insurance policy that does not contain an express exclusion for (or, alternatively, is covered by a separate policy that insures against property damage resulting from) acts of terrorism.

(yy)          An appraisal of the related Mortgaged Property was conducted in connection with the origination of such Purchased Asset (or in the case of a Participation, the date of origination of the Underlying Mortgage Loan), and such appraisal satisfied the guidelines in Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, in either case as in effect on the date such Purchased Asset (or in the case of a Participation, the Underlying Mortgage Loan) was originated.

Defined Terms

As used in this Exhibit:

The term “Allocated Loan Amount” shall mean, for each Mortgaged Property, the portion of principal of the related Purchased Asset allocated to such Mortgaged Property for certain purposes (including determining the release prices of properties, if permitted) under such Purchased Asset as set forth in the related loan documents.  There can be no assurance, and it is unlikely, that the Allocated Loan Amounts represent the current values of individual Mortgaged Properties, the price at which an individual Mortgaged Property could be sold in the future to a willing buyer or the replacement cost of the Mortgaged Properties.

The term “Anticipated Repayment Date” shall mean, with respect to any Purchased Asset that is indicated on the Purchased Asset Schedule as having a Revised Rate, the date upon which such Purchased Asset commences accruing interest at such Revised Rate.

The term “Assignment of Leases” shall have the meaning specified in paragraph 10 of this Exhibit VI.

The term “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, subject to the terms, covenants and provisions of this Agreement.

The term “ARD Loan” shall mean any Purchased Asset that provides that if the unamortized principal balance thereof is not repaid on its Anticipated Repayment Date, such Purchased Asset will accrue Excess Interest at the rate specified in the related Mortgage Note and the Mortgagor is required to apply excess monthly cash flow generated by the related Mortgaged Property to the repayment of the outstanding principal balance on such Purchased Asset.

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The term “Due Date” shall mean the day of the month set forth in the related Mortgage Note on which each monthly payment of interest and/or principal thereon is scheduled to be first due.

The term “Environmental Site Assessment” shall mean a Phase I environmental report meeting the requirements of the American Society for Testing and Materials, and, if in accordance with customary industry standards a reasonable lender would require it, a Phase II environmental report, each prepared by a licensed third party professional experienced in environmental matters.

The term “Excess Cash Flow” shall mean the cash flow from the Mortgaged Property securing an ARD Loan after payments of interest (at the Mortgage Interest Rate) and principal (based on the amortization schedule), and (a) required payments for the tax and insurance fund and ground lease escrows fund, (b) required payments for the monthly debt service escrows, if any, (c) payments to any other required escrow funds and (d) payment of operating expenses pursuant to the terms of an annual budget approved by the servicer and discretionary (lender approved) capital expenditures.

The term “Excess Interest” shall mean any accrued and deferred interest on an ARD Loan in accordance with the following terms.  Commencing on the respective Anticipated Repayment Date each ARD Loan (pursuant to its existing terms or a unilateral option, as defined in Treasury Regulations under Article 1001 of the Code, in the Purchased Assets exercisable during the term of the Purchased Asset) generally will bear interest at a fixed rate (the “Revised Rate”) per annum equal to the Mortgage Interest Rate plus a percentage specified in the related Mortgage Loan Documents.  Until the principal balance of each such Purchased Asset has been reduced to zero (pursuant to its existing terms or a unilateral option, as defined in Treasury Regulations under Article 1001 of the Code, in the Purchased Assets exercisable during the term of the Mortgage Loan), such Purchased Asset will only be required to pay interest at the Mortgage Interest Rate and the interest accrued at the excess of the related Revised Rate over the related Mortgage Interest Rate will be deferred (such accrued and deferred interest and interest thereon, if any, is “Excess Interest”).

The term “Mortgage Interest Rate” shall mean the fixed rate, or the formula applicable to determine the floating rate, of interest per annum that each Purchased Asset bears as of the Purchase Date.

The term “Permitted Encumbrances” shall mean:

I. the lien of current real property taxes, water charges, sewer rents and assessments not yet delinquent or accruing interest or penalties;

II. covenants, conditions and restrictions, rights of way, easements and other matters of public record acceptable to mortgage lending institutions generally and referred to in the related mortgagee’s title insurance policy;

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III. other matters to which like properties are commonly subject and which are acceptable to mortgage lending institutions generally, and

IV. the rights of tenants, as tenants only, whether under ground leases or space leases at the Mortgaged Property

that together do not materially and adversely affect the related Mortgagor’s ability to timely make payments on the related Purchased Asset, which do not materially interfere with the benefits of the security intended to be provided by the related Mortgage or the use, for the use currently being made, the operation as currently being operated, enjoyment, value or marketability of such Mortgaged Property, provided, however, that, for the avoidance of doubt, Permitted Encumbrances shall exclude all pari passu, second, junior and subordinated mortgages but shall not exclude mortgages that secure Purchased Assets that are cross-collateralized with other Purchased Assets.

The term “Revised Rate” shall mean, with respect to those Purchased Assets on the Purchased Asset Schedule indicated as having a revised rate, the increased interest rate after the Anticipated Repayment Date (in the absence of a default) for each applicable Purchased Asset, as calculated and as set forth in the related Purchased Asset.

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REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET

THAT IS A JUNIOR INTEREST

IN A PERFORMING COMMERCIAL

MORTGAGE LOAN SECURED BY A FIRST LIEN ON

A MULTIFAMILY OR COMMERCIAL PROPERTY

(a)           The representations and warranties set forth in this Exhibit VI regarding the senior mortgage loan from which the Purchased Asset is derived shall be deemed incorporated herein in respect of such senior mortgage loan, provided, however, that, in the event that such senior mortgage loan was not originated by Seller or an Affiliate of Seller, Seller shall be deemed to be making the representations set forth in this Exhibit VI with respect to such senior mortgage loan to the best of Seller’s knowledge.

(b)           The information set forth in the Purchased Asset Schedule is complete, true and correct in all material respects.

(c)           There exists no material default, breach, violation or event of acceleration (and no event that, with the passage of time or the giving of notice, or both, would constitute any of the foregoing) under the documents evidencing or securing the Purchased Asset, in any such case to the extent the same materially and adversely affects the value of the Purchased Asset and the related underlying real property.

(d)           Except with respect to the enforceability of any provisions requiring the payment of default interest, late fees, additional interest, prepayment premiums or yield maintenance charges, neither the Purchased Asset nor any of the related Purchased Asset Documents is subject to any right of rescission, set-off, abatement, diminution, valid counterclaim or defense, including the defense of usury, nor will the operation of any of the terms of any such Purchased Asset Documents, or the exercise (in compliance with procedures permitted under applicable law) of any right thereunder, render any Purchased Asset Documents subject to any right of rescission, set-off, abatement, diminution, valid counterclaim or defense, including the defense of usury (subject to anti-deficiency or one form of action laws and to bankruptcy, receivership, conservatorship, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditor’s rights generally and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law)), and no such right of rescission, set-off, abatement, diminution, valid counterclaim or defense has been asserted with respect thereto.

(e)           The Purchased Asset Documents have been duly and properly executed by the originator of the Purchased Asset, and each is the legal, valid and binding obligation of the parties thereto, enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws relating to or affecting the rights of creditors generally and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).  The Purchased Asset is not usurious.

(f)           The terms of the related Purchased Asset Documents have not been impaired, waived, altered or modified in any material respect (other than by a written instrument that is included in the related Purchased Asset File).

(g)           The assignment of the Purchased Asset constitutes the legal, valid and binding assignment of such Purchased Asset from Seller to or for the benefit of Buyer enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws relating to or affecting the rights of creditors generally and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

(h)           All representations and warranties in the Purchased Asset Documents and in the underlying documents for the performing commercial mortgage loan secured by a first lien on a multifamily or commercial property to which such Purchased Asset relates are true and correct in all material respects.

(i)           The servicing and collection practices used by Seller for the Purchased Asset have complied with applicable law in all material respects and are consistent with those employed by prudent servicers of comparable Purchased Assets.

(j)           Seller is not a debtor in any state or federal bankruptcy or insolvency proceeding.

(k)           As of the Purchase Date, there is no payment default, giving effect to any applicable notice and/or grace period, and there is no other material default under any of the related Purchased Asset Documents, giving effect to any applicable notice and/or grace period; no such material default or breach has been waived by Seller or on its behalf or by Seller’s predecessors in interest with respect to the Purchased Assets; and no event has occurred that, with the passing of time or giving of notice would constitute a material default or breach; provided, however, that the representations and warranties set forth in this sentence do not cover any default, breach, violation or event of acceleration that specifically pertains to or arises out of any subject matter otherwise covered by any other representation or warranty made by Seller in this Exhibit VI.  No Purchased Asset has been accelerated and no foreclosure or power of sale proceeding has been initiated in respect of the related Mortgage.  Seller has not waived any material claims against the related Mortgagor under any non-recourse exceptions contained in the Mortgage Note.

(l)           No Purchased Asset has been satisfied, canceled, subordinated (except to the senior mortgage loan from which the Purchased Asset is derived), released or rescinded, in whole or in part, and the related Mortgagor has not been released, in whole or in part, from its obligations under any related Purchased Asset Document.

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REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET

THAT IS A CMBS

(a)           The CMBS consists of pass-through certificates representing beneficial ownership interests in one or more REMICs consisting of one or more first lien mortgage loans secured by commercial and/or multifamily properties.

(b)           Immediately prior to the sale, transfer and assignment to Buyer thereof, Seller had good and marketable title to, and was the sole owner and holder of, such CMBS, and Seller is transferring such CMBS free and clear of any and all liens, pledges, encumbrances, charges, security interests or any other ownership interests of any nature encumbering such CMBS.

(c)           Seller has full right, power and authority to sell and assign such CMBS and such CMBS has not been cancelled, satisfied or rescinded in whole or part nor has any instrument been executed that would effect a cancellation, satisfaction or rescission thereof.

(d)           Other than consents and approvals obtained as of the related Purchase Date or those already granted in the related documents governing such CMBS, no consent or approval by any Person is required in connection with Buyer’s acquisition of such CMBS, for Buyer’s exercise of any rights or remedies in respect of such CMBS or for Buyer’s sale or other disposition of such CMBS.  No third party holds any “right of first refusal”, “right of first negotiation”, “right of first offer”, purchase option, or other similar rights of any kind, and no other impediment exists to any such transfer or exercise of rights or remedies.

(e)           Upon consummation of the purchase contemplated to occur in respect of such CMBS on the Purchase Date therefor, Seller will have validly and effectively conveyed to Buyer all legal and beneficial interest in and to such CMBS free and clear of any and all liens, pledges, encumbrances, charges, security interests or any other ownership interests of any nature.

(f)           The CMBS is a physical security in registered form, or is in book-entry form and held through the facilities of (a) The Depository Trust Corporation in New York, New York, or

(b) another clearing organization or book-entry system reasonably acceptable to Buyer.

(g)          With respect to any CMBS that is a physical security, Seller has delivered to Buyer or its designee such physical security, along with any and all certificates and assignments necessary to transfer such security under the issuing documents of such CMBS.

(h)          With respect to any CMBS registered with DTC or another clearing organization, Seller has delivered to Buyer or its designee evidence of re-registration to the securities intermediary in Buyer’s name on behalf of Buyer.

(i)           All information contained in the related Purchased Asset File (or as otherwise provided to Buyer) in respect of such CMBS is accurate and complete in all material respects.

(j)           As of the date of its issuance, such CMBS complied in all material respects with, or was exempt from, all requirements of federal, state or local law relating to the issuance thereof including, without limitation, any registration requirements of the Securities Act of 1933, as amended.

(k)           Except as included in the Purchased Asset File, there is no document that by its terms modifies or affects the rights and obligations of the holder of such CMBS, the terms of the related pooling and servicing agreement or any other agreement relating to the CMBS, and, since issuance, there has been no material change or waiver to any term or provision of any such document, instrument or agreement.

(l)           There is no (i) monetary default, breach or violation of any pooling and servicing agreement or other document governing or pertaining to such CMBS, (ii) material non-monetary default, breach or violation of any such agreement or other document or other document governing or pertaining to such CMBS, or (iii) event that, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration under such documents and agreements.

(m)          No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority over Seller is required for any transfer or assignment of such CMBS.

(n)          Except as included in the Purchased Asset File, (i) no interest shortfalls have occurred and no realized losses have been applied to any CMBS or otherwise incurred with respect to any mortgage loan related to such CMBS nor any class of CMBS issued under the same governing documents as any CMBS, and (ii) Seller has no knowledge of any circumstances that could have a Material Adverse Effect on the CMBS.

(o)          With respect to CMBS backed by a single mortgaged asset, there are no circumstances or conditions with respect to the CMBS, the Underlying Mortgaged Property or the related Mortgagor’s credit standing that can reasonably be expected to have a Material Adverse Effect on the CMBS.

(p)          Seller has not received written notice of any outstanding liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind for which the holder of such CMBS is or may become obligated.

(q)          There is no material inaccuracy in any servicer report or trustee report delivered to it (and, in turn, delivered pursuant to the terms of this Agreement) in connection with such CMBS.

(r)           No servicer of the CMBS has made any advances, directly or indirectly, with respect to the CMBS or to any mortgage loan relating to such CMBS.

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REPRESENTATIONS AND WARRANTIES

REGARDING EACH INDIVIDUAL PURCHASED ASSET

THAT IS A CRE CDO

(a)           Immediately prior to the sale, transfer and assignment to Buyer thereof, Seller had good and marketable title to, and was the sole owner and holder of, such CRE CDO, and Seller is transferring such CRE CDO free and clear of any and all liens, pledges, encumbrances, charges, security interests or any other ownership interests of any nature encumbering such CRE CDO.

(b)           Seller has full right, power and authority to sell and assign such CRE CDO and such CRE CDO has not been cancelled, satisfied or rescinded in whole or part nor has any instrument been executed that would effect a cancellation, satisfaction or rescission thereof.

(c)           Other than consents and approvals obtained as of the related Purchase Date or those already granted in the related documents governing such CRE CDO, no consent or approval by any Person is required in connection with Buyer’s acquisition of such CRE CDO, for Buyer’s exercise of any rights or remedies in respect of such CRE CDO or for Buyer’s sale or other disposition of such CRE CDO.  No third party holds any “right of first refusal”, “right of first negotiation”, “right of first offer”, purchase option, or other similar rights of any kind, and no other impediment exists to any such transfer or exercise of rights or remedies.

(d)           Upon consummation of the purchase contemplated to occur in respect of such CRE CDO on the Purchase Date therefor, Seller will have validly and effectively conveyed to Buyer all legal and beneficial interest in and to such CRE CDO free and clear of any and all liens, pledges, encumbrances, charges, security interests or any other ownership interests of any nature.

(e)           The CRE CDO is a physical security in registered form, or is in book-entry form and held through the facilities of (a) The Depository Trust Corporation in New York, New York, or (b) another clearing organization or book-entry system reasonably acceptable to Buyer.

(f)           With respect to any CRE CDO that is a physical security, Seller has delivered to Buyer or its designee such physical security, along with any and all certificates and assignments necessary to transfer such security under the issuing documents of such CRE CDO.

(g)           With respect to any CRE CDO registered with DTC or another clearing organization, Seller has delivered to Buyer or its designee evidence of re-registration to the securities intermediary in Buyer’s name on behalf of Buyer.

(h)           All information contained in the related Purchased Asset File (or as otherwise provided to Buyer) in respect of such CRE CDO is accurate and complete in all material respects.

(i)            To the knowledge of Seller, as of the date of its issuance, such CRE CDO complied in all material respects with, or was exempt from, all requirements of federal, state or local law relating to the issuance thereof including, without limitation, any registration requirements of the Securities Act of 1933, as amended.

(j)            Except as included in the Purchased Asset File, there is no document that by its terms modifies or affects the rights and obligations of the holder of such CRE CDO, the terms of the related pooling and servicing agreement or any other agreement relating to the CRE CDO, and, since issuance, there has been no material change or waiver to any term or provision of any such document, instrument or agreement.

(k)           There is no (i) monetary default, breach or violation exists with respect to any pooling and servicing agreement, indenture, or other document governing or pertaining to such CRE CDO, (ii) material non-monetary default, breach or violation exists with respect to any such agreement, indenture, or other document governing or pertaining to such CRE CDO, or (iii) event that, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration under such documents and agreements.

(l)            No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority over Seller is required for any transfer or assignment of such CRE CDO.

(m)          Except as included in the Purchased Asset File, (i) no interest shortfalls have occurred and no realized losses have been applied to any CRE CDO or otherwise incurred with respect to any mortgage loan related to such CRE CDO nor any class of CRE CDO issued under the same governing documents as any CRE CDO, and (ii) Seller has no knowledge of any circumstances that could have a Material Adverse Effect on the CRE CDO.

(n)           Seller has not received written notice of any outstanding liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind for which the holder of such CRE CDO is or may become obligated.

(o)           There is no material inaccuracy in any servicer report or trustee report delivered to it (and, in turn, delivered pursuant to the terms of this Agreement) in connection with such CRE CDO.

(p)           No fraudulent acts were committed by Seller in connection with its acquisition of such CRE CDO.

(q)           No servicer of the CRE CDO has made any advances, directly or indirectly, with respect to the CRE CDO or to any mortgage loan relating to such CRE CDO.

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REPRESENTATIONS AND WARRANTIES

RE: PURCHASED ASSETS CONSISTING OF MEZZANINE LOANS

(a)           The Mezzanine Loan is a performing mezzanine loan secured by a pledge of all of the Capital Stock of a Mortgagor that owns income producing commercial real estate.

(b)           As of the Purchase Date, such Mezzanine Loan complies in all material respects with, or is exempt from, all requirements of federal, state or local law relating to such Mezzanine Loan.

(c)           Immediately prior to the sale, transfer and assignment to Buyer thereof, Seller had good and marketable title to, and was the sole owner and holder of, such Mezzanine Loan, and Seller is transferring such Mezzanine Loan free and clear of any and all liens, pledges, encumbrances, charges, security interests or any other ownership interests of any nature encumbering such Mezzanine Loan.  Upon consummation of the purchase contemplated to occur in respect of such Mezzanine Loan on the Purchase Date therefor, Seller will have validly and effectively conveyed to Buyer all legal and beneficial interest in and to such Mezzanine Loan free and clear of any pledge, lien, encumbrance or security interest.

(d)           No fraudulent acts were committed by Seller in connection with its acquisition or origination of such Mezzanine Loan nor were any fraudulent acts committed by any Person in connection with the origination of such Mezzanine Loan.

(e)           All information contained in the related Underwriting Package (or as otherwise provided to Buyer) in respect of such Mezzanine Loan is accurate and complete in all material respects.

(f)           Except as included in the Underwriting Package, Seller is not a party to any document, instrument or agreement, and there is no document, that by its terms modifies or affects the rights and obligations of any holder of such Mezzanine Loan and Seller has not consented to any material change or waiver to any term or provision of any such document, instrument or agreement and no such change or waiver exists.

(g)           Such Mezzanine Loan is presently outstanding, the proceeds thereof have been fully and properly disbursed and, except for amounts held in escrow by Seller, there is no requirement for any future advances thereunder.

(h)           Seller has full right, power and authority to sell and assign such Mezzanine Loan and such Mezzanine Loan or any related Mezzanine Note has not been cancelled, satisfied or rescinded in whole or part nor has any instrument been executed that would effect a cancellation, satisfaction or rescission thereof.

(i)           Other than consents and approvals obtained as of the related Purchase Date or those already granted in the documentation governing such Mezzanine Loan (the “Mezzanine Loan Documents”), no consent or approval by any Person is required in connection with Seller’s sale and/or Buyer’s acquisition of such Mezzanine Loan, for Buyer’s exercise of any rights or remedies in respect of such Mezzanine Loan or for Buyer’s sale, pledge or other disposition of such Mezzanine Loan.  No third party holds any “right of first refusal”, “right of first negotiation”, “right of first offer”, purchase option, or other similar rights of any kind, and no other impediment exists to any such transfer or exercise of rights or remedies.

(j)           The Mezzanine Collateral is secured by a pledge of equity ownership interests in the related borrower under the Underlying Mortgage Loan or a direct or indirect owner of the related borrower and the security interest created thereby has been fully perfected in favor of Seller as Mezzanine Lender.

(k)          The Underlying Property Owner has been duly organized and is validly existing and in good standing under the laws of its jurisdiction of organization, with requisite power and authority to own its assets and to transact the business in which it is now engaged, the sole purpose of the Underlying Property Owner under its organizational documents is to own, finance, sell or otherwise manage the Properties and to engage in any and all activities related or incidental thereto, and the Mortgaged Properties constitute the sole assets of the Underlying Property Owner.

(l)           The Underlying Property Owner has good and marketable title to the Underlying Mortgaged Property, no claims under the title policies insuring the Underlying Property Owner’s title to the Properties have been made, and the Underlying Property Owner has not received any written notice regarding any material violation of any easement, restrictive covenant or similar instrument affecting the Underlying Mortgaged Property.

(m)         The representations and warranties made by the borrower (the “Mezzanine Borrower”) in the Mezzanine Loan Documents were true and correct in all material respects as of the date such representations and warranties were stated to be true therein, and there has been no adverse change with respect to the Mezzanine Loan, the Mezzanine Borrower, the Underlying Mortgaged Property or the Underlying Property Owner that would render any such representation or warranty not true or correct in any material respect as of the Purchase Date.

(n)          The Mezzanine Loan Documents provide for the acceleration of the payment of the unpaid principal balance of the Mezzanine Loan if (i) the related borrower voluntarily transfers or encumbers all or any portion of any related Mezzanine Collateral, or (ii) any direct or indirect interest in the related borrower is voluntarily transferred or assigned, other than, in each case, as permitted under the terms and conditions of the related loan documents.

(o)          Pursuant to the terms of the Mezzanine Loan Documents: (a) no material terms of any related Mortgage may be waived, canceled, subordinated or modified in any material respect and no material portion of such Mortgage or the Underlying Mortgaged Property may be released without the consent of the holder of the Mezzanine Loan; (b) no material action may be taken by the Underlying Property Owner with respect to the Underlying Mortgaged Property without the consent of the holder of the Mezzanine Loan; (c) the holder of the Mezzanine Loan is entitled to approve the budget of the Underlying Property Owner as it relates to the Underlying Mortgaged Property; and (d) the holder of the Mezzanine Loan's consent is required prior to the Underlying Property Owner incurring any additional indebtedness.

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(p)          There is no (i) monetary default, breach or violation with respect to such Mezzanine Loan, the Underlying Mortgage Loan or any other obligation of the owner of the Underlying Mortgaged Property (the “Underlying Property Owner”), (ii) material non-monetary default, breach or violation with respect to such Mezzanine Loan, the Underlying Mortgage Loan or any other obligation of the Underlying Property Owner or (iii) event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration.

(q)          No default or event of default has occurred under any agreement pertaining to any lien or other interest that ranks pari passu with or senior to the interests of the holder of such Mezzanine Loan or with respect to any Underlying Mortgage Loan or other indebtedness in respect of the related Underlying Mortgaged Property and there is no provision in any agreement related to any such lien, interest or loan which would provide for any increase in the principal amount of any such lien, other interest or loan.

(r)           Seller’s security interest in the Mezzanine Loan is covered by a UCC-9 insurance policy (the “UCC-9 Policy”) in the maximum principal amount of the Mezzanine Loan insuring that the related pledge is a valid first priority lien on the collateral pledged in respect of such Mezzanine Loan (the “Mezzanine Collateral”), subject only to the exceptions stated therein (or a pro forma title policy or marked up title insurance commitment on which the required premium has been paid exists which evidences that such UCC-9 Policy will be issued), such UCC-9 Policy (or, if it has yet to be issued, the coverage to be provided thereby) is in full force and effect, no material claims have been made thereunder and no claims have been paid thereunder, Seller has not done, by act or omission, anything that would materially impair the coverage under the UCC9 Policy and as of the Purchase Date, the UCC-9 Policy (or, if it has yet to be issued, the coverage to be provided thereby) will inure to the benefit of Buyer without the consent of or notice to the insurer.

(s)          The Mezzanine Loan, and each party involved in the origination of the Mezzanine Loan, complied as of the date of origination with, or was exempt from, applicable state or federal laws, regulations and other requirements pertaining to usury.

(t)           Seller has delivered to Buyer or its designee the original promissory note made in respect of such Mezzanine Loan, together with an original assignment thereof executed by Seller in blank.

(u)          Seller has not received any written notice that the Mezzanine Loan may be subject to reduction or disallowance for any reason, including without limitation, any setoff, right of recoupment, defense, counterclaim or impairment of any kind.

(v)          Seller has no obligation to make loans to, make guarantees on behalf of, or otherwise extend credit to, or make any of the foregoing for the benefit of, the Mezzanine Borrower or any other person under or in connection with the Mezzanine Loan.

(w)          The servicing and collection practices used by the servicer of the Mezzanine Loan, and the origination practices of the related originator, have been in all respects legal, proper and prudent and have met customary industry standards by prudent institutional commercial mezzanine lenders and mezzanine loan servicers except to the extent that, in connection with its origination, such standards were modified as reflected in the documentation delivered to Buyer.

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(x)           If applicable, the ground lessor consented to and acknowledged that (i) the Mezzanine Loan is permitted / approved, (ii) any foreclosure of the Mezzanine Loan and related change in ownership of the ground lessee will not require the consent of the ground lessor or constitute a default under the ground lease, (iii) copies of default notices would be sent to Mezzanine Lender and (iv) it would accept cure from Mezzanine Lender on behalf of the ground lessee.

(y)           To the extent the Buyer was granted a security interest with respect to the Mezzanine Loan, such interest (i) was given for due consideration, (ii) has attached, (iii) is perfected, (iv) is a first priority Lien, and (v) has been appropriately assigned to the Buyer by the Underlying Property Owner.

(z)           No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority is required for any transfer or assignment by the holder of such Mezzanine Loan.

(aa)         Seller has not received written notice of any outstanding liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind for which the holder of such Mezzanine Loan is or may become obligated.

(bb)         Seller has not advanced funds, or knowingly received any advance of funds from a party other than the borrower relating to such Mezzanine Loan, directly or indirectly, for the payment of any amount required by such Mezzanine Loan.

(cc)         All real estate taxes and governmental assessments, or installments thereof, which would be a lien on any related Underlying Mortgaged Property and that prior to the Purchase Date for the related Purchased Asset have become delinquent in respect of such Underlying Mortgaged Property have been paid, or an escrow of funds in an amount sufficient to cover such payments has been established.  For purposes of this representation and warranty, real estate taxes and governmental assessments and installments thereof shall not be considered delinquent until the earlier of (a) the date on which interest and/or penalties would first be payable thereon and (b) the date on which enforcement action is entitled to be taken by the related taxing authority.

(dd)         As of the Purchase Date for the related Purchased Asset, each related Underlying Mortgaged Property was free and clear of any material damage (other than deferred maintenance for which escrows were established at origination) that would affect materially and adversely the value of such Underlying Mortgaged Property as security for the related Underlying Mortgage Loan and there was no proceeding pending or, based solely upon the delivery of written notice thereof from the appropriate condemning authority, threatened for the total or partial condemnation of such Underlying Mortgaged Property.

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(ee)          As of the Purchase Date of the Mezzanine Loan, all insurance coverage required under the Mezzanine Loan Documents and/or any Mortgage Loan related to the Underlying Mortgaged Property, which insurance covered such risks as were customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Underlying Mortgaged Property in the jurisdiction in which such Underlying Mortgaged Property is located, and with respect to a fire and extended perils insurance policy, is in an amount (subject to a customary deductible) at least equal to the lesser of (i) the replacement cost of improvements located on such Underlying Mortgaged Property, or (ii) the outstanding principal balance of the Underlying Mortgage Loan, and in any event, the amount necessary to prevent operation of any co-insurance provisions; and, except if such Underlying Mortgaged Property is operated as a mobile home park, is also covered by business interruption or rental loss insurance, in an amount at least equal to 12 months of operations of the related Underlying Mortgaged Property, all of which was in full force and effect with respect to each related Underlying Mortgaged Property; and, as of the Purchase Date for the related Purchased Asset, all insurance coverage required under the Mezzanine Loan Documents and/or any Underlying Mortgage Loan related to the Underlying Mortgaged Property, which insurance covers such risks and is in such amounts as are customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Underlying Mortgaged Property in the jurisdiction in which such Underlying Mortgaged Property is located, is in full force and effect with respect to each related Underlying Mortgaged Property; all premiums due and payable through the Purchase Date for the related Purchased Asset have been paid; and no notice of termination or cancellation with respect to any such insurance policy has been received by Seller; and except for certain amounts not greater than amounts which would be considered prudent by an institutional commercial and/or multifamily mortgage lender with respect to a similar mortgage loan and which are set forth in the Mezzanine Loan Documents and/or any Underlying Mortgage Loan related to the Underlying Mortgaged Property, any insurance proceeds in respect of a casualty loss, will be applied either (i) to the repair or restoration of all or part of the related Underlying Mortgaged Property or (ii) the reduction of the outstanding principal balance of the Underlying Mortgage Loan, subject in either case to requirements with respect to leases at the related Underlying Mortgaged Property and to other exceptions customarily provided for by prudent institutional lenders for similar loans.  The Underlying Mortgaged Property is also covered by comprehensive general liability insurance against claims for personal and bodily injury, death or property damage occurring on, in or about the related Underlying Mortgaged Property, in an amount customarily required by prudent institutional lenders.  An architectural or engineering consultant has performed an analysis of the Underlying Mortgaged Properties located in seismic zone 3 or 4 in order to evaluate the structural and seismic condition of such property, for the sole purpose of assessing the probable maximum loss (“PML”) for the Underlying Mortgaged Property in the event of an earthquake.  In such instance, the PML was based on a 475 year lookback with a 10% probability of exceedance in a 50 year period.  If the resulting report concluded that the PML would exceed 20% of the amount of the replacement costs of the improvements, earthquake insurance on such Underlying Mortgaged Property was obtained by an insurer rated at least A-:V by A.M. Best Company or “BBB-” (or the equivalent) from S&P and Fitch or “Baa3” (or the equivalent) from Moody’s.  If the Underlying Mortgaged Property is located in Florida or within 25 miles of the coast of Texas, Louisiana, Mississippi, Alabama, Georgia, North Carolina or South Carolina such Underlying Mortgaged Property is insured by windstorm insurance in an amount at least equal to the lesser of (i) the outstanding principal balance of such Underlying Mortgage Loan and (ii) 100% of the full insurable value, or 100% of the replacement cost, of the improvements located on the related Underlying Mortgaged Property.

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(ff)           The insurance policies contain a standard Mortgagee clause naming the Mortgagee, its successors and assigns as loss payee, in the case of a property insurance policy, and additional insured in the case of a liability insurance policy and provide that they are not terminable without 30 days prior written notice to the Mortgagee (or, with respect to nonpayment, 10 days prior written notice to the Mortgagee) or such lesser period as prescribed by applicable law.  Each Mortgage requires that the Mortgagor maintain insurance as described above or permits the Mortgagee to require insurance as described above, and permits the Mortgagee to purchase such insurance at the Mortgagor’s expense if Mortgagor fails to do so.

(gg)         There is no material and adverse environmental condition or circumstance affecting the Underlying Mortgaged Property; there is no material violation of any applicable Environmental Law with respect to the Underlying Mortgaged Property; neither Seller nor the Underlying Property Owner has taken any actions which would cause the Underlying Mortgaged Property not to be in compliance with all applicable Environmental Laws; the Underlying Mortgage Loan documents require the borrower to comply with all Environmental Laws; and each Mortgagor has agreed to indemnify the Mortgagee for any losses resulting from any material, adverse environmental condition or failure of the Mortgagor to abide by such Environmental Laws or has provided environmental insurance.

(hh)         No borrower under the Mezzanine Loan nor any Mortgagor under any Underlying Mortgage Loan is a debtor in any state or federal bankruptcy or insolvency proceeding.

(ii)            Each related Underlying Mortgaged Property was inspected by or on behalf of the related originator or an affiliate during the 12 month period prior to the related origination date.

(jj)           There are no material violations of any applicable zoning ordinances, building codes and land laws applicable to the Underlying Mortgaged Property or the use and occupancy thereof which (i) are not insured by an ALTA lender’s title insurance policy (or a binding commitment therefor), or its equivalent as adopted in the applicable jurisdiction, or a law and ordinance insurance policy or (ii) would have a material adverse effect on the value, operation or net operating income of the Underlying Mortgaged Property.  The Mezzanine Loan Documents and the Underlying Mortgage Loan documents require the Underlying Mortgaged Property to comply with all applicable laws and ordinances.

(kk)          None of the material improvements which were included for the purposes of determining the appraised value of any related Underlying Mortgaged Property at the time of the origination of the Mezzanine Loan or any related Underlying Mortgage Loan lies outside of the boundaries and building restriction lines of such property (except Underlying Mortgaged Properties which are legal non-conforming uses), to an extent which would have a material adverse affect on the value of the Underlying Mortgaged Property or the related Mortgagor’s use and operation of such Underlying Mortgaged Property (unless affirmatively covered by title insurance) and no improvements on adjoining properties encroached upon such Underlying Mortgaged Property to any material and adverse extent (unless affirmatively covered by title insurance).

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(ll)           As of the Purchase Date for the related Purchased Asset, there was no pending action, suit or proceeding, or governmental investigation of which Seller, the Mezzanine Borrower or the Underlying Property Owner has received notice, against the Mortgagor or the related Underlying Mortgaged Property the adverse outcome of which could reasonably be expected to materially and adversely affect the Mezzanine Loan or the Underlying Mortgage Loan.

(mm)       The improvements located on the Underlying Mortgaged Property are either not located in a federally designated special flood hazard area or, if so located, the Mortgagor is required to maintain or the Mortgagee maintains, flood insurance with respect to such improvements and such policy is in full force and effect in an amount no less than the lesser of (i) the original principal balance of the Underlying Mortgage Loan, (ii) the value of such improvements on the related Underlying Mortgaged Property located in such flood hazard area or (iii) the maximum allowed under the related federal flood insurance program.

(nn)         Except for Mortgagors under Underlying Mortgage Loans the Underlying Mortgaged Property with respect to which includes a Ground Lease, the related Mortgagor (or its affiliate) has title in the fee simple interest in each related Underlying Mortgaged Property.

(oo)         The related Underlying Mortgaged Property is not encumbered, and none of the Mezzanine Loan Documents or any Underlying Mortgage Loan documents permits the related Underlying Mortgaged Property to be encumbered subsequent to the Purchase Date of the related Purchased Asset without the prior written consent of the holder thereof, by any lien securing the payment of money junior to or of equal priority with, or superior to, the lien of the related Mortgage (other than Title Exceptions, taxes, assessments and contested mechanics and materialmens liens that become payable after such Purchase Date).

(pp)         Each related Underlying Mortgaged Property constitutes one or more complete separate tax lots (or the related Mortgagor has covenanted to obtain separate tax lots and a Person has indemnified the Mortgagee for any loss suffered in connection therewith or an escrow of funds in an amount sufficient to pay taxes resulting from a breach thereof has been established) or is subject to an endorsement under the related title insurance policy.

(qq)         An appraisal of the related Underlying Mortgaged Property was conducted in connection with the origination of the Underlying Mortgage Loan; and such appraisal satisfied either (A) the requirements of the “Uniform Standards of Professional Appraisal Practice” as adopted by the Appraisal Standards Board of the Appraisal Foundation, or (B) the guidelines in Title XI of the Financial Institutions Reform, Recovery and Enforcement Act or 1989, in either case as in effect on the date such Underlying Mortgage Loan was originated.

(rr)           The related Underlying Mortgaged Property is served by public utilities, water and sewer (or septic facilities) and otherwise appropriate for the use in which the Underlying Mortgaged Property is currently being utilized.

(ss)          With respect to each related Underlying Mortgaged Property consisting of a Ground Lease, Seller represents and warrants the following with respect to the related Ground Lease:

I.           Such Ground Lease or a memorandum thereof has been or will be duly recorded no later than 30 days after the Purchase Date of the related Purchased Asset and such Ground Lease permits the interest of the lessee thereunder to be encumbered by the related Mortgage or, if consent of the lessor thereunder is required, it has been obtained prior to the Purchase Date.

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II.          Upon the foreclosure of the Underlying Mortgage Loan (or acceptance of a deed in lieu thereof), the Mortgagor’s interest in such Ground Lease is assignable to the Mortgagee under the leasehold estate and its assigns without the consent of the lessor thereunder (or, if any such consent is required, it has been obtained prior to the Purchase Date).

III.         Such Ground Lease may not be amended, modified, canceled or terminated without the prior written consent of the Mortgagee and any such action without such consent is not binding on the Mortgagee, its successors or assigns, except termination or cancellation if (i) an event of default occurs under the Ground Lease, (ii) notice thereof is provided to the Mortgagee and (iii) such default is curable by the Mortgagee as provided in the Ground Lease but remains uncured beyond the applicable cure period.

IV.         Such Ground Lease is in full force and effect, there is no material default under such Ground Lease, and there is no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a material default under such Ground Lease.

V.          The Ground Lease or ancillary agreement between the lessor and the lessee requires the lessor to give notice of any default by the lessee to the Mortgagee.  The Ground Lease or ancillary agreement further provides that no notice given is effective against the Mortgagee unless a copy has been given to the Mortgagee in a manner described in the Ground Lease or ancillary agreement.

VI.         The Ground Lease (i) is not subject to any liens or encumbrances superior to, or of equal priority with, the Mortgage, subject, however, to only the Title Exceptions or (ii) is subject to a subordination, non-disturbance and attornment agreement to which the Mortgagee on the lessor’s fee interest in the Underlying Mortgaged Property is subject.

VII.        A Mortgagee is permitted a reasonable opportunity (including, where necessary, sufficient time to gain possession of the interest of the lessee under the Ground Lease) to cure any curable default under such Ground Lease before the lessor thereunder may terminate such Ground Lease.

VIII.       Such Ground Lease has an original term (together with any extension options, whether or not currently exercised, set forth therein all of which can be exercised by the Mortgagee if the Mortgagee acquires the lessee’s rights under the Ground Lease) that extends not less than 20 years beyond the stated maturity date.

IX.          Under the terms of such Ground Lease, any estoppel or consent letter received by the Mortgagee from the lessor, and the related Mortgage, taken together, any related insurance proceeds or condemnation award (other than in respect of a total or substantially total loss or taking) will be applied either to the repair or restoration of all or part of the related Underlying Mortgaged Property, with the Mortgagee or a trustee appointed by it having the right to hold and disburse such proceeds as repair or restoration progresses, or to the payment or defeasance of the outstanding principal balance of the Underlying Mortgage Loan, together with any accrued interest (except in cases where a different allocation would not be viewed as commercially unreasonable by any commercial mortgage lender, taking into account the relative duration of the Ground Lease and the related Mortgage and the ratio of the market value of the related Underlying Mortgaged Property to the outstanding principal balance of such Underlying Mortgage Loan).

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X.           The Ground Lease does not impose any restrictions on subletting that would be viewed as commercially unreasonable by a prudent commercial lender.

XI.          The ground lessor under such Ground Lease is required to enter into a new lease upon termination of the Ground Lease for any reason, including the rejection of the Ground Lease in bankruptcy.

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REPRESENTATIONS AND WARRANTIES

RE:  PURCHASED ASSETS CONSISTING

OF MEZZANINE PARTICIPATIONS

(a)           The Mezzanine Participation is a senior participation interest in a Mezzanine Loan.

(b)           As of the Purchase Date, the Mezzanine Participation complies in all material respects with, or is exempt from, all requirements of federal, state or local law relating to the Mezzanine Participation.

(c)           Immediately prior to the sale, transfer and assignment to Buyer thereof, Seller had good and marketable title to, and was the sole owner and holder of, the Mezzanine Participation, and Seller is transferring the Mezzanine Participation free and clear of any and all liens, pledges, encumbrances, charges, security interests or any other ownership interests of any nature encumbering the Mezzanine Participation.  Upon consummation of the purchase contemplated to occur in respect of the Mezzanine Participation on the Purchase Date therefor, Seller will have validly and effectively conveyed to Buyer all legal and beneficial interest in and to the Mezzanine Participation free and clear of any pledge, lien, encumbrance or security interest.

(d)           No fraudulent acts were committed by Seller in connection with its acquisition or origination of the Mezzanine Participation nor were any fraudulent acts committed by any Person in connection with the origination of the Mezzanine Participation.

(e)           All information contained in the related Underwriting Package (or as otherwise provided to Buyer) in respect of the Mezzanine Participation is accurate and complete in all material respects.

(f)            Seller has full right, power and authority to sell and assign the Mezzanine Participation and the Mezzanine Participation has not been cancelled, satisfied or rescinded in whole or part nor has any instrument been executed that would effect a cancellation, satisfaction or rescission thereof.

(g)           Other than consents and approvals obtained as of the related Purchase Date, no consent or approval by any Person is required in connection with Seller’s sale and/or Buyer’s acquisition of the Mezzanine Participation, for Buyer’s exercise of any rights or remedies in respect of the Mezzanine Participation or for Buyer’s sale, pledge or other disposition of the Mezzanine Participation.  No third party holds any “right of first refusal”, “right of first negotiation”, “right of first offer”, purchase option, or other similar rights of any kind, and no other impediment exists to any such transfer or exercise of rights or remedies.

(h)           No consent, approval, authorization or order of, or registration or filing with, or notice to, any court or governmental agency or body having jurisdiction or regulatory authority is required for any transfer or assignment by the holder of the Mezzanine Participation.

(i)            Seller has delivered to Buyer or its designee the original promissory note, certificate or other similar indicia of ownership of the Mezzanine Participation, however denominated, together with an original assignment thereof, executed by Seller in blank, or, with respect to a participation interest, reissued in Buyer’s name (or such other name as designated by the Buyer).

(j)            No (i) monetary default, breach or violation exists with respect to any agreement or other document governing or pertaining to the Mezzanine Participation, (ii) material non-monetary default, breach or violation exists with respect to the Mezzanine Participation, or (iii) event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration.

(k)           The Mezzanine Participation has not been and shall not be deemed to be a Security within the meaning of the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended.

(l)            Seller has not received written notice of any outstanding liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind for which the holder of the Mezzanine Participation is or may become obligated.

(m)          No issuer of the Mezzanine Participation is a debtor in any state or federal bankruptcy or insolvency proceeding.

(n)           With respect to the Mezzanine Participation, except as set forth in the related documents delivered to Buyer, the terms of the related documents have not been waived, modified, altered, satisfied, impaired, canceled, subordinated or rescinded in any manner which materially interferes with the security intended to be provided by such documents and no such waiver, modification, alteration, satisfaction, impairment, cancellation, subordination or recission has occurred since the date upon which the due diligence file related to the Mezzanine Participation was delivered to Buyer or its designee.

(o)           With respect to the related Mezzanine Loan, the related Mezzanine Loan documents require the Mezzanine Borrower to provide the Mezzanine Lender with certain financial information at the times required under the related Mezzanine Loan documents.

(p)           The Mezzanine Loan is secured by a pledge of equity ownership interests in the related borrower under the Underlying Mortgage Loan or a direct or indirect owner of the related borrower.

(q)           As of the Purchase Date, the related Mezzanine Loan complies in all material respects with, or is exempt from, all requirements of federal, state or local law relating to the related Mezzanine Loan.

(r)           All information contained in the related Underwriting Package (or as otherwise provided to Buyer) in respect of the related Mezzanine Loan is accurate and complete in all material respects.

(s)           Except as included in the Underwriting Package, Seller is not a party to any document, instrument or agreement, and there is no document, that by its terms modifies or affects the rights and obligations of any holder of the Mezzanine Participation or the related Mezzanine Loan and Seller has not consented to any material change or waiver to any term or provision of any such document, instrument or agreement and no such change or waiver exists.

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(t)           The related Mezzanine Loan is presently outstanding, the proceeds thereof have been fully and properly disbursed and, except for amounts held in escrow, there is no requirement for any future advances thereunder.

(u)           The Underlying Property Owner has been duly organized and is validly existing and in good standing under the laws of its jurisdiction of organization, with requisite power and authority to own its assets and to transact the business in which it is now engaged, the sole purpose of the Underlying Property Owner under its organizational documents is to own, finance, sell or otherwise manage the Properties and to engage in any and all activities related or incidental thereto, and the Mortgaged Properties constitute the sole assets of the Underlying Property Owner.

(v)           The Underlying Property Owner has good and marketable title to the Underlying Mortgaged Property, no claims under the title policies insuring the Underlying Property Owner’s title to the Properties have been made, and the Underlying Property Owner has not received any written notice regarding any material violation of any easement, restrictive covenant or similar instrument affecting the Underlying Mortgaged Property.

(w)          The representations and warranties made by the borrower (the “Mezzanine Borrower”) in the Mezzanine Loan Documents were true and correct in all material respects as of the date such representations and warranties were stated to be true therein, and there has been no adverse change with respect to the Mezzanine Loan, the Mezzanine Borrower, the Underlying Mortgaged Property or the Underlying Property Owner that would render any such representation or warranty not true or correct in any material respect as of the Purchase Date.

(x)           The Mezzanine Loan Documents provide for the acceleration of the payment of the unpaid principal balance of the Mezzanine Loan if (i) the related borrower voluntarily transfers or encumbers all or any portion of any related Mezzanine Collateral, or (ii) any direct or indirect interest in the related borrower is voluntarily transferred or assigned, other than, in each case, as permitted under the terms and conditions of the related loan documents.

(y)           Pursuant to the terms of the Mezzanine Loan Documents: (a) no material terms of any related Mortgage may be waived, canceled, subordinated or modified in any material respect and no material portion of such Mortgage or the Underlying Mortgaged Property may be released without the consent of the holder of the Mezzanine Loan; (b) no material action may be taken by the Underlying Property Owner with respect to the Underlying Mortgaged Property without the consent of the holder of the Mezzanine Loan; (c) the holder of the Mezzanine Loan is entitled to approve the budget of the Underlying Property Owner as it relates to the Underlying Mortgaged Property; and (d) the holder of the Mezzanine Loan's consent is required prior to the Underlying Property Owner incurring any additional indebtedness.

(z)           There is no (i) monetary default, breach or violation with respect to such Mezzanine Loan, the Underlying Mortgage Loan or any other obligation of the owner of the Underlying Mortgaged Property (the “Underlying Property Owner”), (ii) material non-monetary default, breach or violation with respect to such Mezzanine Loan, the Underlying Mortgage Loan or any other obligation of the Underlying Property Owner or (iii) event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration.

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(aa)         No default or event of default has occurred under any agreement pertaining to any lien or other interest that ranks pari passu with or senior to the interests of the Mezzanine Participation or the holder of the related Mezzanine Loan or with respect to any Underlying Mortgage Loan or other indebtedness in respect of the related Underlying Mortgaged Property and there is no provision in any agreement related to any such lien, interest or loan which would provide for any increase in the principal amount of any such lien, other interest or loan.

(bb)         Seller’s security interest in the Mezzanine Loan is covered by a UCC-9 insurance policy (the “UCC-9 Policy”) in the maximum principal amount of the Mezzanine Loan insuring that the related pledge is a valid first priority lien on the collateral pledged in respect of such Mezzanine Loan (the “Mezzanine Collateral”), subject only to the exceptions stated therein (or a pro forma title policy or marked up title insurance commitment on which the required premium has been paid exists which evidences that such UCC-9 Policy will be issued), such UCC-9 Policy (or, if it has yet to be issued, the coverage to be provided thereby) is in full force and effect, no material claims have been made thereunder and no claims have been paid thereunder, Seller has not done, by act or omission, anything that would materially impair the coverage under the UCC-9 Policy and as of the Purchase Date, the UCC-9 Policy (or, if it has yet to be issued, the coverage to be provided thereby) will inure to the benefit of Buyer without the consent of or notice to the insurer.

(cc)          The Mezzanine Loan, and each party involved in the origination of the Mezzanine Loan, complied as of the date of origination with, or was exempt from, applicable state or federal laws, regulations and other requirements pertaining to usury.

(dd)          Seller has not received any written notice that the Mezzanine Loan may be subject to reduction or disallowance for any reason, including without limitation, any setoff, right of recoupment, defense, counterclaim or impairment of any kind.

(ee)           Seller has no obligation to make loans to, make guarantees on behalf of, or otherwise extend credit to, or make any of the foregoing for the benefit of, the Mezzanine Borrower or any other person under or in connection with the Mezzanine Loan.

(ff)            The servicing and collection practices used by the servicer of the Mezzanine Loan, and the origination practices of the related originator, have been in all respects legal, proper and prudent and have met customary industry standards by prudent institutional commercial mezzanine lenders and mezzanine loan servicers except to the extent that, in connection with its origination, such standards were modified as reflected in the documentation delivered to Buyer.

(gg)           If applicable, the ground lessor consented to and acknowledged that (i) the Mezzanine Loan is permitted / approved, (ii) any foreclosure of the Mezzanine Loan and related change in ownership of the ground lessee will not require the consent of the ground lessor or constitute a default under the ground lease, (iii) copies of default notices would be sent to Mezzanine Lender and (iv) it would accept cure from Mezzanine Lender on behalf of the ground lessee.

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(hh)           To the extent the Buyer was granted a security interest with respect to the Mezzanine Loan, such interest (i) was given for due consideration, (ii) has attached, (iii) is perfected, (iv) is a first priority Lien, and (v) has been appropriately assigned to the Buyer by the Underlying Property Owner.

(ii)             Seller has not received written notice of any outstanding liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind for which the holder of such Mezzanine Loan is or may become obligated.

(jj)             Seller has not advanced funds, or knowingly received any advance of funds from a party other than the borrower relating to such Mezzanine Loan, directly or indirectly, for the payment of any amount required by such Mezzanine Loan.

(kk)           All real estate taxes and governmental assessments, or installments thereof, which would be a lien on any related Underlying Mortgaged Property and that prior to the Purchase Date for the related Purchased Asset have become delinquent in respect of such Underlying Mortgaged Property have been paid, or an escrow of funds in an amount sufficient to cover such payments has been established.  For purposes of this representation and warranty, real estate taxes and governmental assessments and installments thereof shall not be considered delinquent until the earlier of (a) the date on which interest and/or penalties would first be payable thereon and (b) the date on which enforcement action is entitled to be taken by the related taxing authority.

(ll)            As of the Purchase Date for the related Purchased Asset, each related Underlying Mortgaged Property was free and clear of any material damage (other than deferred maintenance for which escrows were established at origination) that would affect materially and adversely the value of such Underlying Mortgaged Property as security for the related Underlying Mortgage Loan and there was no proceeding pending or, based solely upon the delivery of written notice thereof from the appropriate condemning authority, threatened for the total or partial condemnation of such Underlying Mortgaged Property.

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(mm)        As of the date of origination of the Mezzanine Loan, all insurance coverage required under the Mezzanine Loan Documents and/or any Mortgage Loan related to the Underlying Mortgaged Property, which insurance covered such risks as were customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Underlying Mortgaged Property in the jurisdiction in which such Underlying Mortgaged Property is located, and with respect to a fire and extended perils insurance policy, is in an amount (subject to a customary deductible) at least equal to the lesser of (i) the replacement cost of improvements located on such Underlying Mortgaged Property, or (ii) the outstanding principal balance of the Underlying Mortgage Loan, and in any event, the amount necessary to prevent operation of any co-insurance provisions; and, except if such Underlying Mortgaged Property is operated as a mobile home park, is also covered by business interruption or rental loss insurance, in an amount at least equal to 12 months of operations of the related Underlying Mortgaged Property, all of which was in full force and effect with respect to each related Underlying Mortgaged Property; and, as of the Purchase Date for the related Purchased Asset, all insurance coverage required under the Mezzanine Loan Documents and/or any Underlying Mortgage Loan related to the Underlying Mortgaged Property, which insurance covers such risks and is in such amounts as are customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related Underlying Mortgaged Property in the jurisdiction in which such Underlying Mortgaged Property is located, is in full force and effect with respect to each related Underlying Mortgaged Property; all premiums due and payable through the Purchase Date for the related Purchased Asset have been paid; and no notice of termination or cancellation with respect to any such insurance policy has been received by Seller; and except for certain amounts not greater than amounts which would be considered prudent by an institutional commercial and/or multifamily mortgage lender with respect to a similar mortgage loan and which are set forth in the Mezzanine Loan Documents and/or any Underlying Mortgage Loan related to the Underlying Mortgaged Property, any insurance proceeds in respect of a casualty loss, will be applied either (i) to the repair or restoration of all or part of the related Underlying Mortgaged Property or (ii) the reduction of the outstanding principal balance of the Underlying Mortgage Loan, subject in either case to requirements with respect to leases at the related Underlying Mortgaged Property and to other exceptions customarily provided for by prudent institutional lenders for similar loans.  The Underlying Mortgaged Property is also covered by comprehensive general liability insurance against claims for personal and bodily injury, death or property damage occurring on, in or about the related Underlying Mortgaged Property, in an amount customarily required by prudent institutional lenders.  An architectural or engineering consultant has performed an analysis of the Underlying Mortgaged Properties located in seismic zone 3 or 4 in order to evaluate the structural and seismic condition of such property, for the sole purpose of assessing the probable maximum loss (“PML”) for the Underlying Mortgaged Property in the event of an earthquake.  In such instance, the PML was based on a 475 year lookback with a 10% probability of exceedance in a 50 year period.  If the resulting report concluded that the PML would exceed 20% of the amount of the replacement costs of the improvements, earthquake insurance on such Underlying Mortgaged Property was obtained by an insurer rated at least A-:V by A.M. Best Company or “BBB-” (or the equivalent) from S&P and Fitch or “Baa3” (or the equivalent) from Moody’s.  If the Underlying Mortgaged Property is located in Florida or within 25 miles of the coast of Texas, Louisiana, Mississippi, Alabama, Georgia, North Carolina or South Carolina such Underlying Mortgaged Property is insured by windstorm insurance in an amount at least equal to the lesser of (i) the outstanding principal balance of such Underlying Mortgage Loan and (ii) 100% of the full insurable value, or 100% of the replacement cost, of the improvements located on the related Underlying Mortgaged Property.

(nn)           The insurance policies contain a standard Mortgagee clause naming the Mortgagee, its successors and assigns as loss payee, in the case of a property insurance policy, and additional insured in the case of a liability insurance policy and provide that they are not terminable without 30 days prior written notice to the Mortgagee (or, with respect to non-payment, 10 days prior written notice to the Mortgagee) or such lesser period as prescribed by applicable law.  Each Mortgage requires that the Mortgagor maintain insurance as described above or permits the Mortgagee to require insurance as described above, and permits the Mortgagee to purchase such insurance at the Mortgagor’s expense if Mortgagor fails to do so.

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(oo)           There is no material and adverse environmental condition or circumstance affecting the Underlying Mortgaged Property; there is no material violation of any applicable Environmental Law with respect to the Underlying Mortgaged Property; neither Seller nor the Underlying Property Owner has taken any actions which would cause the Underlying Mortgaged Property not to be in compliance with all applicable Environmental Laws; the Underlying Mortgage Loan documents require the borrower to comply with all Environmental Laws; and each Mortgagor has agreed to indemnify the Mortgagee for any losses resulting from any material, adverse environmental condition or failure of the Mortgagor to abide by such Environmental Laws or has provided environmental insurance.

(pp)           No borrower under the Mezzanine Loan nor any Mortgagor under any Underlying Mortgage Loan is a debtor in any state or federal bankruptcy or insolvency proceeding.

(qq)           Each related Underlying Mortgaged Property was inspected by or on behalf of the related originator or an affiliate during the 12 month period prior to the related origination date.

(rr)            There are no material violations of any applicable zoning ordinances, building codes and land laws applicable to the Underlying Mortgaged Property or the use and occupancy thereof which (i) are not insured by an ALTA lender’s title insurance policy (or a binding commitment therefor), or its equivalent as adopted in the applicable jurisdiction, or a law and ordinance insurance policy or (ii) would have a material adverse effect on the value, operation or net operating income of the Underlying Mortgaged Property.  The Mezzanine Loan Documents and the Underlying Mortgage Loan documents require the Underlying Mortgaged Property to comply with all applicable laws and ordinances.

(ss)           None of the material improvements which were included for the purposes of determining the appraised value of any related Underlying Mortgaged Property at the time of the origination of the Mezzanine Loan or any related Underlying Mortgage Loan lies outside of the boundaries and building restriction lines of such property (except Underlying Mortgaged Properties which are legal non-conforming uses), to an extent which would have a material adverse affect on the value of the Underlying Mortgaged Property or the related Mortgagor’s use and operation of such Underlying Mortgaged Property (unless affirmatively covered by title insurance) and no improvements on adjoining properties encroached upon such Underlying Mortgaged Property to any material and adverse extent (unless affirmatively covered by title insurance).

(tt)           As of the Purchase Date for the related Purchased Asset, there was no pending action, suit or proceeding, or governmental investigation of which Seller, the Mezzanine Borrower or the Underlying Property Owner has received notice, against the Mortgagor or the related Underlying Mortgaged Property the adverse outcome of which could reasonably be expected to materially and adversely affect the Mezzanine Loan or the Underlying Mortgage Loan.

(uu)         The improvements located on the Underlying Mortgaged Property are either not located in a federally designated special flood hazard area or, if so located, the Mortgagor is required to maintain or the Mortgagee maintains, flood insurance with respect to such improvements and such policy is in full force and effect in an amount no less than the lesser of (i) the original principal balance of the Underlying Mortgage Loan, (ii) the value of such improvements on the related Underlying Mortgaged Property located in such flood hazard area or (iii) the maximum allowed under the related federal flood insurance program.

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(vv)         With respect to each related Underlying Mortgage Loan, except for Mortgagors under Underlying Mortgage Loans, the Underlying Mortgaged Property with respect to which includes a Ground Lease, the related lessor (or its affiliate) has title in the fee simple interest in each related Underlying Mortgaged Property.

(ww)        The related Underlying Mortgaged Property is not encumbered, and none of the Mezzanine Loan Documents or any Underlying Mortgage Loan documents permits the related Underlying Mortgaged Property to be encumbered subsequent to the Purchase Date of the related Purchased Asset without the prior written consent of the holder thereof, by any lien securing the payment of money junior to or of equal priority with, or superior to, the lien of the related Mortgage (other than Title Exceptions, taxes, assessments and contested mechanics and materialmens liens that become payable after such Purchase Date).

(xx)           Each related Underlying Mortgaged Property constitutes one or more complete separate tax lots (or the related Mortgagor has covenanted to obtain separate tax lots and a Person has indemnified the Mortgagee for any loss suffered in connection therewith or an escrow of funds in an amount sufficient to pay taxes resulting from a breach thereof has been established) or is subject to an endorsement under the related title insurance policy.

(yy)          An appraisal of the related Underlying Mortgaged Property was conducted in connection with the origination of the Underlying Mortgage Loan; and such appraisal satisfied either (A) the requirements of the “Uniform Standards of Professional Appraisal Practice” as adopted by the Appraisal Standards Board of the Appraisal Foundation, or (B) the guidelines in Title XI of the Financial Institutions Reform, Recovery and Enforcement Act or 1989, in either case as in effect on the date such Underlying Mortgage Loan was originated.

(zz)           The related Underlying Mortgaged Property is served by public utilities, water and sewer (or septic facilities) and otherwise appropriate for the use in which the Underlying Mortgaged Property is currently being utilized.

(aaa)         With respect to each related Underlying Mortgaged Property consisting of a Ground Lease, Seller represents and warrants the following with respect to the related Ground Lease:

I.           Such Ground Lease or a memorandum thereof has been or will be duly recorded no later than 30 days after the Purchase Date of the related Purchased Asset and such Ground Lease permits the interest of the lessee thereunder to be encumbered by the related Mortgage or, if consent of the lessor thereunder is required, it has been obtained prior to the Purchase Date.

II.          Upon the foreclosure of the Underlying Mortgage Loan (or acceptance of a deed in lieu thereof), the Mortgagor’s interest in such Ground Lease is assignable to the Mortgagee under the leasehold estate and its assigns without the consent of the lessor thereunder (or, if any such consent is required, it has been obtained prior to the Purchase Date).

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III.         Such Ground Lease may not be amended, modified, canceled or terminated without the prior written consent of the Mortgagee and any such action without such consent is not binding on the Mortgagee, its successors or assigns, except termination or cancellation if (i) an event of default occurs under the Ground Lease, (ii) notice thereof is provided to the Mortgagee and (iii) such default is curable by the Mortgagee as provided in the Ground Lease but remains uncured beyond the applicable cure period.

IV.         Such Ground Lease is in full force and effect, there is no material default under such Ground Lease, and there is no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a material default under such Ground Lease.

V.          The Ground Lease or ancillary agreement between the lessor and the lessee requires the lessor to give notice of any default by the lessee to the Mortgagee.  The Ground Lease or ancillary agreement further provides that no notice given is effective against the Mortgagee unless a copy has been given to the Mortgagee in a manner described in the Ground Lease or ancillary agreement.

VI.         The Ground Lease (i) is not subject to any liens or encumbrances superior to, or of equal priority with, the Mortgage, subject, however, to only the Title Exceptions or (ii) is subject to a subordination, non-disturbance and attornment agreement to which the Mortgagee on the lessor’s fee interest in the Underlying Mortgaged Property is subject.

VII.        A Mortgagee is permitted a reasonable opportunity (including, where necessary, sufficient time to gain possession of the interest of the lessee under the Ground Lease) to cure any curable default under such Ground Lease before the lessor thereunder may terminate such Ground Lease.

VIII.       Such Ground Lease has an original term (together with any extension options, whether or not currently exercised, set forth therein all of which can be exercised by the Mortgagee if the Mortgagee acquires the lessee’s rights under the Ground Lease) that extends not less than 20 years beyond the stated maturity date.

IX.          Under the terms of such Ground Lease, any estoppel or consent letter received by the Mortgagee from the lessor, and the related Mortgage, taken together, any related insurance proceeds or condemnation award (other than in respect of a total or substantially total loss or taking) will be applied either to the repair or restoration of all or part of the related Underlying Mortgaged Property, with the Mortgagee or a trustee appointed by it having the right to hold and disburse such proceeds as repair or restoration progresses, or to the payment or defeasance of the outstanding principal balance of the Underlying Mortgage Loan, together with any accrued interest (except in cases where a different allocation would not be viewed as commercially unreasonable by any commercial mortgage lender, taking into account the relative duration of the Ground Lease and the related Mortgage and the ratio of the market value of the related Underlying Mortgaged Property to the outstanding principal balance of such Underlying Mortgage Loan).

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X.           The Ground Lease does not impose any restrictions on subletting that would be viewed as commercially unreasonable by a prudent commercial lender

XI.          The ground lessor under such Ground Lease is required to enter into a new lease upon termination of the Ground Lease for any reason, including the rejection of the Ground Lease in bankruptcy.

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EXHIBIT VII

ASSET INFORMATION

Loan ID #:

Borrower Name:

Borrower Address:

Borrower City:

Borrower State:

Borrower Zip Code:

Recourse?

Guaranteed?

Related Borrower Name(s):

Original Principal Balance:

Note Date:

Loan Date:

Loan Type (e.g. fixed/arm):

Current Principal Balance:

Current Interest Rate (per annum):

Paid to date:

Annual P&I:

Next Payment due date:

Index (complete whether fixed or arm):

Gross Spread/Margin (complete whether fixed or arm):

Life Cap:

Life Floor:

Periodic Cap:

Periodic Floor:

Rounding Factor:

Lookback (in days):

Interest Calculation Method (e.g., Actual/360):

Interest rate adjustment frequency:

P&I payment frequency:

First P&I payment due:

First interest rate adjustment date:

First payment adjustment date:

Next interest rate adjustment date:

Next payment adjustment date:

Conversion Date:

Converted Interest Rate Index:

Converted Interest Rate Spread:

Maturity date:

Loan term:

Amortization term:

Hyper-Amortization Flag:

Hyper-Amortization Term:

Hyper-Amortization Rate Increase:

ASSET INFORMATION (continued)

Balloon Amount:

Balloon LTV:

Prepayment Penalty Flag:

Prepayment Penalty Text:

Lockout Period:

Lien Position:

Fee/Leasehold:

Ground Lease Expiration Date:

CTL (Yes/No):

CTL Rating (Moody’s):

CTL Rating (Duff):

CTL Rating (S&P):

CTL Rating (Fitch):

Lease Guarantor:

CTL Lease Type (NNN, NN, Bondable):

Property Name:

Property Address:

Property City:

Property Zip Code:

Property Type (General):

Property Type (Specific):

Cross-collateralized (Yes/No)*:

Property Size:

Year built:

Year renovated:

Actual Average Occupancy:

Occupancy Rent Roll Date:

Underwritten Average Occupancy:

Largest Tenant:

Largest Tenant SF:

Largest Tenant Lease Expiration:

2nd Largest Tenant:

2nd Largest Tenant SF:

2nd Largest Tenant Lease Expiration:

3rd Largest Tenant:

3rd Largest Tenant SF:

3rd Largest Tenant Lease Expiration:

Underwritten Average Rental Rate/ADR:

Underwritten Vacancy/Credit Loss:

Underwritten Other Income:

Underwritten Total Revenues:

_______________________

 

* If yes, give property information on each property covered and in aggregate as appropriate.  Loan ID’s should be denoted with a suffix letter to signify loans/collateral.

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ASSET INFORMATION (continued)

Underwritten Replacement Reserves:

Underwritten Management Fees:

Underwritten Franchise Fees:

Underwritten Total Expenses:

Underwritten Leasing Commissions:

Underwritten Tenant Improvement Costs:

Underwritten NOI:

Underwritten NCF:

Underwritten Debt Service Constant:

Underwritten DSCR at NOI:

Underwritten DSCR at NCF:

Underwritten NOI Period End Date:

Hotel Franchise:

Hotel Franchise Expiration Date:

Appraiser Name:

Appraised Value:

Appraisal Date:

Appraisal Cap Rate:

Appraisal Discount Rate:

Underwritten LTV:

Environmental Report Preparer:

Environmental Report Date:

Environmental Report Issues:

Architectural and Engineering Report Preparer:

Architectural and Engineering Report Date:

Deferred Maintenance Amount:

Ongoing Replacement Reserve Requirement per A&E Report:

Immediate Repairs Escrow % (e.g. [___]%):

Replacement Reserve Annual Deposit:

Replacement Reserve Balance:

Tenant Improvement/Leasing Commission Annual Deposits:

Tenant Improvement/Leasing Commission Balance:

Taxes paid through date:

Monthly Tax Escrow:

Tax Escrow Balance:

Insurance paid through date:

Monthly Insurance Escrow:

Insurance Escrow Balance:

Reserve/Escrow Balance as of Date:

Probable Maximum Loss %:

Covered by Earthquake Insurance (Yes/No):

Number of times 30 days late in last 12 months:

Number of times 60 days late in last 12 months:

Number of times 90 days late in last 12 months:

Servicing Fee:

Notes:

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EXHIBIT VIII

ADVANCE PROCEDURES

(a)           Submission of Due Diligence Package.  No less than fifteen (15) Business Days prior to the proposed Purchase Date, Seller shall deliver to Buyer a due diligence package for Buyer’s review and approval, which shall contain the following items (the “Due Diligence Package”):

1. Delivery of Purchased Asset Documents.  With respect to a New Asset that is a Pre-Existing Asset, each of the Purchased Asset Documents.

2. Transaction-Specific Due Diligence Materials.  With respect to any New Asset, a summary memorandum outlining the proposed transaction, including potential transaction benefits and all material underwriting risks, all Underwriting Issues and all other characteristics of the proposed transaction that a reasonable buyer would consider material, together with the following due diligence information relating to the New Asset:

A.           With respect to each Eligible Asset that is an Eligible Loan,

(ii)           the Asset Information and, if available, maps and photos;

(iii)          a current rent roll and roll over schedule, if applicable;

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

(v)           copies of appraisal, environmental, engineering and any other third-party reports; provided, that, if same are not available to Seller at the time of Seller’s submission of the Due Diligence Package to Buyer, Seller shall deliver such items to Buyer promptly upon Seller’s receipt of such items;

(vi)

(vii)         a description of the underlying real estate directly or indirectly securing or supporting such Purchased Asset and the ownership structure of the borrower and the sponsor (including, without limitation, the board of directors, if applicable) and, to the extent that real property does not secure such Eligible Loan, the related collateral securing such Eligible Loan, if any;

(viii)        indicative debt service coverage ratios;

(ix)           indicative loan-to-value ratios;

(x)            a term sheet outlining the transaction generally;

(xi)           a description of the Mortgagor, including experience with other projects (real estate owned), its ownership structure and financial statements;

(xii)          a description of Seller’s relationship with the Mortgagor, if any;

(xiii)         copies of documents evidencing such New Asset, or current drafts thereof, including, without limitation, underlying debt and security documents, guaranties, the underlying borrower’s and guarantor’s organizational documents, warrant agreements, and loan and collateral pledge agreements, as applicable, provided that, if same are not available to Seller at the time of Seller’s submission of the Due Diligence Package to Buyer, Seller shall deliver such items to Buyer promptly upon Seller’s receipt of such items;

(xiv)         in the case of Subordinate Eligible Assets, all information described in this section 2(A) that would otherwise be provided for the Underlying Mortgage Loan if it were an Eligible Asset, and in addition, all documentation evidencing such Subordinate Eligible Asset; and

(xv)          any exceptions to the representations and warranties set forth in Exhibit VI to this Agreement.

B.           With respect to each Eligible Asset that is CMBS,

(xvi)         the related prospectus or offering circular;

(xvii)        all structural and collateral term sheets and all other computational or other similar materials provided to Seller in connection with its acquisition of such CMBS;

(xviii)       all distribution date statements issued in respect thereof during the immediately preceding 12 months (or, if less, since the date such CMBS was issued);

(xix)          all monthly CMSA reporting packages issued in respect of such CMBS during the immediately preceding 12 months (or, if less, since the date such CMBS was issued);

(xx)           all Rating Agency pre-sale reports;

(xxi)          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; and

(xxii)         the related pooling and servicing agreement.

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3. Environmental and Engineering.  A “Phase 1” (and, if requested by Buyer, “Phase 2”) environmental report, an asbestos survey, if applicable, and an engineering report, each in form reasonably satisfactory to Buyer, by an engineer or environmental consultant reasonably approved by Buyer.

4. Credit Memorandum.  A credit memorandum, asset summary or other similar document that details cash flow underwriting, historical operating numbers, underwriting footnotes, rent roll and lease rollover schedule.

5. Appraisal.  Either an appraisal approved by Buyer or a Draft Appraisal, each by an MAI appraiser, if applicable.  If Buyer receives only a Draft Appraisal prior to entering into a Transaction, Seller shall deliver an appraisal approved by Buyer by an MAI appraiser on or before ten (10) calendar days after the Purchase Date.  The related appraisal shall (i) be dated less than twelve (12) months prior to the proposed financing date and (ii) not be ordered by the related borrower or an Affiliate of the related borrower.

6. Opinions of Counsel.  An opinion to Seller and its successors and assigns from counsel to the underlying obligor on the underlying loan transaction, as applicable, as to enforceability of the loan documents governing such transaction and such other matters as Buyer shall require (including, without limitation, opinions as to due formation, authority, choice of law and perfection of security interests).

7. Additional Real Estate Matters.  To the extent obtained by Seller from the Mortgagor or the underlying obligor relating to any Eligible Asset at the origination of the Eligible Asset, such other real estate related certificates and documentation as may have been requested by Buyer, such as abstracts of all leases in effect at the real property relating to such Eligible Asset.

8. Other Documents.  Any other documents as Buyer or its counsel shall reasonably deem necessary.

(b)           Submission of Legal Documents.  With respect to a New Asset that is an Originated Asset, no less than seven (7) calendar days prior to the proposed Purchase Date, Seller shall deliver, or cause to be delivered, to counsel for Buyer the following items, where applicable:

1. Copies of all draft Purchased Asset Documents in substantially final form, blacklined against the approved form Purchased Asset Documents.

2. Certificates or other evidence of insurance demonstrating insurance coverage in respect of the underlying real estate directly or indirectly securing or supporting such Purchased Asset of types, in amounts, with insurers and otherwise in compliance with the terms, provisions and conditions set forth in the Purchased Asset Documents.  Such certificates or other evidence shall indicate that Seller (or, as to Subordinate Eligible Assets, the lead lender on the whole loan in which Seller is a participant or holder of a note or has an equity interest in the Mortgagor, as applicable), 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 Asset Documents.

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3. All surveys of the underlying real estate directly or indirectly securing or supporting such Purchased Asset that are in Seller’s possession.

4. As reasonably requested by Buyer, satisfactory reports of UCC, tax lien, judgment and litigation searches and title updates conducted by search firms and/or title companies reasonably acceptable to Buyer with respect to the Eligible Loan, underlying real estate directly or indirectly securing or supporting such Eligible Loan, Seller and Mortgagor, such searches to be conducted in each location Buyer shall reasonably designate.

5. An unconditional commitment to issue a Title Policy in favor of Buyer and Buyer’s successors and/or assigns with respect to Buyer’s interest in the related real property and insuring the assignment of the Eligible Asset to Buyer, with an amount of insurance that shall be not less than the maximum principal amount of the Eligible Asset (taking into account the proposed Advance), or an endorsement or confirmatory letter from the title insurance company that issued the existing title insurance policy, in favor of Buyer and Buyer’s successors and/or assigns, that amends the existing title insurance policy by stating that the amount of the insurance is not less than the maximum principal amount of the Eligible Asset (taking into account the proposed Advance).

6. Certificates of occupancy and letters certifying that the property is in compliance with all applicable zoning laws, each issued by the appropriate Governmental Authority.

(c)           Approval of Eligible Asset.  Conditioned upon the timely and satisfactory completion of Seller’s requirements in clauses (a) through (c) above, Buyer shall, no less than five (5) calendar days prior to the proposed Purchase Date (1) notify Seller in writing (which may take the form of electronic mail format) that Buyer has not approved the proposed Eligible Asset as a Purchased Asset or (2) notify Seller in writing (which may take the form of electronic mail format) that Buyer has approved the proposed Eligible Asset as a Purchased Asset.  Buyer’s failure to respond to Seller on or prior to five (5) calendar days prior to the proposed Purchase Date, shall be deemed to be a denial of Seller’s request that Buyer approve the proposed Eligible Loan, unless Buyer and Seller has agreed otherwise in writing.

(d)           Assignment Documents.  No less than two (2) business days prior to the proposed Purchase Date, Seller shall have executed and delivered to Buyer, in form and substance reasonably satisfactory to Buyer and its counsel, all applicable assignment documents assigning to Buyer the proposed Eligible Asset (and in any Hedging Transactions held by Seller with respect thereto) that shall be subject to no liens except as expressly permitted by Buyer.  Each of the assignment documents shall contain such representations and warranties in writing concerning the proposed Eligible Asset and such other terms as shall be satisfactory to Buyer in its sole discretion.

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EXHIBIT IX

FORM OF BAILEE LETTER

_______________ __, 20__

__________________________

__________________________

__________________________

Re: Bailee Agreement (the “Bailee Agreement”) in connection with the pledge by[ ] (the “Seller”) to JPMorgan Chase Funding Inc. (the “Buyer”)

Ladies and Gentlemen:

In consideration of the mutual promises set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller, Buyer and [ ] (the “Bailee”) hereby agree as follows:

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

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

(c)           The Bailee shall issue and deliver to Buyer and LaSalle Bank National Association (the “Custodian”) on or prior to the Funding Date by facsimile (a) in the name of Buyer, an initial trust receipt and certification in the form of Attachment 2 attached hereto (the “Bailee’s Trust Receipt and Certification”) which Bailee’s Trust Receipt and Certification shall state that the Bailee has received the documents comprising the Purchased Asset File as set forth in the Custodial Identification Certificate (as defined in that certain Custodial Agreement dated as of November 21, 2008, among [  ], Seller, Buyer and Custodian (as defined in Article 5 below), in addition to such other documents required to be delivered to Buyer and/or Custodian pursuant to the Master Repurchase Agreement dated as of November 21, 2008, between [ ], Seller and Buyer (the “Repurchase Agreement”).

(d)           On the applicable Funding Date, in the event that Buyer fails to purchase from Seller the Purchased Assets identified in the related Custodial Identification Certificate, Buyer shall deliver by facsimile to the Bailee at [  ] to the attention of [  ], an authorization (the “Facsimile Authorization”) to release the Purchased Asset Files with respect to the Purchased Assets identified therein to Seller.  Upon receipt of such Facsimile Authorization, the Bailee shall release the Purchased Asset Files to Seller in accordance with Seller’s instructions.

(e)           Following the Funding Date, the Bailee shall forward the Purchased Asset Files to the Custodian at 135 S. LaSalle Street, Suite 1640, Chicago, Illinois 60603, Attention: Ann Dolezal, by insured overnight courier for receipt by the Custodian no later than 1:00 p.m. on the third Business Day following the applicable Funding Date (the “Delivery Date”).

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

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

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

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

(j)           Seller hereby represents, warrants and covenants that the Bailee is not an affiliate of or otherwise controlled by Seller.  Notwithstanding the foregoing, the parties hereby acknowledge that the Bailee hereunder may act as Counsel to Seller in connection with a proposed transaction and [  ], if acting as Bailee, has represented Seller in connection with negotiation, execution and delivery of the Repurchase Agreement.

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

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

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

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

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

(p)          Capitalized terms used herein and defined herein shall have the meanings ascribed to them in the Repurchase Agreement.

Very truly yours,
[SELLER]
By:
	Name:
	Title:

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ACCEPTED AND AGREED:

[BAILEE]

By:
	Name:
	Title:

ACCEPTED AND AGREED:

JPMORGAN CHASE FUNDING INC., Buyer

By:
	Name:
	Title:

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Schedule A

[List of Purchased Asset Documents]

Attachment 1

IDENTIFICATION CERTIFICATE

On this ____ day of ____________, 200_, [SELLER] (the “Seller”), under that certain Bailee Agreement of even date herewith (the “Bailee Agreement”), among Seller, [  ] (the “Bailee”), and JPMORGAN CHASE FUNDING INC., as Buyer, does hereby instruct the Bailee to hold, in its capacity as Bailee, the Purchased Asset Files with respect to the Purchased Assets listed on Exhibit A hereto, which Purchased Assets shall be subject to the terms of the Bailee Agreement as of the date hereof.

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

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

[SELLER]
By:
	Name:
	Title:

Exhibit A to Attachment 1

PURCHASED ASSET SCHEDULE

Attachment 2

FORM OF BAILEE’S TRUST RECEIPT AND CERTIFICATION

____________, 200_

JPMORGAN CHASE FUNDING INC.

c/o JPMorgan Chase Bank, N.A.

4 New York Plaza, 20th Floor

New York, New York 10004-2413

Attention:     Ms. Nancy S. Alto

Telephone:    (212) 623-7109

Telecopy:      (212) 623-0353

Re: Bailee Agreement, dated as of ___________ __, 200_ (the “Bailee Agreement”) among [SELLER] (the “Seller”), JPMorgan Chase Funding Inc. (the “Buyer”) and [    ] (the “Bailee”)

Ladies and Gentlemen:

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

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

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

[      ], BAILEE
By:
	Name:
	Title:

EXHIBIT X

FORM OF MARGIN DEFICIT NOTICE

[DATE]/[TIME]

VIA ELECTRONIC TRANSMISSION

[SELLER]

[     ]

[     ]

Attn: [     ]

Re: Master Repurchase Agreement, dated as of November 21, 2008 (as amended, restated, supplemented, or otherwise modified and in effect from time to time, the “Master Repurchase Agreement”; capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Master Repurchase Agreement) by and among JPMorgan Chase Funding Inc. (“Buyer”) and CT BSI Funding Corp., a Delaware corporation and Capital Trust, Inc., a Maryland corporation (“Sellers”).

Pursuant to Article 4(a) of the Master Repurchase Agreement, Buyer hereby notifies Seller of the existence of a Margin Deficit as of the date hereof as follows:

[Repurchase Price for specific Purchased Asset: Asset Value of such Purchased Asset:	$______________   $______________
MARGIN DEFICIT: [Aggregate Repurchase Price of all Purchased Assets: Maximum Amount: $__________	$______________ ] $______________   $______________
MARGIN DEFICIT:	$______________ ]

SELLER IS REQUIRED TO CURE THE MARGIN DEFICIT SPECIFIED ABOVE IN ACCORDANCE WITH THE MASTER REPURCHASE AGREEMENT AND WITHIN THE TIME PERIOD SPECIFIED ARTICLE 4(a) THEREOF.

JPMORGAN CHASE FUNDING INC.
By:
	Name:
	Title:

EXHIBIT XI

UCC FILING JURISDICTIONS

Maryland

and

Delaware

EXHIBIT XII

FORM OF SERVICER NOTICE

[DATE]

[SERVICER], as Special Servicer

[ADDRESS]

Attention:  ___________

Re: Master Repurchase Agreement, dated as of November 21, 2008 by and between JPMorgan Chase Funding Inc. (“Buyer”) and CT BSI Funding Corp. and Capital Trust, Inc. (“Sellers”) (as amended, restated, supplemented, or otherwise modified and in effect from time to time, the “Master Repurchase Agreement”); (capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Master Repurchase Agreement).

Ladies and Gentlemen:

[SERVICER] (the “Servicer”) is servicing certain mortgage assets for Sellers pursuant to one or more Servicing Agreements between Servicer and Sellers (the “Purchased Assets”).  Pursuant to the Master Repurchase Agreement, Servicer is hereby notified that Seller has granted a security interest to Buyer in the Purchased Assets which are serviced by Servicer.

Servicer shall segregate all amounts collected on account of the Purchased Assets sold to Buyer under the Master Repurchase Agreement, hold them in trust for the sole and exclusive benefit of Buyer, and remit such collections to the following account which has been established at PNC Bank, National Association, ABA# 043-000-096, Account # [ ], (the “Depository Account”).  Servicer acknowledges that the Depository Account is held for the benefit of Buyer pursuant to the Depository Agreement, dated as of November 21, 2008, by and between Sellers, Buyer, Midland Loan Services, Inc. and PNC Bank, National Association.  Upon receipt of a notice of Event of Default from Buyer, Servicer shall follow the instructions of Buyer with respect to the Purchased Assets, and shall deliver to Buyer any information with respect to the Purchased Assets reasonably requested by Buyer.

Servicer hereby agrees that, notwithstanding any provision to the contrary in any Servicing Agreement which exists between Servicer and Sellers in respect of any Purchased Asset, (i) Servicer is servicing the Purchased Assets for the joint benefit of Seller and Buyer, (ii) Buyer is expressly intended to be a third-party beneficiary under each Servicing Agreement and (iii) Buyer may, at any time, terminate any such Servicing Agreement immediately upon the delivery of written notice thereof to Servicer and/or in any event transfer servicing to Buyer’s designee, at no cost or expense to Buyer, it being agreed that Sellers will pay any and all fees required to terminate any Servicing Agreement and to effectuate the transfer of servicing to the designee of Buyer.

Notwithstanding any contrary information or direction which may be delivered to Servicer by Sellers, Servicer may conclusively rely on any information, direction or notice of an Event of Default delivered by Buyer, and Sellers shall indemnify and hold Servicer harmless for any and all claims asserted against Servicer for any actions taken in good faith by Servicer in connection with the delivery of such information or notice of Event of Default.

No provision of this letter may be amended, countermanded or otherwise modified without the prior written consent of Buyer.  Buyer is an intended third party beneficiary of this letter.

Please acknowledge receipt and your agreement to the terms of this instruction letter by signing in the signature block below and forwarding an executed copy to Buyer promptly upon receipt.  Any notices to Buyer should be delivered to the following address: 4 New York Plaza, 20th Floor, New York, NY 10004-2413  Attn: Nancy S. Alto, Telephone: (212) 623-7109, Fax:  (212) 623-0353.

Very truly yours,
[SERVICER]
By:
	Name:
	Title:

ACKNOWLEDGED AND AGREED TO:

[SELLER]

By:
	Name:
	Title:

EXHIBIT XIII

FORM OF RELEASE LETTER

[Date]

JPMorgan Chase Funding Inc.

c/o JP Morgan Chase Bank, N.A.

4 New York Plaza, 20th Floor

New York, New York 100004-2413

Attention:  Ms. Nancy S. Alto

Re: Master Repurchase Agreement, dated as of November 21, 2008 by and between JPMorgan Chase Funding Inc. (“Buyer”) and CT BSI Funding Corp. and Capital Trust, Inc. (“Sellers”) (as amended, restated, supplemented, or otherwise modified and in effect from time to time, the “Master Repurchase Agreement”); (capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Master Repurchase Agreement).

Ladies and Gentlemen:

With respect to the Purchased Assets described in the attached Schedule A (the “Purchased Assets”) (a) we hereby certify to you that the Purchased Assets are not subject to a lien of any third party, and (b) we hereby release all right, interest or claim of any kind other than any rights under the Master Repurchase Agreement with respect to such Purchased Assets, such release to be effective automatically without further action by any party upon payment by Buyer of the amount of the Purchase Price contemplated under the Master Repurchase Agreement (calculated in accordance with the terms thereof) in accordance with the wiring instructions set forth in the Master Repurchase Agreement.

Very truly yours,
[SERVICER]
By:
	Name:
	Title:

Schedule A

[List of Purchased Asset Documents]

EXHIBIT XIV

FORM OF COVENANT COMPLIANCE CERTIFICATE

[      ] [  ], 200[ ]

JPMorgan Chase Funding Inc.

c/o JPMorgan Chase Bank, N.A.

270 Park Avenue, 7th Floor

New York, New York 10017-2014

Attention:  Kunal K. Singh

This Compliance Certificate is furnished pursuant to that certain Master Repurchase Agreement, dated as of November 21, 2008 (as amended, restated, supplemented, or otherwise modified and in effect from time to time, the “Master Repurchase Agreement”) by and among JPMorgan Chase Funding Inc. (“Buyer”) and CT BSI Funding Corp. and Capital Trust, Inc. (“Sellers”).  Unless otherwise defined herein, capitalized terms used in this Compliance Certificate have the respective meanings ascribed thereto in the Master Repurchase Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

1. I am a duly elected Responsible Officer of [ ] (“Seller”).

2. All of the financial statements, calculations and other information set forth in this Compliance Certificate, including, without limitation, in any exhibit or other attachment hereto, are true, complete and correct as of the date hereof.

3. I have reviewed the terms of the Master Repurchase Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and financial condition of Seller during the accounting period covered by the financial statements attached (or most recently delivered to Buyer if none are attached).

4. I am not aware of any facts, or pending developments that have caused, or may in the future cause the Market Value of any Purchased Asset to decline at any time within the reasonably foreseeable future.

5. As of the date hereof, and since the date of the certificate most recently delivered pursuant to Article 12(j) of the Master Repurchase Agreement, 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 the Master Repurchase Agreement and the related documents to be observed, performed or satisfied by it.

6. The examinations described in Paragraph 3 above did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Event of Default or Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Compliance Certificate (including after giving effect to any pending Transactions requested to be entered into), except as set forth below.

7. As of the date hereof, each of the representations and warranties made by Seller in the Master Repurchase Agreement are true, correct and complete in all material respects with the same force and effect as if made on and as of the date hereof, except as to the extent of any approved exceptions.

8. No condition or event that constitutes a “Termination Event”, “Event of Default”, “Potential Event of Default” or any similar event by Seller, however denominated, has occurred or is continuing under any Hedging Transaction.

9. Attached as Exhibit 2 hereto is a description of all interests of Affiliates of each Seller in any Underlying Mortgaged Property (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, a Mortgage Asset in right of payment or priority).

10. Attached as Exhibit 3 hereto are the financial statements required to be delivered pursuant to Article 12 of the Master Repurchase Agreement (or, if none are required to be delivered as of the date of this Compliance Certificate, the financial statements most recently delivered pursuant to Article 12 of the Master Repurchase Agreement), which financial statements, to the best of my knowledge after due inquiry, fairly and accurately present in all material respects, the financial condition and operations of Seller as of the date or with respect to the period therein specified, determined in accordance with the requirements set forth in Article 12.

11. Attached as Exhibit 4 hereto are the calculations demonstrating compliance with the financial covenants set forth in Article 11 of the Master Repurchase Agreement.

To the best of my knowledge, Seller has, during the period since the delivery of the immediately preceding Compliance Certificate, observed or performed all of its covenants and other agreements in all material respects, and satisfied in all material respects every condition, contained in the Master Repurchase Agreement and the related documents to be observed, performed or satisfied by it, and I have no knowledge of the occurrence during such period, or present existence, of any condition or event which constitutes an Event of Default or Default (including after giving effect to any pending Transactions requested to be entered into), except as set forth below.

Described below are the exceptions, if any, to paragraph 10, listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Parent or any Seller has taken, is taking, or proposes to take with respect to each such condition or event:

-2-

The foregoing certifications, together with the financial statements, updates, reports, materials, calculations and other information set forth in any exhibit or other attachment hereto, or otherwise covered by this Compliance Certificate, are made and delivered this [ ] day of [ ], 200[ ].

Name: 

Title: 

-3-

EX-10.50B

AMENDMENT NO. 1 TO MASTER REPURCHASE AGREEMENT

AMENDMENT NO. 1, dated as of March 16, 2009 (this “Amendment”), to that certain Master Repurchase Agreement, dated as of November 21, 2008 (as amended, restated, supplemented or otherwise modified and in effect prior to the date hereof, the “Existing Repurchase Agreement,” and as amended hereby and as further amended, restated, supplemented or otherwise modified and in effect from time to time, the “Repurchase Agreement”), by and among CT BSI FUNDING CORP. (“CT BSI”) and CAPITAL TRUST, INC. (“Capital Trust”), as sellers (collectively, the “Sellers”), JPMORGAN CHASE FUNDING INC., as buyer (“Buyer”) and JPMORGAN CHASE BANK, N.A., as affiliated hedge counterparty (the “Affiliated Hedge Counterparty”).  Capitalized terms used but not otherwise defined herein shall have the meanings specified therefor in the Repurchase Agreement.

RECITALS

WHEREAS, Sellers and Buyer are parties to the Existing Repurchase Agreement;

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of July 29, 2005 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “MS Repurchase Agreement”), by and among Capital Trust, CT RE CDO 2004-1 SUB, LLC, CT RE CDO 2005-1 SUB, LLC and CT XLC HOLDING, LLC, as sellers (in such capacity, collectively, the “MS Sellers”) and MORGAN STANLEY BANK, as buyer (“Morgan Stanley”);

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of October 24, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMCB Repurchase Agreement”; together with the Repurchase Agreement, collectively, the “JPM Repurchase Agreements”), by and among CT BSI and Capital Trust, as sellers (in such capacity, collectively, the “JPMCB Sellers”; together with the Sellers, collectively, the “JPM Sellers”) and JPMORGAN CHASE BANK, N.A., as buyer (“JPMCB”; and together with Buyer, collectively, the “JPM Parties”);

WHEREAS, Capital Trust is party to that certain Master Repurchase Agreement, dated as of July 30, 2007 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Citigroup Repurchase Agreement,” and together with the  JPMorgan Repurchase Agreements and the MS Repurchase Agreement, the “Senior Secured Facilities”), by and among Capital Trust, as seller (together with JPM Sellers and the MS Sellers, the “CT Parties”) and CITIGROUP GLOBAL MARKETS INC. and CITIGROUP FINANCIAL PRODUCTS INC., as buyers (collectively, “Citigroup”, and together with the JPM Parties and Morgan Stanley, the “Secured Plan Participants”);

WHEREAS, Sellers and Buyer have agreed, subject to the terms and conditions hereof, that the Existing Repurchase Agreement shall be amended as set forth in this Amendment.

NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, Sellers and Buyer agree as follows:

SECTION 1. Amendments to Master Repurchase Agreement.

(a)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definitions of “Buyer’s Margin Amount”, “EBITDA”, “EBITDA to Fixed Charge Ratio”, “Fixed Charges”, “Interest Expense”, “Leverage”, “Net Assets”, “Net Income”, “Margin Deadline”, “Margin Deficit”, “Margin Deficit Notice”, “Minimum Transfer Amount”, “Senior Recourse Indebtedness”, “Tangible Net Worth”, “Total Indebtedness” and “Total Non-Securitized Indebtedness” in their entirety.

(b)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Income” in its entirety and inserting in lieu thereof the following:

“Income” shall mean, with respect to any Purchased Asset at any time, any Principal Income thereof and all Interest Income thereon.

(c)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Maturity Date” in its entirety and inserting in lieu thereof the following:

“Maturity Date” shall mean March 16, 2010 or such earlier date on which this Agreement shall terminate in accordance with the provisions thereof or hereof or by operation of law; provided, however, that if the applicable conditions set forth in Article 3(m) shall have been satisfied, the Maturity Date shall be extended to the applicable date set forth in Article 3(m) of this Agreement.

(d)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Repurchase Price” in its entirety and inserting in lieu thereof the following:

“Repurchase Price” shall mean, with respect to any Purchased Asset as of any Repurchase Date or any date on which the Repurchase Price is required to be determined hereunder, the price at which such Purchased Asset is to be transferred from Buyer to a Seller; such price will be determined in each case as the sum of the (i) Purchase Price of such Purchased Asset (as increased by any other additional funds advanced in connection with such Purchased Asset); (ii) the accreted and unpaid Price Differential with respect to such Purchased Asset as of the date of such determination; (iii) any other amounts due and owing by any Seller to Buyer and its Affiliates pursuant to the terms of this Agreement as of such date; (iv) if such Repurchase Date is not a Remittance Date, any Breakage Costs payable in connection with such repurchase; (v) any amounts that would be payable to (a positive amount) a Qualified Hedge Counterparty under any related Hedging Transaction, if such Hedging Transaction were terminated on the date of determination, if such determination is in connection with any calculation of LTCV; and (vi) any amounts that would be payable to (a positive amount) an Affiliated Hedge Counterparty under any related Hedging Transaction, if such Hedging Transaction were terminated on the date of determination, if such determination is in connection with any calculation of LTCV (and not in connection with an actual repurchase of a Purchased Asset).  In addition to the forgoing, the Repurchase Price shall be increased by any other additional funds advanced in connection with such Purchased Asset and decreased by (A) the portion of any Principal Payments on such Purchased Asset that is applied pursuant to Article 5 to reduce such Repurchase Price and (B) any other amounts paid to Buyer by a Seller to reduce such Repurchase Price.

(e)           Article 2 of the Existing Repurchase Agreement is hereby amended by appending the following sentence to the definition of “Subsidiary”:

“Notwithstanding the foregoing, Subsidiary shall not include investment funds managed by a Seller or subsidiaries of same or investment funds of which a Seller controls the general partner or managing member thereof or subsidiaries of same (except for those investment funds or subsidiaries of same of which a Seller directly or indirectly owns at least a majority of the securities or other ownership interests therein).”

(f)           Article 2 of the Existing Repurchase Agreement is hereby amended by deleting the definition of “Transaction Documents” in its entirety and inserting in lieu thereof the following:

“Transaction Documents” shall mean, collectively, this Agreement, any applicable Annexes to this Agreement, the Custodial Agreement, the Interim Servicing Agreement, the Depository Agreement, the Warrant, all Hedging Transactions and all Confirmations and assignment documentation executed pursuant to this Agreement in connection with specific Transactions.

(g)           Article 2 of the Existing Repurchase Agreement is hereby amended by inserting the following new definitions in proper alphabetical order:

“Additional Restricted Cash” shall mean, to the extent otherwise constituting Unrestricted Cash, any cash or Cash Equivalent of Capital Trust and its Subsidiaries (i) that is required to be trapped pursuant to the other Senior Secured Facilities or the terms of any other loan agreement, repurchase agreement, or other extension of credit, (ii) that is received in anticipation of a disbursement by Capital Trust or any of its Subsidiaries to a Person other than Capital Trust or any Subsidiary within one (1) Business Day, (iii) that is provided as cash collateral to support letters of credit and bank guarantees, customs and other import duties in the ordinary course of business of Capital Trust or any of its Subsidiaries or (iv) that, if distributed or paid, would result in the insolvency of Capital Trust.

“Amendment No. 1” shall mean that certain Amendment No. 1 to this Agreement, dated as of March 16, 2009, among Sellers and Buyer.

“Amendment No. 1 Effective Date” shall mean the “Amendment Effective Date”, as defined in Section 2 of Amendment No. 1.

“Bonds” shall mean all Purchased Assets designated as “bonds” in Exhibit XV.

“Capital Trust” shall mean Capital Trust, Inc.

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

“Citigroup Repurchase Agreement” shall have the meaning specified in Amendment No. 1.

“Collateral Value” shall mean, as of any date of determination, in respect of any Purchased Asset, (a) in the case of Bonds, as determined by Buyer in its sole discretion exercised in good faith and (b) in the case of Purchased Assets other than  Bonds, the Initial Value of such Purchased Assets, adjusted by taking into account credit risk (including, without limitation, information relating to the sponsor or tenant for such Purchased Asset or other information relating to the likelihood of payment of such Purchased Asset; any alleged violation of Environmental Laws; any bankruptcy filings, casualty loss, or condemnation affecting or impacting the Underlying Mortgaged Property; any bankruptcy filing or other act of insolvency with respect to any co-participant or any other Person having an interest in such Purchased Asset or any Underlying Mortgaged Property that is senior to, or pari passu with, the rights of Buyer in such Purchased Asset; any payment of principal and/or interest are more than 60 days past due under any mortgage note affecting any Underlying Mortgaged Property or such Purchased Asset (without giving effect to any waiver by the lender thereunder); any modification of the Underlying Mortgaged Property or to the related loan documents (or any financing senior thereto); any market comparables for any Underlying Mortgaged Property) applicable to such Purchased Asset; but excluding market risk (e.g., interest rate risk) applicable to the Purchased Asset; provided, however, that Buyer may take into account any performance assumptions with respect to such Purchased Asset (including, without limitation: the sponsorship thereof; projections as to default probabilities and estimated losses; changes in the cash flow generated by the Underlying Mortgaged Property; the ultimate collectibility of the Purchased Asset if held to maturity; for assets held or to be held by the Custodian, the failure to deliver the Purchased Asset Documents to the Custodian in accordance with the terms of this Agreement and the Custodial Agreement; whether the Purchased Asset has been released from the possession of the Custodian under the Custodial Agreement to a Seller for a period in excess of twenty (20) calendar days without the consent of Buyer; and a breach of any of the representations and warranties regarding the Purchased Asset contained in Article 10(b)(x)(D) or Exhibit VI, in each case in its sole discretion exercised in good faith; and provided further, that the Collateral Value, without giving effect to such increase, shall in no event exceed one hundred percent (100%) of the outstanding principal balance of the related Purchased Asset.

“CT Cash Account” shall mean one or more deposit accounts established by Capital Trust with Merrill Lynch, Pierce, Fenner & Smith Incorporated or Bank of America, N.A.

“Defaulted Collateral Asset” shall mean a Purchased Asset with respect to which (a) a monetary default has occurred or (b) an acceleration or foreclosure (including, in the case of Senior Mortgage Loans, Mezzanine Loans, B-Notes or Junior Interests, a foreclosure of the Underlying Mortgaged Property) has been declared or commenced, and, in either case, such Transaction has not been returned to performing status within 90 days; provided that Defaulted Collateral Assets shall not include (a) any Bonds, and (b) any Purchased Asset with a Collateral Value or allocated borrowing of zero.

“Excess Cash” shall mean an amount, if any, by which Unrestricted Cash exceeds the sum of (a) $25,000,000 and (b) the aggregate amount of Unfunded Commitments.

“Future Advances” shall mean Capital Trust’s commitment to make future advances on Purchased Assets and assets under other Senior Secured Facilities as specified therefor on Exhibit XV.

“Initial Advance Rate” shall mean, with respect to each Purchased Asset, a rate as specified therefor on Exhibit XV hereto.

“Initial LTCV” shall mean the LTCV, calculated as of the Amendment No. 1 Effective Date.

“Initial Mark” shall mean, with respect to each Purchased Asset, a percentage as specified therefor on Exhibit XV hereto.

“Initial Value” shall mean, with respect to each Purchased Asset, a value equal to the product of (i) the “Face Amount” for such Purchased Asset as specified therefor on Exhibit XV hereto and (ii) the Initial Mark for such Purchased Asset.

“Interest Allocation Percentage” shall mean, initially, 65%, or, if the Maturity Date is extended pursuant to Article 3(m) and beginning on the first day after the original Maturity Date, such other percentage as agreed to in good faith among Sellers and the Secured Plan Participants, in each case, in their commercially reasonable discretion.

“Interest Income” shall mean, with respect to any Purchased Asset at any time, all interest, dividends or other distributions thereon.

“JPM Indebtedness” shall mean all Indebtedness from time to time owed by Seller to Buyer or any Affiliate of Buyer including, without limitation, under this Agreement, the JPMCB Repurchase Agreement, Hedging Transaction or any repurchase, loan or other agreement between Buyer, or an Affiliate of Buyer, and any of the Sellers.

“JPMorgan Account” shall mean the Sellers’ account number 230-254-632, held with JPMorgan Chase Bank, N.A.

“JPMorgan Repurchase Agreements” shall have the meaning specified therefor in Amendment No. 1.

“Lehman Facility” shall mean that certain Amended and Restated Loan and Security Agreement, dated as of September 10, 2008, between Capital Trust, as borrower, and Lehman Commercial Paper Inc. as lender.

“Liquidity” shall mean, on any date of determination, the sum of (A) the consolidated amount of Unrestricted Cash of Capital Trust and its Subsidiaries on such date, and (B) the incremental amount of borrowings Capital Trust and its Subsidiaries are, as of such date, permitted to borrow pursuant to the terms of existing committed Indebtedness of Capital Trust or its Subsidiaries in effect on such date, as to which all conditions precedent have been satisfied and which borrowings do not require the discretionary consent of the applicable lender, counterparty, credit provider or any other Person.

“LTCV” shall mean, as of any date of determination, the ratio (expressed as a percentage) of the aggregate Repurchase Price for all Purchased Assets to the aggregate Collateral Value of all Purchased Assets.

“Maximum Outstanding Amount” shall mean, for all Transactions related to the JPM Repurchase Agreements, an amount equal to $276,005,779.85; provided that solely for purposes of Article 3(m), the Maximum Outstanding Amount may be adjusted pursuant to Article 5.

“Minimum Release Price” shall mean, for any Purchased Asset, an amount equal to the greater of (a) the lesser of (i) the Initial Value of such Purchased Asset, (ii) the Collateral Value for such Purchased Asset as of the date that Capital Trust notifies Buyer of its intent to sell, dispose, transfer or refinance such Purchased Asset pursuant to a Permitted Disposition, and (iii) 110% of the Repurchase Price of such Purchased Asset and (b) the Repurchase Price.

“Net Proceeds” shall mean, with respect to any Permitted Disposition, or the incurrence or issuance of any Indebtedness permitted by Article 11(n), the aggregate amount of cash received by or on behalf of such Person for its own account in connection with any such transaction, after deducting therefrom only:

(a)           reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder’s fees and other similar fees, costs and commissions that, in each case, are actually paid at the time of receipt of such cash to a Person that is not a Subsidiary or Affiliate of any of the Sellers or any of their respective Subsidiaries or Affiliates;

(b)           the amount of taxes payable in connection with or as a result of such transaction that, in each case, are actually paid at the time of receipt of such cash to the applicable taxation authority or other Governmental Authority or, so long as such Person is not otherwise indemnified therefor, are reserved for in accordance with GAAP, as in effect at the time of receipt of such cash, based upon such Person’s reasonable estimate of such taxes, and paid to the applicable taxation authority or other Governmental Authority within 90 days after the date of receipt of such cash; and

(c)           in the case of any Permitted Disposition, the outstanding principal amount of, the premium or penalty, if any, on, and any accrued and unpaid interest on, any Indebtedness (other than Indebtedness under or in respect of the Transaction Documents) that is secured by a Lien on the property and assets subject to such Permitted Disposition and is required to be repaid under the terms of such Indebtedness as a result of such Permitted Disposition, in each case, to the extent that the amounts so deducted are actually paid at the time of receipt of such cash to a Person that is not an Affiliate of any of the Sellers or any of their Affiliates;

provided that, any and all amounts so deducted by any such Person pursuant to clauses (a) through (c) of this definition shall be properly attributable to such transaction or to the property or asset that is the subject thereof; provided, further, that if, at the time any of the taxes referred to in clause (b) are actually paid or otherwise satisfied, and the reserve therefor exceeds the amount paid or otherwise satisfied, then the amount of such excess reserve shall constitute “Net Proceeds” on and as of the date of such payment or other satisfaction for all purposes of this Agreement.

“Permitted Disposition” shall mean the sale, transfer, disposition or refinancing of any Purchased Asset by Capital Trust in accordance with Article 11(d); provided that (a) the Net Proceeds from such sale, transfer, disposition or refinancing shall be no less than the Minimum Release Price for such Purchased Asset; (b) 100% of the Net Proceeds from such Permitted Disposition is applied pursuant to Article 5 hereof; (c) any sale, transfer or disposition of Purchased Assets be made to a bona fide third party or, with Buyer’s prior written approval, to an Affiliate of Capital Trust; and (d) no Purchased Asset may be refinanced without the prior written approval of Buyer.

“Principal Income” shall mean, with respect to any Purchased Asset at any time, any principal thereon and all payments actually received by Buyer on account of Hedging Transactions.

“Secured Plan Facilities Obligations” shall mean the sum of the aggregate amount of all obligations owed by Capital Trust or any Affiliate of Capital Trust under the JPM Repurchase Agreements, the MS Repurchase Agreement and the Citigroup Repurchase Agreement.

“Secured Plan Participants” shall have the meaning specified therefor in the recitals to Amendment No. 1.

“Senior Secured Facilities” shall have the meaning specified therefor in the recitals to Amendment No. 1.

“Senior Unsecured Facility” shall mean that certain Credit Agreement, dated as of March 22, 2007, by and among Capital Trust as borrower, WestLB AG, New York Branch, as administrative agent, and the lenders party thereto, as the same may be amended, restated, supplemented or otherwise modified and in effect from time to time.

“Unfunded Commitments” shall mean, as of any date, an amount equal to the sum of Capital Trust’s unfunded commitments to make Future Advances and meet future capital calls for CT Opportunity Partners I, LP as of such date.

“Unrestricted Cash” shall mean (a) cash and Cash Equivalents that would not appear in the consolidated financial statements of Capital Trust, prepared in accordance with GAAP, as a line item on the balance sheet as “restricted cash” or similar caption minus (b) any Additional Restricted Cash.

“Unsecured Lenders” shall mean the lenders party to the Senior Unsecured Facility.

“Valuation Test Date” shall have the meaning specified in Article 4.

“Valuation Test Failure” shall have the meaning specified in Article 4.

“Valuation Test Period” shall have the meaning specified in Article 4.

“Warrant” shall mean that certain Warrant, dated as of March 16, 2009, made by Capital Trust in favor of JPMorgan Chase Funding, Inc.

(h)           Article 4 of the Existing Repurchase Agreement is hereby amended by deleting Article 4(a) in its entirety and inserting in lieu thereof the following:

“(a)          On the first Business Day of each month, beginning on September 1, 2009 (each such date, a “Valuation Test Date”), Buyer will determine the Collateral Value of each Purchased Asset.  If on any Valuation Test Date, the LTCV exceeds 1.15 times the Initial LTCV (a “Valuation Test Failure”), Sellers shall, within five (5) Business Days following such Valuation Test Date, make a prepayment in reduction of the Repurchase Price of such Purchased Asset, such that after giving effect to such prepayment, the LTCV, as re-determined by Buyer, shall not exceed 1.15 times the Initial LTCV.  All prepayments in reduction of such Repurchase Price shall be applied by Buyer in its sole discretion.  If Sellers are not able to cure a Valuation Test Failure within five (5) Business Days after the applicable Valuation Test Date, then Sellers shall cooperate with Buyer to select one or more Purchased Assets to liquidate and will use commercially reasonable efforts, taking into account the rights and interests of Buyer, to expeditiously commence the liquidation process for same.  If the Valuation Test Failure is not cured within 60 days from the initial failure, an Event of Default will occur; provided that if Sellers provide Buyer with a copy of an executed asset sale or refinancing agreement, acceptable to Buyer in its sole discretion, prior to the end of such 60-day period in respect of the selected Purchased Assets, Buyer may, at its option, grant a one-time 15-day extension to cure such Valuation Test Failure (such 60-day period and any 15-day extension, a “Valuation Test Period”).  Notwithstanding the above, in the event that a Purchased Asset becomes a Defaulted Collateral Asset, a Valuation Test will be performed at that time, and the provisions of this Article 4 shall apply.”

(i)           Article 3(m) of the Existing Repurchase Agreement is hereby amended by deleting subsection (a) thereof in its entirety and inserting in lieu thereof the following new subsection (a):

“(m)         (i) Notwithstanding the definition of Maturity Date herein, Sellers may, in their sole discretion by notice to Buyer between 90 and 20 days prior to the originally scheduled Maturity Date, extend the Maturity Date with respect to all of the Transactions until the first (1st) anniversary of the originally scheduled Maturity Date (all of the other terms and conditions of such Transactions remaining the same) provided that the following conditions precedent are satisfied as of the date of the effectiveness of such extension: (1) the aggregate Repurchase Price for all Purchased Assets under the JPM Repurchase Agreements as of the date of such extension are less than or equal to the Maximum Outstanding Amount, (2) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (3) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that, if conditions (1) through (3) are met and if any extension request is made during a Valuation Test Period, such extension shall be provisionally granted until the end of such Valuation Test Period, and such extension shall be granted only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

(ii)           Notwithstanding the foregoing, if the initial Maturity Date shall have been extended pursuant to Article 3(m)(i), Sellers may request, between 90 and 20 days prior to the extended Maturity Date, and subject to the written approval of Buyer in its sole and absolute discretion given no later than ten (10) days prior to the extended Maturity Date (any failure by Buyer to deliver such notice of its approval to an extension to Sellers shall be deemed a denial of Sellers’ request to extend the Maturity Date) provided that in any event, the following conditions precedent are satisfied as of the date of the effectiveness of such second extension: (1) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (2) Sellers and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that if conditions (1) and (2) or any other conditions then required by Buyer in its sole discretion (including, without limitation, requirements of additional payments, prepayments, revaluations of Collateral Value for any Purchased Asset or delivery of additional documents) are met and if any extension request is made during a Valuation Test Period, such extension may be provisionally granted by Buyer, in its sole and absolute discretion, until the end of such Valuation Test Period, and such extension may be granted by Buyer, in its sole and absolute discretion, only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

(iii)          Notwithstanding any extension to the Maturity Date as described in this Article 3(m), if the Repurchase Date for a Transaction is extended by agreement of the Buyer and Sellers, Buyer and Sellers shall execute a new Confirmation containing the same pricing terms as the original Confirmation and the extended Repurchase Date for the Transaction.”

(j)           Article 5 of the Existing Repurchase Agreement is hereby amended by deleting the phrase “Articles 5(c) through 5(f) of this Agreement” in Article 5(a) in its entirety and inserting “Articles 5(c) and (d) of this Agreement”.

(k)           Article 5 of the Existing Repurchase Agreement is hereby amended by deleting Articles 5(c) through (f) in their entirety and inserting in lieu thereof the following:

“(c)         Principal Income.  Sellers shall cause (1) all Principal Income in respect of the Purchased Assets and (2) 100% of all Net Proceeds in respect of Permitted Dispositions of Purchased Assets, in each case, to be deposited directly in the Depository Account.  Such Principal Income shall be applied within one (1) Business Day following receipt by Buyer as follows: (i) first, pro rata, (A) to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Assets and (B) solely with respect to any Hedging Transaction with an Affiliated Hedge Counterparty related to such Purchased Asset, to such Affiliated Hedge Counterparty an amount equal to any accrued and unpaid amounts due to such Affiliated Hedge Counterparty under such Hedging Transaction related to such Purchased Asset, (ii) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (iii) third, to make a payment to Buyer on account of the Repurchase Price of the Purchased Assets in respect of which such Principal Income is received, until the Repurchase Price for each such Purchased Asset has been reduced to zero, (iv) fourth, to make a payment to Buyer on account of the Repurchase Price of all other Purchased Assets until the Repurchase Price for such other Purchased Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero; (v) fifth, to make a payment to JPMCB on account of the Repurchase Price of all other Purchased Assets related to the JPMCB Repurchase Agreement until the Repurchase Price for such Purchased Assets has been reduced to zero, each such payment to be allocated in JPMCB’s sole discretion; and (vi) sixth, to remit to the applicable Seller the remainder.

(d)           Interest Income.  Sellers shall cause all Interest Income in respect of the Purchased Assets to be deposited directly in the Depository Account.  Such Interest Income shall be applied monthly by Buyer as follows:

(i) so long as no Event of Default shall have occurred and be continuing, (1) first, pro rata, (A) to Buyer, an amount equal to the Price Differential that has accreted and is outstanding in respect of all the Purchased Assets and (B) to any Affiliated Hedge Counterparty, any amount then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to a Purchased Asset, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a payment to Buyer on account of the Repurchase Price of all Purchased Assets, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to the product of the Interest Allocation Percentage multiplied by the difference between (x) the total Interest Income received by Sellers during such month and (y) the Price Differential otherwise actually paid by Sellers to Buyer during such month, and (4) fourth, to remit to the applicable Seller the remainder; and

(ii) if an Event of Default shall have occurred and be continuing, (1) first, pro rata, (A) to remit to Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Assets and (B) to any Affiliated Hedge Counterparty, any amounts then due and payable to an Affiliated Hedge Counterparty under any Hedging Transaction related to such Purchased Asset, (2) second, to make a payment to Buyer on account of any other amounts (other than Repurchase Price) due and payable to Buyer under the Agreement and the other Transaction Documents, (3) third, to make a payment to Buyer on account of the Repurchase Price of all Purchased Assets until the Repurchase Price for all Purchased Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero; (4) fourth, to make a payment to JPMCB on account of the Repurchase Price of all other Purchased Assets related to the JPMCB Repurchase Agreement until the Repurchase Price for such Purchased Assets has been reduced to zero, each such payment to be allocated in JPMCB’s sole discretion and (5) fifth, to remit to the applicable Seller the remainder.

(e)           Control Rights.  So long as no Event of Default shall have occurred and be continuing, and subject to the terms of the Transaction Documents and Article 11(g) hereof, each Seller shall retain the right to take all actions under the Transaction Documents and to retain all contact with the relevant Mortgagor.

(f)           Excess Cash.  At the end of each calendar quarter, Capital Trust shall make a payment to Buyer on account of the Repurchase Price of all Purchased Assets until the Repurchase Price for all Purchased Assets has been reduced to zero, each such payment to be allocated in Buyer’s sole discretion among those Purchased Assets with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to (i) Excess Cash as of the last day of such calendar quarter, multiplied by (ii) the ratio of the aggregate outstanding Repurchase Price for all Purchased Assets to the aggregate Secured Plan Facilities Obligations as of such date.

(g)           Future Advances.  Notwithstanding anything contained herein or in any other Transaction Document to the contrary, as of the Amendment No. 1 Effective Date, Buyer shall have no obligation to make any Future Advances and Capital Trust will fund 100% of all Future Advances.  Solely for purposes of Article 3(m) hereof, after each funding of Future Advances in respect of Purchased Assets by Capital Trust, the Maximum Outstanding Amount will be increased by an amount equal to the product of: (a) the amount of such Future Advance actually funded by Capital Trust, (b) the Initial Mark for the applicable Purchased Asset, (c) the Initial Advance Rate for such Purchased Asset and (d) 50%.”

(l)           Article 3(b)(ii)(K) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“(K)           Buyer shall have determined, in its sole and absolute discretion, that no Valuation Test Failure shall exist, either immediately prior to or after giving effect to the requested Transaction, calculated as of the date of such Transaction;”

(m)           Article 3(b)(ii) of the Existing Repurchase Agreement is hereby amended by deleting the word “and” at the end of subparagraph (T), replacing the period at the end of subparagraph (U) with the words “; and” and inserting the following as a new Article (V):

“(V)           Buyer shall have determined the Initial Advance Rate, Initial Mark, Initial Value, Purchase Price and Pricing Rate and any other information listed in Exhibit XV hereto with respect to such Eligible Asset and shall have amended Exhibit XV to reflect such determinations.”

(n)           Article 3(f) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“(f)           Each Seller shall be entitled to terminate a Transaction on demand and repurchase the Purchased Asset subject to a Transaction on any Business Day prior to the Repurchase Date (an “Early Repurchase Date”); provided, however, that no Default or Event of Default shall exist (other than a Default or Event of Default that (a) relates solely to the Purchased Assets to be released and (b) will no longer exist after giving effect to such release) and either (x) Seller shall have paid all sums then due under the Transaction relating thereto (including any sums related to Hedging Transactions with respect to such Purchased Asset) or (y) Buyer shall have applied 100% of the Net Proceeds from a Permitted Disposition pursuant to Article 5 hereof, then upon (i) the relevant Seller’s payment in full of the Repurchase Price or the application of such Net Proceeds pursuant to Article 5 hereof, and (ii) receipt by Buyer of a written request from such Seller for the release of such Purchased Asset, Buyer shall as soon as practicable release (and Buyer shall reasonably cooperate with such Seller to facilitate reasonable escrow arrangements to facilitate a simultaneous release of) the related Purchased Asset Documents and the related Purchased Asset and any liens related thereto to such Seller or, to the extent necessary to facilitate future savings of mortgage tax in states that impose mortgage taxes, assign such liens as such Seller shall request, provided that any such assignments shall be without expense, recourse, representation or warranty of any kind except that Buyer shall represent and warrant that such Purchased Asset has not been previously assigned by Buyer.  At Sellers’ expense, Buyer shall with reasonable promptness, after a written request from Seller, execute any document or instrument necessary to effectuate such release or assignment.

(o)           Article 7(c) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:  “[Reserved]”.

(p)           Article 10(b)(viii) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“No Valuation Test Failure; No Defaults.  No Valuation Test Failure exists and no Default or Event of Default has occurred or exists under or with respect to the Transaction Documents.”

(q)           Article 11(d) of the Existing Repurchase Agreement is hereby amended by appending the following proviso at the end thereof:

“; provided, however, that a Seller may request from time to time, subject to Buyer’s approval in Buyer’s sole determination, to sell participation interests in its interests in the Purchased Assets in connection with a Permitted Disposition, the sale of which participation interests shall be arm’s length transactions and subject to such terms and conditions as Buyer in its sole discretion shall require; provided further, that Buyer (i) retains an interest in the tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition, subject to the terms of this Agreement or (ii) shall maintain a security interest in such tranche or participation that is not sold or refinanced pursuant to such Permitted Disposition; and provided further, that such Seller complies in all respects with the Purchased Asset Document delivery requirements contained in this Agreement and the Custodial Agreement;”

(r)           Article 11(g) of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following:

“(g)         amend, modify or otherwise agree to any change in the applicable documents for any Purchased Asset, the Underlying Mortgaged Property or other underlying collateral thereunder, without the prior written consent of Buyer other than in accordance with Article 28.”

(s)           Article 11 of the Existing Repurchase Agreement is hereby amended by deleting Articles 11(l) through (p) in their entirety and inserting in lieu thereof the following new Articles 11(l) through (t):

“(l)           No Seller shall 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 any Seller, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of any Seller, either directly or indirectly, whether in cash or property or in obligations of any Seller or any of Subsidiary of a Seller, except to the minimum extent required for a Seller to maintain its status as a real estate investment trust and, to the extent permitted, such distribution shall be made in equity in lieu of cash; provided, that any Seller may make distributions to Capital Trust or any other wholly-owned Subsidiary of Capital Trust;

(m)           without the prior written consent of Buyer, no Seller shall, nor permit any Subsidiary to, originate, acquire or invest in any new stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person except to (i) make co-investments in future funds of which Capital Trust (or its Affiliates) is the sponsor or manager, and (ii) make protective investments to defend existing Purchased Assets or assets subject to another Senior Secured Facility or that are pledged as collateral security for the Senior Unsecured Facility.  With respect to co-investments, (i) no investments will be permitted in the first six (6) months following the Amendment No. 1 Effective Date, (ii) the projected base management fees generated by the proposed future fund over the first 36 months must equal or exceed the co-investment commitment, and (iii) the total amount of co-investment capital for all such proposed future funds may not exceed $10,000,000 without the prior written approval of Buyer.  With respect to protective investments made in respect of Purchased Assets or assets subject to another Senior Secured Facility, the amount of each investment may not exceed $5,000,000 per Purchased Asset, transaction or asset.  With respect to protective investments made in respect of assets pledged as collateral security for the Senior Unsecured Facility, the aggregate amount of such investments may not exceed $1,000,000;

(n)           no Seller shall, nor permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness other than the Indebtedness already incurred as of the Amendment No. 1 Effective Date; provided, that additional Indebtedness may be incurred by Sellers or any of their Subsidiaries and so long as the following conditions are satisfied: (i) to the extent that the Indebtedness is incurred in connection with a Permitted Disposition, the Net Proceeds of such Permitted Disposition are applied in accordance to Article 5, (ii) to the extent that such new Indebtedness is unsecured (and subordinate to all obligations owed by the applicable Seller under any Secured Plan Facility or the Senior Unsecured Facility) or incurred through the pledge of unencumbered assets, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account and (iii) to the extent that such new Indebtedness is recourse Indebtedness, only to the extent that it replaces existing recourse Indebtedness or is subordinate to all obligations owed to Buyer (and to the extent such Indebtedness is not subject to clause (i) above, 100% of the Net Proceeds of such Indebtedness are deposited in the CT Cash Account);

(o)           permit, for all employees of Capital Trust and its Subsidiaries, other than the CEO, COO & CFO, total cash compensation (including base salary and bonus), in the aggregate to exceed $5.8 million.  Subject to the limitation in the preceding sentence, compensation for individual employees shall be determined by Capital Trust in its sole discretion.  For Capital Trust’s CEO, COO & CFO, (i) base salaries shall remain the same as in effect in 2008, and (ii) any cash bonus will be approved based upon performance metrics designed to create alignment with the interests of the Secured Plan Participants and the Unsecured Lenders and must be approved by unanimous consent of a committee comprised of (x) a representative selected by the Secured Plan Participants, (y) the administrative agent of the Senior Unsecured Facility and (z) a representative selected by the board of directors of Capital Trust;

(p)           permit John Klopp and Stephen Plavin to discontinue their current employment with their current respective responsibilities throughout the term of this Agreement; provided that if both John Klopp and Stephen Plavin are no longer so employed, replacement(s) acceptable to Buyer in its sole and absolute discretion shall be appointed within 30 days after their departure;

(q)           permit the Liquidity of Capital Trust, at all times, to be less than $7,000,000 in 2009 or less than $5,000,000 thereafter;

(r)           (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Seller or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(s)           agree to (i) any amendment or modification to any Senior Secured Facility or the Senior Unsecured Facility that relates to the subject matter of Amendment No. 1 or would materially and adversely impair the interests of the Buyer without the prior written consent of Buyer or (ii) any proposed waiver to any Senior Secured Facility or the Senior Unsecured Facility without providing prior written notice to Buyer;

(t)           agree to any amendment or modification to the Lehman Facility without the prior written consent of Buyer, such consent not to be unreasonably withheld, conditioned or delayed; and

(u)           establish and/or maintain any deposit account (other than any deposit accounts specifically relating to the Purchased Assets or any asset or collateral subject to any Senior Secured Facility or the Senior Unsecured Facility) with financial institutions that are Secured Plan Participants or Unsecured Lenders; provided that the Sellers may maintain the JPMorgan Account so long as (i) no more than $1,000,000 may remain in the JPMorgan Account at any time, (ii) no Seller may transfer any funds into the JPMorgan Account from any CT Cash Account, (iii) any funds deposited in the JPMorgan Account will be transferred to a CT Cash Account within two (2) Business Days from receipt of such funds in the JPMorgan Account and (iv) all funds in the JPMorgan Account will be transferred to a CT Cash Account and the JPMorgan Account will be closed on or before December 31, 2009.  For the avoidance of doubt, the Depository Account and Collection Account and any other deposit account relating to Purchased Assets may be established and maintained at any financial institution selected by Buyer in its sole discretion.”

(t)           Article 11 of the Existing Repurchase Agreement is hereby amended by deleting it in its entirety the final paragraph thereto and inserting in lieu thereof the following:

“Compliance with covenants (m), (o) and (q) this Article 11 must be evidenced by financial statements and by a compliance certificate furnished together therewith as further provided in Article 12(j)(ii) below, and compliance with all such covenants are subject to verification by Buyer.  All of the financial tests and covenants in this Agreement will be measured based on the consolidated position of Capital Trust, Inc. and its Subsidiaries.”

(u)           Article 12(j) of the Existing Repurchase Agreement is hereby amended by deleting the word “and” at the end of subparagraph (iii), replacing the period at the end of subparagraph (iv) with the words “; and”, renumbering the existing Article 12(j)(v) as Article 12(j)(vi) and inserting the following as a new Article 12(j)(v):

“(v)         Without duplicating the reports provided under Articles 12(j)(i) through (iv), (A) certified quarterly financial statements and audited annual financial statements prepared in accordance with GAAP filed within SEC mandated time frames, (B) within thirty (30) Business Days following the end of each calendar month commencing with April 2009, unaudited monthly financial statements, (C) within ten (10) Business Days following the end of each calendar month, reports on asset level performance for each Purchased Asset, and (D) promptly, following any reasonable request therefor, reports of such other information regarding each Seller’s operations, business affairs and financial condition, or compliance with the terms of this Agreement.  Any reports provided above will include, without limitation, details of Sellers’ cash accounts at each quarter end and a schedule of each Seller’s Excess Cash, Unrestricted Cash and Unfunded Commitments.  Sellers agree to provide Buyer with an annual budget no later than 60 days after the end of each fiscal year.”

(v)           Article 12(t) of the Existing Repurchase Agreement is hereby amended by (i) deleting the phrase “margin call in excess of $7,500,000 that is delivered to it under any other repurchase agreement” and replacing it with the phrase “Valuation Test Failure under any other Senior Secured Facility” and (ii) deleting the phrase “knowledge of such margin call” and replacing it with the phrase “knowledge of such Valuation Test Failure”.

(w)           Article 12 of the Existing Repurchase Agreement is hereby amended by inserting the following as a new Article 12(u) and (v):

“(u)         Seller shall cure any Valuation Test Failure in accordance with Article 4 hereof.

(v)           Sellers acknowledge that Buyer shall, until all Repurchase Obligations are satisfied and this Agreement terminates pursuant to its terms, maintain control over the Depository Account subject to the terms of the Depository Agreement.  At Sellers’ expense, Buyer may require that Sellers establish a new Depository Account at a depository institution selected by Buyer in its sole discretion and such new Depository Account shall be the “Depository Account” for all purposes hereunder.”

(x)           Article 13 of the Existing Repurchase Agreement is hereby amended by deleting Article 13(a)(iii) in its entirety and inserting in lieu thereof the following new subsection (iii):

“any Seller shall fail to cure any Valuation Test Failure in accordance with Article 4 of this Agreement;”

(y)           Article 13(a) of the Existing Repurchase Agreement is hereby amended by deleting subsection (ix) and (x) in their entirety and inserting in lieu thereof the following new subsections:

“(ix)         any event or condition occurs that results in (i) any obligation or liability of any Seller under any note, indenture, loan agreement, guaranty, swap agreement or any other contract to which it is a party (other than JPM Indebtedness), whether singly or in the aggregate, in excess of $1,000,000 becoming due prior to its scheduled maturity or that enables or permits (after the expiration of all grace or cure periods) the beneficiaries of, the holder or holders of, or any other party to any such indebtedness or contract, or any trustee or agent on its or their behalf, to cause any such obligation or liability to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or (ii) any monetary default under any note, indenture, loan agreement, guaranty, swap agreement or any other contract, credit facility or other obligation of a Seller (other than JPM Indebtedness) if the aggregate amount of such credit facility, contract or other obligation in respect of which such monetary default shall have occurred is at least $1,000,000; provided that this Event of Default shall not apply to secured indebtedness that becomes due as a result of the sale or transfer of the property or assets securing such indebtedness;

(x)           any Seller shall be in default under any JPM Indebtedness of such Seller to Buyer or any of its present or future Affiliates, 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;”

(z)           The Existing Repurchase Agreement is hereby amended by inserting Exhibit A attached hereto as a new Exhibit XV in proper alphabetical order.

SECTION 2. Other Agreements.

(a)           From and after the Amendment Effective Date (as defined below), JPMorgan Chase Bank, N.A. will be deemed to be a party to the Existing Repurchase Agreement in its capacity as the Affiliated Hedge Counterparty.  In its capacity as the Affiliated Hedge Counterparty, JPMorgan Chase Bank, N.A. shall have all the rights, powers and obligations of an Affiliated Hedge Counterparty under the Existing Repurchase Agreement as if it had executed the Existing Repurchase Agreement.  All references to the Affiliated Hedge Counterparty in the Existing Repurchase Agreement and the other Transaction Documents shall be deemed to be references to JPMorgan Chase Bank, N.A. in its capacity as the Affiliated Hedge Counterparty.

(b)           The Affiliated Hedge Counterparty acknowledges that it has received a copy of the Existing Repurchase Agreement and each other Transaction Document.

(c)           All notices and other communications provided for in the Existing Repurchase Agreement and each other Transaction Document shall be delivered to it at its address set forth below its signature to this Amendment.  All such notices and other communications shall be delivered in the manner and be effective as described in Article 16 of the Existing Repurchase Agreement.

SECTION 3. Conditions Precedent.  This Amendment shall become effective on the date (the “Amendment Effective Date”) on which (1) all the representations and warranties made by Sellers in this Amendment are true and correct and (2) Buyer shall have received:

(a)           this Amendment, executed and delivered by a duly authorized officer of each of Sellers and Buyer;

(b)           payment of the Upfront Paydown in accordance with that certain Amendment No.1 to the JPMCB Repurchase Agreements;

(c)           the Warrant, executed and delivered by a duly authorized officer of Capital Trust;

(d)           legal opinions from counsel to the Sellers dated as of the date hereof addressed to Buyer and its successors and assigns (i) as to the enforceability of the Repurchase Agreement, as amended by this Amendment, and (ii) as to each Seller’s authority to execute, deliver and perform its obligations under the Repurchase Agreement as amended hereby, in each case, in form and substance acceptable to Buyer in its reasonable discretion;

(e)           evidence, satisfactory to the Buyer in its sole discretion, of the payment in full of all obligations owed by any Seller under, and the termination of, the credit facilities identified on Schedule I hereto;

(f)           a copy of an amendment to the Senior Unsecured Facility, executed and delivered by a duly authorized officer of the parties thereto, in form and substance acceptable to Buyer in its sole discretion; and

(g)           for the account of Buyer, payment and reimbursement for all of Buyer’s corresponding costs and expenses incurred in connection with this Amendment, all prior amendments and modifications to the Repurchase Agreement, any other documents prepared in connection herewith and therewith and the transactions contemplated hereby and thereby.

SECTION 4. Representations and Warranties.  On and as of the date first above written, each of Sellers hereby represents and warrants to Buyer that (a) it is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, (b) after giving effect to this Amendment, no Default or Event of Default under the Repurchase Agreement has occurred and is continuing, and (c) after giving effect to this Amendment, the representations and warranties contained in Article 10 of the Repurchase Agreement are true and correct in all material respects as though made on such date (except for any such representation or warranty that by its terms refers to a specific date other than the date first above written, in which case it shall be true and correct in all material respects as of such other date).

SECTION 5. General Release.  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Seller, for: (i) itself, (ii) any parent or Subsidiary thereof, and (iii) the respective partners, officers, directors, shareholders, successors and assigns of all of the foregoing persons and entities,

(a)           hereby releases and forever discharges Buyer and each of its subsidiaries, affiliates, its past, present and future officers, directors, agents, employees, partners, managers, shareholders, servants, attorneys and representatives, as well as their, successors, assigns, their respective heirs, legal representatives, legatees, predecessors-in-interest, successors and assigns, of and from any and all actions, claims, demands, damages, debts, suits, contracts, agreements, losses, liabilities, indebtedness, causes of action either at law or in equity, obligations of whatever kind or nature, accounts, defenses, and offsets against liabilities and obligations, whether known or unknown, direct or indirect, new or existing, by reason of any matter, cause or thing whatsoever occurring on or prior to the date hereof arising out of or relating to any matter or thing whatever, including without limitation, such claims and defenses as fraud, misrepresentation, breach of duty, mistake, duress, usury, claims pertaining to so-called “lender liability,” and claims pertaining to creditor’s rights, which such party ever had, now has, or might hereafter have against the other, jointly or severally, for or by reason of any matter, act, omission, cause or thing whatsoever occurring, on or prior to the date of this Amendment, that is related to, in whole or in part, directly or indirectly, the Transactions, the Repurchase Agreement, the Transaction Documents and this Amendment; and

(b)           warrants, represents and acknowledges that it has no defenses to the payment of, nor any right to set off against, all or any of the amounts due and owing under the Transaction Documents, nor any counterclaims or other rights of action against Buyer of any kind whatsoever, including, without limitation, any right to contest any of the following: the enforceability, applicability or validity of any provisions of the Transaction Documents, Buyer’s right to all proceeds of the Purchased Assets, the existence, validity, enforceability, or perfection of any security interest or mortgage in favor of Buyer, the conduct of Buyer in administering the Transaction Documents and any legal fees and expenses incurred by the Buyer under the Repurchase Agreement, the other Transaction Documents or this Amendment.

SECTION 6. Limited Effect.  Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with their respective terms; provided, however, that upon the Amendment Effective Date, all references in the Repurchase Agreement to the “Transaction Documents” shall be deemed to include, in any event, this Amendment.  Each reference to Repurchase Agreement in any of the Transaction Documents shall be deemed to be a reference to the Repurchase Agreement as amended hereby.

SECTION 7. Override Provision.  Notwithstanding any provision in the Repurchase Agreement to the contrary, which are hereby pro tanto superseded and modified or replaced mutatis mutandis to the extent of any inconsistency, the provisions in this Amendment shall apply from and after the date hereof.

SECTION 8. Counterparts.  This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.

SECTION 9.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[SIGNATURES FOLLOW]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.

CAPITAL TRUST, INC.
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

CT BSI FUNDING CORP.
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

Signature Page to Amendment No. 1 to JPMCF Master Repurchase Agreement

JPMORGAN CHASE FUNDING INC., as Buyer
By:	/s/ Gerald M. McCrink
	Name: Gerald M. McCrink
	Title: Authorized Signer

JPMORGAN CHASE BANK, N.A., as Affiliated Hedge Counterparty
By:	/s/ Kunal K. Singh
	Name: Kunal K. Singh
	Title: Vice President
Address for notices: JPMORGAN CHASE BANK, N.A. 4 New York Plaza, 22nd Floor New York, New York 10004 Attention:  Ms. Nancy S. Alto Telephone:  (212) 623-7109 Telecopy:  (212) 623-7714

Signature Page to Amendment No. 1 to JPMCF Master Repurchase Agreement

Schedule I

Closeout Facilities

1.           Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, between Capital Trust, as seller, and Goldman Sachs Mortgage Company (“Goldman”), as buyer, as supplemented by that certain Amended and Restated Annex I to Amended and Restated Master Repurchase Agreement, dated as of October 30, 2007.

2.           Master Repurchase Agreement, dated as of October 30, 2007, between Capital Trust, as seller, and Goldman, as buyer, as supplemented by that certain Annex I to Master Repurchase Agreement, dated as of October 30, 2007.

Schedule I

EX-10.61

JUNIOR SUBORDINATED INDENTURE

between

CAPITAL TRUST, INC.

and

THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION,

as Trustee

________________

Dated as of March 16, 2009

________________

TABLE OF CONTENTS

Page

ARTICLE I Definitions and Other Provisions of General Application		1
SECTION 1.1	Definitions	1
SECTION 1.2	Compliance Certificate and Opinions	8
SECTION 1.3	Forms of Documents Delivered to Trustee	9
SECTION 1.4	Acts of Holders	9
SECTION 1.5	Notices, Etc.  to Trustee and Company	11
SECTION 1.6	Notice to Holders; Waiver	12
SECTION 1.7	Effect of Headings and Table of Contents	12
SECTION 1.8	Successors and Assigns	12
SECTION 1.9	Separability Clause	13
SECTION 1.10	Benefits of Indenture	13
SECTION 1.11	Governing Law	13
SECTION 1.12	Submission to Jurisdiction	13
SECTION 1.13	Non-Business Days	13
ARTICLE II Security Forms		14
SECTION 2.1	Form of Security	14
SECTION 2.2	Restricted Legend.	18
SECTION 2.3	Form of Trustee’s Certificate of Authentication.	20
SECTION 2.4	Temporary Securities.	20
SECTION 2.5	Definitive Securities.	20
ARTICLE III The Securities		21
SECTION 3.1	Payment of Principal and Interest.	21
SECTION 3.2	Denominations.	23
SECTION 3.3	Execution, Authentication, Delivery and Dating.	23
SECTION 3.4	Global Securities.	24
SECTION 3.5	Registration, Transfer and Exchange Generally.	25
SECTION 3.6	Mutilated, Destroyed, Lost and Stolen Securities.	27
SECTION 3.7	Persons Deemed Owners.	28
SECTION 3.8	Cancellation.	28
SECTION 3.9	Reserved.	28
SECTION 3.10	Reserved.	28
SECTION 3.11	Agreed Tax Treatment.	28
SECTION 3.12	CUSIP Numbers.	28
ARTICLE IV Satisfaction and Discharge		29
SECTION 4.1	Satisfaction and Discharge of Indenture.	29
SECTION 4.2	Application of Trust Money.	30

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ARTICLE V Remedies		30
SECTION 5.1	Events of Default.	30
SECTION 5.2	Acceleration of Maturity; Rescission and Annulment.	31
SECTION 5.3	Collection of Indebtedness and Suits for Enforcement by Trustee.	32
SECTION 5.4	Trustee May File Proofs of Claim.	32
SECTION 5.5	Trustee May Enforce Claim Without Possession of Securities.	33
SECTION 5.6	Application of Money Collected.	33
SECTION 5.7	Limitation on Suits.	33
SECTION 5.8	Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest.	34
SECTION 5.9	Restoration of Rights and Remedies.	34
SECTION 5.10	Rights and Remedies Cumulative.	35
SECTION 5.11	Delay or Omission Not Waiver.	35
SECTION 5.12	Control by Holders.	35
SECTION 5.13	Waiver of Past Defaults.	35
SECTION 5.14	Undertaking for Costs.	36
SECTION 5.15	Waiver of Usury, Stay or Extension Laws.	36
ARTICLE VI The Trustee		36
SECTION 6.1	Corporate Trustee Required.	36
SECTION 6.2	Certain Duties and Responsibilities.	37
SECTION 6.3	Notice of Defaults.	38
SECTION 6.4	Certain Rights of Trustee.	38
SECTION 6.5	May Hold Securities.	40
SECTION 6.6	Compensation; Reimbursement; Indemnity.	40
SECTION 6.7	Resignation and Removal; Appointment of Successor.	41
SECTION 6.8	Acceptance of Appointment by Successor.	42
SECTION 6.9	Merger, Conversion, Consolidation or Succession to Business.	42
SECTION 6.10	Not Responsible for Recitals or Issuance of Securities.	43
SECTION 6.11	Appointment of Authenticating Agent.	43
ARTICLE VII Holder’s Lists and Reports by Company		44
SECTION 7.1	Company to Furnish Trustee Names and Addresses of Holders.	44
SECTION 7.2	Preservation of Information, Communications to Holders.	45
SECTION 7.3	Reports by Company.	45
ARTICLE VIII Consolidation, Merger, Conveyance, Transfer or Lease		46
SECTION 8.1	Company May Consolidate, Etc., Only on Certain Terms.	46
SECTION 8.2	Successor Company Substituted.	47
ARTICLE IX Supplemental Indentures		47
SECTION 9.1	Supplemental Indentures without Consent of Holders.	47
SECTION 9.2	Supplemental Indentures with Consent of Holders.	48

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SECTION 9.3	Execution of Supplemental Indentures.	49
SECTION 9.4	Effect of Supplemental Indentures.	49
SECTION 9.5	Reference in Securities to Supplemental Indentures.	49
ARTICLE X Covenants		49
SECTION 10.1	Payment of Principal, Premium, if any, and Interest.	49
SECTION 10.2	Money for Security Payments to be Held in Trust.	49
SECTION 10.3	Statement as to Compliance.	50
SECTION 10.4	Calculation Agent.	51
SECTION 10.5	Reserved.	51
SECTION 10.6	Additional Covenants.	51
SECTION 10.7	Waiver of Covenants.	53
SECTION 10.8	Treatment of Securities.	53
SECTION 10.9	Inspection of Books and Records	53
ARTICLE XI Redemption of Securities		54
SECTION 11.1	Optional Redemption.	54
SECTION 11.2	Reserved.	54
SECTION 11.3	Election to Redeem; Notice to Trustee.	54
SECTION 11.4	Selection of Securities to be Redeemed.	54
SECTION 11.5	Notice of Redemption.	55
SECTION 11.6	Deposit of Redemption Price.	55
SECTION 11.7	Payment of Securities Called for Redemption.	56
ARTICLE XII Subordination of Securities		56
SECTION 12.1	Securities Subordinate to Senior Debt.	56
SECTION 12.2	No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.	56
SECTION 12.3	Payment Permitted If No Default.	58

SECTION 12.4	Subrogation to Rights of Holders of Senior Debt.	58
SECTION 12.5	Provisions Solely to Define Relative Rights.	59
SECTION 12.6	Trustee to Effectuate Subordination.	59
SECTION 12.7	No Waiver of Subordination Provisions.	59
SECTION 12.8	Notice to Trustee.	60
SECTION 12.9	Reliance on Judicial Order or Certificate of Liquidating Agent.	60
SECTION 12.10	Trustee Not Fiduciary for Holders of Senior Debt.	61
SECTION 12.11	Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights.	61
SECTION 12.12	Article Applicable to Paying Agents	61
SECTION 12.13		61

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SCHEDULES

Schedule A–Determination of LIBOR

Exhibit A–Form of Officer’s Financial Certificate

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Junior Subordinated Indenture, dated as of March 16, 2009, between Capital Trust, Inc., a Maryland corporation (the “Company”), and The Bank of New York Mellon Trust Company, National Association, a national banking association, as Trustee (in such capacity, the “Trustee”).

Recitals of the Company

Whereas, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its unsecured junior subordinated notes (the “Securities”), and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered; and

Whereas, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.

Now, Therefore, this Indenture Witnesseth:

For and in consideration of the premises herein it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:

ARTICLE I

Definitions and Other Provisions of General Application

SECTION 1.1 Definitions.

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a)           the terms defined in this Article I have the meanings assigned to them in this Article I;

(b)           the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;

(c)           all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;

(d)           unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Indenture;

(e)           the words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;

(f)           a reference to the singular includes the plural and vice versa; and

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(g)           the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.

“Act” when used with respect to any Holder, has the meaning specified in Section 1.4.

 “Additional Interest” means the interest, if any, that shall accrue on any amounts payable on the Securities, the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security, in each case to the extent legally enforceable.

 “Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For the purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Applicable Depositary Procedures” means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time.

“Authenticating Agent” means any Person authorized by the Trustee pursuant to Section 6.11 to act on behalf of the Trustee to authenticate the Securities.

“Board of Directors” means the board of directors of the Company or any duly authorized committee of that board.

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.

“Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.

“Calculation Agent” has the meaning specified in Section 10.4.

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

“Commission” has the meaning specified in Section 7.3(b).

“Company” means the Person named as the “Company” in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.

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“Company Request” and “Company Order” mean, respectively, the written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its Chief Executive Officer, President or a Vice President, and by its Chief Financial Officer, its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.

“Corporate Trust Office” means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Indenture is located at 601 Travis Street, 16th Floor, Houston, Texas 77002 Attn: Global Corporate Trust — CDO Group.  Initially, all notices and correspondence shall be addressed to Mudassir Mohamed, telephone number (713) 483-6029.

“Debt” means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or other accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Indenture or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).

“Defaulted Interest” has the meaning specified in Section 3.1.

 “Depositary” means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Company or any successor thereto.

“Depositary Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.

 “Dollar” or “$” means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts.

“EDGAR” has the meaning specified in Section 7.3(c).

“Equity Interests” means (a) the partnership interests (general or limited) in a partnership, (b) the membership interests in a limited liability company and (c) the shares or stock interests  (both common stock and preferred stock) in a corporation.

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“Event of Default” has the meaning specified in Section 5.1.

“Exchange Act” means the Securities Exchange Act of 1934 or any statute successor thereto, in each case as amended from time to time.

“Exchange Agreement” means that certain Exchange Agreement executed and delivered contemporaneously with this Indenture by the Company, Taberna Preferred Funding V, Ltd., Taberna Preferred Funding VI, Ltd., Taberna Preferred Funding VIII, Ltd. and Taberna Preferred Funding IX, Ltd., as the same may be amended from time to time.

“Expiration Date” has the meaning specified in Section 1.4(h).

“Fixed Rate” means a rate equal to (a) for the Interest Period commencing on March 16, 2009, and for each Interest Period thereafter through and including April 29, 2012, a fixed rate equal to one percent (1%) per annum and (b) for the Interest Period commencing on April 30, 2012 and for each Interest Period thereafter through and including April 29, 2016, a fixed rate equal to 7.23%.

“Fixed Rate Period” has the meaning specified in Section 3.1(a).

“GAAP” means United States generally accepted accounting principles, consistently applied, from time to time in effect.

“Global Security” means a Security that evidences all or part of the Securities, the ownership and transfers of which shall be made through book entries by a Depositary.

“Government Obligation” means (a) any security that is (i) a direct obligation of the United States of America of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation that is specified in clause (a) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation that is so specified and held, provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.

“Holder” means a Person in whose name a Security is registered in the Securities Register.

“Indenture” means this instrument as originally executed or as it may from time to time be amended or supplemented by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof.

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“Interest Payment Date” means January 30, April 30, July 30 and October 30 of each year, commencing on April 30, 2009, during the term of this Indenture.

“Interest Period” means the period commencing on an Interest Payment Date and continuing through and including the day prior to the next succeeding Interest Payment Date.

“Investment Company Act” means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time.

“LIBOR” has the meaning specified in Schedule A.

“LIBOR Business Day” has the meaning specified in Schedule A.

“LIBOR Determination Date” has the meaning specified in Schedule A.

 “Maturity” means, when used with respect to any Security, the date on which the principal of such Security or any installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

“Notice of Default” means a written notice of the kind specified in Section 5.1(c).

“Officers’ Certificate” means a certificate signed by the Chief Executive Officer, the President, a Managing Director, a Director or a Vice President, or by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company and delivered to the Trustee.

“Opinion of Counsel” means a written opinion of counsel, who may be counsel for or an employee of the Company or any Affiliate of the Company.

“Optional Redemption Price” has the meaning set forth in Section 11.1.

“Original Issue Date” means the date of original issuance of each Security.

“Outstanding” means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:

(i)           Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

(ii)          Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securities; provided, that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and

(iii)         Securities that have been paid or in substitution for or in lieu of which other Securities have been authenticated and delivered pursuant to the provisions of this Indenture, unless proof satisfactory to the Trustee is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company;

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provided, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding unless the Company shall hold all Outstanding Securities, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded.  Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor.

“Paying Agent” means the Trustee or any Person (other than the Company or any Affiliate of the Company) authorized by the Company to pay the principal of or any premium or interest on, or other amounts in respect of, any Securities on behalf of the Company.

“Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, company, limited liability company, trust, unincorporated association, or government, or any agency or political subdivision thereof, or any other entity of whatever nature.

“Place of Payment” means, with respect to the Securities, the Corporate Trust Office of the Trustee.

“Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security.  For the purposes of this definition, any security authenticated and delivered under Section 3.6 in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

 “Proceeding” has the meaning specified in Section 12.2(b).

 “Redemption Date” means, when used with respect to any Security to be redeemed, the date fixed for such redemption by or pursuant to this Indenture.

“Redemption Price” means, when used with respect to any Security to be redeemed, in whole or in part, the Optional Redemption Price at which such Security or portion thereof is to be redeemed as fixed by or pursuant to this Indenture.

“Reference Banks” has the meaning specified in Schedule A.

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“Regular Record Date” for the interest payable on any Interest Payment Date with respect to the Securities means the date that is fifteen (15) days preceding such Interest Payment Date (whether or not a Business Day).

“REIT” has the meaning set forth in Section 10.6(b).

“Responsible Officer” means, when used with respect to the Trustee, the officer in the Worldwide Securities Services department of the Trustee having direct responsibility for the administration of this Indenture.

“Rights Plan” means a plan of the Company providing for the issuance by the Company to all holders of its Equity Interests of rights entitling the holders thereof to subscribe for or purchase Equity Interests or any class or series of Equity Interests in the Company which rights (i) are deemed to be transferred with such Equity Interests and (ii) are also issued in respect of future issuances of such Equity Interests, in each case until the occurrence of a specified event or events.

“Securities” or “Security” means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture.

“Securities Act” means the Securities Act of 1933 or any successor statute thereto, in each case as amended from time to time.

“Securities Register” and “Securities Registrar” have the respective meanings specified in Section 3.5.

“Senior Debt” means the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company, whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Company, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right of payment to the Securities issued under this Indenture; provided, that Senior Debt shall not be deemed to include any debt (and guarantees, if any, in respect of any such debt) issued to any trust (or a trustee of any such trust) affiliated with the Company that is a financing vehicle of the Company (a “financing entity”) in connection with the issuance by such financing entity of equity securities or other securities, in each case pursuant to an instrument that ranks pari passu with or junior in right of payment to this Indenture.  For the avoidance of doubt, the proviso in the previous sentence (x) only refers to the Company’s issuance of debt in connection with trust preferred securities substantially similar to the Original Preferred Securities (which debt and trust preferred securities may be pari passu with, or junior to, the Securities but will not be entitled to the subordination provisions of Article XII) and (y) in no way (i) affects the subordination of the Securities to other Senior Debt pursuant to the provisions of Article XII or (ii) is a limitation on the Company’s ability to issue additional Debt or other securities.

“Shareholders Act” means the Shareholders Communication Act of 1985 (as amended from time to time).

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“Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.1.

“Stated Maturity” means April 30, 2036.

“Subsidiary” of a Person means (a) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries or (b) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries.  Unless otherwise expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of the Company.

“Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument, solely in its capacity as such and not in its individual capacity, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter, “Trustee” shall mean or include each Person who is then a Trustee hereunder.

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended and as in effect on the date as of this Indenture.

SECTION 1.2 Compliance Certificate and Opinions.

(a)           Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall, if requested by the Trustee, furnish to the Trustee an Officers’ Certificate stating that all conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been complied with.

(b)           Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificate provided pursuant to Section 10.3) shall include:

(i)           a statement by each individual signing such certificate or opinion that such individual has read such covenant or condition and the definitions herein relating thereto;

(ii)           a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions of such individual contained in such certificate or opinion are based;

(iii)           a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and

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(iv)           a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with.

SECTION 1.3 Forms of Documents Delivered to Trustee.

(a)           In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

(b)           Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to matters upon which his or her certificate or opinion is based are erroneous.  Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to such matters are erroneous.

(c)           Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

(d)           Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officers’ Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally received in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted.  Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities.

SECTION 1.4 Acts of Holders.

(a)           Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent thereof duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments (including any appointment of an agent) is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company.  Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments.  Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.4.

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(b)           The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof.  Where such execution is by a Person acting in other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority.  The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine.

(c)           The ownership of Securities shall be proved by the Securities Register.

(d)           Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.

(e)           Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.

(f)           Except as set forth in paragraph (g) of this Section 1.4, the Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities.  If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as defined in Section 1.4(h)) by Holders of the requisite principal amount of Outstanding Securities on such record date.  Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect).  Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities in the manner set forth in Section 1.6.

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(g)           The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration or rescission or annulment thereof referred to in Section 5.2, (iii) any request to institute proceedings referred to in Section 5.7(b) or (iv) any direction referred to in Section 5.12.  If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date.  Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect).  Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in Section 1.6.

(h)           With respect to any record date set pursuant to paragraph (f) or (g) of this Section 1.4, the party hereto that sets such record date may designate any day as the “Expiration Date” and from time to time may change the Expiration Date to any earlier or later day; provided, that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities in the manner set forth in Section 1.6, on or prior to the existing Expiration Date.  If an Expiration Date is not designated with respect to any record date set pursuant to this Section 1.4, the party hereto that set such record date shall be deemed to have initially designated the ninetieth (90th) day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph.  Notwithstanding the foregoing, no Expiration Date shall be later than the one hundred eightieth (180th) day after the applicable record date.

SECTION 1.5 Notices, Etc.  to Trustee and Company.

(a)           Any request, demand, authorization, direction, notice, consent, waiver, Act of Holders, or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:

(i)           the Trustee by any Holder or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with and received by the Trustee at its Corporate Trust Office, or

(ii)          the Company by the Trustee or any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at 410 Park Avenue, 14th Floor, New York, New York 10022 or at any other address previously furnished in writing to the Trustee by the Company.

(b)           The Trustee may, but is not required to, rely upon and comply with instructions and directions sent by email or facsimile, (or any other reasonable means of communication) by persons believed by the Trustee in good faith to be authorized to provide such instructions or direction; provided, however, that the Trustee may require such additional evidence, confirmation or certification from any such party or parties as the Trustee, in its reasonable discretion, deems necessary or advisable before acting or refraining from acting upon any such instruction or direction.

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(c)           Subject to Section 1.5(b) above, the Trustee agrees to accept and act upon instructions or directions pursuant to this Agreement sent by unsecured email, facsimile transmission or other similar unsecured electronic methods; provided, however, that any Person providing such instructions or directions shall provide to the Trustee an incumbency certificate listing such designated persons, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing.  If such Person elects to give the Trustee email or facsimile instructions (or instructions by a similar electronic method) the Trustee’s understanding of such instructions shall be deemed controlling.  The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction.  Each Person providing instructions or directions to the Trustee hereunder agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting, in good faith, on unauthorized instructions, and the risk of interception and misuse by third parties.

SECTION 1.6 Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class, postage prepaid, to each Holder affected by such event to the address of such Holder as it appears in the Securities Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice.  If, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice.  In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders.  Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

SECTION 1.7 Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction of this Indenture.

SECTION 1.8 Successors and Assigns.

This Indenture shall be binding upon and shall inure to the benefit of any successor to the Company and the Trustee, including any successor by operation of law.  Except in connection with a transaction involving the Company that is permitted under Article VIII and pursuant to which the assignee agrees in writing to perform the Company’s obligations hereunder, the Company shall not assign its obligations hereunder.

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SECTION 1.9 Separability Clause.

If any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.

SECTION 1.10 Benefits of Indenture.

Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Debt, and the Holders of the Securities any benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION 1.11 Governing Law.

This Indenture and the rights and obligations of each of the Holders, the Company and the Trustee shall be construed and enforced in accordance with and governed by the laws of the State of New York without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).

SECTION 1.12 Submission to Jurisdiction.

ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN).  BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE.

SECTION 1.13 Non-Business Days.

If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest, premium, if any, or principal or other amounts in respect of such Security shall not be made on such date, but shall be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day) except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity.

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ARTICLE II

Security Forms

SECTION 2.1 Form of Security.

Any Security issued hereunder shall be in substantially the following form:

CAPITAL TRUST, INC.

Junior Subordinated Note due 2036

No.  _____________   $ ____________ 

Capital Trust, Inc., a corporation organized and existing under the laws of Maryland (hereinafter called the “Company,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to _____________________, or registered assigns, the principal sum of __________ Dollars ($_______) [if the Security is a Global Security, then insert— or such other principal amount represented hereby as may be set forth in the records of the Securities Registrar hereinafter referred to in accordance with the Indenture] on April 30, 2036. The Company further promises to pay interest on said principal sum from March 16, 2009 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly in arrears on January 30, April 30, July 30 and October 30 of each year, commencing April 30, 2009, or if any such day is not a Business Day, on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date until such next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on the Interest Payment Date, at a fixed rate equal to the applicable Fixed Rate through the Interest Payment Date occurring in April, 2016 (the “Fixed Rate Period”) and thereafter at a variable rate equal to LIBOR plus 2.44% per annum until the principal hereof is paid or duly provided for or made available for payment; provided, further, that any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at a fixed rate equal to the applicable Fixed Rate then in effect through the Interest Payment Date occurring in April, 2016 and thereafter at a variable rate equal to LIBOR plus 2.44% per annum (to the extent that the payment of such interest shall be legally enforceable), compounded quarterly, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand.

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During the Fixed Rate Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360 day year of twelve 30 day months.  Upon expiration of the Fixed Rate Period, the amount of interest payable for any Interest Period will be computed on the basis of a 360 day year and the actual number of days elapsed in the relevant Interest Period.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment.  Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

Payment of principal of, premium, if any, and interest on this Security shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  Payments of principal, premium, if any, and interest due at the Maturity of this Security shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent, and payments of interest shall be made, subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.

The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt, and this Security is issued subject to the provisions of the Indenture with respect thereto.  Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes.  Each Holder hereof, by his or her acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.

Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

[FORM OF REVERSE OF SECURITY]

This Security is one of a duly authorized issue of securities of the Company (the “Securities”) issued under the Junior Subordinated Indenture, dated as of March 16, 2009 (the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, National Association, as Trustee (in such capacity, the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Debt and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.

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All terms used in this Security that are not defined herein shall have the meanings assigned to them in the Indenture.

The Company may, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee) and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time at a Redemption Price equal to one hundred percent (100%) of the principal amount hereof, (or of the redeemed portion hereof, as applicable), together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.

In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.  If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security.

The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities.  The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities, on behalf of the Holders of all Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium, if any, and interest, including any Additional Interest (to the extent legally enforceable), on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

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As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is restricted to transfers to (i) the Company, (ii) “Qualified Institutional Buyers” (as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”)), (iii) outside the United States in an offshore transaction in accordance with Regulation S under the Securities Act, (iv) pursuant to an effective registration statement under the Securities Act or (v) pursuant to another exemption from registration under the Securities Act and, in the case of clauses (ii), (iii), (iv) or (v), a person whom the Company reasonably believes also is a “Qualified Purchaser” (as defined in Section 2(a)(51) of the Investment Company Act of 1940, as amended, and is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Securities, of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

The Securities are issuable only in registered form without coupons in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof.  As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

The Company and, by its acceptance of this Security or a beneficial interest herein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that, for United States federal, state and local tax purposes, it is intended that this Security constitute indebtedness.

This Security shall be construed and enforced in accordance with and governed by the laws of the State of New York, without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on this ____ day of __________, 20__.

Capital Trust, Inc.
By:
	Name:
	Title:

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SECTION 2.2 Restricted Legend.

(a)           Any Security issued hereunder shall bear a legend in substantially the following form:

“[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC.  THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.  OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.  OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.

THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY OR (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A OF THE SECURITIES ACT), (III) OUTSIDE THE UNITED STATES IN  AN OFFSHORE TRANSACTION IN  ACCORDANCE WITH REGULATION S UNDER THE SECURITIES  ACT, (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (V) PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND, IN THE CASE OF CLAUSES II, III, IV, OR V, TO A PERSON WHOM THE ISSUER REASONABLY BELIEVES ALSO IS A “QUALIFIED PURCHASER” (AS DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED, AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

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THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.  TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.  TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.

THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN.  ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE.”

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(b)           The above legends shall not be removed from any Security unless there is delivered to the Company satisfactory evidence, which may include an Opinion of Counsel, as may be reasonably required to ensure that any future transfers thereof may be made without restriction under or violation of the provisions of the Securities Act and other applicable law.  Upon provision of such satisfactory evidence, the Company shall execute and deliver to the Trustee, and the Trustee shall deliver, upon receipt of a Company Order directing it to do so, a Security that does not bear the legend.

SECTION 2.3 Form of Trustee’s Certificate of Authentication.

The Trustee’s certificate of authentication shall be in substantially the following form:

This is one of the Securities referred to in the within-mentioned Indenture.

Dated:	[TRUSTEE], not in its individual capacity, but solely as Trustee
	By:
		Authorized Signatory

SECTION 2.4 Temporary Securities.

(a)           Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.

(b)           If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay.  After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder.  Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities.  Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.

SECTION 2.5 Definitive Securities.

The Securities issued on the Original Issue Date shall be in definitive form.  The definitive Securities shall be printed, lithographed or engraved, or produced by any combination of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.

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ARTICLE III

The Securities

SECTION 3.1 Payment of Principal and Interest.

(a)           The unpaid principal amount of the Securities shall bear interest at the applicable Fixed Rate through the Interest Payment Date occurring in April 2016 (the “Fixed Rate Period”), and thereafter at a variable rate equal to LIBOR plus 2.44% per annum, until paid as duly provided for such interest to accrue from the Original Issue Date or from the most recent Interest Payment Date to which interest has been paid or duly provided for.  Any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at a fixed rate equal to the applicable Fixed Rate through the Interest Payment Date in April, 2016, and thereafter at a variable rate equal to LIBOR plus 2.44% per annum, compounded quarterly from the dates such amounts are due until they are paid or funds for the payment thereof are made available for payment.

(b)           Interest and Additional Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, except that interest and any Additional Interest payable on the Stated Maturity (or any date of principal repayment upon early maturity) of the principal of a Security or on a Redemption Date shall be paid to the Person to whom principal is paid.  The initial payment of interest on any Security that is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security.

(c)           Any interest on any Security that is due and payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities (herein called “Defaulted Interest”) shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (i) or (ii) below:

(i)           The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest (a “Special Record Date”), which shall be fixed in the following manner.  At least thirty (30) days prior to the date of the proposed payment, the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest.  Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt by the Trustee of the notice of the proposed payment.  The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security at the address of such Holder as it appears in the Securities Register not less than ten (10) days prior to such Special Record Date.  Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date; or

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(ii)           The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities may be listed, traded or quoted and, upon such notice as may be required by such exchange or automated quotation system (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such payment shall be deemed practicable by the Trustee.

(d)           Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. During the Fixed Rate Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months.  Upon expiration of the Fixed Rate Period, the amount of interest payable for any Interest Period will be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant Interest Period.

(e)           Payment of principal of, premium, if any, and interest on the Securities shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.  Payments of principal, premium, if any, and interest due at the Maturity of such Securities shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent and payments of interest shall be made subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.

(f)           Subject to the foregoing provisions of this Section 3.1, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.

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SECTION 3.2 Denominations.

The Securities shall be in registered form without coupons and shall be issuable in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof.

SECTION 3.3 Execution, Authentication, Delivery and Dating.

(a)           At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities in an aggregate principal amount (including all then Outstanding Securities) not in excess of One Hundred Eighteen Million Five Hundred Ninety-Three Thousand Seven Hundred Fifty Dollars ($118,593,750) executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities.  In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and shall be fully protected in relying upon:

(i)           a copy of any Board Resolution relating thereto; and

(ii)          an Opinion of Counsel stating that:  (1) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute, and the Indenture constitutes, valid and legally binding obligations of the Company, each enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; (2) the Securities have been duly authorized and executed by the Company and have been delivered to the Trustee for authentication in accordance with this Indenture; (3) the Securities are not required to be registered under the Securities Act; and (4) the Indenture is not required to be qualified under the Trust Indenture Act.

(b)           The Securities shall be executed on behalf of the Company by its Chief Executive Officer, its President, a Managing Director, a Director or one of its Vice Presidents or by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.  The signature of any of these officers on the Securities may be manual or facsimile.  Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

(c)           No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder.  Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.8, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

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(d)           Each Security shall be dated the date of its authentication.

SECTION 3.4 Global Securities.

(a)           Upon the election of the Holder after the Original Issue Date, which election need not be in writing, the Securities owned by such Holder shall be issued in the form of one or more Global Securities registered in the name of the Depositary or its nominee.  Each Global Security issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.

(b)           Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for registered Securities, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Security, and no qualified successor is appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii) the Company executes and delivers to the Trustee a Company Order stating that the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default shall have occurred and be continuing.  Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee shall notify the Depositary and instruct the Depositary to notify all owners of beneficial interests in such Global Security of the occurrence of such event and of the availability of Securities to such owners of beneficial interests requesting the same.  The Trustee may conclusively rely, and be protected in relying, upon the written identification of the owners of beneficial interests furnished by the Depositary, and shall not be liable for any delay resulting from a delay by the Depositary.  Upon the issuance of such Securities and the registration in the Securities Register of such Securities in the names of the Holders of the beneficial interests therein, the Trustees shall recognize such holders of beneficial interests as Holders.

(c)           If any Global Security is to be exchanged for other Securities or canceled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this Article III or (ii) the principal amount thereof shall be reduced or increased by an amount equal to (x) the portion thereof to be so exchanged or canceled, or (y) the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records.  Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied by registration instructions, the Company shall execute and the Trustee shall authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary.  The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.

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(d)           Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.

(e)           The Depositary or its nominee, as the registered owner of a Global Security, shall be the Holder of such Global Security for all purposes under this Indenture and the Securities, and owners of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable Depositary Procedures.  Accordingly, any such owner’s beneficial interest in a Global Security shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary Participants.  The Securities Registrar and the Trustee shall be entitled to deal with the Depositary for all purposes of this Indenture relating to a Global Security (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the giving of notices) as the sole Holder of the Security and shall have no obligations to the owners of beneficial interests therein.  Neither the Trustee nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary.

(f)           The rights of owners of beneficial interests in a Global Security shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its Depositary Participants.

(g)           No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever.  None of the Company, the Trustee nor any agent of the Company or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or maintaining, supervising or reviewing any records relating to such beneficial ownership interests.  Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security.

SECTION 3.5 Registration, Transfer and Exchange Generally.

(a)           The Trustee shall cause to be kept at the Corporate Trust Office a register (the “Securities Register”) in which the registrar and transfer agent with respect to the Securities (the “Securities Registrar”), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Securities and of transfers and exchanges of Securities.  The Trustee shall at all times also be the Securities Registrar.  The provisions of Article VI shall apply to the Trustee in its role as Securities Registrar.

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(b)           Subject to compliance with Section 2.2(b), upon surrender for registration of transfer of any Security at the offices or agencies of the Company designated for that purpose the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations of like tenor and aggregate principal amount.

(c)           At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations, of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency.  Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive.

(d)           All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.

(e)           Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.

(f)           No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities.

(g)           Neither the Company nor the Trustee shall be required pursuant to the provisions of this Section 3.5(g):  (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of Securities pursuant to Article XI and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any such Security to be redeemed in part, any portion thereof not to be redeemed.

(h)           The Company shall designate an office or offices or agency or agencies where Securities may be surrendered for registration or transfer or exchange.  The Company initially designates the Corporate Trust Office as its office and agency for such purposes.  The Company shall give prompt written notice to the Trustee and to the Holders of any change in the location of any such office or agency.

(i)           The Securities may only be transferred to (i) the Company, (ii) a “qualified institutional  buyer” (as defined in Rule 144A of the Securities Act), (iii) outside the United States in an offshore transaction in accordance with Regulation S under the Securities Act, (iv) pursuant to an effective registration statement under the Securities Act or (v) pursuant to another exemption from registration under the Securities Act and, in the case of clauses (ii), (iii), (iv) or (v), to a Person whom the Company reasonably believes is also a “Qualified Purchaser”, as such term is defined in Section 2(a)(51) of the Investment Company Act.

(j)           Neither the Trustee nor the Securities Registrar shall be responsible for ascertaining whether any transfer hereunder complies with the registration provisions of or any exemptions from the Securities Act, applicable state securities laws or the applicable laws of any other jurisdiction, ERISA, the Code, or the Investment Company Act; provided, that if a certificate is specifically required by the express terms of this Section 3.5 to be delivered to the Trustee or the Securities Registrar by a Holder or transferee of a Security, the Trustee and the Securities Registrar shall be under a duty to receive and examine the same to determine whether or not the certificate substantially conforms on its face to the requirements of this Indenture and shall promptly notify the party delivering the same if such certificate does not comply with such terms.

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SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Securities.

(a)           If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Trustee to save the Company and the Trustee harmless, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding.

(b)           If there shall be delivered to the Trustee (i) evidence to its satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by it to save each of the Company and the Trustee harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and aggregate principal amount as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding.

(c)           If any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

(d)           Upon the issuance of any new Security under this Section 3.6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

(e)           Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.

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(f)           The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION 3.7 Persons Deemed Owners.

The Company, the Trustee and any agent of the Company or the Trustee shall treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any interest on such Security and for all other purposes whatsoever, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

SECTION 3.8 Cancellation.

All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by it.  The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee.  No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section 3.8, except as expressly permitted by this Indenture.  All canceled Securities shall be retained or disposed of by the Trustee in accordance with its customary practices and the Trustee shall deliver to the Company a certificate of such disposition.

SECTION 3.9 Reserved.

SECTION 3.10 Reserved.

SECTION 3.11 Agreed Tax Treatment.

Each Security issued hereunder shall provide that the Company and, by its acceptance or acquisition of a Security or a beneficial interest therein, each Holder of, and any Person that acquires a direct or indirect beneficial interest in, such Security, intend and agree to treat such Security as indebtedness of the Company for United States Federal, state and local and foreign tax purposes.  The provisions of this Indenture shall be interpreted to further this intention and agreement of the parties.

SECTION 3.12 CUSIP Numbers.

The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption and other similar or related materials as a convenience to Holders; provided, that any such notice or other materials may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other materials and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.

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ARTICLE IV

Satisfaction and Discharge

SECTION 4.1 Satisfaction and Discharge of Indenture.

This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this Section 4.1) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when

(a)           either

(i)           all Securities theretofore authenticated and delivered (other than (A) Securities that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.6 and (B) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 10.2) have been delivered to the Trustee for cancellation; or

(ii)           all such Securities not theretofore delivered to the Trustee for cancellation

(A)           have become due and payable, or

(B)           will become due and payable at their Stated Maturity within one year of the date of deposit, or

(C)           are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

and the Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose (x) an amount in the currency or currencies in which the Securities are payable, (y) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment, money in an amount or (z) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest (including any Additional Interest) to the date of such deposit (in the case of Securities that have become due and payable) or to the Stated Maturity (or any date of principal repayment upon early maturity) or Redemption Date, as the case may be;

(b)           the Company has paid or caused to be paid all other sums payable hereunder by the Company; and

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(c)           the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.6, the obligations of the Company to any Authenticating Agent under Section 6.11 and, if money shall have been deposited with the Trustee pursuant to subclause (a)(ii) of this Section 4.1, the obligations of the Trustee under Section 4.2 and Section 10.2(e) shall survive.

SECTION 4.2 Application of Trust Money.

Subject to the provisions of Section 10.2(d), all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment in accordance with Section 3.1, either directly or through any Paying Agent as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest (including any Additional Interest) for the payment of which such money or obligations have been deposited with or received by the Trustee.  Moneys held by the Trustee under this Section 4.2 shall not be subject to the claims of holders of Senior Debt under Article XII.

ARTICLE V

Remedies

SECTION 5.1 Events of Default.

“Event of Default” means, wherever used herein with respect to the Securities, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a)           default in the payment of any interest upon any Security, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of thirty (30) days; or

(b)           default in the payment of the principal of or any premium on any Security at its Maturity; or

(c)           default in the performance, or breach, of any covenant or warranty in any material respect of the Company in this Indenture and continuance of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder;

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(d)           the entry by a court having jurisdiction in the premises of a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of ninety (90) consecutive days; or

(e)           the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt or insolvent, or the taking of corporate action by the Company in furtherance of any such action.

SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.

(a)           If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities shall become immediately due and payable.

(b)           At any time after such a declaration of acceleration with respect to Securities has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article V, the Holders of a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Trustee, may rescind and annul such declaration and its consequences if:

(i)           the Company has paid or deposited with the Trustee a sum sufficient to pay:

(A)           all overdue installments of interest on all Securities,

(B)           any accrued Additional Interest on all Securities,

(C)           the principal of and any premium on any Securities that have become due otherwise than by such declaration of acceleration and interest (including any Additional Interest) thereon at the rate borne by the Securities, and

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(D)           all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, and its agents and counsel; and

(ii)           all Events of Default with respect to Securities, other than the non-payment of the principal of Securities that has become due solely by such acceleration, have been cured or waived as provided in Section 5.13;

No such rescission shall affect any subsequent default or impair any right consequent thereon.

SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.

(a)           The Company covenants that (subject to Section 5.2(b) hereof) if:

(i)           default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of thirty (30) days, or

(ii)           default is made in the payment of the principal of and any premium on any Security at the Maturity thereof,

the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest (including any Additional Interest) and, in addition thereto, all amounts owing the Trustee under Section 6.6.

(b)           If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated.

(c)           If an Event of Default with respect to Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 5.4 Trustee May File Proofs of Claim.

In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or similar judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized hereunder in order to have claims of the Holders and the Trustee allowed in any such proceeding.  In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to first pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6.

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SECTION 5.5 Trustee May Enforce Claim Without Possession of Securities.

All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, subject to Article XII and after provision for the payment of all the amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

SECTION 5.6 Application of Money Collected.

Any money or property collected or to be applied by the Trustee with respect to the Securities pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or any premium or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

FIRST:  To the payment of all amounts due the Trustee, any predecessor Trustee and other Persons under Section 6.6;

SECOND:  To the payment of all Senior Debt of the Company if and to the extent required by Article XII;

THIRD:  Subject to Article XII, to the payment of the amounts then due and unpaid upon the Securities for principal and any premium and interest (including any Additional Interest) in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and any premium and interest (including any Additional Interest), respectively; and

FOURTH:  The balance, if any, to the Person or Persons entitled thereto.

SECTION 5.7 Limitation on Suits.

Subject to Section 5.8, no Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless:

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(a)           such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities;

(b)           the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

(c)           such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;

(d)           the Trustee after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding for sixty (60) days; and

(e)           no direction inconsistent with such written request has been given to the Trustee during such sixty (60) day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities;

it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.

SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest.

Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium on such Security at its Maturity and payment of interest (including any Additional Interest) on such Security when due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.

SECTION 5.9 Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or such Holder then and in every such case the Company, the Trustee and such Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and such Holder shall continue as though no such proceeding had been instituted.

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SECTION 5.10 Rights and Remedies Cumulative.

Except as otherwise provided in Section 3.6(f), no right or remedy herein conferred upon or reserved to the Trustee or the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

SECTION 5.11 Delay or Omission Not Waiver.

No delay or omission of the Trustee or any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article V or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or the Holders, as the case may be.

SECTION 5.12 Control by Holders.

The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities  shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided, that:

(a)           such direction shall not be in conflict with any rule of law or with this Indenture,

(b)           the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction, and

(c)           subject to the provisions of Section 6.2, the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, reasonably determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability.

SECTION 5.13 Waiver of Past Defaults.

(a)           The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities may waive any past Event of Default hereunder and its consequences except an Event of Default:

(i)           in the payment of the principal of or any premium or interest (including any Additional Interest) on any Outstanding Security (unless such Event of Default has been cured and the Company has paid to or deposited with the Trustee a sum sufficient to pay all installments of interest (including any Additional Interest) due and past due and all principal of and any premium on all Securities due otherwise than by acceleration), or

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(ii)           in respect of a covenant or provision hereof that under Article IX cannot be modified or amended without the consent of each Holder of any Outstanding Security.

(b)           Any such waiver shall be deemed to be on behalf of the Holders of all the Outstanding Securities.

(c)           Upon any such waiver, such Event of Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.

SECTION 5.14 Undertaking for Costs.

All parties to this Indenture agree, and each Holder of any Security by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium on the Security after the Stated Maturity or any interest (including any Additional Interest) on any Security after it is due and payable.

SECTION 5.15 Waiver of Usury, Stay or Extension Laws.

The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE VI

The Trustee

SECTION 6.1 Corporate Trustee Required.

There shall at all times be a Trustee hereunder with respect to the Securities.  The Trustee shall be a corporation or national banking association organized and doing business under the laws of the United States or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or state authority and having an office within the United States.  If such entity publishes reports of condition at  least annually, pursuant to law or to the requirements of such supervising or examining authority, then, for the purposes of this Section 6.1, the combined capital and surplus of such entity shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.1, it shall resign immediately in the manner and with the effect hereinafter specified in this Article VI.

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SECTION 6.2 Certain Duties and Responsibilities.

Except during the continuance of an Event of Default:

(i)           the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii)           in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided, that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they substantially conform on their face to the requirements of this Indenture.

(b)           If an Event of Default known to the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(c)           Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.  Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.2.  To the extent that, at law or in equity, the Trustee has duties and liabilities relating to the Holders, the Trustee shall not be liable to any Holder for the Trustee’s good faith reliance on the provisions of this Indenture.  The provisions of this Indenture, to the extent that they restrict the duties and liabilities of the Trustee otherwise existing at law or in equity, are agreed by the Company and the Holders to replace such other duties and liabilities of the Trustee.

(d)           No provisions of this Indenture shall be construed to relieve the Trustee from liability with respect to matters that are within the authority of the Trustee under this Indenture for its own negligent action, negligent failure to act or willful misconduct, except that:

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(i)           the Trustee shall not be liable for any error or judgment made in good faith by an authorized officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

(ii)          the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities; and

(iii)         the Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company and money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.

SECTION 6.3 Notice of Defaults.

Within ninety (90) days after the occurrence of any default actually known to the Trustee, the Trustee shall give the Holders notice of such default unless such default shall have been cured or waived; provided, that except in the case of a default in the payment of the principal of or any premium or interest on any Securities, the Trustee shall be fully protected in withholding the notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interest of holders of Securities; and provided, further, that in the case of any default of the character specified in Section 5.1(c), no such notice to Holders shall be given until at least thirty (30) days after the occurrence thereof.  For the purpose of this Section 6.3, the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.

SECTION 6.4 Certain Rights of Trustee.

Subject to the provisions of Section 6.2:

(a)           the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b)           if (i) in performing its duties under this Indenture the Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Indenture the Trustee finds ambiguous or inconsistent with any other provisions contained herein or (iii) the Trustee is unsure of the application of any provision of this Indenture, then, except as to any matter as to which the Holders are entitled to decide under the terms of this Indenture, the Trustee shall deliver a notice to the Company requesting the Company’s written instruction as to the course of action to be taken and the Trustee shall take such action, or refrain from taking such action, as the Trustee shall be instructed in writing to take, or to refrain from taking, by the Company; provided, that if the Trustee does not receive such instructions from the Company within ten (10) Business Days after it has delivered such notice or such reasonably shorter period of time set forth in such notice the Trustee may, but shall be under no duty to, take such action, or refrain from taking such action, as the Trustee shall deem advisable and in the best interests of the Holders, in which event the Trustee shall have no liability except for its own negligence, bad faith or willful misconduct;

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(c)           any request or direction of the Company shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

(d)           the Trustee may consult with counsel (which counsel may be counsel to the Trustee, the Company or any of its Affiliates, and may include any of its employees) and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

(e)           the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Trustee;

(f)           the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, note or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;

(g)           the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder;

(h)           whenever in the administration of this Indenture the Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action with respect to enforcing any remedy or right hereunder, the Trustee (i) may request instructions from the Holders (which instructions may only be given by the Holders of the same aggregate principal amount of Outstanding Securities as would be entitled to direct the Trustee under this Indenture in respect of such remedy, right or action), (ii) may refrain from enforcing such remedy or right or taking such action until such instructions are received and (iii) shall be protected in acting in accordance with such instructions;

(i)           except as otherwise expressly provided by this Indenture, the Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Indenture;

(j)           without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with any bankruptcy, insolvency or other proceeding referred to in clauses (d) or (e) of the definition of Event of Default, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy laws or law relating to creditors rights generally;

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(k)           whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officers’ Certificate addressing such matter, which, upon receipt of such request, shall be promptly delivered by the Company;

(l)            the Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge or (ii) the Trustee shall have received written notice thereof from the Company or a Holder; and

(m)          in the event that the Trustee is also acting as Paying Agent, Authenticating Agent or Securities Registrar hereunder, the rights and protections afforded to the Trustee pursuant to this Article VI shall also be afforded such Paying Agent, Authenticating Agent, or Securities Registrar.

SECTION 6.5 May Hold Securities.

The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent.

SECTION 6.6 Compensation; Reimbursement; Indemnity.

(a)           The Company agrees:

(i)           to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Company and the Trustee shall agree from time to time; (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(ii)          to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances actually incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct; and

(iii)         to the fullest extent permitted by applicable law, to indemnify the Trustee and its Affiliates, and their officers, directors, shareholders, agents, representatives and employees for, and to hold them harmless against, any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to (i) or (ii) hereof), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part arising out of or in connection with the acceptance or administration of this trust or the performance of the Trustee’s duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

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(b)           To secure the Company’s payment obligations in this Section 6.6, the Company hereby grants and pledges to the Trustee and the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, other than money or property held in trust to pay principal and interest on particular Securities.  Such lien shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.

(c)           The obligations of the Company under this Section 6.6 shall survive the satisfaction and discharge of this Indenture and the earlier resignation or removal of the Trustee.

(d)           In no event shall the Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(e)           In no event shall the Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Indenture.

SECTION 6.7 Resignation and Removal; Appointment of Successor.

(a)           No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article VI shall become effective until the acceptance of appointment by the successor Trustee under Section 6.8.

(b)           The Trustee may resign at any time by giving written notice thereof to the Company.

(c)           The Trustee may be removed only by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and to the Company.

(d)           If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason the Holders, by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8.  If no successor Trustee shall have been so appointed by the Holders and accepted appointment within sixty (60) days after the giving of a notice of resignation by the Trustee or the removal of the Trustee in the manner required by Section 6.8, any Holder who has been a bona fide Holder of a Security for at least six months (or, if the Securities have been Outstanding for less than six (6) months, the entire period of such lesser time) may, on behalf of such Holder and all others similarly situated, and any resigning Trustee may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.

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(e)           The Company shall give notice to all Holders in the manner provided in Section 1.6 of each resignation and each removal of the Trustee and each appointment of a successor Trustee.  Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.

SECTION 6.8 Acceptance of Appointment by Successor.

(a)           In case of the appointment hereunder of a successor Trustee, each successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.

(b)           Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) of this Section 6.8.

(c)           No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article VI.

SECTION 6.9 Merger, Conversion, Consolidation or Succession to Business.

Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided, that such Person shall be otherwise qualified and eligible under this Article VI.  In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation or as otherwise provided above in this Section 6.9 to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have.

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SECTION 6.10 Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness.  The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities.  Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof.

SECTION 6.11 Appointment of Authenticating Agent.

(a)           The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities, which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder.  Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent.  Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation or national banking association organized and doing business under the laws of the United States of America, or of any State or Territory thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or state authority.  If such Authenticating Agent publishes reports of condition at least annually pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 6.11 the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.11, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section 6.11.

(b)           Any Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such Person shall be otherwise eligible under this Section 6.11, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

(c)           An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company.  The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company.  Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.11, the Trustee may appoint a successor Authenticating Agent eligible under the provisions of this Section 6.11, which shall be acceptable to the Company, and shall give notice of such appointment to all Holders.  Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.

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(d)           The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 6.11 in such amounts as the Company and the Authenticating Agent shall agree from time to time.

(e)           If an appointment of an Authenticating Agent is made pursuant to this Section 6.11, the Securities may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:

This is one of the Securities referred to in the within mentioned Indenture.

Dated:	[Trustee], not in its individual capacity, but solely as Trustee
	By:
		Authenticating Agent

By:
	Authorized Signatory

ARTICLE VII

Holder’s Lists and Reports by Company

SECTION 7.1 Company to Furnish Trustee Names and Addresses of Holders.

The Company will furnish or cause to be furnished to the Trustee:

(a)           semiannually, on or before June 30 and December 31 of each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than fifteen (15) days prior to the delivery thereof, and

(b)           at such other times as the Trustee may request in writing, within thirty (30) days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than fifteen (15) days prior to the time such list is furnished,

in each case to the extent such information is in the possession or control of the Company and has not otherwise been received by the Trustee in its capacity as Securities Registrar.

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SECTION 7.2 Preservation of Information, Communications to Holders.

(a)           The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar.  The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished.

(b)           The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act.

(c)           Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act.

SECTION 7.3 Reports by Company.

(a)           The Company shall furnish to the Holders and to prospective purchasers of Securities, upon their request, the information required to be furnished pursuant to Rule 144A(d)(4) under the Securities Act.  The delivery requirement set forth in the preceding sentence may be satisfied by compliance with Section 7.3(b) hereof.

(b)           Unless filed with the Securities and Exchange Commission (the “Commission”) as contemplated in Section 7.3(c) below, the Company shall furnish to each of (i) the Trustee, (ii) the Holders and to subsequent holders of Securities, (iii) Taberna Capital Management, LLC, 450 Park Avenue, 11th Floor, New York, New York 10022, Attn:  Raphael Licht (or such other address as designated by Taberna Capital Management, LLC) and (iv) any beneficial owner of the Securities reasonably identified to the Company (which identification may be made either by such beneficial owner or by Taberna Capital Management, LLC), a duly completed and executed certificate substantially and substantively in the form attached hereto as Exhibit A, including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Company (x) so long as the Company is registered with the Commission, not later than the time periods in which such quarterly reports would be required to be filed with the Commission after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than the time periods within which such annual report would be required to be filed with the Commission after the end of each fiscal year of the Company or (y) at any time that the Company is not registered with the Commission, not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company.

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(c)           If the Company intends to file its annual and quarterly information with the Commission in electronic form pursuant to Regulation S-T of the Commission using the Commission’s Electronic Data Gathering, Analysis and Retrieval (“EDGAR”) system, the Company shall notify the Trustee in the manner prescribed herein of each such annual and quarterly filing.  The Trustee is hereby authorized and directed to access the EDGAR system for purposes of retrieving the financial information so filed.  Compliance with the foregoing shall constitute delivery by the Company of its financial statements to the Trustee in compliance with the provisions of Section 314(a) of the Trust Indenture Act, if applicable, and shall satisfy its obligations to the Trustee and the Holders of the Securities under Section 7.3(b). The Trustee shall have no duty to search for or obtain any electronic or other filings that the Company makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of reports, information and documents to the Trustee pursuant to this Section 7.3(c) shall be solely for purposes of compliance with this Section 7.3(c) and, if applicable, with Section 314(a) of the Trust Indenture Act.  The Trustee’s receipt of such reports, information and documents shall not constitute notice to it of the content thereof or any matter determinable from the content thereof, including the Company’s compliance with any of its covenants hereunder, as to which the Trustee is entitled to rely upon Officers’ Certificates.

ARTICLE VIII

Consolidation, Merger, Conveyance, Transfer or Lease

SECTION 8.1 Company May Consolidate, Etc., Only on Certain Terms.

The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless:

(a)           if the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall (i) be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and (ii) expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;

(b)           immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and

(c)           the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this Article VIII and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1.

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SECTION 8.2 Successor Company Substituted.

(a)           Upon any consolidation or merger by the Company with or into any other Person, or any conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person in accordance with Section 8.1 and the execution and delivery to the Trustee of the supplemental indenture described in Section 8.1(a), the successor entity formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and in the event of any such conveyance or transfer, following the execution and delivery of such supplemental indenture, the Company shall be discharged from all obligations and covenants under the Indenture and the Securities.

(b)           Such successor Person may cause to be executed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities that such successor Person thereafter shall cause to be executed and delivered to the Trustee on its behalf.  All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture.

(c)           In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate to reflect such occurrence.

ARTICLE IX

Supplemental Indentures

SECTION 9.1 Supplemental Indentures without Consent of Holders.

Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, and upon request by the Company (provided that all conditions precedent thereto have been met), the Trustee shall enter into such indenture supplemental hereto for any of the following purposes:

(a)           to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities; or

(b)           to evidence and provide for the acceptance of appointment hereunder by a successor trustee; or

(c)           to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Indenture, which shall not be inconsistent with the other provisions of this Indenture, provided, that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders; or

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(d)           to comply with the rules and regulations of any securities exchange or automated quotation system on which any of the Securities may be listed, traded or quoted; or

(e)           to add to the covenants, restrictions or obligations of the Company or to add to the Events of Default, provided, that such action pursuant to this clause (e) shall not adversely affect in any material respect the interests of any Holders; or

(f)           to modify, eliminate or add to any provisions of the Indenture or the Securities to such extent as shall be necessary to ensure that the Securities are treated as indebtedness of the Company for United States Federal income tax purposes, provided, that such action pursuant to this clause (f) shall not adversely affect in any material respect the interests of any Holders.

SECTION 9.2 Supplemental Indentures with Consent of Holders.

(a)           Subject to Section 9.1, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities under this Indenture; provided, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security,

(i)           change the Stated Maturity of the principal or any premium of any Security or change the date of payment of any installment of interest (including any Additional Interest) on any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or restrict or impair the right to institute suit for the enforcement of any such payment on or after such date, or

(ii)           reduce the percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with any provision of this Indenture or of defaults hereunder and their consequences provided for in this Indenture, or

(iii)           modify any of the provisions of this Section 9.2, Section 5.13 or Section 10.7, except to increase any percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any reason, or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security;

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(b)           It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

SECTION 9.3 Execution of Supplemental Indentures.

In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent herein provided for relating to such action have been complied with.  The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee’s own rights, duties, indemnities or immunities under this Indenture or otherwise.  Copies of the final form of each supplemental indenture shall be delivered by the Trustee at the expense of the Company to each Holder, promptly after the execution thereof.

SECTION 9.4 Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article IX, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

SECTION 9.5 Reference in Securities to Supplemental Indentures.

Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture.  If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities.

ARTICLE X

Covenants

SECTION 10.1 Payment of Principal, Premium, if any, and Interest.

The Company covenants and agrees for the benefit of the Holders of the Securities that it will duly and punctually pay the principal of and any premium and interest (including any Additional Interest) on the Securities in accordance with the terms of the Securities and this Indenture.

SECTION 10.2 Money for Security Payments to be Held in Trust.

(a)           Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m., New York City time, on each due date of the principal of or any premium or interest (including any Additional Interest) on any Securities, deposit with such Paying Agent a sum sufficient to pay such amount, such sum to be held as provided in the Trust Indenture Act and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure to so act.

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(b)           The Company will cause each Paying Agent for the Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee (who by executing and delivering this Indenture agrees to be so bound), subject to the provisions of this Section 10.2, that such Paying Agent will (i) comply with the provisions of this Indenture and the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities.

(c)           The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

(d)           Any money deposited with the Trustee or any Paying Agent for the payment of the principal of and any premium or interest (including any Additional Interest) on any Security and remaining unclaimed for two years after such principal and any premium or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.

SECTION 10.3 Statement as to Compliance.

Upon the reasonable request of the Holders of a majority in aggregate principal amount of the Outstanding Securities, the Company shall deliver to the Trustee, within thirty (30) days after such request, an Officers’ Certificate covering the preceding calendar year, stating whether or not to the knowledge of the signers thereof the Company is in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.  The delivery requirements of this Section 10.3 may be satisfied by compliance with Section 8.16(a) of the Trust Agreement.

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SECTION 10.4 Calculation Agent.

(a)           The Company hereby agrees that for so long as any of the Securities remain Outstanding, there will at all times be an agent appointed to calculate LIBOR in respect of each Interest Payment Date in accordance with the terms of Schedule A (the “Calculation Agent”).  The Company has initially appointed the Trustee as Calculation Agent for purposes of determining LIBOR for each Interest Payment Date.  The Calculation Agent may be removed by the Company at any time.  If the Calculation Agent is unable or unwilling to act as such or is removed by the Company, the Company will promptly appoint as a replacement Calculation Agent the London office of a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market and which does not control or is not controlled by or under common control with the Company or its Affiliates.  The Calculation Agent may not resign its duties without a successor having been duly appointed.

(b)           The Calculation Agent shall be required to agree that, as soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date (as defined in Schedule A), but in no event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date, the Calculation Agent will calculate the interest rate (the Interest Payment shall be rounded to the nearest cent, with half a cent being rounded upwards) for the related Interest Payment Date, and will communicate such rate and amount to the Company, the Trustee, each Paying Agent and the Depositary.  The Calculation Agent will also specify to the Company the quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation Agent shall notify the Company before 5:00 p.m.  (London time) on each LIBOR Determination Date that either:  (i) it has determined or is in the process of determining the foregoing rates and amounts or (ii) it has not determined and is not in the process of determining the foregoing rates and amounts, together with its reasons therefor.  The Calculation Agent’s determination of the foregoing rates and amounts for any Interest Payment Date will (in the absence of manifest error) be final and binding upon all parties.  For the sole purpose of calculating the interest rate for the Securities, “Business Day” shall be defined as any day on which dealings in deposits in Dollars are transacted in the London interbank market.

SECTION 10.5 Reserved.

SECTION 10.6 Additional Covenants.

(a)           The Company covenants and agrees with each Holder of Securities that if an Event of Default shall have occurred and be continuing, it shall not (x) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company’s Equity Interests, (y) vote in favor of or permit or otherwise allow any of its Subsidiaries to declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to or otherwise retire, any shares of any such Subsidiary’s preferred stock or other Equity Interests entitling the holders thereof to a stated rate of return (for the avoidance of doubt, whether such preferred stock or other Equity Interests are perpetual or otherwise) other than to the Company or (z) make any payment of principal of or any interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Securities (other than (A) repurchases, redemptions or other acquisitions of Equity Interests of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of Equity Securities of the Company (or securities convertible into or exercisable for such Equity Securities) as consideration in an acquisition transaction entered into prior to the Event of Default, (B) as a result of an exchange or conversion of any class or series of the Company’s Equity Interests (or any Equity Securities of a Subsidiary of the Company) for any class or series of the Company’s Equity Interests or of any class or series of the Company’s indebtedness for any class or series of the Company’s Equity Interests, (C) the purchase of fractional interests in shares of the Company’s Equity Interests pursuant to the conversion or exchange provisions of such Equity Interests or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto, (E) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock, or (F) any declaration or payment of a dividend or other distribution in order for the Company to maintain its status as a REIT, provided that any such declaration or payment shall be in the form of stock to the extent permitted by the Code and commercially reasonable to do so).

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(b)           The Company covenants and agrees with each Holder of Securities that during the period commencing on the date hereof and continuing through April 30, 2012, it shall not declare or pay dividends or distributions on, or redeem, purchase, or acquire any of the Company’s Equity Interests (for the avoidance of doubt the Original Preferred Securities (as defined in the Exchange Agreement) shall not be deemed to be Equity Interests of the Company), except for (A) repurchases, redemptions or other acquisitions of Equity Interests of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of Equity Securities of the Company (or securities convertible into or exercisable for such Equity Securities) as consideration in an acquisition transaction, (B) as a result of an exchange or conversion of any class or series of the Company’s Equity Interests (or any Equity Securities of a Subsidiary of the Company) for any class or series of the Company’s Equity Interests or of any class or series of the Company’s indebtedness for any class or series of the Company’s Equity Interests, (C) the purchase of fractional interests in shares of the Company’s Equity Interests pursuant to the conversion or exchange provisions of such Equity Interests or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto,  (E) any dividend in the form of Equity Interests, warrants, options or other rights exercisable for Equity Interests, or (F) any declaration or payment of a dividend or other distribution in order for the Company to maintain its status as a REIT, provided that any such declaration or payment shall be in the form of stock to the extent permitted by the Code and commercially reasonable to do so.

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(c)           As of the date hereof, the Company is qualified as a real estate investment trust (a “REIT”) under the Code and no circumstance or event has occurred that would disqualify the Company as a REIT.  Subject to the Company’s right to merge into an entity that is not a real estate investment trust pursuant to Section 8.1 hereof, the Company agrees to use its commercially reasonable efforts to, at all times meet the requirements to qualify as a REIT unless and until the Board of Directors of the Company determines that it is not in the best interests of the Company to be organized as a REIT.

SECTION 10.7 Waiver of Covenants.

The Company may omit in any particular instance to comply with any covenant or condition contained in Section 10.6 if, before or after the time for such compliance, the Holders of at least a majority in aggregate principal amount of the Outstanding Securities shall either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect.

SECTION 10.8 Treatment of Securities.

The Company will treat the Securities as indebtedness, and the amounts, other than payments of principal, payable in respect of the principal amount of such Securities as interest, for all U.S. federal income tax purposes.  All payments in respect of the Securities will be made free and clear of U.S. withholding tax to any beneficial owner thereof that has provided an Internal Revenue Service Form W-9 or W-8BEN (or any substitute or successor form) establishing its U.S. or non-U.S. status for U.S. federal income tax purposes, or any other applicable form establishing a complete exemption from U.S. withholding tax.

SECTION 10.9 Inspection of Books and Records

.  If the Company is no longer subject to the reporting requirements of the Exchange Act and if an Event of Default has occurred and is continuing under his Indenture, the Company shall permit the Holders to examine the books and records of account of the Company and its Subsidiaries (and to make copies thereof and extracts therefrom) and to discuss the affairs, finances and accounts of such Persons with, and to be advised as to the same by, its officers, all at such reasonable times and intervals during normal business hours as the Holders may reasonably request, provided, that prior to any such examination by the Holders, the Company and the Holders shall have entered into a commercially reasonable confidentiality agreement.  The Holders shall use good faith efforts to coordinate such inspections so as to minimize the interference with and disruption to the Company’s normal business operations.

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ARTICLE XI

Redemption of Securities

SECTION 11.1 Optional Redemption.

The Company may, at its option, redeem the Securities in whole at any time or in part from time to time, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion thereof, as applicable), together, in the case of any such redemption, with accrued and unpaid interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date (the “Optional Redemption Price”).

SECTION 11.2 Reserved.

SECTION 11.3 Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Securities, in whole or in part, shall be evidenced by or pursuant to a Board Resolution.  In case of any redemption at the election of the Company, the Company shall, not less than forty-five (45) days and not more than seventy-five (75) days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such date and of the principal amount of the Securities to be redeemed and provide the additional information required to be included in the notice or notices contemplated by Section 11.5.  In the case of any redemption of Securities, in whole or in part, (a) prior to the expiration of any restriction on such redemption provided in this Indenture or the Securities or (b) pursuant to an election of the Company which is subject to a condition specified in this Indenture or the Securities, the Company shall furnish the Trustee with an Officers’ Certificate and an Opinion of Counsel evidencing compliance with such restriction or condition.

SECTION 11.4 Selection of Securities to be Redeemed.

(a)           If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected and redeemed on a pro rata basis not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, provided, that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

(b)           The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed.  For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed.

(c)           The provisions of paragraphs (a) and (b) of this Section 11.4 shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part.  In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.

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SECTION 11.5 Notice of Redemption.

(a)           Notice of redemption shall be given not later than the thirtieth (30th) day, and not earlier than the sixtieth (60th) day, prior to the Redemption Date to each Holder of Securities to be redeemed, in whole or in part (unless a shorter notice shall be satisfactory to the Trustee).

(b)           With respect to Securities to be redeemed, in whole or in part, each notice of redemption shall state:

(i)           the Redemption Date;

(ii)          the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price, as calculated by the Company, together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the fifth (5th) Business Day prior to the Redemption Date (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated);

(iii)         if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the amount of and particular Securities to be redeemed;

(iv)        that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that any interest (including any Additional Interest) on such Security or such portion, as the case may be, shall cease to accrue on and after said date; and

(v)         the place or places where such Securities are to be surrendered for payment of the Redemption Price.

(c)           Notice of redemption of Securities to be redeemed, in whole or in part, at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company and shall be irrevocable.  The notice if mailed in the manner provided above shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice.  In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.

SECTION 11.6 Deposit of Redemption Price.

Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of redemption given as provided in Section 11.5, the Company will deposit with the Trustee or with one or more Paying Agents  an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including any Additional Interest) on, all the Securities (or portions thereof) that are to be redeemed on that date.

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SECTION 11.7 Payment of Securities Called for Redemption.

(a)           If any notice of redemption has been given as provided in Section 11.5, the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date.  On presentation and surrender of such Securities at a Place of Payment specified in such notice, the Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date.

(b)           Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms.

(c)           If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.

ARTICLE XII

Subordination of Securities

SECTION 12.1 Securities Subordinate to Senior Debt.

The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article XII, the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt.  Notwithstanding anything to the contrary contained herein, the Original Preferred Securities and the Existing Subordinated Notes (as defined in the Exchange Agreement) shall not be Senior Debt or otherwise entitled to the subordination provisions of this Article XII and the Securities shall be superior in right of payment to the Original Preferred Securities and the Existing Subordinated Notes and shall be deemed to be senior debt for purposes thereof, the Existing Indentures (as defined in the Exchange Agreement) and the Trust Agreements (as defined in the Exchange Agreement).

SECTION 12.2 No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.

(a)           In the event and during the continuation of any default by the Company in the payment of any principal of or any premium or interest on any Senior Debt (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.

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(b)           In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a “Proceeding”), all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof.  Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt in accordance with the priorities then existing among such holders until all Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.

(c)           In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any Equity Interests or any obligations of the Company ranking junior to the Securities and such other obligations.  If, notwithstanding the foregoing, any payment or distribution of any character on any security, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) in full.  In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or assign the same.

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(d)          The Trustee and the Holders, at the expense of the Company, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior Debt or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.

(e)           The provisions of this Section 12.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.

(f)           The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.

SECTION 12.3 Payment Permitted If No Default.

Nothing contained in this Article XII or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time, except during the pendency of the conditions described in paragraph (a) of Section 12.2 or of any Proceeding referred to in Section 12.2, from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with Section 12.8) that such payment would have been prohibited by the provisions of this Article XII, except as provided in Section 12.8.

SECTION 12.4 Subrogation to Rights of Holders of Senior Debt.

Subject to the payment in full of all amounts due or to become due on all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions of this Article XII (equally and ratably with the holders of all indebtedness of the Company that by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Securities are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full.  For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XII, and no payments made pursuant to the provisions of this Article XII to the holders of Senior Debt by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt.

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SECTION 12.5 Provisions Solely to Define Relative Rights.

The provisions of this Article XII are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt on the other hand.  Nothing contained in this Article XII or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Debt or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article XII of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.

SECTION 12.6 Trustee to Effectuate Subordination.

Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article XII and appoints the Trustee his or her attorney-in-fact for any and all such purposes.

SECTION 12.7 No Waiver of Subordination Provisions.

(a)           No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.

(b)           Without in any way limiting the generality of paragraph (a) of this Section 12.7, the holders of Senior Debt may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Article XII or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt, do any one or more of the following:  (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt or any instrument evidencing the same or any agreement under which Senior Debt is outstanding, (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt, (iii) release any Person liable in any manner for the payment of Senior Debt and (iv) exercise or refrain from exercising any rights against the Company and any other Person.

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SECTION 12.8 Notice to Trustee.

(a)           The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Securities.  Notwithstanding the provisions of this Article XII or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder of Senior Debt or from any trustee, agent or representative therefor; provided, that if the Trustee shall not have received the notice provided for in this Section 12.8 at least two (2) Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two (2) Business Days prior to such date.

(b)           The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor).  In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article XII, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XII, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

SECTION 12.9 Reliance on Judicial Order or Certificate of Liquidating Agent.

Upon any payment or distribution of assets of the Company referred to in this Article XII, the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XII.

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SECTION 12.10 Trustee Not Fiduciary for Holders of Senior Debt.

The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this Article XII or otherwise.

SECTION 12.11 Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights.

The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII with respect to any Senior Debt that may at any time be held by it, to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder.

SECTION 12.12 Article Applicable to Paying Agents

If at any time any Paying Agent other than the Trustee shall have been appointed by the Trustee and be then acting hereunder, the term “Trustee” as used in this Article XII shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XII in addition to or in place of the Trustee. For the avoidance of doubt, neither the Company nor any Affiliate of the Company shall be permitted to serve as a Paying Agent hereunder.

SECTION 12.13

With respect to Securities issued in the United States, the Shareholders Act requires the Trustee to disclose to the issuers, upon their request, the name, address and securities position of its customers who are (a) the "beneficial owners" (as defined in the Shareholders Act) of the issuer’s Securities, if the beneficial owner does not object to such disclosure, or (b) acting as a "respondent bank" (as defined in the Shareholders Act) with respect to the Securities.  (Under the Shareholders Act, "respondent banks" do not have the option of objecting to such disclosure upon the issuers' request.)  The Shareholders Act defines a "beneficial owner" as any person who has, or shares, the power to vote a security (pursuant to an agreement or otherwise), or who directs the voting of a security.  The Shareholders Act defines a "respondent bank" as any bank, association or other entity that exercises fiduciary powers which holds securities on behalf of beneficial owners and deposits such securities for safekeeping with a bank, such as the Trustee.  Under the Shareholders Act, each Holder is either the "beneficial owner" or a "respondent bank."

For Purposes of this Indenture, until the Trustee receives a contrary written instruction from a Holder, the Trustee shall assume that such Holder is the beneficial owner of the Securities.

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For purposes of this Indenture, until the Trustee receives a contrary instruction from a Holder, the Trustee shall release the name, address and securities position to any issuer which requests such information pursuant to the Shareholders Act for the specific purpose of direct communications between such issuer and such Holder.  With respect to Securities issued outside of the United States, information shall be released to issuers only if required by law or regulation of the particular country in which the Securities are located.

* * * *

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

* * * *

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.

Capital Trust, Inc., a Maryland Corporation
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

The Bank of New York Mellon Trust Company, National Association, as Trustee
By:	/s/ Bill Marshall
	Name: Bill Marshall
	Title: Vice President

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Schedule A

DETERMINATION OF LIBOR

With respect to the Securities, the London interbank offered rate (“LIBOR”) shall be determined by the Calculation Agent in accordance with the following provisions (in each case rounded to the nearest .000001%):

(1)           On the second LIBOR Business Day (as defined below) prior to a Interest Payment Date after the expiration of the Fixed Rate Period(each such day, a “LIBOR Determination Date”), LIBOR for any given security shall for the following Interest Period equal the rate (expressed as a percentage per annum) for U.S. dollar deposits in Europe, for a three (3) month period, that appears on Dow Jones Telerate (as defined in the International Swaps and Derivatives Association, Inc. 2000 Interest Rate and Currency Exchange Definitions) Page 3750, or such other page as may replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date, as reported by Bloomberg Financial Market Commodities News or any successor service. If such rate is superseded on Telerate Page 3750 by a corrected rate before 12:00 noon (London time) on such LIBOR Determination Date, the corrected rate as so substituted will be LIBOR for such LIBOR Determination Date.

(2)           If on any LIBOR Determination Date such rate does not appear on Dow Jones Telerate Page 3750 or such other page as may replace such Page 3750, the Calculation Agent shall determine the arithmetic mean of the offered quotations (expressed as a percentage per annum) of the Reference Banks (as defined below) to leading banks in the London interbank market for U.S. dollar deposits in Europe, for a three (3) month period, for an amount determined by the Calculation Agent (but not less than U.S. $1,000,000) by reference to requests for quotations as of approximately 11:00 A.M. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If on any LIBOR Determination Date at least two of the Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean of such quotations. If on any LIBOR Determination Date only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered quotations (expressed as a percentage per annum) that two (2) leading banks in The City of New York selected by the Calculation Agent are quoting on the relevant LIBOR Determination Date for U.S. dollar deposits in Europe, for a three (3) month period, for an amount determined by the Calculation Agent (but not less than U.S. $1,000,000); provided, that if the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR Determination Date.

(3)           As used herein: “Reference Banks” means four major banks in the London interbank market selected by the Calculation Agent; and “LIBOR Business Day” means a day (a) on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London and (b) is not a Saturday, Sunday or other day on which commercial banking institutions in New York, New York are authorized or obligated by law or executive order to be closed.

Schedule A-1

Exhibit A

Form of Officer’s Financial Certificate

(See Attached)

Schedule A-2

EX-10.69

AMENDMENT NO. 3 TO MASTER REPURCHASE AGREEMENT

AMENDMENT NO. 3 TO MASTER REPURCHASE AGREEMENT, dated as of March 16, 2009 (this “Amendment”), by and between CAPITAL TRUST, INC., a Maryland corporation (“Seller”) and CITIGROUP GLOBAL MARKETS, INC., a Delaware corporation (“Securities Buyer”), and CITIGROUP FINANCIAL PRODUCTS INC., a Delaware corporation (“Loan Buyer”; each of Loan Buyer and Securities Buyer, a “Buyer” and collectively, the “Buyers”). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the Existing Repurchase Agreement (as hereinafter defined).

RECITALS

WHEREAS, Seller and the Buyers are parties to that certain Master Repurchase Agreement dated as of July 30, 2007, which Master Repurchase Agreement was amended by that certain Amendment No. 1 to Master Repurchase Agreement dated as of June 26, 2008, and that  certain Amendment No. 2 to Master Repurchase Agreement dated as of July 24, 2008 (as so amended, the “Existing Repurchase Agreement,” and as amended hereby and as further amended, restated, supplemented or otherwise modified from time to time, the “Repurchase Agreement”);

WHEREAS, Seller is party to that certain Master Repurchase Agreement, dated as of July 29, 2005 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Morgan Stanley Repurchase Agreement”), by and among Seller, CT RE CDO 2004-1 SUB, LLC, CT RE CDO 2005-1 SUB, LLC and CT XLC HOLDINGS, LLC, as sellers (collectively, the “Morgan Stanley Sellers”) and MORGAN STANLEY BANK, N.A., as buyer (“Morgan Stanley”);

WHEREAS, Seller is party to that certain Master Repurchase Agreement, dated as of October 24, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMorgan-A Repurchase Agreement”), by and among CT BSI FUNDING CORP. (“CT BSI”) and Seller, as sellers (in such capacity, collectively, the “JPM-A Sellers”) and JPMORGAN CHASE BANK, N.A., as buyer (“JPMorgan”);

WHEREAS, Seller is party to that certain Master Repurchase Agreement, dated as of November 21, 2008 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “JPMorgan-B Repurchase Agreement”; together with the JPMorgan-A Repurchase Agreement, collectively, the “JPMorgan Repurchase Agreements,” and together with the Repurchase Agreement, the Morgan Stanley Repurchase Agreement, the “Senior Secured Facilities”), by and among CT BSI and Seller, as sellers (in such capacity, collectively, the “JPM-B Sellers”; together with the JPM-A Sellers, collectively, the “JPM Sellers”; and together with Seller and the Morgan Stanley Sellers, the “CT Parties”) and JPMORGAN CHASE FUNDING INC., as buyer (“JPMorgan Funding”; and together with JPMorgan, collectively, the “JPM Parties,” and together with the Buyers and Morgan Stanley, the “Secured Plan Participants”); and

WHEREAS, Seller and the Buyers wish to amend the Existing Repurchase Agreement as more particularly set forth herein.

NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and the Buyers hereby agree as follows:

SECTION 1. Amendments.

(a)           The following definitions are hereby added to Section 2 of the Existing Repurchase Agreement in the appropriate alphabetical order:

“Additional Senior Unsecured Payment Amount” shall mean an amount, calculated on a quarterly basis, equal to (x) the total amount of cash paid by Seller or its Affiliates to the Senior Unsecured Facility during the immediately preceding calendar quarter (including interest and amortization payments), less (y) the Baseline Senior Unsecured Payment Amount.

 “Additional Restricted Cash” shall mean, to the extent otherwise constituting Unrestricted Cash, any cash or Cash Equivalent of Seller and its Subsidiaries (i) that is required to be trapped pursuant to the other Senior Secured Facilities or the terms of any other loan agreement, repurchase agreement, or other extension of credit, (ii) that is received in anticipation of a disbursement by Seller or any of its Subsidiaries to a Person other than Seller or any Subsidiary within one (1) Business Day, (iii) that is provided as cash collateral to support letters of credit and bank guarantees, customs and other import duties in the ordinary course of business of Seller or any of its Subsidiaries or (iv) that, if distributed or paid, would result in the insolvency of Seller.

“Amendment No. 3” shall mean that certain Amendment No. 3 to this Agreement, dated as of March 16, 2009, among Seller and the Buyers.

“Amendment No. 3  Effective Date” shall mean the “Amendment Effective Date”, as defined in Section 2 of Amendment No. 3.

“Baseline Senior Unsecured Payment Amount” shall mean an amount, calculated on a quarterly basis, equal to the product of (x) $100,000,000, multiplied by (y) Senior Unsecured Facility LIBOR, plus 175 basis points (1.75%).

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

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“Citigroup’s Proportionate Share” shall mean, as of any date, a fraction the numerator of which is the outstanding Repurchase Price of all Purchased Loans, and the denominator of which is the Secured Plan Facilities Obligations.

 “Collateral Value” shall mean, as of any date of determination, in respect of any Purchased Loan, the Initial Value of such Purchased Loan, adjusted by taking into account credit risk (including, without limitation, information relating to the sponsor or tenant for such Purchased Loan or other information relating to the likelihood of payment of such Purchased Loan; any alleged violation of Environmental Laws; any bankruptcy filings, casualty loss, or condemnation affecting or impacting the applicable Underlying Mortgaged Property; any bankruptcy filing or other act of insolvency with respect to any co-participant or any other Person having an interest in such Purchased Loan or any related Underlying Mortgaged Property that is senior to, or pari passu with, the rights of Loan Buyer in such Purchased Loan; any payment of principal and/or interest are more than 60 days past due under any mortgage note affecting the Underlying Mortgaged Property or Underlying Mortgaged Properties or such Purchased Loan (without giving effect to any waiver by the lender thereunder); any modification of the Underlying Mortgaged Property or to the related loan documents (or any financing senior thereto); any market comparables for the Underlying Mortgaged Property or Underlying Mortgaged Properties) applicable to such Purchased Loan; but excluding market risk (e.g., interest rate risk) applicable to the Purchased Loan ; provided, however, that Loan Buyer may take into account any performance assumptions with respect to such Purchased Loan (including, without limitation: the sponsorship thereof; projections as to default probabilities and estimated losses; changes in the cash flow generated by the Underlying Mortgaged Property; the ultimate collectibility of the Purchased Loan if held to maturity; for assets held or to be held by the Custodian, the failure to deliver the Purchased Loan Documents to the Custodian in accordance with the terms of this Agreement and the Custodial Agreement; whether the Purchased Loan has been released from the possession of the Custodian under the Custodial Agreement to Seller for a period in excess of twenty (20) calendar days without the consent of Loan Buyer; and a breach of any of the representations and warranties regarding the Purchased Loan contained in Section 10(b)(vi)), in each case in its sole discretion exercised in good faith; and provided further, that the Collateral Value, without giving effect to such increase, shall in no event exceed one hundred percent (100%) of the outstanding principal balance of the related Purchased Loan.

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 “CT Cash Account” shall mean one or more deposit accounts established by Seller with Merrill Lynch, Pierce, Fenner & Smith Incorporated or Bank of America, N.A.

“Defaulted Purchased Loan” shall mean a Purchased Loan with respect to which (a) a monetary default has occurred or (b) an acceleration or foreclosure (including, in the case of Mezzanine Loans or B-Notes, a foreclosure of the Underlying Mortgaged Property) has been declared or commenced, and, in either case, such Purchased Loan has not been returned to performing status within 90 days; provided that Defaulted Purchased Loans shall not include any Purchased Loan with a Collateral Value or Repurchase Price of zero.

“Depository Agreement” shall mean that certain Depository Agreement, dated as of July 30, 2007, by and between the Buyers, Seller, Depository Bank and Midland Loan Services, Inc.

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

“Excess Cash” shall mean an amount, if any, by which Unrestricted Cash exceeds the sum of (a) $25,000,000 and (b) the aggregate amount of Seller’s Unfunded Commitments.

“Future Advances” shall mean Seller’s commitment to make future advances on assets under other Senior Secured Facilities, as detailed in Exhibit IX.

“Initial LTCV” shall mean the LTCV, calculated as of the Amendment No. 3 Effective Date.

“Initial Mark” shall mean, with respect to each Purchased Loan, a percentage as specified therefor on Exhibit IX hereto.

“Initial Value” shall mean, with respect to each Purchased Loan, a value equal to the product of (i) the “Face Amount” for such Purchased Loan as specified therefor on Exhibit G hereto and (ii) the Initial Mark for such Purchased Loan.

“Interest Allocation Percentage” shall mean, initially, 65%, or, if the Repurchase Date is extended pursuant to Section 3(e) and beginning on the first day after the original Repurchase Date, such other percentage as agreed to in good faith among Seller and the Secured Plan Participants, in each case, in their commercially reasonable discretion.

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“Interest Income” shall mean, with respect to any Purchased Loan, at any time, all interest, dividends or other distributions thereon.

“JPMorgan Account” shall mean the Seller’s account held with JP Morgan Chase Bank, N.A.

 “JPMorgan Repurchase Agreements” shall have the meaning specified therefor in Amendment No. 3.

“Lehman Facility” shall mean that certain Amended and Restated Loan and Security Agreement, dated as of September 10, 2008, between Seller, as borrower, and Lehman Commercial Paper Inc. as lender.

“Liquidity” shall mean, on any date of determination, the sum of (A) the consolidated amount of Unrestricted Cash of Seller and its Subsidiaries on such date, and (B) the incremental amount of borrowings Seller and its Subsidiaries are, as of such date, permitted to borrow pursuant to the terms of existing committed Indebtedness of Seller or its Subsidiaries in effect on such date, as to which all conditions precedent have been satisfied and which borrowings do not require the discretionary consent of the applicable lender, counterparty, credit provider or any other Person.

 “LTCV” shall mean, as of any date of determination, the ratio (expressed as a percentage) of the aggregate Repurchase Price of all Purchased Loans to the aggregate Collateral Value of all Purchased Loans.

“Maximum Outstanding Amount” shall mean, for all Transactions, an amount equal to $50,893,935.84.

“Minimum Release Price” shall mean, for any Purchased Loan, an amount equal to the greater of (a) the lesser of (i) the Initial Value of such Purchased Loan, (ii) the Collateral Value for such Purchased Loan as of the date that Seller notifies Loan Buyer of its intent to effect an Early Repurchase of such Purchased Loan, and (iii) 110% of the Repurchase Price of such Purchased Loan and (b) the Repurchase Price of such Purchased Loan.

“Morgan Stanley Repurchase Agreement” shall have the meaning specified in Amendment No. 3.

“Net Proceeds” shall mean, with respect to any Early Repurchase, the aggregate amount of cash received by or on behalf of such Person for its own account in connection with any such transaction, after deducting therefrom only:

(a)           reasonable and customary brokerage commissions, underwriting fees and discounts, legal fees, finder’s fees and other similar fees, costs and commissions that, in each case, are actually paid at the time of receipt of such cash to a Person that is not a Subsidiary or Affiliate of the Seller;

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(b)           the amount of taxes payable in connection with or as a result of such transaction that, in each case, are actually paid at the time of receipt of such cash to the applicable taxation authority or other Governmental Authority or, so long as such Person is not otherwise indemnified therefor, are reserved for in accordance with GAAP, as in effect at the time of receipt of such cash, based upon such Person’s reasonable estimate of such taxes, and paid to the applicable taxation authority or other Governmental Authority within 90 days after the date of receipt of such cash; and

(c)           the outstanding principal amount of, the premium or penalty, if any, on, and any accrued and unpaid interest on, any Indebtedness (other than Indebtedness under or in respect of the Transaction Documents) that is secured by a lien on the property and assets subject to such Early Repurchase and is required to be repaid under the terms of such Indebtedness as a result of such Early Repurchase, in each case, to the extent that the amounts so deducted are actually paid at the time of receipt of such cash to a Person that is not an Affiliate of Seller;

provided that, any and all amounts so deducted by any such Person pursuant to clauses (a) through (c) of this definition shall be properly attributable to such Early Repurchase or to the property or asset that is the subject thereof; provided, further, that if, at the time any of the taxes referred to in clause (b) are actually paid or otherwise satisfied, and the reserve therefor exceeds the amount paid or otherwise satisfied, then the amount of such excess reserve shall constitute “Net Proceeds” on and as of the date of such payment or other satisfaction for all purposes of this Agreement.

“Secured Plan Facilities Obligations” shall mean the sum of (a) the aggregate Repurchase Price of all Purchased Loans, and (b) and the aggregate amount of all obligations owed by Seller or any Subsidiary of Seller under the JPMorgan Repurchase Agreements and the Morgan Stanley Repurchase Agreement.

“Secured Plan Participants” shall have the meaning specified therefor in the recitals to Amendment No. 3.

“Senior Secured Facilities” shall have the meaning specified therefor in the recitals to Amendment No. 3.

“Senior Unsecured Facility” shall mean that certain Credit Agreement, dated as of March 22, 2007, by and among Seller as borrower, WestLB AG, New York Branch, as administrative agent, and the lenders party thereto, as the same may be amended, restated, supplemented or otherwise modified and in effect from time to time.

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“Senior Unsecured Facility LIBOR” shall mean, for any period, the measure of LIBOR used to calculate the interest payments made under the Senior Unsecured Facility during such period.

“Unfunded Commitments” shall mean, as of any date, an amount equal to the sum of Seller’s unfunded commitments to make Future Advances and meet future capital calls for CT Opportunity Partners I, LP, as of such date.

“Unrestricted Cash” shall mean (a) cash and Cash Equivalents that would not appear in the consolidated financial statements of Seller, prepared in accordance with GAAP, as a line item on the balance sheet as “restricted cash” or similar caption minus (b) any Additional Restricted Cash.

“Unsecured Lenders” shall mean the lenders party to the Senior Unsecured Facility.

“Valuation Test Date” shall have the meaning specified in Section 4.

“Valuation Test Failure” shall have the meaning specified in Section 4.

“Valuation Test Period” shall have the meaning specified in Section 4.

“Warrant” shall mean that certain Warrant, dated as of March 16, 2009, made by Seller in favor of Loan Buyer.

(b)           The definition of “Buyer’s Margin Amount” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(c)           The definition of “Buyer’s Margin Percentage” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(d)           The definition of “EBITDA” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(e)           The definition of “Fixed Charge Ratio” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(f)           The definition of “Margin Deficit” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(g)           The definition of “Margin Excess” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(h)           The definition of “Margin Notice Deadline” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

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(i)           The definition of “Market Value” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(j)           The definition of “Net Income” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(k)           The definition of “Net Worth” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(l)           The definition of “Recourse Debt to Equity Ratio” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(m)           The definition of “Repurchase Date” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

“Repurchase Date” shall mean March 16, 2010 or such earlier date on which this Agreement shall terminate in accordance with the provisions thereof or hereof or by operation of law; provided, however, that if the applicable conditions set forth in such Section 3(e) of this Agreement shall have been satisfied, the Termination Date shall be extended to the applicable date set forth in Section 3(e) of this Agreement.

(n)           The definition of “Subsidiary” contained in Section 2 of the Existing Repurchase Agreement is hereby modified by inserting the following as the last sentence thereof:

Notwithstanding the foregoing, Subsidiary shall not include investment funds managed by Seller or subsidiaries of same or investment funds of which Seller controls the general partner or managing member thereof or subsidiaries of same (except for those investment funds or subsidiaries of same of which Seller directly or indirectly owns at least a majority of the securities or other ownership interests therein).

(o)           The definition of “Tangible Net Worth” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(p)           The definition of “Target Price” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(q)           The definition of “Total Debt to Equity Ratio” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(r)           The definition of “Total Indebtedness” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(s)           The definition of “Total Recourse Indebtedness” contained in Section 2 of the Existing Repurchase Agreement is hereby deleted in its entirety.

(t)           Section 3(d) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(d)           No Transaction shall be terminable on demand by Loan Buyer (other than upon the occurrence and during the continuance of an Event of Default by Seller).  Seller shall be entitled to terminate a Transaction on demand, in whole or in part, and repurchase any or all of the Purchased Loans subject to a Transaction on any Business Day prior to the Repurchase Date (such repurchase, an “Early Repurchase,” and the date of such Early Repurchase, an “Early Repurchase Date”); provided, however, that:

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(i) Seller notifies Loan Buyer in writing of its intent to terminate such Transaction and repurchase such Purchased Loan no later than two (2) Business Days (or such shorter period of time as Loan Buyer may consent to, such consent not to be unreasonably withheld, delayed or conditioned) prior to such Early Repurchase Date,

(ii) Such Purchased Loan or Purchased Loans are simultaneously sold to a bona fide third-party purchaser, or with Loan Buyer’s approval (which may be withheld in Loan Buyer’s sole discretion) to an Affiliate of Seller,

(iii) All of the Net Proceeds of such sale are deposited directly into the Loan Cash Management Account and applied in accordance with Section 5(d) hereof,  and

(iv) on such Early Repurchase Date Seller pays to Loan Buyer (inclusive of Net Proceeds deposited in the Loan Cash Management Account pursuant to clause (iii) above) an amount equal to the Minimum Release Price for such Purchased Loan or Purchased Loans.

(u)           Section 3(e) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(e)           Seller hereby promises to pay in full on the Repurchase Date, in accordance with the provisions of the definition of Repurchase Date, the aggregate Repurchase Price with respect to all Purchased Loans then held by Loan Buyer.

(i)           Notwithstanding the foregoing, Seller may, in its sole discretion by notice to Loan Buyer between 90 and 20 days prior to the originally scheduled Repurchase Date, extend the Repurchase Date with respect to all of the Transactions until the first (1st) anniversary of the originally scheduled Termination Date (all of the other terms and conditions of such Transactions remaining the same) provided that the following conditions precedent are satisfied as of the date of the effectiveness of such extension: (1) the aggregate Repurchase Price of all Purchased Loans as of the date of such extension is less than or equal to the Maximum Outstanding Amount, (2) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (3) Seller and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that, if conditions (1) through (3) are met and if any extension request is made during a Valuation Test Period, such extension shall be provisionally granted until the end of such Valuation Test Period, and such extension shall be granted only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

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(ii)           Notwithstanding the foregoing, if the initial Repurchase Date shall have been extended pursuant to Section 3(e)(i), Seller may request, between 90 and 20 days prior to the extended Repurchase Date, and subject to the written approval of Loan Buyer in its sole and absolute discretion given no later than ten (10) days prior to the extended Repurchase Date (any failure by Loan Buyer to deliver such notice of its approval to an extension to Seller shall be deemed a denial of Seller’s request to extend the Repurchase Date) provided that in any event, the following conditions precedent are satisfied as of the date of the effectiveness of such second extension: (1) no Defaults or Events of Default have occurred and are continuing, or would be caused by such extension under this Agreement and (2) Seller and the Secured Plan Participants have agreed to a new Interest Allocation Percentage; provided further, that if conditions (1) and (2) or any other conditions then required by Loan Buyer in its sole discretion (including, without limitation, requirements of additional payments, prepayments, revaluations of Collateral Value for any Purchased Loan or delivery of additional documents) are met and if any extension request is made during a Valuation Test Period, such extension may be provisionally granted by Loan Buyer, in its sole and absolute discretion, until the end of such Valuation Test Period, and such extension may be granted by Loan Buyer, in its sole and absolute discretion, only if no Valuation Test Failure exists as of the end of such Valuation Test Period.

(v)           The following is hereby added to the Existing Repurchase Agreement as Section 3(n):

(n)           Seller may request from time to time, subject to Loan Buyer’s approval in Loan Buyer’s sole determination, to sell participation interests in its interests in any Purchased Loan in connection with an Early Repurchase of such Purchased Asset in accordance with Section 3(d) hereof, the sale of which participation interests shall be arm’s length transactions and subject to such terms and conditions as Loan Buyer in its sole discretion shall require; provided that Loan Buyer (a) retains an interest in the tranche or participation that is not sold or refinanced pursuant to such Early Repurchase, subject to the terms of this Agreement or (b) shall maintain a security interest in such tranche or participation that is not sold or refinanced pursuant to such Early Repurchase.

(w)           Section 4 of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

4.           MARGIN MAINTENANCE

Beginning with September 1, 2009, and on the first Business Day of each calendar month thereafter (each such date, a “Valuation Test Date”), Loan Buyer will determine the Collateral Value of each Purchased Loan.  If on any Valuation Test Date, the LTCV exceeds 1.15 times the Initial LTCV (a “Valuation Test Failure”), Seller shall, within five (5) Business Days following such Valuation Test Date, make a prepayment in reduction of the Repurchase Price, such that after giving effect to such prepayment, the LTCV, as re-determined by Loan Buyer, shall not exceed 1.15 times the Initial LTCV.  All prepayments in reduction of Repurchase Price shall be applied by Loan Buyer in its sole discretion.  If Seller is not able to cure a Valuation Test Failure within five (5) Business Days after the applicable Valuation Test Date, then Seller shall cooperate with Loan Buyer to select one or more Purchased Loans to liquidate and will use its commercially reasonable efforts, taking into account the rights and interests of Loan Buyer, to expeditiously commence the liquidation process for same.  If the Valuation Test Failure is not cured within 60 days from the initial failure, an Event of Default will occur; provided that if Seller provides Loan Buyer with a copy of an executed asset sale or refinancing agreement, acceptable to Loan Buyer in its sole discretion, prior to the end of such 60-day period in respect of the selected Purchased Loans, Loan Buyer may, at its option, grant a one-time 15-day extension to cure such Valuation Test Failure (such 60-day period and any 15-day extension, a “Valuation Test Period”).  Notwithstanding the above, in the event that a Purchased Loan becomes a Defaulted Purchased Loan, a Valuation Test will be performed at that time, and the provisions of this Section 4 shall apply.

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(x)           Section 5(c) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(c)           So long as no Event of Default (other than with respect to a Buyer) shall have occurred and be continuing, all Interest Income received by the Depository in respect of the Purchased Loans during each Collection Period shall be applied by the Depository on the related Remittance Date in the following order of priority:

(i)           first, to remit to Loan Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Loans,

(ii)           second, to make a payment to Loan Buyer on account of any other amounts (other than Repurchase Price) due and payable to Loan Buyer under the Agreement and the other Transaction Documents,

(iii)           third, to make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero, an amount equal to the product of the Interest Allocation Percentage multiplied by the difference between (x) the total Interest Income received by Seller during such month on account of the Purchased Loans and (y) the Price Differential otherwise actually paid by Seller to Loan Buyer during such month, and

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

(y)           Section 5(d) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(d)           So long as no Event of Default (other than with respect to a Buyer) shall have occurred and be continuing, all Income received by the Depository in respect of the Purchased Loans, other than Interest Income, during each Collection Period shall be applied by the Depository within one (1) Business Day following receipt thereof in the following order of priority:

(i)           first, to remit to Loan Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Loans,

(ii)           second, to make a payment to Loan Buyer on account of any other amounts (other than Repurchase Price) due and payable to Loan Buyer under the Agreement and the other Transaction Documents,

(iii)           third, to make a payment to Loan Buyer on account of the Repurchase Price of the Purchased Loan in respect of which such Income is received until the Repurchase Price for such Purchased Loan has been reduced to zero;

(iv)           fourth, to make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans until the Repurchase Price for all Purchased Loans has been reduced to zero, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero; and

(v)           fifth, to remit to Seller the remainder.

(z)           Section 5(e) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(e)           If an Event of Default (other than with respect to a Buyer) shall have occurred and be continuing, all Income received by the Depository in respect of the Purchased Loans shall be applied by the Depository within one (1) Business Days following receipt thereof in the following order of priority:

(i)           first, to remit to Loan Buyer an amount equal to the Price Differential which has accreted and is outstanding in respect of all of the Purchased Loans,

(ii)           second, to make a payment to Loan Buyer on account of any other amounts (other than Repurchase Price) due and payable to Loan Buyer under the Agreement and the other Transaction Documents,

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(iii)           third, to make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans until the Repurchase Price for all Purchased Loans has been reduced to zero, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero; and

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

(aa)            The following is hereby added to the Existing Repurchase Agreement as Section 5(f):

 (f)           At the end of each calendar quarter, Seller shall make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans until the Repurchase Price for all Purchased Loans has been reduced to zero, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to (i) Excess Cash as of the last day of such calendar quarter, multiplied by Loan Buyer’s pro rata share, based on the then outstanding Repurchase Price of all Purchased Loans at such date, of the aggregate Secured Plan Facilities Obligations as of such date.

(bb)           The following is hereby added to the Existing Repurchase Agreement as Section 5(g):

 (g)           On the first Business Day of each calendar quarter, Seller shall make a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans until the Repurchase Price for all Purchased Loans has been reduced to zero, each such payment to be allocated in Loan Buyer’s sole discretion among those Purchased Loans with respect to which the Repurchase Price has not been reduced to zero, in an amount equal to the lesser of (i) the then outstanding Repurchase Price of all Purchased Loans, and (ii) the product of (x) the Additional Senior Unsecured Payment Amount, multiplied by (y) Citigroup’s Proportionate Share.

(cc)             The fifth through tenth lines of Section 7(a) of the Existing Repurchase Agreement are hereby deleted in their entirety and replaced with following:

Bank:	Bank of America
ABA:	026009593
Account Name:	Capital Trust, Inc.
Account #:	483024227101
Attention:	Geoffrey G. Jervis – 212-655-0247

(dd)           The following are hereby added into the Existing Repurchase Agreement as Sections 12(q) through 12(dd):

(q)           If at any time there exists a Valuation Test Failure, Seller shall cure same in accordance with Section 4 hereof.

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(r)           Seller shall not make any payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement or other acquisition of any equity or partnership interest of Seller, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of Seller, either directly or indirectly, whether in cash or property or in obligations of Seller or any of Subsidiary of Seller, except to the minimum extent required for Seller to maintain its status as a real estate investment trust and, to the extent permitted, such distribution shall be made in equity in lieu of cash; provided that any Subsidiary of Seller may make distributions to Seller.

 (s)           Without the prior written consent of Loan Buyer, Seller shall not, nor permit any Subsidiary to, originate, acquire or invest in any new stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person except to (a) make co-investments in future funds of which Seller (or its Affiliates) is the sponsor or manager, and (b) make protective investments to defend existing Purchased Assets or assets subject to another Senior Secured Facility or that are pledged as collateral security for the Senior Unsecured Facility.  With respect to co-investments, (a) no investments will be permitted in the first six (6) months following the Amendment No. 3 Effective Date, (b) the projected base management fees generated by the proposed future fund over the first 36 months must equal or exceed the co-investment commitment, and (c) the total amount of co-investment capital for all such proposed future funds may not exceed $10,000,000 without the prior written approval of Loan Buyer.  With respect to protective investments made in respect of Purchased Loans or assets subject to another Senior Secured Facility, the amount of each investment may not exceed $5,000,000 per Purchased Loan, transaction or asset.  With respect to protective investments made in respect of assets pledged as collateral security for the Senior Unsecured Facility, the aggregate amount of such investments may not exceed $1,000,000.

(t)           Seller shall not, nor permit any Subsidiary to, create, incur, assume or permit to exist any Indebtedness other than the Indebtedness already incurred as of the Amendment No. 3 Effective Date; provided, that additional Indebtedness may be incurred by Seller or any of their Subsidiaries so long as the following conditions are satisfied: (i) to the extent that the Indebtedness is incurred in connection with an Early Repurchase, the Net Proceeds of which are applied in accordance to Section 3(d), (ii) to the extent that such new Indebtedness is unsecured (and subordinate to all obligations owed by Seller under any Secured Plan Facility or the Senior Unsecured Facility) or incurred through the pledge of unencumbered assets, 100% of the net proceeds of such new Indebtedness are deposited in the CT Cash Account and (iii) to the extent that such new Indebtedness is recourse Indebtedness, only to the extent that it replaces existing recourse Indebtedness or is subordinate to all obligations owed to Loan Buyer (and to the extent such Indebtedness is not subject to clause (i) above, 100% of the net proceeds of such Indebtedness are deposited in the CT Cash Account).

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(u)           For all employees of Seller and its Subsidiaries, other than the CEO, COO & CFO, total cash compensation (including base salary and bonus), in the aggregate shall not exceed $5.8 million.  Subject to the limitation in the preceding sentence, compensation for individual employees shall be determined by Seller in its sole discretion.  For Seller’s CEO, COO & CFO, (i) base salaries shall remain the same as in effect in 2008, and (ii) any cash bonus will be approved based upon performance metrics designed to create alignment with the interests of the Secured Plan Participants and the Unsecured Lenders and must be approved by unanimous consent of a committee comprised of (x) a representative selected by the Secured Plan Participants, (y) the administrative agent of the Senior Unsecured Facility and (z) a representative selected by the board of directors of Seller.

(v)           John Klopp and/or Stephen Plavin will continue their current employment with their current respective responsibilities throughout the term of this Agreement; provided that if both John Klopp and Stephen Plavin are no longer so employed, a replacement(s) acceptable to Loan Buyer in its sole and absolute discretion shall be appointed within 30 days after the departure of such person.

(w)           Seller shall maintain, at all times, a minimum Liquidity of $7,000,000 in 2009 and $5,000,000 thereafter.

(x)           Without duplicating the reports provided under 12(k), Seller will provide Loan Buyer with (a) certified quarterly financial statements and audited annual financial statements prepared in accordance with GAAP, filed within SEC mandated time frames, (b) within thirty (30) Business Days following the end of each calendar month commencing with April 2009, unaudited monthly financial statements, (c) within ten (10) Business Days following the end of each calendar month, reports on asset level performance for each Purchased Loan, and (d) promptly, following any reasonable request therefor, reports of such other information regarding Seller’s operations, business affairs and financial condition, or compliance with the terms of this Agreement.  Any reports provided above will include, without limitation, details of Seller’s cash accounts at each quarter end and a schedule of Seller’s Excess Cash, Unrestricted Cash and Unfunded Commitments.  Seller agrees to provide Loan Buyer with an annual budget no later than 60 days after the end of each fiscal year.

(y)           Seller will not (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Seller or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing.

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(z)           Seller will not amend, modify or otherwise agree to any change in the applicable documents for any Purchased Loan without the prior written consent of Loan Buyer.

(aa)         Seller shall not agree to any amendment or modification to any Senior Secured Facility nor the Senior Unsecured Facility without the prior written consent of Loan Buyer.

(bb)         Notwithstanding anything contained in this Agreement to the contrary, Seller acknowledges that Loan Buyer shall, until all of Seller’s obligations under the Transaction Documents have been satisfied and this Agreement terminates pursuant to its terms, maintain control over the Loan Cash Management Account subject to the terms the Depository Agreement.  At Seller’s expense, Loan Buyer may require that Seller establish a new Loan Cash Management Account at a depository institution selected by Loan Buyer in its sole discretion and such new account shall be the “Loan Cash Management Account” for all purposes hereunder.

(cc)         Seller shall not agree to any amendment or modification to the Lehman Facility without the prior written consent of Loan Buyer, such consent not to be unreasonably withheld, conditioned or delayed.

(dd)         All deposit accounts (other than (i) the Cash Management Accounts and (ii) any other deposit accounts specifically relating to the Purchased Loans or any asset or collateral subject to any Senior Secured Facility or the Senior Unsecured Facility) shall be established and maintained with financial institutions that are not Secured Plan Participants nor Unsecured Lenders; provided that Seller may maintain the JPMorgan Account so long as (w) no more than $1,000,000 may remain in the JPMorgan Account at any time, (x) Seller may not transfer any funds into the JPMorgan Account from any CT Cash Account, (y) any funds deposited in the JPMorgan Account will be transferred to a CT Cash Account within two (2) Business Days from receipt of such funds in the JPMorgan Account and (z) all funds in the JPMorgan Account will be transferred to a CT Cash Account and the JPMorgan Account will be closed on or before December 31, 2009.  For the avoidance of doubt, the Collections Accounts, and any other deposit account relating to the Purchased Loans may be established and maintained at any financial institution selected by Buyer in its sole discretion.

(ee)           Section 14(a)(xiii) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

(xiii)          Seller shall fail to comply with the requirements of Sections 12(q) through 12(dd);

(ff)           Section 14(a)(xv) of the Existing Repurchase Agreement is hereby deleted in its entirety and replaced with the following:

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(xv)           any event or condition occurs that results in (i) any obligation or liability of Seller under any note, indenture, loan agreement, guaranty, swap agreement or any other contract to which it is a party, whether singly or in the aggregate, in excess of $1,000,000 becoming due prior to its scheduled maturity or that enables or permits (after the expiration of all grace or cure periods) the beneficiaries of, the holder or holders of, or any other party to any such indebtedness or contract, or any trustee or agent on its or their behalf, to cause any such obligation or liability to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity and (ii) any monetary default under any note, indenture, loan agreement, guaranty, swap agreement or any other contract, credit facility or other obligation of Seller  if the aggregate amount of such credit facility, contract or other obligation in respect of which such monetary default shall have occurred is at least $1,000,000; provided that this Event of Default shall not apply to secured indebtedness that becomes due as a result of the sale or transfer of the property or assets securing such indebtedness;

(gg)           The Existing Repurchase Agreement is hereby amended by inserting Exhibit A attached hereto as a new Exhibit IX.

SECTION 2.  Conditions Precedent.  This Amendment shall become effective on the date (the “Amendment Effective Date”) on which (1) all the representations and warranties made by Seller in this Amendment are true and correct and (2) Loan Buyer shall have received:

(a)           this Amendment, executed and delivered by a duly authorized officer of each of Seller and the Buyers;

(b)           a payment to Loan Buyer on account of the Repurchase Price of all Purchased Loans, such payment to be allocated in Loan Buyer’s sole discretion among the Purchased Loans, in an amount equal to $1,914,897.59;

(c)           the Warrant, executed and delivered by a duly authorized officer of Seller;

(d)           evidence, satisfactory to Loan Buyer in its sole discretion, of the payment in full of all obligations owed by Seller under, and the termination of, the credit facilities identified on Schedule I hereto;

(e)           a copy of an amendment to the Senior Unsecured Facility, executed and delivered by a duly authorized officer of the parties thereto, in form and substance acceptable to Loan Buyer in its sole discretion;

(f)           legal opinions from counsel to Seller dated as of the date hereof addressed to Buyers and its successors and assigns (i) as to the enforceability of the Repurchase Agreement, as amended by this Amendment, and (ii) as to Seller’s authority to execute, deliver and perform its obligations under the Repurchase Agreement as amended hereby, in each case, in form and substance acceptable to Buyers in their reasonable discretion; and

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(g)           for the account of Loan Buyer, payment and reimbursement for all of Loan Buyer’s corresponding costs and expenses incurred in connection with this Amendment, all prior amendments and modifications to the Repurchase Agreement, any other documents prepared in connection herewith and therewith and the transactions contemplated hereby and thereby.

SECTION 3. Representations and Warranties.  On and as of the date first above written, Seller hereby represents and warrants to Loan Buyer that (a) it is in compliance with all the terms and provisions set forth in the Repurchase Agreement on its part to be observed or performed, (b) after giving effect to this Amendment, no Default or Event of Default under the Repurchase Agreement has occurred and is continuing, and (c) after giving effect to this Amendment, the representations and warranties contained in Section 10 of the Repurchase Agreement are true and correct in all material respects as though made on such date (except for any such representation or warranty that by its terms refers to a specific date other than the date first above written, in which case it shall be true and correct in all material respects as of such other date).

SECTION 4. General Release.  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller, for: (i) itself, (ii) any parent or Subsidiary thereof, and (iii) the respective partners, officers, directors, shareholders, successors and assigns of all of the foregoing persons and entities,

(a)                      hereby releases and forever discharges the Buyers and each of its subsidiaries, affiliates, its past, present and future officers, directors, agents, employees, partners, managers, shareholders, servants, attorneys and representatives, as well as their, successors, assigns, their respective heirs, legal representatives, legatees, predecessors-in-interest, successors and assigns, of and from any and all actions, claims, demands, damages, debts, suits, contracts, agreements, losses, liabilities, indebtedness, causes of action either at law or in equity, obligations of whatever kind or nature, accounts, defenses, and offsets against liabilities and obligations, whether known or unknown, direct or indirect, new or existing, by reason of any matter, cause or thing whatsoever occurring on or prior to the date hereof arising out of or relating to any matter or thing whatever, including without limitation, such claims and defenses as fraud, misrepresentation, breach of duty, mistake, duress, usury, claims pertaining to so-called “lender liability,” and claims pertaining to creditor’s rights, which such party ever had, now has, or might hereafter have against the other, jointly or severally, for or by reason of any matter, act, omission, cause or thing whatsoever occurring, on or prior to the date of this Amendment, that is related to, in whole or in part, directly or indirectly, the Transactions, the Repurchase Agreement, the Transaction Documents and this Amendment; and

(b)                      warrants, represents and acknowledges that it has no defenses to the payment of, nor any right to set off against, all or any of the obligations set forth in the Transaction Documents, nor any counterclaims or other rights of action against the Buyers of any kind whatsoever, including, without limitation, any right to contest any of the following: the enforceability, applicability or validity of any provisions of the Transaction Documents, Loan Buyer’s right to all proceeds of the Purchased Loans, the existence, validity, enforceability, or perfection of any security interest or mortgage in favor of Loan Buyer, the conduct of the Buyers in administering the Transaction Documents and any legal fees and expenses incurred by the Buyers under the Repurchase Agreement, the other Transaction Documents or this Amendment.

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SECTION 5. Limited Effect.  Except as expressly amended and modified by this Amendment, the Existing Repurchase Agreement shall continue to be, and shall remain, in full force and effect in accordance with their respective terms; provided, however, that upon the Amendment Effective Date, all references in the Repurchase Agreement to the “Transaction Documents” shall be deemed to include, in any event, this Amendment.  Each reference to Repurchase Agreement in any of the Transaction Documents shall be deemed to be a reference to the Repurchase Agreement as amended hereby.

SECTION 6. Override Provision.  Notwithstanding any provision in the Repurchase Agreement to the contrary, which are hereby pro tanto superseded and modified or replaced mutatis mutandis to the extent of any inconsistency, the provisions in this Amendment shall apply from and after the date hereof.

SECTION 7. Counterparts.  This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.

SECTION 8. GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

[NO FURTHER TEXT ON THIS PAGE]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.

LOAN BUYER:
CITIGROUP FINANCIAL PRODUCTS INC., a Delaware corporation
By:	/s/ Richard B. Schlenger
	Name: Richard B. Schlenger
	Title: Authorized Signatory

SECURITIES BUYER:
CITIGROUP GLOBAL MARKETS INC., a Delaware corporation
By:	/s/ Richard B. Schlenger
	Name: Richard B. Schlenger
	Title: Authorized Signatory

SELLER:
CAPITAL TRUST, INC., a Maryland corporation
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

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SCHEDULE I

Closeout Facilities

1.           Amended and Restated Master Repurchase Agreement, dated as of August 15, 2006, between Capital Trust, as seller, and Goldman Sachs Mortgage Company (“Goldman”), as buyer, as supplemented by that certain Amended and Restated Annex I to Amended and Restated Master Repurchase Agreement, dated as of October 30, 2007.

2.           Master Repurchase Agreement, dated as of October 30, 2007, between Capital Trust, as seller, and Goldman, as buyer, as supplemented by that certain Annex I to Master Repurchase Agreement, dated as of October 30, 2007.

EX-10.70

AMENDED AND RESTATED

CREDIT AGREEMENT

dated as of

March 16, 2009

among

CAPITAL TRUST, INC.

The Lenders Party Hereto

and

WESTLB AG, NEW YORK BRANCH,

as Administrative Agent

___________________________

WESTLB AG, NEW YORK BRANCH,

as Sole Bookrunner, Sole Lead Arranger and Sole Syndication Agent

TABLE OF CONTENTS		Page
ARTICLE I
Definitions
SECTION 1.01.	Defined Terms	1
SECTION 1.02.	Classification of Loans and Borrowings	14
SECTION 1.03.	Terms Generally	14
SECTION 1.04.	Accounting Terms; GAAP	14
ARTICLE II
The Credits
SECTION 2.01.	Loans and Borrowings	14
SECTION 2.02.	Interest Period.	15
SECTION 2.03.	Repayment of Loans; Evidence of Indebtedness.	16
SECTION 2.04.	Principal Payments; Optional and Mandatory Prepayment of Loans.	16
SECTION 2.05.	Fees	17
SECTION 2.06.	Interest.	17
SECTION 2.07.	Alternate Rate of Interest	18
SECTION 2.08.	Increased Costs.	19
SECTION 2.09.	Break Funding Payments	19
SECTION 2.10.	Taxes.	20
SECTION 2.11.	Payments Generally; Pro Rata Treatment; Sharing of Set-offs.	21
SECTION 2.12.	Mitigation Obligations; Replacement of Lenders.	22
SECTION 2.13.	Extension of Maturity Date	24
ARTICLE III
Representations and Warranties
SECTION 3.01.	Organization; Powers	24
SECTION 3.02.	Authorization; Enforceability	24
SECTION 3.03.	Governmental Approvals; No Conflicts	24
SECTION 3.04.	Financial Condition; No Material Adverse Change.	25
SECTION 3.05.	Properties.	25
SECTION 3.06.	Litigation and Environmental Matters.	25
SECTION 3.07.	Compliance with Laws and Agreements	26
SECTION 3.08.	Investment Company Status	26
SECTION 3.09.	Taxes	26
SECTION 3.10.	ERISA	26
SECTION 3.11.	Disclosure	26

i

SECTION 3.12.	Solvency	27
SECTION 3.13.	Subsidiaries	27
SECTION 3.14.	REIT Qualification	27
SECTION 3.15.	Use of Proceeds; Margin Regulations	27
SECTION 3.16.	Insurance	27
SECTION 3.17.	Labor Matters	27
SECTION 3.18.	Brokers’ Fees	28
SECTION 3.19.	Security Agreement	28
ARTICLE IV
Conditions
SECTION 4.01.	Restatement Effective Date	28
ARTICLE V
Affirmative Covenants
SECTION 5.01.	Financial Statements; Ratings Change and Other Information	30
SECTION 5.02.	Notices of Material Events	31
SECTION 5.03.	Existence; Conduct of Business	32
SECTION 5.04.	Payment of Obligations	32
SECTION 5.05.	Maintenance of Properties; Insurance	32
SECTION 5.06.	Books and Records; Inspection Rights	32
SECTION 5.07.	Compliance with Laws	32
SECTION 5.08.	Use of Proceeds	33
SECTION 5.09.	REIT Status	33
SECTION 5.10.	Key Employees	33
SECTION 5.11.	Liquidity	33
ARTICLE VI
Negative Covenants
SECTION 6.01.	Indebtedness	33
SECTION 6.02.	Liens	34
SECTION 6.03.	Mergers, Consolidations, Sales of Assets, etc.	34
SECTION 6.04.	Limitation on Distributions	34
SECTION 6.05.	Transactions with Affiliates	35
SECTION 6.06.	Restrictive Agreements	35
SECTION 6.07.	Organizational Documents	35
SECTION 6.08.	Fiscal Year 2009 Compensation	35
SECTION 6.09.	New Investments	36
SECTION 6.10.	Bankruptcy	36
SECTION 6.11.	Consent Rights	36
SECTION 6.12.	Amendments	36

ii

SECTION 6.13.	Deposit Accounts	36
ARTICLE VII
Events of Default
ARTICLE VIII
The Administrative Agent
ARTICLE IX
Miscellaneous
SECTION 9.01.	Notices.	41
SECTION 9.02.	Waivers; Amendments.	42
SECTION 9.03.	Expenses; Indemnity; Damage Waiver.	43
SECTION 9.04.	Successors and Assigns.	44
SECTION 9.05.	Survival	47
SECTION 9.06.	Counterparts; Integration; Effectiveness	47
SECTION 9.07.	Severability	47
SECTION 9.08.	Right of Setoff	47
SECTION 9.09.	Governing Law; Jurisdiction; Consent to Service of Process.	48
SECTION 9.10.	WAIVER OF JURY TRIAL	48
SECTION 9.11.	Headings	49
SECTION 9.12.	Confidentiality	49
SECTION 9.13.	Interest Rate Limitation	49
SECTION 9.14.	USA PATRIOT Act	50
SECTION 9.15.	General Release	50
SECTION 9.16.	Amendment and Restatement of Existing Credit Agreement; No Novation.	51

SCHEDULES:

Schedule 1.01 – Excluded Subsidiaries

Schedule 2.02 – Loans

Schedule 3.06 – Disclosed Matters

Schedule 3.13 – Subsidiaries

Schedule 6.02 – Liens

Schedule 6.06 – Restrictive Agreements

iii

EXHIBITS:

Exhibit A - -- Form of Assignment and Assumption

iv

AMENDED AND RESTATED CREDIT AGREEMENT dated as of March 16, 2009 (this “Agreement”), among CAPITAL TRUST, INC., a Maryland corporation (the “Borrower”), the banks and financial institutions listed on the signature pages hereto as a Lender (as hereinafter defined), and WESTLB AG, NEW YORK BRANCH, as Administrative Agent (as hereinafter defined) for the Lenders.

W I T N E S S E T H :

WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties to that certain Credit Agreement, dated as of March 22, 2007, as amended by the First Amendment, dated as of June 7, 2007, and the Second Amendment, dated as of July 3, 2008 (as so amended, the “Existing Credit Agreement”); and

WHEREAS, the Borrower has requested, and the Administrative Agent and the Lenders have agreed, to amend and restate the Existing Credit Agreement upon the terms and conditions set forth herein;

NOW THEREFORE, in consideration of the mutual promises and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree that from and after the Restatement Effective Date the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:

ARTICLE I

Definitions

SECTION 1.01.  Defined Terms.  As used in this Agreement, the following terms have the meanings specified below:

“ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

“Additional Restricted Cash” means, to the extent otherwise constituting Unrestricted Cash, any cash or Cash Equivalent of the Borrower and its Subsidiaries (i) that is required to be trapped pursuant to the Amended Senior Secured Credit Facilities, this Agreement, or the terms of any other loan agreement, repurchase agreement, or other extension of credit, (ii) that is received in anticipation of a disbursement by the Borrower or any of its Subsidiaries to a Person other than the Borrower or any Subsidiary within one (1) Business Day of such disbursement, (iii) that is provided as cash collateral to support letters of credit and bank guarantees, customs and other import duties in the ordinary course of business of the Borrower or any of its Subsidiaries or (iv) that, if distributed or paid, would result in the insolvency of the Borrower.

“Administrative Agent” means WestLB AG, New York Branch, in its capacity as administrative agent for the Lenders hereunder.

“Administrative Agent Restatement Fee” means a fee of $50,000 payable to the Administrative Agent on the Restatement Effective Date.

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“Agreement” has the meaning assigned to such term in the preamble.

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day (b) the Federal Funds Effective Rate in effect on such day plus 0.50% and (c) the one month LIBO Rate plus 1.00%.  Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

“Amended Senior Secured Credit Facilities” means, collectively, the Citi Repo Facility, the JPM Repo Facility, and the Morgan Stanley Repo Facility.

“Applicable Margin” means:

(a) with respect to any ABR Loan, for any day from and after the Restatement Effective Date, 2.00%; and

(b) with respect to any Eurodollar Loan, for any day from and after the Restatement Effective Date, 3.00%.

“Applicable Percentage” means, with respect to any Lender, the percentage of the total unpaid principal amount of the Loans represented by the unpaid principal amount of the Loans owing to such Lender.

“Applicable Preceding Principal Installment Payment Date” has the meaning assigned to such term in Section 2.04(c).

“Approved Fund” has the meaning assigned to such term in Section 9.04(b)(ii).

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent.

“Borrower” has the meaning assigned to such term in the preamble.

“Borrowing” means the borrowing of Eurodollar Loans as to which a single Interest Period is in effect.

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“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

“Capitalized Interest” shall have the meaning given to such term in Section 2.06(d).

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

“Cash Rate” means the LIBO Rate for the applicable Interest Period in effect for such Borrowing plus the Applicable Margin for Eurodollar Loans.

“CEO” shall have the meaning assigned to such term in Section 6.08.

“CFO” shall have the meaning assigned to such term in Section 6.08.

“Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof), of Equity Interests representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower; (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated by the board of directors of the Borrower nor (ii) appointed by directors so nominated; or (c) the acquisition of direct or indirect Control of the Borrower by any Person or group.

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“Change in Law” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.08(b), by any lending office of such Lender or by such Lender's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

“Charges” has the meaning assigned to such term in Section 9.13.

“Citi Repo Facility” means the $250,000,000 Master Repurchase Agreement, dated as of July 30, 2007 between Capital Trust, Inc, as Seller, and Citigroup Global Markets Inc., as Securities Buyer and Citigroup Financial Products Inc., as Loan Buyer, as amended by Amendment No. 1 thereto, dated June 26, 2008, Amendment No. 2 dated July 24, 2008 and Amendment No. 3 thereto, dated as of March 16, 2009.

“COO” shall have the meaning assigned to such term in Section 6.08.

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

“Collateral” has the meaning assigned to such term in the Pledge and Security Agreement.

“Consolidated Tangible Net Worth” means, as of any date of determination, the tangible net worth of the Borrower and its Subsidiaries (determined on a consolidated basis in accordance with GAAP).

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

“CT Cash Account” means one or more deposit accounts established by the Borrower with Merrill Lynch or Bank of America.

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“Disclosed Matters” means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06.

“dollars” or “$” refers to lawful money of the United States of America.

4

“Eligible Assignee” has the meaning assigned to such term in Section 9.04(b)(ii).

“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

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“Eurodollar”, when used in reference to any Loan or Borrowing, refers to Loans, or the Loans comprising such Borrowing, bearing interest at a rate determined by reference to the LIBO Rate.

“Events of Default” has the meaning assigned to such term in Article VII.

“Excess Cash” shall mean an amount, if any, by which Unrestricted Cash exceeds the sum of (a) $25,000,000 and (b) the aggregate amount of the Borrower’s Unfunded Commitments.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income  by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.12(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender's failure to comply with Section 2.10(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.10(a).

“Existing Credit Agreement” shall have the meaning assigned to such term in the first recital hereof.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“Financial Officer” means the chief executive officer, chief operating officer, chief financial officer, principal accounting officer, treasurer or controller of the Borrower.

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

“GAAP” means generally accepted accounting principles in the United States of America.

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“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount (based on the maximum reasonably anticipated net liability in respect thereof as determined by the Borrower in good faith) of the primary obligation or portion thereof in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated net liability in respect thereof (assuming such Person is required to perform thereunder) as determined by the Borrower in good faith.

“Hazardous Materials”  means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others 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 owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (j) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances.  The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

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“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Indemnitee” has the meaning assigned to such term in Section 9.03(b).

“Information” has the meaning assigned to such term in Section 9.12.

“Interest Election Request” means a request by the Borrower to convert or continue a Loan in accordance with Section 2.02.

“Interest Payment Date” means (a) with respect to any ABR Loan, the first Business Day of each month for interest due through the last day of the preceding month and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part, or if such day is not a Business Day, the next succeeding Business Day.

“Interest Period” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two or three months thereafter, as the Borrower may elect; provided, that (i) the Interest Period may be seven (7) or fourteen (14) days, or, with the consent of the Administrative Agent and the Required Lenders, otherwise be shorter than one month, in order to consolidate Eurodollar Borrowings, (ii) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (iii) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and, in the case of a Loan, thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

“JPM Repo Facility” means the Master Repurchase Agreement, dated as of October 24, 2008 among Borrower and CT BSI Funding Corp., as Sellers, and JPMorgan Chase Bank, N.A., as Buyer, as amended by Amendment No. 1 thereto, dated as of March 16, 2009.

“Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

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“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Reuters Screen LIBOR01 Page (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period shall be determined from such financial reporting service or other information as shall be mutually acceptable to the Borrower and the Administrative Agent.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

“Liquidity” shall mean, on any date of determination, the sum of (A) the consolidated amount of Unrestricted Cash of the Borrower and its Subsidiaries on such date, and (B) the incremental amount of borrowings the Borrower and its Subsidiaries are, as of such date, permitted to borrow pursuant to the terms of existing committed Indebtedness of the Borrower or its Subsidiaries in effect on such date, as to which all conditions precedent have been satisfied and which borrowings do not require the discretionary consent of the applicable lender, counterparty, credit provider or any other Person.

“Loan Documents” means this Agreement, the Pledge and Security Agreement,  the Securities Account Control Agreement and all other documents executed and delivered pursuant hereto or thereto.

“Loans” means the loans continued by the Lenders to the Borrower pursuant to this Agreement, together with all Capitalized Interest pursuant to Section 2.06(d).

“Margin Stock” has the meaning assigned thereto in Regulation U.

“Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations or condition, financial or otherwise, of the Borrower and the Subsidiaries taken as a whole, (b) the ability of the Borrower to perform any of its material obligations under this Agreement or (c) the material rights of or benefits available to the Lenders under this Agreement.

“Material Subsidiary” has the meaning assigned to such term in Article VII.

“Maturity Date” means initially, March 15, 2010, as the same may be extended pursuant to Section 2.13, unless otherwise accelerated in accordance with the terms hereof.

“Maximum Rate” has the meaning assigned to such term in Section 9.13.

“Minimum Interest Rate” means 7.2% per annum, compounded quarterly.

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“Morgan Stanley Repo Facility” means that certain Master Repurchase Agreement dated as of July 29, 2005 by and among Borrower, CT RE CDO 2004-1 SUB, LLC, a Delaware limited liability company, CT RE CDO 2005-1 SUB, LLC, a Delaware limited liability company and CT XLC HOLDING, LLC, a Delaware limited liability company, as Sellers, and MORGAN STANLEY BANK, N.A., a national banking association, as Buyer, as successor to Morgan Stanley Bank, a Utah industrial bank, as amended by that certain Amendment No. 1 to Master Repurchase Agreement dated as of November 4, 2005, as amended by that certain Amendment No. 2 to Master Repurchase Agreement dated as of November 16, 2005, as amended by that certain Amendment No. 3 to Master Repurchase Agreement dated as of April 6, 2006, as amended by that certain Amendment No. 4 to Master Repurchase Agreement dated as of April 26, 2006, as amended by that certain letter from Seller dated June 23, 2006, as amended by that certain Amendment No. 5 to Master Repurchase Agreement dated as of February 14, 2007, as amended by that certain Joinder and Amendment dated as of June 5, 2007, as amended by that certain Amendment No. 6 to Master Repurchase Agreement dated as of December 14, 2007, as amended by that certain Amendment No. 7 to Master Repurchase Agreement dated as of June 30, 2008, as amended by that certain Amendment No. 8 to Master Repurchase Agreement dated as of July 25, 2008, as amended by that certain waiver and amendment letter dated as of December 11, 2008, as amended by that certain waiver and amendment letter dated as of January 13, 2009, as amended by that certain waiver and amendment letter dated as of January 20, 2009, as amended by that certain waiver and amendment letter dated as of January 30, 2009, as amended by that certain waiver and amendment letter dated as of February 13, 2009, as further amended by that certain Joinder No. 2 and Amendment No. 9 to Master Repurchase Agreement dated as of February 13, 2009, as amended by that certain waiver and amendment letter dated February 20, 2009, and as amended by Amendment No. 10 thereto, dated as of March 16, 2009.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“NYSE” means the New York Stock Exchange, Inc.

“Obligations” means all loans, advances, debts, liabilities and obligations for the performance of covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable) owing by the Borrower to the Administrative Agent or any Lender, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement, or other instrument, arising under the Agreement or any of the other Loan Documents.  This term includes all principal, interest (including all interest that accrues after the commencement of any case or proceeding by or against the Borrower in bankruptcy, whether or not allowed in such case or proceeding), fees, expenses, attorneys’ fees and any other sum chargeable to the Borrower under the Agreement or any of the other Loan Documents.

“Other Taxes” means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.

“Participant” has the meaning assigned to such term in Section 9.04(c)(i).

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“Patriot Act” has the meaning assigned to such term in Section 9.14.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

“Permitted Encumbrances” means:

(a)           Liens imposed by law for taxes that are not yet due or are being contested in compliance with Section 5.04;

(b)           carriers', warehousemen's, mechanics', materialmen's, repairmen's and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than thirty (30) days or are being contested in compliance with Section 5.04;

(c)           pledges and deposits made in the ordinary course of business in compliance with workers' compensation, unemployment insurance and other social security laws or regulations;

(d)           deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

(e)           judgment liens in respect of judgments that do not constitute an Event of Default under clause (j) of Article VII; and

(f)           easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any Subsidiary;

provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Plan”  means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Plan Amendment Agreements” means the Amended Senior Secured Credit Facilities, and all ancillary documents and agreements executed in connection therewith, including without limitation each document creating, perfecting or evidencing a security interest in connection with the Amended Senior Secured Credit Facilities.

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“Pledge and Security Agreement” means a Pledge and Security Agreement, dated as of March 16, 2009 between the Borrower and the Administrative Agent, in form and substance satisfactory to the Administrative Agent.

“Prime Rate” means, on any day, the rate of interest per annum equal to the rate on such date published in H.15(519) under the caption “Bank Prime Loan” or, if not published by 3:00 P.M., New York City time, on such date, the rate on such date published in H.15 Daily Update, or such other recognized electronic source used for the purpose of displaying such rate, under the caption “Bank Prime Loan”.  If such rate is not yet published in H.15(519), H.15 Daily Update or another recognized electronic source by 3:00 P.M., New York City time, on such date, then the Prime Rate shall be the rate of interest announced publicly from time to time by the Administrative Agent or its successor, as its “prime rate” for such date.

“Principal Installment Payment Date” shall mean the 15th day of each June, September, December and March, beginning with June 15, 2009, to, but excluding the Maturity Date.

“Register” has the meaning assigned to such term in Section 9.04(b)(iv).

“Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System, from time to time in effect, and shall include any successor or other regulation relating to reserve requirements or margin requirements, as the case may be, applicable to member banks of the Federal Reserve System.

“Related Parties” means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates.

“Released Parties” as the meaning assigned to such term in Section 9.15.

“Required Lenders” means, at any time, Lenders having outstanding Loans representing more than 66-2/3% of the sum of the total outstanding Loans at such time.

“Restatement Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the Borrower or any option, warrant or other right to acquire any such Equity Interests in the Borrower.

 “SEC” means the Securities and Exchange Commission, or any regulatory body that succeeds to the functions thereof.

“Secured Parties” means the Lenders and the Administrative Agent.

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“Securities Account” means securities account number 725839.1 established with the Securities Intermediary.

“Securities Account Control Agreement” means the securities account control agreement in respect of the Securities Account, dated as of March 16, 2009, among the Securities Intermediary, the Borrower and the Administrative Agent.

“Securities Intermediary” means Bank of America, National Association.

 “Senior Secured Lenders” means the lenders from time to time party to the Amended Senior Secured Credit Facilities.

“Senior Secured Maturity Date” means the maturity date as in effect for the Amended Senior Secured Credit Facilities.

“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

“Subsidiary” means any subsidiary of the Borrower other than those persons listed on Schedule 1.01 hereto.

“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority.

“Transactions” means the execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents and the Amended Senior Secured Credit Facilities.

“Transaction Assets” shall, collectively, mean the assets designated as such in each Amended Senior Secured Credit Facility.

“Unfunded Commitments” shall mean an amount equal to the sum of the Borrower’s unfunded commitments to make future advances in respect of Transaction Assets and meet future capital calls for CT Opportunity Partners I, LP.

“Unrestricted Cash” shall mean (a) cash and Cash Equivalents that would not appear in the consolidated financial statements of Borrower, prepared in accordance with GAAP, as a line item on the balance sheet as “restricted cash” or similar caption minus (b) any Additional Restricted Cash.

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“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

SECTION 1.02.  Classification of Loans and Borrowings.  For purposes of this Agreement, Loans and Borrowings may be classified and referred to by Type (e.g., a “Eurodollar Loan” or a “Eurodollar Borrowing”).

SECTION 1.03.  Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

SECTION 1.04.  Accounting Terms; GAAP.  Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

ARTICLE II

The Credits

SECTION 2.01.  Loans and Borrowings.  Subject to the terms and conditions hereof, each Lender agrees to continue its Loans to the Borrower on the Restatement Effective Date in the amounts set forth next to such Lender’s name on Schedule 2.01 hereto.  For the avoidance of doubt, no Lender shall have any obligation to advance any amounts to the Borrower and all Loans referred to in this Agreement shall have been made prior to the Restatement Effective Date.  Subject to Section 2.07, all Loans shall be Eurodollar Loans.  Each Lender at its option may continue its Loan by causing any domestic or foreign branch or Affiliate of such Lender to continue its Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.  Loans continued hereunder and repaid may not be reborrowed.

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SECTION 2.02.  Interest Period.

(a)           Each Loan, shall have an initial Interest Period of one (1) month.  Thereafter, the Borrower may elect Interest Periods for the Loans, as provided in this Section 2.02.  The Borrower may elect different options with respect to different portions of the Loans, in which case each such portion shall be allocated ratably among the Lenders holding the Loans, and the Loans comprising each such portion shall be considered a separate Borrowing.

(b)           To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election in writing no later than 11 a.m., New York City time, three (3) Business Days before the date such election is to take effect.  Each such Interest Election Request shall be irrevocable and shall be made by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower.

(c)           Each Interest Election Request shall specify the following information in compliance with this Section 2.02:

(i)           if different options are being elected with respect to different portions of the Loans, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clause (iii) below shall be specified for each resulting Borrowing);

(ii)           the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; and

(iii)           the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

If the Borrower does not specify an Interest Period with respect to any portion of Loans, then the Borrower shall be deemed to have selected an Interest Period of one month's duration.

(d)           Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender's portion of each resulting Borrowing.

(e)           If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be continued as a Loan with the same Interest Period as applicable thereto immediately prior to the end of such Interest Period.  Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing, unless repaid, each Borrowing shall be converted to a Eurodollar Borrowing with an Interest Period of one (1) month at the end of the Interest Period applicable thereto.

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(f)           Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

SECTION 2.03.  Repayment of Loans; Evidence of Indebtedness.

(a)           The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan on the Maturity Date.

(b)           Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan owing to such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(c)           The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan hereunder and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof.

(d)           The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.

(e)           Any Lender may request that the Loans, including any Capitalized Interest, owing to it be evidenced by a promissory note.  In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent.  Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.04.  Principal Payments; Optional and Mandatory Prepayment of Loans.

(a)           On each Principal Installment Payment Date, Borrower shall pay to the Administrative Agent for the account of the Lenders a minimum of $1.25 million, as repayment of the principal amount of the Loans; provided that on the Principal Installment Payment Date occurring in March of each year, the amount payable pursuant to this Section 2.04(a), shall be adjusted such that the amount paid by the Borrower on such Principal Installment Payment Date, together with such amounts paid since but not including (x) the Principal Installment Payment Date falling in March of the preceding calendar year or, (y) with respect to the Principal Installment Payment Date falling in March 2010 only, since the Restatement Effective Date, ((x) or (y), as applicable, being referred to herein as the “Applicable Preceding Principal Installment Payment Date”) shall be equal to the greater of (i) $5.00 million or (ii) 25% of all amounts received by the Borrower as interest payments in respect of the Collateral since such Applicable Preceding Principal Installment Payment Date.

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(b)           The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (b) of this Section.

(c)           The Borrower shall notify the Administrative  Agent by telecopy of any prepayment hereunder not later than 11:00 a.m., New York City time, three (3) Business Days before the date of prepayment, or by such other date as may be agreed to by the Administrative Agent; provided that any prepayment shall be in a minimum principal amount of $5,000,000 or, if less, the entire principal amount then outstanding.  Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid.  Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof.  Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued interest to the extent required by Section 2.06 and shall be accompanied by any additional amounts required pursuant to Section 2.06.

SECTION 2.05.  Fees.  All fees payable hereunder or in connection herewith shall be paid on the dates due, in immediately available funds, to the Administrative Agent .  Fees paid shall be fully earned and non-refundable when paid under any circumstances.

SECTION 2.06.  Interest.

(a)           The Loans shall bear interest at the greater of (i) Cash Rate and (ii) the Minimum Interest Rate.

(b)           Notwithstanding the foregoing, if any principal of or interest, including Capitalized Interest, on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to the greater of (i) the Cash Rate plus 6.00% or (ii) 11.00%.

(c)           Subject to Section 2.06(d), accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; provided, interest accrued pursuant to paragraph (b) of this Section shall be payable on demand, and (ii) in the event of any repayment or prepayment of any Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment.

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(d)           For each Interest Payment Date, the Administrative Agent shall calculate the payment of the amount of interest payable resulting from the amount, if any, by which the interest payable pursuant to the Minimum Interest Rate exceeds the interest payable pursuant to the Cash Rate for the applicable Interest Period, since (x) the most recent date on which interest on the Loans has been paid, or (y) the Restatement Effective Date if interest on the Loans has not been previously paid pursuant to this Section 2.06(d) (such amount being the “Periodic Deferred Amount”).  The Administrative Agent shall advise the Borrower of the expected Periodic Deferred Amount no later than three (3) Business Days prior to the applicable Interest Payment Date.  On each Principal Installment Payment Date and on the Maturity Date, the sum of the Periodic Deferred Amounts calculated in accordance with this Section 2.06(d) since the previous Principal Installment Payment Date or, with respect to the first Principal Installment Payment Date, since the Restatement Effective Date, shall be added to the principal balance of the Loans.  All such deferred interest (x) shall be referred to in the aggregate as “Capitalized Interest”, (y) shall be treated as an additional principal amount due under, and evidenced by, this Agreement, and (z) shall bear interest, from such Principal Installment Payment Date until paid in full, at the rate per annum otherwise applicable to Loans, pursuant to Section 2.06 (a), (b) or (c) above, as applicable.  To the extent that the Interest Payment Dates and the Principal Installment Payment Dates for any period do not coincide, the calculation shall be adjusted accordingly.

(e)           All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.07.  Alternate Rate of Interest.  If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(a)           the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the LIBO Rate for such Interest Period; or

(b)           the Administrative Agent is advised by the Required Lenders that the LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter, any Interest Election Request shall be ineffective, and all Loans shall convert automatically on the last day of the applicable Interest Period then in effect to Loans that bear interest at the Alternate Base Rate plus the Applicable Margin, until such time as the Administrative Agent, at the direction of the Required Lenders, determines that such circumstances set forth in Section 2.07(a) or (b) are no longer in effect.

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SECTION 2.08.  Increased Costs.

(a)           If any Change in Law shall:

(i)           impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender; or

(ii)           impose on any Lender or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

(b)           If any Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's capital or on the capital of such Lender's holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender's holding company could have achieved but for such Change in Law (taking into consideration such Lender's policies and the policies of such Lender's holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender's holding company for any such reduction suffered.

(c)           A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

(d)           Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

SECTION 2.09.  Break Funding Payments.  In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.02(b) and is revoked in accordance therewith) or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.12, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event.  Such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market.  A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

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SECTION 2.10.  Taxes.

(a)           Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b)           In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

(c)           The Borrower shall indemnify the Administrative Agent and each Lender, within ten (10) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

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(d)           As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e)           Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate.

(f)           If the Administrative Agent or a Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.10, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.10 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This Section shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person.

SECTION 2.11.  Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

(a)           The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or other amounts payable under Section 2.08, 2.09 or 2.10, or otherwise) prior to 12:00 p.m. noon, New York City time, on the date when due, in immediately available funds, without set-off or counterclaim.  Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to the Administrative Agent at its offices at 1211 Avenue of the Americas, New York, New York, except that payments pursuant to Sections 2.08, 2.09, 2.10 and 9.03 shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.  All payments hereunder shall be made in dollars.

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(b)           If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties.

(c)           If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(d)           Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

SECTION 2.12.  Mitigation Obligations; Replacement of Lenders.

(a)           If any Lender requests compensation under Section 2.08, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.10, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.08 or 2.10, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

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(b)           If (i) any Lender requests compensation under Section 2.08, (ii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.10, (iii) any Lender defaults in its obligation to fund Loans hereunder or (iv) in connection with any proposed amendment, modification, termination, waiver or consent with respect to any of the provisions hereof as contemplated by Section 9.02, the consent of Required Lenders shall have been obtained but the consent of one or more of such other Lenders whose consent is required shall not have been obtained, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement (other than any outstanding Competitive Loans held by it) to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.08 or payments required to be made pursuant to Section 2.10, such assignment will result in a reduction in such compensation or payments.  A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

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SECTION 2.13.  Extension of Maturity Date.  Unless the maturity of the Loans has been accelerated pursuant to the terms hereof, the initial Maturity Date shall be extended for a period of one (1) year on each of the first anniversary of the Restatement Effective Date and the second anniversary of the Restatement Effective Date, provided that on the date of each such extension (x) no Default or Event of Default has occurred and is continuing or would be caused by any such extension, and (y) the Senior Secured Maturity Date is extended by one (1) year to coincide with the Maturity Date as extended pursuant hereto; provided further, that the Administrative Agent has received (x) notice from the Borrower of such extension at least 10 days prior to the date of any such extension and (y) evidence satisfactory to the Administrative Agent in its sole discretion (promptly copied to the Lenders) that the conditions to any such extension set forth in this Section 2.13 (including calculations all in reasonable detail demonstrating compliance with the financial covenants hereunder) are met as of the date of such notice and of such extension.

ARTICLE III

Representations and Warranties

The Borrower represents and warrants to the Lenders that:

SECTION 3.01.  Organization; Powers.  Each of the Borrower and its Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required.

SECTION 3.02.  Authorization; Enforceability.  The Transactions are within the Borrower's corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action.  Each Loan Document has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 3.03.  Governmental Approvals; No Conflicts.  The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Borrower or any of its Subsidiaries or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any of its Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.

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SECTION 3.04.  Financial Condition; No Material Adverse Change.

(a)           The Borrower has heretofore furnished to the Lenders (i) its audited consolidated balance sheet and statements of income, stockholders equity and cash flows as of and for the fiscal year ended December 31, 2007, reported on by Ernst & Young LLP, independent public accountants and (ii) its unaudited consolidated balance sheet and statements of income, stockholders equity and cash flows as of and for the 9 months ended September 30, 2008 as they appear on Form 10-Q.  Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP.  Except as referred to or reflected or provided in such audited balance sheets (or the related footnotes) as at December 31, 2007, in the Borrower’s report on Form 10-K for the fiscal year ended December 31, 2007, none of the Borrower nor any of its Subsidiaries has on the Restatement Effective Date any material contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments that are required to be disclosed by GAAP or in such reports on Form 10-K.

(b)           Since December 31, 2008, there has been no material adverse change in the business, assets, operations, prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries, taken as a whole.

SECTION 3.05.  Properties.

(a)           Each of the Borrower and its Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.

(b)           Each of the Borrower and its Subsidiaries owns, or is licensed to use, all trademarks, trade names, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.06.  Litigation and Environmental Matters.

(a)           There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of its Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve this Agreement or the Transactions.

(b)           Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

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(c)           Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

SECTION 3.07.  Compliance with Laws and Agreements.  Each of the Borrower and its Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  No Default or Event of Default has occurred and is continuing.

SECTION 3.08.  Investment Company Status.  Neither the Borrower nor any of its Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.

SECTION 3.09.  Taxes.  Each of the Borrower and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.10.  ERISA.  No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.  The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $5,000,000 the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $5,000,000 the fair market value of the assets of all such underfunded Plans.

SECTION 3.11.  Disclosure.  The Borrower has disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  None of the reports, financial statements, certificates or other information furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

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SECTION 3.12.  Solvency.  The Borrower and its consolidated Subsidiaries have capital sufficient to carry on their business and transactions and all business and transactions in which they are about to engage and are now solvent and able to pay their respective Indebtedness as such Indebtedness mature, and the Borrower and its consolidated Subsidiaries now own property and assets having a value, at fair valuation, greater than the amount required to pay their existing Indebtedness.

SECTION 3.13.  Subsidiaries.  Set forth in Schedule 3.13 is a complete and correct list of all of the Subsidiaries of the Borrower as of the date hereof, together with, for each such Subsidiary, (a) the jurisdiction of organization of such Subsidiary, (b) each Person holding Equity Interests of such Subsidiary and (c) the nature of the Equity Interests held by each such Person and the percentage of ownership of such Subsidiary represented by such Equity Interests. Except as disclosed in Schedule 3.13, as of the date hereof, (i) each of the Borrower and its Subsidiaries owns, free and clear of Liens (other than Liens permitted in Section 6.02(b)), and has the unencumbered right to vote, all outstanding Equity Interests in each Person shown to be held by it in Schedule 3.13, (ii) all of the issued and outstanding capital stock of each such Person organized as a corporation is validly issued, fully paid and nonassessable and (iii) there are no outstanding subscriptions, options, warrants, commitments, preemptive rights or agreements of any kind (including any shareholders’ or voting trust agreements) for the issuance, sale, registration or voting of, or securities convertible into, any additional shares of capital stock of any class of, or partnership or other ownership interests of any type in, any Subsidiary.

SECTION 3.14.  REIT Qualification.  The Borrower has elected to be taxed as a “real estate investment trust” under the Code.  The Borrower has qualified as a “real estate investment trust” under the Code for its taxable year ended December 31, 2008.  The Borrower’s present and contemplated operations, assets and income will enable the Borrower to meet the requirements for qualification and taxation as a “real estate investment trust” under the Code.

SECTION 3.15.  Use of Proceeds; Margin Regulations.  The proceeds of the Loans are to be used solely for general corporate purposes and for general working capital needs not in contravention of Article VI.  Not more than 25% of the assets of the Borrower and its Subsidiaries on a consolidated basis consists of any Margin Stock, and no part of the proceeds of any Loan will be used to buy or carry any Margin Stock in violation of Regulation U.  Neither the Borrower nor any Subsidiary is generally engaged in the business of buying or selling Margin Stock or extending credit for the purpose of buying or carrying Margin Stock.

SECTION 3.16.  Insurance.  The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrowers, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses in localities where the Borrower or its applicable Subsidiary operates.

SECTION 3.17.  Labor Matters.  Except as, in the aggregate, could not reasonably be expected to have a Material Adverse Effect:  (a) there are no strikes or other labor disputes against the Borrower or any of its Subsidiaries pending or, to the knowledge of the Borrower, threatened; (b) hours worked by and payment made to employees of the Borrower or any of its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Law dealing with such matters; and (c) there are no complaints or charges against the Borrower or any of its Subsidiaries pending or, to the knowledge of the Borrower, threatened to be filed with any Governmental Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment by the Borrower of any individual which could reasonably be expected to have a Material Adverse Effect.

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SECTION 3.18.  Brokers’ Fees.  Neither the Borrower nor any Subsidiary has any obligation to any Person in respect of any finder’s, broker’s, investment banking or other similar fee in connection with the Transactions.

SECTION 3.19.  Security Agreement.  The Pledge and Security Agreement is effective to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral to the extent that a security interest can be created in such property under the Uniform Commercial Code, and the Pledge and Security Agreement, together with the Securities Account Control Agreement, shall constitute a fully perfected first-priority Lien on, and security interest in all right, title and interest of the Borrower thereunder in such Collateral.

ARTICLE IV

Conditions

SECTION 4.01.  Restatement Effective Date.  The obligations of the Lenders to enter into this Agreement shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):

(a)           The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement.

(b)           The Administrative Agent shall have received favorable written opinions (addressed to the Administrative Agent and the Lenders and dated the Restatement Effective Date) of each of Paul, Hastings, Janofsky & Walker LLP and Venable LLP as counsel for the Borrower, all in form and substance satisfactory to the Administrative Agent, and covering such other matters relating to the Borrower, this Agreement or any Transaction as the Required Lenders shall reasonably request.  The Borrower hereby requests such counsels to deliver such opinions.

(c)           The Administrative Agent shall have received such evidence as the Administrative Agent or its counsel may reasonably request that all Collateral shall have been credited to the Securities Account.

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(d)           The Administrative Agent shall have received a perfected, first priority security interest in the Securities Account and all other Collateral.

(e)            The Administrative Agent shall have received a copy of (i) the Pledge and Security Agreement, and (ii) the Securities Account Control Agreement, duly executed and delivered by each of the parties thereto.

(f)           The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Borrower, the authorization of the Transactions and any other legal matters relating to the Borrower, this Agreement or the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel.

(g)           The Administrative Agent shall have received a certificate, dated the Restatement Effective Date and signed by the President, a Vice President or a Financial Officer of the Borrower, confirming compliance with the conditions set forth in paragraphs (k), (l) and (m) of this Section 4.01.

(h)           The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Restatement Effective Date, including (i) to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder and (ii) the Administrative Agent Restatement Fee.

(i)           The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request evidencing the creation of the Securities Account at the Securities Intermediary.

(j)           Administrative Agent (or its counsel) shall have received (x) from each party thereto (i) a counterpart of each Plan Amendment Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of each Plan Amendment Agreement) that such party has signed a counterpart of such Plan Amendment Agreement and (y) a certificate, dated the Restatement Effective Date and signed by the President, a Vice President or a Financial Officer of the Borrower, attaching true, complete and correct copies of each Plan Amendment Agreement and certifying that each such copy conforms to the original.

(k)           The representations and warranties of the Borrower set forth in this Agreement and each of the Loan Documents shall be true and correct on and as of the Restatement Effective Date.

(l)            No Default or Event of Default shall have occurred and be continuing on and as of the Restatement Effective Date.

(m)          All waivers and consents necessary for the restructuring of the Borrower’s debt in connection with the Transaction and the Plan Amendment Agreements shall have been received and obtained, and no payment was made in connection with such waivers or consents other than payments made in accordance with this Agreement or the Plan Amendment Agreements.

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The Administrative Agent shall notify the Borrower and the Lenders of the Restatement Effective Date, and such notice shall be conclusive and binding.

ARTICLE V

Affirmative Covenants

Until all Obligations shall have been paid in full in cash, the Borrower covenants and agrees with the Lenders that:

SECTION 5.01.  Financial Statements; Ratings Change and Other Information.  The Borrower will furnish to the Administrative Agent and each Lender:

(a)           as soon as available and in any event within ninety (90) days after the end of each fiscal year, the audited consolidated balance sheet and related statements of operations, changes in shareholders’ equity and cash flows of the Borrower (to the extent not publicly available) as of the end of and for each fiscal year of the Borrower, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Ernst & Young LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;

(b)           as soon as available and in any event within forty-five (45) days after the end of each fiscal quarter, the consolidated balance sheet and related statements of operations, changes in shareholders’ equity and cash flows of the Borrower (to the extent not publicly available) as of the end of and for each of the first three fiscal quarters of each fiscal year of Borrower and the then elapsed portion of each such fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by the chief financial officer of the Borrower as presenting fairly in all material respects the consolidated financial condition and results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes, and together with the reports furnished pursuant to this Section 5.01(b), details of the Borrower’s cash accounts at each quarter end and a schedule of the Borrower’s Excess Cash, Unrestricted Cash and Unfunded Commitments;

(c)           as soon as available and in any event (i) within thirty (30) days following the end of each calendar month commencing with April 2009, unaudited monthly financial statements, and (ii) within ten (10) Business Days following the end of each calendar month, reports on asset level performance for all of the Collateral;

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(d)           an annual budget no later than 60 days after the end of each fiscal year;

(e)           concurrently with any delivery of financial statements under clause (a), (b) and (c) above, a certificate of a Financial Officer of the Borrower (i) certifying as to whether a Default or Event of Default has occurred and, if a Default or Event of Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Sections 5.11, 6.01, 6.04 6.08, and 6.09, and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

(f)           to the extent not publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the SEC or the NYSE, any other national securities exchange, any commodities exchange or any self-regulatory organization, or distributed by the Borrower to its shareholders generally, as the case may be; and

(g)           promptly following any request therefor, such other information that is regularly prepared by the Borrower regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary (including, without limitation, details of Borrower’s cash accounts at each quarter end and a schedule of its Unfunded Commitments), or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request.

SECTION 5.02.  Notices of Material Events.  The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following:

(a)           the occurrence of any Default or Event of Default;

(b)           the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Subsidiary thereof that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect;

(c)           (i) any failure to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) any Environmental Liability, (iii) a notice of any claim with respect to any Environmental Liability or (iv) knowledge of any basis for any Environmental Liability, in each case, that, individually, or in the aggregate, could reasonably be expected to result in a Material Adverse Effect;

(d)           the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $5,000,000; and

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(e)           any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect;

(f)           (i) any election to extend the maturity date of any Amended Senior Secured Credit Facility and (ii) the extension of the maturity date of any Amended Senior Secured Credit Facility;  and

(g)           the occurrence of any default, event of default or Valuation Test Failure (as such term is defined in any Amended Senior Secured Credit Facility) under any Amended Senior Secured Credit Facility.

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

SECTION 5.03.  Existence; Conduct of Business.  The Borrower will, and will cause each of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.

SECTION 5.04.  Payment of Obligations.  The Borrower will, and will cause each of its Subsidiaries to, pay its obligations, including Tax liabilities, that, if not paid, could result in a Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

SECTION 5.05.  Maintenance of Properties; Insurance.  The Borrower will, and will cause each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations.

SECTION 5.06.  Books and Records; Inspection Rights.  The Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities.  The Borrower will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.

SECTION 5.07.  Compliance with Laws.  The Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

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SECTION 5.08.  Use of Proceeds.  The proceeds of the Loans will be used solely for general corporate purposes and general working capital needs of the Borrower not in contravention of Article VI.  Not more than 25% of the assets of the Borrower and its Subsidiaries on a consolidated basis will consist of any Margin Stock, and no part of the proceeds of any Loan will be used to buy or carry any Margin Stock in violation of Regulation U.  Neither the Borrower nor any Subsidiary will be engaged in the business of buying or selling Margin Stock or extending credit for the purpose of buying or carrying Margin Stock.

SECTION 5.09.  REIT Status.  The Borrower shall timely elect that the Borrower be treated as a “real estate investment trust”, and to maintain in effect the Borrower’s status as a “real estate investment trust” under the Code following such election.

SECTION 5.10.  Key Employees.  The Borrower shall cause John Klopp and/or Stephen Plavin to continue their current employment with their current respective responsibilities throughout the term of this Agreement; provided that if both John Klopp and Stephen Plavin are no longer so employed or have resigned, a replacement(s) acceptable to the Lenders in their sole and absolute discretion shall be appointed within thirty (30) days after the departure of such persons.

SECTION 5.11.  Liquidity.   The Borrower will maintain, at all times, a minimum Liquidity of $7,000,000 in fiscal year 2009 and $5,000,000 thereafter.

ARTICLE VI

Negative Covenants

Until all Obligations shall have been paid in full in cash, the Borrower covenants and agrees with the Lenders that:

SECTION 6.01.  Indebtedness.  The Borrower will not, and will not permit any of its Subsidiaries to, create, incur, assume or permit to exist any Indebtedness other than the Indebtedness incurred as of the Restatement Effective Date and set forth on Schedule 6.01; provided, that additional Indebtedness may be incurred by the Borrower or any of its Subsidiaries so long as the following conditions are satisfied (and the Borrower agrees to furnish the Administrative Agent evidence of the satisfaction thereof within three (3) Business Days of the incurrence of such Indebtedness): (i) to the extent that the Indebtedness is incurred in connection with a Permitted Disposition (as defined in each Amended Senior Secured Credit Facility), the Net Proceeds (as defined in each Amended Senior Secured Credit Facility) of such Permitted Disposition are applied in accordance with each Amended Senior Secured Credit Facility, (ii) to the extent that such new Indebtedness is unsecured (and subordinate to all obligations owed by the Borrower under each Amended Senior Secured Credit Facility and this Agreement) or incurred through the pledge of unencumbered assets, 100% of the Net Proceeds are deposited in the CT Cash Account and (iii) to the extent that such new Indebtedness is recourse only to the extent that it replaces existing recourse Indebtedness or is subordinate to all obligations owed under any Amended Senior Secured Credit Facility and this Agreement.

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SECTION 6.02.  Liens.  The Borrower will not create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights in respect of any thereof, except:

(a)           Permitted Encumbrances;

(b)           any Lien on any property or asset of the Borrower existing on the date hereof and set forth in Schedule 6.02; provided that (i) such Lien shall not apply to any other property or asset of the Borrower and (ii) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof; and

(c)           any Lien on any property or asset of the Borrower that secures Indebtedness permitted by Section 6.01that is permitted to be secured thereunder.

SECTION 6.03.  Mergers, Consolidations, Sales of Assets, etc.

(a)           The Borrower will not, and will not permit any of its Subsidiaries to, merge, dissolve, liquidate, consolidate with or into any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of the assets of the Borrower and the Subsidiaries, taken as a whole (whether now owned or hereafter acquired); provided that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing, (1) any Person may merge into the Borrower in a transaction in which the Borrower is the surviving entity, (2) any Person may merge into any Subsidiary in a transaction in which the surviving entity is a Subsidiary, (3) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the Borrower or to another Subsidiary, and (4) any Subsidiary may liquidate or dissolve if the Borrower (x) determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and does not materially and adversely affect the rights of Lenders hereunder and (y) furnishes prior written notice to the Lenders.

(b)           The Borrower and its Subsidiaries shall continue in the primary line of business of owning and managing loan assets and other debt investments and businesses reasonably related thereto.

SECTION 6.04.  Limitation on Distributions.  The Borrower will not, and will not permit any of its Subsidiaries to, 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 the Borrower, whether now or hereafter outstanding, or make any other distribution in respect of any of the foregoing or to any shareholder or equity owner of the Borrower, either directly or indirectly, whether in cash or property or in obligations of the Borrower or any Subsidiary, except to the minimum extent required for the Borrower to maintain its status as a real estate investment trust and, to the extent permitted, such distribution shall be made in equity in lieu of cash; provided that any Subsidiary of the Borrower may make such distributions to the Borrower.

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SECTION 6.05.  Transactions with Affiliates.  The Borrower will not, and will not permit any of its Subsidiaries to, make any Restricted Payment or to sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm's-length basis from unrelated third parties, (b) transactions between or among the Borrower and its wholly owned Subsidiaries not involving any other Affiliate and (c) any Restricted Payment permitted by Section 6.04.

SECTION 6.06.  Restrictive Agreements.  The Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that the foregoing shall not apply to (i) restrictions and conditions imposed by law or by this Agreement, (ii) restrictions and conditions existing as of the date hereof in the Amended Senior Secured Credit Facilities (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (iii) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, (iv) (in the case of clause (a) above) restrictions or conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or conditions apply only to the property or assets securing such Indebtedness and customary provisions in leases and other contracts restricting the assignment thereof and (v) restrictions or conditions imposed by any agreement relating to any collateral securing Indebtedness permitted by this Agreement.

SECTION 6.07.  Organizational Documents.  The Borrower shall not amend, modify or change its Organizational Documents in a manner adverse to the Lenders.

SECTION 6.08.  Fiscal Year 2009 Compensation.  The Borrower will not, and will not permit any of its Subsidiaries to, permit total cash compensation (including base salary and bonus) in the aggregate, for all employees of the Borrower and its Subsidiaries other than the chief executive officer (“CEO”), the chief operating officer (“COO”) and the chief financial officer (“CFO”), to exceed $5.8 million for fiscal year 2009.  Subject to the limitation in the preceding sentence, compensation for individual employees shall be determined by the Borrower in its sole discretion.  For the Borrower’s CEO, COO and CFO, (i) base salaries shall remain the same as in effect in 2008, and (ii) any cash bonus will be approved based upon performance metrics designed to create alignment with the interests of the Senior Secured Lenders and the Lenders and must be approved by unanimous consent of a committee comprised of (x) a representative selected by the Senior Secured Lenders, (y) a representative selected by the Administrative Agent acting at the direction of the Required Lenders and (z) a representative selected by the board of directors of the Borrower.

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SECTION 6.09.  New Investments.  The Borrower will not, and will not permit any of its Subsidiaries to, originate, acquire or invest in any new stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person except to (a) make co-investments in future funds of which the Borrower (or its Affiliates) is the sponsor or manager, and (b) make protective investments to defend existing Collateral or assets subject to any Loan Document or that are pledged as collateral security for the Amended Senior Secured Credit Facilities.  The Borrower will not, and will not permit any of its Subsidiaries to make co-investments, (a) within the first six (6) months following the Restatement Effective Date, (b) if the projected base management fees generated by the proposed future fund over the first thirty-six (36) months do not equal or exceed the co-investment commitment, and (c) if the total amount of co-investment capital for all such proposed future funds would exceed $10,000,000 without the prior written approval of each Senior Secured Lender and the Required Lenders.  The Borrower will not, and will not permit any of its Subsidiaries to make protective investments, in an amount for each investment in excess of $5,000,000 per transaction or asset and the aggregate amount of such investments, other than protective investments made in respect of Transaction Assets or assets subject to another Senior Secured Facility, may not exceed $5,000,000.

SECTION 6.10.  Bankruptcy.  The Borrower will not (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing.

SECTION 6.11.  Consent Rights.  The Borrower will not amend, modify or otherwise agree to any change in the applicable documents for any of the Collateral or other underlying collateral thereunder, without the prior written consent of the Administrative Agent and the Required Lenders.

SECTION 6.12.  Amendments.  The Borrower will not, and will not permit its Subsidiaries to, agree to any amendment or modification to any Amended Senior Secured Credit Facility, without the prior written consent of the Administrative Agent and the Required Lenders.

SECTION 6.13.  Deposit Accounts.  The Borrower will not have any deposit accounts with the Lenders or the Senior Secured Lenders, other than the Securities Account and any account relating to the collateral securing the Obligations under the Amended Senior Secured Credit Facilities; provided that the Borrower may hold those deposit accounts in existence on the Restatement Effective Date so long as (i) Borrower and its Subsidiaries will not transfer any amounts into such deposit accounts from any CT Cash Account (ii) the amounts held in any such deposit accounts held with JP Morgan Chase Bank, N. A. shall not exceed $1,000,000, in aggregate, (iii) any amounts deposited into any such accounts with JP Morgan Chase Bank, N. A. on or after the Restatement Effective Date, shall be transferred to a CT Cash Account no later than two (2) Business Days after the Borrower or any of its Subsidiaries becomes aware of any such deposits and (iv) all such accounts are closed no later than June 30, 2009.

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ARTICLE VII

Events of Default

If any of the following events (“Events of Default”) shall occur:

(a)           the Borrower shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise;

(b)           the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five (5) days;

(c)           any representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any amendment or modification hereof or waiver hereunder, shall prove to have been incorrect in any material respect when made or deemed made;

(d)           the Borrower shall fail to observe or perform any covenant, condition or agreement contained in (x) Section 5.01(a) through (e) (for which such failure shall continue unremedied for a period of three (3) Business Days), (y) Section 5.02, 5.03 (with respect to the Borrower's existence) or 5.08, 5.10 or 5.11 or (z) Article VI;

(e)           the Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (c) of this Article) or in any other Loan Document, and such failure shall continue unremedied for a period of thirty (30) days after notice thereof from the Administrative Agent to the Borrower (which notice will be given at the request of any Lender);

(f)           any event or condition occurs that results in (i) any obligation or liability of the Borrower under any note, indenture, loan agreement, guaranty, swap agreement or any other contract to which it is a party (other than Indebtedness hereunder), whether singly or in the aggregate, in excess of $1,000,000 becoming due prior to its scheduled maturity or that enables or permits (after the expiration of all grace or cure periods) the beneficiaries of, the holder or holders of, or any other party to any such indebtedness or contract, or any trustee or agent on its or their behalf, to cause any such obligation or liability to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity and (ii) any monetary default under any note, indenture, loan agreement, guaranty, swap agreement or any other contract, credit facility or other obligation of the Borrower (other than Indebtedness hereunder) if the aggregate amount of such note, indenture, loan agreement, guaranty, swap agreement, contract, credit facility or other obligation in respect of which such monetary default shall have occurred is at least $1,000,000; provided that this Event of Default shall not apply to secured Indebtedness that becomes due as a result of the sale or transfer of the property or assets securing such Indebtedness;

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(g)           an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of (x) the Borrower or (y) any one or more Subsidiary or Affiliate of the Borrower to which the Consolidated Tangible Net Worth attributable to such one or more Subsidiary or Affiliate, individually, is $25,000,000 or more, or, in the aggregate, is $50,000,000 or more (each such Subsidiary, a “Material Subsidiary”), or any of its respective debts, or of a substantial part of its respective assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or a Material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for thirty (30) days or an order or decree approving or ordering any of the foregoing shall be entered;

(h)           the Borrower or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (j) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Material Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(i)           the Borrower or any Material Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

(j)           one or more judgments for the payment of money in an aggregate amount in excess of $15,000,000 shall be rendered against the Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Subsidiary to enforce any such judgment;

(k)           an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $5,000,000;

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(l)           a Change in Control shall occur; or

(m)           any security interest purported to be created by the Pledge and Security Agreement shall cease to be, or shall be asserted by the Borrower or any other Person not to be, a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Pledge and Security Agreement) security interest in the Collateral covered thereby;

then, and in every such event (other than an event with respect to the Borrower described in clause (g) or (h) of this Article), and at any time thereafter during the continuance of such event, the Administrative Agent, at the request of the Required Lenders, shall, by notice to the Borrower, declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become  due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (g) or (h) of this Article, the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

ARTICLE VIII

The Administrative Agent

Each of the Lenders hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto.

The bank serving as the Administrative Agent hereunder and under the other Loan Documents shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent hereunder or under any other Loan Document.

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The Administrative Agent shall not have any duties or obligations except those expressly set forth herein or in any other Loan Document.  Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or Event of Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing as directed by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth herein or in any other Loan Document, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity.  The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not to have knowledge of any Default or Event of Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or under any other Loan Document or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or in any other Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein or in any other Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties.  The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein or in any other Loan Document as well as activities as Administrative Agent.

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Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders and the Borrower.  Upon any such resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor.  If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may (in consultation with the Borrower), on behalf of the Lenders, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank.  Upon the acceptance of its appointment as Administrative Agent hereunder or under any other Loan Document by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under any other Loan Document.  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the Administrative Agent's resignation hereunder and under any other Loan Document, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.

Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or under any other Loan Document or thereunder.

ARTICLE IX

Miscellaneous

SECTION 9.01.  Notices.

(a)           Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(i)            if to the Borrower, to it at Capital Trust, Inc., 410 Park Avenue, 14th Floor, New York, NY 10022, Attention of Douglas N. Armer (Telecopy No. (212) 655-0044), with a copy to Capital Trust, Inc., 410 Park Avenue, 14th Floor, New York, NY 10022, Attention of Geoffrey G. Jervis (Telecopy No. (212) 655-0044) andPaul, Hastings, Janofsky & Walker LLP, 75 East 55th Street, New York, NY 10022, Attention of Robert J. Grados, ESQ. (Telecopy No. (212) 230-7830);

(ii)           if to the Administrative Agent, to WestLB AG, New York Branch, 1211 Avenue of the Americas, New York, New York 10036, Attention of Petra Fishert (Telecopy No. (212) 597-1157), with a copy to WestLB AG, New York Branch, 1211 Avenue of the Americas, New York, New York 10036, Attention of Andrea Bailey (Telecopy No. (212) 302-7946) with an electronic copy to NYC_Agency_Services@Westlb.com; or to such other address as may be designated in writing to the parties hereto upon the appointment of a successor Administrative Agent in accordance with the terms of Article VIII;

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(iii)           if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

(b)           Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

(c)           Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto.  All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

SECTION 9.02.  Waivers; Amendments.

(a)           No failure or delay by the Administrative Agent or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right and power.  The rights and remedies of the Administrative Agent and the Lenders hereunder or under any other Loan Document are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default or Event of Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default or Event of Default at the time.

(b)           Neither this Agreement nor any other Loan Document or any provision hereof or thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) subject any Lender to any additional obligation hereunder without the written consent of such Lender, (ii) reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder without the written consent of each Lender, (iii), except as permitted in Section 2.13, postpone the scheduled date of payment of the principal amount of any Loan, or any interest thereon, or any fees payable hereunder or reduce the amount of, waive or excuse any such payment, without the written consent of each Lender, (iv) change Section 2.11(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, or (v) change any of the provisions of Section 5.10, this Section or the definition of “Required Lenders” or any other provision hereof or of any other Loan Document specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or under any other Loan Document or make any determination or grant any consent hereunder or under any other Loan Document, without the written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent hereunder or under any other Loan Document without the prior written consent of the Administrative Agent.

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SECTION 9.03.  Expenses; Indemnity; Damage Waiver.

(a)           The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with (x) the preparation and administration of this Agreement and the other Loan Documents and (y) any amendments, modifications or waivers of the provisions hereof or of any other Loan Document (whether or not the Transactions or any transactions contemplated thereby shall be consummated) and (ii) all out-of-pocket expenses incurred by the Administrative Agent or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with the Obligations, including all such out-of-pocket expenses incurred during  any workout, restructuring or negotiations in respect of such Obligations.

(b)           The Borrower shall indemnify the Administrative Agent and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the Transactions, (ii) any Loan or the use of the proceeds therefrom, (iii) any Collateral, (iv) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (v) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

(c)           To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent in its capacity as such.

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(d)           To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, any Transaction or any Loan or the use of the proceeds thereof, any Collateral or of any other Loan Document.

(e)           All amounts due under this Section shall be payable not later than ten (10) Business Days after written demand therefor.

SECTION 9.04.  Successors and Assigns.

(a)           The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder or under any other Loan Document without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)           (i)  Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of:

(A)           the Borrower, provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default has occurred and is continuing, any other assignee;

(B)           the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment of any Loan to an assignee that is a Lender immediately prior to giving effect to such assignment; and

(ii)           Assignments shall be subject to the following additional conditions:

(A)           except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Loans of any Type, the amount of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing;

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(B)           each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement;

(C)           the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and

(D)           the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

For the purposes of this Section 9.04(b), the terms “Approved Fund” and “Eligible Assignee” have the following respective meanings:

“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Eligible Assignee” means any of (a) any Lender or Affiliate thereof, (b) a commercial bank having total assets in excess of $5,000,000,000, (c) the central bank of any country which is a member of the Organization for Economic Cooperation and Development and (d) a finance company or other financial institution, which is regularly engaged in making, purchasing or investing in loans and having total assets in excess of $500,000,000, reasonably acceptable to the Administrative Agent.

(iii)           Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.08, 2.09, 2.10 and 9.03).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

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(iv)           The Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof or of any other Loan Document from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(v)           Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(c)           (i)  Any Lender may, without the consent of the Borrower and the Administrative Agent, sell participations to one or more Eligible Assignees (a “Participant”) in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of the Loans owing to it); provided that (A) such Lender's obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant.  Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.08, 2.09 and 2.10 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.11(c) as though it were a Lender.

(ii)           A Participant shall not be entitled to receive any greater payment under Section 2.08 or 2.10 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.10 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.10(e) as though it were a Lender.

(d)           Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

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SECTION 9.05.  Survival.  All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments  delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid.  The provisions of Sections 2.08, 2.09, 2.10 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the Transactions, the repayment of the Loans, or the termination of this Agreement or any provision hereof.

SECTION 9.06.  Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 9.07.  Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08.  Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured.  The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

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SECTION 9.09.  Governing Law; Jurisdiction; Consent to Service of Process.

(a)           This Agreement shall be construed in accordance with and governed by the law of the State of New York.

(b)           The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto 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 Agreement shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction.

(c)           The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d)           Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01.  Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

48

SECTION 9.11.  Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 9.12.  Confidentiality.  Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder or under any other Loan Document, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii)  any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a non-confidential basis from a source other than the Borrower.  For purposes of this Section, “Information” means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower; provided that, in the case of information received from the Borrower after the date hereof such information shall be deemed confidential unless identified at the time of delivery as not confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

SECTION 9.13.  Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

49

SECTION 9.14.  USA PATRIOT Act.  Each Lender that is subject to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”) hereby notifies the Borrower that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Patriot Act.

SECTION 9.15.  General Release.  For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, for: (i) itself, (ii) any parent or Subsidiary thereof, and (iii) the respective partners, officers, directors, shareholders, successors and assigns of all of the foregoing persons and entities,

(i)           hereby releases and forever discharges the Administrative Agent and each Lender and each of their Subsidiaries, Affiliates, their past, present and future officers, directors, agents, employees, partners, managers, shareholders, servants, attorneys and representatives, as well as their, successors, assigns, their respective heirs, legal representatives, legatees, predecessors-in-interest, successors and assigns (all of the foregoing, the “Released Parties”), of and from any and all actions, claims, demands, damages, debts, suits, contracts, agreements, losses, liabilities, indebtedness, causes of action either at law or in equity, obligations of whatever kind or nature, accounts, defenses, and offsets against liabilities and obligations, whether known or unknown, direct or indirect, new or existing, by reason of any matter, cause or thing whatsoever occurring on or prior to the date hereof arising out of or relating to any matter or thing whatever, including without limitation, such claims and defenses as fraud, misrepresentation, breach of duty, mistake, duress, usury, claims pertaining to so-called “lender liability,” and claims pertaining to creditor’s rights, which such party ever had, now has, or might hereafter have against any Released Party, jointly or severally, for or by reason of any matter, act, omission, cause or thing whatsoever occurring, on or prior to the date of this Agreement, that is related to, in whole or in part, directly or indirectly, the Transactions and the Loan Documents; and

(ii)           warrants, represents and acknowledges that it has no defenses to the payment of, nor any right to set off against, all or any of the Obligations set forth in the Loan Documents, nor any counterclaims or other rights of action against the Released Parties of any kind whatsoever, including, without limitation, any right to contest any of the following: the enforceability, applicability or validity of any provisions of the Loan Documents, the Administrative Agent’s or any Lender’s right, as applicable, to all proceeds of the Collateral, the existence, validity, enforceability, or perfection of any security interest in favor of the Administrative Agent, the conduct of the Administrative Agent in administering the Loan Documents and any legal fees and expenses incurred by the Administrative Agent under this Agreement or the other Loan Documents.

50

SECTION 9.16.  Amendment and Restatement of Existing Credit Agreement; No Novation.

(a)           This Agreement amends and restates in its entirety the Existing Credit Agreement and, upon the effectiveness of this Agreement, the terms and provisions of the Existing Credit Agreement shall be superseded hereby.

(b)           Notwithstanding the amendment and restatement of the Existing Credit Agreement by this Agreement, all amounts owing to the Lenders under the Existing Credit Agreement whether on account of principal, interest or otherwise which remain outstanding as of the date hereof, shall constitute Obligations owing hereunder.  This Agreement is given in substitution for the Existing Credit Agreement, and not as payment of any amounts due by the Borrower thereunder, and is in no way intended to constitute a novation of the Existing Credit Agreement.

(c)           Upon the effectiveness of this Agreement, unless the context otherwise requires, each reference to the Existing Credit Agreement in each document, instrument or agreement executed and/or delivered in connection therewith shall mean and be a reference to this Agreement.  Except as expressly modified as of the Restatement Effective Date, each other document, instrument or agreement executed and/or delivered in connection with the Existing Credit Agreement shall remain in full force and effect and are hereby ratified and confirmed.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

BORROWER
CAPITAL TRUST, INC., a Maryland corporation
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

Signature Page

to

Amended and Restated Credit Agreement

ADMINISTRATIVE AGENT:
WESTLB AG, NEW YORK BRANCH
By:	/s/ Christian Reuhmer
	Name:  Christian Reuhmer
	Title:  Managing Director

By:	/s/ Petra Beckert
	Name:  Petra Beckert
	Title:  Executive Director

Signature Page

to

Amended and Restated Credit Agreement

LENDERS:
WESTLB AG, NEW YORK BRANCH
By:	/s/ Christian Reuhmer
	Name:  Christian Reuhmer
	Title:  Managing Director

By:	/s/ Petra Beckert
	Name:  Petra Beckert
	Title:  Executive Director

Signature Page

to

Amended and Restated Credit Agreement

FORTIS BANK SA/NV, NEW YORK BRANCH
By:	/s/ Barry Chung
	Name:  Barry Chung
	Title:  Director

By:	/s/ Jack Au
	Name:  Jack Au
	Title:  Director

Signature Page

to

Amended and Restated Credit Agreement

MORGAN STANLEY BANK
By:	/s/ Charles O'Brien
	Name:  Charles O'Brien
	Title:  Chief Credit Officer

Signature Page

to

Amended and Restated Credit Agreement

JPMORGAN CHASE BANK, N.A., successor to BEAR STEARNS CORPORATE LENDING, INC.
By:	/s/ Kimberly Turner
	Name:  Kimberly Turner
	Title:  Executive Director

Signature Page

to

Amended and Restated Credit Agreement

DEUTSCHE BANK TRUST COMPANY AMERICAS
By:	/s/ James Rolison
	Name:  James Rolison
	Title:  Managing Director

By:	/s/ R. Chris Jones
	Name:  R. Chris Jones
	Title:  Director

Signature Page

to

Amended and Restated Credit Agreement

WELLS FARGO BANK, NATIONAL ASSOCIATION
By:	/s/ Vanessa M. Rodriguez
	Name:  Vanessa M. Rodriguez
	Title:  Assistant Vice President

Signature Page

to

Amended and Restated Credit Agreement

Schedule 1.01

· CT High Grade Partners II, LLC

· CT High Grade Mezzanine Accounts

· CT Mezzanine Partners III, Inc.

· CTX Fund I, L.P.

· CT Opportunity Partners I, LP

· CT Large Loan 2006, Inc.

· all current and future subsidiaries of each of the foregoing

·  all future investment management funds and accounts and each of their subsidiaries 

Schedule 2.01

Loans

LENDER	PRINCIPAL AMOUNT
WestLB AG, New York Branch	$25,000,000
Fortis Bank SA/NV, New York Branch	$25,000,000
Morgan Stanley Bank	$12,500,000
JPMorgan Chase Bank, N.A.	$12,500,000
Deutsche Bank Trust Company Americas	$10,000,000
Wells Fargo Bank, National Association	$15,000,000
TOTAL	$100,000,000

Schedule 3.06

None

Schedule 3.13

Entity	Jurisdiction, type
Capital Trust RE CDO 2004-1 Corp.	Delaware Corporation
Capital Trust RE CDO 2004-1 Ltd.	Cayman Island Exempted Company
Capital Trust RE CDO 2005-1 Ltd.	Cayman Island Exempted Company
Capital Trust RE CDO Depositor	Delaware Corporation
CDO V	Cayman Island Exempted Company
Crossing HH, LLC	Delaware LLC
CT Asia Fund Manager, LLC	Delaware LLC
CT Bracor Holding LLC	Delaware LLC
CT BSI Funding Corp.	Delaware Corporation
CT CDO III Corp.	Delaware Corporation
CT CDO III Ltd.	Cayman Island Exempted Company
CT CDO III, LLC	Delaware LLC
CT CDO IV Corp.	Delaware Corporation
CT CDO IV Ltd.	Cayman Island Exempted Company
CT CDO IV, LLC	Delaware LLC
CT High Grade Mezzanine Manager, LLC	Delaware LLC
CT High Grade Partners II Manager, LLC	Delaware LLC
CT High Grade Partners II MM, LLC	Delaware LLC
CT Investment Management Co., LLC	Delaware LLC
CT Large Loan Manager, LLC	Delaware LLC
CT LF Funding Corp.	Delaware Corporation
CT LH Finance Sub, LLC	Delaware LLC
CT OPI GP, LLC	Delaware LLC
CT OPI Investor, LLC	Delaware LLC
CT OPI Manager, LLC	Delaware LLC
CT Preferred Trust I	Delaware Statutory Trust
CT Preferred Trust II	Delaware Statutory Trust
CT Public Preferred Trust I	Maryland Corporation
CT Public Preferred Trust II	Maryland Corporation
CT Public Preferred Trust III	Maryland Corporation
CT RE CDO 2004-1 Sub, LLC	Delaware LLC
CT RE CDO 2005-1 Corp.	Delaware Corporation
CT RE CDO 2005-1 Sub, LLC	Delaware LLC
CT Rosarito LLC	Delaware LLC

CT Rosarito Retail LLC	Delaware LLC
CTAMPI MS, Ltd.	Cayman Island Exempted Co.
CT-F2-GP, LLC	Delaware LLC
CT-F2-LP, LLC	Delaware LLC
CTIMCO China RO, LLC	Delaware LLC
CTIMCO China RO, Ltd.	Cayman Island Exempted Co.
CTIMCO CTX Manager, LLC	Delaware LLC
CTIMCO Employee Sub, LLC	Delaware LLC
CTIMCO Operating Subsidiary, LLC	Delaware LLC
CTX CDO I Manager, LLC	Delaware LLC
CTX Co-Invest Sub, LLC	Delaware LLC
CTX Fund GP, LLC	Delaware LLC
PRN Capital, LLC	Delaware LLC
VCG Montreal Management, Inc.	New York Corporation
VIC, Inc.	Delaware Corporation
Victor Capital Group, LP	Delaware LP
CT XLC Holding, LLC	Delaware LLC

Schedule 6.02

None

Schedule 6.06

None

EXHIBIT A

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Amended and Restated Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”).  Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1.	Assignor:	______________________________
2.	Assignee:	______________________________ [and is an Affiliate/Approved Fund of [identify Lender]]
3.	Borrower(s):	Capital Trust, Inc.
4.	Administrative Agent:	WestLB AG, New York Branch, as the administrative agent under the Amended and Credit Agreement
5.	Credit Agreement:	The Amended and Restated Credit Agreement dated as of March 16, 2009 among Capital Trust, Inc., the Lenders parties thereto, WestLB AG, New York Branch, as Administrative Agent, and the other agents parties thereto

6. Assigned Interest:

Aggregate Amount of Loans for all Lenders	Amount of Loans Assigned	Percentage Assigned of Loans1
$	$	%
$	$	%
$	$	%

Effective Date:   _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR
[NAME OF ASSIGNOR]
By:
	Title:

ASSIGNEE
[NAME OF ASSIGNEE]
By:
	Title:

___________________ 

1  Set forth, to at least 9 decimals, as a percentage of the Loans of all Lenders thereunder.

Consented to and Accepted:
WESTLB AG, NEW YORK BRANCH, as Administrative Agent
By:
	Title:

Consented to:
[NAME OF RELEVANT PARTY]
By:
	Title:

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1.           Representations and Warranties.

1.1           Assignor.  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other Loan Document, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement or any other Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under the Credit Agreement or any other Loan Document.

1.2.           Assignee.  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement and each other Loan Document, as applicable, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement and each other Loan Document as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement and each other Loan Document, together with copies of the most recent financial statements delivered pursuant to Section 5.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any other Loan Document, as applicable, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement or any other Loan Document are required to be performed by it as a Lender.

2.           Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

3.           General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

2

EX-10.71

Exhibit 10.71

SATISFACTION, TERMINATION AND RELEASE AGREEMENT

This SATISFACTION, TERMINATION AND RELEASE AGREEMENT (this “Agreement”) is dated as of February 25, 2009, between UBS REAL ESTATE SECURITIES INC.(“Buyer”), having an address at 1285 Avenue of the Americas, New York, NY 10019, and CAPITAL TRUST, INC.(“Seller”), having an address at 410 Park Avenue, 14th Floor, New York, NY 10022.

RECITALS

WHEREAS, Buyer and Seller are parties to that certain Master Repurchase Agreement, dated as of October 30, 2007, as supplemented by that certain Confirmation to Master Repurchase Agreement, dated as of October 30, 2007 (collectively, the “Repurchase Agreement”);

WHEREAS, by the Repurchase Agreement, Seller is obligated to repurchase the Purchased Security at the Repurchase Price on the Repurchase Date and, upon payment by Seller to Buyer of the Repurchase Price, Buyer is obligated to deliver the Purchased Security to Seller;

WHEREAS, Seller does not wish to repurchase the Purchased Security and Buyer wishes to retain the Purchased Security;

WHEREAS, Buyer has proposed, and Seller has consented to transfer to Buyer, and Buyer unconditionally accept and retain, all of Seller’s right, title and interest in the Purchased Security, in full satisfaction of the Seller Obligations; and

WHEREAS, each of the parties hereto desire to terminate its respective right, title and interest in, to and under the Repurchase Agreement and to each release the other from all obligations and liabilities under the Repurchase Agreement as set forth herein.

NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the parties), the parties hereby agree as follows:

1.            Satisfaction, Termination and Release.

(a)          Capitalized terms used herein and not defined herein shall have the respective meanings attributed thereto in the Repurchase Agreement.

(b)          Buyer hereby proposes, and Seller hereby consents, and Buyer and Seller hereby acknowledge, that (i) Seller by this Agreement transfers to Buyer, and Buyer unconditionally accepts and retains, all of Seller’s right, title and interest in the Purchased Security (the “Transfer”) and (ii) the Transfer shall unconditionally and fully satisfy the Seller Obligations in all respects, including, without limitation, Seller’s obligations to pay the Repurchase Price and all other amounts owed to Buyer under the Repurchase Agreement and other Repurchase Documents.  As such, Seller shall have no further rights with respect to the Purchased Security or under the Repurchase Documents and no further obligations with respect to the Seller Obligations, and Buyer shall be entitled to all rights of ownership of the Purchased Security and shall have no further rights to collect or otherwise enforce the Seller Obligations.

(c)          Buyer and Seller hereby acknowledge that the Repurchase Agreement, all other Repurchase Documents and the Transactions contemplated thereby are hereby terminated and of no further force and effect and that (x) Buyer and Seller are each hereby released and discharged from all their respective obligations or liabilities under the Repurchase Agreement and all other Repurchase Documents, and (y) the rights of Buyer and Seller under the Repurchase Agreement and all other Repurchase Documents are terminated.  Buyer authorizes Seller to file a UCC Financing Statement Amendment to terminate UCC Financing Statement #0001489904 filed with the State of Maryland Department of Assessments and Taxation on November 14, 2007 naming Seller as debtor and Buyer as secured party.

2.            Representations and Warranties.  Each of the parties hereto represent and warrant to each other, that, as of the date hereof: (a) it has the requisite authority and power to enter into this Agreement and the transactions contemplated hereby, and (b) the execution and delivery of this Agreement has been duly authorized and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms.

3.            Further Assurances.  Each party hereto shall promptly execute and deliver, or to cause to be executed and delivered, all such instruments and to take all such actions as the other party may reasonably request to effectuate the intent and purposes, and to carry out the terms, of this Agreement, including, without limitation, the delivery and transfer by Seller to Buyer of the Purchased Security.

4.            Counterparts.  This Agreement may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.

5.            Amendment.  This Agreement may not be amended or modified, except by an instrument in writing signed by the Buyer and Seller.

2

6.            Costs and Expenses.  Each of the parties hereto shall be liable for its own costs and expenses in connection with the preparation, negotiation, execution and performance of this Agreement.

7.            Severability.  The illegality, invalidity, or unenforceability of any provision of this Agreement under the law of any jurisdiction shall not affect its legality, validity or enforceability under the law of any other jurisdiction nor the legality, validity or enforceability of any other provision.

8.            Successors and Assigns.  The terms of this Agreement and the respective rights and obligations of the parties hereunder shall be binding upon, and inure to the benefit of, their respective successors and assigns.

9.            Governing Law; Waiver of Jury Trial. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS OF THE STATE OF NEW YORK.

 [Signature pages follow]

3

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first written above.

UBS REAL ESTATE SECURITIES INC., as Buyer
By:	/s/ Bessie T. Giannopulos
	Name:	Bessie T. Giannopulos
	Title:	Executive Director
By:	/s/ Henry Chung
	Name:	Henry Chung
	Title:	Executive Director
CAPITAL TRUST, INC., as Seller
By:	/s/ Geoffrey G. Jervis
	Name:	Geoffrey G. Jervis
	Title:	Chief Financial Officer

EX-10.72

EXCHANGE AGREEMENT

among

CAPITAL TRUST, INC.

and

TABERNA PREFERRED FUNDING V, LTD.,

TABERNA PREFERRED FUNDING VI, LTD.,

TABERNA PREFERRED FUNDING VIII, LTD.,

and

TABERNA PREFERRED FUNDING IX, LTD.

Dated as of March 16, 2009

EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT, dated as of March 16, 2009 (this “Agreement”), is entered into by and among CAPITAL TRUST, INC., a Maryland corporation (the “Company”) and TABERNA PREFERRED FUNDING V, LTD. (“Taberna V”), TABERNA PREFERRED FUNDING VI, LTD. (“Taberna VI”), TABERNA PREFERRED FUNDING VIII, LTD., (“Taberna VIII”) and TABERNA PREFERRED FUNDING IX, LTD. (“Taberna IX”, and together with Taberna V, Taberna VI and Taberna VIII, collectively, “Taberna”).

RECITAL:

A.           Reference is made to (i) that certain Junior Subordinated Indenture dated as of February 10, 2006 (the “2006 Indenture”) and (ii) that certain Junior Subordinated Indenture dated as of March 29, 2007 (the “2007 Indenture” and together with the 2006 Indenture, the “Existing Indentures”), each by and between the Company and The Bank of New York Mellon Trust Company, National Association (“BNYM”) (the “Existing Indenture Trustee”).

B.           Reference is made to (i) that certain Amended and Restated Trust Agreement dated as of February 10, 2006 (the “2006 Trust Agreement”) and (ii) that certain Amended and Restated Trust Agreement dated as of March 29, 2007 (the “2007 Trust Agreement” and together with the 2006 Trust Agreement, the “Trust Agreements”), each by and among the Company, as depositor, BNYM, as property trustee (the “Property Trustee”), BNY Mellon Trust (Delaware), as Delaware trustee (the “Delaware Trustee”), the respective administrative trustees named therein and other parties thereto.

C.           CT Preferred Trust I (“Trust I”) is the holder of the Junior Subordinated Note due 2036 in the original principal amount of $51,550,000 issued by the Company pursuant to the 2006 Indenture (“Subordinated Note I”).

D.           CT Preferred Trust II (“Trust II”) is the holder of the Junior Subordinated Note due 2037 in the original principal amount of $77,325,000 issued by the Company pursuant to the 2007 Indenture (“Subordinated Note II” and together with Subordinated Note I, the “Existing Subordinated Notes”)

E.           Taberna V and Taberna VI are the holders of Preferred Securities in the original aggregate principal amount of $50,000,000 issued by Trust I pursuant to the 2006 Trust Agreement, copies of which are attached hereto as Exhibit A-1 (the “Trust I Preferred Securities”).

F.           Taberna VIII and Taberna IX are the holders of Preferred Securities in the original aggregate principal amount of $53,125,000 issued by Trust II pursuant to the 2007 Trust Agreement, copies of which are attached hereto as Exhibit A-2 (the “Trust II Preferred Securities” and together with the Trust I Preferred Securities, the “Original Preferred Securities”).

G.           Simultaneously herewith, the Company and BNYM, as trustee (the “New Indenture Trustee”), have entered into that certain Junior Subordinated Indenture (the “New Indenture”) pursuant to which Company proposes to issue One Hundred Eighteen Million Five Hundred Ninety-Three Thousand Seven Hundred Fifty Dollars ($118,593,750.00) in aggregate principal amount of the Junior Subordinated Notes due April 30, 2036 of the Company as follows (collectively, the “Securities”):

(i) Junior Subordinated Note due 2036 in the original principal amount of $28,750,000.00 issued by the Company to Taberna V, a copy of which is attached hereto as Exhibit B-1 (“Note 1”);

(ii) Junior Subordinated Note due 2036 in the original principal amount of $28,750,000.00 issued by the Company to Taberna VI, a copy of which is attached hereto as Exhibit B-2 (“Note 2”);

(iii) Junior Subordinated Note due 2036 in the original principal amount of $28,750,000.00 issued by the Company to Taberna VIII, a copy of which is attached hereto as Exhibit B-3 (“Note 3”); and

(iv) Junior Subordinated Note due 2036 in the original principal amount of $32,343,750.00 issued by the Company to Taberna IX, a copy of which is attached hereto as Exhibit B-4 (“Note 4”);

H.           On the terms and subject to the conditions set forth in this Agreement, the Company and Taberna have agreed to exchange the Original Preferred Securities for the Securities.

NOW, THEREFORE, in consideration of the mutual agreements and subject to the terms and conditions herein set forth, the parties hereto agree as follows:

1. Definitions. This Agreement, the New Indenture and the Securities are collectively referred to herein as the “Operative Documents.” All other capitalized terms used but not defined in this Agreement shall have the respective meanings ascribed thereto in the New Indenture. The following terms shall have the following meanings:

“2006 Indenture” has the meaning set forth in the Recitals.

“2007 Indenture” has the meaning set forth in the Recitals.

“2006 Trust Agreement” has the meaning set forth in the Recitals.

“2007 Trust Agreement” has the meaning set forth in the Recitals.

“Bankruptcy Code” means the Bankruptcy Reform Act of 1978, 11 U.S.C. §§101 et seq., as amended.

“Benefit Plan” means an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, a “plan” as defined in Section 4975 of the Code or any entity whose assets include (for purposes of U.S. Department of Labor Regulations Section 2510.3-101 or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan.”

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“BNYM” has the meaning set forth in the Recitals.

“CDO Trustee” has the meaning set forth in Section 2(b)(i).

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated under it.

“Closing Date” has the meaning set forth in Section 2(b).

“Closing Room” has the meaning set forth in Section 2(b).

“Company” has the meaning set forth in the introductory paragraph hereof.

“Company Counsel” has the meaning set forth in Section 3(b).

“Commission” has the meaning set forth in Section 4(v)

“Delaware Trustee” has the meaning set forth in the Recitals.

“Environmental Law” has the meaning set forth in Section 4(jj).

“Environmental Laws” shall have the correlative meaning.

“Equity Interests” means with respect to any Person (a) if such a Person is a partnership, the partnership interests (general or limited) in a partnership, (b) if such Person is a limited liability company, the membership interests in a limited liability company and (c) if such Person is a corporation, the shares or stock interests (both common stock and preferred stock) in a corporation.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated under it.

“Exchange” has the meaning set forth in Section 2(b).

“Exchange Act” has the meaning set forth in Section 4(j).

“Existing Indentures” has the meaning set forth in the Recitals.

“Existing Indenture Trustee” has the meaning set forth in the Recitals.

“Existing Subordinated Notes” has the meaning set forth in the Recitals.

“Financial Statements” has the meaning set forth in Section 4(w).

“GAAP” has the meaning set forth in Section 4(w).

“Governmental Entities” has the meaning set forth in Section 4(o).

“Governmental Licenses” has the meaning set forth in Section 4(r).

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“Hazardous Materials” has the meaning set forth in Section 4(jj).

“Holder” has the meaning set forth in the New Indenture.

“Impairment” means any claim, counterclaim, setoff, defense, action, demand, litigation (including administrative proceedings or derivative actions), encumbrance, right (including expungement, avoidance, reduction, contractual or equitable subordination, or otherwise) or defect.

“Indemnified Party” has the meaning set forth in Section 8(a).  “Indemnified Parties” shall have the correlative meaning.

“Investment Company Act” has the meaning set forth in Section 4(j).

“Interim Financial Statements” has the meaning set forth in Section 4(w).

“Lien” has the meaning set forth in Section 4(o).

“Material Adverse Effect” means a material adverse effect on the condition (financial or otherwise), earnings, business, liabilities or assets of the Company and its Significant Subsidiaries taken as a whole, provided, however, that the disclosure set forth in Schedule 2 shall not be deemed to constitute a Material Adverse Effect.

“Material Adverse Change” has the meaning set forth in Section 3(e)(ii).

“New Indenture” has the meaning set forth in the Recitals.

“New Indenture Trustee” has the meaning set forth in the Recitals.

“Note 1” has the meaning set forth in the Recitals.

“Note 2” has the meaning set forth in the Recitals.

“Note 3” has the meaning set forth in the Recitals.

“Note 4” has the meaning set forth in the Recitals.

“Original Preferred Securities” has the meaning set forth in the Recitals.

“Properties” has the meaning set forth in Section 4(ii).

“Property Trustee” has the meaning set forth in the Recitals.

“Regulation D” has the meaning set forth in Section 4(h).

“Repayment Event” has the meaning set forth in Section 4(o).

“Rule 144A(d)(3)” has the meaning set forth in Section 4(j).

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“Securities” has the meaning set forth in the Recitals.

“Securities Act” means the Securities Act of 1933, 15 U.S.C. §§77a et seq., as amended, and the rules and regulations promulgated under it.

“Significant Subsidiary” has the meaning as set forth in Securities and Exchange Commission Regulation S-X.

“Significant Subsidiaries” means, collectively, each and every Significant Subsidiary.

“Subordinated Note I” has the meaning set forth in the Recitals.

“Subordinated Note II” has the meaning set forth in the Recitals.

“Taberna” has the meaning set forth in the introductory paragraph hereof.

“Taberna V” has the meaning set forth in the introductory paragraph hereof.

“Taberna VI” has the meaning set forth in the introductory paragraph hereof.

“Taberna VIII” has the meaning set forth in the introductory paragraph hereof.

“Taberna IX” has the meaning set forth in the introductory paragraph hereof.

“Taberna Transferred Rights” means any and all of Taberna’s right, title, and interest in, to and under the Original Preferred Securities, including, without limitation, the following:

(i)           the Existing Indentures and Trust Agreement;

(ii)           all amounts payable to Taberna under the Original Preferred Securities, the Existing Indentures and/or the Trust Agreements, excluding, however, amounts payable on account of interest for the period from January 30, 2009 through March [__], 2009;

(iii)           all claims (including “claims” as defined in Section §101(5) of the Bankruptcy Code, suits, causes of action, and any other right of Taberna, whether known or unknown, against the Company or any of its affiliates (including the Trusts), agents, representatives, contractors, advisors, or any other entity that in any way is based upon, arises out of or is related to any of the foregoing, including all claims (including contract claims, tort claims, malpractice claims, and claims under any law governing the exchange of, purchase and sale of, or indentures for, securities), suits, causes of action, and any other right of Taberna against any attorney, accountant, financial advisor, or other entity arising under or in connection with the Original Preferred Securities, the Existing Indentures, the Trust Agreements, the Purchase Agreements or the transactions related thereto or contemplated thereby;

(iv)           all guarantees and all collateral and security of any kind for or in respect of the foregoing;

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(v)           all cash, securities, or other property, and all setoffs and recoupments, to be received, applied, or effected by or for the account of Taberna under the Original Preferred Securities, the Existing Indentures and the Trust Agreements, other than fees, costs and expenses payable to Taberna hereunder and all cash, securities, interest, dividends, and other property that may be exchanged for, or distributed or collected with respect to, any of the foregoing; and

(vi)           all proceeds of the foregoing.

“Trust I” has the meaning set forth in the Recitals.

“Trust II” has the meaning set forth in the Recitals.

 “Trust I Preferred Securities” has the meaning set forth in the Recitals.

“Trust II Preferred Securities” has the meaning set forth in the Recitals.

“Trust Agreements” has the meaning set forth in the Recitals.

“Trusts” has the meaning set forth in the Recitals.

“Venable” has the meaning set forth in Section 3(b).

2. Exchange of Original Preferred Securities for Securities

(a)           The Company agrees to issue the Securities in accordance with the New Indenture and has requested that Taberna accept such Securities in exchange for the Original Preferred Securities, and Taberna hereby accepts such Securities in exchange for the Original Preferred Securities upon the terms and conditions set forth herein.

(b)           The closing of the exchange contemplated herein shall occur at the offices of Nixon Peabody, LLP in New York, New York (the “Closing Room”), or such other place as the parties hereto shall agree, at 11:00 a.m. New York time, on March 16, 2009 or such later date as the parties may agree (such date and time of delivery the “Closing Date”). The Company and Taberna hereby agree that the exchange (the “Exchange”) will occur in accordance with the following requirements:

(i)           Taberna Capital Management, LLC (as collateral manager for each of the Taberna entities) shall have delivered an issuer order instructing each trustee (in each such capacity, a “CDO Trustee”) under the applicable indenture pursuant to which such CDO Trustee serves as trustee for the holders of the Original Preferred Securities to exchange the Original Preferred Securities for the Securities.

(ii)           The Trust I Preferred Securities and the Securities shall have been delivered to the Closing Room, copies of which Trust I Preferred Securities and Securities shall have previously been made available for inspection, if so requested.

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(iii)           The Company shall have directed the New Indenture Trustee to authenticate the Securities and deliver them to the applicable CDO Trustee, as follows: (i) Note 1 to Taberna V, (ii) Note 2 to Taberna VI, (iii) Note 3 to Taberna VIII, and (iv) Note 4 to Taberna IX.

(iv)           The New Indenture Trustee shall have authenticated the Securities in accordance with the terms of the New Indenture and delivered them as provided above.

(v)           The Property Trustee, on behalf of Trust I, shall obtain the Trust I Preferred Securities and shall promptly after the Exchange and receipt of direction to do so cancel them and the Property Trustee on behalf of Trust II, promptly after the Exchange and receipt of direction to do so, enter an order with the CDO Trustee of Taberna VIII and Taberna IX directing such CDO Trustee to cancel the position of such CDO Trustee in respect of the respective Trust II Preferred Securities.

(vi)           Simultaneously with the occurrence of the events described in subsections (iv) and (v) hereof, (A) each Taberna entity holding the applicable Original Preferred Securities irrevocably transfers, assigns, grants and conveys the related Taberna Transferred Rights to the Company and the Company assumes all rights and obligations of Taberna with respect to the Original Preferred Securities and the Taberna Transferred Rights and (B) each Holder shall be entitled to all of the rights, title and interest of a Holder of the Securities under the terms of the Securities, the New Indenture and any other Operative Documents.

(vii)           the Company shall have paid to BNYM all of such party’s reasonable legal fees, costs and other expenses in connection with the Exchange, as well as all other accrued and unpaid fees, costs and expenses under the Existing Indentures and the Trust Agreements, if any.

(viii)          The Company shall have paid to the Trustee, for applications upon the Original Preferred Securities and for distribution to the applicable Taberna entities holding such Original Preferred Securities pursuant to the terms of the Existing Indentures, all accrued interest for the period commencing on the most recent interest payment date under the Original Preferred Securities and continuing through and including March 16, 2009.

3. Conditions Precedent. The obligations of the parties under this Agreement are subject to the following conditions precedent:

(a)           The representations and warranties contained herein shall be accurate as of the date of delivery of the Securities.

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(b)           Paul, Hastings, Janofsky & Walker LLP, counsel for the Company (the “Company Counsel”), shall have delivered an opinion, dated the Closing Date, addressed to each Holder and to the New Indenture Trustee, in substantially the form set out in Annex A-I hereto, the Company shall have furnished to the Holders and the New Indenture Trustee, a certificate signed by the Company’s Chief Executive Officer, President, any Executive Vice President, Chief Financial Officer, Treasurer or Assistant Treasurer, dated the Closing Date, addressed to the Holders and to the New Indenture Trustee, in substantially the form set out in Annex A-II hereto, and Venable LLP, Maryland counsel for the Company (“Venable”), shall have delivered an opinion, dated the Closing Date, addressed to the Holders and the New Indenture Trustee, in substantially the form set out in Annex-III hereto.  In rendering its opinion, the Company Counsel and Venable may rely as to factual matters upon certificates or other documents furnished by officers, directors and trustees of the Company and by government officials; provided, however, that copies of any such certificates or documents are delivered to the Holders and the New Indenture Trustee) and by and upon such other documents as such counsel may, in their reasonable opinion, deem appropriate as a basis for the Company Counsel’s opinion.  The Company Counsel may specify the jurisdictions in which they are admitted to practice and that they are not admitted to practice in any other jurisdiction and are not experts in the law of any other jurisdiction.

(c)           Intentionally Omitted.

(d)           The Holders of the Securities shall have received the opinion of Gardere Wynne Sewell LLP, special counsel for the New Indenture Trustee, dated as of the Closing Date, addressed to the Holders of the Securities and their successors and assigns, in substantially the form set out in Annex C hereto.

(e)           The Company shall have furnished to the Holders of the Securities a certificate of the Company, signed by the Chief Executive Officer, President or an Executive Vice President, and the Chief Financial Officer, Treasurer or Assistant Treasurer of the Company, in their capacities as such, dated as of the Closing Date, as to (i) and (ii) below:

(i)           the representations and warranties in this Agreement and the New Indenture are true and correct on and as of the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date; and

(ii)           since the date of the latest Interim Financial Statements, there has been no material adverse change in the condition (financial or other), earnings, business or assets of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions occurring in the ordinary course of business, other than the disclosure set forth in Schedule 2, which disclosure shall not be deemed to constitute a Material Adverse Change. (a “Material Adverse Change”).

(f)           Intentionally omitted.

(g)           Prior to the Closing Date, the Company shall have furnished to the Holders of the Securities and their counsel such further information, certificates and documents as the Holders of the Securities or such counsel may reasonably request.

If any of the conditions specified in this Section 3 shall not have been fulfilled when and as provided in this Agreement, or if any of the opinions, certificates and documents mentioned above or elsewhere in this Agreement shall not be reasonably satisfactory in form and substance to the Holders of the Securities or their counsel, this Agreement and any obligations of Taberna hereunder, whether as holders of the Original Preferred Securities or as prospective Holders of the Securities, may be canceled at, or at any time prior to, the Closing Date by Taberna.  Notice of such cancellation shall be given to the Company in writing or by telephone and confirmed in writing, or by e-mail or facsimile.

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Each certificate signed by any officer of the Company and delivered to the Holders of the Securities or the Holders’ counsel in connection with the Operative Documents and the transactions contemplated hereby and thereby shall be deemed to be a representation and warranty of the Company and not by such officer in any individual capacity.

4. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with the Taberna, as holders of the Original Preferred Securities and with the Holders of the Securities, as follows:

(a)           It (i) is duly organized and validly existing under the laws of its jurisdiction of organization or incorporation, and (ii) has full power and authority to execute, deliver and perform its obligations under this Agreement and the other Operative Documents.

(b)           Intentionally Omitted.

(c)           Intentionally omitted.

(d)           None of the Securities, the New Indenture, or the Exchange is or may be subject to any Impairment.  The Company has no current intention to initiate any bankruptcy or insolvency proceedings.  The Company (i) has not entered into the Exchange or any Operative Documents with the actual intent to hinder, delay, or defraud any creditor and (ii) received reasonably equivalent value in exchange for its obligations under the Operative Documents.

(e)           It (i) is a sophisticated entity with respect to matters such as the Exchange, (ii) has such knowledge and experience, and has made investments of a similar nature, so as to be aware of the risks and uncertainties inherent in the Exchange and (iii) has independently and without reliance upon Taberna, any Holder of the Securities, Taberna Capital Management, LLC or the Trustee or any of their affiliates, and based on such information as it has deemed appropriate, made its own analysis and decision to enter into this Agreement, except that it has relied upon Taberna’s express representations, warranties, covenants and agreements in this Agreement.  The Company acknowledges that none of Taberna, any Holders of the Securities, Taberna Capital Management, LLC or Trustee or any of their affiliates has given it any investment advice, credit information or opinion on whether the Exchange is prudent.

(f)           It has not engaged any broker, finder or other entity acting under the authority of it or any of its affiliates that is entitled to any broker’s commission or other fee in connection with the transaction for which Taberna, any Holder, Trustee or any of their affiliates could be responsible.

(g)           Intentionally Omitted.

(h)           Neither the Company nor any of its “Affiliates” (as defined in Rule 501(b) of Regulation D (“Regulation D”) under the Securities Act (as defined below)), nor any person acting on its or their behalf, has, directly or indirectly, made offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the registration of any of the Securities under the Securities Act.

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(i)           Neither the Company nor any of its Affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of any of the Securities.

(j)           The Securities (i) are not and have not been listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or quoted on a U.S. automated inter-dealer quotation system and (ii) are not of an open-end investment company, unit investment trust or face-amount certificate company that are, or are required to be, registered under Section 8 of the Investment Company Act of 1940, as amended (the “Investment Company Act”), and the Securities otherwise satisfy the eligibility requirements of Rule 144A(d)(3) promulgated pursuant to the Securities Act (“Rule 144A(d)(3)”).

(k)           Neither the Company nor any of its Affiliates, nor any person acting on its or their behalf, has engaged, or will engage, in any “directed selling efforts” within the meaning of Regulation S under the Securities Act with respect to the Securities.

(l)           The Company is not, and immediately following consummation of the transactions contemplated hereby, will not be, an “investment company” or an entity “controlled” by an “investment company,” in each case within the meaning of Section 3(a) of the Investment Company Act.

(m)           Each of this Agreement and the New Indenture and the consummation of the transactions contemplated herein and therein have been duly authorized by the Company and, on the Closing Date, will have been duly executed and delivered by the Company, and, assuming due authorization, execution and delivery by Taberna and/or the Trustee, as applicable, will be a legal, valid and binding obligations of the Company enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.

(n)           The Securities have been duly authorized by the Company and, on the Closing Date, will have been duly executed and delivered to the Trustee for authentication in accordance with the New Indenture and, when authenticated in the manner provided for in the New Indenture and delivered to the Holders in exchange for the Original Preferred Securities, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the New Indenture, enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.

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(o)           Neither the issue of the Securities and exchange of the Securities for the Original Preferred Securities, nor the execution and delivery of and compliance with the Operative Documents by the Company, nor the consummation of the transactions contemplated herein or therein, (i) will conflict with or constitute a violation or breach of (x) the charter or bylaws or similar organizational documents of the Company or any subsidiary of the Company or (y) any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, governmental authority, agency or instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or their respective properties or assets (collectively, the “Governmental Entities”), (ii) will conflict with or constitute a violation or breach of, or a default or Repayment Event (as defined below) under, or result in the creation or imposition of any pledge, security interest, claim, lien or other encumbrance of any kind (each, a “Lien”) upon any property or assets of the Company or any if its subsidiaries pursuant to any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which (A) the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or (B) to which any of the property or assets of any of them is subject, or any judgment, order or decree of any court, Governmental Entity or arbitrator, except, in the case of clause (i)(y) or this clause (ii), for such conflicts, breaches, violations, defaults, Repayment Events (as defined below) or Liens which (X) would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents and (Y) would not, singly or in the aggregate, have a Material Adverse Effect or (iii) will require the consent, approval, authorization or order of any court or Governmental Entity.  As used herein, a “Repayment Event” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries prior to its scheduled maturity.

(p)           The Company has all requisite power and authority to own, lease and operate its properties and assets and conduct the business it transacts and proposes to transact, and is duly qualified to transact business and is in good standing in each jurisdiction where the nature of its activities requires such qualification, except where the failure of the Company to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect.

(q)           The Company has no subsidiaries that are material to its business, financial condition or earnings, other than those Significant Subsidiaries listed in Schedule 1 attached hereto (which Schedule 1 includes each of the Company’s Significant Subsidiaries).  Each Significant Subsidiary is a corporation, partnership or limited liability company duly and properly incorporated or organized or formed, as the case may be, validly existing and in good standing under the laws of the jurisdiction in which it is chartered or organized or formed, with all requisite corporate power and authority to own, lease and operate its properties and conduct the business it transacts.  Each Significant Subsidiary is duly qualified to transact business as a foreign corporation, partnership or limited liability company, as applicable, and is in good standing in each jurisdiction where the nature of its activities requires such qualification, except where the failure to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect.  No Significant Subsidiary of the Company (other than a taxable REIT subsidiary, if any) is currently prohibited, directly or indirectly, under any agreement or other instrument, other than as required by applicable law, to which it is a party or is subject , from paying any dividends to the Company, from making  any other distribution on such Significant Subsidiary’s capital stock or other Equity Interests, from repaying to the Company any loans or advances to such Significant Subsidiary from the Company or from transferring any of such Significant Subsidiary’s properties or assets to the Company or any other subsidiary of the Company.

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(r)           The Company and each of the Company’s subsidiaries hold all necessary approvals, authorizations, orders, licenses, consents, registrations, qualifications, certificates and permits (collectively, the “Governmental Licenses”) of and from Governmental Entities necessary to conduct their respective businesses as now being conducted, and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental License, except where the failure to be so licensed or approved or the receipt of an unfavorable decision, ruling or finding, would not, singly or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except where the invalidity or the failure of such Governmental Licenses to be in full force and effect, would not, singly or in the aggregate, have a Material Adverse Effect; and the Company and its subsidiaries are in compliance with all applicable laws, rules, regulations, judgments, orders, decrees and consents, except where the failure to be in compliance would not, singly or in the aggregate, have a Material Adverse Effect.

(s)           All of the issued and outstanding Equity Interests of the Company and each of its subsidiaries are validly issued, fully paid and non-assessable; all of the issued and outstanding Equity Interests of each consolidated subsidiary of the Company is owned by the Company, directly or through subsidiaries, free and clear of any Lien, claim, or equitable right (in each case, other than preferred equity interests issued by CDO subsidiaries); and none of the issued and outstanding Equity Interests of the Company or any subsidiary was issued in violation of any preemptive or similar rights arising by operation of law, under the charter or by-laws of such entity or under any agreement to which the Company or any of its subsidiaries is a party.

(t)           Neither the Company nor any of its subsidiaries is (i) in violation of its respective charter or by-laws or similar organizational documents or (ii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Company or any such subsidiary is a party or by which it or any of them may be bound or to which any of the property or assets of any of them is subject, except, in the case of clause (ii), where such violation or default would not, singly or in the aggregate, have a Material Adverse Effect.

(u)           There is no action, suit or proceeding before or by any Governmental Entity, arbitrator or court, domestic or foreign, now pending or, to the knowledge of the Company after due inquiry, threatened against or affecting the Company or any of its subsidiaries, except for such actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents or have a Material Adverse Effect; and the aggregate of all pending legal or governmental proceedings to which the Company or any of its subsidiaries is a party or of which any of their respective properties or assets is subject, including ordinary routine litigation incidental to the business, are not expected to result in a Material Adverse Effect.

(v)           The accountants of the Company who certified the Financial Statements(defined below) are independent public accountants of the Company and its subsidiaries within the meaning of the Securities Act, and the rules and regulations of the Securities and Exchange Commission (the “Commission”) thereunder.

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(w)           The audited consolidated financial statements (including the notes thereto) and schedules of the Company and its consolidated subsidiaries for the fiscal year ended December 31, 2007, (the “Financial Statements”) and the interim [unaudited] consolidated financial statements of the Company and its consolidated subsidiaries for the quarter ended September 30, 2008 (the “Interim Financial Statements”) provided to Taberna are the most recent publicly available audited and unaudited consolidated financial statements of the Company and its consolidated subsidiaries, respectively, and fairly present in all material respects, in accordance with U.S. generally accepted accounting principles (“GAAP”), the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the dates and for the periods therein specified, subject, in the case of Interim Financial Statements, to year-end adjustments.  Such consolidated financial statements and schedules have been prepared in accordance with GAAP consistently applied throughout the periods involved (except as otherwise noted therein and subject to normal recurring adjustments in the ordinary course).

(x)           Neither the Company nor any of its subsidiaries has any material liability, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for taxes (and there is no past or present fact, situation, circumstance, condition or other basis for any present or future action, suit, proceeding, hearing, charge, complaint, claim or demand against the Company or any of its subsidiaries that could give rise to any such liability), except for (i) liabilities set forth in the Financial Statements or the Interim Financial Statements and (ii) normal fluctuations in the amount of the liabilities referred to in clause (i) above occurring in the ordinary course of business of the Company and all of its subsidiaries since the date of the most recent balance sheet included in such Interim Financial Statements and (iii) as described on Schedule A.

(y)           Since the respective dates of the Interim Financial Statements, there has not been (A) any Material Adverse Change or (B) any dividend or distribution of any kind declared, paid or made by the Company on any class of its Equity Interests, other than regular quarterly dividends on the Company’s common stock.

(z)           The documents of the Company filed with the Commission in accordance with the Exchange Act, from and including the commencement of the fiscal year covered by the Company’s most recent Annual Report on Form 10-K, at the time they were or hereafter are filed by the Company with the Commission (collectively, the “1934 Act Reports”), complied and will comply in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder (the “1934 Act Regulations”), and, at the date of this Agreement and on the Closing Date, do not and will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and other than such instruments, agreements, contracts and other documents as are filed as exhibits to the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, there are no instruments, agreements, contracts or documents of a character described in Item 601 of Regulation S-K promulgated by the Commission to which the Company or any of its subsidiaries is a party that are required to be so filed.  To the actual knowledge of the Chief Financial Officer of the Company, except as set forth in Schedule (x), the Company is in compliance with all currently applicable requirements of the Exchange Act that were added by the Sarbanes-Oxley Act of 2002.

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(aa)           No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent, except those which would not, singly or in the aggregate, have a Material Adverse Effect.

(bb)           No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity, other than those that have been made or obtained, is necessary or required for the performance by the Company of its obligations under the Operative Documents, as applicable, or the consummation by the Company of the transactions contemplated by the Operative Documents.

(cc)           The Company and each of its subsidiaries has good and marketable title to all of its respective real and personal property, in each case free and clear of all Liens and defects, except for those that would not, singly or in the aggregate, have a Material Adverse Effect; and all of the leases and subleases under which the Company or any of its subsidiaries holds properties are in full force and effect, except where the failure of such leases and subleases to be in full force and effect would not, singly or in the aggregate, have a Material Adverse Effect, and neither the Company nor any of its subsidiaries has any notice of any claim of any sort that has been asserted by anyone adverse to the rights of the Company or any subsidiary of the Company under any such leases or subleases, or affecting or questioning the rights of such entity to the continued possession of the leased or subleased premises under any such lease or sublease, except for such claims that would not, singly or in the aggregate, have a Material Adverse Effect.

(dd)           Commencing with its taxable year ended December 31, 2003, the Company has been, and upon the completion of the transactions contemplated hereby, the Company will continue to be (for as long as the Board of Directors of the Company believes it is in the Company’s best interest to qualify as a REIT), organized and operated in conformity with the requirements for qualification and taxation as a real estate investment trust (a “REIT’) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), and the Company’s organizational structure and proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code, and no actions have been taken (or not taken which are required to be taken) which would cause such qualification to be lost.  As long as the Board of Directors of the Company believes it is in the Company’s best interests to qualify as a REIT, the Company expects to continue to be organized and to operate in a manner so as to qualify as a REIT in the taxable year ending December 31, [____] and succeeding taxable years.

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(ee)           The Company and each Significant Subsidiary has timely and duly filed (or filed extensions thereof (and which extensions are presently in effect)) all Tax Returns (as defined below) required to be filed by them, except where such would not, singly or in the aggregate, have a Material Adverse Effect, and all such Tax Returns are true, correct and complete in all material respects.  The Company and each Significant Subsidiary has timely and duly paid in full all Taxes (as defined below) required to be paid by them (whether or not such amounts are shown as due on any Tax Return), except for any Taxes that are being disputed in good faith and for which adequate reserves are held.  There are no federal, state, or other Tax audits or deficiency assessments proposed or pending with respect to the Company or any of the Significant Subsidiaries, and no such audits or assessments are threatened.  As used herein, the terms “Tax” or “Taxes” mean (i) all federal, state, local, and foreign taxes, and other assessments of a similar nature (whether imposed directly or through withholding), including any interest, additions to tax, or penalties applicable thereto, imposed by any Governmental Entity, and (ii) all liabilities in respect of such amounts arising as a result of being a member of any affiliated, consolidated, combined, unitary or similar group, as a successor to another person or by contract.  As used herein, the term “Tax Returns” means all federal, state, local, and foreign Tax returns, declarations, statements, reports, schedules, forms, and information returns and any amendments thereto filed or required to be filed with any Governmental Entity.

(ff)           Interest payable by the Company on the Securities is deductible by the Company  for United Stated Federal income tax purposes and there are no rulemaking or similar proceedings before the U.S. Internal Revenue Service or comparable federal, state, local or foreign government bodies which involve or affect the Company or any subsidiary, which, if the subject of an action unfavorable to the Company or any subsidiary, would likely result in a Material Adverse Effect.

(gg)           The books, records and accounts of the Company and its subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company and its subsidiaries.  The Company and each of its subsidiaries maintains a system of internal accounting controls to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

(hh)           The Company and the Significant Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts in all material respects as are customary in the businesses in which they are engaged or propose to engage after giving effect to the transactions contemplated hereby including but not limited to, real or personal property owned or leased against theft, damage, destruction, act of vandalism and all other risks customarily insured against.  All policies of insurance and fidelity or surety bonds insuring the Company or any of the Significant Subsidiaries or the Company’s or Significant Subsidiaries’ respective businesses, assets, employees, officers and directors are in full force and effect.  The Company and each of the Significant Subsidiaries are in compliance with the terms of such policies and instruments in all material respects. Neither the Company nor any Significant Subsidiary has reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.  Within the past twelve months, neither the Company nor any Significant Subsidiary has been denied any insurance coverage it has sought or for which it has applied.

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(ii)           The Company and its subsidiaries or any person acting on behalf of the Company and its subsidiaries including, without limitation, any director, officer, agent or employee of the Company or its subsidiaries has not, directly or indirectly, while acting on behalf of the Company and its subsidiaries (i) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds; (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful payment.

(jj)           The information provided by the Company pursuant to the Operative Documents does not, as of the date hereof, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(kk)           Except as would not, individually or in the aggregate, result in a Material Adverse Change, (i) to the Company’s actual knowledge, the Company and its subsidiaries have been and are in compliance with applicable Environmental Laws (as defined below), (ii) to the Company’s actual knowledge neither the Company, nor any of its subsidiaries has at any time released (as such term is defined in CERCLA (as defined below)) or otherwise disposed of Hazardous Materials (as defined below) on, to, in, under or from any of the real properties currently or previously owned, leased or operated by the Company or any of its subsidiaries (collectively, the “Properties”) other than in compliance with all Environmental Laws, (iii) to the Company’s actual knowledge, neither the Company nor any of its subsidiaries has used the Properties, other than in compliance with applicable Environmental Laws, (iv) neither the Company nor any of its subsidiaries has received any written notice of, or has any actual knowledge of any occurrence or circumstance which, with notice or passage of time or both, is reasonably likely to give rise to a claim under or pursuant to any Environmental Law with respect to the Properties, or their respective assets or arising out of the conduct of the Company or its subsidiaries, (v) to the Company’s actual knowledge, none of the Properties are included or proposed for inclusion on the National Priorities List issued pursuant to CERCLA by the United States Environmental Protection Agency or proposed for inclusion on any similar list or inventory issued pursuant to any other Environmental Law or issued by any other Governmental Entity, (vi) to the Company’s actual knowledge, none of the Company, any of its subsidiaries or agents or any other person or entity for whose conduct any of them is reasonably likely to be held responsible, has generated, manufactured, refined, transported, treated, stored, handled, disposed, transferred, produced or processed any Hazardous Material at any of the Properties, except in compliance with all applicable Environmental Laws, (vii) to the Company’s knowledge, no lien has been imposed on the Properties by any Governmental Entity in connection with the presence on or off such Property of any Hazardous Material, and (viii) none of the Company, any of its subsidiaries or, to the Company’s actual knowledge, any other person or entity for whose conduct any of them is reasonably likely to be held responsible, has entered into or been subject to any consent decree, compliance order, or administrative order with respect to the Properties or any facilities or improvements or any operations or activities thereon.

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(ll)           As used herein, “Hazardous Materials” shall include, without limitation, any flammable materials, explosives, radioactive materials, hazardous materials, hazardous substances, hazardous wastes, toxic substances or related materials, asbestos, petroleum, petroleum products and any hazardous material as defined by any federal, state or local environmental law, statute, ordinance, rule or regulation, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601-9675 (“CERCLA”), the Hazardous Materials Transportation Act, as amended, 49 U.S.C. §§ 5101-5127, the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901-6992k, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001-11050, the Toxic Substances Control Act, 15 U.S.C. §§ 2601-2692, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136-136y, the Clean Air Act, 42 U.S.C. §§ 7401-7642, the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. §§ 1251-1387, the Safe Drinking Water Act, 42 U.S.C. §§ 300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C. §§ 651-678, and any analogous state laws, as any of the above may be amended from time to time and in the regulations promulgated pursuant to each of the foregoing (including environmental statutes and laws not specifically defined herein) (individually, an “Environmental Law” and collectively, the “Environmental Laws”) or by any Governmental Entity.

5. Representations and Warranties of Taberna. Each Taberna entity, for itself, represents and warrants to, and agrees with, the Company as follows:

(a)           It is a company duly formed, validly existing and in good standing under the laws of the jurisdiction in which it is organized with all requisite (i) power and authority to execute, deliver and perform its obligations under the Operative Documents to which it is a party, to make the representations and warranties specified herein and therein and to consummate the transactions contemplated in the Operative Documents.

(b)           This Agreement and the consummation of the transactions contemplated herein has been duly authorized by it and, on the Closing Date, will have been duly executed and delivered by it and, assuming due authorization, execution and delivery by the Company and Trustee of the Operative Documents to which each is a party, will be a legal, valid and binding obligation of such Taberna entity, enforceable against such Taberna entity in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.

(c)           No filing with, or authorization, approval, consent, license, order registration, qualification or decree of, any Governmental Entity or any other Person, other than those that have been made or obtained, is necessary or required for the performance by such Taberna entity of its obligations under this Agreement or to consummate the transactions contemplated herein.

(d)           It is a “Qualified Purchaser” as such term is defined in Section 2(a)(51) of the Investment Company Act.

(e)           Taberna V and Taberna VI are the sole legal and beneficial owners of the Trust I Preferred Securities and the related Taberna Transferred Rights and shall deliver the Trust I Preferred Securities free and clear of any Lien.

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(f)           Taberna VIII, and Taberna IX are the legal and beneficial owners of the Trust II Preferred Securities and the related Taberna Transferred Rights and shall deliver the Trust II Preferred Securities free and clear of any Lien.

(g)           Intentionally Omitted.

(h)           Intentionally Omitted.

(i)           There is no action, suit or proceeding before or by any Governmental Entity, arbitrator or court, domestic or foreign, now pending or, to its knowledge, threatened against or affecting it, except for such actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents.

(j)           The outstanding principal amount of its respective Original Preferred Securities is the face amount as set forth in such Original Preferred Securities.

(k)           It is aware that the Securities have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to “U.S. persons” (as defined in Regulation S under the Securities Act) except in accordance with Rule 903 of Regulation S under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act.

(l)           It is an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D under the Securities Act. It has not made any offers to sell, or solicitations of any offers to buy, all or any portion of the Original Preferred Securities or Taberna Transferred Rights in violation of any applicable securities laws.

(m)           Neither it nor any of its Affiliates, nor any person acting on its or its Affiliate’s behalf has engaged, or will engage, in any form of “general solicitation or general advertising” (within the meaning of Regulation D under the Securities Act) in connection with any offer or sale of the Securities.

(n)           It understands and acknowledges that (i) no public market exists for any of the Securities and that it is unlikely that a public market will ever exist for the Securities, (ii) such Holder is purchasing the Securities for its own account, for investment and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or other applicable securities laws, subject to any requirement of law that the disposition of its property be at all times within its control and subject to its ability to resell such Securities pursuant to an effective registration statement under the Securities Act or pursuant to an exemption therefrom or in a transaction not subject thereto, and it agrees to the legends and transfer restrictions applicable to the Securities contained in the New Indenture, and (iii) it has had the opportunity to ask questions of, and receive answers and request additional information from, the Company and is aware that it may be required to bear the economic risk of an investment in the Securities.

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(o)           It has not engaged any broker, finder or other entity acting under its authority that is entitled to any broker’s commission or other fee in connection with this Agreement and the consummation of transactions contemplated in this Agreement and the New Indenture for which the Company could be responsible.

(p)           It (i) is a sophisticated entity with respect to the Exchange, (ii) has such knowledge and experience, and has made investments of a similar nature, so as to be aware of the risks and uncertainties inherent in the Exchange and (iii) has independently and without reliance upon the Company or any of its affiliates, and based on such information as it has deemed appropriate, made its own analysis and decision to enter into this Agreement, except that it has relied upon the Company’s express representations, warranties, covenants and agreements in the Operative Documents and the other documents delivered by the Company in connection therewith.

Except as expressly stated in this Agreement, Taberna make no representations or warranties, express or implied, with respect to the Exchange, the Taberna Transferred Rights, the Original Preferred Securities, the Existing Indentures, or any other matter.

6. Covenants and Agreements of the Company. The Company agrees with the Taberna and the Holders as follows:

(a)           Reserved.

(b)           The Company will arrange for the qualification of the Securities for sale under the laws of such jurisdictions as the Holders of the Securities may designate and will maintain such qualifications in effect so long as required for the sale of the Securities.  The Company will promptly advise the Holders of the Securities of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose.

(c)           Reserved.

(d)           The Company will not, nor will it permit any of its Affiliates or any person acting on their behalf to, engage in any “directed selling efforts” within the meaning of Regulation S under the Securities Act with respect to the Securities.

(e)           The Company will not, and will not permit any of its Affiliates or any person acting on its or their behalf to, directly or indirectly, make offers or sales of any security, or solicit offers to buy any security, under circumstances that would require the registration of any of the Securities under the Securities Act.

(f)           The Company will not, and will not permit any of its Affiliates or any person acting on its or their behalf to, engage in any form of “general solicitation or general advertising” (within the meaning of Regulation D) in connection with any offer or sale of the any of the Securities.

(g)           So long as any of the Securities are outstanding, (i) the Securities shall not be listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system and (ii) the Company shall not be an open-end investment company, unit investment trust or face-amount certificate company that is, or is required to be, registered under Section 8 of the Investment Company Act, and, the Securities shall otherwise satisfy the eligibility requirements of Rule 144A(d)(3).

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(h)           At Closing the Company shall furnish to (i) the Holders of the Securities, (ii) Taberna Capital Management, LLC and (iii) any beneficial owner of the Securities reasonably identified to the Company, a duly completed and executed Officer’s Financial Certificate in the form required pursuant to the New Indenture.

(i)           The Company will, during any period in which it is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, or it is not exempt from such reporting requirements pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each Holder of the Securities, upon the request of such Holder, any information required to be provided by Rule 144A(d)(4) under the Securities Act.  If the Company is required to register under the Exchange Act, such reports filed in compliance with Rule 12g3-2(b) shall be sufficient information as required above.  This covenant is intended to be for the benefit of the Holders of the Securities.

(j)           The Company will not, until one hundred eighty (180) days following the Closing Date, without the Holders’ prior written consent, offer, sell, contract to sell, grant any option to purchase or otherwise dispose of, directly or indirectly, (i) any Securities or other securities substantially similar to the Securities other than as contemplated by the New Indenture, if at all, or (ii) any other securities convertible into, or exercisable or exchangeable for, any of the Securities or other securities substantially similar to the Securities or (ii) any preferred securities, unless the Company provides the Purchasers with an opinion of counsel (such counsel to have experience and sophistication in the matters addressed in such opinion) addressed to the Purchasers stating that any such offer, sale or other disposition will not result in the Securities being integrated in a transaction that would require registration under the Securities Act.

(k)           The Company will not identify any of the Indemnified Parties (as defined below) in a press release or any other public statement without the prior written consent of such Indemnified Party, unless such disclosure is required by applicable statute, court of law, regulatory authority or securities exchange.

(l)           Intentionally omitted.

(m)           The Company will use its commercially reasonable efforts to meet the requirements to qualify as a REIT under sections 856 through 860 of the Code, effective for the taxable year ending December 31, 2008 (and each fiscal quarter of such year) and unless and until the Board of Directors of the Company determines that it is in the best interests of the Company not to be organized as a REIT, the Company will be organized in conformity with the requirements for qualification as a REIT under the Code, and the Company will conduct its operations in a manner that will enable the Company to meet the requirements for qualification and taxation as a REIT under the Code.

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7. Payment of Expenses. In addition to the obligations agreed to by the Company under Section 2(b)(vii) herein, the Company agrees to pay all costs and expenses incident to the performance of the obligations of the Company under this Agreement, whether or not the transactions contemplated herein are consummated or this Agreement is terminated, including all costs and expenses incident to (i) the authorization, issuance, sale and delivery of the Securities and any taxes payable in connection therewith; (ii) the fees and expenses of counsel, accountants and any other experts or advisors retained by the Company; and (iv) the fees and all reasonable expenses of the New Indenture Trustee and any other trustee or paying agent appointed under the Operative Documents, including the fees and disbursements of counsel for such trustees. The fees of the New Indenture Trustee (excluding fees and disbursements of counsel) shall not exceed the amounts set forth in that certain Fee Agreement dated as of the date hereof between the Company and The Bank of New York Mellon Trust Company, National Association, executed in connection with this Agreement and the New Indenture.

8. Indemnification. (a) The Company agrees to indemnify and hold harmless BNYM, the Holders, Taberna, Taberna Capital Management, LLC, Taberna Securities, LLC, and their respective affiliates (collectively, the “Indemnified Parties”) the Indemnified Parties’ respective directors, officers, employees and agents and each person, if any, who controls the Indemnified parties within the meaning of the Securities Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which the Indemnified Parties may become subject, under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based on (i) any untrue statement or alleged untrue statement of a material fact contained in any information or documents provided by or on behalf of the Company, (ii) any omission or alleged omission to state a material fact required to be stated or necessary to make the statements contained in any information provided by the Company, in light of the circumstances under which they were made, not misleading, (iii) the breach or alleged breach of any representation, warranty, or agreement of the Company contained herein, or (iv) the execution and delivery by the Company of the Operative Documents and the consummation of the transactions contemplated herein and therein, and agrees to reimburse each such Indemnified Party, as incurred, for any legal or other expenses reasonably incurred by the Indemnified Parties in connection with investigating or defending any such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability that the Company may otherwise have.

(b)           Promptly after receipt by an Indemnified Party under this Section 8 of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, promptly notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve the indemnifying party from liability under paragraph (a) above unless and to the extent that such failure results in the forfeiture by the indemnifying party of material rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any Indemnified Party other than the indemnification obligation provided in paragraph (a) above.  The Indemnified Parties shall be entitled to appoint counsel to represent the Indemnified Parties in any action for which indemnification is sought.  An indemnifying party may participate at its own expense in the defense of any such action; provided, that counsel to the indemnifying party shall not (except with the consent of the Indemnified Party) also be counsel to the Indemnified Party.  In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all Indemnified Parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, unless an Indemnified Party elects to engage separate counsel because such Indemnified Party believes that its interests are not aligned with the interests of another Indemnified Party or that a conflict of interest might result.  An indemnifying party will not, without the prior written consent of the Indemnified Parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not the Indemnified Parties are actual or potential parties to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action, suit or proceeding.

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9. Representations and Indemnities to Survive.  The respective agreements, representations, warranties, indemnities and other statements of the Company and/or its officers set forth in or made pursuant to this Agreement will remain in full force and effect and will survive the Exchange.  The provisions of Sections 7 and 8 shall survive the termination or cancellation of this Agreement.

10. Amendments.  This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement by each of the parties hereto.

11. Notices.  All communications hereunder will be in writing and effective only on receipt, and will be mailed, delivered by hand or courier or sent by facsimile and confirmed or by any other reasonable means of communication, including by electronic mail, to the relevant party at its address specified in Exhibit C.

12. Successors and Assigns.  This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.  Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person other than the parties hereto and the affiliates, directors, officers, employees, agents and controlling persons referred to in Section 8 hereof and their successors, assigns, heirs and legal representatives, any right or obligation hereunder.  None of the rights or obligations of the Company under this Agreement may be assigned, whether by operation of law or otherwise, without Taberna’s prior written consent.  The rights and obligations of the Holders under this Agreement may be assigned by the Holders without the Company’s consent; provided that the assignee assumes the obligations of any such Holders under this Agreement.

13. Applicable Law.  THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

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14. Submission to Jurisdiction.  ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

15. Counterparts and Facsimile.  This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.  This Agreement may be executed by any one or more of the parties hereto by facsimile.

16. Entire Agreement.  This Agreement constitutes the entire agreement of the parties to this Agreement and supercedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof.

[Signature Page Follows]

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IN WITNESS WHEREOF, this Agreement has been entered into as of the date first written above.

CAPITAL TRUST, INC.
By:	/s/ Geoffrey G. Jervis
	Name: Geoffrey G. Jervis
	Title: Chief Financial Officer

(Signatures continue on the next page)

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TABERNA, AS HOLDERS OF THE ORIGINAL PREFERRED SECURITIES AND AS HOLDERS (AS DEFINED IN THE NEW INDENTURE):

TABERNA PREFERRED FUNDING V LTD.
By:	/s/ Alasdair Foster
	Name:	Alasdair Foster
	Title:	Director

TABERNA PREFERRED FUNDING VI, LTD.
By:	/s/ Alasdair Foster
	Name:	Alasdair Foster
	Title:	Director

TABERNA PREFERRED FUNDING VIII, LTD.
By:	/s/ Alasdair Foster
	Name:	Alasdair Foster
	Title:	Director

TABERNA PREFERRED FUNDING IX, LTD.
By:	/s/ Alasdair Foster
	Name:	Alasdair Foster
	Title:	Director

- 25 - -

Acknowledged and Agreed:

THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION

not in its individual capacity but as Existing Indenture Trustee, Property Trustee and New Indenture Trustee

By:	/s/ Bill Marshall
	Name: Bill Marshall
	Title: Vice President

- 26 - -

EXHIBIT A-1

Copy of Trust I Preferred Securities

A-1

EXHIBIT A-2

Copies of Trust II Preferred Securities

A-2

EXHIBIT B-1

Copy of Note 1

B-1

EXHIBIT B-2

Copy of Note 2

B-2

EXHIBIT B-3

Copy of Note 3

B-3

EXHIBIT B-4

Copy of Note 4

B-4

EXHIBIT C

Notice Information

Taberna:

c/o Taberna Capital Management, LLC

450 Park Avenue, 11th Floor

New York, NY  10022

Attention:  Mr. Raphael Licht

Facsimile:  (212) 243-9039

e-mail:  rlicht@raitft.com

Company:

Capital Trust, Inc.

410 Park Avenue, 14th Floor

New York, NY 10022

Attention:  Geoffrey Jervis

D-1

SCHEDULE 1

List of Significant Subsidiaries

(See attached)

Sch. 1-1

ANNEX A-I

Pursuant to Section 3(b) of the Agreement, Paul, Hastings, Janofsky & Walker LLP counsel for the Company, shall deliver an opinion to the effect that:

Annex A-1

ANNEX A-II

CAPITAL TRUST, INC.

Chief Financial Officer’s Certificate

I, __________________, the Chief Financial Officer of Capital Trust, Inc. (the “Company”), hereby certify that:

(i)           as of December 31, 2008, the Company had total consolidated assets of approximately $[*], and no event has occurred nor circumstance exists since such date that materially and adversely affects the total assts of the Company; and

(ii)          the Company (which, for purposes of this certificate, includes any predecessor entity) has been in operation since at least 1997.

[Signature page follows]

Annex A-1

ANNEX A-III

Venable Opinion

(see attached)

Annex A-1

ANNEX B

Pursuant to Section 3(d) of the Agreement, Paul, Hastings, Janofsky & Walker LLP shall deliver an opinion to the effect that for U.S. federal income tax purposes, the Securities will constitute indebtedness of the Company.

In rendering such opinion, such counsel may (A) state that its opinion is limited to the federal laws of the United States and (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Company and public officials.

Annex B-1

ANNEX C

Pursuant to Section 3(d) of the Agreement, Gardere Wynne Sewell LLP, special counsel for the Trustee, shall deliver to the Holders an opinion to the effect that:

(i)           The Bank of New York Mellon Trust Company, National Association (the “Bank”) is a national banking association with trust powers, duly and validly existing under the laws of the United States of America, with corporate power and authority to execute, deliver and perform its obligations under the New Indenture and to authenticate and deliver the Securities, and is duly eligible and qualified to act as Trustee under the New Indenture pursuant to Section 6.1 thereof.

(ii)           The New Indenture has been duly authorized, executed and delivered by the Bank and constitutes the valid and binding obligation of the Bank, enforceable against it in accordance with its terms except (A) as may be limited by bankruptcy, fraudulent conveyance, fraudulent transfer, insolvency, reorganization, liquidation, receivership, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally, and by general equitable principles, regardless of whether considered in a proceeding in equity or at law and (B) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

(iii)           Neither the execution or delivery by the Bank of the New Indenture, the authentication and delivery of the Securities pursuant to the terms of the New Indenture, nor the performance by the Bank of its obligations under the New Indenture (A) requires the consent or approval of, the giving of notice to or the registration or filing with, any governmental authority or agency under any existing law of the United States of America governing the banking or trust powers of the Bank or (B) violates or conflicts with the Articles of Association or By-laws of the Bank or any law or regulation of the State of New York or the United States of America governing the banking or trust powers of the Bank.

(iv)           The Securities have been authenticated and delivered by a duly authorized officer of the Bank.

In rendering such opinion, such counsel may (A) state that its opinion is limited to the laws of the State of New York and the laws of the United States of America, (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Bank, the Company and public officials, and (C) make customary assumptions and exceptions as to enforceability and other matters.

Annex C-1

SCHEDULE 2

Disclosure

The Company paid approximately $100 million in margin calls in Q4 2008.

The risk factors below will appear in the 10-K the Company plans to file after market close on Monday:

We are subject to the general risk of a leveraged investment strategy and the specific risks ofmark to market indebtedness.

Our restructured secured debt obligations are secured by our investments, which are subject to being marked to market by our credit providers. If the market value of the underlying property collateralizing our investments decline, we may be required to liquidate our investments if we do not have the liquidity in excess of minimum required liquidity to pay down the related debt obligation. Moreover, we cannot assure you that we will be able to meet mark-to-market capital calls or debt service obligations in general and, to the extent such obligations are not met, there is a risk of loss of some or all of our investments through foreclosure or a financial loss if we or they are required to liquidate assets, the impact of which could be magnified if such a liquidation is at a commercially inopportune time. In addition, the occurrence of any event or condition which causes any obligation or liability of more than $1.0 million to become due prior to its scheduled maturity or any monetary default under our restructured debt obligations if the amount of such obligation is at least $1.0 million could constitute a cross-default under our restructured debt obligations. If a cross-default occurs, the maturity of almost all of our indebtedness could be accelerated and become immediately due and payable.

Our restructured debt obligations with our lenders prohibit new balance sheet investment activities, which prevents us from growing our balance sheet portfolio.

Following a series of negotiations that were precipitated by our decision to conserve our cash resources and not meet further margin calls made by our secured lenders, we have restructured our debt obligations with our participating secured and unsecured lenders, a development that has consequences to our business. Under the terms of the restructured debt obligations, we are prohibited from acquiring or originating new investments. This restriction precludes us from growing our balance sheet portfolio at a time when investment opportunities that provide targeted risk-adjusted returns may otherwise be available to us. Our interest earning investments will continue to be reduced which will negatively impact our net investment income. There can be no assurance that we will be able to retire completely or refinance our restructured debt obligations so that we can resume our balance sheet investment activities.

Sch. 2-1

Our secured and unsecured credit agreements may impose restrictions on our operation of the business.

Under our secured and unsecured credit agreements, such as our repurchase agreements and derivative agreements, we may make certain representations, warranties and affirmative and negative covenants that may restrict our ability to operate while still utilizing those sources of credit. Currently, our restructure plan prohibits us from acquiring or originating new balance sheet investments or incurring additional indebtedness unless used to pay down such obligations. Such representations, warranties and covenants may also include, but are not limited to, restrictions on corporate guarantees, the maintenance of certain financial ratios, including our ratio of debt to equity capital and our debt service coverage ratio, as well as the maintenance of a minimum net worth, restrictions against a change of control of our company and limitations on alternative sources of capital. In addition, we may be subject to potential margin calls under the terms of our repurchase facilities should the value of our investments decline. If margin calls are not met, we would be forced to sell investments, which could lead to losses. Given current market conditions, in many cases there is no active market into which to sell our assets and where offers to purchase our assets are obtainable there is a risk that the prices quoted will be significantly below their fair value, and consequently, any forced sales following unmet margin calls will result in significant losses.

Sch. 2-2

EX-10.73

PLEDGE AND SECURITY AGREEMENT

This PLEDGE AND SECURITY AGREEMENT (this “Agreement”) dated as of March 16, 2009 by CAPITAL TRUST, INC., a Maryland corporation (the“Pledgor”), for the benefit of WESTLB AG, NEW YORK BRANCH, as collateral agent on behalf of the lenders party to the Credit Agreement (as hereinafter defined) (in such capacity, together with its successors in such capacity, the “Collateral Agent”).

RECITALS

A.           The Pledgor, the Collateral Agent and certain other lenders (collectively, “Lenders”) are parties to that certain Amended and Restated Credit Agreement, dated as of the date hereof (as may be further amended or modified, collectively, the “Credit Agreement”).

B.           For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Pledgor has agreed to pledge and grant, and, pursuant to this Agreement, does hereby pledge and grant, a first priority security interest in the Collateral (as defined below) as security for the Obligations.

Accordingly, the parties hereto agree as follows:

Section 1.               Definitions.

“Certificated Securities” shall mean the Pledged Securities identified on Schedule 2 attached hereto.

“Collateral” shall have the meaning ascribed thereto in Section 2 hereof.

“Obligations” shall have the meaning ascribed thereto in the Credit Agreement.

“Pledged Securities” shall mean the assets as described on Schedule 1 attached hereto.

“Secured Parties” shall have the meaning ascribed thereto in the Credit Agreement.

“Securities Account Control Agreement” shall mean that certain Securities Account Control Agreement in respect of account number 725839.1 held with the Securities Intermediary, among the Pledgor, the Collateral Agent and the Securities Intermediary, dated as of the date hereof.

“Securities Account” shall have the meaning ascribed thereto in the Credit Agreement.

“Securities Intermediary” shall mean Bank of America, National Association

“Securities Rights” means all voting and other rights and remedies in respect of any of the Pledged Securities, and all securities, interest or other distributions and any other right or property which the Pledgor shall receive or shall become entitled to receive for any reason whatsoever with respect to, in replacement for, in substitution for or in exchange for any of the Pledged Securities, in which the Pledgor now has or hereafter acquires any right.

“UCC-1 Financing Statements” shall mean the UCC-1 Financing Statements filed to perfect the security interests granted herein.

“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York.

Capitalized terms used but not defined herein have the meanings assigned to such terms in the Credit Agreement.

Section 2.               Pledge and Delivery of Collateral.

2.1           The Pledge.  As security for the prompt payment in full when due of the Obligations, the Pledgor hereby pledges, assigns and grants to the Collateral Agent, for the benefit of the Secured Parties, a security interest in all of the Pledgor’s right, title and interest in the following property wherever located (all being collectively referred to herein as “Collateral”):

(i)           all Pledged Securities;

(ii)          the Securities Account, all “financial assets” (as defined in the Uniform Commercial Code) and cash credited to the Securities Account;

(iii)         all “investment property”, “instruments”, “general intangibles”, “accounts”, “chattel paper” and “supporting obligations” (each, as defined in the Uniform Commercial Code) and all Securities Rights, in each case, relating to or constituting any and all of the foregoing set forth in items (i) and (ii) of this Section 2.1; and

(iv)         any and all interest on, and proceeds (including, without limitation, condemnation proceeds) of, any and all of the foregoing set forth in items (i) through (iii) of this Section 2.1;

in each case whether now owned or hereafter acquired, now existing or hereafter created and wherever located.

2.2           Delivery of the Collateral.  All Pledged Securities (including without limitation, all Certificated Securities), shall be credited to and held at all times in the Securities Account on behalf of the Collateral Agent for the benefit of the Secured Parties, and evidence of such credit and holding shall be delivered to the Collateral Agent from the Securities Intermediary.

Section 3.               Representations and Warranties.  The Pledgor represents and warrants as of the date hereof that:

(a)           The execution and delivery of this Agreement and the performance of the obligations hereunder (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any Person, except such as have been obtained or made and are in full force and effect, (ii) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Pledgor or any order of any Governmental Authority, and (iii) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Pledgor or any of its Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by the Pledgor or any of its Subsidiaries;

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(b)           Schedule I sets forth an accurate description of the Pledged Securities.  The Pledgor has not assigned, pledged or otherwise conveyed or encumbered the Collateral to any other Person other than the Collateral Agent under this Agreement, and the Pledgor is the record and beneficial owner of, and has good and marketable title to, the Collateral free and clear of any and all Liens or options in favor of, or claims of, any other Person, except the Lien created by this Agreement;

(c)           the provisions of this Agreement are effective to create in favor of the Collateral Agent a valid security interest in all right, title and interest of the Pledgor in, to and under the Collateral;

(d)           upon receipt by the Securities Intermediary of the Pledged Securities pursuant to Section 2.2 of this Agreement, by virtue of this Agreement and the Control Agreement, the Lien granted pursuant to this Agreement will constitute a valid, perfected first-priority Lien on the Collateral, enforceable as such against all creditors of the Pledgor and any persons purporting to purchase any of such Collateral;

(e)           the principal place of business and chief executive office of the Pledgor is 410 Park Avenue, 14th Floor, New York, New York 10022-9442; and

(f)           the exact legal name of the Pledgor is Capital Trust, Inc.

Section 4.               Covenants.  In furtherance of the grant of the pledge and security interest pursuant to Section 2 hereof, the Pledgor hereby agrees with the Collateral Agent, for the benefit of the Secured Parties, as follows:

4.1           Delivery and Other Perfection.  The Pledgor shall, and hereby authorizes the Collateral Agent to, give, execute, deliver, file and/or record any financing statement, notice, instrument, document, agreement or other papers that may be necessary (in the reasonable judgment of the Collateral Agent) to create, preserve or perfect the security interest granted pursuant hereto or, upon the occurrence and during the continuance of an Event of Default, to enable the Collateral Agent to exercise and enforce its rights hereunder with respect to such pledge and security interest, including, without limitation, causing any or all of the Collateral to be transferred of record into the name of the Collateral Agent or its nominee.  The Pledgor hereby authorizes the Collateral Agent to file any financing statement or continuation statement without the signature of the Pledgor to the extent permitted by law.

4.2           Sale of Collateral; Liens.  Without the prior written consent of the Collateral Agent, the Pledgor shall not, directly or indirectly, except as otherwise permitted by this Agreement (i) sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to, the Collateral, or (ii) create, incur, authorize or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Collateral, or any interest therein, except for the Lien provided for by this Agreement.  The Pledgor shall defend the right, title and interest of the Collateral Agent in and to the Collateral against the claims and demands of all persons whomsoever.

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4.3           Use of Collateral.  The Pledgor will not remove any Collateral from the Securities Account once such Collateral is credited thereto, except Distributions (as defined in the Control Agreement) in accordance with the terms of the Control Agreement.

4.4           Pledged Securities.

(a)           So long as no Event of Default has occurred and is continuing Pledgor shall have the right to receive any payments with respect to any Pledged Securities and apply such payments on its own account and to its benefit.

(b)           So long as no Event of Default has occurred and is continuing, all payments received by the Pledgor with respect to the Collateral shall be deposited directly into the Securities Account or such other account as designated by the Pledgor and, absent any Event of Default, shall be swept to Debtor’s account at the Securities Intermediary within two (2) Business Days.

(c)           The Pledgor will not make or agree to make any discount, credit or other reduction in the original amount owing on any Pledged Securities or accept in satisfaction of any Pledged Securities less than the original amount thereof.

(d)           Except as otherwise provided in this Security Agreement, the Pledgor will collect and enforce, at the Pledgor’s sole expense, all amounts due or hereafter due to the Pledgor under the Pledged Securities.

(e)           If to the knowledge of the Pledgor, any dispute, setoff, claim, counterclaim or defense exists or has been asserted or threatened with respect to any Pledged Securities, the Pledgor will promptly disclose such fact to the Collateral Agent in writing, electronic or otherwise.

4.5           Change in Corporate Existence, Type or Jurisdiction of Organization, Location, Name.  The Pledgor will:

(a)           preserve its existence and corporate structure as in effect on the Restatement Effective Date;

(b)           not change its jurisdiction of organization;

(c)           not maintain its place of business (if it has only one) or its chief executive office (if it has more than one place of business) at a location other than the location specified in the Credit Agreement; and

(d)           not change its name or its mailing address;

unless, in each such case, the Pledgor shall have given the Collateral Agent not less than thirty (30) days’ prior written notice of such event or occurrence and the Collateral Agent shall have either (x) reasonably determined that such event or occurrence will not adversely affect the validity, perfection or priority of the Collateral Agent’s security interest in the Collateral, or (y) taken such steps (with the cooperation of such Pledgor to the extent necessary or advisable) as are necessary or advisable to properly maintain the validity, perfection and priority of the Collateral Agent’s security interest in the Collateral owned by the Pledgor.

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Section 5.               Events of Default, Remedies, etc.  During the period during which an Event of Default shall have occurred and be continuing, in addition to the rights and remedies set forth in the Credit Agreement:

(a)           The Collateral Agent, for the benefit of the Secured Parties, in addition to the rights and remedies set forth in the Credit Agreement, shall have all of the rights and remedies with respect to the Collateral of a secured party under the Uniform Commercial Code (whether or not said Uniform Commercial Code is in effect in the jurisdiction where the rights and remedies are asserted) and such additional rights and remedies to which a secured party is entitled under the laws in effect in any jurisdiction where any rights and remedies hereunder may be asserted, including, without limitation, the right, to the maximum extent permitted by law, to exercise all voting, consensual and other powers of ownership pertaining to the Collateral as if the Collateral Agent, for the benefit of the Secured Parties, were the sole and absolute owner thereof (and the Pledgor agrees to take all such action as may be appropriate to give effect to such right);

(b)           The Collateral Agent in its discretion may, in its name or in the name of the Pledgor or otherwise, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for any of the Collateral, but shall be under no obligation to do so;

(c)           The Collateral Agent may, upon ten (10) days’ prior written notice to the Pledgor of the time and place (which notice the Pledgor acknowledges as reasonable and sufficient), with respect to the Collateral or any part thereof which shall then be or shall thereafter come into the possession, custody or control of the Collateral Agent or any of its agents, sell, assign or otherwise dispose of all or any part of such Collateral, at such place or places as the Collateral Agent deems best, and for cash or on credit or for future delivery, at public or private sale, without demand of performance or notice of intention to effect any such disposition or of time or place thereof (except such notice as is required above or by applicable statute and cannot be waived) and the Collateral Agent or anyone else may be the purchaser, assignee or recipient of any or all of the Collateral so disposed of at any public sale (or, to the extent permitted by law, at any private sale), and thereafter hold the same absolutely, free from any claim or right of whatsoever kind, including any right or equity of redemption (statutory or otherwise), of the Pledgor, any such demand, notice or right and equity being hereby expressly waived and released.  Unless prohibited by applicable law, the Collateral Agent may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned;

(d)           If the Collateral Agent shall so request in writing, the Pledgor agrees to execute and deliver to the Collateral Agent appropriate payment direction and other orders and documents to provide for all Collateral, including without limitation any amounts in the Securities Account, to be applied as directed by the Collateral Agent in its sole discretion.  The foregoing authorization and instructions are irrevocable and may not be modified in any manner other than by the Collateral Agent sending to the Pledgor a notice terminating such authorization and direction;

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(e)           The Collateral Agent may exercise all rights, powers and privileges to the same extent as the Pledgor is entitled to exercise such rights, powers and privileges with respect to the Pledged Securities;

(f)           Except as required applicable law, the Collateral Agent shall not be required to take steps necessary to preserve any rights against prior parties to any of the Collateral;

(g)           In enforcing any rights hereunder, the Collateral Agent shall not be required to resort to any particular security, right or remedy through foreclosure or otherwise or to proceed in any particular order of priority, or otherwise act or refrain from acting, and, to the extent permitted by law, the Pledgor hereby waives and releases any right to a marshaling of assets or a sale in inverse order of alienation;

(h)           The Collateral Agent may register any or all of the Pledged Securities in the name of the Collateral Agent or its nominee without any further consent of the Pledgor;

(i)            The Collateral Agent or its nominee at any time, without notice, to exercise or refrain from exercising any and all voting and other consensual rights pertaining to the Collateral owned by the Pledgor or any part thereof, and to receive all interest and distributions in respect of such Collateral;

(j)            The Pledgor shall assemble and make available to the Collateral Agent the Collateral and all records relating thereto at any place or places specified by the Collateral Agent;

(k)           The Collateral Agent may at any time, by giving the Pledgor written notice, elect to require that the Pledged Securities be paid directly to the Collateral Agent for the benefit of the Secured Parties.  In such event, the Pledgor shall, and shall permit the Collateral Agent to, promptly notify the obligors under the Pledged Securities of the Collateral Agent’s interest therein and direct such obligors to make payment of all amounts then or thereafter due under such Pledged Securities directly to the Collateral Agent.  Upon receipt of any such notice from the Collateral Agent, the Pledgor shall thereafter hold in trust for the Collateral Agent, on behalf of the Secured Parties, all amounts and proceeds received by it with respect to the Pledged Securities and other Collateral and immediately and at all times thereafter deliver to the Collateral Agent all such amounts and proceeds in the same form as so received, whether by cash, check, draft or otherwise, with any necessary endorsements;

(l)            The Collateral Agent may require all cash proceeds of the Collateral to be deposited in a special non-interest bearing cash collateral account with the Collateral Agent and held there as security for the Obligations.  The Pledgor shall not have any control whatsoever over said cash collateral account.  The Collateral Agent may (and shall, at the direction of the Required Lenders), from time to time, apply the collected balances in said cash collateral account to the payment of the Obligations whether or not the Obligations shall then be due; and

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(m)           The Collateral Agent, on behalf of the Secured Parties, may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral, and such compliance will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

The proceeds of each collection, sale or other disposition under this Section 5 shall be applied by the Collateral Agent to the Obligations pursuant to Section 6 hereof.

Section 6.              Application of Proceeds.  Except as otherwise herein expressly provided, the proceeds of any collection, sale or other realization of all or any part of the Collateral pursuant hereto, and any other cash at the time held by the Collateral Agent under this Section 4, shall be applied by the Collateral Agent:

(i)           First, to the payment of the actual and out-of-pocket costs and expenses of such collection, sale or other realization, including, without limitation, reasonable out of pocket costs and expenses of the Collateral Agent and the fees and expenses of its agents and counsel, and all expenses, and advances made or incurred by the Collateral Agent in connection therewith;

(ii)           Next, to the payment in full of the Obligations; and

(iii)           Finally, to the payment to the Pledgor, or its successors or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining.

As used in this Section 6, “proceeds” of Collateral shall mean cash, securities and other property realized in respect of, and distributions in kind of, the Collateral.

Section 7.              Attorney in Fact.  Without limiting any rights or powers granted by this Agreement to the Collateral Agent, upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall be deemed appointed, which appointment as attorney-in-fact is irrevocable and coupled with an interest, the attorney-in-fact of the Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments which the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof.  Without limiting the generality of the foregoing, so long as the Collateral Agent shall be entitled under this Section 7 to make collections in respect of the Collateral, the Collateral Agent shall have the right and power to receive, endorse and collect all checks made payable to the order of the Pledgor representing any payment in respect of the Collateral or any part thereof and to give full discharge for the same.

Section 8.              Termination.  When the Obligations shall have been indefeasibly paid in full in cash, and the Credit Agreement has terminated, the Collateral Agent shall forthwith cause to be assigned, transferred and delivered, against receipt but without any recourse, warranty or representation whatsoever any remaining Collateral and money received in respect thereof, to or on the order of the Pledgor.

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Section 9.              Further Assurances.  The Pledgor agrees that, from time to time upon the written request of the Collateral Agent, the Pledgor will execute and deliver such further documents and do such other acts and things as the Collateral Agent may reasonably request in order fully to effect the purposes of this Agreement. Without limiting the foregoing, on or before March 31, 2009, the Pledgor shall deliver to the Collateral Agent executed transfer documents under each indenture or other document governing the securities constituting Collateral, undated and endorsed “in blank”, as reasonably requested by the Collateral Agent.

Section 10.            Additional Agreements Concerning UCC’s.  The Pledgor authorizes the Collateral Agent to file UCC-1 Financing Statements describing the Collateral and for purposes of perfecting the security interest in the Collateral granted by the Pledgor to the Collateral Agent pursuant to this Agreement.

Section 11.             Miscellaneous.

11.1          No Waiver.  No failure or delay by the Collateral Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Collateral Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have.

11.2           Governing Law; Jurisdiction; Consent to Service of Process.  This Agreement shall be construed in accordance with and governed by the law of the State of New York.  The provisions set forth in Section 9.09(b), (c) and (d) of the Credit Agreement with respect to consent to jurisdiction and service of process are hereby incorporated herein and made applicable hereto, mutatis mutandis.

11.3           Notices.  All notices, consents, approvals and requests required or permitted hereunder shall be given in the manner and to the addresses set forth in Section 9.01 of the Credit Agreement.

11.4           Waivers, etc.  No waiver of any provision of this Agreement or consent to any departure by the Pledgor therefrom shall in any event be effective unless the same shall be permitted in writing by the Pledgor and the Collateral Agent, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, no action or inaction by the Collateral Agent shall be construed as a waiver of any Default or Event of Default, regardless of whether the Collateral Agent or any Lender may have had notice or knowledge of such Default or Event of Default at the time.

11.5           Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns of the Collateral Agent, except that the Pledgor may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Collateral Agent (and any attempted assignment or transfer by the Pledgor without such consent shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, and, to the extent expressly contemplated hereby, the Secured Parties and the Related Parties of each of the Collateral Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

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11.6           Indemnification.  Without limiting the provisions of Section 9.03 of the Credit Agreement, the Pledgor shall indemnify the Collateral Agent and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all actual losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder, (ii) relating to or arising out of the acts or omissions of the Pledgor under this Agreement, (iii) resulting from the ownership of or lien on any Collateral, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

11.7           Taxes and Expenses.  Any taxes (including income taxes) payable or ruled payable by Federal or State authority in respect of this Security Agreement shall be paid by the Pledgor, together with interest and penalties, if any, subject to Pledgor’s right to contest such taxes pursuant to Section 5.04 of the Credit Agreement.  The Pledgor shall reimburse the Collateral Agent for any and all reasonable out-of-pocket expenses (including reasonable attorneys’, auditors’ and accountants’ fees) paid or incurred by the Collateral Agent in connection with the preparation, execution, delivery, administration, collection and enforcement of this Security Agreement and in the administration, collection, preservation or sale of the Collateral.  Any and all costs and expenses incurred by the Pledgor in the performance of actions required pursuant to the terms hereof shall be borne solely by the Pledgor.

11.8           Severability.  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

11.9           Counterparts; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement shall become effective when it shall have been executed by the Collateral Agent and when the Collateral Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

9

11.10         Trial by Jury.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

11.11         Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

11.12         Secured Party Performance of Pledgor’s Obligations.  Without having any obligation to do so, the Collateral Agent may perform or pay any obligation which the Pledgor has agreed to perform or pay in this Agreement and the Pledgor shall reimburse the Collateral Agent for any reasonable amounts paid by the Collateral Agent pursuant to this Section 11.12.  The Pledgor’s obligation to reimburse the Collateral Agent pursuant to the preceding sentence shall be an Obligation payable on demand.

11.13         Collateral Agent.  WestLB AG, New York Branch has been appointed Collateral Agent for the Secured Parties hereunder pursuant to Article VIII of the Credit Agreement.  It is expressly understood and agreed by the parties to this Security Agreement that any authority conferred upon the Collateral Agent hereunder is subject to the terms of the delegation of authority made by the Secured Parties to the Collateral Agent pursuant to the Credit Agreement, and that the Collateral Agent has agreed to act (and any successor Collateral Agent shall act) as such hereunder only on the express conditions contained in such Article VIII.  Any successor Collateral Agent appointed pursuant to Article VIII of the Credit Agreement shall be entitled to all the rights, interests and benefits of the Collateral Agent hereunder.

[THE REMAINDER OF THE PAGE IS INTENTIONALLY BLANK]

10

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

PLEDGOR
CAPITAL TRUST, INC., a Maryland corporation
By:	/s/ Geoffrey G. Jervis
	Name:  Geoffrey G. Jervis
	Title:  Chief Financial Officer

S-1

COLLATERAL AGENT
WESTLB AG, NEW YORK BRANCH
By:	/s/ Christian Reuhmer
	Name:  Christian Reuhmer
	Title:  Managing Director

By:	/s/ Petra Beckert
	Name:  Petra Beckert
	Title:  Executive Director

S-2

EX-21.1

Exhibit 21.1

	Jurisdiction of	D/B/A
Entity	Incorporation	Jurisdiction
Capital Trust RE CDO 2004-1 Corp.	Delaware
Capital Trust RE CDO 2004-1 Ltd.	Cayman Islands
Capital Trust RE CDO 2005-1 Ltd.	Cayman Islands
Capital Trust RE CDO Depositor	Delaware
CDO V	Cayman Islands
Crossing HH, LLC	Delaware
CT Asia Fund Manager, LLC	Delaware
CT Bracor Holding LLC	Delaware
CT BSI Funding Corp.	Delaware
CT CDO III Corp.	Delaware
CT CDO III Ltd.	Cayman Islands
CT CDO III, LLC	Delaware
CT CDO IV Corp.	Delaware
CT CDO IV Ltd.	Cayman Islands
CT CDO IV, LLC	Delaware
CT High Grade Mezzanine Manager, LLC	Delaware
CT High Grade Partners II Manager, LLC	Delaware
CT High Grade Partners II MM, LLC	Delaware
CT Investment Management Co., LLC	Delaware
CT Large Loan Manager, LLC	Delaware
CT LF Funding Corp.	Delaware
CT LH Finance Sub, LLC	Delaware
CT OPI GP, LLC	Delaware
CT OPI Investor, LLC	Delaware
CT OPI Manager, LLC	Delaware
CT Preferred Trust I	Delaware
CT Preferred Trust II	Delaware
CT Public Preferred Trust I	Maryland
CT Public Preferred Trust II	Maryland
CT Public Preferred Trust III	Maryland
CT RE CDO 2004-1 Sub, LLC	Delaware
CT RE CDO 2005-1 Corp.	Delaware
CT RE CDO 2005-1 Sub, LLC	Delaware
CT Rosarito LLC	Delaware
CT Rosarito Retail LLC	Delaware
CTAMPI MS, Ltd.	Cayman Islands
CT-F2-GP, LLC	Delaware
CT-F2-LP, LLC	Delaware
CTIMCO China RO, LLC	Delaware
CTIMCO China RO, Ltd.	Cayman Islands
CTIMCO CTX Manager, LLC	Delaware
CTIMCO Employee Sub, LLC	Delaware
CTIMCO Operating Subsidiary, LLC	Delaware
CTX CDO I Manager, LLC	Delaware
CTX Co-Invest Sub, LLC	Delaware
CTX Fund GP, LLC	Delaware
PRN Capital, LLC	Delaware
VCG Montreal Management, Inc.	New York
VIC, Inc.	Delaware	Vic NY
Victor Capital Group, LP	Delaware

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements on Forms S-3 (Nos. 333-103662, 333-106970, 333-147954 and 333-151331) and in the related Prospectuses and on Forms S-8 (Nos. 333-39743, 333-72725, 333-120145 and 333-144929) pertaining to: (i) the Second Amended and Restated 1997 Long Term Incentive Stock Plan, Amended and Restated 1997 Non-Employee Director Stock Plan; (ii) the 1998 Employee Stock Purchase Plan, 1998 Non-Employee Stock Purchase Plan, and Stock Purchase Loan Plan; (iii) the Amended and Restated 2004 Long-Term Incentive Plan; and (iv) the Amended and Restated 2007 Long-Term Incentive Plan of Capital Trust, Inc. and Subsidiaries of our reports dated March 16, 2009, with respect to the consolidated financial statements and schedule of Capital Trust, Inc. and Subsidiaries, and the effectiveness of internal control over financial reporting of Capital Trust, Inc. and Subsidiaries, included in this Annual Report (Form 10-K) for the year ended December 31, 2008.

	/s/ Ernst & Young LLP
New York, New York
March 16, 2009

EX-31.1

Exhibit 31.1

CERTIFICATION

PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John R. Klopp, certify that:

1. I have reviewed this annual report on Form 10-K of Capital Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 16, 2009

/s/ John R. Klopp

John R. Klopp

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

PURSUANT TO 17 CFR 240.13a-14

PROMULGATED UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Geoffrey G. Jervis, certify that:

1. I have reviewed this annual report on Form 10-K of Capital Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 16, 2009

/s/ Geoffrey G. Jervis

Geoffrey G. Jervis

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Capital Trust, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John R. Klopp, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John R. Klopp

John R. Klopp

Chief Executive Officer

March 16, 2009

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Capital Trust, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Geoffrey G. Jervis, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Geoffrey G. Jervis

GeoffreyG. Jervis

Chief Financial Officer

March 16, 2009