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FORBEARANCE AGREEMENT
AND AMENDMENT
THIS FORBEARANCE AGREEMENT AND AMENDMENT
(this " Agreement ") is entered into as of February 14, 2008
among QUADRA QRS, LLC, a Maryland limited liability company
(together with its successors and permitted assigns, " QRS
"), QUADRA REALTY TRUST, INC., a Maryland corporation (together
with its successors and permitted assigns, the " Trust ",
and collectively with QRS, " Quadra "), and WACHOVIA BANK,
NATIONAL ASSOCIATION (together with its successors and assigns, "
Wachovia "). Unless otherwise expressly provided herein, all
capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to such terms in the Repurchase Agreement
referred to below.
RECITALS
A . Quadra and Wachovia
have entered into that certain Master Repurchase Agreement dated as
of March 29, 2007 (as amended and modified from time to time, the "
Repurchase Agreement ").
B . Quadra and Wachovia
have entered into that certain ISDA Master Agreement and related
Schedule, each dated as of May 7, 2007, and all other documents
executed in connection therewith (as amended and modified from time
to time, including pursuant to the First Amendment (defined below),
the " Master Agreement " and, together with the Credit
Support Annex (defined below), the " Swap Documents
").
C . An Event of Default (as
defined in the Repurchase Agreement) exists under Section 10.1
(v) of the Repurchase Agreement arising from the occurrence of
a Change of Control and Section 10.1 (p) of the
Repurchase Agreement arising from the occurrence of Events of
Default (as defined in the Master Agreement) under the Master
Agreement (the " Existing Repurchase Event of Default
").
D . An Event of Default (as
defined in the Master Agreement) exists under Sections
5(a)(iii)(1) and 5(a)(vi) of the Master Agreement
arising from the occurrence of an Events of Default (as defined in
the Repurchase Agreement) under the Repurchase Agreement (the "
Existing Swap Event of Default ", and, together with the
Existing Repurchase Event of Default, the " Existing Events of
Default ").
E . Quadra has requested
that Wachovia (i) forbear from exercising its rights and remedies
under the Repurchase Documents and Master Agreement, respectively,
arising in connection with the Existing Events of Default and (ii)
modify the Repurchase Agreement and Master Agreement as set forth
herein..
F . Wachovia has agreed to
do so, but only pursuant to the terms and conditions set forth
herein.
G . QRS enters this
Agreement in its capacities as a Seller under the Repurchase
Documents and a Party B under the Master Agreement, the Trust
enters into this Agreement as a Seller, Guarantor and Pledgor under
the Repurchase Documents and a Party B under the Master Agreement,
and Wachovia enters this Agreement as a Purchaser under the
Repurchase Documents and Party A under the Master Agreement. The
Guarantor and Pledgor under the Repurchase Documents join in this
Agreement to evidence their acknowledgement and agreement to the
terms hereof. The Quadra entities in all of their capacities under
the Repurchase Documents and Master Agreement are collectively
referred to herein as the " Quadra Entities ".
AGREEMENT
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1 . Estoppel,
Acknowledgement and Reaffirmation . Each of the Quadra Entities
hereby acknowledges and agrees that (i) as of January 28, 2008, the
Existing Repurchase Event of Default is an Event of Default (as
defined in the Repurchase Agreement) under the Repurchase
Agreement, the Existing Repurchase Event of Default currently
exists and the Existing Repurchase Event of Default has not been
waived by Wachovia, (ii) as of January 28, 2008, the Existing Swap
Event of Default is an Event of Default (as defined in the Master
Agreement) under the Master Agreement, the Existing Swap Event of
Default currently exists and the Existing Swap Event of Default has
not been waived by Wachovia, (iii) as of the date hereof, the total
outstanding principal balance of the Obligations under the
Repurchase Documents is not less than $365,614,458.00, which amount
constitutes a valid and subsisting obligation of Quadra and
Guarantor to Wachovia that is not subject to any credits, offsets,
defenses, claims, counterclaims or adjustments of any kind and (iv)
as of the date hereof, the total notional amount of obligations
covered by the Master Agreement is not less than $54,140,000, which
amount constitutes a valid and subsisting obligation of Quadra to
Wachovia that is not subject to any credits, offsets, defenses,
claims, counterclaims or adjustments of any kind. Each of the
Quadra Entities hereby acknowledges its obligations under the
Repurchase Documents and Master Agreement.
2 . Forbearance .
Subject to the terms and conditions set forth herein, Wachovia
hereby agrees that, during the Forbearance Period (as defined
below), Wachovia shall forbear from exercising any and all rights
or remedies available to Wachovia under the Repurchase Documents
and the Master Agreement as a result of the Existing Events of
Default (including, without limitation, the collection of default
interest under the Repurchase Documents and Master Agreement), but
only to the extent that such rights or remedies arise exclusively
as a result of the existence or continuation of the Existing Events
of Default; provided , however; (i) that Wachovia
shall be free to exercise any or all of Wachovia's rights and
remedies (including, without limitation, the collection of default
interest under the Repurchase Documents and Swap Documents from and
after the occurrence of a Forbearance Termination Event) under the
Repurchase Documents, Master Agreement or Applicable Law arising on
account of the Existing Events of Default (or any other event of
default) at any time upon or after the occurrence of a Forbearance
Termination Event (as defined below), (ii) in connection with the
Repurchase Documents, Wachovia shall have no obligation to purchase
or finance any new Asset or make any advance of Purchase Price or
other amounts with respect to any existing Purchased Assets or new
Assets unless consented to in writing by Wachovia, which consent
may be granted or refused by Wachovia in its sole and absolute
discretion, (iii) in connection with the Master Agreement, Wachovia
shall have no obligation to enter into a Transaction (as defined in
the Master Agreement) unless consented to in writing by Wachovia,
which consent may be granted or refused by Wachovia in its sole and
absolute discretion, and (iv) no amounts under clause
NINTH of Section 2.8 of the Repurchase
Agreement shall be transferred to the Operating Account or the
Quadra Entities, but, instead, all such amounts shall be applied to
the outstanding Obligations under the Repurchase Documents and the
obligations and liabilities under the Swap Documents. Wachovia
agrees to waive any default interest that accrued prior to the date
of this Agreement under the Repurchase Documents and the Master
Agreement as a result of the Existing Events of Default.
Notwithstanding Wachovia's agreement to forbear on account of the
Existing Events of Default subject to the terms and conditions set
forth herein, the Existing Events of Default shall continue to
exist during the Forbearance Period for all purposes under the
Repurchase Agreement and Master Agreement, including any
limitations on actions of the Quadra Entities that may be triggered
upon the existence of an Event of Default (as defined in the
Repurchase Agreement) or Event of Default (as defined under the
Master Agreement). The Quadra Entities acknowledge and agree that
this Agreement does not constitute a waiver of the Existing Events
of Default, a waiver of any other Event of Default (as defined in
the Repurchase Agreement) or Event of Default (as defined in the
Master Agreement) (whether now or in the future) or a waiver or
forbearance (except as expressly set forth herein) of any other
term, provision, duty, obligation, covenant, liability, right,
remedy, power or remedy of any party to the Repurchase Documents
and Master Agreement, and the forbearance evidenced hereby shall
not be a waiver of Wachovia's rights to refuse to enter into any
future forbearance agreements. For the avoidance of doubt, this
Agreement shall not limit, restrict or impair in any way any of
Wachovia's rights under the Repurchase Documents and/or Swap
Documents which are unrelated to rights and remedies upon an Event
of Default under either the Repurchase Documents or the Swap
Documents, including, without limitation, Wachovia's rights to mark
to market and rights to make margin calls. The Quadra Entities
acknowledge and agree that they may not sell, finance or otherwise
transfer any Purchased Asset without Wachovia's prior written
consent thereto in its sole and absolute discretion and Wachovia
shall not release its Lien on any Purchased Asset until all
Obligations under the Repurchase Documents and all obligations and
liabilities then due and payable under the Swap Documents are paid
in full.
3 . Forbearance
Termination Events . Nothing set forth herein or contemplated
hereby is intended to constitute an agreement by Wachovia to
forbear from exercising any of the rights or remedies available to
Wachovia under the Repurchase Documents, Master Agreement or
Applicable Law (all of which rights and remedies are hereby
expressly reserved by Wachovia) upon or after the occurrence of a
Forbearance Termination Event. As used herein, a " Forbearance
Termination Event " shall mean the occurrence of any of the
following: (a) any breach of or default under any term or provision
of this Agreement by any Quadra Entity, (b) any Default (as defined
in the Repurchase Agreement), any Event of Default (as defined in
the Repurchase Agreement) under any of the Repurchase Documents
other than the Existing Repurchase Event of Default, any
Termination Event (as defined in the Master Agreement) or any Event
of Default (as defined in the Master Agreement) under the Swap
Documents other than the Existing Swap Event of Default, (c) any
breach of a representation, warranty or covenant contained in this
Agreement by any Quadra Entity, (d) the earlier of (i) sixty (60)
calendar days from the date of this Agreement and (ii) the date on
which any of the Quadra Entities enters into a contract or
arrangement with a Person (other than the Hypo Entities, as defined
below) for, or that, upon consummation, would result in (A) a
merger, consolidation, amalgamation or similar event of any Quadra
Entity or (B) any Change of Control or (e) the Quadra Entities fail
to pay all Obligations due under the Repurchase Documents and all
obligations and liabilities due under the Swap Documents in full
within one (1) Business Day of the occurrence of any of the
following: (i) the Plan of Merger (defined below) is not
consummated for any reason, (ii) the Agreement and Plan of Merger,
dated as of January 28, 2008, executed in connection with the Plan
of Merger is terminated, cancelled, rescinded or is unenforceable
for any reason or (iii) the tender offer described in the Offer to
Purchase for Cash dated February 13, 2008 initiated in connection
with the Plan of Merger fails, is unsuccessful or is otherwise not
consummated for any reason. The period from the date hereof to (but
excluding) the date that a Forbearance Termination Event occurs
shall be referred to as the " Forbearance Period
".
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