EXHIBIT 10.1
 

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MASTER LOAN AND SERVICING AGREEMENT

dated as of December 21, 2006

by and among

EAR CAPITAL I, LLC

as Borrower

and

DRV CAPITAL, LLC

as Servicer

and

DEBT RESOLVE, INC.

as Parent of Borrower and Servicer

and

SHERIDAN ASSET MANAGEMENT, LLC

as Lender

 

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HEBBLE & ASSOCIATES, P.C.
61 Broadway, Suite 1000
New York, New York 10006-2731

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TABLE OF CONTENTS

   
Page
     
ARTICLE I
THE LOANS
1
Section 1.1
Definitions
1
Section 1.2
The Loans
1
Section 1.3
Procedures for Loans
2
Section 1.4
The Note
2
Section 1.5
Financed Amount
2
Section 1.6
Interest
2
Section 1.7
Conditions to Loans; Loan Closings
3
Section 1.8
Repayment of Principal, Fixed Interest and Lender’s Residual
5
Section 1.9
Survival of Obligation to Pay the Lender’s Residual
6
Section 1.10
Principal
6
Section 1.11
Asset Management Fee
6
ARTICLE II
COLLATERAL, COLLECTIONS AND DISTRIBUTIONS
6
Section 2.1
Perfection of Lender’s Security Interest
6
Section 2.2
Administration of Collateral and Collections
7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BORROWER AND SERVICER
10
Section 3.1
Corporate Existence and Power
10
Section 3.2
Authorization
10
Section 3.3
Compliance with Law and Other Agreements
11
Section 3.4
Litigation
11
Section 3.5
Ownership; Liens
11
Section 3.6
No Materially Adverse Contracts
11
Section 3.7
Disclosure
12

 
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Section 3.8
Government Approval
12
Section 3.9
Professional Capability
12
Section 3.10
Limited Authority over Custodial Account
12
Section 3.11
Credit and Collection Policy
12
ARTICLE IV
ASSET SERVICING
12
Section 4.1
Servicer
12
Section 4.2
Replacement Servicer
13
Section 4.3
Duties of Servicer
13
Section 4.4
Servicer’s Indemnification
14
Section 4.5
Termination of Servicer
15
Section 4.6
Rights of Servicer Upon the Occurrence of a Servicer Termination Event
17
ARTICLE V
COVENANTS OF BORROWER AND SERVICER
17
Section 5.1
Business and Existence
17
Section 5.2
Payment of Obligations and Expenses
18
Section 5.3
Payment of Taxes and Assessments
18
Section 5.4
Notice of Event of Default
18
Section 5.5
Asset Information
18
Section 5.6
Other Information
19
Section 5.7
Right of Inspection
19
Section 5.8
Asset Portfolio Acquisition List
19
Section 5.9
Compliance Certificate
19
Section 5.10
Reimbursement of Collection and Enforcement Expenses
19
Section 5.11
Liens; Other Debt
19
Section 5.12
Consolidation, Merger, Sale of Collateral; Changes to Organizational Documents
20
Section 5.13
Other Agreements
20
Section 5.14
Use of Loan Proceeds
20

 
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Section 5.15
Notification of Legal Process
20
Section 5.16
Transactions with Affiliates
20
Section 5.17
Annual Financial Statements
20
Section 5.18
Quarterly Financial Statements
20
Section 5.19
Single Purpose Entity
21
Section 5.20
Collections Policy
22
Section 5.21
Minimum Monthly Payment Policy
22
Section 5.22
Amendments to Asset Purchase Agreement
22
Section 5.23
Transactions Involving Collateral
22
Section 5.24
Further Assurance on Third Party Financings
22
Section 5.25
Custodial Account
23
ARTICLE VI
DEFAULT
23
Section 6.1
Events of Default
23
Section 6.2
Effect of Event of Default
24
ARTICLE VII
DEFINITIONS
25
ARTICLE VIII
MISCELLANEOUS
31
Section 8.1
Survival of Representations and Warranties
31
Section 8.2
Cure
31
Section 8.3
Relationship between Parties
31
Section 8.4
Confidentiality
32
Section 8.5
Amendment and Modification
32
Section 8.6
Waivers
32
Section 8.7
Assignment and Transferability of Loan Agreement; Loan Participations
32
Section 8.8
Actions in Connection with Bankruptcy
33
Section 8.9
GOVERNING LAW; JURISDICTION; VENUE
33
Section 8.10
WAIVER OF JURY TRIAL
33

 
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Section 8.11
Severability and Enforceability of Loan Agreement
34
Section 8.12
Titles and Headings
34
Section 8.13
Accounting Terms
34
Section 8.14
Notices
34
Section 8.15
Entire Agreement
35
Section 8.16
Borrower’s and Servicer’s Indemnification
36
Section 8.17
Savings Provision
36
Section 8.18
Consent
36
Section 8.19
Catastrophic Event
36
Section 8.20
Conflicts
37
Section 8.21
Further Assurances
37
Section 8.22
Counterparts
37
Section 8.23
Telecopier Execution and Delivery
37

 

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EXHIBITS
Exhibit A
FORM OF PROPOSAL
Exhibit B
FORM OF SECURED PROMISSORY NOTE
Exhibit C
FORM OF SECURITY AGREEMENT
Exhibit D
FORM OF REMITTANCE REPORT
Exhibit E
CLOSING COSTS FOR INITIAL LOAN
Exhibit F
FORM OF COLLATERAL REPORT

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MASTER LOAN AND SERVICING AGREEMENT
 
 
THIS MASTER LOAN AND SERVICING AGREEMENT is made and entered into as of
December 21, 2006 (this “Loan Agreement”), by and among EAR Capital I, LLC, a
Delaware limited liability company (“Borrower”), DRV Capital, LLC, a Delaware
limited liability company (“DRV Cap”), Debt Resolve, Inc., a Delaware
corporation and the parent of DRV Cap and, indirectly, of Borrower, (“Debt
Resolve”), and Sheridan Asset Management, LLC, a Delaware limited liability
company (“Lender”).
 
RECITALS
 
WHEREAS, Borrower and DRV Cap desire that Lender make one or more Loans to
finance Borrower’s acquisition of Assets from various Asset Sellers (as such
terms are defined in Article VII of this Loan Agreement).
 
WHEREAS, Lender is willing to make the Loans, up to an aggregate principal
amount of Twenty Million Dollars ($20,000,000), subject to the terms and
conditions herein set forth.
 
WHEREAS, DRV Cap, Borrower and Lender desire that DRV Cap shall service the
Assets, and DRV Cap is willing to perform such duties.
 
NOW THEREFORE, in consideration of the foregoing premises and the agreements
hereinafter set forth, each of Debt Resolve, Borrower, DRV Cap and Lender hereby
agree as follows:
 
ARTICLE I
THE LOANS
 
Section 1.1 Definitions. Capitalized terms used in this Loan Agreement are
defined in Article VII hereof.
 
Section 1.2 The Loans. Subject to the terms and conditions set forth in this
Loan Agreement and the other Loan Documents, Lender agrees to make one or more
term loans (each, a “Loan” and collectively, the “Loans”), all of such Loans,
collectively, having an aggregate original principal amount not to exceed the
amount of Twenty Million Dollars ($20,000,000), in order to finance Borrower’s
acquisitions of Assets; provided, however, that unless otherwise expressly
agreed to in writing by Lender, in no event shall Lender be required to make a
Loan from and after the first to occur of: (a) the three (3) year anniversary of
the date of this Loan Agreement, and (b) the termination of this Loan Agreement,
in accordance with its terms. The Loans will not be made on a revolving basis.
Debt Resolve shall, until the three (3) year anniversary date of this Loan
Agreement, (i) implement all of its and its Affiliates’ proposed and actual
acquisitions of Assets through Borrower (unless otherwise permitted under
Section 1.3(c)), and (ii) first offer to Lender, exclusively, in accordance with
Section 1.3, the right and opportunity to make Loans to Borrower in accordance
with this Loan Agreement in order to finance each of such proposed and actual
acquisitions of Assets. Further, Debt Resolve hereby agrees that, during the
term of this Loan Agreement, it shall not conduct, directly or indirectly,
through one or more Affiliates (other than DRV Cap in the case of acquisitions
permitted under Section 1.3(c)), any activity substantially similar to the
business of Borrower, without the prior express written consent of Lender.
 
Section 1.3 Procedures for Loans.
 
(a) Proposals. Borrower shall request each such Loan by presenting a Proposal to
Lender for the acquisition of a specific Asset Portfolio. 
 
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(b) Acceptance. Lender shall have five (5) Business Days from the date of its
receipt of the Proposal to accept or reject the Proposal, such acceptance or
rejection to be in Lender’s sole and absolute discretion. If Lender accepts the
Proposal, then such acceptance shall be in writing in the form of a signed
acceptance and consent to the Proposal evidenced at the end thereof. If Lender
does not respond within five (5) Business Days after Lender’s receipt of the
Proposal, then Lender shall be deemed to have rejected the Proposal. All Loans
from Lender to Borrower shall be made at Lender’s sole and absolute discretion.
Lender shall have no obligation to make any Loan except pursuant to and in
accordance with the terms and conditions of this Loan Agreement. Any acceptance
delivered by Lender to Borrower may be withdrawn by Lender for any reason at any
time prior to Borrower’s submission of a written and binding bid to the
respective Asset Seller for the purchase of the respective Asset Portfolio. For
the purposes of this Section 1.3(b), if an Asset Seller permits use of an online
bid, then such online bid shall be considered a written bid.
 
(c) Rejected Proposals. If a Proposal is rejected by Lender, then the Asset
Portfolio which is the subject of such Proposal may only be acquired, in whole
and not in part, by DRV Cap through an Affiliate of DRV Cap which is not
Borrower and which is not a subsidiary of Borrower. Such Affiliate will be
responsible for obtaining its own financing for such acquisition from third
party sources, which may not include Borrower or any subsidiary thereof. If any
such Affiliate desires to acquire only some of the Assets in such Asset
Portfolio, then such desired Assets must first be reoffered to Lender in a new
Proposal.
 
Section 1.4 The Note. The Loans shall be evidenced by the Note duly executed by
Borrower in the form attached hereto as Exhibit B. The Note shall bear interest
on the amount of each Loan commencing on the applicable Borrowing Date for such
Loan, shall represent a borrowing by Borrower in the amount of such Loan from
the Borrowing Date for such Loan, and shall mature on the Maturity Date for the
last Loan outstanding. Payments on the Note will be made in accordance with
Sections 1.8, 1.10 and 2.2. 
 
Section 1.5 Financed Amount. Lender shall not make any Loan in an original
principal amount greater than ninety percent (90%) of the Cost of the Asset
Portfolio to be purchased by Borrower with the proceeds of such Loan. The
remainder of the Cost of such Asset Portfolio (i.e., ten percent (10%)) shall be
funded by Borrower.
 
Section 1.6 Interest. 
 
(a) Fixed Interest. Fixed interest shall accrue on the unpaid principal balance
of the Note from the applicable Borrowing Date, at the rate of twelve
percent (12%) per annum (“Fixed Interest”), and is payable in accordance with
Section 2.2 commencing on the Distribution Date occurring in the first full
calendar month immediately following the applicable Borrowing Date. Fixed
Interest will be computed on the basis of the actual number of days that
principal remains unpaid and a 360-day year. Fixed Interest shall be payable in
arrears on each successive Distribution Date for the amount accrued during the
immediately preceding calendar month, until payment in full of such Loan in
accordance with the terms of Section 2.2. Notwithstanding the fact that Asset
Liquidation Proceeds shall be paid directly to Lender on the date of
consummation of the event generating such Asset Liquidation Proceeds rather than
on the next applicable Distribution Date, Fixed Interest on the Loan relating to
the Assets which generated such Asset Liquidation Proceeds shall accrue for the
entire calendar month for the month in which such Asset Liquidation Proceeds
were paid to Lender, and such Fixed Interest shall be calculated on the balance
of such Loan at the beginning of such month.
 
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(b) Default Interest. Upon the occurrence of an Event of Default, Fixed Interest
shall accrue at a rate (the “Default Rate”) equal to the lesser of (i) eighteen
percent (18%) per annum, or (ii) the maximum interest rate permitted by law.
 
Section 1.7 Conditions to Loans; Loan Closings. This Loan Agreement shall be
effective upon its execution and delivery by each of Debt Resolve, Borrower,
Lender and DRV Cap; provided, however, that each Loan is subject to the
satisfaction or express written waiver of the following conditions precedent on
or before the applicable Borrowing Date for such Loan:
 
(a) Conditions to Initial Loan. The obligation of Lender to advance the initial
Loan hereunder is subject to the satisfaction or express written waiver of the
following conditions precedent on or before the applicable Borrowing Date:
 
(i) Closing Costs. Borrower shall have paid to Lender, by certified bank check
or wire transfer of immediately available funds, at least one (1) Business Day
in advance of the initial closing hereunder, Lender’s initial closing costs as
set forth in Exhibit E attached hereto, or, with Lender’s express prior written
consent, such amounts may be included as part of the Cost of the first Asset
Portfolio purchased with the proceeds of the initial Loan hereunder.
 
(ii) Loan Documents. All of the Loan Documents shall have been fully executed on
behalf of the applicable parties.
 
(iii) Certified Resolutions. Borrower and Servicer shall each have delivered to
Lender certified copies of resolutions or other evidence of limited liability
company action (as applicable) authorizing the execution, delivery and
performance of each of the Loan Documents to which it is a party (including,
without limitation, the borrowing of Loans subsequent to the initial Loan) and
the acquisition of Asset Portfolios (including Asset Portfolios relating to
Loans subsequent to the initial Loan).
 
(iv) Opinions. Lender shall have received opinions from each of Borrower’s
counsel and Servicer’s counsel regarding the existence of Borrower and Servicer,
their limited liability company authority to enter into each of the Loan
Documents to which they are a party, the enforceability of the Loan Documents
under New York law, and the creation and perfection of Lender’s security
interest in the Collateral.
 
(v) Borrower and Servicer Organizational Documents. Lender shall have received
the following with respect to each of Borrower and Servicer: (A) a recent
(within thirty (30) days of the date of this Loan Agreement) Good Standing
Certificate issued by the Secretary of State of the applicable jurisdiction of
their respective formation, (B) a copy of the certificate or articles of
formation, as the case may be, certified by the Secretary of State of the
applicable jurisdiction of their respective formation, and (C) current operating
agreement or limited liability company agreement, as the case may be, certified
by an authorized officer, manager, member, or partner, as applicable.
 
(vi) Credit and Collection Policy. Servicer shall deliver to Lender a true,
correct and complete copy of its Credit and Collection Policy.
 
(b) Conditions to Loans. The obligation of Lender to advance each Loan hereunder
is subject in each case to the satisfaction or express written waiver of the
following conditions precedent on or before the applicable Borrowing Date:
 
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(i) Proposal and Acceptance. Borrower shall have delivered to Lender a complete
Proposal, including all schedules thereto, relating to the requested Loan, duly
executed in writing by an authorized officer, manager, member, or partner, and
the Proposal shall have been accepted and agreed to in writing by Lender as
provided hereunder.
 
(ii) Officer’s Certificates. (A) Borrower shall have caused an authorized
officer (or manager, member or partner, as applicable) to deliver to Lender a
certification to Lender that as of such Borrowing Date, that no Event of Default
exists and that, to the knowledge of Borrower, there exists no condition, event
or act which, with the giving of notice or passage of time, or both, would
constitute an Event of Default, and (B) Servicer shall have caused an authorized
officer (or manager, member or partner, as applicable) to deliver to Lender a
certification to Lender that as of such Borrowing Date, that no Servicer
Termination Event exists and that, to the knowledge of Servicer, there exists no
condition, event or act which, with the giving of notice or passage of time, or
both, would constitute a Servicer Termination Event.
 
(iii) Asset Purchase Agreement Documentation. Lender shall have received all
information and copies of all documents relating to the respective Asset
Purchase Agreement as Lender shall reasonably request. Notwithstanding the
above, Borrower shall deliver to Lender, or Lender’s agent, a true, correct and
complete copy of both the proposed Asset Purchase Agreement and the related bill
of sale or other transfer document, together with an accurate and detailed
description of the Assets constituting Collateral sufficient for filing with a
UCC-1 financing statement, each of which shall be acceptable to Lender in its
sole and absolute discretion.
 
(iv) No Event of Default. As of such Borrowing Date, there shall exist no Event
of Default and, to the knowledge of Borrower, no condition, event or act which,
with the giving of notice or passage of time, or both, would constitute an Event
of Default.
 
(v) Representations and Warranties. All representations and warranties of
Borrower and Servicer contained herein shall be true and correct in all material
respects on such Borrowing Date, with the same force and effect as though such
representations and warranties had been made at such time except to the extent
such representations and warranties expressly relate to an earlier date, in
which case such representations and warranties will be true and correct in all
material respects as of such earlier date or, in the case of financial
statements, shall refer to the financial statements last delivered to Lender.
 
(vi) Acquisition of Asset Portfolio by Borrower. Borrower (and Servicer, if
applicable) and the Asset Seller shall have performed all of their respective
obligations under the respective Asset Purchase Agreement as of the respective
Borrowing Date. Contemporaneously with the closing of the Loan, Borrower shall
pay the full amount of the purchase price of the Asset Portfolio and the Asset
Seller shall transfer to Borrower the Asset Portfolio pursuant to the terms of
such Asset Purchase Agreement, free and clear of all liens, claims and
encumbrances.
 
(vii) Delivery of Documents. Borrower shall, at Lender’s request, have delivered
to Lender, or to Lender’s counsel or agent, copies of all Account Documents
relating to the Assets in such Asset Portfolio then in its possession that are
Chattel Paper or Instruments, and will immediately deliver (or cause the Asset
Seller to deliver) upon its receipt (or right to receive) any additional Account
Documents that are Chattel Paper or Instruments as may be reasonably requested
by Lender; provided, however, that all such Instruments must be delivered to
Lender or Lender’s counsel or agent within the time necessary for Lender to
obtain a first priority perfected purchase money security interest therein. To
the extent that Servicer holds any such Chattel Paper or Instruments, Servicer
shall hold them in a custodial capacity as bailee for Lender.
 
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(viii) Compliance with Agreements. Borrower shall have otherwise complied with
all of the terms and conditions of the Loan Documents.
 
(ix) Frequency. Notwithstanding anything to the contrary herein, Lender shall
make no more than four (4) Loans in any given calendar month, unless Lender
expressly consents to a greater amount in writing, in its sole and absolute
discretion.
 
(c) Closing. Unless otherwise expressly agreed to by Borrower and Lender in
writing, upon the satisfaction of the conditions precedent set forth in this
Section 1.7, the closing in regard to such Asset Purchase Agreement and the
respective Loan will take place at Lender’s offices, or at such other place as
Lender shall designate in its sole and absolute discretion, and in such manner
as Lender shall, in its sole and absolute discretion, deem advisable, including,
but not limited to, the procedure and manner of funding of the Loan.
 
Section 1.8 Repayment of Principal, Fixed Interest and Lender’s Residual.
Borrower covenants to repay Loan principal amounts under the Note pursuant to
the amortization schedule set forth in Schedule 2 of each Proposal, to pay Fixed
Interest on all outstanding principal, and to pay the Lender’s Residual, as more
particularly set forth in Section 2.2 hereof. Any prepayments of any principal
or Fixed Interest may only be made out of Borrower’s share of Gross Collections
as allocated in Section 2.2(b).
 
Section 1.9 Survival of Obligation to Pay the Lender’s Residual. Borrower’s
obligation to pay the Lender’s Residual with respect to each Asset Portfolio and
its corresponding Loan shall not be discharged upon payment in full of the
principal amount of such Loan or of the Note, and Borrower’s obligation to pay
the Lender’s Residual with respect to such Asset Portfolio shall continue (and
the Asset Portfolio Net Collections thereof shall continue to be distributed in
accordance with Section 2.2 hereof).
 
Section 1.10 Principal. 
 
(a) Amortization. Principal payments for each Loan shall be made in accordance
with the twenty-four (24) month Portfolio Amortization Schedule set forth in
Schedule 2 to the Proposal for such Loan (specifically, the minimum payments set
forth therein), and in accordance with Section 2.2 hereof. If Borrower wants to
make any changes to such Portfolio Amortization Schedule, then Borrower shall
submit such requested changes to Lender in writing, with a written explanation
of the need for such changes. Any such requested changes to such Portfolio
Amortization Schedule shall be subject to Lender’s prior written approval.
 
(b) Prepayment of Principal. Except as otherwise expressly provided for in
Section 2.2 hereof, principal may not be prepaid in whole or in part. 
 
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Section 1.11 Asset Management Fee. An Asset Management Fee shall be paid to
Lender in accordance with Section 2.2 hereof.
 
ARTICLE II
COLLATERAL, COLLECTIONS AND DISTRIBUTIONS
 
Section 2.1 Perfection of Lender’s Security Interest. Borrower shall take all
commercially reasonable steps and incur such expenses, or reimburse Lender for
such expenses, as may be necessary or advisable in order to perfect Lender’s
security interest in the Collateral, including, without limitation,
(a) appropriate notations on the computer records with respect to the Asset
Portfolios, (b) physical delivery to Lender or its designated agent of Account
Documents with respect to the Assets that are Chattel Paper or Instruments, or
(c) preparation, filing or recording of an assignment, financing statement,
notice or other writing, such being subject to Lender’s express written approval
in its sole and absolute discretion. Borrower authorizes Lender to file
financing statements to perfect Lender’s security interest in the Collateral and
agrees to execute, acknowledge and deliver all such further and additional
instruments and documents, and take such other actions, as may be reasonably
necessary or advisable, or as Lender or its counsel may reasonably request from
time to time, in order to preserve, perfect and maintain Lender’s rights
hereunder, under the Security Agreement, and under each of the other Loan
Documents. 
 
Section 2.2 Administration of Collateral and Collections. 
 
(a) Payment and Receipt Processing. Borrower and/or Servicer shall instruct all
collection agencies or Persons acting as such to submit Collections directly to
the Custodial Account, as established by Borrower for the benefit of Lender.
Borrower shall direct that any and all other Collections (other than Asset
Liquidation Proceeds) from parties other than Obligors shall be deposited into
the Custodial Account. Borrower shall direct that any and all Asset Liquidation
Proceeds (e.g. the net proceeds of sales of Assets or of putback rights against
Asset Sellers, etc.) shall be paid directly to Lender by wire transfer of
immediately available funds to an account specified by Lender.
 
(b) Distribution of Payments and Collections. For each Asset Portfolio, all
Collections received by the Cutoff Date on account of servicing the Assets in
such Asset Portfolio, together with earned interest, if any, on such amounts,
and net of any amounts paid as a result of putback rights from third parties
(such Collections, plus such interest and net of such amounts paid, in the
aggregate, the “Asset Portfolio Net Collections”), will be distributed (or
allocated, in the case of Asset Liquidation Proceeds which have previously been
paid directly to Lender) by Borrower pursuant to this Loan Agreement on each
Distribution Date in the following order, and as may be more particularly
specified in the Remittance Report for the Loan associated with such Asset
Portfolio, which Remittance Report shall be in the form attached hereto as
Exhibit D, and which must be delivered to Lender (together with the monthly bank
statement for the Custodial Account for the prior calendar month) sufficiently
prior to such Distribution Date such that Lender may review such Remittance
Report and, if need be, discuss same with Borrower such that such Remittance
Report may be revised to the extent necessary so that it may be expressly
approved in writing by Lender, as such approval is required prior to Borrower
making any distributions relating to such Asset Portfolio:
 
(i) First, to the custodian bank for the Custodial Account for payment of
applicable fees;
 
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(ii) Second, to Lender for any unreimbursed payments or advances made by Lender
for the protection of the Collateral as the Lender deemed necessary or
advisable, and for reasonable out-of-pocket expenses incurred by Lender or its
agents with respect to enforcement of the Note in connection with such Loan as
Lender reasonably deemed necessary or advisable, with respect to such Asset
Portfolio (any and all of the foregoing, “Lender Advances”);
 
(iii) Third, to Servicer for the Servicing Fees as set forth in Schedule 1 of
the relevant Proposal for such Asset Portfolio, as have been previously
expressly agreed to in writing by Lender, and out of which Servicer shall pay
the Servicing Expenses relating to such Asset Portfolio, as specified in the
Proposal for such Asset Portfolio;
 
(iv) Fourth, <Intentionally Deleted.>;
 
(v) Fifth, to Lender in an amount equal to Lender’s Asset Management Fee,
calculated with respect to such Asset Portfolio;
 
(vi) Sixth, to Lender in payment of the accrued but unpaid Fixed Interest due
(in accordance with Section 1.6(a)) on the Loan associated with such Asset
Portfolio. If the Asset Portfolio Net Collections remaining after the
distributions set forth in subparagraph (i) through subparagraph (v) above are
not sufficient to pay all such Fixed Interest, then Borrower may apply towards
such Fixed Interest payment any Asset Portfolio Net Collections from one or more
other Asset Portfolios, each of which must have sufficient Asset Portfolio Net
Collections to make the distributions with respect to such other Asset Portfolio
as are required in subparagraph (i) through subparagraph (vii)(C) of this
Section 2.2(b) (collectively, the “Required Distributions”) (each such
qualifying other Asset Portfolio, a “Qualifying Asset Portfolio”). Each such
application shall be limited to the amount by which the Asset Portfolio Net
Collections of such Qualifying Asset Portfolio exceed the amount which is
required for the Required Distributions for such Qualifying Asset Portfolio. Any
such application of Asset Portfolio Net Collections from any Qualifying Asset
Portfolio shall require Borrower to deliver to Lender together with the
Remittance Report a written analysis of its justification for such application
and a reasoned projection of when the Asset Portfolio Net Collections for such
Asset Portfolio shall return to a level sufficient for it to pay the Required
Distributions for such Asset Portfolio. If, in the event of any need to apply
excess Asset Portfolio Net Collections under this subparagraph (vi), there
exists more than one Qualifying Asset Portfolio from which to apply excess Asset
Portfolio Net Collections, then applications shall be made from such Qualifying
Asset Portfolios in the order set forth in subparagraph (vii)(E) below. If after
the application of all available excess Asset Portfolio Net Collections from all
available Qualifying Asset Portfolios there remains any accrued but unpaid Fixed
Interest due, then the amount of the deficiency shall be paid directly by
Borrower to Lender from its own account and Borrower will be entitled to
repayment of such amount as provided under subparagraph (viii) as Borrower’s
Contributions;
 
(vii) Seventh:
 
(A) first, to Lender in payment of principal of the Loan associated with such
Asset Portfolio in accordance with the Proposal relating thereto and pursuant to
the Portfolio Amortization Schedule set forth in Schedule 2 attached to such
Proposal (subject to any changes made thereto pursuant to and in accordance with
Section 1.10(a)), or in accordance with the pro rata monthly progress payments
which may be required under subparagraph (x) below;
 
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(B) second, to Lender as additional payment of principal of the Loan associated
with such Asset Portfolio, until such time as Lender has received the entire
balance of principal with respect to such Loan;
 
(C) third, if there exists any Event of Default with respect to any Loan, then
to Lender to be applied to such interest, principal or other amounts due and
owing to Lender with respect to such Loan, including any such amounts payable to
Lender pursuant to subparagraph (ix) of this Section 2.2(b), as a result of such
Event of Default on such Loan;
 
(D) if the Cutoff Date is in a month which is the 6th, 12th, or 18th month
amortization target for the Loan associated with such Asset Portfolio or any
month in which pro rata monthly progress payments for such Loan are required
under subparagraph (x) below, and the Asset Portfolio Net Collections remaining
after the distributions set forth in subparagraph (i) through subparagraph (vi)
above are not sufficient to pay the amount of principal then due under
subparagraph (vii)(A) above, then Borrower may apply towards such principal
payment Asset Portfolio Net Collections from one or more Qualifying Asset
Portfolios, each of which (1) remains a Qualifying Asset Portfolio after any
contributory allocations under subparagraph (vi) above, and (2) has satisfied
its most recent 6th, 12th, or 18th month amortization target. Each such
application shall be limited to the amount by which the Asset Portfolio Net
Collections of such Qualifying Asset Portfolio exceed the amount which is
required for the Required Distributions for such Qualifying Asset Portfolio. Any
such application of Asset Portfolio Net Collections from any Qualifying Asset
Portfolio shall require Borrower to deliver to Lender together with the
Remittance Report a written analysis of its justification for such application
and a reasoned projection of when the Asset Portfolio Net Collections for such
Asset Portfolio shall return to a level sufficient for it to pay the Required
Distributions for such Asset Portfolio. If, in the event of any need to apply
excess Asset Portfolio Net Collections under this subparagraph (vii)(D), there
exists more than one Qualifying Asset Portfolio from which to apply excess Asset
Portfolio Net Collections, then applications shall be made from such Qualifying
Asset Portfolios in the order set forth in subparagraph (vii)(E) below. If after
the application of all available excess Asset Portfolio Net Collections from all
available Qualifying Asset Portfolios there remains any principal then due under
subparagraph (vii)(A) above with respect to such Asset Portfolio, then the
amount of the deficiency shall be paid directly by Borrower to Lender from its
own account and Borrower will be entitled to repayment of such amount as
provided under subparagraph (viii) as Borrower’s Contributions;
 
(E) if, in the event of any need to apply excess Asset Portfolio Net Collections
under subparagraph (vi) above or subparagraph (vii)(D) above, there exists more
than one Qualifying Asset Portfolio from which to apply excess Asset Portfolio
Net Collections, then applications shall be made from such Qualifying Asset
Portfolios in the following order:
 
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(1) first, from those Qualifying Asset Portfolios which have no remaining
outstanding principal balance with respect to the Loan associated with such
Qualifying Asset Portfolio, and which are then distributing Asset Portfolio Net
Collections under subparagraph (ix) below;
 
(2) second, from those Qualifying Asset Portfolios which have no remaining
outstanding principal balance with respect to the Loan associated with such
Qualifying Asset Portfolio, and which are then distributing Asset Portfolio Net
Collections under subparagraph (viii) below.
 
(viii) Eighth, upon the payment in full of all accrued and outstanding Fixed
Interest and all outstanding principal of the Loan associated with such Asset
Portfolio, unless applied to another Asset Portfolio under subparagraph (vi)
above or subparagraph (vii)(D) above as excess Asset Portfolio Net Collections,
to Borrower, until such time as Borrower has received the balance of Borrower’s
Contributions made with respect to such Loan. If there exists any Event of
Default with respect to any Loan, then no distribution under this subparagraph
shall be made hereunder until such Event of Default has been cured in full;
 
(ix) Ninth, upon the payment in full of all accrued and outstanding Fixed
Interest and all outstanding principal of the Loan associated with such Asset
Portfolio, a percentage equal to the Lender’s Residual Percentage of the
remaining Asset Portfolio Net Collections with respect to such Asset Portfolio
will be distributed to Lender (the “Lender’s Residual”), and, if no Event of
Default has occurred and is continuing, then a percentage equal to the
Borrower’s Residual Percentage of the remaining Asset Portfolio Net Collections
with respect to such Asset Portfolio will be distributed to Borrower (the
“Borrower’s Residual”); and
 
(x) Tenth, notwithstanding the above, if under either subparagraph (vi) or
subparagraph (vii) there is either (A) a Borrower’s Contribution, or (B) an
application of excess Asset Portfolio Net Collections from a Qualifying Asset
Portfolio, then, with respect to the Asset Portfolio with respect to which the
Borrower’s Contribution or application of excess Asset Portfolio Net Collections
was made, Borrower shall be required to make pro rata monthly progress payments
under subparagraph (vii)(A) above toward the next scheduled amortization targets
for the Loan associated with such Asset Portfolio.
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BORROWER AND SERVICER
 
To induce Lender to make Loans under this Loan Agreement, each of Borrower and
Servicer severally makes the following representations and warranties as to
itself (and, in the case of Sections 3.2 and 3.3, Borrower also makes the
representations and warranties relating to Debt Resolve), which shall survive
the execution and delivery of the Loan Documents and shall be deemed to be made
as of each Borrowing Date and shall continue in full force and effect until
payment in full by Borrower of all amounts payable hereunder or under the Loan
Documents and the termination of this Loan Agreement.
 
Section 3.1 Corporate Existence and Power. Each of Borrower and Servicer is a
duly organized and validly existing limited liability company in good standing
under the laws of the State of Delaware with all requisite power and authority
to own and operate its property and assets, to conduct the businesses in which
it is engaged or proposes to engage, and to execute, deliver, and perform its
obligations under the Loan Documents to which it is a party. Borrower does
business only under the name of “EAR Capital I, LLC.”
 
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Section 3.2 Authorization. The execution, delivery and performance of the Loan
Documents by Borrower and Servicer have been duly authorized by all necessary
limited liability company action. The execution, delivery and performance of the
Loan Agreement by Debt Resolve have been duly authorized by all necessary
corporate action. Each of Borrower, Debt Resolve and Servicer has duly
authorized, executed and delivered the Loan Documents to which it is a party,
and each such Loan Document, assuming the due authorization and execution
thereof by Lender, constitutes its legal, valid and binding obligation,
enforceable against Borrower, Debt Resolve or Servicer, as applicable, in
accordance with its respective terms, subject to bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting creditor’s rights generally
and by general principles of equity.
 
Section 3.3 Compliance with Law and Other Agreements. Each of Borrower, Debt
Resolve and Servicer is not in violation of, or in default under, any terms of
its certificate or articles of formation, operating agreement or limited
liability company agreement, certificate of incorporation, or bylaws, as
applicable, or any law or governmental regulation applicable to it or any
agreement to which it is a party, which violation or default would have a
Material Adverse Effect. The execution, delivery, and performance by Borrower,
Debt Resolve or Servicer of the Loan Documents to which they are a party, the
consummation of the transactions contemplated herein or therein and the
compliance with the terms and provisions hereof or thereof will not contravene
any material provision of any law or regulation to which Borrower, Debt Resolve
or Servicer is subject or any order or decree of any court of governmental
authority applicable to Borrower, Debt Resolve or Servicer, and will not result
in any material breach of or constitute a default under any indenture, mortgage,
deed of trust, agreement or other instrument to which Borrower, Debt Resolve or
Servicer is a party or by which it or its properties are bound, or result
(except as contemplated by this Loan Agreement and the Security Agreement) in
the creation or imposition of any Lien on any of the property or assets of
Borrower or Servicer. Each of Borrower and Servicer holds all of the permits,
licenses, certificates, consents and other authorizations of applicable
governmental entities required by law to own and service the Asset Portfolios,
the absence of which would have a Material Adverse Effect.
 
Section 3.4 Litigation. There are no actions, suits, proceedings, or
investigations pending, or, to the knowledge of Borrower, threatened, against or
affecting Borrower, Servicer, any of their respective subsidiaries or the
principals thereof, or any of their respective properties, nor is there any
outstanding judgment, order, writ, injunction, decree or award affecting
Borrower, Servicer, any of their respective subsidiaries or the principals
thereof, or any of their respective properties before any court or before any
federal, state, municipal or other governmental department, commission, board,
bureau or agency, which, either separately or in the aggregate, is reasonably
likely to have a Material Adverse Effect, and neither Borrower nor Servicer
knows of any basis for any such suit, proceeding, or investigation.
 
Section 3.5 Ownership; Liens. Beginning on the applicable Borrowing Date,
Borrower has a valid, first priority ownership interest in the respective
Assets, free and clear of all Liens other than (a) the Lien in favor of Lender
created pursuant to the Security Agreement, (b) the lien of taxes not yet due
and payable, and (c) the lien, if any, of attorneys or others in possession of
Collateral for the purposes of collection.
 
Section 3.6 No Materially Adverse Contracts. Neither Borrower nor Servicer is
obligated under any contract or agreement or under any law, regulation or decree
which is reasonably likely to have a Material Adverse Effect.
 
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Section 3.7 Disclosure. The Loan Documents and the certificates, exhibits and
schedules attached thereto or furnished to Lender by Borrower or Servicer in
connection with the closing of any Loan, do not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which they were made, not misleading. To the best knowledge of each of Borrower
and Servicer, except as previously disclosed to Lender in writing, there is no
fact or condition existing as of the date hereof which has, or in the future is
reasonably like to have, a Material Adverse Effect.
 
Section 3.8 Government Approval. Except for the filing of financing statements
with respect to Borrower, or as may be provided in the Asset Purchase
Agreements, neither Borrower nor Servicer is required to obtain any order,
consent, approval or authorization of, or presently required to make any
declaration or filing with any governmental authority in connection with, their
respective execution, delivery or performance of any Asset Purchase Agreement or
any Loan Document.
 
Section 3.9 Professional Capability. Each of Borrower and Servicer have
(a) appropriate and sufficient personnel and management with appropriate and
sufficient experience to properly undertake and implement the obligations of
Borrower and Servicer, respectively, under the Loan Documents, and
(b) established and instituted proper and necessary controls and procedures to
manage and operate the acquisitions and servicing, respectively, contemplated to
be implemented by the Loan Documents.
 
Section 3.10 Limited Authority over Custodial Account. Borrower has no authority
to withdraw funds from the Custodial Account, except as authorized in
Section 2.2(b) of this Loan Agreement or unless otherwise as expressly directed
and consented to in writing by Lender.
 
Section 3.11 Credit and Collection Policy. The Credit and Collection Policy
delivered by Servicer to Lender is true, correct and complete in all material
respects.
 
ARTICLE IV
ASSET SERVICING
 
Section 4.1 Servicer. The servicing, administering, and collection of the Assets
shall be conducted by a qualified servicer which agrees to perform the customary
duties, obligations and covenants of a servicer, subject and pursuant to the
terms of this Loan Agreement and the other Loan Documents. The term “Servicer”
as used in this Loan Agreement shall mean, initially, DRV Cap, and subsequently,
any subsequent servicer expressly approved in advance by Lender in writing in
its sole discretion, together with, in each and every case, each and every agent
and third party expressly approved by Lender to act for or on behalf of such
servicer. DRV Cap hereby accepts such duties, obligations and covenants and
agrees to serve as the initial Servicer hereunder. Servicer shall be entitled to
receive Servicing Fees from Collections (but calculated excluding Asset
Liquidation Proceeds) received on account of each particular Asset Portfolio as
provided in the applicable Proposal and Section 2.2. Servicer shall be
responsible for the costs of agency and law firm system setup in connection with
servicing the Assets. Servicer may subcontract services to outside service
providers with Lender’s express prior written approval. Servicer shall, at its
expense, conduct on-site audits of subcontractors and vendors retained to
service any of the Assets. Notwithstanding anything to the contrary contained in
this Loan Agreement, all servicing and collection contracts and/or agreements
entered into by either Borrower or Servicer in regard to servicing the Assets
shall contain industry standard terms and provisions and shall be expressly
approved in advance by Lender in writing.
 
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Section 4.2 Replacement Servicer. If the initial Servicer (or any replacement
Servicer) is terminated as Servicer pursuant to Section 4.5 below, then Borrower
shall select a replacement Servicer and, upon Lender’s express written approval
and consent to such replacement Servicer, shall enter into a new servicing
agreement with such replacement Servicer containing industry-standard terms and
provisions and providing for such Servicing Fees and such other terms and
conditions as Lender may expressly approve in writing; provided, however, that
each such replacement Servicer shall agree in writing (an original copy of which
shall be delivered to Lender) to comply with, and be bound by, all of the terms,
provisions and conditions of this Loan Agreement to which the initial Servicer
hereunder is bound, subject to such other terms and conditions set forth in the
new servicing agreement as Lender may expressly approve in writing. Borrower may
not terminate the engagement of any Servicer or transfer or assign the
responsibility of servicing the Assets from Servicer to any other Person without
the express prior written consent of Lender.
 
Section 4.3 Duties of Servicer. 
 
(a) Credit and Collection Policy. For each Asset Portfolio, Servicer shall
manage, service, administer, and collect the Assets in accordance with the
respective provisions of the Credit and Collection Policy, as in effect from
time to time, with the goal of achieving the projections in the applicable
Portfolio Budget attached as Schedule 3 to the Proposal for such Asset
Portfolio.
 
(b) Standard of Care. In performing its duties and obligations under this Loan
Agreement, Servicer will comply with all applicable Credit and Collection Laws
and will apply in performing such duties and obligations, those standards,
policies and procedures which are the higher or most stringent of either
(i) commercially reasonable standards, policies and procedures, or (ii) those
standards, policies and procedures which Servicer applies with respect to assets
owned by Servicer or that Servicer services for, at least in part, its own
benefit or the benefit of Borrower, and which, in either case, are not financed
by Servicer or any Affiliate thereof, and which is not related to or part of any
transaction with Lender pursuant to the Loan Documents or any successor
documents. In performing its duties and obligations hereunder, Servicer shall
maintain all state and federal licenses, permits and franchises necessary for it
to perform its responsibilities hereunder, and shall not impair the rights of
Borrower or Lender in the Collateral.
 
(c) Credit and Collection Policy Changes. Servicer shall make no changes to its
Credit and Collection Policy without the express prior written consent of
Lender.
 
(d) Insurance. Servicer shall maintain an errors and omissions insurance policy
providing coverage in an amount of not less than $1,000,000 and a fidelity bond
in an amount of not less than $100,000, in each case, in such form as is
customary for loan servicers acting in respect of consumer loans on behalf of
institutional investors therein. Borrower and Lender shall be named as
additional insureds under such insurance policy, and as beneficiaries under such
bond, and shall be furnished with not less than thirty (30) calendar days prior
written notice before any amendment or cancellation thereof.
 
(e) Defend Against Claims Through Servicer. Servicer shall defend Borrower’s and
Lender’s right, title and interest to and in the Collateral against all claims
of third parties claiming through or under Servicer.
 
(f) No Transfers of Assets. Servicer shall not sell, pledge, assign, or transfer
to any other Person, or grant, create, incur, assume, permit or suffer to exist
any Lien on any assets of Borrower, including the Collateral, other than as
permitted by the Loan Documents or as otherwise agreed to by Lender.
 
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(g) General. Servicer shall collect all payments due under the Assets, account
for such payments, comply with the Custodial Account procedures, set up a
program for collecting data and records, storing such records, and making
reports to Lender with respect to the Collateral in substantially the form
attached hereto as Exhibit F (each, a “Collateral Report”) and collections on
the Assets, as reflected in the Remittance Reports. Servicer shall provide
Lender with such Collateral Reports and Remittance Reports in electronic form at
Lender’s request, subject to Lender’s right to approve the Remittance Report
provided for in Section 2.2. The Collateral Reports and Remittance Reports shall
be submitted to Lender by the fifth (5th) Business Day after the Cutoff Date.
 
(h) Term. Servicer shall commence servicing each Asset Portfolio on the date
such Asset Portfolio is acquired by Borrower and shall continue servicing such
Asset Portfolio until the earlier of (i) the collection, resolution, disposition
or charge-off of the entire Asset Portfolio to Borrower’s and Lender's
satisfaction, (ii) the appointment of a new Servicer under Section 4.5, or
(iii) the written agreement of Borrower and Lender stating otherwise.
 
(i) No Subcontracting Without Consent. Notwithstanding anything to the contrary
contained in this Loan Agreement, Servicer shall not enter into any servicing or
collection contracts or agreements with third parties in regard to servicing the
Assets without Lender’s express prior written approval.
 
Section 4.4 Servicer’s Indemnification. Servicer agrees to indemnify, defend and
hold Lender harmless from and against any and all losses, damages, costs,
claims, expenses (including reasonable attorneys fees) and liabilities to third
parties growing out of or resulting from (i) the failure of Servicer to comply
with all applicable Credit and Collection Laws; (ii) the actions of any of the
agents, representatives or employees of Servicer taken in connection with the
collection activities with respect to the Assets; (iii) the misapplication
(whether negligent or intentional), misappropriation, conversion or theft of any
part of the Collateral by any officer, director, manager, employee, agent or
representative of Servicer; (iv) a Servicer Termination Event, or (v) fraud or
material misrepresentation by Servicer.
 
Section 4.5 Termination of Servicer.  
 
(a) Notwithstanding anything to the contrary contained in this Loan Agreement,
the occurrence and continuance of any of the following shall constitute a
“Servicer Termination Event”:
 
(i) the occurrence and continuance of an Event of Default by Servicer hereunder;
 
(ii) Servicer has breached any of the terms and conditions of Section 4.3 and
has not cured such breach within five (5) calendar days;
 
(iii) Servicer’s failure to deliver any Collateral Report and/or any Remittance
Report to Lender by the fifth (5th) Business Day after the Distribution Date by
which such report was due;
 
(iv) Servicer’s failure to transfer, deposit or deliver to Lender any proceeds,
or make any payment, in each case as required under this Loan Agreement or any
other Loan Document, and such failure remains unremedied for more than three (3)
Business Days;
 
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(v) Unless as otherwise provided herein, any breach by Servicer of any covenant,
term, agreement or condition contained in any Loan Document to which it is a
party (other than any failure to pay under Section 6.1(a) or provide reports in
a timely manner), which breach has a Material Adverse Effect, and the same shall
continue unremedied for a period of fifteen (15) calendar days after the
Servicer has or reasonably should have had notice thereof (provided, however,
that such fifteen (15) calendar day period shall only be applicable if Servicer
uses diligent efforts during such time to cure such breach) or such other amount
of time permitted for cure that is specifically provided herein;
 
(vi) Servicer delegates its duties under this Loan Agreement, except to the
extent that Servicer retains responsibility to Lender for the performance of
such duty or to the extent otherwise permitted hereby;
 
(vii) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (A) relief in
respect of Servicer, or of a substantial part of the property or assets of
Servicer, under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other federal or state bankruptcy, insolvency,
receivership or similar law, (B) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for Servicer or for a
substantial part of the property or assets of Servicer, or (C) the winding-up or
liquidation of Servicer; and such proceeding or petition or appointment shall
continue undismissed for sixty (60) days or an order or decree approving or
ordering any of the foregoing shall be entered;
 
(viii) Servicer shall (A) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code as now
constituted or hereafter amended, or any other federal or state bankruptcy,
insolvency, receivership or similar law, (B) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or the filing
of any petition described in clause (vii) above, (C) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator or similar official
for Servicer or for a substantial part of the property or assets of Servicer,
(D) file an answer admitting the material allegations of a petition filed
against it in any such proceeding, (E) make a general assignment for the benefit
of creditors, (F) become unable, admit in writing its inability or fail
generally to pay its debts as they become due, or (G) take any action for the
purpose of effecting any of the foregoing; or
 
(ix) any representation or warranty made by Servicer in this Loan Agreement, any
certificate, any Collateral Report and/or Remittance Report delivered pursuant
to this Loan Agreement shall prove to have been false or misleading when made in
any respect that has a Material Adverse Effect, and the same shall continue
unremedied for a period of fifteen (15) calendar days after the earlier to occur
of (A) discovery by a senior officer of Servicer, and (B) the date on which
written notice thereof, requiring the same to be remedied, shall have been
received by a senior officer of Servicer; provided, however, that such
fifteen (15) calendar day period shall only be applicable if Servicer uses
diligent efforts during such time to cure such breach;
 
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(b) Upon any Servicer Termination Event and after any allotted cure period as
may be set forth above if such Servicer Termination Event shall be continuing,
Lender may notify Servicer and Borrower in writing that Servicer is terminated
and shall cease all future servicing of the Assets after a certain date and time
(the “Replacement Date”) no later than five (5) Business Days after the date of
such notice, and that all such future servicing shall be undertaken by a new
Servicer. Borrower shall then, in accordance with Section 4.2, designate a new
Servicer (which is acceptable to and expressly approved in writing by Lender)
and enter into a new servicing contract with such new Servicer by the
Replacement Date which contract shall comply with Section 4.2 and shall provide
for the new Servicer to commence servicing the Assets on the Replacement Date.
If Borrower fails to designate a new Servicer acceptable to Lender by the
third (3rd) calendar day prior to the Replacement Date, then Lender may
designate the new Servicer (and which new Servicer may, but need not, be Lender
(or its designee)). Upon receipt of such written termination notice Servicer
shall terminate its activities as Servicer hereunder and facilitate as quickly
as commercially practicable, the transition of the performance of such
activities to the new Servicer prior to the Replacement Date, and the new
Servicer shall assume each and all of Servicer’s said obligations to service and
administer the Assets, on the terms and subject to the conditions herein set
forth and Servicer shall use its best efforts to assist the new Servicer
in assuming such obligations. Upon Lender’s request following the termination of
Servicer hereunder, Servicer shall refer inquiring Obligors to a telephone
number provided by Lender or Lender’s designee and shall forward all
correspondence received from Obligors to Lender or Lender’s designee within
three (3) Business Days following Servicer’s receipt of such correspondence.
 
(c) If Servicer (or any subsequent Person acting as Servicer) is terminated as
Servicer and servicing is to be performed by a new Servicer, then such new
Servicer shall (i) enter into a new servicing agreement with Borrower (or with
Lender, on Borrower’s behalf, if Lender designates the new Servicer) containing
industry-standard terms and provisions and providing for such Servicing Fees and
such other terms and conditions as to which Borrower may agree and Lender may
expressly approve in writing (or to which Lender may agree, if Lender designates
the new Servicer), and (ii) enter into, in order to have all the rights and
assume all the duties and obligations of Servicer under this Loan Agreement,
including without limitation this Section 4.5, a written agreement (an original
copy of which shall be delivered to Lender) to comply with, and be bound by, all
of the terms, provisions and conditions of this Loan Agreement to which the
initial Servicer hereunder is bound, subject to such other terms and conditions
as may be set forth in the new servicing agreement.
 
Section 4.6 Rights of Servicer Upon the Occurrence of a Servicer Termination
Event. Upon the occurrence and during the continuance of a Servicer Termination
Event and following the appointment of a new Servicer, the power and authority
of Servicer, as initial Servicer (or any subsequent Person acting as the
Servicer), to collect the Assets in the ordinary course of business shall be
deemed to be immediately revoked and terminated, and with or without such
general notification, and, subject to the limitations and requirements of
Section 4.3, the new Servicer shall have the authority to do one or more of the
following:
 
(a) issue a receipt to any person obligated to pay any amount on account of any
Asset, which shall be a full and complete release, discharge, and acquittance to
such person to the extent of any amount so paid to the new Servicer
 
(b) endorse the name of Borrower and/or Servicer or any subsequent Person acting
as Servicer (as applicable) upon any check, draft, instrument, receipt,
instruction, or other document or item, including all items evidencing payment
upon any Asset or other indebtedness constituting Collateral, for which the new
Servicer is hereby granted an irrevocable power of attorney, which grant is
coupled with an interest; or
 
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(c) endorse or otherwise execute all instruments, instructions or other
documents, agreements, or items on behalf of Borrower and/or Servicer or any
subsequent Person acting as the Servicer, as shall be reasonably deemed by the
new Servicer to be necessary or advisable in order to collect upon any
Collateral or protect Lender’s security interest in any Collateral, for which
the new Servicer is hereby granted an irrevocable power of attorney, which is
coupled with an interest.
 
ARTICLE V
COVENANTS OF BORROWER AND SERVICER
 
 
Each of Borrower and Servicer (where applicable) covenants and agrees that from
the date hereof and until payment in full of the Note and of all other amounts
due under this Loan Agreement:
 
Section 5.1 Business and Existence. Each of Borrower and Servicer will perform
all things necessary to preserve and keep in full force and effect its limited
liability company existence and use its commercially reasonable efforts to
comply in all material respects with all laws applicable to it. Borrower will
not engage in any line of business other than purchasing consumer and commercial
loan receivables and the holding and collection of the Assets, without the prior
written consent of Lender. Except for cash, business equipment, supplies,
hardware, software and/or contract rights incidental to the operation of
Borrower as contemplated by this Loan Agreement and those Assets it is allowed
to purchase subject to Sections 1.2, 1.3(b), and 5.24, Borrower will not own
assets other than the Assets.
 
Section 5.2 Payment of Obligations and Expenses. Borrower will pay and discharge
all of its indebtedness, obligations and expenses promptly in accordance with
normal terms and practices of its business, before the same shall become
delinquent, as well as all lawful claims for labor, materials and supplies which
otherwise, if unpaid, might become a lien or charge upon its properties or
assets or any part thereof. Borrower shall not be required to pay any obligation
so long as Borrower shall contest, in good faith and at its own cost and
expense, the amount or validity thereof, in an appropriate manner or by
appropriate proceedings which shall operate during the pendency thereof to
prevent the collection of or other realization upon the obligations so
contested; provided, however, that no such contest shall subject Lender to the
risk of any liability. Borrower shall give Lender prompt written notice of any
such contest.
 
Section 5.3 Payment of Taxes and Assessments. Borrower shall pay when due all
taxes, assessments and other governmental charges or levies which become due and
payable by Borrower to any political entity, subdivision or department thereof
under any law now or hereafter in force or effect. Borrower, however, shall not
be required to pay any tax, charge or assessment so long as Borrower shall
contest, in good faith and at its cost and expense, in its own name and behalf,
the amount or validity thereof, in an appropriate manner or by appropriate
proceedings which shall operate during the pendency thereof to prevent the
collection of or other realization upon the tax, assessment, levy or charge, so
contested, provided that no such contest shall subject Lender to the risk of any
liability. Borrower shall give Lender prompt written notice of any such contest.
 
Section 5.4 Notice of Event of Default. As soon as practicable after an officer
of Borrower or Servicer has knowledge of an Event of Default or any condition
which, with the passage of time could become an Event of Default, Borrower or
Servicer, as the case may be, will furnish Lender with written notice of the
occurrence of any such event or the existence of any such condition which
constitutes or upon written notice or lapse of time could constitute an Event of
Default.
 
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Section 5.5 Asset Information. Each of Borrower and Servicer will provide Lender
sufficient information to allow Lender to make an informed decision with respect
to a Proposal. Such information shall include, but not be limited to, a complete
Proposal (including all schedules thereto) relating to the requested Loan and
any information supporting such complete Proposal, information provided to
Borrower by Asset Sellers related to the proposed Assets, internally generated
stratifications and analyses of the proposed Assets, asset portfolio write-ups
prepared by Borrower, key assumptions used in projecting future cash flows of
the proposed Assets, historical numbers on the proposed Assets, and proposed
Asset Purchase Agreements. Notwithstanding the foregoing, the failure to provide
any requested information other than that expressly specified in the immediately
preceding sentence shall not constitute a default or Event of Default hereunder,
and Lender’s sole remedy in such event shall be to reject the subject Proposal.
 
Section 5.6 Other Information. Each of Borrower and Servicer will furnish such
other information regarding the operations, business affairs and financial
condition of Borrower or Servicer or their respective properties or assets
(including, but not limited to, the Assets or other Borrower assets) as Lender
may reasonably request for the purpose of determining compliance with the Loan
Documents.
 
Section 5.7 Right of Inspection. Upon request of reasonable notice by Lender,
each of Borrower and Servicer shall permit any person designated by Lender, at
Lender’s expense, to visit and inspect any of the properties, books and
financial reports of Borrower or Servicer and to discuss its affairs, finances
and accounts related to the Loans, all at such reasonable times during ordinary
business hours of Borrower or Servicer and as often as Lender may reasonably
request for the purpose of determining compliance with the Loan Documents, or
the status of the Assets and/or the Collateral; provided, however, that Lender
will use reasonable efforts to conduct (or have conducted) any such examination
or inspection so as to minimize disruptions to the operations of Borrower or
Servicer. 
 
Section 5.8 Asset Portfolio Acquisition List. Borrower shall furnish to Lender,
no later than five (5) calendar days after each month-end, a list of the Asset
Portfolios, if any, acquired by Borrower or its Affiliates during the previous
month. Such list shall be certified by an officer of Borrower as to its
completeness and include the following pieces of information: name of Asset
Seller; size of Asset Portfolio; purchase price; and general collateral
characteristics. 
 
Section 5.9 Compliance Certificate. Each of Borrower and Servicer will deliver
to Lender, within forty-five (45) calendar days after the end of each calendar
quarter, a certificate dated as of the end of the quarter in question and signed
by a responsible officer of such party stating (i) that as of the date thereof
no Event of Default has occurred and is continuing or exists (or, if an Event of
Default exists, the nature thereof), (ii) that all respective representations
and warranties of Borrower or Servicer, as the case may be, set forth in this
Loan Agreement remain true and correct in all material respects as of the date
of such compliance certificate, and (iii) that each has carried out its
respective obligations under this Loan Agreement in all material respects.
 
Section 5.10 Reimbursement of Collection and Enforcement Expenses. Borrower will
reimburse Lender, upon demand, for any and all costs, including reasonable
attorneys’ fees and expenses, actually incurred by Lender or its agents in
either collecting any sums payable by Borrower under the Loan Documents or
enforcing any of Borrower’s obligations under the Loan Documents.
 
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Section 5.11 Liens; Other Debt. Neither Borrower nor Servicer will sell,
transfer or assign any part of the Collateral, except as permitted herein or as
may be agreed to by Lender, or contract, create, or incur any Liens upon or
grant any security interest in any of the Collateral, whether now owned or
hereafter acquired, except (i) the Lien in favor of Lender created pursuant to
the Security Agreement, (ii) the lien of taxes not yet due and payable, and
(iii) the lien, if any, of attorneys or others in possession of Collateral for
the purposes of collection. Borrower will not incur any debt, secured or
unsecured, direct or contingent (including guarantying any obligation), other
than the Loans or accounts payable and accruals incurred in the ordinary course
of Borrower’s business.
 
Section 5.12 Consolidation, Merger, Sale of Collateral; Changes to
Organizational Documents. Borrower will not (a) wind up, liquidate, or dissolve
its affairs, (b) enter into any transaction of merger or consolidation, or
(c) convey, sell, lease or otherwise dispose of the Collateral or any part
thereof, except in the normal course of collections on the Asset Portfolios;
provided, however, that any disposition of any nature of any item of Collateral
(other than in the normal course of collections) shall require the prior express
written approval of Lender. Borrower will not amend its certificate of
incorporation or its articles of formation or bylaws or limited liability
company or partnership agreement (as applicable) without the prior express
written consent of Lender, determined in Lender’s reasonable discretion.
 
Section 5.13 Other Agreements. Neither Borrower nor Servicer will enter into any
agreement containing any provision that would be violated or breached by the
performance of their respective obligations under any Loan Document.
 
Section 5.14 Use of Loan Proceeds. Borrower shall apply the proceeds of the
Loans only to pay the Cost of the Asset Portfolios and for no other purpose.
 
Section 5.15 Notification of Legal Process. Each of Borrower and Servicer will
promptly notify Lender of any attachment or other legal process levied against
any of the Collateral and any information received by Borrower or Servicer
relative to the Collateral that may materially or adversely affect the value
thereof or the rights and remedies of Lender with respect thereto.
 
Section 5.16 Transactions with Affiliates. Borrower will not, either directly or
indirectly, enter into any contracts, agreements or transactions, including but
not limited to, brokerage contracts, property management agreements, sales
contracts for the providing of any other goods or services, or the reimbursement
or payment of any fees or expenses, with any of its shareholders, officers,
directors, managers, partners or members, or with any of Borrower’s Affiliates
(including, without limitation, Servicer) or any entities owned in whole or in
part by Borrower or its shareholders, officers, directors, managers, partners or
members, without the express prior written consent of Lender. Lender hereby
approves and consents to DRV Cap being engaged as the initial Servicer
hereunder.
 
Section 5.17 Annual Financial Statements. Each of Borrower and Servicer shall,
no later than one hundred twenty (120) calendar days after their respective
fiscal year end, provide to Lender annual financial statements prepared in
accordance with generally accepted accounting principles, consistently applied,
and certified as correct by a senior and knowledgeable officer or manager of
Borrower or Servicer, as the case may be. Borrower shall also, by such deadline,
provide to Lender a copy of any audited financial statements which its parent
company, DRV Cap, may provide to DRV Cap’s shareholders or the general public
with respect to such fiscal year, together with any and all schedules or other
financial materials that Borrower provides to DRV Cap in order to facilitate the
preparation of DRV Cap’s audited financial statements.
 
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Section 5.18 Quarterly Financial Statements. Each of Borrower and Servicer
shall, no later than forty-five (45) calendar days after the end of each of
their respective fiscal quarters, provide to Lender financial statements for
such quarter prepared in accordance with generally accepted accounting
principles, consistently applied, and certified as correct by a senior and
knowledgeable officer or manager of Borrower or Servicer, as the case may be.
Borrower shall also, by such deadline, provide to Lender a copy of any financial
statements which its parent company, DRV Cap, may provide to DRV Cap’s
shareholders or the general public with respect to such fiscal quarter, together
with any and all schedules or other financial materials that Borrower provides
to DRV Cap in order to facilitate the preparation of DRV Cap’s audited financial
statements.
 
Section 5.19 Single Purpose Entity. If Borrower and Lender agree in writing to
utilize a single purpose entity as Borrower, then the following terms and
conditions shall apply:
 
(a) Compensation of Employees, Agents and Consultants; Limitation on Agency. Any
employee, consultant, director, manager, or agent of Borrower will be
compensated from Borrower’s own bank accounts for services provided to Borrower.
Borrower will engage no agents other than (i) Servicer to service the Assets,
and (ii) those expressly agreed to in writing by Lender in its sole and absolute
discretion.
 
(b) Servicing Fees. Borrower is contracting with Servicer in this Loan Agreement
to perform all operations required on a daily basis to service the Assets.
Borrower will pay Servicing Fees to Servicer from Collections as specified in
this Loan Agreement. Borrower does not expect to incur any material indirect or
overhead expenses for items shared between Borrower and Servicer which are not
reflected in documented service or administration fees. To the extent, if any,
that Borrower and Servicer share items of expenses not reflected in its
respective service or management fees (including, without limiting, legal,
auditing, and other professional services), such expenses will be allocated to
the extent practical on the basis of actual use of the services rendered, and
otherwise on a basis reasonably related to actual use or value of services
rendered.
 
(c) Expenses. Borrower’s operating expenses will not be paid by Servicer.
 
(d) Books and Records. Borrower’s books and records will be maintained
separately from those of Servicer.
 
(e) Financial Statements. Any financial statements of Servicer which are
consolidated to include Borrower shall contain detailed notes clearly stating
that Borrower is a separate legal entity with its own separate creditors which
will be entitled to be satisfied out of Borrower’s assets prior to any value in
Borrower becoming available to Borrower’s equityholders.
 
(f) Holding of Funds and Assets. The assets of Borrower will be maintained in a
manner that facilitates their identification and segregation from those of
Servicer. Funds or other assets of Borrower will not be commingled with those of
Servicer. Borrower shall not maintain joint bank accounts or other depository
accounts to which Servicer (other than in its capacity as Servicer in the
exercise of its servicing responsibilities under this Loan Agreement) has
independent access. No funds of Borrower will at any time be pooled with any
funds of Servicer other than while such funds are in the Custodial Account.
 
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(g) Separate Legal Entities. Borrower acknowledges that all the parties entering
into the Loan Documents, and any other related documents, do so in reliance on
Borrower’s identity as a legal entity separate from Servicer.
 
(h) Arm’s Length Relationships. Borrower will maintain arm’s length
relationships with Servicer and its Affiliates. Neither Borrower nor Servicer
nor any of their respective Affiliates will be or will hold itself out to be
responsible for the debts of the other or the decisions or actions relating to
the daily business and affairs of the other.
 
(i) Loans to Other Parties. Except for Borrower’s Contributions, Borrower will
not make any loans or advances to any third party (including, without
limitation, any Affiliate).
 
Section 5.20 Collections Policy. Servicer shall be entitled to make exceptions
to its general collections policy for individual Obligors, but only to the
extent as is provided for in its Credit and Collection Policy.
 
Section 5.21 Minimum Monthly Payment Policy. Without the express prior written
consent of Lender, Servicer shall not change its general collections policy
regarding minimum monthly payments from that as set forth in its Credit and
Collection Policy. Subject to the foregoing, Servicer shall be entitled to make
exceptions to its general collections policy for individual Obligors under the
same terms and conditions as it makes exceptions for other cardholders in
portfolios of credit card receivables that it owns or services so long as such
exceptions (in the aggregate) are not likely to have a Material Adverse Effect.
 
Section 5.22 Amendments to Asset Purchase Agreement. Borrower will not amend,
modify or terminate any Asset Purchase Agreement without the express prior
written consent of Lender.
 
Section 5.23 Transactions Involving Collateral. Except for Borrower’s
Contributions and comparable advances made in the ordinary course of servicing,
neither Borrower, Servicer, nor any of Borrower’s Affiliates will lend or invest
money in, or borrow from, any Person that purchases all or any portion of the
Collateral, or any interest therein, without the prior express written consent
of Lender.
 
Section 5.24 Further Assurance on Third Party Financings. Notwithstanding
Section 1.2, if DRV Cap (or any Affiliate thereof permitted in accordance with
Section 1.3(c) to acquire a rejected Asset Portfolio) receives financing
approval from a third party on any proposed purchase of an Asset Portfolio for
which Lender has rejected the Proposal to fund the purchase of, then Borrower
and Debt Resolve shall represent, warrant and reasonably demonstrate to Lender
in writing that (a) no Material Adverse Effect shall result from, and that
Lender shall not be adversely affected by, the consummation of any such third
party financing and the acquisition of such Asset Portfolio by such permitted
Affiliate, and (b) the Asset Portfolio for which such third party financing has
been received has been presented to such third party financier in the same light
and on the same (or less favorable to such financier) terms and conditions as it
was initially presented to Lender in the relevant Proposal that was rejected by
Lender.
 
Section 5.25 Custodial Account. Borrower and Servicer shall each cooperate fully
with Lender and with any relevant third parties in the establishment of the
Custodial Account. Borrower and Servicer shall each cooperate fully with Lender
and the financial institution providing the Custodial Account so that Lender
shall have, on an ongoing basis, unrestricted online access to such Custodial
Account over the Internet so that Lender may access account statements and daily
account activity.
 
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ARTICLE VI
DEFAULT
 
Section 6.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an “Event of Default” under this Loan
Agreement:
 
(a) Payment. Failure to make any payments of Fixed Interest, principal, or other
amounts payable to Lender with respect to any Loan under the Note, this Loan
Agreement or any other Loan Document within three (3) Business Days after the
Distribution Date on which such payment is due;
 
(b) Reports. Failure to submit any Remittance Report or any Collateral Report on
or before the fifth (5th) Business Day after the Distribution Date by which such
report was due.
 
(c) Representations and Warranties. Any representation or warranty made by
Borrower or Servicer in any Loan Document shall prove to be false, misleading,
incomplete or untrue in any respect when made that has a Material Adverse Effect
and, if susceptible of being remedied, has not been remedied within fifteen (15)
Business Days after Borrower has or reasonably should have had notice thereof;
 
(d) Covenants. Any breach by Borrower, Debt Resolve or Servicer of any covenant,
term, agreement or condition contained in any Loan Document, which breach (other
than a breach by Debt Resolve of Section 1.2) has a Material Adverse Effect, and
the same shall continue unremedied for a period of fifteen (15) Business Days
after Borrower has or reasonably should have had notice thereof or for such
other amount of time permitted for cure that may be specifically provided for in
such Loan Document; provided, however, that either such time period shall only
be applicable if the breaching party uses diligent efforts during such time to
cure such breach;
 
(e) Bankruptcy or Insolvency. (i) The commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower and such proceeding shall
not be dismissed within sixty (60) calendar days after the date of filing;
(ii) Borrower is unable, or admits in writing its inability, to pay its recourse
debts as they become due; (iii) Borrower makes an assignment for the benefit of
creditors; (iv) Borrower files a petition or applies to any tribunal for the
appointment of a custodian, receiver or any trustee for all or a substantial
part of its assets; (v) Borrower, by any act or omission, indicates its consent,
approval of, or acquiescence in the appointment of a receiver, custodian or
trustee for all or a substantial part of its property; (vi) Borrower is
adjudicated a bankrupt; (vii) Borrower becomes insolvent however otherwise
evidenced; or (viii) Borrower ceases doing business as a going concern;
 
(f) Default in or Breach of Other Agreements. The occurrence and continuance of
an “Event of Default” under the Loan Agreement or any other Loan Document, or
the enforcement of remedies under any other agreement to which Borrower (or
Servicer, as the case may be) is a party by another party thereto following the
occurrence of any default or event of default thereunder or the breach by
Borrower (or Servicer, as the case may be) thereunder, which enforcement has a
Material Adverse Effect;
 
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(g) Judgments. An uninsured portion of any judgment or order for the payment of
money is entered against Borrower for more than One Hundred Thousand Dollars
($100,000) and such judgment is not, within thirty (30) calendar days after the
entry thereof, discharged or execution thereof stayed or bonded pending appeal;
 
(h) Ownership; Liens. Borrower shall fail for any reason to have a valid, first
priority ownership interest or valid first priority perfected security interest
in the Assets, or if Lender shall fail to have a first priority perfected
security interest in the Collateral;
 
(i) Ownership and Control of Borrower and DRV Cap. (i) DRV Cap (while it serves
as Servicer hereunder) shall experience a Change of Control, or (ii) DRV Cap
ceases to own, directly or indirectly, one hundred percent (100%) of the capital
stock and/or membership interests or other equity interests, as the case may be,
of Borrower;
 
(j) Servicer Termination Event. The occurrence and continuance past any
applicable cure period of a Servicer Termination Event;
 
(k) Loss or Damage. The occurrence of loss, theft, damage or destruction of any
material portion of the Collateral, or the making of any seizure, unauthorized
sale or other unauthorized transfer of any Collateral; or
 
(l) Failure to Enforce Asset Purchase Agreement. Borrower shall fail to
diligently pursue enforcement of and remedies under any Asset Purchase Agreement
or related document if either Borrower or DRV Cap (or any subsequent Servicer)
becomes aware of, or should, through the exercise of the standard of care and
conduct required of each of them by this Loan Agreement, be reasonably expected
to become aware of, any material breach thereof by another party thereto or
there exists a material risk of financial harm with respect to the value of the
applicable Asset or Assets.
 
Section 6.2 Effect of Event of Default.
 
(a) Upon the occurrence and during the continuance of any Event of Default,
Lender may at its option, by written notice to Borrower, declare the entire
unpaid principal balance of the Note, and all other amounts due hereunder,
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are expressly waived by Borrower.
 
(b) An Event of Default with respect to any Loan shall be deemed an Event of
Default with respect to all other Loans, it being Borrower’s and Lender’s
intention that the Loans be fully cross-defaulted.
 
(c) Upon any Event of Default which continues beyond any applicable cure period,
if any, Lender may, by written notice to Servicer, direct that, during the
continuance of such Event of Default, all Collections be applied in accordance
with Lender’s written instructions and in accordance with the Loan Documents,
and Lender may exercise its rights under Section 4.5(b) hereunder as if a
Servicer Termination Event has occurred such that Lender may replace Servicer
with a new Servicer selected by Lender.
 
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ARTICLE VII
DEFINITIONS
 
For purposes of this Loan Agreement, the following terms shall have the
following meanings:
 
 
“Account Documents” means, with respect to the Assets, all customer agreements,
notes, security agreements, financing statements, and such other evidences of
indebtedness or documents and all electronic media containing any of the
foregoing.
 
“Affiliate” means, as to any specified Person, (a) any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified Person, and (b) each officer, director, manager,
managing member, or general partner of such specified Person, and (c) each
Person who is the beneficial owner of, or part of a family group which
collectively owns, ten percent (10%) or more of any class of voting equity
interest in such specified Person. For the purposes of this definition,
“control” when used with respect to any specified Person shall mean that any
other Person shall be deemed to “control” such specified Person if the other
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such specified Person, whether
through the ownership of a voting equity interest, or by contract. The terms
“controlling” and “controlled” shall have meanings correlative to the foregoing.
 
“Agent” has the meaning set forth in Section 8.16.
 
“Assets” means non-performing, sub-performing, charged-off or otherwise
distressed consumer debt obligations, consisting of consumer credit card debt or
lease obligations, business credit card debt or lease obligations, consumer
loans, and/or other small balance consumer receivables, that are identified in a
Proposal or the acquisition of which by Borrower has been expressly approved in
writing by Lender and are made subject to the Loan Documents, and including any
amendments, modifications, replacements or renewals of such consumer debt
obligations.
 
“Asset Liquidation Proceeds” means any and all proceeds which may be generated
by any sale or other disposition of an Asset or from any exercise of any
putback, refund or other similar rights against any Asset Seller, or which may
otherwise be received from any Asset Seller, in each case net of fees and
expenses of the transaction (including broker’s fees, accounting fees, rating
agency fees and legal fees and expenses).
 
“Asset Management Fee” means, with respect to any Asset Portfolio, an amount
payable to Lender equal to one percent (1%) of the Gross Collections received
subsequent to the most recent prior Cutoff Date and on or prior to the
applicable Cutoff Date.
 
“Asset Portfolio” means each pool or grouping of Assets purchased from time to
time by Borrower from an Asset Seller.
 
“Asset Portfolio Net Collections” has the meaning set forth in Section 2.2(b).
 
“Asset Purchase Agreement” means the agreement under which the Borrower has
agreed to purchase Assets from an Asset Seller.
 
“Asset Seller” means the Person from whom Borrower acquires Assets.
 
“Borrower” has the meaning set forth in the preamble to this Loan Agreement.
 
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“Borrower’s Contribution” means, with respect to a Loan, the sum of
(a) Borrower’s financial contribution toward payment of the Cost with respect to
the related Asset Portfolio, (b) any Closing Costs and Asset Management Fees not
otherwise paid at the closing of such Loan, as may be expressly approved in
writing by Lender, and (c) any Fixed Interest and principal relating to such
Loan, in each case paid by Borrower from its own account in accordance with
Section 2.2(b).
 
“Borrower’s Residual” has the meaning set forth in Section 2.2(b)(ix).
 
“Borrower’s Residual Percentage” means, with respect to each Asset Portfolio, a
percentage equal to thirty percent (30%).
 
“Borrowing Date” means, with respect to any Loan, the date of funding of such
Loan.
 
“Business Day” means any day other than a Saturday or Sunday, or a date on which
Lender, Borrower, Servicer or commercial banks in the State of New York
generally are closed for regular business; provided, however, that
notwithstanding the forgoing, any such day on which Borrower or Servicer is
conducting normal business operations shall be a Business Day for the purpose of
determining the Cutoff Date.
 
“Change of Control” means, with respect to any particular Person: (i) a sale of
sixty percent (60%) or more (based on fair market value) of the assets of such
Person; (ii) a merger or consolidation involving such Person in which such
Person is not the surviving entity and the equityholders of such Person
immediately prior to the completion of such transaction hold, directly or
indirectly, less than fifty percent (50%) of the beneficial ownership (within
the meaning of Rule l3d-3 promulgated under the Exchange Act, or comparable
successor rules) of the securities of the surviving entity (excluding any
equityholders who possessed a beneficial ownership interest in the surviving
entity prior to the completion of such merger or consolidation transaction);
(iii) a reverse merger involving such Person in which such Person is the
surviving entity but the equity of such Person outstanding immediately preceding
the merger are converted by virtue of the merger into other property, whether in
the form of securities, cash or otherwise, and the equityholders of such Person
immediately prior to the completion of such transaction hold, directly or
indirectly, less than fifty percent (50%) of the beneficial ownership (within
the meaning of Rule l3d-3 promulgated under the Exchange Act, or comparable
successor rules) of the surviving entity or, if more than one entity survives
the transaction, the controlling entity; (iv) an acquisition by any other Person
or group within the meaning of Section 13(d) or 14(d) of the Exchange Act or any
comparable successor provisions (excluding any employee benefit plan, or related
trust, sponsored or maintained by such original Person or any Affiliate thereof)
of the actual or beneficial ownership (within the meaning of Rule l3d-3
promulgated under the Exchange Act, or comparable successor rules) of securities
of such original Person representing at least thirty percent (30%) of the
combined voting power entitled to vote in the election of directors; or, (v) if
the individuals who, as of the date of this Loan Agreement, are members of such
Person’s Board of Directors (the "Incumbent Board”), cease for any reason to
constitute more than fifty-one percent (51%) of such Person’s Board of
Directors. (If the election, or nomination for election by such Person's
equityholders, of any new member of such Person’s Board of Directors is approved
by a vote of at least fifty percent (50%) of the Incumbent Board, then such new
member of such Person’s Board of Directors shall be considered as a member of
the Incumbent Board.)
 
“Chattel Paper” means any "chattel paper," as such term is defined in the Code,
now owned or hereafter acquired by Borrower.
 
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“Closing Costs” means the legal fees and expenses and the other fees and
expenses approved by Lender for the initial Loan, to be paid by Borrower, as set
forth in Exhibit E attached hereto.
 
"Code" means the Uniform Commercial Code as the same may, from time to time, be
enacted and in effect in the State of New York; provided, however, 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 New York, then the term
"Code" shall mean the Uniform Commercial Code as from time to time 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” has the meaning set forth in the Security Agreement.
 
“Collateral Report” has the meaning set forth in Section 4.3(g).
 
“Collections” means, with respect to any Asset Portfolio, all payments made by
Obligors on account of the Assets in such Asset Portfolio, together with any
other collections, income, interest, principal, penalty, late fees, extension
fees, prepayment fees, or other fees on account of the Assets in such Asset
Portfolio, and including Asset Liquidation Proceeds.
 
“Cost” means, for each Asset Portfolio, the Borrower’s purchase price plus such
other fees as may be set forth in the Total Closing Costs and Funding Schedule
attached as Schedule 4 to the Proposal for such Asset Portfolio and as expressly
approved by Lender in advance in writing.
 
“Credit and Collection Policy” means those credit, collection, customer
relations and customer service policies and practices and other written policies
and procedures of Borrower or Servicer, as the case may be.
 
“Credit and Collection Laws” means state and federal laws governing the business
of collecting consumer debt, including without limitation, the Fair Debt
Collection Practices Act, the Federal Consumer Credit Protection Act and
Regulation Z issued thereunder, the Federal Equal Credit Opportunity Act and
Regulation B issued thereunder and the United States Bankruptcy Code, and, for
each of the foregoing, the rules and regulations promulgated thereunder.
 
“Custodial Account” means an account (which shall be a lockbox or blocked
account, at Lender’s discretion) which Borrower shall establish and maintain as
a custodial account in trust for the benefit of Lender until the Loans have been
paid in full, to which Lender shall have online access to account statements and
account activity.
 
“Cutoff Date” means the last Business Day of each calendar month.
 
“Debt Resolve” has the meaning set forth in the preamble to this Loan Agreement.
 
“Default Rate” has the meaning set forth in Section 1.6(b).
 
“Disclosing Party” has the meaning set forth in Section 8.4.
 
“Distribution Date” means the fifth (5th) Business Day of the calendar month
immediately following (a) the previous Cutoff Date, or (b) for a recent Loan,
the first full month following the Borrowing Date of such Loan.
 
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“DRV Cap” has the meaning set forth in the preamble to this Loan Agreement.
 
“Event of Default” has the meaning set forth in Article VI.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any
successor statute, and the rules and regulations promulgated thereunder.
 
“Fixed Interest” has the meaning set forth in Section 1.6(a).
 
“Governing State” means the State of New York.
 
“Gross Collections” means all Collections received by the Cutoff Date on account
of servicing the Assets, unreduced for expenses, fees and costs of servicing
and/or collection, or for any other reason.
 
“Indemnifying Party” has the meaning set forth in Section 8.16.
 
“Instrument” means any "instrument," as such term is defined in the Code, now
owned or hereafter acquired by Borrower, wherever located.
 
“Lender” has the meaning set forth in the preamble to this Loan Agreement.
 
“Lender’s Advances” has the meaning set forth in Section 2.2(b)(ii).
 
“Lender’s Residual” has the meaning set forth in Section 2.2(b)(ix).
 
“Lender’s Residual Percentage” means, with respect to each Asset Portfolio, a
percentage equal to seventy percent (70%).
 
"Lien" means a lien, security interest, pledge, hypothecation, collateral
assignment, charge, encumbrance, or other right or claim of any Person other
than an unfiled lien for tax accrued but not yet payable.
 
“Loan” and “Loans” have the meaning set forth in Section 1.2.
 
“Loan Agreement” has the meaning set forth in the preamble to this Master Loan
and Servicing Agreement.
 
“Loan Documents” mean, collectively, this Loan Agreement, the Note, all
Proposals (and each Schedule attached thereto), the Security Agreement, each
Asset Purchase Agreement to which Borrower is a party, and all other documents,
reports, instruments or certificates delivered pursuant to or in connection with
any of the foregoing or any of the transactions contemplated by any of the
foregoing.
 
“Material Adverse Effect” means, with respect to any event or circumstance, a
material adverse effect on:
 
(a) the ability of Borrower (or applicable party, as the context requires) to
perform its obligations under any Loan Document to which it is a party;
 
(b) the validity or enforceability of any Loan Document;
 
(c) the status, existence, perfection, priority, or enforceability of any lien
or security interest granted to Lender pursuant to the Loan Documents; or
 
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(d) the validity, enforceability or collectibility of the Assets, taken as a
whole.
 
“Maturity Date” means the maturity date for principal and accrued but unpaid
Fixed Interest on each Loan, which shall be the first to occur of (i) the
twenty-fourth (24th) Distribution Date following the applicable Borrowing Date,
or (ii) the date of acceleration pursuant to Section 6.2.
 
“Note” means that certain Secured Promissory Note, substantially in the form of
Exhibit B attached hereto, issued by Borrower to Lender on or about the date
hereof, evidencing, in the aggregate, all the Loans contemplated by this Loan
Agreement, and subject to amendment or supplement to reflect any additional
lending by Lender in accordance with any potential extension or renewal of this
Loan Agreement that has been agreed upon in writing by all of the parties to
this Loan Agreement.
 
“Notice” has the meaning set forth in Section 8.14.
 
“Obligor” means each signer, co-signer, guarantor or other person responsible
for payment of an Asset.
 
“Person” means any natural person, limited liability company, corporation,
partnership, joint venture, firm, association, trust, unincorporated
organization, governmental agency or political subdivision or any other entity,
whether acting in an individual, fiduciary or other capacity.
 
“Pool” means, with respect to any and each calendar quarter, any and all Asset
Portfolios acquired by Borrower during such calendar quarter, the acquisition of
which was funded by Loans from Lender in accordance with this Loan Agreement.
 
“Portfolio Amortization Schedule” means the amortization schedule set forth in
Schedule 2 to a Proposal approved by Lender in writing.
 
“Portfolio Budget” means, with respect to each Asset Portfolio, a strategic
budget developed by Borrower and submitted as part of the Proposal for, and
approved in writing by Lender for, such Asset Portfolio, representing Borrower’s
good faith estimate of the projected cash inflows and outflows, including
Servicing Fees and other expenses.
 
“Proposal” means a written proposal from Borrower to Lender requesting a Loan in
connection with Borrower’s purchase of a specific Asset Portfolio, such proposal
to be substantially in the form of Exhibit A attached hereto.
 
“Qualifying Asset Portfolio” has the meaning set forth in Section 2.2(b)(vi).
 
“Remittance Report” means a report, substantially in the form of Exhibit D
attached hereto, submitted by the fifth (5th) Business Day of each month by
Servicer to Lender listing Gross Collections and any disbursements or expenses
paid or received during the prior month and the proposed disbursements on
account of the Assets serviced by Servicer during such prior month pursuant to
Section 2.2, and expressly approved by Lender in writing prior to the
Distribution Date. A Remittance Report shall be prepared for each separate Asset
Portfolio and shall include, among other things, a detailed description of each
application of excess Asset Portfolio Net Collections to or from such Asset
Portfolio as may be permitted under Section 2.2(b).
 
“Replacement Date” has the meaning set forth in Section 4.5.
 
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“Required Distributions” has the meaning set forth in Section 2.2(b)(vi).
 
“Security Agreement” means that certain Security Agreement, substantially in the
form of Exhibit C attached hereto, entered into by Borrower and Lender on or
about the date hereof, pursuant to which Borrower shall assign to and grant
Lender a security interest in the respective Assets and related Collateral, as
such agreement may be amended, restated, or otherwise modified from time to time
in accordance with the terms thereof.
 
“Servicer” has the meaning set forth in Section 4.1.
 
“Servicer Termination Event” has the meaning set forth in Section 4.5.
 
“Servicing Expenses” means, with respect to each Asset Portfolio, all customary
and reasonable third party costs actually incurred by Servicer in connection
with its collection activities hereunder relating to such Asset Portfolio,
including, but not limited to, attorneys fees and expenses, filing and service
fees, execution fees, court costs, skip trace costs, media costs, and other
costs and expenses, up to, in the aggregate for such Asset Portfolio, the amount
provided for in the Proposal for such Asset Portfolio and agreed to in writing
by Lender, or as otherwise expressly agreed to in writing in advance by Lender.
 
“Servicing Fees” means, with respect to each Asset Portfolio, the Portfolio
Servicing Fees set forth as a percentage of Gross Collections (but excluding
Asset Liquidation Proceeds) in Schedule 1 attached to the Proposal relating to
such Asset Portfolio and approved by Lender in writing at the time of Borrower’s
acquisition of such Asset Portfolio, which are expected to be in accordance with
the following:
 

Asset Category
 
Servicing Fee
 
Prime accounts (no prior collection agency or law firm)
   
34
%
Secondary accounts (one prior collection agency or law firm)
   
39
%
Tertiary accounts (two prior collection agencies or law firms)
   
44
%
Quarternary accounts (three or more prior collection agencies or law firms)
   
47
%
Out of statute accounts
   
54
%

 
ARTICLE VIII
MISCELLANEOUS
 
Section 8.1 Survival of Representations and Warranties. All representations and
warranties of Borrower and Servicer made herein shall be true and correct in all
material respects as of each Borrowing Date and shall survive the Borrowing Date
and the execution and delivery of this Loan Agreement, the Security Agreement,
and the Note, and shall continue in full force and effect until payment in full
by Borrower of all amounts payable hereunder, under the Security Agreement or
under the Note.
 
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Section 8.2 Cure. Lender shall have the right to cure any default by Borrower
upon any lease, insurance policy, indenture, security agreement, mortgage, deed
of trust, agreement or other instrument to which Borrower is a party or by which
its properties are bound or may be subject if such default shall in any manner
affect Lender’s rights hereunder, or in and to the Collateral, or the ability of
Borrower to perform its obligations hereunder or under the Security Agreement or
the Note, and Borrower shall immediately reimburse Lender for any amounts paid
by Lender or its agents to cure such defaults.
 
Section 8.3 Relationship between Parties. The relationship between Lender and
Borrower shall be solely one of commercial lender and borrower, and nothing
contained in this Loan Agreement or in any Loan Document shall constitute the
parties as partners or joint or co-venturers with one another or with any other
party, or as agents for one another or for any other party with regard to any
activities contemplated by this Loan Agreement or otherwise, or render any party
liable for any debts or obligations of any other party. Borrower and Servicer
shall each indemnify, defend, and hold and save Lender harmless from any and all
claims of any nature which may be asserted against Lender as being the agent,
partner, or joint or co-venturer of Borrower or Servicer.
 
Section 8.4 Confidentiality. Borrower, Servicer and Lender each agree to use all
commercially reasonably efforts (equivalent to the efforts such parties apply to
maintain the confidentiality of their own confidential information) to maintain
as confidential all information with respect to the Assets, any Proposal, the
terms of the Loan Documents or other confidential information regarding the
business of the others (to the extent such confidential information was provided
by or on behalf of one or more of the other parties), except that disclosure may
be made as required by law or judicial or administrative process or in
connection with the enforcement of this Loan Agreement or any other Loan
Document, and except that Lender, as the “Disclosing Party” may disclose such
information (a) to Persons employed or engaged by the Disclosing Party in
evaluating, approving, structuring or administering the Loans and Commitments,
(b) to any bona fide or potential assignee of Lender or participant in a Loan
that has agreed in writing to comply with the covenant contained in this Section
(and any such bona fide or potential assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause (a)
above); (c) to any bona fide or potential investor in Lender, but only to the
extent of the terms of the Loan Documents and general performance information
with respect to Lender’s interest in the Loans, (d) as required or requested of
any governmental authority or reasonably believed by the Disclosing Party to be
compelled by, or required under, any regulation or law (including, without
limitation, any securities regulation or law), or any court decree, subpoena or
legal or administrative order or process; (e) as, on the advice of the
Disclosing Party’s counsel, is required by law; (f) in connection with the
exercise of any right or remedy under the Loan Documents or in connection with
any litigation to which the Disclosing Party is a party; or (g) that ceases to
be confidential through no fault of the Disclosing Party. 
 
Section 8.5 Amendment and Modification. Any amendments or modifications to any
provisions of this Loan Agreement, the Note or any other Loan Document must be
(a) in writing, and (b) signed by each of the parties thereto.
 
Section 8.6 Waivers. No party shall be deemed to have waived any of its rights
or remedies hereunder, under the Note or under any other Loan Document unless
such waiver is (a) in writing, and (b) signed by such party, and then only to
the extent specifically recited. No failure to exercise and no delay or omission
in exercising any right, remedy or recourse on the part of any party shall
operate or be deemed as a waiver of such right, remedy or recourse hereunder or
thereunder or preclude any other or further exercise thereof. A waiver or
release on any one occasion shall not be construed as continuing, as a bar to,
or as a waiver or release of any subsequent right, remedy or recourse on any
subsequent occasion. All rights and remedies of the parties, whether pursuant to
this Loan Agreement, the Note, the Security Agreement, or any other Loan
Document, shall be cumulative and concurrent and may be exercised singularly,
successively or concurrently, at the sole and absolute discretion of the subject
party, and may be exercised as often as occasion therefor may exist. 
 
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Section 8.7 Assignment and Transferability of Loan Agreement; Loan
Participations. This Loan Agreement shall be binding upon Borrower, Servicer,
Lender and each of their respective successors and permitted assigns; provided,
however, that (a) neither Borrower nor Servicer may transfer or assign any or
all of their respective rights or obligations hereunder without the prior
express written consent of Lender; and (b) Lender may, upon written notice to
Borrower and Servicer, transfer and assign any or all of its rights or
obligations hereunder or under any Loan or the Note or any other Loan Document,
including, without limitation, the sale of participations in any Loan or the
Note to any party who will be bound by this Agreement. This Loan Agreement shall
be for the benefit of Lender and those of its affiliated funds which agree to
become a party to this Loan Agreement.
 
Section 8.8 Actions in Connection with Bankruptcy. Without the necessity of an
evidentiary hearing and without the necessity or requirement that Lender
establish or prove the value of the Collateral (or any other collateral pledged
to Lender pursuant to the Loan Documents), or the lack of adequate protection of
Lender's interest in the Collateral (or any other collateral pledged to Lender
pursuant to the Loan Documents), Lender shall be entitled to the immediate
termination of the automatic stay of 11 U.S.C. § 362 in order to permit Lender
to exercise all of its rights and remedies in respect of the Collateral (or any
other collateral pledged to Lender pursuant to the Loan Documents), the
existence of this provision constituting sufficient "cause" for purposes of
11 U.S.C. § 362(d)(1). Borrower agrees not to directly or indirectly oppose or
otherwise defend against the termination of the automatic stay. Any reasonable
attorney's fees and other expenses incurred by Lender in connection with
Borrower's bankruptcy or any of the other aforesaid events shall be additional
indebtedness of Borrower.
 
Section 8.9 GOVERNING LAW; JURISDICTION; VENUE. THIS LOAN AGREEMENT, THE NOTE,
AND ALL OTHER LOAN DOCUMENTS, AND WITHOUT LIMITATION ANY QUESTIONS CONCERNING
THE INTERPRETATION OR ENFORCEMENT THEREOF, SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE GOVERNING STATE. The parties
hereto each hereby irrevocably submit to the jurisdiction of any state or
federal court sitting in the Governing State over any suit, action or proceeding
arising out of or relating to a Loan or the Loan Documents. The parties hereto
each irrevocably waive, to the fullest extent permitted by law, any objection
that any such party may now or hereafter have to the laying of venue of any such
suit, action or proceeding brought in any such court and any claims that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing in this Section shall limit the right of Lender to
bring proceedings against any other party hereto in the courts of any other
jurisdiction. Borrower, Debt Resolve and DRV Cap each agree that any forum other
than the Governing State is an inconvenient forum and that a suit brought by
Borrower, Debt Resolve or DRV Cap against Lender in a court of any state other
than the Governing State should be forthwith dismissed or transferred to a court
located in the Governing State by that court.
 
Section 8.10 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG THE PARTIES ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS LOAN AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS RELATED THERETO.
 
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Section 8.11 Severability and Enforceability of Loan Agreement. If any one or
more of the terms or provisions of this Loan Agreement shall be determined by a
court of competent jurisdiction to be illegal, invalid or unenforceable in such
jurisdiction, then all other terms and provisions hereof shall remain effective
and binding on the parties hereto, and such illegal, invalid or unenforceable
term or provision shall be deemed modified, for purposes of performance of this
Loan Agreement in such jurisdiction, to the extent necessary to render it
lawful, valid and enforceable, or, if such a modification is not possible
without materially altering the intention of the parties hereto (in which case
no such modification shall occur), then such term or provision shall be severed
herefrom solely for purposes of performance of this Loan Agreement in such
jurisdiction, but shall remain a part of this Loan Agreement for purposes of
performance in all other jurisdictions. The validity of the remaining terms and
provisions of this Loan Agreement shall not be affected by such modification or
severance, except that if any such severance materially alters the intentions of
the parties hereto as expressed herein, then the parties hereto shall use their
respective best reasonable efforts to agree to appropriate equitable amendments
to this Loan Agreement in light of such severance, and if no such agreement is
reached within a reasonable period of time, then any party hereto may initiate
arbitration under the then current rules of the American Arbitration Association
to determine such appropriate equitable amendments.
 
Section 8.12 Titles and Headings. The titles and headings of the Articles,
Sections, and paragraphs of this Loan Agreement (a) are merely for convenience
of reference only in reading this Loan Agreement, (b) shall not be construed to
alter, modify or interpret the meaning of the provisions under said titles and
headings, and (c) shall not have any effect on the construction or
interpretation of the content of this Loan Agreement.
 
Section 8.13 Accounting Terms. All accounting terms used in this Loan Agreement
shall have the meanings ascribed to them by generally accepted accounting
principles, consistently applied.
 
Section 8.14 Notices. Unless otherwise required or provided by this Loan
Agreement, all demands, notices, approvals and other communications hereunder
(including Borrower’s and Servicer’s reporting obligations set forth herein)
(each such communication, a "Notice") shall be in writing and shall be served
personally, delivered by facsimile or sent by a national overnight delivery or
courier company, and addressed as set forth below. Any such Notices shall be
deemed delivered upon delivery or refusal to accept delivery as indicated in
writing by the person attempting to make personal service, or by similar written
advice from the overnight delivery company; provided, however, that if any such
Notice shall be sent by telecopier to the telecopier number, if any, set forth
below, then such Notice shall be deemed given at the time and on the date of
successful machine transmittal (except if sent after 5:00 p.m. recipient's time,
then the Notice shall be deemed given at 9:00 a.m. on the next Business Day).
Each party hereto shall make an ordinary, good faith effort to ensure that it
will accept or receive Notices that are given in accordance with this
Section 8.14, and that any Person to be given Notice actually receives such
Notice. Any party to whom Notices are to be sent pursuant to this Loan Agreement
may from time to time change its address and/or facsimile number for future
communication hereunder by giving Notice in the manner prescribed herein to all
other parties hereto; provided, however, that the address and/or facsimile
number change shall not be effective until five (5) Business Days after the
Notice of change has been given.
 
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If to Lender, to:
With a Copy to:
Sheridan Asset Management, LLC
1025 Westchester Avenue, Suite 311
White Plains, New York 10604-3508
Attn.:  Christopher J. Morrissey
Fax.:  (914) 285-0071
Tel.:  (914) 285-0070
Hebble & Associates, P.C.
61 Broadway, Suite 1000
New York, New York 10006-2731
Attn.:  Robert M. Hebble, Esq.
Fax.:  (212) 624-1288
Tel.:  (212) 624-1280
   
If to Debt Resolve, to:
With a Copy to:
Debt Resolve, Inc.
707 Westchester Avenue, Suite L-7
White Plains, New York 10604
Attn.:  James D. Burchetta
Fax.:  (914) 428-3044
Tel.:  (914) 949-5500
Greenberg Traurig, LLP
MetLife Building
200 Park Avenue
New York, New York 10166
Attn.:  Spencer Feldman, Esq.
Fax.:  (212) 801-6400
Tel.:  (212) 801-9200
   
If to Borrower, to:
With a Copy to:
EAR Capital I, LLC
707 Westchester Avenue, Suite L-7
White Plains, New York 10604
Attn.:  Howard Knauer
Fax.:  (914) 428-3044
Tel.:  (914) 949-5000
Greenberg Traurig, LLP
MetLife Building
200 Park Avenue
New York, New York 10166
Attn.:  Spencer Feldman, Esq.
Fax.:  (212) 801-6400
Tel.:  (212) 801-9200
   
If to Servicer, to:
With a Copy to:
DRV Capital, LLC
707 Westchester Avenue, Suite L-7
White Plains, New York 10604
Attn.:  Howard Knauer
Fax.:  (914) 428-3044
Tel.:  (914) 949-5000
Greenberg Traurig, LLP
MetLife Building
200 Park Avenue
New York, New York 10166
Attn.:  Spencer Feldman, Esq.
Fax.:  (212) 801-6400
Tel.:  (212) 801-9200

Section 8.15 Entire Agreement. This Loan Agreement (including all Exhibits
hereto), and the Security Agreement, Proposals, Note, and all other Loan
Documents shall constitute the full and entire understanding and agreement of
the parties hereto and there are no further or other agreements or undertakings,
written or oral, in effect between the parties relating to the subject matter
hereof unless expressly referred to herein. All prior negotiations, agreements,
representations and warranties, statements and undertakings concerning the
subject matter hereof between the parties are superseded by this Loan Agreement
and the other Loan Documents. 
 
Section 8.16 Borrower’s and Servicer’s Indemnification. Debt Resolve (solely
with respect to clauses (a), (b), (c), (e) and (f) below), Borrower and DRV Cap
(each, on “Indemnifying Party”) agree to jointly and severally indemnify, defend
and hold Lender (and each of its officers, directors, managers, members,
employees, agents and representatives (each, an “Agent”)) harmless from and
against any and all losses, damages, costs, claims, expenses (including
reasonable attorneys fees) and liabilities to third parties growing out of or
resulting from (a) the failure of any such Indemnifying Party (or of any Agent
thereof) to comply with the Credit and Collection Laws; (b) the actions of any
of the Agents of any such Indemnifying Party taken in connection with the
collection activities with respect to the Assets; (c) the misapplication
(whether negligent or intentional), misappropriation, conversion or theft of any
part of the Collateral by any Agent of any such Indemnifying Party; (d) the
failure to pay and discharge any liens, encumbrances or security interests in
the Collateral (other than liens granted to Lender to secure repayment of Loans)
created or which could be created as a result of the actions of any such
Indemnifying Party (or of any Agent thereof); (e) fraud or material
misrepresentation of Borrower, DRV Cap, any Affiliate of either of them, or any
Agent of either of the foregoing; (f) the misapplication of receipts or proceeds
from the Collateral received by any such Indemnifying Party after notice of
default on any Loan which are not applied to the outstanding balance of the
Note, to payment of debt service on any Loan, or to the payment of any other
amounts payable under this Loan Agreement, or (g) the breach by any such
Indemnifying Party of this Loan Agreement.
 
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Section 8.17 Savings Provision. All agreements between Borrower and Lender are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to Lender for the use,
forbearance, loaning or detention of the indebtedness evidenced hereby exceed
the maximum permissible amount under applicable law. If from any circumstances
whatsoever, fulfillment of any provisions hereof or of any other Loan Document
at any time given shall exceed the maximum permissible amount under applicable
law, then the obligation to be fulfilled shall automatically be reduced to an
amount which complies with applicable law, and if from any circumstances Lender
should ever receive as interest an amount which would exceed the highest lawful
rate of interest, then such amount which would be in excess of such lawful rate
of interest shall be applied to the reduction of the principal balance evidenced
hereby and not to the payment of interest. This provision shall control every
other provision of all agreements between Borrower and Lender and shall also be
binding upon and available to any subsequent holder of the Note.
 
Section 8.18 Consent. Whenever in this Loan Agreement or in any other Loan
Document the consent or approval of Lender is contemplated, such consent or
approval may be granted or withheld by Lender in its sole and absolute
discretion.
 
Section 8.19 Catastrophic Event. If any one or more members of Borrower’s or
Servicer’s senior management is injured or incapacitated in an accident or other
occurrence, or if Borrower’s or Servicer’s facilities become significantly
damaged or destroyed, in whole or in part, by any Act of God, or by any other
force majeure, and this Loan Agreement is currently not then in default, then
all time limits contained in this Loan Agreement shall be extended for a
fifteen (15) calendar day period to allow for the recovery of such Person, or in
the alternative, to allow for parties to be authorized by Lender to take over
Servicer and/or Borrower, and/or for Borrower or Servicer to reestablish their
facilities. After any such extension hereunder, all such time limits shall
return to as originally set forth in this Loan Agreement.
 
Section 8.20 Conflicts. If a conflict arises between any of the terms and
provisions of this Loan Agreement and those of any of the other Loan Documents,
then the terms and provisions of this Loan Agreement shall prevail and control.
 
Section 8.21 Further Assurances. Each of Borrower and Servicer agrees to execute
and deliver to Lender such instruments and documents, and to take such actions,
as Lender may, from time to time, reasonably request in order to effectuate the
purpose of, and carry out the terms and provisions of, this Loan Agreement and
each of the other Loan Documents.
 
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Section 8.22 Counterparts. This Loan Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The signature of any
party hereto on any counterpart shall be deemed to be a signature to each
counterpart, and such signed counterpart may be appended to any other
counterpart. Any counterpart of this Loan Agreement which has attached to it
separate signature pages which collectively contain the signatures of all of the
parties hereto shall for all purposes be deemed to be a fully-executed
instrument.
 
Section 8.23 Telecopier Execution and Delivery. Agreement may be executed by one
or more of the parties hereto, and an executed copy of this Loan Agreement, or
the signature page hereof, may be delivered by one or more parties hereto by
telecopier or other similar electronic transmission device pursuant to which the
signature of or on behalf of such party can be legibly seen, and such execution
and delivery shall be considered valid, binding and effective for all purposes.
Notwithstanding the foregoing, each of the parties hereto shall promptly execute
and deliver to each other party an original hard copy of this Loan Agreement in
addition to any facsimile, telecopy or other electronic reproduction hereof
previously executed and delivered. Any Proposal, any Remittance Report, and any
Collateral Report may be executed and delivered by telecopier or other similar
electronic transmission device pursuant to which the signature of or on behalf
of Borrower (or Servicer, as applicable) can be legibly seen, and such execution
and delivery shall be considered valid, binding and effective for all purposes.
Notwithstanding the foregoing, Borrower (or Servicer, as applicable) shall
promptly execute and deliver to Lender an original hard copy of any such
Proposal or Remittance Report in addition to any facsimile, telecopy or other
electronic reproduction thereof previously executed and delivered.
 
(The remainder of this page was intentionally left blank - signature page
follows.)
 
 
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IN WITNESS WHEREOF, the undersigned have executed this Loan Agreement as of the
date first above written.
 

        BORROWER:       EAR CAPITAL I, LLC  
   
   
    By:   /s/ James D. Burchetta  

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

Name:  James D. Burchetta
Title:  Chief Executive Officer

 

        SERVICER:       DRV CAPITAL, LLC  
   
   
    By:   /s/ James D. Burchetta    

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Name:  James D. Burchetta
Title:  Chief Executive Officer

 

        PARENT:      
DEBT RESOLVE, INC.
(solely with respect to Sections 1.2, 1.7, and 5.24 and Articles VI, VII and
VIII)
 
   
   
    By:   /s/ James D. Burchetta    

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

Name:  James D. Burchetta
Title:  Chief Executive Officer

 

        LENDER:       SHERIDAN ASSET MANAGEMENT, LLC  
   
   
    By:   /s/ Christopher J. Morrissey    

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Name:  Christopher J. Morrissey
Title:  Manager
 

 
 
(Signature page to Master Loan and Servicing Agreement)

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