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          3. Representations and Warranties. The Company represents and warrants to Holderthat:          (a) the Company is duly organized and in good standing under the laws of the state of itsformation or organization and has the power to own its property and to carry on its business ineach jurisdiction in which it operates; and          (b) the Note is a legal, valid and binding obligation of the Company, enforceable inaccordance with its terms.          4. Restriction on Subordinated Indebtedness. The Company covenants and agrees thatuntil it has paid to the Holder in full all amounts owing in respect of this Note, the Companyshall not create, incur, issue, assume or guarantee or otherwise become directly or indirectlyliable, contingently or otherwise, with respect to any subordinated indebtedness unless suchindebtedness is contractually subordinated in right of payment to the Note on terms reasonablysatisfactory to the Holder.          5. Events of Default. If any one or more of the following events, herein called“Events of Default”, shall occur, for any reason whatsoever, and whether such occurrenceshall be voluntary or involuntary or come about or be effected by operation of law or pursuant toor in compliance with any judgment, decree or order of a court of competent jurisdiction or anyorder, rule or regulation of any administrative or other governmental authority, and such Event ofDefault shall be continuing:          (a) default shall be made in the payment of the principal of this Note when and as the sameshall become due and payable, whether at maturity or by acceleration or otherwise; or          (b) default shall be made in the payment of any installment of interest on this Note accordingto its terms when and as the same shall become due and payable; or          (c) default shall be made in the due observance or performance of any other covenant,condition or agreement on the part of the Company to be observed or performed pursuant to the termsof this Note, and such default shall continue for thirty (30) days after written notice thereof,specifying such default and requesting that the same be remedied, shall have been given to theCompany by the Holder; or          (d) the entry of a decree or order for relief by a court having jurisdiction in the premisesin respect of the Company in an involuntary case under the Bankruptcy Reform Act of 1978 of theUnited States of America, as amended, 11 U.S.C. Sections 101, etseq. (the “BankruptcyCode”) or any other applicable federal or state bankruptcy, insolvency or other similar laws,or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similarofficial) of the Company or for any substantial part of its property, or ordering the winding-up orliquidation of any of its affairs and the continuance of any such decree or order unstayed and ineffect for a period of sixty (60) consecutive days; or          (e) the commencement by the Company of a voluntary case under the Bankruptcy Code or any otherapplicable federal or state bankruptcy, insolvency or other similar laws, or the consent by it tothe appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian,sequestrator (or other similar official) of the Company or for any substantial part of itsproperty, or the making by it of any assignment for the benefit of creditors, or the admission bythe Company in writingof its inability to pay its debts generally as such debts become due, or the taking ofcorporate action by the Company in furtherance of any such action; or
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          (f) the Company or any of its subsidiaries shall (i) default in making any payment of anyprincipal of any indebtedness for borrowed money (including, without limitation, any guarantee ofany such indebtedness) on the scheduled original due date (giving effect to any amendment,modification or waiver, contemplated as of the date hereof, to the warehouse or residual creditfacilities arranged by Citigroup Group Global Markets Realty Corp. or any of its affiliates) withrespect thereto, (ii) default in making any payment of any interest on any such indebtedness beyondthe period of grace, if any, provided in the instrument or agreement (as in effect on the datehereof and without giving effect to any amendment, modification or waiver thereto that adverselyeffects the Holder unless the Holder provides prior written consent to such amendment, modificationor waiver, other than any amendment, modification or waiver, contemplated as of the date hereof, tothe warehouse or residual credit facilities arranged by Citigroup Group Global Markets Realty Corp.or any of its affiliates), under which such indebtedness was created, or (iii) default in the dueobservance or performance of any other covenant, condition or agreement relating to any suchindebtedness or contained in any instrument or agreement (as in effect on the date hereof withoutgiving effect to any amendment, modification or waiver thereto that adversely effects the Holderunless the Holder provides prior written consent to such amendment, modification or waiver, otherthan any amendment, modification or waiver, contemplated as of the date hereof, to the warehouse orresidual credit facilities arranged by Citigroup Group Global Markets Realty Corp. or any of itsaffiliates), evidencing, securing or relating thereto, or (iv) any other event shall occur orcondition exist, the effect of which default or other event or condition is to cause, or to permitthe holder or beneficiary of such indebtedness (or a trustee or agent on behalf of such holder orbeneficiary) to cause, without the giving of notice if required, such indebtedness to become dueprior to its stated maturity or to become subject to a mandatory offer to purchase by the obligorthereunder or (in the case of any indebtedness constituting a guarantee obligation) to becomepayable;then, in addition to all other rights and remedies available to the Holder at law or in equity orotherwise, (i) if an Event of Default set forth in clauses (d) or (e) of this Section 5 shall occurand be continuing, or shall exist, this Note automatically shall become immediately due andpayable, together with interest accrued thereon, without presentment, demand, protest or notice ofany kind, all of which are expressly waived to the fullest extent permitted by law and (ii) if anEvent of Default other than an Event of Default set forth in clauses (d) or (e) of this Section 5shall occur and be continuing, or shall exist, Holder may, at its option, by notice to the Company,declare this Note to be, and this Note shall thereupon be and become, immediately due and payable,together with interest accrued thereon, without presentment, demand, protest or other notice of anykind, all of which are expressly waived to the fullest extent permitted by law.          6. Remedies on Default, etc. If an Event of Default has occurred and is continuing,the Holder may proceed to protect and enforce its rights by a suit in equity, action at law orother appropriate proceeding, whether for the specific performance of any agreement contained inthis Note, or for an injunction against a violation of any of the terms hereof or in aid of theexercise of any right, power or remedy granted hereby or by law, equity, statute or otherwise. Nocourse of dealing and no delay on the part of the Holder in exercising any right, power or remedywill operate as a waiver thereof or otherwise prejudice the Holder’s rights, powers or remedies.No right, power or remedy conferred hereby is exclusive of any other right, power or remedyreferred to herein or now or hereafter available at law, in equity, by statute or otherwise. Tothe fullest extent permitted by applicable law, the Company hereby agrees to waive, and does herebyabsolutely and irrevocably waive diligence, demand for payment, presentment, notice of dishonor andprotest of this Note and notice of any kind, and the right to interpose any defense, set-off orcounterclaim of any nature or description in any action or proceeding arising on, out of, under orby reason of this Note.          7. Miscellaneous.          (a) Neither this Note nor any term hereof may be amended or waived orally or in writing,except that any term of this Note may be amended and the observance of any term of this Note
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may bewaived (either generally or in a particular instance and either retroactively or prospectively)with (but only with) the written consent of the Company and the Holder. This Note shall inure tothe benefit of the Holder of this Note and the Company and their respective successors and assignsand be binding upon the Holder of this Note and the Company and their respective successors andassigns.          (b) Any notice or communication must be given in writing or delivered in person, or byovernight courier, or by facsimile addressed as follows:          (i) if to the Company:Triad Financial Corporation