Exhibit 10.3

 

Execution Version

 

AMENDMENT NO. 1 AND JOINDER

 

        AMENDMENT NO. 1 AND JOINDER, dated as of May 21, 2004 (this
“Amendment”), to the Second Amended and Restated Master Loan and Security
Agreement, dated as of January 30, 2004 (as amended, supplemented or otherwise
modified prior to the date hereof, the “Existing Loan Agreement”; as amended
hereby and as further amended, restated, supplemented or otherwise modified and
in effect from time to time, the “Loan Agreement”), by and among NC CAPITAL
CORPORATION (“NC Capital”), NEW CENTURY MORTGAGE CORPORATION (“New Century”,
together with NC Capital, collectively, the “Existing Borrowers”; the Existing
Borrowers together with the Additional Borrower referred to below, collectively,
the “Borrowers”, each, a “Borrower”), MORGAN STANLEY BANK (“MSB”) and MORGAN
STANLEY MORTGAGE CAPITAL INC. (“MSMCI”) (MSMCI, in its capacity as a lender,
together with MSB, collectively, the “Lenders”, and in its capacity as agent for
the Lenders, together with any successors and assigns, the “Agent”). Capitalized
terms used but not otherwise defined herein shall have the meanings given to
them in the Existing Loan Agreement.

 

RECITALS

 

        The Existing Borrowers, the Lenders and the Agent are parties to the
Existing Loan Agreement, pursuant to which the Lenders have agreed to make and
to permit to remain outstanding certain extensions of credit on the terms and
subject to the conditions of the Existing Loan Agreement.

 

        The Borrowers, the Lenders and the Agent have agreed, subject to the
terms and conditions hereof, that the Existing Loan Agreement shall be amended
to make NC Residual II Corporation, a Delaware corporation (“NCRII” or the
“Additional Borrower”), a “Borrower” under the Loan Agreement and to effect
certain other changes as set forth in this Amendment.

 

        Accordingly, the parties hereto hereby agree, in consideration of the
mutual premises and mutual obligations set forth herein, that the Existing Loan
Agreement is hereby amended as follows:

 

        SECTION 1. Amendments.

 

        (a) The definition of “Collateral Value” set forth in Section 1.01 of
the Existing Loan Agreement is hereby amended by deleting clause (a)(i) in its
entirety and substituting in lieu thereof the following:

 

        “(i) the aggregate unpaid principal balance of all Eligible Mortgage
Loans pledged to the Agent hereunder, excluding Alternate ‘A’ Mortgage Loans,
shall not exceed (A) prior to June 30, 2004, $1,800,000,000 and (B) from and
after June 30, 2004, $1,300,000,000;”.

 

        (b) Section 1.01 of the Existing Loan Agreement is hereby amended by
deleting the definition of “Maximum Credit” in its entirety and substituting in
lieu thereof the following definition:

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        “‘Maximum Credit’ shall mean (a) prior to June 30, 2004, $2,000,000,000
and (b) from and after June 30, 2004, $1,500,000,000, in each case as reduced in
accordance with Section 2.01 hereof.”

 

        (c) Section 2.07 of the Existing Loan Agreement is hereby deleted in its
entirety and the following new Section 2.07 is inserted in lieu thereof:

 

        “Section 2.07 Mandatory Prepayments or Pledge.

 

        (a) If at any time the aggregate outstanding principal amount of Loans
exceeds the Borrowing Base (a “Borrowing Base Deficiency”), as determined by the
Agent and notified to the Borrowers on any Business Day, the Borrowers shall no
later than one (1) Business Day after receipt of such notice, either prepay the
Loans in part or in whole or pledge additional Eligible Mortgage Loans (which
Collateral shall be in all respects acceptable to the Agent in its sole
discretion) to the Agent for the account of the Lenders, such that after giving
effect to such prepayment or pledge of additional Eligible Mortgage Loans a
Borrowing Base Deficiency shall no longer exist.

 

        (b) If at any time the aggregate outstanding principal amount of Loans
exceeds the Maximum Credit then in effect, the Borrowers shall at such time
prepay the Loans such that, after giving effect to such prepayment, the
aggregate outstanding principal amount of Loans shall not exceed the Maximum
Credit then in effect.”

 

        (d) Schedule 4 to the Existing Loan Agreement is hereby deleted in its
entirety and the Schedule 4 attached hereto is inserted in lieu thereof.

 

        SECTION 2. Joinder Agreement. From and after the Amendment Effective
Date (defined below), NCRII shall be a “Borrower” under the Loan Agreement with
all of the rights, powers and obligations of a Borrower thereunder and all
references to the “Borrowers” in the Loan Agreement and the other Loan Documents
shall be deemed to include, in any event, NCRII.

 

        SECTION 3. Conditions Precedent. This Amendment shall become effective
on the first date (the “Amendment Effective Date”) that all of the following
conditions precedent shall have been satisfied:

 

        3.1 Delivered Documents. On the Amendment Effective Date, the Agent
shall have received the following documents, each of which shall be satisfactory
to the Agent in form and substance:

 

        (a) Amendment. This Amendment, executed and delivered by a duly
authorized officer of each of the Borrowers, the Guarantor, the Lenders and the
Agent;

 

        (b) Amended and Restated Note. For the account of each Lender, in
exchange for the Note most recently delivered to such Lender under the Existing
Loan Agreement, an Amended and Restated Promissory Note, substantially in the
form of Exhibit A hereto;

 

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        (c) Amendment to Custodial Agreement. An amendment to the Custodial
Agreement providing for the joinder of NCRII as a “Borrower” party thereto,
executed and delivered by a duly authorized officer of each of the Borrowers,
the Custodian, the Disbursement Agent and the Agent;

 

        (d) Servicer Letter. A letter from New Century, in its capacity as
Servicer, confirming that upon the occurrence of an Event of Default, the Agent
may terminate any Servicing Agreement and in any event transfer servicing to the
Agent’s designee, at no cost or expense to the Agent and otherwise satisfying
the requirements of Section 11.14(d).

 

        (e) Secretary’s Certificates of Borrowers. A certificate of the
Secretary or Assistant Secretary of each Borrower, substantially in the form of
Exhibit B hereto, dated as of the date hereof, and

 

        (i) attaching certificates dated as of a recent date from the Secretary
of State or other appropriate authority, evidencing the good standing of each
Borrower in the jurisdiction of its organization,

 

        (ii) attaching a copy of the resolutions, in form and substance
satisfactory to the Agent, of the Board of Directors of each Borrower
authorizing (A) the execution, delivery and performance of this Amendment, and
(B) the borrowings contemplated under the Loan Agreement,

 

        (iii) (A) with respect to each Existing Borrower, certifying that since
the Effective Date of the Existing Loan Agreement there have been no changes to
any of the organizational documents of such Borrower delivered pursuant to
Section 5.01 of the Loan Agreement and (B) with respect to the Additional
Borrower, attaching certified copies of the charter and by-laws (or equivalent
documents) of such Borrower, and

 

        (iv) certifying as to the incumbency and specimen signature of each
officer executing this Amendment;

 

        (f) Legal Opinions. Legal opinions of internal and outside counsel to
the Borrowers, substantially in the forms attached hereto as Exhibits C-1 and
C-2, respectively; and

 

        (g) Other Documents. Such other documents as the Agent or counsel to the
Agent may reasonably request.

 

        3.2 Lien Searches and Actions to Perfect Liens. The Agent shall have
received the results of a search conducted by a Person satisfactory to the Agent
with respect to any liens which may have been filed against any of the
Collateral, and the results of such search shall be satisfactory to the Agent.
The Borrowers shall have taken all such action as the Agent shall deem necessary
or advisable (including, without limitation, the authorization and execution of
Uniform Commercial Code financing, continuation or amendment statements) to
perfect, continue or otherwise ensure perfection of the security interests
granted in favor of the Agent under the Loan Documents.

 

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        3.3 Consents, Licenses, Approvals, etc. Copies certified by the
Borrowers of all consents, licenses and approvals, if any, required in
connection with the execution, delivery and performance by the Borrowers of, and
the validity and enforceability of, the Loan Documents, which consents, licenses
and approvals shall be in full force and effect.

 

        3.4 No Default. On the Amendment Effective Date, (i) each Borrower shall
be in compliance with all of the terms and provisions set forth in the Existing
Loan Agreement and the other Loan Documents on its part to be observed or
performed, (ii) the representations and warranties made and restated by the
Borrowers pursuant to Section 4 of this Amendment shall be true and complete on
and as of such date with the same force and effect as if made on and as of such
date and (iii) no Default shall have occurred and be continuing on such date.

 

        SECTION 4. Representations and Warranties. Each of the Borrowers hereby
represents and warrants to the Agent and the Lenders, as of the date hereof and
as of the Amendment Effective Date, that it is in compliance with all of the
terms and provisions set forth in the Loan Documents on its part to be observed
or performed, and that no Default has occurred or is continuing, and hereby
confirms and reaffirms the representations and warranties contained in Article
VI of the Loan Agreement.

 

        SECTION 5. Limited Effect. Except as expressly amended and modified by
this Amendment, the Existing Loan Agreement and each of the other Loan Documents
shall continue to be, and shall remain, in full force and effect in accordance
with its respective terms; provided, however, that upon the Amendment Effective
Date each reference therein and herein to the “Loan Documents” shall be deemed
to include, in any event, this Amendment and each reference to the Loan
Agreement in any of the Loan Documents shall be deemed to be a reference to the
Loan Agreement as amended hereby.

 

        SECTION 6. Guarantor’s Continuing Obligations. Although consent of the
Guarantor is not required, as a convenience to the parties, the Guarantor hereby
acknowledges the modifications effected by this Amendment, including, without
limitation, the increase of the Maximum Credit and the joinder of NCRII as a
“Borrower” under the Loan Agreement, and the Guarantor hereby affirms and
confirms its obligations under the New Century Guaranty in respect the Loan
Agreement.

 

        SECTION 7. Counterparts. This Amendment may be executed by each of the
parties hereto on any number of separate counterparts, each of which shall be an
original and all of which taken together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Amendment in Portable Document Format (PDF) or by facsimile transmission shall
be effective as delivery of a manually executed original counterpart thereof.

 

        SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

[SIGNATURES FOLLOW]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 and
Joinder to be duly executed and delivered as of the day and year first above
written.

 

BORROWERS

 

NC CAPITAL CORPORATION

 

By:   /s/    KEVIN CLOYD            

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Name: Kevin Cloyd

Title: President

 

NEW CENTURY MORTGAGE CORPORATION

 

By:   /s/    KEVIN CLOYD            

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Name: Kevin Cloyd

Title: Executive Vice President

 

NC RESIDUAL II CORPORATION

 

By:   /s/    KEVIN CLOYD            

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Name: Kevin Cloyd

Title: Executive Vice President

 

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MORGAN STANLEY MORTGAGE
CAPITAL INC., as Agent and as a Lender

 

By:   /s/    ANDREW B. NEUBERGER            

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Name: Andrew B. Neuberger

Title: Vice President

 

MORGAN STANLEY BANK, as a Lender

 

By:   /s/    ANDREW B. NEUBERGER            

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Name: Andrew B. Neuberger

Title: Vice President

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Acknowledged and agreed:

 

NEW CENTURY FINANCIAL CORPORATION, as the Guarantor

 

By:   /s/    KEVIN CLOYD            

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Name: Kevin Cloyd

Title: Executive Vice President

 

By:   /s/    PATRICK FLANAGAN            

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Name: Patrick Flanagan

Title: Executive Vice President

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Schedule 4

 

LENDER COMMITMENTS

 

Prior to June 30, 2004:

      

Lender

     Commitment

Morgan Stanley Bank

   $ 400,000,000

Morgan Stanley Mortgage Capital Inc.

   $ 1,600,000,000

Total

   $ 2,000,000,000

 

From and After June 30, 2004:

      

Lender

     Commitment

Morgan Stanley Bank

   $ 400,000,000

Morgan Stanley Mortgage Capital Inc.

   $ 1,100,000,000

Total

   $ 1,500,000,000

 

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Exhibit A

 

FORM OF AMENDED AND RESTATED PROMISSORY NOTE

 

[$400,000,000.00 / $1,600,000,000.00]   January 30, 2004

amended and restated May     , 2004

New York, New York

 

FOR VALUE RECEIVED, NC CAPITAL CORPORATION, a California corporation (“NC
Capital”), NEW CENTURY MORTGAGE CORPORATION, a California corporation (“New
Century”, together with NC Capital, the “Initial Borrowers”) and NC RESIDUAL II
CORPORATION, a [            ] corporation (“NCRII”, together with NC Capital and
New Century, each a “Borrower” and, collectively, the “Borrowers”), hereby
promises to pay, jointly and severally, to the order of [MORGAN STANLEY BANK /
MORGAN STANLEY MORTGAGE CAPITAL INC.] (the “Lender”), at the principal office of
Morgan Stanley Mortgage Capital Inc., Agent for the Lenders under the Loan
Agreement referred to below, at 1221 Avenue of the Americas, 27th Floor, New
York, New York, 10020, in lawful money of the United States, and in immediately
available funds, the principal sum of [FOUR HUNDRED MILLION AND 00/100 UNITED
STATES DOLLARS ($400,000,000.00) / ONE BILLION SIX HUNDRED MILLION AND 00/100
UNITED STATES DOLLARS ($1,600,000,000.00)] (or such lesser amount as shall equal
the aggregate unpaid principal amount of the Loans made by the Lender to the
Borrowers under the Loan Agreement), on the dates and in the principal amounts
provided in the Loan Agreement, and to pay interest on the unpaid principal
amount of each such Loan, at such office, in like money and funds, for the
period commencing on the date of such Loan until such Loan shall be paid in
full, at the rates per annum and on the dates provided in the Loan Agreement.

 

This Amended and Restated Promissory Note (this “Note”) is one of the “Notes”
referred to in that certain Second Amended and Restated Master Loan and Security
Agreement, dated as of January 30, 2004 (as amended, restated, supplemented or
otherwise modified and in effect from time to time, the “Loan Agreement”), among
the Borrowers, Morgan Stanley Bank, a Utah industrial loan corporation (“MSB”),
as a lender, and Morgan Stanley Mortgage Capital Inc., a New York corporation,
as a lender (in such capacity, together with MSB, collectively, the “Lenders”)
and as agent for the Lenders (in such capacity, the “Agent”). Capitalized terms
used but not defined herein shall have the meanings specified in the Loan
Agreement.

 

This Note amends and restates in its entirety the Promissory Note, dated January
30, 2004 (the “Existing Note”), made by the Initial Borrowers in favor of the
Lender and is given as a continuation, rearrangement and extension, and not a
novation, release or satisfaction, of the Existing Note. Each Initial Borrower
hereby acknowledges and agrees that simultaneously with such Borrower’s
execution and delivery of this Amended and Restated Promissory Note, the Lender
has delivered to the Initial Borrowers the Existing Note.

 

A-1

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Pursuant to and subject to the terms of the Loan Agreement, the Borrowers may
borrow, repay and reborrow funds until the Termination Date. In all events, the
Borrowers shall repay the aggregate outstanding principal amount of all Loans
plus all accrued interest thereon on the Termination Date.

 

Pursuant to the Loan Agreement, from time to time the Borrowers will be required
to pledge additional Collateral or to prepay Loans to cure a Borrowing Base
Deficiency.

 

The date, amount and interest rate of each Loan made by the Lender to the
Borrowers, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books and, prior to any transfer of this Note,
endorsed by the Lender on the schedule attached hereto or any continuation
thereof, provided, that the failure of the Lender to make any such recordation
or endorsement shall not affect the obligations of the Borrowers to make a
payment when due of any amount owing under the Loan Agreement or hereunder in
respect of the Loans made by the Lender.

 

The Borrowers agree, jointly and severally, to pay all the Lender’s costs of
collection and enforcement (including reasonable attorneys’ fees and
disbursements of Lender’s counsel) in respect of this Note when incurred,
including, without limitation, reasonable attorneys’ fees through appellate
proceedings.

 

Notwithstanding the pledge of the Collateral, each Borrower hereby acknowledges,
admits and agrees that each Borrower’s obligations under this Note are recourse
obligations of the Borrowers to which each Borrower pledges its full faith and
credit.

 

The Borrowers, and any endorsers or guarantors hereof, (a) severally waive
diligence, presentment, protest and demand and also notice of protest, demand,
dishonor and nonpayments of this Note, (b) expressly agree that this Note, or
any payment hereunder, may be extended from time to time, and consent to the
acceptance of further Collateral, the release of any Collateral for this Note,
the release of any party primarily or secondarily liable hereon, and (c)
expressly agree that it will not be necessary for the Lender, in order to
enforce payment of this Note, to first institute or exhaust the Lender’s
remedies against the Borrowers or any other party liable hereon or against any
Collateral for this Note. No extension of time for the payment of this Note, or
any installment hereof, made by agreement by the Lender with any person now or
hereafter liable for the payment of this Note, shall affect the liability under
this Note of the Borrowers, even if the Borrowers are not a party to such
agreement; provided, however, that the Lender and the Borrowers, by written
agreement between them, may affect the liability of the Borrowers.

 

Any reference herein to the Lender shall be deemed to include and apply to every
subsequent holder of this Note. Reference is made to the Loan Agreement for
provisions concerning optional and mandatory prepayments, Collateral,
acceleration and other material terms affecting this Note.

 

This Note shall be governed by, and construed and interpreted in accordance
with, the laws of the State of New York, whose laws the Borrowers expressly
elect to apply to this Note. The Borrowers agree that any action or proceeding
brought to enforce or

 

A-2

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arising out of this Note may, be commenced in the Supreme Court of the State of
New York, Borough of Manhattan, or in the District Court of the United States
for the Southern District of New York.

 

[SIGNATURES FOLLOW]

 

A-3

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NC CAPITAL CORPORATION

     

NEW CENTURY MORTGAGE

       

CORPORATION

By:           By:        

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Name:

         

Name:

   

Title:

         

Title:

NC RESIDUAL II CORPORATION

        By:                    

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Name:

               

Title:

           

 

A-4

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SCHEDULE OF LOANS

 

This Note evidences Loans made under the within-described Loan Agreement to the
Borrowers, on the dates, in the principal amounts and bearing interest at the
rates set forth below, and subject to the payments and prepayments of principal
set forth below:

 

Date Made

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Principal Amount
of Loan

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Interest Rate

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Amount Paid or
Prepaid

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Unpaid Principal
Amount

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Notation Made by

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A-5

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Exhibit B

 

Form of Secretary’s Certificate

 

Pursuant to Section 2.1(b) of that certain Amendment No. 1 and Joinder, dated as
of May     , 2004 (the “First Amendment”), to the Second Amended and Restated
Master Loan and Security Agreement, dated as of January 30, 2004 (as amended,
supplemented or otherwise modified prior to the date hereof, the “Existing Loan
Agreement”; as amended by the First Amendment and as further amended, restated,
supplemented or otherwise modified and in effect from time to time, the “Loan
Agreement”; capitalized terms used but not otherwise defined herein shall have
the meanings assigned thereto by the Loan Agreement), by and among NC CAPITAL
CORPORATION (“NC Capital”), NEW CENTURY MORTGAGE CORPORATION (“New Century”,
together with NC Capital, collectively, the “Initial Borrowers”), NC RESIDUAL II
CORPORATION (“NCRII”, together with NC Capital and New Century, collectively,
the “Borrowers”, each, a “Borrower”), MORGAN STANLEY BANK (“MSB”) and MORGAN
STANLEY MORTGAGE CAPITAL INC. (“MSMCI”) (MSMCI, in its capacity as a lender,
together with MSB, collectively, the “Lenders”, and in its capacity as agent for
the Lenders, together with any successors and assigns, the “Agent”), the
undersigned hereby certifies on behalf of [New Century / NC Capital / NCRII]
(the “Specified Borrower”) as follows:

 

(a) Attached hereto as “Annex A” are original certificates dated as of a recent
date from the Secretary of State or other appropriate authority evidencing the
good standing of the Specified Borrower in its jurisdiction of organization;

 

(b) Attached hereto as “Annex B” is a true, correct and complete copy of the
resolutions of the Specified Borrower, together with any and all amendments
thereto, authorizing the execution, delivery and performance of this Amendment
and the borrowings contemplated thereunder, such resolutions having not been
amended, modified, revoked or rescinded, and the same being in full force and
effect in the attached form as of the date hereof;

 

(c) [FOR NEW CENTURY AND NC CAPITAL: Since the Effective Date of the Existing
Loan Agreement there have been no changes to any of the organizational documents
of the Specified Borrower delivered pursuant to Section 5.01 of the Loan
Agreement and each such document remains in full force and effect as of the date
hereof;] [FOR NCRII: Attached hereto as “Annex C” are certified copies of the
charter and by-laws (or equivalent documents) of the Specified Borrower;]

 

(d) The following named individuals are duly elected, qualified and acting
officers of the Specified Borrower, each such individual holding the office(s)
set forth opposite his respective name as of the date hereof, and the signatures
set forth beside the respective name and title of said officers and authorized
signatories are true, authentic signatures:

 

Name

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Title

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Signature

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[SIGNATURES FOLLOW]

 

 

B-1

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IN WITNESS WHEREOF, the undersigned has hereunto executed this Secretary’s
Certificate as of this          day of                                 , 2004.

 

By:        

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Name:

Title:

 

The undersigned,                                     , does hereby certify that
he is the duly elected and presently incumbent                                 
of the Specified Borrower and in such capacity does hereby certify to the Lender
that                                  is the duly elected and presently
incumbent Secretary of the Specified Borrower.

 

By:        

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Name:

Title:

 

B-2

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Exhibit C-1

 

FORM OF OPINION OF INTERNAL COUNSEL TO THE BORROWERS

 

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Exhibit C-2

 

FORM OF OPINION OF OUTSIDE COUNSEL TO THE BORROWERS