EXHIBIT 10.13

EXECUTION
VERSION


AMENDED AND RESTATED

VARIABLE FUNDING LOAN AGREEMENT


[THREE PILLARS]


dated as of June 15, 2006


among


THREE PILLARS FUNDING LLC,


the Lender,


MID-STATE TRUST XIV,


the Borrower,


TREASURY BANK,

A DIVISION OF COUNTRYWIDE BANK, N.A.,


the Custodian,


THE BANK OF NEW YORK,


as Trustee,


SUNTRUST CAPITAL MARKETS, INC.,


as the Agent, the Administrative Trustee and SunTrust Bank, as a Bank
Investor


 


















TABLE OF CONTENTS


	
  

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
  ARTICLE 1

  GENERAL

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section
  1.1.

  	
   

  	
  Certain Defined
  Terms

  	
   

  	
  2

  	
   

  
	
  Section
  1.2.

  	
   

  	
  Other Terms

  	
   

  	
  2

  	
   

  
	
  Section
  1.3.

  	
   

  	
  Computation of
  Time Periods

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE 2

  AMOUNT AND TERMS OF COMMITMENT

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section
  2.1.

  	
   

  	
  Revolving Credit
  Facility.

  	
   

  	
  3

  	
   

  
	
  Section
  2.2.

  	
   

  	
  Loan Requests.

  	
   

  	
  3

  	
   

  
	
  Section
  2.3.

  	
   

  	
  Determination of
  Discount and Rate Periods.

  	
   

  	
  5

  	
   

  
	
  Section
  2.4.

  	
   

  	
  Payment of
  Principal, Interest and Other Amounts.

  	
   

  	
  8

  	
   

  
	
  Section
  2.5.

  	
   

  	
  Breach of
  Representation or Warranty

  	
   

  	
  8

  	
   

  
	
  Section
  2.6.

  	
   

  	
  Mandatory and
  Optional Prepayments.

  	
   

  	
  8

  	
   

  
	
  Section
  2.7.

  	
   

  	
  Proceeds

  	
   

  	
  9

  	
   

  
	
  Section
  2.8.

  	
   

  	
  Pledged
  Accounts.

  	
   

  	
  9

  	
   

  
	
  Section
  2.9.

  	
   

  	
  Payments and
  Computations, Etc.

  	
   

  	
  10

  	
   

  
	
  Section
  2.10.

  	
   

  	
  Reports

  	
   

  	
  11

  	
   

  
	
  Section
  2.11.

  	
   

  	
  Sharing of
  Payments, Etc

  	
   

  	
  11

  	
   

  
	
  Section
  2.12.

  	
   

  	
  Right of Setoff

  	
   

  	
  11

  	
   

  
	
  Section
  2.13.

  	
   

  	
  Assignment by
  Lender to Bank Investors.

  	
   

  	
  11

  	
   

  
	
  Section
  2.14.

  	
   

  	
  Downgrade of
  Bank Investor.

  	
   

  	
  12

  	
   

  
	
  Section
  2.15.

  	
   

  	
  Non-Renewing
  Bank Investors.

  	
   

  	
  14

  	
   

  
	
  Section
  2.16.

  	
   

  	
  Commitment
  Renewal Request.

  	
   

  	
  16

  	
   

  
	
  Section
  2.17.

  	
   

  	
  Interest Rate
  Protection Agreements.

  	
   

  	
  16

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE 3

  REPRESENTATIONS AND WARRANTIES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section
  3.1.

  	
   

  	
  Representations
  and Warranties of the Borrower

  	
   

  	
  16

  	
   

  
	
  Section
  3.2.

  	
   

  	
  Reaffirmation of
  Representations and Warranties by the Borrower

  	
   

  	
  19

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE 4

  CONDITIONS PRECEDENT

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section
  4.1.

  	
   

  	
  Conditions to
  Effectiveness

  	
   

  	
  19

  	
   

  
	
  Section
  4.2.

  	
   

  	
  Conditions to
  Each Loan

  	
   

  	
  19

  	
   

  



 



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  ARTICLE 5

  COVENANTS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section
  5.1.

  	
   

  	
  Affirmative
  Covenants of Borrower

  	
   

  	
  21

  	
   

  
	
  Section 5.2.

  	
   

  	
  Negative
  Covenants of Borrower

  	
   

  	
  24

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE 6

  EVENTS OF DEFAULT AND FACILITY TERMINATION EVENTS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
   

  	
  Events of
  Default

  	
   

  	
  26

  	
   

  
	
  Section 6.2.

  	
   

  	
  Facility
  Termination Events

  	
   

  	
  27

  	
   

  
	
  Section 6.3.

  	
   

  	
  Remedies

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE 7

  INDEMNIFICATION; EXPENSES; RELATED MATTERS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
   

  	
  Indemnities by
  the Borrower

  	
   

  	
  28

  	
   

  
	
  Section 7.2.

  	
   

  	
  Indemnity for
  Taxes, Reserves and Expenses

  	
   

  	
  30

  	
   

  
	
  Section 7.3.

  	
   

  	
  Taxes

  	
   

  	
  33

  	
   

  
	
  Section 7.4.

  	
   

  	
  Other Costs and
  Expenses; Breakage Costs

  	
   

  	
  36

  	
   

  
	
  Section 7.5.

  	
   

  	
  Payment

  	
   

  	
  37

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE 8

  MISCELLANEOUS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
   

  	
  Term of
  Agreement

  	
   

  	
  37

  	
   

  
	
  Section 8.2.

  	
   

  	
  Waivers;
  Amendments

  	
   

  	
  37

  	
   

  
	
  Section 8.3.

  	
   

  	
  Notices

  	
   

  	
  38

  	
   

  
	
  Section 8.4.

  	
   

  	
  Governing Law;
  Submission to Jurisdiction; Integration

  	
   

  	
  40

  	
   

  
	
  Section 8.5.

  	
   

  	
  Severability;
  Counterparts

  	
   

  	
  41

  	
   

  
	
  Section 8.6.

  	
   

  	
  Successors and
  Assigns

  	
   

  	
  41

  	
   

  
	
  Section 8.7.

  	
   

  	
  Waiver of
  Confidentiality

  	
   

  	
  43

  	
   

  
	
  Section 8.8.

  	
   

  	
  Confidentiality
  Agreement

  	
   

  	
  43

  	
   

  
	
  Section 8.9.

  	
   

  	
  Liability of
  Owner Trustee

  	
   

  	
  43

  	
   

  
	
  Section
  8.10.

  	
   

  	
  No Bankruptcy
  Petition Against the Lender

  	
   

  	
  44

  	
   

  
	
  Section
  8.11.

  	
   

  	
  No Recourse
  Against Lender

  	
   

  	
  44

  	
   

  
	
  Section
  8.12.

  	
   

  	
  Assignment by
  Lender to Conduit Assignee

  	
   

  	
  44

  	
   

  
	
  Section
  8.13.

  	
   

  	
  Assignment by
  Lender to Program Support Provider

  	
   

  	
  45

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARTICLE 9

  THE AGENT

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section
  9.1.

  	
   

  	
  Appointment and
  Authorization of Agent

  	
   

  	
  45

  	
   

  
	
  Section
  9.2.

  	
   

  	
  Delegation of
  Duties

  	
   

  	
  46

  	
   

  
	
  Section
  9.3.

  	
   

  	
  Liability of
  Agent

  	
   

  	
  46

  	
   

  
	
  Section
  9.4.

  	
   

  	
  Reliance by
  Agent

  	
   

  	
  46

  	
   

  
	
  Section
  9.5.

  	
   

  	
  Notice of
  Potential Event of Default, Event of Default Facility, Termination Event or
  Servicer Default

  	
   

  	
  47

  	
   

  



 



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  Section 9.6.

  	
   

  	
  Credit Decision;
  Disclosure of Information by the Agent

  	
   

  	
  47

  	
   

  
	
  Section
  9.7.

  	
   

  	
  Indemnification
  of the Agent

  	
   

  	
  48

  	
   

  
	
  Section
  9.8.

  	
   

  	
  Agent in
  Individual Capacity

  	
   

  	
  48

  	
   

  
	
  Section
  9.9.

  	
   

  	
  Resignation of
  Agent

  	
   

  	
  49

  	
   

  
	
  Section
  9.10.

  	
   

  	
  Payments by the
  Agent

  	
   

  	
  49

  	
   

  
	
  Section
  9.11.

  	
   

  	
  Notification by
  Agent

  	
   

  	
  49

  	
   

  
	
  Section
  9.12.

  	
   

  	
  Limited Waiver

  	
   

  	
  49

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A - Form
  of Variable Funding Note

  	
   

  	
  Exhibit A-1

  	
   

  
	
  Exhibit B - Form
  of Borrowing Request

  	
   

  	
  Exhibit B-1

  	
   

  
	
  Annex A - Definitions

  	
   

  	
  A-1

  	
   

  



 


 



 iii















AMENDED
AND RESTATED VARIABLE FUNDING LOAN AGREEMENT


[THREE
PILLARS]


AMENDED AND
RESTATED VARIABLE FUNDING LOAN AGREEMENT (this “Loan Agreement”), dated
as of June 15, 2006, by and among THREE PILLARS FUNDING LLC, a Delaware limited
liability company (together with its successors and assigns, the “Lender”),
MID-STATE TRUST XIV, a Delaware statutory trust, as borrower (the “Borrower”),
TREASURY BANK, A DIVISION OF COUNTRYWIDE BANK, N.A., as custodian (the “Custodian”),
THE BANK OF NEW YORK, a New York banking institution, as trustee (the “Trustee”)
and SUNTRUST CAPITAL MARKETS, INC., a Tennessee corporation, as agent and
administrative trustee (in such capacities, the “Agent” and “Administrative
Trustee”), and SUNTRUST BANK, as a bank investor (in such capacity, a “Bank
Investor”).


PRELIMINARY STATEMENTS


WHEREAS, the
Borrower was established pursuant to the Trust Agreement dated as of February
3, 2005, as amended or modified from time to time, including the Amended and
Restated Trust Agreement dated as of the date hereof;


WHEREAS, the
Lender, the Borrower, the Agent and Wachovia Bank, National Association, as
custodian/collateral agent are parties to that certain Variable Funding Loan
Agreement, dated as of February 4, 2005 (the “Existing Loan Agreement”);


WHEREAS, Wachovia Bank,
National Association has resigned its role as custodian and collateral agent
pursuant to the provisions of the Custodian/Trustee Agreement, dated as of the
date hereof (the “CTA Agreement”), and Treasury Bank has accepted its
appointment as custodian thereunder and The Bank of New York has accepted its
appointment as trustee thereunder.


WHEREAS, on the
Closing Date, and from time to time pursuant to the Amended and Restated
Depositor Account Transfer Agreement, dated as of the date hereof, as amended
or restated from time to time (the “DAT Agreement”), Jim Walter Homes,
Inc. (the “Originator”) and the Eligible Originators party thereto have
agreed to convey certain Accounts to Mid-State Homes, Inc. (the “Depositor”),
and the Depositor, pursuant to the Amended and Restated Borrower Account
Transfer Agreement dated as of the date hereof, as amended or restated from to
time (the “BAT Agreement”), has agreed to convey certain Accounts to the
Borrower;


WHEREAS, pursuant
to the CTA Agreement and as collateral security for its obligations under this
Loan Agreement and the Variable Funding Note, the Borrower has agreed to assign
all Accounts purchased by it, all of its rights under the DAT Agreement, the
BAT Agreement, the Master Servicing Agreement, the Back-up Servicing Agreement
and the Subservicing Agreement, and all of its right, title, interest in and to
certain bank accounts and certain other collateral, and to deliver any notes
evidencing indebtedness and certain other documents related to the Accounts, to
the Trustee for the benefit of the Secured Parties and to take such other steps




 1
 









as set
forth in the CTA Agreement to create and perfect a first lien in all such
rights in favor of the Trustee, for the benefit of the Secured Parties;


WHEREAS, the
Borrower has requested that the Lender and/or Bank Investors make Loans to the
Borrower, from time to time, which will be secured by the Collateral described
above and evidenced by a Variable Funding Note, the proceeds of which will be
used to purchase the Accounts;


WHEREAS, it is the
intent of the parties hereto that the execution and delivery of this Loan
Agreement, made for the purposes described in these Preliminary Statements, not
effectuate a novation of Borrower’s obligations outstanding under the Existing
Loan Agreement, but rather a substitution of certain of the terms governing the
payment and performance of such indebtedness;


WHEREAS, Wachovia
Bank, National Association served as custodian and collateral agent pursuant to
the Custodian/Collateral Agent Agreement, dated February 4, 2005; and


WHEREAS, subject
to the terms and conditions set forth herein, the Bank Investors are willing to
make the Loans to the Borrower;


NOW, THEREFORE, in
consideration of the mutual benefits to be derived and the representations and
warranties, conditions and promises herein contained, and intending to be
legally bound hereby, the parties hereto hereby agree that the Existing Loan
Agreement is hereby amended and restated in its entirety as follows:


ARTICLE
1



GENERAL


Section 1.1.            Certain
Defined Terms.  Capitalized terms
used in this Loan Agreement shall have the meanings given such terms in Annex A
hereto, unless otherwise defined herein.


Section 1.2.            Other
Terms.  All terms defined directly or
by incorporation herein shall have the defined meanings when used in any
certificate or other document delivered pursuant thereto unless otherwise
defined therein.  For purposes of this
Loan Agreement and all such certificates and other documents, unless the
context otherwise requires: 
(a) accounting terms not otherwise defined herein, and accounting
terms partly defined herein to the extent not defined, shall have the
respective meanings given to them under, and shall be construed in accordance
with, GAAP; (b) terms used in Article 9 of the UCC in the State of
New York, and not specifically defined herein, are used herein as defined
in such Article 9; (c) references to any amount as on deposit or
outstanding on any particular date means such amount at the close of business
on such day; (d) the words “hereof”, “herein” and “hereunder” and words of
similar import refer to this Loan Agreement (or other document in which they
are used) as a whole and not to any particular provision of this Loan Agreement
(or such certificate or document); (e) references to any Section,
Schedule, Annex or Exhibit are references to Sections, Schedules, Annexes and
Exhibits in or to this Loan Agreement (or the certificate or other document in
which the reference is made) and references to any paragraph, subsection,
clause or other subdivision within any Section or definition refer to such
paragraph, subsection, clause or other 



 2
 









subdivision of such Section or definition; (f) the term “including”
means “including without limitation”; (g) references to any Law refer to
that Law as amended from time to time and include any successor Law;
(h) references to any agreement refer to that agreement as from time to
time amended or supplemented or as the terms of such agreement are waived or
modified in accordance with its terms; (i) references to any Person
include that Person’s successors and permitted assigns; and (j) headings
are for purposes of reference only and shall not otherwise affect the meaning
or interpretation of any provision hereof.


Section 1.3.            Computation
of Time Periods.  Unless otherwise
stated in this Loan Agreement, in the computation of a period of time from a
specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each means “to but excluding.”


ARTICLE 2


AMOUNT AND TERMS OF
COMMITMENT


Section 2.1.            Revolving
Credit Facility.


(a)           Subject to the terms
and conditions hereof, on the Closing Date, and thereafter from time to time
until the Facility Termination Date, upon the request of the Borrower in
accordance with Section 2.2 hereof, the Lender may, in its sole
discretion, or the Bank Investors shall, make loans to the Borrower (each, a “Loan”)
from time to time as permitted by this Loan Agreement in an aggregate amount
outstanding at any time not to exceed the Maximum Net Investment; provided,
however, that in no event shall the Lender or any Bank Investor make any
Loan if, after giving effect to such Loan, either (a) the Net Investment
would exceed the Maximum Net Investment or (b) a Borrowing Base Deficiency
would exist.


(b)           Variable Funding
Note.  The Loans shall be evidenced
by a promissory note of the Borrower, substantially in the form of Exhibit A
hereto (the “VFN” or “Variable Funding Note”), payable to the
order of the Agent for the account of the Lender or Bank Investors, as
applicable.  The Agent shall record the
date and amount of each Loan made and the date and amount of each payment of
principal thereof, and any such recordation shall constitute prima facie
evidence of the accuracy of the information so recorded.  The VFN shall (a) be dated the date
hereof, (b) be stated to mature on the Scheduled Termination Date, and
(c) provide for the payment of principal, interest and fees in accordance
with Section 2.4 and Section 2.6 hereof.


Section 2.2.            Loan
Requests.


(a)           Notice.  Prior to the Facility Termination Date, the
Borrower may request Loans on any Business Day by delivering to the Agent
irrevocable notice of each borrowing via facsimile in the form of Exhibit B
hereto (a “Borrowing Request”) by 12:00 Noon (New York City time) (i) on
the related Determination Date with respect to Loans to be made on a Remittance
Date, (ii) at least one (1) Business Day prior to the proposed Loan Date with
respect to any Loan which is to be made on any other Loan Date and for which
the related Borrowing Request specifies the CP Rate as the desired Rate Type
and (iii) at least three (3) Business Days prior to the proposed Loan Date with
respect to any Loan which is to be made on any other Loan 



 3
 









Date and for which the related Borrowing Request specifies either the
Offshore Rate or the Base Rate as the desired Rate Type or for which such
Borrowing Request is delivered when any Tranche accruing Discount at either
such Rate Type has a Rate Period that has not yet then expired.  The Borrowing Request shall specify
(a) the proposed date for such Loan (the “Loan Date”); (b) the
amount of the Loan requested, which shall be at least $1,000,000 (and integral
multiples of $100,000 in excess thereof); provided; however, that
from and after the Interest Rate Protection Date, the amount of each Loan shall
be the greater of (i) $1,000,000 (and integral multiples of $100,000 in excess
thereof) and (ii) the minimum amount, if any, required under the Interest Rate Protection
Agreement; provided, that to the extent that the then available unused
portion of the Maximum Net Investment is less than such amount, such lesser
amount equal to such available unused portion of the Maximum Net Investment,
(c) the desired Rate Period and Rate Type related thereto pursuant to
Section 2.3 and (d) whether the request is to the Lender or the Bank
Investors.  Each Borrowing Request shall
be irrevocable and binding on the Borrower and the Borrower shall indemnify the
Lender, the Bank Investors and the Agent against any loss, cost or expense
incurred by the Lender, any Bank Investor or the Agent, either directly or
through any Program Support Agreement, as a result of any failure by the
Borrower to complete such borrowing, including, without limitation, any loss,
cost or expense incurred by the Lender, the Bank Investors or the Agent, either
directly or through any Program Support Agreement, by reason of the liquidation
or reemployment of funds acquired by the Lender, the Bank Investors, the Agent
or the Program Support Provider (including, without limitation, funds obtained
by issuing commercial paper or promissory notes or obtaining deposits as loans
from third parties) for the Lender to fund such borrowing.


(b)           Lender Acceptance
or Rejection.  The Agent will
promptly notify the Lender of the Agent’s receipt of any Borrowing
Request.  If the Borrowing Request is
received prior to the Lender Investment Termination Date, the Lender, in its
sole discretion, shall instruct the Agent to accept or reject such Borrowing
Request by notice given to the Borrower and the Agent by telephone or facsimile
by no later than the close of business on the Business Day the Lender receives
any such Borrowing Request.


(c)           Bank Investor’s
Commitment.  At no time will the
Lender have any obligation to fund a Loan. 
Subject to the conditions set forth herein, at all times on and after
the Lender Investment Termination Date and prior to the Facility Termination
Date, all Loans shall be made by the Bank Investors.  At any time when the Lender has rejected a
request for a Loan, the Agent shall so notify the Bank Investors and the Bank
Investors shall make such Loan, on a pro rata basis, in accordance with their
respective Pro Rata Shares. 
Notwithstanding anything contained in this Section 2.2(c) or elsewhere
in this Loan Agreement to the contrary, no Bank Investor (including in its
capacity as a Program Support Provider pursuant to the Program Support
Agreement to which it is a party) shall be obligated to provide the Borrower
with funds in connection with the Net Investment in an amount that would result
in the portion of the Net Investment then funded by it exceeding the dollar
amount of its Commitment then in effect. 
The obligation of each Bank Investor to remit its Pro Rata Share of any
such Loan shall be several from that of each other Bank Investor, and the
failure of any Bank Investor to so make such amount available to the Lender
shall not relieve any other Bank Investor of its obligation hereunder.



 4
 









(d)           Payment of Loans.  On any Loan Date, the Lender or each Bank
Investor, as the case may be, shall remit its share of the aggregate amount of
such Loan (determined pursuant to Section 2.2(b) and (c) hereof) to the account
of the Agent specified therefore from time to time by the Agent by notice to
such Persons by wire transfer of same day funds. Following the Agent’s receipt
of funds from the Lender or Bank Investors as aforesaid, the Agent shall remit
such funds received to the Borrower’s account at the location indicated in
Section 8.3 by wire transfer of same day funds.


(e)           Defaulting Bank
Investor.  If, by 2:00 p.m.
(New York City time) on any Loan Date, one or more Bank Investors (each, a
“Defaulting Bank Investor”, and each Bank Investor other than any
Defaulting Bank Investor being referred to as a “Non-Defaulting Bank
Investor”) fails to make its Pro Rata Share of any Loan available to the
Agent pursuant to Section 2.2(d) or any Assignment Amount payable by it
pursuant to Section 2.13(a) (the aggregate amount not so made available to
the Agent being herein called in either case the “Loan Deficit”), then
the Agent shall, by no later than 2:30 p.m. (New York City time) on
the applicable Loan Date or the applicable Assignment Date, as the case may be,
instruct each Non-Defaulting Bank Investor to pay, by no later than
3:00 p.m. (New York City time), in immediately available funds, to
the account designated by the Agent, an amount equal to the lesser of
(i) such Non-Defaulting Bank Investor’s proportionate share (based upon
the relative Commitments of the Non-Defaulting Bank Investors) of the Loan
Deficit and (ii) its unused Commitment. 
A Defaulting Bank Investor shall forthwith, upon demand, pay to the
Agent for the ratable benefit of the Non-Defaulting Bank Investors all amounts
paid by each Non-Defaulting Bank Investor on behalf of such Defaulting Bank
Investor, together with interest thereon, for each day from the date a payment
was made by a Non-Defaulting Bank Investor until the date such Non-Defaulting
Bank Investor has been paid such amounts in full, at a rate per annum equal to
the sum of the Base Rate, plus 2.00% per annum. 
In addition, if, after giving effect to the provisions of the
immediately preceding sentence, any Loan Deficit with respect to any Assignment
Amount continues to exist, each such Defaulting Bank Investor shall pay
interest to the Agent, for the account of the Lender, on such Defaulting Bank
Investor’s portion of such remaining Investment Deficit, at a rate per annum,
equal to the sum of the Base Rate, plus 2.00% per annum, for each day from the
applicable Assignment Date until the date such Defaulting Bank Investor shall
pay its portion of such remaining Loan Deficit in full to the Lender.


Section 2.3.            Determination
of Discount and Rate Periods.


(a)           Tranches.


(i)                                     The
Net Investment shall be allocated to tranches (each a “Tranche”) having
Rate Periods and accruing Discount at the Rate Types specified and determined
in accordance with this Section 2.3. 
At any time, each Tranche shall have only one Rate Period and one Rate
Type.  In addition, at any time when the
Net Investment is not divided into more than one portion, “Tranche” means 100%
of the Net Investment.



 5
 









(ii)                                  The
Borrower shall give the Agent irrevocable notice by telephone of each requested
Rate Period and Rate Type by 12:00 Noon (New York City time) (i) at least one
(1) Business Day prior to the requested Loan Date or the expiration of any then
existing Rate Period, as applicable, with respect to any Loan or Tranche for
which the Borrower specifies the CP Rate as the desired Rate Type and (ii) at
least three (3) Business Days prior to the requested Loan Date or the
expiration of any then existing Rate Period, as applicable, with respect to any
Loan or Tranche for which the Borrower specifies either the Offshore Rate or
the Base Rate as the desired Rate Type or for which such notice is delivered
when any Tranche accruing Discount at either such Rate Type has a Rate Period
that has not yet then expired, provided, however, that the Agent
may select, in its sole discretion, any such Rate Period or Rate Type if (i)
the Borrower fails to provide such notice on a timely basis or (ii) the Agent
determines, in its sole reasonable discretion, that the Rate Period or Rate
Type requested by the Borrower is unavailable or for any reason commercially
undesirable to the Lender, the Agent, the Administrative Trustee or the Bank
Investors.


(iii)                               The
Lender confirms that its intention to allocate all or substantially all of the
Net Investment held on its behalf to one or more Rate Periods with respect to
which the Discount applicable thereto is calculated by reference to the CP
Rate; provided that the Agent may determine, from time to time, in its sole
discretion, that funding such Net Investment by means of one or more such Rate
Periods or Rate Types is not possible or is not desirable for any reason.


(b)           Net Investment
funded pursuant to Program Support Agreement.  Each Rate Period applicable to any Tranche
funded pursuant to a Program Support Agreement shall be a period, selected by
the Agent, and Discount with respect thereto shall be calculated by reference
to the Alternate Rate.


(c)           Offshore Rate
Protection; Illegality.


(i)                                     If
the Agent is unable to obtain on a timely basis the information necessary to
determine the Offshore Rate for any proposed Rate Period, then


(A)          the Agent shall forthwith notify the
Lender or the Bank Investors, as applicable, and the Borrower that the Offshore
Rate cannot be determined for such Rate Period, and


(B)           while such circumstances exist, the
Agent shall not allocate any Tranches with respect to Loans made during such
period or reallocate any 



 6
 









Tranches allocated
to any then existing Rate Period ending during such period, to a Rate Period
with respect to which Discount is calculated by reference to the Offshore
Rate.  Discount related to any such
Tranches shall be calculated according to the Base Rate while such
circumstances exist.


(ii)                                  If,
with respect to any outstanding Rate Period, the Lender or any of the Bank
Investors on behalf of which the Agent holds any Tranche notifies the Agent
that it is unable to obtain matching deposits in the London interbank market to
fund its purchase or maintenance of such Tranche or that the Offshore Rate
applicable to such Tranche will not adequately reflect the cost to the Person
of funding or maintaining such Tranche for such Rate Period, then (A) the
Agent shall forthwith so notify the Borrower, the Lender and the Bank Investors
and (B) upon such notice and thereafter while such circumstances exist,
the Agent shall not allocate any other Tranche with respect to Investments made
during such period or reallocate any Tranche allocated to any Rate Period
ending during such period, to a Rate Period with respect to which Discount is
calculated by reference to the Offshore Rate. 
Discount related to any such Tranches shall be calculated according to
the Base Rate while such circumstances exist.


(iii)                               Notwithstanding
any other provision of this Loan Agreement, if the Lender or any of the Bank Investors,
as applicable, shall notify the Agent that such Person has determined (or has
been notified by any Program Support Provider) that the introduction of or any
change in or in the interpretation of any Law makes it unlawful (either for the
Lender, such Bank Investor, or such Program Support Provider, as applicable),
or any central bank or other Governmental Authority asserts that it is
unlawful, for the Lender, such Bank Investor or such Program Support Provider,
as applicable, to fund or maintain any Tranche accruing Discount calculated by
reference to the Offshore Rate, then (A) as of the effective date of such
notice from such Person to the Agent, the obligation or ability of the Lender
or such Bank Investor, as applicable, to fund the making or maintenance of any
Tranche accruing Discount calculated by reference to the Offshore Rate shall be
suspended until such Person notifies the Agent that the circumstances causing
such suspension no longer exist and (B) each Tranche made or maintained by
such Person shall either (1) if such Person may lawfully continue to maintain
such Tranche accruing Discount calculated by reference to the Offshore Rate
until the last day of the applicable Rate Period, be reallocated on the last
day of such Rate Period to another Rate Period and shall accrue Discount
calculated by reference to the Base Rate or (2) if such Person shall determine
that it may not lawfully continue to maintain such Tranche accruing Discount
calculated by reference 



 7
 









to the
Offshore Rate until the end of the applicable Rate Period, such Person’s share
of such Tranche allocated to such Rate Period shall be deemed to accrue
Discount at the Base Rate from the effective date of such notice until the end
of such Rate Period.


Section 2.4.            Payment
of Principal, Interest and Other Amounts.


The Borrower will
duly and punctually pay or cause to be paid amounts due in respect of principal
and interest on the VFN in accordance with the terms of this Loan Agreement,
the Fee Letter, the VFN and the CTA Agreement. 
Without limiting the foregoing, the Borrower will cause to be delivered
to the Trustee all amounts on deposit in the Holding Account when and as
required by the Master Servicing Agreement for application as provided in the
CTA Agreement.  The Borrower shall also
pay or cause to be paid all other amounts payable by or on behalf of the
Borrower pursuant to this Loan Agreement, the Fee Letter, the VFN and the CTA
Agreement to the parties entitled thereto in accordance with the terms hereof
and in the manner and order of priority provided in the CTA Agreement.


Section 2.5.            Breach
of Representation or Warranty.  If on
any day any of the representations or warranties with respect to eligibility
set forth in Section 3.1(j) hereof was or becomes untrue with respect to
an Account (whether on or after the date of the pledge thereof to the Trustee,
for the benefit of the Secured Parties), the Borrower shall be deemed to have
received on such day a Collection of such Account in full and the Borrower
shall on such day pay to the Master Servicer from funds other than actual
Available Collections (other than actual Collections otherwise distributable to
the Borrower under Section 4.1(d) of the CTA Agreement) an amount equal to the
unpaid balance of such Account and such amount shall be allocated and applied
by as a Collection in accordance with Article II of the Master Servicing
Agreement and the CTA Agreement.


Section 2.6.            Mandatory
and Optional Prepayments.


(a)           On each Remittance
Date following the Facility Termination Date, Available Collections shall be
applied to reduce the Net Investment in accordance with Section 4.1(d)(vii) of
the CTA Agreement.


(b)           Prior to the
Facility Termination Date, upon the occurrence of a Borrowing Base Deficiency,
the Borrower shall either: (i) within three (3) Business Days (the “Deficiency
Cure Period”) deliver or cause to be delivered additional Eligible Accounts
to the Trustee or deposit or cause to be deposited cash into the Principal
Payment Account, in either case, in an amount (based, in the case of Eligible
Accounts, on the lesser of the APB and AMV thereof on the date of delivery, as
determined by the Agent) at least equal to such Borrowing Base Deficiency or
(ii) in the event that the Borrowing Base Deficiency arises as a result of the
determination of Market Value pursuant to clause (ii) of the definition
thereof, at the Borrower’s option either (A) follow the procedures set forth in
clause (i) of this Section 2.6(b) or (B) may employ the procedures set forth in
the definition of Market Value, and upon a final determination of Market Value
as contemplated therein, to the extent that a Borrowing Base Deficiency still
exists after using the final determination of Market Value, then, the Borrower
shall follow the procedures set forth in clause (i) of this Section 2.6(b);
provided that in such event, the 



 8
 









Deficiency Cure Period shall be fifteen (15) Business Days following
the occurrence of a Borrowing Base Deficiency. 
Funds deposited in the Principal Payment Account shall be applied to the
reduction of the Net Investment in the manner and subject to the priority of
payments provided in Section 4.1(c) of the CTA Agreement.  Any cash deposited by the Borrower pursuant
to this Section 2.6(b) shall be made from funds other than Available Collections
otherwise distributable to the Borrower pursuant to Section 4.1(d) of the CTA
Agreement, which may be used by the Borrower for such purpose.


(c)           The Borrower shall
have the right on any date, upon written notice to the Agent not later than two
(2) Business Days prior to such date, to deposit into the Principal Payment
Account prepayments of principal on the VFN. 
Any such prepayment (i) shall be at least $1,000,000 and integral
multiples of $100,000 in excess thereof and (ii) shall be made from funds other
than Available Collections, except for Available Collections otherwise
distributable to the Borrower pursuant to Section 4.1(d) of the CTA Agreement,
which may be used by the Borrower for such purpose.


(d)           The Agent agrees
that amounts paid to the Agent from amounts deposited in the Principal Payment
Account pursuant to the provisions of the CTA Agreement shall be applied to
repay: (i) maturing Tranches, Related Liquidity Draw or Related Credit
Support Disbursements as they mature or (ii) upon the Borrower’s request,
with the approval of the Agent, in its sole discretion (except with respect to
amounts deposited prior to the Facility Termination Date pursuant to Section
2.6(c) hereof as to which no such approval shall be required), any other
Tranche; provided that the Borrower shall pay any costs incurred in connection
with such repayment in accordance with Section 7.4(b) and (c) hereof.  The Net Investment shall be reduced by any
amounts withdrawn and paid to or at the direction of the Agent from the
Principal Payment Account.


(e)           The entire principal
balance of the VFN shall be due and payable on the Stated Maturity Date
together with all accrued and unpaid interest thereon.


Section 2.7.            Proceeds.  The proceeds of the Loans shall be used by
the Borrower solely to purchase Accounts and to pay other amounts expressly
permitted under the terms and conditions of the Operative Documents.


Section 2.8.            Pledged
Accounts.


(a)           The
Trustee shall establish, on or prior to the Closing Date, an Eligible Bank
Account (No. 261621) at the Trustee in the name of the Trustee
(the “Collection Account”), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Secured
Parties.


(b)           The
Trustee shall establish, on or prior to the Closing Date, an Eligible Bank
Account (No. 261622) at the Trustee in the name of the Trustee (the “Reserve
Account”) bearing a designation clearly indicating that the funds deposited
therein are for the benefit of the Secured Parties.


(c)           The
Trustee shall establish, on or prior to the Closing Day, an Eligible Bank
Account (No. 8900624213) at the Account Bank for the benefit of
the Master Servicer (the 



 9
 









“Holding Account”) bearing a
designation clearly indicating that the funds deposited therein are for the
benefit of the Secured Parties.


(d)           The Trustee shall
establish, on or prior to the Closing Date, an Eligible Bank Account (No. 8900624183)
at the Agent in the name of the Lender (the “Principal Payment Account”)
bearing a designation clearly indicating that the funds deposited therein are
for the benefit of the Secured Parties.


(e)           If at any time the
Collection Account, the Reserve Account, the Principal Payment Account or the
Holding Account shall no longer be an Eligible Bank Account, then the Borrower
shall, within ten (10) Business Days (or such longer period, not to exceed
thirty (30) calendar days, as to which the Controlling Party shall consent),
cause such account and the funds on deposit therein to be moved so that such
account shall be an Eligible Bank Account. 
The Borrower shall immediately notify the Agent of the new location and
account number of such account.  For
purposes of this Loan Agreement, the term “Eligible Bank Account” shall
mean, if such bank account does not meet the requirements of paragraphs (a) and
(b) of such definition, a bank account otherwise acceptable to the Controlling
Party.


Section 2.9.            Payments
and Computations, Etc.


(a)           On the second
Business Day preceding a Determination Date relating to a Loan Date, the
Borrower shall request from the Agent, and the Agent shall provide to the
Borrower, the Market Discount Rate applicable to the related Loan Date.  On any other date on which the Agent requests
the Borrower to determine the Market Value of the Eligible Accounts, the Agent
shall provide the Market Discount Rate applicable to such date to the
Borrower.  On each Determination Date,
the Borrower shall calculate and deliver to the Agent the APB, AMV and the
Borrowing Base (each, a “Borrowing Base Report”), using in the case of
the AMV, the Market Discount Rate supplied by the Agent.  Neither the Lender, any Bank Investor nor the
Agent shall be bound by any calculation of the APB, the AMV or the Borrowing
Base by the Borrower.


(b)           All amounts to be
paid or deposited by the Borrower hereunder or under the CTA Agreement shall be
paid or deposited in accordance with the terms hereof or thereof no later than
11:00 a.m. (New York City time) on the day when due in immediately
available funds, payable to the Agent, on behalf of the Lender or the Bank
Investors, as applicable.  Such payment
shall be paid or deposited in the account indicated under the heading “Payment
Information” in Section 8.3, until otherwise notified by the
Agent.  The Borrower shall, to the extent
permitted by Law, pay to the Agent, for the benefit of the Lender or Bank
Investors, as applicable, upon demand, interest on all amounts not paid or
deposited when due hereunder (“Default Interest”) at a rate equal to
2.00% per annum, plus the Base Rate (the “Default Rate”).  Default Interest shall be paid in accordance
with Section 4.1(d) of the CTA Agreement. 
All computations of Discount and all per annum fees hereunder shall be
made on the basis of a year of 360 days for the actual number of days
(including the first but excluding the last day) elapsed.  Any computations by the Agent of amounts
payable by the Borrower hereunder shall be binding upon the Borrower absent
manifest error.



 10















Section 2.10.          Reports.  On each Determination Date, the Borrower
shall cause the Master Servicer to provide to the Agent (a) the Master
Servicing Certificate for the related Collection Period, (b) a Schedule of
Accounts with respect to all Accounts owned by the Borrower and (c) such
other information as the Agent may reasonably request.


Section 2.11.          Sharing
of Payments, Etc.  If the Lender or
any Bank Investor (for purposes of this Section only, being a “Recipient”)
shall obtain any payment (whether voluntary, involuntary, through the exercise
of any right of setoff, or otherwise) on account of the portion of the Net
Investment funded or maintained by it (other than pursuant to the Fee Letter,
Section 2.15(b) or Article VII and other than as a result of the
differences in the timing of the applications of Available Collections) in
excess of its ratable share of payments on account of the Net Investment
obtained by the Recipient entitled thereto, such Recipient shall forthwith
purchase from the Lender or Bank Investors entitled to a share of such amount
participations in the portions of the Net Investment funded or maintained by
such Persons as shall be necessary to cause such Recipient to share the excess
payment ratably with each such other Person entitled thereto; provided, however,
that if all or any portion of such excess payment is thereafter recovered from
such Recipient, such purchase from each such other Person shall be rescinded
and each such other Person shall repay to the Recipient the purchase price paid
by such Recipient for such participation to the extent of such recovery,
together with an amount equal to such other Person’s ratable share (according
to the proportion of (a) the amount of such other Person’s required payment to
(b) the total amount so recovered from the Recipient) of any interest or other
amount paid or payable by the Recipient in respect of the total amount so
recovered.


Section 2.12.          Right
of Setoff.  Without in any way
limiting the provisions of Section 2.11, each of the Agent, the Lender and
each Bank Investor is hereby authorized (in addition to any other rights it may
have) at any time after the occurrence of the Facility Termination Date due to
the occurrence of an Event of Default or Facility Termination Event or during
the continuance of a Potential Event of Default, Event of Default, Potential
Facility Termination Event or Facility Termination Event to set-off,
appropriate and apply (without presentment, demand, protest or other notice
which are hereby expressly waived) any deposits and any other indebtedness held
or owing by the Agent, the Lender or such Bank Investor to, or for the account
of, the Borrower.  The Agent shall cause
any amounts so set-off to be deposited in the Collection Account, for
application by the Trustee in accordance with Section 4.1(d) of the CTA
Agreement.


Section 2.13.          Assignment
by Lender to Bank Investors.


(a)           Assignment
Amounts.  At any time on or prior to
the Scheduled Termination Date, if the Administrative Trustee on behalf of the
Lender so elects, by written notice to the Agent, the Borrower hereby
irrevocably requests and directs that the Lender assign, and the Lender does
hereby assign, effective on the Assignment Date referred to below, all or such
portions as may be elected by the Lender of its interest in the Net Investment
at such time to the Bank Investors pursuant to this Section 2.13 and the
Borrower hereby agrees to pay the amounts described in this Section 2.13; provided,
however, that unless such assignment is an assignment of all of the
Lender’s interest in the Net Investment in whole on or after the Lender
Investment Termination Date, no such assignment shall take place pursuant to
this Section 2.13 if a Borrowing Base Deficiency shall then exist; and provided,
further, that no such assignment 



 11
 









 


shall take place pursuant to this Section 2.13 at a time when an
Event of Bankruptcy with respect to the Lender exists.  No further documentation or action on the
part of the Lender or the Borrower shall be required to exercise the rights set
forth in the immediately preceding sentence, other than the giving of the
notice by the Administrative Trustee on behalf of the Lender referred to in
such sentence and the delivery by the Agent of a copy of such notice to each
Bank Investor (the date of the receipt by the Agent of any such notice being
the “Assignment Date”).  Each Bank
Investor hereby agrees, unconditionally and irrevocably and under all
circumstances, without setoff, counterclaim or defense of any kind, to pay the
full amount of its Assignment Amount on such Assignment Date to the Lender in
immediately available funds to an account designated by the Agent.  Upon payment of its Assignment Amount, each
Bank Investor shall acquire an interest in the Net Investment equal to its pro
rata share (based on the outstanding portions of the Net Investment funded by
it). Upon any assignment in whole by the Lender to the Bank Investors on or
after the Lender Investment Termination Date as contemplated hereunder, the
Lender shall cease to make any additional Loans hereunder.  At all times prior to the Lender Investment
Termination Date, nothing herein shall prevent the Lender from making a
subsequent Loan hereunder, in its sole discretion, following any assignment
pursuant to this Section 2.13 or from making more than one assignment
pursuant to this Section 2.13.


(b)           Bank Investor’s
Obligation to Pay Certain Amounts; Additional Assignment Amount.  The Bank Investors shall pay to the Agent, in
accordance with their Pro Rata Shares, for the account of the Lender, in
connection with any assignment by the Lender to the Bank Investors pursuant to
this Section 2.13 an aggregate amount equal to all Discount to accrue
through the end of each outstanding Rate Period to the extent attributable to
the portion of the Net Investment so assigned to the Bank Investors (as
determined immediately prior to giving effect to such assignment), plus all
other Aggregate Unpaids (other than the Net Investment and other than any
Discount not described above).  Such
amounts shall be additional consideration for the interests assigned to the
Bank Investors and the amount of the “Net Investment” hereunder held by
the Bank Investors shall be increased by an amount equal to the additional
amount so paid by the Bank Investors.


(c)           Administration of
Agreement after Assignment from Lender to Bank Investors following the Lender
Investment Termination Date.  After
any assignment in whole by the Lender to the Bank Investors pursuant to this
Section 2.13 at any time on or after the Lender Investment Termination
Date (and the payment of all amounts owing to the Lender in connection
therewith), all rights of the Administrative Trustee set forth herein shall be
given to the Agent on behalf of the Bank Investors instead of the
Administrative Trustee.


(d)           Recovery of Net
Investment.  In the event that the
aggregate of the Assignment Amounts paid by the Bank Investors pursuant to this
Section 2.13 on any Assignment Date occurring on or after the Lender
Investment Termination Date is less than the Net Investment of the Lender on
such Assignment Date, then to the extent of amounts received by the Agent  in respect of the Net Investment in
accordance with Section 4.1(d) of the CTA Agreement exceed the aggregate of the
unrecovered Assignment Amounts and Net Investment funded by the Bank Investors,
such excess shall be remitted by the Agent to the Lender rather than to such
Bank Investors.



 12
 









 


Section 2.14.          Downgrade
of Bank Investor.


(a)           Downgrades
Generally.  If at any time on or
prior to the Scheduled Termination Date, the short term debt rating of any Bank
Investor shall be “A-1” or “P-1” from S&P or Moody’s,
respectively, with negative credit implications, such Bank Investor, upon
request of the Agent, shall, within thirty (30) days of such request, assign
its rights and obligations hereunder to another financial institution (which
institution’s short term debt shall be rated at least “A-1” or “P-1”
from S&P or Moody’s, respectively, and which shall not be so rated with
negative credit implications and which is acceptable to the Lender, the Agent
and the Borrower (in the Borrower’s case, in its reasonable discretion)).  If the short term debt rating of an Bank
Investor shall be “A-2” or “P-2”, or lower, from S&P or Moody’s,
respectively (or such rating shall have been withdrawn by S&P or Moody’s),
such Bank Investor, upon request of the Agent, shall, within five (5) Business
Days of such request, assign its rights and obligations hereunder to another
financial institution (which institution’s short term debt shall be rated at
least “A-1” or “P-1”, from S&P or Moody’s, respectively, and
which shall not be so rated with negative credit implications and which is
acceptable to the Lender, the Agent and the Borrower (in the Borrower’s case,
in its reasonable discretion)).  In
either such case, if any such Bank Investor shall not have assigned its rights
and obligations under this Agreement within the applicable time period
described above (in either such case, the “Required Downgrade  Assignment
Period”), the Administrative Trustee on behalf of the Lender shall have the
right to require such Bank Investor to pay upon one (1) Business Day’s notice
at any time after the Required Downgrade Assignment Period (and each such Bank
Investor hereby agrees in such event to pay within such time) to the Agent an
amount equal to such Bank Investor’s unused Commitment (a “Downgrade Draw”)
for deposit by the Agent into an account, in the name of the Agent (a “Downgrade
Collateral Account”), which shall be in satisfaction of such Bank Investor’s
obligations to make Loans and to pay its Assignment Amount upon an assignment
from the Lender in accordance with Section 2.13; provided, however,
that if, during the Required Downgrade Assignment Period, such Bank Investor
delivers a written notice to the Agent of its intent to deliver a direct pay
irrevocable letter of credit pursuant to this proviso in lieu of the payment
required to fund the Downgrade Draw, then such Bank Investor will not be
required to fund such Downgrade Draw.  If
any Bank Investor gives the Agent such notice, then such Bank Investor shall,
within one (1) Business Day after the Required Downgrade Assignment Period,
deliver to the Agent a direct pay irrevocable letter of credit in favor of the
Agent in an amount equal to the unused portion of such Bank Investor’s
Commitment, which letter of credit shall be issued through an United States
office of a bank or other financial institution (i) whose short-term debt
ratings by S&P and Moody’s are at least equal to the ratings assigned by
such statistical rating organization to the Commercial Paper and (ii) that
is acceptable to the Lender and the Agent. 
Such letter of credit shall provide that the Agent may draw thereon for
payment of any Loan or Assignment Amount payable by such Bank Investor which is
not paid hereunder when required, shall expire no earlier than the Scheduled
Termination Date and shall otherwise be in form and substance acceptable to the
Agent.


(b)           Application of
Funds in Downgrade Collateral Account. 
If any Bank Investor shall be required pursuant to Section 2.14(a)
to fund a Downgrade Draw, then the Agent shall apply the monies in the
Downgrade Collateral Account applicable to such Bank Investor’s Pro Rata Share
of Loans required to be made by the Bank Investors, to any Assignment Amount
payable by such Bank Investor pursuant to Section 2.13 and to any purchase
price payable by such Bank Investor pursuant to Section 2.15(b) at the
times, in the manner and subject to the conditions precedent set forth in this
Loan Agreement.  The deposit of monies in
such 



 13
 









 


Downgrade Collateral Account by any Bank Investor shall not constitute
a Loan or the payment of any Assignment Amount (and such Bank Investor shall
not be entitled to interest on such monies except as provided below in this
Section 2.14, unless and until (and then only to the extent that) such
monies are used to fund Investments or to pay any Assignment Amount or purchase
price pursuant to Section 2.15(b) pursuant to the first sentence of this
Section 2.14.  The amount on deposit
in such Downgrade Collateral Account shall be invested by the Agent in Eligible
Investments and such Eligible Investments shall be selected by the Agent in its
sole discretion.  The Agent shall remit
to such Bank Investor, on the last Business Day of each month, the income
actually received thereon.  Unless
required to be released as provided below in this subsection, Available
Collections received by the Agent in respect of such Bank Investor’s portion of
the Net Investment shall be deposited in the Downgrade Collateral Account for
such Bank Investor.  Amounts on deposit
in such Downgrade Collateral Account shall be released to such Bank Investor
(or the stated amount of the letter of credit delivered by such Bank Investor
pursuant to subsection (a) above may be reduced) within one (1) Business Day
after each Remittance Date following the Facility Termination Date to the
extent that, after giving effect to the distributions made and received by the
Lender or Bank Investors on such Remittance Date, the amount on deposit in such
Downgrade Collateral Account would exceed such Bank Investor’s Pro Rata Share
(determined as of the day prior to the Facility Termination Date) of the sum of
all Tranches then funded by the Lender, plus the Interest Component.  All amounts remaining in such Downgrade
Collateral Account shall be released to such Bank Investor no later than the
Business Day immediately following the earliest of (i) the effective date
of any replacement of such Bank Investor or removal of such Bank Investor as a
party to this Loan Agreement, (ii) the date on which such Bank Investor
shall furnish the Agent with confirmation that such Bank Investor shall have
short-term debt ratings of at least “A-1” or “P-1” from S&P and
Moody’s, respectively, without negative credit implications, and (iii) the
Scheduled Termination Date (or if earlier, the Scheduled Termination Date in
effect prior to any renewal pursuant to Section 2.15 to which such Bank
Investor does not consent, but only after giving effect to any required
purchase pursuant to Section 2.15(b)). 
Nothing in this Section 2.14 shall affect or diminish in any way
any such downgraded Bank Investor’s Commitment to the Borrower or the Lender or
such downgraded Bank Investor’s other obligations and liabilities hereunder and
under the other Operative Documents.


(c)           Program Support
Agreement Downgrade Provisions. 
Notwithstanding the other provisions of this Section 2.14, a Bank
Investor shall not be required to make a Downgrade Draw (or provide for the
issuance of a letter of credit in lieu thereof) pursuant to
Section 2.14(a) at a time when such Bank Investor has a downgrade
collateral account (or letter of credit in lieu thereof) established pursuant
to the Program Support Agreement to which it is a party in an amount at least
equal to its Commitment, and the Agent may apply monies in such downgrade
collateral account in the manner described in Section 2.15(b) as if such
downgrade collateral account were a Downgrade Collateral Account.


Section 2.15.          Non-Renewing
Bank Investors.


(a)           If at any time the
Borrower requests that the Bank Investors renew their Commitments hereunder and
some but less than all the Bank Investors consent to such renewal within thirty
(30) days of the Borrower’s request, but in any event, no later than twenty
(20) days prior to the then current Scheduled Termination Date, the Borrower
may arrange for an 



 14
 









assignment to one or more financial institutions of all the rights and
obligations hereunder of each such non-consenting Bank Investor in accordance
with Section 8.6.  Any such
assignment shall become effective on the then-current Scheduled Termination
Date.  Each Bank Investor which does not
so consent to any renewal shall cooperate fully with the Borrower in
effectuating any such assignment.  If
none or less than all the Commitments of the non-renewing Bank Investors are so
assigned as provided above the Agent shall so notify the Borrower, and the
Borrower shall notify the Agent if it desires to extend the then current Scheduled
Termination Date.  In the event the
Borrower and the Agent each elects to extend the then current Scheduled
Termination Date, (i) the extended Scheduled Termination Date shall be
effective with respect to the renewing Bank Investors, (ii) the Facility
Limit shall automatically be reduced to an amount (rounded up to the nearest
$1,000) equal to the excess of the Facility Limit then in effect over the
lesser of (A) the aggregate of the Commitments of all non-renewing Bank
Investors and (B) the product of (x) the Facility Limit, minus the
Net Investment, multiplied by (y) 1.02, and (iii) this Loan Agreement
and the Commitments of the renewing Bank Investors shall remain in effect in
accordance with their terms notwithstanding the expiration of the Commitments
of the non-renewing Bank Investors.


(b)           If at any time the
Borrower requests that the Bank Investors extend the Scheduled Termination Date
hereunder and some but less than all the Bank Investors consent to such
extension within thirty (30) days after the Borrower’s request (but in any
event, no later than twenty (20) days prior to the then Scheduled Termination
Date), and if none or less than all the Commitments of the non-renewing Bank
Investors are assigned as provided in Section 2.15 and the Borrower and
the Agent each has elected to extend the then current Scheduled Termination
Date, then (without limiting the obligations of all the Bank Investors to make
Loans and pay any Assignment Amount prior to the Scheduled Termination Date in
accordance with the terms hereof) the Lender may sell an interest in the Net
Investment hereunder for an aggregate purchase price equal to the lesser of
(i) the maximum aggregate Assignment Amounts which would be payable if the
Lender assigned its entire interest in the Net Investment at that time under
Section 2.13, and (ii) the aggregate available Commitments of the
non-renewing Bank Investors, which purchase price shall be paid solely by the
non-renewing Bank Investors, pro rata according to their respective Commitments.  Following the payment of such purchase price,
(i) the extended Scheduled Termination Date shall be effective with
respect to the renewing Bank Investors, (ii) the Facility Limit shall
automatically be reduced by the aggregate of the Commitments of all non-renewing
Bank Investors, and (iii) this Loan Agreement and the Commitments of the
renewing Bank Investors shall remain in effect in accordance with their terms
notwithstanding the expiration of the Commitments of the non-renewing Bank
Investors.  Prior to the Facility
Termination Date, all amounts which, under Section 4.1 of the CTA
Agreement are to be paid to the Agent and applied in reduction of the Net
Investment, up to the aggregate Net Investment sold to the non-renewing Bank
Investors as described above in this subsection, shall be distributed to the
non-renewing Bank Investors ratably according to the aggregate Net Investment
held by them, in reduction of their respective portions of Net Investment.  On and after the Facility Termination Date,
each non-renewing Bank Investor shall be entitled to receive distributions as
provided in Section 4.1 of the CTA Agreement based on its pro rata share
of the Net Investment.  When (after the
expiration of the Commitments of the non-renewing Bank Investors) the aggregate
of the Net Investment described above in this subsection shall have been
reduced to zero and all accrued Discount allocable thereto and all other 



 15
 









 


Aggregate Unpaids owing to such Bank Investors shall have been paid to
such Bank Investors in full, then such Bank Investors shall cease to be parties
to this Loan Agreement for any purpose.


Section 2.16.          Commitment
Renewal Request.


Except in the case of an early renewal as agreed upon
by the Borrower and the Agent, the Borrower may, not earlier than one hundred
twenty (120) days or later than sixty (60) days prior to the Scheduled
Termination Date, request that the Bank Investors renew their Commitments
hereunder, provided that no such renewal may be requested if it would cause the
Scheduled Termination Date to be later than 364 days after the then-current
Scheduled Termination Date (or, if the 364th day is not a Business Day, the immediately
preceding Business Day) or such fewer number of days as the Agent shall specify
by notice to the Borrower.  Each Bank
Investor shall notify the Borrower as to whether it consents to such renewal
within thirty (30) days of the Scheduled Termination Date, and the failure of
any Bank Investor to so notify the Borrower shall be deemed to mean that such
Bank Investor does not consent to such renewal.


Section 2.17.          Interest
Rate Protection Agreements.


Borrower agrees that (i) from and after the occurrence
of an Interest Rate Protection Date, it shall provide to the Agent for the
benefit of the Lender and the Bank Investors promptly, and in any event not
later than three (3) Business Days after such Interest Rate Protection Date, an
Interest Rate Protection Agreement and (ii) prior to the execution of any
Interest Rate Protection Agreement at any other time, it shall provide a copy
of the proposed Interest Rate Protection Agreement to the Agent for
approval.  Any such Interest Rate
Protection Agreement shall be provided and maintained at the Borrower’s sole
cost and expense from funds other than Collections.


ARTICLE 3



REPRESENTATIONS AND WARRANTIES


Section 3.1.            Representations
and Warranties of the Borrower.  The
Borrower represents and warrants to each of the Secured Parties on the Closing
Date and each Loan Date that:


(a)           Existence and
Standing.  The Borrower (i) is a statutory
trust duly organized, validly existing, and in good standing under the laws of
the State of Delaware, (ii) has all power and all material governmental
licenses, authorizations, consents, and approvals required to carry on its
business in each jurisdiction in which its business is now conducted, and (iii)
is duly qualified to do business and is in good standing under the laws of each
jurisdiction where the conduct of its business requires such qualification.


(b)           Authorization and
Contravention.  The execution,
delivery, and performance by the Borrower of this Loan Agreement, the VFN, and
the other Operative Documents to which the Borrower is a party are within the
Borrower’s powers, have been duly authorized by all necessary action, require
no action by or in respect of, or filing with, any Governmental Authority, and
do not contravene, or constitute a default under, any provision of applicable
law or regulation or any other Operative Document to which the Borrower is a
party, 



 16
 









 


or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Borrower, or result in the creation or imposition
of any lien on assets of the Borrower.


(c)           Binding Effect.  This Loan Agreement and the VFN constitute
the legal, valid, and binding obligations of the Borrower, enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency,
moratorium, or other similar laws affecting the rights of creditors.


(d)           Perfection.  At all times, the Borrower shall be the owner
of all of the Collateral, free and clear of all liens, encumbrances, security
interests, preferences, or other security arrangement of any kind or nature
whatsoever (other than those created or permitted by the Operative Documents),
and all mortgages, financing statements, and other documents required to be
recorded or filed in order to perfect and protect the Collateral against all
creditors of and purchasers from the Borrower will have been duly and timely
filed 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.


(e)           Good Title.  At all times, the Trustee, for the benefit of
the Secured Parties, shall have a valid and perfected first-priority security
interest in the Collateral free and clear of any Adverse Claim, other than any
Claims made through the Trustee or the Secured Parties.


(f)            Accuracy of
Information.  All information
heretofore furnished by the Borrower or any Affiliate of the Borrower
(including, without limitation, any information delivered pursuant to
Sections 2.10 and 5.1 hereof) to the Lender, any Bank Investor, the Agent
or the Administrative Trustee for purposes of or in connection with this Loan
Agreement or any transactions contemplated hereby is, and all such information
hereafter furnished by the Borrower to the Lender, any Bank Investor, the Agent
or the Administrative Trustee will be, true and accurate in every material
respect on the date such information is stated or certified.


(g)           Tax Status.  The Borrower has timely filed all tax returns
(federal, state, and local) required to be filed and has timely paid or made
adequate provision for the payment of all taxes, assessments, and other
governmental charges.


(h)           Use of Proceeds.  The proceeds of the Loans will be used solely
to purchase Accounts and to pay other amounts expressly permitted under the
terms and conditions of the Operative Documents.


(i)            Place of
Business.  The chief place of
business of the Borrower is located at the address of the Borrower indicated in
Section 8.3 hereof and all of the Borrower’s Records are kept at the
offices of the Custodian.


(j)            Nature of
Accounts.  Each Account to be
purchased with the proceeds of a Loan is an Eligible Account and an “eligible
asset” as defined in Rule 3a-7 under the Investment Company Act of 1940, as
amended.


(k)           No Event of
Default or Facility Termination Event. 
No event has occurred and is continuing and no condition exists which
constitutes an Event of Default or 



 17
 









 


Facility Termination Event or, to the knowledge of the Borrower, a
Potential Event of Default or Potential Facility Termination Event.


(l)            Not an
Investment Company.  The Borrower is
not an “investment company” within the meaning of the Investment Company Act of
1940, as amended, or is exempt from all provisions of such Act.


(m)          ERISA.  The Borrower is in compliance in all material
respects with ERISA and no lien in favor of the Pension Benefit Guaranty
Corporation on any of the Accounts exists.


(n)           Beneficial
Ownership.  The Depositor holds a
100% beneficial ownership in the Borrower.


(o)           Debt for Tax.  The Borrower will treat the Loans as
indebtedness for federal income tax purposes.


(p)           Unacceptable
Investment.  The Borrower has no
knowledge of any material circumstance or condition with respect to the
Accounts, the Obligors, or the credit standing of the Obligors that could
reasonably be expected to cause an Account to be an unacceptable investment or
adversely affect the value of any Account.


(q)           Action, Error,
Omission, Etc.  To the knowledge of
the Borrower, no material action, error, omission, misrepresentation,
negligence, fraud, or similar occurrence with respect to an Account has taken
place on the part of any Person, including, without limitation, any Obligor,
the Depositor, the Originator or any Eligible Originator, any appraiser, any
builder, or developer, or any other party involved in the origination of the
Accounts or in the application of insurance in relation to such Accounts.


(r)            No Litigation.  There are no actions, suits, or proceedings
pending, or to the knowledge of the Borrower, threatened against or affecting
the Borrower or any Affiliate of the Borrower or their respective properties,
in or before any court, arbitrator, or other body which question the validity
of this Loan Agreement or the transactions contemplated herein, or which could
be reasonably expected to have a materially adverse effect on the financial
condition of the Borrower or its ability to perform its obligations under this
Loan Agreement.


(s)           Monthly Payments.  All Monthly Payments (net of the Fees
withdrawn pursuant to Section 2.15 of the Master Servicing Agreement) on the
Accounts to be purchased with the proceeds of a Loan due after the applicable
Cut-Off Date and received more than three (3) Business Days prior to the Loan
Date, plus the proceeds of each Full Prepayment of any such Account (including
any related payment of interest) received by the Master Servicer after the
Cut-Off Date but more than three (3) Business Days prior to the Loan Date, will
have been  deposited in the Holding
Account in accordance with Section 2.7 of the Master Servicing Agreement.


Any document, instrument,
certificate or notice delivered to the Agent or the Administrative Trustee
under this Loan Agreement shall be deemed a representation and warranty by the
Borrower.



 18
 









 


Section 3.2.            Reaffirmation
of Representations and Warranties by the Borrower.  On each day that a Loan is made hereunder,
the Borrower, by accepting the proceeds of such Loan, shall be deemed to have
certified that all representations and warranties described in Section 3.1
are true and correct on and as of such day as though made on and as of such
day.


ARTICLE 4



CONDITIONS PRECEDENT


Section 4.1.            Conditions
to Effectiveness.  On or prior to the
date hereof, the Agent shall have received the following documents, each of
which shall be in a form and substance acceptable to each of them, or the
following actions shall have occurred:


(a)           the Agent, the
Custodian and the Trustee shall have received an Opinion of Counsel to each of
the Custodian and the Trustee, in form and substance satisfactory to the Agent;


(b)           (i) the
Agent, the Custodian and the Trustee shall have received this Loan Agreement,
the BAT Agreement, the DAT Agreement, the Master Servicing Agreement, the
Back-up Servicing Agreement, the Subservicing Agreement and the CTA Agreement,
duly executed by the parties thereto; and


(c)           the Agent shall have
received such other approvals, documents, instruments, certificates and
opinions as it shall reasonably request.


Section 4.2.            Conditions
to Each Loan.  No Loan shall be made
hereunder, and the Bank Investors shall have no obligation to make any Loan,
unless the following conditions have been satisfied:


(a)           the Agent shall have
received an Officers’ Certificate from the Borrower stating that:


(i)                                     no
Event of Default, Potential Event of Default, Potential Facility Termination
Event or Facility Termination Event shall have occurred and the Loan to be made
on such date will not result in any breach of any of the terms, conditions or
provisions of, or constitute a default under any of the Operative Documents to
which the Borrower is a party, or any indenture, mortgage, deed of trust or
other agreement or instrument to which the Borrower is a party or by which it
is bound, or any order of any Governmental Authority entered in any proceeding
to which the Borrower is a party or by which it may be bound or to which it may
be subject, and all conditions precedent provided in this Loan Agreement relating
to the Loan to be made on such date have been complied with;


(ii)                                  the
Borrower is the owner of and has good title to each Account, has not assigned
any interest or participation in any such Account 


 



 19
 









(or, if any
such interest or participation has been assigned, it has been released) and has
the right to Grant each such Account to the Trustee, and no other Person has
any lien on, security interest in or other rights to any such Account;


(iii)                               the
Borrower has Granted to the Trustee all of its right, title, and interest in
and to each Account Granted to the Trustee by it to secure the VFN and the
amounts owed hereunder;


(iv)                              the
information set forth in the Schedule of Accounts delivered to the Custodian,
the Trustee and the Agent is correct in all material respects;


(v)                                 (A)
no Material Adverse Effect shall have occurred in the affairs of (I) the
Borrower since the date of its formation or (II) the Master Servicer since
April 1, 2004 and (B) no material adverse change has occurred in the value of
any Account since the date of origination of such Account; and


(vi)                              the
representations and warranties set forth in Section 3.1 are true and
correct on and as of such day as though made on and as of such day.


(b)           all of the Account
Documents relating to the Accounts to be purchased on such date have been
delivered to the Custodian within the time periods specified in
Section 3.1 of the CTA Agreement, except that (i) in lieu of delivering
the Account Documents for any Account which has been the subject of a Full Prepayment
received by the Master Servicer after the Cut-Off Date but no later than three
(3) Business Days prior to the Loan Date, the Borrower may deliver, or cause to
be delivered, as indicated in the Officers’ Certificate from the Master
Servicer delivered pursuant to paragraph (a) of this Section 4.2, the cash
proceeds of such Full Prepayment and (ii) in lieu of delivering the Account
Documents for any Account with respect to which foreclosure proceedings have
been commenced and such Account Documents are required in connection with the
prosecution of such proceedings, the Master Servicer may deliver a trust
receipt pursuant to Section 3.2 of the CTA Agreement;


(c)           the Borrower shall
have delivered a Borrowing Request to the Agent pursuant to Section 2.2
hereof;


(d)           the Agent, the
Custodian and the Trustee shall have received the Schedule of Accounts relating
to the Accounts to be purchased with the proceeds of such Loan;


(e)           the Agent shall have
received acknowledgment copies of proper financing statements, duly filed under
the Uniform Commercial Code of all jurisdictions that the Lender may deem
necessary or desirable in order to perfect the ownership interest of the
Depositor created by the DAT, the ownership interest of the Borrower created by
the BAT Agreement and the security interest in favor of the Trustee created by
the CTA Agreement and all other filings, notifications, consents and recordings
necessary to consummate the transactions contemplated hereunder and under the
other Operative Documents shall be accomplished and the Agent shall 



 20
 









have received evidence of such filings, notifications, consents and
recordings satisfactory in form and substance to the Agent;




(f)            the Agent shall
have received copies of all consents, licenses and approvals, if any, required
in connection with the execution, delivery and performance by it and the
validity and enforceability against it of the Operative Documents to approvals
shall be in full force and effect;


(g)           the Depositor shall
have continued to purchase or otherwise acquire all or substantially all of the
Accounts originated by the Originator (or originated by an Eligible Originator
and sold to the Depositor) on an ongoing basis;


(h)           after giving effect
to any requested Loan, no Borrowing Base Deficiency shall exist;


(i)            the Facility
Termination Date shall not have occurred;


(j)            no Servicer Default
or default under any Subservicing Agreement shall have occurred and be
continuing, and no condition that with the giving of notice or the passage of
time world constitute a Servicer Default or a default under any Subservicing
Agreement shall have occurred and be continuing;


(k)           no more than 7% of
the Accounts then owned by the Borrower may be in arrears for sixty (60) days
or more as of the last day of any month preceding the Borrowing Date;


(l)            no more than 10% of
the Accounts to be purchased by the Borrower may be in arrears for 30-59 days
as of the last day of any month preceding such Borrowing Date;


(m)          if the Interest Rate
Protection Date has occurred, the Borrower has delivered to the Agent an
Interest Rate Protection Agreement;


(n)           on such date, the
weighted average interest rate of all Eligible Accounts, after giving effect to
all Eligible Accounts to be added on such date, shall be greater than or equal
to 7.25% per annum; and


(o)           on such date, the
weighed average FICO score of all Eligible Accounts, after giving effect to all
Eligible Accounts to be added on such date, shall be greater than 530.


ARTICLE
5


COVENANTS


Section 5.1.            Affirmative
Covenants of Borrower.  At all times
from the date hereof to the date on which all amounts due and owing to any of
the Secured Parties under the Operative Documents have been paid in full and
this Loan Agreement has terminated unless the Controlling Party shall otherwise
consent in writing:



 21















(a)           Agreed Upon
Procedures Report.  Prior to the date
one year from the Closing Date and on each anniversary thereafter beginning in
calendar year 2006, the Borrower shall deliver to the Agent, at its expense, an
Agreed Upon Procedures Report with respect to all Accounts owned by the
Borrower and such other matters as the Agent reasonably requests; provided,
however, so long as no Event of Default, Potential Event of Default,
Facility Termination Event or Potential Facility Termination Event
has occurred, the Borrower shall only be required to deliver one
Agreed Upon Procedures report at its expense in any calendar year.


(b)           Other Information.  The Borrower shall deliver to the Agent
(i) a copy of all financial documents and reports provided to the Borrower
by the Depositor, the Originator, any Eligible Originator or any other Person
in any capacity pursuant to the Operative Documents, (ii) any material
notices with respect to any Mortgaged Property and (iii) such other information
(including non-financial information) as the Agent may from time to time
reasonably request.


(c)           Compliance
Certificate.  The Borrower shall
deliver to the Agent within ninety (90) days after the close of the Borrower’s
fiscal year, a compliance certificate signed by an authorized signatory of the
Borrower stating that no Event of Default or Potential Event of Default exists,
or if any Event of Default or Potential Event of Default exists, stating the
nature and status thereof.


(d)           Notice of
Borrowing Base Deficiency, Event of Default, Potential Event of Default,
Facility Termination Event or Potential Facility Termination Event.  As soon as possible and in any event within
two (2) Business Days after the Borrower receives notice or has actual
knowledge of the occurrence of a Borrowing Base Deficiency, an Event of
Default, a Potential Event of Default, Facility Termination Event or Potential
Facility Termination Event, the Borrower shall provide to the Agent a statement
setting forth details of such Borrowing Base Deficiency, Event of Default,
Potential Event of Default, Potential Facility Termination Event or Facility
Termination Event, and the action which the Borrower proposes to take with
respect thereto.  The Borrower shall
notify the Agent when the Borrower receives notice or has actual knowledge of
the occurrence of any event of default or event, which, due to the giving of
notice or lapse of time, or both, could become an event of default by itself,
the Master Servicer, the Back-up Servicer, the Depositor, any Eligible Originator
or the Originator in any capacity under any of the Operative Documents of which
it becomes aware.


(e)           Conduct of
Business.  The Borrower will carry on
and conduct its business in substantially the same manner as it is presently
conducted and do all things necessary to remain duly organized, validly
existing, and in good standing as a statutory trust in the State of Delaware
and maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.


(f)            Compliance with
Laws.  The Borrower will comply with
all laws, rules, regulations, orders, writs, judgments, injunctions, decrees,
or awards to which it may be subject.


(g)           Furnishing of
Information and Inspection of Records. 
The Borrower will furnish to the Agent from time to time such
information with respect to the Accounts as the



 22
 









Agent may reasonably request, including, without limitation, a schedule
identifying the Obligor and the Principal Balance for each Account.


(h)           Payment of
Obligations.  The Borrower shall pay,
discharge or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever nature.


(i)            Further
Assurances.  The Borrower shall do
such further acts and things and execute and deliver to the Agent such
assignments (including, without limitation, assignments in blank), agreements,
powers and instruments as are reasonably required by the Agent to carry into
effect the purposes of this Loan Agreement and the other Operative Documents or
to better assure and confirm unto the Secured Parties their respective rights,
powers and remedies hereunder and under the other Operative Documents,
including, without limitation, to obtain such consents and give such notices,
and to file and record all such documents and instruments, and renew each such
consent, notice, filing and recordation, at such time or times, in such manner
and at such places, as may be necessary or desirable to preserve and protect
the position of the Secured Parties hereunder and under the other Operative
Documents.  This covenant shall survive
the termination of this Loan Agreement.


(j)            Access.  The
Borrower shall allow, and cause the Depositor to allow, the Agent and their
representatives full and complete access during normal business hours and upon
reasonable notice to the books, records, documents, and facilities of the
Borrower and the Depositor, and will on the same conditions make the officers,
employees, attorneys, agents, independent accountants, and actuaries of the
Borrower and the Depositor available to discuss such aspects of the business,
financial condition, or prospects of the Borrower and the Depositor as may be
reasonably necessary.


(k)           Reliance Letters.  Upon the request of the Agent, the Borrower
shall provide to the Agent within five (5) Business Days, reliance letters with
respect to all legal opinions delivered on the Closing Date (or new legal
opinions addressing the same matters covered in the original legal opinions)
addressed to any entity which becomes a Program Support Provider after the
Closing Date, to the extent such legal opinions did not permit reliance when
delivered.


(l)            Amendments;
Miscellaneous.


(i)                                     The
Borrower shall furnish to the Custodian, the Trustee and the Agent copies of
the form of each proposed amendment to the Trust Agreement, the Master
Servicing Agreement, the Back-up Servicing Agreement or the Subservicing
Agreement at least sixty (60) days prior to the proposed date of adoption of
any such proposed amendment.


(ii)                                  The
Borrower will at all times hold itself out to the public under the Borrower’s
own name and as a separate and distinct entity from Walter Industries, Inc. and
any of its Affiliates.



 23
 









 


(iii)                               The
Borrower will at all times be responsible for the payment of all its
obligations and indebtedness, will at all times maintain a business office,
records, books of account, and funds separate from the Depositor and will
observe all customary formalities of independent existence.


(iv)                              To
the extent such compliance involves questions of law, the Borrower shall be
deemed in compliance with the requirements of any provision of this paragraph
(l) if it is acting in accordance with an opinion of counsel as to such
requirements.


(m)          Weighted Average.  The weighted average interest rate of all Eligible
Accounts shall not be less than 7.25% per annum.  The Borrower shall take all necessary steps
(including, without limitation, the addition or removal of Accounts) as
frequently as necessary (and in any event within two (2) Business Days after
the Borrower receives notice or has actual knowledge of noncompliance with this
Section 5.1(m)) to ensure that in no event shall the weighted average interest
rate of all Eligible Accounts be less than 7.25% per annum.


(n)           Assignments.  The Borrower shall prepare and execute
Assignments in recordable form at the reasonable request of the Agent.


(o)           Due Diligence
Review.  Prior to February 4th of each calendar year, the Borrower shall
complete, at its expense, a Due Diligence Review with respect to all Accounts owned
by the Borrower and such other matters as the Agent reasonably requests; provided,
however, so long as no Event of Default, Potential Event of Default,
Facility Termination Event or Potential Facility Termination Event has
occurred, the Borrower shall only be required to complete one Due Diligence
Review at its expense in any calendar year.


Section 5.2.            Negative
Covenants of Borrower.  At all times
from the date hereof to the date on which all amounts due and owing to any of
the Secured Parties under the Operative Documents have been paid in full and
this Loan Agreement has terminated, unless the Controlling Party shall
otherwise consent in writing:


(a)           No
Extension or Amendment of Accounts. 
Except as permitted by Section 2.1(j) of the Master Servicing Agreement
or Section 3.4 of the CTA Agreement, the Borrower will not extend, amend, or
otherwise modify the terms of any Account, or amend, modify, or waive any term
or condition of any Account Document related thereto.


(b)           No
Sale.  The Borrower shall not sell,
transfer, exchange or otherwise dispose of any portion of the Collateral (other
than any Accounts which are not Eligible Accounts or otherwise excluded from
the Borrowing Base) except as expressly permitted by the Operative Documents.


(c)           No
Insurance.  The Borrower shall not
obtain or carry insurance relating to the Accounts separate from that required
by the Master Servicing Agreement, unless the Trustee shall have the same
rights with respect thereto as it has with respect to the insurance required by
the Master Servicing Agreement.



 24
 









(d)           Other Business.  The Borrower shall not engage in any business
or activity other than in connection with, or relating to, the issuance of the
VFN or the preservation of the Collateral and the release of assets therefrom
pursuant to this Loan Agreement, and the other Operative Documents to which the
Borrower is a party.


(e)           Dissolution.  The Borrower shall not dissolve or liquidate
in whole or in part.


(f)            Liens.  The
Borrower shall not (i) permit the validity or effectiveness of this Loan
Agreement or the CTA Agreement to be impaired, or permit the lien of the CTA
Agreement to be amended, hypothecated, subordinated, terminated or discharged,
or permit any Person to be released from any covenants or obligations under
this Loan Agreement or, (ii) except as may be expressly created or
permitted by the Operative Documents, permit any lien, charge, security
interest, mortgage or other encumbrance (other than the lien of the CTA
Agreement) to be created on or extend to or otherwise arise upon or burden the
Collateral or any part thereof or any interest therein or the Proceeds thereof,
or (iii) except as permitted by the Operative Documents, permit the lien
of the CTA Agreement not to constitute a valid and perfected first priority
security interest in the Collateral.


(g)           No Amendment.  The Borrower shall not amend the Trust
Agreement without the consent of the Controlling Party.


(h)           No Mergers, Etc.  The Borrower will not consolidate or merge
with or into any other Person.


(i)            Change of Name,
Etc.  The Borrower will not change
its name, identity, or structure or its chief executive office or the
jurisdiction under which it has been organized, unless at least ten (10) days
prior to the effective date of any such change the Borrower delivers to the
Trustee UCC financing statements, executed by the Borrower, necessary to
reflect such change and to continue the perfection of the Trustee’s (for the
benefit of the Secured Parties) security interest in the Accounts.


(j)            Borrowing Base
Deficiency.  The Borrower shall at
all times be in compliance with Section 2.6(b) hereof.


(k)           Pledged Accounts.  The Borrower shall not move any Pledged
Account from the institution at which it is maintained on the Closing Date,
except as permitted in accordance with Section 2.8.


(l)            Successor Master
Servicer and Back-up Servicer.  The
Borrower shall not permit any change of master servicer or back-up servicer,
except in accordance with the Master Servicing Agreement or the Back-up
Servicing Agreement, as applicable.


(m)          Eligible
Originators.  The Borrower shall not
make any request for a Loan hereunder unless all criteria set forth in the
definition of “Eligible Originator” have been satisfied.



 25
 









 


(n)           No Debt.  The Borrower shall not incur any debt except as
contemplated by the Operative Documents.


(o)           Amendments.  Neither the Borrower nor the Master Servicer
will amend, modify, supplement restate or replace any of the Trust Agreement,
the Master Servicing Agreement, the Backup Servicing Agreement or the Subservicing
Agreement or any provision of any of the foregoing without the prior written
consent of the Agent.


ARTICLE 6



EVENTS OF DEFAULT AND FACILITY TERMINATION EVENTS


Section 6.1.            Events
of Default.  The occurrence of any
one or more of the following events shall constitute an Event of Default:


(a)           A default in the
payment of any interest on the VFN at the applicable Discount rate when the
same becomes due and payable;


(b)           A default in the
payment of any principal of the VFN in reduction of the Net Investment when due
and payable;


(c)           Any representation,
warranty, certification, or statement made by the Borrower in this Loan
Agreement or in any other document delivered pursuant hereto or other Operative
Document shall prove to have been incorrect in any material respect when made
or deemed made (other than any representation or warranty of the Borrower with
respect to the Accounts or the eligibility thereof);


(d)           Failure of the
Borrower to pay or deposit any amounts (other than interest or principal due in
respect of the VFN) when required hereunder or under any other Operative
Document and such default shall continue unremedied for five (5) Business Days;


(e)           The default by the
Borrower in the performance of any material covenant or undertaking (i) to be performed
or observed under Sections 5.1(d), 5.2(b), (d), (e), (f), (g), or (h) or (ii)
to be performed or observed by the Borrower under any other provision hereof
(other than described in paragraph (b) of this Section 6.1) or under any other
Operative Document and such default in the case of this clause (ii) shall
continue for thirty (30) days;


(f)            Any Event of
Bankruptcy shall occur with respect to the Borrower;


(g)           The Trustee, for the
benefit of the Secured Parties, shall fail to have a valid and first priority
perfected security interest in the Collateral;


(h)           There shall have
occurred any material adverse change in the operations of the Borrower since
the Closing Date which would have or reasonably could be expected to have a
material adverse effect on the Secured Parties or any other event shall have
occurred which materially and adversely affects the Borrower’s ability to
perform under this Loan Agreement or the collectibility of the Accounts;



 26
 









 


(i)            The amount on
deposit in the Reserve Account fails to reach the Specified Reserve Account
Requirements on or prior to the fifteenth (15th) Remittance Date following the Closing
Date or on or prior to the sixth (6th)
Remittance Date following a Reserve Account Event; provided that for the
period extending six (6) Remittance Dates following each  Take-Out, there shall be no Event of Default
under this clause (i) unless the amount on deposit in the Reserve Account shall
fail to be equal to or greater than the sum of (A) the Scheduled Reserve
Account Payment for such Remittance Date and (B) $1,000,000;


(j)            The Delinquency
Ratio with respect to the Accounts owned by the Borrower averaged for any three
(3) consecutive Collection Periods exceeds 3.5%;


(k)           A Borrowing Base
Deficiency shall exist beyond the cure period set forth in Section 2.6(b)
hereof;


(l)            The Default Ratio
with respect to the Accounts owned by the Borrower averaged for any three (3)
consecutive Collection Periods exceeds 6%;


(m)          The Borrower shall
become subject to an entity level tax or to registration as an investment
company under the Investment Company Act; and


(n)           The default by the
Borrower in the performance of any material covenant or undertaking to be
performed or observed under Section 5.1(a) hereof shall continue for ten (10)
Business Days.


Section 6.2.            Facility
Termination Events.  The occurrence
of any one or more of the following events shall constitute a Facility
Termination Event:


(a)           Any representation,
warranty, certification, or statement made by the Depositor, any Eligible
Originator or the Originator in any of the Operative Documents, shall prove to
have been incorrect in any material respect when made or deemed made (other
than any representation or warranty with respect to the Accounts or the
eligibility thereof);


(b)           Failure of the
Originator, any Eligible Originator or the Depositor to pay or deposit any
amounts when required hereunder or under any other Operative Document;


(c)           The default by any
Eligible Originator, the Originator or the Depositor, in the performance of any
covenant or undertaking, (other than, with respect to the Depositor, in its
capacity as Master Servicer) to be performed or observed under any Operative
Document and such default continues unremedied for thirty (30) days;


(d)           A Servicer Default
or an event of default under the Subservicing Agreements shall have occurred;


(e)           any Person shall
institute steps to terminate any Pension Plan if the assets of such Pension
Plan are insufficient to satisfy all of its benefit liabilities (as determined
under Title IV of ERISA), or a contribution failure occurs with respect to
any Pension Plan which is sufficient to give rise to a lien under Section
302(f) of ERISA;



 27
 









 


(f)            any material
provision of this Loan Agreement or any other Operative Document to which the
Originator, any Eligible Originator or the Depositor is a party shall cease to
be in full force and effect or the Originator, any Eligible Originator or the
Depositor shall so state in writing; or


(g)           an Event of Default
shall occur.


Section 6.3.            Remedies.


(a)           If an Event of
Default described in Section 6.1(f) hereof shall occur, then the entire unpaid
principal amount of the VFN, together with accrued and unpaid interest thereon,
shall automatically, without any notice, declaration or any other action become
immediately due and payable.  If any
other Event of Default shall occur and be continuing, then and in every such
case the Controlling Party may declare the entire principal of and accrued
interest on the VFN to be immediately due and payable and the Facility Termination
Date to have occurred, by a notice in writing to the Borrower and the Agent,
and upon such declaration the entire unpaid principal amount of the VFN,
together with accrued and unpaid interest thereon, shall become immediately due
and payable and the Facility Termination Date shall have occurred.  Upon the occurrence of an Event of Default,
the Trustee may, and if directed by the Controlling Party, shall, proceed to
protect and enforce its rights and the rights of the Secured Parties, including
its and their rights under the Operative Documents, and to enforce any other
proper remedy or legal or equitable right vested in the Trustee by this Loan
Agreement, the CTA Agreement or any other Operative Document or by law, by such
appropriate actions and proceedings as the Trustee shall deem most effective or
as so directed.  Upon the declaration of
an Event of Default, the Controlling Party, in addition to all other rights and
remedies it has under the Operative Documents, shall have all other rights and remedies
provided under the UCC and all other applicable laws.  The Facility Termination Date shall be deemed
to have occurred automatically upon the occurrence of any event described in
clause (f) of Section 6.1 with respect to the Borrower.


(b)           If a Facility
Termination Event shall have occurred, the Controlling Party may declare the
Facility Termination Date to have occurred and upon such declaration, the
Facility Term shall terminate.


ARTICLE 7


INDEMNIFICATION; EXPENSES; RELATED MATTERS


Section 7.1.            Indemnities
by the Borrower.  Without limiting
any other rights which the Indemnified Parties may have hereunder or under
applicable Law, the Borrower hereby agrees to indemnify the Lender and any
commercial paper issuer that finances the Lender, the Bank Investors, the
Agent, the Administrative Trustee and their respective officers, directors,
employees, counsel and other agents (collectively, “Indemnified Parties”)
from and against any and all damages, losses, claims, liabilities, costs and
expenses, including reasonable attorneys’ fees (which such attorneys may be
employees of the Bank Investors, the Agent, the Lender and any commercial paper
issuer that finances the Lender or the Administrative Trustee, as applicable)
and disbursements (all of the foregoing being collectively referred to as “Indemnified



 28
 









Amounts”) awarded against or incurred by any
of them in any action or proceeding between the Borrower and any of the
Indemnified Parties or between any of the Indemnified Parties and any third
party or otherwise arising out of or as a result of this Loan Agreement, the
other Operative Documents, the funding or maintenance, either directly or
indirectly, by the Agent, the Lender (including through any Program Support
Provider) or any Bank Investor of the Net Investment or any of the other
transactions contemplated hereby or thereby, excluding, however,
(i) Indemnified Amounts to the extent resulting from gross negligence or
willful misconduct on the part of such Indemnified Party, or (ii) recourse
(except as otherwise specifically provided in this Agreement) for uncollectible
Accounts.  Without limiting the
generality of the foregoing, the Borrower shall indemnify each Indemnified
Party for Indemnified Amounts relating to or resulting from:


(a)           any representation
or warranty made by the Borrower, under or in connection with this Loan
Agreement, any of the other Operative Documents or any other information or
report delivered by the Borrower pursuant hereto, or pursuant to any of the
other Operative Documents which shall have been incomplete, false or incorrect
in any respect when made or deemed made;


(b)           the failure by the
Borrower to comply with any applicable Law with respect to any Account, or the
nonconformity of any Account with any such applicable Law;


(c)           the failure to
create and maintain a valid and perfected first priority security interest in
favor of the Trustee, for the benefit of the Secured Parties, in the
Collateral, free and clear of any Adverse Claim;


(d)           the failure to file
or record, or any delay in filing or recording, financing statements,
continuation statements, mortgages or other similar instruments or documents
under the UCC of any applicable jurisdiction or other applicable laws with
respect to any of the Affected Assets;


(e)           any dispute, claim,
offset or defense (other than discharge in bankruptcy) of the Obligor to the
payment of any Account (including a defense based on such Account not being the
legal, valid and binding obligation of such Obligor enforceable against it in
accordance with its terms), or from any breach or alleged breach of any
provision of the Accounts restricting assignment of any Accounts;


(f)            reserved;


(g)           reserved;


(h)           the failure by the
Borrower to comply with any term, provision or covenant contained in this Loan
Agreement or any of the other Operative Documents to which it is a party or to
perform any of its respective duties or obligations under the Accounts required
to be paid by the Borrower;


(i)            the existence of a
Borrowing Base Deficiency;



 29
 









 


(j)            the failure of the
Borrower to pay when due any taxes, including, without limitation, any sales,
excise or personal property taxes payable in connection with any of the
Accounts required to be paid by the Borrower;


(k)           any repayment by any
Indemnified Party of any amount previously distributed in reduction of Net
Investment which such Indemnified Party believes in good faith is required to
be made;


(l)            the commingling by
the Borrower of Available Collections at any time with any other funds;


(m)          any investigation,
litigation or proceeding related to this Loan Agreement, any of the other
Operative Documents, the use of proceeds of any Loan by the Borrower, the
security interest in the Collateral, or any Affected Asset;


(n)           any inability to
obtain any judgment in or utilize the court or other adjudication system of,
any state in which an Obligor may be located as a result of the failure of the
Borrower to qualify to do business or file any notice of business activity
report or any similar report;


(o)           any attempt by any
Person to void, rescind or set-aside any transfer by the Depositor to the
Borrower of any Account or Related Security under statutory provisions or
common law or equitable action, including any provision of the Bankruptcy Code
or other insolvency law;


(p)           any action taken by
the Borrower in the enforcement or collection of any Account;


(q)           any liability under
the Georgia Fair Lending Act as in effect from October 1, 2002 through March 6,
2003; or


(r)            any liability under
the Home Ownership and Equity Protection Act of 1994, as amended, or similar
federal state or local laws or regulations relating to “high cost” or “predatory”
Accounts and otherwise unacceptable Accounts for secondary market transactions
rated by the Rating Agencies.


Section 7.2.            Indemnity
for Taxes, Reserves and Expenses.


(a)           If after the Closing
Date, the adoption of any Law or bank regulatory guideline or any amendment or
change in the administration, interpretation or application of any existing or
future Law or bank regulatory guideline by any Governmental Authority charged
with the administration, interpretation or application thereof, or the
compliance with any directive of any Governmental Authority (in the case of any
bank regulatory guideline, whether or not having the force of Law):


(i)                                     shall
subject any Indemnified Party (or its Applicable Lending Office) to any tax,
duty or other charge (other than Excluded Taxes, as defined below) with respect
to this Loan Agreement, the 



 30
 









other
Operative Documents, the maintenance or financing of the Net Investment, or
payments of amounts due hereunder, or shall change the basis of taxation of
payments to any Indemnified Party of amounts payable in respect of this Loan
Agreement, the other Operative Documents, the maintenance or financing of the
Net Investment, or payments of amounts due hereunder or its obligation to
advance funds hereunder, either directly or through a Program Support Agreement
or the credit or liquidity support furnished by a Program Support Provider or
otherwise in respect of this Loan Agreement, the other Operative Documents, the
maintenance or financing of the Net Investment (except for changes in the rate
of general corporate, franchise, net income or other income tax imposed on such
Indemnified Party by the jurisdiction in which such Indemnified Party’s
principal executive office is located);


(ii)                                  shall
impose, modify or deem applicable any reserve, special deposit or similar
requirement (including any such requirement imposed by the Board of Governors
of the Federal Reserve System) against assets of, deposits with or for the
account of, or credit extended by, any Indemnified Party or shall impose on any
Indemnified Party or on the United States market for certificates of deposit or
the London interbank market any other condition affecting this Loan Agreement,
the other Operative Documents, the maintenance or financing of the Net
Investment, or payments of amounts due hereunder or its obligation to advance
funds hereunder, either directly or through a Program Support Agreement or the credit
or liquidity support provided by a Program Support Provider or otherwise in
respect of this Loan Agreement, the other Operative Documents, the maintenance
or financing of the Net Investment; or


(iii)                               imposes
upon any Indemnified Party any other condition or expense (including any loss
of margin, reasonable attorneys’ fees and expenses, and expenses of litigation
or preparation therefor in contesting any of the foregoing) with respect to
this Loan Agreement, the other Operative Documents, the maintenance or
financing of the Affected Assets or Net Investment, or payments of amounts due
hereunder or its obligation to advance funds, either directly or through a
Program Support Agreement or the credit or liquidity support furnished by a
Program Support Provider or otherwise in respect of this Loan Agreement, the
other Operative Documents, the maintenance or financing of the Net Investment,


and the result of any of
the foregoing is to increase the cost to or to reduce the amount of any sum
received or receivable by such Indemnified Party with respect to this Loan
Agreement, the other Operative Documents, the maintenance or financing of the
Net Investment, the Accounts,



 31
 









the obligations
hereunder, the funding of any Loans hereunder or through Program Support Agreement,
by an amount deemed by such Indemnified Party to be material, then, within ten
(10) days after demand by such Indemnified Party through the Agent, the
Borrower shall pay to the Agent, for the benefit of such Indemnified Party,
such additional amount or amounts as will compensate such Indemnified Party for
such increased cost or reduction.


(b)           If any Indemnified
Party shall have determined that after the date hereof, the adoption of any
applicable Law or bank regulatory guideline regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof
by any Governmental Authority, or any request or directive regarding capital
adequacy (in the case of any bank regulatory guideline, whether or not having
the force of law) of any such Governmental Authority, has or would have the
effect of reducing the rate of return on capital of such Indemnified Party (and
in the case of the Lender, any Program Support Provider) (or its parent) as a
consequence of such Indemnified Party’s obligations hereunder or with respect
hereto to a level below that which such Indemnified Party (and in the case of
the Lender, any Program Support Provider) (or its parent) could have achieved
but for such adoption, change, request or directive (taking into consideration
its policies with respect to capital adequacy) by an amount deemed by such
Indemnified Party to be material, then from time to time, within ten (10) days
after demand by such Indemnified Party through the Agent, the Borrower shall
pay to the Agent, for the benefit of such Indemnified Party, such additional
amount or amounts as will compensate such Indemnified Party (and in the case of
the Lender, any Program Support Provider) (or its parent) for such reduction.  For the avoidance of doubt, any
interpretation of Accounting Research Bulletin No. 51 by the Financial
Accounting Standards Board shall constitute an adoption, change, request or
directive subject to this Section 7.2(b).


(c)           The Agent shall
promptly notify the Borrower in writing of any event of which it has knowledge,
occurring after the date hereof, which will entitle an Indemnified Party to
compensation pursuant to this Section 7.2; provided that no failure to
give or any delay in giving such notice (so long as such notice is given before
the day which is one day and a year after the payment in full of all
outstanding Commercial Paper of the Lender or other Indebtedness of the Lender)
shall affect the Indemnified Party’s right to receive such compensation.  A notice by the Agent or the applicable
Indemnified Party claiming compensation under this Section and setting forth
the additional amount or amounts to be paid to it hereunder shall be conclusive
in the absence of manifest error.  In
determining such amount, the Agent or any applicable Indemnified Party may use
any reasonable averaging and attributing methods.  The Indemnified Party shall provide the
Borrower with reasonably detailed calculations supporting such amounts.


(d)           Anything in this
Section 7.2 to the contrary notwithstanding, if the Lender enters into
agreements for the acquisition of interests in receivables from one or more
Other Transferors, the Lender shall allocate the liability for any amounts
under this Section 7.2 which are in connection with a Program Support Agreement
or the credit or liquidity support provided by a Program Support Provider (“Additional
Costs”) to the Borrower and each Other Transferor; provided, however,
that if such Additional Costs are attributable to the Borrower, the Originator,
any Eligible Originator, the Master Servicer or the Back-up Servicer and not
attributable to any Other Transferor, the Borrower shall be solely liable for
such Additional Costs or if such Additional Costs are attributable to Other
Transferors and not attributable to the Borrower, the



 32
 









Originator, the Master Servicer or the Back-up Servicer, such Other
Transferors shall be solely liable for such Additional Costs.  The Lender shall provide the Borrower with
written notice of any such Additional Costs accompanied by reasonably detailed
calculations supporting such Additional Costs.


Section 7.3.            Taxes.


(a)           Any and all payments by the Borrower
under or in respect of this Loan Agreement or any other related document to
which the Borrower is a party shall be made free and clear of, and without
deduction or withholding for or on account of, any and all present or future
income, excise, stamp, or franchise taxes and any other taxes, levies, fees,
duties, imposts, deductions, charges or withholdings, and all liabilities
(including penalties, interest and additions to tax) with respect thereto,
whether now or hereafter imposed, levied, collected, withheld or assessed by
any taxation authority or other Governmental Authority (collectively, “Taxes”),
unless required by law.  If the Borrower
shall be required under any applicable law to deduct or withhold any Taxes from
or in respect of any sum payable under or in respect of this Loan Agreement or
any of the other related documents to an Indemnified Party, then the Borrower shall:


(i) make
all such deductions and withholdings in respect of the Taxes;


(ii) pay
directly to the relevant Government Authority the full amount required to be
deducted or withheld in respect of such Taxes in accordance with applicable
law; and


(iii) pay
to the applicable Indemnified Party such additional amount or amounts as
necessary to ensure that the net amount actually received by the recipient will
equal the full amount such Indemnified Party would have received had no
withholding or deduction for Taxes other than Excluded Taxes been required
(including deductions and withholdings applicable to additional sums payable
under this Section 7.3(a)).


For purposes of
this Loan Agreement, “Excluded Taxes” shall mean franchise taxes, branch
profits taxes and taxes imposed on or measured by the Indemnified Party’s net
income or gross receipts.


Moreover, if
any Taxes are directly asserted against any Indemnified Party with respect to
any payment received by such Indemnified Party hereunder, the Indemnified Party
may pay such Taxes and the Borrower will promptly pay such additional amounts
(including any related penalties, interest or expenses) as shall be necessary
in order that the net amount received by the Indemnified Party after the
payment of such Taxes (including any Taxes on such additional amount) shall
equal the amount such Indemnified Party would have received had such Taxes not
been asserted.


If the
Borrower fails to pay any Taxes when due to the appropriate taxing authority or
fails to remit to the applicable Indemnified Party the required receipts or
other required documentary evidence, the Borrower shall indemnify the
applicable Indemnified Party for any incremental Taxes, interest, or penalties
that may become payable by any Indemnified Party as a result of any such
failure.


 



 33















(b)           In
addition, the Borrower hereby agrees to pay any present or future stamp,
recording, documentary, excise, property or similar taxes, charges or levies
that arise from any payment made under or in respect of this Loan Agreement or
any other related documents or from the execution, delivery or registration of,
any performance under, or otherwise with respect to, this Loan Agreement or any
other related documents (collectively, “Other Taxes”).


(c)           The Borrower hereby agrees to
indemnify the applicable Indemnified Parties for, and to hold the applicable
Indemnified Parties harmless against, the full amount of Taxes and Other Taxes,
and the full amount of Taxes of any kind imposed by any jurisdiction on amounts
payable under this Section 7.3, imposed on or paid by such Indemnified Party,
as the case may be, and any liability (including penalties, additions to tax,
interest and expenses) arising therefrom or with respect thereto.  The indemnity by the Borrower provided for in
this Section 7.3 shall apply and be made whether or not the Taxes or Other
Taxes for which indemnification hereunder is sought have been correctly or
legally asserted.  Amounts payable by the
Borrower under the indemnity set forth in this Section 7.3 shall be paid within
30 days from the date on which the applicable Indemnified Party makes
written demand therefore.


(d)           Within 30 days after the date of
any payment of Taxes or Other Taxes, the Borrower (or any Person making such
payment on behalf of Borrower) shall furnish to the applicable Indemnified
Party a certified copy of the original official receipt evidencing payment
thereof.


(e)           Each Indemnified Party that either
(i) is not a United States Person (as such term is defined in Section
7701(a)(30) of the Code (a “US Person”)) for United States federal
income tax purposes or (ii) whose name does not include “Incorporated,” “Inc.,”
“Corporation,” “Corp.” “P.C.,” “insurance company’” or “assurance company”
(each, a “Non-Exempt Party”) shall deliver or caused to be delivered to
the Borrower and the Agent the following properly completed and duly executed
documents;


(i)                                     two
properly completed and executed (x) U.S. Internal Revenue Forms W-8BEN (or any
successor forms thereto) with respect to an income tax treaty providing for a
reduced or a zero rate of withholding tax on interest, or (y) U.S. Internal
Revenue Service Forms W-8ECI (or any successor forms thereto);


(ii)                                  (x) two properly completed and executed U.S. Internal
Revenue Service Forms W-8BEN (or any successor forms thereto), including all
appropriate attachments, documenting the status of such Indemnified Party as a
Non-U.S. Person or (y) a properly completed and executed U.S. Internal Revenue
Service Form W-8IMY (with all appropriate attachments) (or any successor forms
thereto);


(iii)                               two
properly completed and executed (x) Internal Revenue Service Forms W-9 (or any
successor forms thereto), including all appropriate attachments or (y) if such
Non-Exempt Party is disregarded for federal income tax purposes, the documents
that would be required by clause (i), (ii), (iii), or (iv) with respect to its 



 34
 









beneficial owner if such beneficial owner
were the applicable Indemnified Party; or


(iv)                              two
properly completed and executed (x) Internal Revenue Service Forms W-8IMY (or
any successor forms thereto) (including all required documents and attachments)
and (y) without duplication, with respect to each of its beneficial owners and
the beneficial owners of such beneficial owners looking through chains of
owners to individuals or entities that are treated as corporations for U.S.
federal income tax purposes (all such owners, “beneficial owners”), the
documents that would be required by clause (i), (ii), (iii), and/or (iv) with
respect to each such beneficial owner if such beneficial owner were the
applicable Indemnified Party; provided, however, that no such documents will be
required with respect to a beneficial owner to the extent the actual
Indemnified Party is determined to be in compliance with the requirements for
certification on behalf of its beneficial owner as may be provided in
applicable U.S. Treasury Regulations, or the requirements of this clause (iv)
are otherwise determined to be unnecessary, all such determinations under this
clause (iv) to be made in the reasonable discretion of Borrower.


Such documents shall be
delivered by each Indemnified Party on or before the date it becomes a party to
this Loan Agreement and on or before the date, if any, such Indemnified Party
changes its Applicable Lending Office by designating a different lending
office.  In addition, each Indemnified
Party shall deliver to cause to be delivered such Forms and /or Certificates
promptly upon or before the expiration, obsolescence or invalidity of any
document previously delivered by such Indemnified Party.  Notwithstanding any other provision of this
Section 7.3, no Indemnified Party shall be required to deliver any document
pursuant to this Section 7.3 that such Indemnified Party is not legally able to
deliver.


(f)            For any period with respect to which
any Indemnified Party has failed to provide the Borrower with the appropriate
form, certificate or other document described in Section 7.3(e) (other
than (i) if such failure is due to a change in any applicable law, or in
the interpretation or application thereof, occurring after the date on which a
form, certificate or other document originally was required to be provided,
(ii) if such form, certificate or other document otherwise is not required
under Section 7.3(e) or (iii) if
it is legally inadvisable or otherwise commercially disadvantageous for such
Indemnified Party to deliver such form, certificate or other document),
such Indemnified Party shall not be entitled to payment or indemnification
under Section 7.3(a), (b) or (c) with respect to Taxes imposed by the United
States by reason of such failure. Should an Indemnified Party become subject to
Taxes because of its failure to deliver a form, certificate or other document
required by Section 7.3(e), the Borrower shall take such steps as such
Indemnified Party shall reasonably request to assist such Indemnified Party in
recovering such Taxes.


(g)           The Lender hereby agrees that, upon
the occurrence of any circumstances entitling such Lender to additional amounts
pursuant to this Section 7.3, such Lender shall use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions), at
the 



 35
 









sole expense of the Borrower, to designate a
different Applicable Lending Office if the making of such a change would avoid
the need for, or materially reduce the amount of, any such additional amounts
that may thereafter accrue and would not be, in the sole judgment of such
Lender, legally advisable or commercially or otherwise disadvantageous to such
Lender in any respect.


(h)           An applicable Indemnified Party shall
take all reasonable actions (consistent with its internal policy and legal and
regulatory restrictions) requested by Borrower to assist Borrower, as the case
may be, at the sole expense of Borrower, to recover from the relevant taxation
authority or other Governmental Authority any Taxes in respect of which amounts
were paid by Borrower pursuant to Section 7.3(a), (b) or (c).  However, the applicable Indemnified Party
will not be required to take any action that would not be, in the sole judgment
of such Indemnified Party, legally advisable, or would be commercially or
otherwise disadvantageous to such Indemnified Party in any respect, and in no
event shall such Indemnified Party be required to disclose any tax returns or
any other information that, in the sole judgment of such Indemnified Party, is
confidential.


(i)            The Borrower shall not be required
to indemnify any Indemnified Party or to pay any additional amounts to any
Indemnified Party in respect of any U.S. federal income or withholding tax
pursuant to this Section 7.3 to the extent that the obligation to withhold any
amounts with respect to U.S. federal income tax existed on the date such
Indemnified Party became a party to this Loan Agreement (unless such
withholding would not occur if the forms and/or certificates in Section 7.3(e)
were provided) or is incurred because of the merger or consolidation of the
applicable Indemnified Party, after which such merger or consolidation the
applicable Indemnified Party no longer exists.


Section 7.4.            Other
Costs and Expenses; Breakage Costs.


(a)           The Borrower agrees,
upon receipt of a written invoice, to cause to be paid, and to save the Lender,
the Bank Investors and the Agent harmless against liability for the payment of,
all reasonable out-of-pocket expenses (including reasonable attorneys’ fees and
expenses, any filing fees and expenses incurred by officers or employees of the
Lender, any Bank Investor and/or the Agent) or intangible, documentary or
recording taxes incurred by or on behalf of the Lender, any Bank Investor or
the Agent (i) in connection with the preparation, negotiation, execution
and delivery of this Loan Agreement, the other Operative Documents and any
documents or instruments delivered pursuant hereto and thereto and the transactions
contemplated hereby or thereby (including the perfection or protection of the
Collateral) and (ii) from time to time (A) relating to any
amendments, waivers or consents under this Loan Agreement and the other
Operative Documents, (B) arising in connection with the Lender’s, any Bank
Investor’s or the Agent’s enforcement or preservation of rights (including the
perfection and protection of the Collateral under the CTA Agreement and this
Loan Agreement) or (C) arising in connection with any audit, dispute,
disagreement, litigation or preparation for litigation involving this Loan
Agreement or any of the other Operative Documents (all of such amounts,
collectively, “Transaction Costs”).


(b)           The Borrower shall
pay the Lender or the Bank Investors, as applicable, on demand an Early
Collection Fee due on account of the reduction of the Net Investment on a day
prior to a Remittance Date.



 36
 









(c)           The Borrower shall
pay the Agent for the account of the Lender and the Bank Investors, as
applicable, on demand, such amount or amounts as shall compensate the Lenders
and any Bank Investors for any loss, cost or reasonable expense incurred by the
Lender or Bank Investors (as reasonably determined by the Agent) as a result of
any reduction of any portion of any Loan other than on the maturity date of the
Commercial Paper (or other financing source) funding such portion of any Loan,
such compensation to be (i) limited to an amount equal to any loss or expense
suffered by the Lender or the Bank Investors during the period from the date of
receipt of such repayment to (but excluding) the maturity date of such
Commercial Paper (or other financing source) and (ii) net of the income, if
any, received by the recipient of such reductions from investing the proceeds
of such reductions of such portion of any Loan. 
The determination by the Agent of the amount of any such loss or expense
shall be set forth in a written notice to the Borrower in reasonable detail and
shall be conclusive, absent manifest error and shall be accompanied by reasonably
appropriate back-up materials with respect to such amounts.


(d)           The Lender, or its
agent, shall maintain a register (the “Register”) on which it will
record the Lender’s rights hereunder, and each Assignment and Assumption
Agreement.  The Register shall include
the names and addresses of the Lender (including all assignees and successors)
and the percentage or portion of such rights and obligations assigned.


Section 7.5.            Payment.  All amounts required to be paid by the
Borrower under this Article VII (other than legal fees to be paid on the
Closing Date pursuant to Section 7.4(a)(i)) shall be paid from the funds
specified in and in accordance with Section 4.1(d)(viii) and (ix) of the CTA
Agreement.


ARTICLE 8


MISCELLANEOUS


Section 8.1.            Term
of Agreement.  This Loan Agreement
shall terminate following the Facility Termination Date when the Net Investment
has been reduced to zero, all accrued Discount has been paid in full, all other
amounts due under this Loan Agreement have been paid in full and all other
Aggregate Unpaids have been paid in full; provided, however, that
(i) the rights and remedies of the Agent, the Administrative Trustee, the Bank
Investors or the Lender with respect to any representation and warranty made or
deemed to be made by Borrower pursuant to this Loan Agreement, (ii) the
indemnification and payment provisions of Article VII and (iii) the agreement
set forth in Sections 8.9, 8.10 and 8.11 hereof, shall be continuing and shall
survive any termination of this Loan Agreement.


Section 8.2.            Waivers;
Amendments.


(a)           No failure or delay
on the part of the Agent, the Administrative Trustee, any Bank Investor or the
Lender in exercising any power, right, or remedy under this Loan 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.



 37
 









(b)           Any provision of
this Loan Agreement may be amended or waived if, but only if, such amendment is
in writing and is signed by the Borrower, the Agent, the Majority Investors and
the Lender; provided that no such amendment or waiver shall, unless signed by
each Bank Investor directly affected thereby, (i) increase the Commitment of a
Bank Investor, (ii) reduce the Net Investment or rate of Discount to accrue
thereon or any fees or other amounts payable hereunder, (iii) postpone any date
fixed for the payment of any scheduled distribution in respect of the Net
Investment or Discount with respect thereto or any fees or other amounts
payable hereunder or for termination of any Commitment, (iv) change the
percentage of the Commitments of Bank Investors which shall be required for the
Bank Investors or any of them to take any action under this Section or any
other provision of this Loan Agreement, (v) release all or substantially
all of the property with respect to which a security or ownership interest
therein has been granted hereunder to the Agent or the Bank Investors or (vi)
extend or permit the extension of the Scheduled Termination Date (it being
understood that a waiver of an Event of Default shall not constitute an
extension or increase in the Commitment of any Bank Investor).  In the event the Agent requests a Bank
Investor’s consent pursuant to the foregoing provisions and the Agent does not
receive a consent (either positive or negative) from such Bank Investor within
ten (10) Business Days of such Bank Investor’s receipt of such request, then
such Bank Investor (and its percentage interest hereunder) shall be disregarded
in determining whether the Agent shall have obtained sufficient consent
hereunder.


Section 8.3.            Notices.  Except as provided below, all communications
and notices provided for hereunder shall be in writing (including facsimile or
electronic transmission or similar writing) and shall be given to the other
party at its address or facsimile number set forth below or at such other
address or facsimile number as such party may here-after specify for the
purposes of notice to such party.  Each
such notice or other communication shall be effective (a) if given by
facsimile, when such facsimile is transmitted to the facsimile number specified
in this Section and confirmation is received, (b) if given by mail three (3)
Business Days following such posting, (c) if given by overnight courier, one
(1) Business Day after deposit thereof with a national overnight courier service,
or (d) if given by any other means, when received at the address specified in
this Section 8.3, provided that a Borrowing Request shall only be
effective upon receipt by the Agent. 
However, anything in this Section 8.3 to the contrary notwithstanding,
the Borrower hereby authorizes the Agent, the Bank Investors and the Lender to
effect Loans and Rate Period selections and to make Eligible Investments based
on telephonic notices made by any Person which the Agent in good faith believes
to be acting on behalf of the Borrower. 
The Borrower agrees to deliver promptly to the Agent a written
confirmation of each telephonic notice signed by an Authorized Officer of the
Borrower.  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 the Agent, the records of the Agent
shall govern absent manifest error.


If to the Lender:


Three Pillars Funding LLC


303 Peachtree Street, 24th Floor

Atlanta, Georgia 30308





 38
 









Attention: 
Robert S. Ashcom

Telephone:  (404)532-0304

Telecopy:  (404)813-5000


(with a copy to the Administrative Trustee)


If to the Borrower:


Mid-State Trust XIV

c/o Wilmington Trust Company, Owner Trustee

1100 North Market Street

Wilmington, Delaware 19890-1600

Attention:  Corporate Trust
Administration

Telephone:  (302)651-1000

Telecopy:  (302)636-4140


Payment Information:


Bank:  Wachovia

ABA # :  063000021

Acct. Name: Mid-State Trust XIV

Acct. #: 
2050000577196

Ref: Mid-State Trust XIV / Three Pillars Funding LLC


with a copy to:


Mid-State Homes, Inc.

4211 W. Boy Scout Boulevard

Tampa, Florida  33607

Attention:  General Counsel

Telephone:  (813) 871-4120

Telecopy:  (813) 871-4430


If to the Trustee:


The Bank of New York

101 Barclay Street, 8 West

New York, New York 10286

Attention:  Corporate Trust
Administration - Mid-State XIV

Telephone:  (212)815-6140

Telecopy: (212)815-3986


 



 39















If to the Custodian:


Treasury Bank, a division of Countrywide Bank N.A.

4100 E. Los Angeles Avenue

Simi Valley, California 93063

Attention:              Teresita Que

Telephone:            (805) 577-6028

Facsimile:               (805) 577-6069


If to the Agent, Administrative Trustee or Bank Investor:


SunTrust Capital Markets, Inc.

303 Peachtree Street

Mail Code 3950

Atlanta, Georgia  30308

Attention:  Asset Surveillance

Telephone:  (404) 658-4568

Telecopy:  (404) 813-5000

E-mail: 
TPFC.AssetManagement@suntrust.com


Payment Information:


Bank: SunTrust Banks


ABA# 061000104


Acct# 8800171236


Acct. Name: Three Pillars Funding LLC


Attn: Janice Taylor


Reference: Mid-State Trust XIV


Section 8.4.            Governing
Law; Submission to Jurisdiction; Integration.


(a)           THIS LOAN AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.  THE BORROWER HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE
CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS LOAN AGREEMENT, ANY OTHER OPERATIVE DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE BORROWER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.  NOTHING IN THIS SECTION 8.4 SHALL AFFECT
THE RIGHT OF THE AGENT, THE ADMINISTRATIVE TRUSTEE, THE LENDER OR ANY BANK
INVESTOR TO BRING ANY ACTION OR 



 40
 









 


PROCEEDING AGAINST THE BORROWER, OR ANY OF ITS PROPERTY IN THE COURTS
OF OTHER JURISDICTIONS.


(b)           EACH OF THE PARTIES
HERETO HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG ANY OF THEM
ARISING OUT OF, CONNECTED WITH, RELATING TO OR INCIDENTAL TO THE RELATIONSHIP
BETWEEN THEM IN CONNECTION WITH THIS LOAN AGREEMENT OR THE OTHER OPERATIVE
DOCUMENTS.


(c)           This Loan 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 8.5.            Severability;
Counterparts.  This Loan 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
Loan 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.  Delivery by facsimile of an executed
signature page of this Loan Agreement shall be effective as delivery of an
executed counterpart hereof.


Section 8.6.            Successors
and Assigns.


(a)           This Loan Agreement
shall be binding on the parties hereto and their respective successors and
assigns; provided, however, that the Borrower may not assign any
of its rights or delegate any of its duties hereunder without the prior written
consent of the Agent.  Except as set
forth in clause (b) below, no provision of this Loan Agreement shall in any
manner restrict the ability of the Lender or any Bank Investor to assign,
participate, grant security interests in, or otherwise transfer any portion of
its interest under the Operative Documents.


(b)           Any Bank Investor
may assign all or any portion of its Commitment and its interest in the Net
Investment and its other rights and obligations hereunder to any Person with
the written approval of the Administrative Trustee, on behalf of the Lender,
the Agent and, if such assignee is not an Affiliate of the Agent, the
reasonable consent of the Borrower.  Such
Person shall, upon the execution of the Assignment and Assumption Agreement
referred to below, become a Bank Investor hereunder.  In connection with any such assignment, the
assignor shall deliver to the assignee(s) an Assignment and Assumption
Agreement, duly executed, assigning to such assignee a pro rata interest in
such assignor’s Commitment and other obligations hereunder and in the Net
Investment and other rights hereunder, and such assignor shall promptly execute
and deliver all further instruments and documents, and take all further action,
that the assignee may reasonably request, in order to protect, or more fully evidence
the assignee’s right, title and interest in and to such interest and to enable
the Agent, on behalf of 



 41
 









 


such assignee, to exercise or enforce any rights hereunder and under
the other Operative Documents to which such assignor is or, immediately prior
to such assignment, was a party.  Upon
any such assignment, (i) the assignee shall have all of the rights and
obligations of the assignor hereunder and under the other Operative Documents
to which such assignor is or, immediately prior to such assignment, was a party
with respect to such assignor’s Commitment and interest in the Net Investment
for all purposes of this Loan Agreement and under the other Operative Documents
to which such assignor is or, immediately prior to such assignment, was a party
and (ii) the assignor shall have no further obligations with respect to the
portion of its Commitment which has been assigned and shall relinquish its
rights with respect to the portion of its interest in the Net Investment which
has been assigned for all purposes of this Loan Agreement and under the other
Operative Documents to which such assignor is or, immediately prior to such
assignment, was a party.  No such
assignment shall be effective unless a fully executed copy of the related
Assignment and Assumption Agreement shall be delivered to the Agent and the
Borrower.  Upon execution, the Agent
shall deliver a copy of the related Assignment and Assumption Agreement to the
Trustee.  All costs and expenses of the
Agent incurred in connection with any assignment hereunder shall be borne by
the Bank Investor and such assignee.  No
Bank Investor shall assign any portion of its Commitment hereunder without also
simultaneously assigning an equal portion of its interest in the Program
Support Agreement to which it is a party or under which it has acquired a
participation.


(c)           By executing and
delivering an Assignment and Assumption Agreement, the assignor and assignee
thereunder confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Assumption
Agreement, the assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Loan Agreement, the other Operative
Documents or any other instrument or document furnished pursuant hereto or
thereto or the execution, legality, validity, enforceability, genuineness,
sufficiency or value or this Loan Agreement, the other Operative Documents or
any such other instrument or document; (ii) the assignor makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any Eligible Originator, the Originator,
the Depositor, the Back-up Servicer or the Master Servicer or the performance
or observance by the Borrower, any Eligible Originator, the Originator, the
Depositor, the Master Servicer or the Back-up Servicer of any of their
respective obligations under this Loan Agreement, the other Operative Documents
or any other instrument or document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Loan Agreement, each
other Operative Document and such other instruments, documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Assumption Agreement and to purchase such
interest; (iv) such assignee will, independently and without reliance upon the
Agent, or any of its Affiliates, or the assignor and based on such agreements,
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this Loan
Agreement and the other Operative Documents; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Loan Agreement, the other Operative Documents and any
other instrument or document furnished pursuant hereto or thereto as are
delegated to the Agent by the terms hereof or thereof, together with such
powers as are reasonably incidental thereto and to enforce its respective
rights and interests in and under this Loan Agreement, the other Operative
Documents and the Affected Assets; (vi) such assignee agrees that it will
perform in accordance 



 42
 









 


with their terms all of the obligations which by the terms of this Loan
Agreement and the other Operative Documents are required to be performed by it
as the assignee of the assignor; and (vii) such assignee agrees that it will
not institute against the Lender any proceeding of the type referred to in
Section 8.10 prior to the date which is one year and one day after the payment
in full of all Commercial Paper issued by the Lender.


Section 8.7.            Waiver
of Confidentiality.  The Borrower
hereby consents to the disclosure of any non-public information with respect to
it received by the Lender, the Agent, any Bank Investor or the Administrative
Trustee (A) to any of the Lender, any nationally recognized rating agency rating
the Lender’s commercial paper, the Agent, the Liquidity Provider, the Dealers,
or the Credit Support Provider, any other Bank Investor, any dealer or
placement agent of or depositary for the Lender’s Commercial Paper or any of
such Person’s counsel or accountants in relation to this Loan Agreement or (B)
to such other Persons in connection with the enforcement by any such Person of
its rights hereunder or under any other Operative Document.  Such consent shall not extend to information
concerning any Affiliate of the Borrower.


Section 8.8.            Confidentiality
Agreement.


(a)           The Borrower hereby
agrees that it will not disclose the contents of this Loan Agreement or any
other proprietary or confidential information of the Lender, any Bank Investor,
the Agent, the Custodian, the Trustee, the Administrative Trustee, the
Liquidity Provider or the Credit Support Provider to any other Person except
(i) its auditors and attorneys, employees or financial advisors (other
than any commercial bank), and any nationally recognized rating agency,
provided such auditors, attorneys, employees, financial advisors, or rating
agencies are informed of the highly confidential nature of such information or
(ii) as otherwise required by applicable law or order of a court of competent
jurisdiction.


(b)           The Lender, the Bank
Investors, the Agent, the Custodian, the Trustee and the Administrative Trustee
each hereby agrees that it will not disclose the contents of this Loan
Agreement or any other proprietary or confidential information of the Borrower
or any Affiliate of the Borrower obtained solely due to its participation in
the transactions governed by this Loan Agreement and the Operative Documents to
any other Person except (i) its auditors and attorneys, employees or
financial advisors (other than any commercial bank), and any nationally
recognized rating agency, provided such auditors, attorneys, employees,
financial advisors, or rating agencies are informed of the highly confidential
nature of such information, (ii) as otherwise required by applicable law
or order of a court of competent jurisdiction or (iii) as permitted
pursuant to Section 8.7.


Section 8.9.            Liability
of Owner Trustee.  It is expressly
understood and agreed by the parties hereto that (a) this Loan Agreement is executed
and delivered by Wilmington Trust Company, not individually or personally but
solely as Owner Trustee under the Trust Agreement, in the exercise of the
powers and authority conferred and vested in it as the Owner Trustee, (b) each
of the representations, undertakings and agreements herein made on the part of
the Borrower is made and intended not as personal representations, undertakings
and agreements by Wilmington Trust Company but is made and intended for the
purpose for binding only the Borrower, (c) nothing herein contained shall be
construed as creating any liability on 



 43
 









 


Wilmington Trust Company, individually or personally, to perform any
covenant either expressed or implied contained herein, all such liability, if
any, being expressly waived by the other parties hereto and by any Person
claiming by, through or under such parties and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Borrower or be liable for the breach or failure
of any obligation, representation, warranty or covenant made or undertaken by
the Borrower under this Loan Agreement.


Section 8.10.          No
Bankruptcy Petition Against the Lender. 
The Borrower hereby covenants and agrees that, prior to the date which
is one (1) year and one (1) day after the payment in full of all outstanding
Commercial Paper or other indebtedness of the Lender, it will not institute
against, or join any other Person in instituting against, the Lender any
bankruptcy, reorganization, arrangement, insolvency, or liquidation proceedings
or other similar proceeding under the laws of the United States or any state of
the United States.


Section 8.11.          No
Recourse Against Lender. 
Notwithstanding anything to the contrary contained in this Loan
Agreement, the obligations of the Lender under this Loan Agreement and all
other Operative Documents are solely the corporate obligations of the Lender
and shall be payable solely to the extent of funds received from the Borrower
in accordance herewith or from any party to any Operative Document in
accordance with the terms thereof in excess of funds necessary to pay matured
and maturing Commercial Paper.


Section 8.12.          Assignment
by Lender to Conduit Assignee.


(a)           Without limiting
Section 2.13 or 8.6 hereof, the Lender may, from time to time, with prior or
concurrent notice to the Borrower and the Master Servicer, in one transaction
or a series of transactions, assign all or a portion of the Net Investment and
its rights and obligations under this Loan Agreement and any other Operative
Documents to which it is a party to a Conduit Assignee.  Upon and to the extent of such assignment by
the Lender to a Conduit Assignee, (i) such Conduit Assignee shall be the owner
of the assigned portion of the Net Investment, (ii) the related administrator
for such Conduit Assignee will act as the Administrative Trustee for such
Conduit Assignee, with all corresponding rights and powers, express or implied,
granted to the Administrative Trustee hereunder or under the other Operative
Documents, (iii) such Conduit Assignee and its liquidity support provider(s)
and credit support provider(s) and other related parties shall have the benefit
of all the rights and protections provided to the Lender and its Program
Support Provider(s) herein and in the other Operative Documents (including any
limitation on recourse against such Conduit Assignee or related parties, any
agreement not to file or join in the filing of a petition to commence an
insolvency proceeding against such Conduit Assignee, and the right to assign to
another Conduit Assignee as provided in this paragraph), (iv) such Conduit
Assignee shall assume all (or the assigned or assumed portion) of the Lender’s
obligations, if any, hereunder or any other Operative Document, and the Lender
shall be released from such obligations, in each case to the extent of such
assignment, and the obligations of the Lender and such Conduit Assignee shall
be several and not joint, (v) all distributions in respect of the Net
Investment shall be made to the applicable agent or Administrative Trustee, as
applicable, on behalf of the Lender and such Conduit Assignee on a pro rata
basis according to their respective interests, (vi) the definition of the term “CP
Rate” with respect to the portion of the Net Investment funded with
commercial paper 



 44
 









 


issued by the Lender from time to time shall be determined in the
manner set forth in the definition of “CP Rate” applicable to the Lender
on the basis of the interest rate or discount applicable to commercial paper
issued by such Conduit Assignee (rather than the Lender), (vii) the defined
terms and other terms and provisions of this Loan Agreement and the other
Operative Documents shall be interpreted in accordance with the foregoing, and
(viii) if requested by the Agent or Administrative Trustee with respect to the
Conduit Assignee, the parties will execute and deliver such further agreements
and documents and take such other actions as the Agent or such Administrative
Trustee may reasonably request to evidence and give effect to the
foregoing.  No assignment by the Lender
to a Conduit Assignee of all or any portion of the Net Investment shall in any
way diminish the related Bank Investors’ obligation under Section 2.3 to fund
any Investment not funded by the Lender or such Conduit Assignee or to acquire
from the Lender or such Conduit Assignee all or any portion of the Net
Investment pursuant to Section 2.13. 
The Agent shall promptly notify the Trustee of any such assignment.


(b)           In the event that the
Lender makes an assignment to a Conduit Assignee in accordance with clause (a)
above, the Bank Investors: (i) if requested by the Agent, shall terminate their
participation in the applicable Program Support Agreement to the extent of such
assignment, (ii) if requested by the Agent, shall execute (either directly or
through a participation agreement, as determined by the Administrative Trustee)
the program support agreement related to such Conduit Assignee, to the extent
of such assignment, the terms of which shall be substantially similar to those
of the participation or other agreement entered into by such Bank Investor with
respect to the applicable Program Support Agreement (or which shall be
otherwise reasonably satisfactory to SunTrust Capital Markets, Inc. and the
Bank Investors), (iii) if requested by the Lender, shall enter into such
agreements as requested by the Lender pursuant to which they shall be obligated
to provide funding to the Conduit Assignee on substantially the same terms and
conditions as is provided for in this Loan Agreement in respect of the Lender
(or which agreements shall be otherwise reasonably satisfactory to the Lender
and the Bank Investors), and (iv) shall take such actions as the Agent shall
reasonably request in connection therewith.


Section 8.13.          Assignment
by Lender to Program Support Provider. 
The Borrower hereby agrees and consents to the assignment by the Lender
from time to time of all or any part of its rights under, interest in and title
to this Loan Agreement and the Net Investment to any Program Support Provider.


ARTICLE
9


THE
AGENT


Section 9.1.            Appointment
and Authorization of Agent.  Each
Bank Investor and the Lender hereby irrevocably appoints, designates and
authorizes the Agent to take such action on its behalf under the provisions of
this Loan Agreement and each other Operative Document and to exercise such
powers and perform such duties as are expressly delegated to the Agent by the
terms of this Loan Agreement and any other Operative Document, together with
such other powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary
contained elsewhere in this Loan Agreement or in any other Operative Document,
the Agent shall not have any duties or responsibilities, except those expressly
set forth in this Loan 



 45
 









 


Agreement, nor shall the Agent have or be deemed to have any fiduciary
relationship with the Lender or any Investor, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read into
this Loan Agreement or any other Operative Document or otherwise exist against
the Agent.  Without limiting the
generality of the foregoing sentence, the use of the term “agent” in this Loan
Agreement with reference to the Agent is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable Law.  Instead, such term is
used merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties.


Section 9.2.            Delegation
of Duties.  The Agent may execute any
of its duties under this Loan Agreement or any other Operative Document by or
through agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties.  The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.


Section 9.3.            Liability
of Agent.  No Agent-Related Person
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Loan Agreement or any other Operative Document
or the transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any Investor for
any recital, statement, representation or warranty made by the Borrower, any
Eligible Originator, the Originator, the Depositor, the Master Servicer or the
Back-up Servicer, or any officer thereof, contained in this Loan Agreement or
in any other Operative Document, or in any certificate, report, statement or
other document referred to or provided for in, or received by the Agent under
or in connection with, this Loan Agreement or any other Operative Document, or
the validity, effectiveness, genuineness, enforceability or sufficiency of this
Loan Agreement or any other Operative Document, or for any failure of the
Borrower, any Eligible Originator, the Originator, the Depositor, the Master
Servicer, or the Back-up Servicer or any other party to any Operative Document
to perform its obligations hereunder or thereunder.  No Agent-Related Person shall be under any
obligation to the Lender or any Bank Investor to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Loan Agreement or any other Operative Document, or to
inspect the properties, books or records of the Borrower, any Eligible
Originator, the Originator, the Depositor, the Master Servicer, the Back-up
Servicer or any of their respective Affiliates.


Section 9.4.            Reliance
by Agent.


(a)           The Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to the Borrower, any
Eligible Originator, the Originator, the Depositor, the Master Servicer and the
Back-up Servicer), independent accountants and other experts selected by the
Agent.  The Agent shall be fully
justified in failing or refusing to take any action under this Loan Agreement
or any other Operative Document unless it shall first receive such advice or
concurrence of the Majority Investors as it deems appropriate and, if it so
requests, it shall first be indemnified to its 



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satisfaction by the Lender and the Bank Investors against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.  The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Loan Agreement or any other Operative Document in accordance
with a request or consent of the Majority Investors or, if required hereunder,
all Investors and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Investors.


(b)           For purposes of
determining compliance with the conditions specified in Article V, the
Lender and each Bank Investor that has executed this Loan Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to the Lender or such Bank
Investor for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory to
the Lender or such Bank Investor.


Section 9.5.            Notice
of Potential Event of Default, Event of Default Facility, Termination Event or
Servicer Default.  The Agent shall
not be deemed to have knowledge or notice of the occurrence of a Potential
Event of Default, an Event of Default, Facility Termination Event or a Servicer
Default, unless the Agent has received written notice from the Lender, a Bank
Investor or the Borrower referring to this Loan Agreement, describing such
Potential Event of Default, an Event of Default, Facility Termination Event or
Servicer Default and stating that such notice is a “Notice of Potential
Event of Default,” “Notice of Event of Default”, “Notice of
Facility Termination Date” or “Notice of Servicer Default,” as
applicable.  The Agent will notify the
Bank Investors and the Borrower of its receipt of any such notice.  The Agent shall (subject to Section 9.4) take
such action with respect to such Potential Event of Default, Event of Default,
Facility Termination Event or Servicer Default as may be requested by the
Majority Investors, provided, however, that, unless and until the
Agent shall have received any such request, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Potential Event of Default, Event of Default or Servicer
Default as it shall deem advisable or in the best interest of the Lender and
the Bank Investors.


Section 9.6.            Credit
Decision; Disclosure of Information by the Agent.  Each Bank Investor and the Lender
acknowledges that none of the Agent-Related Persons has made any representation
or warranty to it, and that no act by the Agent hereinafter taken, including
any consent to and acceptance of any assignment or review of the affairs of the
Borrower, the Master Servicer, the Back-up Servicer, the Originator, any
Eligible Originator, the Depositor or any of their respective Affiliates, shall
be deemed to constitute any representation or warranty by any Agent-Related
Person to any Bank Investor or the Lender as to any matter, including whether
the Agent-Related Persons have disclosed material information in their
possession.  Each Bank Investor and the
Lender, including any Bank Investor by assignment, represents to the Agent that
it has, independently and without reliance upon any 



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Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Borrower, the Master Servicer, the Back-up Servicer,
the Originator, each Eligible Originator, the Depositor or their respective
Affiliates, and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Loan
Agreement and to extend credit to the Borrower hereunder.  Each Bank Investor and the Lender also
represents that it shall, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Loan Agreement and the other
Operative Documents, and to make such investigations as it deems necessary to
inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Borrower, the Master Servicer,
the Back-up Servicer, each Eligible Originator, the Depositor or the
Originator.  Except for notices, reports
and other documents expressly herein required to be furnished to the Bank
Investors and the Lender by the Agent herein, the Agent shall not have any duty
or responsibility to provide any Investor with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrower, the Master Servicer, the Back-up
Servicer, the Originator, each Eligible Originator, the Depositor or their
respective Affiliates which may come into the possession of any of the
Agent-Related Persons.


Section 9.7.            Indemnification
of the Agent.  Whether or not the
transactions contemplated hereby are consummated, the Bank Investors shall indemnify
upon demand each Agent-Related Person (to the extent not reimbursed by or on
behalf of the Borrower and without limiting the obligation of the Borrower to
do so), pro rata, and hold harmless each Agent-Related Person from and against
any and all Indemnified Amounts incurred by it; provided, however,
that no Bank Investor shall be liable for the payment to any Agent-Related
Person of any portion of such Indemnified Amounts resulting from such Person’s
gross negligence or willful misconduct; provided, however, that
no action taken in accordance with the directions of the Majority Investors
shall be deemed to constitute gross negligence or willful misconduct for
purposes of this Section.  Without
limitation of the foregoing, each Bank Investor shall reimburse the Agent upon
demand for its ratable share of any costs or out-of-pocket expenses (including
attorney’s fees) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Loan Agreement, any
other Operative Document, or any document contemplated by or referred to
herein, to the extent that the Agent is not reimbursed for such expenses by or
on behalf of the Borrower.  The
undertaking in this Section 9.7 shall survive payment of all Aggregate Unpaids
and the resignation or replacement of the Agent.


Section 9.8.            Agent
in Individual Capacity.  SunTrust
Capital Markets, Inc. (and any successor acting as Agent) and its Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with any of the
Borrower, the Originator, any Eligible Originator, the Depositor, the Master
Servicer and the Back-up Servicer or any of their Subsidiaries or Affiliates as
though SunTrust Capital Markets, Inc. were not the Agent or a Bank Investor
hereunder and without notice to or consent of the Lender or the Bank
Investors.  The Bank Investors
acknowledge that, pursuant to such activities, SunTrust Capital Markets, Inc.
or its Affiliates may receive information regarding the Borrower, the
Originator, the Master Servicer, each Eligible Originator, the Depositor or
their respective Affiliates (including information that may be subject to
confidentiality obligations in favor of such Person) and acknowledge that the Agent
shall be under no obligation to provide such information to them.  With respect to its Commitment, SunTrust
Capital Markets, Inc. (and any successor acting as Agent) in its capacity as a
Bank Investor hereunder shall have the same rights and powers 



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under this Loan Agreement as any other Bank Investor and may exercise
the same as though it were not the Agent or a Bank Investor, and the term “Bank
Investor” or “Bank Investors” shall, unless the context otherwise
indicates, include the Agent in its individual capacity.


Section 9.9.            Resignation
of Agent.  The Agent may resign as
Agent upon thirty (30) days’ notice to the Borrower, the Bank Investors and the
Lender.  If the Agent resigns under this
Loan Agreement, the Majority Investors shall appoint, with the consent of the
Borrower, which consent shall not unreasonably be withheld, from among the Bank
Investors a successor agent for the Bank Investors.  If no successor agent is appointed prior to
the effective date of the resignation of the Agent, the Agent may appoint,
after consulting with the Bank Investors a successor agent from among the Bank
Investors and, with the consent of the Borrower, which consent shall not
unreasonably be withheld.  Upon the
acceptance of its appointment as successor agent hereunder, such successor
agent shall succeed to all the rights, powers and duties of the retiring Agent
and the term “Agent” shall mean such successor agent and the retiring
Agent’s appointment, powers and duties as Agent shall be terminated.  After any retiring Agent’s resignation
hereunder as Agent, the provisions of this Section 9.9 and Sections 9.3 and 9.7
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Agent under this Loan Agreement.  If no successor agent has accepted
appointment as Agent by the date which is thirty (30) days following a retiring
Agent’s notice of resignation, the retiring Agent’s resignation shall
nevertheless thereupon become effective and the Bank Investors shall perform
all of the duties of the Agent hereunder until such time, if any, as the
Majority Investors appoint a successor agent as provided for above.


Section 9.10.          Payments
by the Agent.  Unless specifically
allocated to a Bank Investor pursuant to the terms of this Loan Agreement, all
amounts received by the Agent on behalf of the Bank Investors shall be paid by
the Agent to the Bank Investors (at their respective accounts specified in
their respective Assignment and Assumption Agreements) pro rata in accordance
with their respective outstanding funded portions of the Net Investment on the
Business Day received by the Agent, unless such amounts are received after
12:00 Noon (New York City time) on such Business Day, in which case the Agent
shall use its reasonable efforts to pay such amounts to the Bank Investors on
such Business Day, but, in any event, shall pay such amounts to the Bank
Investors not later than the following Business Day.


Section 9.11.          Notification
by Agent.


The Agent agrees, upon its receipt of notice of a Facility
Termination Date described in clause (b), (d) or (e) of the definition thereof,
to promptly notify the Borrower of any such occurrence; provided, however,
that no failure to give or any delay in giving such notice shall affect the
occurrence of the Facility Termination Date.


Section 9.12.          Limited
Waiver.


(a)           Pursuant to Section
6.1(e) of the Loan Agreement, an Event of Default shall occur upon the default
by the Borrower in the performance of any material covenant or undertaking  to be performed or observed by the Borrower
under any provision of the Loan Agreement. 
The Borrower hereby inform the Agent of the failure to comply with the
requirement of Section 5.1(l)(i) that the Borrower shall furnish to the Trustee
and the Agent 



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copies of the
form of each proposed amendment to the Trust Agreement, the Master Servicing
Agreement, the Back-up Servicing Agreement or the Subservicing Agreement at
least sixty (60) days prior to the proposed date of adoption of any such
proposed amendment (the “Sixty Day Notice
Event”).  The Borrower
hereby requests that the Agent waive any Event of Default occurring as a result
of such Sixty Day Notice Event.  Subject
to the following, the Agent hereby waives such Event of Default.


(b)           Other than as
provided in subsection (a) above, the Agent has not waived, is not by this
Section 9.12 waiving, and has no intention of waiving, any Event of Default
which may be continuing on the date hereof 
and, other than as provided in this Section 9.12, the Agent has not
agreed to forbear with respect to any of its rights or remedies concerning any
Event of Default which may have occurred or are continuing as of the date
hereof or which may occur after the date hereof.  The Agent reserves the right, in its sole
discretion, to exercise any or all of its rights and remedies under this Loan
Agreement and the other Transaction Documents as a result of any other Event of
Default (other than as described herein) which may be continuing on the date
hereof or any Event of Default which may occur after the date hereof, and Agent
has not waived any of such rights or remedies, and nothing in this Loan
Agreement, and no delay on its part in exercising any such rights or remedies,
should, or shall, be construed as a waiver of any such rights or remedies


[remainder of page intentionally left blank]


[Signature
pages omitted]


 



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