Exhibit 10.16

 

AGREEMENT IN RESPECT OF SALE AND TRANSFER

IN DISPOSITION OF COLLATERAL UNDER UNIFORM COMMERCIAL CODE

 

THIS AGREEMENT IN RESPECT OF SALE AND TRANSFER IN DISPOSITION OF COLLATERAL
UNDER UNIFORM COMMERCIAL CODE (“Agreement”) is made and entered into as of
December [__], 2004 (the “Effective Date”) by and between WELLS FARGO FOOTHILL,
INC., a California corporation (formerly, Foothill Capital Corporation and
hereinafter called “Secured Party”) and KELTIC FINANCIAL PARTNERS, LP, a
Delaware limited partnership (“Buyer”), joined as provided herein by EQUINOX
BUSINESS CREDIT CORPORATION, a New Jersey corporation (“Debtor”) and, as
follows.

 

RECITALS

 

This Agreement is made and executed in the following circumstances.

 

A.                                   Debtor is in the business of originating,
funding and servicing loans to borrowers (“Obligors”) in the ordinary course of
business.  On the Effective Date, Debtor is owner and holder of each of the
Loans (defined below) and the Loan Documents (defined below), respectively.

 

B.                                     Debtor and Secured Party previously
entered into the certain Loan and Security Agreement dated as of December 19,
2001 (as amended, the “Loan and Security Agreement”), pursuant to which, subject
to the terms thereof, at the request of Debtor, Secured Party from time to time
has made loans and otherwise extended credit to Debtor for the purpose, among
other things, of providing financing to Debtor for funding the Loans.  Pursuant
to the Loan and Security Agreement, and to secure payment and performance of all
of Debtor’s obligations thereunder, Debtor granted to Secured Party a first
priority, perfected, continuing security interest in, among other property of
Debtor, all of Debtor’s right, title and interest in all Loans, together with
the Loan Documents and the Obligor Collateral, including, but not limited to,
all instruments and promissory notes, drafts, chattel paper, letters of credit,
letter of credit rights, general intangibles, documents and records and
supporting obligations evidencing or relating to the Loans, and all proceeds
thereof, including without limitation, cash proceeds (collectively, the “Related
Collateral”).

 

C.                                     Pursuant to the express terms of the Loan
and Security Agreement:

 

(i)                                     on December 19, 2004 (the “Maturity
Date”), all obligations and indebtedness owing by Debtor to Secured Party
thereunder immediately become due and payable without notice or demand or
further action by Secured Party; and

 

(ii)                                  on and after the Maturity Date, Secured
Party has no obligation to make loans or extend credit to Debtor.

 

D.                                    Secured Party has previously notified
Debtor that:

 

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(i)                                     Secured Party will not agree to extend
the term for financing, or otherwise extend credit to Debtor, under the Loan and
Security Agreement beyond the Maturity Date; and

 

(ii)                                  In the event all obligations and
indebtedness owing by Debtor to Secured Party under the Loan and Security
Agreement are not timely paid in full on or before the Maturity Date, Secured
Party intends to exercise any and all remedies available to it pursuant to the
Loan and Security Agreement and applicable law.

 

E.                                      In connection with the recitals set
forth in clauses (C) and (D) preceding:

 

(i)                                     Debtor has made diligent inquiry and
used its best efforts to obtain alternative financing to replace the financing
provided by the Loan and Security Agreement and to refinance and pay all of
Debtor’s obligations and indebtedness thereunder.  Debtor has concluded, in its
business judgment, that Debtor is unable to obtain any such financing;

 

(ii)                                  Debtor is not able to obtain additional
cash contributions from its sole shareholder; and

 

(iii)                               On and after the Maturity Date, Debtor has
no source for cash needed to meet its obligations to provide financing to
Obligors on the Loans or to continue servicing the Loans.

 

F.                                      In connection with the recitals set
forth in clause (E) preceding, Debtor has made diligent inquiry and used its
best efforts to identify prospective buyers with whom Debtor could negotiate
terms for selling the Loans and use the proceeds thereof to pay all obligations
and indebtedness owing by Debtor to Secured Party under the Loan and Security
Agreement.  Notwithstanding its best efforts, Debtor has been unable to
consummate a sale of the Loans and has concluded, in its business judgment, that
it will be unable to do so prior to the Maturity Date.

 

G.                                     In connection with the recitals set forth
in clauses (E) and (F) preceding, Debtor has determined, in its business
judgment, and has notified Secured Party that:

 

(i)                                     Debtor is, and on and after the Maturity
Date will be, unable to repay all indebtedness owing by Debtor under the Loan
and Security Agreement or otherwise perform its obligations thereunder, and that
therefore, Debtor cannot and will not perform its obligations under the Loan and
Security Agreement; and

 

(ii)                                  Debtor will be unable, on and after the
Maturity Date, to meet its obligations to Obligors to provide financing to
Obligors on the Loans, or to continue servicing the Loans.

 

H.                                    Debtor’s notification to Secured Party
described in clause (G)(i) preceding constituted a total breach by anticipatory
repudiation by Debtor of its obligations under the Loan and Security Agreement
which constituted a default of the Loan and Security Agreement for purposes of
Article 9 of the UCC (defined below), and, pursuant to Section 9-609 of the UCC,

 

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Secured Party therefore has the right to take possession of and sell or
otherwise dispose of the Loans and Related Collateral by private sale pursuant
to the UCC.

 

I.                                         Time is of the essence, in that:

 

(i)                                     Prior to the Maturity Date, Debtor’s
inability to assure Obligors on the Loans that, on and after the Maturity Date,
Debtor will be able to provide financing to Obligors on the Loans is likely to
cause material deterioration in the value of the Related Collateral;

 

(ii)                                  Debtor’s inability to provide financing to
Obligors on the Loans, or continue servicing the Loans, on and after the
Maturity Date is certain to cause material deterioration in the value of the
Loans and Related Collateral, as well as expose Debtor to a material risk of
liability for claims by Obligors; and

 

(iii)                               The orderly transfer of servicing of the
Loans from Debtor to another servicing agent involves transition execution
which, if deferred until on or after the Maturity Date, could cause an
interruption in servicing of the Loans or otherwise impair the ability to
effectively service the Loans on and after the Maturity Date, which would cause
material deterioration in the value of the Loans and Related Collateral.

 

J.                                        Debtor has referred Buyer to Secured
Party as a prospective buyer of the Loans and Related Collateral, with whom
Debtor has had previous negotiations but with respect to whom Debtor was not
able to meet required conditions in order to consummate a sale on or prior to
the Maturity Date.

 

K.                                    Buyer desires to purchase, and Secured
Party is willing to transfer and sell to Buyer, all of Debtor’s right, title and
interest in and to the Loans and Related Collateral, subject to the terms and
conditions of this Agreement.

 

L.                                      Debtor has determined, in its business
judgment, that disposition by Secured Party of the Loans and Related Collateral
to Buyer pursuant to the terms of this Agreement will prevent diminution of
value of the Loans and Related Collateral and maximize the amount of proceeds
recoverable in respect thereof, and is in the best interest of Debtor, its
creditors and its shareholder.

 

NOW THEREFORE, for value received, the receipt and sufficiency of which hereby
is acknowledged, and in consideration of the premises and mutual agreements
herein, Debtor and Secured Party hereby agree as follows:

 

SECTION 1. DEFINITIONS.  FOR THE PURPOSES OF THIS AGREEMENT, THE FOLLOWING TERMS
SHALL HAVE THE MEANINGS SPECIFIED OR REFERRED TO IN THIS SECTION 1.

 

“Adjusted Purchase Price” shall mean the purchase price determined, on the
Purchase Price Adjustment Date, as of the Closing Date and calculated as set
forth in Section 3.2.

 

“Agreement” has the meaning prescribed in the preamble to this Agreement.

 

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“Applicable Law” shall mean any law, statute, ordinance, rule, regulation,
judgment, order, injunction, writ, decree, ruling, assessment or interpretation
of any governmental authority.

 

“Business Day” shall mean any day other than a Saturday or Sunday, or a day on
which national banks are authorized by law or executive order to be closed.

 

“Buyer” has the meaning prescribed in the preamble to this Agreement.

 

“Cash Portion” shall mean the Estimated Purchase Price less the Hold Back
Amount, payable as required by Section 3.1(b).

 

“Closing Date” means the date on which the Bill of Sale and Related Agreements
have been executed and delivered by Secured Party to Buyer as provided by
Section 4.

 

“Coast” means Coast Capital Partners, L.L.C., a Delaware limited liability
company.

 

“Coast Payment Letter” means a letter addressed to Secured Party and Buyer and
consented to by Debtor, executed by Coast, acknowledging that Coast has no
obligation or commitment to extend credit to Debtor, that there is no
indebtedness or other obligation owed to Coast by Debtor, and that Secured Party
and Buyer are authorized to file UCC amendments to terminate any UCC Financing
Statements of record listing Debtor as debtor and Coast as Secured Party.

 

“Debtor” has the meaning prescribed in the preamble to this Agreement.

 

“Deposit” shall mean the sum of Six Thousand Dollars ($6,000.00) which has
previously been delivered to Buyer by Debtor.

 

“Disputed Matters” shall have the meaning set forth in Section 3.2(c).

 

“Earnings” shall mean income received by Buyer on the Portfolio from interest,
loan or termination fees and late charges.

 

“Effective Date” means the date set forth in the preamble to this Agreement.

 

“Estimated Purchase Price” shall have the meaning set forth in Section 3.1(b).

 

“Estoppel Certificates” mean the estoppel certificates, substantially in the
form of Exhibit C, delivered to Secured Party and Buyer by each Obligor in
connection with the Closing of the transaction which is the subject of this
Agreement.

 

“Federal Funds Rate” shall mean, for any date, the average of the Federal Funds
Offer Rate as published in The Wall Street Journal on each of the five (5)
Business Days ending on the day before the relevant date.

 

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“Hold Back Amount” shall mean the sum of Eight Hundred Twenty-Five Thousand
Dollars ($825,000.00).

 

“Laurus” means Laurus Master Fund, Ltd., a Cayman Islands corporation.

 

“Laurus Payment Letter” means a letter addressed to Secured Party, Buyer and
Debtor, executed by Laurus and consented to by Debtor, providing information and
payoff instructions in respect of payment of indebtedness owing by Debtor to
Laurus which is or may be secured by a subordinate security interest in the
Loans, in form and substance satisfactory to Secured Party.

 

“Letters of Credit” shall mean any documentary or standby letter of credit
issued to or for the benefit of Debtor, Secured Party or an Obligor with respect
to a Loan.

 

“LIBOR” shall mean the thirty (30) day London Inter-Bank Offered Rate as quoted
by CitiBank, N.A. in New York City at 11:00 a.m. (New York time) based upon
CitiBank, N.A.’s or an affiliated agency’s or branch’s quotes to prime banks in
the London Inter-Bank Euro-currency Market for Eurodollar deposits.

 

“Lien” shall mean any mortgage, pledge, security interests, lien, charge,
liability, encumbrance, restriction on transfer, claim or option of whatever
nature imposed upon any of the Purchased Assets.

 

“Loans” means the loans identified in Exhibit A to this Agreement and “Loan”
means any one of such Loans.

 

“Loan and Security Agreement” has the meaning prescribed in the Recitals to this
Agreement.

 

“Loan Documents” shall mean the various loan agreements relating to the Loans as
more particularly set forth in Exhibit B, and commitments to make or increase
the principal amounts of any such Loans, including interests in any such Loans
originated or agented by others, together with any Letters of Credit, promissory
notes, equity participation agreements, guaranties, security agreements,
pledges, mortgages and other collateral, and incidental and supporting documents
with respect thereto and all amendments, modifications, extensions, or renewals
thereto, if any; provided, however, that such term shall not include any fees
earned by Debtor or Secured Party and paid by Obligors prior to the Closing Date
under any such agreements, instruments and documents.

 

“Loan Files” shall mean all documents in the possession of the Debtor pertaining
to the lending relationships of the Debtor relating to the Loans, including,
without limitation:

 

(i) the Loan Documents, general credit information, credit records from the
Debtor, payment histories, appraisals, property insurance policies, title
insurance policies or attorney’s title opinions, all availability reports and
supporting documentation submitted by any Obligor to the Debtor, and all field
examination reports and supporting work papers of the Debtor in possession of
the Debtor;

 

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(ii)                                  all sales data, customer lists and
customer information relating to the lending relationships relating to the
Loans, including, for the avoidance of doubt, the Letters of Credit relating
thereto;

 

(iii)                               all of the Records of Debtor (as hereinbelow
defined) (whether written, electronic or otherwise) relating to the Loans,
including, for avoidance of doubt, but without limitation, the Letters of
Credit, the Loan Files (subject, however, to the right of the Secured Party to
retain such copies (but not originals) as may be necessary or advisable for
internal tax and accounting purposes and to satisfy any statutory or regulatory
requirement as to the retention of records), including financial, accounting,
tax and loan transaction records;

 

(iv)                              the Estoppel Certificates; and

 

(v)                                 all deposit or security accounts, lock box
account or other accounts for control of money which constitutes Related
Collateral relating to the Loans assigned to Buyer.

 

“Loss” or “Losses” shall mean, as to a Loan, after (i) an Event of Default (as
defined in the Loan Documents) shall have occurred or (ii) a filing by or
against an Obligor of a bankruptcy, reorganization, receivership, winding up or
liquidation proceeding or any other such analogous proceeding shall have
occurred, using the same policies Buyer uses in making such determination with
regard to other loans in its portfolio, the amount (y) Buyer has reserved, on
its books and records, against the obligations incurred pursuant to the Loan
Documents and related obligations as of the date of determination thereof, and
(z) without duplication, of the actual loss reflected on Buyer’s books and
records after the Buyer has completed the liquidation or abandonment of the
Obligor Collateral with respect to such a Loan.

 

“Loss Adjustment” shall mean the sum of Forty Thousand Dollars ($40,000.00).

 

“Maturity Date” has the meaning prescribed in the Recitals to this Agreement.

 

“Notice of Disagreement” has the meaning set forth in Section 3.2(c.)

 

“Obligor Collateral” shall mean all accounts receivable, inventory, machinery,
equipment, insurance, instruments and promissory notes, drafts, chattel paper,
letters of credit, letter of credit rights, general intangibles, documents and
records and supporting obligations securing the Loans, and all proceeds thereof,
including without limitation, cash proceeds and all other property of Obligors,
or any other person or entity, pledged to Debtor to secure a Loan.

 

“Obligors” has the meaning prescribed in the Recitals to this Agreement.

 

“Party in Interest” means each of Laurus and Coast.

 

“Portfolio” shall mean, as of the date of determination thereof, all Loans
except: (a) those which have been paid in full and the commitment to lend has
expired or been terminated, or (b) those which have been liquidated such that
all of the collateral securing the particular Loan Documents has been disposed
of or abandoned,  (c) those which are not in default and which Buyer has
extended the maturity of the Loan for a period greater than ninety (90) days
from the

 

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maturity set forth in the applicable Loan Documents as in effect on September
30, 2004; provided, however, with respect to the Loan made to Ambassador
Publications, LLC, if the maturity date has been extended beyond January 31,
2006.

 

“Portfolio Yield” shall mean the Earnings actually received by Buyer in any
period on the Portfolio.

 

“Purchase Price” has the meaning prescribed by Section 3.

 

“Purchase Price Adjustment” shall mean the sum of $112,478.00.

 

“Purchased Assets” shall mean:

 

(i)                                     the Loans and any remaining commitments
to extend financial accommodations thereunder or pertaining thereto; and

 

(ii)                                  the Related Collateral, including, without
limitation, the Loan Files.

 

“Records of Debtor” shall mean the books and records of Debtor related to the
Purchased Assets.

 

“Related Agreements” has the meaning set forth in Section 9.2(a).

 

“Related Collateral has the meaning prescribed in the Recitals to this
Agreement.

 

“Reviewer” shall have the meaning set forth in Section 3.2(c).

 

“Secured Party” has the meaning prescribed in the preamble to this Agreement.

 

“Secured Party Payment Letter” has the meaning set forth in Section 5.2(d).

 

“Tax” or “Taxes” shall mean all taxes, levies and assessments of any kind or
nature imposed by any governmental authority, including, without limitation, all
income, sales, use, real and personal property, payroll, employment, gross
receipts, license, withholding, transfer, excise, stamp, value added,
alternative or add-on minimum, estimated, franchise, duty or other tax of any
kind whatsoever, together with any interest thereon and any penalties, additions
to tax or additional amounts applicable thereto.

 

“Third Party Consent” shall mean the consent, authorization, approval, waiver,
order, license, certificate or permit or act of or from or notice to any party
to any contract, agreement, instrument, lease or license to which the Debtor is
a party or subject or by which Debtor or any of the Purchased Assets are bound.

 

“UCC” means the Uniform Commercial Code as enacted in the State of New Jersey.

 

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SECTION 2.                              DISPOSITION AND RELATED PROVISIONS

 

1.1                                 DEBTOR’S ACKNOWLEDGEMENT OF DEFAULT AND
SECURED PARTY’S RIGHTS.  DEBTOR ACKNOWLEDGES THAT ITS NOTIFICATION TO SECURED
PARTY DESCRIBED IN CLAUSE (G)(I) OF THE RECITALS TO THIS AGREEMENT WAS A TOTAL
BREACH BY ANTICIPATORY REPUDIATION OF DEBTOR’S OBLIGATIONS UNDER THE LOAN AND
SECURITY AGREEMENT, WHICH CONSTITUTED A DEFAULT OF THE LOAN AND SECURITY
AGREEMENT FOR PURPOSES OF ARTICLE 9 OF THE UCC.  DEBTOR ACKNOWLEDGES THAT
SECURED PARTY HAS THE RIGHT TO SELL OR OTHERWISE DISPOSE OF THE LOANS AND
RELATED COLLATERAL BY PRIVATE SALE PURSUANT TO THE UCC.

 

1.2                                 SALE AND TRANSFER.  SUBJECT TO THE TERMS OF
THIS AGREEMENT, SECURED PARTY HEREBY SELLS, TRANSFERS AND CONVEYS TO BUYER, AND
BUYER HEREBY PURCHASES, ALL OF DEBTOR’S RIGHT, TITLE, INTEREST IN, TO AND UNDER
THE PURCHASED ASSETS, TOGETHER WITH ALL PAYMENTS AND RIGHTS TO PAYMENT
THEREUNDER, AND ALL SECURITY INTERESTS, LIENS AND OTHER RIGHTS OF DEBTOR
THEREUNDER OR IN CONNECTION THEREWITH.

 

SECTION 3.                            PURCHASE PRICE

 

SECTION 3.1                                      PURCHASE PRICE.

 

(a)                                  The purchase price for the Purchased Assets
(the “Purchase Price”) shall equal the amount of (i) the outstanding principal
loan balance due under the Loan Documents as of the close of business on the
Closing Date, plus (ii) the unpaid accrued interest and prorated fees relating
to the Loans as of the close of business on the Closing Date, plus (iii) the
Deposit, less the sum of (w) the Loss Adjustment, (x) the Purchase Price
Adjustment, (y) prorated prepaid fees, and (z) credits due to Obligors of each
Loan, including, but not limited to: deposits, customer cash, and all set-offs
due to any Obligor under a Loan.

 

(b)                                 At the Closing, the Buyer shall pay, on
account of the Purchase Price, an amount equal to (i) the amount provided by
Section 3.1(a) estimated on and as of the Closing Date, the computation of which
is set forth on Schedule 3.1(b) (the “Estimated Purchase Price”), less (ii) the
Hold Back Amount.

 

SECTION 3.2                                      PURCHASE PRICE ADJUSTMENT.

 

(a)                                  Not less than five (5) Business Days after
the Closing Date (the “Purchase Price Adjustment Date”), the Buyer shall deliver
to Secured Party and Debtor:

 

(I)                                     AN UPDATED CALCULATION OF THE PURCHASE
PRICE WHICH SHALL LIST THE LOANS TOGETHER WITH THE OUTSTANDING PRINCIPAL BALANCE
DUE UNDER THE LOAN DOCUMENTS AS OF THE CLOSE OF BUSINESS ON THE CLOSING DATE;

 

(II)                                  A STATEMENT SETTING FORTH THE AGGREGATE
INTEREST ACCRUED BUT UNPAID WITH RESPECT TO EACH OF THE LOANS AS OF THE CLOSE OF
BUSINESS ON THE CLOSING DATE;

 

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(III)                               A STATEMENT SETTING FORTH ALL CREDITS DUE
OBLIGORS WITH RESPECT TO EACH OF THE LOANS, INCLUDING, BUT NOT LIMITED TO:
DEPOSITS; SPECIAL CREDIT RESERVES, CUSTOMER CASH AND CREDIT RESERVES ON RECORDS
OF DEBTOR, AND ALL SET-OFFS DUE TO ANY OBLIGOR UNDER A LOAN; AND

 

(V)                                 A STATEMENT SETTING FORTH THE DIFFERENCE
(POSITIVE OR NEGATIVE) BETWEEN THE ESTIMATED PURCHASE PRICE AND THE PURCHASE
PRICE AS OF THE CLOSING DATE, RECALCULATED ON THE PURCHASE PRICE ADJUSTMENT
DATE.

 

(B)                                 IN THE EVENT THAT THE PURCHASE PRICE
CALCULATED ON THE PURCHASE PRICE ADJUSTMENT DATE IS GREATER THAN THE ESTIMATED
PURCHASE PRICE, THE BUYER SHALL PAY THE AMOUNT OF SUCH SHORTFALL TO THE PARTY
ENTITLED TO PAYMENT THEREOF (AS PROVIDED BY SECTION 7).  IN THE EVENT THAT THE
PURCHASE PRICE CALCULATED ON THE PURCHASE PRICE ADJUSTMENT DATE IS LESS THAN THE
ESTIMATED PURCHASE PRICE, THE DEBTOR SHALL PAY THE AMOUNT OF SUCH DEFICIENCY TO
THE BUYER OR IF NOT PAID AS HEREIN PROVIDED, BUYER SHALL SET OFF THE AMOUNT OF
SUCH DEFICIENCY AGAINST ANY FUTURE PAYMENTS BUYER OWES HEREUNDER.  ANY PAYMENT
FROM THE DEBTOR OR THE BUYER PURSUANT TO THIS SECTION 3.2(B) SHALL BE MADE NO
LATER THAN TEN (10) BUSINESS DAYS FOLLOWING (I) THE DATE OF THE BUYER’S RECEIPT
OF THE DOCUMENTS DESCRIBED IN SECTION 3.2(A) (COLLECTIVELY, THE “CLOSING DATE
DOCUMENTS”) OR (II) IN THE EVENT THAT THE SECURED PARTY OR DEBTOR DELIVERS A
NOTICE OF DISAGREEMENT TO THE BUYER PURSUANT TO SECTION 3.2(C), THE DATE OF
FINAL RESOLUTION OF ALL DISPUTED MATTERS IN ACCORDANCE WITH SECTION 3.2(C).  ANY
SUCH PAYMENT SHALL BE MADE BY WIRE TRANSFER, TOGETHER WITH INTEREST CALCULATED
ON THE AMOUNT OF THE REQUIRED PAYMENT AT THE FEDERAL FUNDS RATE FROM THE CLOSING
DATE TO (BUT NOT INCLUDING) THE DATE ON WHICH SUCH AMOUNT IS PAID IN FULL.

 

(C)                                  UPON RECEIPT OF THE CLOSING DATE DOCUMENTS,
THE SECURED PARTY OR DEBTOR, AS THE CASE MAY BE, SHALL BE AFFORDED, AT THE
SECURED PARTY’S OR DEBTOR’S EXPENSE, FULL ACCESS TO THE RECORDS OF DEBTOR
RELATED TO THE PURCHASED ASSETS, ANY WORK PAPERS PREPARED BY THE BUYER AND ANY
OFFICERS, EMPLOYEES OR OTHER REPRESENTATIVES OF THE BUYER THAT PARTICIPATED IN
THE DETERMINATION OF THE ADJUSTED PURCHASE PRICE.  THE SECURED PARTY OR DEBTOR,
AS THE CASE MAY BE, SHALL, NOT MORE THAN TEN (10) BUSINESS DAYS FOLLOWING
BUYER’S DELIVERY OF ITS CALCULATION OF THE ADJUSTED PURCHASE PRICE, HAVE THE
RIGHT TO NOTIFY THE BUYER IN WRITING THAT IT DISAGREES WITH THE ADJUSTED
PURCHASE PRICE (THE “NOTICE OF DISAGREEMENT”), SPECIFYING TO THE EXTENT
PRACTICABLE, IN REASONABLE DETAIL, THE ITEMS AS TO WHICH DISAGREEMENT EXISTS
(THE “DISPUTED MATTERS”).  IF THE SECURED PARTY OR DEBTOR, AS THE CASE MAY BE,
FAILS TO DELIVER A NOTICE OF DISAGREEMENT WITHIN SAID TIME, IT SHALL BE DEEMED
TO HAVE CONCURRED WITH THE ADJUSTED PURCHASE PRICE.  IF A NOTICE OF DISAGREEMENT
SHALL BE DELIVERED BY THE SECURED PARTY OR DEBTOR, AS THE CASE MAY BE, THEN THE
BUYER AND THE SECURED PARTY OR DEBTOR, AS THE CASE MAY BE, SHALL NEGOTIATE IN
GOOD FAITH TO RESOLVE IN WRITING ANY DISPUTED MATTERS.  ALL DISPUTED MATTERS AS
TO WHICH WRITTEN AGREEMENT HAS NOT BEEN REACHED WITHIN THIRTY (30) DAYS OF
RECEIPT OF A NOTICE OF DISAGREEMENT FROM THE SECURED PARTY OR DEBTOR, AS THE
CASE MAY BE,  SHALL BE SUBMITTED TO AND REVIEWED BY AN INDEPENDENT ACCOUNTING
FIRM (OTHER THAN THE ACCOUNTANTS OF THE BUYER AND THE ACCOUNTANTS OF THE DEBTOR
AND SECURED PARTY, AS APPLICABLE) MUTUALLY AGREED TO BY THE BUYER AND THE
SECURED PARTY OR DEBTOR, AS THE CASE MAY BE (THE “REVIEWER”) UNDER PROCEDURES TO
BE AGREED UPON BY SUCH PARTIES.  THE REVIEWER SHALL CONSIDER ONLY THE DISPUTED
MATTERS AND SHALL ACT PROMPTLY TO RESOLVE ALL DISPUTED MATTERS, AND ITS DECISION
WITH RESPECT THERETO SHALL BE FINAL AND BINDING UPON THE PARTIES.  THE FEES AND
EXPENSES OF THE REVIEWER IN CONNECTION WITH ITS REVIEW AND DETERMINATION OF ANY
DISPUTED MATTERS SHALL BE BORNE EQUALLY BY THE BUYER AND THE DEBTOR.  SECURED
PARTY SHALL HAVE

 

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NO LIABILITY FOR (I) ANY AMOUNTS DUE ON ACCOUNT OF THE ADJUSTED PURCHASE PRICE
OR (II) THE FEES AND EXPENSES OF THE REVIEWER.

 

SECTION 3.3                                      HOLD BACK AMOUNT. 

 

(A)                                  THE HOLD BACK AMOUNT SHALL BE DEDUCTED FROM
THE AMOUNT OF THE PURCHASE PRICE PAID ON THE CLOSING DATE, AS PROVIDED BY
SECTION 3.1(B).  THE HOLD BACK AMOUNT SHALL BE ADJUSTED (THE “ADJUSTED HOLD
BACK”) (A) ON JANUARY 31, 2006, TO AN AMOUNT EQUAL TO SEVEN PERCENT (7%) OF THE
HIGHEST OUTSTANDING PRINCIPAL BALANCE OF EACH LOAN IN THE PORTFOLIO ON WHICH NO
EVENT OF DEFAULT (AS DEFINED IN THE LOAN DOCUMENTS) SHALL HAVE OCCURRED AND BEEN
DECLARED AT THAT TIME (INCLUDING OUTSTANDING BUT UNDRAWN LETTERS OF CREDIT)
DURING THE THREE MONTHS PRECEDING JANUARY 31, 2006 PLUS ONE HUNDRED PERCENT
(100%) OF THE UNPAID PRINCIPAL BALANCE, ACCRUED INTEREST AND UNPAID FEES,
EXPENSES AND CHARGES DUE ON ANY LOANS IN THE PORTFOLIO ON WHICH AN EVENT OF
DEFAULT (AS DEFINED IN THE LOAN DOCUMENTS) SHALL HAVE OCCURRED AND BEEN DECLARED
AT THAT TIME, AND (B) JULY 31, 2006 AND ON JANUARY 31 AND JULY 31 OF EACH YEAR
THEREAFTER, AN AMOUNT (NOT TO EXCEED THE HOLD BACK AMOUNT) EQUAL TO SEVEN
PERCENT (7%) OF THE HIGHEST OUTSTANDING PRINCIPAL BALANCE OF EACH LOAN REMAINING
IN THE PORTFOLIO AT THE TIME OF CALCULATION ON WHICH NO EVENT OF DEFAULT (AS
DEFINED IN THE LOAN DOCUMENTS) (INCLUDING OUTSTANDING BUT UNDRAWN LETTERS OF
CREDIT) DURING THE THREE MONTHS PRECEDING JANUARY 31 OF SUCH YEAR PLUS ONE
HUNDRED PERCENT (100%) OF UNPAID PRINCIPAL BALANCE, ACCRUED INTEREST AND UNPAID
FEES, EXPENSES AND CHARGES DUE ON ANY LOANS ON WHICH AN EVENT OF DEFAULT (AS
DEFINED IN THE LOAN DOCUMENTS) SHALL HAVE OCCURRED AND BEEN DECLARED AT THAT
TIME.  THE BUYER SHALL PAY THE AMOUNT DUE PURSUANT TO THIS SECTION 3.3(A) IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 3.3(D).

 

(B)                                 THE HOLD BACK AMOUNT IS INTENDED TO FULLY
COMPENSATE BUYER FOR EACH LOSS RECORDED BY BUYER ON BUYER’S BOOKS AND RECORDS
WITH RESPECT TO A LOAN IN THE PORTFOLIO.  WITH RESPECT TO EACH LOSS, THE HOLD
BACK AMOUNT SHALL BE IMMEDIATELY, AUTOMATICALLY AND PERMANENTLY DEBITED BY THE
AMOUNT OF SUCH LOSS (THE “HOLD BACK REDUCTION”) AND THE HOLD BACK REDUCTION
SHALL BE CREDITED TO BUYER.   FOR THE AVOIDANCE OF DOUBT, IF A $50,000 LOSS
OCCURS WITH REGARD TO A LOAN, THE HOLD BACK AMOUNT SHALL BE REDUCED BY $50,000
AND CREDITED TO BUYER TO MAKE BUYER WHOLE.  UPON CREDITING THE LOSS TO BUYER,
THE BUYER’S RECORDS SHALL REFLECT THAT THE HOLD BACK AMOUNT HAS BEEN PERMANENTLY
REDUCED BY SUCH AMOUNT FOR ALL PURPOSES.  IN THE EVENT THAT A LOSS, WHICH
PREVIOUSLY RESULTED IN A HOLD BACK REDUCTION, IS SUBSEQUENTLY RECOVERED, BUYER’S
RECORDS SHALL REFLECT THAT THE HOLD BACK AMOUNT HAS BEEN RESTORED BY THE AMOUNT
OF THE RECOVERY OF SUCH LOSS AT THE TIME THE RECOVERY IS ACTUALLY RECEIVED BY
BUYER, LESS THE INTEREST, FEES, LATE CHARGES AND EXPENSES (INCLUDING LEGAL FEES)
DUE TO OR INCURRED BY BUYER WITH RESPECT TO SUCH LOSS OR TO EFFECTUATE SUCH
RECOVERY.  ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, IT IS UNDERSTOOD
THAT THE SECURED PARTY AND BUYER HAVE AGREED UPON THE LOSS ADJUSTMENT TO REDUCE
(ALTHOUGH NOT ELIMINATE) UNCERTAINTY REGARDING THE PURCHASE PRICE AND THEREFORE,
(I) SECURED PARTY OR THE DEBTOR, AS THE CASE MAY BE, SHALL NOT BE CHARGED WITH
ANY HOLD BACK REDUCTION UNTIL BUYER HAS SUFFERED A LOSS OR LOSSES WHICH, IN THE
AGGREGATE, EXCEED THE LOSS ADJUSTMENT AND (II) IN THE EVENT BUYER DOES NOT
EXPERIENCE A LOSS OR LOSSES WHICH, IN THE AGGREGATE, EXCEED THE LOSS ADJUSTMENT,
THEN SECURED PARTY OR THE DEBTOR, AS THE CASE MAY BE, SHALL NOT BE ENTITLED AND
SHALL NOT BE REFUNDED ANY UNUSED PORTION OF THE LOSS ADJUSTMENT.

 

(C)                                  BUYER SHALL PAY TO THE PARTY ENTITLED TO
PAYMENT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 7, ON ACCOUNT OF THE HOLD
BACK AMOUNT, A SUM CALCULATED BY MULTIPLYING

 

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AN AMOUNT THAT IS EIGHTY-FIVE PERCENT (85%) OF THE PORTFOLIO YIELD FOR THE
PERIOD FOR WHICH THE CALCULATION IS BEING MADE BY A FRACTION, THE NUMERATOR OF
WHICH IS THE HOLD BACK AMOUNT, AS ADJUSTED FROM TIME TO TIME, AND THE
DENOMINATOR OF WHICH IS THE TOTAL AVERAGE UNPAID PRINCIPAL BALANCE DUE ON THE
PORTFOLIO FOR THE MONTH IN WHICH THE CALCULATION IS MADE (THE “YIELD SHARE”). 
HOWEVER, IN THE EVENT THAT, IN ANY MONTH, THE PORTFOLIO YIELD ACTUALLY RECEIVED
BY BUYER SHALL BE LESS THAN THE AMOUNT BUYER IS CONTRACTUALLY ENTITLED TO
RECEIVE IN ACCORDANCE WITH THE TERMS OF THE LOAN DOCUMENTS, NO PAYMENT OF THE
YIELD SHARE SHALL BE PAID UNTIL ALL OF THE BUYER PAYMENTS (AS DEFINED BELOW)
OWED TO BUYER SHALL HAVE BEEN ACTUALLY RECEIVED BY BUYER.  FOR THE AVOIDANCE OF
DOUBT, IF IN ANY MONTH A LOAN IN THE PORTFOLIO SHALL BE IN DEFAULT OF PAYMENT OF
PRINCIPAL, INTEREST, FEES, LATE CHARGES OR EXPENSES, INCLUDING LEGAL FEES DUE TO
BUYER (“BUYER PAYMENTS”) WITH REGARD TO ONE OR MORE LOANS OR IF BUYER SHALL,
BASED UPON ITS THEN EXISTING POLICIES, PLACE ONE OR MORE LOANS ON NON-ACCRUAL
STATUS ON BUYER’S BOOKS AND RECORDS, THE AMOUNT OF THE PORTFOLIO YIELD OTHERWISE
DUE AS HEREIN PROVIDED SHALL BE WITHHELD AND PAID TO BUYER UNTIL SUCH TIME AS
BUYER SHALL HAVE BEEN PAID, IN FULL, ALL BUYER PAYMENTS DUE TO BUYER.  FOR
EXAMPLE, IF AN OBLIGOR DEFAULTS ON PAYMENT OF $3,000 IN BUYER PAYMENTS, THEN,
(A) OUT OF THE YIELD SHARE, BUYER SHALL BE PAID $3,000 AND (B) UNTIL BUYER HAS
BEEN PAID ALL BUYER PAYMENTS IN FULL, NO PAYMENT ON ACCOUNT OF THE YIELD SHARE
SHALL BE PAID.

 

(D)                                 BUYER SHALL:

 

(I) ON OR PRIOR TO THE 10TH DAY OF EACH MONTH, PROVIDE THE PARTY ENTITLED TO
PAYMENT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 7, WITH (Y) A STATEMENT OF
THE PORTFOLIO YIELD WITH RESPECT TO EACH LOAN AND (Z) THE ADJUSTED HOLD BACK
AMOUNT; AND

 

(II) ON OR PRIOR TO THE 10TH DAY OF FEBRUARY AND AUGUST OF EACH YEAR, PAY OR
OTHERWISE ACCOUNT TO EACH PARTY THEN ENTITLED TO ANY PAYMENTS PURSUANT TO
SECTION 7: (Y) THE YIELD SHARE; AND (Z) THE ADJUSTMENT TO THE HOLD BACK AMOUNT,
IF ANY, CALCULATED PURSUANT TO SECTION 3.3(B); PROVIDED, HOWEVER, BUYER SHALL,
SUBJECT TO SECTION 3.3(C), PAY ONLY THE NET AMOUNT OF (A) THE YIELD SHARE AND
(B) THE HOLD BACK AMOUNT DUE FOR EACH SUCH PERIOD BASED UPON THE PORTFOLIO TAKEN
AS A WHOLE.

 

(E)                                  ANYTHING HEREIN TO THE CONTRARY
NOTWITHSTANDING, IN ADDITION TO BUYER’S RIGHTS UNDER SECTION 3.3(B) OR OTHERWISE
PROVIDE BY LAW, ANY PAYMENT PAYABLE HEREUNDER SHALL BE SUBJECT TO THE BUYER’S
RIGHT  TO SET OFF ALL AMOUNTS OWED BY BUYER TO SECURED PARTY OR DEBTOR
HEREUNDER, AS THE CASE MAY BE, INCLUDING, BUT NOT LIMITED TO, THE AMOUNTS OWING
BY REASON OF THE INDEMNIFICATION PROVISIONS SET FORTH IN SECTION 14.

 

(F)                                    IN THE EVENT THAT BUYER SHALL HOLD ALL OR
ANY PORTION OF THE HOLD BACK AMOUNT DURING A TIME AFTER WHICH NO LOANS REMAIN IN
THE PORTFOLIO, THEN FROM THAT DATE UNTIL THE DATE UPON WHICH THE ADJUSTED HOLD
BACK AMOUNT IS PAID IN FULL, BUYER SHALL PAY TO THE PARTY ENTITLED TO PAYMENT
THEREOF (AS PROVIDED BY SECTION 7) INTEREST ON THE ADJUSTED HOLD BACK AMOUNT AT
THE RATE OF LIBOR PLUS TWO PERCENT (2%) PER ANNUM.  BUYER SHALL PAY SUCH PARTY
THE INTEREST DUE HEREUNDER IN ACCORDANCE WITH, AND AT THE SAME TIMES AS SET
FORTH IN, SECTION 3.3(D)(II).

 

SECTION 3.4                                      DEFERRED PURCHASE PRICE. 
WITHIN THIRTY (30) DAYS OF EACH ANNIVERSARY DATE OF THE CALCULATION DATE (AS
DEFINED BELOW), FOR A PERIOD OF THREE (3) YEARS, BUYER SHALL ADVISE

 

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each party then entitled to payments pursuant to Section 7 of the Portfolio
Yield for the immediately preceding year and deliver to such party or parties a
statement setting forth the calculation of the Portfolio Yield (the
“Calculation”).  “Calculation Date” shall mean the anniversary date of the last
day of the first full month following the date on which the Closing occurs. 
Subject to the provisions of Sections 3.3(c) and 3.3(e), on the 31st day after
the Calculation Date of each year following the period for which the Calculation
is made, Buyer shall pay the party entitled to payment pursuant to Section 7,
the following percentage of the Portfolio Yield (the “Premium” or “Premiums”):

 

(a)                                  for the 1st anniversary date  -  three
percent (3%),

 

(b)                                 for the 2nd anniversary date  -  two percent
(2%),

 

(c)                                  for the 3rd anniversary date  -  one
percent (1%).

 

After the 3rd anniversary date, no further Premium payments shall be due under
this Agreement.

 

SECTION 3.5                                      FORM OF PAYMENT.  ALL PAYMENTS
REQUIRED TO BE MADE UNDER THIS AGREEMENT SHALL BE MADE IN FEDERAL OR OTHER
IMMEDIATELY AVAILABLE FUNDS BY WIRE TRANSFER IN UNITED STATES DOLLARS TO AN
ACCOUNT OR ACCOUNTS DESIGNATED IN WRITING BY THE SECURED PARTY, LAURUS, DEBTOR
OR THE BUYER, AS THE CASE MAY BE.

 

SECTION 3.6                                      POST-CLOSING REMITTANCES.  IF,
AFTER THE CLOSING DATE, THE SECURED PARTY, LAURUS OR DEBTOR SHALL RECEIVE ANY
REMITTANCE OF MONEY OR COMMUNICATION WITH RESPECT TO ANY PURCHASED ASSETS, IT
SHALL ENDORSE OR OTHERWISE TRANSFER OR PAY OVER SUCH REMITTANCE TO THE BUYER AND
SHALL FORWARD SUCH REMITTANCE OR COMMUNICATION, AS APPLICABLE, TO THE BUYER
WITHIN TWO (2) BUSINESS DAYS OF RECEIPT IN THE MANNER AND/OR TO THE ACCOUNT
SPECIFIED BY THE BUYER FROM TIME TO TIME IN WRITING.  IF, AFTER CLOSING, BUYER
RECEIVES ANY PAYMENT RELATING TO ASSETS OF THE DEBTOR WHICH ARE NOT A PART OF
THE PURCHASED ASSETS, BUYER SHALL PROMPTLY DELIVER SAME TO THE PARTY ENTITLED TO
SUCH PAYMENT(S) PURSUANT TO SECTION 7 HEREOF.

 

SECTION 3.7                                      LETTERS OF CREDIT.  FOR EACH
EXISTING LETTER OF CREDIT PREVIOUSLY ISSUED BY SECURED PARTY OR ANY AFFILIATE OF
SECURED PARTY WITH RESPECT TO A LOAN AND WHICH REMAINS OUTSTANDING ON THE
CLOSING DATE (“EXISTING LCS “), THE BUYER SHALL, AT THE BUYER’S OPTION, EITHER
(I) AS OF THE CLOSING DATE, DELIVER TO SECURED PARTY (A) ONE OR MORE BACKUP
LETTERS OF CREDIT ISSUED TO AND FOR THE BENEFIT OF SECURED PARTY BY A COMMERCIAL
BANK ACCEPTABLE TO, AND IN FORM AND SUBSTANCE SATISFACTORY TO, SECURED PARTY, IN
AN AGGREGATE AMOUNT EQUAL TO THE AGGREGATE UNDRAWN AND UNREIMBURSED AMOUNT OF
ALL SUCH EXISTING LCS, TOGETHER WITH (B) A CASH DEPOSIT IN THE AMOUNT EQUAL TO
3.0% OF THE AGGREGATE AMOUNT OF ALL SUCH EXISTING LC’S, TO BE HELD BY SECURED
PARTY AND APPLIED IN REIMBURSEMENT OF COSTS, FEES AND EXPENSES (“LC CHARGES”)
FROM TIME TO TIME CHARGED OR INCURRED BY SECURED PARTY OR ITS AFFILIATE
ASSOCIATED WITH THE EXISTING LCS, OR ANY OF THEM, OR (II) ELECT THAT ANY LETTER
OF CREDIT REMAIN OUTSTANDING IN ACCORDANCE WITH ITS TERMS; PROVIDED BUYER
DELIVERS TO THE ISSUER CASH COLLATERAL IN AN AMOUNT EQUAL TO 105% OF THE UNDRAWN
AND UNREIMBURSED AMOUNT OF SUCH LETTER OF CREDIT, BUT IN EACH INSTANCE ONLY
UNTIL THE NEXT SCHEDULED EXPIRATION DATE APPLICABLE THERETO. DURING ANY TIME
THAT A LETTER OF CREDIT SHALL REMAIN OUTSTANDING, SECURED PARTY SHALL (A) NOT
CONSENT OR AGREE TO AMEND SAME WITHOUT THE BUYER’S CONSENT AND (B) IF
APPLICABLE, ASSIGN SAME TO BUYER.  BUYER AGREES TO PAY SECURED PARTY,

 

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ON DEMAND, THE AMOUNT, IF ANY, BY WHICH THE AGGREGATE LC CHARGES EXCEED THE
AMOUNT DEPOSITED BY BUYER PURSUANT TO CLAUSE (I)(B) PRECEDING.  AS SOON AS IS
REASONABLY PRACTICABLE AFTER THE EXPIRY DATE OF EACH UNDRAWN EXISTING LC,
SECURED PARTY SHALL DELIVER TO THE BUYER (X) THE AMOUNT OF ANY CASH COLLATERAL
POSTED IN ACCORDANCE WITH CLAUSE (II) ABOVE OR (Y) IF THE BUYER HAS ELECTED THE
OPTION SET FORTH IN CLAUSE (I) ABOVE, THE UNUSED PORTION OF THE LC CHARGES
RELATIVE TO THE UNUSED PORTION OF THE EXPIRED EXISTING LC THEN HELD BY SECURED
PARTY AND AN ACCOUNTING SETTING FORTH THE APPLICATION OF SUCH LC CHARGES.

 

3.8                                 LIQUIDATION OF PORTFOLIO.   BUYER AGREES
THAT, UNTIL THE PORTFOLIO HAS BEEN PAID IN FULL OR LIQUIDATED, IT SHALL SERVICE
THE LOANS IN THE SAME MANNER AS IT SERVICES ALL OF ITS OTHER LOANS AND IN
ACCORDANCE WITH ITS THEN EXISTING CREDIT POLICIES AND PROCEDURES.  ALL PAYMENTS
OF PRINCIPAL, INTEREST AND FEES SHALL BE CALCULATED AS SET FORTH IN SECTION 3.3
AND DISTRIBUTED IN ACCORDANCE WITH SECTION 7.  BECAUSE OF DRAW DOWNS ON THE HOLD
BACK AMOUNT OR PAYMENT BY THE OBLIGORS OR BOTH, THERE MAY COME A TIME (THE
“BUYER PAYMENT DATE”) WHEN PAYMENTS MADE ON ACCOUNT OF THE LOANS SHALL
EFFECTIVELY BE ENTIRELY FOR THE BENEFIT OF THE PARTY ENTITLED TO PAYMENTS IN
ACCORDANCE WITH SECTION 7.  FROM AND AFTER THAT TIME, THE HOLD BACK AMOUNT MAY
OR MAY NOT HAVE BEEN ENTIRELY DEPLETED.  RECOGNIZING THAT BUYER, AT THAT TIME,
WOULD HAVE NO INCENTIVE TO PURSUE COLLECTION OF THE REMAINING BALANCE DUE ON THE
LOANS, IT IS AGREED THAT ON THE BUYER PAYMENT DATE AND DURING THE CONTINUANCE
THEREOF, BUYER SHALL BE PAID A FEE DETERMINED AS FOLLOWS:

 

FOR EACH DAY ON WHICH THE AVERAGE AGGREGATE OUTSTANDING PRINCIPAL AMOUNT OF THE
LOANS WITHIN THE PORTFOLIO WAS EQUAL TO OR LESS THAN THE THEN APPLICABLE HOLD
BACK AMOUNT OR ADJUSTED HOLD BACK, AS THE CASE MAY BE, THE AMOUNT OF EACH
PAYMENT TO BE MADE AS SET FORTH IN SECTION 3.3(D)(II) SHALL BE REDUCED BY AN
AMOUNT EQUAL TO THE GREATER OF (A) .00019178 MULTIPLIED BY THE AVERAGE AGGREGATE
PRINCIPAL AMOUNT OF THE LOANS WITHIN THE PORTFOLIO, AND (B) $133.34 MULTIPLIED
BY THE NUMBER OF LOANS OUTSTANDING WITHIN THE PORTFOLIO FOR EACH DAY IN THE
PERIOD OF DETERMINATION.

 

3.9                                 QUARTERLY REPORT.    AT THE REQUEST OF
DEBTOR OR SECURED PARTY, BUYER SHALL PROVIDE QUARTERLY, A REPORT SETTING FORTH
THE CALCULATION BY BUYER OF ALL AMOUNTS DUE PURSUANT TO SECTION 3.3(A), (B) AND
(C).  AT THE REQUEST OF DEBTOR OR SECURED PARTY AND AT DEBTOR’S SOLE COST AND
EXPENSE, DEBTOR OR SECURED PARTY, OR ITS RESPECTIVE AGENTS, SERVANTS OR
EMPLOYEES SHALL HAVE THE RIGHT, ONCE IN EACH CALENDAR QUARTER, TO EXAMINE THE
BOOKS AND RECORDS OF BUYER SOLELY WITH RESPECT TO LOANS AND BUYER’S CALCULATION
OF AMOUNTS DUE UNDER SECTION 3.

 

SECTION 4.                            DELIVERABLES.  FOLLOWING SATISFACTION OR
WAIVER BY THE APPLICABLE PARTY OF EACH OF THE CONDITIONS PRECEDENT SPECIFIED BY
SECTION 5, SECURED PARTY SHALL PROMPTLY DELIVER TO BUYER THE BILL OF SALE,
EXECUTED BY SECURED PARTY, SUBSTANTIALLY IN FORM AS APPEARS IN EXHIBIT D, AND
SECURED PARTY WILL PROMPTLY DELIVER OR CAUSE TO BE DELIVERED (AND IN RECOGNITION
AND ACKNOWLEDGEMENT OF SECURED PARTY’S RIGHTS AS SECURED PARTY, DEBTOR AGREES TO
DELIVER) TO BUYER THE ORIGINAL LOAN FILES.  AT BUYER’S REQUEST, SECURED PARTY
SHALL CAUSE EACH SUCH PROMISSORY NOTE TO BE PROPERLY ENDORSED WITHOUT RECOURSE
(AND IN RECOGNITION AND ACKNOWLEDGEMENT OF SECURED PARTY’S RIGHTS AS SECURED
PARTY, DEBTOR AGREES TO ENDORSE EACH SUCH PROMISSORY NOTE) IN FAVOR OF BUYER
(AND IN THE EVENT DEBTOR DOES NOT DO SO PROMPTLY UPON REQUEST, DEBTOR HEREBY
AUTHORIZES

 

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SECURED PARTY TO DO SO ON ITS BEHALF) AS FOLLOWS:  “PAY TO THE ORDER OF “KELTIC
FINANCIAL PARTNERS LP.”

 

SECTION 5.                            CONDITIONS PRECEDENT.

 

SECTION 5.1                                      BUYER’S OBLIGATION TO DELIVER
THE CASH PORTION AND PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT IS CONDITIONED
UPON SATISFACTION OF EACH OF THE FOLLOWING CONDITIONS PRECEDENT:

 

I.                                          DELIVERY TO BUYER OF A COUNTERPART
OF THIS AGREEMENT, EXECUTED BY SECURED PARTY AND DEBTOR, AND CONSENTED TO BY
EACH PARTY IN INTEREST IN THE MANNER SET FORTH FOLLOWING THE SIGNATURE PAGES TO
THIS AGREEMENT;

 

II.                                       DELIVERY TO BUYER OF AN OPINION OF
DEBTOR’S DELAWARE COUNSEL AND AN OPINION OF DEBTOR’S NEW JERSEY COUNSEL, IN EACH
CASE ADDRESSED TO SECURED PARTY AND BUYER IN THE FORM SUBSTANTIALLY AS APPEARS
IN EXHIBIT E ATTACHED HERETO AND EXECUTED BY SUCH COUNSEL; AND

 

III.                                    DELIVERY TO BUYER OF A COUNTERPART OF
THE COAST PAYMENT LETTER EXECUTED BY COAST, AND THE LAURUS PAYMENT LETTER
EXECUTED BY LAURUS, IN EACH CASE CONSENTED TO BY DEBTOR.

 

IV.                                   THE FULFILLMENT OF THE CONDITIONS SET
FORTH IN CLAUSES (A), (B) AND (C) OF SECTION 5.2;

 

V.                                      SUCH REVISIONS, IF ANY,  AS MAY BE
NECESSARY AND MUTUALLY ACCEPTABLE TO BUYER AND SECURED PARTY OF ALL OF THE
EXHIBITS AND SCHEDULES BEING SUPPLIED HEREUNDER SO THAT THEY ARE ACCURATE AND
COMPLETE AS OF THE CLOSING DATE;

 

VI.                                   PRESENTATION FOR DELIVERY, AT CLOSING, OF
THE BILL OF SALE PROPOSED TO BE DELIVERED PURSUANT TO SECTION 4 AND RELATED
AGREEMENTS;

 

VII.                                ASSIGNMENTS RELATING TO THE LOANS AND THE
ORIGINAL AGREEMENTS, DOCUMENTS AND INSTRUMENTS CONSTITUTING THE PURCHASED ASSETS
AND SUCH ENDORSEMENTS (INCLUDING INSURANCE ENDORSEMENTS) AS MAY BE NECESSARY OR
DESIRABLE TO TRANSFER THE PURCHASED ASSETS TO THE BUYER, IN SUCH FORM AS IS
REASONABLY SATISFACTORY TO BUYER;

 

VIII.                             PRESENTATION FOR DELIVERY, AT CLOSING, OF
EVIDENCE REASONABLY SATISFACTORY TO BUYER THAT FINANCING STATEMENTS ASSIGNING TO
BUYER, DEBTOR’S, RIGHT, TITLE AND INTEREST IN THE OBLIGOR COLLATERAL SECURING
EACH OF THE LOANS HAVE BEEN DULY AND PROPERLY FILED IN ALL JURISDICTIONS
REQUESTED BY THE BUYER OR AUTHORIZATION OF DEBTOR, IN WRITING, AUTHORIZING BUYER
TO FILE SUCH FINANCING STATEMENTS;

 

IX.                                     PRESENTATION FOR DELIVERY, AT CLOSING,
WRITTEN ACKNOWLEDGMENT OF RECEIPT BY SECURED PARTY OF THE  ESTIMATED PURCHASE
PRICE AS SET FORTH IN SECTION 3;

 

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X.                                        PRESENTATION FOR DELIVERY, AT CLOSING,
AN EXECUTED RECEIPT ACKNOWLEDGING PAYMENT OF THE AMOUNT SET FORTH IN THE LAURUS
PAYMENT LETTER;

 

XI.                                     DELIVERY TO BUYER OF TERMINATION
STATEMENTS OF ALL UCC FINANCING STATEMENTS AND DISCHARGES OF LIENS OR
AUTHORIZATION TO TERMINATE UCC FINANCING STATEMENTS HELD BY COAST AGAINST THE
PURCHASED ASSETS IN FORM AND SUBSTANCE SATISFACTORY TO BUYER;

 

XII.                                  DELIVERY TO BUYER OF THE ESTOPPEL
CERTIFICATES; AND

 

XIII.                               SUCH OTHER DOCUMENTS, INSTRUMENTS OR
CERTIFICATES AS SHALL BE REASONABLY REQUESTED BY BUYER OR ITS COUNSEL.

 

SECTION 5.2                                      THE OBLIGATION OF SECURED PARTY
TO PERFORM ITS OBLIGATIONS UNDER SECTION 4 AND DEBTOR’S OBLIGATION TO PERFORM
ITS OBLIGATIONS UNDER THIS AGREEMENT IS CONDITIONED UPON SATISFACTION OF EACH OF
THE FOLLOWING CONDITIONS PRECEDENT:

 

XIV.                              DELIVERY TO SECURED PARTY OF A COUNTERPART OF
THIS AGREEMENT, EXECUTED BY BUYER AND DEBTOR, TOGETHER WITH COUNTERPARTS OF THE
ACKNOWLEDGEMENTS SET FORTH FOLLOWING THE SIGNATURE PAGES TO THIS AGREEMENT,
EXECUTED BY EACH PARTY IN INTEREST;

 

XV.                                 DELIVERY OF AN OPINION OF DEBTOR’S DELAWARE
COUNSEL AND AN OPINION OF DEBTOR’S NEW JERSEY COUNSEL TO SECURED PARTY, IN EACH
CASE ADDRESSED TO SECURED PARTY AND BUYER AND IN THE FORM SUBSTANTIALLY AS
APPEARS IN EXHIBIT E ATTACHED HERETO AND EXECUTED BY SUCH COUNSEL;

 

XVI.                              DELIVERY TO SECURED PARTY OF A COUNTERPART OF
THE COAST PAYMENT LETTER EXECUTED BY COAST, AND THE LAURUS PAYMENT LETTER
EXECUTED BY LAURUS, IN EACH CASE CONSENTED TO BY DEBTOR;

 

XVII.                           DELIVERY TO SECURED PARTY OF TERMINATION
STATEMENTS BY LAURUS AND COAST OF ALL UCC FINANCING STATEMENTS, IF ANY, AND
DISCHARGES OF LIENS, IF ANY, HELD BY COAST AGAINST THE PURCHASED ASSETS IN FORM
AND SUBSTANCE SATISFACTORY TO SECURED PARTY; AND

 

XVIII.                        PAYMENT BY BUYER TO SECURED PARTY OF AN AMOUNT
EQUAL TO THE LESSER OF THE AMOUNT PAYABLE BY BUYER PURSUANT TO: (I) SECTION
3.1(B) OR (II) THE SECURED PARTY PAYMENT LETTER, SETTING FORTH THE INDEBTEDNESS
DUE TO SECURED PARTY BY DEBTOR PURSUANT TO THE LOAN AND SECURITY AGREEMENT (THE
“SECURED PARTY PAYMENT LETTER”).

 

SECTION 6.                          ADDITIONAL DOCUMENTS.  SECURED PARTY AND
DEBTOR AGREE THAT, AT ANY TIME AND FROM TIME TO TIME AFTER THE CLOSING DATE,
THEY WILL, UPON THE REASONABLE REQUEST OF THE BUYER, DO, EXECUTE, ACKNOWLEDGE
AND DELIVER, OR CAUSE TO BE DONE, EXECUTED, ACKNOWLEDGED OR DELIVERED, ALL SUCH
FURTHER ACTS, DEEDS, ASSIGNMENTS, TRANSFERS, CONVEYANCES, POWERS OF ATTORNEY OR
ASSURANCES AS MAY BE REASONABLY REQUIRED FOR THE BETTER ASSIGNING, TRANSFERRING,
GRANTING,

 

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CONVEYING, ASSURING AND CONFIRMING TO THE BUYER, FOR AIDING AND ASSISTING IN THE
REDUCTION TO POSSESSION BY THE BUYER OF, OR FOR INSURING THE ENFORCEABILITY OF,
THE PURCHASED ASSETS.

 

SECTION 7.                            APPLICATION OF PROCEEDS.  CASH PROCEEDS
PAID OR PAYABLE BY BUYER UNDER SECTION 3 SHALL BE PAID AND APPLIED, OR PAID
OVER, AS THE CASE MAY BE, AS FOLLOWS:

 

FIRST, PAID TO SECURED PARTY AND APPLIED TO SECURED PARTY’S REASONABLE EXPENSES
IN CONNECTION WITH NEGOTIATION, PREPARATION AND CLOSING OF THIS AGREEMENT;

 

SECOND, PAID TO SECURED PARTY AND APPLIED TO SATISFACTION OF THE INDEBTEDNESS
AND OBLIGATIONS SECURED BY SECURED PARTY’S SECURITY INTERESTS IN THE LOANS, IN
THE MANNER PRESCRIBED BY THE LOAN AND SECURITY AGREEMENT TO THE EXTENT NOT
INCONSISTENT WITH THE REQUIREMENTS OF THIS SECTION 7, UNTIL SUCH INDEBTEDNESS
AND OBLIGATIONS ARE PAID IN FULL;

 

THIRD, TO THE EXTENT OF THE AMOUNT OF $124,052.00, PAID TO SECURED PARTY AND
HELD BY SECURED PARTY AS CASH COLLATERAL FOR DEBTOR’S INDEMNITY OBLIGATIONS
UNDER THE LOAN AND SECURITY AGREEMENT; WHICH CASH COLLATERAL SHALL CONSTITUTE
“COLLATERAL” UNDER THE LOAN AND SECURITY AGREEMENT TO BE HELD PURSUANT THERETO. 
THE SECURED PARTY AND DEBTOR HEREBY ACKNOWLEDGE AND AGREE THAT BUYER SHALL HAVE
NO RESPONSIBILITY, LIABILITY OR OBLIGATION WITH RESPECT TO (X) THE CASH
COLLATERAL ONCE SAME HAS BEEN PAID TO SECURED PARTY OR (Y) THE INDEMNITY
OBLIGATIONS.

 

FOURTH, PAID OVER TO LAURUS, TO THE EXTENT OF THE PAYMENT AMOUNT SPECIFIED IN
THE LAURUS PAYMENT LETTER, ACCORDING TO THE PAYMENT INSTRUCTIONS SPECIFIED FOR
IT THEREIN;

 

FIFTH, PAID OVER TO COAST, TO THE EXTENT OF THE PAYMENT AMOUNT, IF ANY,
SPECIFIED IN THE COAST PAYOFF LETTER, ACCORDING TO THE PAYMENT INSTRUCTIONS, IF
ANY, SPECIFIED FOR IT THEREIN;

 

SIXTH, PAID OVER TO DEBTOR.

 

FOR AVOIDANCE OF DOUBT, IT IS UNDERSTOOD AND AGREED THAT, UPON PAYMENT TO
SECURED PARTY OF ALL AMOUNTS PROVIDED BY CLAUSES (A), (B) AND (C) PRECEDING, ALL
PAYMENTS OTHERWISE PAYABLE IN ACCORDANCE WITH THIS AGREEMENT SHALL BE PAID
PURSUANT TO THE PROVISIONS OF THIS SECTION 7.  SECURED PARTY SHALL HAVE NO
OBLIGATION TO LAURUS, COAST OR THE DEBTOR FOR THE PAYMENT OF ANY AMOUNTS
SPECIFIED IN THE LAURUS PAYMENT LETTER OR FOR MONIES DUE, IF ANY, HEREUNDER TO
COAST OR THE DEBTOR.

 

SECTION 8.                            DEFICIENCY.  DEBTOR SHALL REMAIN AND BE
LIABLE FOR ANY DEFICIENCY, IF ANY, OWING BY DEBTOR TO SECURED PARTY AFTER
PAYMENT TO SECURED PARTY AND APPLICATIONS AS PROVIDED BY SECTION 7.  DEBTOR’S
INDEBTEDNESS AND OBLIGATIONS SHALL BE REDUCED SOLELY AS A RESULT OF APPLICATION
OF CASH PROCEEDS AS PROVIDED BY SECTION 7.  NOTHING HEREIN CONSTITUTES AN ACCORD
AND SATISFACTION OF DEBTOR’S INDEBTEDNESS AND OBLIGATIONS NOW OR HEREAFTER OWING
BY DEBTOR TO SECURED PARTY UNDER THE LOAN AND SECURITY AGREEMENT.

 

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SECTION 9                               REPRESENTATIONS.

 

SECTION 9.1                                      REPRESENTATIONS BY BUYER.   THE
BUYER REPRESENTS AND WARRANTS TO THE SECURED PARTY AS FOLLOWS:

 

(A)                                  CORPORATE ORGANIZATION.                
BUYER IS A LIMITED PARTNERSHIP DULY ORGANIZED AND EXISTING AND IN GOOD STANDING
UNDER THE LAWS OF THE STATE OF DELAWARE.

 

(B)                                 AUTHORIZATION.                   THE
EXECUTION, DELIVERY, AND PERFORMANCE BY BUYER OF THIS AGREEMENT HAS BEEN DULY
AUTHORIZED BY ALL NECESSARY ACTION ON THE PART OF BUYER.

 

(C)                                 
NONCONTRAVENTION.                                           THE EXECUTION,
DELIVERY, AND PERFORMANCE BY BUYER OF THIS AGREEMENT  DOES NOT AND WILL NOT
(I) VIOLATE BUYER’S ORGANIZATIONAL DOCUMENTS OR ANY LAW APPLICABLE TO BUYER,
(II) RESULT IN A BREACH OF OR CONSTITUTE (WITH NOTICE OR PASSAGE OF TIME OR
BOTH) A DEFAULT UNDER ANY CONTRACTUAL OBLIGATION OF BUYER OR (III) REQUIRE ANY
APPROVAL OF ANY PERSON OTHER THAN CONSENTS OR APPROVALS WHICH HAVE BEEN
OBTAINED.

 

(D)                                 VALIDITY.    THIS AGREEMENT, WHEN EXECUTED
AND DELIVERED BY THE PARTIES HERETO, WILL BE THE LEGALLY VALID AND BINDING
OBLIGATIONS OF BUYER, ENFORCEABLE AGAINST BUYER IN ACCORDANCE WITH ITS
RESPECTIVE TERMS, EXCEPT AS ENFORCEMENT MAY BE LIMITED BY EQUITABLE PRINCIPLES
OR BY BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM, OR SIMILAR LAWS
RELATING TO OR LIMITING CREDITORS’ RIGHTS GENERALLY.

 

(E)                                  INVESTIGATION.   BUYER HAS COMPLETED ITS
OWN INDEPENDENT INVESTIGATION OF THE PURCHASED ASSETS.  EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN SECTION 9.2, BUYER IS RELYING SOLELY ON THE INVESTIGATION
OF THE PURCHASED ASSETS CONDUCTED BY IT AND NOT ON ANY INFORMATION (WHETHER
WRITTEN OR ORAL) PROVIDED BY SECURED PARTY.  BUYER HAS REVIEWED, OR HAD THE
OPPORTUNITY TO REVIEW, ALL DOCUMENTATION EVIDENCING OR RELATING TO THE PURCHASED
ASSETS.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN SECTION 9.2, NO
REPRESENTATIONS OR WARRANTIES WITH REGARD TO THE PURCHASED ASSETS, VERBAL OR
OTHERWISE, HAVE BEEN MADE TO BUYER BY SECURED PARTY OR BY ANY AGENT, EMPLOYEE OR
AFFILIATE OF SECURED PARTY AND IN ENTERING INTO THIS TRANSACTION BUYER IS NOT
RELYING UPON ANY INFORMATION OTHER THAN THE RESULTS OF ITS OWN INDEPENDENT
INVESTIGATION.

 

SECTION 9.2                                      REPRESENTATIONS BY SECURED
PARTY.   THE SECURED PARTY HEREBY REPRESENTS AND WARRANTS TO THE BUYER AS
FOLLOWS:

 

(A)                                  CORPORATE ORGANIZATION.  SECURED PARTY IS
DULY ORGANIZED AND EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF
CALIFORNIA.

 

(B)                                 AUTHORIZATION.   THE EXECUTION, DELIVERY AND
PERFORMANCE BY SECURED PARTY OF THIS AGREEMENT HAS BEEN DULY AUTHORIZED BY ALL
NECESSARY ACTION ON THE PART OF SECURED PARTY.

 

(C)                                  DEBT AND LIEN.    SECURED PARTY IS THE SOLE
OWNER AND PAYEE OF THE INDEBTEDNESS AND OBLIGATIONS OWING BY DEBTOR AND THE
SECURITY INTERESTS SECURING SAME, UNDER THE LOAN AND SECURITY AGREEMENT, AND HAS
NOT SIGNED OR DELIVERED TO ANY PERSON, CORPORATION, PARTNERSHIP, GOVERNMENTAL
AGENCY OR OTHER ENTITY, A TERMINATION OR DISCHARGE OF ALL OR ANY PART OF ITS
SECURITY INTERESTS IN THE PURCHASED ASSETS AS OF THE DATE HEREOF.

 

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SECTION 9.3                                      REPRESENTATIONS BY DEBTOR.  THE
DEBTOR HEREBY REPRESENTS AND WARRANTS TO THE BUYER AS FOLLOWS:

 

XIX.                                CORPORATE ORGANIZATION.   DEBTOR IS A
CORPORATION DULY ORGANIZED AND EXISTING AND IN GOOD STANDING UNDER THE LAWS OF
THE STATE OF NEW JERSEY AND IN EACH JURISDICTION IN WHICH THE NATURE OF ITS
BUSINESS OR THE LOCATION OF ITS PROPERTIES RELATING TO THE PURCHASED ASSETS
REQUIRES.

 

XX.                                   AUTHORIZATION.                     THE
EXECUTION, DELIVERY, AND PERFORMANCE BY DEBTOR OF THIS AGREEMENT HAS BEEN DULY
AUTHORIZED BY ALL NECESSARY ACTION ON THE PART OF DEBTOR.

 

XXI.                               
NONCONTRAVENTION.                                           THE EXECUTION,
DELIVERY, AND PERFORMANCE BY DEBTOR OF THIS AGREEMENT  DOES NOT AND WILL NOT
(I) VIOLATE DEBTOR’S ORGANIZATIONAL DOCUMENTS OR ANY LAW APPLICABLE TO DEBTOR,
(II) RESULT IN A BREACH OF OR CONSTITUTE (WITH NOTICE OR PASSAGE OF TIME OR
BOTH) A DEFAULT UNDER ANY CONTRACTUAL OBLIGATION OF DEBTOR OR (III) REQUIRE ANY
APPROVAL OF ANY PERSON OTHER THAN CONSENTS OR APPROVALS WHICH HAVE BEEN
OBTAINED.

 

XXII.                             VALIDITY.   THIS AGREEMENT, WHEN EXECUTED AND
DELIVERED BY THE PARTIES HERETO, WILL BE THE LEGALLY VALID AND BINDING
OBLIGATIONS OF DEBTOR, ENFORCEABLE AGAINST DEBTOR IN ACCORDANCE WITH ITS
RESPECTIVE TERMS, EXCEPT AS ENFORCEMENT MAY BE LIMITED BY EQUITABLE PRINCIPLES
OR BY BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM, OR SIMILAR LAWS
RELATING TO OR LIMITING CREDITORS’ RIGHTS GENERALLY.

 

XXIII.                          OWNERSHIP.   DEBTOR IS SOLE OWNER OF THE LOANS
AND RELATED COLLATERAL, FREE AND CLEAR OF ANY LIENS OR SECURITY INTERESTS OTHER
THAN THE FIRST AND PRIOR SECURITY INTEREST OF SECURED PARTY AND SUBORDINATE
SECURITY INTERESTS GRANTED BY DEBTOR TO EACH OF THE PARTIES IN INTEREST.

 

XXIV.                         RECITALS.   EACH OF THE STATEMENTS SET FORTH IN
THE RECITALS TO THIS AGREEMENT IS TRUE AND CORRECT.

 

XXV.                            CONSENTS AND APPROVALS.  (I) NO ORDER, LICENSE,
CERTIFICATE OR PERMIT OR ACT OF OR FROM, OR DECLARATION OR FILING WITH, ANY
GOVERNMENTAL AUTHORITY (COLLECTIVELY, “GOVERNMENTAL APPROVALS”), AND (II) NO
ORDER, THIRD PARTY CONSENT FOR THE EXECUTION, DELIVERY OR PERFORMANCE BY THE
DEBTOR OF THIS AGREEMENT OR ANY RELATED AGREEMENT TO WHICH IT IS OR WILL BE A
PARTY, IS NECESSARY OR REQUIRED FOR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY; PROVIDED, HOWEVER, IT IS UNDERSTOOD THAT CERTAIN
THIRD PARTY CONSENTS HAVE NOT YET BEEN RECEIVED OR OBTAINED, INCLUDING, BUT NOT
LIMITED TO, LANDLORD WAIVERS, BAILEE NOTICE LETTERS, ASSIGNMENTS OF LIFE
INSURANCE POLICIES AND ASSIGNMENTS OF MOTOR VEHICLE LIENS, ALL OF WHICH THE
DEBTOR AGREES TO UNDERTAKE TO OBTAIN FOR THE BENEFIT OF BUYER AND COOPERATE WITH
BUYER TO EFFECTUATE THE TRANSFER, ASSIGNMENT, CONVEYANCE, GRANTING, CONVEYING OR
CONFIRMATION OF SUCH THIRD PARTY CONSENTS AFTER THE CLOSING DATE AS PROVIDED FOR
IN SECTION 6 HEREOF.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE
TRANSACTIONS CONTEMPLATED HEREBY COMPLY WITH ALL APPLICABLE LAWS AND DO NOT
CONSTITUTE A FRAUDULENT CONVEYANCE UNDER ANY STATE OR FEDERAL LAWS REGARDING
CREDITORS’ RIGHTS.  THIRD PARTY CONSENTS INCLUDE, WITHOUT LIMITATION, ANY
REQUIRED NOTIFICATION TO, OR ANY REQUIRED WRITTEN CONSENT OR ACKNOWLEDGEMENT
FROM, EACH OBLIGOR OR AGENT UNDER THE LOAN DOCUMENTS CONSTITUTING PART OF THE
PURCHASED ASSETS.

 

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XXVI.                         COMPLIANCE WITH APPLICABLE LAWS.  THE DEBTOR HAS
BEEN AND WILL BE IN COMPLIANCE WITH ALL APPLICABLE LAWS TO THE EXTENT THAT
FAILURE TO DO SO WOULD ADVERSELY AFFECT THE  PURCHASED ASSETS OR THE
ENFORCEABILITY OF THIS AGREEMENT OR ANY RELATED AGREEMENT, WOULD ADVERSELY
EFFECT THE ABILITY OF THE DEBTOR TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR THE RELATED AGREEMENTS, OR WOULD GIVE ANY PERSON ANY CLAIM
AGAINST THE BUYER, OR THE PURCHASED ASSETS.

 

XXVII.                      NO UNDISCLOSED LIABILITIES.  EXCEPT AS SET FORTH IN
SCHEDULE 9.3(I), THE PURCHASED ASSETS ARE NOT SUBJECT TO ANY LIABILITY OF WHICH
THE DEBTOR HAS KNOWLEDGE, WHETHER ABSOLUTE, CONTINGENT, ACCRUED, UNACCRUED OR
OTHERWISE, OF A KIND REQUIRED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES TO BE
SET FORTH ON A FINANCIAL STATEMENT OR DESCRIBED IN THE NOTES THERETO AND NOT
OTHERWISE DISCLOSED HEREIN.

 

XXVIII.                   LIENS, CLAIMS  (A)  THE LIENS SET FORTH IN THE LOAN
DOCUMENTS ARE VALID, EXISTING, PERFECTED PRIORITY LIENS; (B) EXCEPT FOR LAURUS
AND COAST, THERE ARE NO VALID OR EXISTING SECONDARY OBLIGATIONS OWED BY DEBTOR
WHICH ARE SECURED BY LIENS IN THE PURCHASED ASSETS; (C) THERE ARE NO CLAIMS,
COUNTERCLAIMS, DEFENSES OR OFFSETS EXISTING WITH RESPECT TO THE PAYMENT OF ANY
OF THE LOANS, THE RELATED COLLATERAL OR ANY OF THE PURCHASED ASSETS; AND (D) 
THE TERMS OF AND LIENS GRANTED BY THE OBLIGORS RELATING TO THE PURCHASED ASSETS
COMPLY WITH ALL APPLICABLE LAWS.

 

XXIX.                           ESTOPPEL
CERTIFICATES.                               THE PRINCIPAL BALANCE DUE ON ACCOUNT
OF EACH OF THE LOANS, AS SET FORTH IN THE ESTOPPEL CERTIFICATES, IS TRUE AND
CORRECT AS OF THE DATE SET FORTH IN THE ESTOPPEL CERTIFICATE.

 

SECTION 10.                     TERMS OF TRANSFER

 

EXCEPT AS OTHERWISE SPECIFICALLY STATED IN SECTION 9.2, SECURED PARTY EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY, VERBAL OR WRITTEN, PAST, PRESENT OR
FUTURE, WITH RESPECT TO THE PURCHASED ASSETS, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OR REPRESENTATION RELATING TO (A) THE PERFECTION, PRIORITY OR EXTENT OF
ANY LIEN OR SECURITY INTEREST, OR THE CONDITION OF ANY COLLATERAL SECURING ANY
LOAN, (B) THE VALIDITY, EXISTENCE OR EXTENT OF ANY SECONDARY OBLIGATION SECURING
ANY LOAN, (C) CLAIM, COUNTERCLAIM, DEFENSE OR OFFSET, IF ANY, RELATING TO THE
PURCHASED ASSETS, (D) THE FINANCIAL CONDITION, CREDIT WORTHINESS OR FUTURE
PERFORMANCE OF ANY OBLIGOR, OR (E) THE COMPLIANCE OF THE PURCHASED ASSETS OR ANY
OF THE LOAN FILES WITH ANY APPLICABLE LAWS; THE SALE AND TRANSFER OF THE
PURCHASED ASSETS AS PROVIDED BY THIS AGREEMENT IS EXPRESSLY MADE BY SECURED
PARTY, AND ACCEPTED BY BUYER, WITHOUT RECOURSE ON AN “AS IS”, “WHERE IS” BASIS,
WITH ALL FAULTS, AND BUYER, BY ACCEPTANCE OF THIS AGREEMENT, EXPRESSLY
ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY STATED IN SECTION 9.2, SECURED PARTY
MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, AND THAT THERE IS NO
WARRANTY, EXPRESS OR IMPLIED, ARISING UNDER THIS AGREEMENT OR BY OPERATION OF
LAW RELATING TO THE PURCHASED ASSETS OR ANY OTHER MATTER UNDER OR

 

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IN CONNECTION WITH THIS AGREEMENT, ALL OF WHICH ARE EXPRESSLY DISCLAIMED.  THERE
IS NO WARRANTY RELATING TO DEBTOR’S TITLE, POSSESSION, QUIET ENJOYMENT OR THE
LIKE IN THIS DISPOSITION.

 

SECTION 11.                     RELEASES

 

(A)                                          IN CONSIDERATION OF THIS AGREEMENT,
BUYER HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES SECURED
PARTY AND ITS AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, OF AND FROM ALL
POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES,
AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, FIXED, CONTINGENT OR CONDITIONAL,
AT LAW OR IN EQUITY, ARISING IN ANY WAY IN CONNECTION WITH THIS AGREEMENT OR ANY
TRANSACTIONS OR ACTS IN CONNECTION THEREWITH, ORIGINATING IN WHOLE OR IN PART ON
OR BEFORE THE EFFECTIVE DATE, WHICH BUYER MAY NOW OR HEREAFTER MAY HAVE AGAINST
ANY SUCH PERSON, IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSE OR LIABILITIES ARE BASED UPON
CONTRACT, TORT, VIOLATION OF LAW OR OTHERWISE.

 

FOR THE AVOIDANCE OF DOUBT, THIS RELEASE DOES NOT ENCOMPASS, AND EXPRESSLY
EXCLUDES (I) ANY AND ALL COVENANTS, AGREEMENTS OR OBLIGATIONS OF SECURED PARTY
UNDER AND PURSUANT TO THIS AGREEMENT, AND (II) ANY AND ALL OTHER CLAIMS,
DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES
WHATSOEVER, KNOWN OR UNKNOWN, ARISING IN ANY WAY IN CONNECTION WITH ANY OTHER
AGREEMENT OR TRANSACTION BETWEEN OR INVOLVING IN ANY WAY, SECURED PARTY AND
BUYER, OR ANYONE CLAIMING THROUGH SUCH PARTIES.

 

(B)                                            IN CONSIDERATION OF THIS
AGREEMENT, DEBTOR HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER
DISCHARGES SECURED PARTY AND BUYER AND THEIR RESPECTIVE AGENTS, EMPLOYEES,
SUCCESSORS AND ASSIGNS, OF AND FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR
UNKNOWN, FIXED, CONTINGENT OR CONDITIONAL, AT LAW OR IN EQUITY, ARISING IN ANY
WAY IN CONNECTION WITH THE PURCHASED ASSETS OR THIS AGREEMENT, OR ANY
TRANSACTIONS OR ACTS IN CONNECTION THEREWITH, ORIGINATING IN WHOLE OR IN PART ON
OR BEFORE THE CLOSING DATE, WHICH DEBTOR NOW OR HEREAFTER MAY HAVE AGAINST ANY
SUCH PERSON, IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS, DEMANDS, ACTIONS, CAUSES
OF ACTION, DAMAGES, COSTS, EXPENSES, OR LIABILITIES ARE BASED UPON CONTRACT,
TORT, VIOLATION OF LAW OR OTHERWISE.

 

SECTION 12.                     ACKNOWLEDGEMENTS AND CONSENTS BY DEBTOR.

 

SECTION 12.1                                DEBTOR CONSENTS TO DISPOSITION OF
THE PURCHASED ASSETS PURSUANT TO THE TERMS OF THIS AGREEMENT.

 

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SECTION 12.2                                DEBTOR EXPRESSLY AGREES AND
ACKNOWLEDGES THAT ALL ASPECTS OF THE DISPOSITION BY SECURED PARTY OF THE
PURCHASED ASSETS PURSUANT TO THE TERMS OF THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION THE METHOD, MANNER, TIME, PLACE AND OTHER TERMS, INCLUDING WITHOUT
LIMITATION, THE AMOUNT OF THE PURCHASE PRICE AND TERMS FOR PAYMENT THEREOF, ARE
COMMERCIALLY REASONABLE.

 

SECTION 13.                     WAIVERS BY DEBTOR.

 

SECTION 13.1                                DEBTOR EXPRESSLY WAIVES ITS RIGHTS
TO NOTIFICATION OF DISPOSITION OF THE PURCHASED ASSETS.

 

SECTION 13.2                                DEBTOR EXPRESSLY WAIVES ALL RIGHTS
TO REDEEM IN RESPECT OF THE PURCHASED ASSETS.

 

Debtor expressly acknowledges that its waivers under this Section 13 are entered
into and authenticated by Debtor after default as contemplated by Article 9 of
the UCC.

 

SECTION 14.                     INDEMNIFICATION BY DEBTOR.  DEBTOR HEREBY AGREES
TO PAY, INDEMNIFY, DEFEND AND HOLD SECURED PARTY AND BUYER, AND THEIR EMPLOYEES
AND AGENTS (EACH, AN “INDEMNIFIED PERSON”) HARMLESS (TO THE FULLEST EXTENT
PERMITTED BY LAW) FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, SUITS, ACTIONS,
INVESTIGATIONS, PROCEEDINGS, AND DAMAGES, AND ALL REASONABLE ATTORNEYS FEES AND
DISBURSEMENTS AND OTHER COSTS AND EXPENSES ACTUALLY INCURRED IN CONNECTION
THEREWITH (AS AND WHEN THEY ARE INCURRED AND IRRESPECTIVE OF WHETHER SUIT IS
BROUGHT), AT ANY TIME ASSERTED AGAINST, IMPOSED UPON, OR INCURRED BY ANY OF THEM
(A) IN CONNECTION WITH OR AS A RESULT OF OR RELATED TO THE EXECUTION, DELIVERY,
ENFORCEMENT, PERFORMANCE, OR ADMINISTRATION (INCLUDING ANY AMENDMENT OR
MODIFICATION WITH RESPECT HERETO) OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY AND (B) WITH RESPECT TO ANY INVESTIGATION,
LITIGATION, OR PROCEEDING RELATED TO THIS AGREEMENT OR THE DISBURSEMENT OR USE
OF PROCEEDS OR PAYMENTS MADE HEREUNDER (IRRESPECTIVE OF WHETHER ANY INDEMNIFIED
PERSON IS A PARTY THERETO), OR ANY ACT, OMISSION, EVENT, OR CIRCUMSTANCE IN ANY
MANNER RELATED THERETO (ALL THE FOREGOING, COLLECTIVELY, THE “INDEMNIFIED
LIABILITIES”).  THE FOREGOING TO THE CONTRARY NOTWITHSTANDING, DEBTOR SHALL HAVE
NO OBLIGATION TO ANY INDEMNIFIED PERSON UNDER THIS SECTION 14 WITH RESPECT TO
ANY INDEMNIFIED LIABILITY THAT A COURT OF COMPETENT JURISDICTION FINALLY
DETERMINES TO HAVE RESULTED FROM THE NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNIFIED PERSON.  THIS PROVISION SHALL SURVIVE THE TERMINATION AND
PERFORMANCE OF THIS AGREEMENT.  IF ANY INDEMNIFIED PERSON MAKES ANY PAYMENT TO
ANY OTHER INDEMNIFIED PERSON WITH RESPECT TO AN INDEMNIFIED LIABILITY AS TO
WHICH DEBTOR WAS REQUIRED TO INDEMNIFY THE INDEMNIFIED PERSON RECEIVING SUCH
PAYMENT, THE INDEMNIFIED PERSON MAKING SUCH PAYMENT IS ENTITLED TO BE
INDEMNIFIED AND REIMBURSED BY DEBTOR WITH RESPECT THERETO.  WITHOUT LIMITATION,
THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF
ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
 DEBTOR HEREBY INDEMNIFIES AND HOLDS SECURED PARTY AND BUYER HARMLESS FROM AND
AGAINST ANY AND ALL DOCUMENTARY, STAMP, INTANGIBLE, TRANSFER AND OTHER SIMILAR
TAXES, CHARGES OR LEVIES IMPOSED ON OR ASSERTED AGAINST SECURED PARTY IN
CONNECTION WITH TRANSFER OF THE PURCHASED ASSETS PURSUANT TO THIS AGREEMENT.

 

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SECTION 15.                     INDEMNIFICATION BY BUYER.   BUYER HEREBY AGREES
TO PAY, INDEMNIFY, DEFEND AND HOLD DEBTOR AND ITS EMPLOYEES AND AGENTS (EACH,
“DEBTOR INDEMNIFIED PERSON”) HARMLESS (TO THE FULLEST EXTENT PERMITTED BY LAW)
FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, SUITS, ACTIONS, INVESTIGATIONS,
PROCEEDINGS, AND DAMAGES, AND ALL REASONABLE ATTORNEYS FEES AND DISBURSEMENTS
AND OTHER COSTS AND EXPENSES ACTUALLY INCURRED IN CONNECTION THEREWITH (AS AND
WHEN THEY ARE INCURRED AND IRRESPECTIVE OF WHETHER SUIT IS BROUGHT), AT ANY TIME
ASSERTED AGAINST, IMPOSED UPON, OR INCURRED BY ANY OF THEM IN CONNECTION WITH OR
AS A RESULT OF OR RELATED TO BUYER’S (AND ONLY BUYER’S) NEGLIGENT ACTIONS AFTER
THE CLOSING DATE WITH RESPECT TO THE SERVICING OF ANY LOAN OR LOANS, PROVIDED IT
IS DETERMINED BY A FINAL NON-APPEALABLE ORDER OF A COURT OF COMPETENT
JURISDICTION OR OTHER AGREED UPON DISPUTE RESOLUTION PROCEEDING THAT BUYER’S
NEGLIGENCE WAS THE PROXIMATE CAUSE OF DAMAGES OR LOSS WHICH IS THE SUBJECT
MATTER OF THE CLAIM FOR WHICH INDEMNIFICATION IS SOUGHT BY THE DEBTOR
INDEMNIFIED PARTY, AND PROVIDED, FURTHER, THAT THE BUYER’S OBLIGATION TO PAY OR
REIMBURSE DEBTOR FOR LEGAL FEES, COSTS AND EXPENSES INCURRED IN CONNECTION WITH
DEBTOR’S DEFENSE OF SUCH CLAIMS SHALL NOT EXCEED $30,000.00 (THE “DEBTOR
INDEMNIFIED LIABILITY”).  THE FOREGOING TO THE CONTRARY NOTWITHSTANDING, BUYER
SHALL HAVE NO OBLIGATION TO ANY DEBTOR INDEMNIFIED PERSON UNDER THIS SECTION 15
WITH RESPECT TO ANY DEBTOR INDEMNIFIED LIABILITY THAT A COURT OF COMPETENT
JURISDICTION FINALLY DETERMINES TO HAVE RESULTED FROM THE NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH DEBTOR INDEMNIFIED PERSON.  THIS PROVISION SHALL SURVIVE THE
TERMINATION AND PERFORMANCE OF THIS AGREEMENT.  IF ANY DEBTOR INDEMNIFIED PERSON
MAKES ANY PAYMENT TO ANY OTHER DEBTOR INDEMNIFIED PERSON WITH RESPECT TO A
DEBTOR INDEMNIFIED LIABILITY AS TO WHICH BUYER WAS REQUIRED TO INDEMNIFY THE
DEBTOR INDEMNIFIED PERSON RECEIVING SUCH PAYMENT, THE DEBTOR INDEMNIFIED PERSON
MAKING SUCH PAYMENT IS ENTITLED TO BE INDEMNIFIED AND REIMBURSED BY BUYER WITH
RESPECT THERETO.

 

SECTION 16.                     AUTHORIZATION FOR ASSIGNMENT STATEMENTS.

 

SECTION 16.1                                DEBTOR HEREBY AUTHORIZES BUYER,
FOLLOWING THE EFFECTIVENESS OF THIS AGREEMENT, TO FILE APPROPRIATE ASSIGNMENT
STATEMENTS IN THE PUBLIC RECORDS WITH RESPECT TO EACH EFFECTIVE FINANCING
PREVIOUSLY FILED IN FAVOR OF DEBTOR WITH RESPECT TO ANY SECURITY INTEREST
SECURING ANY LOAN.

 

SECTION 16.2                                LAURUS HEREBY AUTHORIZES BUYER,
FOLLOWING THE EFFECTIVENESS OF THIS AGREEMENT, TO TERMINATE ANY LIENS HELD OR
FILED BY LAURUS AGAINST THE DEBTOR WITH RESPECT TO THE PURCHASED ASSETS.

 

SECTION 16.3                                COAST HEREBY AUTHORIZES BUYER,
FOLLOWING THE EFFECTIVENESS OF THIS AGREEMENT, TO TERMINATE ANY LIENS HELD OR
FILED BY COAST AGAINST THE DEBTOR WITH RESPECT TO THE PURCHASED ASSETS.

 

SECTION 17.                          MISCELLANEOUS

 

SECTION 17.1                                RESERVATION OF RIGHTS.  EXCEPT AS
EXPRESSLY PROVIDED HEREIN WITH RESPECT TO THE PURCHASED ASSETS, NOTHING IN THIS
AGREEMENT RELEASES OR ADVERSELY AFFECTS ANY RIGHTS OF SECURED PARTY UNDER THE
LOAN AND SECURITY AGREEMENT.  WITHOUT LIMITING THE FOREGOING, UNTIL ALL
INDEBTEDNESS AND OBLIGATIONS NOW OR HEREAFTER OWING BY DEBTOR TO SECURED PARTY
UNDER THE LOAN AND SECURITY AGREEMENT ARE PAID IN FULL, ALL SECURITY INTERESTS
AND LIENS OF SECURED PARTY IN ANY AND ALL PROPERTY OF DEBTOR OTHER THAN THE
PURCHASED ASSETS REMAIN IN FULL FORCE AND EFFECT.  ALL

 

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RIGHTS AND REMEDIES UNDER OR IN CONNECTION WITH THE LOAN AND SECURITY AGREEMENT
OR APPLICABLE LAW ARE EXPRESSLY RESERVED.

 

SECTION 17.2                                EFFECTIVENESS.  THIS AGREEMENT SHALL
BE BINDING AND DEEMED EFFECTIVE WHEN EXECUTED BY BUYER, DEBTOR AND SECURED
PARTY, AND BY THE PARTIES IN INTEREST WHOSE SIGNATURE IS PROVIDED FOR ON
FOLLOWING THE SIGNATURE PAGES HEREOF.  IT IS FURTHER UNDERSTOOD AND AGREED THAT
ALL REPRESENTATIONS AND WARRANTIES MADE HEREUNDER, WHETHER MADE TO BUYER OR
ANOTHER PARTY, SHALL BE DEEMED TO HAVE BEEN MADE TO BUYER WITH THE INTENT THAT
BUYER RELY UPON SAME IN ENTERING INTO THIS AGREEMENT.

 

SECTION 17.3                                SECTION HEADINGS; SEVERABILITY. 
HEADINGS AND NUMBERS HAVE BEEN SET FORTH HEREIN FOR CONVENIENCE ONLY.  UNLESS
THE CONTRARY IS COMPELLED BY THE CONTEXT, EVERYTHING CONTAINED IN EACH SECTION
APPLIES EQUALLY TO THIS ENTIRE AGREEMENT.  EACH PROVISION OF THIS AGREEMENT
SHALL BE SEVERABLE FROM EVERY OTHER PROVISION OF THIS AGREEMENT FOR THE PURPOSE
OF DETERMINING THE LEGAL ENFORCEABILITY OF ANY SPECIFIC PROVISION.

 

SECTION 17.4                                INTERPRETATION.  NEITHER THIS
AGREEMENT NOR ANY UNCERTAINTY OR AMBIGUITY HEREIN SHALL BE CONSTRUED AGAINST
SECURED PARTY, BUYER OR DEBTOR, WHETHER UNDER ANY RULE OF CONSTRUCTION OR
OTHERWISE.  ON THE CONTRARY, EACH OF SECURED PARTY, BUYER AND DEBTOR HAS BEEN
INVOLVED IN THE NEGOTIATION AND PREPARATION OF THIS AGREEMENT AND HAS BEEN
REPRESENTED BY COUNSEL OF THEIR CHOICE IN CONNECTION THEREWITH.

 

SECTION 17.5                                CHOICE OF LAW AND VENUE; JURY TRIAL
WAIVER.

 

THE VALIDITY OF THIS AGREEMENT AND THE OTHER DOCUMENTS OR AGREEMENTS EXECUTED IN
CONNECTION HEREWITH (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN SUCH OTHER
DOCUMENT OR AGREEMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA.

 

EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
DOCUMENTS OR AGREEMENT IN CONNECTION HEREWITH OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH PARTY
REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE
EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.

 

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SECTION 17.6.                             NOTICES.  UNLESS OTHERWISE
SPECIFICALLY PROVIDED IN THIS AGREEMENT, ALL NOTICES OR DEMANDS BY ANY PARTY TO
ANOTHER RELATING TO THIS AGREEMENT SHALL BE IN WRITING AND SHALL BE PERSONALLY
DELIVERED OR SENT BY REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID, RETURN
RECEIPT REQUESTED), OVERNIGHT COURIER OR TELEFACSIMILE TO EACH OTHER PARTY, AS
THE CASE MAY BE, AT ITS ADDRESS SET FORTH BELOW:

 

Buyer:

 

Keltic Financial Partners, LP

 

 

555 Theo. Fremd Avenue

 

 

Rye, NY 10580

 

 

Attn: Robert N. Laughlin, Managing Partner

 

 

Fax No.: (914) 921-1154

 

 

 

with copies to:

 

Pitney Hardin LLP

 

 

200 Campus Dr.

 

 

Florham Park, NJ 07932

 

 

Attn: Peter A. Forgosh, Esq.

 

 

Fax No.: (973) 966-1550

 

 

 

Secured Party:

 

Wells Fargo Foothill, Inc.

 

 

2450 Colorado Avenue

 

 

Suite 3000 West

 

 

Santa Monica, California 90404

 

 

Attn: Business Finance Division Manager

 

 

Fax No.: 310-453-7413

 

 

 

 

 

Wells Fargo Foothill, Inc.

 

 

13717 Noel Road

 

 

Suite 1020

 

 

Dallas, Texas 75240

 

 

Attn: Loan Portfolio Manager

 

 

Fax No.: 972-387-4375

 

 

 

with copies to:

 

Jenkens & Gilchrist

 

 

1445 Ross Avenue, Suite 3200

 

 

Dallas, Texas 75202

 

 

Attn: Daniel C. Garner, Esq.

 

 

Fax No. 214-855-4300

 

 

 

Debtor:

 

Equinox Business Credit Corporation

 

 

1011 Highway 71, Suite 200

 

 

Spring Lake, New Jersey 07762

 

 

Attn: Walter M. Craig, Jr.

 

 

 

with copies to:

 

St. John & Wayne, L.L.C.

 

 

2 Penn Plaza - 10th Floor

 

 

Newark, New Jersey 07105

 

 

Attn: Lee A. Albanese, Esq.

 

 

Fax No.: 973-491-3408

 

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Any party may change the address at which it is to receive notices hereunder, by
notice in writing in the foregoing manner given to each other party.  All
notices or demands sent in accordance with this Section 17.6, shall be deemed
received on the earlier of the date of actual receipt or three (3) Business Days
after the deposit thereof in the mail.

 

Section 17.7                                Amendments in Writing.  This
Agreement only can be amended by a writing signed by Secured Party, Buyer and
Debtor.

 

Section 17.8                                Counterparts; Telefacsimile
Execution.  This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement.  Delivery of an
executed counterpart of this Agreement by telefacsimile or electronic delivery
shall be equally as effective as delivery of an original executed counterpart of
this Agreement.  Any party delivering an executed counterpart of this Agreement
by telefacsimile or electronic delivery also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement.  The foregoing shall apply to each other agreement or other
document executed in connection with this Agreement, mutatis mutandis.

 

SECTION 17.9                                BUYER PRACTICES.  BUYER SHALL FOLLOW
ITS USUAL AND CUSTOMARY POLICIES AND PROCEDURES AND EXERCISE ITS PRUDENT
BUSINESS JUDGMENT IN CONNECTION WITH ANY AMENDMENTS, MODIFICATIONS OR EXTENSIONS
IT MAY GRANT TO AN OBLIGOR IN CONNECTION WITH ANY OF THE LOANS.

 

SECTION 17.10                          DEFAULT.  IN THE EVENT THAT EITHER DEBTOR
OR BUYER FAILS TO MAKE A PAYMENT DUE PURSUANT TO SECTIONS 3.2(B), 3.3(D), 3.4
AND 3.6 WITHIN THIRTY (30) DAYS AFTER RECEIPT OF NOTICE, IN WRITING, FROM THE
DEMANDING PARTY, OF THE FAILURE TO MAKE SUCH PAYMENT, THEN, IF THE DEMANDING
PARTY IS SUCCESSFUL IN ITS CLAIM, IN ADDITION TO ANY OTHER REMEDY AVAILABLE TO
THE NON-DEFAULTING PARTY, THE DEFAULTING PARTY SHALL PAY INTEREST ON THE SUM DUE
(FROM ITS ORIGINALLY SCHEDULED DUE DATE) AT THE RATE OF LIBOR PLUS FIVE PERCENT
(5%) AND REASONABLE ATTORNEYS’ FEES INCURRED IN THE COLLECTION OF SAME.

 

SECTION 17.11                          INTEGRATION.  THIS AGREEMENT, TOGETHER
WITH THE OTHER LOAN DOCUMENTS, REFLECTS THE ENTIRE UNDERSTANDING OF THE PARTIES
WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY AND SHALL NOT BE
CONTRADICTED OR QUALIFIED BY ANY OTHER AGREEMENT, ORAL OR WRITTEN, BEFORE THE
DATE HEREOF.

 

[Signature Page Follows]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.

 

 

SECURED PARTY:

 

 

 

 

WELLS FARGO FOOTHILL, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

BUYER:

 

 

 

KELTIC FINANCIAL PARTNERS, LP

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

DEBTOR:

 

 

 

EQUINOX BUSINESS CREDIT CORPORATION

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

to

 

TRANSFER AND SALE AGREEMENT

 

LOANS

 

BORROWERS OF EQUINOX AS OF DECEMBER 16, 2004

 

1.                                       The Crowell Corporation

Loan and Security Agreement dated August 15, 2002 evidenced by Promissory Note
in the face amount of $1,000,000.

 

2.                                       North American Cable Equipment, Inc.

Loan and Security Agreement dated March 29, 2002 evidenced by Promissory Note
dated $1,000,000.

 

3.                                       Kirby and Allen, Inc.

Loan and Security Agreement dated January 24, 2002 evidenced by Promissory Note
in the face amount of $3,000.000.

 

4.                                       Ambassador Publications, LLC

Loan and Security Agreement dated January 29, 1993 evidenced by Promissory Note
in the face amount of $2,000,000.

 

5.                                       Ace Surgical Supply Co., Inc. and IHW,
Inc.

Loan and Security Agreement dated June 19, 2003 evidenced by Promissory Note in
the face amount of $2,000,000, executed by Ace Surgical Supply Co., Inc., and a
Promissory Note in the amount of $2,000,000, executed by IHW, Inc.

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

to

 

TRANSFER AND SALE AGREEMENT

 

LOAN DOCUMENTS

 

LIST OF LOAN DOCUMENTS AS OF DECEMBER 16, 2004

 

THE CROWELL CORPORATION (Borrower)

 

1.                                       Loan and Security Agreement dated
August 15, 2002

2.                                       Promissory Note by Borrower in the face
amount of $1,000,000

3.                                       Accountant’s Access Letter

4.                                       Payment Direction Letter

5.                                       Side Letter re:  Advances

6.                                       Post Closing Letter

7.                                       Lockbox Agreement with Hudson United
Bank

8.                                       Bank Account Letter

9.                                       Trademark Collateral Security Agreement

10.                                 Assignment of Trademark

11.                                 Power of Attorney

12.                                 Letter of Direction to Post Office and Post
Office Change of Address Card

13.                                 Opinion of Borrower’s Counsel (Young Conaway
Stargatt & Traylor, LLP)

14.                                 Mortgagee Waiver by Stancorp Mortgage
Investors, LLC

15.                                 Subordination Agreement among Borrower,
Equinox and Herbert B. Adelman

16.                                 Subordination Agreement among Borrower,
Equinox and Joan E. Adelman

17.                                 Subordination Agreement among Borrower,
Equinox and Robert W. Adelman

18.                                 Guaranty Agreement by Herbert Adelman

19.                                 Reliance Letter from Equipment Appraisers
re:  Equipment Appraisal by Thomas Industries Appraisal Corporation

20.                                 Cash Collateral Deposit Letter

21.                                 UCC-1 Financing Statement against Borrower
(DE)

22.                                 UCC-1 Financing Statement against Borrower
(New Castle County)

23.                                 Secretary’s Certificate

24.                                 Mortgage

25.                                 Title Commitment

26.                                 Zoning Compliance

27.                                 Reliance Letter from Environmental Engineer
re:  Phase I Environmental Report

28.                                 Settlement Statement

 

--------------------------------------------------------------------------------

 

AMBASSADOR PUBLICATIONS, LLC (Borrower)

 

1.                                       Loan and Security Agreement dated
January 29, 2003

2.                                       Promissory Note by Borrower in the face
amount of $2,000,000

3.                                       Accountant’s Access Letter

4.                                       Accountant’s Acknowledgement Letter

5.                                       Payment Direction Letter

6.                                       Side Letter re:  Advances

7.                                       Tradestyle Letter

8.                                       Borrowing Base Certificate

9.                                       Lockbox Agreement with Hudson United
Bank

10.                                 Deposit Account Control Agreement re: 
Credit Card Collections

11.                                 Bank Account Letter

12.                                 Collateral Assignment of Keyman Life
Insurance Policy on the life of Kathryn A. Hipple

13.                                 Opinion of Borrower’s Counsel (Berkowitz,
Trager & Trager, LLC)

14.                                 Subordination Agreement among Borrower,
Equinox and Kathryn Hipple

15.                                 Lien Subordination Agreement with R.R.
Donnelly & Sons and R.R. Donnelley Receivables

16.                                 Guarantee of Validity of Collateral by
Kathryn Hipple

17.                                 Post Office Change of Address Card

18.                                 Post Closing Letter

19.                                 UCC-1 Financing Statement against Borrower
(DE) (blanket)

20.                                 UCC-1 Financing Statement against Borrower
(DE) (commercial tort claims)

21.                                 Certificate of Incumbency and Resolutions

22.                                 Consent of the Holders of the Convertible
Preferred Units

23.                                 Amendment No. 1 to Loan and Security
Agreement dated November 1, 2003

 

KIRBY AND ALLEN, INC.  (Borrower)

 

1.                                       Loan and Security Agreement dated
January 24, 2002

2.                                       Promissory Note by Borrower in the face
amount of $3,000,000

3.                                       Accountant’s Access Letter

4.                                       Payment Direction Letter

5.                                       Side Letter re:  Exercising Remedies

6.                                       Supplement Letter of Credit Security
Agreement

7.                                       Lockbox Agreement

8.                                       Blocked Account Termination Letter

9.                                       Trademark Collateral Security Agreement

10.                                 Assignment of Trademarks

11.                                 Power of Attorney

12.                                 Post Office Change of Address Card

13.                                 Collateral Assignment of Keyman Life
Insurance Policy on Charles Ellis

14.                                 Collateral Assignment of Keyman Life
Insurance Policy on Chul Woo Lee

15.                                 Releases of Prior Assignments of Keyman Life
Insurance Policy for Charles Ellis

 

--------------------------------------------------------------------------------

 

16.                                 Releases of Prior Assignments of Keyman Life
Insurance Policy for Chul Woo Lee

17.                                 Opinion of Borrower’s Counsel re:  MA
Mortgage (Bernkopf, Goodman & Baseman LLP)

18.                                 Opinion of Borrower’s Counsel

19.                                 Landlord Waiver for 1330 Livingston Avenue,
N. Brunswick, NJ

20.                                 Guaranty Agreement by Charles Ellis

21.                                 Guaranty Agreement by Chul Woo Lee

22.                                 Limited Recourse Guaranty Agreement by Jung
Eun Lee

23.                                 Subordination Agreement with Choolim Park

24.                                 Post Closing Letter

25.                                 UCC-1 Financing Statements

26.                                 Payoff Letter by Wells Fargo

27.                                 Assistant Secretary’s Certificate

28.                                 Mortgage for property located at 700 Main
Street, Hingham, MA

29.                                 Mortgage for property located at 19
Gladstone Drive, E. Brunswick, NJ

30.                                 Title Commitment for MA Property

31.                                 Title Commitment for NJ Property

32.                                 Survey for MA Property

33.                                 Survey for NJ Property

34.                                 Release of Prior Mortgage(s) for MA Property

35.                                 Release of Prior Mortgage(s) for NJ Property

36.                                 Amendment No. 1 to Loan and Security
Agreement dated June 18, 2002

37.                                 Subordination and Intercreditor Agreement
among Equinox, Hemanshu Doshi and Borrower dated March 17, 2003

 

NORTH AMERICAN CABLE EQUIPMENT, INC. (Borrower)

 

1.                                       Loan and Security Agreement dated March
29, 2002

2.                                       Promissory Note by Borrower in the face
amount of $1,000,000

3.                                       Accountant’s Access Letter

4.                                       Payment Direction Letter

5.                                       Borrowing Base Certificate

6.                                       Supplement Letter of Credit Security
Agreement

7.                                       Credit Card Processor Agreements with
American Express

8.                                       Credit Card Processor Agreement with
Nova (Visa)

9.                                       Credit Card Processor Agreement with
Nova (Mastercard)

10.                                 Lockbox Agreement

11.                                 Bank Account Letter

12.                                 Intellectual Property Security Agreement

13.                                 Collateral Assignment of Keyman Life
Insurance Policy on Aaron Starr

14.                                 Opinion of Borrower’s Counsel (O’Neill,
Bragg & Staffin, P.C.)

15.                                 Landlord Waiver with Andrews Bridge
Associates LP (West Chester, PA)

16.                                 Landlord Waiver with Tennis Partners, Inc.
(Margate, FL)

17.                                 Landlord Waiver with Development Associates,
Inc. (Henderson, NV)

 

--------------------------------------------------------------------------------

 

18.                                 Landlord Waiver with Bales-Meyer Partnership
(St. Peters, Missouri)

19.                                 Guaranty Agreement by Aaron Starr

20.                                 Post Office Change of Address Cards

21.                                 Post Closing Letter

22.                                 UCC-1 Financing Statements

23.                                 Payoff Letter by Finova Capital Corporation

24.                                 Sony Electronics Termination Letter

25.                                 Secretary’s Certificate

26.                                 Amendment No. 1 to Loan and Security
Agreement dated April 9, 2003

27.                                 Amendment No. 2 to Loan and Security
Agreement dated October, 2003

28.                                 Amendment No. 3 to Loan and Security
Agreement dated December 2, 2003

29.                                 Collateral Pledge Agreement by Aaron Star in
favor of Penn SE Mezzanine Fund, L.P. dated May 24, 2002

30.                                 Security Agreement by Borrower to Penn SE
Mezzanine Fund, L.P. dated May 24, 2002

31.                                 Promissory Note by Borrower to Penn SE
Mezzanine Fund, L.P. dated May 24, 2002 in the face amount of $400,000.00

32.                                 Disclosure for Confession of Judgment by
Borrower dated May 24, 2002

 

ACE SURGICAL SUPPLY CO., INC. and IHW, Inc. (Borrower)

 

1.                                       Loan and Security Agreement dated June
19, 2003

2.                                       Promissory Note by Borrower

3.                                       Promissory Note by IHW, Inc.

4.                                       Accountant’s Access Letter

5.                                       Payment Direction Letter

6.                                       Side Letter re:  Advances

7.                                       Borrowing Base Certificate

8.                                       Supplement Letter of Credit Security
Agreement

9.                                       Letter of Credit Application

10.                                 Bank Account Letters

11.                                 Trademark Collateral Security Agreement

12.                                 Assignment of Security

13.                                 Power of Attorney

14.                                 Tradestyle Letter

15.                                 Collateral Assignment of Keyman Life
Insurance policy on life of David Guttman

16.                                 Release of Prior Assignment of Keyman Life
Insurance policy on life of David Guttman

17.                                 Opinion of Borrower’s Counsel (Ellenoff
Grossman & Schole LLP)

18.                                 Landlord Waiver by Atlantic Paste & Glue
(170 53rd Street, Brooklyn, NY)

19.                                 Landlord Waiver by Segut (170 53rd Street,
Brooklyn, NY)

20.                                 Warehouseman Waiver by Eric Storage &
Handling (742 Old Post Rd., Edison, NJ)

21.                                 Limited Guaranty Agreement by David Guttman

22.                                 Guaranty Agreement by Creative Technologies
Corp.

 

--------------------------------------------------------------------------------

 

23.                                 Guaranty Security Agreement by Creative
Technologies Corp.

24.                                 Post Office Change of Address Cards

25.                                 Post-Closing Letter

26.                                 UCC-1 Financing Statements

27.                                 Payoff Letter by Wells Fargo Credit, Inc.

28.                                 Secretary’s Certificate of Borrower

29.                                 Secretary’s Certificate of IHW, Inc.

30.                                 Secretary’s Certificate of Creative
Technologies Corp.

31.                                 Amendment No. 1 to Loan and Security
Agreement dated October 18, 2004

 

--------------------------------------------------------------------------------

 

EXHIBIT C

to

TRANSFER AND SALE AGREEMENT

 

FORM OF ESTOPPEL CERTIFICATE

 

BORROWER’S ESTOPPEL CERTIFICATE

 

In order to induce Wells Fargo Foothill, Inc., a California corporation, and its
assigns, including Keltic Financial Partners, LP, a Delaware limited partnership
(collectively, “Foothill”) to accept an assignment of the Loan Documents (the
“Loan Documents”) from Equinox Business Credit Corp., a New Jersey corporation
(“Equinox”), evidencing and securing the financial accommodations extended by
Equinox to                                        (“Borrower”), which Loan
Documents are more fully described on Exhibit A, annexed hereto and made a part
hereof, Borrower hereby certifies, represents, warrants and agrees as follows:

 

(a)                                 I am the President of Borrower and am duly
authorized to make and execute this Certificate.

 

(b)                                I have reviewed the terms of the Loan
Documents, and have made, or have caused to be made under my supervision, a
review in reasonable detail of the loan transactions with Equinox and the
financial condition of the Borrower during the immediately preceding year. 
Except as set forth in Exhibit B, there are no amendments, modifications,
waivers, forbearance or other alteration of the terms of the Loan Documents.

 

(c)                                 The review described in paragraph (b) above
did not disclose the existence during or at the end of such period, and I have
no knowledge of the existence as of the date hereof, of any condition or event
which constitutes a Default or an Event of Default, except as set forth in
Exhibit C.

 

(d)                                All of Borrower’s representations and
warranties in the Loan Documents are, except as set forth on Exhibit D annexed
hereto and made a part hereof, true and correct as of the date of this
Certificate and ratified and confirmed without condition as if made anew.

 

(e)                                 As of the date of this Certificate, (a) all
obligations and conditions under the Loan Documents to be performed to date by
Equinox have been performed and satisfied; (b) no event has occurred which, with
the passage of time or the giving of notice or both, would constitute an event
of default by Equinox under the Loan Documents; and (c) Borrower has no
defenses, right of off-set, counterclaim, right of recoupment, discount or
claims of any kind or nature against Equinox under or relating to the Loan
Documents or otherwise.

 

(f)                                   I have reviewed or caused to be reviewed
under my supervision the Borrowing Base Certificate dated
                               , 2004 (the “BBC”), annexed hereto and made a
part hereof as Exhibit E.

 

--------------------------------------------------------------------------------

 

(g)                                As of                           , 2004, the
outstanding obligation of Borrower to Equinox was
$                                     .

 

(h)                                The review described in paragraph (f) above
did not disclose the existence of any errors or omissions in the BBC and the BBC
represents a true and accurate state of the matters set forth therein as of the
date set forth in the BBC.

 

(i)                                    The Borrower has not changed its name or
transacted business under any trade name, style, or fictitious name, other than
those set forth in the Loan Documents.

 

(j)                                    The Borrower has not changed its state of
formation, changed the location of its chief executive office, or changed the
location of its books and records, or changed the location of or disposed of any
of its assets (other than as permitted under the Loan Documents) or established
any new inventory or equipment locations, other than as previously disclosed to
Equinox in writing or as set forth in Exhibit F annexed hereto and made a part
hereof.

 

(k)                                 The Borrower has not permitted or suffered
to exist any liens or encumbrances on any of its properties, whether real,
personal, or mixed, other than as specifically permitted in the Loan Documents.

 

(l)                                    Without limiting the generality of the
foregoing provisions, Borrower certifies as follows: (a) Borrower has received
no notice by any governmental authority or person claiming a violation of, or
requiring compliance with, any federal, state or local statute, ordinance, rule,
regulation or other requirement of law; (b) there is no action, suit or
proceeding at law or in equity by or before any court, governmental
instrumentality or other agency now pending, or to the best of Borrower’s
knowledge, threatened against Borrower or any of its respective properties or
rights, wherein an unfavorable decision, ruling or finding would materially
impair its right to carry on its business substantially as now conducted or
would materially adversely affect its financial condition or ability to carry
out its obligations under or the validity or enforceability of the Loan
Documents; and (c) Borrower is not in breach of the performance, observance or
fulfillment of any of its obligations, covenants or conditions contained in any
agreement or instrument to which it is a party, and further, no Default or Event
of Default has occurred which would permit the holder of any money obligation to
declare such obligation due prior to its stated date of maturity.

 

All of the capitalized terms not expressly defined in this Certificate shall
have the meanings ascribed to such terms in the Loan Documents.

 

The foregoing statements are made with the express understanding and agreement
of Borrower that Foothill and Foothill’s successors and assigns may and are
authorized to rely upon this Certificate in consummating the proposed and any
future assignment of the Loan Documents.  This Certificate shall be deemed made
to any subsequent assignee as if such assignee were the original assignee to
whom this Certificate is delivered.

 

WITNESS AND SIGNATURE PAGE FOLLOWS

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, intending to be legally bound herby, the undersigned has
caused this Certificate to be duly executed and delivered this                
day of                                  , 2004.

 

WITNESS:

 

Borrower:

 

 

 

 

 

 

 

Name:

 

Company Name:

Title:

 

 

 

 

Name:

 

 

Title:

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

LIST OF LOAN DOCUMENTS

 

 

EXHIBIT B

 

AMENDMENTS, MODIFICATIONS, WAIVERS, FORBEARANCE OR OTHER
ALTERATION OF THE TERMS OF THE LOAN DOCUMENTS

 

 

EXHIBIT C

 

DEFAULTS AND EVENTS OF DEFAULT

 

 

EXHIBIT D

 

REPRESENTATIONS AND WARRANTIES

 

 

EXHIBIT E

 

BORROWING BASE CERTIFICATE

 

 

EXHIBIT F

 

NEW LOCATIONS

 

--------------------------------------------------------------------------------

 

EXHIBIT D

to

TRANSFER AND SALE AGREEMENT

 

FORM OF BILL OF SALE

 

BILL OF SALE

 

This BILL OF SALE, dated as of December           , 2004, by Wells Fargo
Foothill, Inc. (“Secured Party”) in favor of Keltic Financial Partners, LP
(“Buyer”).

 

BACKGROUND

 

This Bill of Sale is being executed and delivered pursuant to that certain
Agreement in Respect of Sale and Transfer in Disposition of Collateral under
Uniform Commercial Code, dated as of December           , 2004, among Wells
Fargo Foothill, Inc., Keltic Financial Partners, LP and Equinox Business Credit
Corporation (the  “Agreement”).  All capitalized terms used but not defined
herein shall have the meanings ascribed to said terms in the Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration more particularly described in the Agreement, the receipt
and sufficiency of which is hereby acknowledged, and pursuant to Section 9-610
of the Uniform Commercial Code, as enacted and as amended in the State of New
Jersey, Secured Party does hereby grant, bargain, sell, assign, transfer and
convey unto the Buyer, its successors and assigns, all right, title and interest
of Debtor in and to the Purchased Assets, including, without limitation, all of
the Loans, Loan Documents, Loan Files and Estoppel Certificates described on
Exhibit A hereto, upon and subject to the terms described in the Agreement, the
terms of which are incorporated herein by reference as though set forth fully at
length.

 

Buyer hereby assumes all of the obligations of Debtor in connection with or
arising out of the Loan Documents and accruing from and after the date hereof.

 

This Bill of Sale is made subject to the terms of the Agreement and is made
without recourse and without any representations or warranties of any kind
whatsoever, except as expressly provided therein, but subject to the provisions
of Section 10 thereof.  Without limiting the foregoing, the sale and transfer of
the Purchased Assets as provided by this Bill of Sale is expressly made by
Secured Party, and accepted by Buyer, without recourse on an “as is”, “where is”
basis, with all faults, and Buyer, by acceptance of this Bill of Sale, expressly
acknowledges that, except as expressly stated in Section 9.2 of the Agreement,
Secured Party makes no warranty or representation, express or implied, and that
there is no warranty, express or implied, arising under this Bill of Sale or by
operation of law relating to the Purchased Assets, all of which are expressly
disclaimed.  There is no warranty relating to Debtor’s title, possession, quiet
enjoyment or the like in this disposition.

 

[END OF TEXT; SIGNATURE PAGE FOLLOWS]

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, Secured Party, intending to be legally bound hereby, has
executed this Bill of Sale as of the date first above written.

 

 

 

Secured Party:

 

 

 

 

 

WELLS FARGO FOOTHILL, INC.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

 

Agreed to:

 

 

 

Acknowledged and consented to this             day of December, 2004.

 

Buyer:

 

 

Keltic Financial Partners, LP

Equinox Business Credit Corp.

 

By: Keltic Financial Services, LLC

 

 

 

By:

 

 

 

By:

 

 

Name:

 

 

 

Name:

 

 

Title:

 

 

 

Title:

 

 

 

--------------------------------------------------------------------------------

 

ACKNOWLEDGMENT

 

STATE OF

:

 

:SS

COUNTY OF

:

 

On this, the            day of December, 2004, before me, the subscriber, a
notary public for the aforesaid State and County, personally appeared
                                                                    , who I am
satisfied is the person who executed the foregoing instrument as the
                                        of Wells Fargo Foothill, Inc., the
secured party named in the foregoing instrument and who acknowledge that he/she,
as such officer, being authorized to do so, executed the foregoing instrument as
such corporation’s voluntary act and deed for the purposes therein contained by
signing on behalf of said corporation as such officer.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

 

 

 

 

Notary Public

 

--------------------------------------------------------------------------------

 

EXHIBIT A

To Bill of Sale

 

--------------------------------------------------------------------------------

 

EXHIBIT E

to

TRANSFER AND SALE AGREEMENT

 

FORM OF OPINIONS OF DEBTOR’S DELAWARE COUNSEL

(attached)

 

FORM OF OPINIONS OF DEBTOR’S NEW JERSEY COUNSEL

(attached)

 

--------------------------------------------------------------------------------

 

SCHEDULE 3.1(b)

to

TRANSFER AND SALE AGREEMENT

 

ESTIMATED PURCHASE PRICE

 

The Estimated Purchase Price is computed as follows:

 

(a)

Aggregate outstanding principal loan balance due under the Loan Documents

 

$

7,056,982.65

 

 

 

 

 

 

(b)

Unpaid accrued interest relating to the Loans

 

$

27,504.13

 

 

 

 

 

 

(c)

Deposit

 

$

6,000.00

 

 

 

 

 

 

(d)

Accrued but unpaid fees (prorated)

 

$

5,153.03

 

 

 

 

 

 

(e)

Accrued but unpaid LC fees (prorated)

 

$

352.60

 

 

 

 

 

Subtotal

 

 

$

7,095,992.41

 

 

 

 

 

Less:

 

 

 

 

(i)

Loss Adjustment

 

$

40,000.00

 

 

 

 

 

 

 

 

 

 

 

 

(ii)

Purchase Price Adjustment

 

$

112,478.00

 

 

 

 

 

 

 

 

 

 

 

 

(iii)

Unearned portion (proceeds) of prepaid fees

 

$

2,662.50

 

 

 

 

 

 

 

 

 

 

 

 

(iv)

Aggregate credits due to the Obligors

 

$

0

 

 

 

 

 

 

 

 

 

Subtotal

 

 

$

155,140.50

 

 

 

 

 

 

Estimated Purchase Price (before the Hold Back Amount):

 

$

6,940,851.91

 

 

 

 

 

 

Less:

 

 

 

 

Hold Back Amount:

 

$

(825,000.00

)

 

 

 

 

 

Total Estimated Purchase Price to be paid by Buyer to Secured Party

 

$

6,115,851.91

 

 

--------------------------------------------------------------------------------

 

SCHEDULE 9.3(i),

to

TRANSFER AND SALE AGREEMENT

 

UNDISCLOSED LIABILITIES OF DEBTOR

 

None

 

--------------------------------------------------------------------------------