Exhibit 10.22
 
LOAN AND SECURITY AGREEMENT
 
THIS LOAN AND SECURITY AGREEMENT (as amended, modified or restated from time to
time, this “Agreement”) dated as of NOVEMBER 4, 2011 (the “Effective Date”),
will serve to set forth the terms of the Credit Facility by and among THE
NATIONAL CREDIT UNION ADMINISTRATION BOARD AS LIQUIDATING AGENT OF WESTERN
CORPORATE FEDERAL CREDIT UNION (together with its successors and assigns,
“Lender”) and MINISTRY PARTNERS INVESTMENT COMPANY, LLC, a California limited
liability company (“Debtor”).
 
RECITALS
 
WHEREAS, Debtor and WESTERN CORPORATE FEDERAL CREDIT UNION have entered into
that certain LOAN AND SECURITY AGREEMENT dated as of NOVEMBER 30, 2009 (as
amended, modified or restated from time to time, the “Original Loan Agreement”).
 
WHEREAS, Debtor and Lender have agreed for purposes of clarity and ease of
administration, to amend the Original Loan Agreement and then restate and
supersede such agreement in its entirety by means of this Agreement.
 
WHEREAS, Debtor has requested that Lender extend the Credit Facility to Debtor
on the terms described in this Agreement.
 
WHEREAS, Lender is willing to make the Credit Facility available to Debtor upon
and subject to the provisions, terms and conditions set forth in the Loan
Documents.
 
NOW THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
 
1. Definitions.  As used in this Agreement, all exhibits, appendices and
schedules hereto, and in any other Loan Documents made or delivered pursuant to
this Agreement, the following terms will have the meanings given such terms in
this Section 1 or in the provisions, sections or recitals herein:
 
“Act” means the USA Patriot Act of 2001, 31 U.S.C. § 5318.
 
“Affiliate” means, with respect to a specified Person, another Person that
directly or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
 
“Appraisal” means an appraisal that satisfies the requirements of an appraisal
set forth in the Underwriting Guidelines and is otherwise in form and substance
satisfactory to Lender.
 
“Borrowing Base” means an amount equal to up to 66.67% of the outstanding
principal balance of Debtor’s Eligible Notes, or Collateral Notes in which
Debtor owns a participation interest and which would otherwise be Eligible
Notes, in each case pledged to Lender as Collateral from and after the Effective
Date, as determined from time to time.
 
“Business Day” means any day other than a Saturday, Sunday or any other day on
which the Federal Reserve Bank of Dallas, Texas, is closed.
 
“Call Date” has the meaning stated in Section 2(b).
 
“Cash Flow Available for Debt Service” means, with respect to the maker of any
Collateral Note for the prior twelve (12) month period most recently ending,
such maker’s annual Net Income (or change in net assets) plus interest expense
related to the Collateral Loan (if taken out of such maker’s financial
statement) plus depreciation (if taken out of such maker’s financial statement)
plus amortization (if taken out of such maker’s financial statement), plus
principal payments relating to the Collateral Loan, plus interest and principal
on Debt of a Collateral Obligor if such Debt has a superior lien position to
that of Debtor with respect to any collateral securing such Collateral Loans,
for the prior twelve (12) month period most recently ending, provided, that,
principal and interest must be derived from financial statement footnotes for
any maker that has more than one Collateral Loan outstanding.
 
 
 

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“Claims” has the meaning stated in Section 12.
 
“Code” means the Uniform Commercial Code as the same may, from time to time, be
enacted and in effect in the State of Texas; provided, that to the extent that
the Code is used to define any term herein or in any Loan Document and such term
is defined differently in different articles or divisions of the Code, the
definition of such term contained in Article 9 shall govern; provided further,
that in the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection or priority of, or remedies with respect to, Lender’s
lien on any Collateral is governed by the Uniform Commercial Code as enacted and
in effect in a jurisdiction other than the State of Texas, the term “Code” shall
mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions.
 
“Collateral” means:
 
(a) All Collateral Notes and other Collateral Loan Documents relating to such
Collateral Notes pledged to Lender from time to time;
 
(b) All cash paid or consideration received by Debtor from all Purchase
Commitments held by, or subsequently obtained by, Debtor;
 
(c) All of the collateral pledged to Lender to secure the Members United
Facility;
 
(d) All payment intangibles, payment rights, general intangibles and all other
rights relating to or arising under the Collateral Loan Documents pledged to
Lender from time to time;
 
(e) All property of Debtor, now owned or hereafter acquired, upon which Lender’s
lien is purported to be created by the Collateral Loan Documents; and
 
(f) All books, records, and data containing any information, pertaining directly
or indirectly to the Collateral and any right of Debtor to retrieve data and
other information pertaining directly or indirectly to the Collateral from third
parties.
 
The term “Collateral,” as used herein, shall also include (a) any other property
or assets, real or personal, tangible or intangible, now existing or hereafter
acquired, of Debtor that may at any time be or become subject to a security
interest or lien in favor of Lender as security for the Indebtedness, and (b)
all SUPPORTING OBLIGATIONS (including, but not limited to, all Mortgages, liens,
security interests and guaranties relating to or arising under or in connection
with the Collateral Notes), PRODUCTS and PROCEEDS of the foregoing (including
without limitation, insurance payable by reason of loss or damage to the
foregoing property) and any property, assets securities, guaranties or monies of
Debtor which may at any time come into the possession of Lender.
 
 
 

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“Collateral Loan” means (a) a loan made by Debtor evidenced by a Collateral
Note; (b) all rights, including all rights of repayment, under the Collateral
Loan Documents and all other agreements, documents and instruments arising from
such loan or relating thereto; and (c) all proceeds arising from such loan or
relating thereto (including, but not limited to any collateral acquired by
Debtor in the exercise of its rights under the Collateral Loan Documents).
 
“Collateral Loan Documents” means the Collateral Notes, the Mortgages, and all
other agreements (including, without limitation, all security agreements,
pledges or other agreements evidencing any lien or encumbrance securing a
Collateral Note), guaranties, instruments and documents evidencing, securing,
governing, guaranteeing, pertaining or relating to a Collateral Note.
 
“Collateral Note” means the promissory notes or other similar rights to payment
executed by a Collateral Obligor and pledged by Debtor (whether as the lead
lender or a participant) to Lender as Collateral, which are described in
Schedule I attached hereto (as the same may be amended from time to time).
 
“Collateral Obligor” means any Person who guaranteed or is otherwise obligated
to pay or perform all or any portion of the indebtedness evidenced by a
Collateral Note whether as a maker, co-signer or in any other capacity.
 
“Constituent Documents” means the organizational and governance documents and
agreements of a Person.
 
“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or
otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.
 
“Credit Facility” has the meaning stated in Section 2(a).
 
“Current Financial Statements” means financial statements of a Collateral
Obligor which (a) in the case of a Collateral Loan described by Section 7(o),
have been delivered in compliance with Section 7(o), and (b) in the case of any
other Collateral Loan, have been delivered within one hundred twenty (120) days
after the end of the most recent fiscal year of such Collateral Obligor.
 
“Debt” means as to any Person at any time (without duplication) all items of
indebtedness, obligation or liability of a Person, whether mature or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, joint or
several, that should be classified as liabilities in accordance with GAAP.
 
“Debt Service” means a sum equal to (a) the payments of principal and interest
on a Collateral Note for the prior twelve (12) month period most recently
ending, and (b) the payments of principal and interest on Debt of a Collateral
Obligor for the prior twelve (12) month period most recently ending, if such
Debt has a superior lien position to that of Debtor with respect to any
collateral securing a Collateral Loan.
 
“Debt Service Coverage Ratio” shall mean, in respect of a Person and for any
period of determination, the ratio, computed on a rolling prior twelve (12)
month basis, of (a) Cash Flow Available for Debt Service to (b) Debt Service.
 
“Default” means any Event of Default or event which with notice and/or the
passage of time would be an Event of Default.
 
 
 

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“Dollars” and “$” mean lawful money of the United States of America.
 
“ECCU” means EVANGELICAL CHRISTIAN CREDIT UNION, a federally insured credit
union organized under the laws of the State of California.
 
“Eligible Notes” means those Collateral Notes which comply with all of the
following:
 
(a) Lender has a perfected first priority security interest in any such
Collateral Note and in the other Collateral Loan Documents relating thereto and
in any collateral or support obligations relating thereto.
 
(b) The Collateral Note complies with all applicable laws, rules, and
regulations governing the Loan Documents.
 
(c) The Collateral Note is enforceable in accordance with its terms against the
maker and the performance of any obligations thereunder have been completed by
Debtor.
 
(d) Debtor has good and indefeasible title to such Collateral Note and the other
Collateral Loan Documents, or portion thereof, and such Collateral Loan
Documents are not subject to any lien except liens in favor of Lender.  To the
extent Debtor has sold participation interests in such Collateral Note and other
Collateral Loan Documents, only the percentage interest of the Collateral Note
not sold by Debtor shall be considered an Eligible Note.
 
(e) The indebtedness evidenced by such Collateral Note is not subject to any
setoff, counterclaim, defense, dispute, recoupment, or adjustment.
 
(f) (A) The maker of such Collateral Note is not insolvent or the subject of any
bankruptcy or insolvency proceeding and has not made an assignment for the
benefit of creditors, suspended normal business operations, dissolved,
liquidated, terminated its existence, ceased to pay its debts as they become
due, or suffered a receiver or trustee to be appointed for any of its assets or
affairs, or (B) the Collateral Note is not “uncollectable” (a Collateral Note is
“uncollectable” if it is the subject of any foreclosure order entered into by a
court or carried out by law in a non-judicial proceeding, charged off by Debtor,
or if the maker of the Collateral Note ceases to be a legal entity under
applicable law).
 
(g) The Collateral Note is not owed by an affiliate, employee, officer, director
or equity holder of Debtor.
 
(h) The Collateral Note complies with the covenants in this Agreement applicable
thereto.
 
(i) With respect to Eligible Notes pledged as substitute Collateral under
Section 4(c), each substitute Collateral Note:
 
(i) was originated or purchased by Debtor in the ordinary course of its business
and in accordance with its Church and Ministry Loan Policy and is serviced by
Debtor or a servicer in accordance with its credit and collection policy;
 
(ii) creates a valid, subsisting, and enforceable first priority security
interest in Debtor’s favor in the property covered by the Mortgage and contains
customary and enforceable provisions adequate for the realization against the
collateral of the benefits of the security;
 
 
 

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(iii) arises under a duly authorized, delivered and validly existing and
enforceable Collateral Note and is secured by a Mortgage;
 
(iv) is a loan to an evangelical church or other religious organization that has
been in operation for at least three (3) years, and is not an Affiliate of
Debtor or the servicer;
 
(v) at the time it is pledged, has a loan-to-value ratio which does not exceed
80.00% based upon the most recent Appraisal that was performed within twelve
(12) months of the pledge date, made available to Debtor;
 
(vi) at the time it is pledged, has a Debt Service Coverage Ratio of 1.10 to
1.00 based on the Collateral Obligor’s Current Financial Statements;
 
(vii) has an original amortization period of three hundred (300) months or less;
 
(viii) requires interest to be payable no less frequently than monthly on a
current basis;
 
(ix) is a fully drawn, permanent whole debt obligation with no obligation for
future advances and is not a construction loan;
 
(x) is fully assignable without any requirement to obtain the consent of, or
give notice to, any person;
 
(xi) is not delinquent;
 
(xii) is an “instrument” or “tangible chattel paper” within the meaning of
Section 9.102 of the Code;
 
(xiii) is insured by a title insurance policy in the minimum amount equal to the
original principal balance of such Collateral Note;
 
(xiv) is secured by mortgaged property which is insured by an insurance policy
covering standard fire and traditional perils and provides for standard coverage
against loss or damage;
 
(xv) if a participated Collateral Loan, (a) is subject to a participation
agreement or loan documents which Debtor or the lead lender acts as
administrative and collateral trustee or the lead trustee and (b) Debtor or the
lead lender controls the enforcement and foreclosure of the Collateral Loan; and
 
(xvi) has not been previously pledged as collateral to another lender by Debtor.
 
The term “Eligible Notes” includes any Collateral Notes that are included in the
borrowing base under the Original Loan Agreement as of the Effective Date,
regardless of whether such Collateral Notes meet the foregoing criteria.
 
“Event of Default” has the meaning stated in Section 10.
 
 
 

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“GAAP” means generally accepted accounting principles, applied on a consistent
basis, as set forth in Opinions of the Accounting Principles Board of the
American Institute of Certified Public Accountants and/or in statements of the
Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in
question.  Accounting principles are applied on a “consistent basis” when the
accounting principles applied in a current period are comparable in all material
respects to those accounting principles applied in a preceding period.
 
“Governmental Authority” means the government of the United States of America,
any other nation or any political subdivision thereof, whether state or local,
and any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.
 
“Indebtedness” means (a) all indebtedness, obligations and liabilities of Debtor
to Lender of any kind or character, now existing or hereafter arising, under the
Note, this Agreement, the other Loan Documents, (b) all accrued but unpaid
interest on any of the indebtedness described in (a) above, (c) all obligations
of Debtor to Lender under the Loan Documents, (d) all costs and expenses
incurred by Lender in connection with the collection and administration of all
or any part of the indebtedness and obligations described in (a), (b) and (c)
above or the protection or preservation of, or realization upon, the collateral
securing all or any part of such indebtedness and obligations, including without
limitation all reasonable attorneys’ fees and (e) all renewals, extensions,
modifications and rearrangements of the indebtedness and obligations described
in (a), (b), (c) and (d) above.
 
“Indemnified Person” has the meaning stated in Section 12.
 
“Information” has the meaning stated in Section 28.
 
“Lender’s Counsel” has the meaning stated in Section 14.
 
“Loan” and “Loans” means all or any loans under the Credit Facility.
 
“Loan Documents” means this Agreement, the Note, and the other agreements,
instruments and documents evidencing, securing, governing, guaranteeing or
pertaining to the Loan, but excluding the Collateral Loan Documents.
 
“Lockbox” has the meaning stated in Section 7(h).
 
“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, property, operations, condition or prospects of Debtor, (b) the ability
of Debtor to pay or perform the Indebtedness, (c) any of the rights of or
benefits available to Lender under the Loan Documents or (d) the validity or
enforceability of the Loan Documents.
 
“Maturity Date” has the meaning stated in Section 2(a).
 
“Members United Facility” means the credit facility established under that
certain LOAN AND SECURITY AGREEMENT dated as of even date herewith, between THE
NATIONAL CREDIT UNION ADMINISTRATION BOARD AS LIQUIDATING AGENT OF MEMBERS
UNITED CORPORATE FEDERAL CREDIT UNION and Debtor.
 
“Minimum Collateralization Ratio” means as of any Reporting Date, the percentage
obtained by dividing the outstanding principal balance of Debtor’s Eligible
Notes pledged to Lender as Collateral by the outstanding principal amount of the
Indebtedness as of the date determined.
 
 
 

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“Mortgage” means a mortgage or deed of trust executed in connection with a
Collateral Note evidencing an encumbrance on real property.
 
“Net Income” means for any period, a Person’s before-tax net income for such
period, as determined in accordance with GAAP; provided that, if such Person’s
net income includes real property lease payments, such payments shall only be
included in net income if a written lease agreement under which such leases
payments arise has been executed; provided further that, if the tenant under the
lease is an Affiliate of such Person, such payments shall only be included in
such Person’s net income if such Person supplies written evidence of the prior
twelve (12) months’ payment history under the lease agreement.
 
“Note” means, collectively, any promissory note evidencing all or part of the
Indebtedness from time to time (as any such Note may be amended, modified or
restated from time to time).
 
“Overadvance” has the meaning stated in Section 2(a).
 
“Permitted Encumbrances” means the following encumbrances: (a) liens for taxes,
assessments or governmental charges or levies not yet due and payable or liens
for taxes, assessments or governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP; (b) liens created by or pursuant to the
Loan Documents; (c) prior liens in existence on the Effective Date which are
reasonably substantiated by Debtor and the property subject thereto described in
Schedule II, without giving effect to any extensions or renewals thereof;
(d) liens arising from judgments, decrees, awards or attachments in
circumstances not constituting an Event of Default; (e) liens securing the
Members United Facility; and (f) interests in Collateral Loans which have been
sold under participation agreements.
 
“Person” means any individual, corporation, limited liability company, business
trust, association, company, partnership, joint venture, Governmental Authority,
or other entity, and shall include such Person’s heirs, administrators, personal
representatives, executors, successors and assigns.
 
“Purchase Commitment” means a written commitment, subscription for or purchase
agreement issued in favor of Debtor by an investor or group of investors
pursuant to which that investor or group of investors commits to purchase an
interest in a Collateral Loan.
 
“Reporting Date” means the date specified in a statement of value of Collateral
delivered under Section 8(e)(iii).
 
“Required MCR” has the meaning stated in Section 2(c).
 
“Underwriting Guidelines” means the credit approval guidelines used by Debtor in
the origination of Collateral Notes, a copy of which is annexed to this
Agreement as Schedule III.
 
“Venue Site” has the meaning stated in Section 19.
 
All words and phrases used herein shall have the meaning specified in the Code
except to the extent such meaning is inconsistent with this Agreement. All
definitions contained in this Agreement are equally applicable to the singular
and plural forms of the terms defined.  The words “hereof,” “herein” and
“hereunder” and words of similar import referring to this Agreement refer to
this Agreement as a whole and not to any particular provision of this
Agreement.  Any accounting term used in the Loan Documents shall have, unless
otherwise specifically provided therein, the meaning customarily given such term
in accordance with GAAP, and all financial computations thereunder shall be
computed, unless otherwise specifically provided therein, in accordance with
GAAP consistently applied; provided, that all financial covenants and
calculations in the Loan Documents shall be made in accordance with GAAP as in
effect on the Effective Date unless Debtor and Lender shall otherwise
specifically agree in writing.  That certain items or computations are
explicitly modified by the phrase “in accordance with GAAP” shall in no way be
construed to limit the foregoing.
 
 
 

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2. Credit Facility.
 
(a) Credit Facility.  Subject to the terms and conditions set forth in this
Agreement and the other Loan Documents, Lender hereby agrees to make the Loan
(the “Credit Facility”) to Debtor in an amount equal to the lesser of (i) the
Borrowing Base, or (ii) Twenty-Three Million Five Hundred Twenty-Two Thousand
Nine Hundred Thirty-One and 41/100 Dollars ($23,522,931.41), commencing on the
Effective Date and continuing until the earliest of: (i) the acceleration of the
Indebtedness pursuant to the terms of the Loan Documents; (ii) OCTOBER 31, 2018;
or (iii) such other date as may be established by a written instrument between
Debtor and Lender from time to time (the “Maturity Date”).  If at any time the
sum of the aggregate principal amount of the Loan outstanding hereunder exceeds
the Borrowing Base, such amounts shall be deemed an “Overadvance.”  Debtor shall
repay the amount of such Overadvance plus all accrued and unpaid interest
thereon upon in accordance with Section 2(b) of this Agreement, or shall
otherwise comply with Section 2(b) of this Agreement.  Notwithstanding anything
contained herein to the contrary, an Overadvance shall be considered part of the
Loan and shall bear interest at the interest rates set forth in the Note and be
secured by this Agreement.
 
(b) Overadvance.  If at the close of business on any Business Day an Overadvance
shall have occurred and be continuing, then prior to the close of business on
the fifth (5th) Business Day after the occurrence of such event (such date,
being a “Call Date”), Debtor shall prepay a portion of the Loan in an amount
equal to the Overadvance, provided, however, no such payment shall be required
if prior to the close of business on the Call Date, Debtor assigns to Lender
pursuant to this Agreement a replacement Eligible Note (or Eligible Notes) that
is (are) in an amount sufficient to cause Debtor to be in compliance with the
Borrowing Base.
 
(c) Minimum Collateralization.  Debtor shall maintain at all times a Minimum
Collateralization Ratio of at least 150.00% (the “Required MCR”).  If at any
time Lender determines that Debtor has failed to maintain the Required MCR,
Debtor shall prepay a portion of the Loan (prior to the close of business on the
fifth (5th) Business Day after notice to Debtor following such determination) in
an amount sufficient to be in compliance with the Required MCR, provided,
however, no such payment shall be required if Debtor assigns to Lender pursuant
to this Agreement a replacement Eligible Note (or Eligible Notes) that is (are)
in an amount sufficient to cause Debtor to be in compliance with the Required
MCR.
 
3. Note, Rate, Computation of Interest, and Prepayments.  The Credit Facility
shall be evidenced by a Note duly executed by Debtor and payable to the order of
Lender, in form and substance acceptable to Lender.  The principal of and
interest on the Note shall be due and payable in accordance with the terms and
conditions set forth in the Note and in this Agreement.  All payments made by
Debtor under this Agreement and the other Loan Documents shall be made to Lender
at Lender’s offices as set forth herein in Dollars and immediately available
funds, without setoff, deduction or counterclaim, and free and clear of all
taxes, at the time and in the manner provided in the Note.  Debtor shall
promptly, and in any event within ten (10) days of any such occurrence, prepay
the Note as follows:
 
(a) If Debtor receives proceeds from the sale of a Collateral Loan (under a
Purchase Commitment or otherwise), Debtor shall prepay the Note in an amount
sufficient to cause Debtor to comply with the Required MCR; and
 
 
 

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(b) If Debtor receives prepayment (in whole or in part) or payment in full of
any Collateral Note (whether at maturity, by acceleration, from third party
capital or otherwise), which causes a failure by Debtor to comply with the
Required MCR, Debtor shall prepay the Note in an amount sufficient to cause
Debtor to comply with the Required MCR; provided that, if Debtor exercises its
right to substitute an Eligible Note as provided in Section 4(c), then no
prepayment of the Note shall be required as a result of such prepayment; and
provided further that, if at any time the Note is prepaid in such an amount that
the regularly scheduled payments of principal and interest will be sufficient to
fully amortize the Note on the Maturity Date, and no balloon payment will then
be due and owing, no mandatory prepayment shall be required following a
prepayment described in this Section 3(b).
 
4. Collateral.
 
(a) Grant of Security Interest.  As collateral security for the prompt payment
in full when due (whether at stated maturity, by acceleration or otherwise) of
the Indebtedness, Debtor hereby pledges to and grants Lender, a security
interest in, all of Debtor’s right, title and interest in the Collateral,
whether now owned by Debtor or hereafter acquired and whether now existing or
hereafter coming into existence.
 
(b) Debtor Remains Liable.  Notwithstanding anything to the contrary contained
herein, (i) Debtor shall remain liable under the contracts and agreements
included in the Collateral to the extent set forth therein to perform all of
Lender’s respective duties and obligations thereunder to the same extent as if
this Agreement had not been executed; (ii) the exercise by Lender of any of its
rights hereunder shall not release Debtor from any of its duties or obligations
under the contracts and agreements included in the Collateral and (iii) Lender
shall not have any obligation or liability under any of the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
Lender be obligated to perform any of the obligations or duties of Debtor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
 
(c) Substitution of Collateral Notes.  If any Collateral Note is paid in full or
is no longer an Eligible Note, Debtor may, at any time and from time to time,
substitute one or more additional Eligible Notes in place of such Collateral
Note, provided that the outstanding principal balance of such substitute
Eligible Note is sufficient in amount to cause Debtor to comply with the
Required MCR.  Debtor shall execute any and all documents deemed necessary or
required by Lender to evidence the assignment of any substitute Collateral Note,
together with all security therefore (including the other Collateral Loan
Documents relating thereto), to Lender.
 
(d) Additional Documents.  To secure full and complete payment and performance
of the Indebtedness, Debtor shall execute and deliver or cause to be executed
and delivered all of the Loan Documents reasonably required by Lender covering
the Collateral.  Debtor shall execute and cause to be executed such further
documents and instruments, as Lender, in its reasonable discretion, deems
necessary or desirable to create, evidence, preserve and perfect its liens and
security interests in the Collateral.  In the event any of the Loan Documents
evidencing or securing the Indebtedness misrepresents or inaccurately reflects
the correct terms and/or provisions of the Indebtedness, Debtor shall upon
request by Lender and in order to correct such mistake, execute such new
documents or initial corrected, original documents as Lender may deem reasonably
necessary to remedy said errors or mistakes.  Debtor shall execute such other
documents as Lender shall deem reasonably necessary to correct any defects or
deficiencies in the Loan Documents.  Debtor’s failure to execute such documents
as requested shall constitute an Event of Default under this Agreement.
 
 
 

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(e) Satisfaction of Indebtedness.  Until the Indebtedness has been indefeasibly
paid and fully satisfied (other than contingent indemnification obligations to
the extent no unsatisfied claim has been asserted) and the commitments of Lender
under the Credit Facility have been terminated, Lender shall be entitled to
retain the security interests in the Collateral granted under the Loan Documents
and the ability to exercise all rights and remedies available to Lender under
the Loan Documents and applicable laws.
 
(f) Collection and Servicing Rights. So long as no Event of Default shall
have occurred and be continuing, and subject to Section 7(p), ECCU, Debtor or
Debtor’s designated servicing agent shall be entitled to service, and shall
continue to service the Collateral Loans, and to receive and collect directly
all sums payable to Debtor in respect of the Collateral.  Lender hereby
acknowledges that Debtor may continue to have the Collateral Loans serviced by
ECCU pursuant to the terms of its existing LOAN SERVICING AGREEMENT with Debtor.
 
(g) Release of Collateral.  If on any monthly valuation date Debtor determines
that the value of the Collateral Loans exceeds the amount necessary to maintain
a Minimum Collateralization Ratio of 150.00%, Debtor may request and receive a
release of Collateral Loans up to the Dollar amount sufficient for Debtor to
maintain compliance with such Minimum Collateralization Ratio.  So long as no
Event of Default shall have occurred and be continuing, the release of
Collateral Loans shall be subject to mutual agreement between Lender and Debtor
on the specific Collateral Loans(s) to be released.  If at any time Debtor has
not maintained a Minimum Collateralization Ratio (as defined in the LOAN AND
SECURITY AGREEMENT governing the Members United Facility) under the Members
United Facility of 150.00%, Debtor shall pledge to Lender (as liquidating agent
of Members United Corporate Federal Credit Union) the Collateral Loans released
under this Section 4(g), to secure the Members United Facility, but only up to
the Dollar amount sufficient for Debtor to maintain such minimum
collateralization ratio under the Members United Facility.
 
5. Conditions Precedent.
 
(a) Loan.  The obligation of Lender to make the Loan under the Credit Facility
is subject to the condition precedent that Lender shall have received, or such
condition shall be otherwise satisfied, as of the Effective Date, to Lender’s
satisfaction:
 
(i) Closing Certificate.  A CLOSING CERTIFICATE of an officer of Debtor, which
certifies: (1) the resolutions of Debtor authorizing the execution, delivery,
and performance of the Loan Documents that Debtor is a party to; (2)
certificates of the appropriate government officials and any governing body of
Debtor, and (to the extent required by applicable law) any state any such Person
is currently doing business as to the existence, qualification and good standing
of Debtor, dated no more than ten (10) days prior to the Effective Date; (3) the
true and correct Constituent Documents of Debtor; and (4) the names of the
individuals or other Persons authorized to sign the Loan Documents that Debtor
is a party to, together with specimen signatures of such Persons.
 
(ii) Loan Documents.  The Loan Documents executed by Debtor.
 
(iii) Lien Search.  The results of a Code or other lien search showing all
financing statements and other documents or instruments on file against Debtor
in such locations as Lender may reasonably request, dated no more than ten (10)
days prior to the Effective Date.
 
 
 

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(iv) Financing Statements.  Code financing statements covering the Collateral
shall have been filed with such filing offices as Lender may request.
 
(v) Reserved.
 
(vi) Collateral Notes.  Debtor shall cause to be delivered to Lender or its
designated agent (who shall hold each Collateral Note for the benefit of Lender)
(1) each Collateral Note, together with an allonge thereto payable to the order
of Lender in form and content satisfactory to Lender, and (2) an assignment in
blank relating to each Mortgage and the other recorded Collateral Loan
Documents, in form and content satisfactory to Lender.
 
(vii) Other Matters.  Such other documents and agreements as may be required by
Lender in its reasonable discretion.
 
6. Representations and Warranties.  Debtor hereby represents and warrants to
Lender as follows:
 
(a) Existence.  Debtor (i) is duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its organization; (ii) has all
requisite power and authority to own its assets and carry on its business as now
being or as proposed to be conducted; and (iii) is qualified to do business in
all jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a Material Adverse
Effect.  Debtor has the power and authority to execute, deliver, and perform its
obligations under the Loan Documents to which it is or may become a party.
 
(b) Binding Obligations.  The execution, delivery, and performance of the Loan
Documents by Debtor have been duly authorized by all necessary action by Debtor,
and constitute legal, valid and binding obligations of Debtor, enforceable in
accordance with their respective terms, except as limited by bankruptcy,
insolvency or similar laws of general application relating to the enforcement of
creditors’ rights and except to the extent specific remedies may generally be
limited by equitable principles.
 
(c) No Consent.  The execution, delivery and performance of the Loan Documents,
and the consummation of the transactions contemplated thereby, do not
(i) conflict with, result in a violation of, or constitute a default under
(1) any provision of the Constituent Documents (if any) or other instrument
binding upon Debtor, (2)  or, to its knowledge, any law, governmental
regulation, court decree or order applicable to Debtor, or (3) any contractual
obligation, agreement, judgment, license, order or permit applicable to or
binding upon Debtor, (ii) require the consent, approval or authorization of any
third party, or (iii) result in or require the creation of any lien, charge or
encumbrance upon any property or asset of Debtor except as may be expressly
contemplated in the Loan Documents.
 
(d) Financial Condition.  Each financial statement of Debtor supplied to Lender
truly discloses and fairly presents Debtor’s financial condition as of the date
of each such statement.  There has been no material adverse change in such
financial condition or results of operations of Debtor subsequent to the date of
the most recent financial statement supplied to Lender.
 
(e) Disclosure.  No statement, information, report, representation, or warranty
made by Debtor in the Loan Documents or furnished to Lender in connection with
the Loan Documents or any of the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein not misleading.  There is no
fact known to Debtor which could reasonably be expected to have a Material
Adverse Effect that has not been disclosed in writing to Lender.
 
 
 

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(f) Security Interest.  Debtor has and will have at all times full right, power
and authority to grant a security interest in the Collateral to Lender in the
manner provided herein, free and clear of any lien, security interest or other
charge or encumbrance other than for the Permitted Encumbrances.
 
(g) Location.  Debtor’s chief executive office and the office where the records
concerning the Collateral are kept are at its address set forth on the signature
page hereof.
 
(h) Collateral Notes.
 
(i) Ownership; No Liens; Pledge to Lender.  (1) Debtor is the sole owner of each
Collateral Loan, free and clear of all liens (except for Permitted
Encumbrances), and is fully authorized with the consent of Lender to sell,
transfer, pledge and/or grant a security interest in each and every Collateral
Loan; (2) each Collateral Loan is a good and valid loan representing an
undisputed bona fide indebtedness incurred or an amount indisputably owed by the
Collateral Obligor therein named, for a fixed sum as set forth in the Collateral
Loan Documents; (3) no Collateral Loan is subject to any defense, offset,
counterclaim, discount or allowance, and, to its knowledge, each Collateral Loan
will be collected when due; (4) none of the transactions underlying or giving
rise to any Collateral Loan, to its knowledge, violate any applicable state or
federal laws or regulations, and all documents relating thereto are legally
sufficient under such laws or regulations and shall be legally enforceable in
accordance with their terms; (5) all agreements, instruments and other documents
relating to any Collateral Loan are true and correct and in all material
respects what they purport to be; (6) all signatures and endorsements that
appear on all material agreements, instruments and other documents relating to
any Collateral Loan are genuine and all signatories and endorsers have full
capacity to contract; (7) Debtor has maintained books and records pertaining to
said Collateral Loan in such detail, form and scope as Lender shall reasonably
require; and (8) Lender has a first perfected lien on the Collateral.  Each
Collateral Note pledged to Lender complied, to its knowledge, with the
requirements for pledged collateral under the Original Loan Agreement at the
time such Collateral Note was pledged.
 
(ii) Compliance with Laws; Enforceability; Modification; Required Documents,
Etc.  Each Collateral Loan and the Collateral Loan Documents related thereto (1)
was made and has been serviced, to its knowledge, in compliance, in all
respects, with all requirements of applicable laws, rules and regulations (such
as OFAC checks, red flag rules, privacy notifications, usury laws, and other
disclosures), (2) is genuine, valid, duly authorized, properly executed and
enforceable in accordance with the terms set forth therein, without defense or
offset, (3) complies with the terms of this Agreement, and (4) with respect to
each Collateral Loan, has been fully advanced in the respective face amounts
thereof.
 
(iii) Underwriting.  Each Collateral Note was underwritten, to its knowledge, in
accordance with underwriting guidelines that are not less stringent than the
Underwriting Guidelines.
 
(iv) Collection Practices.  The collection practices used with respect to each
Collateral Note has been in all respects legal, proper, prudent and customary in
the lending and servicing business with respect to loans similar to the loans
evidenced by the Collateral Notes.
 
 
 

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(v) Purchase Commitments.  Debtor shall promptly comply in all respects with the
terms and conditions of all Purchase Commitments.
 
7. Covenants.  Until all Indebtedness of Debtor under the Loan Documents is
indefeasibly paid or performed, and Lender has no further commitment (if any) to
lend under the Credit Facility, Debtor agrees and covenants as follows:
 
(a) Maintenance.  Debtor will do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges, agreements and franchises material to the
conduct of its business.
 
(b) Books and Records; Inspection Rights.  Debtor will keep proper books of
record and account in which full, true and correct entries are made of all
dealings and transactions in relation to its business and activities relating to
the Collateral Notes.  Debtor will permit any representatives designated by
Lender, upon reasonable prior notice, to visit and inspect its properties, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
all at such reasonable times and as often as reasonably requested.
 
(c) Compliance with Laws.  Debtor will comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
 
(d) Compliance with Agreements.  Debtor will comply, in all material respects
with the Members United Facility and all other material agreements, contracts,
and instruments binding on it or affecting its properties, assets or business.
 
(e) Notices of Material Events.  Debtor will furnish to Lender prompt written
notice of the following:
 
(i) the occurrence of any Default;
 
(ii) the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority against Debtor that, if adversely
determined, could reasonably be expected to result in a Material Adverse Effect;
and
 
(iii) any and all material adverse changes in Debtor’s financial condition and
all claims made against Debtor that could materially affect the financial
condition of Debtor.
 
Each notice delivered under this Section shall be accompanied by a statement of
an officer of Debtor setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.
 
(f) Ownership and Liens.  Debtor will maintain good and indefeasible title to
the Collateral free and clear of all liens, security interests, encumbrances or
adverse claims, except for Permitted Encumbrances.  Debtor will cause any
financing statement or other security instrument with respect to the Collateral
to be terminated, except for Permitted Encumbrances.  Debtor will defend at its
expense Lender’s right, title and security interest in and to the Collateral
against the claims of any third party.
 
 
 

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(g) Collateral Notes.  Debtor will take such action as may be reasonably
requested by Lender in order to cause all Collateral Notes to be valid and
enforceable and will cause all Collateral Notes to have only one original
counterpart.  Upon written request, Debtor will deliver to Lender or its agent
all Collateral Notes.  Debtor will not deliver possession of such Collateral to
any other Person and upon written request from Lender, will mark each Collateral
Notes with a legend indicating that such Collateral Note is subject to the
security interest granted hereunder.  So long as Debtor complies with the
Required MCR and is otherwise in compliance with the Agreement, Debtor may sell
Collateral Notes in whole or in part, whether by participation or otherwise.
 
(h) Lockbox and Accounts.  To induce Lender to establish the interest rates
provided for in the Note and in order to enable Lender to more fully monitor the
Collateral Notes, Debtor will maintain as security for the Indebtedness, a
lockbox (“Lockbox”) and shall direct all payments from Collateral Obligors with
respect to a Collateral Note to the Lockbox.  Debtor shall, upon written request
by Lender, execute and cause to be executed a control agreement (springing
control) with respect to such Lockbox and any account into which the funds
received therein shall be deposited.
 
(i) Fundamental Change.  Unless Debtor notifies Lender in advance, furnishes a
reasonable business purpose for such change and obtains Lender’s consent (which
shall not be unreasonably withheld, conditioned or delayed), Debtor will not (i)
make any material change in the nature of its business as carried on as of the
Effective Date, (ii) liquidate, merge or consolidate with or into any other
Person, (iii) make a change in organizational structure pursuant to a change in
Control in Debtor, or the jurisdiction in which it is organized, or (iv) permit
any change in (1) the location of any Collateral, (2) the location of any
records concerning any Collateral, (3) Debtor’s legal name, or (4) the state of
Debtor’s organization to another jurisdiction.
 
(j) Transfer or Encumbrance.  Except as otherwise permitted by this Agreement,
Debtor will not (i) sell, assign (by operation of law or otherwise), transfer,
exchange, lease or otherwise dispose of any of the Collateral, (ii) grant a lien
or security interest in or execute, file or record any financing statement or
other security instrument with respect to the Collateral, or (iii) deliver
actual or constructive possession of any of the Collateral or its property to
any Person other than Lender, Lender’s agent or, to the extent ECCU is servicing
such Collateral, ECCU.
 
(k) Impairment of Security Interest.  Debtor will not take any action that would
in any manner impair the enforceability of Lender’s security interest in any
Collateral.
 
(l) Compromise of Collateral.  Debtor will not (or will not permit any Person
to) adjust, settle, compromise, amend or modify any Collateral, except an
adjustment, settlement, compromise, amendment or modification in good faith and
in the ordinary course of business; provided, however, this exception shall
terminate following written notice from Lender upon the occurrence and during
the continuation of an Event of Default.  Debtor shall provide to Lender such
information concerning (i) any adjustment, settlement, compromise, amendment or
modification of any Collateral, and (ii) any claim asserted by any account
debtor for credit, allowance, adjustment, dispute, setoff or counterclaim, as
Lender may reasonably request from time to time.
 
(m) Certain Agreements.  Debtor will not and will not permit any Person to agree
to any material amendment or other material change to or material waiver of any
of its rights under any Collateral Loan.
 
 
 

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(n) Limitations on Credit and Collection Policies.  Debtor will not permit and
will not allow any Person to make any change in servicing standards applicable
to a Collateral Loan, which change would, based upon the facts and circumstances
in existence at such time, reasonably be expected to materially adversely affect
the collectability, credit quality or characteristics of the Collateral Loans,
taken as a whole, the ability of Debtor to exercise any of its rights and
remedies under any Collateral Loan Document, or the ability of Lender to
exercise any of its rights and remedies hereunder or under any other Loan
Document.
 
(o) Collateral Loan Financial Statements.  Each Collateral Loan extended by
Debtor after the Effective Date, and each renewal or extension of a Collateral
Loan by Debtor after the Effective Date, shall require the maker of the related
Collateral Note to deliver to Debtor, within ninety (90) days after the end of
each fiscal year of such maker, a financial statement to include a balance sheet
and income statement of such maker, as of the end of such fiscal year.
 
(p) Renewal and Extension of Collateral Loans.  Debtor shall not renew or extend
a Collateral Loan unless (i) Debtor has obtained and delivered to Lender a
recent Appraisal of the real property securing such Collateral Loan, which may
be waived with Lender’s consent, (ii) such Collateral Loan will continue to
amortize over the same number of months as stated in the Collateral Note prior
to the renewal and extension thereof, (iii) each Collateral Obligor of such
Collateral Loan that is not a natural person is in good standing under the laws
of its jurisdiction of organization, (iv) Debtor shall thereafter service such
Collateral Loan, and (v) if the maker of such Collateral Loan has a negative
annual Net Income or a Debt Service Coverage Ratio of less than 1.00 to 1.00, in
either case based on the collateral report compiled from the most recent Current
Financial Statement of such maker, such maker is thereafter required to provide
to Debtor, within forty-five (45) days after the end of each calendar quarter,
financial statements to include a balance sheet and income statement of such
maker, as of the end of such calendar quarter all in form and in reasonable
detail satisfactory to Debtor and duly certified (subject to year-end review
adjustments) by an appropriate officer of such maker as being true and correct
in all material aspects to the best of such officer’s knowledge (subject to
year-end adjustments).
 
(q) Members United Facility.  Debtor shall not, without Lender’s prior written
consent (which shall not be unreasonably withheld, conditioned or delayed)
increase or materially alter the terms of the Members United Facility.
 
8. Reporting Requirements.  Until all Indebtedness of Debtor under the Loan
Documents is indefeasibly paid and satisfied, and Lender has no further
commitment to lend under the Credit Facility, Debtor agrees and covenants that
it will furnish or cause to be furnished the following:
 
(a) Interim Financial Statements.  As soon as available, and in any event within
thirty (30) days after the end of each calendar month, financial statements to
include a balance sheet, income statement and cash flow statement of Debtor, as
of the end of such calendar month all in form and in reasonable detail
satisfactory to Lender and duly certified (subject to year-end review
adjustments) by an appropriate officer of Debtor (i) as being true and correct
in all material aspects to the best of such officer’s knowledge (subject to
year-end adjustments), and (ii) as having been prepared in accordance with
GAAP.  Within ten (10) days after filing, Debtor shall deliver to Lender a copy
of Debtor’s quarterly report on Form 10-Q filed with the U.S. Securities and
Exchange Commission.  Debtor may satisfy this notice requirement by furnishing
notification that its quarterly reports have been electronically filed on the
EDGAR System of the U.S. Securities and Exchange Commission.
 
 
 

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(b) Annual Financial Statements and Tax Returns.  As soon as available and in
any event (i) within one hundred twenty (120) days after the end of each fiscal
year, a financial statement to include a balance sheet, income statement and
cash flow statement of Debtor, as of the end of such fiscal year, audited by
independent certified public accountants which are registered with the Public
Company Accounting Oversight Board (PCAOB), (ii) within thirty (30) days of
filing, annual income tax returns for Debtor, and (iii) within one hundred
twenty (120) days after the end of each fiscal year, notice that its Annual
Report on Form 10-K has been filed electronically on the EDGAR System of the
U.S. Securities and Exchange Commission.
 
(c) Management Letters.  Promptly upon receipt thereof Debtor shall furnish to
Lender (i) a copy of any management letter or written report submitted to Debtor
by independent certified public accountants with respect to the business,
condition (financial or otherwise), operations, prospects, or properties of
Debtor, and (ii) if performed, a loan file review report by an independent third
party acceptable to Debtor.
 
(d) Notice of Default and Events of Default.  As soon as possible and in any
event within five (5) Business Days after the occurrence of each Event of
Default, a written notice setting forth the details of such Event of Default and
the action which is proposed to be taken by Debtor with respect thereto.
 
(e) Borrowing Base; Reports on Collateral.  As soon as available and in any
event within twenty (20) days after the end of each calendar month or more often
as may be required by Lender, (i) a Borrowing Base report, (ii) a servicing
report relating to the Collateral Loans in form and content satisfactory to
Lender in its reasonable discretion, (iii) a certificate of valuation of the
Collateral certified by an authorized officer of Debtor; and (iv) in connection
with the collateral Borrowing Base report delivered to Lender for the month
following the month in which Debtor receives the Current Financial Statements,
copies of such Current Financial Statements and an analysis of each Collateral
Obligor’s compliance with the financial covenants under the Collateral Loan
Documents.
 
(f) General Information.  Debtor shall promptly deliver such other information
concerning Debtor or the Collateral Loans as Lender may request.
 
9. Rights of Lender.  Lender shall have the rights contained in this Section at
all times that this Agreement is effective.
 
(a) Financing Statements.  Debtor hereby authorizes Lender to file one or more
financing or continuation statements, and amendments thereto, relating to the
Collateral.
 
(b) Power of Attorney.  Debtor hereby irrevocably appoints Lender as Debtor’s
attorney-in-fact, such power of attorney being coupled with an interest, with
full authority in the place and stead of Debtor and in the name of Debtor or
otherwise, from time to time following the occurrence and during the
continuation of an Event of Default in Lender’s reasonable discretion, to take
any action and to execute any instrument which Lender may deem necessary or
appropriate to accomplish the purposes of this Agreement.
 
(c) Performance by Lender.  If Debtor fails to perform any agreement or
obligation provided for in any Loan Document (unless waived by Lender) within
ten (10) days after Lender furnishes notice to Debtor of its obligations under a
Loan Document, Lender may itself perform, or cause performance of, such
agreement or obligation, and the expenses of Lender incurred in connection
therewith shall be a part of the Indebtedness, secured by the Collateral and
payable by Debtor on demand.
 
 
 

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(d) Debtor’s Receipt of Proceeds.  Upon the occurrence and during the
continuation of an Event of Default, all amounts and proceeds (including
instruments and writings) received by Debtor in respect of the Collateral shall
be received in trust for the benefit of Lender hereunder and, upon the written
request of Lender, shall be segregated from other property of Debtor and shall
be forthwith delivered to Lender in the same form as so received (with any
necessary endorsement) and applied to the Indebtedness in accordance with the
Loan Documents.
 
(e) Notification of Collateral Obligors.  Lender may at its reasonable
discretion from time to time during the continuation of an Event of Default
notify any or all Collateral Obligors under any Collateral Note to make payment
of all amounts due or to become due to Debtor thereunder directly to Lender.
 
(f) Collection of Collateral Loans; Management of Collateral.  Nothing herein
contained shall be construed to constitute Lender as agent of Debtor for any
purpose whatsoever, and Lender shall not be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause thereof (other than
from acts of omission or commission constituting gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction).  Lender shall not, under any circumstance or in any event
whatsoever, have any liability for any error or omission or delay of any kind
occurring in the settlement, collection or payment of any of the Collateral
Loans or any instrument received in payment thereof or for any damage resulting
therefrom (other than acts of omission or commission constituting gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction).  Lender, by anything herein or in any assignment or
otherwise, does not assume any of the obligations under any contract or
agreement assigned to Lender and shall not be responsible in any way for the
performance by Debtor of any of the terms and conditions thereof.
 
(g) Appraisals.  Lender may obtain at Debtor’s expense, at such times as Lender
may request, an Appraisal of the collateral securing a Collateral Loan by a
third-party appraiser selected and instructed by Lender.  All Appraisals shall
satisfy all of Lender’s regulatory requirements applicable to such Appraisal, be
prepared in accordance with instructions from Lender and by a professional
appraiser satisfactory to Lender.  The cost of any Appraisal shall be payable by
Debtor to Lender within ten (10) days after demand (which obligation Debtor
hereby promises to pay, provided that, Debtor shall not be required to pay for
(i) more than five (5) Appraisals per rolling twelve (12) month period, or (ii)
any Appraisal of collateral for which an Appraisal was done within the preceding
twelve (12) months).
 
10. Events of Default.  Each of the following shall constitute an “Event of
Default” under this Agreement:
 
(a) Payment Default.  The failure, refusal or neglect of Debtor to pay when due
any part of the principal of, or interest on the Indebtedness owing to Lender by
Debtor or any other indebtedness or obligations due and owing from Debtor to
Lender under the Loan Documents from time to time and such failure, refusal or
neglect shall continue unremedied for a period of ten (10) days from the date
such payment is due.
 
(b) Performance or Warranty Default.  Except as otherwise provided in this
Section 10, the failure of Debtor to timely and properly observe, keep or
perform any covenant, agreement, warranty or condition required herein or in any
of the other Loan Documents or any other agreement with Lender which is not
cured within ten (10) Business Days following written notice from Lender to
Debtor; provided, that (i) if such default cannot be cured within ten (10)
Business Days, (ii) Debtor has, within such period, taken such actions as deemed
reasonably necessary and appropriate by Lender to cure such default, and
(iii) Debtor shall continue to diligently pursue such actions, such cure period
shall be extended for a period of thirty (30) days.
 
 
 

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(c) Representations.  Any representation contained herein or in any of the other
Loan Documents made by Debtor is false, misleading or erroneous in any material
respect when made or when deemed to have been made.
 
(d) Default under other Debt.  The occurrence of any event which permits the
acceleration of the maturity of any Debt for borrowed money in an aggregate
principal amount in excess of One Million Five Hundred Thousand And No/100
Dollars ($1,500,000.00) owing by Debtor to any third party under any agreement
or understanding.
 
(e) Insolvency.  If Debtor (i) becomes insolvent, or makes a transfer in fraud
of creditors, or makes an assignment for the benefit of creditors, or admits in
writing its inability to pay its debts as they become due; (ii) generally is not
paying its debts as such debts become due; or (iii) has a liquidator, receiver,
trustee or custodian appointed for, or take possession of, all or substantially
all of its assets.
 
(f) Failure to Comply.  The failure of Debtor to comply with the requirements of
Section 2(b).
 
(g) Judgment.  The entry of any judgment against Debtor or the issuance or entry
of any attachments or other liens against any of the property of Debtor for an
amount in excess of One Million Five Hundred Thousand And No/100 Dollars
($1,500,000.00) (individually or in the aggregate) if uninsured, undischarged,
unbonded or undismissed on the date on which such judgment could be executed
upon.
 
(h) Action Against Collateral.  The Collateral or any portion thereof is taken
on execution or other process of law in any action.
 
(i) Action of Lien Holder.  The holder of any lien or security interest on the
Collateral (without hereby implying the consent of Lender to the existence or
creation of any such lien or security interest on the Collateral), declares a
default thereunder or institutes foreclosure or other proceedings for the
enforcement of its remedies thereunder.
 
(j) Material Adverse Effect.  Any event shall have occurred or is continuing
which shall have had a Material Adverse Effect.
 
(k) Loan Documents.  (i) The Loan Documents shall at any time after their
execution and delivery and for any reason cease (1) to create a valid and
perfected first priority security interest (subject to Permitted Encumbrances)
in and to the Collateral; or (2) to be in full force and effect or shall be
declared null and void, or (ii) the validity of enforceability the Loan
Documents shall be contested by Debtor or any other Person party thereto or
Debtor shall deny it has any further liability or obligation under the Loan
Documents.
 
(l) Members United Facility.  An event of default occurs under the Members
United Facility; provided, however that an event of default under the Members
United Facility shall not constitute an Event of Default unless, at such time,
the outstanding principal amount of the Members United Facility exceeds
$1,500,000.
 
 
 

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Nothing contained in this Agreement shall be construed to limit the events of
default enumerated in any of the other Loan Documents and all such events of
default shall be cumulative.
 
11. Remedies and Related Rights.  If an Event of Default shall have occurred and
be continuing, and without limiting any other rights and remedies provided
herein, under any of the Loan Documents or otherwise available to Lender, Lender
may exercise one or more of the rights and remedies provided in this Section.
 
(a) Remedies.  Upon the occurrence of any one or more of the foregoing Events of
Default, the entire unpaid balance of principal of the Note, together with all
accrued but unpaid interest thereon, and all other Indebtedness owing to Lender
by Debtor at such time shall, at the option of Lender, become immediately due
and payable without further notice, demand, presentation, notice of dishonor,
notice of intent to accelerate, notice of acceleration, protest or notice of
protest of any kind, all of which are expressly waived by Debtor; provided,
however, concurrently and automatically with the occurrence of an Event of
Default under Section 10(e), the Indebtedness at such time shall, without any
action by Lender, become due and payable, without further notice, demand,
presentation, notice of dishonor, notice of acceleration, notice of intent to
accelerate, protest or notice of protest of any kind, all of which are expressly
waived by Debtor.  All rights and remedies of Lender set forth in this Agreement
and in any of the other Loan Documents may also be exercised by Lender, at its
option to be exercised in its sole discretion, upon the occurrence of an Event
of Default, and not in substitution or diminution of any rights now or hereafter
held by Lender under the terms of any other agreement.
 
(b) Other Remedies.  Upon the occurrence of any one or more of the foregoing
Events of Default, Lender may from time to time at its discretion, without
limitation and without notice except as expressly provided in any of the Loan
Documents:
 
(i) Exercise in respect of the Collateral all the rights and remedies of a
secured party under the Code (whether or not the Code applies to the affected
Collateral);
 
(ii) Require Debtor to, and Debtor hereby agrees that it will at its expense and
upon request of Lender, assemble the Collateral as directed by Lender and make
it available to Lender at a place to be designated by Lender which is reasonably
convenient to both parties;
 
(iii) Reduce its claim to judgment or foreclose or otherwise enforce, in whole
or in part, the security interest granted hereunder by any available judicial
procedure;
 
(iv) Sell or otherwise dispose of, at its office, on the premises of Debtor or
elsewhere, the Collateral, as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed that the sale
or other disposition of any part of the Collateral shall not exhaust Lender’s
power of sale, but sales or other dispositions may be made from time to time
until all of the Collateral has been sold or disposed of or until the
Indebtedness has been paid and performed in full), and at any such sale or other
disposition it shall not be necessary to exhibit any of the Collateral;
 
(v) Buy the Collateral, or any portion thereof, at any public sale;
 
 
 

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(vi) Buy the Collateral, or any portion thereof, at any private sale if the
Collateral is of a type customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price quotations;
 
(vii) Apply for the appointment of a receiver for the Collateral, and Debtor
hereby consents to any such appointment; and
 
(viii) At its option, retain the Collateral in satisfaction of the Indebtedness
whenever the circumstances are such that Lender is entitled to do so under the
Code or otherwise.
 
Debtor agrees that in the event Debtor is entitled to receive any notice under
the Code, as it exists in the state governing any such notice, of the sale or
other disposition of any Collateral, reasonable notice shall be deemed given
when such notice is deposited in a depository receptacle under the care and
custody of the United States Postal Service, postage prepaid, at Debtor’s
address set forth on the signature page hereof, TEN (10) days prior to the date
of any public sale, or after which a private sale, of any of such Collateral is
to be held.  Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given.  Lender may adjourn any public
or private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
 
(c) Application of Proceeds.  If any Event of Default shall have occurred and is
continuing, Lender may at its discretion apply or use any cash held by Lender as
Collateral, and any cash proceeds received by Lender in respect of any sale or
other disposition of, collection from, or other realization upon, all or any
part of the Collateral as follows in such order and manner as Lender may elect:
 
(i) to the repayment or reimbursement of the reasonable costs and expenses
(including, without limitation, reasonable attorneys’ fees and expenses)
incurred by Lender in connection with (1) the administration of the Loan
Documents, (2) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, the Collateral, and (3) the exercise
or enforcement of any of the rights and remedies of Lender hereunder;
 
(ii) to the payment or other satisfaction of any liens and other encumbrances
upon the Collateral;
 
(iii) to the satisfaction of the Indebtedness;
 
(iv) by holding such cash and proceeds as Collateral;
 
(v) to the payment of any other amounts required by applicable law; and
 
(vi) by delivery to Debtor or any other party lawfully entitled to receive such
cash or proceeds whether by direction of a court of competent jurisdiction or
otherwise.
 
(d) Limited Recourse.  In the event that the proceeds of any sale of, collection
from, or other realization upon, all or any part of the Collateral by Lender are
insufficient to pay all amounts to which Lender is legally entitled, Debtor
(unless otherwise provided) shall not be liable for any deficiency.
 
(e) Non-Judicial Remedies.  In granting to Lender the power to enforce its
rights hereunder without prior judicial process or judicial hearing, Debtor
expressly waives, renounces and knowingly relinquishes any legal right which
might otherwise require Lender to enforce its rights by judicial
process.  Debtor recognizes and concedes that non-judicial remedies are
consistent with the usage of trade, are responsive to commercial necessity and
are the result of a bargain at arm’s length.  Nothing herein is intended to
prevent Lender or Debtor from resorting to judicial process at either party’s
option.
 
 
 

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(f) No Waiver; Cumulative Remedies.  No failure on the part of Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power, or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power, or
privilege under this Agreement preclude any other or further exercise thereof or
the exercise of any other right, power, or privilege. The rights and remedies
provided for in this Agreement and the other Loan Documents are cumulative and
not exclusive of any rights and remedies provided by law.
 
(g) Equitable Relief.  Debtor recognizes that in the event Debtor fails to pay,
perform, observe, or discharge any or all of the Indebtedness, any remedy at law
may prove to be inadequate relief to Lender.  Debtor therefore agrees that
Lender, if Lender so requests, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
 
(h) Anti-Marshalling Provisions.  Lender may release all or any part of the
Collateral without notice to, or the consent, approval or agreement of other
parties and interests, including junior lienors, which releases shall not impair
in any manner the validity of or priority of the liens and security interest in
the remaining Collateral, nor release Debtor from liability for the
Indebtedness.  Notwithstanding the existence of any other security interest in
the Collateral held by Lender, Lender shall have the right to determine the
order in which any or all of the Collateral shall be subjected to the remedies
provided herein or under any other Loan Document. Debtor hereby waives any and
all rights to require the marshalling of assets in connection with the exercise
of any of the remedies permitted by applicable law or provided herein or
therein.
 
(i) Waiver of Suretyship Rights.  Debtor and Lender intend that the Indebtedness
constitutes a direct obligation of Debtor and not an obligation in the nature of
a guaranty or a surety.  Nevertheless, should it ever be deemed that Debtor’s
obligations hereunder are in the nature of a guarantor or surety, then Debtor
expressly waives any and all benefits under applicable suretyship or similar
laws now or hereafter in effect.  Debtor agrees that Lender may enforce this
Agreement without the necessity of resorting to or exhausting any Collateral,
and Debtor waives the right to require Lender to proceed against Debtor, to
exercise any right or remedy under this Agreement or to pursue any other remedy,
or to enforce any other right.
 
12. Indemnity.  Debtor hereby indemnifies and agrees to hold harmless Lender,
and its officers, directors, employees, agents, representatives and contractors
(each an “Indemnified Person”) from and against any and all liabilities,
obligations, claims, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature (collectively, the
“Claims”) which may be imposed on, incurred by, or asserted against, any
Indemnified Person arising in connection with the Loan Documents, the
Indebtedness or the Collateral (including without limitation, the enforcement of
the Loan Documents and the defense of any Indemnified Person’s actions and/or
inactions in connection with the Loan Documents).  WITHOUT LIMITATION, THE
FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO ANY
CLAIMS WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF
SUCH INDEMNIFIED PERSON AND/OR ANY OTHER INDEMNIFIED PERSON, EXCEPT TO THE
LIMITED EXTENT THE CLAIMS AGAINST AN INDEMNIFIED PERSON ARE PROXIMATELY CAUSED
BY SUCH INDEMNIFIED PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.  If Debtor
or any third party ever alleges such gross negligence or willful misconduct by
any Indemnified Person, the indemnification provided for in this Section shall
nonetheless be paid upon demand, subject to later adjustment or reimbursement,
until such time as (a) a court of competent jurisdiction enters a final judgment
as to the extent and effect of the alleged gross negligence or willful
misconduct, or (b) Lender has expressly agreed in writing with Debtor that such
Claim is proximately caused by such Indemnified Person’s gross negligence or
willful misconduct.  The indemnification provided for in this Section shall
survive the termination of this Agreement and shall extend and continue to
benefit each individual or entity that is or has at any time been an Indemnified
Person hereunder.
 
 
 

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13. Limitation of Liability.  Neither Lender nor any officer, director,
employee, attorney, or agent of Lender shall have any liability with respect to,
and Debtor hereby waives, releases, and agrees not to sue any of them upon, any
claim for any special, indirect, incidental, or consequential damages suffered
or incurred by Debtor in connection with, arising out of, or in any way related
to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan
Documents.  Debtor hereby waives, releases, and agrees not to sue Lender or any
of Lender’s Affiliates, officers, directors, employees, attorneys, or agents for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Agreement or any of the other Loan
Documents.
 
14. No Duty.  All attorneys, accountants, appraisers, and other professional
Persons and consultants retained by Lender shall have the right to act
exclusively in the interest of Lender and shall have no duty of disclosure, duty
of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to Debtor or any of Debtor’s equity holders or any other
Person.  Documents in connection with the transactions contemplated hereunder
have been prepared by GARDERE WYNNE SEWELL LLP (“Lender’s Counsel”).  Debtor
acknowledges and understands that Lender’s Counsel is acting solely as counsel
to Lender in connection with the transaction contemplated herein, is not
representing Debtor in connection therewith, and has not, in any manner,
undertaken to assist or render legal advice to Debtor with respect to this
transaction.  Debtor has been advised to seek other legal counsel to represent
Debtor’s interests in connection with the transactions contemplated herein.
 
15. Lender not Fiduciary.  The relationship between Debtor and Lender is solely
that of debtor and creditor, and Lender has no fiduciary or other special
relationship with Debtor, and no term or condition of any of the Loan Documents
shall be construed so as to deem the relationship between Debtor and Lender to
be other than that of debtor and creditor.
 
16. Waiver and Agreement.  Neither the failure nor any delay on the part of
Lender to exercise any right, power or privilege herein or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.  No
waiver of any provision in this Agreement or in any of the other Loan Documents
and no departure by Debtor therefrom shall be effective unless the same shall be
in writing and signed by Lender, and then shall be effective only in the
specific instance and for the purpose for which given and to the extent
specified in such writing.  No modification or amendment to this Agreement or to
any of the other Loan Documents shall be valid or effective unless the same is
signed by the party against whom it is sought to be enforced.
 
17. Benefits.  This Agreement shall be binding upon and inure to the benefit of
Lender and Debtor, and their respective successors and assigns, provided,
however, (a) that Debtor may not, without the prior written consent of Lender,
assign any rights, powers, duties or obligations under this Agreement or any of
the other Loan Documents, and (b) clause (b) of Section 29 shall not inure to
the benefit of any successor to Lender.
 
 
 

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18. Notices.  All notices, requests, demands or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and given
by (a) personal delivery, (b) expedited delivery service with proof of delivery,
or (c) United States mail, postage prepaid, registered or certified mail, return
receipt requested, sent to the intended addressee at the address set forth on
the signature page hereof and shall be deemed to have been received either, in
the case of personal delivery, as of the time of personal delivery, in the case
of expedited delivery service, as of the time of the expedited delivery and in
the manner provided herein, or in the case of mail, upon the third (3rd) day
after deposit in a depository receptacle under the care and custody of the
United States Postal Service.  Any party shall have the right to change its
address for notice hereunder to any other location within the continental United
States by notice to the other party of such new address.
 
19. Construction; Venue; Service of Process.  The Loan Documents have been
executed and delivered in the State of Texas, shall be governed by and construed
in accordance with the laws of the State of Texas, and shall be performable by
the parties hereto in the county in Texas where Lender’s address set forth on
the signature page hereof is located (the “Venue Site”).  Any action or
proceeding against Debtor under or in connection with any of the Loan Documents
may be brought in any state or federal court within the Venue Site.  Debtor
hereby irrevocably (a) submits to the nonexclusive jurisdiction of such courts,
and (b) waives any objection it may now or hereafter have as to the venue of any
such action or proceeding brought in any such court or that any such court is an
inconvenient forum.  Debtor agrees that service of process upon it may be made
by certified or registered mail, return receipt requested, at its address
specified or determined in accordance with the provisions of this
Agreement.  Nothing in any of the other Loan Documents shall affect the right of
Lender to serve process in any other manner permitted by law or shall limit the
right of Lender to bring any action or proceeding against Debtor or with respect
to any of its property in courts in other jurisdictions.  Any action or
proceeding by Debtor against Lender shall be brought only in a court located in
the Venue Site.
 
20. Invalid Provisions.  If any provision of the Loan Documents is held to be
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable and the remaining provisions of the Loan Documents
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance.
 
21. Expenses.  Debtor shall pay all reasonable costs and expenses (including,
without limitation, reasonable attorneys’ fees) in connection with any action in
the enforcement of Lender’s rights upon the occurrence of an Event of Default.
 
22. Participation of the Loans.  Debtor agrees that Lender may, at its option,
sell interests in the Loans and its rights under this Agreement to a financial
institution or institutions or any other Person or Persons, in connection with
each such sale, Lender may disclose any financial and other information
available to Lender concerning Debtor to each prospective purchaser subject to
obtaining a confidentiality agreement with each prospective purchaser prior to
disclosing Debtor’s confidential information.
 
23. Conflicts.  Except as otherwise expressly provided in the Note, in the event
any term or provision of this Agreement is inconsistent with or conflicts with
any provision of the other Loan Documents, the terms and provisions contained in
this Agreement shall be controlling.
 
24. Counterparts.  The Loan Documents may be separately executed in any number
of counterparts, each of which shall be an original, but all of which, taken
together, shall be deemed to constitute one and the same instrument.
 
 
 

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25. Survival.  All representations and warranties made in the Loan Documents or
in any document, statement, or certificate furnished in connection with this
Agreement shall survive the execution and delivery of the Loan Documents, and no
investigation by Lender or any closing shall affect the representations and
warranties or the right of Lender to rely upon them.
 
26. Waiver of Right to Trial by Jury.  THE PARTIES HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING, OR COUNTERCLAIM THAT RELATES TO OR ARISES OUT OF THE LOAN DOCUMENTS
OR THE ACTS OR FAILURE TO ACT OF OR BY LENDER IN THE ENFORCEMENT OF ANY OF THE
TERMS OR PROVISIONS OF THE LOAN DOCUMENTS.
 
27. Patriot Act Notice.  Lender hereby notifies Debtor that pursuant to the
requirements of the Act, Lender is required to obtain, verify and record
information that identifies Debtor, which information includes the name and
address of Debtor and other information that will allow such Lender to identify
Debtor in accordance with the Act.
 
28. Confidentiality.
 
(a) Lender agrees to maintain the confidentiality of the Information, except
that Information may be disclosed to its respective directors, officers,
employees, agents, trustees, advisors and representatives (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential) only to the extent such disclosure is necessary for and directly
related to the administration of this Agreement.  “Information” means all
information received from Debtor relating to Debtor or any of its respective
businesses or any Collateral Obligor, other than any such information that is
available to Lender on a nonconfidential basis prior to disclosure by Debtor,
provided that, in the case of information received from Debtor after the date
hereof, such information is clearly identified at the time of delivery as
confidential, unless such information thereafter becomes publicly
available.  Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
 
(b) Lender acknowledges that (i) the Information may include material non-public
Information concerning Collateral Obligors or Debtor, (ii) it has developed
compliance procedures regarding the use of material non-public Information and
(iii) it will handle such material non-public Information in accordance with
applicable law, including federal and state securities laws.  Lender’s
obligations under this provision shall be continuous and survive any termination
of this Agreement. To comply with Section III, D of Appendix A to 12 CFR Part
748 “Guidelines for Safeguarding Member Information” of the NCUA Regulations,
Lender further agrees to the following:
 
(i) Upon Debtor’s reasonable request, to provide in a timely manner review
audits, summaries of test results or equivalent evaluations of its compliance
with this provision and the compliance of its service providers.
 
(ii) To notify Debtor of a security breach of such Information immediately or no
later than two (2) Business Days hours following discovery.
 
 
 

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(iii) To use commercially reasonable security measures and that at all times its
security measures will satisfy the objectives of the “Guidelines for
Safeguarding Member Information.”
 
(c) Lender acknowledges and agrees that there is no adequate remedy at law for a
breach of this provision, that such breach would irreparably harm Debtor and
that Debtor is entitled to equitable relief (including, without limitation,
injunctions to enjoin the activity of Lender with respect to any such breach or
potential breach) in addition to any other remedies available to it at law or in
equity, including, without limitation an action for damages.
 
29. Cross-Collateralization, Eligible Notes and Cross-Defaults.  Debtor and
Lender agree that (a) the Credit Facility and the Members United Facility will
each be secured by all of the Collateral, and (b) Lender may, at Debtor’s
request, remove Eligible Notes from the Borrowing Base hereunder and cause such
Eligible Notes to be included in the borrowing base under the Members United
Facility, and vice versa.  Except as provided in Section 10(l), if any default
occurs under the Members United Facility, then Lender may declare an Event of
Default, and vice versa.  Lender’s failure to exercise cross-defaults shall not
constitute a waiver by Lender of such right.
 
30. Notice of Final Agreement.  It is the intention of Debtor and Lender that
the following NOTICE OF FINAL AGREEMENT be incorporated by reference into each
of the Loan Documents (as the same may be amended, modified or restated from
time to time).  Debtor and Lender warrant and represent that the entire
agreement made and existing by or among Debtor and Lender with respect to the
Loans is and shall be contained within the Loan Documents, and that no
agreements or promises exist or shall exist by or among, Debtor and Lender that
are not reflected in the Loan Documents.

NOTICE OF FINAL AGREEMENT

THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES, AND THE SAME MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
 
 
 
 
 

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AGREED as of the Effective Date.
 
LENDER:
 
THE NATIONAL CREDIT UNION
ADMINISTRATION BOARD AS LIQUIDATING
AGENT OF WESTERN CORPORATE
 
By:                                                   
Name:                                                  
Title:                                                  
 
With copies of notices to:
       
DEBTOR:
 
MINISTRY PARTNERS INVESTMENT
COMPANY, LLC
 
By:                                                  
Name:                                                  
Title:                                                  

 
 
 

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