Exhibit 10.1

 

REVOLVING WAREHOUSE FINANCING AGREEMENT

among

FALCON FINANCIAL INVESTMENT TRUST,
as Customer,

iSTAR FINANCIAL INC.,
as Buyer,

and

THE BANK OF NEW YORK,
as Paying Agent and Custodian

Dated as of April 28, 2004

 

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TABLE OF CONTENTS

 

ARTICLE I  DEFINITIONS

 

Section 1.1.

Certain Defined Terms

 

Section 1.2.

Interpretation.

 

 

 

 

ARTICLE II  PURCHASES AND SETTLEMENT

 

Section 2.1.

Assignment and Conveyance

 

Section 2.2.

Facility and Incremental Investments.

 

Section 2.3.

Changes to Tranche Periods and Rate.

 

Section 2.4.

Interest, Fees and Other Costs and Expenses.

 

Section 2.5.

Non-Liquidation Settlement Procedures.

 

Section 2.6.

Settlement Procedures to Be Followed if a Liquidation Day Occurs.

 

Section 2.7.

Facility Fees

 

Section 2.8.

Protection of Ownership Interest of Buyer; Attorney-in-Fact.

 

Section 2.9.

General Settlement Procedures.

 

Section 2.10.

Payments and Computations, etc

 

Section 2.11.

Reports.

 

Section 2.12.

Cash Trap.

 

Section 2.13.

Whole Loan Repurchases

 

 

 

 

ARTICLE III  REPRESENTATIONS AND WARRANTIES

 

Section 3.1.

Representations and Warranties

 

Section 3.2.

Reaffirmation of Representations and Warranties

 

 

 

 

ARTICLE IV  CONDITIONS PRECEDENT

 

Section 4.1.

Conditions to Closing

 

Section 4.2.

Conditions to All Investments of Principal

 

 

 

 

ARTICLE V  COVENANTS

 

Section 5.1.

Affirmative Covenants of Customer

 

Section 5.2.

Negative Covenants of Customer

 

 

 

 

ARTICLE VI  ADMINISTRATION AND COLLECTIONS

 

Section 6.1.

Designation of Servicer

 

Section 6.2.

Lock Box Arrangements

 

Section 6.3.

Enforcement Rights

 

Section 6.4.

Responsibilities of Customer

 

 

 

 

ARTICLE VII  TERMINATION EVENTS

 

Section 7.1.

Termination Events

 

Section 7.2.

Remedies.

 

Section 7.3.

Injunctive Relief

 

Section 7.4.

Remedies Cumulative

 

 

 

 

ARTICLE VIII  SECURITY INTEREST

 

Section 8.1.

Grant of Security Interest

 

 

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ARTICLE IX  INDEMNIFICATION

 

Section 9.1.

Indemnities by Customer

 

Section 9.2.

Tax Indemnification and Characterization.

 

Section 9.3.

Increased Cost and Reduced Return.

 

Section 9.4.

Other Costs and Expenses

 

Section 9.5.

Due Diligence

 

Section 9.6.

Withholding Taxes.

 

 

 

 

ARTICLE X  CUSTODIAN

 

Section 10.1.

Duties of Custodian.

 

Section 10.2.

Rights of Custodian.

 

Section 10.3.

Individual Rights of Custodian

 

Section 10.4.

Custodian’s Disclaimer

 

Section 10.5.

Notice of Termination Event

 

Section 10.6.

Reports by Custodian to Facility Agent and Buyer

 

Section 10.7.

Compensation

 

Section 10.8.

Replacement of Custodian

 

Section 10.9.

Successor Custodian by Merger

 

Section 10.10.

Appointment of Co-Custodian or Separate Custodian.

 

Section 10.11.

Eligibility; Disqualification

 

Section 10.12.

Representations and Warranties of Custodian

 

 

 

 

ARTICLE XI  SECONDARY MARKET TRANSACTION

 

Section 11.1.

Secondary Market Transaction; Cooperation

 

 

 

 

ARTICLE XII  MISCELLANEOUS

 

Section 12.1.

Survival of Representations and Indemnities

 

Section 12.2.

Waivers; Amendments

 

Section 12.3.

Notices

 

Section 12.4.

Independence of Covenants

 

Section 12.5.

Governing Law

 

Section 12.6.

Consent to Jurisdiction and Service of Process

 

Section 12.7.

Integration

 

Section 12.8.

Severability; Counterparts

 

Section 12.9.

Successors and Assigns

 

Section 12.10.

Confidentiality

 

Section 12.11.

Time is of the Essence

 

Section 12.12.

Waiver of Jury Trial

 

Section 12.13.

Headings

 

Section 12.14.

No Presumption

 

Section 12.15.

Continuing Assignment; Reversion of Warehouse Assets

 

Section 12.16.

Independent Contractor

 

Section 12.17.

Statements of Account

 

Section 12.18.

Publicity

 

 

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EXHIBITS

 

 

 

 

Exhibit A-1

-

Form of Investment of Principal Request and Sources and Uses Statement

 

Exhibit B

-

Contract Forms

 

Exhibit C

-

Form of Power of Attorney

 

Exhibit D

-

Form of Assignment of Insurance

 

Exhibit E

-

Form of Auditor’s Letter

 

 

 

SCHEDULES

 

 

 

Schedule 1.1

-

Warehouse Asset Approved by Buyer for Purchase on Closing Date

 

Schedule 1.1(a)

-

Loan Origination Guidelines

 

Schedule 1.1(b)

-

List of Franchises

 

Schedule 1.1(c)

-

Form of Customer’s Standard Loan Submission Memorandum

 

Schedule 1.1(d)

-

Receivable Delivery Documents

 

Schedule 2.2-1

-

Transaction Procedure

 

Schedule 2.2-2

-

Form of Confirmation

 

Schedule 2.2-3

-

Form of Closing Certificate

 

Schedule 2.11(f)

-

Form of Servicing Report

 

Schedule 3.1(a)

-

Subsidiaries

 

Schedule 3.1(g)

-

Litigation

 

Schedule 3.1(l)

-

Account Banks and Payment Instructions

 

Schedule 3.1(k)

-

Location of Records

 

Schedule 3.1(n)

-

Customer’s Business Names

 

Schedule 3.1(t)

-

Employee Benefit Plans

 

Schedule 3.1(y)

-

Representations and Warranties regarding Warehouse Assets

 

Schedule 5.2(a)

-

Permitted Liens

 

Schedule 5.2(f)

-

Permitted Indebtedness

 

 

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THIS REVOLVING WAREHOUSE FINANCING AGREEMENT (this “Agreement”) is dated as of
April 28, 2004, among FALCON FINANCIAL INVESTMENT TRUST, a Maryland real estate
investment trust, as Customer (the “Customer”), THE BANK OF NEW YORK, as Paying
Agent and Custodian (the “Paying Agent” or the “Custodian,” as the context
requires), and iSTAR FINANCIAL INC., a Maryland corporation, as Buyer (the
“Buyer”).

 

RECITALS

 

A.            Customer is primarily in the business of extending financing to
certain franchised new car automobile and motorcycle dealers, by making term
loans directly to a dealer.

 

B.            Customer, in order to finance such loans under this warehouse
financing facility, desires to sell, transfer and assign (with full recourse to
Customer) from time to time, an undivided 100% interest in all of its term
loans, to Buyer, and, subject to the terms and conditions of this Agreement,
Buyer subject to the terms and conditions of this Agreement, desires to purchase
such undivided 100% interests.  Customer commits to repurchase such loans and
repay all such principal with interest in accordance with the terms hereof.

 

C.            Capitalized terms used in these Recitals without definition shall
have the respective meanings set forth in Article I.

 

In consideration of the mutual agreements, provisions and covenants contained
herein, the parties hereto agree as follows:

 

ARTICLE I
DEFINITIONS

 

SECTION 1.1.            CERTAIN DEFINED TERMS.  AS USED IN THIS AGREEMENT, THE
FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:

 

“Accounting Period” means the period commencing on a Cut-Off Date (or, in the
case of the initial Accounting Period, the Closing Date), to but not including
the next succeeding Cut-Off Date.

 

“Advance Rate” means 80%; provided, however, as to any Receivable with regard to
which an Obligor Financial Covenant Default shall exist, the Advance Rate means,
40%.

 

“Adverse Claim” means any claim of ownership interest or any mortgage, deed of
trust, deed to secure debt, trust deed, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, Lien (statutory or other) or other security
agreement of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing.

 

“Affiliate” as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with, that Person.  For purposes of this definition “control” (including
the correlative meanings the terms “controlling,”

 

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“controlled by,” and “under common control with”) means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of the controlled Person, whether through ownership of voting
securities, by contract or otherwise; provided, that Buyer and its respective
Affiliates shall not be considered an Affiliate of Customer or any of its
Subsidiaries.

 

“Affiliate Guaranty” means a guaranty by an Obligor Affiliate of an Obligor’s
obligations under the relevant Receivable, in substantially the form of one of
the form contracts set forth in Exhibit B annexed hereto.

 

“Alternate Rate” means, in the event the LIBOR Rate is no longer published, as
of any date of determination, in The Wall Street Journal or charging of Interest
that is calculated based upon the LIBOR Rate would violate applicable law or
regulation, the “prime rate” (or “base rate”) reported in the Money Rates column
or section of The Wall Street Journal published on the second full Business Day
preceding the first day of the applicable Tranche Period as having been the rate
in effect for corporate loans at large U.S. money center commercial banks
(whether or not such rate has actually been charged by any such bank) or, if
The Wall Street Journal ceases publication of such “prime rate” or “base rate,”
the annual rate of interest announced by JP Morgan Chase Bank (or another
financial institution with a main or branch office in New York City, New York,
selected, from time to time, by Buyer in its reasonable discretion) from time to
time as its “prime rate” or “base rate” in effect at its principal office in
New York, New York at 5:00 p.m., New York City time (in either case, the “Prime
Rate”), for such date minus 2.0%.

 

“Agreement” means this Revolving Warehouse Financing Agreement, together with
its exhibits, schedules and other attachments, as the same may be amended,
modified or supplemented from time to time.

 

“Aggregate Principal Outstanding” means, at any time, the sum of the Outstanding
Principal Invested less the sum of (x) the aggregate amount of Collections
received and applied to reduce such Aggregate Principal Outstanding pursuant to
Sections 2.5 or 2.6, plus (y) without duplication, Partial Prepayments of
Invested Principal; provided that the Aggregate Principal Outstanding shall be
restored in the amount of any Collections or Partial Prepayments of Invested
Principal so received and applied if at any time the distribution of any such
Collections or Partial Prepayments of Invested Principal is rescinded or must
otherwise be returned for any reason.

 

“Applicable Margin” means 2.9%.

 

“Applicable Rate” means, the Base Rate or the Overdue Rate as is deemed to be in
effect pursuant to the terms of this Agreement, at which Interest accrues on the
Aggregate Principal Outstanding.

 

“Asset Sale” means the sale by Customer or any of its Subsidiaries to any Person
of any assets (whether tangible or intangible) of Customer or any of its
Subsidiaries outside of the ordinary course of business, including, in any
event, a sale of Eligible Receivables by Customer to a Subsidiary (including a
trust) in connection with a Securitization Transaction.

 

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“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy,” as now and hereafter in effect, or any successor statute.

 

“Base Rate” means a variable rate per annum equal to the sum of (a) the LIBOR
Rate, or the Alternate Rate, as the case may be, plus (b) the Applicable Margin
increasing or decreasing with each increase or decrease in the LIBOR Rate, or
the Alternate Rate, as the case may be (as and when the LIBOR Rate or the
Alternate Rate change as described in this Agreement).

 

“Business Day” means any day, other than a Saturday or a Sunday, on which banks
are open for business in New York, New York and on which dealings in U.S.
dollars are carried out on the London interbank market.

 

“Buyer” means iStar Financial Inc., and its successors and assigns.

 

“Capital Lease”, as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.

 

“Capital Lease Obligations” means, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.

 

“Change of Control” means following the Closing Date, (a) the sale, transfer, or
other disposition of all or substantially all of Customer’s assets (excluding
any sale of Receivables that provides proceeds simultaneously paid to Buyer
pursuant to Section 2.13); (b) the consummation of a merger or consolidation of
Customer with or into another entity or any other corporate reorganization, if
30% or more of the combined voting power of the continuing or surviving entity’s
stock outstanding immediately after such merger, consolidation or such other
reorganization is owned, directly or indirectly, by Persons who were not
stockholders of Customer immediately prior to such merger, consolidation or
other reorganization or Persons who were not stockholders of Customer
immediately prior to such merger, consolidation or event have the power to
select a majority of the Board of Directors, Board of Trustees or analogous body
of Customer; or (c) a majority of the members of the board of directors, board
of trustees or analogous body of Customer changes during any twelve (12) month
period; provided, however, the resignation, termination or replacement of a
director or trustee with a Person supported by a majority of the trustees or
directors of Customer immediately prior to the resignation, termination or
replacement in question shall not be counted for purposes of this part (c).

 

“Charge-Off” or “Charge-Off Receivable” means a Receivable:  (i) which has been
identified by Customer as uncollectible, (ii) which in accordance with GAAP
should be written off Customer’s books as uncollectible, (iii) which is a
Defaulted Receivable, (iv) for which any obligations thereunder have been
charged by Customer against any reserves, holdbacks, or discounts or otherwise
accounted for as a loss by Customer in accordance with

 

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Customer’s practices as in effect on the date hereof or (v) with respect to
which Customer has commenced a foreclosure action or other lawsuit against the
Obligor.

 

“Charge-Off Losses” means, as of the end of any Accounting Period, with respect
to the aggregation of all Receivables as of such date, the quotient of
(i) (A) the principal balance of all Defaulted Receivables which become
Defaulted Receivables during Accounting Period minus (B) amounts deposited in
the Collection Account from Net Recoveries on Defaulted Receivables (which
became Defaulted Receivables during a prior Accounting Period) and allocated to
principal divided by (ii) the principal balance of all Receivables which are not
Defaulted Receivables, which quotient shall be expressed as a percentage, and
calculated in accordance with GAAP.

 

“Closing Certificate” means a certificate executed by Customer in the form of
Schedule 2.2-3, certifying that (i) it has deposited all funds required to be
deposited by it pursuant to the Escrow Agreement with the Escrow Agent, (ii) the
representations and warranties of Customer in the Transaction Documents are true
and correct on and as of the Funding Date in question (after giving effect to
the applicable funding of Invested Principal and related sale of Warehouse
Assets), (ii) all conditions to the funding of the Invested Principal have been
satisfied, and (iv) the original Contract and other Receivable Delivery
Documents deposited with the Custodian (or Escrow Agent) have been executed and
delivered by the applicable party thereto and, are substantially in (x) the form
of the applicable Contract document attached hereto as Exhibit B, or (y) the
same form as the draft documents delivered to Buyer with the relevant Contract
Approval Request, or, in the event of any modification of the underlying
Contracts, in the same form as comparisons of the same to the forms delivered to
Buyer and previously approved by Buyer.

 

“Closing Date” means the Business Day following the date on which all of the
conditions set forth in Section 4.1 are satisfied or expressly waived, in
writing, by Buyer, in the exercise of Buyer’s sole discretion.

 

“Code” means The Internal Revenue Code of 1986, as amended, as now and hereafter
in effect, or any successor statute.

 

“Collection Account” means the segregated account in Customer’s name, in which
Buyer has a first priority, perfected security interest, maintained by Paying
Agent at The Bank of New York, or such other bank approved by Buyer for the
purpose of receiving and concentrating Collections and such accounts as may be
added thereto or deleted therefrom.  As of the Closing Date, the Collection
Account is maintained by Paying Agent at The Bank of New York (ABA No. 
021-000-018), 101 Barclay Street, 8 West, New York, NY 10286, designated as
Account Number:  8900393297.

 

“Collections” means, with respect to any Receivable or Related Security, all
cash collections and other cash proceeds of such Receivable or Related Security,
including, without limitation, all Scheduled Payments, Finance Charges, full or
partial prepayments, liquidation proceeds, insurance proceeds, refunds, late
charges, fees (including “insufficient funds” and returned check fees and
extension fees) or other cash proceeds of Related Security with respect to such
Receivable, and any amount deemed to have been received by or on behalf of
Customer

 

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with respect to such Receivable, including, without limitation, cash collections
or proceeds received whenever any Receivable or Related Security is sold,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.

 

“Consolidated Capital Expenditures” means, for any period, the sum of (i) the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital Leases which is
capitalized on the consolidated balance sheet of Customer and its Subsidiaries)
by Customer and its Subsidiaries during that period that, in conformity with
GAAP, are included in “additions to property, plant or equipment” or comparable
items reflected in the consolidated statement of cash flows of Customer and its
Subsidiaries plus (ii) to the extent not covered by clause (i) of this
definition, the aggregate of all expenditures by Customer and its Subsidiaries
during that period to acquire (by purchase or otherwise) the business, property
or fixed assets of, or stock or other evidence of beneficial ownership of, any
Person.

 

“Consolidated Net Worth” means, for Customer and its Subsidiaries on a
consolidated basis, as of a particular date: (a) all amounts which would be
included under capital on a balance sheet of such Person at such date,
determined in accordance with GAAP; less (b) (i) amounts owing to such Person
from Affiliates, or from officers, employees, shareholders or other Persons
similarly affiliated with such Person, (ii) intangible assets and (iii) deferred
tax liabilities.

 

“Consolidated Rental Payments” means, for any period, the aggregate amount of
all rents paid or payable by Customer and its Subsidiaries on a consolidated
basis during that period under all Capital Leases and Operating Leases to which
Customer or any of its Subsidiaries is a party as lessee.

 

“Consolidated Total Debt” means, as at any date of determination, the aggregate
stated balance sheet amount of all Indebtedness of Customer and its
Subsidiaries, determined on a consolidated basis, in accordance with GAAP.

 

“Contingent Obligation,” as applied to any Person, means any direct or indirect
liability, contingent or otherwise, of that Person (i) with respect to any
Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof,
(ii) with respect to any letter of credit issued for the account of that Person
or as to which that Person is otherwise liable for reimbursement of drawings, or
(iii) under interest rate swap, cap or collar agreements and currency swap or
cap agreements or any other similar agreements.  Contingent Obligations shall
include, without limitation, (a) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the
obligation of another, (b) the obligation to make take-or-pay or similar
payments if required regardless of non-performance by any other party or parties
to an agreement, and (c) any liability of such Person for the obligation of
another through any agreement (contingent or otherwise) (X) to purchase,
repurchase or otherwise acquire such

 

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obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (Y) to maintain the solvency
or any balance sheet item, level of income or financial condition of another if,
in the case of any agreement described under subclauses (X) or (Y) of this
sentence, the primary purpose or intent thereof is as described in the preceding
sentence.  The amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported or, if less, the amount
to which such Contingent Obligation is specifically limited.

 

“Contract” means the agreements and instruments evidencing a Receivable and
pursuant to which a security interest in the Related Security is granted and
perfected, including, but not limited to, each promissory note, security
agreement, Affiliate Guaranty, deed of trust, mortgage, deed to secure debt and
other loan documents, to the extent applicable.

 

“Contract Approval Request” is defined in Schedule 2.2-1.

 

“Contractual Obligation” as applied to any Person, means any provision of any
Securities issued by that Person or of any material indenture, mortgage, deed of
trust, deed to secure debt, contract, undertaking, agreement or other instrument
to which that Person is a party or by which it or any of its properties is bound
or to which it or any of its properties is subject.

 

“Corporate Custodian Office” means the principal office of Custodian at which at
any particular time its corporate custodian business shall be administered,
which office at the date of the execution of this Agreement is located at New
York, New York; or at such other address as Custodian may designate from time to
time by notice to Customer, Buyer and the Purchaser Representatives, or the
principal corporate custodian office of any successor Custodian (of which
address such successor Custodian will notify Customer, Buyer and the Purchaser
Representatives).

 

“Custodian” means The Bank of New York, and its permitted successors and
assigns, acting in its capacity as Custodian under this Agreement.

 

“Customer” means Falcon Financial Investment Trust, a Maryland real estate
investment trust, and its successors.

 

“Customer Obligations” means all obligations of every nature of Customer from
time to time owed to Buyer, or Servicer or any Purchaser Representative under
any Transaction Document, whether for the Aggregate Principal Outstanding,
interest, fees, expenses, indemnification or otherwise.

 

“Customer Repurchase Price” means an amount equal to: the sum of: (a) the
aggregate amount of all outstanding Invested Principal, plus (b) all Interest
accrued on such Invested Principal through the date of the repurchase, plus
(c) any unpaid Late Charges.

 

“Cut-Off Date” means the sixth day of each month; provided that if such sixth
day is not a Business Day, the Cut-Off Date for such month shall be the next
Business Day; provided, further, that if a Cut-Off Date as so determined would
fall on a Business Day that is less than four (4) Business Days prior to the
next succeeding Interest Payment Date, such Cut-Off

 

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Date shall instead be the Business Day that is four (4) Business Days prior to
the next succeeding Interest Payment Date.

 

“Defaulted Receivable” means a Receivable (i) for which all, or any part, of any
scheduled payment is due and unpaid more than thirty (30) days after the due
date for such scheduled payment, (ii) which has been settled for less than its
principal balance, (iii) which has been liquidated by Servicer through the sale
of such Receivable or any Related Security, (iv) with respect to which proceeds
have been received which in Buyer’s judgment, constitute the final amounts
recoverable in respect of such Receivable, (v) which is a Charge-Off Receivable
(or should be a Charge-Off Receivable) in accordance with the Loan Origination
Guidelines, (vi) the Obligor of which is a party to a proceeding under the
Bankruptcy Code or similar debtor relief law (other than as a creditor or
claimant), (vii) with regard to which a material non-monetary default (other
than an Obligor Financial Covenant Default) has occurred under the relevant
Contract which has not been cured within the applicable grace period set forth
in the applicable Contract or (viii) the scheduled maturity date of which has
been accelerated.

 

“Direct Loan Receivable” means any term loan secured, in whole or in part, by a
first priority lien on real estate made by Customer to a franchised new car
automobile dealer, in each case as amended, modified or supplemented from time
to time, and all rights of every nature of Customer and all obligations of
Obligor thereunder, including but not limited to all Indebtedness or other
obligations owed to Customer (without giving effect to any transfer or
conveyance to Buyer hereunder) of such Obligor arising thereunder, and includes,
without limitation, the obligation to pay any Finance Charges with respect
thereto.

 

“DOL” means the United States Department of Labor and any successor department
or agency.

 

“Eligible Direct Loan Receivable” means, at any time, any Direct Loan Receivable
that is listed on a List of Receivables that has been delivered to Buyer which
has been approved by Buyer, in Buyer’s sole discretion and which, in Buyer’s
sole discretion, also satisfies each of the following requirements:

 

(A)           IN EACH CASE PURSUANT TO THE FRANCHISE LOAN ORIGINATION
GUIDELINES, AS IN EFFECT AT THE TIME SUCH RECEIVABLE ORIGINATED: (I) THE OBLIGOR
OF THE RECEIVABLE MEETS THE CRITERIA FOR ELIGIBILITY AS A BORROWER; (II) THE
OBLIGOR AFFILIATES MEET THE CRITERIA FOR ELIGIBILITY AS GUARANTORS; (III) THE
RELATED SECURITY PROVIDED BY THE OBLIGOR AND THE OBLIGOR AFFILIATES MEETS THE
CRITERIA FOR REQUIRED COLLATERAL.

 

(B)           THE OBLIGOR OF THE RECEIVABLE, OR ONE OF THE OBLIGOR AFFILIATES
PROVIDING AN AFFILIATE GUARANTY, OWNS ONE OR MORE OF THE FRANCHISES SET FORTH ON
SCHEDULE 1.1(B) ATTACHED HERETO, AS AMENDED FROM TIME TO TIME WITH THE PRIOR
WRITTEN CONSENT OF BUYER.

 

(C)           NEITHER THE OBLIGOR OF THE RECEIVABLE NOR ANY OF THE OBLIGOR
AFFILIATES IS AN AFFILIATE OF ANY OF THE PARTIES HERETO.

 

(D)           NEITHER THE OBLIGOR OF THE RECEIVABLE NOR ANY OF THE OBLIGOR
AFFILIATES IS THE OBLIGOR OR AN OBLIGOR AFFILIATE OF ANY RECEIVABLE THAT HAS AT
ANY TIME BEEN A DEFAULTED RECEIVABLE.

 

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(E)           THE RECEIVABLE IS NOT, AND HAS NOT AT ANY TIME BEEN, A DEFAULTED
RECEIVABLE.

 

(F)            THE RECEIVABLE IS EVIDENCED BY AN “INSTRUMENT” WITHIN THE MEANING
OF THE UCC OF ALL APPLICABLE JURISDICTIONS.

 

(G)           THE RECEIVABLE IS DENOMINATED AND PAYABLE ONLY IN UNITED STATES
DOLLARS IN THE UNITED STATES.

 

(H)           THE RECEIVABLE, EACH AFFILIATE GUARANTY AND ALL OTHER INSTRUMENTS
EVIDENCING THE RELATED SECURITY ARISE UNDER A CONTRACT IN SUBSTANTIALLY THE FORM
OF ONE OR MORE OF THE FORM CONTRACTS SET FORTH IN EXHIBIT B ANNEXED HERETO; THE
APPLICABLE CONTRACT DOCUMENTS (INCLUDING THE APPLICABLE RECEIVABLE DELIVERY
DOCUMENTS) AND ASSIGNMENTS THEREOF TO BUYER (OR, IN BLANK) ARE SUBSTANTIALLY IN
THE FORM OF THE DRAFT DOCUMENTS PROVIDED TO BUYER PURSUANT TO SCHEDULE 2.2-1, OR
IN THE ALTERNATIVE, CUSTOMER HAS PROVIDED BUYER WITH MACHINE-GENERATED
COMPARISONS OF SUCH DOCUMENTS AGAINST THE DRAFT DOCUMENTS PROVIDED TO BUYER,
WITH SUCH CHANGES REASONABLY APPROVED BY BUYER; SUCH CONTRACT AND SUCH
RECEIVABLE AND THE RELATED RECEIVABLE DELIVERY DOCUMENTS ARE IN FULL FORCE AND
EFFECT AND CONSTITUTE THE LEGAL, VALID AND BINDING OBLIGATIONS OF THE OBLIGOR
AND THE OBLIGOR AFFILIATES ENFORCEABLE AGAINST SUCH OBLIGOR AND OBLIGOR
AFFILIATES IN ACCORDANCE WITH THEIR RESPECTIVE TERMS SUBJECT TO NO OFFSET,
COUNTERCLAIM OR OTHER DEFENSE, EXCEPT AS MAY BE LIMITED BY BANKRUPTCY,
INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR LAWS RELATING TO OR LIMITING
CREDITOR’S RIGHTS GENERALLY OR BY EQUITABLE PRINCIPLES RELATING TO
ENFORCEABILITY.

 

(I)            THE RECEIVABLE, EACH AFFILIATE GUARANTY AND ALL OTHER INSTRUMENTS
EVIDENCING THE RELATED SECURITY ARISE UNDER A CONTRACT WHICH (I) DOES NOT
REQUIRE THE OBLIGOR OR OBLIGOR AFFILIATE UNDER SUCH CONTRACT TO CONSENT TO THE
TRANSFER, SALE OR ASSIGNMENT OF THE RIGHTS AND DUTIES OF CUSTOMER UNDER SUCH
CONTRACT AND (II) DOES NOT CONTAIN A CONFIDENTIALITY PROVISION THAT PURPORTS TO
RESTRICT THE ABILITY OF BUYER OR ITS SUCCESSORS OR ASSIGNS TO EXERCISE RIGHTS
UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, THEIR RIGHT TO REVIEW SUCH CONTRACT.

 

(J)            THE RECEIVABLE IS LEGALLY AND BENEFICIALLY OWNED BY CUSTOMER,
FREE AND CLEAR OF ANY ADVERSE CLAIM, EXCEPT AS CREATED OR PERMITTED HEREUNDER,
AND ANY ASSIGNMENT OF SUCH RECEIVABLE BY CUSTOMER OR ITS TRANSFEREES IS NOT
PROHIBITED BY THE APPLICABLE CONTRACT OR ANY RELATED SECURITY WITH RESPECT
THERETO.

 

(K)           THE RECEIVABLE TOGETHER WITH THE CONTRACT RELATED THERETO, DOES
NOT CONTRAVENE ANY LAWS, RULES OR REGULATIONS APPLICABLE THERETO (INCLUDING,
WITHOUT LIMITATION, LAWS, RULES AND REGULATIONS RELATING TO TRUTH IN LENDING,
FAIR CREDIT BILLING, FAIR CREDIT REPORTING, EQUAL CREDIT OPPORTUNITY, FAIR DEBT
COLLECTION PRACTICES, PRIVACY, USURY AND OTHER CONSUMER LAWS) AND WITH RESPECT
TO WHICH NO PART OF THE CONTRACT RELATED THERETO IS IN VIOLATION OF ANY SUCH
LAW, RULE OR REGULATION.

 

(L)            THE RECEIVABLE WAS GENERATED IN THE ORDINARY COURSE OF CUSTOMER’S
BUSINESS.

 

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(M)          THE RECEIVABLE ARISES UNDER A CONTRACT THE TERMS OF WHICH CALL FOR
MONTHLY AND NO MORE THAN 240 INSTALLMENT PAYMENTS. WHERE THE RECEIVABLE IS A
FIXED RATE OBLIGATION PURSUANT TO THE FRANCHISE LOAN ORIGINATION GUIDELINES, THE
TERMS OF THE CONTRACT CALL FOR LEVEL PAY INSTALLMENT PAYMENTS, EXCEPT FOR THE
FIRST INSTALLMENT AND THE FINAL INSTALLMENT, EACH OF WHICH MAY BE LESS BUT NOT
MORE THAN THE OTHER MONTHLY PAYMENTS. THE RECEIVABLE HAS A FIRST INSTALLMENT DUE
DATE NO LATER THAN THE NEXT SUCCEEDING CUT-OFF DATE UNLESS THE FIRST INSTALLMENT
IS PREPAID, IN WHICH CASE THE NEXT INSTALLMENT HAS A DUE DATE NO LATER THAN THE
SECOND CUT-OFF DATE FOLLOWING THE DATE ON WHICH THE RECEIVABLE IS MADE. EACH
PAYMENT IS DUE ON THE SAME DAY OF THE MONTH.

 

(N)           BUYER HAS A PERFECTED OWNERSHIP INTEREST IN OR A FIRST PERFECTED
SECURITY INTEREST IN THE RECEIVABLE AND ALL RELATED SECURITY AND THE RELATED
SECURITY INCLUDES, WITHOUT LIMITATION, (I) THE FEE SIMPLE INTEREST IN ALL REAL
PROPERTY OWNED BY THE OBLIGOR AND/OR THE OBLIGOR AFFILIATES AND USED IN
CONNECTION WITH THE OPERATION OF THE AUTOMOBILE DEALERSHIP TO WHICH THE
RECEIVABLE RELATES, AND (II) IF THE OBLIGOR IS NOT THE OWNER THEREOF AND/OR THE
OBLIGOR IS NOT THE FRANCHISEE, THE LEASEHOLD INTEREST IN SUCH REAL PROPERTY.

 

(O)           BUYER HAS NOT NOTIFIED CUSTOMER IN WRITING THAT IT HAS DETERMINED,
IN ITS GOOD FAITH DISCRETION, THAT SUCH RECEIVABLE OR CLASS OF RECEIVABLES IS
NOT ACCEPTABLE AS AN ELIGIBLE RECEIVABLE BECAUSE SUCH RECEIVABLE POSES A
MATERIAL RISK OF UNCOLLECTIBILITY OR INABILITY TO BE INCLUDED IN A
SECURITIZATION TRANSACTION.

 

(P)           THE CONTRACT CONTAINS THE ORIGINAL SIGNATURES OF THE RESPECTIVE
OBLIGOR AND OBLIGOR AFFILIATES.

 

(Q)           NO PROVISION OF THE CONTRACT HAS BEEN WAIVED, EXTENDED, ALTERED OR
MODIFIED IN ANY MATERIAL RESPECT EXCEPT IN ACCORDANCE WITH THE FRANCHISE LOAN
ORIGINATION GUIDELINES, OR, IF CRITERIA FOR SUCH WAIVER, EXTENSION, ALTERATION
OR MODIFICATION IS NOT CONTAINED IN THE FRANCHISE LOAN ORIGINATION GUIDELINES,
WITH THE PRIOR CONSENT OF BUYER.

 

(R)            ALL SCHEDULED PAYMENTS MADE ON THE RECEIVABLE HAVE BEEN APPLIED
TO THE OUTSTANDING PRINCIPAL BALANCE AS REQUIRED BY THE CONTRACT AND BY LAW. 
ANY PAYMENTS IN RESPECT OF INTEREST AND PRINCIPAL IN EXCESS OF THE SCHEDULED
PAYMENTS DUE AT THE TIME OF SUCH PAYMENT WERE APPLIED TO THE FINAL MATURING
SCHEDULED PAYMENTS AND NOT THE SCHEDULED PAYMENTS NEXT DUE.

 

(S)           ON THE DATE THE RECEIVABLE WAS ORIGINATED, THE OBLIGOR AND EACH
OBLIGOR AFFILIATE HAD THE CAPACITY TO CONTRACT AND WAS SOLVENT. CUSTOMER IS NOT
AWARE OF FACTS WHICH INDICATE OBLIGOR OR ANY OBLIGOR AFFILIATE DID NOT HAVE THE
CAPACITY TO CONTRACT OR WHICH INDICATE A MATERIAL ADVERSE CHANGE SINCE THE DATE
OF THE CONTRACT IN THE OBLIGOR’S OR ANY OBLIGOR AFFILIATE’S FINANCIAL CONDITION
OR THE VALUE OF THE RELATED SECURITY.

 

(T)            CUSTOMER HAS NOT COMMENCED A FORECLOSURE ACTION OR OTHER LAWSUIT
AGAINST THE OBLIGOR OR ANY OBLIGOR AFFILIATE; NOR HAS CUSTOMER DESIGNATED THE
CONTRACT FOR SUCH ACTION.

 

(U)           THE CONTRACT RELATING TO SUCH RECEIVABLE IS TO BE COLLECTED AND
OTHERWISE SERVICED BY SERVICER.

 

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(V)           THE OBLIGATIONS OF THE ORIGINAL OBLIGOR AND THE OBLIGOR AFFILIATES
HAVE NOT BEEN RELEASED OR ASSUMED BY ANOTHER PERSON UNLESS THE RELEASE OR
ASSUMPTION WAS PROPERLY DOCUMENTED (OR, IN THE CASE OF AN ASSUMPTION, OCCURRED
BY OPERATION OF LAW) AND BUYER CONSENTS IN WRITING TO ANY SUCH RELEASE OR
ASSUMPTION FOR PURPOSES OF THE CONTRACT BEING AN ELIGIBLE RECEIVABLE.

 

(W)          THE CONTRACT HAS NOT BEEN, NOR IS IT DESIGNATED TO BE, TERMINATED,
SATISFIED, CANCELED, SUBORDINATED OR RESCINDED IN WHOLE OR IN PART; NOR HAS ANY
RELATED SECURITY BEEN RELEASED, OR DESIGNATED FOR RELEASE, FROM THE SECURITY
INTEREST GRANTED BY THE CONTRACT, UNLESS, AND ONLY TO THE EXTENT, EXPRESSLY
PROVIDED IN THE CONTRACT OR OTHERWISE CONSENTED TO BY BUYER.

 

(X)            NO CLAIMS OF RESCISSION, SETOFF, COUNTERCLAIM, DEFENSE OR OTHER
DISPUTE HAVE BEEN ASSERTED WITH RESPECT TO THE CONTRACT.  NEITHER CUSTOMER NOR
ANY AFFILIATE OF CUSTOMER HAS MADE ANY AGREEMENT WITH OBLIGOR OR ANY OBLIGOR
AFFILIATE TO REDUCE THE AMOUNT OWED OR THE OBLIGATIONS INCURRED UNDER THE
CONTRACT.  NEITHER CUSTOMER NOR ANY SUCH AFFILIATE ARE REQUIRED TO PERFORM ANY
ADDITIONAL SERVICE FOR, OR PERFORM OR INCUR ANY ADDITIONAL OBLIGATION TO,
OBLIGOR OR ANY OBLIGOR AFFILIATE IN ORDER FOR CUSTOMER TO ENFORCE THE CONTRACT.

 

(Y)           EXCEPT FOR PAYMENT DEFAULTS CURED WITHIN THIRTY (30) DAYS AND
OBLIGOR FINANCIAL COVENANT DEFAULTS EXPRESSLY DISCLOSED IN WRITING TO BUYER, NO
DEFAULT, BREACH, VIOLATION OR EVENT PERMITTING ACCELERATION UNDER THE TERMS OF
THE CONTRACT HAS OCCURRED.

 

(Z)            CUSTODIAN OR ESCROW AGENT HAS RECEIVED FOR DELIVERY TO CUSTODIAN:
(I) THE ORIGINAL CONTRACT, BEARING THE ORIGINAL SIGNATURES OF OBLIGOR AND EACH
OBLIGOR AFFILIATE, INCLUDING ANY MODIFICATIONS OR SUPPLEMENTS THERETO; AND (II)
TO THE EXTENT NOT SUBSUMED IN (I), THE ORIGINAL RECEIVABLE DELIVERY DOCUMENTS
TOGETHER WITH ALL OTHER DOCUMENTS, AGREEMENTS AND INSTRUMENTS LISTED IN THE
SCHEDULES TO THE CLOSING INSTRUCTIONS DELIVERED PURSUANT TO THE ESCROW AGREEMENT
IN CONNECTION WITH THE CLOSING OF SUCH RECEIVABLE.

 

“Eligible Investment” means (i) marketable securities issued or directly and
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.;
(iii) commercial paper maturing no more than one year from the date of creation
thereof and, at the time of acquisition, having a rating of at least A-1 from
Standard & Poor’s Ratings Group or at least P-1 from Moody’s Investors Service,
Inc.; (iv) certificates of deposit or bankers’ acceptances maturing within one
year from the date of acquisition thereof issued by any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia having unimpaired capital and surplus of not less than
$250,000,000 (each such commercial bank herein called an “Eligible Bank”);
(v) Eurodollar time deposits having a maturity of less than one year purchased
directly from any Eligible Bank (whether such deposit is with such Eligible Bank
or any other Eligible Bank); (vi) money market funds having the highest rating
obtainable from either Standard & Poor’s Ratings Group or Moody’s Investors
Service, Inc.; and (vii) debt securities issued by

 

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REITs held as a temporary qualifying investments for REITs under the Code;
provided, however, the investments described in part (vii) of this definition of
Eligible Investments shall not be deemed Eligible Investment for purposes of
investments of funds in the Collection Account.

 

ANY OF THE FOREGOING ELIGIBLE INVESTMENTS MAY, BUT SHALL NOT BE REQUIRED TO, BE
PURCHASED BY OR THROUGH CUSTODIAN OR ANY OF ITS AFFILIATES.  ELIGIBLE
INVESTMENTS MAY, BUT SHALL NOT BE REQUIRED TO, INCLUDE ANY OF THE AFORESAID
ITEMS WHICH ARE OBLIGATIONS OF CUSTODIAN AND OTHERWISE QUALIFY PURSUANT TO THE
PRECEDING PROVISION OF THIS DEFINITION.

 

“ELIGIBLE MORTGAGE LOAN RECEIVABLE” MEANS, AT ANY TIME, ANY MORTGAGE LOAN
RECEIVABLE THAT IS LISTED ON A LIST OF RECEIVABLES THAT HAS BEEN DELIVERED TO
BUYER AND WHICH HAS BEEN APPROVED BY BUYER, IN BUYER’S SOLE DISCRETION, AND
WHICH, IN BUYER’S SOLE DISCRETION, ALSO SATISFIES EACH OF THE FOLLOWING
REQUIREMENTS:

 

(A)           THE OBLIGOR OF WHICH MEETS THE CRITERIA FOR ELIGIBILITY AS A
BORROWER PURSUANT TO THE MORTGAGE LOAN ORIGINATION GUIDELINES, AS IN EFFECT AT
THE TIME SUCH RECEIVABLE ORIGINATED.

 

(B)           THE OBLIGOR OF WHICH IS NOT AN AFFILIATE OF ANY OF THE PARTIES
HERETO.

 

(C)           THE OBLIGOR OF WHICH IS NOT THE OBLIGOR OF ANY RECEIVABLE THAT HAS
AT ANY TIME BEEN A DEFAULTED RECEIVABLE.

 

(D)           THE RECEIVABLE IS NOT, AND HAS NOT AT ANY TIME BEEN, A DEFAULTED
RECEIVABLE.

 

(E)           THE RECEIVABLE IS EVIDENCED BY AN “INSTRUMENT” WITHIN THE MEANING
OF THE UCC OF ALL APPLICABLE JURISDICTIONS.

 

(F)            THE RECEIVABLE IS DENOMINATED AND PAYABLE ONLY IN UNITED STATES
DOLLARS IN THE UNITED STATES.

 

(G)           THE RECEIVABLE ARISES UNDER A CONTRACT IN SUBSTANTIALLY THE FORM
OF ONE OF THE FORM CONTRACTS SET FORTH ON EXHIBIT B ANNEXED HERETO; THE
APPLICABLE CONTRACT DOCUMENTS AND ASSIGNMENTS THEREOF TO BUYER (OR IN BLANK)
EVIDENCING OR SECURING THE APPLICABLE RECEIVABLE ARE SUBSTANTIALLY IN THE FORM
OF THE DOCUMENTS PROVIDED TO BUYER PURSUANT TO SCHEDULE 2.2-1 OR IN THE
ALTERNATIVE, CUSTOMER HAS PROVIDED BUYER WITH MACHINE-GENERATED COMPARISONS OF
SUCH DOCUMENTS AGAINST THE DRAFT DOCUMENTS PROVIDED TO BUYER, WITH SUCH CHANGES
REASONABLY APPROVED BY BUYER; SUCH CONTRACT AND SUCH RECEIVABLE AND THE RELATED
RECEIVABLE DELIVERY DOCUMENTS ARE IN FULL FORCE AND EFFECT AND CONSTITUTE THE
LEGAL, VALID AND BINDING OBLIGATIONS OF THE OBLIGOR ENFORCEABLE AGAINST SUCH
OBLIGOR IN ACCORDANCE WITH THEIR RESPECTIVE TERMS SUBJECT TO NO OFFSET,
COUNTERCLAIM OR OTHER DEFENSE, EXCEPT AS MAY BE LIMITED BY BANKRUPTCY,
INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR LAWS RELATING TO OR LIMITING
CREDITOR’S RIGHTS GENERALLY OR BY EQUITABLE PRINCIPLES RELATING TO
ENFORCEABILITY.

 

(H)           THE RECEIVABLE ARISES UNDER A CONTRACT WHICH (I) DOES NOT REQUIRE
THE OBLIGOR UNDER SUCH CONTRACT TO CONSENT TO THE TRANSFER, SALE OR ASSIGNMENT
OF THE RIGHTS AND DUTIES

 

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OF CUSTOMER UNDER SUCH CONTRACT AND (II) DOES NOT CONTAIN A CONFIDENTIALITY
PROVISION THAT PURPORTS TO RESTRICT THE ABILITY OF BUYER OR ITS SUCCESSORS OR
ASSIGNS TO EXERCISE RIGHTS UNDER THIS AGREEMENT OR THE OTHER TRANSACTION
DOCUMENTS, INCLUDING, WITHOUT LIMITATION, THEIR RIGHT TO REVIEW SUCH CONTRACT.

 

(I)            THE RECEIVABLE IS LEGALLY AND BENEFICIALLY OWNED BY CUSTOMER,
FREE AND CLEAR OF ANY ADVERSE CLAIM, EXCEPT AS CREATED OR PERMITTED HEREUNDER,
AND ANY ASSIGNMENT OF SUCH RECEIVABLE BY CUSTOMER OR ITS TRANSFEREES IS NOT
PROHIBITED BY THE APPLICABLE CONTRACT OR ANY RELATED SECURITY WITH RESPECT
THERETO.

 

(J)            THE RECEIVABLE TOGETHER WITH THE CONTRACT RELATED THERETO, DOES
NOT CONTRAVENE ANY LAWS, RULES OR REGULATIONS APPLICABLE THERETO (INCLUDING,
WITHOUT LIMITATION, LAWS, RULES AND REGULATIONS RELATING TO TRUTH IN LENDING,
FAIR CREDIT BILLING, FAIR CREDIT REPORTING, EQUAL CREDIT OPPORTUNITY, FAIR DEBT
COLLECTION PRACTICES, PRIVACY, USURY AND OTHER CONSUMER LAWS) AND WITH RESPECT
TO WHICH NO PART OF THE CONTRACT RELATED THERETO IS IN VIOLATION OF ANY SUCH
LAW, RULE OR REGULATION.

 

(K)           THE RECEIVABLE WAS GENERATED IN THE ORDINARY COURSE OF CUSTOMER’S
BUSINESS.

 

(L)            THE RECEIVABLE ARISES UNDER A CONTRACT THE TERMS OF WHICH CALL
FOR MONTHLY AND NO MORE THAN 240 INSTALLMENT PAYMENTS. WHERE THE RECEIVABLE IS A
FIXED RATE OBLIGATION PURSUANT TO THE MORTGAGE LOAN ORIGINATION GUIDELINES, THE
TERMS OF THE CONTRACT CALL FOR LEVEL PAY INSTALLMENT PAYMENTS, EXCEPT FOR THE
FIRST INSTALLMENT AND THE FINAL INSTALLMENT, EACH OF WHICH MAY BE LESS BUT NOT
MORE THAN THE OTHER MONTHLY PAYMENTS. THE RECEIVABLE HAS A FIRST INSTALLMENT DUE
DATE NO LATER THAN THE NEXT SUCCEEDING CUT-OFF DATE UNLESS THE FIRST INSTALLMENT
IS PREPAID, IN WHICH CASE THE NEXT INSTALLMENT HAS A DUE DATE NO LATER THAN THE
SECOND CUT-OFF DATE FOLLOWING THE DATE ON WHICH THE RECEIVABLE IS MADE. EACH
PAYMENT IS DUE ON THE SAME DAY OF THE MONTH.

 

(M)          BUYER HAS A FIRST PERFECTED OWNERSHIP INTEREST IN OR A FIRST
PERFECTED SECURITY INTEREST IN THE RECEIVABLE AND ALL RELATED SECURITY.

 

(N)           BUYER HAS NOT NOTIFIED CUSTOMER IN WRITING THAT IT HAS DETERMINED,
IN ITS GOOD FAITH DISCRETION, THAT SUCH RECEIVABLE OR CLASS OF RECEIVABLES IS
NOT ACCEPTABLE AS AN ELIGIBLE RECEIVABLE BECAUSE SUCH RECEIVABLE POSES A
MATERIAL RISK OF UNCOLLECTIBILITY.

 

(O)           THE CONTRACT CONTAINS THE ORIGINAL SIGNATURE OF THE RESPECTIVE
OBLIGOR.

 

(P)           NO PROVISION OF THE CONTRACT HAS BEEN WAIVED, EXTENDED, ALTERED OR
MODIFIED IN ANY MATERIAL RESPECT EXCEPT IN ACCORDANCE WITH THE MORTGAGE LOAN
ORIGINATION GUIDELINES, OR, IF CRITERIA FOR SUCH WAIVER, EXTENSION, ALTERATION
OR MODIFICATION IS NOT CONTAINED IN THE MORTGAGE LOAN ORIGINATION GUIDELINES,
WITH THE PRIOR CONSENT OF BUYER.

 

(Q)           ALL SCHEDULED PAYMENTS MADE ON THE CONTRACT HAVE BEEN APPLIED TO
THE OUTSTANDING PRINCIPAL BALANCE AS REQUIRED BY THE CONTRACT AND BY LAW.  ANY
PAYMENTS IN RESPECT OF INTEREST AND PRINCIPAL IN EXCESS OF THE SCHEDULED
PAYMENTS DUE AT THE TIME OF SUCH PAYMENT

 

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WERE APPLIED TO THE FINAL MATURING SCHEDULED PAYMENTS (THEREBY REDUCING THE
OUTSTANDING PRINCIPAL BALANCE THEREOF) AND NOT THE SCHEDULED PAYMENTS NEXT DUE.

 

(R)            ON THE DATE OF THE CONTRACT, THE OBLIGOR HAD THE CAPACITY TO
CONTRACT AND WAS SOLVENT.  CUSTOMER IS NOT AWARE OF FACTS, ARISING AFTER THE
DATE OF THE RECEIVABLE, WHICH INDICATE OBLIGOR DID NOT HAVE THE CAPACITY OR
WHICH INDICATE A MATERIALLY ADVERSE CHANGE SINCE THE DATE OF THE CONTRACT IN THE
OBLIGOR’S FINANCIAL CONDITION OR THE VALUE OF THE RELATED SECURITY.

 

(S)           CUSTOMER HAS NOT COMMENCED A FORECLOSURE ACTION OR OTHER LAWSUIT
AGAINST THE OBLIGOR; NOR HAS CUSTOMER DESIGNATED THE CONTRACT FOR SUCH ACTION.

 

(T)            THE CONTRACT IS TO BE COLLECTED AND OTHERWISE SERVICED BY
CUSTOMER.

 

(U)           THE OBLIGATION OF THE ORIGINAL OBLIGOR HAS NOT BEEN RELEASED OR
ASSUMED BY ANOTHER PERSON UNLESS THE RELEASE OR ASSUMPTION WAS PROPERLY
DOCUMENTED (OR, IN THE CASE OF AN ASSUMPTION, OCCURRED BY OPERATION OF LAW) AND
BUYER CONSENTS IN WRITING TO IT FOR PURPOSES OF THE CONTRACT BEING AN ELIGIBLE
RECEIVABLE.

 

(V)           THE CONTRACT HAS NOT BEEN, NOR IS IT DESIGNATED TO BE, TERMINATED,
SATISFIED, CANCELED, SUBORDINATED OR RESCINDED IN WHOLE OR IN PART; NOR HAS ANY
RELATED SECURITY BEEN RELEASED, OR DESIGNATED FOR RELEASE, FROM THE SECURITY
INTEREST GRANTED BY THE CONTRACT, UNLESS, AND ONLY TO THE EXTENT, CONSENTED TO
BY BUYER.

 

(W)          NO CLAIMS OF RESCISSION, SETOFF, COUNTERCLAIM, DEFENSE OR OTHER
DISPUTE HAVE BEEN ASSERTED WITH RESPECT TO THE CONTRACT.  NEITHER CUSTOMER NOR
ANY AFFILIATE OF CUSTOMER HAS MADE ANY AGREEMENT WITH OBLIGOR TO REDUCE THE
AMOUNT OWED UNDER THE CONTRACT.  NEITHER CUSTOMER NOR ANY SUCH AFFILIATE ARE
REQUIRED TO PERFORM ANY ADDITIONAL SERVICE FOR, OR PERFORM OR INCUR ANY
ADDITIONAL OBLIGATION TO, OBLIGOR IN ORDER FOR CUSTOMER TO ENFORCE THE CONTRACT.

 

(X)            EXCEPT FOR PAYMENT DEFAULTS CURED WITHIN THIRTY (30) DAYS AND
OBLIGOR FINANCIAL COVENANTS DEFAULTS EXPRESSLY DISCLOSED, IN WRITING, TO BUYER,
NO DEFAULT, BREACH, VIOLATION OR EVENT PERMITTING ACCELERATION UNDER THE TERMS
OF THE CONTRACT HAS OCCURRED.

 

(Y)           CUSTODIAN, ON BEHALF OF BUYER OR ESCROW AGENT, PURSUANT TO THE
PAYING AGENT AGREEMENT, AS BUYER’S AGENT, HAS RECEIVED FOR DELIVERY TO
CUSTODIAN: (I) THE ORIGINAL CONTRACT, BEARING THE ORIGINAL SIGNATURE OF OBLIGOR,
INCLUDING ANY MODIFICATIONS OR SUPPLEMENTS THERETO; AND (II)  TO THE EXTENT NOT
SUBSUMED IN (I), THE RECEIVABLE DELIVERY DOCUMENTS, AND ALL OF THE DOCUMENTS,
AGREEMENTS AND INSTRUMENTS LISTED IN THE SCHEDULES TO THE CLOSING INSTRUCTIONS
DELIVERED PURSUANT TO THE ESCROW AGREEMENT IN CONNECTION WITH THE CLOSING OF
SUCH RECEIVABLE.

 

“Eligible Receivable” means any Eligible Direct Loan Receivable and any Eligible
Mortgage Loan Receivable.

 

“Environmental Laws” means all statutes, ordinances, orders, rules, regulations,
plans, policies or decrees and the like relating to (i) environmental matters,
including, without limitation, those relating to fines, injunctions, penalties,
damages, contribution, cost recovery compensation, losses or injuries resulting
from the Release or threatened Release of Hazardous Materials, (ii) the
generation, use, storage, transportation or disposal of Hazardous Materials, or

 

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(iii) occupational safety and health, industrial hygiene, land use or the
protection of human, plant or animal health or welfare, in any manner applicable
to Customer or any of its Subsidiaries or any of their respective properties.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any successor thereto.

 

“ERISA Affiliate” means, as applied to any Person, (i) any corporation which is
a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that Person is a member;
and (iii) any member of an affiliated service group within the meaning of
Section 414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is a member.  Any former ERISA Affiliate of Customer or any of
its Subsidiaries shall continue to be considered an ERISA Affiliate of Customer
or such Subsidiary within the meaning of this definition with respect to the
period such entity was an ERISA Affiliate of Customer or such Subsidiary and
with respect to liabilities arising after such period for which Customer or such
Subsidiary could be liable under the Internal Revenue Code or ERISA.

 

“ERISA Event” means (i) a “reportable event” within the meaning of Section 4043
of ERISA and the regulations issued thereunder with respect to any Pension Plan
(excluding those for which the provision for thirty (30) day notice to the PBGC
has been waived by regulation); (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect to any Pension
Plan (whether or not waived in accordance with Section 412(d) of the Internal
Revenue Code) or the failure to make by their due date a required installment
under Section 412(m) of the Internal Revenue Code with respect to any Pension
Plan or the failure to make any required contribution to a Multiemployer Plan;
(iii) the provision by the administrator of any Pension Plan pursuant to
Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a
distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal
by Customer any of its Subsidiaries or any of its ERISA Affiliates from any
Pension Plan with two or more contributing sponsors or the termination of any
such Pension Plan resulting in liability pursuant to Section 4063 or 4064 of
ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension
Plan, or the occurrence of any event or condition which might constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on Customer, any
of its Subsidiaries or any of its ERISA Affiliates pursuant to Section 4062(e)
or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA;
(vii) the withdrawal of Customer, any of its Subsidiaries or any of its ERISA
Affiliates in a complete or partial withdrawal (within the meaning of
Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any
potential liability therefor, or the receipt by Customer, any of its
Subsidiaries or any of its ERISA Affiliates of notice from any Multiemployer
Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245
of ERISA, or that it intends to terminate or has terminated under Section 4041A
or 4042 of ERISA; (viii) the occurrence of an act or omission which could give
rise to the imposition on Customer, any of its Subsidiaries or any of its ERISA
Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the

 

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Internal Revenue Code or under Section 409, Section 502(c), (i) or (l), or
Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
assertion of a material claim (other than routine claims for benefits) against
any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof,
or against Customer, any of its Subsidiaries or any of its ERISA Affiliates in
connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue
Service of notice of the failure of any Pension Plan (or any other Employee
Benefit Plan intended to be qualified under Section 401(a) of the Internal
Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan to qualify for
exemption from taxation under Section 501(a) of the Internal Revenue Code; or
(xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.

 

“Escrow Agent” means Lawyers Title Insurance Corporation or another escrow agent
selected by Customer with the approval of Buyer, as Escrow Agent, under the
Escrow Agreement.

 

“Escrow Agreement” means an Escrow Agreement among Buyer, Customer and Escrow
Agent executed and delivered on or prior to the Closing Date in form and
substance satisfactory to Buyer.

 

“Excess Principal” means the remainder of (x) the product of (1) the Advance
Rate, multiplied by (2) the Net Receivables Balance, minus (y) the Aggregate
Principal Outstanding; provided, that for purposes of calculating available
Excess Principal, the Aggregate Principal Outstanding will be reduced by Partial
Prepayments of Invested Principal only to the extent made on a voluntary basis
by Customer pursuant to Section 2.9(d) hereof; provided, however, after giving
effect to any proposed disbursement request (or actual disbursement) in respect
of Excess Principal, the Aggregate Principal Outstanding may not exceed the
lesser of (x) the Facility Limit and (y) the Warehouse Asset Limit Amount.

 

“Facilities” means all real property now, hereafter or heretofore owned, leased,
operated or used by Customer or any of its Subsidiaries or any of their
respective predecessors or Affiliates.

 

“Facility Limit” means $150,000,000; provided, however, the Facility Limit may
be increased, upon ten (10) Business Days’ notice from Customer, to Buyer to
$200,000,000, but only with Buyer’s consent, which consent may be given or
withheld in the sole discretion of Buyer (i.e., it may be given or withheld by
Buyer for any or no reason) and payment to Buyer by Customer of an additional
fee equal to $625,000.

 

“Facility Termination Date” means April 10, 2005.

 

“Financial Condition Covenants” is defined in Section 5.1(n).

 

“Finance Charges” means, with respect to a Contract, any finance, interest, late
or similar charges owing by an Obligor pursuant to such Contract.

 

“Fiscal Quarter” means a fiscal quarter of any Fiscal Year.

 

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“Fiscal Year” means the fiscal year of Customer and its Subsidiaries ending on
December 31 of each calendar year.

 

“FRANCHISE LOAN ORIGINATION GUIDELINES” MEANS CUSTOMER’S LOAN ORIGINATION
POLICIES AND PRACTICES RELATING TO DIRECT LOAN RECEIVABLES EXISTING ON THE DATE
HEREOF AND SET FORTH IN SCHEDULE 1.1(A) ANNEXED HERETO, AS MODIFIED FROM TIME TO
TIME BY CUSTOMER’S BOARD OF DIRECTORS.

 

“Funding Date” means, with respect to each Investment of Principal, the Business
Day on which such Investment of Principal is made.

 

“GAAP” means generally accepted accounting principles set forth in opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession, in each
case as the same are applicable to the circumstances as of the date of
determination.

 

“Governmental Authority” means the United States of America, any state or other
political subdivision thereof and any other foreign or domestic court, tribunal
or entity of any nature exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.

 

“Governmental Authorization” means any permit, license, authorization, plan,
directive, consent order or consent decree of or from any Governmental
Authority.

 

“Gross Negligence” means willful misconduct, recklessness or the absence of the
slightest care or the complete disregard of consequences.  Gross Negligence does
not mean the absence of ordinary care or diligence, or an inadvertent act or an
inadvertent failure to act.  To the extent the term “gross negligence” is used
with respect to Buyer or another Purchaser Representative or any other
indemnitee in any of the Transaction Documents, it shall have the meaning set
forth herein.

 

“Guaranty” of a Person means any agreement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes liable upon, the obligation of any other
Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person or otherwise assures any creditor of
such other Person against loss, including, without limitation, any comfort
letter, operating agreement or take-or-pay contract and shall include, without
limitation, the contingent liability of such Person in connection with any
application for a letter of credit.

 

“Hazardous Materials” means any chemical, material or substance, exposure to
which is prohibited, limited or regulated by any Governmental Authority, or
which may or could pose a hazard to the health and safety of the owners,
occupants or any Persons in the vicinity of the Facilities.

 

“Indebtedness” means, with respect to any Person on a consolidated basis: (a)
obligations created, issued or incurred by such Person for borrowed money
(whether by loan, the

 

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issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business, so long as such trade accounts
payable are payable within ninety (90) days of the date the respective goods are
delivered or the respective services are rendered; (c) indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for the account of such Person; (e) Capital Lease Obligations of such Person;
(f) obligations of such Person under repurchase agreements, sale/buy-back
agreements or like arrangements; (g) indebtedness of others subject to a
Guaranty by such Person; and (h) indebtedness of general partnerships of which
such Person is a general partner.

 

“Indemnified Amount” has the meaning assigned to that term in Section 9.1.

 

“Indemnified Party” has the meaning assigned to that term in Section 9.1.

 

“Interest” means, with respect to any Tranche Period or other applicable period,
the aggregate of the following:

 

AR x PO x AD

 360

Where

 

AR =          the Applicable Rate for such Tranche Period,

 

PO =           the Aggregate Principal Outstanding for such Tranche Period, and

 

AD =          the actual number of days elapsed during such Tranche Period;

 

provided, however, that no provision of this Agreement shall require the payment
or permit the collection of Interest in excess of the maximum permitted by
applicable law; and provided further, that Interest shall not be considered paid
by any payment if at any time such payment is rescinded or must be returned for
any reason.

 

“Interest Payment Date” means the tenth day of each month, commencing with the
first such date after the first Funding Date; provided that if such tenth day is
not a Business Day, the Interest Payment Date for such month shall be the next
succeeding Business Day.

 

“Invested Principal” means, with respect to any Investment of Principal, the
amount paid to Customer by Buyer hereunder in connection with such Investment of
Principal.

 

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“Investment” means any direct or indirect purchase or other acquisition by
Customer or any of its Subsidiaries of, or of a beneficial interest in, any
stock or other Securities of any other Person or any direct or indirect loan,
advance (other than acquisitions of Warehouse Assets permitted hereunder) or
capital contribution by Customer or any of its Subsidiaries to any other Person,
including all indebtedness and accounts receivable from that other Person that
are not current assets or did not arise from sales to that other Person in the
ordinary course of business.  The amount of any Investment shall be the original
cost of such Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment.

 

“Investment of Principal” means any advance of principal by Buyer hereunder to
Customer.

 

“Investment of Principal Request” means a notice substantially in the form of
Exhibit A-1 annexed hereto delivered by Customer to Buyer pursuant to
Section 2.2(c) with respect to a proposed Investment of Principal.

 

“Joint Venture” means a joint venture, partnership or other similar arrangement,
whether in corporate, partnership or other legal form; provided that in no event
shall any corporate subsidiary of any Person be considered to be a Joint Venture
to which such Person is a party.

 

“Late Charge” is defined in Section 2.4(c).

 

“LIBOR Rate” means the rate per annum (rounded upwards, if necessary, to the
next higher one hundred-thousandth of a percentage point) equal to the London
Interbank Offered Rate (LIBOR) with a one-month maturity as reported in the
Money Rates column or section of The Wall Street Journal published on the second
Business Day preceding the first day of the relevant Tranche Period (or other
relevant period).  For purposes hereof, the LIBOR Rate for the period commencing
on the Closing Date and ending on May 9, 2004 shall be 1.10%.

 

“Lien” means any lien, mortgage, pledge, assignment, security interest, charge
or encumbrance (including, without limitation, any conditional sale or other
title retention agreement, any lease in the nature thereof, and any agreement to
give any security interest, and any mechanic’s Liens) and any credit insurance
arrangement option, trust or other preferential arrangement having the practical
effect of any of the foregoing.

 

“Liquidation Day” for any portion of the Warehouse Assets means any day on or
after the Termination Date.

 

“List of Receivables” means the list delivered to Buyer and Custodian by
Customer with each Receivable which:  (i) identifies each Receivable being
delivered by account number, the name of the Obligor and the Outstanding
Principal Balance and (ii) identifies all Related Security with respect to each
Receivable.

 

“Loan Origination Guidelines” means the Franchise Loan Origination Guidelines
and the Mortgage Loan Origination Guidelines, collectively.

 

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“Market Value” means, as of any relevant date, the lesser of (x) market value of
the Receivables on such date, as determined by Buyer in the manner set forth
below, and (y) the Net Receivables Balance.  The Market Value of all Receivables
on the Receivables List shall be determined by Buyer, in its sole but
commercially reasonable discretion, on each Business Day during the term of the
Agreement taking into account, among other things, the then current market value
of the Swap Agreement.  Customer shall cooperate with Buyer in its determination
of Market Value of each of the Receivables (including, without limitation,
providing all information and documentation in the possession of Customer
regarding such Receivables or otherwise required by Buyer in its commercially
reasonable judgment).  For purposes of clarification, it is agreed that in the
event (x) a payment delinquency of more than thirty (30) days by an Obligor or
Obligor Affiliate shall exist, or (y) the applicable Receivable is a Defaulted
Receivable or is no longer an Eligible Direct Loan Receivable or Eligible
Mortgage Loan Receivable, the Market Value of the applicable Receivable shall be
zero.  In no event shall the Market Value of any Warehouse Asset be deemed to
exceed $25,000,000.

 

“Material Adverse Change” means an event or condition the occurrence of which
has had, or could reasonably be expected to have (i) a material adverse effect
upon the business, operations, properties, assets, condition (financial or
otherwise) or prospects of Customer or the value or collectibility of the
Warehouse Assets or (ii) a material adverse effect on the ability of Customer to
pay or perform any Customer Obligation or any other obligations under any of the
Transaction Documents, or on the rights and remedies of Buyer under any
Transaction Document with respect to the Warehouse Assets or otherwise.

 

“Maximum Advance Rate” means 66.6%.

 

“MORTGAGE LOAN ORIGINATION GUIDELINES” MEANS CUSTOMER’S LOAN ORIGINATION
POLICIES AND PRACTICES RELATING TO MORTGAGE LOAN RECEIVABLES EXISTING ON THE
DATE HEREOF AND SET FORTH IN SCHEDULE 1.1(A) ANNEXED HERETO, AS MODIFIED FROM
TIME TO TIME BY CUSTOMER’S BOARD OF DIRECTORS.

 

“Mortgage Loan Receivable” means any term loan made by Customer to a borrower in
connection with a Real Estate Mortgage Loan, in each case as amended, modified
or supplemented from time to time, and all rights of every nature of Customer
and all obligations of Obligor thereunder, including but not limited to all
Indebtedness or other obligations owed to Customer (without giving effect to any
transfer or conveyance to Buyer hereunder) of such Obligor arising thereunder,
and includes, without limitation, the obligation to pay any Finance Charges with
respect thereto.

 

“Multiemployer Plan” means any Employee Benefit Plan which is a “multiemployer
plan” as defined in Section 3(37) of ERISA.

 

“NAIC” means The National Association of Insurance Commissioners.

 

“Net Receivables Balance” means, at any time, an amount equal to the Outstanding
Principal Balance of all Eligible Receivables reduced by the entire Outstanding
Principal Balance of all Eligible Receivables constituting Defaulted Receivables
or other Charge-Off Receivables.

 

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“Net Recoveries” means, with respect to a Defaulted Receivable, the monies
collected from whatever source, during any Accounting Period following the
Accounting Period in which such Receivable became a Defaulted Receivable, net of
the reasonable costs of liquidation plus any amounts required by law to be
remitted to the respective Obligor.

 

“Obligor” means, with respect to any Receivable, the Person or Persons obligated
to make payments pursuant to the Contract or any Guaranty relating to such
Receivable.

 

“Obligor Affiliate” means each Affiliate of the Obligor granting a security
interest in all or part of the Related Security and/or providing an Affiliate
Guaranty.

 

“Obligor Financial Covenants” means the financial covenants of an Obligor or
Obligor Affiliate set forth in a Contract.

 

“Obligor Financial Covenant Default” means the failure of an Obligor or Obligor
Affiliate to comply with its Obligor Financial Covenants.

 

“Officers’ Certificate” means, as applied to any corporation, a certificate
executed on behalf of such corporation by its chairman of the board (if an
officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer.

 

“Operating Lease” means, as applied to any Person, any lease of any property
that is not a Capital Lease, other than any such lease under which that Person
is the lessor.

 

“Other Costs” has the meaning assigned to such term in Section 9.4.

 

“Outstanding Principal Balance” means the outstanding principal balance of a
Contract.

 

“Outstanding Principal Invested” means the aggregate outstanding principal
balance of all Invested Principal.

 

“Overdue Rate” means at all times (including after the occurrence of a
Termination Event), a rate per annum equal to (a) the Base Rate plus (b) 5%.

 

“Partial Prepayments of Invested Principal” means amounts paid from time to time
in reduction of the Aggregate Principal Outstanding pursuant to the requirements
of Section 2.9(c) or made voluntarily by Customer pursuant to Section 2.9(d) or
Section 2.13.

 

“Paying Agent” means The Bank of New York, and its permitted successors and
assigns, acting in its capacity as Paying Agent under the Paying Agent
Agreement.

 

“Paying Agent Agreement” means the Custodial and Paying Agent Agreement to be
entered into on or prior to the Closing Date among Buyer, Paying Agent and
Customer on terms and conditions satisfactory to Buyer.

 

“PBGC” means the Pension Benefit Guaranty Corporation and any Person succeeding
to any or all of the functions thereof.

 

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“Permitted Tax Distributions” means a declaration or payment of any dividend or
the making of any distribution by Customer equal to the greater of: (a) the
amount determined by Customer’s Board of Directors, board of trustees or
analogous body, to be necessary to permit Customer to distribute to its
shareholders with respect to any calendar year (whether made during such year or
after the end thereof) 100% of the “real estate investment trust taxable income”
of Customer within the meaning of Code Section 857(b)(2), determined without
regard to deductions for dividends paid; or (b) the amount that is determined by
Customer’s Board of Directors, board of trustees or analogous body, to be
necessary either to maintain Customer’s status as a REIT under the Code for any
calendar year or to enable Customer to avoid the payment of any tax for any
calendar year that could be avoided by reason of a distribution by Customer to
its shareholders, with such distributions to be made as and when determined by
Customer’s Board of Directors, board of trustees or analogous body, whether
during or after the end of the relevant calendar year.

 

“Person” means any legal person, including any individual, corporation, limited
liability company, partnership, limited partnership, limited liability
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

 

“Potential Termination Event” means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Termination Event.

 

“Prior Period” means, with respect to any Interest Payment Date, the period
commencing on the prior Interest Payment Date to but excluding the referenced
Interest Payment Date.

 

“Preliminary Due Diligence Package” shall mean with respect to any proposed
Warehouse Asset, Customer’s standard loan submission memorandum substantially,
in the form of Schedule 1.1(c) attached hereto, accompanied by (a) a final or
draft third-party appraisal of the real property securing the applicable
Warehouse Asset, (b) a draft or final third-party environmental site assessment
report for the applicable Warehouse Asset, (c) a draft or final third party real
estate asset physical condition report for the applicable Warehouse Asset and
(d) to the extent such approvals have occurred, a copy of all Customer internal
approvals required for the origination of the Receivable in question.

 

“Proceeding” has the meaning assigned to that term in Section 5.1(b)(iv).

 

“Property” means any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible.

 

“Purchase” means the acquisition hereunder by Buyer of the Warehouse Assets.

 

“Purchaser Representative” means each of Buyer, Custodian and Paying Agent.

 

“Real Estate Mortgage Loan” means loans or notes secured by a first lien on real
estate upon which is located one or more commercial structures.

 

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“Receivable” means any Direct Loan Receivable and any Mortgage Loan Receivable.

 

“Receivable Delivery Documents” means (i) the original Contracts with respect to
each Receivable and its Related Security and (ii) each other document, agreement
or instrument listed in the schedules to the Closing Instructions delivered
pursuant to the Escrow Agreement in connection with the closing of such
Receivable.  The Receivable Delivery Documents shall, in each instance, include
the documents identified on Schedule 1.1(d).

 

“Records” means, with respect to any Receivable, the Receivable Delivery
Documents and other documents, books, records, reports, files, documents and
other information (including, without limitation, computer programs, electronic
data, tapes, discs, punch cards, data processing software and related property
and rights) relating to such Receivable and the related Warehouse Assets or the
related Obligor.

 

“Regulatory Change” has the meaning assigned to that term in Section 9.3.

 

“REIT” means a domestic trust or corporation that qualifies as a real estate
investment trust under the provisions of Section 856, et. seq. of the Code.

 

“Related Security” means with respect to any Receivable:

 

(A)           (I) THE RECORDS AND ANY OTHER DOCUMENTS CONTAINED IN ANY
RECEIVABLE FILE; AND (II) FUNDS DEPOSITED IN THE COLLECTION ACCOUNT AND PROCEEDS
THEREOF;

 

(B)           ALL PROPERTY FROM TIME TO TIME, IF ANY, PURPORTING TO SECURE
PAYMENT OF SUCH RECEIVABLE, WHETHER PURSUANT TO THE CONTRACT RELATED TO SUCH
RECEIVABLE OR OTHERWISE, TOGETHER WITH ALL FINANCING STATEMENTS SIGNED BY AN
OBLIGOR DESCRIBING ANY COLLATERAL SECURING SUCH RECEIVABLE;

 

(C)           ALL GUARANTEES, INSURANCE AND OTHER AGREEMENTS OR ARRANGEMENTS OF
WHATEVER CHARACTER FROM TIME TO TIME SUPPORTING OR GUARANTEEING PAYMENT OF SUCH
RECEIVABLE, WHETHER PURSUANT TO THE CONTRACT RELATED TO SUCH RECEIVABLE OR
OTHERWISE; AND

 

(D)           ALL PROCEEDS, PRODUCTS OR ANY OTHER DISTRIBUTIONS OF, FROM OR IN
RESPECT OF ANY OR ALL OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, WHATEVER
IS RECEIVABLE OR RECEIVED WHEN ANY OF THE FOREGOING IS SOLD, EXCHANGED,
COLLECTED OR OTHERWISE DISPOSED OF, WHETHER SUCH DISPOSITION IS VOLUNTARY OR
INVOLUNTARY.

 

“Release” means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the environment, or into or out of any
Facility.

 

“Requirements of Law” means, with respect to any Person, any law, treaty, rule
or regulation or determination of an arbitrator or Governmental Authority
applicable to or binding upon such Person or to which such Person is subject,
whether federal, state or local, regulations promulgated pursuant to any of the
foregoing and all state and local counterparts of such laws.

 

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“Responsible Officer” means, with respect to Custodian, any officer within the
Corporate Custodian Office of Custodian, including any Vice President (however
designated), Assistant Treasurer, Assistant Secretary, Managing Director or
other officer of Custodian customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer’s knowledge of and familiarity with the particular subject.

 

“Restricted Junior Payment” means (a) any dividend or other distribution, direct
or indirect, on account of any shares of or interests in any class of equity
Securities of Customer now or hereafter outstanding, except a dividend payable
solely in shares of or interests in that class of equity Securities to the
holders of that class, (b) any redemption, retirement, sinking fund, or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of or interests in any class of equity Securities of Customer now or
hereafter outstanding, and (c) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of or interests in any class of equity Securities of Customer now or
hereafter outstanding.

 

“Schedule of Payments” means the schedule of payments disclosed on a Contract.

 

“Scheduled Payment” means the periodic installment payment amount disclosed in
the Schedule of Payments for the Contract.

 

“Securities” means any stock, limited liability company interests, shares,
partnership interests, voting trust certificates, certificates of interest or
participation in any profit-sharing agreement or arrangement, options,
certificates issued in connection with a Securitization Transaction, warrants,
bonds, debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly known as “securities” or any certificates of interest, shares or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.

 

“Securities Act” means The Securities Act of 1933, as amended, as now and
hereafter in effect, or any successor statute.

 

“Securitization Transaction” means a securitization of Receivables by a
Subsidiary of Customer in rated (by one or more nationally recognized rating
agencies) asset backed transactions on terms acceptable to Buyer or that
simultaneously with the closing thereof, causes payment in full, to Buyer, of
the entire Customer Repurchase Price for all Receivables sold to Buyer not
previously repurchased by Customer.

 

“Servicer” means BNY Asset Solutions, LLC, a Delaware limited liability company,
in its capacity as Servicer under the Servicing Agreement.

 

“Servicing Agreement” means the Interim Servicing Agreement dated as of even
date herewith among Servicer, Customer and Buyer.

 

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“Servicer Default” means any “Event of Default” as defined in the Servicing
Agreement unless such Event of Default has been timely remedied by Servicer or
waived by Buyer.

 

“Solvent” means, with respect to any Person, that as of the date of
determination both (a) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person’s then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person’s
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (b) such Person is
“solvent” within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances.  For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.

 

“Subsidiary” means, for any Person, any corporation or other business
organization 50% or more of the outstanding voting Securities or other equity
Securities of which shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more such corporations or organizations
or by such Person and one or more such corporations or organizations, and any
partnership of which such corporation or organization is a general partner.

 

“Swap Agreement” means interest rate swap agreements between Customer and one or
more counterparties, which shall be collaterally assigned to Buyer.

 

“Tax” or “Taxes” means all taxes, charges, fees, levies or other assessments
including, without limitation, income, gross receipts, profits, withholding,
excise, property, sales, use, occupation and franchise taxes (including, in each
such case, any interest, penalties or additions attributable to or imposed on or
with respect to any such taxes, charges, fees or other assessments) imposed by
the United States, any state or political subdivision thereof, any foreign
government or any other jurisdiction or taxing authority.

 

“Taxable Non-REIT Assets” means Property of Customer that Customer’s Board of
Directors, board of trustees or analogous body, determines is necessary to
transfer to a Subsidiary or a grantor trust of which such Subsidiary is the sole
beneficiary (a ‘Taxable REIT Subsidiary Entity’) in order to establish or
maintain Customer’s status as a REIT under the Code, together with any other
Property principally associated with Customer’s servicing and loan underwriting
business, including, without limitation, leases, equipment, employment
arrangements and cash, but excluding any Property the transfer of which would
constitute a breach of Section 5.2(n) hereof.

 

“Termination Date” means the earliest to occur of (a) the date of the occurrence
of a Termination Event described in Section 7.1, or (b) the Facility Termination
Date.

 

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“Termination Event” means an event described in Section 7.1.

 

“Tranche” means a portion of the Aggregate Principal Outstanding allocated to a
Tranche Period.

 

“Tranche Period” means with respect to any Investment of Principal, initially a
period of days commencing on the date of such Investment of Principal to and
excluding the next succeeding Interest Payment Date, and, with respect to each
continuation thereof, a period of days commencing on the Interest Payment Date
on which such continuation began to and excluding the next succeeding Interest
Payment Date.  No Tranche Period shall extend beyond the Termination Date.

 

“Transaction Documents” means this Agreement, the Servicing Agreement, the
Paying Agent Agreement, the Swap Agreements and all other agreements,
instruments, documents, UCC financing statements or certificates necessary to
effectuate the transactions contemplated herein and therein.

 

“UCC” means, with respect to any state, the Uniform Commercial Code as from time
to time in effect in such state or, if no state is specified, in the State of
New York.

 

“Warehouse Assets” means, at any time, (a) each Receivable, including, without
limitation, each Receivable identified on any List of Receivables delivered by
Customer or Servicer to Buyer or any other Purchaser Representative and, for
each such Receivable, the note representing such Receivable and the related
Receivable Delivery Documents, (b) all Related Security with respect to each
such Receivable, (c) each Collection with respect to each Receivable or its
Related Security and (d) all proceeds, products or any other distributions of,
from or in respect of any of the foregoing, including, without limitation,
whatever is receivable or received when any of the foregoing is sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary or
involuntary.  For avoidance of doubt, the Warehouse Assets identified on
Schedule 1.1 have been approved by Buyer for purchase on the Closing Date.

 

“Warehouse Asset Limit Amount” means, at any time, the sum of (a) the product of
(i) the Maximum Advance Rate times (b) the Market Value of the Warehouse Assets
with respect to which no Obligor Financial Covenant Default exists plus (b) the
product of  (i) the Advance Rate applicable to Warehouse Assets as to which an
Obligor Financial Covenant Default exists (i.e., 40%) times (ii) the Market
Value of Warehouse Assets with respect to which an Obligor Financial Covenant
Default exists.

 

SECTION 1.2.            INTERPRETATION.

 

(A)           IN EACH TRANSACTION DOCUMENT, UNLESS A CLEAR CONTRARY INTENTION
APPEARS:

 

(I)            THE SINGULAR NUMBER INCLUDES THE PLURAL NUMBER AND VICE VERSA;

 

(II)           REFERENCE TO ANY PERSON INCLUDES SUCH PERSON’S SUCCESSORS AND
ASSIGNS BUT, IF APPLICABLE, ONLY IF SUCH SUCCESSORS AND ASSIGNS ARE PERMITTED BY
THE

 

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TRANSACTION DOCUMENTS, AND REFERENCE TO A PERSON IN A PARTICULAR CAPACITY
EXCLUDES SUCH PERSON IN ANY OTHER CAPACITY OR INDIVIDUALLY;

 

(III)          REFERENCE TO ANY GENDER INCLUDES EACH OTHER GENDER;

 

(IV)          REFERENCE TO ANY AGREEMENT (INCLUDING ANY TRANSACTION DOCUMENT),
DOCUMENT OR INSTRUMENT MEANS SUCH AGREEMENT, DOCUMENT OR INSTRUMENT AS AMENDED,
SUPPLEMENTED OR MODIFIED AND IN EFFECT FROM TIME TO TIME IN ACCORDANCE WITH THE
TERMS THEREOF AND, IF APPLICABLE, THE TERMS OF THE OTHER TRANSACTION DOCUMENTS
AND REFERENCE TO ANY PROMISSORY NOTE INCLUDES ANY PROMISSORY NOTE WHICH IS AN
EXTENSION OR RENEWAL THEREOF OR A SUBSTITUTE OR REPLACEMENT THEREFOR;

 

(V)           REFERENCE TO ANY LAW MEANS SUCH LAW AS AMENDED, MODIFIED,
CODIFIED, REPLACED OR REENACTED, IN WHOLE OR IN PART, AND IN EFFECT FROM TIME TO
TIME, INCLUDING RULES AND REGULATIONS PROMULGATED THEREUNDER AND REFERENCE TO
ANY SECTION OR OTHER PROVISION OF ANY LAW MEANS THAT PROVISION OF SUCH LAW FROM
TIME TO TIME IN EFFECT AND CONSTITUTING THE SUBSTANTIVE AMENDMENT, MODIFICATION,
CODIFICATION, REPLACEMENT OR REENACTMENT OF SUCH SECTION OR OTHER PROVISION;

 

(VI)          REFERENCE IN ANY TRANSACTION DOCUMENT TO ANY ARTICLE, SECTION,
APPENDIX, SCHEDULE OR EXHIBIT MEANS SUCH ARTICLE OR SECTION THEREOF OR APPENDIX,
SCHEDULE OR EXHIBIT THERETO;

 

(VII)         “HEREUNDER,” “HEREOF,” “HERETO” AND WORDS OF SIMILAR IMPORT SHALL
BE DEEMED REFERENCES TO A TRANSACTION DOCUMENT AS A WHOLE AND NOT TO ANY
PARTICULAR ARTICLE, SECTION OR OTHER PROVISION HEREOF;

 

(VIII)        “INCLUDING” (AND WITH CORRELATIVE MEANING “INCLUDE”) MEANS
INCLUDING WITHOUT LIMITING THE GENERALITY OF ANY DESCRIPTION PRECEDING SUCH
TERM;

 

(IX)           “OR” IS NOT EXCLUSIVE; AND

 

(X)            RELATIVE TO THE DETERMINATION OF ANY PERIOD OF TIME, “FROM” MEANS
“FROM AND INCLUDING” AND “TO” MEANS “TO BUT EXCLUDING.”

 

(B)           ACCOUNTING TERMS.  IN EACH TRANSACTION DOCUMENT, UNLESS EXPRESSLY
OTHERWISE PROVIDED, ACCOUNTING TERMS SHALL BE CONSTRUED AND INTERPRETED, AND
ACCOUNTING DETERMINATIONS AND COMPUTATIONS SHALL BE MADE, IN ACCORDANCE WITH
GAAP.

 

(C)           CONFLICT IN TRANSACTION DOCUMENTS.  IF THERE IS ANY CONFLICT
BETWEEN ANY TRANSACTION DOCUMENTS, SUCH TRANSACTION DOCUMENT SHALL BE
INTERPRETED AND CONSTRUED, IF POSSIBLE, SO AS TO AVOID OR MINIMIZE SUCH CONFLICT
BUT, TO THE EXTENT (AND ONLY TO THE EXTENT) OF SUCH CONFLICT, THIS AGREEMENT
SHALL PREVAIL AND CONTROL.

 

(D)           LEGAL REPRESENTATION OF THE PARTIES.  THE TRANSACTION DOCUMENTS
WERE NEGOTIATED BY THE PARTIES WITH THE BENEFIT OF LEGAL REPRESENTATION AND ANY
RULE OF CONSTRUCTION OR INTERPRETATION OTHERWISE REQUIRING THE TRANSACTION
DOCUMENT TO BE CONSTRUED OR INTERPRETED AGAINST ANY PARTY SHALL NOT APPLY TO ANY
CONSTRUCTION OR INTERPRETATION HEREOF OR THEREOF.

 

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(E)           DEFINED TERMS.  UNLESS A CLEAR CONTRARY INTENTION APPEARS, TERMS
DEFINED HEREIN HAVE THE RESPECTIVE INDICATED MEANINGS WHEN USED IN EACH
TRANSACTION DOCUMENT.

 

ARTICLE II
PURCHASES AND SETTLEMENT

 

SECTION 2.1.            ASSIGNMENT AND CONVEYANCE.  CUSTOMER HEREBY SELLS,
ASSIGNS, TRANSFERS AND CONVEYS TO BUYER, AS OF THE CLOSING DATE, AND BUYER
HEREBY PURCHASES AND ACCEPTS, AS OF THE CLOSING DATE, ASSIGNMENT AND TRANSFER
FROM CUSTOMER OF, WITH RECOURSE, ALL OF CUSTOMER’S RIGHT, TITLE AND INTEREST OF
EVERY NATURE IN AND TO THE WAREHOUSE ASSETS, WHETHER NOW OR HEREAFTER EXISTING
OR IN WHICH CUSTOMER NOW HAS OR HEREAFTER ACQUIRES AN INTEREST.

 

SECTION 2.2.            FACILITY AND INCREMENTAL INVESTMENTS.

 

(A)           UPON THE TERMS AND SUBJECT TO THE CONDITIONS AND IN RELIANCE UPON
THE REPRESENTATIONS AND WARRANTIES OF CUSTOMER HEREIN AND IN THE TRANSACTION
DOCUMENTS SET FORTH, CUSTOMER MAY, AT ITS OPTION, AFTER THE CLOSING DATE,
REQUEST BUYER MAKE, FROM TIME TO TIME, AND BUYER MAY MAKE, FROM TIME TO TIME,
ADDITIONAL INVESTMENTS OF PRINCIPAL; PROVIDED, HOWEVER, THAT, AT NO TIME SHALL
ANY INVESTMENT BE MADE AT ANY TIME THAT THE AGGREGATE PRINCIPAL OUTSTANDING
EXCEEDS THE LESSER OF (I) FACILITY LIMIT OR (II) THE WAREHOUSE ASSET LIMIT
AMOUNT.

 

(B)           NO INVESTMENT OF PRINCIPAL SHALL BE MADE ON OR AFTER THE
TERMINATION DATE.  IN ADDITION, NO INVESTMENT OF PRINCIPAL SHALL BE MADE IF
AFTER GIVING EFFECT TO SUCH INVESTMENT OF PRINCIPAL, THE AGGREGATE PRINCIPAL
OUTSTANDING WOULD EXCEED THE LESSER OF (I) THE FACILITY LIMIT OR (II) THE
WAREHOUSE ASSET LIMIT AMOUNT.  NO RECEIVABLE SHALL BE ORIGINATED, AND NO
INVESTMENT OF PRINCIPAL WITH RESPECT THERETO SHALL BE MADE AFTER THE DATE THAT
BOTH VERNON SCHWARTZ AND DAVID A. KARP CEASE TO BE EMPLOYED BY CUSTOMER, AS AN
EXECUTIVE OFFICER OF CUSTOMER IN THE SAME OR SIMILAR CAPACITY AND WITH THE SAME
DECISION MAKING AUTHORITY AS OF THE DATE OF THE AGREEMENT.

 

(C)           THE PROCEDURE FOR APPROVAL OF WAREHOUSE ASSET SALES TO BUYER AND
CUSTOMER’S OBTAINING FUNDS WITH RESPECT THERETO FROM BUYER IS SET FORTH IN THIS
SECTION 2.2, AND, IS FURTHER SUBJECT TO SATISFACTION OF THE APPLICABLE
CONDITIONS, SET FORTH IN SECTIONS 4.1 AND 4.2, AND THE CONDITIONS, PROCESSES AND
REQUIREMENTS SET FORTH ON SCHEDULE 2.2-1.  IN THE EVENT CUSTOMER SHALL DESIRE
THAT BUYER ACQUIRE A WAREHOUSE ASSET, THE FOLLOWING PROCEDURES SHALL APPLY:

 

(I)            INVESTMENT OF PRINCIPAL REQUEST.  CUSTOMER SHALL PROVIDE BUYER
AND CUSTODIAN WITH A REQUEST IN SUBSTANTIALLY THE FORM OF EXHIBIT A-1 ANNEXED
HERETO (AN “INVESTMENT OF PRINCIPAL REQUEST”) OF EACH REQUESTED INVESTMENT OF
PRINCIPAL, SPECIFYING, AMONG OTHER THINGS, THE REQUESTED INVESTMENT OF
PRINCIPAL, THE REQUESTED FUNDING DATE FOR SUCH INVESTMENT OF PRINCIPAL (WHICH
SHALL NOT BE LESS THAN THREE (3) BUSINESS DAYS FOLLOWING THE DATE OF THE
INVESTMENT OF PRINCIPAL REQUEST) AND THE PROPOSED ELIGIBLE RECEIVABLE THAT
CUSTOMER DESIRES BUYER TO ACQUIRE AND SHALL BE DELIVERED TOGETHER WITH A
DETAILED SOURCES AND USES STATEMENT RELATING TO SUCH INVESTMENT OF PRINCIPAL IN
SUBSTANTIALLY THE FORM OF SCHEDULE 1 TO EXHIBIT A-1 ANNEXED HERETO.

 

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(II)           PRELIMINARY DUE DILIGENCE PACKAGE. PRIOR TO, OR SIMULTANEOUS
WITH, AN INVESTMENT OF PRINCIPAL REQUEST, CUSTOMER SHALL DELIVER TO BUYER THE
PRELIMINARY DUE DILIGENCE PACKAGE PERTAINING TO THE RECEIVABLE IN QUESTION.

 

(III)          BUYER REVIEW AND CONFIRMATION. BUYER SHALL INFORM CUSTOMER OF ITS
DETERMINATION WITH RESPECT TO ANY ASSETS PROPOSED TO BE SOLD TO BUYER BY
CUSTOMER IN ACCORDANCE WITH THE PROCEDURES SET FORTH ON SCHEDULE 2.2-1 ATTACHED
HERETO.   NOTWITHSTANDING SCHEDULE 2.2-1 OR ANY OTHER PROVISIONS OF THIS
AGREEMENT, BUYER SHALL HAVE THE RIGHT TO REVIEW AND APPROVE, IN ACCORDANCE WITH
THE TERMS OF THIS AGREEMENT, ALL PROPOSED WAREHOUSE ASSETS (AND THE RELATED
INVESTMENT OF PRINCIPAL) PROPOSED TO BE SOLD TO BUYER AND TO CONDUCT, AT
CUSTOMER’S SOLE COST AND EXPENSE, ITS OWN DUE DILIGENCE INVESTIGATION OF SUCH
PROPOSED WAREHOUSE ASSETS AS BUYER DETERMINES, IN ITS SOLE DISCRETION.  UPON
AGREEING TO MAKE AN INVESTMENT OF PRINCIPAL, BUYER SHALL PROMPTLY DELIVER TO
CUSTOMER A WRITTEN CONFIRMATION IN THE FORM OF SCHEDULE 2.2-2 ATTACHED HERETO (A
“CONFIRMATION”), WHICH CONFIRMATION SHALL BE PROMPTLY EXECUTED AND DELIVERED TO
BUYER BY CUSTOMER (AND, IN ANY EVENT NOT LATER THAN THE EARLIER OF (X) THE DATE
OF THE REQUESTED FUNDING OF INVESTED PRINCIPAL AND (Y) TWO (2) BUSINESS DAYS
AFTER BUYER GIVES SUCH CONFIRMATION TO CUSTOMER); PROVIDED, THAT UNLESS
OTHERWISE AGREED BY CUSTOMER, BUYER SHALL DELIVER A SEPARATE CONFIRMATION WITH
RESPECT TO EACH WAREHOUSE ASSET WHICH IS THE SUBJECT OF AN INVESTMENT OF
PRINCIPAL.   UNLESS OTHERWISE EXTENDED PURSUANT TO SECTION 2.2(C)(VI), THE
FUNDING DATE SHALL OCCUR NO LATER THAN FOURTEEN (14) DAYS FOLLOWING THE DATE OF
THE CONFIRMATION.

 

(IV)          CONTRACT APPROVAL REQUEST. NOT LATER THAN THREE (3) BUSINESS DAYS
PRIOR TO THE APPLICABLE FUNDING DATE, CUSTOMER WILL PROVIDE BUYER A CONTRACT
APPROVAL REQUEST IN ACCORDANCE WITH SCHEDULE 2.2-1 TOGETHER WITH THE RELATED
DRAFTS REQUIRED TO BE DELIVERED IN ACCORDANCE WITH SCHEDULE 2.2-1. BUYER SHALL
APPROVE OR DISAPPROVE SUCH CONTRACT APPROVAL REQUEST IN ACCORDANCE WITH SCHEDULE
2.2-1.

 

(V)           FUNDING.  IF BUYER HAS APPROVED A WAREHOUSE ASSET, A CONFIRMATION
HAS BEEN JOINTLY EXECUTED AND DELIVERED BY BUYER AND CUSTOMER, AND BUYER HAS
APPROVED A CONTRACT APPROVAL REQUEST IN ACCORDANCE WITH SCHEDULE 2.2-1, THEN, ON
THE FUNDING DATE FOR THE INVESTMENT OF PRINCIPAL REQUESTED BY CUSTOMER IN THE
APPLICABLE INVESTMENT OF PRINCIPAL REQUEST, THE WAREHOUSE ASSET IN QUESTION
SHALL BE TRANSFERRED TO BUYER AGAINST THE ADDITIONAL INVESTMENT OF PRINCIPAL,
SUBJECT TO THE CONDITIONS THAT (A) EACH OF THE CONDITIONS SET FORTH IN SECTION
4.2 HAVE BEEN SATISFIED, (B) CUSTOMER SHALL HAVE PROVIDED CUSTODIAN (OR THE
ESCROW AGENT ON BEHALF OF CUSTODIAN, AS PROVIDED IN THE ESCROW AGREEMENT) THE
ORIGINALS OF THE CONTRACT AND OTHER RECEIVABLE DELIVERY DOCUMENTS WITH RESPECT
TO THE RECEIVABLE(S) TO BE PURCHASED WITH SUCH INVESTMENT OF PRINCIPAL, (C)
ESCROW AGENT SHALL HAVE EXECUTED AND DELIVERED TO BUYER AND CUSTOMER THE CLOSING
CONFIRMATION LETTER (AS DEFINED IN THE ESCROW AGREEMENT) IN ACCORDANCE WITH
SECTION 5.D OF THE ESCROW AGREEMENT; AND (D) CUSTOMER SHALL HAVE EXECUTED AND
DELIVERED TO BUYER ITS CLOSING CERTIFICATE. UPON AND SUBJECT TO THE TERMS AND
CONDITIONS AND IN RELIANCE ON THE REPRESENTATIONS AND WARRANTIES SET FORTH
HEREIN, BUYER SHALL DEPOSIT ON THE REQUESTED FUNDING DATE AS SET FORTH IN THE
INVESTMENT OF PRINCIPAL REQUEST IN IMMEDIATELY AVAILABLE FUNDS, AN AMOUNT EQUAL
TO THE REQUESTED INVESTMENT OF PRINCIPAL TO ESCROW AGENT’S ACCOUNT AS SET FORTH
IN THE ESCROW AGREEMENT.  BUYER SHALL CAUSE SUCH

 

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DEPOSIT TO BE MADE NOT LATER THAN 1:00 P.M. (NEW YORK TIME) ON THE REQUESTED
FUNDING DATE PROVIDED ALL CONDITIONS TO SUCH FUNDING HAVE BEEN TIMELY
SATISFIED.   ON THE SAME BUSINESS DAY AS BUYER ACQUIRES A WAREHOUSE ASSET,
CUSTOMER SHALL FURNISH BUYER AND CUSTODIAN AN UPDATED LIST OF RECEIVABLES
INCLUDING THE WAREHOUSE ASSET IN QUESTION.

 

(VI)          FUNDING DATE DELAY.  IN THE EVENT THE FUNDING DATE IS EXTENDED
BEYOND FOURTEEN (14) DAYS FOLLOWING THE DATE OF THE CONFIRMATION, THE RELATED
INVESTMENT OF PRINCIPAL REQUEST SHALL BE DEEMED RESCINDED AND MUST BE
RESUBMITTED FOR BUYER’S APPROVAL AND THE PROCEDURES SET FORTH IN THIS SECTION
2.2 ADHERED TO, AND IN CONNECTION THEREWITH, IN THE EVENT OF ANY MODIFICATION OF
THE PRELIMINARY DUE DILIGENCE PACKAGE OR THE UNDERLYING CONTRACTS, CUSTOMER
SHALL DELIVER ANY APPLICABLE UPDATES TO THE PRELIMINARY DUE DILIGENCE PACKAGE
AND/OR COMPARISONS OF THE CONTRACTS TO THE FORMS PREVIOUSLY APPROVED, AS WELL
AS, IF APPLICABLE, AN UPDATED INVESTMENT OF PRINCIPAL REQUEST SETTING FORTH ANY
REVISIONS TO THE PROPOSED RECEIVABLE, AND THE OTHER CHANGES, IF ANY, TO THE
INVESTMENT OF PRINCIPAL REQUEST.

 

(VII)         CLOSING DATE FUNDING; EXCESS PRINCIPAL.  SUBJECT TO THE
SATISFACTION OF THE CONDITIONS SET FORTH IN SECTIONS 4.1 AND 4.2, AS APPLICABLE,
THE PROCEDURES SET FORTH IN CLAUSES (I) – (VI) OF THIS SECTION 2.2(C) SHALL NOT
APPLY TO (I) THE INVESTMENT OF PRINCIPAL TO BE MADE ON THE CLOSING DATE OR (II)
ANY INVESTMENT OF PRINCIPAL WITH RESPECT TO EXCESS PRINCIPAL.  IN THE CASE OF AN
INVESTMENT OF PRINCIPAL WITH RESPECT TO EXCESS PRINCIPAL, CUSTOMER MAY (I)
DELIVER A NOTICE REQUESTING SUCH INVESTMENT OF PRINCIPAL AT ANY TIME NOT LATER
THAN THREE (3) BUSINESS DAYS PRIOR TO THE REQUESTED FUNDING DATE, AND SUBJECT TO
THE OTHER CONDITIONS SET FORTH IN SECTIONS 4.1 AND 4.2, BUYER SHALL FUND SUCH
REQUESTED INVESTMENT OF PRINCIPAL ON THE REQUESTED FUNDING DATE IN IMMEDIATELY
AVAILABLE FUNDS TO CUSTOMER’S ACCOUNT DESIGNATED FOR SUCH PURPOSE IN THE
RELEVANT INVESTMENT OF PRINCIPAL REQUEST.  ANY INVESTMENT OF PRINCIPAL WITH
RESPECT TO EXCESS PRINCIPAL MAY BE USED FOR ANY GENERAL CORPORATE PURPOSE OF
CUSTOMER INCLUDING WORKING CAPITAL REQUIREMENTS.

 

(D)           EACH INVESTMENT OF PRINCIPAL REQUEST SHALL BE IRREVOCABLE AND
BINDING ON CUSTOMER AND CUSTOMER SHALL INDEMNIFY BUYER AND CUSTODIAN AGAINST ANY
LOSS OR EXPENSE INCURRED BY ANY OF THEM AS A RESULT OF ANY FAILURE BY CUSTOMER
TO ACCEPT SUCH INVESTMENT OF PRINCIPAL, INCLUDING, WITHOUT LIMITATION, ANY LOSS
OR EXPENSE INCURRED BY ANY BUYER BY REASON OF THE LIQUIDATION OR REEMPLOYMENT OF
FUNDS ACQUIRED OR REQUESTED BY BUYER TO FUND SUCH INVESTMENT OF PRINCIPAL.

 

(E)           EACH INVESTMENT OF PRINCIPAL WITH RESPECT TO WHICH RECEIVABLES ARE
TO BE ACQUIRED WITH THE PROCEEDS THEREOF SHALL BE IN A MINIMUM AMOUNT OF
$2,500,000 AND IN ANY AMOUNT IN EXCESS THEREOF.  EACH SUCH INVESTMENT OF
PRINCIPAL SHALL BE IN AN AMOUNT NOT IN EXCESS OF THE SUM OF (I) THE ADVANCE RATE
MULTIPLIED BY THE MARKET VALUE OF THE ELIGIBLE RECEIVABLE TO BE ACQUIRED WITH
THE PROCEEDS OF SUCH INVESTMENT OF PRINCIPAL AND (II) THE MAXIMUM AVAILABLE
AMOUNT OF EXCESS PRINCIPAL.  EACH INVESTMENT OF PRINCIPAL WITH RESPECT TO EXCESS
PRINCIPAL THAT IS NOT MADE IN CONNECTION WITH AN ACQUISITION OF RECEIVABLES
SHALL BE IN A MINIMUM AMOUNT OF $2,500,000 (OR, IN THE CASE THE MAXIMUM
AVAILABLE AMOUNT OF EXCESS PRINCIPAL IS LESS THAN $2,500,000, SUCH LESSER
AMOUNT) AND IN ANY AMOUNT IN EXCESS THEREOF UP TO MAXIMUM AVAILABLE

 

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AMOUNT OF EXCESS PRINCIPAL.  THE MAXIMUM INVESTED PRINCIPAL ALLOCABLE TO ANY
RECEIVABLE SHALL NOT EXCEED $20,000,000.

 

(F)            THE AGGREGATE NUMBER OF INVESTMENTS OF PRINCIPAL AND PRINCIPAL
PREPAYMENTS PURSUANT TO SECTION 2.9(D), SHALL NOT EXCEED SIX PER MONTH.

 

(G)           ON EACH INTEREST PAYMENT DATE, TRANCHES REPRESENTING THE AGGREGATE
PRINCIPAL OUTSTANDING LESS THE AMOUNT PAID IN REDUCTION THEREOF ON SUCH INTEREST
PAYMENT DATE PURSUANT TO SECTIONS 2.5(C) OR 2.6(B) OR PURSUANT TO ANY OTHER
PARTIAL PREPAYMENTS OF INVESTED PRINCIPAL SHALL BE CONTINUED WITHOUT FURTHER
ACTION OF THE PARTIES.

 

(H)           ON THE TERMINATION DATE, CUSTOMER SHALL REPURCHASE THE WAREHOUSE
ASSETS FROM BUYER AND PAY CUSTOMER REPURCHASE PRICE TO BUYER.

 

(I)            IN THE EVENT THAT BUYER DISAPPROVES (OR IS DEEMED TO DISAPPROVE)
ANY WAREHOUSE ASSET IN ACCORDANCE WITH THIS AGREEMENT, CUSTOMER MAY NEVERTHELESS
ORIGINATE SUCH WAREHOUSE ASSET USING IT OWN FUNDS.

 

SECTION 2.3.            DEFAULT INTEREST.

 

(A)           AT ALL TIMES ON AND AFTER THE FACILITY TERMINATION DATE OR THE
OCCURRENCE AND CONTINUATION OF A TERMINATION EVENT, THE AGGREGATE PRINCIPAL
OUTSTANDING SHALL ACCRUE INTEREST AT THE OVERDUE RATE.

 

SECTION 2.4.            INTEREST, FEES AND OTHER COSTS AND EXPENSES.

 

(A)           CUSTOMER SHALL PAY, AS A FULL RECOURSE OBLIGATION, AS AND WHEN DUE
IN ACCORDANCE WITH THIS AGREEMENT, ALL AMOUNTS PAYABLE AS INTEREST AND FEES AND
COSTS AND INDEMNITIES PAYABLE HEREUNDER, THE AGGREGATE PRINCIPAL OUTSTANDING,
ALL AMOUNTS PAYABLE PURSUANT TO ARTICLE IX HEREOF, IF ANY, THE PAYING AGENT AND
CUSTODIAN FEES PAYABLE PURSUANT TO THE PAYING AGENT AGREEMENT AND ALL OTHER
AMOUNTS PAYABLE HEREUNDER, IF ANY.

 

(B)           ALL INVESTMENTS OF PRINCIPAL SHALL, UNLESS ACCRUING INTEREST AT
THE OVERDUE RATE PURSUANT TO SECTION 2.3(C), ACCRUE INTEREST AT THE BASE RATE.

 

(C)           IN THE EVENT ANY PAYMENT OF INTEREST OR ANY OTHER PAYMENT REQUIRED
UNDER THE TRANSACTION DOCUMENTS IS NOT PAID BY CUSTOMER WHEN DUE, CUSTOMER SHALL
PAY TO BUYER, A LATE CHARGE (“LATE CHARGE”) EQUAL TO 5% OF THE OVERDUE PAYMENT
TO COMPENSATE BUYER FOR THE COST AND EXPENSE ARISING FROM THE LATE PAYMENT IN
QUESTION.

 

(D)           NOT LESS THAN ONE BUSINESS DAY PRIOR TO EACH INTEREST PAYMENT
DATE, CUSTOMER SHALL, TO THE EXTENT NECESSARY TO MAKE ALL PAYMENTS REQUIRED TO
BE MADE ON AN INTEREST PAYMENT DATE, PAY TO CUSTODIAN AN AMOUNT EQUAL TO ACCRUED
AND UNPAID INTEREST ON ALL TRANCHES FOR THE RELATED TRANCHE PERIODS.  IF ANY
AMOUNT HEREUNDER SHALL BE PAYABLE ON A DAY THAT IS NOT A BUSINESS DAY, SUCH
AMOUNT SHALL BE PAYABLE ON THE NEXT SUCCEEDING BUSINESS DAY.  INTEREST SHALL BE
COMPUTED ON THE BASIS OF A THREE HUNDRED SIXTY (360) DAY YEAR FOR THE ACTUAL
NUMBER OF DAYS ELAPSED IN THE PERIOD DURING WHICH IT ACCRUES, EXCLUDING THE DATE
OF PAYMENT.  NOTHING IN THIS

 

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AGREEMENT (INCLUDING SECTIONS 2.5 AND 2.6 HEREOF) SHALL LIMIT IN ANY WAY THE
OBLIGATIONS OF CUSTOMER TO PAY THE AMOUNTS SET FORTH IN SECTION 2.2(H) OR IN
THIS SECTION 2.4.

 

SECTION 2.5.            NON-LIQUIDATION SETTLEMENT PROCEDURES.

 

(A)           ON EACH DAY (OTHER THAN A LIQUIDATION DAY) ON WHICH COLLECTIONS
ARE RECEIVED IN THE COLLECTION ACCOUNT, CUSTODIAN SHALL SET ASIDE AND HOLD ALL
SUCH FUNDS IN TRUST FOR THE BENEFIT OF PAYING AGENT AND THE RECIPIENTS DESCRIBED
BELOW.  ON EACH INTEREST PAYMENT DATE, PAYING AGENT WILL IN TURN TRANSFER SUCH
FUNDS TO THE RECIPIENTS DESCRIBED BELOW IN ACCORDANCE WITH THE TERMS OF THE
PAYING AGENT AGREEMENT.

 

(B)           ON OR PRIOR TO THE BUSINESS DAY PRECEDING EACH CUT-OFF DATE, BUYER
WILL PROVIDE CUSTOMER WITH WRITTEN NOTICE DETAILING INTEREST OWING TO BUYER ON
THE NEXT SUCCEEDING INTEREST PAYMENT DATE.  ON OR PRIOR TO EACH CUT-OFF DATE,
BUYER AND EACH OF THE PURCHASER REPRESENTATIVES WILL PROVIDE CUSTOMER WITH
WRITTEN NOTICE DETAILING ALL UNPAID AMOUNTS THEN OWING BY CUSTOMER TO SUCH
PERSON (AND, IN THE CASE OF BUYER, INCLUDING AMOUNTS OWING TO BUYER IN RESPECT
OF INTEREST) UNDER THIS AGREEMENT FOR PAYMENT ON THE NEXT SUCCEEDING INTEREST
PAYMENT DATE IN ACCORDANCE WITH THE RESPECTIVE PRIORITIES SET FORTH IN
SECTIONS 2.5(C) AND 2.6(B) BELOW.  ANY AMOUNTS NOT SO INVOICED OR PAID MAY BE
SUBMITTED ON OR BEFORE ANY SUBSEQUENT CUT-OFF DATE FOR PAYMENT ON THE NEXT
SUCCEEDING INTEREST PAYMENT DATE.

 

(C)           ON EACH INTEREST PAYMENT DATE (IF NO LIQUIDATION DAY SHALL HAVE
OCCURRED SINCE THE LAST INTEREST PAYMENT DATE), PAYING AGENT SHALL MAKE
REMITTANCES IN ACCORDANCE WITH THE TERMS OF THE PAYING AGENT AGREEMENT IN THE
FOLLOWING PRIORITY:

 

(I)            FIRST, CONCURRENTLY, (A) TO SERVICER AN AMOUNT EQUAL TO (I) THE
SUMS PAID INTO THE COLLECTION ACCOUNT BY AN OBLIGOR FOR DEPOSIT INTO ANY ESCROW
ACCOUNT TO BE MAINTAINED BY SERVICER AND (II) THE UNPAID FEES AND EXPENSES OWING
TO SERVICER UNDER THE SERVICING AGREEMENT FOR ALL PRIOR PERIODS AND (B) TO
ITSELF, AN AMOUNT EQUAL TO THE UNPAID FEES AND EXPENSES PAYABLE TO CUSTODIAN AND
PAYING AGENT UNDER THIS AGREEMENT WITH RESPECT TO ALL PRIOR PERIODS;

 

(II)           SECOND, TO BUYER, AN AMOUNT EQUAL TO THE INTEREST ACCRUED AND
UNPAID THROUGH SUCH DAY ON THE AGGREGATE PRINCIPAL OUTSTANDING;

 

(III)          THIRD, TO BUYER, ANY OTHER AMOUNTS (OTHER THAN AGGREGATE
PRINCIPAL OUTSTANDING) OWING TO BUYER UNDER THIS AGREEMENT, INCLUDING UNDER
SECTION 2.7 HEREOF;

 

(IV)          FOURTH, CONCURRENTLY, TO CUSTODIAN, BUYER, SERVICER OR ANY OTHER
PURCHASER REPRESENTATIVE ANY FEES, EXPENSES AND OTHER AMOUNTS OWING FOR ANY
INDEMNIFICATION OF SUCH PERSON BY CUSTOMER THAT HAVE NOT OTHERWISE BE PROVIDED
FOR IN ITEMS (I)-(III) ABOVE;

 

(V)           FIFTH, TO BUYER FOR THE REDUCTION OF THE AGGREGATE PRINCIPAL
OUTSTANDING, AN AMOUNT EQUAL TO THE SUM OF THE AGGREGATE PRINCIPAL AMOUNT OF
RECEIVABLES SCHEDULED TO BE PAID FOR THE PRIOR PERIOD AND THE AGGREGATE
PRINCIPAL AMOUNT PREPAID DURING SUCH PRIOR PERIOD;

 

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(VI)          SIXTH, IF THE AGGREGATE PRINCIPAL OUTSTANDING IS IN AN AMOUNT THAT
EXCEEDS THE LESSER OF (1) THE FACILITY LIMIT OR (2) THE WAREHOUSE ASSET LIMIT
AMOUNT, TO BUYER FOR THE REDUCTION OF THE AGGREGATE PRINCIPAL OUTSTANDING, AN
AMOUNT EQUAL TO SUCH EXCESS, IF ANY;

 

(VII)         SEVENTH, IF BUYER HAS GIVEN CUSTOMER AND PAYING AGENT NOTICE OF
THE EXISTENCE OF MONETARY POTENTIAL TERMINATION EVENT OR A NON-MONETARY
POTENTIAL TERMINATION EVENT DETERMINED BY BUYER, IN ITS SOLE DISCRETION TO BE
MATERIAL OR THAT WOULD BE MATERIAL IF IT RIPENED INTO A TERMINATION EVENT, TO
BUYER TO BE HELD BY BUYER AS SECURITY FOR CUSTOMER’S OBLIGATIONS IN ACCORDANCE
WITH SECTION 2.12; AND

 

(VIII)        EIGHTH, THE REMAINDER, IF ANY, TO CUSTOMER.

 

SECTION 2.6.            SETTLEMENT PROCEDURES TO BE FOLLOWED IF A LIQUIDATION
DAY OCCURS.

 

(A)           ON EACH LIQUIDATION DAY ON WHICH COLLECTIONS ARE RECEIVED IN THE
COLLECTION ACCOUNT, CUSTODIAN SHALL SET ASIDE AND HOLD ALL SUCH FUNDS IN TRUST
FOR THE BENEFIT OF PAYING AGENT AND THE RECIPIENTS DESCRIBED BELOW.  ON EACH
INTEREST PAYMENT DATE FOLLOWING ONE OR MORE LIQUIDATION DAYS, PAYING AGENT WILL
IN TURN TRANSFER SUCH FUNDS TO THE RECIPIENTS DESCRIBED BELOW IN ACCORDANCE WITH
THE TERMS OF THE PAYING AGENT AGREEMENT.

 

(B)           ON EACH INTEREST PAYMENT DATE (IF ONE OR MORE LIQUIDATION DAYS
SHALL HAVE OCCURRED AFTER THE PRIOR INTEREST PAYMENT DATE), PAYING AGENT SHALL
MAKE REMITTANCES IN THE FOLLOWING PRIORITY:

 

(I)            FIRST, CONCURRENTLY, (A) TO SERVICER AN AMOUNT EQUAL TO (I) THE
SUMS PAID INTO THE COLLECTION ACCOUNT BY AN OBLIGOR FOR DEPOSIT INTO ANY ESCROW
ACCOUNT TO BE MAINTAINED BY SERVICER AND (II) AN AMOUNT EQUAL TO UNPAID FEES AND
EXPENSES OWING TO SERVICER UNDER THE SERVICING AGREEMENT WITH RESPECT TO ALL
PRIOR PERIODS AND (B) TO ITSELF, AN AMOUNT EQUAL TO THE UNPAID FEES AND EXPENSES
PAYABLE TO CUSTODIAN AND PAYING AGENT UNDER THIS AGREEMENT WITH RESPECT TO ALL
PRIOR PERIODS;

 

(II)           SECOND, TO BUYER, AN AMOUNT EQUAL TO THE INTEREST ACCRUED AND
UNPAID THROUGH SUCH DAY ON THE AGGREGATE PRINCIPAL OUTSTANDING;

 

(III)          THIRD, CONCURRENTLY, TO BUYER AND ANY OTHER PURCHASER
REPRESENTATIVE, ANY FEES, EXPENSES AND OTHER AMOUNTS OWED (OTHER THAN AGGREGATE
PRINCIPAL OUTSTANDING) UNDER THIS AGREEMENT TO SUCH PARTY, RATABLY IN ACCORDANCE
WITH THE UNPAID AMOUNTS THEREOF;

 

(IV)          FOURTH, TO BUYER, AN AMOUNT EQUAL TO THE AGGREGATE PRINCIPAL
OUTSTANDING; AND

 

(V)           FIFTH, THE REMAINDER, IF ANY, TO CUSTOMER.

 

SECTION 2.7.            FACILITY FEES.  CUSTOMER AGREES TO PAY TO BUYER A
FACILITY FEE EQUAL TO $1,875,000, SUCH FACILITY FEE TO BE PAYABLE ON THE CLOSING
DATE.

 

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SECTION 2.8.            PROTECTION OF OWNERSHIP INTEREST OF BUYER;
ATTORNEY-IN-FACT.

 

(A)           CUSTOMER AGREES THAT FROM TIME TO TIME, AT ITS EXPENSE, IT WILL
PROMPTLY EXECUTE AND DELIVER ALL INSTRUMENTS AND DOCUMENTS AND TAKE ALL ACTION
THAT BUYER MAY REASONABLY REQUEST IN ORDER TO PERFECT OR PROTECT THE WAREHOUSE
ASSETS OR TO ENABLE BUYER TO EXERCISE OR ENFORCE ANY OF ITS RIGHTS HEREUNDER. 
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, CUSTOMER WILL EXECUTE AND FILE
SUCH FINANCING OR CONTINUATION STATEMENTS OR AMENDMENTS THERETO OR ASSIGNMENTS
THEREOF AS MAY BE REASONABLY REQUESTED BY BUYER AND (C) DELIVER TO CUSTODIAN,
ALL CONTRACTS RELATING TO THE WAREHOUSE ASSETS.  TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, BUYER SHALL BE PERMITTED (BUT SHALL NOT BE OBLIGATED) TO SIGN
AND FILE CONTINUATION STATEMENTS AND AMENDMENTS THERETO AND ASSIGNMENTS THEREOF
WITHOUT CUSTOMER’S SIGNATURE.  CARBON, PHOTOGRAPHIC OR OTHER REPRODUCTION OF
THIS AGREEMENT OR ANY FINANCING STATEMENT SHALL BE SUFFICIENT AS A FINANCING
STATEMENT.  CUSTOMER HEREBY AUTHORIZES BUYER TO FILE ONE OR MORE FINANCING
STATEMENTS WITH REGARD TO THE WAREHOUSE ASSETS.

 

(B)           CUSTOMER HEREBY IRREVOCABLY AUTHORIZES, UPON THE OCCURRENCE AND
DURING THE CONTINUATION OF A TERMINATION EVENT, BUYER, AT CUSTOMER’S EXPENSE
WITHOUT ANY NOTICE TO CUSTOMER, AND TO NOTIFY ANY OR ALL OBLIGORS THAT BUYER HAS
AN INTEREST IN THE WAREHOUSE ASSETS.  ANY SUCH NOTICE SHALL, AT BUYER’S
ELECTION, BE SIGNED BY CUSTOMER AND MAY BE SENT ON CUSTOMER’S STATIONERY.

 

(C)           CUSTOMER HEREBY IRREVOCABLY APPOINTS BUYER (AND ALL PERSONS
DESIGNATED BY BUYER FOR THAT PURPOSE) AS CUSTOMER’S TRUE AND LAWFUL
ATTORNEY-IN-FACT TO ACT IN CUSTOMER’S PLACE IN CUSTOMER’S OR BUYER’S NAME (WHICH
APPOINTMENT SHALL BECOME EFFECTIVE UPON THE CLOSING DATE; PROVIDED, HOWEVER,
THAT NEITHER BUYER NOR ANY PERSON DESIGNATED BY BUYER PURSUANT TO THIS SECTION
2.8(C) SHALL EXERCISE THE FOLLOWING EXCEPT UPON AND DURING THE CONTINUATION OF A
TERMINATION EVENT):  (I) TO ENDORSE CUSTOMER’S NAME ON ANY COLLECTION; (II) TO
SIGN CUSTOMER’S NAME ON ANY ASSIGNMENT OR TERMINATION OF A SECURITY INTEREST ON
ANY UCC FINANCING STATEMENT RELATED TO ANY WAREHOUSE ASSETS, AND ON ANY OTHER
PUBLIC RECORDS REGARDING ANY WAREHOUSE ASSETS; (III) TO SEND REQUESTS FOR
VERIFICATION TO OBLIGORS; (IV) DEMAND PAYMENT OF THE RECEIVABLES, OTHER
WAREHOUSE ASSETS CONSISTING OF PAYMENT OBLIGATIONS AND RELATED SECURITY;
(V) ENFORCE PAYMENT OF THE RECEIVABLES, OTHER WAREHOUSE ASSETS CONSISTING OF
PAYMENT OBLIGATIONS AND RELATED SECURITY, BY LEGAL PROCEEDINGS OR OTHERWISE;
(VI) EXERCISE ALL OF CUSTOMER’S RIGHTS AND REMEDIES WITH RESPECT TO THE
COLLECTION AND ENFORCEMENT OF THE RECEIVABLES, OTHER WAREHOUSE ASSETS CONSISTING
OF PAYMENT OBLIGATIONS, AND RELATED SECURITY; (VII) SETTLE, ADJUST, COMPROMISE,
DISCHARGE, RELEASE, EXTEND, RENEW OR, FOLLOWING NOTICE TO CUSTOMER (UNLESS
DISCHARGE OR RELEASE IS REQUIRED PURSUANT TO THE APPLICABLE CONTRACT OR
APPLICABLE LAW) DISCHARGE OR RELEASE, THE RECEIVABLES, OTHER WAREHOUSE ASSETS
CONSISTING OF PAYMENT OBLIGATIONS, AND CONTRACT RIGHTS; (VIII) IF PERMITTED BY
APPLICABLE LAW, SELL OR ASSIGN THE WAREHOUSE ASSETS UPON SUCH TERMS, FOR SUCH
AMOUNTS AND AT SUCH TIME OR TIMES AS BUYER DEEMS ADVISABLE; (IX) TAKE CONTROL,
IN ANY MANNER, OF ANY ITEM OF PAYMENT OR PROCEEDS WITH RESPECT TO THE WAREHOUSE
ASSETS; (X) PREPARE, FILE AND SIGN CUSTOMER’S NAME ON ANY PROOF OF CLAIM IN
BANKRUPTCY OR SIMILAR DOCUMENT AGAINST ANY OBLIGOR OR ANY OTHER PERSON;
(XI) PREPARE, FILE AND SIGN CUSTOMER’S NAME ON ANY NOTICE OF LIEN, ASSIGNMENT OR
SATISFACTION OF LIEN OR SIMILAR DOCUMENT IN CONNECTION WITH THE WAREHOUSE
ASSETS; (XII) DO ALL ACTS AND THINGS NECESSARY, IN BUYER’S SOLE DISCRETION, TO
EXERCISE BUYER’S RIGHTS GRANTED IN OR REFERRED TO IN SECTION 7.2 OF THIS
AGREEMENT; (XIII) ENDORSE THE NAME OF CUSTOMER UPON ANY ITEM OF PAYMENT OR
PROCEEDS

 

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CONSISTING OF OR RELATING TO THE WAREHOUSE ASSETS AND DEPOSIT THE SAME TO THE
ACCOUNT OF BUYER FOR APPLICATION TO CUSTOMER OBLIGATIONS; (XIV) USE THE
INFORMATION RECORDED ON OR CONTAINED IN ANY DATA PROCESSING EQUIPMENT AND
COMPUTER HARDWARE AND SOFTWARE RELATING TO THE WAREHOUSE ASSETS TO WHICH
CUSTOMER HAS ACCESS FOR THE PURPOSE OF ADMINISTERING THE WAREHOUSE ASSETS;
(XV) OPEN CUSTOMER’S MAIL TO COLLECT WAREHOUSE ASSETS AND DIRECT THE POST OFFICE
TO DELIVER CUSTOMER’S MAIL TO AN ADDRESS DESIGNATED BY BUYER; AND (XVI) DO ALL
THINGS NECESSARY TO CARRY OUT AND ENFORCE THIS AGREEMENT THAT CUSTOMER HAS
FAILED TO DO.  CUSTOMER RATIFIES AND APPROVES ALL ACTS OF BUYER IN ACCORDANCE
WITH THIS SECTION 2.8(C) AS CUSTOMER’S ATTORNEY-IN-FACT.  BUYER SHALL NOT, WHEN
ACTING AS ATTORNEY-IN-FACT IN ACCORDANCE WITH THIS SECTION 2.8(C), BE LIABLE FOR
ANY ACTS OR OMISSIONS OR FOR ANY ERROR OF JUDGMENT OR MISTAKE OF FACT OR LAW,
EXCEPT FOR GROSS NEGLIGENCE, AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION.  THIS POWER, BEING COUPLED WITH AN INTEREST, IS IRREVOCABLE UNTIL
ALL CUSTOMER OBLIGATIONS HAVE BEEN FULLY SATISFIED.  CUSTOMER SHALL UPON REQUEST
OF BUYER EXECUTE POWERS OF ATTORNEY TO SEPARATELY EVIDENCE THE FOREGOING POWERS
GRANTED TO BUYER.  ALL COSTS, FEES AND EXPENSES INCURRED BY BUYER, OR FOR WHICH
BUYER BECOMES OBLIGATED, IN CONNECTION WITH EXERCISING ANY OF THE FOREGOING
POWERS SHALL BE PAYABLE TO BUYER BY CUSTOMER ON DEMAND BY BUYER.

 

SECTION 2.9.            GENERAL SETTLEMENT PROCEDURES; MANDATORY AND VOLUNTARY
PREPAYMENTS.

 

(A)           CUSTOMER SHALL CAUSE, AND SHALL INSTRUCT ALL OBLIGORS AT ALL TIMES
TO CAUSE, AND SHALL ENSURE THAT AT ALL TIMES, ALL COLLECTIONS OF RECEIVABLES
RELATING TO THE WAREHOUSE ASSETS BE PAID DIRECTLY TO THE COLLECTION ACCOUNT.  IF
FOR ANY REASON CUSTOMER RECEIVES ANY COLLECTIONS IN ANY OTHER MANNER, IT WILL BY
THE CLOSE OF BUSINESS ON THE FIRST BUSINESS DAY AFTER THE DATE OF RECEIPT
DEPOSIT THE SAME TO THE COLLECTION ACCOUNT, AND CUSTOMER SHALL DIRECT SERVICER
TO SO DEPOSIT SUCH COLLECTIONS RECEIVED BY SERVICER, AND ALL SUCH COLLECTIONS
SHALL BE HELD IN TRUST FOR BUYER PENDING SUCH DEPOSIT.

 

(B)           EXCEPT AS PROVIDED IN SECTIONS 2.9(C) OR (D), ANY PAYMENT BY AN
OBLIGOR IN RESPECT OF ANY INDEBTEDNESS OWED BY IT TO CUSTOMER SHALL, EXCEPT AS
OTHERWISE SPECIFIED BY SUCH OBLIGOR OR OTHERWISE REQUIRED BY CONTRACT OR LAW AND
UNLESS OTHERWISE INSTRUCTED BY BUYER BE APPLIED AS A COLLECTION OF ANY
RECEIVABLE OF SUCH OBLIGOR (STARTING WITH THE OLDEST SUCH RECEIVABLE) TO THE
EXTENT OF ANY AMOUNTS THEN DUE AND PAYABLE THEREUNDER BEFORE BEING APPLIED TO
ANY OTHER INDEBTEDNESS OF SUCH OBLIGOR.

 

(C)           CUSTOMER SHALL PAY MANDATORY PARTIAL PREPAYMENTS OF INVESTED
PRINCIPAL DIRECTLY TO BUYER FOR APPLICATION AGAINST THE AGGREGATE PRINCIPAL
OUTSTANDING ON THE SECOND BUSINESS DAY FOLLOWING THE DATE THAT BUYER NOTIFIES
CUSTOMER THAT THE AGGREGATE PRINCIPAL OUTSTANDING EXCEEDS THE LESSER OF (I) THE
FACILITY LIMIT OR (II) THE WAREHOUSE ASSET LIMIT AMOUNT IN AN AMOUNT NOT LESS
THAN THE EXCESS OF AGGREGATE PRINCIPAL OUTSTANDING OVER THE LESSER OF (X) THE
FACILITY LIMIT OR (Y) THE WAREHOUSE ASSET LIMIT AMOUNT.  NOTWITHSTANDING
ANYTHING IN SECTIONS 2.5 OR 2.6 OR THE PAYING AGENT AGREEMENT TO THE CONTRARY,
ALL PARTIAL PREPAYMENTS OF INVESTED PRINCIPAL SHALL BE APPLIED BY BUYER TO
REDUCE THE AGGREGATE PRINCIPAL OUTSTANDING.  UNLESS A TERMINATION EVENT EXISTS,
BUYER WILL NOT PROVIDE THE NOTICE DESCRIBED IN THIS SECTION 2.9(C) AS A RESULT
OF MARKET VALUE REDUCTIONS (EXCLUSIVE OF REDUCTIONS IN MARKET VALUE BY VIRTUE OF
DEFAULTED RECEIVABLES OR OTHER CHANGES IN THE NET RECEIVABLES BALANCE) UNLESS
AND

 

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UNTIL THE AGGREGATE OF ALL MARKET VALUE REDUCTIONS EQUALS OR EXCEEDS FIVE
PERCENT (5%) OF THE THEN AGGREGATE PRINCIPAL OUTSTANDING.

 

(D)           VOLUNTARY PARTIAL PREPAYMENTS OF INVESTED PRINCIPAL ARE NOT
PERMITTED EXCEPT AS PROVIDED IN THIS SECTION 2.9(D) AND SECTION 2.13  CUSTOMER
MAY, ON NOT LESS THAN TEN (10) BUSINESS DAYS’ PRIOR IRREVOCABLE NOTICE, MAKE
VOLUNTARY PARTIAL PREPAYMENTS OF INVESTED PRINCIPAL TO BUYER FOR APPLICATION
AGAINST THE AGGREGATE PRINCIPAL OUTSTANDING ON THE DATE OF SUCH PAYMENT. 
NOTWITHSTANDING THIS SECTION 2.9(D) TO THE CONTRARY, (I) MINIMUM PARTIAL
PREPAYMENTS OF INVESTED PRINCIPAL SHALL NOT BE LESS THAN $2,500,000 AND (II) NO
SUCH PARTIAL PREPAYMENT OF INVESTED PRINCIPAL WILL BE PERMITTED IF SUCH PARTIAL
PREPAYMENT, TOGETHER WITH ALL OTHER SUCH PARTIAL PREPAYMENTS AND INVESTMENTS OF
PRINCIPAL, EXCEEDS SIX IN ANY MONTH.  NOTWITHSTANDING ANYTHING IN SECTIONS 2.5
OR 2.6 OF THIS AGREEMENT TO THE CONTRARY, ALL PARTIAL PREPAYMENTS OF INVESTED
PRINCIPAL MADE PURSUANT TO THIS SECTION 2.9(D) SHALL BE APPLIED BY BUYER TO
REDUCE THE AGGREGATE PRINCIPAL OUTSTANDING.

 

SECTION 2.10.          PAYMENTS AND COMPUTATIONS, ETC.  ALL PAYMENTS BY CUSTOMER
OF INTEREST, FEES AND OTHER CUSTOMER OBLIGATIONS HEREUNDER SHALL BE MADE IN SAME
DAY FUNDS AND WITHOUT DEFENSE, SETOFF OR COUNTERCLAIM, FREE OF ANY RESTRICTION
OR CONDITION, AND DELIVERED NOT LATER THAN 3:00 P.M. (NEW YORK TIME) ON THE DAY
WHEN DUE IN IMMEDIATELY AVAILABLE FUNDS, WITH AMOUNTS RECEIVED AFTER SUCH TIME
BEING DEEMED PAID ON THE BUSINESS DAY FOLLOWING SUCH RECEIPT.  ANY PAYMENT OR
OTHER TRANSFER OF FUNDS SCHEDULED TO BE MADE ON A DAY THAT IS NOT A BUSINESS DAY
SHALL BE MADE ON THE NEXT BUSINESS DAY, AND ANY INTEREST ACCRUING ON SUCH AMOUNT
TO BE PAID OR TRANSFERRED SHALL CONTINUE TO ACCRUE TO SUCH NEXT BUSINESS DAY. 
CUSTOMER SHALL, TO THE EXTENT PERMITTED BY LAW, PAY TO CUSTODIAN UPON DEMAND,
INTEREST ON ALL AMOUNTS NOT PAID OR DEPOSITED WHEN DUE TO CUSTODIAN, SERVICER,
BUYER AND BUYER HEREUNDER AT A RATE EQUAL TO THE OVERDUE RATE.

 

SECTION 2.11.          REPORTS.

 

(A)           FUNDING NOTICES.  CUSTOMER SHALL PROVIDE THE INFORMATION AND
REPORTS DESCRIBED IN SECTIONS 4(E) AND 4(F) THE PAYING AGENT AGREEMENT IN
ACCORDANCE WITH THE TERMS THEREOF.

 

(B)           DAILY NET RECEIVABLES BALANCE COMPUTATION.  IF REQUESTED BY BUYER,
AT ANY TIME THAT (I) THE EXCESS OF THE NET RECEIVABLES BALANCE OVER THE
AGGREGATE PRINCIPAL OUTSTANDING IS LESS THAN OR EQUAL TO 50.0% OF THE AGGREGATE
OUTSTANDING PRINCIPAL BALANCE PLUS $500,000 OR (II) AFTER THE OCCURRENCE OF
TERMINATION EVENT, CUSTOMER SHALL FURNISH TO BUYER BY 6:00 P.M. (NEW YORK, NEW
YORK TIME) EACH BUSINESS DAY, A CERTIFICATE IN FORM AND SUBSTANCE SATISFACTORY
TO BUYER THAT CALCULATES THE NET RECEIVABLES BALANCE AND AGGREGATE PRINCIPAL
OUTSTANDING BASED ON INFORMATION CURRENT AS OF THE END OF THE IMMEDIATELY
PRECEDING BUSINESS DAY.

 

(C)           NON-ELIGIBLE RECEIVABLE.  AFTER AN ELIGIBLE RECEIVABLE IS INCLUDED
IN ANY LIST OF RECEIVABLES, IF CUSTOMER BECOMES AWARE THAT ONE OF THE
REQUIREMENTS IN THE DEFINITION OF ELIGIBLE RECEIVABLES ARE NO LONGER BEING
SATISFIED WITH RESPECT TO SUCH RECEIVABLE, CUSTOMER SHALL PROVIDE BUYER AND
CUSTODIAN WITH WRITTEN NOTICE THEREOF WITHIN TEN (10) BUSINESS DAYS OF CUSTOMER
BECOMING AWARE, EXPLAINING IN DETAIL THE TIMING AND REASONS WHY THE REQUIREMENT
OR CONDITION IS NOT SATISFIED.

 

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(D)           CREDIT BUREAU REPORTS.  UPON THE REQUEST OF BUYER, CUSTOMER SHALL
TO THE EXTENT AUTHORIZED BY LAW OBTAIN CURRENT CREDIT BUREAU REPORTS ON
OBLIGORS.

 

(E)           REPORTING GENERALLY.  IN ADDITION TO THE FOREGOING, CUSTOMER SHALL
FURNISH TO BUYER SUCH REPORTS IN SUCH FORM THAT BUYER REASONABLY DETERMINES ARE
NECESSARY TO TRACK AND MONITOR THE WAREHOUSE ASSETS.  SUCH REPORTS SHALL BE IN
FORM AND SUBSTANCE SATISFACTORY TO BUYER.  ALL REPORTS REQUIRED HEREUNDER MAY BE
PROVIDED IN “PAPER” FORM OR ON COMPUTER TAPE OR DISK OR OTHER ELECTRONIC MEANS
ACCEPTABLE TO AND USABLE BY THE RECEIVING PARTY.

 

(F)            QUARTERLY AND MONTHLY RECEIVABLES AND SERVICING REPORTS. 
CUSTOMER SHALL DELIVER TO BUYER AND SERVICER, NO LATER THAN THE FIFTEENTH DAY
FOLLOWING THE LAST BUSINESS DAY OF EACH FISCAL QUARTER, (I)  UP-TO-DATE SUMMARY
OF PAYMENT HISTORIES, CONTRACT ACCOUNTING, OUTSTANDING PRINCIPAL BALANCE,
CUSTOMER SERVICE NOTES, COLLECTION HISTORIES, OBLIGOR NAMES AND ADDRESSES AND A
DELINQUENCY REPORT, AS CUSTOMER PERIODICALLY PREPARES FOR ITS INTERNAL PURPOSES;
AND (II) SUCH OTHER MATERIALS REGARDING THE PERFORMANCE AND FINANCIAL CONDITION
OF THE OBLIGORS AS CUSTOMER PERIODICALLY PREPARES FOR ITS INTERNAL PURPOSES. 
CUSTOMER SHALL DELIVER TO BUYER, NO LATER THAN EACH INTEREST PAYMENT DATE, A
SERVICING REPORT IN A FORMAT AND CONTAINING SUCH INFORMATION THAT IS REASONABLY
SATISFACTORY TO BUYER AND CUSTOMER.  SUCH REPORT SHALL BE MADE AVAILABLE IN
WRITTEN OR ELECTRONIC FORMAT.  BUYER AND CUSTOMER AGREE THAT THE FORM OF REPORT
ATTACHED HERETO AS SCHEDULE 2.11(F) IS SATISFACTORY.

 

SECTION 2.12.          CASH TRAP.  BUYER SHALL HOLD FUNDS PAID TO IT PURSUANT TO
SECTION 2.5(C)(VII) AS ADDITIONAL SECURITY FOR CUSTOMER’S OBLIGATION.  IF THE
POTENTIAL TERMINATION EVENT IN QUESTION SHALL CEASE TO EXIST AND NO TERMINATION
EVENT OR OTHER POTENTIAL TERMINATION EVENT SHALL THEN EXIST, BUYER WILL DISBURSE
THE AMOUNT SO HELD TO CUSTOMER AND IF A TERMINATION EVENT SHALL OCCUR OR EXIST,
ALL FUNDS PAID PURSUANT TO SECTION 2.5(C)(VII) WILL BE APPLIED TO CUSTOMER’S
OBLIGATIONS AS DETERMINED BY BUYER, IN ITS SOLE DISCRETION.

 

SECTION 2.13.          WHOLE LOAN REPURCHASES.  SO LONG AS A TERMINATION EVENT
HAS NOT OCCURRED, CUSTOMER, WITH THE PRIOR CONSENT OF BUYER (OR, WITHOUT BUYER’S
CONSENT, IF ALL RECEIVABLES ARE BEING REPURCHASED), MAY, ON NOT LESS THAN FOUR
(4) BUSINESS DAYS’ PRIOR IRREVOCABLE NOTICE, REPURCHASE, ON A WHOLE LOAN BASIS,
ANY RECEIVABLE FROM BUYER.  IF CUSTOMER ELECTS TO SO REPURCHASE ANY RECEIVABLE,
CUSTOMER SHALL PAY TO BUYER, CUSTOMER REPURCHASE PRICE WITH RESPECT TO SUCH
RECEIVABLE (AND IF ALL RECEIVABLES ARE REPURCHASED, CUSTOMER REPURCHASE PRICE
FOR ALL RECEIVABLES) AND THEREAFTER SELL THE RECEIVABLE TO A PARTY (WHICH MAY BE
CUSTOMER OR ANOTHER SUBSIDIARY OF CUSTOMER), THEREBY REMOVING THE RECEIVABLE(S)
FROM THE LIST OF RECEIVABLES AND REDUCING THE AGGREGATE PRINCIPAL OUTSTANDING IN
AN AMOUNT EQUAL TO THE PORTION OF CUSTOMER REPURCHASE PRICE RELATING TO SUCH
RECEIVABLE(S) THAT IS ALLOCABLE TO PART (A) OF THE DEFINITION OF CUSTOMER
REPURCHASE PRICE.  IN CONNECTION WITH SUCH REPURCHASE, BUYER SHALL, AT
CUSTOMER’S SOLE COST AND EXPENSE, TAKE ALL ACTIONS AS MAY BE REASONABLY BE
REQUESTED BY CUSTOMER TO RECONVEY, WITHOUT RECOURSE OR WARRANTY, OR EVIDENCE THE
RECONVEYANCE, WITHOUT RECOURSE OR WARRANTY, OF THE RECEIVABLE(S) IN QUESTION TO
CUSTOMER OR SUCH OTHER PERSON AS CUSTOMER MAY DESIGNATE, INCLUDING DELIVERY OF
INSTRUCTIONS TO THE SERVICER PURSUANT TO SECTIONS 3.6 AND 8.2 OF THE SERVICING
AGREEMENT.

 

SECTION 2.14.          DEFEASANCE OF RECEIVABLES.  CUSTOMER ACKNOWLEDGES AND
AGREES THAT IN THE EVENT ANY OBLIGOR CONDUCTS A DEFEASANCE OF ANY RECEIVABLE,
CUSTOMER SHALL PROMPTLY

 

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GIVE BUYER NOTICE THEREOF, AND SHALL CAUSE THE RELATED DEFEASANCE COLLATERAL AND
DOCUMENTATION REQUIRED TO BE DELIVERED IN ACCORDANCE WITH THE TERMS OF THE
APPLICABLE CONTRACTS, TO BE DELIVERED TO CUSTODIAN, TO BE MAINTAINED IN TRUST
FOR THE BENEFIT OF BUYER PURSUANT TO THE PAYING AGENT AGREEMENT.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1.            REPRESENTATIONS AND WARRANTIES.  EXCEPT AS EXPRESSLY SET
FORTH BELOW, CUSTOMER REPRESENTS AND WARRANTS AS OF THE DATE HEREOF, ON THE
CLOSING DATE, AND AS OF THE DATE OF EACH PURCHASE AND INVESTMENT OF PRINCIPAL
HEREUNDER, AS FOLLOWS:

 

(A)           CORPORATE EXISTENCE AND POWER; SUBSIDIARIES.  CUSTOMER IS A
MARYLAND REAL ESTATE INVESTMENT TRUST DULY ORGANIZED, VALIDLY EXISTING AND
SUBSISTING UNDER THE LAWS OF THE STATE OF MARYLAND.  CUSTOMER HAS ALL REQUISITE
POWER AND AUTHORITY TO OWN AND OPERATE ITS PROPERTIES, TO CARRY ON ITS BUSINESS
AS NOW CONDUCTED AND AS PROPOSED TO BE CONDUCTED, TO ENTER INTO THIS AGREEMENT
AND THE TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY AND TO CARRY OUT THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.  CUSTOMER IS QUALIFIED TO DO
BUSINESS AND IN GOOD STANDING IN EVERY JURISDICTION WHERE IT IS REQUIRED TO SO
QUALIFY TO CARRY OUT ITS BUSINESS AND OPERATIONS, AND IS IN COMPLIANCE WITH ALL
LICENSING REQUIREMENTS REQUIRED TO CARRY OUT ITS BUSINESS AND OPERATIONS AT SUCH
TIME, EXCEPT IN JURISDICTIONS WHERE THE FAILURE TO BE SO QUALIFIED OR IN GOOD
STANDING OR LICENSED HAS NOT RESULTED IN AND WILL NOT RESULT IN A MATERIAL
ADVERSE CHANGE.  CUSTOMER AND ITS SUBSIDIARIES ARE ENGAGED ONLY IN THE
BUSINESSES PERMITTED TO BE ENGAGED IN PURSUANT TO SECTION 5.2.  CUSTOMER HAS NO
SUBSIDIARIES AS OF THE CLOSING DATE EXCEPT AS DISCLOSED ON SCHEDULE 3.1(A).

 

(B)           CORPORATE AND GOVERNMENTAL AUTHORIZATION; CONTRAVENTION.  THE
EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT AND THE TRANSACTION
DOCUMENTS HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY ACTION OF THE PART OF
CUSTOMER AND DO NOT AND WILL NOT (I) VIOLATE ANY PROVISION OF ANY LAW OR ANY
GOVERNMENTAL RULE OR REGULATION APPLICABLE TO CUSTOMER OR ANY OF ITS
SUBSIDIARIES, THE OPERATING AGREEMENT, LIMITED LIABILITY AGREEMENT, DECLARATION
OF TRUST, TRUST AGREEMENT, CERTIFICATES OF FORMATION, ARTICLES OF INCORPORATION,
ARTICLES OR CERTIFICATES OF INCORPORATION OR BYLAWS, AS APPLICABLE, OF CUSTOMER
OR OTHER CHARTER DOCUMENTS OF CUSTOMER OR ANY OF ITS SUBSIDIARIES OR ANY ORDER,
JUDGMENT OR DECREE OF ANY COURT OR OTHER AGENCY OF GOVERNMENT BINDING ON
CUSTOMER OR ANY OF ITS SUBSIDIARIES, (II) CONFLICT WITH, RESULT IN A BREACH OF
OR CONSTITUTE (WITH DUE NOTICE OR LAPSE OF TIME OR BOTH) A DEFAULT UNDER ANY
CONTRACTUAL OBLIGATION OF CUSTOMER OR ANY OF ITS SUBSIDIARIES, (III) RESULT IN
OR REQUIRE THE CREATION OR IMPOSITION OF ANY LIEN UPON ANY OF THE PROPERTIES OR
ASSETS OF CUSTOMER OR ANY OF ITS SUBSIDIARIES, OTHER THAN ANY LIEN CREATED BY A
TRANSACTION DOCUMENT, OR (IV) REQUIRE ANY APPROVAL OF MEMBERS OR STOCKHOLDERS OR
ANY APPROVAL OR CONSENT OF ANY PERSON UNDER ANY CONTRACTUAL OBLIGATION OF
CUSTOMER OR ANY OF ITS SUBSIDIARIES, EXCEPT FOR SUCH APPROVALS OR CONSENTS WHICH
WILL BE OBTAINED ON OR BEFORE THE CLOSING DATE AND DISCLOSED IN WRITING TO
BUYER.

 

(C)           VALID SALE; BINDING EFFECT.  EACH SALE MADE BY CUSTOMER PURSUANT
TO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS SHALL CONSTITUTE A VALID
ASSIGNMENT OF OR SECURITY INTEREST IN ALL OF CUSTOMER’S RIGHT, TITLE AND
INTEREST IN, TO AND UNDER THE WAREHOUSE ASSETS BY CUSTOMER TO BUYER THAT IS
PERFECTED AND OF FIRST PRIORITY UNDER THE UCC AND OTHERWISE

 

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ENFORCEABLE AGAINST CREDITORS OF AND PURCHASERS FROM CUSTOMER AND FREE AND CLEAR
OF ANY ADVERSE CLAIM (OTHER THAN THOSE PERMITTED HEREUNDER).  THIS AGREEMENT AND
THE OTHER TRANSACTION DOCUMENTS HAVE BEEN DULY EXECUTED AND DELIVERED BY
CUSTOMER AND CONSTITUTE THE LEGAL, VALID AND BINDING OBLIGATIONS OF CUSTOMER,
ENFORCEABLE AGAINST CUSTOMER IN ACCORDANCE WITH THEIR RESPECTIVE TERMS EXCEPT AS
MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR SIMILAR
LAWS RELATING TO OR LIMITING CREDITORS’ RIGHTS GENERALLY OR BY EQUITABLE
PRINCIPLES RELATING TO ENFORCEABILITY.

 

(D)           GOVERNMENT APPROVALS.  ALL AUTHORIZATIONS, CONSENTS, ORDERS AND
APPROVALS OF, OR OTHER ACTION BY, ANY GOVERNMENTAL AUTHORITY THAT ARE REQUIRED
TO BE OBTAINED BY CUSTOMER AND ALL NOTICES TO AND FILINGS WITH ANY GOVERNMENTAL
AUTHORITY THAT ARE REQUIRED TO BE MADE BY CUSTOMER, IN THE CASE OF THE FOREGOING
IN CONNECTION WITH THE CONVEYANCE OF THE WAREHOUSE ASSETS OR THE DUE EXECUTION,
DELIVERY AND PERFORMANCE BY CUSTOMER OF THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, HAVE BEEN OBTAINED OR MADE AND
ARE IN FULL FORCE AND EFFECT.

 

(E)           PERFECTION.  CUSTOMER IS AND SHALL BE THE OWNER OF ALL OF THE
WAREHOUSE ASSETS FREE AND CLEAR OF ANY ADVERSE CLAIMS EXCEPT THOSE OF BUYER.  ON
OR PRIOR TO THE DATE HEREOF AND PRIOR TO CUSTOMER’S ACQUISITION OF ANY NEW
RECEIVABLE, AND ON OR PRIOR TO EACH INVESTMENT OF PRINCIPAL, ALL FINANCING
STATEMENTS AND OTHER DOCUMENTS REQUIRED TO BE RECORDED OR FILED AND ALL ACTIONS
NECESSARY OR ADVISABLE IN ORDER TO PERFECT AND PROTECT THE WAREHOUSE ASSETS
AGAINST ALL CREDITORS OF AND PURCHASERS FROM CUSTOMER WILL HAVE BEEN DELIVERED
FOR FILING IN EACH FILING OFFICE NECESSARY FOR SUCH PURPOSE AND ALL FILING FEES
AND TAXES, IF ANY, PAYABLE IN CONNECTION WITH SUCH FILINGS SHALL HAVE BEEN PAID
IN FULL, OR PROVISION THEREFOR SHALL HAVE BEEN MADE.

 

(F)            ACCURACY OF INFORMATION AND RELATED MATTERS.  ALL INFORMATION
HERETOFORE FURNISHED BY CUSTOMER TO BUYER OR ANY OTHER PURCHASER REPRESENTATIVE
FOR THE PURPOSES OF OR IN CONNECTION WITH THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY, WHICH IN EACH CASE
WAS PREPARED EITHER BY CUSTOMER OR AN OBLIGOR IS, AND ALL SUCH INFORMATION
HEREAFTER FURNISHED BY CUSTOMER TO SERVICER, BUYER OR ANY OTHER PURCHASER
REPRESENTATIVE WILL BE, TRUE AND ACCURATE IN EVERY MATERIAL RESPECT, ON THE DATE
SUCH INFORMATION IS STATED OR CERTIFIED, OR, IN THE CASE OF INFORMATION PROVIDED
BY AN OBLIGOR IS OR WILL BE TRUE AND ACCURATE IN EVERY MATERIAL RESPECT TO THE
BEST OF CUSTOMER’S KNOWLEDGE.  THERE ARE NO FACTS KNOWN (OR THAT SHOULD UPON THE
REASONABLE EXERCISE OF DILIGENCE BE KNOWN) TO CUSTOMER (OTHER THAN MATTERS OF A
GENERAL ECONOMIC NATURE) THAT, INDIVIDUALLY OR IN THE AGGREGATE, COULD
REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE CHANGE AND THAT HAVE NOT
BEEN DISCLOSED HEREIN OR IN SUCH OTHER DOCUMENTS, CERTIFICATES AND STATEMENTS
FURNISHED BY CUSTOMER TO BUYER FOR USE IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

(G)           ACTIONS; SUITS.  THERE IS NO ACTION, SUIT, PROCEEDING, ARBITRATION
OR GOVERNMENTAL INVESTIGATION (WHETHER OR NOT PURPORTEDLY ON BEHALF OF CUSTOMER
OR ANY OF ITS SUBSIDIARIES) AT LAW OR IN EQUITY OR BEFORE OR BY ANY FEDERAL,
STATE, MUNICIPAL OR OTHER GOVERNMENTAL DEPARTMENT, COMMISSION, BOARD, BUREAU,
AGENCY OR INSTRUMENTALITY, DOMESTIC OR FOREIGN, PENDING OR, TO THE KNOWLEDGE OF
CUSTOMER, THREATENED AGAINST OR AFFECTING CUSTOMER OR ITS SUBSIDIARIES OR ANY
PROPERTY OF CUSTOMER OR ANY OF ITS SUBSIDIARIES THAT HAS RESULTED IN, OR COULD
REASONABLY BE EXPECTED TO RESULT IN, A MATERIAL ADVERSE CHANGE.  NEITHER
CUSTOMER NOR ANY OF ITS SUBSIDIARIES IS (I) IN VIOLATION OF ANY APPLICABLE LAW
THAT HAS RESULTED IN, OR

 

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COULD REASONABLY BE EXPECTED TO RESULT IN, A MATERIAL ADVERSE CHANGE, OR
(II) SUBJECT TO OR IN DEFAULT WITH RESPECT TO ANY FINAL JUDGMENT, WRIT,
INJUNCTION, DECREE, RULE OR REGULATION OF ANY COURT OR ANY FEDERAL, STATE,
MUNICIPAL OR OTHER GOVERNMENTAL DEPARTMENT, COMMISSION, BOARD, BUREAU, AGENCY OR
INSTRUMENTALITY, DOMESTIC OR FOREIGN, THAT HAS RESULTED IN, OR COULD REASONABLY
BE EXPECTED TO RESULT IN, A MATERIAL ADVERSE CHANGE.  SCHEDULE 3.1(G) IDENTIFIES
AS OF THE CLOSING DATE ALL PROCEEDINGS INVOLVING AN ALLEGED LIABILITY OF, OR
CLAIMS AGAINST OR AFFECTING, CUSTOMER OR ANY OF ITS SUBSIDIARIES EQUAL TO OR
GREATER THAN $100,000.

 

(H)           PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.  NEITHER
CUSTOMER NOR ANY OF ITS SUBSIDIARIES IS IN DEFAULT IN THE PERFORMANCE,
OBSERVANCE OR FULFILLMENT OF ANY OF THE OBLIGATIONS, COVENANTS OR CONDITIONS
CONTAINED IN ANY OF ITS CONTRACTUAL OBLIGATIONS, AND NO CONDITION EXISTS THAT,
WITH THE GIVING OF NOTICE OR THE LAPSE OF TIME OR BOTH, WOULD CONSTITUTE SUCH A
DEFAULT, EXCEPT WHERE THE CONSEQUENCES, DIRECT OR INDIRECT, OF SUCH DEFAULT OR
DEFAULTS, IF ANY, WOULD NOT RESULT IN A MATERIAL ADVERSE CHANGE.  NEITHER
CUSTOMER NOR ANY OF ITS SUBSIDIARIES IS A PARTY TO OR IS OTHERWISE SUBJECT TO
ANY AGREEMENT OR INSTRUMENT OR ANY CHARTER OR OTHER INTERNAL RESTRICTION WHICH
HAS RESULTED IN, OR COULD REASONABLY BE EXPECTED TO RESULT IN, INDIVIDUALLY OR
IN THE AGGREGATE, A MATERIAL ADVERSE CHANGE.

 

(I)            BULK SALES ACT.  NO TRANSACTION CONTEMPLATED BY THIS AGREEMENT
REQUIRES COMPLIANCE WITH, OR WILL BE SUBJECT TO AVOIDANCE UNDER, ANY BULK SALES
ACT OR SIMILAR LAW.

 

(J)            MARGIN REGULATIONS; GOVERNMENTAL REGULATIONS.  NO USE OF ANY
FUNDS OBTAINED BY CUSTOMER UNDER THIS AGREEMENT OR THE OTHER TRANSACTION
DOCUMENTS WILL CONFLICT WITH OR CONTRAVENE ANY OF REGULATIONS G, T, U, AND X
PROMULGATED BY THE FEDERAL RESERVE BOARD FROM TIME TO TIME.  NEITHER CUSTOMER
NOR ANY OF ITS SUBSIDIARIES IS SUBJECT TO REGULATION UNDER THE PUBLIC UTILITY
HOLDING CUSTOMER ACT OF 1935, THE FEDERAL POWER ACT, THE INTERSTATE COMMERCE ACT
OR THE INVESTMENT COMPANY ACT OF 1940 OR UNDER ANY OTHER FEDERAL OR STATE
STATUTE OR REGULATION WHICH MAY LIMIT ITS ABILITY TO INCUR INDEBTEDNESS OR WHICH
MAY OTHERWISE RENDER ALL OR ANY PORTION OF CUSTOMER OBLIGATIONS UNENFORCEABLE.

 

(K)           PLACE OF BUSINESS.  THE CHIEF PLACE OF BUSINESS AND CHIEF
EXECUTIVE OFFICE OF CUSTOMER IS LOCATED AT THE ADDRESS OF CUSTOMER SET FORTH ON
THE SIGNATURE PAGE OF THIS AGREEMENT; AND THE OFFICES WHERE CUSTOMER KEEPS ALL
OF ITS RECORDS ARE LOCATED AT THE ADDRESS(ES) LISTED ON SCHEDULE 3.1(K) ANNEXED
HERETO OR SUCH OTHER LOCATIONS OF WHICH BUYER HAS BEEN GIVEN NOTICE IN
ACCORDANCE WITH SECTION 2.8 IN JURISDICTIONS WHERE ALL ACTION REQUIRED BY
SECTION 2.8 HAS BEEN TAKEN AND COMPLETED.

 

(L)            ACCOUNT BANKS AND PAYMENT INSTRUCTIONS.  THE NAMES AND ADDRESSES
OF ALL BANKS WITH THE ACCOUNT NUMBERS OF THE ACCOUNTS AT THE BANKS INTO WHICH
COLLECTIONS ARE TO BE PAID ARE ACCURATELY LISTED ON SCHEDULE 3.1(L) ANNEXED
HERETO.  CUSTOMER HAS INSTRUCTED ALL OBLIGORS TO SUBMIT ALL PAYMENTS ON THE
RECEIVABLES AND RELATED SECURITY DIRECTLY TO THE COLLECTION ACCOUNT.

 

(M)          GOOD TITLE.  CUSTOMER AND ITS SUBSIDIARIES HAVE GOOD, SUFFICIENT
AND LEGAL TITLE TO ALL OF THEIR RESPECTIVE PROPERTIES AND ASSETS REFLECTED IN
THE MOST RECENT FINANCIAL

 

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STATEMENTS DELIVERED TO BUYER, EXCEPT FOR ASSETS DISPOSED OF SINCE THE DATE OF
SUCH FINANCIAL STATEMENTS IN THE ORDINARY COURSE OF BUSINESS.  EXCEPT AS
PERMITTED BY SECTION 5.2(A), ALL SUCH PROPERTIES AND ASSETS ARE FREE AND CLEAR
OF LIENS.

 

(N)           NAMES.  AS OF THE DATE HEREOF AND EXCEPT AS SET FORTH ON
SCHEDULE 3.1(N), THE LEGAL NAMES OF CUSTOMER ARE THE ONLY NAMES USED BY SUCH
PERSON.  CUSTOMER HAS NOT USED ANY CORPORATE NAMES, TRADE NAMES OR ASSUMED
NAMES, EXCEPT AS DISCLOSED ON SCHEDULE 3.1(N), AND WILL NOT USE ANY SUCH NAMES
WITHOUT FIRST GIVING WRITTEN NOTICE THEREOF TO BUYER AND CUSTODIAN.

 

(O)           ELIGIBLE RECEIVABLES.  EACH RECEIVABLE INCLUDED IN THE NET
RECEIVABLES BALANCE AS AN ELIGIBLE RECEIVABLE ON THE DATE OF ANY PURCHASE OR ANY
INVESTMENT OF PRINCIPAL SHALL IN FACT BE AN ELIGIBLE RECEIVABLE ON AND AS OF
SUCH DATE OF PURCHASE OR INVESTMENT OF PRINCIPAL.

 

(P)           SERVICING PROGRAMS.  NO LICENSE OR APPROVAL IS REQUIRED FOR
CUSTOMER’S, BUYER’S OR ANY PURCHASER REPRESENTATIVE’S USE OF ANY PROGRAM OR
OTHER PROPERTY USED BY SERVICER IN THE SERVICING OF THE WAREHOUSE ASSETS, OTHER
THAN THOSE WHICH HAVE BEEN OBTAINED AND ARE IN FULL FORCE AND EFFECT.

 

(Q)           LOAN ORIGINATION GUIDELINES.  CUSTOMER HAS COMPLIED, AND WILL
COMPLY, IN ALL MATERIAL RESPECTS WITH THE FRANCHISE LOAN ORIGINATION GUIDELINES
OR MORTGAGE LOAN ORIGINATION GUIDELINES, AS APPLICABLE, IN REGARD TO EACH
RECEIVABLE AND RELATED CONTRACT.

 

(R)            NO MATERIAL ADVERSE CHANGE.  SINCE DECEMBER 31, 2003, NO EVENT OR
CHANGE HAS OCCURRED THAT HAS CAUSED OR EVIDENCES, EITHER IN ANY CASE OR IN THE
AGGREGATE, A MATERIAL ADVERSE CHANGE.  EXCEPT AS EXPRESSLY PERMITTED PURSUANT TO
SECTION 5.2(H), NEITHER CUSTOMER NOR ANY OF ITS SUBSIDIARIES HAS DIRECTLY OR
INDIRECTLY DECLARED, ORDERED, PAID OR MADE, OR SET APART ANY SUM OR PROPERTY
FOR, ANY RESTRICTED JUNIOR PAYMENT OR AGREED TO DO SO.

 

(S)           PAYMENT OF TAXES.  ALL TAX RETURNS AND REPORTS OF CUSTOMER AND ITS
SUBSIDIARIES REQUIRED TO BE FILED BY ANY OF THEM HAVE BEEN TIMELY FILED, AND ALL
TAXES SHOWN ON SUCH TAX RETURNS TO BE DUE AND PAYABLE AND ALL ASSESSMENTS, FEES
AND OTHER GOVERNMENTAL CHARGES UPON CUSTOMER AND ITS SUBSIDIARIES AND UPON THEIR
RESPECTIVE PROPERTIES, ASSETS, INCOME, BUSINESSES AND FRANCHISES WHICH ARE DUE
AND PAYABLE HAVE BEEN PAID WHEN DUE AND PAYABLE.  CUSTOMER KNOWS OF NO PROPOSED
TAX ASSESSMENT AGAINST CUSTOMER OR ANY OF ITS SUBSIDIARIES WHICH IS NOT BEING
ACTIVELY CONTESTED BY CUSTOMER OR SUCH SUBSIDIARY IN GOOD FAITH AND BY
APPROPRIATE PROCEEDINGS; PROVIDED THAT SUCH RESERVES OR OTHER APPROPRIATE
PROVISIONS, IF ANY, AS SHALL BE REQUIRED IN CONFORMITY WITH GAAP SHALL HAVE BEEN
MADE OR PROVIDED THEREFOR.

 

(T)            EMPLOYEE BENEFIT PLANS.

 

(I)            CUSTOMER, EACH OF ITS SUBSIDIARIES AND EACH OF ITS ERISA
AFFILIATES ARE IN COMPLIANCE WITH ALL APPLICABLE PROVISIONS AND REQUIREMENTS OF
ERISA AND THE REGULATIONS AND PUBLISHED INTERPRETATIONS THEREUNDER WITH RESPECT
TO EACH EMPLOYEE BENEFIT PLAN, AND HAVE PERFORMED ALL THEIR OBLIGATIONS UNDER
EACH EMPLOYEE BENEFIT PLAN.  EACH EMPLOYEE BENEFIT PLAN WHICH IS INTENDED TO
QUALIFY UNDER SECTION 401(A) OF THE

 

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INTERNAL REVENUE CODE IS SO QUALIFIED.  EACH EMPLOYEE BENEFIT PLAN IS LISTED ON
SCHEDULE 3.1(T) ANNEXED HERETO.

 

(II)           NO ERISA EVENT HAS OCCURRED OR IS REASONABLY EXPECTED TO OCCUR.

 

(III)          EXCEPT TO THE EXTENT REQUIRED UNDER SECTION 4980B OF THE INTERNAL
REVENUE CODE, NO EMPLOYEE BENEFIT PLAN PROVIDES HEALTH OR WELFARE BENEFITS
(THROUGH THE PURCHASE OF INSURANCE OR OTHERWISE) FOR ANY RETIRED OR FORMER
EMPLOYEE OF CUSTOMER, ANY OF ITS SUBSIDIARIES OR ANY OF ITS ERISA AFFILIATES.

 

(IV)          AS OF THE MOST RECENT VALUATION DATE FOR ANY PENSION PLAN, THE
AMOUNT OF UNFUNDED BENEFIT LIABILITIES (AS DEFINED IN SECTION 4001(A)(18) OF
ERISA), INDIVIDUALLY OR IN THE AGGREGATE FOR ALL PENSION PLANS (EXCLUDING FOR
PURPOSES OF SUCH COMPUTATION ANY PENSION PLANS WITH RESPECT TO WHICH ASSETS
EXCEED BENEFIT LIABILITIES), DOES NOT EXCEED $100,000.

 

(V)           AS OF THE MOST RECENT VALUATION DATE FOR EACH MULTIEMPLOYER PLAN
FOR WHICH THE ACTUARIAL REPORT IS AVAILABLE, THE POTENTIAL LIABILITY OF
CUSTOMER, ITS SUBSIDIARIES AND ITS ERISA AFFILIATES FOR A COMPLETE WITHDRAWAL
FROM SUCH MULTIEMPLOYER PLAN (WITHIN THE MEANING OF SECTION 4203 OF ERISA), WHEN
AGGREGATED WITH SUCH POTENTIAL LIABILITY FOR A COMPLETE WITHDRAWAL FROM ALL
MULTIEMPLOYER PLANS, BASED ON INFORMATION AVAILABLE PURSUANT TO SECTION 4221(E)
OF ERISA, DOES NOT EXCEED $100,000.

 

(U)           SOLVENCY.  CUSTOMER AND EACH OF ITS SUBSIDIARIES IS AND, UPON THE
INCURRENCE OF ANY CUSTOMER OBLIGATIONS BY CUSTOMER ON ANY DATE ON WHICH THIS
REPRESENTATION IS MADE, WILL BE, SOLVENT.

 

(V)           REIT.  CUSTOMER IS, AND AT ALL TIMES SINCE ITS FORMATION HAS BEEN,
A REIT.

 

(W)          ENVIRONMENTAL PROTECTION.  (I) THE OPERATIONS OF CUSTOMER AND EACH
OF ITS SUBSIDIARIES (INCLUDING, WITHOUT LIMITATION, ALL OPERATIONS AND
CONDITIONS AT OR IN THE FACILITIES) COMPLY IN ALL MATERIAL RESPECTS WITH ALL
ENVIRONMENTAL LAWS; (II) CUSTOMER AND EACH OF ITS SUBSIDIARIES HAS OBTAINED ALL
GOVERNMENTAL AUTHORIZATIONS UNDER ENVIRONMENTAL LAWS NECESSARY TO THEIR
RESPECTIVE OPERATIONS, AND ALL SUCH GOVERNMENTAL AUTHORIZATIONS ARE IN GOOD
STANDING, AND CUSTOMER AND EACH OF ITS SUBSIDIARIES ARE IN COMPLIANCE WITH ALL
MATERIAL TERMS AND CONDITIONS OF SUCH GOVERNMENTAL AUTHORIZATIONS; (III) NEITHER
CUSTOMER NOR ANY OF ITS SUBSIDIARIES HAS RECEIVED (A) ANY NOTICE OR CLAIM TO THE
EFFECT THAT IT IS OR MAY BE LIABLE TO ANY PERSON AS A RESULT OF OR IN CONNECTION
WITH ANY HAZARDOUS MATERIALS OR (B) ANY LETTER OR REQUEST FOR INFORMATION UNDER
SECTION 104 OF THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND
LIABILITY ACT (42 U.S.C. § 9604) OR COMPARABLE STATE LAWS, AND, TO THE BEST OF
CUSTOMER’S KNOWLEDGE, NONE OF THE OPERATIONS OF CUSTOMER OR ANY OF ITS
SUBSIDIARIES IS THE SUBJECT OF ANY FEDERAL OR STATE INVESTIGATION RELATING TO OR
IN CONNECTION WITH ANY HAZARDOUS MATERIALS AT ANY FACILITY OR AT ANY OTHER
LOCATION; (IV) NONE OF THE OPERATIONS OF CUSTOMER OR ANY OF ITS SUBSIDIARIES IS
SUBJECT TO ANY JUDICIAL OR ADMINISTRATIVE PROCEEDING ALLEGING THE VIOLATION OF
OR LIABILITY UNDER ANY ENVIRONMENTAL LAWS WHICH IF ADVERSELY DETERMINED COULD
REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE CHANGE; AND (V) NEITHER
CUSTOMER NOR ANY OF ITS

 

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SUBSIDIARIES HAS ANY CONTINGENT LIABILITY IN CONNECTION WITH ANY RELEASE OF ANY
HAZARDOUS MATERIALS BY CUSTOMER OR ANY OF ITS SUBSIDIARIES.

 

(X)            EMPLOYEE MATTERS.  THERE IS NO STRIKE OR WORK STOPPAGE IN
EXISTENCE OR THREATENED INVOLVING CUSTOMER OR ANY OF ITS SUBSIDIARIES THAT COULD
REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE CHANGE.

 

(Y)           WAREHOUSE ASSETS.  AS TO EACH OF THE WAREHOUSE ASSETS, EXCEPT AS
EXPRESSLY DISCLOSED IN WRITING TO, AND EXPRESSLY APPROVED IN WRITING BY, BUYER,
THE STATEMENTS ON SCHEDULE 3.1(Y) ARE TRUE AND CORRECT IN ALL RESPECTS AND EACH
OF THE WAREHOUSE ASSETS IS AN ELIGIBLE RECEIVABLE.

 

(Z)            TERMINATION EVENTS.  NO TERMINATION EVENT OR POTENTIAL
TERMINATION EXISTS.

 

(AA)         INDEBTEDNESS.  CUSTOMER HAS NOT INCURRED AND IS NOT LIABLE ON
ACCOUNT OF ANY INDEBTEDNESS OR CONTINGENT OBLIGATION THAT IS NOT EXPRESSLY
PERMITTED PURSUANT TO THIS AGREEMENT.

 

(BB)         REGISTERED ORGANIZATION.  CUSTOMER IS A “REGISTERED ORGANIZATION”
(AS DEFINED IN THE UCC) OF THE STATE OF MARYLAND.

 

SECTION 3.2.            REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES.  ON
EACH DAY THAT AN INVESTMENT OF PRINCIPAL IS MADE HEREUNDER, CUSTOMER, BY
ACCEPTING THE PROCEEDS OF SUCH INVESTMENT OF PRINCIPAL, SHALL BE DEEMED TO HAVE
CERTIFIED THAT (I) ALL REPRESENTATIONS AND WARRANTIES DESCRIBED IN SECTION 3.1
HEREOF ARE CORRECT ON AND AS OF SUCH DAY AS THOUGH MADE ON AND AS OF SUCH DAY,
AND (II) NO EVENT HAS OCCURRED OR IS CONTINUING, OR WOULD RESULT FROM ANY SUCH
INVESTMENT OF PRINCIPAL, THAT CONSTITUTES A TERMINATION EVENT OR A POTENTIAL
TERMINATION EVENT.

 

ARTICLE IV
CONDITIONS PRECEDENT

 

SECTION 4.1.            CONDITIONS TO CLOSING.  THE OBLIGATIONS OF BUYER
HEREUNDER ARE SUBJECT TO THE SATISFACTION OF ALL THE FOLLOWING CONDITIONS:

 

(A)           CUSTOMER DOCUMENTS.  ON OR BEFORE THE CLOSING DATE, CUSTOMER SHALL
DELIVER OR CAUSE TO BE DELIVERED TO BUYER THE FOLLOWING, EACH, UNLESS OTHERWISE
NOTED, DATED THE CLOSING DATE:

 

(I)            CERTIFIED COPIES OF ITS DECLARATION OF TRUST AND BYLAWS, TOGETHER
WITH A GOOD STANDING CERTIFICATE (LONG-FORM) FROM THE RESPECTIVE JURISDICTION OF
FORMATION AND EACH STATE IN WHICH CUSTOMER IS QUALIFIED AS A FOREIGN PERSON TO
DO BUSINESS, EACH DATED A RECENT DATE PRIOR TO THE CLOSING DATE;

 

(II)           RESOLUTIONS OF THE TRUSTEES OF CUSTOMER APPROVING AND AUTHORIZING
THE SALE OF THE WAREHOUSE ASSETS AND THE INCURRING OF OBLIGATIONS UNDER THE
TRANSACTION DOCUMENTS, AND THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS TO WHICH CUSTOMER IS A PARTY,
CERTIFIED AS OF THE CLOSING DATE BY

 

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A MANAGER OR THE SECRETARY OF CUSTOMER AS BEING IN FULL FORCE AND EFFECT WITHOUT
MODIFICATION OR AMENDMENT;

 

(III)          SIGNATURE AND INCUMBENCY CERTIFICATES OF CUSTOMER’S OFFICERS
EXECUTING THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS TO WHICH PERSON IS
A PARTY;

 

(IV)          EXECUTED ORIGINALS OF THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS; AND

 

(V)           SUCH OTHER DOCUMENTS AS BUYER MAY REASONABLY REQUEST.

 

(B)           OPINIONS OF CUSTOMER’S COUNSEL.  BUYER AND ITS COUNSEL SHALL HAVE
RECEIVED ORIGINALLY EXECUTED COPIES OF ONE OR MORE FAVORABLE WRITTEN OPINIONS OF
HOGAN & HARTSON L.L.P., COUNSEL FOR CUSTOMER, ADDRESSED TO BUYER, IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO BUYER AND ITS COUNSEL, DATED AS OF THE
CLOSING DATE AND SETTING FORTH SUCH MATTERS AS BUYER AND ITS COUNSEL MAY
REASONABLY REQUEST.

 

(C)           NO MATERIAL ADVERSE CHANGE.  SINCE DECEMBER 31, 2003, NO MATERIAL
ADVERSE CHANGE (IN THE SOLE OPINION OF BUYER) SHALL HAVE OCCURRED.

 

(D)           REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. 
CUSTOMER SHALL HAVE DELIVERED TO BUYER AN OFFICERS’ CERTIFICATE, IN FORM AND
SUBSTANCE SATISFACTORY TO BUYER, TO THE EFFECT THAT THE REPRESENTATIONS AND
WARRANTIES IN SECTION 3.1 HEREOF AND IN THE OTHER TRANSACTION DOCUMENTS ARE
TRUE, CORRECT AND COMPLETE IN ALL MATERIAL RESPECTS ON AND AS OF THE CLOSING
DATE TO THE SAME EXTENT AS THOUGH MADE ON AND AS OF THAT DATE, THAT NO
TERMINATION EVENT OR POTENTIAL TERMINATION EVENT HAS OCCURRED AND IS CONTINUING
AND THAT CUSTOMER SHALL HAVE PERFORMED IN ALL MATERIAL RESPECTS ALL AGREEMENTS
AND SATISFIED ALL CONDITIONS THAT THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS PROVIDES SHALL BE PERFORMED OR SATISFIED BY CUSTOMER ON OR BEFORE THE
CLOSING DATE, EXCEPT AS OTHERWISE DISCLOSED TO AND AGREED TO IN WRITING BY
BUYER.

 

(E)           COMPLETION OF PROCEEDINGS.  ALL CORPORATE AND OTHER PROCEEDINGS
TAKEN OR TO BE TAKEN IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY AND
ALL DOCUMENTS INCIDENTAL THERETO NOT PREVIOUSLY FOUND ACCEPTABLE BY BUYER AND
ITS COUNSEL SHALL BE SATISFACTORY IN FORM AND SUBSTANCE TO BUYER AND SUCH
COUNSEL, AND BUYER AND SUCH COUNSEL SHALL HAVE RECEIVED ALL SUCH COUNTERPART
ORIGINALS OR CERTIFIED COPIES OF SUCH DOCUMENTS AS BUYER MAY REASONABLY REQUEST.

 

(F)            WAREHOUSE ASSETS.  CUSTOMER SHALL HAVE TAKEN OR CAUSED TO BE
TAKEN ALL SUCH ACTIONS AS MAY BE NECESSARY (IN BUYER’S JUDGMENT) TO GIVE BUYER A
VALID AND PERFECTED FIRST PRIORITY INTEREST IN THE WAREHOUSE ASSETS, SUBJECT TO
NO ADVERSE CLAIMS.  SUCH ACTIONS SHALL INCLUDE, WITHOUT LIMITATION:

 

(I)            THE DELIVERY TO BUYER OF AN OMNIBUS ASSIGNMENT WITH RESPECT TO
THE RECEIVABLES, RELATED SECURITY AND OTHER WAREHOUSE ASSETS;

 

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(II)           THE DELIVERY TO BUYER FOR FILING PURSUANT TO THIS AGREEMENT OF
FINANCING STATEMENTS UNDER THE UCC (OR ANY EQUIVALENT OR SIMILAR LEGISLATION) IN
FORM AND SUBSTANCE SATISFACTORY TO BUYER IN EACH JURISDICTION AS MAY BE
NECESSARY (IN BUYER’S JUDGMENT) EFFECTIVELY TO PERFECT THE INTERESTS IN ALL
WAREHOUSE ASSETS CREATED BY THIS AGREEMENT;

 

(III)          COPIES OF PROPER FINANCING TERMINATION STATEMENTS, IF ANY,
NECESSARY TO RELEASE ALL ADVERSE CLAIMS OF ANY PERSON IN WAREHOUSE ASSETS
PREVIOUSLY GRANTED BY CUSTOMER OR ANY OTHER PERSON;

 

(IV)          ALL CONTRACTS AND RECEIVABLE DELIVERY DOCUMENTS RELATING TO THE
WAREHOUSE ASSETS AS OF THE CLOSING DATE SHALL HAVE BEEN DELIVERED TO CUSTODIAN;

 

(V)           CERTIFIED COPIES OF REQUEST FOR INFORMATION OR COPIES (FORM 11)
(OR A SIMILAR SEARCH REPORT CERTIFIED BY PARTIES ACCEPTABLE TO BUYER) DATED A
DATE REASONABLY NEAR THE CLOSING DATE LISTING ALL EFFECTIVE FINANCING STATEMENTS
THAT NAME CUSTOMER (UNDER SUCH PRESENT NAME AND ANY PREVIOUS NAME) AS TRANSFEROR
OR DEBTOR AND THAT ARE FILED IN JURISDICTIONS IN WHICH THE FILINGS WERE MADE
PURSUANT TO ITEM (F)(II) ABOVE TOGETHER WITH COPIES OF SUCH FINANCING STATEMENTS
(NONE OF WHICH SHALL COVER ANY WAREHOUSE ASSETS); AND

 

(VI)          EVIDENCE REASONABLY SATISFACTORY TO BUYER THAT ALL OTHER FILINGS,
RECORDINGS AND OTHER ACTIONS BUYER DEEMS NECESSARY OR ADVISABLE TO ESTABLISH,
PRESERVE AND PERFECT THE LIENS GRANTED TO BUYER IN THE WAREHOUSE ASSETS SHALL
HAVE BEEN MADE.

 

(G)           POWERS OF ATTORNEY AND OTHER DOCUMENTS.  CUSTOMER SHALL HAVE
DELIVERED TO BUYER SUCH POWERS OF ATTORNEY AND DOCUMENTS AS BUYER SHALL REQUEST
TO ENABLE BUYER OR CUSTODIAN TO COLLECT ALL AMOUNTS DUE UNDER ANY AND ALL
WAREHOUSE ASSETS, INCLUDING A POWER OF ATTORNEY IN SUBSTANTIALLY THE FORM OF
EXHIBIT C ANNEXED HERETO.

 

(H)           INSURANCE.  CUSTOMER SHALL HAVE DELIVERED TO BUYER EVIDENCE
SATISFACTORY TO BUYER THAT THE INSURANCE POLICIES REQUIRED BY SECTION 5.1(I)
HAVE BEEN OBTAINED AND ARE IN FULL FORCE AND EFFECT, AND AN ASSIGNMENT OF
INSURANCE INTERESTS IN THE FORM OF EXHIBIT D ANNEXED HERETO DULY EXECUTED BY
CUSTOMER.

 

(I)            EXECUTION OF TRANSACTION DOCUMENTS.  CUSTOMER SHALL HAVE
DELIVERED TO BUYER EVIDENCE SATISFACTORY TO BUYER OF THE EXECUTION AND DELIVERY
BY EACH OF THE PARTIES THERETO OF ALL TRANSACTION DOCUMENTS AND INSTRUMENTS
CONTEMPLATED THEREBY.

 

(J)            AUDITORS LETTER.  CUSTOMER SHALL HAVE DELIVERED TO BUYER A COPY
OF A LETTER IN SUBSTANTIALLY THE FORM OF EXHIBIT F ANNEXED HERETO DELIVERED BY
CUSTOMER TO ITS ACCOUNTANTS INSTRUCTING THEM TO DISCLOSE TO BUYER OR ANY OTHER
PURCHASER REPRESENTATIVE ALL FINANCIAL STATEMENTS AND OTHER INFORMATION OF ANY
KIND RELATING TO CUSTOMER’S BUSINESS, FINANCIAL CONDITION AND OTHER AFFAIRS THAT
BUYER OR ANY OTHER PURCHASER REPRESENTATIVE MAY REASONABLY REQUEST.

 

(K)           INSPECTION OF RECORDS.  CUSTOMER SHALL HAVE DELIVERED TO BUYER A
DIRECTION LETTER EXECUTED BY CUSTOMER AUTHORIZING BUYER, SERVICER AND CUSTODIAN
AND DIRECTING

 

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WAREHOUSEMEN TO ALLOW BUYER, CUSTODIAN OR SERVICER, TO INSPECT AND MAKE COPIES
FROM CUSTOMER’S BOOKS AND RECORDS MAINTAINED AT OFF-SITE DATA PROCESSING OR
STORAGE FACILITIES.

 

(L)            CONSENTS.  CUSTOMER SHALL HAVE DELIVERED TO BUYER EXECUTED COPIES
OF (I) ALL CONSENTS FROM AND AUTHORIZATIONS BY ANY PERSONS AND (II) ALL WAIVERS
AND AMENDMENTS TO EXISTING CREDIT FACILITIES, THAT ARE NECESSARY IN CONNECTION
WITH THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS.

 

(M)          LICENSES.  TO THE EXTENT ANY SUCH LICENSES ARE REQUIRED TO BE
OBTAINED BY CUSTOMER, CUSTOMER SHALL HAVE DELIVERED TO BUYER A COPY OF
CUSTOMER’S FINANCE LICENSES.

 

(N)           ESCROW AGREEMENT.  THE PARTIES THERETO SHALL HAVE ENTERED INTO THE
ESCROW AGREEMENT, IN FORM AND SUBSTANCE SATISFACTORY TO BUYER, WHICH ESCROW
AGREEMENT SHALL NOT HAVE BEEN TERMINATED.

 

(O)           PAYING AGENT AGREEMENT.  THE PARTIES THERETO SHALL HAVE ENTERED
INTO THE PAYING AGENT AGREEMENT, IN FORM AND SUBSTANCE SATISFACTORY TO BUYER.

 

(P)           SWAP AGREEMENT.  CUSTOMER SHALL HAVE ENTERED INTO THE SWAP
AGREEMENT.

 

(Q)           FACILITY FEE.  WITH RESPECT TO THE FIRST INVESTMENT OF PRINCIPAL,
CUSTOMER SHALL HAVE PAID TO BUYER THE FEES PAYABLE ON THE CLOSING DATE REFERRED
TO IN SECTION 2.7, TOGETHER WITH ALL COSTS AND EXPENSES OF BUYER, EACH OTHER
PURCHASER REPRESENTATIVE AND THEIR RESPECTIVE COUNSEL.

 

(R)            OTHER INFORMATION AND DOCUMENTS.  CUSTOMER SHALL HAVE DELIVERED
TO BUYER SUCH OTHER INFORMATION AND DOCUMENTS AS BUYER MAY REASONABLY REQUEST.

 

SECTION 4.2.            CONDITIONS TO ALL INVESTMENTS OF PRINCIPAL.  THE
OBLIGATIONS OF BUYER AND EACH PURCHASER REPRESENTATIVE WITH RESPECT TO EACH
INVESTMENT OF PRINCIPAL IS SUBJECT TO THE SATISFACTION OF ALL OF THE FOLLOWING
CONDITIONS:

 

(A)           CUSTOMER SHALL HAVE PAID ALL COSTS AND EXPENSES OF BUYER, EACH
OTHER PURCHASER REPRESENTATIVE AND THEIR RESPECTIVE COUNSEL.

 

(B)           ON EACH DAY THAT AN INVESTMENT OF PRINCIPAL IS MADE PURSUANT TO
THIS AGREEMENT, THE FOLLOWING STATEMENTS SHALL BE TRUE, AND CUSTOMER BY
ACCEPTING THE PROCEEDS OF SUCH INVESTMENT OF PRINCIPAL, SHALL BE DEEMED TO HAVE
CERTIFIED, REPRESENTED AND WARRANTED THAT:

 

(I)            ALL REPRESENTATIONS AND WARRANTIES OF CUSTOMER UNDER SECTION 3.1
HEREIN AND IN THE OTHER TRANSACTION DOCUMENTS ARE CORRECT ON AND AS OF SUCH DAY
AS THOUGH MADE ON AND AS OF SUCH DAY;

 

(II)           NO EVENT HAS OCCURRED OR IS CONTINUING, OR WOULD RESULT FROM ANY
SUCH INVESTMENT OF PRINCIPAL, THAT CONSTITUTES A TERMINATION EVENT OR A
POTENTIAL TERMINATION EVENT;

 

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(III)          AFTER GIVING EFFECT TO THE INVESTMENT OF PRINCIPAL, THE AGGREGATE
PRINCIPAL OUTSTANDING WILL NOT EXCEED THE FACILITY LIMIT;

 

(IV)          NO EVENT OR CHANGE SHALL HAVE OCCURRED THAT HAS CAUSED OR
EVIDENCES, EITHER IN ANY CASE OR IN THE AGGREGATE, A MATERIAL ADVERSE CHANGE; OR

 

(V)           AFTER GIVING EFFECT TO THE INVESTMENT OF PRINCIPAL, THE AGGREGATE
PRINCIPAL OUTSTANDING WILL NOT EXCEED THE WAREHOUSE ASSET LIMIT AMOUNT.

 

(C)           WITH RESPECT TO EACH INVESTMENT OF PRINCIPAL FOR WHICH RECEIVABLES
ARE TO BE ACQUIRED WITH THE PROCEEDS THEREOF, AS PROVIDED IN THE ESCROW
AGREEMENT, ESCROW AGENT SHALL HAVE DELIVERED TO BUYER AND THE OTHER REQUIRED
PARTIES THE CLOSING CONFIRMATION LETTER (AS DEFINED IN THE ESCROW AGREEMENT).

 

(D)           WITH RESPECT TO EACH INVESTMENT OF PRINCIPAL FOR WHICH RECEIVABLES
ARE TO BE ACQUIRED WITH THE PROCEEDS THEREOF, CUSTODIAN AND BUYER SHALL HAVE
RECEIVED SUCH OTHER DOCUMENTS, CERTIFICATES, LEGAL OPINIONS, AUDIT REPORTS,
SERVICER REPORTS AND OTHER ITEMS AS CUSTODIAN OR BUYER MAY REASONABLY REQUEST,
IN FORM AND SUBSTANCE SATISFACTORY TO THEM.

 

(E)           WITH RESPECT TO EACH INVESTMENT OF PRINCIPAL FOR WHICH RECEIVABLES
ARE TO BE ACQUIRED WITH THE PROCEEDS THEREOF, (I) FOR EACH ELIGIBLE RECEIVABLE,
CUSTOMER SHALL HAVE INCLUDED THE ELIGIBLE RECEIVABLE ON A LIST OF RECEIVABLES
DELIVERED TO BUYER AND CUSTODIAN AND SHALL HAVE DELIVERED TO CUSTODIAN (OR TO
ESCROW AGENT ON BEHALF OF CUSTODIAN) THE RECEIVABLE DELIVERY DOCUMENTS AND (II)
BUYER SHALL HAVE RECEIVED CUSTOMER’S CLOSING CERTIFICATE THEREFOR DULY EXECUTED
BY CUSTOMER.

 

(F)            NO CLAIM SHALL HAVE BEEN ASSERTED OR PROCEEDING COMMENCED
CHALLENGING ANY TRANSACTION DOCUMENT OR BUYER’S OR CUSTODIAN’S RIGHTS UNDER THIS
AGREEMENT, AND NO CLAIM HAS BEEN ASSERTED WHICH IF TRUE WOULD BE A BREACH OF A
REPRESENTATION AND WARRANTY IN THE TRANSACTION DOCUMENTS.

 

(G)           NO VENDOR OR CREDITOR OF CUSTOMER SHALL HAVE PROVIDED ADVERSE
CREDIT INFORMATION OF A MATERIAL NATURE ABOUT CUSTOMER TO BUYER.

 

(H)           BUYER’S MOST RECENT INSPECTION OF THE WAREHOUSE ASSETS OR
CUSTOMER’S RECORDS OR OPERATIONS SHALL HAVE BEEN REASONABLY SATISFACTORY TO
BUYER.

 

(I)            NONE OF THE ACTIONS TAKEN OR DOCUMENTS EXECUTED TO SATISFY THE
CONDITIONS IN SECTION 4.1 SHALL HAVE BEEN REVOKED, RESCINDED, TERMINATED, OR
CANCELED WITHOUT BUYER’S PRIOR CONSENT.

 

(J)            WITH REGARD TO EACH PURCHASE, BUYER SHALL HAVE APPROVED, IN ITS
SOLE DISCRETION, THE WAREHOUSE ASSET IN QUESTION, IN ACCORDANCE WITH THIS
AGREEMENT.

 

(K)           WITH REGARD TO EACH PURCHASE AND INVESTMENT OF PRINCIPAL, THE
PROVISIONS OF SECTION 2.2 AND SCHEDULE 2.2-1 HAVE BEEN COMPLIED WITH AND THE
CONDITIONS SET FORTH THEREIN SATISFIED AND CUSTODIAN HAS (OR ESCROW AGENT, AS
CONFIRMED IN THE ESCROW CONFIRMATION LETTER,

 

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AS AGENT AND BAILEE FOR BUYER) HAS POSSESSION OF, ORIGINAL COUNTERPART COPIES OF
THE APPLICABLE CONTRACT AND OTHER RECEIVABLE DELIVERY DOCUMENTS.

 

ARTICLE V
COVENANTS

 

SECTION 5.1.            AFFIRMATIVE COVENANTS OF CUSTOMER.  CUSTOMER HEREBY
COVENANTS, UNDERTAKES AND AGREES THAT AT ALL TIMES FROM THE DATE HEREOF TO THE
DATE ON WHICH ALL AMOUNTS PAYABLE HEREUNDER AND UNDER THE OTHER TRANSACTION
DOCUMENTS SHALL BE INDEFEASIBLY PAID IN FULL OR IF LATER, THE TERMINATION DATE,
UNLESS BUYER SHALL OTHERWISE CONSENT IN WRITING:

 

(A)           FINANCIAL REPORTING.  CUSTOMER WILL MAINTAIN, AND EACH OF ITS
SUBSIDIARIES TO MAINTAIN, A SYSTEM OF ACCOUNTING ESTABLISHED AND ADMINISTERED IN
ACCORDANCE WITH SOUND BUSINESS PRACTICES TO PERMIT PREPARATION OF FINANCIAL
STATEMENTS IN CONFORMITY WITH GAAP.  CUSTOMER WILL DELIVER TO BUYER AND
CUSTODIAN:

 

(I)            YEAR-END FINANCIALS.  AS SOON AS AVAILABLE AND IN ANY EVENT
WITHIN ONE HUNDRED TWENTY (120) DAYS AFTER THE END OF EACH FISCAL YEAR, (A) THE
CONSOLIDATED BALANCE SHEETS OF CUSTOMER AND ITS SUBSIDIARIES AS AT THE END OF
SUCH FISCAL YEAR AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME,
STOCKHOLDER’S EQUITY AND CASH FLOWS OF CUSTOMER AND ITS SUBSIDIARIES FOR SUCH
FISCAL YEAR, SETTING FORTH IN EACH CASE IN COMPARATIVE FORM THE CORRESPONDING
FIGURES FOR THE PREVIOUS FISCAL YEAR, ALL IN REASONABLE DETAIL AND CERTIFIED BY
THE CHIEF FINANCIAL OFFICER OF CUSTOMER THAT THEY FAIRLY PRESENT THE FINANCIAL
CONDITION OF CUSTOMER AND ITS SUBSIDIARIES AS AT THE DATES INDICATED AND THE
RESULTS OF THEIR OPERATIONS AND THEIR CASH FLOWS FOR THE PERIODS INDICATED,
(B) A NARRATIVE REPORT DESCRIBING THE OPERATIONS OF CUSTOMER AND ITS
SUBSIDIARIES IN THE FORM PREPARED FOR PRESENTATION TO SENIOR MANAGEMENT FOR SUCH
FISCAL YEAR, AND (C) IN THE CASE OF SUCH CONSOLIDATED FINANCIAL STATEMENTS, A
REPORT THEREON OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF RECOGNIZED
NATIONAL STANDING SELECTED BY CUSTOMER AND SATISFACTORY TO BUYER, WHICH REPORT
SHALL BE UNQUALIFIED, SHALL EXPRESS NO DOUBTS ABOUT THE ABILITY OF CUSTOMER AND
ITS SUBSIDIARIES TO CONTINUE AS A GOING CONCERN, AND SHALL STATE THAT SUCH
CONSOLIDATED FINANCIAL STATEMENTS FAIRLY PRESENT THE CONSOLIDATED FINANCIAL
POSITION OF CUSTOMER AND ITS SUBSIDIARIES AS AT THE DATES INDICATED AND THE
RESULTS OF THEIR OPERATIONS AND THEIR CASH FLOWS FOR THE PERIODS INDICATED IN
CONFORMITY WITH GAAP APPLIED ON A BASIS CONSISTENT WITH PRIOR YEARS (EXCEPT AS
OTHERWISE DISCLOSED IN SUCH FINANCIAL STATEMENTS).

 

(II)           QUARTERLY FINANCIALS.  AS SOON AS AVAILABLE, AND IN ANY EVENT
WITHIN SIXTY (60) DAYS AFTER THE END OF EACH OF THE FIRST THREE FISCAL QUARTERS
AND WITHIN ONE HUNDRED TWENTY (120) DAYS AFTER THE END OF THE FOURTH FISCAL
QUARTER, CUSTOMER SHALL DELIVER TO BUYER THE CONSOLIDATED BALANCE SHEETS OF
CUSTOMER AND ITS SUBSIDIARIES AS AT THE END OF SUCH QUARTER AND THE RELATED
CONSOLIDATED STATEMENTS OF INCOME, STOCKHOLDER’S EQUITY AND CASH FLOWS OF
CUSTOMER AND ITS SUBSIDIARIES FOR SUCH QUARTER, SETTING FORTH IN EACH CASE IN
COMPARATIVE FORM FOR THE PERIOD COMMENCING AT THE END OF THE PREVIOUS QUARTER
AND ENDING WITH THE END OF SUCH QUARTER, ALL IN REASONABLE DETAIL AND CERTIFIED
BY THE CHIEF FINANCIAL OFFICER OF CUSTOMER THAT THEY FAIRLY PRESENT THE
FINANCIAL CONDITION OF CUSTOMER AND ITS SUBSIDIARIES AS AT THE DATES INDICATED
AND THE RESULTS OF THEIR OPERATIONS

 

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AND THEIR CASH FLOWS FOR THE PERIODS INDICATED, ALL IN REASONABLE DETAIL AND
DULY CERTIFIED BY THE CHIEF FINANCIAL OFFICER OF CUSTOMER.

 

(III)          COMPLIANCE CERTIFICATE.  TOGETHER WITH EACH DELIVERY OF FINANCIAL
STATEMENTS OF CUSTOMER AND ITS SUBSIDIARIES PURSUANT TO SUBDIVISIONS (I) AND
(II) ABOVE, (A) AN OFFICERS’ CERTIFICATE OF CUSTOMER STATING THAT THE SIGNERS
HAVE REVIEWED THE TERMS OF THIS AGREEMENT AND HAVE MADE, OR CAUSED TO BE MADE
UNDER THEIR SUPERVISION, A REVIEW IN REASONABLE DETAIL OF THE TRANSACTIONS AND
CONDITION OF CUSTOMER AND ITS SUBSIDIARIES DURING THE ACCOUNTING PERIOD COVERED
BY SUCH FINANCIAL STATEMENTS AND THAT SUCH REVIEW HAS NOT DISCLOSED THE
EXISTENCE DURING OR AT THE END OF SUCH ACCOUNTING PERIOD, AND THAT THE SIGNERS
DO NOT HAVE KNOWLEDGE OF THE EXISTENCE AS AT THE DATE OF SUCH OFFICERS’
CERTIFICATE, OF ANY CONDITION OR EVENT THAT CONSTITUTES A TERMINATION EVENT OR
POTENTIAL TERMINATION EVENT, OR, IF ANY SUCH CONDITION OR EVENT EXISTED OR
EXISTS, SPECIFYING THE NATURE AND PERIOD OF EXISTENCE THEREOF AND WHAT ACTION
CUSTOMER HAS TAKEN, IS TAKING AND PROPOSES TO TAKE WITH RESPECT THERETO; AND
(B) A COMPLIANCE CERTIFICATE DEMONSTRATING IN REASONABLE DETAIL COMPLIANCE
DURING AND AT THE END OF THE APPLICABLE ACCOUNTING PERIODS WITH THE FINANCIAL
CONDITION COVENANTS CONTAINED IN SECTION 5.1(N).

 

(IV)          S.E.C. FILINGS.  PROMPTLY UPON THE FILING THEREOF, COPIES OF ALL
PRESS RELEASES, REGISTRATION STATEMENTS AND ANNUAL, QUARTERLY, MONTHLY OR OTHER
REGULAR REPORTS WHICH CUSTOMER FILES WITH THE SECURITIES AND EXCHANGE COMMISSION
OR ANY SECURITIES EXCHANGE.

 

(V)           ERISA EVENTS.  PROMPTLY UPON BECOMING AWARE OF THE OCCURRENCE OF
OR FORTHCOMING OCCURRENCE OF ANY ERISA EVENT, A WRITTEN NOTICE SPECIFYING THE
NATURE THEREOF, WHAT ACTION CUSTOMER OR ANY OF ITS ERISA AFFILIATES HAS TAKEN,
IS TAKING OR PROPOSES TO TAKE WITH RESPECT THERETO AND, WHEN KNOWN, ANY ACTION
TAKEN OR THREATENED BY THE INTERNAL REVENUE SERVICE, THE DOL OR THE PBGC WITH
RESPECT THERETO.

 

(VI)          ERISA NOTICES.  WITH REASONABLE PROMPTNESS, COPIES OF EACH
SCHEDULE B (ACTUARIAL INFORMATION) TO THE ANNUAL REPORT (FORM 5500 SERIES) FILED
BY CUSTOMER, OR ANY OF ITS ERISA AFFILIATES WITH THE INTERNAL REVENUE SERVICE
WITH RESPECT TO EACH PENSION PLAN; ALL NOTICES RECEIVED BY CUSTOMER OR ANY OF
ITS ERISA AFFILIATES FROM A MULTIEMPLOYER PLAN SPONSOR CONCERNING AN ERISA
EVENT; AND COPIES OF SUCH OTHER DOCUMENTS OR GOVERNMENTAL REPORTS OR FILINGS
RELATING TO ANY EMPLOYEE BENEFIT PLAN AS BUYER SHALL REASONABLY REQUEST;

 

(VII)         OTHER INFORMATION.  SUCH OTHER INFORMATION (INCLUDING
NON-FINANCIAL INFORMATION AND ANY INFORMATION WITH RESPECT TO CUSTOMER OR ANY OF
ITS SUBSIDIARIES OR OTHER AFFILIATES) AS BUYER OR ANY OTHER PURCHASER
REPRESENTATIVE MAY FROM TIME TO TIME REASONABLY REQUEST.

 

(B)           NOTICES.  CUSTOMER WILL NOTIFY BUYER AND CUSTODIAN IN WRITING OF
ANY OF THE FOLLOWING AS SOON AS PRACTICABLE (BUT IN ANY EVENT WITHIN THREE (3)
BUSINESS DAYS) AFTER ANY OFFICER OF CUSTOMER LEARNING OF THE OCCURRENCE THEREOF,
DESCRIBING THE SAME AND, IF APPLICABLE, THE STEPS BEING TAKEN BY THE PERSON(S)
AFFECTED WITH RESPECT THERETO:

 

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(I)            TERMINATION EVENTS OR POTENTIAL TERMINATION EVENTS.  BY A
STATEMENT OF THE PRESIDENT, CORPORATE COMPTROLLER OR SENIOR FINANCIAL OFFICER OF
CUSTOMER, THE OCCURRENCE OF A TERMINATION EVENT OR POTENTIAL TERMINATION EVENT.

 

(II)           REPRESENTATIONS AND WARRANTIES.  THE FAILURE OF ANY
REPRESENTATION OR WARRANTY TO BE TRUE (WHEN MADE OR AT ANY TIME THEREAFTER) WITH
RESPECT TO ANY RECEIVABLE OR OTHER WAREHOUSE ASSET.

 

(III)          DOWNGRADE.  ANY DOWNWARD CHANGE IN THE RATING OF ANY INDEBTEDNESS
OR SECURITIES (OR EQUIVALENT) OF CUSTOMER OR ANY OF ITS SUBSIDIARIES, OR OF
SERVICER (EXCLUDING ANY ASSET-BACKED SECURITIES ISSUED BY SERVICER WITH RESPECT
TO SECURITIZATIONS OR OTHER SEGREGATED POOLS OF ASSETS), OR OF ANY CREDIT
SUPPORT PROVIDER, IF APPLICABLE, OR AFFILIATE BY ANY RATING AGENCY, SETTING
FORTH THE INDEBTEDNESS OR SECURITIES AFFECTED AND THE NATURE OF SUCH CHANGE.

 

(IV)          LITIGATION.  THE INSTITUTION OF, OR NON-FRIVOLOUS THREAT OF, ANY
ACTION, SUIT, PROCEEDING (WHETHER ADMINISTRATIVE, JUDICIAL OR OTHERWISE),
GOVERNMENTAL INVESTIGATION OR ARBITRATION AGAINST OR AFFECTING CUSTOMER OR ANY
OF ITS SUBSIDIARIES OR AFFILIATES OR ANY PROPERTY OF CUSTOMER OR ANY OF ITS
SUBSIDIARIES OR AFFILIATES (COLLECTIVELY, “PROCEEDINGS”) NOT PREVIOUSLY
DISCLOSED IN WRITING BY CUSTOMER TO BUYER OR ANY MATERIAL DEVELOPMENT IN ANY
PROCEEDING THAT, IN ANY CASE:  (A) IF ADVERSELY DETERMINED, HAS A REASONABLE
POSSIBILITY OF GIVING RISE TO A MATERIAL ADVERSE CHANGE, OR (B) SEEKS TO ENJOIN
OR OTHERWISE PREVENT THE CONSUMMATION OF, OR TO RECOVER ANY DAMAGES OR OBTAIN
RELIEF AS A RESULT OF, THE TRANSACTIONS CONTEMPLATED HEREBY, AND PROMPTLY AFTER
REQUEST BY BUYER SUCH OTHER INFORMATION AS MAY BE REASONABLY REQUESTED BY BUYER
TO ENABLE BUYER AND ITS COUNSEL TO EVALUATE ANY OF SUCH PROCEEDINGS.

 

(V)           ACCELERATION.  THE ACCELERATION OF ANY WAREHOUSE ASSETS.

 

(VI)          PREPAYMENT.  RECEIPT OF NOTICE OF PREPAYMENT OR DEFEASANCE OF
WAREHOUSE ASSETS.

 

(VII)         WAREHOUSE ASSET DEFAULT.  THE OCCURRENCE OF ANY MONETARY DEFAULT
UNDER A WAREHOUSE ASSET NOT CURED WITHIN THE GRACE PERIOD APPLICABLE THERETO,
THE OCCURRENCE OF ANY MATERIAL NON-MONETARY DEFAULT UNDER ANY RECEIVABLES NOT
CURED WITHIN THE GRACE PERIOD APPLICABLE THERETO, THE GIVING OF ANY NOTICE OF
DEFAULT WITH REGARD TO ANY RECEIVABLES, IF ANY RECEIVABLE BECOMES A DEFAULTED
RECEIVABLE, THE EXISTENCE OF AN OBLIGOR FINANCIAL COVENANT DEFAULT, AND THE
OCCURRENCE AND AMOUNT OF ANY CHARGE-OFF LOSSES.

 

(C)           COMPLIANCE WITH LAWS.  CUSTOMER WILL COMPLY IN ALL MATERIAL
RESPECTS WITH ALL LAWS, RULES, REGULATIONS, ORDERS, WRITS, JUDGMENTS,
INJUNCTIONS, DECREES OR AWARDS TO WHICH IT MAY BE SUBJECT, INCLUDING, WITHOUT
LIMITATION ALL USURY, TRUTH-IN-LENDING AND CONSUMER LAWS.

 

(D)           FURNISHING OF INFORMATION AND AUDITS.

 

(I)            CUSTOMER WILL FURNISH TO BUYER AND CUSTODIAN, FROM TIME TO TIME,
SUCH INFORMATION WITH RESPECT TO THE WAREHOUSE ASSETS AS THEY SHALL REASONABLY
REQUEST,

 

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INCLUDING, WITHOUT LIMITATION, THE INFORMATION AND REPORTS DESCRIBED IN
SECTION 2.11 HEREOF.

 

(II)           CUSTOMER WILL PERMIT BUYER OR A FIRM SELECTED BY BUYER TO CONDUCT
A REVIEW AND AUDIT CUSTOMER’S PRELIMINARY DUE DILIGENCE PACKAGE TO ENSURE
COMPLIANCE WITH THE LOAN ORIGINATION GUIDELINES, SUCH AUDIT AND REVIEW TO TAKE
PLACE, AT BUYER’S OPTION, PRIOR TO EACH INVESTMENT OF PRINCIPAL AND THEREAFTER
ON A QUARTERLY BASIS.  EACH SUCH REVIEW AND AUDIT SHALL BE AT CUSTOMER’S
EXPENSE.  CUSTOMER WILL PROVIDE ACCESS TO SUCH FIRM PURSUANT TO SUBSECTION (III)
BELOW.

 

(III)          CUSTOMER WILL PERMIT, AT ANY TIME AND FROM TIME TO TIME DURING
REGULAR BUSINESS HOURS (AND, PRIOR TO THE OCCURRENCE OF A TERMINATION EVENT OR
POTENTIAL TERMINATION EVENT, AFTER ADVANCE NOTICE TO CUSTOMER), BUYER,
CUSTODIAN, SERVICER OR ANY OTHER PURCHASER REPRESENTATIVE, OR THEIR AGENTS OR
REPRESENTATIVES, (A) TO EXAMINE AND MAKE COPIES OF AND ABSTRACTS FROM ALL
RECORDS AND (B) TO VISIT THE OFFICES AND PROPERTIES OF CUSTOMER FOR THE PURPOSE
OF EXAMINING SUCH RECORDS, AND TO DISCUSS MATTERS RELATING TO WAREHOUSE ASSETS,
CUSTOMER’S PERFORMANCE UNDER ANY TRANSACTION DOCUMENT OR ANY FINANCIAL OR OTHER
ASPECT OF CUSTOMER OR ANY OF ITS SUBSIDIARIES OR AFFILIATES WITH ANY OF THE
OFFICERS, DIRECTORS, EMPLOYEES OR INDEPENDENT PUBLIC ACCOUNTANTS OF CUSTOMER.

 

(IV)          NOTWITHSTANDING CLAUSE (III) ABOVE, FROM TIME TO TIME DURING
REGULAR BUSINESS HOURS, CUSTOMER WILL PERMIT (OR CAUSE TO BE PERMITTED)
CERTIFIED PUBLIC ACCOUNTANTS OR OTHER AUDITORS ACCEPTABLE TO BUYER, TO CONDUCT,
AT CUSTOMER’S EXPENSE, A REVIEW OF THE RECORDS, CUSTOMER’S FINANCIAL STATEMENTS
AND CUSTOMER’S COMPUTER SYSTEMS AND SERVICING REPORTS.  BUYER, CUSTODIAN, OR ANY
OTHER PURCHASER REPRESENTATIVE, OR THEIR AGENTS OR REPRESENTATIVES, MAY CONDUCT
REVIEWS OF THE TYPE DESCRIBED IN THIS CLAUSE (IV) WHENEVER THEY, IN THEIR
REASONABLE JUDGMENT, DEEM SUCH REVIEWS APPROPRIATE.

 

(E)           KEEPING AND MARKING OF RECORDS AND BOOKS.

 

(I)            CUSTOMER WILL MAINTAIN AND IMPLEMENT ADMINISTRATIVE AND OPERATING
PROCEDURES (INCLUDING, WITHOUT LIMITATION, AN ABILITY TO RECREATE RECORDS
EVIDENCING WAREHOUSE ASSETS IN THE EVENT OF THE DESTRUCTION OF THE ORIGINALS
THEREOF), AND KEEP AND MAINTAIN, ALL DOCUMENTS, BOOKS, RECORDS AND OTHER
INFORMATION REASONABLY NECESSARY OR ADVISABLE FOR THE COLLECTION OF ALL
RECEIVABLES AND OTHER WAREHOUSE ASSETS (INCLUDING, WITHOUT LIMITATION, RECORDS
ADEQUATE TO PERMIT THE IMMEDIATE IDENTIFICATION OF EACH NEW RECEIVABLE AND ALL
COLLECTIONS OF AND ADJUSTMENTS TO EACH EXISTING RECEIVABLE).  CUSTOMER WILL GIVE
BUYER, CUSTODIAN AND SERVICER WRITTEN NOTICE OF ANY MATERIAL CHANGE IN THE
ADMINISTRATIVE AND OPERATING PROCEDURES REFERRED TO IN THE PREVIOUS SENTENCE.

 

(II)           CUSTOMER WILL KEEP BOOKS OF RECORD AND ACCOUNT OF CUSTOMER IN
WHICH FULL, TRUE AND CORRECT ENTRIES IN ACCORDANCE WITH GAAP WILL BE MADE OF ALL
DEALINGS OR TRANSACTIONS IN RELATION TO ITS BUSINESS AND ACTIVITIES, INCLUDING
THE SETTING UP ON ITS BOOKS, FROM INCOME, RESERVES ADEQUATE IN THE JUDGMENT OF
CUSTOMER AND CUSTOMER’S INDEPENDENT AUDITORS FOR OBSOLESCENCE, DEPRECIATION,
DEPLETION AND AMORTIZATION OF THE PROPERTIES OF CUSTOMER DURING EACH YEAR.

 

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(F)            PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND CONTRACTS. 
CUSTOMER WILL AT ITS EXPENSE TIMELY AND FULLY PERFORM AND COMPLY WITH ALL
PROVISIONS, COVENANTS AND OTHER PROMISES REQUIRED TO BE OBSERVED BY IT UNDER THE
CONTRACTS RELATED TO THE RECEIVABLES AND THE OTHER WAREHOUSE ASSETS.

 

(G)           LOAN ORIGINATION GUIDELINES.  CUSTOMER WILL COMPLY WITH THE LOAN
ORIGINATION GUIDELINES IN REGARD TO THE WAREHOUSE ASSETS, INCLUDING WITH RESPECT
TO EACH RECEIVABLE AND THE RELATED CONTRACT.

 

(H)           SUBSEQUENT ACTIONS.  AT THE REQUEST OF BUYER, CUSTOMER SHALL
EXECUTE AND DELIVER TO BUYER SUCH DOCUMENTS OR TAKE SUCH ACTION AS BUYER DEEMS
REASONABLY NECESSARY TO CARRY OUT THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS.

 

(I)            MAINTENANCE OF PROPERTIES; CUSTOMER INSURANCE.  CUSTOMER WILL,
AND EACH OF ITS SUBSIDIARIES TO, MAINTAIN OR CAUSE TO BE MAINTAINED IN GOOD
REPAIR, WORKING ORDER AND CONDITION, ORDINARY WEAR AND TEAR EXCEPTED, ALL
MATERIAL PROPERTIES USED OR USEFUL IN THE BUSINESS OF CUSTOMER AND ITS
SUBSIDIARIES AND FROM TIME TO TIME WILL MAKE OR CAUSE TO BE MADE ALL APPROPRIATE
REPAIRS, RENEWALS AND REPLACEMENTS THEREOF.  CUSTOMER WILL MAINTAIN OR CAUSE TO
BE MAINTAINED, WITH FINANCIALLY SOUND AND REPUTABLE INSURERS, INSURANCE WITH
RESPECT TO CUSTOMER’S PROPERTIES AND BUSINESS AND THE PROPERTIES AND BUSINESSES
OF CUSTOMER’S SUBSIDIARIES AGAINST LOSS OR DAMAGE OF THE KINDS CUSTOMARILY
CARRIED OR MAINTAINED UNDER SIMILAR CIRCUMSTANCES BY CORPORATIONS OF ESTABLISHED
REPUTATION ENGAGED IN SIMILAR BUSINESSES.

 

(J)            CUSTOMER’S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS. 
CUSTOMER SHALL PROMPTLY TAKE, AND SHALL CAUSE EACH OF ITS SUBSIDIARIES PROMPTLY
TO TAKE, ALL NECESSARY REMEDIAL ACTION IN CONNECTION WITH THE PRESENCE, STORAGE,
USE, DISPOSAL, TRANSPORTATION OR RELEASE OF ANY HAZARDOUS MATERIALS ON, UNDER OR
ABOUT ANY FACILITY IN ORDER TO COMPLY WITH ALL APPLICABLE ENVIRONMENTAL LAWS AND
GOVERNMENTAL AUTHORIZATIONS.  IF CUSTOMER OR ANY OF ITS SUBSIDIARIES UNDERTAKES
ANY REMEDIAL ACTION WITH RESPECT TO ANY HAZARDOUS MATERIALS ON, UNDER OR ABOUT
ANY FACILITY, CUSTOMER SHALL CAUSE SUCH REMEDIAL ACTION TO BE CONDUCTED AND
COMPLETED IN COMPLIANCE WITH ALL APPLICABLE ENVIRONMENTAL LAWS, AND IN
ACCORDANCE WITH THE POLICIES, ORDERS AND DIRECTIVES OF ALL APPLICABLE
GOVERNMENTAL AUTHORITIES EXCEPT WHEN, AND ONLY TO THE EXTENT THAT, CUSTOMER’S OR
SUCH SUBSIDIARY’S LIABILITY FOR SUCH PRESENCE, STORAGE, USE, DISPOSAL,
TRANSPORTATION OR DISCHARGE OF ANY HAZARDOUS MATERIALS IS BEING CONTESTED IN
GOOD FAITH BY CUSTOMER OR SUCH SUBSIDIARY.

 

(K)           HEDGE OBLIGATIONS.  CUSTOMER SHALL OBTAIN PROTECTION FROM INTEREST
RATE FLUCTUATIONS FOR THE AGGREGATE OUTSTANDING PRINCIPAL BALANCE OF ALL
RECEIVABLES OR IN SUCH DIFFERENT AMOUNT AS MAY BE DETERMINED FROM TIME TO TIME
BY CUSTOMER’S BOARD OF DIRECTORS, WHETHER THROUGH THE SWAP AGREEMENT OR
OTHERWISE, AND SHALL PROVIDE BUYER WITH A DESCRIPTION THEREOF, TOGETHER WITH
COPIES OF ALL DOCUMENTS AND INSTRUMENTS EVIDENCING SUCH HEDGE OBLIGATIONS.

 

(L)            DOCUMENT DELIVERIES.  WITHIN TWENTY (20) BUSINESS DAYS AFTER ANY
INVESTMENT OF PRINCIPAL PURSUANT TO WHICH A WAREHOUSE ASSET IS SOLD TO BUYER,
CUSTOMER WILL DELIVER TO BUYER A TRUE AND COMPLETE COPY OF EACH OF THE
RECEIVABLE DELIVERY DOCUMENTS OBTAINED IN CONNECTION WITH THE RELEVANT WAREHOUSE
ASSET, WHICH MAY BE DELIVERED ON A

 

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COMPUTER DISKETTE IN ADOBE ACROBAT OR SIMILAR FORMAT.  TO THE EXTENT THAT A
CONTRACT INCLUDES AN INTEREST RATE PROTECTION AGREEMENT, SUCH AGREEMENT (AND
RELATED CONFIRMATION, IF ANY) WILL NOT PROHIBIT THE ASSIGNMENT OF SUCH
INSTRUMENT TO BUYER (OR, IF PROHIBITED, THE REQUIRED CONSENT SHALL HAVE BEEN
OBTAINED PRIOR TO THE APPLICABLE ACQUISITION OF THE WAREHOUSE ASSET IN QUESTION)
AND CUSTOMER WILL DELIVER TO CUSTODIAN (AND PROVIDE TO BUYER A TRUE AND COMPLETE
COPY OF AN ORIGINAL COUNTERPART OF SUCH AGREEMENT (AND RELATED CONFIRMATION, IF
ANY)) PROMPTLY AFTER RECEIPT BY CUSTOMER.  WITHIN TEN (10) BUSINESS DAYS AFTER
ANY REQUEST FROM BUYER, FROM TIME TO TIME, CUSTOMER WILL DELIVER TO BUYER A TRUE
AND COMPLETE COPY OF ANY REPORT, DOCUMENT OR OTHER ITEM IN ITS ASSET
ADMINISTRATION, SERVICING OR OTHER FILES REGARDING ANY WAREHOUSE ASSET.

 

(M)          [INTENTIONALLY OMITTED.]

 

(N)           FINANCIAL CONDITION COVENANTS.  CUSTOMER SHALL AT ALL TIMES TO
COMPLY WITH THE FOLLOWING FINANCIAL CONDITION COVENANTS (COLLECTIVELY, THE
“FINANCIAL CONDITION COVENANTS”):

 

(I)            MINIMUM CONSOLIDATED NET WORTH.  CUSTOMER SHALL NOT PERMIT
CONSOLIDATED NET WORTH AT ANY TIME TO BE LESS THAN $80,000,000.

 

(II)           MAXIMUM LEVERAGE RATIO.  CUSTOMER SHALL NOT PERMIT THE RATIO OF
(X) CONSOLIDATED TOTAL DEBT TO (Y) CONSOLIDATED NET WORTH TO EXCEED 4:1 AT ANY
TIME.

 

For purposes of calculating compliance with the Financial Condition Covenants,
Securities that are issued in connection with Securitization Transactions where
Customer or any of its Subsidiaries retain (or otherwise acquire) Securities,
shall be considered Indebtedness of Customer.

 

SECTION 5.2.            NEGATIVE COVENANTS OF CUSTOMER.  CUSTOMER HEREBY
COVENANTS, UNDERTAKES AND AGREES THAT AT ALL TIMES FROM THE DATE HEREOF TO THE
DATE ON WHICH ALL AMOUNTS PAYABLE HEREUNDER AND UNDER THE OTHER TRANSACTION
DOCUMENTS SHALL BE INDEFEASIBLY PAID IN FULL OR IF LATER, THE TERMINATION DATE,
UNLESS BUYER SHALL OTHERWISE CONSENT IN WRITING:

 

(A)           LIENS.  CUSTOMER SHALL NOT, AND SHALL NOT PERMIT ANY OF ITS
SUBSIDIARIES TO, DIRECTLY OR INDIRECTLY, CREATE, INCUR, ASSUME OR PERMIT TO
EXIST ANY LIEN OR OTHER ADVERSE CLAIM ON OR WITH RESPECT TO ANY PROPERTY OR
ASSET OF ANY KIND (INCLUDING ANY WAREHOUSE ASSETS OR THE COLLECTION ACCOUNT) OF
CUSTOMER OR ANY OF ITS SUBSIDIARIES, WHETHER NOW OWNED OR HEREAFTER ACQUIRED, OR
ANY INCOME OR PROFITS THEREFROM, OR FILE OR PERMIT THE FILING OF, OR PERMIT TO
REMAIN IN EFFECT, ANY FINANCING STATEMENT OR OTHER SIMILAR NOTICE OF ANY LIEN
WITH RESPECT TO ANY SUCH PROPERTY, ASSET, INCOME OR PROFITS UNDER THE UCC OF ANY
STATE OR UNDER ANY SIMILAR RECORDING OR NOTICE STATUTE, EXCEPT:

 

(I)            LIENS INCURRED BY CUSTOMER IN CONNECTION WITH THE SWAP AGREEMENT;

 

(II)           LIENS WITH RESPECT TO INDEBTEDNESS PERMITTED UNDER
SECTIONS 5.2(F)(III), 5.2(F)(V) OR 5.2(F)(VI) (WHICH LIENS SHALL APPLY ONLY TO
THE ASSETS ACQUIRED BY SUCH INDEBTEDNESS, OR, IN THE CASE OF SECTION 5.2(F)(VI),
THE ASSETS SUBJECT TO A SECURITIZATION TRANSACTION);

 

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(III)          LIENS IN FAVOR OF BUYER;

 

(IV)          LIENS DESCRIBED IN SCHEDULE 5.2(A) ANNEXED HERETO; AND

 

(V)           NONCONSENSUAL LIENS THAT ARE BEING CONTESTED, IN GOOD FAITH BY
CUSTOMER, AND WITH RESPECT TO WHICH CUSTOMER HAS ESTABLISHED AND MAINTAINS
RESERVES, DEEMED APPROPRIATE, BY ITS BOARD OF TRUSTEES, BOARD OF DIRECTORS OR
ANALOGOUS BODY.

 

(B)           NO FURTHER NEGATIVE PLEDGES.  EXCEPT WITH RESPECT TO SPECIFIC
PROPERTY (EXCLUSIVE OF WAREHOUSE ASSETS) ENCUMBERED TO SECURE PAYMENT OF
PARTICULAR INDEBTEDNESS PERMITTED PURSUANT TO THIS AGREEMENT AND EXCEPT AS
PROVIDED IN THIS AGREEMENT, NEITHER CUSTOMER NOR ANY OF ITS SUBSIDIARIES SHALL
ENTER INTO ANY AGREEMENT PROHIBITING THE CREATION OR ASSUMPTION OF ANY LIEN UPON
ANY OF ITS PROPERTIES OR ASSETS, WHETHER NOW OWNED OR HEREAFTER ACQUIRED.

 

(C)           NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO CUSTOMER OR OTHER
SUBSIDIARIES.  EXCEPT AS PROVIDED HEREIN AND EXCEPT WITH RESPECT TO SPECIFIC
PROPERTY ENCUMBERED TO SECURE PAYMENT OF PARTICULAR INDEBTEDNESS PERMITTED
PURSUANT TO THIS AGREEMENT, CUSTOMER WILL NOT, AND WILL NOT PERMIT ANY OF ITS
SUBSIDIARIES TO, CREATE OR OTHERWISE CAUSE OR SUFFER TO EXIST OR BECOME
EFFECTIVE ANY CONSENSUAL ENCUMBRANCE OR RESTRICTION OF ANY KIND ON THE ABILITY
OF ANY SUCH SUBSIDIARY TO (I) PAY DIVIDENDS OR MAKE ANY OTHER DISTRIBUTIONS ON
ANY OF SUCH SUBSIDIARY’S CAPITAL STOCK OWNED BY CUSTOMER OR ANY SUBSIDIARY OF
CUSTOMER, (II) REPAY OR PREPAY ANY INDEBTEDNESS OWED BY SUCH SUBSIDIARY TO
CUSTOMER OR ANY SUBSIDIARY OF CUSTOMER, (III) MAKE LOANS OR ADVANCES TO CUSTOMER
OR ANY SUBSIDIARY OF CUSTOMER, OR (IV) TRANSFER ANY OF ITS PROPERTY OR ASSETS TO
CUSTOMER OR ANY SUBSIDIARY OF CUSTOMER.

 

(D)           EXTENSION OR AMENDMENT OF RECEIVABLES.  EXCEPT AS EXPRESSLY
CONTEMPLATED BY THIS AGREEMENT, CUSTOMER WILL NOT EXTEND, AMEND OR OTHERWISE
MODIFY THE TERMS OF ANY RECEIVABLE IN ANY MATERIAL RESPECT, OR AMEND, MODIFY OR
WAIVE ANY TERM OR CONDITION OF ANY CONTRACT RELATED THERETO IN ANY MATERIAL
RESPECT, OR GRANT ANY MATERIAL CONSENT WITH REGARD TO ANY CONTRACT.

 

(E)           INVESTMENTS.  CUSTOMER SHALL NOT, AND SHALL NOT PERMIT ANY OF ITS
SUBSIDIARIES TO, DIRECTLY OR INDIRECTLY, MAKE OR OWN ANY INVESTMENT IN ANY
PERSON, INCLUDING ANY JOINT VENTURE, EXCEPT:

 

(I)            CUSTOMER AND ITS SUBSIDIARIES MAY MAKE AND OWN INVESTMENTS IN (1)
ELIGIBLE INVESTMENTS, (2) MORTGAGE BACKED SECURITIES, INCLUDING, WITHOUT
LIMITATION, PRIVATE LABEL MORTGAGE PASS THROUGH CERTIFICATES AND OBLIGATIONS OF
FANNIE MAE AND FREDDIE MAC, AND (3) INVESTMENTS BY CUSTOMER PURSUANT TO THE SWAP
AGREEMENT;

 

(II)           PARENT MAY (A) MAKE INTERCOMPANY LOANS TO THE EXTENT EXPRESSLY
PERMITTED IN THIS AGREEMENT AND (B) TRANSFER TAXABLE NON-REIT ASSETS TO A
TAXABLE REIT SUBSIDIARY ENTITY;

 

(III)          CUSTOMER AND ITS SUBSIDIARIES MAY MAKE CONSOLIDATED CAPITAL
EXPENDITURES AS EXPRESSLY PERMITTED IN THIS AGREEMENT;

 

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(IV)          CUSTOMER AND ITS SUBSIDIARIES MAY ACQUIRE ELIGIBLE RECEIVABLES AND
RELATED WAREHOUSE ASSETS, INCLUDING, WITHOUT LIMITATION, RETAINED SECURITIES
RELATING TO SECURITIZATION TRANSACTIONS;

 

(V)           CUSTOMER AND ITS SUBSIDIARIES MAY FORM BANKRUPTCY-REMOTE
WHOLLY-OWNED SUBSIDIARIES FOR THE SOLE PURPOSE OF ACQUIRING ELIGIBLE RECEIVABLES
FROM CUSTOMER AND ENTERING INTO SECURITIZATION TRANSACTIONS; AND

 

(VI)          CUSTOMER MAY MAKE AND OWN INVESTMENTS PURSUANT TO THE TERMS OF THE
SWAP AGREEMENT.

 

(F)            INDEBTEDNESS AND GUARANTIES.  CUSTOMER SHALL NOT, AND SHALL NOT
PERMIT ANY OF ITS SUBSIDIARIES TO, DIRECTLY OR INDIRECTLY, CREATE, INCUR, ASSUME
OR GUARANTY, OR OTHERWISE BECOME OR REMAIN DIRECTLY OR INDIRECTLY LIABLE WITH
RESPECT TO, ANY INDEBTEDNESS, EXCEPT:

 

(I)            CUSTOMER MAY BECOME AND REMAIN LIABLE WITH RESPECT TO CUSTOMER
OBLIGATIONS;

 

(II)           CUSTOMER AND ITS SUBSIDIARIES MAY BECOME AND REMAIN LIABLE WITH
RESPECT TO CONTINGENT OBLIGATIONS EXPRESSLY PERMITTED BY THIS AGREEMENT AND,
UPON ANY MATURED OBLIGATIONS ACTUALLY ARISING PURSUANT THERETO, THE INDEBTEDNESS
CORRESPONDING TO THE CONTINGENT OBLIGATIONS SO EXTINGUISHED;

 

(III)          CUSTOMER MAY BECOME AND REMAIN LIABLE WITH RESPECT TO
INDEBTEDNESS IN RESPECT OF CAPITAL LEASES; PROVIDED THAT SUCH CAPITAL LEASES ARE
EXPRESSLY PERMITTED BY THIS AGREEMENT;

 

(IV)          CUSTOMER MAY BECOME AND REMAIN LIABLE WITH RESPECT TO INDEBTEDNESS
TO ANY OF ITS WHOLLY-OWNED SUBSIDIARIES, AND ANY WHOLLY-OWNED SUBSIDIARY OF
CUSTOMER MAY BECOME AND REMAIN LIABLE WITH RESPECT TO INDEBTEDNESS TO CUSTOMER
OR ANY OTHER WHOLLY-OWNED SUBSIDIARY OF CUSTOMER; PROVIDED THAT (A) ALL SUCH
INTERCOMPANY INDEBTEDNESS SHALL BE EVIDENCED BY PROMISSORY NOTES, (B) ALL SUCH
INTERCOMPANY INDEBTEDNESS OWED BY CUSTOMER TO ANY OF ITS SUBSIDIARIES SHALL BE
SUBORDINATED IN RIGHT OF PAYMENT TO THE PAYMENT IN FULL OF CUSTOMER OBLIGATIONS
PURSUANT TO THE TERMS OF THE APPLICABLE PROMISSORY NOTES OR AN INTERCOMPANY
SUBORDINATION AGREEMENT, AND (C) ANY PAYMENT BY ANY SUBSIDIARY OF CUSTOMER UNDER
ANY GUARANTY OF CUSTOMER OBLIGATIONS SHALL RESULT IN A PRO TANTO REDUCTION OF
THE AMOUNT OF ANY INTERCOMPANY INDEBTEDNESS OWED BY SUCH SUBSIDIARY TO CUSTOMER
OR TO ANY OF ITS SUBSIDIARIES FOR WHOSE BENEFIT SUCH PAYMENT IS MADE;

 

(V)           CUSTOMER MAY BECOME AND REMAIN LIABLE WITH RESPECT TO INDEBTEDNESS
(OTHER THAN CAPITAL LEASES) TO FINANCE THE PURCHASE PRICE OF ASSETS (OTHER THAN
ELIGIBLE RECEIVABLES) ACQUIRED AFTER THE CLOSING DATE IN THE ORDINARY COURSE OF
BUSINESS IN AN AGGREGATE PRINCIPAL AMOUNT FOR CUSTOMER AND ITS SUBSIDIARIES NOT
TO EXCEED $1,000,000 AT ANY TIME OUTSTANDING;

 

(VI)          CUSTOMER’S SUBSIDIARIES MAY BECOME AND REMAIN LIABLE WITH RESPECT
TO INDEBTEDNESS INCURRED IN CONNECTION WITH THE SECURITIZATION TRANSACTIONS;

 

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(VII)                           CUSTOMER AND ITS SUBSIDIARIES MAY BECOME AND
REMAIN LIABLE WITH RESPECT TO INDEBTEDNESS DESCRIBED IN SCHEDULE 5.2(F) ANNEXED
THERETO;

 

(VIII)                        CUSTOMER MAY BECOME AND REMAIN LIABLE WITH RESPECT
TO THE LEASE OBLIGATIONS OF ANY SUBSIDIARY THAT ARE OTHERWISE PERMITTED UNDER
SECTION 5.2(K) HEREOF; AND

 

(IX)                                CUSTOMER MAY BECOME AND REMAIN LIABLE WITH
RESPECT TO INDEBTEDNESS IN RESPECT OF THE SWAP AGREEMENT PERMITTED HEREUNDER.

 

(G)                                 CONTINGENT OBLIGATIONS.  CUSTOMER SHALL NOT,
AND SHALL NOT PERMIT ANY OF ITS SUBSIDIARIES TO, DIRECTLY OR INDIRECTLY, CREATE
OR BECOME OR REMAIN LIABLE WITH RESPECT TO ANY CONTINGENT OBLIGATION, EXCEPT:

 

(I)                                     CUSTOMER AND ITS SUBSIDIARIES MAY BECOME
AND REMAIN LIABLE WITH RESPECT TO CONTINGENT OBLIGATIONS IN RESPECT OF CUSTOMARY
INDEMNIFICATION AND PURCHASE PRICE ADJUSTMENT OBLIGATIONS INCURRED IN CONNECTION
WITH SECURITIZATION TRANSACTIONS OR OTHER SALES OF ASSETS;

 

(II)                                  CUSTOMER AND ITS SUBSIDIARIES MAY BECOME
AND REMAIN LIABLE WITH RESPECT TO CONTINGENT OBLIGATIONS IN RESPECT OF ANY
INDEBTEDNESS OF CUSTOMER OR ANY OF ITS SUBSIDIARIES PERMITTED BY SECTION 5.2(F),
INCLUDING, WITHOUT LIMITATION, PURSUANT TO THE SWAP AGREEMENT; AND

 

(III)                               CUSTOMER MAY BECOME AND REMAIN LIABLE WITH
RESPECT TO CONTINGENT OBLIGATIONS IN RESPECT OF REPURCHASE OBLIGATIONS PURSUANT
TO THIS AGREEMENT.

 

(H)                                 RESTRICTED JUNIOR PAYMENTS.  CUSTOMER SHALL
NOT, AND SHALL NOT PERMIT ANY OF ITS SUBSIDIARIES TO, MAKE ANY RESTRICTED JUNIOR
PAYMENT, EXCEPT THAT CUSTOMER MAY MAKE PERMITTED TAX DISTRIBUTIONS SO LONG AS
(I) NO TERMINATION EVENT EXISTS, (II) NO MONETARY POTENTIAL TERMINATION EVENT OR
MATERIAL NON-MONETARY POTENTIAL TERMINATION EVENT EXISTS WITH RESPECT TO WHICH
BUYER HAS GIVEN NOTICE TO CUSTOMER, AND (III) CUSTOMER IS NOT THEN REQUIRED TO
MAKE A PAYMENT PURSUANT TO SECTION 2.9(C).

 

(I)                                     CAPITAL STRUCTURE.  CUSTOMER SHALL NOT,
AND SHALL NOT PERMIT ANY OF ITS SUBSIDIARIES TO, ALTER THE CORPORATE, CAPITAL OR
LEGAL STRUCTURE OF CUSTOMER OR ANY OF ITS SUBSIDIARIES, OR ENTER INTO ANY
TRANSACTION OF MERGER OR CONSOLIDATION, OR LIQUIDATE, WIND-UP OR DISSOLVE ITSELF
(OR SUFFER ANY LIQUIDATION OR DISSOLUTION), OR CONVEY, SELL, LEASE, SUB-LEASE,
TRANSFER OR OTHERWISE DISPOSE OF, IN ONE TRANSACTION OR A SERIES OF
TRANSACTIONS, ALL OR ANY PART OF ITS BUSINESS, PROPERTY OR FIXED ASSETS, WHETHER
NOW OWNED OR HEREAFTER ACQUIRED, OR ACQUIRE BY PURCHASE OR OTHERWISE ALL OR
SUBSTANTIALLY ALL THE BUSINESS, PROPERTY OR FIXED ASSETS OF, OR STOCK OR OTHER
EVIDENCE OF BENEFICIAL OWNERSHIP OF, ANY PERSON, EXCEPT:

 

(I)                                     ANY SUBSIDIARY OF CUSTOMER MAY BE MERGED
WITH OR INTO CUSTOMER OR ANY WHOLLY-OWNED SUBSIDIARY OF CUSTOMER, OR BE
LIQUIDATED, WOUND UP OR DISSOLVED, OR ALL OR ANY SUBSTANTIAL PART OF ITS
BUSINESS, PROPERTY OR ASSETS MAY BE CONVEYED, SOLD, LEASED, TRANSFERRED OR
OTHERWISE DISPOSED OF, IN ONE TRANSACTION OR A SERIES OF TRANSACTIONS,

 

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TO CUSTOMER OR ANY WHOLLY-OWNED SUBSIDIARY OF CUSTOMER; PROVIDED THAT, IN THE
CASE OF SUCH A MERGER, CUSTOMER OR SUCH WHOLLY-OWNED SUBSIDIARY SHALL BE THE
CONTINUING OR SURVIVING CORPORATION;

 

(II)                                  CUSTOMER AND ITS SUBSIDIARIES MAY MAKE
CONSOLIDATED CAPITAL EXPENDITURES PERMITTED UNDER SECTION 5.2(J) BELOW;

 

(III)                               CUSTOMER MAY MAKE ASSET SALES IN CONNECTION
WITH SECURITIZATION TRANSACTIONS;

 

(IV)                              CUSTOMER MAY MAKE TRANSFERS PURSUANT TO THE
SWAP AGREEMENT; AND

 

(V)                                 CUSTOMER MAY TRANSFER TAXABLE NON-REIT
ASSETS TO A TAXABLE REIT SUBSIDIARY ENTITY.

 

(J)                                     CONSOLIDATED CAPITAL EXPENDITURES. 
CUSTOMER SHALL NOT, AND SHALL NOT PERMIT ITS SUBSIDIARIES TO, MAKE OR INCUR
CONSOLIDATED CAPITAL EXPENDITURES, EXCEPT IN THE ORDINARY COURSE OF BUSINESS IN
AN AGGREGATE AMOUNT NOT TO EXCEED $1,000,000 IN ANY FISCAL YEAR.

 

(K)                                  RESTRICTION ON LEASES.  CUSTOMER SHALL NOT,
AND SHALL NOT PERMIT ANY OF ITS SUBSIDIARIES TO, BECOME LIABLE IN ANY WAY,
WHETHER DIRECTLY OR BY ASSIGNMENT OR AS A GUARANTOR OR OTHER SURETY, FOR THE
OBLIGATIONS OF THE LESSEE UNDER ANY LEASE, WHETHER AN OPERATING LEASE OR A
CAPITAL LEASE EXCEPT FOR (A) OBLIGATIONS INCURRED IN THE ORDINARY COURSE OF
BUSINESS IF IMMEDIATELY AFTER GIVING EFFECT TO THE INCURRENCE OF LIABILITY WITH
RESPECT TO SUCH LEASE, THE CONSOLIDATED RENTAL PAYMENTS AT THE TIME IN EFFECT
DURING THE THEN CURRENT FISCAL YEAR OR ANY FUTURE PERIOD OF 12 CONSECUTIVE
CALENDAR MONTHS SHALL NOT EXCEED $500,000, AND (B) OBLIGATIONS FOR LEASED OFFICE
SPACE NOT TO EXCEED $400,000 IN ANY FISCAL YEAR.

 

(L)                                     TRANSACTION WITH AFFILIATES.  EXCEPT FOR
THE TRANSACTIONS EXPRESSLY CONTEMPLATED BY THIS AGREEMENT AND TRANSFERS BY
CUSTOMER OF TAXABLE NON-REIT ASSETS TO A TAXABLE REIT SUBSIDIARY ENTITY,
CUSTOMER SHALL NOT AND SHALL NOT PERMIT ITS SUBSIDIARIES TO ENTER INTO, OR BE A
PARTY TO, ANY TRANSACTION WITH ANY AFFILIATE, SHAREHOLDER, OFFICER, DIRECTOR OR
TRUSTEE OF CUSTOMER, EXCEPT, CONSISTENT WITH CUSTOMER’S PRACTICE BEFORE ENTERING
INTO THIS AGREEMENT, IN THE ORDINARY COURSE OF, AND PURSUANT TO THE REASONABLE
REQUIREMENTS OF, CUSTOMER’S BUSINESS AND UPON FAIR AND REASONABLE TERMS WHICH
ARE FULLY DISCLOSED IN WRITING TO BUYER PRIOR TO ENTERING INTO SUCH TRANSACTION
AND ARE NO LESS FAVORABLE TO CUSTOMER THAN WOULD OBTAIN IN A COMPARABLE ARM’S
LENGTH TRANSACTION WITH A PERSON NOT AN AFFILIATE OR SHAREHOLDER, OFFICER,
DIRECTOR OR TRUSTEE OF CUSTOMER.

 

(M)                               ADVERSE TRANSACTIONS.  CUSTOMER SHALL NOT AND
SHALL NOT PERMIT ANY OF ITS SUBSIDIARIES TO ENTER INTO ANY TRANSACTION WHICH
ADVERSELY AFFECTS THE RECEIVABLES OR CUSTOMER’S ABILITY TO PERFORM ANY OF ITS
RESPECTIVE OBLIGATIONS UNDER ANY TRANSACTION DOCUMENT OR BUYER’S OR ANY
PURCHASER REPRESENTATIVE’S RIGHTS OR INTERESTS UNDER ANY TRANSACTION DOCUMENT.

 

(N)                                 RECEIVABLES AND RELATED PROPERTY.  EXCEPT AS
OTHERWISE EXPRESSLY PERMITTED IN THE TRANSACTION DOCUMENTS, CUSTOMER SHALL NOT
CONVEY, TRANSFER, ASSIGN, PLEDGE, OR

 

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allow any ownership, Lien or other interest in the Receivables or other
Warehouse Assets other than Customer’s and Buyer’s respective interests as
described hereunder.

 

(O)                                 DISPOSAL OF SUBSIDIARY STOCK.  CUSTOMER
SHALL NOT, AND SHALL NOT PERMIT ANY OF ITS SUBSIDIARIES TO, DIRECTLY OR
INDIRECTLY TO SELL, ASSIGN, PLEDGE OR OTHERWISE ENCUMBER OR DISPOSE OF ANY
SHARES OF CAPITAL STOCK OR OTHER EQUITY SECURITIES OF ANY OF ITS SUBSIDIARIES,
EXCEPT TO CUSTOMER OR ANOTHER SUBSIDIARY OF CUSTOMER, OR TO QUALIFY DIRECTORS IF
REQUIRED BY APPLICABLE LAW.

 

(P)                                 CONDUCT OF BUSINESS.  EXCEPT AS OTHERWISE
EXPRESSLY PERMITTED HEREUNDER, CUSTOMER SHALL NOT, AND SHALL NOT PERMIT ANY OF
ITS SUBSIDIARIES TO, ENGAGE IN ANY BUSINESS OTHER THAN (I) THOSE NECESSARY FOR,
INCIDENT TO, CONNECTED WITH, OR ARISING OUT OF THE ACQUISITION AND SERVICING OF
ELIGIBLE RECEIVABLES AND THE MAKING OF INVESTMENTS PERMITTED PURSUANT TO
SECTION 5.2(E), AND (II) AND SUCH OTHER LINES OF BUSINESS AS MAY BE CONSENTED TO
BY BUYER.  NOTWITHSTANDING THE FOREGOING, AND EXCEPT FOR THE CONDUCT OF THE
SERVICING AND LOAN UNDERWRITING BUSINESS BY A TAXABLE REIT SUBSIDIARY ENTITY, NO
SUBSIDIARY OF CUSTOMER SHALL ENGAGE IN ANY BUSINESS EXCEPT AS CONTEMPLATED BY
THE SECURITIZATION TRANSACTION TO WHICH IT IS A PARTY.

 

(Q)                                 ACCOUNTING CHANGES.

 

(I)                                     CUSTOMER SHALL NOT, AND SHALL NOT PERMIT
ANY OF ITS SUBSIDIARIES TO, (A) MAKE OR PERMIT ANY CHANGE IN ACCOUNTING
PRINCIPLES OR REPORTING PRACTICES, EXCEPT AS REQUIRED OR PERMITTED BY GAAP OR
(B) CHANGE ITS FISCAL YEAR OR FISCAL QUARTERS.

 

(II)                                  CUSTOMER AND ITS SUBSIDIARIES WILL USE ONE
OF THE FOLLOWING ACCOUNTING FIRMS, OR ITS SUCCESSORS (OR ANOTHER INDEPENDENT
ACCOUNTING FIRM OF NATIONALLY RECOGNIZED STANDING REASONABLY SATISFACTORY TO
BUYER):

 

KPMG Peat Marwick LLP
Ernst & Young
PriceWaterhouseCoopers
Deloitte Touche

 

(R)                                    ENFORCEMENT OF RECEIVABLES.  CUSTOMER
WILL NOT FORECLOSE ANY LIENS SECURING RECEIVABLES OR ACCEPT (OR PERMIT ANY
SUBSIDIARY OR AFFILIATE TO ACCEPT) ANY PROPERTY IN LIEU OF FORECLOSURE.

 

(S)                                  MISCELLANEOUS UCC MATTERS.  CUSTOMER SHALL
NEITHER CHANGE ITS NAME, IDENTITY OR CORPORATE STRUCTURE NOR RELOCATE ITS CHIEF
EXECUTIVE OFFICE OR ANY OFFICE WHERE RECORDS ARE KEPT UNLESS IT SHALL HAVE:  (I)
GIVEN BUYER, SERVICER AND CUSTODIAN AT LEAST THIRTY (30) DAYS PRIOR NOTICE
THEREOF AND (II) DELIVERED TO CUSTODIAN ALL FINANCING STATEMENTS, INSTRUMENTS
AND OTHER DOCUMENTS REASONABLY REQUESTED BY CUSTODIAN, BUYER OR SERVICER IN
CONNECTION WITH SUCH CHANGE OR RELOCATION.  CUSTOMER SHALL AT ALL TIMES MAINTAIN
ITS CHIEF EXECUTIVE OFFICE WITHIN A JURISDICTION IN THE UNITED STATES IN WHICH
ARTICLE 9 OF THE UCC IS IN EFFECT AND IF IT MOVES ITS CHIEF EXECUTIVE OFFICE TO
A LOCATION WHICH MAY CHARGE TAXES, FEES, COSTS, EXPENSES OR OTHER CHARGES TO
PERFECT THE WAREHOUSE ASSETS, IT SHALL PAY ALL TAXES, FEES, COSTS, EXPENSES AND
OTHER CHARGES ASSOCIATED WITH PERFECTING THE WAREHOUSE ASSETS AND ANY OTHER
COSTS AND EXPENSES

 

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incurred in order to maintain the enforceability of this Agreement and the
Warehouse Assets, and take all actions at its expense as Buyer may reasonably
request.

 

ARTICLE VI
ADMINISTRATION AND COLLECTIONS

 

SECTION 6.1.                                   DESIGNATION OF SERVICER.  BUYER
SHALL BE, AND HEREBY IS, VESTED WITH THE RIGHT TO ENFORCE AND COLLECT THE
RECEIVABLES.  NOTWITHSTANDING THE FOREGOING, BUYER HEREBY DELEGATES TO CUSTOMER
THE RIGHT TO SERVICE, ADMINISTER, COLLECT AND ENFORCE THE RECEIVABLES IN
ACCORDANCE WITH THE TERMS AND PROVISIONS OF THE SERVICING AGREEMENT AND PURSUANT
TO A STANDARD THAT MEETS OR EXCEEDS THE GREATER OF (A) THE SERVICING,
ADMINISTRATION, COLLECTION AND ENFORCEMENT THAT WOULD BE UNDERTAKEN BY A
REASONABLY PRUDENT PERSON PERFORMING SUCH ACTIONS WITH REGARD TO SIMILAR
RECEIVABLES, (B) THE STANDARDS OBSERVED BY CUSTOMER IN CONNECTION WITH WAREHOUSE
ASSETS NOT SOLD TO BUYER, AND (C) THE STANDARD IMPOSED UPON THE SERVICERS IN
CONNECTION WITH SECURITIZATION TRANSACTIONS SPONSORED BY CUSTOMER (OR ITS
SUBSIDIARIES); PROVIDED, HOWEVER, THE FOREGOING DELEGATION SHALL TERMINATE UPON
THE OCCURRENCE OF A TERMINATION EVENT.  BUYER AND CUSTOMER HEREBY AUTHORIZE
SERVICER TO SERVICE, ADMINISTER, COLLECT AND ENFORCE THE RECEIVABLES AND TO
ENGAGE SUB-SERVICERS TO RENDER SUCH SERVICES ON ITS BEHALF PURSUANT TO THE
SERVICING AGREEMENT.  UPON THE OCCURRENCE OF A TERMINATION EVENT OR A SERVICER
DEFAULT, BUYER, IN ITS SOLE DISCRETION, MAY DESIGNATE ANY PERSON (INCLUDING
ITSELF) TO SUCCEED SERVICER AS SERVICER OF THE WAREHOUSE ASSETS.  CUSTOMER SHALL
TIMELY PAY ALL OF THE REASONABLE AND CUSTOMARY FEES AND EXPENSES OF SERVICER
PURSUANT TO THE SERVICING AGREEMENT AND BEAR ALL THE OUT-OF-POCKET COSTS OF
BUYER IN CONNECTION WITH A TERMINATION OF THE SERVICING AGREEMENT AND TRANSFER
OF SERVICING ARRANGEMENTS, INCLUDING ANY TERMINATION PAYMENT PAYABLE UNDER THE
SERVICING AGREEMENT.  CUSTOMER SHALL FULLY COOPERATE WITH AND ASSIST ANY NEW
SERVICER OF THE MORTGAGE LOAN RECEIVABLES OR THE DIRECT LOAN RECEIVABLES.  SUCH
COOPERATION SHALL INCLUDE (WITHOUT LIMITATION) ACCESS TO AND TRANSFER OF RECORDS
AND USE BY THE NEW SERVICER OR ITS DESIGNEE, OF ALL LICENSES, HARDWARE OR
SOFTWARE IN THE POSSESSION OR CONTROL OF CUSTOMER NECESSARY OR DESIRABLE TO
COLLECT THE RECEIVABLES AND THE RELATED SECURITY.

 

SECTION 6.2.                                   BANK ACCOUNT ARRANGEMENTS.  PRIOR
TO THE INITIAL PURCHASE HEREUNDER, CUSTOMER, CUSTODIAN AND BUYER SHALL ENTER
INTO THE PAYING AGENT AGREEMENT.  THE COLLECTION ACCOUNT WILL BE UNDER THE SOLE
AND EXCLUSIVE DOMINION AND CONTROL OF BUYER, SUBJECT TO THE TERMS AND PROVISIONS
OF THE PAYING AGENT AGREEMENT.  UPON THE OCCURRENCE AND DURING THE CONTINUATION
OF A TERMINATION EVENT, CUSTODIAN MAY, UPON INSTRUCTION FROM BUYER AND AS
BUYER’S AGENT, DO ANY OR ALL OF THE FOLLOWING:  (I) TO CONTINUE TO EXERCISE
EXCLUSIVE DOMINION AND CONTROL OVER THE FUNDS DEPOSITED IN THE COLLECTION
ACCOUNT, (II) TO HAVE THE PROCEEDS THAT ARE SENT TO THE COLLECTION ACCOUNT BE
REDIRECTED PURSUANT TO ITS INSTRUCTIONS RATHER THAN DEPOSITED IN THE COLLECTION
ACCOUNT, AND (III) TO TAKE ANY OR ALL OTHER ACTIONS PERMITTED UNDER THE PAYING
AGENT AGREEMENT.  CUSTOMER HEREBY AGREES THAT IF CUSTODIAN, AT ANY TIME, TAKES
ANY ACTION SET FORTH IN THE PRECEDING SENTENCE, CUSTODIAN SHALL HAVE EXCLUSIVE
CONTROL, AS THE TRUSTEE FOR BUYER, OF THE RECEIVABLES AND THE PROCEEDS
(INCLUDING COLLECTIONS) OF ALL RECEIVABLES AND CUSTOMER HEREBY FURTHER AGREES TO
TAKE ANY OTHER ACTION THAT CUSTODIAN OR BUYER MAY REASONABLY REQUEST TO TRANSFER
SUCH CONTROL.  ANY PROCEEDS OF RECEIVABLES RECEIVED BY CUSTOMER SHALL BE SENT
IMMEDIATELY TO CUSTODIAN FOR DEPOSIT INTO THE COLLECTION ACCOUNT.  THE PARTIES
HERETO HEREBY ACKNOWLEDGE THAT NEITHER CUSTODIAN NOR BUYER SHALL HAVE ANY RIGHTS
TO THE FUNDS IN THE COLLECTION ACCOUNT FOR ITS OWN ACCOUNT (OTHER THAN, IN THE
CASE OF CUSTODIAN, FOR THE PAYMENT OF

 

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its fees and expenses or, in the case of Buyer, for application in accordance
with Sections 2.5 and 2.6 and the Paying Agent Agreement, as applicable).  Funds
in the Collection Account shall be held by Custodian as trustee for the benefit
of Buyer, and Custodian shall distribute or cause to be distributed such funds
in its capacity as Paying Agent under this Agreement and the Paying Agent
Agreement.  At all times, Customer shall irrevocably direct that each Obligor
make all payments in respect of the Warehouse Assets to the Servicing Collection
Account (as defined in the Servicing Agreement).

 

SECTION 6.3.                                   ENFORCEMENT RIGHTS.  AT ANY TIME
FOLLOWING THE TERMINATION OF THE SERVICING AGREEMENT UNDER SECTION 6.1 ON
DESIGNATION OF A NEW SERVICER PURSUANT TO SECTION 6.1:

 

(A)                                  BUYER MAY DIRECT THE OBLIGORS THAT PAYMENT
OF ALL AMOUNTS PAYABLE UNDER ANY RECEIVABLE BE MADE DIRECTLY TO CUSTODIAN OR ITS
DESIGNEE OR IF DIRECTED BY BUYER, TO BUYER OR ITS DESIGNEE.

 

(B)                                 CUSTOMER SHALL, AT BUYER’S REQUEST AND AT
CUSTOMER’S EXPENSE, GIVE NOTICE OF BUYER’S OWNERSHIP OF RECEIVABLES TO EACH
OBLIGOR AND DIRECT THAT PAYMENTS BE MADE DIRECTLY TO CUSTODIAN OR ITS DESIGNEE
OR IF DIRECTED BY BUYER, TO BUYER OR ITS DESIGNEE.

 

(C)                                  BUYER MAY REQUEST CUSTOMER TO, AND UPON
SUCH REQUEST CUSTOMER SHALL, ASSEMBLE ALL OF THE RECORDS NECESSARY OR DESIRABLE
TO COLLECT THE RECEIVABLES AND THE RELATED SECURITY, AND TRANSFER OR LICENSE THE
USE OF, TO THE NEW SERVICER, ALL SOFTWARE NECESSARY OR DESIRABLE TO COLLECT THE
RECEIVABLES AND THE RELATED SECURITY, AND MAKE THE SAME AVAILABLE TO BUYER OR
ITS DESIGNEE OR CUSTODIAN AT A PLACE SELECTED BY BUYER.

 

(D)                                 CUSTOMER HEREBY AUTHORIZES BUYER AND EACH
OTHER PURCHASER REPRESENTATIVE (OR ITS DESIGNEES), UPON THE OCCURRENCE AND
DURING THE CONTINUATION OF A TERMINATION EVENT, TO TAKE ALL STEPS IN CUSTOMER’S
NAME AND ON BEHALF OF CUSTOMER NECESSARY OR DESIRABLE, IN THE DETERMINATION OF
BUYER OR SUCH OTHER PURCHASER REPRESENTATIVE, TO COLLECT ALL AMOUNTS DUE UNDER
ALL RECEIVABLES, INCLUDING, WITHOUT LIMITATION, ENDORSING CUSTOMER’S NAME ON
CHECKS AND OTHER INSTRUMENTS REPRESENTING COLLECTIONS AND ENFORCING SUCH
RECEIVABLES, RELATED SECURITY AND THE RELATED CONTRACTS.

 

SECTION 6.4.                                   RESPONSIBILITIES OF CUSTOMER. 
ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, CUSTOMER SHALL (I) PERFORM ALL
OF ITS OBLIGATIONS UNDER THE CONTRACTS RELATED TO THE RECEIVABLES TO THE SAME
EXTENT AS IF INTERESTS IN SUCH RECEIVABLES HAD NOT BEEN SOLD HEREUNDER AND THE
EXERCISE BY BUYER OR CUSTODIAN OF THEIR RIGHTS HEREUNDER SHALL NOT RELIEVE
CUSTOMER FROM SUCH OBLIGATIONS, AND (II) PAY WHEN DUE ANY TAXES INCLUDING
WITHOUT LIMITATION, ANY SALES TAXES PAYABLE IN CONNECTION WITH THE RECEIVABLES
AND THEIR CREATION AND SATISFACTION.  NONE OF BUYER NOR ANY PURCHASER
REPRESENTATIVE SHALL HAVE ANY OBLIGATION OR LIABILITY WITH RESPECT TO ANY
RECEIVABLE, RELATED SECURITY OR RELATED CONTRACT, NOR SHALL IT BE OBLIGATED TO
PERFORM ANY OF THE OBLIGATIONS OF CUSTOMER THEREUNDER, IT BEING UNDERSTOOD THAT
THE EXERCISE BY BUYER OR ANY PURCHASER REPRESENTATIVE OF ANY RIGHTS UNDER ANY OF
THE TRANSACTION DOCUMENTS SHALL NOT RELEASE CUSTOMER FROM ANY OF ITS DUTIES OR
OBLIGATIONS UNDER THE CONTRACTS, OR ANY OTHER CONTRACTS AND AGREEMENTS.

 

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ARTICLE VII
TERMINATION EVENTS

 

SECTION 7.1.                                   TERMINATION EVENTS.  THE
OCCURRENCE OF ANY ONE OR MORE OF THE FOLLOWING EVENTS SHALL CONSTITUTE A
“TERMINATION EVENT:”

 

(A)                                  CUSTOMER SHALL FAIL TO MAKE ANY PAYMENT OR
DEPOSIT TO BE MADE BY IT HEREUNDER WHEN DUE (INCLUDING PURSUANT TO SECTIONS
2.2(H), 2.4(D) AND 2.9(C) HEREOF) OR UNDER ANY TRANSACTION DOCUMENT WHEN DUE; OR

 

(B)                                 (I) CUSTOMER SHALL WAIVE ANY SERVICER
DEFAULT WITHOUT THE PRIOR CONSENT OF BUYER, OR (II) NO REPLACEMENT SERVICER HAS
BEEN APPOINTED BY CUSTOMER (WITH THE PRIOR CONSENT OF BUYER, WHICH CONSENT SHALL
NOT BE UNREASONABLY WITHHELD OR DELAYED) USING GOOD FAITH EFFORTS WITHIN THIRTY
(30) DAYS OF CUSTOMER OBTAINING KNOWLEDGE OF A SERVICER DEFAULT THAT IS NOT
WAIVED (WITH BUYER’S PRIOR CONSENT); OR

 

(C)                                  [INTENTIONALLY OMITTED]

 

(D)                                 ANY REPRESENTATION, WARRANTY, CERTIFICATION
OR STATEMENT MADE BY CUSTOMER OR ANY OF ITS SUBSIDIARIES IN THIS AGREEMENT OR IN
ANY OTHER TRANSACTION DOCUMENT OR IN STATEMENT OR CERTIFICATE AT ANY TIME GIVEN
BY CUSTOMER OR ANY OF ITS SUBSIDIARIES IN WRITING PURSUANT HERETO OR THERETO OR
IN CONNECTION HEREWITH OR THEREWITH SHALL BE FALSE IN ANY MATERIAL RESPECT ON
THE DATE AS OF WHICH MADE PROVIDED, THAT IF SUCH DEFAULT REFERRED TO IN THIS
SECTION 7.1(D) IS SUSCEPTIBLE OF BEING CURED, NO TERMINATION EVENT SHALL ARISE
UNDER THIS SECTION 7.1(D) UNLESS SUCH DEFAULT SHALL REMAIN UNCURED FOR A THIRTY
(30) DAY PERIOD AFTER SUCH OCCURRENCE, PROVIDED, FURTHER, HOWEVER, THAT IF THE
DEFAULT IS SUSCEPTIBLE OF CURE (AND IS NOT SUSCEPTIBLE TO CURE SOLELY BY THE
PAYMENT OF MONEY) BUT CANNOT REASONABLY BE CURED WITH SUCH THIRTY (30) DAY
PERIOD AND CUSTOMER SHALL HAVE COMMENCED TO CURE SUCH DEFAULT WITHIN SUCH THIRTY
(30) DAY PERIOD AND THEREAFTER DILIGENTLY AND EXPEDITIOUSLY PROCEEDS TO CURE THE
SAME, CUSTOMER SHALL HAVE SUCH ADDITIONAL TIME AS IS REASONABLY NECESSARY TO
EFFECT SUCH CURE, BUT IN NO EVENT IN EXCESS OF SIXTY (60) DAYS FROM THE ORIGINAL
OCCURRENCE, WHEREUPON A TERMINATION EVENT SHALL ARISE UNDER THIS SECTION 7.1(D);
OR ANY OTHER DOCUMENT DELIVERED PURSUANT HERETO SHALL PROVE TO HAVE BEEN
INCORRECT, WHEN MADE OR DEEMED MADE; OR

 

(E)                                  (I) CUSTOMER OR ANY OF ITS SUBSIDIARIES
SHALL FAIL TO PAY WHEN DUE (A) ANY PRINCIPAL OF OR INTEREST ON ANY INDEBTEDNESS
(OTHER THAN INDEBTEDNESS REFERRED TO IN SECTION 7.1(A) ABOVE) OR (B) ANY
CONTINGENT OBLIGATION, IN EACH CASE BEYOND THE END OF ANY GRACE PERIOD PROVIDED
THEREFOR; OR (II) A BREACH OR DEFAULT BY CUSTOMER OR ANY OF ITS SUBSIDIARIES
WITH RESPECT TO ANY OTHER MATERIAL TERM OF (A) ANY EVIDENCE OF ANY INDEBTEDNESS
OR ANY CONTINGENT OBLIGATION, OR (B) ANY LOAN AGREEMENT, MORTGAGE, INDENTURE OR
OTHER AGREEMENT RELATING TO SUCH INDEBTEDNESS OR CONTINGENT OBLIGATION(S), IF
THE EFFECT OF SUCH BREACH OR DEFAULT IS TO CAUSE THAT INDEBTEDNESS OR CONTINGENT
OBLIGATION(S) TO BECOME OR BE DECLARED DUE AND PAYABLE PRIOR TO ITS STATED
MATURITY OR THE STATED MATURITY OF ANY UNDERLYING OBLIGATION, AS THE CASE MAY BE
(UPON THE GIVING OR RECEIVING OF NOTICE, LAPSE OF TIME, BOTH, OR OTHERWISE); OR

 

(F)                                    CUSTOMER SHALL DEFAULT IN THE PERFORMANCE
OF ANY OTHER COVENANT OR UNDERTAKING HEREUNDER OR UNDER ANY TRANSACTION
DOCUMENT, OTHER THAN ANY SUCH TERM REFERRED TO IN ANY OTHER PARAGRAPH OF THIS
SECTION 7.1; PROVIDED, THAT IF SUCH DEFAULT REFERRED TO IN THIS

 

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Section 7.1(f) is susceptible of being cured, no Termination Event shall arise
under this Section 7.1(f) unless such default shall remain uncured for a thirty
(30) day period after such occurrence, provided, further, however, that if the
default is susceptible of cure (and is not susceptible to cure solely by the
payment of money) but cannot reasonably be cured with such thirty (30) day
period and Customer shall have commenced to cure such default within such thirty
(30) day period and thereafter diligently and expeditiously proceeds to cure the
same, Customer shall have such additional time as is reasonably necessary to
effect such cure, but in no event in excess of sixty (60) days from the original
occurrence, whereupon a Termination Event shall arise under this Section 7.1(f);
or

 

(G)                                 (I) A COURT HAVING JURISDICTION SHALL ENTER
A DECREE OR ORDER FOR RELIEF IN RESPECT OF CUSTOMER OR ANY OF ITS SUBSIDIARIES
IN AN INVOLUNTARY CASE UNDER THE BANKRUPTCY CODE OR UNDER ANY OTHER APPLICABLE
BANKRUPTCY, INSOLVENCY OR SIMILAR LAW NOW OR HEREAFTER IN EFFECT, WHICH DECREE
OR ORDER IS NOT STAYED; OR ANY OTHER SIMILAR RELIEF SHALL BE GRANTED UNDER ANY
APPLICABLE FEDERAL OR STATE LAW; OR (II) AN INVOLUNTARY CASE SHALL BE COMMENCED
AGAINST CUSTOMER OR ANY OF ITS SUBSIDIARIES UNDER THE BANKRUPTCY CODE OR UNDER
ANY OTHER APPLICABLE BANKRUPTCY, INSOLVENCY OR SIMILAR LAW NOW OR HEREAFTER IN
EFFECT; OR A DECREE OR ORDER OF A COURT HAVING JURISDICTION IN THE PREMISES FOR
THE APPOINTMENT OF A RECEIVER, LIQUIDATOR, SEQUESTRATOR, TRUSTEE, CUSTODIAN OR
OTHER OFFICER HAVING SIMILAR POWERS OVER CUSTOMER OR ANY OF ITS SUBSIDIARIES, OR
OVER ALL OR A SUBSTANTIAL PART OF ITS PROPERTY, SHALL HAVE BEEN ENTERED; OR
THERE SHALL HAVE OCCURRED THE INVOLUNTARY APPOINTMENT OF AN INTERIM RECEIVER,
TRUSTEE OR OTHER CUSTODIAN OF CUSTOMER OR ANY OF ITS SUBSIDIARIES FOR ALL OR A
SUBSTANTIAL PART OF ITS PROPERTY; OR A WARRANT OF ATTACHMENT, EXECUTION OR
SIMILAR PROCESS SHALL HAVE BEEN ISSUED AGAINST ANY SUBSTANTIAL PART OF THE
PROPERTY OF CUSTOMER OR ANY OF ITS SUBSIDIARIES, AND ANY SUCH EVENT DESCRIBED IN
THIS CLAUSE (II) SHALL CONTINUE FOR SIXTY (60) DAYS UNLESS DISMISSED, BONDED OR
DISCHARGED; OR

 

(H)                                 (I) CUSTOMER OR ANY OF ITS SUBSIDIARIES
SHALL HAVE AN ORDER FOR RELIEF ENTERED WITH RESPECT TO IT OR COMMENCE A
VOLUNTARY CASE UNDER THE BANKRUPTCY CODE OR UNDER ANY OTHER APPLICABLE
BANKRUPTCY, INSOLVENCY OR SIMILAR LAW NOW OR HEREAFTER IN EFFECT, OR SHALL
CONSENT TO THE ENTRY OF AN ORDER FOR RELIEF IN AN INVOLUNTARY CASE, OR TO THE
CONVERSION OF AN INVOLUNTARY CASE TO A VOLUNTARY CASE, UNDER ANY SUCH LAW, OR
SHALL CONSENT TO THE APPOINTMENT OF OR TAKING POSSESSION BY A RECEIVER, TRUSTEE
OR OTHER CUSTODIAN FOR ALL OR A SUBSTANTIAL PART OF ITS PROPERTY; OR CUSTOMER OR
ANY OF ITS SUBSIDIARIES SHALL MAKE ANY ASSIGNMENT FOR THE BENEFIT OF CREDITORS;
OR (II) CUSTOMER OR ANY OF ITS SUBSIDIARIES SHALL BE UNABLE, OR SHALL FAIL
GENERALLY, OR SHALL ADMIT IN WRITING ITS INABILITY, TO PAY ITS DEBTS AS SUCH
DEBTS BECOME DUE; OR THE MANAGERS OR DIRECTORS OR TRUSTEES OF CUSTOMER OR OF ANY
OF ITS SUBSIDIARIES (OR ANY COMMITTEE THEREOF) SHALL ADOPT ANY RESOLUTION OR
OTHERWISE AUTHORIZE ANY ACTION TO APPROVE ANY OF THE ACTIONS REFERRED TO IN
CLAUSE (I) ABOVE OR THIS CLAUSE (II); OR

 

(I)                                     ANY MONEY JUDGMENT, WRIT OR WARRANT OF
ATTACHMENT OR SIMILAR PROCESS INVOLVING (I) IN ANY INDIVIDUAL CASE AN AMOUNT IN
EXCESS OF $250,000 OR (II) IN THE AGGREGATE AT ANY TIME AN AMOUNT IN EXCESS OF
$1,000,000 (IN EITHER CASE NOT ADEQUATELY COVERED BY INSURANCE AS TO WHICH A
SOLVENT AND UNAFFILIATED INSURANCE COMPANY HAS ACKNOWLEDGED COVERAGE) SHALL BE
ENTERED OR FILED AGAINST CUSTOMER OR ANY OF ITS SUBSIDIARIES OR ANY OF THEIR
RESPECTIVE ASSETS AND SHALL REMAIN UNDISCHARGED, UNVACATED, UNBONDED OR UNSTAYED
FOR A PERIOD OF SIXTY (60) DAYS (OR IN ANY EVENT LATER THAN FIVE (5) DAYS PRIOR
TO THE DATE OF ANY PROPOSED SALE THEREUNDER); OR

 

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(J)                                     ANY ORDER, JUDGMENT OR DECREE SHALL BE
ENTERED AGAINST CUSTOMER OR ANY OF ITS SUBSIDIARIES DECREEING THE DISSOLUTION OR
SPLIT UP OF CUSTOMER OR THAT SUBSIDIARY AND SUCH ORDER SHALL REMAIN UNDISCHARGED
OR UNSTAYED FOR A PERIOD IN EXCESS OF THIRTY (30) DAYS; OR

 

(K)                                  THERE SHALL OCCUR ONE OR MORE ERISA EVENTS
WHICH INDIVIDUALLY OR IN THE AGGREGATE RESULTS IN OR MIGHT REASONABLY BE
EXPECTED TO RESULT IN LIABILITY OF CUSTOMER OR ANY OF ITS ERISA AFFILIATES IN
EXCESS OF $250,000 DURING THE TERM OF THIS AGREEMENT; OR THERE SHALL EXIST AN
AMOUNT OF UNFUNDED BENEFIT LIABILITIES (AS DEFINED IN SECTION 4001(A)(18) OF
ERISA), INDIVIDUALLY OR IN THE AGGREGATE FOR ALL PENSION PLANS (EXCLUDING FOR
PURPOSES OF SUCH COMPUTATION ANY PENSION PLANS WITH RESPECT TO WHICH ASSETS
EXCEED BENEFIT LIABILITIES), WHICH EXCEEDS $1,000,000; PROVIDED, THAT IF SUCH
DEFAULT REFERRED TO IN THIS SECTION 7.1(K) IS SUSCEPTIBLE OF BEING CURED, NO
TERMINATION EVENT SHALL ARISE UNDER THIS SECTION 7.1(K) UNLESS SUCH DEFAULT
SHALL REMAIN UNCURED FOR A THIRTY (30) DAY PERIOD AFTER SUCH OCCURRENCE,
PROVIDED, FURTHER, HOWEVER, THAT IF THE DEFAULT IS SUSCEPTIBLE OF CURE BUT
CANNOT REASONABLY BE CURED WITH SUCH THIRTY (30) DAY PERIOD AND CUSTOMER SHALL
HAVE COMMENCED TO CURE SUCH DEFAULT WITHIN SUCH THIRTY (30) DAY PERIOD AND
THEREAFTER DILIGENTLY AND EXPEDITIOUSLY PROCEEDS TO CURE THE SAME, CUSTOMER
SHALL HAVE SUCH ADDITIONAL TIME AS IS REASONABLY NECESSARY TO EFFECT SUCH CURE,
BUT IN NO EVENT IN EXCESS OF SIXTY (60) DAYS FROM THE ORIGINAL OCCURRENCE,
WHEREUPON AN TERMINATION EVENT SHALL ARISE UNDER THIS SECTION 7.1(K); OR

 

(L)                                     CUSTOMER OR ANY SUBSIDIARY OF CUSTOMER
SHALL BE CONVICTED OF, OR INDICTED FOR, ANY CRIME; OR

 

(M)                               ANY MATERIAL DEFICIENCY OR QUALIFICATION IN
ANY AUDIT PERFORMED IN CONNECTION WITH THE WAREHOUSE ASSETS IS NOT, IN THE
OPINION OF BUYER, SATISFACTORILY CURED WITHIN THIRTY (30) DAYS (WHICH CURE MAY
BE ACCOMPLISHED BY MAKING VOLUNTARY PARTIAL PREPAYMENTS OF INVESTED PRINCIPAL
WITH RESPECT TO THE WAREHOUSE ASSETS THAT ARE THE SUBJECT OF SUCH AUDIT);OR

 

(N)                                 A CHANGE OF CONTROL SHALL OCCUR; OR

 

(O)                                 THIS AGREEMENT SHALL FOR ANY REASON CEASE TO
CREATE A VALID, FIRST PRIORITY OWNERSHIP OR SECURITY INTEREST IN ANY OF THE
RECEIVABLES AND OTHER WAREHOUSE ASSETS, OR THE VALIDITY OR ENFORCEABILITY
THEREOF SHALL BE CONTESTED BY CUSTOMER OR ANY SUBSIDIARY OR AFFILIATE OF
CUSTOMER; OR

 

(P)                                 CUSTOMER FAILS TO COMPLY WITH ANY OF THE
FINANCIAL CONDITION COVENANTS IN ACCORDANCE WITH SECTION 5.1(N); OR

 

(Q)                                 CUSTOMER SHALL CEASE AT ANY TIME TO QUALIFY
AS A REIT UNDER THE CODE; OR

 

(R)                                    CUSTOMER SHALL CEASE TO BE A PUBLICLY
TRADED COMPANY LISTED, QUOTED OR TRADED ON THE NEW YORK STOCK EXCHANGE, THE
AMERICAN STOCK EXCHANGE OR NASDAQ.

 

SECTION 7.2.                                   REMEDIES.

 

(A)                                  OPTIONAL LIQUIDATION.  UPON THE OCCURRENCE
AND DURING THE CONTINUANCE OF A TERMINATION EVENT (OTHER THAN A TERMINATION
EVENT DESCRIBED IN SECTIONS 7.1(G) OR 7.1(H),

 

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Buyer may declare the Termination Date to have occurred whereupon the
Termination Date shall occur.

 

(B)                                 AUTOMATIC LIQUIDATION.  UPON THE OCCURRENCE
OF A TERMINATION EVENT DESCRIBED IN SECTIONS 7.1(G) OR 7.1(H), THE TERMINATION
DATE SHALL BE DEEMED TO HAVE OCCURRED AUTOMATICALLY UPON THE OCCURRENCE OF SUCH
TERMINATION EVENT.

 

(C)                                  ADDITIONAL REMEDIES.  UPON THE OCCURRENCE
OF THE TERMINATION EVENT, IN ADDITION TO ALL OTHER RIGHTS AND REMEDIES THAT
BUYER HAVE HEREUNDER, UNDER THE OTHER TRANSACTION DOCUMENTS AND UNDER APPLICABLE
LAW INCLUDING WITHOUT LIMITATION UNDER THE UCC:

 

(I)                                     BUYER MAY REQUIRE CUSTOMER TO REPURCHASE
ON DEMAND, AND CUSTOMER SHALL MAKE SUCH REPURCHASE ON DEMAND, WITHOUT RECOURSE
AGAINST BUYER AND REGARDLESS IF THE RECEIVABLES HAVE ANY VALUE, FROM BUYER, ALL
RECEIVABLES SOLD BY CUSTOMER TO BUYER, FOR AN AMOUNT EQUAL TO CUSTOMER
REPURCHASE PRICE PLUS ALL OTHER AMOUNTS PAYABLE HEREUNDER AND UNDER THE OTHER
TRANSACTION DOCUMENTS WITHOUT SET-OFF, COUNTERCLAIMS, ABATEMENT OR DEFENSE, OR
BUYER MAY SELL, TRANSFER OR LIQUIDATE, OR REQUIRE CUSTOMER TO SELL OR OTHERWISE
TRANSFER OR LIQUIDATE, ALL OR ANY OF THE RECEIVABLES, RELATED SECURITY AND/OR
WAREHOUSE ASSETS ON BEHALF OF BUYER PUBLICLY OR PRIVATELY ON SUCH TERMS AS BUYER
MAY DETERMINE ARE APPROPRIATE IN ITS DISCRETION TO ANY PERSON INCLUDING ITSELF;
AND/OR

 

(II)                                  BUYER MAY REPLACE SERVICER PURSUANT TO
SECTION 6.1 OR THE SERVICING AGREEMENT; AND/OR

 

(III)                               TO THE EXTENT NOT DONE PREVIOUSLY, BUYER MAY
TRANSFER THE WAREHOUSE ASSETS TO BUYER OR ITS DESIGNEES;

 

(IV)                              WITH RESPECT TO BUYER, THE RIGHT TO CARRY OUT
THE ACTION WITHIN THE SCOPE OF CUSTOMER’S APPOINTMENT OF BUYER AS
ATTORNEY-IN-FACT; AND/OR

 

(V)                                 BUYER MAY EXERCISE ITS RIGHTS UNDER ANY
TRANSACTION DOCUMENTS.

 

Buyer shall have the right at any time and from time to time, at Buyer’s sole
discretion and without notice to Customer, (a) to enforce payment of the
Obligors’ obligations and any other Warehouse Assets, and to collect and
foreclose, by legal proceedings or otherwise, the Warehouse Assets in the name
of Buyer and (b) to take control, in any manner, of any item of payment for or
proceeds of the Warehouse Assets.  Neither Buyer nor any Purchaser
Representative is obligated to pursue the Warehouse Assets or any other Person
in order to enforce Customer’s obligations hereunder.  Buyer and the other
Purchaser Representatives are hereby granted a license or other applicable right
to use, without charge, Customer’s labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks and advertising matter, or any
property of a similar nature, as it pertains to the Warehouse Assets, in
advertising for sale and selling any Warehouse Assets and Customer’s rights
under all licenses and all franchise agreements shall inure to Buyer’s and the
other Purchaser Representatives’ benefit for this purpose.

 

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SECTION 7.3.                                   INJUNCTIVE RELIEF.  CUSTOMER
RECOGNIZES THAT IF THERE IS A TERMINATION EVENT THEN, DEPENDING ON THE NATURE OF
THE TERMINATION EVENT, IT MAY BE THAT NO REMEDY AT LAW WILL PROVIDE COMPLETE OR
ADEQUATE RELIEF TO BUYER, AND BUYER MAY, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, BE ENTITLED TO TEMPORARY AND PERMANENT INJUNCTIVE RELIEF IN ANY SUCH CASE
WITHOUT THE NECESSITY OF PROVING ACTUAL DAMAGES.  THE INJUNCTIVE RELIEF SHALL
NOT BE A WAIVER OF BUYER’S RIGHTS TO OTHER RELIEF AND REMEDIES.

 

SECTION 7.4.                                   REMEDIES CUMULATIVE.  ALL RIGHTS,
REMEDIES AND POWERS OF BUYER HEREUNDER AND, UNDER THE TRANSACTION DOCUMENTS AND
IN CONNECTION HEREWITH OR THEREWITH ARE IRREVOCABLE AND CUMULATIVE, AND NOT
ALTERNATIVE OR EXCLUSIVE, AND SHALL BE IN ADDITION TO ALL OTHER RIGHTS, REMEDIES
AND POWERS OF BUYER WHETHER UNDER LAW, EQUITY OR AGREEMENT.  IN ADDITION TO THE
RIGHTS AND REMEDIES GRANTED TO IT IN THIS AGREEMENT, BUYER SHALL HAVE ALL RIGHTS
AND REMEDIES OF A SECURED PARTY UNDER THE UCC.

 

ARTICLE VIII
SECURITY INTEREST

 

SECTION 8.1.                                   GRANT OF SECURITY INTEREST. 
CUSTOMER HEREBY ASSIGNS AND GRANTS TO BUYER A FIRST PRIORITY SECURITY INTEREST
IN ALL OF SUCH CUSTOMER’S RIGHT, TITLE AND INTEREST IN, TO AND UNDER ALL OF THE
FOLLOWING, WHETHER NOW OR HEREAFTER EXISTING:  (A) EACH AND EVERY RECEIVABLE,
ALL RELATED SECURITY WITH RESPECT TO EACH SUCH RECEIVABLE, EACH AND EVERY
COLLECTION RELATED THERETO AND ALL OTHER WAREHOUSE ASSETS OF EVERY NATURE,
(B) THE COLLECTION ACCOUNT, ALL FUNDS ON DEPOSIT THEREIN AND ALL CERTIFICATES
AND INSTRUMENTS, IF ANY, FROM TIME TO TIME EVIDENCING SUCH ACCOUNT AND FUNDS ON
DEPOSIT THEREIN, ALL INVESTMENTS MADE WITH SUCH FUNDS, ALL CLAIMS THEREUNDER OR
IN CONNECTION THEREWITH, ALL CONTRACT RIGHTS (INCLUDING UNDER INSURANCE
POLICIES) AND OTHER RIGHTS RELATING THERETO AND ALL INTEREST, DIVIDENDS, MONEYS,
INSTRUMENTS, SECURITIES AND OTHER PROPERTY FROM TIME TO TIME RECEIVED,
RECEIVABLE OR OTHERWISE DISTRIBUTED IN RESPECT OR IN EXCHANGE FOR ANY OR ALL OF
THE FOREGOING AND ANYTHING ELSE CONSTITUTING PART OF THE WAREHOUSE ASSETS, (C)
THE SWAP AGREEMENT, (D) ALL PROCEEDS AND AMOUNTS RECEIVED OR RECEIVABLE BY
CUSTOMER, BUYER OR ANY OTHER PURCHASER REPRESENTATIVES UNDER ANY OR ALL OF THE
FOREGOING, (E) ALL “GENERAL INTANGIBLES,” “ACCOUNTS” AND “CHATTEL PAPER” (AS
SUCH TERMS ARE DEFINED IN THE UCC) RELATING TO OR CONSTITUTING ANY AND ALL OF
THE FOREGOING, AND (F) ALL REPLACEMENTS, SUBSTITUTIONS OR DISTRIBUTIONS ON OR
PROCEEDS, PAYMENTS, INCOME AND PROFITS OF, AND RECORDS AND FILES RELATING TO ANY
AND ALL OF ANY OF THE FOREGOING, TO SECURE THE PROMPT PAYMENT AND PERFORMANCE OF
ALL CUSTOMER OBLIGATIONS ARISING IN CONNECTION WITH THIS AGREEMENT AND EACH
OTHER TRANSACTION DOCUMENT, WHETHER NOW OR HEREAFTER EXISTING, DUE OR TO BECOME
DUE, DIRECT OR INDIRECT, OR ABSOLUTE OR CONTINGENT, INCLUDING, WITHOUT
LIMITATION, ALL INDEMNIFIED AMOUNTS, ALL INTEREST, ALL FEES, AN AMOUNT EQUAL TO
CUSTOMER REPURCHASE PRICE PLUS ALL OTHER AMOUNTS PAYABLE HEREUNDER AND UNDER THE
OTHER TRANSACTION DOCUMENTS, REPURCHASE AND PAYMENT IN FULL OF ALL RECEIVABLES
FUNDED BY BUYER HEREUNDER, PAYMENTS ON ACCOUNT OF COLLECTIONS RECEIVED OR DEEMED
TO BE RECEIVED AND FEES.  THIS AGREEMENT SHALL CONSTITUTE A SECURITY AGREEMENT
UNDER APPLICABLE LAW WITH REGARD TO THE SECURITY INTEREST GRANTED PURSUANT TO
THIS SECTION 8.1.  BUYER SHALL HAVE ALL OF THE RIGHTS AND MAY  EXERCISE ALL OF
THE REMEDIES OF A SECURED CREDITOR UNDER THE UCC AND THE OTHER LAWS OF THE STATE
OF NEW YORK.  IN FURTHERANCE OF THE FOREGOING, (A) CUSTOMER, AT ITS SOLE COST
AND EXPENSE, SHALL CAUSE TO BE FILED IN SUCH LOCATIONS AS MAY BE NECESSARY TO
PERFECT AND MAINTAIN PERFECTION AND PRIORITY OF THE SECURITY INTEREST GRANTED
HEREBY, UCC-1 FINANCING STATEMENTS AND CONTINUATION STATEMENTS (COLLECTIVELY,
THE “FILINGS”), AND SHALL FORWARD COPIES OF SUCH FILINGS TO BUYER UPON
COMPLETION

 

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thereof, and (b) Customer shall from time to time take such further actions as
may be reasonably requested by Buyer to maintain and continue the perfection and
priority of the security interest granted hereby.  To the extent permitted by
applicable law, Customer waives all claims, damages, and demands against Buyer
arising out of the repossession, retention or sale of the Warehouse Assets,
except in each case arising out of the Gross Negligence of Buyer, as finally
determined by a court of competent jurisdiction.  Customer agrees that Buyer
need not give more than ten (10) days’ notice of the time and place of any
public sale or of the time after which a private sale may take place and that
such notice is commercially reasonable notification of such matters.

 

ARTICLE IX
INDEMNIFICATION

 

SECTION 9.1.                                   INDEMNITIES BY CUSTOMER.  WITHOUT
LIMITING ANY OTHER RIGHTS WHICH BUYER AND ANY OTHER PURCHASER REPRESENTATIVE MAY
HAVE HEREUNDER OR UNDER APPLICABLE LAW, CUSTOMER HEREBY AGREES TO, AND DOES
HEREBY, INDEMNIFY AND HOLD HARMLESS BUYER AND EACH OTHER PURCHASER
REPRESENTATIVE AND THEIR RESPECTIVE OFFICERS, DIRECTORS, AGENTS, EMPLOYEES,
HEIRS, SUCCESSORS AND ASSIGNS (EACH AN “INDEMNIFIED PARTY”) FROM AND AGAINST ALL
DAMAGES, LOSSES, CLAIMS, LIABILITIES, COSTS AND EXPENSES, INCLUDING REASONABLE
ATTORNEYS’ FEES (WHICH SUCH ATTORNEYS MAY BE EMPLOYEES OF SUCH INDEMNIFIED
PARTIES, OR ANY ASSIGNEE, IF ANY) AND DISBURSEMENTS (ALL OF THE FOREGOING BEING
COLLECTIVELY REFERRED TO AS “INDEMNIFIED AMOUNTS”) AWARDED AGAINST OR INCURRED
BY ANY OF THEM ARISING OUT OF OR AS A RESULT OF THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT, OR THE ACQUISITION, EITHER DIRECTLY OR INDIRECTLY, BY
BUYER OR ITS SUCCESSORS OR ASSIGNS OF THE WAREHOUSE ASSETS, OR IN RESPECT OF ANY
COMMITMENT OR OBLIGATION OF BUYER TO ACQUIRE THE WAREHOUSE ASSETS AND PAY
AMOUNTS IN RESPECT OF THIS FACILITY, EXCLUDING, HOWEVER, INDEMNIFIED AMOUNTS TO
THE EXTENT FINAL JUDGMENT OF A COURT OF COMPETENT JURISDICTION HOLDS SUCH
INDEMNIFIED AMOUNTS RESULTED FROM GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE
PART OF THE INDEMNIFIED PARTY SEEKING INDEMNIFICATION; PROVIDED THAT NOTHING
CONTAINED IN THIS SENTENCE SHALL LIMIT THE LIABILITY OF CUSTOMER OR LIMIT THE
RECOURSE OF BUYER OR ANY OTHER PURCHASER REPRESENTATIVE TO CUSTOMER FOR AMOUNTS
OTHERWISE SPECIFICALLY PROVIDED TO BE PAID BY CUSTOMER UNDER THE TERMS OF THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, INCLUDING WITHOUT LIMITATION UNDER
THE TERMS OF THE NEXT SUCCEEDING SENTENCE.  WITHOUT LIMITING THE GENERALITY OF
THE FOREGOING INDEMNIFICATION, CUSTOMER SHALL INDEMNIFY AND HOLD HARMLESS BUYER
AND EACH OTHER PURCHASER REPRESENTATIVE FOR INDEMNIFIED AMOUNTS (INCLUDING,
WITHOUT LIMITATION, LOSSES IN RESPECT OF UNCOLLECTIBLE RECEIVABLES, REGARDLESS
OF WHETHER REIMBURSEMENT THEREFOR WOULD CONSTITUTE RECOURSE TO CUSTOMER)
RELATING TO OR RESULTING FROM:

 

(A)                                  THE TRANSFER TO BUYER OF AN UNDIVIDED
PERCENTAGE OWNERSHIP INTEREST IN ANY RECEIVABLE AND OTHERWISE WITH RESPECT TO
THE RECEIVABLES AND PURCHASES AND INVESTMENTS OF PRINCIPAL HEREUNDER AND UNDER
THE TRANSACTION DOCUMENTS, AND THE TRANSACTIONS HEREUNDER AND CONTEMPLATED
HEREBY;

 

(B)                                 ANY REPRESENTATION OR WARRANTY MADE BY
CUSTOMER OR ANY OF ITS SUBSIDIARIES (OR ANY OFFICERS, MANAGERS OR MEMBERS OF
CUSTOMER OR ANY OF ITS SUBSIDIARIES) UNDER OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OTHER TRANSACTION DOCUMENT, ANY REPORT OR ANY OTHER INFORMATION OR REPORT
DELIVERED BY CUSTOMER OR ANY OF ITS SUBSIDIARIES PURSUANT HERETO, WHICH SHALL
HAVE BEEN FALSE OR INCORRECT WHEN MADE OR DEEMED MADE;

 

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(C)                                  THE FAILURE BY CUSTOMER TO COMPLY WITH ANY
APPLICABLE LAW, RULE OR REGULATION WITH RESPECT TO ANY RECEIVABLE OR CONTRACT
RELATED THERETO, OR THE NONCONFORMITY OF ANY RECEIVABLE OR CONTRACT INCLUDED
THEREIN WITH ANY SUCH APPLICABLE LAW RULE OR REGULATION;

 

(D)                                 THE FAILURE TO VEST AND MAINTAIN VESTED IN
BUYER THE WAREHOUSE ASSETS, FREE AND CLEAR OF ANY ADVERSE CLAIM;

 

(E)                                  THE FAILURE TO FILE, OR ANY DELAY IN
FILING, FINANCING STATEMENTS OR OTHER SIMILAR INSTRUMENTS OR DOCUMENTS UNDER THE
UCC OF ANY APPLICABLE JURISDICTION OR OTHER APPLICABLE LAWS WITH RESPECT TO THE
WAREHOUSE ASSETS;

 

(F)                                    ANY DISPUTE, CLAIM, OFFSET OR DEFENSE
(OTHER THAN DISCHARGE IN BANKRUPTCY OF THE OBLIGOR) OF THE OBLIGOR TO THE
PAYMENT OF ANY RECEIVABLE INCLUDED IN THE WAREHOUSE ASSETS (INCLUDING, WITHOUT
LIMITATION, A DEFENSE BASED ON SUCH RECEIVABLE OR THE CONTRACT RELATING TO SUCH
RECEIVABLE NOT BEING A LEGAL, VALID AND BINDING OBLIGATION OF SUCH OBLIGOR
ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS TERMS), OR ANY OTHER CLAIM
RESULTING FROM THE SALE OR LEASE OF GOODS OR THE RENDERING OF SERVICES RELATED
TO SUCH RECEIVABLE OR THE FURNISHING OR FAILURE TO FURNISH SUCH GOODS OR
SERVICES;

 

(G)                                 ANY FAILURE OF CUSTOMER TO PERFORM ITS
DUTIES OR OBLIGATIONS IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT OR
UNDER THE OTHER TRANSACTION DOCUMENTS;

 

(H)                                 ANY LEGAL SUIT OR OTHER CLAIM OR ACTION OF
WHATEVER SORT ARISING OUT OF OR IN CONNECTION WITH ANY RECEIVABLE OR THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT; OR

 

(I)                                     ANY PRODUCTS LIABILITY CLAIM OR PERSONAL
INJURY OR PROPERTY DAMAGE SUIT OR OTHER CLAIM OR ACTION OF WHATEVER SORT ARISING
OUT OF OR IN CONNECTION WITH ANY RECEIVABLE, THE RELATED SECURITY THEREFOR OR
THIS AGREEMENT.

 

SECTION 9.2.                                   TAX INDEMNIFICATION AND
CHARACTERIZATION.

 

(A)                                  CUSTOMER HEREBY AGREES TO PAY, AND TO
INDEMNIFY, PROTECT, SAVE AND HOLD HARMLESS, ON AN AFTER-TAX BASIS, BUYER AND
EACH OTHER PURCHASER REPRESENTATIVE FROM AND AGAINST ALL (I) TAXES WHICH MAY AT
ANY TIME BE IMPOSED OR ASSERTED BY REASON OF, IN CONNECTION WITH OR IN RESPECT
OF THE RECEIVABLES OR THE WAREHOUSE ASSETS OR ANY TRANSACTIONS CONTEMPLATED
HEREBY OR THE RECEIPT OF PAYMENT UNDER THIS SECTION 9.2, WHETHER IMPOSED ON
BUYER, ANY OTHER PURCHASER REPRESENTATIVE, CUSTOMER, THE RECEIVABLES, THE
WAREHOUSE ASSETS OR OTHERWISE, AND WHETHER ARISING BY REASON OF THE ACTS TO BE
PERFORMED BY CUSTOMER HEREUNDER OR OTHERWISE AND (II) DAMAGES, LOSSES, CLAIMS,
LIABILITIES AND RELATED COSTS AND EXPENSES OF BUYER AND EACH OTHER PURCHASER
REPRESENTATIVE IN CONNECTION WITH THE IMPOSITION OR ASSERTION OF ANY TAX
DESCRIBED IN (I); PROVIDED, HOWEVER, THIS SECTION 9.2(A) SHALL NOT APPLY WITH
RESPECT TO TAXES ON OR MEASURED BY THE OVERALL NET INCOME, NET PROFITS OR NET
RECEIPTS OF BUYER OR SUCH PURCHASER REPRESENTATIVE (“INCOME TAXES”) TO THE
EXTENT THAT THE COMPUTATION OF SUCH INCOME TAXES IS CONSISTENT WITH THE INTENDED
CHARACTERIZATION (AS DEFINED IN SECTION 9.2(C)).

 

(B)                                 IN ADDITION TO AND NOT IN LIMITATION OF THE
INDEMNIFICATIONS CONTAINED IN SECTION 9.2(A), CUSTOMER HEREBY AGREES TO PAY, AND
TO INDEMNIFY, PROTECT, SAVE AND HOLD HARMLESS, BUYER AND EACH OTHER PURCHASER
REPRESENTATIVE, ON AN AFTER-TAX BASIS, FROM AND

 

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against (i) the excess of (x) the aggregate state and local Taxes on or measured
by net income or profits (and Taxes in lieu thereof) payable by any such
indemnified party in connection with or in respect of the Receivables or any
transactions contemplated hereby or the receipt of payment under this
Section 9.2, over (y) the amount of such state and local income Taxes which
would have been payable on such indemnified party’s net income in connection
with or in respect of the Receivables or any transactions contemplated hereby,
had the entire amount of such income been subject to Tax in the jurisdiction in
which such indemnified party’s principal executive office is located, and only
in such jurisdiction and (ii) all damages, losses, claims, liabilities and
related costs and expenses of such indemnified party in connection with
clause (i).

 

(C)                                  IT IS THE INTENTION OF THE PARTIES HERETO
THAT FOR THE PURPOSES OF ALL TAXES, THE TRANSACTIONS CONTEMPLATED HEREBY SHALL
BE TREATED AS A LOAN BY BUYER TO CUSTOMER (THE “INTENDED CHARACTERIZATION”). 
THE PARTIES HEREBY AGREE TO REPORT SUCH TRANSACTIONS FOR THE PURPOSES OF ALL
TAXES, AND OTHERWISE TO ACT FOR THE PURPOSES OF ALL TAXES, IN A MANNER
CONSISTENT WITH THE INTENDED CHARACTERIZATION.

 

(D)                                 ALL PAYMENTS DUE PURSUANT TO THIS
SECTION 9.2 SHALL BE PAID NO LATER THAN FIVE (5) DAYS AFTER DEMAND FOR SUCH
PAYMENT HAS BEEN MADE BY AN INDEMNIFIED PARTY.  WITHOUT IN ANY WAY LIMITING SUCH
PARTIES’ REMEDIES, ANY SUCH AMOUNT NOT PAID WHEN DUE SHALL BEAR INTEREST AT A
RATE EQUAL TO THE OVERDUE RATE.  ANY CLAIM THAT AN INDEMNIFIED PARTY MAKES FOR
PAYMENT PURSUANT TO THIS SECTION 9.2 SHALL BE ACCOMPANIED BY A STATEMENT OF SUCH
PARTIES’ ACCOUNTANTS WHICH ATTESTS THAT THE CLAIM HAS BEEN COMPUTED IN
CONFORMITY WITH THE REQUIREMENTS OF THIS SECTION 9.2.

 

SECTION 9.3.                                   INCREASED COST AND REDUCED
RETURN.

 

(A)                                  IF AFTER THE DATE HEREOF, AN INDEMNIFIED
PARTY SHALL BE CHARGED ANY FEE, EXPENSE OR INCREASED COST PURSUANT TO IN
CONNECTION HEREWITH IN EACH CASE ON ACCOUNT OF THE ADOPTION OF ANY APPLICABLE
LAW, RULE OR REGULATION, OR ANY CHANGE THEREIN, OR ANY CHANGE IN THE
INTERPRETATION OR ADMINISTRATION THEREOF BY ANY GOVERNMENTAL AUTHORITY, CENTRAL
BANK, STATE INSURANCE REGULATORY BODY OR THE NAIC OR COMPARABLE AGENCY CHARGED
WITH THE INTERPRETATION OR ADMINISTRATION THEREOF, OR IN CONNECTION HEREWITH
WITH ANY REQUEST OR DIRECTIVE (WHETHER OR NOT HAVING THE FORCE OF LAW) OF ANY
SUCH AUTHORITY, CENTRAL BANK OR COMPARABLE AGENCY (A “REGULATORY CHANGE”): 
(I) WHICH SUBJECTS SUCH INDEMNIFIED PARTY TO ANY CHARGE OR WITHHOLDING ON OR
WITH RESPECT TO THE TRANSACTION DOCUMENTS OR OTHERWISE IN CONNECTION HEREWITH,
OR CHANGES THE BASIS OF TAXATION OF PAYMENTS TO SUCH INDEMNIFIED PARTY OF OR IN
CONNECTION HEREWITH (EXCEPT FOR CHANGES IN THE RATE OF TAX ON THE OVERALL NET
INCOME OF SUCH FINANCIAL INSTITUTION) OR (II) WHICH IMPOSES, MODIFIES OR DEEMS
APPLICABLE ANY RESERVE, ASSESSMENT, INSURANCE CHARGE, SPECIAL DEPOSIT OR SIMILAR
REQUIREMENT AGAINST ASSETS OF, DEPOSITS WITH OR FOR THE ACCOUNT OF SUCH
INDEMNIFIED PARTY, OR CREDIT EXTENDED BY SUCH INDEMNIFIED PARTY OR (III) WHICH
IMPOSES ANY OTHER CONDITION THE RESULT OF WHICH IS TO INCREASE THE COST TO SUCH
INDEMNIFIED PARTY IN CONNECTION HEREWITH, THEN, UPON DEMAND BY SUCH AN
INDEMNIFIED PARTY, CUSTOMER SHALL PAY TO SUCH PARTIES SUCH AMOUNTS CHARGED TO
THEM.

 

(B)                                 IF AFTER THE DATE HEREOF, AN INDEMNIFIED
PARTY SHALL BE CHARGED ANY FEE, EXPENSE OR INCREASED COST IN CONNECTION HEREWITH
HAVING DETERMINED THAT THE ADOPTION OF ANY APPLICABLE LAW, RULE OR REGULATION
REGARDING CAPITAL ADEQUACY, OR ANY CHANGE THEREIN, OR ANY

 

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change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Indemnified Party with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Indemnified Party’s capital as a
consequence of its obligation under such funding agreement, to a level below
that which such Indemnified Party could have achieved but for such adoption,
change or compliance, then, upon demand by an Indemnified Party, Customer shall
pay to such parties any such amounts charged to them.

 

SECTION 9.4.                                   OTHER COSTS AND EXPENSES. 
CUSTOMER SHALL PAY TO BUYER AND EACH OTHER PURCHASER REPRESENTATIVE ON DEMAND,
ALL COSTS AND EXPENSES (EXCLUDING SUCH PERSON’S ALLOCATED INTERNAL COSTS) IN
CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION AND
ENFORCEMENT OF THIS AGREEMENT AND THE OTHER DOCUMENTS TO BE DELIVERED HEREUNDER,
INCLUDING WITHOUT LIMITATION, REASONABLE FEES AND OUT-OF-POCKET EXPENSES OF
LEGAL COUNSEL FOR BUYER AND EACH OTHER PURCHASER REPRESENTATIVE WITH RESPECT
THERETO AND WITH RESPECT TO ADVISING BUYER OR ANY OTHER PURCHASER REPRESENTATIVE
AS TO ITS RIGHTS AND REMEDIES UNDER THIS AGREEMENT, AND ALL COSTS AND EXPENSES,
IF ANY, INCLUDING REASONABLE COUNSEL FEES AND EXPENSES IN CONNECTION WITH THE
ADMINISTRATION AND ENFORCEMENT OF THIS AGREEMENT AND THE OTHER DOCUMENTS
DELIVERED HEREUNDER AND IN CONNECTION WITH ANY RESTRUCTURING OR WORKOUT OF THIS
AGREEMENT OR SUCH DOCUMENTS OR THE ADMINISTRATION OF THIS AGREEMENT FOLLOWING A
TERMINATION EVENT; PROVIDED, THAT UNLESS BUYER, CUSTODIAN OR ANOTHER PURCHASER
REPRESENTATIVE REASONABLY CONCLUDES THAT THE REPRESENTATION BY ONE COUNSEL OF
ALL OF THE THEM WOULD CREATE A CONFLICT OF INTEREST FOR SUCH COUNSEL, CUSTOMER
SHALL ONLY BE RESPONSIBLE FOR THE FEES AND EXPENSES OF ONE COUNSEL UNDER THIS
SECTION 9.4.  CUSTOMER SHALL REIMBURSE BUYER AND EACH OTHER PURCHASER
REPRESENTATIVE ON DEMAND FOR ANY AMOUNT THEY MUST PAY ON ACCOUNT ON ANY TAX
DESCRIBED IN SECTION 9.2.  CUSTOMER SHALL REIMBURSE BUYER AND EACH OTHER
PURCHASER REPRESENTATIVE ON DEMAND FOR CUSTOMER’S ALLOCABLE PORTION OF ALL OTHER
COSTS AND EXPENSES INCURRED BY BUYER AND SUCH OTHER PURCHASER REPRESENTATIVE
(“OTHER COSTS”) INCURRED IN CONNECTION WITH AUDITING THE BOOKS, RECORDS AND
PROCEDURES OF CUSTOMER.

 

SECTION 9.5.                                   DUE DILIGENCE.  CUSTOMER
ACKNOWLEDGES THAT BUYER HAS THE RIGHT TO PERFORM CONTINUING DUE DILIGENCE
REVIEWS WITH RESPECT TO THE WAREHOUSE ASSETS, FOR PURPOSES OF VERIFYING
COMPLIANCE WITH THE REPRESENTATIONS, WARRANTIES AND SPECIFICATIONS MADE
HEREUNDER, OR OTHERWISE, AND CUSTOMER AGREES THAT UPON REASONABLE PRIOR NOTICE
TO CUSTOMER, BUYER OR ITS AUTHORIZED REPRESENTATIVES WILL BE PERMITTED DURING
NORMAL BUSINESS HOURS TO EXAMINE, INSPECT, AND MAKE COPIES AND EXTRACTS OF, THE
RECORDS, SERVICING RECORDS AND ANY AND ALL DOCUMENTS, RECORDS, AGREEMENTS,
INSTRUMENTS OR INFORMATION RELATING TO THE WAREHOUSE ASSETS IN THE POSSESSION OR
UNDER THE CONTROL OF CUSTOMER, ANY OTHER SERVICER OR SUBSERVICER AND/OR
CUSTODIAN.  CUSTOMER ALSO SHALL MAKE AVAILABLE TO BUYER A KNOWLEDGEABLE
FINANCIAL OR ACCOUNTING OFFICER FOR THE PURPOSE OF ANSWERING QUESTIONS
RESPECTING THE WAREHOUSE ASSETS.  WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, CUSTOMER ACKNOWLEDGES THAT BUYER MAY MAKE INVESTMENT OF PRINCIPAL
BASED SOLELY UPON THE INFORMATION PROVIDED BY CUSTOMER TO BUYER AND THE
REPRESENTATIONS, WARRANTIES AND COVENANTS CONTAINED HEREIN, AND THAT BUYER, AT
ITS OPTION, HAS THE RIGHT AT ANY TIME TO CONDUCT A PARTIAL OR COMPLETE DUE
DILIGENCE REVIEW ON SOME OR ALL OF THE WAREHOUSE ASSETS.  BUYER MAY UNDERWRITE
SUCH WAREHOUSE ASSETS ITSELF OR ENGAGE A THIRD PARTY UNDERWRITER TO PERFORM SUCH
UNDERWRITING.  CUSTOMER AGREES TO REASONABLY COOPERATE WITH BUYER

 

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and any third party underwriter in connection with such underwriting, including,
but not limited to, providing Buyer and any third party underwriter with access
to any and all documents, records, agreements, instruments or information
relating to such Warehouse Assets in the possession, or under the control, of
Customer.  Customer shall promptly upon demand pay Buyer’s reasonable,
third-party expenses in connection with underwriting assets, making Investments
of Principal and, acquiring and reselling the Warehouse Assets, including the
reasonable fees and expenses of Buyer’s counsel.

 

SECTION 9.6.                                   WITHHOLDING TAXES.

 

(A)                                  ALL PAYMENTS MADE BY CUSTOMER HEREUNDER TO
BUYER (A “RECIPIENT”) SHALL BE MADE WITHOUT WITHHOLDING FOR OR ON ACCOUNT OF ANY
PRESENT OR FUTURE (I) UNITED STATES FEDERAL WITHHOLDING TAXES ON INCOME OR
(II) ANY OTHER TAXES IMPOSED BY ANY JURISDICTION IN THE USA OR ANY JURISDICTION
FROM WHICH CUSTOMER MAKES A PAYMENT HEREUNDER, EXCLUDING TAXES IMPOSED ON NET
INCOME, NET PROFITS OR NET RECEIPTS OF THE RECIPIENT AND FRANCHISE TAXES IMPOSED
BY THE JURISDICTION UNDER WHICH THE RECIPIENT IS ORGANIZED OR ANY POLITICAL
SUBDIVISION THEREOF OR BY ANY JURISDICTION OR ANY POLITICAL SUBDIVISION THEREOF
IN WHICH THE RECIPIENT HOLDS ANY ASSET IN CONNECTION WITH THIS AGREEMENT (SUCH
NON-EXCLUDED TAXES, THE “INDEMNIFIED TAXES”).  IF ANY SUCH WITHHOLDING IS SO
REQUIRED, CUSTOMER SHALL MAKE THE WITHHOLDING, PAY THE AMOUNT WITHHELD IN THE
APPROPRIATE AUTHORITY BEFORE PENALTIES ATTACH THERETO OR INTEREST ACCRUES
THEREON AND PAY SUCH ADDITIONAL AMOUNT AS MAY BE NECESSARY TO ENSURE THAT THE
NET AMOUNT ACTUALLY RECEIVED BY THE RECIPIENT IS FREE AND CLEAR OF SUCH
INDEMNIFIED TAXES (INCLUDING SUCH INDEMNIFIED TAXES ON SUCH ADDITIONAL AMOUNT)
AND IS EQUAL TO THE AMOUNT THAT THE RECIPIENT WOULD HAVE RECEIVED HAD SUCH
WITHHOLDING NOT BEEN MADE; PROVIDED, NO PAYMENT SHALL BE REQUIRED UNDER THIS
SENTENCE IF THE WITHHOLDING IS REQUIRED AS A RESULT OF THE FAILURE OF THE
RECIPIENT TO DELIVER THE FORM REQUIRED BY SECTION 9.5(B).  IF CUSTOMER PAYS ANY
SUCH INDEMNIFIED TAXES, PENALTIES OR INTEREST, IT SHALL DELIVER OFFICIAL TAX
RECEIPTS EVIDENCING THAT PAYMENT OR CERTIFIED COPIES THEREOF TO THE RECIPIENT ON
WHOSE ACCOUNT SUCH WITHHOLDING AS MADE (WITH A COPY TO BUYER IF NOT THE
RECIPIENT OF THE ORIGINAL) ON OR BEFORE THE THIRTIETH DAY AFTER PAYMENT.

 

(B)                                 BEFORE THE FIRST DATE ON WHICH ANY AMOUNT IS
PAYABLE HEREUNDER FOR THE ACCOUNT OF ANY RECIPIENT NOT INCORPORATED UNDER THE
LAWS OF THE USA, SUCH RECIPIENT SHALL DELIVER TO CUSTOMER AND BUYER EACH TWO
DULY COMPLETED COPIES OF UNITED STATES INTERNAL REVENUE SERVICE FORM 1001 OR
4224 (OR SUCCESSOR APPLICABLE FORM) CERTIFYING THAT SUCH RECIPIENT IS ENTITLED
TO RECEIVE PAYMENTS HEREUNDER WITHOUT DEDUCTION OR WITHHOLDING OF ANY UNITED
STATES FEDERAL INCOME TAXES.  EACH SUCH RECIPIENT SHALL REPLACE OR UPDATE SUCH
FORMS WHEN NECESSARY TO MAINTAIN ANY APPLICABLE EXEMPTION AND AS REQUESTED BY
BUYER.  BUYER AND EACH RECIPIENT HEREBY REPRESENTS AND WARRANTS TO CUSTOMER
THAT, AS OF THE DATE OF THIS AGREEMENT, NO PAYMENTS TO IT HEREUNDER OR IN
CONNECTION HEREWITH ARE SUBJECT TO ANY UNITED STATES FEDERAL WITHHOLDING TAXES
OR ANY OTHER TAXES IMPOSED BY ANY JURISDICTION IN THE USA OR ANY JURISDICTION
FROM WHICH CUSTOMER OR BUYER MAKES A PAYMENT HEREUNDER.

 

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ARTICLE X
CUSTODIAN

 

SECTION 10.1.                             DUTIES OF CUSTODIAN.

 

(A)                                  CUSTOMER AND BUYER HEREBY APPOINT
CUSTODIAN, AND CUSTODIAN HEREBY AGREES, TO ACT AS CUSTODIAN IN ACCORDANCE WITH
THE TERMS OF THIS AGREEMENT.  CUSTODIAN WILL HOLD ALL WAREHOUSE ASSETS DELIVERED
TO IT FROM TIME TO TIME AS CUSTODIAN FOR THE BENEFIT OF BUYER, SUBJECT TO THE
TERMS AND PROVISIONS HEREOF.  EXCEPT AS SPECIFICALLY SET FORTH HEREIN, CUSTODIAN
SHALL HAVE NO OBLIGATION TO COLLECT ANY AMOUNTS OR PROPERTY TO BE PAID OR
DELIVERED TO IT HEREUNDER.

 

(B)                                 CUSTODIAN WILL PERFORM ITS DUTIES UNDER THIS
SECTION 10.1 AND HEREUNDER ON BEHALF OF AND FOR THE BENEFIT OF BUYER AS ITS
CUSTODIAN, IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT AND APPLICABLE LAW
AND, TO THE EXTENT CONSISTENT WITH SUCH TERMS, IN THE SAME MANNER IN WHICH, AND
WITH THE SAME CARE, SKILL, PRUDENCE AND DILIGENCE WITH WHICH IT ADMINISTERS
DOCUMENTS RELATING TO SIMILAR ASSETS, GIVING DUE CONSIDERATION TO CUSTOMARY AND
USUAL STANDARDS OF PRACTICE OF PRUDENT INSTITUTIONAL LOAN CUSTODIANS AND, IN
EACH CASE, TAKING INTO ACCOUNT ITS OTHER OBLIGATIONS HEREUNDER, BUT WITHOUT
REGARD TO:

 

(I)                                     ANY RELATIONSHIP THAT CUSTODIAN OR ANY
AFFILIATE THEREOF MAY HAVE WITH THE RELATED OBLIGOR; OR

 

(II)                                  THE OWNERSHIP, OR HOLDING IN TRUST FOR
OTHERS, BY CUSTODIAN, OF ANY OTHER LOANS, LEASES OR PROPERTY.

 

(C)                                  CUSTODIAN SHALL PROMPTLY REPORT TO BUYER
ANY FAILURE BY IT TO HOLD THE RECEIVABLES DELIVERY DOCUMENTS AS HEREIN PROVIDED
AND SHALL PROMPTLY TAKE APPROPRIATE ACTION TO REMEDY ANY SUCH FAILURE BUT SHALL
BE LIABLE THEREFOR ONLY TO THE EXTENT (I) ANY SUCH FAILURE IS CAUSED BY THE ACTS
OR OMISSIONS OF CUSTODIAN RESULTING FROM ITS GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT AND (II) SUCH REMEDIAL ACTION IS OR WAS AT THE TIME OF SUCH FAILURE
OTHERWISE WITHIN ITS CAPABILITIES OR CONTROL.  CUSTODIAN SHALL HAVE AND PERFORM
THE FOLLOWING POWERS AND DUTIES:

 

(I)                                     HOLD THE RECEIVABLES DELIVERY DOCUMENTS
ON BEHALF OF BUYER, MAINTAIN ACCURATE RECORDS PERTAINING TO THE RECEIVABLES
DELIVERY DOCUMENTS TO ENABLE IT TO COMPLY WITH THE TERMS OF THIS AGREEMENT, AND
MAINTAIN A CURRENT INVENTORY THEREOF;

 

(II)                                  IMPLEMENT POLICIES AND PROCEDURES IN
ACCORDANCE WITH CUSTODIAN’S NORMAL BUSINESS PRACTICES WITH RESPECT TO THE
HANDLING AND CUSTODY OF THE RECEIVABLES DELIVERY DOCUMENTS SO THAT THE INTEGRITY
AND PHYSICAL POSSESSION OF THE RECEIVABLES DELIVERY DOCUMENTS WILL BE
MAINTAINED; AND

 

(III)                               HOLD AND DISTRIBUTE AND INVEST MONIES AND
OTHER ASSETS IN ACCORDANCE WITH THE TERMS HEREOF.

 

(D)                                 IN ACTING AS CUSTODIAN OF THE RECEIVABLES
DELIVERY DOCUMENTS, CUSTODIAN AGREES FURTHER THAT IT DOES NOT AND WILL NOT HAVE
OR ASSERT ANY INTEREST IN THE WAREHOUSE ASSETS IN ITS INDIVIDUAL CAPACITY.

 

(E)                                  CUSTODIAN AGREES TO MAINTAIN THE
RECEIVABLES DELIVERY DOCUMENTS AT THE CORPORATE CUSTODIAN OFFICE OR AT SUCH
OTHER OFFICES OF CUSTODIAN AS SHALL FROM TIME TO TIME BE IDENTIFIED BY PRIOR
WRITTEN NOTICE TO BUYER.  SUBJECT TO THE FOREGOING, CUSTODIAN MAY TEMPORARILY

 

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move Receivables Delivery Documents or any portion thereof without notice as
necessary to conduct its duties pursuant to this Agreement or any other
Transaction Document.

 

(F)                                    IF A TERMINATION EVENT HAS OCCURRED AND
IS CONTINUING OF WHICH A RESPONSIBLE OFFICER OF CUSTODIAN SHALL HAVE ACTUAL
KNOWLEDGE, CUSTODIAN SHALL EXERCISE THE RIGHTS AND POWERS VESTED IN IT BY THIS
AGREEMENT AND USE THE SAME DEGREE OF CARE AND SKILL IN THEIR EXERCISE AS A
PRUDENT PERSON WOULD EXERCISE OR USE UNDER THE CIRCUMSTANCES IN THE CONDUCT OF
SUCH PERSON’S OWN AFFAIRS.

 

(G)                                 EXCEPT DURING THE CONTINUANCE OF A
TERMINATION EVENT:  (I) CUSTODIAN UNDERTAKES TO PERFORM SUCH DUTIES AND ONLY
SUCH DUTIES AS ARE SPECIFICALLY SET FORTH IN THIS AGREEMENT AND IN THE PAYING
AGENT AGREEMENT AND NO IMPLIED COVENANTS OR OBLIGATIONS SHALL BE READ INTO THIS
AGREEMENT AGAINST CUSTODIAN; AND (II) IN THE ABSENCE OF BAD FAITH ON ITS PART,
CUSTODIAN MAY CONCLUSIVELY RELY, AS TO THE TRUTH OF THE STATEMENTS AND THE
CORRECTNESS OF THE OPINIONS EXPRESSED THEREIN, UPON CERTIFICATES OR OPINIONS
FURNISHED TO CUSTODIAN AND CONFORMING TO THE REQUIREMENTS OF THIS AGREEMENT;
HOWEVER, CUSTODIAN SHALL EXAMINE THE CERTIFICATES AND OPINIONS TO DETERMINE
WHETHER OR NOT THEY CONFORM ON THEIR FACE TO THE REQUIREMENTS OF THIS AGREEMENT.

 

(H)                                 CUSTODIAN MAY NOT BE RELIEVED FROM LIABILITY
FOR ITS OWN GROSSLY NEGLIGENT ACTION, ITS OWN GROSSLY NEGLIGENT FAILURE TO ACT
OR ITS OWN WILLFUL MISCONDUCT, EXCEPT THAT:  (I) THIS PARAGRAPH DOES NOT LIMIT
THE EFFECT OF SECTION 10.1(G); (II) CUSTODIAN SHALL NOT BE LIABLE FOR ANY ERROR
OF JUDGMENT MADE IN GOOD FAITH BY A RESPONSIBLE OFFICER UNLESS IT IS PROVED THAT
CUSTODIAN WAS GROSSLY NEGLIGENT IN ASCERTAINING THE PERTINENT FACTS; AND
(III) CUSTODIAN SHALL NOT BE LIABLE WITH RESPECT TO ANY ACTION IT TAKES OR OMITS
TO TAKE IN GOOD FAITH IN ACCORDANCE WITH A DIRECTION RECEIVED BY IT PURSUANT TO
THIS AGREEMENT.

 

(I)                                     EVERY PROVISION OF THIS AGREEMENT THAT
IN ANY WAY RELATES TO CUSTODIAN IS SUBJECT TO SECTIONS 10.1(F), (G), (H) AND
(I).

 

(J)                                     EXCEPT FOR THE OBLIGATION TO INVEST
FUNDS IN THE COLLECTION ACCOUNT AS SET FORTH IN THE PAYING AGENT AGREEMENT,
CUSTODIAN SHALL NOT BE LIABLE FOR INTEREST ON ANY MONEY RECEIVED BY IT.

 

(K)                                  MONEY HELD IN TRUST BY CUSTODIAN NEED NOT
BE SEGREGATED FROM OTHER FUNDS EXCEPT TO THE EXTENT REQUIRED BY LAW OR THE TERMS
OF THIS AGREEMENT OR THE PAYING AGENT AGREEMENT.

 

(L)                                     NO PROVISION OF THIS AGREEMENT SHALL
REQUIRE CUSTODIAN TO EXPEND OR RISK ITS OWN FUNDS OR OTHERWISE INCUR FINANCIAL
LIABILITY IN THE PERFORMANCE OF ANY OF ITS DUTIES HEREUNDER OR IN THE EXERCISE
OF ANY OF ITS RIGHTS OR POWERS, IF IT SHALL HAVE REASONABLE GROUNDS TO BELIEVE
THAT REPAYMENT OF SUCH FUNDS OR INDEMNITY REASONABLY SATISFACTORY TO IT AGAINST
SUCH RISK OR LIABILITY IS NOT REASONABLY ASSURED TO IT.

 

(M)                               EVERY PROVISION OF THIS AGREEMENT RELATING TO
THE CONDUCT OR AFFECTING THE LIABILITY OF OR AFFORDING PROTECTION TO CUSTODIAN
SHALL BE SUBJECT TO THE PROVISIONS OF THIS ARTICLE X.

 

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(N)                                 CUSTODIAN SHALL NOT BE REQUIRED TO TAKE
NOTICE OR BE DEEMED TO HAVE NOTICE OR KNOWLEDGE OF ANY SERVICER DEFAULT OR
TERMINATION EVENT HEREUNDER UNLESS CUSTODIAN SHALL HAVE RECEIVED WRITTEN NOTICE
OR HAVE ACTUAL KNOWLEDGE THEREOF.

 

(O)                                 THE PERMISSIVE RIGHT OF CUSTODIAN TO TAKE
ACTIONS ENUMERATED IN THIS AGREEMENT SHALL NOT BE CONSTRUED AS A DUTY OR
OBLIGATION AND CUSTODIAN SHALL NOT BE ANSWERABLE FOR OTHER THAN ITS OWN
NEGLIGENT OR WILLFUL MISCONDUCT.

 

(P)                                 FROM TIME TO TIME, CUSTOMER SHALL FORWARD TO
CUSTODIAN ADDITIONAL ORIGINAL DOCUMENTS OR ADDITIONAL DOCUMENTS EVIDENCING ANY
ASSUMPTION, MODIFICATION, CONSOLIDATION OR EXTENSION OF A WAREHOUSE ASSET
APPROVED IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT, AND UPON RECEIPT OF ANY
SUCH OTHER DOCUMENTS, CUSTODIAN SHALL HOLD SUCH OTHER DOCUMENTS AS BUYER SHALL
REQUEST FROM TIME TO TIME IN ACCORDANCE WITH THE PAYING GENT AGREEMENT. WITH
RESPECT TO ANY DOCUMENTS WHICH HAVE BEEN DELIVERED OR ARE BEING DELIVERED TO
RECORDING OFFICES FOR RECORDING AND HAVE NOT BEEN RETURNED TO CUSTOMER IN TIME
TO PERMIT THEIR DELIVERY HEREUNDER AT THE TIME REQUIRED, IN LIEU OF DELIVERING
SUCH ORIGINAL DOCUMENTS, CUSTOMER SHALL DELIVER TO BUYER A TRUE COPY THEREOF
WITH AN OFFICER’S CERTIFICATE CERTIFYING THAT SUCH COPY IS A TRUE, CORRECT AND
COMPLETE COPY OF THE ORIGINAL, WHICH HAS BEEN TRANSMITTED FOR RECORDATION.
CUSTOMER SHALL DELIVER SUCH ORIGINAL DOCUMENTS TO CUSTODIAN PROMPTLY WHEN THEY
ARE RECEIVED.

 

SECTION 10.2.                             RIGHTS OF CUSTODIAN.

 

(A)                                  CUSTODIAN MAY CONCLUSIVELY RELY, AS TO THE
TRUTH OF THE STATEMENTS OR THE CORRECTNESS OF THE OPINIONS EXPRESSED THEREIN, ON
ANY DOCUMENT BELIEVED BY IT TO BE GENUINE AND TO HAVE BEEN SIGNED OR PRESENTED
BY THE PROPER PERSON.  CUSTODIAN NEED NOT INVESTIGATE ANY FACT OR MATTER STATED
IN THE DOCUMENT.

 

(B)                                 BEFORE CUSTODIAN ACTS OR REFRAINS FROM
ACTING, IT MAY REQUIRE AN OFFICER’S CERTIFICATE OR AN OPINION OF COUNSEL. 
CUSTODIAN SHALL NOT BE LIABLE FOR ANY ACTION IT TAKES OR OMITS TO TAKE IN GOOD
FAITH IN RELIANCE ON AN OFFICER’S CERTIFICATE OR OPINION OF COUNSEL.

 

(C)                                  CUSTODIAN MAY EXECUTE ANY OF THE TRUSTS OR
POWERS HEREUNDER OR PERFORM ANY DUTIES HEREUNDER EITHER DIRECTLY OR BY OR
THROUGH AGENTS OR ATTORNEYS OR A CUSTODIAN OR NOMINEE, AND CUSTODIAN SHALL NOT
BE RESPONSIBLE FOR ANY MISCONDUCT OR NEGLIGENCE ON THE PART OF, OR FOR THE
SUPERVISION OF, ANY SUCH AGENT, ATTORNEY, CUSTODIAN OR NOMINEE APPOINTED WITH
DUE CARE BY IT HEREUNDER.

 

(D)                                 CUSTODIAN SHALL NOT BE LIABLE FOR ANY ACTION
IT TAKES OR OMITS TO TAKE IN GOOD FAITH WHICH IT BELIEVES TO BE AUTHORIZED OR
WITHIN ITS RIGHTS OR POWERS; PROVIDED, HOWEVER, THAT CUSTODIAN’S CONDUCT DOES
NOT CONSTITUTE WILLFUL MISCONDUCT, NEGLIGENCE OR BAD FAITH.

 

(E)                                  CUSTODIAN MAY CONSULT WITH COUNSEL,
INCLUDING CUSTOMER’S COUNSEL, AND THE ADVICE OR OPINION OF COUNSEL WITH RESPECT
TO LEGAL MATTERS RELATING TO THIS AGREEMENT SHALL BE FULL AND COMPLETE
AUTHORIZATION AND PROTECTION FROM LIABILITY IN RESPECT TO ANY ACTION TAKEN,
OMITTED OR SUFFERED BY IT HEREUNDER IN GOOD FAITH AND IN ACCORDANCE WITH THE
ADVICE OR OPINION OF SUCH COUNSEL.

 

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(F)                                    CUSTODIAN SHALL NOT BE LIABLE FOR ANY
INDIRECT, CONSEQUENTIAL OR PUNITIVE LOSS OR DAMAGES ARISING FROM THIS AGREEMENT
OR THE PAYING AGENT AGREEMENT.

 

SECTION 10.3.                             INDIVIDUAL RIGHTS OF CUSTODIAN. 
CUSTODIAN IN ITS INDIVIDUAL OR ANY OTHER CAPACITY MAY OTHERWISE DEAL WITH
CUSTOMER OR ITS AFFILIATES WITH THE SAME RIGHTS IT WOULD HAVE IF IT WERE NOT
CUSTODIAN.  HOWEVER, CUSTODIAN MUST COMPLY WITH SECTION 10.11.

 

SECTION 10.4.                             CUSTODIAN’S DISCLAIMER.  CUSTODIAN
SHALL NOT BE RESPONSIBLE FOR AND MAKES NO REPRESENTATION AS TO THE VALIDITY OR
ADEQUACY OF THIS AGREEMENT, IT SHALL NOT BE ACCOUNTABLE FOR CUSTOMER’S USE OF
THE PROCEEDS FROM PURCHASES, AND IT SHALL NOT BE RESPONSIBLE FOR ANY STATEMENT
OF CUSTOMER IN ANY TRANSACTION DOCUMENT OR IN ANY DOCUMENT ISSUED IN CONNECTION
WITH ANY TRANSACTION DOCUMENT.  CUSTODIAN SHALL HAVE NO DUTY (I) TO SEE TO ANY
RECORDING, FILING, OR DEPOSITING OF THIS AGREEMENT OR ANY OTHER AGREEMENT
REFERRED TO HEREIN OR ANY FINANCING STATEMENT OR CONTINUATION STATEMENT
EVIDENCING A SECURITY INTEREST, OR TO SEE TO THE MAINTENANCE OF ANY RECORDING OR
FILING OR DEPOSITING OR TO ANY RERECORDING, REFILING OR REDEPOSITING OF ANY
THEREOF; (II) TO SEE TO THE ACQUISITION OR MAINTENANCE OF ANY INSURANCE,
(III) TO SEE TO THE PAYMENT OR DISCHARGE OF ANY TAX, ASSESSMENT OR ANY OTHER
GOVERNMENTAL CHARGE OR ANY LIEN OR ENCUMBRANCE OF ANY KIND OWING WITH RESPECT
TO, ASSESSED OR LEVIED AGAINST, WAREHOUSE ASSETS AND (IV) TO CONFIRM OR VERIFY
THE CONTENTS OF ANY REPORTS OR CERTIFICATES OF CUSTOMER OR SERVICER DELIVERED TO
CUSTODIAN PURSUANT TO THIS AGREEMENT BELIEVED IN GOOD FAITH BY CUSTODIAN TO BE
GENUINE AND TO HAVE BEEN SIGNED OR PRESENTED BY THE PROPER PARTY OR PARTIES.

 

SECTION 10.5.                             NOTICE OF TERMINATION EVENT.  IF A
POTENTIAL TERMINATION EVENT OR TERMINATION EVENT OCCURS AND IS CONTINUING AND IF
IT IS EITHER ACTUALLY KNOWN OR WRITTEN NOTICE OF THE EXISTENCE THEREOF HAS BEEN
DELIVERED TO A RESPONSIBLE OFFICER OF CUSTODIAN, CUSTODIAN SHALL PROMPTLY MAIL
TO BUYER NOTICE OF THE POTENTIAL TERMINATION EVENT OR TERMINATION EVENT.

 

SECTION 10.6.                             REPORTS BY CUSTODIAN TO BUYER. 
CUSTOMER OR SERVICER SHALL PREPARE AND PROVIDE TO CUSTODIAN, AND CUSTODIAN SHALL
DELIVER TO BUYER SUCH INFORMATION AS MAY BE REQUIRED TO ENABLE SUCH HOLDER TO
PREPARE ITS FEDERAL AND STATE INCOME TAX RETURNS.

 

SECTION 10.7.                             COMPENSATION.  CUSTOMER SHALL PAY TO
CUSTODIAN THE COMPENSATION DESCRIBED IN THE PAYING AGENT AGREEMENT.  CUSTODIAN’S
COMPENSATION SHALL NOT BE LIMITED BY ANY LAW ON COMPENSATION OF A CUSTODIAN OF
AN EXPRESS TRUST.  CUSTOMER SHALL REIMBURSE CUSTODIAN FOR ALL REASONABLE
OUT-OF-POCKET EXPENSES INCURRED OR MADE BY IT, INCLUDING COSTS OF COLLECTION, IN
ADDITION TO THE COMPENSATION FOR ITS SERVICES.  SUCH EXPENSES SHALL INCLUDE THE
REASONABLE COMPENSATION AND EXPENSES, DISBURSEMENTS AND ADVANCES OF CUSTODIAN’S
AGENTS, COUNSEL, ACCOUNTANTS AND EXPERTS.  CUSTOMER’S OBLIGATIONS TO CUSTODIAN
PURSUANT TO THIS ARTICLE X SHALL SURVIVE THE DISCHARGE OF THIS AGREEMENT, AND
THE RESIGNATION OR REMOVAL OF CUSTODIAN.  WHEN CUSTODIAN INCURS EXPENSES AFTER
THE OCCURRENCE OF A TERMINATION EVENT SPECIFIED IN SECTION 7.1(G) WITH RESPECT
TO CUSTOMER, THE EXPENSES ARE INTENDED TO CONSTITUTE EXPENSES OF ADMINISTRATION
UNDER TITLE 11 OF THE UNITED STATES CODE OR ANY OTHER APPLICABLE FEDERAL OR
STATE BANKRUPTCY, INSOLVENCY OR SIMILAR LAW.

 

SECTION 10.8.                             REPLACEMENT OF CUSTODIAN.  NO
RESIGNATION OR REMOVAL OF CUSTODIAN AND NO APPOINTMENT OF A SUCCESSOR CUSTODIAN
SHALL BECOME EFFECTIVE UNTIL THE ACCEPTANCE OF APPOINTMENT BY THE SUCCESSOR
CUSTODIAN PURSUANT TO THIS SECTION 10.8.  CUSTODIAN

 

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may resign at any time by so notifying Customer.  Buyer may remove Custodian by
so notifying Custodian and may appoint a successor Custodian.  Custodian shall
be removed if:  (a) Custodian fails to comply with Section 10.11; (b) Custodian
is adjudged bankrupt or insolvent; (c) a receiver or other public officer takes
charge of Custodian or its property; or (d) Custodian otherwise becomes
incapable of acting.  If Custodian resigns or is removed or if a vacancy exists
in the office of Custodian for any reason (Custodian in such event being
referred to herein as the retiring Custodian), Buyer shall promptly appoint a
successor Custodian.  A successor Custodian shall deliver a written acceptance
of its appointment to the retiring Custodian and to Customer, and Buyer. 
Thereupon the resignation or removal of the retiring Custodian shall become
effective, and the successor Custodian shall have all the rights, powers and
duties of Custodian under this Agreement.  The successor Custodian shall mail a
notice of its succession to Buyer and each Purchaser Representative.  The
retiring Custodian shall promptly transfer all Warehouse Assets or other
property held by it as Custodian pursuant hereto to the successor Custodian. 
All out-of-pocket expenses of Custodian incurred in connection with such
transfer (other than a transfer upon a removal of Custodian for cause) shall be
reimbursed by Customer.  If a successor Custodian does not take office within
sixty (60) days after the retiring Custodian resigns or is removed, the retiring
Custodian, Buyer may petition any court of competent jurisdiction for the
appointment of a successor Custodian.

 

Notwithstanding the replacement of Custodian pursuant to this Section 10.8,
Customer’s and Servicer’s obligations under Section 10.7 shall continue for the
benefit of the retiring Custodian.  Custodian shall not be liable for the acts
or omissions of any successor Custodian.

 

SECTION 10.9.                             SUCCESSOR CUSTODIAN BY MERGER.  IF
CUSTODIAN CONSOLIDATES WITH, MERGES OR CONVERTS INTO, OR TRANSFERS ALL OR
SUBSTANTIALLY ALL ITS CORPORATE TRUST BUSINESS OR ASSETS TO, ANOTHER CORPORATION
OR BANKING ASSOCIATION, THE RESULTING, SURVIVING OR TRANSFEREE CORPORATION
WITHOUT ANY FURTHER ACT SHALL BE THE SUCCESSOR CUSTODIAN; PROVIDED, THAT SUCH
CORPORATION OR BANKING ASSOCIATION SHALL BE OTHERWISE QUALIFIED AND ELIGIBLE
UNDER SECTION 10.11.

 

SECTION 10.10.                       APPOINTMENT OF CO-CUSTODIAN OR SEPARATE
CUSTODIAN.

 

(A)                                  NOTWITHSTANDING ANY OTHER PROVISIONS OF
THIS AGREEMENT, AT ANY TIME, FOR THE PURPOSE OF MEETING ANY LEGAL REQUIREMENT OF
ANY JURISDICTION IN WHICH ANY PART OF THE WAREHOUSE ASSETS MAY AT THE TIME BE
LOCATED, CUSTODIAN SHALL HAVE THE POWER AND MAY EXECUTE AND DELIVER ALL
INSTRUMENTS TO APPOINT ONE OR MORE PERSONS TO ACT AS A CO-CUSTODIAN OR
CO-CUSTODIANS, OR SEPARATE CUSTODIAN OR SEPARATE CUSTODIANS, OF ALL OR ANY PART
OF THE WAREHOUSE ASSETS, AND TO VEST IN SUCH PERSON OR PERSONS, IN SUCH CAPACITY
AND FOR THE BENEFIT OF BUYER, SUCH TITLE TO THE WAREHOUSE ASSETS, OR ANY PART
HEREOF, AND, SUBJECT TO THE OTHER PROVISIONS OF THIS SECTION 10.10, SUCH POWERS,
DUTIES, OBLIGATIONS, RIGHTS AND TRUSTS AS CUSTODIAN MAY CONSIDER NECESSARY OR
DESIRABLE.  NO CO-CUSTODIAN OR SEPARATE CUSTODIAN HEREUNDER SHALL BE REQUIRED TO
MEET THE TERMS OF ELIGIBILITY AS A SUCCESSOR CUSTODIAN UNDER SECTION 10.11.

 

(B)                                 EVERY SEPARATE CUSTODIAN AND CO-CUSTODIAN
SHALL, TO THE EXTENT PERMITTED BY LAW, BE APPOINTED AND ACT SUBJECT TO THE
FOLLOWING PROVISIONS AND CONDITIONS:

 

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(I)                                     ALL RIGHTS, POWERS, DUTIES AND
OBLIGATIONS CONFERRED OR IMPOSED UPON CUSTODIAN SHALL BE CONFERRED OR IMPOSED
UPON AND EXERCISED OR PERFORMED BY CUSTODIAN AND SUCH SEPARATE CUSTODIAN OR
CO-CUSTODIAN JOINTLY (IT BEING UNDERSTOOD THAT SUCH SEPARATE CUSTODIAN OR
CO-CUSTODIAN IS NOT AUTHORIZED TO ACT SEPARATELY WITHOUT CUSTODIAN JOINING IN
SUCH ACT), EXCEPT TO THE EXTENT THAT UNDER ANY LAW OF ANY JURISDICTION IN WHICH
ANY PARTICULAR ACT OR ACTS ARE TO BE PERFORMED CUSTODIAN SHALL BE INCOMPETENT OR
UNQUALIFIED TO PERFORM SUCH ACT OR ACTS, IN WHICH EVENT SUCH RIGHTS, POWERS,
DUTIES AND OBLIGATIONS (INCLUDING THE HOLDING OF TITLE TO THE WAREHOUSE ASSETS
OR ANY PORTION THEREOF IN ANY SUCH JURISDICTION) SHALL BE EXERCISED AND
PERFORMED SINGLY BY SUCH SEPARATE CUSTODIAN OR CO-CUSTODIAN, BUT SOLELY AT THE
DIRECTION OF CUSTODIAN;

 

(II)                                  NO CUSTODIAN HEREUNDER SHALL BE PERSONALLY
LIABLE BY REASON OF ANY ACT OR OMISSION OF ANY OTHER CUSTODIAN HEREUNDER; AND

 

(III)                               CUSTODIAN MAY AT ANY TIME ACCEPT THE
RESIGNATION OF OR REMOVE ANY SEPARATE CUSTODIAN OR CO-CUSTODIAN.

 

(C)                                  ANY NOTICE, REQUEST OR OTHER WRITING GIVEN
TO CUSTODIAN SHALL BE DEEMED TO HAVE BEEN GIVEN TO EACH OF THE THEN SEPARATE
CUSTODIANS AND CO-CUSTODIANS, AS EFFECTIVELY AS IF GIVEN TO EACH OF THEM.  EVERY
INSTRUMENT APPOINTING ANY SEPARATE CUSTODIAN OR CO-CUSTODIAN SHALL REFER TO THIS
AGREEMENT AND THE CONDITIONS OF THIS ARTICLE X.  EACH SEPARATE CUSTODIAN OR
CO-CUSTODIAN, UPON ITS ACCEPTANCE OF THE TRUSTS CONFERRED, SHALL BE VESTED WITH
THE ESTATES OR PROPERTY SPECIFIED IN ITS INSTRUMENT OF APPOINTMENT, EITHER
JOINTLY WITH CUSTODIAN OR SEPARATELY, AS MAY BE PROVIDED THEREIN, SUBJECT TO ALL
THE PROVISIONS OF THIS AGREEMENT, SPECIFICALLY INCLUDING EVERY PROVISION OF THIS
AGREEMENT RELATING TO THE CONDUCT OF, AFFECTING THE LIABILITY OF, OR AFFORDING
PROTECTION TO, CUSTODIAN.  EVERY SUCH INSTRUMENT SHALL BE FILED WITH CUSTODIAN.

 

(D)                                 ANY SEPARATE CUSTODIAN OR CO-CUSTODIAN MAY
AT ANY TIME CONSTITUTE CUSTODIAN ITS AGENT OR ATTORNEY-IN-FACT WITH FULL POWER
AND AUTHORITY, TO THE EXTENT NOT PROHIBITED BY LAW, TO DO ANY LAWFUL ACT UNDER
OR IN RESPECT OF THIS AGREEMENT ON ITS BEHALF AND IN ITS NAME.  IF ANY SEPARATE
CUSTODIAN OR CO-CUSTODIAN SHALL DIE, BECOME INCAPABLE OF ACTING, RESIGN OR BE
REMOVED, ALL OF ITS ESTATES, PROPERTIES, RIGHTS, REMEDIES AND TRUSTS SHALL VEST
IN AND BE EXERCISED BY CUSTODIAN, TO THE EXTENT PERMITTED BY LAW, WITHOUT THE
APPOINTMENT OF A NEW OR SUCCESSOR CUSTODIAN.

 

SECTION 10.11.                       ELIGIBILITY; DISQUALIFICATION.  CUSTODIAN
SHALL AT ALL TIMES BE A FINANCIAL INSTITUTION ORGANIZED AND DOING BUSINESS UNDER
THE LAWS OF THE UNITED STATES OF AMERICA OR ANY STATE, BE AUTHORIZED UNDER SUCH
LAWS TO EXERCISE CORPORATE TRUST POWERS, BE SUBJECT TO SUPERVISION AND
EXAMINATION BY FEDERAL OR STATE AUTHORITY, AND HAVE A COMBINED CAPITAL AND
SURPLUS OF AT LEAST $50,000,000 AS SET FORTH IN ITS MOST RECENT PUBLISHED ANNUAL
REPORT OF CONDITION.

 

SECTION 10.12.                       REPRESENTATIONS AND WARRANTIES OF
CUSTODIAN.  CUSTODIAN REPRESENTS AND WARRANTS THAT:  (A) CUSTODIAN IS DULY
ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE FEDERAL
LAWS OF THE UNITED STATES; (B) CUSTODIAN HAS THE CORPORATE POWER AND AUTHORITY
TO ENTER INTO AND PERFORM ITS OBLIGATIONS UNDER THE AGREEMENT AND HAS DULY
AUTHORIZED, EXECUTED AND DELIVERED THE AGREEMENT; AND (C) THE EXECUTION AND
DELIVERY OF THIS

 

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Agreement will not conflict with or result in a breach of any of the provisions
of Custodian’s charter or by-laws.

 

ARTICLE XI
SECONDARY MARKET TRANSACTION

 

SECTION 11.1.                             SECONDARY MARKET TRANSACTION;
COOPERATION.  CUSTOMER AGREES THAT BUYER HAS THE ABSOLUTE RIGHT TO SECURITIZE,
SYNDICATE, GRANT PARTICIPATIONS IN, ASSIGN, PLEDGE, HYPOTHECATE OR OTHERWISE
TRANSFER ALL OR ANY PORTION OF ITS RIGHTS AND OBLIGATIONS UNDER THE TRANSACTION
DOCUMENTS (EACH SUCH TRANSACTION, A “SECURITIZATION”).  CUSTOMER SHALL, UPON
REQUEST FROM BUYER, FROM TIME TO TIME, COOPERATE IN ALL REASONABLE RESPECTS IN
CONNECTION WITH A SECURITIZATION.  SUCH COOPERATION MAY, IN BUYER’S DISCRETION,
INCLUDE DOCUMENTATION CHANGES, SITE INSPECTIONS, UPDATED APPRAISALS, PREPARATION
AND DELIVERY OF FINANCIAL INFORMATION OR OTHER DILIGENCE REQUESTED BY BUYER. 
CUSTOMER WILL NOT BE REQUIRED TO INCUR EXPENSES OR COSTS PURSUANT TO THIS
ARTICLE XI.  CUSTOMER WILL, UPON REQUEST FROM BUYER, IN CONNECTION WITH A
SECURITIZATION, ENTER INTO SUCH ACKNOWLEDGMENTS AND CONFIRMATIONS OF THE
APPLICABLE ASSIGNMENTS AS BUYER MAY REQUEST.  CUSTOMER SHALL, SUBJECT TO THE
TERMS AND PROVISIONS OF THIS ARTICLE XI, USE REASONABLE EFFORTS TO SATISFY THE
MARKET STANDARDS WHICH BUYER DETERMINES ARE REASONABLY REQUIRED IN THE
MARKETPLACE IN CONNECTION WITH A SECURITIZATION.  CUSTOMER WILL NOT, PURSUANT TO
ANY OF THE PROVISIONS OF THIS ARTICLE XI, INCUR, SUFFER OR ACCEPT ANY LESSER
RIGHTS OR GREATER OBLIGATIONS AS ARE SET FORTH IN THE TRANSACTION DOCUMENTS.  NO
SECURITIZATION WILL RELEASE BUYER FROM ITS OBLIGATIONS UNDER THIS AGREEMENT AND
THE OTHER TRANSACTION DOCUMENTS.

 

ARTICLE XII
MISCELLANEOUS

 

SECTION 12.1.                             SURVIVAL OF REPRESENTATIONS AND
INDEMNITIES.  THE RIGHTS AND REMEDIES OF THE PARTIES HERETO WITH RESPECT TO ANY
REPRESENTATION AND WARRANTY MADE OR DEEMED TO BE MADE BY CUSTOMER PURSUANT TO
THIS AGREEMENT AND THE INDEMNIFICATION AND PAYMENT PROVISIONS OF ARTICLE IX,
SHALL BE CONTINUING AND SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT.

 

SECTION 12.2.                             WAIVERS; AMENDMENTS.  NO FAILURE OR
DELAY ON THE PART OF ANY PARTY IN EXERCISING ANY POWER, RIGHT OR REMEDY UNDER
THIS AGREEMENT SHALL OPERATE AS A WAIVER THEREOF, NOR SHALL ANY SINGLE OR
PARTIAL EXERCISE OF ANY SUCH POWER, RIGHT OR REMEDY PRECLUDE ANY OTHER FURTHER
EXERCISE THEREOF OR THE EXERCISE OF ANY OTHER POWER, RIGHT OR REMEDY.  THE
RIGHTS AND REMEDIES HEREIN PROVIDED SHALL BE CUMULATIVE AND NONEXCLUSIVE OF ANY
RIGHTS OR REMEDIES PROVIDED BY LAW.  NO WAIVER OF THIS AGREEMENT SHALL IN ANY
EVENT BE EFFECTIVE WITH RESPECT TO ANY PARTY UNLESS THE SAME SHALL BE IN WRITING
AND SIGNED BY SUCH PARTY, AND THEN ANY SUCH WAIVER SHALL BE EFFECTIVE ONLY IN
THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH GIVEN.  ANY
PROVISION OF THIS AGREEMENT MAY BE AMENDED IF, BUT ONLY IF, SUCH AMENDMENT IS IN
WRITING AND IS SIGNED BY THE PARTIES TO BE BOUND THEREBY AND BUYER; PROVIDED,
HOWEVER, THAT THIS AGREEMENT MAY BE AMENDED WITHOUT SERVICER’S SIGNATURE IF, BUT
ONLY IF, SUCH AMENDMENT DOES NOT AFFECT SERVICER’S RIGHTS OR DUTIES UNDER THIS
AGREEMENT.

 

SECTION 12.3.                             NOTICES.  EXCEPT AS PROVIDED BELOW,
ALL COMMUNICATIONS AND NOTICES PROVIDED FOR HEREUNDER SHALL BE IN WRITING
(INCLUDING BANK WIRE, TELECOPY OR ELECTRONIC FACSIMILE TRANSMISSION OR SIMILAR
WRITING) AND SHALL BE GIVEN TO THE OTHER PARTY AT ITS ADDRESS OR

 

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telecopy number set forth on the signature page hereof or at such other address
or telecopy number as such party may hereafter specify for the purposes of
notice to such party.  Each such notice or other communication shall be
effective (i) if given by telecopy, upon receipt thereof, (ii) if given by mail,
four (4) Business Days after the time such communication is deposited in the
mails with first-class postage prepaid or (iii) if given by any other means,
when received at the address specified in this Section 12.3.  However, anything
in this Section 12.3 to the contrary notwithstanding, Customer hereby authorizes
Buyer to effect Investments of Principal, based on telephonic notices made by
any Person whom Buyer in good faith believes to be acting on behalf of
Customer.  Customer agrees to deliver promptly to Buyer a written confirmation
of each telephonic notice signed by an authorized officer of Customer.  However,
the absence of such confirmation shall not affect the validity of such notice. 
If the written confirmation differs in any material respect from the action
taken by or records of Buyer or Custodian, the records of Buyer shall govern
absent manifest error.

 

SECTION 12.4.                             INDEPENDENCE OF COVENANTS.  ALL
COVENANTS HEREUNDER SHALL BE GIVEN INDEPENDENT EFFECT SO THAT IF A PARTICULAR
ACTION OR CONDITION IS NOT PERMITTED BY ANY OF SUCH COVENANTS, THE FACT THAT IT
WOULD BE PERMITTED BY AN EXCEPTION TO, OR WOULD OTHERWISE BE WITHIN THE
LIMITATIONS OF, ANOTHER COVENANT SHALL NOT AVOID THE OCCURRENCE OF A TERMINATION
EVENT OR POTENTIAL TERMINATION EVENT IF SUCH ACTION IS TAKEN OR CONDITION
EXISTS.

 

SECTION 12.5.                             GOVERNING LAW.  THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

 

SECTION 12.6.                             CONSENT TO JURISDICTION AND SERVICE OF
PROCESS.  ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST CUSTOMER ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK.  BY EXECUTING AND
DELIVERING THIS AGREEMENT, CUSTOMER, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY

 

(I)                                    ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;

 

(II)                                WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;

 

(III)                            AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO CUSTOMER AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SECTION 12.3;

 

(IV)                            AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III)
ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER

 

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CUSTOMER IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;

 

(V)                                AGREES THAT BUYER AND EACH PURCHASER
REPRESENTATIVE RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO BRING PROCEEDINGS AGAINST CUSTOMER IN THE COURTS OF ANY OTHER
JURISDICTION; AND

 

(VI)                            AGREES THAT THE PROVISIONS OF THIS SECTION 12.6
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE
FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402
OR OTHERWISE.

 

SECTION 12.7.                             INTEGRATION.  THIS AGREEMENT CONTAINS
THE FINAL AND COMPLETE INTEGRATION OF ALL PRIOR EXPRESSIONS BY THE PARTIES
HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SHALL CONSTITUTE THE ENTIRE
AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
SUPERSEDING ALL PRIOR ORAL OR WRITTEN UNDERSTANDINGS.

 

SECTION 12.8.                             SEVERABILITY; COUNTERPARTS.  THIS
AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF COUNTERPARTS AND BY DIFFERENT PARTIES
HERETO IN SEPARATE COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED SHALL BE DEEMED
TO BE AN ORIGINAL AND ALL OF WHICH WHEN TAKEN TOGETHER SHALL CONSTITUTE ONE AND
THE SAME AGREEMENT.  ANY PROVISIONS OF THIS AGREEMENT WHICH ARE PROHIBITED OR
UNENFORCEABLE IN ANY JURISDICTION SHALL, AS TO SUCH JURISDICTION, BE INEFFECTIVE
TO THE EXTENT OF SUCH PROHIBITION OR UNENFORCEABILITY WITHOUT INVALIDATING THE
REMAINING PROVISIONS HEREOF, AND ANY SUCH PROHIBITION OR UNENFORCEABILITY IN ANY
JURISDICTION SHALL NOT INVALIDATE OR RENDER UNENFORCEABLE SUCH PROVISION IN ANY
OTHER JURISDICTION.

 

SECTION 12.9.                             SUCCESSORS AND ASSIGNS.  THIS
AGREEMENT SHALL BE BINDING ON THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS
AND ASSIGNS; PROVIDED, HOWEVER, THAT CUSTOMER MAY NOT ASSIGN ANY OF ITS RIGHTS
OR DELEGATE ANY OF ITS DUTIES HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF
CUSTODIAN AND BUYER.

 

SECTION 12.10.                       CONFIDENTIALITY.  EACH PARTY TO THIS
AGREEMENT SHALL HOLD ALL NON-PUBLIC INFORMATION OBTAINED PURSUANT TO THE
REQUIREMENTS OF THIS AGREEMENT THAT HAS BEEN IDENTIFIED AS CONFIDENTIAL BY
CUSTOMER OR ANY OTHER PARTY IN ACCORDANCE WITH SUCH PERSON’S CUSTOMARY
PROCEDURES FOR HANDLING CONFIDENTIAL INFORMATION OF THIS NATURE, IT BEING
UNDERSTOOD AND AGREED THAT IN ANY EVENT EACH PARTY TO THIS AGREEMENT MAY MAKE
DISCLOSURES TO AFFILIATES OF SUCH PARTY, DISCLOSURES TO STATISTICAL OR CREDIT
RATING AGENCIES, DISCLOSURES TO ITS AGENTS, AUDITORS, CONSULTANTS AND COUNSEL
WHO HAVE BEEN ADVISED OF THESE PROVISIONS AND DISCLOSURES REASONABLY REQUIRED BY
ANY BONA FIDE ASSIGNEE, TRANSFEREE OR PARTICIPANT THAT AGREES TO BE BOUND BY
THESE CONFIDENTIALITY PROVISIONS OR DISCLOSURES REQUIRED OR REQUESTED BY ANY
GOVERNMENTAL AGENCY OR REPRESENTATIVE THEREOF OR PURSUANT TO LEGAL PROCESS;
PROVIDED THAT, UNLESS SPECIFICALLY PROHIBITED BY APPLICABLE LAW OR COURT ORDER,
EACH PARTY TO THIS AGREEMENT SHALL NOTIFY THE OTHER PARTIES TO THIS AGREEMENT OF
ANY REQUEST BY ANY GOVERNMENTAL AGENCY OR REPRESENTATIVE THEREOF FOR DISCLOSURE
OF ANY SUCH NON-PUBLIC INFORMATION PRIOR TO DISCLOSURE OF SUCH INFORMATION; AND

 

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provided, further that in no event shall Buyer or any other Purchaser
Representative be obligated or required to return any materials furnished by
Customer or any of their respective Subsidiaries.

 

SECTION 12.11.                       TIME IS OF THE ESSENCE.  TIME IS OF THE
ESSENCE UNDER THE TRANSACTION DOCUMENTS AND ALL REFERENCES TO A TIME SHALL MEAN
NEW YORK TIME IN EFFECT ON THE DATE OF THE ACTION UNLESS OTHERWISE EXPRESSLY
STATED IN THE TRANSACTION DOCUMENTS.

 

SECTION 12.12.                       WAIVER OF JURY TRIAL.  EACH OF THE PARTIES
TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR
ANY OF THE OTHER TRANSACTION DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS TRANSACTION OR THE RELATIONSHIP THAT IS BEING
ESTABLISHED.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ALL
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF
THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS
AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  EACH PARTY HERETO ACKNOWLEDGES
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND
THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS.  EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 12.12 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR TO
ANY OTHER DOCUMENTS OR AGREEMENTS RELATING THERETO.  IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

SECTION 12.13.                       HEADINGS.  THE HEADINGS IN THE TRANSACTION
DOCUMENTS ARE FOR CONVENIENCE OF REFERENCE ONLY AND SHALL NOT AFFECT THE
INTERPRETATION OR CONSTRUCTION OF THE TRANSACTION DOCUMENTS.

 

SECTION 12.14.                       NO PRESUMPTION.  SHOULD ANY PROVISION OF
THE TRANSACTION DOCUMENTS REQUIRE JUDICIAL INTERPRETATION, IT IS AGREED THAT A
COURT INTERPRETING OR CONSTRUING THE SAME SHALL NOT APPLY A PRESUMPTION THAT THE
TERMS HEREOF SHALL BE MORE STRICTLY CONSTRUED AGAINST ANY PERSON BY REASON OF
THE RULE OF CONSTRUCTION THAT A DOCUMENT IS TO BE CONSTRUED MORE STRICTLY
AGAINST THE PERSON WHO ITSELF OR THROUGH ITS AGENT PREPARED THE SAME, IT BEING
AGREED THAT ALL PARTIES HAVE PARTICIPATED IN THE PREPARATION OF THE TRANSACTION
DOCUMENTS.

 

SECTION 12.15.                       CONTINUING ASSIGNMENT; REVERSION OF
WAREHOUSE ASSETS.  THIS AGREEMENT SHALL CREATE A CONTINUING ASSIGNMENT OF AND
INTEREST IN THE WAREHOUSE ASSETS AND SHALL (A) REMAIN IN FULL FORCE AND EFFECT
UNTIL INDEFEASIBLE PAYMENT IN FULL OF ALL CUSTOMER OBLIGATIONS, (B) BE BINDING
UPON CUSTOMER AND ITS SUCCESSORS AND ASSIGNS AND (C) INURE, TOGETHER WITH THE
RIGHTS AND REMEDIES OF BUYER AND THE OTHER PURCHASER REPRESENTATIVES HEREUNDER,
TO THE BENEFIT OF BUYER AND THE OTHER PURCHASER REPRESENTATIVES AND THEIR
RESPECTIVE SUCCESSORS,

 

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transferees and assigns.  Upon the indefeasible payment in full of Customer
Obligations and the termination of this Agreement, the interests granted hereby
shall terminate and all rights to the Warehouse Assets assigned or pledged by
Customer shall revert to Customer.  Upon any such termination, Buyer and the
other Purchaser Representatives will, at Customer’s expense, execute and deliver
to Customer such documents as Customer shall reasonably request to evidence such
termination.

 

Customer agrees that this Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, on
any Customer Obligation is rescinded or must otherwise be restored by Customer
upon the bankruptcy or reorganization of Customer or any of its Subsidiaries or
any other Person or otherwise.

 

SECTION 12.16.                       INDEPENDENT CONTRACTOR.  CUSTOMER IS AN
INDEPENDENT CONTRACTOR IN ALL MATTERS RELATING TO THIS AGREEMENT AND THE
WAREHOUSE ASSETS AND IS NOT AN AGENT OR REPRESENTATIVE OF BUYER OR ANY OF ITS
AFFILIATES.  CUSTOMER HAS NO AUTHORITY TO ACT ON BEHALF OF OR BIND BUYER OR ANY
OF ITS AFFILIATES.

 

SECTION 12.17.                       STATEMENTS OF ACCOUNT.  EACH REPORT,
BILLING STATEMENT, AND PAYMENT TRANSCRIPT WHICH IS PREPARED BY BUYER SHALL,
EXCEPT FOR DEMONSTRABLE ERRORS, BE DEEMED FINAL, BINDING AND CONCLUSIVE UPON
CUSTOMER IN ALL RESPECTS AS TO ALL MATTERS REFLECTED THEREIN, AND SHALL
CONSTITUTE AN ACCOUNT STATED BETWEEN CUSTOMER AND BUYER, UNLESS THEREAFTER
WAIVED IN WRITING BY BUYER OR UNLESS, WITHIN SIXTY (60) DAYS AFTER CUSTOMER’S
RECEIPT OF SUCH DOCUMENT, CUSTOMER DELIVERS TO BUYER NOTICE OF A WRITTEN
OBJECTION THERETO SPECIFYING THE CLAIMED ERROR.  IN THE EVENT OF SUCH AN ERROR,
ONLY THOSE ITEMS EXPRESSLY OBJECTED TO IN SUCH NOTICE SHALL BE DEEMED TO BE
DISPUTED BY CUSTOMER AND BUYER’S ONLY LIABILITY TO CUSTOMER SHALL BE TO ISSUE A
CORRECTED DOCUMENT.

 

SECTION 12.18.                       PUBLICITY.  BUYER (AND BUYER’S AFFILIATES)
MAY AND CUSTOMER DOES HEREBY AUTHORIZE BUYER (AND ITS AFFILIATES) TO, REFER, IN
ITS SOLE DISCRETION, TO THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT IN
TOMBSTONE ADVERTISEMENTS, OFFERING MEMORANDA IN CONNECTION WITH SECURITIZATIONS
AND REPORTS TO INVESTORS, WHICH REFERENCES, MAY INCLUDE USE OF PHOTOGRAPHS,
DRAWINGS AND OTHER DEPICTIONS, A DESCRIPTION OF THE TRANSACTION CONTEMPLATED BY
THIS AGREEMENT, USE OF CUSTOMER’S NAME AND THE LOGO OF CUSTOMER.

 

80

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date hereof.

 

 

FALCON FINANCIAL INVESTMENT TRUST, a
Maryland real estate investment trust, as Customer

 

 

 

 

 

By:

/s/ David A. Karp

 

Name: David A. Karp

 

Title: President

 

 

 

 

Telecopier No.:  (203) 967-1717

 

15 Commerce Road

 

Stamford, Connecticut  06902

 

Attn:   President

 

 

 

with copies to:

 

 

 

 

Telecopier No.  (203) 967-1717

 

15 Commerce Road

 

Stamford, Connecticut  06902

 

Attn:   General Counsel

 

 

 

and to:

 

 

 

Telecopier No.  (202) 637-5910

 

Hogan & Hartson L.L.P.

 

555 Thirteenth Street, NW

 

Washington, DC 20004-1109

 

Attn:   Stuart Barr

 

 

 

 

 

iSTAR FINANCIAL INC., a Maryland corporation,
as Buyer

 

 

 

 

 

By:

/s/ Jeffrey R. Digel

 

Name: Jeffrey R. Digel

 

Title: Executive Vice President

 

 

 

 

Telecopier No.:  (212) 930-9494

 

1114 Avenue of the Americas

 

New York, New York 10036

 

Attn:  Chief Operating Officer

 

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

 

 

with copies to:

 

 

 

 

 

Telecopier No.:  (212) 930-9492

 

iStar Financial Inc.

 

 

1114 Avenue of the Americas

 

New York, New York 10036

 

Attn:  General Counsel

 

 

 

 

 

and to:

 

 

 

 

Telecopier No:   (860) 815-5901

 

iStar Asset Services Inc.

 

180 Glastonbury Blvd., Suite 201

 

Glastonbury, Connecticut  06033

 

Attn:  President

 

 

 

 

and to:

 

 

 

 

 

Telecopier No.:  (312) 577-8646

 

Katten Muchin Zavis Rosenman

 

525 West Monroe Street

 

Suite 1600

 

Chicago, Illinois 60661-3693

 

Attn:  Kenneth M. Jacobson, Esq.

 

Reference:  208972/00300

 

 

 

 

 

 

 

THE BANK OF NEW YORK, as Custodian and
Paying Agent

 

 

 

 

 

 

By:

/s/ Diane Pickett

 

Name: Diane Pickett

 

Title:  Vice President

 

 

 

 

 

Telecopier No.:  (212) 815-3986

 

101 Barclay Street—8W

 

New York, New York 10286

 

Attn: Diane Pickett

 

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