Document:

Exhibit
10.6

 

FALCON
FINANCIAL, LLC

FIFTH AMENDMENT TO

REVOLVING WAREHOUSE FINANCING
AGREEMENT

 

This FIFTH AMENDMENT TO REVOLVING WAREHOUSE
FINANCING AGREEMENT (this “Fifth Amendment”) is dated as of November
21, 2003 and entered into by and among Falcon Financial, LLC, SunAmerica Life
Insurance Company, Bank of New York (as successor to LaSalle National Bank) and
ABN AMRO Bank N.V., and is made with reference to the Revolving Warehouse
Financing Agreement dated as of January 7, 1998 by and among the parties hereto
(as amended, the “Warehouse Agreement”). 
Capitalized terms used herein without definition shall have the
respective meanings set forth in the Warehouse Agreement.

WHEREAS, the parties hereto have entered into
the First Amendment to Revolving Warehouse Financing Agreement as of March 25,
1998 (the “First Amendment”), which amended the Warehouse Agreement,
among other things to add new definitions to, and amend and restate existing
definitions in, Article I of the Warehouse Agreement for the purpose of
clarifying certain terms relating to the franchise loans eligible to be
financed under the Warehouse Agreement;

WHEREAS, the parties hereto have entered into
the Second Amendment to Revolving Warehouse Financing Agreement as of October
2, 1998 (the “Second Amendment”), which amended the Warehouse Agreement,
among other things to amend the recitals, add new definitions to, and amend and
restate existing definitions in, Article I of the Warehouse Agreement and amend
certain other sections of the Warehouse Agreement to provide for the financing
of mortgage loans under the Warehouse Agreement;

WHEREAS, the parties hereto have entered into
the Third Amendment to Revolving Warehouse Financing Agreement as of April 19,
1999 (the “Third Amendment”),
which amended the Warehouse Agreement, among other things to reflect the
increase in the working capital facility under the Senior Subordinated Loan
Agreement and the existence of the Junior Subordinated Loan Agreement;

WHEREAS, the parties hereto have entered into the
Fourth Amendment to Revolving Warehouse Financing Agreement as of October 29,
2001 (the “Fourth Amendment”),
which amended the Warehouse Agreement, among other things to temporarily
increase the Facility Limit and to set the Applicable Margin at 3%;

WHEREAS, Customer, SunAmerica and Goldman Sachs
Mortgage Company (“Goldman Sachs”)
have entered into that certain Agreement Relating to Receivables dated as of
October 27, 2003 (the “Receivables Agreement”)
pursuant to which Customer granted SunAmerica and Goldman Sachs certain rights
with respect to approving Customer’s origination 

 

 

1

 

of Receivables
under the Warehouse Agreement and requiring Customer to make Partial
Prepayments of Invested Principal under the circumstances described therein;

WHEREAS, Customer intends to merge with and into
Falcon Financial Investment Trust, a Maryland real estate investment trust (“FFIT”), with FFIT as the surviving entity
(the “Merger”) and to transfer
certain assets to a newly-formed wholly-owned subsidiary of FFIT;

WHEREAS, immediately following the Merger, FFIT will make an initial public
offering of its common shares (the “IPO”;
the date of consummation of the IPO being the “IPO Date”) as described in the Registration Statement on Form
S-11 (Registration No. 333-108603) (the “Registration
Statement”);

WHEREAS, in the event the IPO occurs, Customer desires that the other parties
to the Warehouse Agreement agree to waive the Termination Events resulting from
the Merger and the IPO and that such parties consent to the substitution of
FFIT as the “Customer” with all the rights and obligations of Customer
thereunder;

WHEREAS, in the event the IPO occurs, the parties desire to reduce the
Applicable Margin to 2%, reduce the Advance Rate to 80% and provide for the
ability of Customer to borrow for general corporate purposes to the extent any
voluntary Partial Prepayments of Invested Principal reduce the Aggregate Amount
Outstanding below 80% of the Net Receivables Balance;

WHEREAS, the parties desire to further amend the Warehouse Agreement as
provided below;

WHEREAS, except as expressly set forth herein,
the parties hereto disclaim any intent to effect a novation or an
extinguishment or discharge of any liability or obligation under the Warehouse
Agreement arising prior to the date of this Fifth Amendment;

NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:

Section 1.                                          AGREEMENTS AND AMENDMENTS
EFFECTIVE AS OF THE DATE OF THIS FIFTH AMENDMENT

The following agreements and amendments to the
Warehouse Agreement will be effective, without further action of the parties,
on the date of this Fifth Amendment (unless otherwise specifically set forth
below).

1.1          Receivables Agreement. 
Attached hereto as Exhibit A is a copy of the Receivables
Agreement.  Facility Agent acknowledges
such agreement and consents to the application of Partial Prepayments of Invested
Principal pursuant to the terms of Section 2.4 thereof.

1.2          Fees.

A.            Extension Fee. 
Not later than the second Business Day after the date of this Fifth
Amendment, Customer shall pay the sum of $750,000 to each of SunAmerica and
Goldman Sachs by wire transfer of immediately available funds to the accounts
specified in the written instructions from each such party delivered to
Customer on the date hereof.

B.            Term Fees. 
Unless the Warehouse Agreement is terminated and all obligations of
Customer to the other parties thereto are paid and satisfied in full prior to
May 1, 2004, Customer shall pay on May 1, 2004 the sum of $1,500,000 to each of
SunAmerica and Goldman Sachs, by wire transfer of immediately available funds
to such account(s) as are specified by them not less than three Business Days
prior to May 1, 2004.  In addition,
unless the Warehouse Agreement is terminated and all obligations of Customer to
the other parties thereto are paid and satisfied in full prior to October 1,
2004, Customer shall pay on October 1, 2004 the sum of $750,000 to each of
SunAmerica and Goldman Sachs, by wire transfer of immediately available funds
to such account(s) as are specified by them not less than three Business Days
prior to October 1, 2004.

C.            Early Exit Fee. 
If the Warehouse Agreement is terminated and all obligations of Customer
to the other parties thereto are paid and satisfied in full prior to October 1,
2004 (an “Early Termination”), Customer shall pay on the date of such Early
Termination, the product of .50% multiplied by the Aggregate Principal Outstanding
immediately prior to such termination, payable one-half to SunAmerica and
one-half to Goldman Sachs, by wire transfer of immediately available funds to
such account(s) as are specified by them not less than three Business Days
prior to the date of such Early Termination; provided, however, that no such
fee shall become payable if such Early Termination occurs in connection with a
Securitization Transaction.

 

2

 

1.3          Amendment of Existing Definitions.  Notwithstanding anything to the
contrary in the Receivables Agreement, Section 1.1 of the Warehouse Agreement
is amended by amending and restating the following definition in its entirety:

“‘Facility
Termination Date’ means October 1, 2004.”

1.4          Additional Definition. 
Section 1.1 of the Warehouse Agreement is amended by adding the
following definition in appropriate alphabetical order:

“‘Fifth Amendment’ means the Fifth Amendment to
this Agreement, dated as of November 21, 2003.”

1.5          Amendment to Section 2.2(b). 
Section 2.2(b) of the Warehouse Agreement is amended by adding the
following at the end thereof:

“Except for those
proposed Receivables set forth on Exhibit B to the Fifth Amendment, no
Receivable shall be originated, and no Investment of Principal with respect
thereto shall be made, after the date of the Fifth Amendment if Customer shall
not have retained an individual to be designated by Customer, with the consent
of SunAmerica, as a compliance consultant on the terms and conditions
reasonably satisfactory to SunAmerica; provided, however, that
notwithstanding the foregoing the Receivable to be originated to each of the
Persons on Exhibit B to the Fifth Amendment (and the applicable Investment of
Principal with respect thereto) may be made by Customer after the date of the
Fifth Amendment.”

1.6          Amendments to Section 5.1.

A.            Effective as of the date of the Fourth
Amendment, Section 1.4 of the Fourth Amendment purporting to amend Section
5.1(k) of the Warehouse Agreement is deleted in its entirety and replaced with
Section 1.7 of this Fifth Amendment below.

B.            Section 5.1 of the Warehouse Agreement is amended by
inserting the following new paragraph immediately following paragraph (k):

“(l)          Credit Committee Consultant.  From the date of the Fifth Amendment until
the Facility Termination Date, Don Grigley (or, in the case of his death,
disability, incapacity or resignation, such other individual appointed by
Customer with the consent of SunAmerica) shall serve as a consultant to
Customer’s credit committee, advising such committee with respect to each
Receivable proposed to be originated by Customer.”

1.7          Amendment to Section 5.2(k). 
Section 5.2(k) of the Warehouse Agreement is amended effective as of the
date of the Fourth Amendment by deleting the reference to “$200,000” in clause
(b) and replacing it with a reference to “$400,000”.

1.8          Amendment
to Section 5.2(r).  Section 5.2(r) of the Warehouse Agreement is
amended and restated in its entirety as follows:

“(r)          Principal Balance of Receivables.  Except with SunAmerica’s express prior
written consent, Customer shall not submit any Receivable as an Eligible
Receivable hereunder, unless:

(i)            the original principal amount of
such Receivable together with the original principal amount of all other
Receivables owing by the Obligor and its Affiliates is less than $15,000,000;
and

(ii)           if the Receivable is a Large
Receivable (as defined below), Customer shall not submit an Investment of
Principal Request in an amount in excess of 70% of the original principal amount
of such Large Receivable; provided, however, that at any time when the
Aggregate Principal Outstanding is (or would be, after giving effect to the
Investment of Principal with respect to such Large Receivable) greater than
$80,000,000, Customer may, subject to the terms of this Agreement, submit an
Investment of Principal Request for such Large Receivable of up to (x) the
Advance Rate multiplied by (y) the lesser of (1) the original principal amount
of such Large Receivable and (2) 10% of the Net Receivables Balance (giving
effect to such Large Receivable).  For
purposes of the foregoing, a “Large Receivable” means a Receivable with an
original principal amount of $10,000,000 or more.”

1.9          Waiver Relating to Rating Agency
Downgrades.  SunAmerica,
Facility Agent, Paying Agent and Custodian acknowledge and agree that effective
on the date hereof, each such party waives the Termination Event pursuant to
Section 7.1(l) of the Warehouse Agreement arising out of the downgrades and
review for possible further downgrades by Moody’s Investors Service and Fitch
of Customer’s 2003 securitization, in each case as described in the most recent
draft of the Registration Statement delivered by Customer to SunAmerica on or
prior to the date hereof.

 

 

3

 

Section 2.                                          AGREEMENTS AND
AMENDMENTS EFFECTIVE AS OF THE IPO DATE.

The following agreements
and amendments to the Warehouse Agreement will be effective, without further
action of the parties, on the IPO Date.

2.1          Waiver of Certain Termination Events Related
to Merger and IPO

A.            Without limiting Customer’s obligations
under Section 2.8(a) of the Warehouse Agreement, SunAmerica, Facility Agent,
Paying Agent and Custodian acknowledge and agree that effective upon the IPO
Date, each such party shall be deemed to have waived the following Termination
Events: (i) pursuant to Section 7.1(f) of the Warehouse Agreement, the breach
of the covenants set forth in Sections 5.2(e), 
5.2(i) and 5.2(l) of the Warehouse Agreement regarding changes to
Customer’s capital structure and transfers of Taxable Non-REIT Assets to a
Taxable REIT Subsidiary Entity (each as defined in Section 2.6 below) in
connection with the Merger, the IPO and FFIT’s existence as a REIT; (ii)
pursuant to Section 7.1(f) of the Warehouse Agreement, the breach of the
covenant set forth in Section 5.2(q) with respect to the change of Customer’s
Fiscal Year and fiscal quarters in connection with the IPO and FFIT’s existence
as a REIT; and (iii) pursuant to Section 7.1(r) of the Warehouse Agreement, the
Change of Control triggered by the Merger and the IPO.

B.            Notwithstanding anything to the contrary
set forth in Section 2.1A, the waivers set forth in Section 2.1A will expire
and be of no further force or effect if (i) the IPO is not consummated on or
prior to February 27, 2004, or (ii) after the date hereof, Customer amends the
Registration Statement in a manner that alters the terms of the common stock
(other than the price per share) offered pursuant thereto (it being understood
that for purposes of this clause (ii), a change in the total number of shares
offered shall not constitute an alteration of the terms of the common stock).

2.2          Consent to Assignment and Substitution. 
Effective upon consummation of the Merger, SunAmerica, Facility Agent,
Paying Agent and Custodian consent to the assignment by Falcon Financial, LLC
and the assumption by FFIT of all of the rights and obligations of Falcon
Financial, LLC under the Warehouse Agreement and the other Transaction
Documents by operation of law pursuant to the Merger and to the substitution of
FFIT as “Customer” under the Warehouse Agreement.

2.3          Repayment and Termination of Subordinated
Loan Agreements.  Customer shall use its
commercially reasonable best efforts to repay in full on the IPO Date (but in
any event Customer shall repay in full no later than the Business Day
immediately following the IPO Date) all principal, interest, fees and costs
then outstanding under each of the Senior Subordinated Loan Agreement and the
Junior Subordinated Loan Agreement and satisfy in full all other outstanding
obligations thereunder.  Following such
repayments in full, Customer and SunAmerica shall, and shall use their
commercially reasonable best efforts to cause the other parties to the Senior
Subordinated Loan Agreement and the Junior Subordinated Loan Agreement to,
terminate the Senior Subordinated Loan Agreement and the Junior Subordinated
Loan Agreement.

 

 

4

 

2.4          UCC Filing Amendments. 
Pursuant to, but without limiting, Customer’s obligations under Section
2.8(a) and Section 7.1(s) of the Warehouse Agreement or any other obligation
thereunder relating to Customer’s maintenance of a first perfected security
interest in the Receivables and any other Warehouse Assets, not later than 5
Business Days after the effective date of the Merger (or such earlier date as
may be required to maintain a first perfected security interest therein),
Customer shall file, at its sole cost and expense, amendments to such UCC
financing statements as are required to be filed with respect to the
Receivables and any other Warehouse Assets to ensure the continued perfection
of the security interests described in Sections 2.8(a) and 7.1(s) of the
Warehouse Agreement following the Merger and the substitution of FFIT as the
“Customer” under the Warehouse Agreement. 
SunAmerica, Goldman Sachs and Facility Agent agree to cooperate with
Customer in all such UCC amendments.

2.5          Amendments to Existing Definitions. 
Section 1.1 of the Warehouse Agreement is amended by amending and
restating the following definitions in their entirety:

“‘Advance Rate’
means 80%.”

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

“‘Applicable Margin’
means, prior to May 1, 2004, 2%, and thereafter 2.5%.”

“‘Change of Control’ means (a) the sale,
transfer, or other disposition of all or substantially all of Customer’s assets
(excluding any such action taken in connection with any Securitization
Transaction or sale of Receivables in the ordinary course of Customer’s
business); or (b) the consummation of a merger or consolidation of Customer
with or into another entity or any other corporate reorganization, if more than
50% of the combined voting power of the continuing or surviving entity’s stock
outstanding immediately after such merger, consolidation or such other
reorganization is owned, directly or indirectly, by Persons who were not
stockholders of Customer immediately prior to such merger, consolidation or
other reorganization.”

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

“‘Indebtedness’
means, with respect to any Person on a consolidated basis: (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of 

 

 

5

 

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

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

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

2.6          Additional Definitions. 
Section 1.1 of the Warehouse Agreement is amended by adding the
following definitions in appropriate alphabetical order:

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

“‘Consolidated Net
Income’ means, for Customer and its Subsidiaries on a consolidated basis,
for any period, the consolidated net income of such Persons for such period as
determined in accordance with GAAP, excluding, however, any net gains or losses
attributable to changes in the value of hedge positions maintained in the
ordinary course of business by Customer and its Subsidiaries, including
pursuant to the Hedge Agreement.”

“‘Consolidated Net
Worth’ means, for Customer and its Subsidiaries on a consolidated basis, as
of a particular date: (a) all amounts which would be included under capital on
a balance sheet of such Person at such date, determined in accordance with
GAAP; less (b) (i) amounts 

 

6

 

owing to such Person from Affiliates, or from
officers, employees, shareholders or other Persons similarly affiliated with
such Person, (ii) intangible assets and (iii) deferred tax liabilities.”

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

“Excess Principal” means the remainder of (x)
the product of (1) the Advance Rate, multiplied by (2) the Net Receivables
Balance, minus (y) the Aggregate Principal Outstanding; provided, that for
purposes of calculating available Excess Principal, the Aggregate Principal
Outstanding will be reduced by Partial Prepayments of Invested Principal only
to the extent made on a voluntary basis by Customer pursuant to Section 2.9(d)
hereof (and will not be reduced by any Partial Prepayments of Invested
Principal required pursuant to this Agreement or Section 2.4 of the Receivables
Agreement).”

“‘FFIT’ means Falcon Financial Investment
Trust, a Maryland real estate investment trust.”

“‘Fiscal Quarter’
means a fiscal quarter of any Fiscal Year; provided, however, that for purposes
of the Financial Condition Covenants, the first fiscal quarter after the IPO
shall be deemed to commence on the IPO Date and end on the last day of the
then-current fiscal quarter of the Fiscal Year.”

“‘IPO’ means the initial public offering of
FFIT’s common shares as described in the Registration Statement on Form S-11
(Registration No. 333-108603).”

“‘IPO Date’ means the date of consummation of
the IPO.”

“Prepayment Tranche Request’ is defined in
Section 2.9(e).”

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

“‘Receivables Agreement” means that certain
Agreement Relating to Receivables dated as of October 27, 2003 among Customer,
SunAmerica and Goldman Sachs Mortgage Company.”

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

“‘Revolving Hedge
Facility’ means a revolving credit facility for the sole purpose of
satisfying Customer’s obligations to fund any Margin Excess (as defined in the
Hedge Agreement) pursuant to the Hedge Agreement.”

“‘Taxable Non-REIT Assets’ means Property of
Customer that Customer’s Board of Director’s determines is necessary to
transfer to a Subsidiary or a grantor trust of which such Subsidiary is the
sole beneficiary (a ‘Taxable REIT Subsidiary Entity’) in order to
establish or maintain FFIT’s status as a REIT under the Code, together with any
other Property principally associated with Customer’s servicing and loan
underwriting business, including, without

 

7

 

limitation, leases, equipment, employment arrangements
and cash, but excluding any Property the transfer of which would constitute a
breach by Customer of Section 5.2(n) hereof.”

2.7          Amendments to Sections 2.2(b), 4.2(b)(iv) and
Form of Investment of Principal Request.  Each of
Sections 2.2(b), 4.2(b)(iv) and item (v) of Exhibit A-1 (Form of Investment of
Principal Request) of the Warehouse Agreement are amended by deleting each reference
to “92%” and replacing it with a reference to “80%”.

2.8          Amendment to Section 2.2(b). 
Section 2.2(b) of the Warehouse Agreement is amended by adding the
following sentence to the end of such Section:

“No Receivable
shall be originated, and no Investment of Principal with respect thereto shall
be made after the date that either Vernon Schwartz or David Karp ceases to be
employed by Customer, for any reason other than such individual’s death,
disability or incapacity, as an executive officer of Customer in the same or
similar capacity and with the same decision making authority as of the date of
the Fifth Amendment.”

2.9          Amendments to Section 2.2(c).

A.            The second sentence of Section 2.2(c) is
amended by adding the following proviso to the end of such sentence:

“; provided, any
Investment of Principal with respect to Excess Principal may be used for any
general corporate purpose of Customer, including working capital requirements.”

B.            The sixth sentence of Section 2.2(c) is
amended by adding the phrase “with respect to which a Receivable is to be
acquired with the proceeds thereof” after the phrase “Prior to any Investment
of Principal”.

C.            The seventh sentence of Section 2.2(c) is
amended and restated in its entirety as follows:

“Upon and subject to the
terms and conditions and in reliance on the representations and warranties set
forth herein, Facility Agent shall cause, in the case of Amsterdam only if
Amsterdam agrees to make the Investment of Principal, the applicable
Purchaser(s) to deposit, or, if applicable, SunAmerica shall deposit on the
requested Funding Date as set forth in the Investment of Principal Request or a
postponement notice, as the case may be, in immediately available funds, an
amount equal to the requested Investment of Principal: (x) for any Investment
of Principal with respect to which a Receivable is to be acquired with the
proceeds thereof, to Escrow Agent’s account as set forth in the Escrow
Agreement, and (y) for any Investment of Principal with respect to Excess
Principal, to Customer’s account designated for such purpose in the relevant
Investment of Principal Request.”

2.10        Amendment to Section 2.2(e). 
Section 2.2(e) of the Warehouse Agreement is amended and restated as
follows:

 

8

 

“(e)         Each Investment of Principal with
respect to which Receivables are to be acquired with the proceeds thereof shall
be in a minimum amount of $1,000,000 and in any amount in excess thereof.  Each such Investment of Principal shall be
in an amount not in excess of the sum of (i) the Advance Rate multiplied by the
face amount of the Eligible Receivable to be acquired with the proceeds of such
Investment of Principal and (ii) the maximum available amount of Excess
Principal.  Each Investment of Principal
with respect to Excess Principal that is not made in connection with an
acquisition of Receivables shall be in a minimum amount of $5,000,000 (or, in
the case the maximum available amount of Excess Principal is less than
$5,000,000, such lesser amount) and in any amount in excess thereof up to
maximum available amount of Excess Principal.”

2.11        Amendment to Section 2.2(g). 
Section 2.2(g) of the Warehouse Agreement is amended by adding the
following phrase at the end of the first sentence thereof:

“or pursuant to
any other Partial Prepayments of Invested Principal”

2.12        Amendment to Section 2.3(e). 
Section 2.3(e) of the Warehouse Agreement is amended by deleting it in
its entirety and replacing it with “[Intentionally Omitted.]”.

2.13        Amendment to Section 2.9. 
Section 2.9 of the Warehouse Agreement is amended by (i) inserting the
phrase “Except as provided in Sections 2.9(c) or (d),” immediately prior to the
word “any” in the first line of paragraph (b) thereof and (ii) inserting the
following new paragraphs immediately following paragraph (b):

“(c)  Customer shall pay mandatory Partial
Prepayments of Invested Principal directly to Facility Agent for application
against the Aggregate Principal Outstanding on the date of such payment as
follows: (i) not later than one Business Day following the IPO, in an amount
not less than the amount by which the Aggregate Principal Outstanding exceeds
80% of the Net Receivables Balance; (ii) at such time and in such amount as may
be required pursuant to Section 2.4 of the Receivables Agreement; and (iii)
except as provided in clause (i) of this Section 2.9(c), on any date that the
Aggregate Principal Outstanding exceeds 80% of the Net Receivables Balance
(other than in connection with any Defaulted Receivable which must be
repurchased within the time period specified in Section 7.1(c)).  Notwithstanding anything in Section 2.5 or
2.6 of this Agreement to the contrary, all payments made pursuant to this
Section 2.9(c) shall be applied by the Facility Agent to reduce the Aggregate
Principal Outstanding.  In connection
with any such mandatory prepayment pursuant to this Section 2.9(c), except in
the case of a prepayment not in excess of $25,000,000 that is made on the
second Business Day following the receipt of a Deficiency Notice pursuant to
the requirements of Section 2.4 of the Receivables Agreement, an Early
Collection Fee shall become due and owing unless Customer makes such payment on
an Interest Payment Date or the last day of a Modified Tranche Period.

(d)  Customer may make voluntary Partial
Prepayments of Invested Principal to the Facility Agent for application against
the Aggregate Principal Outstanding on the date of such payment (i) not later
than one Business Day following the IPO, (ii) on any Interest Payment Date,
(iii) on the last day of any Modified Tranche Period, or (iv) in connection

 

 

9

 

with a voluntary
termination of the obligations to make Investments of Principal and a payment
of all outstanding obligations under this Agreement and the other Transaction
Documents.  In connection with any such
prepayment pursuant to this Section 2.9(d), an Early Collection Fee shall
become due and owing if such prepayments are not made on an Interest Payment
Date or the last day of a Modified Tranche Period.  Notwithstanding anything in Section 2.5 or 2.6 of this Agreement
to the contrary, all payments made pursuant to this Section 2.9(d) shall,
unless otherwise requested by Customer in the written notice specifying the
prepayment, be applied by the Facility Agent to reduce the Aggregate Principal
Outstanding.

(e)  If Customer believes in good faith that an
event giving rise to a mandatory prepayment described in Section 2.9(c) or a
voluntary prepayment pursuant to Section 2.9(d) will take place on a date that
is not an Interest Payment Date, Customer shall give written notice (a “Prepayment Tranche Request”) to SunAmerica,
Facility Agent and Custodian at least three (3) Business Days prior to the
Interest Payment Date preceding such event requesting a Modified Tranche Period
commencing on such Interest Payment Date to and including the Business Day that
the anticipated date of the relevant event is expected to occur, and specifying
the amount of the Aggregate Principal Outstanding to be allocated to such
Modified Tranche Period.  If such
Modified Tranche Period is available and SunAmerica has not determined in its
sole discretion that such Modified Tranche Period is undesirable, the
Prepayment Tranche Request shall constitute irrevocable notice of an election
of such Modified Tranche Period.  If the
anticipated date of the relevant event changes from the date set forth in any
Prepayment Tranche Request, Customer shall, at least three (3) Business Days
prior to the end of the Modified Tranche Period, deliver a new Prepayment
Tranche Request requesting a Modified Tranche Period to commence upon the
expiration of the Tranche Period then in effect.”

2.14        Amendments to Section 2.11.

A.            Paragraph (b) of Section 2.11 of the
Warehouse Agreement is amended by deleting the reference to “8%” and replacing
it with a reference to “20%”.

B.            Section 2.11 of the Warehouse Agreement
is amended by inserting a new paragraph immediately following paragraph (e):

“(f)          Quarterly Financials and Compliance
Certificate.  As soon as available, and
in any event within 45 days after the end of each Fiscal Quarter, Customer
shall deliver to SunAmerica (i) a consolidated balance sheet of Customer and
its Subsidiaries as of the end of such quarter, (ii) a consolidated statement
of income and cash flow of Customer and its Subsidiaries for the period
commencing at the end of the previous quarter (or in the case of the first
Fiscal Quarter following the IPO, commencing on the IPO Date) and ending with
the end of such quarter, and (iii) a consolidated statement of income and cash
flow of Customer and its Subsidiaries for the period commencing on the IPO Date
and ending with the end of such quarter, all in reasonable detail and duly
certified by the chief financial officer of Customer.  Together with each set of quarterly financials pursuant to this
paragraph (f), Customer shall deliver to SunAmerica a certificate of its chief
financial officer (1) stating that no Termination Event has occurred and is
continuing or, if a

 

10

 

Termination Event has
occurred and is continuing, a statement as to the nature thereof and the action
that Customer has taken and proposes to take with respect thereto, and (2)
setting forth the computations used by Customer in determining compliance with
the financial condition covenants set forth in Section 5.1(n).”

2.15        Amendment to Section 3.1. 
Section 3.1(a)  of the Warehouse
Agreement is amended by amending and restating the first sentence thereof in
its entirety as follows:

“Customer is a Maryland
real estate investment trust duly organized, validly existing and subsisting
under the laws of the State of Maryland.”

2.16        Amendments to Section 4.2. 
Paragraphs (c), (d) and (e) of Section 4.2 of the Warehouse Agreement
are amended by adding the following clause to the beginning of each such
paragraph:

“With respect to each
Investment of Principal for which Receivables are to be acquired with the
proceeds thereof,”

2.17        Amendment to Section 5.1.  Section 5.1 of the Warehouse
Agreement is amended by inserting the following new paragraph immediately
following paragraph (m):

“(n)         Financial
Condition Covenants.  Customer shall at
all times comply with the following financial condition covenants (collectively,
the “Financial Condition Covenants”):

(i)            Minimum Consolidated Net Worth.  Customer shall not permit Consolidated Net
Worth at any time to be less than the sum of (a) 80% of the net proceeds to
Customer of the IPO, plus (b) 75% of the net proceeds to Customer of any
subsequent sale or issuance of any equity securities of Customer or its
Subsidiaries.

(ii)           Minimum Consolidated Net Income.  Customer shall not permit Consolidated Net
Income, as of the end of any Fiscal Quarter, to be less than negative $500,000;
provided, however, that as of the end of the first Fiscal Quarter of Fiscal
Year 2004, Customer’s Consolidated Net Income shall not be less than negative
$2,000,000.

(iii)          Maximum Leverage Ratio.  Customer shall not permit the ratio of (x)
Consolidated Total Debt to (y) Consolidated Net Worth to exceed 5:1 at any
time.”

2.18        Amendments to Section 5.2.

A.            Subparagraph (i) of Section 5.2(e) of the
Warehouse Agreement is amended by amending and restating such subparagraph in
its entirety as follows:

“(i)          Customer
and its Subsidiaries may make and own Investments in (1) Eligible Investments,
(2) mortgage backed securities, including, without limitation, private label
mortgage pass through certificates and obligations of Fannie Mae and Freddie
Mac, and (3) investments pursuant to the Hedge Agreement.”

 

11

 

B.            Subparagraph (ii) of Section 5.2(e) of
the Warehouse Agreement is amended by amending and restating such subparagraph
in its entirety as follows:

“(ii)         Customer
may (a) make intercompany loans to the extent expressly permitted in this
Agreement and (b) transfer Taxable Non-REIT Assets to a Taxable REIT Subsidiary
Entity.”

C.            Subparagraph (vi) of Section 5.2(f) of
the Warehouse Agreement is amended by deleting the reference to “$500,000” and
replacing it with a reference to “$1,000,000”.

D.            Paragraph (f) of Section 5.2 of the
Warehouse Agreement is further amended by deleting the “and” at the end of
subparagraph (vii), and adding two new subparagraphs immediately following
subparagraph (viii):

“(ix)         Customer and its Subsidiaries may
become and remain liable with respect to Indebtedness of not more than $10
million pursuant to the Revolving Hedge Facility; and

(x)            Customer may become and remain liable
with respect to the lease obligations of any Subsidiary that are otherwise
permitted under Section 5.2(k) hereof.”

E.             Section 5.2(i) of the Warehouse Agreement
is amended by deleting the “and” at the end of subparagraph (iii), adding “and”
at the end of subparagraph (iv), and adding a new subparagraph (v):

“(v)         Customer may transfer Taxable Non-REIT
Assets to a Taxable REIT Subsidiary Entity.”

F.             Section 5.2(l) of the Warehouse Agreement
is amended by inserting the phrase “and transfers by Customer of Taxable
Non-REIT Assets to a Taxable REIT Subsidiary Entity” immediately following the
phrase “contemplated by this Agreement” in the second line thereof.

G.            Section 5.2(p) of the Warehouse Agreement
is amended and restated in its entirety as follows:

“(p)         Conduct of Business.  Except as otherwise expressly permitted
hereunder, Customer shall not, and shall not permit any of its Subsidiaries to,
engage in any business other than (i) those necessary for, incident to,
connected with, or arising out of the acquisition and servicing of Eligible
Receivables and pursuant to Sale/Leaseback Transactions and the making of
Investments permitted pursuant to Section 5.2(e), and (ii) such other lines of
business as may be consented to by SunAmerica. 
Notwithstanding the foregoing, and except for the conduct of the
servicing and loan underwriting business by the Taxable REIT Subsidiary Entity,
no Subsidiary of Customer shall engage in any business except as contemplated
by the Securitization Transaction to which it is a party.”

2.19        Amendment to Section 7.1.

A.            Section 7.1(a) of the Warehouse Agreement
is amended and restated as follows:

 

 

12

 

“(a)         Customer
shall fail to make any payment or deposit to be made by it hereunder when due
(including pursuant to Section 2.9(c) hereof) or under any Transaction Document
when due; or”

B.            Section 7.1(t) of the Warehouse Agreement
is amended and restated as follows:

“(t)           Customer fails to comply with any of
the Financial Condition Covenants in accordance with Section 5.1(n).”

Section
3.                                          AMENDMENTS EFFECTIVE AS
OF THE TERMINATION OF THE SUBORDINATED LOAN AGREEMENTS.

The following amendments
to the Warehouse Agreement will be effective, without further action of the
parties, upon satisfaction of the covenants set forth in Section 2.3 of this
Fifth Amendment.

3.1          Amendments to Section 2.5(c).

A.            Paragraph (c) of Section 2.5 of the
Warehouse Agreement is amended by deleting subparagraphs (viii), (ix), (x) and
(xi).

B.            Subparagraph (xii) of Section 2.5(c) of
the Warehouse Agreement is amended as follows: (i) by renaming such
subparagraph “(viii),”; and (ii) deleting the word “twelfth” and replacing it
with “eighth.”

3.2          Amendments to Section 2.6(b).

A.            Paragraph (b) of Section 2.6 of the
Warehouse Agreement is amended by deleting subparagraphs (vii), (viii), (ix),
(x), (xi), (xii), (xiii) and (xiv).

B.            Subparagraph (xv) of Section 2.6(c) of
the Warehouse Agreement is amended as follows: (i) by renaming such
subparagraph “(vii),”; and (ii) deleting the word “fifteenth” and replacing it
with “seventh.”

3.3          Amendments to Section 3.1.

A.            Section 3.1 of the Warehouse Agreement is
amended by adding the following clause at the beginning thereof:

“Except as expressly set
forth below,”

B.            Paragraph (v) of Section 3.1 of the
Warehouse Agreement is amended by amending and restating such paragraph in its
entirety as follows:

“(v)         Subordinated Notes.  Customer represents and warrants, but only
at all times prior to repayment in full by Customer of the Senior Subordinated
Loan Agreement and the Junior Subordinated Loan Agreement and the satisfaction
in full all other outstanding obligations thereunder, that: (i) Customer has
the corporate power and authority to issue 

 

 

13

 

the Subordinated Notes
and the Subordinated Notes are the legally valid and binding obligations of
Customer enforceable in accordance with their respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditor’s rights generally or by equitable
principles relating to enforceability; (ii) the subordination provisions of the
Senior Subordinated Loan Agreement and Junior Subordinated Loan Agreement,
respectively, will be enforceable against the holders thereof or Persons party
thereto, as applicable, and all Customer Obligations are within the definition
of “Senior Loan Obligations” included in such provisions; and (iii) the
aggregate principal amount of Senior Subordinated Notes available pursuant to
the Senior Subordinated Loan Agreement is $19,300,000, together with the
aggregate principal amount of the Senior Interest Capitalization Notes
delivered pursuant to the Senior Subordinated Loan Agreement and the aggregate
principal amount of the Junior Subordinated Note available pursuant to the
Junior Subordinated Loan Agreement is $500,000, together with the aggregate
principal amount of the Junior Interest Capitalization Note delivered pursuant
to the Junior Subordinated Loan Agreement.”

3.4          Amendment to Section 3.2.  Section 3.2 of the Warehouse
Agreement is amended by adding the following at the end thereof:

“, provided, however,
that the representations and warranties of Customer in Section 3.1(v) will be
deemed to have been so certified only on each such day prior to repayment in
full by Customer of the Senior Subordinated Loan Agreement and the Junior
Subordinated Loan Agreement and the satisfaction in full all other outstanding
obligations thereunder.”

3.5          Amendments to Section 5.2.

A.            Paragraph (a) of Section 5.2 of the
Warehouse Agreement is amended by deleting the reference following subparagraph
(iii) to “Liens incurred pursuant to the Senior Subordinated Loan Agreement”.

B.            Paragraph (c) of Section 5.2 of the
Warehouse Agreement is amended by deleting the reference to “ and the Senior
Subordinated Loan Agreement,” following the first clause of the sentence.

C.            Paragraph (f) of Section 5.2 of the
Warehouse Agreement is amended as follows: (i) by deleting subparagraph (v)
thereof; and (ii) renaming subparagraphs (vi), (vii), (viii), (ix) and (x)  as “(v)”, “(vi)”, “(vii)”, “(viii)” and
“(ix)”, respectively.

D.            Paragraph (h) of Section 5.2 of the
Warehouse Agreement is amended and restated in its entirety as follows:

“(h)         Restricted Junior Payments.  Customer shall not, and shall not permit any
of its Subsidiaries to, make any Restricted Junior Payment, except that
Customer may make Permitted Tax Distributions.”

 

 

14

 

3.6          Amendment to Section 7.1.  Section 7.1 of the Warehouse
Agreement is amended by deleting the following parenthetical clause to the
introductory clause of Section 7.1 immediately following the phrase “shall
constitute a ‘Termination Event’”:

“(provided, that notwithstanding
the following provisions of this Section 7.1 and in light of the subordinated
position of the obligations under the Junior Subordinated Loan Agreement, an
Event of Default under the Junior Subordinated Loan Agreement, including but
not limited to a failure to make a scheduled interest payment when due, shall
not constitute a Termination Event hereunder):”

Section 4.              MISCELLANEOUS.

4.1          Reference to and effect on the
Warehouse Agreement and other documents relating to the Warehouse Agreement.

A.            On and after the date hereof, each
reference in the Warehouse Agreement to “this Agreement”, “hereunder”,
“hereof”, “herein” or words of like import referring to the Warehouse
Agreement, and each reference in any other document relating to the Warehouse
Agreement to the “Warehouse Agreement”, “thereunder”, “thereof”, or words of
like import referring to the Warehouse Agreement shall mean and be a reference
to the Warehouse Agreement as amended by the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment and this Fifth Amendment.

B.            Except as specifically amended by the
First Amendment, the Second Amendment, the Third Amendment, the Fourth
Amendment and this Fifth Amendment, the Warehouse Agreement and any other
documents relating to the Warehouse Agreement shall remain in full force and
effect and are hereby ratified and confirmed.

C.            The execution, delivery and performance
of the First Amendment, the Second Amendment, the Third Amendment, the Fourth
Amendment and this Fifth Amendment shall not, except as expressly provided
therein and herein, constitute a waiver of any provision of, or operate as a
waiver of any right, power or remedy of the parties under, the Warehouse
Agreement or any other document relating to the Warehouse Agreement.

4.2          Execution in Counterparts.  This Fifth Amendment may be
executed in any number of counterparts, and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts taken together shall constitute
but one and the same instrument.

4.3          Headings.  Section and subsection headings
in this Fifth Amendment are included herein for convenience of reference only
and shall not constitute a part of this Fifth Amendment for any other purpose
or be given any substantive effect.

4.4          Further Assurances.  The parties to this Fifth
Amendment agree to execute and deliver any additional information, documents or
agreements contemplated hereby and/or necessary or appropriate to effect and
perform the actions contemplated hereby and to amend each of the Transaction
Documents, including the Paying Agent Agreement, as is necessary to conform
such documents to the amendments to the Warehouse Agreement set forth herein.

 

 

15

 

4.5          Applicable Law.  THIS FIFTH AMENDMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO AND ALL OTHER ASPECTS HEREOF SHALL
BE DEEMED TO BE MADE UNDER, SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

[Remainder of page
intentionally left blank]

 

16

 

IN WITNESS WHEREOF, the parties hereto have caused this
Fifth Amendment to be executed by their respective duly authorized officers as
of the date first above written.

 

	
  FALCON
  FINANCIAL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ David A. Karp

  
	
   

  	
   

  	
  Name:  David A. Karp

  
	
   

  	
   

  	
  Title:  President

  

 

 

 

	
  SUNAMERICA
  LIFE INSURANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  AIG Global Investment
  Corp.

  
	
  Its:

  	
   

  	
  Investment Advisor

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Thomas Denkler

  
	
   

  	
   

  	
  Name:  Thomas
  Denkler

  
	
   

  	
   

  	
  Title:  Vice
  President

  

 

 

 

	
  THE
  BANK OF NEW YORK, as Paying Agent and Custodian

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Diane Pickett

  
	
   

  	
   

  	
  Name:  Diane Pickett

  
	
   

  	
   

  	
  Title:  Vice President

  

 

 

 

	
  ABN
  AMRO BANK N.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Patricia M. Luken

  
	
   

  	
   

  	
  Name:  Patricia M. Luken

  
	
   

  	
   

  	
  Title:  Group Vice President

  

 

 

	
  By:

  	
   

  	
  /s/ Nancy C. Beese

  
	
   

  	
   

  	
  Name:  Nancy C. Beese

  
	
   

  	
   

  	
  Title:  Group Vice President

  

 

 

 

S-1

 

                ACKNOWLEDGED
AND AGREED as of
the date first above written pursuant to Section 2 of the Participation
Agreement dated as of January 7, 1998 between SunAmerica Life Insurance Company
and the undersigned.

 

	
  GOLDMAN
  SACHS MORTGAGE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  GOLDMAN SACHS REAL ESTATE FUNDING CORP., its general
  partner

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Peter C. Aberg

  
	
   

  	
   

  	
  Name:  Peter C. Aberg

  
	
   

  	
   

  	
  Title:  Vice President

  

 

 

S-2

 

EXHIBIT A

 

RECEIVABLES AGREEMENT

 

(See Attached)

 

 

 

 

FALCON
FINANCIAL, LLC

 

AGREEMENT
RELATING TO RECEIVABLES

 

This AGREEMENT RELATING TO RECEIVABLES (“Agreement”)
is dated as of October 27, 2003 and entered into by and among Falcon Financial,
LLC (“Company”),
SunAmerica Life Insurance Company (“SunAmerica”), and Goldman Sachs Mortgage
Company (“Goldman
Sachs”; and together with SunAmerica, the “Lenders”).  Capitalized terms used herein without
definition have the meanings set forth in Section 5.

 

WHEREAS, Company is the borrower under the
Revolving Warehouse Financing Agreement dated as of January 7, 1998 by and
among Company, SunAmerica, LaSalle National Bank and ABN AMRO Bank N.V. (as
amended, “Warehouse
Agreement”).

 

WHEREAS, Company is the borrower under the
Amended and Restated Senior Subordinated Loan Agreement dated as of January 7,
1998 by and among Company and the Lenders (as amended, “Senior Subordinated  Loan Agreement”).

 

WHEREAS, Lenders provide credit support on
behalf of Company relating to the Warehouse Agreement under the terms of the
Master Agreement and the Participation Agreement dated as of January 7, 1998 by
and between Lenders.

 

WHEREAS, unless extended, the term of Warehouse
Agreement expires on October 27, 2003 and Company desires to extend the term of
the Warehouse Agreement until May 1, 2004, and that Lenders consent to such
extension.

 

WHEREAS, subject to Company’s covenants and
agreements set forth in this Agreement, Lenders consent to such extension of
the Warehouse Agreement.

 

                NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants and agreements set forth herein, the parties
hereto agree as follows:

 

Section 5.              Consent of Lenders to Origination of
Receivables.

Company shall not,
without the approval of Lenders pursuant to this Section 1, originate any
Receivable.

5.1          Submission of Receivable Proposal. 
Prior to originating any Receivable, Company will (i) certify that such
Receivable, if and when originated, will comply with the Loan Origination
Guidelines as then in effect, and (ii) submit to Lenders a Preliminary Due
Diligence Package.

5.2          Review of Receivable Proposal. 
Upon Lenders’ receipt of a complete Preliminary Due Diligence Package,
Lenders will have the right to request, within three (3) Business Days,
additional diligence materials as Lenders may reasonably specify on a
Supplemental Due Diligence List.

 

A-1

 

5.3          Approval of Receivables.

A.            Upon Lenders’ receipt of all of the
Diligence Materials or waiver thereof, Lenders, within five (5) Business Days,
will notify Company of their (i) approval of the origination of the Receivable
on the terms and conditions set forth in the Diligence Materials (an “Approval”), (ii) conditional approval of
the origination of the Receivable (a “Conditional
Approval”), subject to Company’s compliance with the terms and
conditions set forth in such notice (the “Approval
Requirements”), or (iii) disapproval of the origination of the
Receivable (a “Disapproval”), in
each case such Approval, Conditional Approval or Disapproval to be made in
Lenders’ good faith discretion. 
Lenders’ failure to respond to Company within five (5) Business Days
following receipt of all Diligence Materials or written waiver thereof will be
deemed to be a Disapproval of origination of such Receivable.

B.            Upon receipt of an Approval, Company may
(but will not be required to) originate such Receivable, but only on the terms
and conditions set forth in the Diligence Materials.

C.            Upon receipt of a Conditional Approval, Company
will, within 30 days (or such longer or shorter time as expressly set forth in
the Approval Requirements), satisfy each of the Approval Requirements and
deliver to Lenders evidence thereof satisfactory to Lenders in their good faith
discretion.  Upon satisfaction of each
Approval Requirement within the applicable time frame, Lenders will be deemed
to have given Approval to originate the Receivable.  If Company fails to satisfy each of the Approval Requirements
within the applicable time frame, Company will not originate such Receivable
without again complying de novo with
the requirements of this Section 1, unless Lenders have otherwise agreed in
writing.

D.            Company will not submit a Receivable for
origination to an Obligor that was the subject of a Disapproval at any time
within 180 days following such Disapproval, unless Lenders have otherwise
agreed in writing.

Section 6.              Deficient Receivables; Mandatory Reduction of
Invested Principal.

6.1          Basis of Receivables. 
Company will allocate to each Receivable a basis (the “Basis”) which, at the time of the
origination of the Receivable by Company, will be equal to its principal
balance; provided, that the Basis of any Receivable which is acquired from a
third party will be the purchase price paid by Company.  The Basis of each Receivable will be reduced
by any payment (or other return) of principal thereon to the extent such
payment or other return reduces the Invested Principal related to such
Receivable under the Warehouse Agreement.

6.2          Changes in Underwriting Issues. 
With respect to each Receivable, Company will monitor, by making
reasonable inquiries and exercising reasonable care and diligence under the
circumstances, the continuing creditworthiness of Obligor and the status of the
Related Security.  Company will provide
prompt written notice to Lenders of any material change in the actual or
potential risks with respect to the timely and complete satisfaction of
Obligor’s obligations relating to the Receivable under the Contracts related
thereto.

6.3          Deficiency. 
If Lenders determine in their good faith sole discretion that the
aggregate present value of the Receivables is less than the sum of (x) the
aggregate Basis, plus (y) all accrued and unpaid interest on the Aggregate
Principal Outstanding, then a “Deficiency”
will be

 

 

A-2

 

deemed to exist. 
Lenders will provide written notice to Company (a “Deficiency Notice”) setting forth the
aggregate present value of the Receivables as so determined by Lenders, which
may, in the sole discretion of Lenders, be determined by applying the
Deficiency pro rata to all Receivables or to specific Receivables (the
aggregate Basis of Receivables after application of the Deficiency being the “Aggregated Adjusted Basis”).  Thereafter, for purposes of determining the
existence of a Deficiency, the Basis of each Receivable will be deemed to be
the Basis as so adjusted (the “Adjusted Basis”).  Company will cooperate with Lenders in their
assessment of a potential Deficiency and their determination of Aggregate
Adjusted Basis (including but not limited to providing all information and
documentation in the possession or under the control of Company regarding the
Receivables and Related Security as requested by Lenders).

6.4          Mandatory Prepayment of Aggregate Principal
Outstanding.  Company will make, within two Business Days
after receipt of a Deficiency Notice, a prepayment of the Aggregate Principal
Outstanding such that the Aggregate Principal Outstanding will be no greater
than the product of (x) the Advance Rate, multiplied by (y) the Aggregate
Adjusted Basis.  Such prepayment will be
allocated, in the sole discretion of Lenders, either to reduce the Invested
Principal of all Receivables on a pro rata basis or to reduce the Invested
Principal of specific Receivables.  The
Deficiency Notice will include the Lenders’ direction with respect to the
allocation of any such  prepayment.

Section 7.              Extension of Facility Termination Date. 
Concurrently with the execution hereof, SunAmerica will issue a Restart
Notice that extends the Facility Termination Date until May 1, 2004.

Section
8.              Miscellaneous.

8.1          Remedies for Breach.  Company
acknowledges that, in the sole discretion of Lenders, the following will
constitute a Termination Event pursuant to Section 7.1(o) of the Warehouse
Agreement: (i) failure by Company to make any required prepayment of Aggregate
Principal Outstanding pursuant to and within the time period specified in
Section 2.4; or (ii) any other material breach of this Agreement by Company
that remains uncured more than 15 days following receipt of written notice
thereof given by Lenders.  The foregoing
remedy is in addition to any other rights of remedies available to Lenders
under applicable law with respect to such breach by Company.

 

8.2          Amendment.  No amendment, modification,
termination or waiver of any provision of this Agreement, or consent to any
departure by Company therefrom, will be effective without the written consent
of the Lenders.

 

8.3          Successors and Assigns. 
This Agreement will be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns.  Neither Company’s rights or obligations
hereunder nor any interest therein may be assigned or delegated by Company
without the prior written consent of Lenders.

 

8.4          No Waiver; Cumulative Remedies.  No failure
or delay on the part of either Lender in the exercise of any power, right or
privilege hereunder will impair such power, right or privilege

 

 

A-3

 

or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other power, right or
privilege.  All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.

 

8.5          Notices.  Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given will be in writing and may be personally served, telecopied or sent by
United States mail or courier service and will be deemed to have been given
when delivered in person or by courier service, upon receipt of telecopy, or
four (4) Business Days after depositing it in the United States mail,
registered or certified, with postage prepaid and properly addressed.  For the purposes hereof, the address of each
party hereto will be as set forth under such party’s name on the signature pages
hereof or such other address as may be designated by such party in a written
notice delivered to the other parties hereto.

 

8.6          Execution in Counterpart.  This
Agreement may be executed in any number of counterparts, and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts taken together
shall constitute but one and the same instrument.

 

8.7          Headings. 
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.

 

8.8          Further Assurances. 
The parties agree to execute and deliver any additional information, documents
or agreements contemplated hereby and/or necessary or appropriate to effect and
perform the actions contemplated hereby, including but not limited to any
amendments to the Company’s operating agreement or the Senior Subordinated Loan
Agreement as may be necessary to effectuate the covenants and agreements set
forth herein.

 

8.9          Applicable Law. 
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO AND
ALL OTHER ASPECTS HEREOF SHALL BE DEEMED TO BE MADE UNDER, SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.

 

Section
9.              Definitions.

9.1          Terms Defined in Warehouse Agreement. 
The following terms have the respective meanings set forth in the
Warehouse Agreement:

Advance Rate

Aggregate Principal Outstanding

Business Day

Contract

 

 

A-4

 

Hedge Agreement

Interest Payment Date

Invested Principal

Loan Origination Guidelines

Master Agreement

Obligor

Receivable

Related Security

Restart Notice

9.2          Additional Definitions.

“Appraisal” means an appraisal of any Related Security prepared by a
licensed appraiser in accordance with the Uniform Standards of Professional
Appraisal Practice of the Appraisal Foundation, in compliance with the requirements
of Title 11 of the Financial Institution Reform, Recovery and Enforcement Act
and utilizing customary valuation methods such as the income, sales/market or
cost approaches, as any of the same may be updated by recertification from time
to time by the appraiser performing such appraisal.

 

“Diligence Materials” means the Preliminary Due Diligence Package
together with the materials requested in the Supplemental Due Diligence List.

 

“Preliminary Due Diligence Package” means, with respect to any proposed
Receivables, the following due diligence information relating to the applicable
Obligor and the Related Security to be provided by Company to Lenders pursuant
to this Agreement:

 

(i)            a summary memorandum outlining the
proposed Receivable, including potential transaction benefits and all material
underwriting risks, all Underwriting Issues and all other characteristics of
the proposed Receivable and the Obligor that a prudent lender would consider
material;

(ii)           all Contracts, or current drafts
thereof, including without limitation, financing agreements, promissory notes,
mortgages and other loan documents (but excluding secretaries’ and officers’
closing certificates and similar immaterial closing documents) under which such
Receivable is proposed to arise and by which a security interest in the assets
collateralizing such Receivable is proposed to be granted and perfected, in
each case marked to show cumulative changes from Company’s standard form of
such Contract;

(iii)          the charter and other organizational
documents of Obligor;

 

 

A-5

 

(iv)          the agreements, instruments and
documents with respect to claims on or liens against the assets or properties
of Obligor purporting to secure payment of the Receivable;

(v)           current rent roll, if applicable;

(vi)          cash flow pro-forma, plus historical
information, if available;

(vii)         indicative debt service coverage
ratios;

(viii)        indicative loan-to-value ratio;

(ix)           Company’s, any affiliate’s or any of
their respective officers or directors relationship with Obligor or any
affiliate;

(x)            if applicable, Phase I environmental
report (including asbestos and lead paint report);

(xi)           if applicable, engineering and
structural reports;

(xii)          third party reports, to the extent
available and applicable, including:

(a)           current Appraisal;

(b)           Phase II or other follow-up
environmental report if recommended in Phase I;

(c)           seismic reports; and

(d)           operations and maintenance plan with
respect to asbestos containing materials;

(xiii)         to the extent applicable, a list that
specifically identifies any Contracts or other documents that relate to the
Receivable or Related Security but are not in Company’s possession (e.g., a
document relevant to the summary memorandum referenced clause (i) above but
which is in the possession of the master servicer); and

(xiv)        insurance documentation satisfactory to
Lenders in their sole discretion.

“Supplemental Due Diligence List” means, with respect to any proposed
Receivable, information or deliveries concerning the Obligor and/or the Related
Security that Lenders may request in addition to the Preliminary Due Diligence
Package including without limitation a credit approval memorandum representing
the final terms of the underlying Receivable, a final updated loan-to-value
ratio computation and a final debt service coverage ratio computation for such
proposed Receivable.

 

“Underwriting Issues” means with respect to any proposed Receivable,
all information that has come to Company’s attention, based on the making of
reasonable inquiries and the exercise of

 

 

A-6

 

 reasonable care and diligence
under the circumstances, which would be considered a materially “negative”
factor (either separately or in the aggregate with other information), or a
material defect in loan documentation or closing deliveries, to a reasonable
institutional lender in determining whether to originate or acquire the
Receivable in question.

 

[remainder of page
intentionally left blank]

 

 

A-7

 

IN
WITNESS WHEREOF,
the parties hereto have caused this Agreement Relating to Receivables to be
executed by their respective duly authorized officers as of the date first
above written.

 

	
  COMPANY:

  
	
  FALCON FINANCIAL, LLC

  
	
   

  
	
   

  
	
  By: 

  	
  /s/  David A. Karp

  
	
   

  	
  Name:  David A. Karp

  
	
   

  	
  Title:  President

  
	
  Address:

  

 

 

	
  SUNAMERICA:

  
	
   

  	
   

  	
   

  
	
  SUNAMERICA
  LIFE INSURANCE COMPANY

  
	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  AIG
  Global Investment Corp.

  
	
  Its:

  	
   

  	
  Investment
  Advisor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Thomas Denkler

  
	
   

  	
   

  	
  Name:  Thomas Denkler

  
	
   

  	
   

  	
  Title:  Vice President

  
	
  Address:

  

 

 

	
  GOLDMAN
  SACHS:

  
	
   

  	
   

  	
   

  
	
  GOLDMAN
  SACHS MORTGAGE COMPANY

  
	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  GOLDMAN SACHS REAL ESTATE FUNDING CORP., its general
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Peter C. Aberg

  
	
   

  	
   

  	
  Name:  Peter C. Aberg

  
	
   

  	
   

  	
  Title:  Vice President

  
	
  Address:

  

 

 

 

EXHIBIT B

 

RECEIVABLES APPROVED
PRIOR TO APPOINTMENT OF CONSULTANT

 

 

Eddy’s Toyota

Pete Kirill (Schilly Investments)

Yosemite Harley-Davidson

Michael HolleyExhibit
10.14

 

 

 

 

 

 

 

 

 

 

 

 

FALCON
FINANCIAL INVESTMENT TRUST

 

EQUITY INCENTIVE PLAN

 

 

 

 

TABLE OF CONTENTS

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  PURPOSE

  	
  1

  
	
  2.

  	
  DEFINITIONS

  	
  1

  
	
  3.

  	
  ADMINISTRATION OF THE PLAN

  	
  5

  
	
   

  	
  3.1.

  	
  Board

  	
  5

  
	
   

  	
  3.2.

  	
  Committee.

  	
  5

  
	
   

  	
  3.3.

  	
  Terms of Awards.

  	
  6

  
	
   

  	
  3.4.

  	
  Deferral Arrangement.

  	
  7

  
	
   

  	
  3.5.

  	
  No Liability.

  	
  7

  
	
  4.

  	
  SHARES SUBJECT TO THE PLAN

  	
  7

  
	
  5.

  	
  EFFECTIVE DATE, DURATION AND AMENDMENTS

  	
  8

  
	
   

  	
  5.1.

  	
  Effective Date.

  	
  8

  
	
   

  	
  5.2.

  	
  Term.

  	
  8

  
	
   

  	
  5.3.

  	
  Amendment and Termination of the Plan

  	
  8

  
	
  6.

  	
  AWARD ELIGIBILITY AND LIMITATIONS

  	
  8

  
	
   

  	
  6.1.

  	
  Service Providers; Outside Trustees; Other Persons

  	
  8

  
	
   

  	
  6.2.

  	
  Successive Awards.

  	
  8

  
	
   

  	
  6.3.

  	
  Limitation on Shares Subject to Awards and Cash Awards.

  	
  9

  
	
   

  	
  6.4.

  	
  Limitations on Incentive Stock Options.

  	
  9

  
	
   

  	
  6.5.

  	
  Stand-Alone, Additional, Tandem, and Substitute Awards

  	
  9

  
	
  7.

  	
  AWARD AGREEMENT

  	
  9

  
	
  8.

  	
  TERMS AND CONDITIONS OF OPTIONS

  	
  10

  
	
   

  	
  8.1.

  	
  Option Price

  	
  10

  
	
   

  	
  8.2.

  	
  Vesting.

  	
  10

  
	
   

  	
  8.3.

  	
  Term.

  	
  10

  
	
   

  	
  8.4.

  	
  Termination of Service.

  	
  10

  
	
   

  	
  8.5.

  	
  Limitations on Exercise of Option.

  	
  11

  
	
   

  	
  8.6.

  	
  Method of Exercise.

  	
  11

  
	
   

  	
  8.7.

  	
  Rights of Holders of Options

  	
  11

  
	
   

  	
  8.8.

  	
  Delivery of Share Certificates or Book Entry.

  	
  11

  
	
   

  	
  8.9.

  	
  No Option Repricing.

  	
  11

  
	
  9.

  	
  TRANSFERABILITY OF OPTIONS

  	
  12

  
	
   

  	
  9.1.

  	
  Transferability of Options

  	
  12

  
	
   

  	
  9.2.

  	
  Family Transfers.

  	
  12

  
	
  10.

  	
  SHARE APPRECIATION RIGHTS

  	
  12

  
	
   

  	
  10.1.

  	
  Right to Payment.

  	
  12

  
	
   

  	
  10.2.

  	
  Other Terms.

  	
  12

  
	
  11.

  	
  RESTRICTED SHARES AND SHARE UNITS

  	
  13

  
	
   

  	
  11.1.

  	
  Grant of Restricted Shares or Share Units.

  	
  13

  
	
   

  	
  11.2.

  	
  Restrictions.

  	
  13

  
	
   

  	
  11.3.

  	
  Restricted Share Certificates.

  	
  13

  
	
   

  	
  11.4.

  	
  Rights of Holders of Restricted Shares.

  	
  13

  

 

-i-

 

	
   

  	
  11.5.

  	
  Rights of Holders of Share Units.

  	
  14

  
	
   

  	
   

  	
  11.5.1.

  	
  Voting and Dividend Rights.

  	
  14

  
	
   

  	
   

  	
  11.5.2.

  	
  Creditor’s Rights.

  	
  14

  
	
   

  	
  11.6.

  	
  Termination of Service.

  	
  14

  
	
   

  	
  11.7.

  	
  Purchase of Restricted Shares.

  	
  14

  
	
   

  	
  11.8.

  	
  Delivery of Shares.

  	
  14

  
	
  12.

  	
  UNRESTRICTED SHARE AWARDS

  	
  15

  
	
  13.

  	
  FORM OF PAYMENT FOR OPTIONS AND RESTRICTED SHARES

  	
  15

  
	
   

  	
  13.1.

  	
  General Rule.

  	
  15

  
	
   

  	
  13.2.

  	
  Surrender of Shares.

  	
  15

  
	
   

  	
  13.3.

  	
  Cashless Exercise.

  	
  15

  
	
   

  	
  13.4.

  	
  Other Forms of Payment.

  	
  15

  
	
  14.

  	
  DIVIDEND EQUIVALENT RIGHTS

  	
  16

  
	
   

  	
  14.1.

  	
  Dividend Equivalent Rights.

  	
  16

  
	
   

  	
  14.2.

  	
  Termination of Service.

  	
  16

  
	
  15.

  	
  PERFORMANCE AND ANNUAL INCENTIVE AWARDS

  	
  16

  
	
   

  	
  15.1.

  	
  Performance Conditions

  	
  16

  
	
   

  	
  15.2.

  	
  Performance or Annual Incentive Awards Granted to Designated Covered
  Employees

  	
  17

  
	
   

  	
   

  	
  15.2.1.

  	
  Performance Goals Generally.

  	
  17

  
	
   

  	
   

  	
  15.2.2.

  	
  Business Criteria.

  	
  17

  
	
   

  	
   

  	
  15.2.3.

  	
  Timing For Establishing Performance Goals.

  	
  17

  
	
   

  	
   

  	
  15.2.4.

  	
  Performance or Annual Incentive Award Pool.

  	
  18

  
	
   

  	
   

  	
  15.2.5.

  	
  Settlement of Performance or Annual Incentive Awards; Other Terms.

  	
  18

  
	
   

  	
  15.3.

  	
  Written Determinations.

  	
  18

  
	
   

  	
  15.4.

  	
  Status of Section 15.2 Awards Under Code Section 162(m)

  	
  18

  
	
  16.

  	
  PARACHUTE LIMITATIONS

  	
  19

  
	
  17.

  	
  REQUIREMENTS OF LAW

  	
  19

  
	
   

  	
  17.1.

  	
  General.

  	
  19

  
	
   

  	
  17.2.

  	
  Rule 16b-3.

  	
  20

  
	
  18.

  	
  EFFECT OF CHANGES IN CAPITALIZATION

  	
  20

  
	
   

  	
  18.1.

  	
  Changes in Shares.

  	
  20

  
	
   

  	
  18.2.

  	
  Reorganization in Which the Company Is the Surviving Entity Which
  does not Constitute a Corporate Transaction.

  	
  21

  
	
   

  	
  18.3.

  	
  Corporate Transaction.

  	
  21

  
	
   

  	
  18.4.

  	
  Adjustments.

  	
  22

  
	
   

  	
  18.5.

  	
  No Limitations on Company.

  	
  22

  
	
  19.

  	
  GENERAL PROVISIONS

  	
  23

  
	
   

  	
  19.1.

  	
  Disclaimer of Rights

  	
  23

  
	
   

  	
  19.2.

  	
  Nonexclusivity of the Plan

  	
  23

  
	
   

  	
  19.3.

  	
  Withholding Taxes

  	
  23

  
	
   

  	
  19.4.

  	
  Captions

  	
  24

  
	
   

  	
  19.5.

  	
  Other Provisions

  	
  24

  

 

-ii-

 

	
   

  	
  19.6.

  	
  Number And Gender

  	
  24

  
	
   

  	
  19.7.

  	
  Severability

  	
  24

  
	
   

  	
  19.8.

  	
  Governing Law

  	
  24

  

 

-iii-

 

 

 

FALCON FINANCIAL INVESTMENT TRUST

 

EQUITY INCENTIVE PLAN

 

 

                Falcon Financial
Investment Trust, a Maryland real estate investment trust (the “Company”), sets
forth herein the terms of its Equity Incentive Plan (the “Plan”), as follows:

1.                                      PURPOSE

               This Plan is intended to (a) provide
incentive to eligible persons to stimulate their efforts toward the continued
success of the Company and to operate and manage their businesses in a manner
that will provide for the long-term growth and profitability of the Company;
and (b) provide a means of obtaining, rewarding and retaining key
personnel.  To this end, the Plan provides for the grant of share options, share
appreciation rights, restricted shares, shares units, unrestricted shares,
dividend equivalent rights and cash awards. 
Any of these awards may, but need not, be made as performance incentives
to reward attainment of annual or long-term performance goals in accordance
with the terms hereof.  Options granted
under the Plan may be non-qualified stock options or incentive stock options,
as provided herein.

2.                                      DEFINITIONS

               For purposes of
interpreting the Plan and related documents (including Award Agreements), the
following definitions shall apply:

 

2.1           “Affiliate” means, with respect to the Company, any company or
other trade or business that controls, is controlled by or is under common
control with the Company within the meaning of Rule 405 of Regulation C under
the Securities Act, including, without limitation, any Subsidiary.

 

2.2           “Annual Incentive Award” means an Award
made subject to attainment of performance goals (as described in Section 15)
over a performance period of up to and including one year (the fiscal year,
unless otherwise specified by the Committee).

 

2.3           “Award” means a grant of an
Option, Share Appreciation Right, Restricted Shares, Unrestricted Shares, Share
Unit, Dividend Equivalent Rights, or cash award  under the Plan.

 

2.4           “Award Agreement” means the
written agreement between the Company and a Grantee that evidences and sets out
the terms and conditions of an Award.

 

2.5           “Benefit Arrangement” shall
have the meaning set forth in Section 16 hereof.

 

2.6           “Board” means the Board of
Trustees of the Company.

 

 

 

2.7           “Cause”  means, as determined by the Board and
unless otherwise provided in an applicable agreement with the Company or an
Affiliate, (i) gross negligence or willful misconduct in connection with the
performance of duties; (ii) conviction of a criminal offense (other than
minor traffic offenses); or (iii) material breach of any term of any
employment, consulting or other services, confidentiality, intellectual
property or non-competition agreements, if any, between the Service Provider
and the Company or an Affiliate.

 

2.8           “Code” means the Internal
Revenue Code of 1986, as now in effect or as hereafter amended.

 

2.9           “Committee” means the
Compensation Committee of the Board.

 

2.10         “Company” means Falcon
Financial Investment Trust.

 

2.11         “Corporate Transaction” means (i) the dissolution or liquidation of the
Company or a merger, consolidation, or reorganization of the Company with one
or more other entities in which the Company is not the surviving entity, (ii) a
sale of substantially all of the assets of the Company to another person or
entity, or (iii) any transaction (including without limitation a merger or
reorganization in which the Company is the surviving entity) which results in
any person or entity (other than persons who are shareholders or Affiliates
immediately prior to the transaction) owning 50% or more of the combined voting
power of all classes of shares of the Company.

2.12         “Covered Employee” means a Grantee who is a
Covered Employee within the meaning of Section 162(m)(3) of the Code.

2.13         “Disability” means the Grantee is unable to
perform each of the essential duties of such Grantee’s position by reason of a
medically determinable physical or mental impairment which is potentially
permanent in character or which can be expected to last for a continuous period
of not less than 12 months; provided, however, that, with respect to rules
regarding expiration of an Incentive Stock Option following termination of the
Grantee’s Service, Disability shall mean the Grantee is unable to engage in any
substantial gainful activity by reason of a medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months.

2.14         “Dividend Equivalent” means a right,
granted to a Grantee under Section 14 hereof, to receive cash, Shares,
other Awards or other property equal in value to dividends paid with respect to
a specified number of Shares, or other periodic payments.

 

2

 

2.15         “Effective Date” means  November __, 2003.

 

2.16         “Exchange Act” means the Securities
Exchange Act of 1934, as now in effect or as hereafter amended.

 

2.17         “Fair Market Value”  means the value of a Share, determined as
follows:  if on the Grant Date or other
determination date the Shares is listed on an established national or regional
stock exchange, is admitted to quotation on The Nasdaq Stock Market, Inc. or is
publicly traded on an established securities market, the Fair Market Value of a
Share shall be the closing price of the Shares on such exchange or in such
market (if there is more than one such exchange or market the Board shall
determine the appropriate exchange or market) on the Grant Date or such other
determination date (or if there is no such reported closing price, the Fair
Market Value shall be the mean between the highest bid and lowest asked prices
or between the high and low sale prices on such trading day) or, if no sale of
Shares is reported for such trading day, on the next preceding day on which any
sale shall have been reported.  If the
Shares is not listed on such an exchange, quoted on such system or traded on
such a market, Fair Market Value shall be the value of the Shares as determined
by the Board in good faith.

2.18          “Family Member” means a
person who is a spouse, former spouse, child, stepchild, grandchild, parent,
stepparent, grandparent, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law,
including adoptive relationships, of the Grantee, any person sharing the
Grantee’s household (other than a tenant or employee), a trust in which any one or more of these
persons have more than fifty percent of the beneficial interest, a foundation
in which any one or more of these persons (or the Grantee) control the
management of assets, and any other entity in which one or more of these
persons (or the Grantee) own more than fifty
percent of the voting interests.

 

2.19         “Grant Date” means, as
determined by the Board or the Committee, the latest to occur of  (i) the date as of which the
Board or such Committee approves an Award, (ii) the date on which the recipient
of an Award first becomes eligible to receive an Award under Section 6 hereof, or (iii) such other
date as may be specified by the Board or such Committee.

 

2.20         “Grantee” means a person who
receives or holds an Award under the Plan.

 

2.21         “Incentive Stock Option”
means an “incentive stock option” within the meaning of Section 422 of the
Code, or the corresponding provision of any subsequently enacted tax statute,
as amended from time to time.

 

2.22         “Non-qualified Stock Option”
means an Option that is not an Incentive Stock Option.

 

2.23         “Option” means an option to
purchase one or more shares of Shares pursuant to the Plan.

 

 

3

 

2.24         “Option Price” means the
purchase price for each Share subject to an Option.

 

2.25         “Other Agreement” shall have
the meaning set forth in Section 16 hereof.

 

2.26         “Outside Trustee” means a
member of the Board who is not an officer or employee of the Company.

 

2.27         “Performance Award” means an Award made
subject to the attainment of performance goals (as described in Section 15)
over a performance period of more than one year.

2.28         “Plan” means this Falcon
Financial Investment Trust Equity Incentive Plan.

 

2.29         “Purchase Price”  means the purchase price for each Share
pursuant to a grant of Restricted Shares or Unrestricted Shares.

 

2.30         “Reporting Person” means a
person who is required to file reports under Section 16(a) of the Exchange
Act.

 

2.31         “Restricted Shares” means
shares of Shares, awarded to a Grantee pursuant to Section 11 hereof.

 

2.32         “SAR
Exercise Price”
means the per share exercise price of an SAR granted to a Grantee under Section 10
hereof.

 

2.33         “Securities Act” means the
Securities Act of 1933, as now in effect or as hereafter amended.

 

2.34         “Service” means service as an employee, officer, Outside
Trustee or other Service Provider of the Company or an Affiliate.  Unless otherwise stated in the applicable
Award Agreement, a Grantee’s change in position or duties shall not result in
interrupted or terminated Service, so long as such Grantee continues to be an
employee, officer, Outside Trustee or other Service Provider of the Company or
an Affiliate.  Subject to the preceding
sentence, whether a termination of Service shall have occurred for purposes of
the Plan shall be determined by the Board, which determination shall be final,
binding and conclusive.

 

2.35         “Service Provider” means an
employee, officer or Outside Trustee of the Company or an Affiliate, or a
consultant or adviser currently providing services to the Company or an
Affiliate.

 

2.36         “Shares” means the common Shares,
par value $.01 per share, of the Company.

 

 

4

 

2.37         “Share
Appreciation Right”
or “SAR”
means a right granted to a Grantee under Section 10 hereof.

 

2.38         “Share Unit” means a bookkeeping entry
representing the equivalent of a Share, awarded to a Grantee pursuant to Section 11
hereof.

 

2.39         “Subsidiary” means any
“subsidiary corporation” of the Company within the meaning of Section 424(f) of
the Code.

 

2.40         “Termination Date” means the
date upon which an Option shall terminate or expire, as set forth in Section 8.3
hereof.

 

2.41         “Ten Percent Shareholder” means an employee
who owns more than ten percent (10%) of the total combined voting power of all
classes of outstanding shares of the Company, its parent or any of its
Subsidiaries.  In determining share
ownership, the attribution rules of Section 424(d) of the Code shall be
applied.

2.42         
“Unrestricted Shares” means an Award pursuant to Section 12 hereof.

3.                                      ADMINISTRATION OF THE PLAN

3.1.                            Board

                The Board shall
have such powers and authorities related to the administration of the Plan as
are consistent with the Company’s declaration
of trust and bylaws and applicable law. 
The Board shall have full power and authority to take all actions and to
make all determinations required or provided for under the Plan, any Award or
any Award Agreement, and shall have full power and authority to take all such
other actions and make all such other determinations not inconsistent with the
specific terms and provisions of the Plan that the Board deems to be necessary
or appropriate to the administration of the Plan, any Award or any Award
Agreement.  All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous consent of the Board executed in
writing in accordance with the Company’s declaration of trust and bylaws and applicable law.  The interpretation and construction by the
Board of any provision of the Plan, any Award or any Award Agreement shall be
final, binding and conclusive.

3.2.                            Committee.

The Board from
time to time may delegate to the Committee such powers and authorities related
to the administration and implementation of the Plan, as set forth in Section 3.1
above and other applicable provisions, as the Board shall determine, consistent
with the declaration
of trust and bylaws of the Company and applicable law.  The Board may also appoint one or more
separate committees of the Board, each composed of one or more trustees of the
Company who need not be Outside Trustees, who may administer the Plan with
respect to employees or other Service Providers who are not officers or
trustees of the Company, may grant Awards under the Plan to such employees 

 

5

 

or other Service
Providers, and may determine all terms of such Awards.  In the event that the Plan, any Award or any Award Agreement entered into hereunder
provides for any action to be taken by or determination to be made by the Board,
such action may be taken or such determination may be made by the Committee if
the power and authority to do so has been delegated to the Committee by the
Board as provided for in this Section. 
Unless otherwise expressly determined by the Board, any such action or
determination by the Committee shall be final, binding and conclusive.  To the
extent permitted by law, the Committee may delegate its authority under the
Plan to a member of the Board.

3.3.                            Terms of
Awards.

                Subject to the
other terms and conditions of the Plan, the Board shall have full and final
authority to:

 

(i)            designate Grantees,

(ii)           determine the type
or types of Awards to be made to a Grantee,

(iii)          determine the number
of Shares to be subject to an Award,

(iv)          establish the terms
and conditions of each Award (including, but not limited to, the exercise price
of any Option, the nature and duration of any restriction or condition (or
provision for lapse thereof) relating to the vesting, exercise, transfer, or
forfeiture of an Award or the Shares subject thereto, and any terms or
conditions that may be necessary to qualify Options as Incentive Stock
Options),

(v)           prescribe the form of
each Award Agreement evidencing an Award, and

(vi)          amend, modify, or
supplement the terms of any outstanding Award, subject to Section  8.9.  Such authority specifically includes the
authority, in order to effectuate the purposes of the Plan but without amending
the Plan, to modify Awards to eligible individuals who are foreign nationals or
are individuals who are employed outside the United States to recognize
differences in local law, tax policy, or custom.

The Board
shall have the right, in its discretion, to make Awards in substitution or
exchange for any other award under another plan of the Company, any Affiliate,
or any business entity to be acquired by the Company or an Affiliate.  Shares issued pursuant to Awards granted in
substitution for awards held by employees of a business entity acquired by the
Company or an Affiliate shall not count against the shares available for
issuance under the Plan.  The Company
may retain the right in an Award Agreement to cause a forfeiture of the gain
realized by a Grantee on account of actions taken by the Grantee in violation
or breach of or in conflict with any non-competition agreement, any agreement
prohibiting solicitation of employees or clients of the Company or any
Affiliatethereof or any confidentiality obligation with respect to the
Company or any Affiliate  thereof or otherwise in competition with
the Company or any Affiliate thereof, to the extent specified in such Award
Agreement applicable to the Grantee. 
Furthermore, the Company may annul an Award if the Grantee is an
employee of the Company or an Affiliate thereof and is terminated for Cause as
defined in the applicable Award Agreement or the Plan, as 

 

6

 

applicable. The
grant of any Award shall be contingent upon the Grantee executing the
appropriate Award Agreement.

3.4.                            Deferral
Arrangement.

The Board may permit or require the deferral of any
award payment into a deferred compensation arrangement, subject to such rules
and procedures as it may establish, which may include provisions for the
payment or crediting of interest or dividend equivalents, including converting
such credits into deferred Share equivalents and restricting deferrals to
comply with hardship distribution rules affecting 401(k) plans.

3.5.                            No
Liability.

               No member of the
Board or of the Committee shall be liable for any action or determination made
in good faith with respect to the Plan or any Award or Award Agreement.

4.                                      SHARES SUBJECT TO THE PLAN

               Subject to
adjustment as provided in Section 18 hereof, the number of
Shares available for issuance under the Plan shall be 616,9710.  Shares issued or
to be issued under the Plan shall be authorized but unissued shares or treasury
shares.  If any shares covered by an
Award are not purchased or are forfeited, if an Award is settled in cash or if
an Award otherwise terminates without delivery of any Shares subject thereto,
then the number of Shares counted against the aggregate number of shares
available under the Plan with respect to such Award shall, to the extent of any
such forfeiture, cash payment or termination, again be available for making
Awards under the Plan.  If the Option
Price of any Option granted under the Plan, the withholding obligation of any
Grantee with respect to an Option pursuant to Section 19.3 or any other
payment under the Plan is satisfied by tendering Shares to the Company (by
either actual delivery or by attestation) or by withholding Shares, the total
number of shares of Stock issued shall be deemed delivered for purposes of
determining the maximum number of shares of Stock available for delivery under
the Plan.

 

7

 

5.                                      EFFECTIVE DATE, DURATION AND AMENDMENTS

5.1.                            Effective
Date.

               The Plan shall be
effective as of the Effective Date, subject to approval of the Plan by the
Company’s shareholders within one year of the Effective Date.  Upon approval of the Plan by the
shareholders of the Company as set forth above, all Awards made under the Plan
on or after the Effective Date shall be fully effective as if the shareholders
of the Company had approved the Plan on the Effective Date.  If the shareholders fail to approve the Plan
within one year after the Effective Date, any Awards made hereunder shall be
null and void and of no effect.

5.2.                            Term.

               The Plan shall
terminate automatically ten (10) years after the Effective Date and may be
terminated on any earlier date as provided in Section 5.3.

5.3.                            Amendment
and Termination of the Plan

               The Board may, at
any time and from time to time, amend, suspend, or terminate the Plan as to any
Shares as to which Awards have not been made. 
An amendment shall be contingent on approval of the Company’s
shareholders to the extent stated by the Board or required by applicable
law.  In addition, an amendment will be
contingent on approval of the Company’s shareholders if the amendment would (i)
materially increase the benefits accruing to participants under the Plan, (ii)
materially increase the aggregate number of Shares that may be issued under the
Plan, or (iii) materially modify the requirements as to eligibility for
participation in the Plan.  No Awards
shall be made after termination of the Plan. 
No amendment, suspension, or termination of the Plan shall, without the
consent of the Grantee, impair rights or obligations under any Award
theretofore awarded under the Plan.

 

6.                                      AWARD ELIGIBILITY AND LIMITATIONS

6.1.                            Service
Providers; Outside Trustees; Other Persons

               Subject to this Section 6,
Awards may be made under the Plan to: (i) 
any Service Provider to the Company or of any Affiliate, including any
such Service Provider who is an officer or trustee of the Company, or of any
Affiliate, as the Board shall determine and designate from time to time, (ii)
any Outside Trustee, and (iii) any other individual whose participation in the
Plan is determined to be in the best interests of the Company by the Board.

6.2.                            Successive
Awards.

               An eligible person
may receive more than one Award, subject to such restrictions as are provided
herein.

 

8

 

6.3.                            Limitation
on Shares Subject to Awards and Cash Awards.

               During any time when
the Company has a class of equity security registered under Section 12 of the
Exchange Act, but only after such time as the reliance period described in
Treas. Reg. Section 1.162-27(f)(2) has expired:

 

               (i) the maximum
number of Shares subject to Options or SARs that can be issued under the Plan
to any person eligible for an Award under Section 6 hereof is two hundred thousand
(200,000) in any single calendar year;

 

               (ii) the maximum
number of shares that can be issued under the Plan, other than pursuant to an
Option, SAR or time-vested Restricted Shares grant to any person eligible for
an Award under Section 6 hereof is two hundred thousand (200,000) in any
single calendar year; and

 

               (iii) the maximum amount that may be earned as
an Annual Incentive Award or other cash Award in any fiscal year by any one
Grantee shall be $2,000,000 and the maximum amount that may be earned as a
Performance Award or other cash Award in respect of a performance period by any
one Grantee shall be $5,000,000.

 

               The preceding limitations in this Section 6.3
are subject to adjustment as provided in Section 18
hereof.

6.4.                            Limitations
on Incentive Stock Options.

               An Option shall
constitute an Incentive Stock Option only (i) if the Grantee of such Option is
an employee of the Company or any Subsidiary of the Company; (ii) to the extent
specifically provided in the related Award Agreement; and (iii) to the extent
that the aggregate Fair Market Value (determined at the time the Option is
granted) of the Shares with respect to which all Incentive Stock Options held
by such Grantee become exercisable for the first time during any calendar year
(under the Plan and all other plans of the Grantee’s employer and its
Affiliates) does not exceed $100,000. 
This limitation shall be applied by taking Options into account in the
order in which they were granted.

6.5.                            Stand-Alone,
Additional, Tandem, and Substitute Awards

                Awards granted under the Plan
may, in the discretion of the Board, be granted either alone or in addition to,
in tandem with, or in substitution or exchange for, any other Award or any
award granted under another plan of the Company, any Affiliate, or any business
entity to be acquired by the Company or an Affiliate, or any other right of a
Grantee to receive payment from the Company or any Affiliate.  Such additional, tandem, and substitute or
exchange Awards may be granted at any time. 
If an Award is granted in substitution or exchange for another Award,
the Board shall require the surrender of such other Award in consideration for
the grant of the new Award.  In
addition, Awards may be granted in lieu of cash compensation, including in lieu
of cash amounts payable under other plans of the Company or any Affiliate.

7.                                      AWARD AGREEMENT

 

9

 

               Each Award granted
pursuant to the Plan shall be evidenced by an Award Agreement, in such form or
forms as the Board shall from time to time determine.  Award Agreements granted from time to time or at the same time
need not contain similar provisions but shall be consistent with the terms of
the Plan.  Each Award Agreement
evidencing an Award of Options shall specify whether such Options are intended
to be Non-qualified Stock Options or Incentive Stock Options, and in the
absence of such specification such options shall be deemed Non-qualified Stock
Options.

8.                                      TERMS AND CONDITIONS OF OPTIONS

8.1.                            Option Price

               The Option Price of
each Option shall be fixed by the Board and stated in the Award Agreement
evidencing such Option.  The Option
Price of each Option shall be  at
least the Fair Market Value on the Grant Date of a Share; provided, however,
that in the event that a Grantee is a Ten Percent Shareholder, the Option Price
of an Option granted to such Grantee that is intended to be an Incentive Stock
Option shall be not less than 110 percent of the Fair Market Value of a Share
on the Grant Date.  In no case shall the
Option Price of any Option be less than the par value of a Share.

8.2.                            Vesting.

                Subject to Sections 8.3
and 18 hereof, each Option granted under the Plan shall become exercisable at such
times and under such conditions as shall be determined by the Board and stated
in the Award Agreement.  For purposes of
this Section 8.2,
fractional numbers of Shares subject to an Option shall be rounded down to the
next nearest whole number. No Option granted under the Plan shall be
exercisable in whole or in part prior to the date the Plan is approved by the
Shareholders of the Company as provided in Section 5.1 hereof.

8.3.                            Term.

               Each Option granted
under the Plan shall terminate, and all rights to purchase Shares thereunder
shall cease, upon the expiration of ten years from the date such Option is
granted, or under such circumstances and on such date prior thereto as is set
forth in the Plan or as may be fixed by the Board and stated in the Award
Agreement relating to such Option (the “Termination Date”); provided, however,
that in the event that the Grantee is a Ten Percent Shareholder, an Option
granted to such Grantee that is intended to be an Incentive Stock Option shall
not be exercisable after the expiration of five years from its Grant Date.

8.4.                            Termination
of Service.

Each Award
Agreement shall set forth the extent to which the Grantee shall have the right
to exercise the Option following termination of the Grantee’s Service.  Such provisions shall be determined in the
sole discretion of the Board, need not be uniform among all Options issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination of Service.  An Option that
is intended to be an Incentive Stock 

 

10

 

Option shall no
longer exercisable as an Incentive Stock Option ninety (90) days after the
termination of the Grantee’s Service.

8.5.                            Limitations
on Exercise of Option.

               Notwithstanding any
other provision of the Plan, in no event may any Option be exercised, in whole
or in part, prior to the date the Plan is approved by the shareholders of the
Company as provided herein, or after ten years following the Grant Date, or
after the occurrence of an event referred to in Section 18 hereof which
results in termination of the Option.

8.6.                            Method of
Exercise.

               An Option that is
exercisable may be exercised by the Grantee’s delivery to the Company of
written notice of exercise on any business day, at the Company’s principal
office, on the form specified by the Company. 
Such notice shall specify the number of Shares with respect to which the
Option is being exercised and shall be accompanied by payment in full of the
Option Price of the shares for which the Option is being exercised.

 

8.7.                            Rights of
Holders of Options

               Unless otherwise
stated in the applicable Award Agreement, an individual holding or exercising
an Option shall have none of the rights of a shareholder (for example, the
right to receive cash or dividend payments or distributions attributable to the
subject Shares or to direct the voting of the subject Shares ) until the Shares
covered thereby are fully paid and issued to him.  Except as provided in Section 18 hereof, no adjustment shall
be made for dividends, distributions or other rights for which the record date
is prior to the date of such issuance.

8.8.                            Delivery of
Share Certificates or Book Entry.

               Promptly after the exercise
of an Option by a Grantee and the payment in full of the Option Price, such
Grantee shall be entitled to the issuance of a share certificate or
certificates evidencing his or her ownership of the Shares subject to the
Option.  Notwithstanding any other
provision of this Plan to the contrary, the Company may elect to satisfy any
requirement under this Plan for the delivery of share certificates through the
use of book-entry.

.

8.9.                            No Option
Repricing.

               Notwithstanding any
other provision in the Plan to the contrary, the Option Price of an Option may
not be amended or modified after the Grant Date, and an Option may not be
surrendered in consideration of or exchanged for cash, a grant of Restricted
Shares or a new option having an Option Price below that of the Option which
was surrendered or exchanged without approval of the Company’s shareholders.

 

11

 

9.                                      TRANSFERABILITY OF OPTIONS

9.1.                            Transferability
of Options

                Except as provided in Section 9.2,
during the lifetime of a Grantee, only the Grantee (or, in the event of legal
incapacity or incompetency, the Grantee’s guardian or legal representative) may
exercise an Option.  Except as provided
in Section
9.2, no Option shall be assignable or transferable by the Grantee to
whom it is granted, other than by will or the laws of descent and distribution.

9.2.                            Family
Transfers.

                If authorized in the applicable Award Agreement, a
Grantee may transfer, not for value, all or part of an Option which is not an
Incentive Stock Option to any Family Member. 
For the purpose of this Section 9.2, a “not for value” transfer is
a transfer which is (i) a gift, (ii) a transfer under a domestic relations
order in settlement of marital property rights; or (iii) a transfer to an
entity in which more than fifty percent of the voting interests are owned by
Family Members (or the Grantee) in exchange for an interest in that
entity.  Following a transfer under this
Section
9.2, any such Option shall continue to be subject to the same terms
and conditions as were applicable immediately prior to transfer.  Subsequent transfers of transferred Options
are prohibited except to Family Members of the original Grantee in accordance
with this Section
9.2
or by will or the laws of descent and distribution.  The events of termination of Service of Section 8.4 hereof shall
continue to be applied with respect to the original Grantee, following which
the Option shall be exercisable by the transferee only to the extent, and for
the periods specified, in Section 8.4.

 

10.                               SHARE APPRECIATION RIGHTS

The
Board is authorized to grant Share Appreciation Rights (“SARs”) to Grantees on
the following terms and conditions:

10.1.                     Right to Payment.

               A SAR shall confer on the Grantee
to whom it is granted a right to receive, upon exercise thereof, the excess of
(A) the Fair Market Value of one Share on the date of exercise over (B) the
grant price of the SAR as determined by the Board.  The Award Agreement for an SAR shall specify the grant price of
the SAR, which shall  be fixed at the
Fair Market Value of a Share on the date of grant.

10.2.                     Other Terms.

               The Board shall determine at the
date of grant or thereafter, the time or times at which and the circumstances
under which a SAR may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), the time
or times at which SARs shall cease to be or become exercisable following
termination of Service or upon other conditions, the method of exercise, method
of 

 

12

 

settlement, form
of consideration payable in settlement which may be cash or Shares, method by
or forms in which Shares will be delivered or deemed to be delivered to
Grantees, whether or not a SAR shall be in tandem or in combination with any
other Award, and any other terms and conditions of any SAR.

 

11.                               RESTRICTED SHARES AND SHARE UNITS

11.1.                     Grant of Restricted
Shares or Share Units.

               The Board may from
time to time grant Restricted Shares or Share Units to persons eligible to
receive Awards under Section 6 hereof, subject to such
restrictions, conditions and other terms, if any, as the Board may
determine.  Awards of Restricted Shares
may be made for no consideration (other than par value of the shares which is
deemed paid by Services already rendered).

11.2.                     Restrictions.

               At the time a grant
of Restricted Shares or Share Units is made, the Board may, in its sole
discretion, establish a period of time (a “restricted period”) applicable to
such Restricted Shares or Share Units. 
Each Award of Restricted Shares or Share Units may be subject to a
different restricted period.  The Board
may, in its sole discretion, at the time a grant of Restricted Shares or Share
Units is made, prescribe restrictions in addition to or other than the
expiration of the restricted period, including the satisfaction of corporate or
individual performance objectives, which may be applicable to all or any
portion of the Restricted Shares or Share Units in accordance with Section 15.1
and 15.2.  Neither
Restricted Shares nor Share Units may be sold, transferred, assigned, pledged
or otherwise encumbered or disposed of during the restricted period or prior to
the satisfaction of any other restrictions prescribed by the Board with respect
to such Restricted Shares or Share Units.

11.3.                     Restricted Share
Certificates.

               The Company shall
issue, in the name of each Grantee to whom Restricted Shares has been granted,
share certificates representing the total number of Restricted Shares granted
to the Grantee, as soon as reasonably practicable after the Grant Date.  The Board may provide in an Award Agreement
that either (i)  the Secretary of the
Company, or his delegate, shall hold such certificates for the Grantee’s
benefit until such time as the Restricted Shares is forfeited to the Company or
the restrictions lapse, or (ii)  such
certificates shall be delivered to the Grantee, provided, however,
that all such certificates, regardless of whether held by the Secretary, his
delegate or delivered to the Grantee, 
shall bear a legend or legends that comply with the applicable
securities laws and regulations and makes appropriate reference to the
restrictions imposed under the Plan and the Award Agreement.

11.4.                     Rights of Holders
of Restricted Shares.

               Unless the Board
otherwise provides in an Award Agreement, holders of Restricted Shares shall
have the right to vote such Shares and the right to receive any dividends
declared or paid with respect to such Shares. 
The Board may provide that any dividends paid on Restricted Shares must
be reinvested in Shares, which may or may not be subject to 

 

13

 

the same vesting conditions and restrictions applicable to such
Restricted Shares.  All distributions,
if any, received by a Grantee with respect to Restricted Shares as a result of
any share split, share dividend, combination of shares, or other similar
transaction shall be subject to the restrictions applicable to the original
Grant.

11.5.                     Rights of Holders
of Share Units.

11.5.1.             Voting and Dividend Rights.

               Unless the Board
otherwise provides in an Award Agreement, holders of Share Units shall have no
rights as shareholders of the Company. 
The Board may provide in an Award Agreement evidencing a grant of Share
Units that the holder of such Share Units shall be entitled to receive, upon
the Company’s payment of a cash dividend on its outstanding Shares, a cash
payment for each Share Unit held equal to the per-share dividend paid on the
Shares.  Such Award Agreement may also
provide that such cash payment will be deemed reinvested in additional Share
Units at a price per unit equal to the Fair Market Value of a Share on the date
that such dividend is paid.

 

11.5.2.             Creditor’s Rights.

               A holder of Share
Units shall have no rights other than those of a general creditor of the
Company.  Share Units represent an
unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Award Agreement.

11.6.                     Termination of
Service.

               Unless the Board
otherwise provides in an Award Agreement or in writing after the Award Agreement is issued, upon the termination of a Grantee’s Service, any
Restricted Shares or Share Units held by such Grantee that have not vested, or
with respect to which all applicable restrictions and conditions have not
lapsed, shall immediately be deemed forfeited. 
Upon forfeiture of Restricted Shares or Share Units, the Grantee shall
have no further rights with respect to such Award, including but not limited to
any right to vote Restricted Shares or any right to receive dividends with
respect to Restricted Shares or Share Units.

11.7.                     Purchase of
Restricted Shares.

The Grantee shall
be required, to the extent required by applicable law, to purchase the
Restricted Shares from the Company at a Purchase Price equal to the greater of
(i) the aggregate par value of the Shares represented by such Restricted Shares
or (ii) the Purchase Price, if any, specified in the Award Agreement relating
to such Restricted Shares.  The Purchase
Price shall be payable in a form described in Section 13 or, in the
discretion of the Board, in consideration for past Services rendered to the
Company or an Affiliate.

11.8.                     Delivery of Shares.

               Upon the expiration
or termination of any restricted period and the satisfaction of any other
conditions prescribed by the Board, the restrictions applicable to Restricted
Shares or Share Units settled in Shares shall lapse, and, unless otherwise
provided in the Award 

 

14

 

Agreement, a share certificate for such shares shall be delivered, free
of all such restrictions, to the Grantee or the Grantee’s beneficiary or
estate, as the case may be.  Share Units
may also be settled in cash upon the determination of the Board or as specified
in the applicable Award Agreement.

12.                               UNRESTRICTED SHARE AWARDS

                The Board may, in its sole
discretion, grant (or sell at par value or such other higher purchase price
determined by the Board) an Unrestricted Share Award to any Grantee pursuant to
which such Grantee may receive Shares free of any restrictions (“Unrestricted
Shares”) under the Plan.  Unrestricted
Share Awards may be granted or sold as described in the preceding sentence in
lieu of cash bonuses due to such Grantee.

13.                               FORM OF PAYMENT FOR OPTIONS AND RESTRICTED SHARES

13.1.                     General Rule.

Payment of the
Option Price for the shares purchased pursuant to the exercise of an Option or
the Purchase Price for Restricted Shares shall be made in cash or in cash
equivalents acceptable to the Company.

13.2.                     Surrender of
Shares.

To the extent the
Award Agreement so provides, payment of the Option Price for shares purchased
pursuant to the exercise of an Option or the Purchase Price for Restricted
Shares may be made all or in part through the tender to the Company of Shares,
which shares, if acquired from the Company, shall have been held for at least
six months at the time of tender and which shall be valued, for purposes of
determining the extent to which the Option Price or Purchase Price has been
paid thereby, at their Fair Market Value on the date of exercise.

13.3.                     Cashless Exercise.

With respect to an
Option only (and not with respect to Restricted Shares), to the extent the
Award Agreement so provides and subject to compliance with applicable law,
payment of the Option Price for shares purchased pursuant to the exercise of an
Option may be made all or in part by delivery (on a form acceptable to the
Board) of an irrevocable direction to a licensed securities broker acceptable
to the Company to sell Shares and to deliver all or part of the sales proceeds
to the Company in payment of the Option Price and any withholding taxes
described in Section 19.3.

13.4.                     Other Forms of
Payment.

To the extent the Award Agreement so provides, payment of the Option
Price for shares purchased pursuant to exercise of an Option or the Purchase
Price for Restricted 

 

15

 

Shares may be made in any other form that is consistent with applicable
laws, regulations and rules.

14.                               DIVIDEND EQUIVALENT RIGHTS

14.1.                     Dividend Equivalent
Rights.

                A Dividend Equivalent Right is
an Award entitling the recipient to receive credits based on cash distributions
that would have been paid on the Shares specified in the Dividend Equivalent
Right (or other award to which it relates) if such shares had been issued to
and held by the recipient.  A Dividend
Equivalent Right may be granted hereunder to any Grantee only as a component of
an Option Award and only on a one-for-one basis with such Option Award.  The terms and conditions of Dividend
Equivalent Rights shall be specified in the grant.  Dividend Equivalent Rights may be settled in cash or Shares or a
combination thereof, as determined in the sole discretion of the Board.  A Dividend Equivalent Right shall provide
that such Dividend Equivalent Right shall be settled upon the exercise of the
related Option and that the Dividend Equivalent Right shall expire or be forfeited
under the same conditions as the related Option.

14.2.                     Termination of
Service.

                Except as may otherwise be provided by the Board
either in the Award Agreement or in writing after the Award Agreement is
issued, a Grantee’s rights in all Dividend Equivalent Rights or interest
equivalents shall automatically terminate upon the Grantee’s termination of
Service for any reason.

15.                               PERFORMANCE AND ANNUAL INCENTIVE AWARDS

15.1.                     Performance
Conditions

The right of a Grantee
to exercise or receive a grant or settlement of any Award, and the timing thereof,
may be subject to such performance conditions as may be specified by the
Board.  The Board may use such business
criteria and other measures of performance as it may deem appropriate in
establishing any performance conditions, and may exercise its discretion to
reduce the amounts payable under any Award subject to performance conditions,
except as limited under Sections 15.2 hereof in the case of a
Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m).  If and to the extent
required under Code Section 162(m), any power or authority relating to a
Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m), shall be exercised by the Committee and not the Board.

 

16

 

15.2.                     Performance or
Annual Incentive Awards Granted to Designated Covered Employees

If and to the extent
that the Committee determines that a Performance or Annual Incentive Award to
be granted to a Grantee who is designated by the Committee as likely to be a
Covered Employee should qualify as “performance-based compensation” for
purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Performance or Annual Incentive Award shall be contingent upon achievement of
pre-established performance goals and other terms set forth in this Section 15.2.

15.2.1.             Performance Goals Generally.

               The performance goals for such
Performance or Annual Incentive Awards shall consist of one or more business
criteria and a targeted level or levels of performance with respect to each of
such criteria, as specified by the Committee consistent with this Section 15.2.  Performance
goals shall be objective and shall otherwise meet the requirements of Code
Section 162(m) and regulations thereunder including the requirement that the
level or levels of performance targeted by the Committee result in the
achievement of performance goals being “substantially uncertain.”  The Committee may determine that such
Performance or Annual Incentive Awards shall be granted, exercised and/or
settled upon achievement of any one performance goal or that two or more of the
performance goals must be achieved as a condition to grant, exercise and/or
settlement of such Performance or Annual Incentive Awards.  Performance goals may differ for Performance
or Annual Incentive Awards granted to any one Grantee or to different Grantees.

 

15.2.2.             Business Criteria.

               One or more of the following
business criteria for the Company, on a consolidated basis, and/or specified
subsidiaries or business units of the Company (except with respect to the total
shareholder return and earnings per share criteria), shall be used exclusively
by the Committee in establishing performance goals for such Performance or
Annual Incentive Awards: (1) total shareholder return; (2) such total
shareholder return as compared to total return (on a comparable basis) of a
publicly available index such as, but not limited to, the Standard & Poor’s
500 Stock Index; (3) net income; (4) pretax earnings; (5) funds from operation
(FFO), (6) earnings before interest expense, taxes, depreciation and
amortization (EBITDA); (7) pretax operating earnings after interest expense and
before bonuses, service fees, and extraordinary or special items; (8) operating
margin; (9) earnings per share; (10) return on equity; (11) return on assets,
(12) return on capital; (13) return on investment; (14) operating earnings;
(15) working capital; (16) ratio of debt to shareholders’ equity, (17) revenue
and (18) book value.

 

15.2.3.                       Timing For
Establishing Performance Goals.

               Performance goals shall be
established not later than 90 days after the beginning of any performance
period applicable to such Performance or Annual Incentive Awards, or at such
other date as may be required or permitted for “performance-based compensation”
under Code Section 162(m).

 

17

 

15.2.4.                       Performance
or Annual Incentive Award Pool.

               The Committee may establish a
Performance or Annual Incentive Award pool, which shall be an unfunded pool,
for purposes of measuring Company performance in connection with Performance or
Annual Incentive Awards.

 

15.2.5.                       Settlement
of Performance or Annual Incentive Awards; Other Terms.

               Settlement of such Performance or
Annual Incentive Awards shall be in cash, Shares, other Awards or other
property, in the discretion of the Committee. 
The Committee may, in its discretion, reduce the amount of a settlement
otherwise to be made in connection with such Performance or Annual Incentive
Awards.  The Committee shall specify the
circumstances in which such Performance or Annual Incentive Awards shall be
paid or forfeited in the event of termination of Service by the Grantee prior
to the end of a performance period or settlement of Performance Awards.

15.3.                     Written
Determinations.

All determinations by
the Committee as to the establishment of performance goals, the amount of any
Performance Award pool or potential individual Performance Awards and as to the
achievement of performance goals relating to Performance Awards, and the amount
of any Annual Incentive Award pool or potential individual Annual Incentive
Awards and the amount of final Annual Incentive Awards, shall be made in
writing in the case of any Award intended to qualify under Code Section
162(m).  To the extent required to
comply with Code Section 162(m), the Committee may delegate any responsibility
relating to such Performance Awards or Annual Incentive Awards.

15.4.                     Status of Section
15.2 Awards Under Code Section 162(m)

It is the intent of the
Company that Performance Awards and Annual Incentive Awards under Section 15.2
hereof granted to persons who are designated by the Committee as likely to be
Covered Employees within the meaning of Code Section 162(m) and regulations
thereunder shall, if so designated by the Committee, constitute “qualified
performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder.  Accordingly,
the terms of Section 15.2, including the definitions of Covered Employee
and other terms used therein, shall be interpreted in a manner consistent with
Code Section 162(m) and regulations thereunder.  The foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Grantee will be a Covered Employee
with respect to a fiscal year that has not yet been completed, the term Covered
Employee as used herein shall mean only a person designated by the Committee,
at the time of grant of Performance Awards or an Annual Incentive Award, as
likely to be a Covered Employee with respect to that fiscal year.  If any provision of the Plan or any
agreement relating to such Performance Awards or Annual Incentive Awards does
not comply or is inconsistent with the requirements of Code Section 162(m) or
regulations thereunder, such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements.

 

18

 

16.                               PARACHUTE LIMITATIONS

                Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter entered into by a
Grantee with the Company or any Affiliate, except an agreement, contract, or
understanding between the Grantee and the Company or any Affiliate that
modifies or excludes application of this paragraph (an “Other Agreement”), and
notwithstanding any formal or informal plan or other arrangement for the direct
or indirect provision of compensation to the Grantee (including groups or
classes of Grantees or beneficiaries of which the Grantee is a member), whether
or not such compensation is deferred, is in cash, or is in the form of a
benefit to or for the Grantee (a “Benefit Arrangement”), if the Grantee is a
“disqualified individual,” as defined in Section 280G(c) of the Code, any
Option, Restricted Shares or Share Unit held by that Grantee and any right to
receive any payment or other benefit under this Plan shall not become
exercisable or vested (i) to the extent that such right to exercise, vesting,
payment, or benefit, taking into account all other rights, payments, or
benefits to or for the Grantee under this Plan, all Other Agreements, and all
Benefit Arrangements, would cause any payment or benefit to the Grantee under
this Plan to be considered a “parachute payment” within the meaning of
Section 280G(b)(2) of the Code as then in effect (a “Parachute Payment”) and
(ii) if, as a result of receiving a Parachute Payment, the aggregate
after-tax amounts received by the Grantee from the Company under this Plan, all
Other Agreements, and all Benefit Arrangements would be less than the maximum
after-tax amount that could be received by the Grantee without causing any such
payment or benefit to be considered a Parachute Payment.  In the event that the receipt of any such
right to exercise, vesting, payment, or benefit under this Plan, in conjunction
with all other rights, payments, or benefits to or for the Grantee under any
Other Agreement or any Benefit Arrangement would cause the Grantee to be
considered to have received a Parachute Payment under this Plan that would have
the effect of decreasing the after-tax amount received by the Grantee as
described in clause (ii) of the preceding sentence, then the Grantee shall
have the right, in the Grantee’s sole discretion, to designate those rights,
payments, or benefits under this Plan, any Other Agreements, and any Benefit
Arrangements that should be reduced or eliminated so as to avoid having the
payment or benefit to the Grantee under this Plan be deemed to be a Parachute
Payment.

 

17.                               REQUIREMENTS OF LAW

17.1.                     General.

               The Company shall not be required
to sell or issue any Shares under any Award if the sale or issuance of such
shares would constitute a violation by the Grantee, any other individual
exercising an Option, or the Company of any provision of any law or regulation
of any governmental authority, including without limitation any federal or
state securities laws or regulations. 
If at any time the Company shall determine, in its discretion, that the
listing, registration or qualification of any shares  subject to an Award upon any securities exchange or under any
governmental regulatory body is necessary or desirable as a condition of, or in
connection with, the issuance or purchase of shares hereunder, no Shares may be
issued or sold to the Grantee or any other individual exercising an Option
pursuant to such Award 

 

19

 

unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company, and
any delay caused thereby shall in no way affect the date of termination of the
Award.  Specifically, in connection with
the Securities Act, upon the exercise of any Option or the delivery of any
Shares underlying an Award, unless a registration statement under such Act is
in effect with respect to the Shares covered by such Award, the Company shall
not be required to sell or issue such shares unless the Board has received
evidence satisfactory to it that the Grantee or any other individual exercising
an Option may acquire such shares 
pursuant to an exemption from registration under the Securities
Act.  Any determination in this
connection by the Board shall be final, binding, and conclusive.  The Company may, but shall in no event be
obligated to, register any securities covered hereby pursuant to the Securities
Act.  The Company shall not be obligated
to take any affirmative action in order to cause the exercise of an Option or
the issuance of Shares pursuant to the Plan to comply with any law or
regulation of any governmental authority. 
As to any jurisdiction that expressly imposes the requirement that an
Option shall not be exercisable until the Shares covered by such Option are registered
or are exempt from registration, the exercise of such Option (under
circumstances in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.

17.2.                     Rule 16b-3.

               During any time when the Company
has a class of equity security registered under Section 12 of the Exchange Act,
it is the intent of the Company that Awards pursuant to the Plan and the
exercise of Options granted hereunder will qualify for the exemption provided
by Rule 16b-3 under the Exchange Act. 
To the extent that any provision of the Plan or action by the Board does
not comply with the requirements of Rule 16b-3, it shall be deemed inoperative to
the extent permitted by law and deemed advisable by the Board, and shall not
affect the validity of the Plan.  In the
event that Rule 16b-3 is revised or replaced, the Board may exercise its
discretion to modify this Plan in any respect necessary to satisfy the
requirements of, or to take advantage of any features of, the revised exemption
or its replacement.

 

18.                               EFFECT OF CHANGES IN CAPITALIZATION

18.1.                     Changes in Shares.

               If the number of
outstanding Shares is increased or decreased or the Shares are changed into or
exchanged for a different number or kind of shares or other securities of the
Company on account of any recapitalization, reclassification, share split,
reverse split, combination of shares, exchange of shares, share dividend or
other distribution payable in capital shares, or other increase or decrease in
such shares effected without receipt of consideration by the Company occurring
after the Effective Date, the number and kinds of shares for which grants of
Options and other Awards may be made under the Plan shall be adjusted proportionately
and accordingly by the Company.  In
addition, the number and kind of shares for which Awards are outstanding shall
be adjusted proportionately and accordingly so that the proportionate interest
of the Grantee immediately following such event shall, to the extent
practicable, be the same as immediately before such event.  Any such adjustment in 

 

20

 

outstanding Options or SARs shall not change the aggregate Option Price
or SAR Exercise Price payable with respect to shares that are subject to the
unexercised portion of an outstanding Option or SAR, as applicable, but shall
include a corresponding proportionate adjustment in the Option Price or SAR
Exercise Price per share.  The
conversion of any convertible securities of the Company shall not be treated as
an increase in shares effected without receipt of consideration.   Notwithstanding the foregoing, in the event
of any distribution to the Company’s shareholders of securities of any other
entity or other assets without receipt of consideration by the Company, the
Company may, in such manner as the Company deems appropriate, adjust (i) the
number and kind of shares subject to outstanding Awards and/or (ii) the
exercise price of outstanding Options and Share Appreciation Rights to reflect
such distribution.

18.2.                     Reorganization in
which the Company is the Surviving Entity which does not Constitute a Corporate
Transaction.

               Subject to Section 18.3 hereof, if
the Company shall be the surviving entity in any reorganization, merger, or
consolidation of the Company with one or more other entities which does not
constitute a Corporate Transaction, any Option or SAR theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of Shares subject to such Option or SAR would have been
entitled immediately following such reorganization, merger, or consolidation,
with a corresponding proportionate adjustment of the Option Price or SAR
Exercise Price per share so that the aggregate Option Price or SAR Exercise
Price thereafter shall be the same as the aggregate Option Price or SAR
Exercise Price of the shares remaining subject to the Option or SAR immediately
prior to such reorganization, merger, or consolidation.  Subject to any contrary language in an Award
Agreement evidencing an Award, any restrictions applicable to such Award shall
apply as well to any replacement shares received by the Grantee as a result of
the reorganization, merger or consolidation.

18.3.                     Corporate
Transaction.

                             Subject
to the exceptions set forth in the last sentence of this Section 18.3 and the last
sentence of Section 18.4:

 

                             (i)
upon the occurrence of a Corporate Transaction, all outstanding Restricted
Shares shall be deemed to have vested, and all restrictions and conditions
applicable to such Restricted Shares shall be deemed to have lapsed,
immediately prior to the occurrence of such Corporate Transaction, and

 

                             (ii)
either of the following two actions shall be taken:

 

                                            (A)
fifteen days prior to the scheduled consummation of a Corporate Transaction,
all Options and SARs outstanding hereunder shall become immediately exercisable
and shall remain exercisable for a period of fifteen days, or

 

                                            (B)
the Board may elect, in its sole discretion, to cancel any outstanding Awards
of Options, Restricted Shares, and/or SARs and pay or deliver, or cause to be
paid or delivered, to the holder thereof an amount in cash or securities having
a value (as determined 

 

21

 

by the Board acting in good faith), in the case of Restricted Shares,
equal to the formula or fixed price per share paid to holders of Shares and, in
the case of Options or SARs, equal to the product of the number of Shares subject
to the Option or SAR (the “Award Shares”) multiplied by the amount, if any, by
which (I) the formula or fixed price per share paid to holders of Shares
pursuant to such transaction exceeds (II) the Option Price or SAR Exercise
Price applicable to such Award Shares.

 

                             With
respect to the Company’s establishment of an exercise window, (i) any exercise
of an Option or SAR during such fifteen-day period shall be conditioned upon
the consummation of the event and shall be effective only immediately before the
consummation of the event, and (ii) upon consummation of any Corporate
Transaction the Plan, and all outstanding but unexercised Options and SARs
shall terminate.  The Board shall send
written notice of an event that will result in such a termination to all
individuals who hold Options and SARs not later than the time at which the
Company gives notice thereof to its shareholders.  This Section 18.3 shall not apply to any
Corporate Transaction to the extent that provision is made in writing in
connection with such Corporate Transaction for the assumption or continuation
of the Options, SARs and Restricted Shares theretofore granted, or for the
substitution for such Options, SARs and Restricted Shares for new options and
share appreciation rights and new restricted shares relating to the shares of a
successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number of shares (disregarding any consideration that is
not common shares) and option and share appreciation right exercise prices, in
which event the Plan, Options, SARs and Restricted Shares theretofore granted
shall continue in the manner and under the terms so provided.

 

18.4.                     Adjustments.

               Adjustments under
this Section 18
related to Shares or securities of the Company shall be made by the Board,
whose determination in that respect shall be final, binding and
conclusive.  No fractional shares or
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case
by rounding downward to the nearest whole share. The Board shall determine the
effect of a Corporate Transaction upon Awards other than Options, SARs, and
Restricted Shares, and such effect shall be set forth in the appropriate Award
Agreement.  The Board may provide in the
Award Agreements at the time of grant, or any time thereafter with the consent
of the Grantee, for different provisions to apply to an Award in place of those
described in Sections 18.1, 18.2, and 18.3.

18.5.                     No Limitations on
Company.

               The making of Awards
pursuant to the Plan shall not affect or limit in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations, or changes
of its capital or business structure or to merge, consolidate, dissolve, or
liquidate, or to sell or transfer all or any part of its business or assets.

 

22

 

19.                               GENERAL PROVISIONS

19.1.                     Disclaimer of
Rights

               No provision in the
Plan or in any Award or Award Agreement shall be construed to confer upon any
individual the right to remain in the employ or service of the Company or any
Affiliate, or to interfere in any way with any contractual or other right or
authority of the Company either to increase or decrease the compensation or
other payments to any individual at any time, or to terminate any employment or
other relationship between any individual and the Company.  In addition, notwithstanding anything
contained in the Plan to the contrary, unless otherwise stated in the
applicable Award Agreement, no Award granted under the Plan shall be affected
by any change of duties or position of the Grantee, so long as such Grantee
continues to be a trustee, officer, consultant or employee of the Company or an
Affiliate.  The obligation of the
Company to pay any benefits pursuant to this Plan shall be interpreted as a
contractual obligation to pay only those amounts described herein, in the
manner and under the conditions prescribed herein.  The Plan shall in no way be interpreted to require the Company to
transfer any amounts to a third party trustee or otherwise hold any amounts in
trust or escrow for payment to any Grantee or beneficiary under the terms of
the Plan.

19.2.                     Nonexclusivity of
the Plan

               Neither the adoption
of the Plan nor the submission of the Plan to the shareholders of the Company
for approval shall be construed as creating any limitations upon the right and
authority of the Board to adopt such other incentive compensation arrangements
(which arrangements may be applicable either generally to a class or classes of
individuals or specifically to a particular individual or particular
individuals) as the Board in its discretion determines desirable, including,
without limitation, the granting of share options otherwise than under the
Plan.

19.3.                     Withholding Taxes

               The Company or an
Affiliate, as the case may be, shall have the right to deduct from payments of
any kind otherwise due to a Grantee any Federal, state, or local taxes of any
kind required by law to be withheld with respect to the vesting of or other
lapse of restrictions applicable to an Award or upon the issuance of any Shares
upon the exercise of an Option or pursuant to an Award.  At the time of such vesting, lapse, or
exercise, the Grantee shall pay to the Company or the Affiliate, as the case
may be, any amount that the Company or the Affiliate may reasonably determine
to be necessary to satisfy such withholding obligation.  Subject to the prior approval of the Company
or the Affiliate, which may be withheld by the Company or the Affiliate, as the
case may be, in its sole discretion, the Grantee may elect to satisfy such
obligations, in whole or in part, (i) by causing the Company or the
Affiliate to withhold Shares otherwise issuable to the Grantee or (ii) by
delivering to the Company or the Affiliate Shares already owned by the
Grantee.  The Shares so delivered or
withheld shall have an aggregate Fair Market Value equal to such withholding
obligations.  The Fair Market Value of
the Shares used to satisfy such withholding obligation shall be determined by
the Company or the Affiliate as of the date that the amount of tax to be
withheld is to be determined.  A Grantee
who has made an 

 

23

 

election pursuant to this Section 19.3 may satisfy his or her
withholding obligation only with Shares that are not subject to any repurchase,
forfeiture, unfulfilled vesting, or other similar requirements.

19.4.                     Captions

               The use of captions
in this Plan or any Award Agreement is for the convenience of reference only
and shall not affect the meaning of any provision of the Plan or such Award
Agreement.

19.5.                     Other Provisions

               Each Award granted
under the Plan may contain such other terms and conditions not inconsistent
with the Plan as may be determined by the Board, in its sole discretion.

19.6.                     Number And Gender

               With respect to
words used in this Plan, the singular form shall include the plural form, the
masculine gender shall include the feminine gender, etc., as the context
requires.

19.7.                     Severability

               If any provision of
the Plan or any Award Agreement shall be determined to be illegal or
unenforceable by any court of law in any jurisdiction, the remaining provisions
hereof and thereof shall be severable and enforceable in accordance with their
terms, and all provisions shall remain enforceable in any other jurisdiction.

19.8.                     Governing Law

The validity and
construction of this Plan and the instruments evidencing the Award hereunder
shall be governed by the laws of the State of Maryland, other than any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Plan and the instruments evidencing the
Awards granted hereunder to the substantive laws of any other jurisdiction.

 

*    *    *

 

 

24

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}]]