Document:

EXHIBIT
10.1

SUBORDINATED
DELAYED DRAW CREDIT AGREEMENT

among

FIRSTCITY
FINANCIAL CORPORATION

as Borrower

and

THE FINANCIAL
INSTITUTIONS LISTED

ON THE SIGNATURE PAGES HEREOF

as Lenders,

with

BoS (USA) Inc.,

as Agent

Dated as of
September 5, 2007

TABLE OF CONTENTS

	
  Section 1.

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  THE LOANS

  	
   

  	
  1

  
	
  2.1

  	
   

  	
  The Loans

  	
   

  	
  1

  
	
  2.2

  	
   

  	
  Notice of Borrowing

  	
   

  	
  2

  
	
  2.3

  	
   

  	
  The Notes

  	
   

  	
  4

  
	
  2.4

  	
   

  	
  Mandatory Prepayments and Repayments of Loans

  	
   

  	
  4

  
	
  2.5

  	
   

  	
  Voluntary Prepayments of Loans

  	
   

  	
  4

  
	
  2.6

  	
   

  	
  Reduction of Commitments

  	
   

  	
  5

  
	
  2.7

  	
   

  	
  Subordination

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  INTEREST

  	
   

  	
  5

  
	
  3.1

  	
   

  	
  Rate of Interest

  	
   

  	
  5

  
	
  3.2

  	
   

  	
  Interest Payment Dates

  	
   

  	
  5

  
	
  3.3

  	
   

  	
  Past Due Rate

  	
   

  	
  5

  
	
  3.4

  	
   

  	
  Capital Adequacy

  	
   

  	
  6

  
	
  3.5

  	
   

  	
  Determination of Rate of Borrowing

  	
   

  	
  6

  
	
  3.6

  	
   

  	
  Substituted Rate of Borrowing

  	
   

  	
  7

  
	
  3.7

  	
   

  	
  Required Termination and Prepayment

  	
   

  	
  8

  
	
  3.8

  	
   

  	
  Compensation

  	
   

  	
  9

  
	
  3.9

  	
   

  	
  LIBOR Interest Period Determination

  	
   

  	
  9

  
	
  3.10

  	
   

  	
  Conversions

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  FEES

  	
   

  	
  10

  
	
  4.1

  	
   

  	
  Commitment Commission

  	
   

  	
  10

  
	
  4.2

  	
   

  	
  Upfront Fee

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  PAYMENTS, ETC.

  	
   

  	
  10

  
	
  5.1

  	
   

  	
  Currency of Payments

  	
   

  	
  10

  
	
  5.2

  	
   

  	
  Payments on Non-Business Days; Calculations

  	
   

  	
  11

  
	
  5.3

  	
   

  	
  Payment Date and Distribution of Funds

  	
   

  	
  11

  
	
  5.4

  	
   

  	
  Net Payments; Application

  	
   

  	
  12

  
	
  5.5

  	
   

  	
  Distribution by Agent

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
   

  	
  CONDITIONS PRECEDENT TO EFFECTIVENESS

  	
   

  	
  13

  
	
  6.1

  	
   

  	
  Default, etc

  	
   

  	
  13

  
	
  6.2

  	
   

  	
  Notes

  	
   

  	
  14

  
	
  6.3

  	
   

  	
  Supporting Documents of Borrower

  	
   

  	
  14

  
	
  6.4

  	
   

  	
  Officer’s Certificate

  	
   

  	
  14

  
	
  6.5

  	
   

  	
  Certifications; Financial Statements

  	
   

  	
  14

  
	
  6.6

  	
   

  	
  Approvals and Consents

  	
   

  	
  14

  
	
  6.7

  	
   

  	
  Legal Opinions

  	
   

  	
  14

  
	
  6.8

  	
   

  	
  Adverse Change

  	
   

  	
  14

  
	
  6.9

  	
   

  	
  Change in Law; No Opposition

  	
   

  	
  14

  
	
  6.10

  	
   

  	
  All Proceedings to be Satisfactory

  	
   

  	
  15

  
	
  6.11

  	
   

  	
  Fees and Expenses

  	
   

  	
  15

  
	
  6.12

  	
   

  	
  Security Documents, Schedules, etc

  	
   

  	
  15

  

 

 i
 

 

	
  Section 7.

  	
   

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  20

  
	
  7.1

  	
   

  	
  Financial Statements

  	
   

  	
  21

  
	
  7.2

  	
   

  	
  Other Required Notices

  	
   

  	
  23

  
	
  7.3

  	
   

  	
  Payment of Charges

  	
   

  	
  26

  
	
  7.4

  	
   

  	
  Insurance

  	
   

  	
  26

  
	
  7.5

  	
   

  	
  Maintenance of Records

  	
   

  	
  27

  
	
  7.6

  	
   

  	
  Preservation of Existence

  	
   

  	
  27

  
	
  7.7

  	
   

  	
  Preservation of Assets

  	
   

  	
  27

  
	
  7.8

  	
   

  	
  Inspection of Books and Assets

  	
   

  	
  27

  
	
  7.9

  	
   

  	
  Payment of Indebtedness

  	
   

  	
  28

  
	
  7.10

  	
   

  	
  Further Assurances

  	
   

  	
  28

  
	
  7.11

  	
   

  	
  Notice of Default

  	
   

  	
  29

  
	
  7.12

  	
   

  	
  Reserves

  	
   

  	
  29

  
	
  7.13

  	
   

  	
  Representation and Warranties; Covenants as to Other
  Persons, Amendment of Schedules

  	
   

  	
  29

  
	
  7.14

  	
   

  	
  Perform Obligations

  	
   

  	
  30

  
	
  7.15

  	
   

  	
  New Debt and Equity Interests

  	
   

  	
  30

  
	
  7.16

  	
   

  	
  Cooperation

  	
   

  	
  31

  
	
  7.17

  	
   

  	
  Approvals and Consents

  	
   

  	
  31

  
	
  7.18

  	
   

  	
  Payment of Dividends from Primary Obligors and
  Subsidiaries

  	
   

  	
  31

  
	
  7.19

  	
   

  	
  Stay, Extension and Usury Laws

  	
   

  	
  31

  
	
  7.20

  	
   

  	
  Compliance with Laws

  	
   

  	
  31

  
	
  7.21

  	
   

  	
  Payment of Extraordinary Proceeds

  	
   

  	
  31

  
	
  7.22

  	
   

  	
  Amendment of Mexican Loan Facility

  	
   

  	
  31

  
	
  7.23

  	
   

  	
  Replacement of RAL

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
   

  	
  NEGATIVE COVENANTS

  	
   

  	
  32

  
	
  8.1

  	
   

  	
  Amend Charter Documents; Engage in Same Type of
  Business

  	
   

  	
  32

  
	
  8.2

  	
   

  	
  Liens

  	
   

  	
  32

  
	
  8.3

  	
   

  	
  Other Indebtedness

  	
   

  	
  33

  
	
  8.4

  	
   

  	
  Sell Assets

  	
   

  	
  33

  
	
  8.5

  	
   

  	
  Attachment

  	
   

  	
  34

  
	
  8.6

  	
   

  	
  Receiver

  	
   

  	
  34

  
	
  8.7

  	
   

  	
  Mergers and Acquisitions

  	
   

  	
  34

  
	
  8.8

  	
   

  	
  Stock Transfers

  	
   

  	
  34

  
	
  8.9

  	
   

  	
  Adverse Transactions

  	
   

  	
  35

  
	
  8.10

  	
   

  	
  Investments

  	
   

  	
  35

  
	
  8.11

  	
   

  	
  Dividends

  	
   

  	
  35

  
	
  8.12

  	
   

  	
  Loan; Guaranty Debt

  	
   

  	
  36

  
	
  8.13

  	
   

  	
  Issue Power of Attorney

  	
   

  	
  36

  
	
  8.14

  	
   

  	
  Amendment of Credit Agreements

  	
   

  	
  37

  
	
  8.15

  	
   

  	
  Use of Proceeds

  	
   

  	
  37

  
	
  8.16

  	
   

  	
  Payments for Consent

  	
   

  	
  37

  
	
  8.17

  	
   

  	
  Limitations on Dividends and Other Payment
  Restrictions Affecting Subsidiaries

  	
   

  	
  37

  
	
  8.18

  	
   

  	
  Financial Covenants

  	
   

  	
  38

  
	
  8.19

  	
   

  	
  Accounting Changes

  	
   

  	
  39

  
	
  8.20

  	
   

  	
  Related Transactions

  	
   

  	
  39

  

 

 ii
 

 

	
  8.21

  	
   

  	
  Leasebacks

  	
   

  	
  40

  
	
  8.22

  	
   

  	
  Compliance with ERISA

  	
   

  	
  40

  
	
  8.23

  	
   

  	
  [Reserved]

  	
   

  	
  40

  
	
  8.24

  	
   

  	
  Distributions to Primary Obligors and Borrower

  	
   

  	
  40

  
	
  8.25

  	
   

  	
  Capital Expenditures

  	
   

  	
  41

  
	
  8.26

  	
   

  	
  Servicing

  	
   

  	
  41

  
	
  8.27

  	
   

  	
  Portfolio Entity Ownership

  	
   

  	
  41

  
	
  8.28

  	
   

  	
  Activities of Portfolio Entity

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.

  	
   

  	
  EVENTS OF DEFAULT

  	
   

  	
  42

  
	
  9.1

  	
   

  	
  Principal and Interest

  	
   

  	
  42

  
	
  9.2

  	
   

  	
  Representations and Warranties

  	
   

  	
  42

  
	
  9.3

  	
   

  	
  Negative and Certain Other Covenants

  	
   

  	
  42

  
	
  9.4

  	
   

  	
  Other Covenants

  	
   

  	
  42

  
	
  9.5

  	
   

  	
  Other Indebtedness of Borrower

  	
   

  	
  42

  
	
  9.6

  	
   

  	
  Other Indebtedness of other Loan Parties

  	
   

  	
  43

  
	
  9.7

  	
   

  	
  [Reserved.]

  	
   

  	
  43

  
	
  9.8

  	
   

  	
  Insolvency

  	
   

  	
  43

  
	
  9.9

  	
   

  	
  Security Documents

  	
   

  	
  43

  
	
  9.10

  	
   

  	
  Notice of Charge

  	
   

  	
  44

  
	
  9.11

  	
   

  	
  Judgments

  	
   

  	
  44

  
	
  9.12

  	
   

  	
  Stock Issuance or Transfer

  	
   

  	
  45

  
	
  9.13

  	
   

  	
  ERISA

  	
   

  	
  45

  
	
  9.14

  	
   

  	
  Material Effect Defaults

  	
   

  	
  45

  
	
  9.15

  	
   

  	
  Change in Control

  	
   

  	
  45

  
	
  9.16

  	
   

  	
  Management

  	
   

  	
  45

  
	
  9.17

  	
   

  	
  Court Orders

  	
   

  	
  45

  
	
  9.18

  	
   

  	
  Dissolution

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.

  	
   

  	
  GENERAL REPRESENTATIONS AND WARRANTIES AND RELATED
  COVENANTS

  	
   

  	
  46

  
	
  10.1

  	
   

  	
  Organization

  	
   

  	
  46

  
	
  10.2

  	
   

  	
  Entity Power

  	
   

  	
  47

  
	
  10.3

  	
   

  	
  Violation of Charter Documents

  	
   

  	
  47

  
	
  10.4

  	
   

  	
  Enforceability

  	
   

  	
  47

  
	
  10.5

  	
   

  	
  Ownership

  	
   

  	
  48

  
	
  10.6

  	
   

  	
  Fictitious Names

  	
   

  	
  48

  
	
  10.7

  	
   

  	
  Title

  	
   

  	
  49

  
	
  10.8

  	
   

  	
  Financial Warranty

  	
   

  	
  49

  
	
  10.9

  	
   

  	
  Proceedings

  	
   

  	
  49

  
	
  10.10

  	
   

  	
  Government Contracts

  	
   

  	
  49

  
	
  10.11

  	
   

  	
  Adequate Licenses

  	
   

  	
  49

  
	
  10.12

  	
   

  	
  Government Permits; Approvals and Consents

  	
   

  	
  49

  
	
  10.13

  	
   

  	
  Charge; Restrictions

  	
   

  	
  50

  
	
  10.14

  	
   

  	
  Compliance with Laws

  	
   

  	
  50

  
	
  10.15

  	
   

  	
  Compliance with Indebtedness Instruments

  	
   

  	
  50

  
	
  10.16

  	
   

  	
  Financials

  	
   

  	
  50

  
	
  10.17

  	
   

  	
  Tax Returns

  	
   

  	
  50

  

 

 iii
 

 

	
  10.18

  	
   

  	
  No Material Adverse Change

  	
   

  	
  51

  
	
  10.19

  	
   

  	
  No Indebtedness

  	
   

  	
  51

  
	
  10.20

  	
   

  	
  Affiliate Notes

  	
   

  	
  51

  
	
  10.21

  	
   

  	
  No Liability on Lenders or Agent

  	
   

  	
  51

  
	
  10.22

  	
   

  	
  Affiliates

  	
   

  	
  51

  
	
  10.23

  	
   

  	
  Real Property; Environmental Issues

  	
   

  	
  52

  
	
  10.24

  	
   

  	
  Investment Company Act and Public Utility Holding
  Company Act

  	
   

  	
  52

  
	
  10.25

  	
   

  	
  Disclosure

  	
   

  	
  52

  
	
  10.26

  	
   

  	
  Qualification

  	
   

  	
  52

  
	
  10.27

  	
   

  	
  Federal Reserve Margin Regulations; Use of Proceeds

  	
   

  	
  53

  
	
  10.28

  	
   

  	
  Intellectual Property

  	
   

  	
  53

  
	
  10.29

  	
   

  	
  Compliance with ERISA

  	
   

  	
  53

  
	
  10.30

  	
   

  	
  The Security Documents

  	
   

  	
  54

  
	
  10.31

  	
   

  	
  Other Loan Documents

  	
   

  	
  55

  
	
  10.32

  	
   

  	
  Exclusion of Harbor Debtors

  	
   

  	
  55

  
	
  10.33

  	
   

  	
  Crestone Portfolio Entities

  	
   

  	
  55

  
	
  10.34

  	
   

  	
  [FCS Fisher, Ltd. Transactions

  	
   

  	
  55

  
	
  10.35

  	
   

  	
  Fee Agreements

  	
   

  	
  55

  
	
  10.36

  	
   

  	
  Securitization Agreements

  	
   

  	
  55

  
	
  10.37

  	
   

  	
  Immaterial Entities

  	
   

  	
  56

  
	
  10.38

  	
   

  	
  Waterfall Restrictions

  	
   

  	
  56

  
	
  10.39

  	
   

  	
  Wholly Owned Subsidiary Interests

  	
   

  	
  56

  
	
  10.40

  	
   

  	
  REO Affiliates

  	
   

  	
  56

  
	
  10.41

  	
   

  	
  Material Portfolio Entities

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.

  	
   

  	
  AGENT

  	
   

  	
  56

  
	
  11.1

  	
   

  	
  Appointment

  	
   

  	
  56

  
	
  11.2

  	
   

  	
  Nature of Duties

  	
   

  	
  56

  
	
  11.3

  	
   

  	
  Lack of Reliance

  	
   

  	
  57

  
	
  11.4

  	
   

  	
  Certain Rights

  	
   

  	
  57

  
	
  11.5

  	
   

  	
  Reliance

  	
   

  	
  57

  
	
  11.6

  	
   

  	
  Indemnification

  	
   

  	
  57

  
	
  11.7

  	
   

  	
  Agent, Individually

  	
   

  	
  58

  
	
  11.8

  	
   

  	
  Holders of Notes

  	
   

  	
  58

  
	
  11.9

  	
   

  	
  Resignation

  	
   

  	
  58

  
	
  11.10

  	
   

  	
  Reimbursement

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  59

  
	
  12.1

  	
   

  	
  Calculations and Financial Data

  	
   

  	
  59

  
	
  12.2

  	
   

  	
  Amendment and Waiver

  	
   

  	
  59

  
	
  12.3

  	
   

  	
  Expenses; Indemnification

  	
   

  	
  60

  
	
  12.4

  	
   

  	
  Benefits of Agreement; Descriptive Headings

  	
   

  	
  61

  
	
  12.5

  	
   

  	
  Notices, Requests, Demands, etc

  	
   

  	
  63

  
	
  12.6

  	
   

  	
  Governing Law

  	
   

  	
  63

  
	
  12.7

  	
   

  	
  Counterparts; Telecopies

  	
   

  	
  63

  
	
  12.8

  	
   

  	
  Waiver; Remedies Cumulative; Payment of Claims; Full
  Recourse

  	
   

  	
  63

  
	
  12.9

  	
   

  	
  Recoveries; Pro Rata Sharing

  	
   

  	
  64

  
	
  12.10

  	
   

  	
  Jurisdiction

  	
   

  	
  65

  

 

 iv
 

 

	
  12.11

  	
   

  	
  Severability

  	
   

  	
  65

  
	
  12.12

  	
   

  	
  Right of Set-off

  	
   

  	
  65

  
	
  12.13

  	
   

  	
  No Third Party Beneficiaries

  	
   

  	
  66

  
	
  12.14

  	
   

  	
  Survival; Integration

  	
   

  	
  66

  
	
  12.15

  	
   

  	
  Domicile of Loans

  	
   

  	
  66

  
	
  12.16

  	
   

  	
  No Usury

  	
   

  	
  66

  
	
  12.17

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
  67

  
	
  12.18

  	
   

  	
  Waiver by Borrower

  	
   

  	
  67

  
	
  12.19

  	
   

  	
  Waiver of Marshaling

  	
   

  	
  67

  
	
  12.20

  	
   

  	
  Waiver of Claims; Release by Borrower

  	
   

  	
  68

  
	
  12.21

  	
   

  	
  Confidentiality

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 13.

  	
   

  	
  TEXAS LANGUAGE

  	
   

  	
  68

  

 

 v

EXHIBITS

	
  Annex I

  	
  Definitions

  
	
   

  	
   

  
	
  Exhibit A - Promissory Note

  
	
  Exhibit B - Report Setting Forth the Computation of
  the Aggregate Undistributed Funds of all Portfolio Entities.

  
	
  Exhibit C - Form of Asset Pool Acquisition
  Certificate

  
	
  Exhibit D - Eligible Asset Pool

  
	
  Exhibit E - Permitted Shareholder
  Agreements/Arrangements

  
	
  Exhibit F - Net Present Value

  
	
  Exhibit G - Borrowing Base Certificate

  
	
  Exhibit H - Notice of Borrowing

  

LIST OF SCHEDULES

	
  Schedule 2.1 -

  	
   

  	
  Original Principal Amount

  
	
  Schedule 6C.1 -

  	
   

  	
  Closing Checklist

  
	
  Schedule 8.12(a) -

  	
   

  	
  Loan; Guaranty Debt

  
	
  Schedule 8.12(b) -

  	
   

  	
  Guaranty Equivalents

  
	
  Schedule 8.17 -

  	
   

  	
  Limitations on Dividends and Other Payment
  Restrictions Affecting Subsidiaries

  
	
  Schedule 8.18 -

  	
   

  	
  Financial Covenants

  
	
  Schedule 10.1(a) -

  	
   

  	
  Organization of Borrower

  
	
  Schedule 10.1(d) -

  	
   

  	
  Organization of Each Primary Obligor, Portfolio
  Entity, Related Entity and Each Other Loan Party

  
	
  Schedule 10.1(e) -

  	
   

  	
  Shareholder Agreements

  
	
  Schedule 10.5(a) -

  	
   

  	
  Classes of Stock of Borrower

  
	
  Schedule 10.5(b) -

  	
   

  	
  Classes of Stock and/or Other Equity Interests
  Issued by Each Primary Obligor, Each Portfolio Entity and Each Related
  Entity, the Shareholders and Other Equity Holders

  
	
  Schedule 10.5(c) -

  	
   

  	
  Options, Warrants and Other Rights to Acquire Stock
  or Other Equity Interests of Borrower, any Primary Obligor, any Portfolio
  Entity, any Related Entity and any Other Pledged Entity

  
	
  Schedule 10.6 -

  	
   

  	
  Fictitious Names

  
	
  Schedule 10.7 -

  	
   

  	
  Liens Relating to the Collateral

  
	
  Schedule 10.8 -

  	
   

  	
  Financial Warranty

  
	
  Schedule 10.9 -

  	
   

  	
  Proceedings

  
	
  Schedule 10.10 -

  	
   

  	
  Government Contracts

  
	
  Schedule 10.12 -

  	
   

  	
  Government Permits; Approvals and Consents

  
	
  Schedule 10.15 -

  	
   

  	
  Defaults under any Indebtedness Instrument

  
	
  Schedule 10.18 -

  	
   

  	
  Material Adverse Change

  
	
  Schedule 10.19 -

  	
   

  	
  Indebtedness Existing on the Effective Date

  
	
  Schedule 10.20 -

  	
   

  	
  Affiliate Notes

  
	
  Schedule 10.22 -

  	
   

  	
  Affiliates

  
	
  Schedule 10.23 -

  	
   

  	
  Real Property; Environmental Issues

  
	
  Schedule 10.26 -

  	
   

  	
  SEC Filings

  
	
  Schedule 10.28 -

  	
   

  	
  Intellectual Property

  
	
  Schedule 10.29 -

  	
   

  	
  Compliance with ERISA

  
	
  Schedule 10.30(b) -

  	
   

  	
  Pledge Agreements and Security Agreements

  
	
  Schedule 10.33 -

  	
   

  	
  FC Commercial Guaranty in Favor of CFSC

  
	
  Schedule 10.33(b) -

  	
   

  	
  FC Holdings Line of Credit Material Documents

  
	
  Schedule 10.33(c) -

  	
   

  	
  Shared Collateral

  
	
  Schedule 10.35 -

  	
   

  	
  Fee Agreements

  
	
  Schedule 10.36 -

  	
   

  	
  Securitization Agreements

  
	
  Schedule 10.37 -

  	
   

  	
  Immaterial Entity

  
	
  Schedule 10.39 -

  	
   

  	
  Wholly Owned Subsidiary Interests

  
	
  Schedule 10.40 -

  	
   

  	
  REO Affiliates

  

 

 

	
  Schedule 10.41 -

  	
   

  	
  Material Portfolio Entities

  
	
  Schedule I - (EE) -

  	
   

  	
  Excluded Entities

  
	
  Schedule I - (EN) -

  	
   

  	
  Excluded Notes

  
	
  Schedule I - (MPE) -

  	
   

  	
  Material Portfolio
  Entity

  
	
  Schedule I - (PN) -

  	
   

  	
  Pledged Notes

  
	
  Schedule (PL) -

  	
   

  	
  Permitted Liens

  
	
  Schedule I - (RE) -

  	
   

  	
  Related Entity

  

 

ANNEX I

DEFINITIONS

As
used in the Subordinated Delayed Draw Credit Agreement to which this Annex I is
annexed, the following terms shall have the meanings herein specified or as
specified in the Section of such Loan Agreement or in such other document
herein referenced:

“ABL”
shall mean American Business Lending, Inc., a Texas corporation.

“ABL
Capital Note” shall mean that certain Promissory Note by ABL to the order
of Borrower, dated December 15, 2006, in the maximum principal amount of
$4,000,000.

“ABL
Facility” shall mean that certain Loan Agreement between ABL and Wells
Fargo Foothill, LLC, dated as of December 15, 2006, together with the “Loan
Documents” as therein defined, as the same may be amended, restated or
otherwise modified from time to time with the prior written consent of the
Lenders.

“ABL
Options” shall mean options, if any, granted to Charles P. Bell, Jr., Chief
Executive Officer of ABL, and/or Joseph N. Smith, President of ABL, to purchase
up to 8%, respectively, of restricted common stock of ABL, which options may be
granted within ten (10) Business Days after the end of the 2007, 2008, 2009 and
2010 Fiscal Years, provided such executives remain officers of ABL at such
time.

“Acquired
Gateway Loans” shall mean those loans to be acquired by ABL pursuant to the
terms of the Gateway Portfolio Purchase Agreement.

“Acquisition
Loan” – Section 2.1(b).

“Acquisition
Price” with respect to any Asset Pool means the purchase price to be paid
to the seller of the Asset Pool by the Portfolio Entity acquiring such Asset
Pool for the acquisition of all rights to all property included in such Asset
Pool plus transaction costs relating to the acquisition of such Asset Pool of
up to 2% of the purchase price of such pool; provided that with respect to an
Asset Pool that consists of one or more loans originated by the Crestone
Portfolio Entity, Acquisition Price shall mean the principal balance of the
loan originated by the Crestone Portfolio Entity plus transaction costs
relating to the origination of such Asset Pool of up to 2% of the principal
balance of that Asset Pool.

“Adverse
Waterfall Event” shall mean with respect to any Portfolio Entity owning
more than one Asset Pool or Assets in addition to those contained in its
initial Asset Pool, that any lender to such Portfolio Entity has for any reason
diverted (whether to make up for a shortfall with respect to any other pool or
asset or otherwise) any portion of collections from any Asset Pool of such
Portfolio Entity to a different  asset or
asset pool (or waterfall with respect thereto) of such Portfolio Entity or
otherwise subsidized any other such asset or asset pool with collections from
any Asset Pool or otherwise restricted distributions from, or reduced waterfall

amounts arising
from, collections of any Asset Pool on account of any condition or occurrence
other than a condition or occurrence arising directly from such Asset Pool.

“Affected
Interest Period” – Section 3.6(a).

“Affected
Lender” – Section 3.6(b).

“Affiliate”
shall mean any Person (i) in which Borrower and/or any Parent,
individually, jointly and/or severally, now or at any time or times hereafter,
has or have an equity or other ownership interest equal to or in excess of
twenty–five percent (25%) of the total equity of or other ownership interest in
such Person; and/or (ii) which directly or indirectly through one or more
intermediaries controls or is controlled by, or is under common control with
Borrower; and/or (iii) any officer or director of Borrower or any Primary
Obligor.  For purposes of this
definition, “control” shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of Stock, by contract or otherwise, and
in any case shall include direct or indirect ownership (beneficially or of
record) of, or direct or indirect power to vote, 25% or more of the outstanding
shares of any class of capital stock of such Person (or in the case of a Person
that is not a corporation, 25% or more of any class of equity interest).  Notwithstanding the foregoing, none of the
Harbor Debtors shall be deemed to be an Affiliate for the purposes of this
Agreement other than Section 8.20.

“Agent”
– introductory paragraph.

“Aggregate Net Present Equity Value” shall mean
the sum of the Net Present Equity Value of each Portfolio Entity (for
clarification, expressly excluding the New Ventures which are not Portfolio
Entities) (after giving effect, in the case of a Borrowing Base Certificate
delivered contemporaneously with a Notice of Borrowing, to an applicable
Eligible Portfolio Entity’s acquisition of an Asset Pool with proceeds of the
related Acquisition Loan, or, with respect to an Asset Pool that consists of
one or more Assets originated by a Crestone Portfolio Entity, to the Crestone
Portfolio Entity’s origination of an Asset Pool with proceeds of the related
Acquisition Loan).

“Aggregate Undistributed Funds” shall mean, on any date of determination, the
sum of the amounts determined by multiplying (i) the FC Percentage of each
Portfolio Entity, times (ii) the amount of funds held by such Portfolio Entity
(which for purposes of this definition shall include the operating funds of the
general partner of any limited partnership which is the Portfolio Entity) which
are not (w) held in a lockbox account, nor (x) held by such Portfolio Entity
for the payment (a) of indebtedness to a Permitted Portfolio Company Creditor
of such Portfolio Entity due within the next 30 days or (b) Portfolio
Protection Expenses, nor (y) retained by such Portfolio Entity to satisfy a
leverage covenant imposed thereon by the Permitted Portfolio Company Creditor
thereof pursuant to a covenant under a loan agreement between such creditor and
such Portfolio Entity as in effect on the Execution Date, of which Agent has
been given written notice, nor (z)
held by ABL or any New Venture.

“Agreement”
or “Loan Agreement” shall mean this Subordinated Delayed Draw Credit
Agreement, as it may from time to time be amended, extended, restated,
supplemented or otherwise modified.

“Applicable
Indebtedness” of any Person shall mean all Indebtedness of such Person,
including, without limitation, as to Borrower, the RAL, other than trade
payables incurred in the ordinary course of business which are not evidenced by
an Indebtedness Instrument.

“Applicable Margin”
shall mean, for each period from and including each Payment Date to but
excluding the following Payment Date, 3.00% for Base Rate Loans and 5.00% for
LIBOR Loans.

“Applicable
Portfolio Percentage” shall mean, with respect to the Acquisition Price of
any Asset Pool, the percentage of outstanding shares of stock, membership
interests, or partnership interests (as the case may be) or, in the case of a
non–U.S. entity, similar equity interests, issued to the Borrower or directly
or indirectly to the Primary Obligors by the Portfolio Entity acquiring such
Asset Pool.

“Approved
Portfolio Leverage Arrangement” shall mean (i) each borrowing arrangement
between a Portfolio Entity and a financial institution existing as of the
Effective Date and (ii) each future borrowing arrangement between a Portfolio
Entity and a financial institution on terms and conditions reasonably
satisfactory to Agent (as indicated in writing by Agent). Without limiting the
scope of Agent’s discretion pursuant to the preceding sentence,  (i) no borrowing arrangement shall be deemed
an Approved Portfolio Leverage Arrangement if such arrangement cross–defaults
to a credit arrangement of any other Portfolio Entity or contains any
provisions which would in any way restrict, reduce or prohibit distributions by
a Portfolio Entity on account of any event or condition with respect to any
Affiliate of such Portfolio Entity; and (ii) references herein to an Approved
Portfolio Leverage Arrangement shall be limited to such borrowing arrangements
governed by the terms of the loan agreement and other documents in the form
delivered to Agent at the time such arrangements were approved by Agent, as
amended, supplemented or otherwise modified with the written consent of Agent.

“ASDM”
shall mean Asset Servicing de Mexico S.A. de C.V.

“Asset”
shall mean any real, personal and intangible property of a Person, including,
without limitation, accounts, chattel paper, contract rights, letters of
credit, instruments and documents, equipment , general intangibles, inventory,
leases, options, licenses, real property, and Equity Interests issued by any
other Person whether now existing or hereafter acquired or arising.

“Asset
Pool” shall mean (x) in connection with the acquisition thereof by an
Eligible Portfolio Entity or the origination of an Asset by a Crestone
Portfolio Entity, a portfolio of loans or one or more Assets described in an
Asset Pool Acquisition Certificate, and (y) in all other contexts, all Assets
of a Portfolio Entity.

“Asset
Pool Acquisition Certificate” shall mean a certificate from an Executive
Officer of Borrower in the form of Exhibit C to the Agreement, to which is
attached (as contemplated by the form of such certificate) the asset purchase
agreement relating to the Assets proposed to be purchased, and, if not
previously provided to Agent or if amended, restated or otherwise modified
since previously provided, the Charter Documents for the purchasing Portfolio Entity
and any Shareholders Agreement entered into or proposed to be entered into by
the holders of the Equity Interests of such Portfolio Entity; provided that
with respect to any Crestone Portfolio Entity, the certificate may relate to
the origination of an Asset in which case Borrower shall provide such other
documentation requested by Agent related to the Asset.

 “Associate”, when used to indicate a
relationship with a Person, shall mean (i) another Person (other than a Loan
Party or a Subsidiary thereof) of which such Person is an officer or partner or
is, directly or indirectly, the beneficial owner of 10 percent or more of any
class of equity securities, (ii) any trust or other estate in which such Person
has a substantial beneficial interest or as to which such Person or an
immediate member of his family serves as trustee or in a similar capacity, and
(iii) any relative or spouse of such Person or any relative of such spouse.

“Auditors”
shall mean KPMG LLP or other independent certified public accountants of
recognized standing selected by Borrower and satisfactory to Agent.

“Base
Rate” shall mean, for any day, the higher of (x) the fluctuating interest
rate per annum, in effect from time to time, established by Bank of Scotland in
New York as its base, prime or reference rate for U.S. domestic commercial
loans in Dollars, or (y) the Federal Funds Rate in effect on such day plus
0.5%.  Any change in the interest rate
resulting from a change in the Base Rate shall be effective as of the opening
of business on the day on which such change becomes effective; it is understood
and agreed that the aforesaid rates and the Base Rate are reference rates only
and do not necessarily represent the lowest or best rate actually charged to
any customer.

“Base
Rate Loan” shall mean any Loan during any period that it bears interest
determined by reference to the Base Rate.

“Basle
Laws” – Section 3.4.

“Borrower”
– introductory paragraph.

“Borrower
Pledge Agreement” shall mean the Pledge Agreement (Stock and Debt) made by
Borrower in favor of the Collateral Agent dated as of the date hereof delivered
pursuant to Section 6 and each other pledge agreement with respect to shares of
stock or affiliate indebtedness from time to time hereafter delivered by
Borrower in respect of the Obligations, as each such agreement may be from time
to time amended, extended, restated, supplemented or otherwise modified.

“Borrowing
Base” shall mean, as of any date of calculation an amount equal to, the sum
of (A) the Traditional Borrowing Base plus (B) the New Ventures
Borrowing Base.

“Borrowing
Base Availability” shall mean, as of any computation date, an amount equal
to the sum of (A) 80% of the Traditional Borrowing Base in effect on such date plus
(B) 90% of the New Ventures Borrowing Base in effect on such date less
(C) Total Outstandings under the RAL.

“Borrowing
Base Certificate” shall mean a certificate, in the form attached as Exhibit
G hereto, of the CFO of Borrower setting forth the Borrowing Base and showing
the computation thereof in reasonable detail.

“Borrowing
Date”– Section 2.2.

“Business
Day” shall mean any day that is not a Saturday, Sunday or legal holiday in
the State of New York,  the State of
Texas, the State of Connecticut (or any other State where the CFCCA is
maintained) or a day on which banking institutions chartered by the State of
New York, the State of Texas, the State of Connecticut (or any other State
where the CFCCA is maintained) or the United States are legally required or
authorized to close, and, when used in connection with LIBOR, means any such
Business Day which is also a day on which deposits in Dollars may be dealt in
on the London interbank market.

“Capital
Expenditures” shall mean, with respect to any Person, all expenditures by
such Person which should be capitalized in accordance with GAAP, including all
such expenditures with respect to fixed or capital Assets (including, without
limitation, expenditures for maintenance and repairs which  should be capitalized in accordance with
GAAP) and the amount of obligations under Capitalized Leases incurred by such
Person.

“Capitalized
Lease” shall mean any lease which is, or is required under GAAP to be,
capitalized on the balance sheet of the lessee at such time, and “Capitalized
Lease Obligation” of any Person at any time shall mean the aggregate amount of
rental expenses which is, or is required under GAAP to be, capitalized on the
books of such Person under Capitalized Leases.

“Cash
Collateral Account-Servicing” shall mean the account at the Depositary
specified in the Cash Collateral Agreement-Servicing and in the letter
agreement between the Collateral Agent and the Depositary relating thereto or
such other account, if any, which is specified in a cash collateral agreement
(in form and substance satisfactory to Agent) between FC Servicing and
Collateral Agent and letter agreement (in form and substance satisfactory to
the Collateral Agent) between the Collateral Agent and the depositary bank with
respect to such other account.

“Cash
Collateral Agreement” shall mean the Collateral Assignment of Account (Cash
Flow Cash Collateral Account), dated as of even date herewith, made by Borrower
in favor of the Collateral Agent, as such agreement may be from time to time
amended, extended, restated, supplemented or otherwise modified.

“Cash
Collateral Agreement-Servicing” shall mean the Collateral Assignment of
Account (FC Servicing), dated as of even date herewith, made by Borrower in
favor of the Collateral Agent, as such agreement may be from time to time
amended, extended, restated, supplemented or otherwise modified.

“Cash
Flow Cash Collateral Account” and “CFCCA” shall mean the account at
the Depositary specified by account number in the Cash Collateral Agreement and
in the letter agreement between the Collateral Agent and the Depositary
relating thereto or such other account, if any, which is specified by account
number in a cash collateral agreement (in form and substance satisfactory to
Agent) between Borrower and Collateral Agent and letter agreement (in form and
substance satisfactory to the Collateral Agent) between the Collateral Agent
and the depositary bank with respect to such other account.

“Certified
Error Certificate” shall have the meaning set forth in the form of
Waterfall Certificate approved by Agent prior to the first Borrowing Date of
Acquisition Loans under this Agreement (as the form of certificate constituting
the “Waterfall Certificate” for the purposes of this Agreement may be from time
to time amended, supplemented, restated or otherwise modified).

“CFO”,
as to any Loan Party shall mean such Loan Party’s chief financial officer.

“Charges”
shall mean all national, Federal, state, county, city, municipal and/or other
governmental (or any instrumentality, division, agency, body or department
thereof, including without limitation the PBGC) taxes, levies, assessments,
charges, liens, claims or encumbrances upon and/or relating to the Obligations,
a Person’s Assets, a Person’s business, a Person’s ownership and/or use of any
of its Assets, a Person’s income and/or gross receipts and/or a Person’s
ownership and/or use of any of its Assets.

“Charter
Document” shall mean (i) with respect to a corporation: its certificate or
articles of incorporation or association and its by–laws or comparable
documents under non–US laws; (ii) with respect to a partnership: its
partnership agreement, certificate of partnership (if a limited partnership)
and its certificate of doing business under an assumed name (if a general
partnership); (iii) with respect to a trust, its trust agreement or declaration
of trust; and (iv) with respect to a limited liability company, its certificate
of formation and operating agreement or analogous documents; in each case, with
such other similar documents as Agent shall request or specify.

“Closing
Checklist” shall mean the Closing Checklist in the form of Schedule 6C.1
to the Agreement.

“Closing
Office” shall mean the office of Agent at 565 Fifth Avenue, New York, New
York 10017 or such other office as may be designated in writing to Borrowers by
Agent.

“Closing
Office Time” shall mean the local time in effect at the Closing Office.

“Code”
shall mean the Internal Revenue Code of 1986, as the same may be amended from
time to time.

“Collateral”
– Section 10.30.

“Collateral
Agent” shall mean Agent in its capacity as agent under one or more of the
Security Documents and its successor and assigns (Agent, in such capacity,
being sometimes referred to herein and in other Loan Documents as the “Collateral
Agent” and sometimes as the “Agent”).

“Commitment
Commission” – Section 4.2.

 “Commitment Period” shall mean the
period from the Effective Date to and including the Maturity Date.

“Commitments”
shall mean the Total Loan Commitment.

“Consolidated
Group” shall mean Borrower and its consolidated Subsidiaries, other than
the Harbor Debtors.

“Crestone
Facility” shall mean a $20 million line of credit to be provided by
FirstCity Denver Investment Corp. to FC Crestone 07 Corp. or other Crestone
Portfolio Entities to be used exclusively for the acquisition and origination
of Assets and payment of expenses related to those Assets which is to be
secured by a first priority lien on all assets of the Crestone Portfolio
Entities and a $2 million line of credit to be provided by FirstCity Denver
Investment Corp. to FirstCity Crestone LLC to be used exclusively for working
capital purposes.

“Crestone
Notes” shall mean the promissory notes issued from time to time under the
Crestone Facility, as the same may be amended, restated or otherwise modified
from time to time with the prior written consent of the Lenders.

“Crestone
Portfolio Entity” shall mean FC Crestone 07 Corp. and any other entity
organized by FirstCity Denver Investment Corp, for the purpose of originating
or acquiring Assets.

“Cumulative
Current Recovered and Projected Collections” shall mean, at any date of
determination, an amount equal to the sum of (x) the aggregate amount of all
cash previously collected on Assets described in Final NPV Pool Certificates
delivered in connection with Asset Pools acquired on or after January 1, 2004,
plus (y) all reasonably anticipated future collections on such Assets.

“Cumulative
Original Projected Collections” shall mean an amount equal to the sum of
all anticipated future collections on all Assets described in Final NPV Pool
Certificates delivered in connection with Asset Pools acquired on or after
January 1, 2004, as projected at the time of the delivery of, and as set forth
in, all such Final NPV Pool Certificates.

“Deemed
Disbursement” – Section 2A.6.

“Deemed
Disbursement Account” – Section 2A.6.

“Default”
shall mean any event which with notice or lapse of time, or both, would become
an Event of Default.

“Depositary”
shall mean Bank of America, N.A.

“Disbursement”
– Section 2A.4(b).

“Disbursement
Date” – Section 2A.4(a).

“Disclosure
Restriction” – Section 7.1 (m).

“Dividend”
– Section 8.11.

“Dollars”,
“U.S. $”, “$” and “U.S. dollars” shall mean the lawful
currency of the United States of America.

“EBITDA”
for any period, shall mean net income (excluding extraordinary and non–recurring
items, including those which are non–cash in nature) for such period plus
(i) all interest expense, plus (ii) income tax expenses, plus
(iii) depreciation and amortization (including amortization of any goodwill or
other intangibles), minus or plus (iv) without duplication, gains
and losses attributable to any sale of Assets not in the ordinary course of
business, plus or minus (v) any other non–cash charges or gains
which have been subtracted or added in calculating such net income other than
gains on asset–securitizations and loan loss provision charges.

“Effective
Date” – Section 6.

“Eligible
Asset Pool” shall
mean an Asset Pool, to be acquired by a Portfolio Entity from an Eligible
Seller for an all cash purchase price, which (unless Agent in its discretion
otherwise consents in writing) conforms in every respect with the requirements
of Exhibit D to the Agreement; provided that (a) with respect to ABL the
requirements of items 2 and 5 of Exhibit D shall not apply, and (b) with
respect to a Crestone Portfolio Entity, that any Asset Pool which is an Asset
originated by the Crestone Portfolio Entity is not subject to the requirement
that the Asset Pool be acquired from an Eligible Seller or that the Eligible
Asset Pool conform in any respect with the requirements of items 1(c), 2 and 5
of Exhibit D to the Agreement.

“Eligible
Portfolio Entity” shall
mean a partnership, corporation, trust, or limited liability company or, if not
formed in the United States, a similar foreign organized entity which is a
Portfolio Entity of which (i) if such Portfolio Entity is a US Person, not less
than 50% of each class of Equity Interests is owned directly or indirectly by
Borrower or a Primary Obligor, (ii) no Equity Interests thereof owned directly
or indirectly by Borrower or a Primary Obligor are pledged to any Person other
than Agent, for the benefit of the Lenders, provided that the Equity Interests
of a Crestone Portfolio Entity may be pledged to secure the Crestone Facility,
so long as the Crestone Notes and documents securing the Crestone Facility are
assigned to Agent to secure the obligations of Borrower herein, (iii) the
Charter Documents and Shareholder Agreements result in Permitted Shareholder
Arrangements, (iv) which has no Indebtedness other than Indebtedness under an
Indebtedness Instrument (a) pursuant to Approved Portfolio Leverage
Arrangements, or with respect to ABL, the ABL Facility, (b) incurred to pay
development expenses related to real estate, or (c) loaned to it by the owners
of the Equity Interests of the

Portfolio Entity to pay Property Improvement Expenses, and (vi) in
respect of which no Disclosure Restriction exists.

“Eligible
Seller” shall mean (i) a seller of an Asset Pool which is selling an Asset
Pool the loans of which were originated in the United States (or a possession
thereof) or (ii) a Non–US Seller which is selling an Asset Pool the loans of
which were originated in Argentina, Brazil, Chile, France, Germany, Italy,
Mexico, the United Kingdom, or Uruguay.

“Environmental
Laws” shall mean all laws, common law, statutes, rules and regulations, and
all judgments, decrees, franchises, orders or permits, issued, promulgated,
approved or entered thereunder by any Government Authority relating to
pollution or protection of the environment or occupational health and safety,
including, without limitation, those relating to emissions, discharges,
releases or threatened releases of any waste, pollutant, chemical, hazardous
material, hazardous substance, toxic substance, hazardous waste, special waste,
petroleum or petroleum–derived substance or waste, or any constituent of any
such pollutant material, substance or waste, into the environment (including,
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
waste, pollutant, chemical, hazardous material, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum–derived
substance or waste.

“Equity
Interests” shall mean any equity interests issued by any Person, including,
without limitation, Stock (including, without limitation, common stock and
preferred stock), partnership interests or limited liability company interests,
any other securities convertible into, or exercisable for, any of the foregoing
or other securities of such Person, and options and warrants or other rights to
acquire any of the foregoing.

“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time.

“ERISA
Affiliate” shall mean any Person which is from time to time a member of a
controlled group or a group under common control with any Loan Party within the
meaning of Sections 414(b), 414(c), 414(m) or 414(o) of the Code or Section
4001(a)(14) of ERISA.

“European
Acquisition Entity” shall mean a Foreign Portfolio Entity which has
acquired Assets that originated in Europe.

“Event
of Default” shall mean each of the Events of Default defined in Section 9.

“Excluded
Entities” shall mean each Person listed on Schedule I–(EE).

“Excluded
Notes” shall mean those notes listed on Schedule I–(EN).

“Execution
Date” shall mean the date on which all parties to this Agreement shall have
signed a copy this Agreement (whether the same or different copies) and shall
have delivered the same to Agent.

“Executive
Officer” shall mean the President of Borrower, the CFO of Borrower or any
Senior Vice President of Borrower.

“Extraordinary
Transaction”  shall mean (i) a sale,
conveyance, lease, or other transfer by Borrower, any Primary Obligor, or any
Related Entity of any of its Assets (other
than any Equity Interest in a Portfolio Entity or REO Affiliate), not in
the ordinary course of its business; (ii) a sale, conveyance, lease, or other
transfer by any Portfolio Entity of a substantial portion of its Assets for any
consideration other than cash; (iii) any sale, conveyance or other transfer of
any Indebtedness owed to a Related Entity by Borrower, a Primary Obligor or any
Affiliate of such Related Entity and any sale, conveyance or other transfer of
Indebtedness (regardless of by whom owed) by Borrower or any Primary Obligor
other than pursuant to a Security Document; (iv) the issuance of any Equity Interests
by Borrower, any Primary Obligor or any Related Entity other than the issuance
of Equity Interests by a Related Entity upon formation thereof where the
capital raised by such issuance is used for the acquisition of portfolio
Assets; and (v) receipt of proceeds by Borrower or any Primary Obligor of a
settlement or payments received from litigation, excluding any such proceeds or
payments payable to FC Servicing and/or its Subsidiaries in its capacity as
servicer and collector of debt portfolios.

“Facility
Fee” – Section 4.1.

“FCBLC”  shall mean FirstCity Business Lending
Corporation, a Texas corporation.

“FC
Capital” shall mean FC Capital Corp., a New York corporation.

“FC
Commercial” shall mean FirstCity Commercial Corporation, a Texas
corporation.

“FC
Commercial Real Property Financing Loan” shall mean (i) that certain loan
in an original principal amount not in excess of $16,000,000 made by FC
Commercial to RKS Texas Investments, L.P. on or about October 13, 2006 and (ii)
that certain loan in an original principal amount not in excess of $3,500,000
made by FC Commercial to RKS Texas Investments, L.P. on or about February 26,
2007.

“FC
Europe” shall mean FirstCity Europe Corporation, a Texas corporation.

“FC
Holdings” shall mean FirstCity Holdings Corporation, a Texas corporation.

“FC
Holdings Real Property Financing Loans” shall mean (i) the FCS Fischer
Loan, and (ii) FCS
Lancaster Loan.

“FC
International” shall mean FirstCity International Corporation, a Texas
corporation.

“FC
Mexico” shall mean FirstCity Mexico, Inc., a Texas corporation.

“FC
Percentage” (x) with respect to any Portfolio Entity or any other Person
shall mean the percentage of outstanding shares of stock, limited liability
company interests or partnership interests (or, in the case of a non–US entity,
similar equity interests) of such Portfolio Entity or Person owned directly or
indirectly by Borrower, (y) with respect to any Asset Pool or any Asset

owned by any
Portfolio Entity, the FC Percentage with respect to such Portfolio Entity, and
(z) with respect to any Asset Pool or any Asset owned by any REO Affiliate, the
FC Percentage of the Portfolio Entity which is the parent of the REO Affiliate.

“FC
Servicing” shall mean FirstCity Servicing, Inc., a Texas corporation.

“FCS Fischer Loan” shall mean that certain
loan amended on December 29, 2006, having a balance consisting of principal,
capitalized interest and accrued interest as of December 26, 2006, not in
excess of $5,098,798.05 made by FC Holdings to FCS Fischer, Ltd.

“FCS Lancaster Loan” shall mean that certain
loan in an original principal amount not in excess of $2,200,000.00 made by FC
Holdings to FCS Lancaster, Ltd. on or about December 29, 2005.

“Federal
Funds Rate” shall mean the rate of interest charged by banks with excess
reserves at a Federal Reserve district bank to banks needing overnight loans to
meet reserve requirements.

“Fee
Agreements” shall mean any partnership agreement, management agreement,
consulting agreement, or other agreement pursuant to which Borrower, any
Primary Obligor or any Related Entity is to be paid fees, distributions,
allocations, expense reimbursements, consideration, salary or other
compensation in consideration for providing management, personnel or services,
in any form whatsoever, from any Affiliate or from any other Person.  Services to be rendered under Fee Agreements
may include, but not be limited to consulting, collecting revenues, paying
operating expenses not paid directly by others, and providing clerical and
bookkeeping services.

“Final
Asset Pool Acquisition Certificate” with respect to an Asset Pool at any
time,  shall mean the Asset Pool
Acquisition Certificate with respect to such Asset Pool or, if such Asset Pool
Acquisition Certificate has been supplemented or revised, the last supplement
or revision of such Certificate.

“Final
NPV Pool Certificate” with respect to any Asset Pool shall mean a
certificate in a form approved by Agent prior to the first Borrowing Date of
Acquisition Loans under this Agreement which sets forth the anticipated cash
flows and Net Present Value of each Asset included in such Asset Pool and lists
each item of collateral for any Asset in such Asset Pool.

“Financial
Statements” shall mean, with respect to any Person, the statement of
financial position (balance sheet) and the statement of earnings, cash flow,
and stockholders’ (or partners’ or members) equity of such Person.

“First
Amendment to ABL Facility” shall mean that certain First Amendment to Loan
Agreement dated as of February 27, 2007, between ABL, as borrower, and Wells
Fargo Foothill, LLC, as Lender, which provides for an increase of the maximum
credit line under the facility to $40,000,000.00 with the increase to be used
for financing of the acquisition of and which will be secured by the Acquired
Gateway Loans.

“First
B” shall mean First B Realty L.P., a Texas limited partnership.

“First
X” shall mean First X Realty L.P., a Texas limited partnership.

“Fiscal
Year” shall mean each January 1 to December 31 period.  “Fiscal Year” followed by a year means the
Fiscal Year with its Fiscal Year–End in such calendar year.

“Fixed
Rate” shall mean, for any Loan which the Agent has consented in writing to
being a Fixed Rate Loan for a period of time, the rate of interest agreed to in
writing by the Agent and Borrower.

“Fixed
Rate Loan” shall mean any Loan during any period that, with the prior
written consent of the Agent, it bears interest determined by reference to a
Fixed Rate.

“Fixed
Rate Loan Period” shall mean, for any Loan which the Agent has consented in
writing to being a Fixed Rate Loan, the period of time agreed to in writing by
the Agent and Borrower that such Loan will bear interest at a Fixed Rate.

“Foreign
Portfolio Entity” shall mean a Portfolio Entity domiciled in or with a
principal place of business in a country other than the United States or which
has acquired Assets originating outside of the United States.

“Funding
Date” shall mean each date on which an Acquisition Loan was made.

“GAAP”
shall mean generally accepted accounting principles (as promulgated by the
Financial Accounting Standards Board or any successor entity) in the United
States provided, that when with respect to a Person which is not a US
Person, GAAP shall mean the equivalent in such Person’s jurisdiction of
organization.

“Gateway
Portfolio Purchase Agreement” shall mean that certain SBA Loan Portfolio
Purchase Agreement dated as of December 21, 2006 (as amended or modified from
time to time), by and among ABL, as purchaser, and State Bank, a Texas banking
association, Gateway National Bank, a national banking association, and GNB
Financial, n.a., a national banking association, as sellers, pursuant to which
ABL is acquiring from Prosperity Bank, as successor in interest by merger to
each of State Bank, Gateway National Bank, and GNB Financial, n.a., all of the
loans identified in that purchase agreement.

“Government
Authority” shall mean any nation or government, any state or political
subdivision thereof, any agency, authority, regulatory body, bureau, central
bank, commission, department or instrumentality of any of the foregoing or any
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

“Guarantor”
shall mean each Primary Obligor and any other Person which is a guarantor under
any Guaranty.

“Guaranty”
shall mean any one or more of the guaranties delivered pursuant to Section 6
and each other guaranty agreement delivered in respect of the Obligations, as
each such

agreement may be
from time to time amended, extended, restated, supplemented or otherwise
modified.

“Guaranty
Equivalent” shall mean any agreement, document or instrument pursuant to
which a Person directly or indirectly guarantees, becomes surety for, endorses,
assumes, agrees to indemnify the obligee of any other Person against, or
otherwise agrees, becomes or remains liable (contingently or otherwise) for,
such obligation, other than (i) by endorsements of instruments in the ordinary
course of business or (ii) indemnification of sellers of assets related to
breaches of confidential agreements and obligations related to performance of
purchase and sale agreements in the conduct of the Asset acquisition
business.  Without limitation, a Guaranty
Equivalent shall be deemed to exist if a Person agrees, becomes or remains
liable (contingently or otherwise), directly or indirectly: (i) to purchase or
assume, or to supply funds for the payment, purchase or satisfaction of, an
obligation; (ii) to make any loan, advance, capital contribution or other
investment in, or a purchase or lease of any property or services from, a
Person; (iii) to maintain the solvency of such Person; (iv) to enable such
Person to meet any other financial condition; (v) to enable such Person to
satisfy any obligation or to make any payment; (vi) to assure the holder of an
obligation against loss; (vii) to purchase or lease property or services from
such Person regardless of the non–delivery of or failure to furnish of such
property or services; or (viii) in respect of any other transaction the effect
of which is to assure the payment or performance (or payment of damages or
other remedy in the event of nonpayment or nonperformance) of any obligation.

“Harbor
Debtors” shall mean, collectively, (i) Harbor Financial Mortgage Corp.,
(ii) NAF, Inc. (f/k/a New America Financial, Inc.), (iii) Hamilton Financial
Services Corp., (iv) Community National Mortgage Corp., (v) CalCap, Inc. and
(vi) Harbor Financial Group, Inc, and any Subsidiary of such Person.

“Immaterial
Entity” shall mean each Person listed on Schedule 10.37; provided,
that if any such Person engages in business or has assets with an aggregate
fair market value of $100,000 or more, such Person shall cease to constitute an
Immaterial Entity.

“Incidental
Equity Interests” shall mean Equity Interests in a Person acquired by a
Portfolio Entity or Related Entity in settlement of collection of an asset in
the portfolio of such Portfolio Entity or Related Entity if such Equity
Interests so acquired (i) constitute Equity Interests in a Person engaged in a
business unrelated to the business of the Consolidated Group and such Person is
not Borrower or an Affiliate of Borrower or a Person in which or in an
Affiliate of which any other Equity Interest is owned by Borrower, any Primary Obligor
or any Related Entity at the time such Equity Interest is so acquired; and (ii)
have a value of less than $500,000.

“Indebtedness”
shall mean, with respect to any Person (without duplication): (i) all
obligations on account of money borrowed by, or credit extended to or on behalf
of, or for or on account of deposits with or advances to, such Person; (ii) all
obligations of such Person evidenced by bonds, debentures,  notes or similar instruments; (iii) all obligations
of such Person for the deferred purchase price of property or services other
than trade payables incurred in the ordinary course of business and on terms
customary in the trade; (iv) all obligations secured by a

Lien on property
owned by such Person (whether or not assumed); and all obligations of such
Person under Capitalized Leases (without regard to any limitation of the rights
and remedies of the holder of such Lien or the lessor under such Capitalized
Lease to repossession or sale of such property); (v) the face amount of all letters
of credit issued for the account of such Person and, without duplication, the
unreimbursed amount of all drafts drawn thereunder, and all other obligations
of such Person associated with such letters of credit or draws thereon; (vi)
all obligations of such Person in respect of acceptances or similar obligations
issued for the account of such Person; (vii) all obligations of such Person
under a project financing or similar arrangement; (viii) all obligations of
such Person under any interest rate or currency protection agreement, interest
rate or currency future, interest rate or currency option, interest rate or
currency swap or cap or other interest rate or currency hedge agreement; and
(ix) all obligations and liabilities with respect to unfunded vested benefits
under any “employee benefit plan” or with respect to withdrawal liabilities
incurred under ERISA by Borrower or any ERISA Affiliate to a “multiemployer
plan”, as such terms are defined under the Employee Retirement Income Security
Act of 1974.

“Indebtedness
Instrument” shall mean any note, mortgage, indenture, chattel mortgage,
deed of trust, loan agreement, hypothecation agreement, Guaranty Equivalent,
pledge agreement, security agreement, financing statement or other document,
instrument or agreement evidencing or securing the payment of or otherwise
relating to the borrowing of monies, including, without limitation, the
RAL.  Indebtedness Instruments shall
include, but not be limited to the Loan Documents.

“Indemnified
Party” – Section 12.3.

“Interest
Coverage” shall mean, for any period, total interest expense (including
that attributable to Capital Leases under GAAP) of the Consolidated Group on a
consolidated basis determined in accordance with GAAP.

“IRS”
shall mean the Internal Revenue Service of the United States.

“Issuance
Request” – Section 2A.1.

“Issuer”
shall mean the BoS (USA) Inc. in its capacity as a Lender hereunder and not in
its capacity as Agent.  References to the
Lenders in this Agreement and the other Loan Documents (when used to refer to
BoS (USA) Inc.) shall (without duplication) include such Lender as Issuer.

“Latin
American Acquisition Entity” shall mean a Foreign Portfolio Entity which
has acquired Assets that originated in a Latin American country.

“Legal
Requirements” shall mean, with respect to any Person, all laws, common law,
statutes, rules and regulations of any Government Authority to which such
Person or any of its assets is subject or any judgment, decree, franchise,
order or permit of any Government Authority applicable to such Person or any of
its assets.

“Lender
Assignee” – Section 12.4(a).

“Lenders”
– introductory paragraph.

“LIBOR”
shall mean, for each applicable Interest Period, (x) the per annum rate of
interest at which U.S. Dollar deposits in the amount of the outstanding
principal balance of the Loan are or would be offered for such applicable
Interest Period in the London interbank market at 11:00 A.M. London time two
Business Days prior to the start of such applicable Interest Period as
published by the British Bankers’ Association as the “Interest Settlement Rate”
for such period, divided by (y) a percentage equal to 100% minus the then
stated maximum rate of all reserve requirements (including without limitation
any marginal, emergency, supplemental, special or other reserves required by
applicable law) applicable to any member bank of the Federal Reserve System in
the United States in respect of such funding or liabilities.

“LIBOR
Interest Determination Date” shall mean the date as of which LIBOR is determined,
which shall be two Business Days prior to the commencement of a LIBOR Interest
Period.

“LIBOR
Interest Period” shall mean, with respect to each LIBOR Loan, the interest
period applicable pursuant to Section 3.9(a) hereof.

“LIBOR
Loan” shall mean any Loan during any period that it bears interest
determined by reference to LIBOR.

“Lien”
shall mean any mortgage, deed of trust, security deed, pledge, security
interest, encumbrance, lien or other charge of any kind or any other agreement
or arrangement having the effect of conferring security (including any
agreement to give any of the foregoing, any assignment or lease in the nature
thereof, and any conditional sale or other title retention agreement), any lien
arising by operation of law, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction (or
any similar or  comparable law of any
jurisdiction that has not enacted the Uniform Commercial Code).

“Loan(s)”
– Section 2.1(a) or, in the context of the RAL, Loans under the RAL.

“Loan
Commitment” shall mean as to each Lender, the amount set forth opposite its
name on Schedule 2.1 under the heading “Loan Commitment” as such amount may be
modified by the provisions of any Transfer Supplement from time to time entered
into and as the same may from time to time be reduced or terminated pursuant to
Section 2.8(b) , Section 9 or any other Section of the Agreement.

“Loan
Documents” shall mean, individually and collectively, this Agreement, the
Notes, the Guaranties, the Pledge Agreements, the Security Agreements, the
other Security Documents and all other instruments and agreements heretofore or
from time to time hereafter executed by or on behalf of Borrower, any Primary
Obligor, any Related Entity or any other Loan Party in connection herewith or
therewith, in each case as amended, extended, restated, supplemented or
otherwise modified from time to time. 
Without limiting the generality of the foregoing, each

amendment to (or
constituting part of) this Agreement or any other Loan Document and each
instrument and agreement (including, without limitation, consents or waivers,
but excluding any amendment, consent or waiver executed prior to the Effective
Date) executed in connection with any Loan Document shall be deemed to be a
Loan Document for all purposes of the Agreement and the other Loan Documents.

“Loan
Party” shall mean, individually and collectively, Borrower and each Primary
Obligor and each other Person which has executed any Security Document as a
pledgor or grantor of collateral thereunder.

“Loans
Outstandings” as of any particular date shall mean the aggregate
outstanding principal amount of Loans as of such date in Dollars.

“LTV
Ratio” shall mean as of any date of determination the ratio of Total
Outstandings to the Borrowing Base as of such date.

“Majority
Lenders” as of a particular date shall mean the holders of at least 51% of
the aggregate unpaid principal amount of all Loans at the particular time
outstanding or, if no Loans are then outstanding, Lenders whose Commitments
aggregate at least 51% of the Total Commitment.

“Management
Letter” shall mean any correspondence or report submitted by the Auditors
to a Loan Party’s chief executive officer, its Board of Directors or any
committee thereof containing comments and suggestions concerning a Loan Party’s
accounting procedures and systems based upon the work done by the Auditors
during their annual or other audit.

“Material
Adverse Change” shall mean a material adverse change in (i) the
business, properties, operations, prospects or condition (financial or
otherwise) of Borrower, the Primary Obligors, Portfolio Entities and the
Related Entities, taken as a whole or (ii)  the ability of Borrower or any
other Loan Party to perform, or of Agent to enforce, any of the Obligations.

“Material
Adverse Effect” shall mean an effect that would result in a Material
Adverse Change.

“Material
Portfolio Entity” shall mean each Portfolio Entity, each Person listed on Schedule
I–(MPE) and each other Portfolio Entity (other than a Foreign Portfolio Entity)
with a Net Present Equity Value of $5,000,000 or more.  Each such 
Person, which at any time constitutes a Material Portfolio Entity shall
continue to constitute a Material Portfolio Entity until the time (if any) when
Borrower sends to Agent written notice (a “Redesignation Notice”)
executed by an Executive Officer of Borrower certifying, as to such Person that
the Net Present Equity Value of such Person (the “Subject MPE”) is below
$5,000,000 and has been below $5,000,000 for the preceding period of 90
consecutive days or more, and requesting that such Subject MPE no longer
constitute a Material Portfolio Entity.  
Provided that Borrower provides such additional information, if any,
that Agent may request with respect to such Subject MPE and that Agent has not
given Borrower notice that it disputes such redesignation of such Subject
MPE  within 30 days after receiving such
Redesignation Notice or, if later, within 30 days after

Agent received
additional information (if any) requested by it with respect to such requested
redesignation, the Subject MPE shall cease to constitute a Material Portfolio
Entity (until, the time, if any, that such Subject MPE  again satisfies the criteria applicable to
Material Portfolio Entities).

“Maturity
Date” shall mean November 12, 2010.

“MCS”
shall mean MCS et Associes S.A.

“Minn
Servicing” shall mean FirstCity Serving of Minnesota, Inc.

“Multiemployer
Plan” shall mean any employee benefit plan which is a “multiemployer plan”
within the meaning of Section 3(37) of ERISA and to which any Loan Party or any
ERISA Affiliate of either Borrower contributes or has been obligated to
contribute.

“Net Collections”
with respect to a Portfolio Entity for any applicable period shall mean the
gross aggregate amount received during such period by the Portfolio Entity on
account of the Assets of the Portfolio Entity (including, in addition, amounts
received by any REO Affiliate of such Portfolio Entity) or collateral therefor,
and including amounts received on account of such Assets prior to the
commencement of such period which were paid to or for the benefit of such
Portfolio Entity during such period, reduced by (a) amounts which were paid
directly to the Permitted Portfolio Company Creditor of such Portfolio Entity
under an Approved Portfolio Leverage Arrangement or amounts which were remitted
to such Creditor, in either case pursuant to the requirements of such Approved
Portfolio Leverage Arrangement, which, in any such case, have not been released
by such Creditor to (or for the benefit of) such Portfolio Entity (and/or any
REO Affiliate thereof), (b) servicing fees, custodial fees and lockbox bank
fees related to such Assets paid by such Portfolio Entity during such period,
(c) escrow payments or deposits made by any obligor related to an Asset, (d)
reasonable accounting and legal fees paid by the Portfolio Entity related to
the operation of the Portfolio Entity, and (e) Portfolio Protection Expenses
related to the Assets of the Portfolio Entity or its related REO Affiliate.

“Net
Present Equity Value” shall mean, with respect to any Person other than
ABL, the amount determined by multiplying (x) the FC Percentage in respect of
such Person and (y) the amount by which (A) the Net Present Value of the Assets
of such Person exceeds (B) the sum of (i) outstanding Indebtedness of such
Person under any Approved Portfolio Leverage Arrangements and (ii) indebtedness
for money borrowed by, or for any monetary judgment rendered against, such
Person; in the case of the determination of the Net Present Equity Value of an
REO Affiliate the outstanding Indebtedness of the REO Owner under any Approved
Portfolio Leverage Arrangements shall be allocated proportionately between the
REO Affiliate and the REO Owner; provided, however, with respect to ABL, “Net
Present Equity Value” shall mean an amount equal to (A) the sum of (i) the
unpaid principal amount payable to Borrower under the ABL Capital Note, plus
(ii) provided FCBLC shall hold all preferred stock issued by ABL, the sum of
the FC Percentage of the amount of capital contributions paid in cash to ABL
for the common stock of ABL, and the amount of capital contributions paid in
cash to ABL for preferred stock of ABL, plus (iii) retained earnings, if any,
minus (B) the sum of (i) accumulated deficit, if any, plus (ii) the sum of the
book values, determined in accordance with GAAP, of the

SBA License,
servicing rights, furniture, fixtures and equipment and prepaid expenses, as
reflected on the most recent balance sheet of ABL, plus (iii) all fees, costs
and expenses payable by ABL (including, without limitation, any fees, costs and
expenses of Wells Fargo Foothill, LLC which must be reimbursed or otherwise
paid by ABL) in connection with the negotiation, execution and delivery of the
ABL Facility, and including, without limitation, the closing fee payable
thereunder, plus (iv) such other reserves as Agent shall from time to time
deem, in good faith to be appropriate, which is not otherwise taken into
account in determining the Net Present Equity Value of ABL.

“Net
Present Value” as to
any Asset or Asset Pool, the net
present value of all reasonably projected future collections from such Asset(s)
reduced by reasonable and necessary collection expenses and discounted using
the “ASR NPV” discount rate assignments utilized by the Portfolio Entity in
making such determinations for each Asset as set forth on Exhibit F to the
Agreement, as adjusted from time to time with the approval of Agent; all of
which determinations must be reasonably satisfactory to Agent.

“New
Ventures” shall mean Franklin Joint Venture, a to-be-formed entity,
American Pioneer Bank, a Utah industrial bank, an investment in a De  Novo
bank, and such other ventures as the Agent and Borrower may hereafter designate.

“New
Ventures Borrowing Base” shall mean an amount equal to (A) the sum of (i)
all capital contributions paid in cash to any New Venture for the equity of
such New Venture plus (ii) retained earnings, if any, minus  (B) the sum of (i) accumulated deficit, if
any, plus (ii) such other reserves as Agent shall from time to time
deem, in good faith, to be appropriate, which is not otherwise taken into
account in determining the New Ventures Borrowing Base.  Once determined, the New Ventures Borrowing
Base shall remain in effect until the earlier of the next Borrowing Date or the
next Payment Date.

“Non-Default
Voluntary Custodial Arrangement” shall mean an arrangement to perfect a
lien in favor of Agent or the holder of a different Permitted Lien, in each
case, on certain specified Assets of a Person entered into voluntarily by a
Portfolio Entity or Related Entity at a time when no Default or Event of
Default has occurred and is continuing.

“Non–US
Seller” shall mean a Person selling or proposing to sell an Asset Pool to a
Portfolio Entity, which Asset Pool contains Assets which originated outside of
the United States.

“Notes”
– Section 2.3.

“Notice
of Borrowing” shall mean notice of borrowing providing the information
described in Section 2.2(a) or (b), as applicable, and such other information
as Agent shall require, in the form attached to this Agreement as Exhibit H
to the Loan Agreement.

“Notice
of Conversion” – Section 5.10.

“Obligations”
shall mean (x) with respect to each Loan Party other than Borrower, all
obligations of such Loan Party with respect to the repayment or performance of
any obligations

(monetary or
otherwise) of Borrower arising under or in connection with this Agreement, the
Notes or any other Loan Document, and (y) with respect to Borrower, all
obligations of Borrower with respect to the repayment or performance of
obligations (monetary or otherwise) arising under or in connection with this
Agreement, the Notes or any other Loan Document.

“Obligor
Funding Obligations” shall mean obligations (whether pending, contingent or
otherwise) of a Portfolio Entity to make one or more advances to a Person which
is the obligor of one or more outstanding loans the rights to which were
acquired by such Portfolio Entity pursuant to a purchase by such Portfolio
Entity of a portfolio of loans made by one or more Persons who are not
Affiliates or Associates of Borrower or of such Portfolio Entity.

Other
Indebtedness Instrument Unmatured Default – Section 7.1(f).

“Other
Laws” – Section 3.4.

“Parent”
shall mean any Person now or at any time hereafter owning or controlling (alone
or with Borrower, any Subsidiary and/or any other Person) at least a majority
of the issued and outstanding Stock or other ownership interest of Borrower or
any Subsidiary.  For purposes of this
definition, “control” shall have the same meaning ascribed to such term in the
definition of “Affiliate”. 
Notwithstanding the forgoing, no Person shall be a Parent which is not a
Parent of Borrower or a 51% or more owned subsidiary, directly or indirectly,
of Borrower.

“Past–Due
Rate” – Section 3.3.

“Payment
Date” – Section 5.3.

“PBGC”
shall mean the Pension Benefit Guaranty Corporation established pursuant to
Section 4002 of ERISA.

“Pension
Plan” shall mean any employee pension benefit plan subject to Title IV of
ERISA and maintained by any Loan Party or any ERISA Affiliate of any Loan Party
or any such plan to which any Loan Party or any ERISA Affiliate is or has been
required to contribute on behalf of any of its employees, other than a Multiemployer
Plan.

“Permitted
Liens” shall mean (i) any liens created pursuant to the Loan Documents
in favor of Agent for the benefit of Lenders and Agent to secure the
Obligations; (ii)  liens for Charges which are not yet due and payable, or
claims and unfunded liabilities under ERISA not yet due and payable or which
are being contested in good faith by appropriate proceedings diligently
pursued; (iii) liens arising in connection with worker’s compensation,
unemployment insurance, old age pensions and social security benefits which are
not overdue or are being contested in good faith by appropriate proceedings
diligently pursued, provided that in the case of any such contest any
proceedings commenced for the enforcement of such lien shall have been duly suspended
and such provision for the payment of such lien has been made on the books of
Borrower (or the applicable Affiliate) as may be required by GAAP; (iv) liens
incurred in the ordinary course of business to secure the performance of
statutory obligations arising in connection with progress payments or advance
payments due under contracts with the United 

States Government
or any agency thereof entered into in the ordinary course of business; (v) any
liens securing Indebtedness of Borrower (or any Affiliate) to any Persons in an
amount not greater than $250,000 for each such Person, provided the aggregate
amount of Indebtedness secured by all such Liens shall not exceed $500,000;
(vi) Charges relating to Assets of First B and First X; (vii) as to any Affiliate,
other than Borrower, a Primary Obligor or a Portfolio Entity, purchase money
liens securing permitted indebtedness incurred in connection with the
acquisition of Assets and other indebtedness incurred under the credit
agreement under which such permitted indebtedness to acquire such Assets was
incurred so long as such liens encumber only the Assets acquired, (viii) as to
any Affiliate, other than Borrower or a Primary Obligor or a Portfolio Entity,
liens relating to permitted Indebtedness incurred in connection with the
warehousing of Assets or the securitization of Assets, so long as such liens
encumber only the Assets warehoused or securitized; (ix) those liens
disclosed on Schedule (PL); (x) those liens granted to CFSC in the
Shared Collateral pursuant to the Holdings/CFSC Loan Documents (as in effect on
the date of the execution and delivery of the Holdings/CFSC Loan Documents);
(xi) liens on Assets of a Portfolio Entity in favor of the Person providing
financing under an Approved Portfolio Leverage Arrangement in respect of the
acquisition of Assets acquired pursuant to such Approved Portfolio Leverage
Arrangement to the extent such liens are required by, and secure only
obligations under, such Approved Portfolio Leverage Arrangement; and (xii) liens
on real property of a Portfolio Entity or an REO Affiliate in favor of a Person
providing financing of development expenses related to such real property which
is permitted under Section 8.3(x).

“Permitted
Portfolio Company Creditor” shall mean those creditors of a Portfolio
Entity which have provided loans pursuant to Approved Portfolio Leveraged
Arrangement.

“Permitted
Restrictions” on the payment of dividends by a Person shall mean provisions
(i) of an Approved Portfolio Leverage Arrangement, or (ii) of a loan agreement,
as in effect when first entered into, to which such Person is a party as
borrower which prohibit such Person from paying dividends for either of the
following reasons:

(x)
the funds restricted from being distributed are required to satisfy a leverage
or required reserve amount covenant (but only if such covenant would not
reasonably be expected to significantly impair such Person’s ability to pay
dividends if anticipated cash flows are received as and when anticipated and in
approximately the amounts anticipated); and

(y)
such dividends are restricted when there exists an event of default of a
customary type to be found in such agreements and that also permits the
relevant lender to accelerate the maturity of indebtedness outstanding under
such agreement.

“Permitted
Shareholder Agreement” shall mean a Shareholder Agreement with terms
permitted by Exhibit E.

“Permitted
Shareholder Arrangements” shall mean arrangements which would arise from a
Permitted Shareholder Agreement.

SUBORDINATED DELAYED DRAW CREDIT AGREEMENT

SUBORDINATED DELAYED DRAW CREDIT AGREEMENT, dated as of September 5,
2007, among FIRSTCITY FINANCIAL CORPORATION, a Delaware corporation (“Borrower”),
the financial institutions from time to time party hereto (each a “Lender”
and collectively, the “Lenders”) and BoS (USA) Inc., as agent for
Lenders (in such capacity, “Agent”).

W I T N E S S E T H :

WHEREAS, Borrower has requested Lenders to make loans from time to time
to Borrower, and Lenders are willing to make loans from time to time to
Borrower, on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, it is agreed:

Section 1.                                            DEFINITIONS.

(a)                                  Terms used in this
Agreement which are defined in Annex I hereto shall have the meanings specified
in such Annex I hereto (unless otherwise defined herein) and shall include in
the singular number the plural and in the plural number the singular.

(b)                                 Unless otherwise
specified, each reference in this Agreement or in any other Loan Document to a
Loan Document shall mean such Loan Document as the same may from time to time
be amended, extended, restated, supplemented or otherwise modified.

(c)                                  All references to
Sections in this Agreement or in Annex I hereto shall be deemed references to
Sections in this Agreement unless otherwise specified.

(d)                                 As used in this
Agreement and the other Loan Documents, the terms “including” and “such as” are
illustrative and not limitative.

Section 2.                                            THE
LOANS.

2.1                                 The
Loans.

(a)                                  Subject to the terms
and conditions set forth herein, each Lender severally agrees, at any time and
from time to time during the Commitment Period to make one or more loans in
Dollars to Borrower (each a “Loan”, and collectively the “Loans”)
in an aggregate outstanding principal amount not in excess of its Loan
Commitment; provided that, after giving effect to all pending requests
for Loans, Total Outstandings shall not exceed the lesser of (x) the Total Loan
Commitment then in effect and (y) Borrowing Base Availability; and provided,
further, that, the aggregate amount of Acquisition Loans (as defined
below) financing the acquisition of any Eligible Asset Pool shall not exceed
(i) the Applicable Portfolio Percentage, times the Acquisition Price of
the Related Asset Pool, in the event proceeds of such Loans shall be 

contributed to the capital of the acquiring Portfolio Entity, or (ii)
the Acquisition Price of the Related Asset Pool, in the event proceeds of such
Loans shall be loaned to the acquiring Portfolio Entity.

(b)                                 The Loans shall be
used by Borrower solely (i) (A) to make advances to a Primary Obligor, the full
amount of which advances are used by such Primary Obligor (as more fully set
forth in other portions of this Section 2, in Section 6B and in other Sections
of this Agreement) to make, directly or indirectly, a loan or contribution to
the capital of an Eligible Portfolio Entity to be used by such entity for the
acquisition of one or more Eligible Asset Pools, (B) to make advances to an
Eligible Portfolio Entity, the full amount of which advances are used by such
entity for the acquisition of one or more Eligible Asset Pools, (C) to make an
advance to FC Commercial, the full amount of which advance is used by FC
Commercial to make the FC Commercial Real Property Financing Loan, (D) to make
advances to FC Commercial to enable FC Commercial to make loans to FirstCity
Denver Investment Corp. to be loaned to Crestone Portfolio Entities under the
Crestone Facility, (E) to make investments in New Ventures, (F) if requested by
Borrower in the Notice of Borrowing for such Loans, to pay any fee (including
the Utilization Fee) in respect of such Loans (such Loans, “Acquisition
Loans”); or (ii) for working capital and other general corporate purposes
(such Loans, “Working Capital Loans”).

(c)                                  Loans made pursuant
to Section 2.1 shall be made from each Lender pro  rata, based
upon the percentage that each Lender’s Loan Commitment represents of the Total
Loan Commitment.

(d)                                 Amounts loaned
hereunder and repaid from time to time, whether at maturity, by prepayment or
otherwise, shall not be available for reborrowings thereafter and the Total
Loan Commitment shall be reduced by the amount of any such repayment.

2.2                                 Notice
of Borrowing.

(a)                                  Whenever Borrower
desires to utilize the Loan Commitments for an Acquisition Loan, it shall
deliver to Agent a Borrowing Base Certificate and a Notice of Borrowing not
later than 11:00 a.m., Closing Office Time, three Business Days prior to the
date of the proposed borrowing, which Notice of Borrowing shall, among other
items, (A) specify (i) the Eligible Portfolio Entity to whose capital Borrower
or a Primary Obligor will, directly or indirectly, contribute or loan the
proceeds of the Loans; (ii) the Asset Pool or Asset Pools to be acquired by
such Portfolio Entity; (iii) the date of the proposed borrowing (which shall be
a Business Day (each, a “Borrowing Date”)); (iv) if such Borrowing Date
is a Payment Date, whether such Loans shall constitute Base Rate Loans, LIBOR
Loans or, if the Agent in its sole discretion consents thereto, Fixed Rate
Loans (if not specified or if such date is not a Payment Date, Base Rate Loans
shall be deemed to have been requested); (v) the total amount of such borrowing
(which shall be in a minimum amount of $100,000 and integral multiples of
$100,000); and (vi) the amount, if any, of fees requested to be borrowed; and
(B) certify that (x) Borrower delivered the Final Asset Pool Acquisition
Certificate in respect of such Asset Pool or Asset Pools not later than five
Business Days before the Borrowing Date specified in such notice and that all
information set forth in such Asset Pool Acquisition Certificate (as revised
through the Final Asset Pool Acquisition Certificate and as further revised to
the extent permitted by Section 6B.4) 

 2
 

remains true and correct and (y) on or prior to the date of such Notice
of Borrowing, Borrower has delivered to Agent a Final NPV Pool Certificate in
respect of such Asset Pool.

(b)                                 Whenever Borrower
desires to utilize the Loan Commitments for Working Capital Loans, it shall deliver
to Agent a Notice of Borrowing not later than 11:00 a.m., Closing Office Time,
three Business Days prior to the date of the proposed borrowing, which notice
shall specify (i) the date of the proposed borrowing (which shall be a Business
Day) (each, also a “Borrowing Date”), (ii) if such Borrowing Date is a
Payment Date, whether such Loans shall constitute Base Rate Loans, LIBOR Loans
or, if the Agent in its sole discretion consents thereto, Fixed Rate Loans (if
not specified or if such date is not a Payment Date, Base Rate Loans shall be
deemed to have been requested) and (iii) the total amount of such borrowing
(which shall be in a minimum amount of $250,000 and, if greater, in integral
multiples of $100,000).

(c)                                  Agent shall promptly
notify (in writing or by telephone, confirmed as soon as possible thereafter in
writing) each of Lenders of the date and type (i.e., Acquisition Loan or
Working Capital Loan) of any proposed Loans, the amount of the Loan or Loans
such Lender is being requested to make and whether such Loans shall constitute
Base Rate Loans or, if the Agent in its sole discretion consents thereto, Fixed
Rate Loans.  Each Lender will make the
amount of its Loan or Loans available to Agent, at the Closing Office, before
1:00 p.m. Closing Office Time on the date specified in the Notice of Borrowing
in same day funds.   Such proceeds
shall be made available to Borrower (subject to Section 2.2(d)) by Agent, in
the same type of funds received by Agent, at the Closing Office against
delivery to Agent for the account of each Lender of such instruments, documents
and papers as are provided for herein. 
Agent shall deliver the instruments, documents and papers received by it
for the account of each Lender to such Lender or upon its order.

(d)                                 Unless Agent shall
have received notice from a Lender prior to 11:00 a.m., Closing Office Time, on
the date of any borrowing that such Lender will not make available to Agent
such Lender’s ratable portion of such borrowing, Agent may assume that such
Lender has made such portion available to Agent on the date of such borrowing
in accordance with Section 2.2(c) and Agent may, in reliance upon such
assumption, make available to Borrower on such date a corresponding
amount.  If and to the extent such Lender
shall not have made such ratable portion available to Agent, such Lender and
Borrower severally agree to repay to Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to Borrower until the date such amount is repaid
to Agent, at the rate from time to time prevailing on the applicable Note;
provided that to the extent such interest is paid by a Lender, interest shall
be at the rate specified in Section 11.10 hereof.  If such Lender shall pay to Agent such
corresponding amount, such amount so paid shall constitute such Lender’s Loan
as part of such borrowing for purposes of this Agreement.

(e)                                  The failure of any
Lender to make the Loan to be made by it as part of any borrowing shall not
relieve any other Lender of its obligation, if any, hereunder to make its Loan
on the date of such borrowing.  No Lender
shall be responsible for the failure of any other Lender to make the Loan to be
made by such other Lender on the date of any borrowing.

 3
 

2.3                                 The
Notes.

(a)                                  Borrower’s obligation
to pay (x) the principal of, and interest on, the Loans of each Lender shall be
evidenced by a promissory note payable to the order of such Lender, each
substantially in the form of Exhibit A (each a “Note”, and
collectively, the “Notes”).

(b)                                 The Note of each
Lender shall: (i) be dated the Effective Date; (ii) be in an original principal
amount, with respect to each Lender, as set forth on Schedule 0 hereto;
(iii) be payable in full on the Maturity Date (subject to mandatory prepayment
as herein provided).

(c)                                  The Notes shall be,
and hereby are, secured by the Collateral and the Security Documents.

2.4                                 Mandatory
Prepayments and Repayments of Loans.

(a)                                  If at any time Total
Outstandings shall exceed the Total Loan Commitment in effect at such time,
Borrower shall immediately prepay the Loans in an amount equal to or greater
than the amount of such excess together with the Prepayment Fee.

(b)                                 If at any time Total
Outstandings shall exceed Borrowing Base Availability at such time and Total
Outstandings under the RAL exceed the RAL Borrowing Base Availability at such
time, Borrower shall immediately prepay amounts outstanding under the RAL in
accordance with and as required by Section 2.4 of the RAL, and then, after
giving effect to such prepayment, if Total Outstandings still exceed Borrowing
Base Availability at such time, Borrower shall immediately prepay the Loans in
an amount equal to or greater than the amount of such excess.

(c)                                  Borrower shall repay
the unpaid principal amount of all Loans, together with all unpaid interest
thereon and all other fees and amounts due with respect thereto in full on the
Maturity Date.

(d)                                 Unless there shall
exist any Default or any Event of Default, Borrower shall be entitled to designate
whether mandatory prepayments are applied to Working Capital Loans or
Acquisition Loans.

2.5                                 Voluntary
Prepayments of Loans.

(a)                                  Borrower may, upon
not less than three Business Days prior written notice to Agent (which notice
Agent shall promptly transmit to Lenders in writing or by telephone, confirmed
as soon as possible thereafter in writing) prepay any Loans in whole at any
time, or from time to time in part in amounts of $250,000 (and, if greater, in
integral multiples of $50,000); provided that at the time of any such
prepayment, Borrower shall pay all interest accrued on the principal amount so
prepaid together with the Prepayment Fee. 
Repayments pursuant to this Section 2.5 shall be applied to such Loans
as Borrower may at the time in writing direct or, if no such direction is
given, as determined by Agent.  All
notices pursuant to this Section 2.5 shall be irrevocable and result in
the principal amount of Loans specified therein becoming due and payable on the
prepayment date specified therein. 
Amounts prepaid under this Section 2.5 may not be reborrowed.

 4
 

2.6                                 Reduction
of Commitments.

(a)                                  Borrower shall have
the right at any time and from time to time upon at least three Business Days’
prior written notice to Agent (which notice Agent shall promptly transmit to
Lenders in writing or by telephone, confirmed as soon as possible thereafter in
writing) to reduce permanently in amounts equal to $500,000 (and if greater, in
integral multiples of $100,000) or terminate the unutilized (after giving
effect to all pending requests for Loans) Total Loan Commitment.

(b)                                 Any reduction of the
Total Loan Commitment pursuant to this Section 2.6 shall be allocated to the
Loan Commitments of Lenders, pro  rata, based upon the percentage
that each Lender’s Loan Commitment represents of Total Loan Commitment.  Any reduction to or any termination of the
Total Loan Commitment shall be accompanied by the payment in full of any
Commitment Commission then accrued hereunder together with the Prepayment Fee
on the amount of such reduction or termination.

2.7                                 Subordination.  Borrower and each Lender hereby covenants and
agrees that notwithstanding any other provision of this Agreement, the payment
of the principal of and interest on the Loans shall be subordinated in right of
payment to the prior payment in full of all Senior Indebtedness at any time
outstanding to the extent set forth in the Subordination Agreement.

Section 3.                                            INTEREST.

3.1                                 Rate
of Interest.

(a)                                  Subject to the
provisions of Section 3.3, Borrower agrees to pay interest in respect of the
unpaid principal amount of the Loans from the date such Loans are made until
maturity (whether by acceleration or otherwise) for each period from and
including each Payment Date to but excluding the immediately following Payment
Date at the following rates:  (i) Base
Rate Loans, at a rate per annum equal to the sum of the Base Rate, plus the
Applicable Margin in effect for such period, such rate to change as and when
the Base Rate shall change, (ii) LIBOR Loans, at a rate per annum equal to
LIBOR plus the Applicable Margin in effect for such period and (iii) Fixed Rate
Loans, at the Fixed Rate applicable thereto.

(b)                                 Loans which are made
on a date other than a Payment Date shall constitute Base Rate Loans.

3.2                                 Interest
Payment Dates.  Interest on and prior
to maturity in respect of each Loan shall be payable in arrears (i) on each
Payment Date; (ii) upon any repayment or prepayment (to the extent accrued on
the principal amount so repaid or prepaid); and (iii) at maturity (whether by
acceleration or otherwise) and, after maturity, on demand.

3.3                                 Past
Due Rate.  Each Loan (and any overdue
interest in respect of each Loan) shall bear interest for each day on which an
Event of Default exists (after as well as before judgment), payable on demand,
at a rate per annum (the “Past-Due Rate”) equal to the greater of 5% in
excess of the interest rate otherwise applicable to such Loan on such day or
7.5% in excess of the Base Rate in effect on such day.

 5
 

3.4                                 Capital
Adequacy.  If any Lender shall have
determined that the applicability of any law, rule, regulation or guideline
adopted after the date hereof, it being agreed that “adopted after the date
hereof” shall include compliance by a Lender or any lending office or holding
company of a Lender with any Basle Law whether or not such Basle Law was in
effect, applicable or phased in on or prior to or after the date hereof
pursuant to or arising out of the July 1988 report of the Basle Committee on
Banking Regulations and Supervisory Practices entitled “International
Convergence of Capital Measurement and Capital Standards” or pursuant to or
arising out of any report, agreement or convention of  any international banking group adopted
subsequent to such 1988 report (said laws, rules, regulations and guidelines
pursuant to or arising out of such 1988 report or any such subsequently adopted
report, agreement or convention being sometimes collectively herein referred to
as “Basle Laws”), or the adoption after the date hereof of any other
law, rule, regulation or guideline regarding capital adequacy (any such other
law, rule, regulation or guideline being sometimes herein referred to as “Other
Laws”), or any change in any of the foregoing (after the date hereof in
respect of Other Laws; before or after the date hereof in respect of Basle
Laws) or in the enforcement or interpretation or administration of any of the
foregoing (after the date hereof in respect of Other Laws; before or after the
date hereof in respect of Basle Laws) by any Government Authority, central bank
or comparable agency charged with the enforcement or interpretation or
administration thereof, or compliance by any Lender (or any lending office of
any Lender) or any holding company of any Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender’s capital or on the capital of such
Lender’s holding company, if any, as a consequence of its Commitments, Loans or
any of its obligations hereunder to a level below that which such Lender or
such Lender’s holding company could have achieved but for such applicability,
adoption, change or compliance (taking into consideration such Lender’s
policies and the policies of such Lender’s holding company with respect to
capital adequacy) by an amount deemed by such Lender to be material, then,
upon demand by such Lender (or by Agent on such Lender’s behalf), Borrower
shall pay to such Lender from time to time such additional amount or amounts as
will compensate such Lender or such Lender’s holding company for any such
reduction suffered, together with interest on each such amount from the date
demanded until payment in full (after as well as before judgment) thereof at
the Base Rate. Each Lender shall endeavor to give Borrower notice of its
intention to require compensation under this Section 3.4 within a reasonable
time after the loan officer of such Lender with responsibility for this
Agreement becomes aware of its entitlement to such compensation under this
Section 3.4, but no failure to give any such notice shall affect or relieve
Borrower of any of Borrower’s obligations under this Section 3.4 or under any
other provision of this Agreement or any other Loan Document or result in any
obligation or liability of Agent or any Lender to Borrower or any other
Person.  A certificate of a Lender as to
the amount required to be paid by Borrower under this Section 3.4 and showing
in reasonable detail the basis for the calculation thereof shall, absent
manifest error, be final and conclusive (it being understood that in no event
shall any Lender be required to disclose in such certificate or otherwise any
non-public information). In determining such amount or amounts, a Lender may
use any method of averaging and attribution as it (in its sole and absolute
discretion) shall deem applicable.

3.5                                 Determination
of Rate of Borrowing.  As soon as
practicable after 10:00 A.M. (New York time) on each LIBOR Interest
Determination Date, Agent shall determine (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties) the 

 6
 

rate of interest (the “Rate of Borrowing”) which shall be applicable to
the LIBOR Loans for the next succeeding LIBOR Interest Period and shall
promptly give notice thereof in writing or by telephone (confirmed in writing)
to Borrower and Lenders.

3.6                                 Substituted
Rate of Borrowing.

(a)                                  In the event that on
any LIBOR Interest Determination Date any Lender shall have reasonably
determined (which determination shall be final and conclusive and binding upon
all parties but, with respect to the following clauses (i), (ii)(y) and
(ii)(z), shall be made only after consultation with Agent on the date of such
determination) that:

(i)                                     by
reason of any changes arising after the date of this Agreement affecting the
interbank LIBOR market or affecting the position of such Lender in such market,
adequate and fair means do not exist for ascertaining the applicable Rate of
Borrowing by reference to LIBOR with respect to the LIBOR Loans as to which an
interest rate determination is then being made; or

(ii)                                  by
reason of (x) the requirements of Regulation D, (y) any change after the date
hereof in any other applicable law or governmental rule, regulation or order
(or any interpretation thereof and including the enactment of any new law or
governmental rule, regulation or order) or (z) other circumstances affecting
such Lender or the interbank LIBOR market or the position of such Lender in
such market (such as for example but not limited to a change in official
reserve requirements or increased capital reserves required or imposed by any
regulatory authority or entity (domestic or foreign) having jurisdiction over
or with respect to such Lender to the extent not provided for in clause (ii)(x)
above), LIBOR shall not represent the effective pricing to such Lender for U.S.
dollar deposits of comparable amounts for the relevant periods;

then, and in any such event, Lender so affected shall
on such date give notice of such determination in writing or by telephone
(confirmed in writing) to Borrower and to Agent.  Thereafter, Borrower shall pay to such
Lender, upon written demand therefor, such additional amounts (in the form of
an increased rate of, or a different method of calculating, interest or
otherwise as such Lender in its reasonable discretion shall determine) as shall
be required to cause such Lender to receive interest with respect to its LIBOR
Loan for the LIBOR Interest Period following such LIBOR Interest Determination
Date and for any succeeding LIBOR Interest Period with respect to which such
changes or requirements apply (each such period, an “Affected Interest Period”)
at a rate per annum equal to 5.75% in excess of the effective pricing to such
Lender for U.S. dollar deposits to make or maintain its LIBOR Loans, provided
that in the case of any such determination pursuant to clause (ii)(x), the
written notice from such Lender to Agent and Borrower on the relevant LIBOR
Interest Determination Date shall specify (x) any such amount on account
thereof theretofore incurred, and such amount shall be paid at such time and
(y) the additional amount required to be paid with respect to the relevant
Affected Interest Period (with such amount so stated to be final with respect
to the relevant Affected Interest Period) and such additional amount shall be
paid at the same time, and together with, the interest otherwise payable in
respect of such LIBOR Loans for such Affected Interest Period.  A certificate as to additional amounts owed
any such Lender, showing in reasonable detail the basis 

 7
 

for the calculation thereof, submitted to Borrower by
such Lender through Agent shall, absent manifest error, be final and conclusive
and binding upon all of the parties hereto.

(b)                                 In lieu of paying
additional moneys to any Lender affected by Section (a), other than clause
(ii)(x) thereof (any such Lender, together with any Lender affected by Section 3.7(a),
an “Affected Lender”), Borrower may (subject to Section 3.8), by giving notice
in writing or by telephone (confirmed in writing) to the Affected Lender, Agent
and the other Lenders on such LIBOR Interest Determination Date, (x) require
the Affected Lender to convert its LIBOR Loan then outstanding or requested
that is so affected into a Base Rate Loan on the first day of the Affected
Interest Period, such notice to pertain only to the Loans of the Affected
Lender and to have no effect on the obligations of the other Lenders to maintain
LIBOR Loans, or (y) terminate the obligations of Lenders to make or maintain
Loans as, or convert Loans into, LIBOR Loans and in such event, on the first
day of what would have been the next LIBOR Interest Period, all LIBOR Loans
shall be outstanding as Base Rate Loans.

3.7                                 Required
Termination and Prepayment.

(a)                                  In the event that at
any time any Affected Lender shall have reasonably determined (which
determination shall be final and conclusive and binding upon all parties) that
the making or continuation of its LIBOR Loans has become unlawful by compliance
by such Lender in good faith with any law, governmental rule, regulation,
guideline or order, the Affected Lender shall on such date give notice in
writing or by telephone (confirmed in writing) to Agent and Borrower of such
determination.  The obligation of the
Affected Lender to make or maintain its LIBOR Loan or Loans so affected shall
be terminated and Borrower shall forthwith and in any event no later than the
earliest of (x) the termination of the LIBOR Interest Period in effect at the
time any such determination pursuant to this Section 3.7(a) is made, (y) the
first day of the LIBOR Interest Period commencing immediately thereafter if
such determination is made in respect of a requested LIBOR Loan, or (z) five
Business Days after receipt of notice from an Affected Lender under this
Section 3.7(a), take one of the actions specified in Section 3.7(b).  If by the earliest of (x), (y) or (z)
Borrower has not exercised one of the options specified in Section 3.7(b),
Borrower shall be deemed to have exercised the option set forth in clause (iii)
of Section 3.7(b) and to have given the notice specified therein.

(b)                                 Upon receiving any
notification provided in Section 3.7(a), Borrower may (subject to Section 3.8)
exercise one of the following options:

(i)                                     If
the determination by an Affected Bank relates only to LIBOR Loans then being
requested by Borrower pursuant to a Notice of Borrowing or to Base Rate Loans
then being requested by Borrower to be converted to LIBOR Loans pursuant  to a Notice of Conversion, Borrower may by
giving notice in writing to Agent and Lenders prior to the date on which such
LIBOR Loan is to be made or converted, withdraw such Notice of Borrowing or
Notice of Conversion for all Lenders;

(ii)                                  Upon
written notice to Lenders, Borrower may terminate the obligations of Lenders to
make or maintain Loans as, or convert Loans into, LIBOR Loans and in such
event, Borrower, shall not later than the time specified in subsection 3.7(a),
convert all LIBOR Loans into Base Rate Loans by giving notice thereof to Agent
and Lenders.

 8
 

(iii)                               Borrower
may, by giving notice in writing to the Affected Lender, Agent and the other
Lenders require the Affected Lender to make the LIBOR Loan then being requested
as a Base Rate Loan (or to keep outstanding as a Base Rate Loan the Base Rate
Loan then being converted), such notice to pertain only to the affected LIBOR
Loans of the Affected Lender and to have no effect on the obligations of the
other Lenders to make or maintain LIBOR Loans.

3.8                                 Compensation.  Borrower shall compensate each Lender, upon
written request by such Lender (which request shall be made through Agent and
shall set forth the basis for requesting such amounts), for all losses,
expenses and liabilities (including, without limitation, any interest paid by
such Lender to lenders of funds borrowed by it to make or carry its LIBOR Loans
to Borrower, losses sustained by such Lender in connection with the liquidation
or re employment of such funds and all other funding losses) which such Lender
may sustain: (i) if for any reason a conversion of any LIBOR Loan does not
occur on a date specified therefor pursuant to Section 3.6, 3.7 or 3.10, or any
conversion into a LIBOR Loan does not occur on the date specified therefor in
Section 3.10, (ii) if for any reason any prepayment or repayment or conversion
of any of its LIBOR Loans occurs on a date which is not the last day of a LIBOR
Interest Period applicable thereto, (iii) if any prepayment, repayment or conversion
of any of its LIBOR Loans occurs on such last day of the LIBOR Interest Period
applicable thereto in any amount in excess of the amount notified to Agent in
writing not less than three Business Days prior to such last day of such LIBOR
Interest Period, (iv) if any prepayment, repayment or conversion of any of its
LIBOR Loans occurs without at least three Business Days prior written notice
thereof having been given to Agent, (v) if any prepayment or repayment of any
of its LIBOR Loans is not made on any date specified in a notice thereof given
by Borrower or if any prepayment or repayment contemplated or required by a
Waterfall Certificate is not made on the Payment Date following the date such
Waterfall Certificate is delivered, (vi) as a consequence of any default under
this Agreement or the delivery of any Certified Error Certificate or (vii) if
for any reason any prepayment or repayment or conversion of any of its Fixed
Rate Loans occurs on a date which is not the last day of the Fixed Rate Loan
Period applicable thereto.

3.9                                 LIBOR
Interest Period Determination.

(a)                                  Each LIBOR Interest
Period for any Loan shall commence on a Payment Date and expire on the
succeeding Payment Date.

(b)                                 No LIBOR Interest
Period in respect of any Loan shall extend beyond its stated maturity date.

(c)                                  Subject to Section
3.9(e), if Agent shall not have received written notice from Borrower on or
prior to 11:00 a.m. (Closing Office time) at least three Business Days prior to
a Payment Date that Borrower has elected to convert all or a portion of Loans
outstanding as LIBOR Loans to Base Rate Loans or Fixed Rate Loans in accordance
with the other provisions of this Agreement, Borrower shall be deemed to have
elected to have such Loans (or portion thereof, as the case may be) continued
as LIBOR Loans for a new LIBOR Interest Period.

 9
 

(d)                                 Unless the Majority
Lenders specifically agree in writing, no LIBOR Interest Period may be selected
at any time that a Default or Event of Default exists and Borrower shall be
deemed to have elected to convert such LIBOR Loans into Base Rate Loans.

(e)                                  Borrower shall not be
permitted to maintain as LIBOR Loans any Loans if the outstanding amount of
such Loans to be maintained as LIBOR Loans is less than $1,000,000, or an
integral multiple of $100,000.

3.10                           Conversions.  Borrower shall have the option to convert, on
any Payment Date, all or any portion of Loans from Base Rate Loans to LIBOR
Loans or, with the written consent of the Agent, Fixed Rate Loans or from LIBOR
Loans to Base Rate Loans or, with the written consent of the Agent, Fixed Rate
Loans or Fixed Rate Loans to Base Rate Loans or LIBOR Loans; provided that (i)
after giving effect to any such conversion the amount outstanding as a LIBOR
Loan, if any, shall be equal to $1,000,000 or an integral multiple of $100,000
in excess thereof, and the amount outstanding as Base Rate Loans, if any, shall
not be less than $20,000; and (ii) unless the Majority Lenders specifically
agree in writing, no conversion to LIBOR Loans shall be permitted at any time
that a Default or Event of Default exists. 
Each such conversion shall be effected by Borrower giving Agent written
notice thereof (a “Notice of Conversion”) on or prior to 11:00 a.m. (Closing
Office time) at least three Business Days prior to a Payment Date, specifying
the amount of Loans to be converted and whether such Loans are Acquisition
Loans or Working Capital Loans..

Section 4.                                            FEES.

4.1                                 Commitment
Commission.  Borrower agrees to pay
to Agent for the account of each Lender a commitment commission with respect to
each Lender’s Loan Commitment for the period commencing on the Effective Date,
to and including the Maturity Date, computed at a rate per annum (calculated on
the basis of a 360-day year and the actual number of days elapsed) equal to
..25% of the average daily Unutilized Loan Commitment of such Lender during the
period for which payment is made.  Such
commission (each a “Commitment Commission”) shall be due and payable
quarterly in arrears on the fourth to last Business Day of the months of March,
June, September, and December, commencing with September 25, 2007 (such date to
include the full period from the Effective Date until said date).

4.2                                 Upfront
Fee.  Borrower agrees to pay to
Agent, for the ratable account of each Lender (based upon the percentage that
each Lender’s Loan Commitment represents of the Total Loan Commitment) an
upfront fee (the “Upfront Fee”) in the amount of $250,000, which fee
shall be deemed earned in full on the date hereof and shall be due and payable
in four equal installments of $62,500, with the first installment due and
payable on the date hereof and the three subsequent installments due and
payable on March 5, 2008, September 5, 2008 and March 5, 2009.

Section 5.                                            PAYMENTS,
ETC.

5.1                                 Currency
of Payments.  All payments of
principal and interest on Loans and under the Notes shall be made to Agent in
immediately available funds in Dollars.

 10
 

5.2                                 Payments
on Non-Business Days; Calculations. 
Whenever any payment to be made hereunder or under the Notes shall be stated
to be due on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and interest shall be payable at
the applicable rate during such extension. 
Interest on Base Rate Loans hereunder and under the Notes shall be
calculated on the basis of a 365-day year and the actual number of days elapsed
and interest on Fixed Rate Loans and LIBOR Loans hereunder and under the Notes
shall be calculated on the basis of a 360-day year and the actual number of days
elapsed.  If for any reason a Loan is
repaid on the same day on which it is made, one day’s interest (subject to the
other provisions of this Agreement) shall be paid on that Loan.  Borrower hereby authorizes and directs Agent
and each Lender to charge any account of Borrower maintained at any office of
Agent or such Lender with the amount of any principal, interest or fee when the
same becomes due and payable under the terms hereof or of the Notes; provided,
however, that neither Agent nor any Lender shall be under any obligation
to charge any such account.

5.3                                 Payment
Date and Distribution of Funds.

(a)                                  Until such time as
Agent, or Senior Agent, as the case may be, has exercised control over the Cash
Flow Cash Collateral Account and the Cash Collateral Account-Servicing in
accordance with the Loan Documents, all funds in such accounts shall be
distributed by Borrower on the fourth to last Business Day of each month (each,
a “Payment Date”) pursuant to the distribution statement approved in
writing by Agent, or Senior Agent, as the case may be (or at any other times as
may be agreed upon from time to time by Borrower, Agent, Senior Agent and
Lenders) to be paid and applied as follows:

(i)                                     First,
to the payment to Senior Agent, for the account of Senior Lenders, of all
interest under the RAL which is then due and payable;

(ii)                                  Second,
to the payment to Senior Agent, for the account of Senior Lenders, of any
commitment fee payable pursuant to the RAL;

(iii)                               Third,
to the payment to Agent, for the account of Lenders, of all interest on the
Loans which is then due and payable;

(iv)                              Fourth,
to the payment to Agent, for the account of Lenders, of any Commitment
Commission payable pursuant to Section 4.1;

(v)                                 Fifth,
to the payment to Senior Agent, for the account of Senior Lenders, as a
principal payment, any mandatory prepayment which is then due and payable under
the RAL;

(vi)                              Sixth,
to the payment to Agent, for the account of Lenders, as a principal payment,
any mandatory prepayment which is then due and payable pursuant to Section
2.4(a) and 2.4(b);

(vii)                           Seventh,
to the payment to Senior Agent, for the account of Senior Lenders, an amount
equal to all of any fees, late charges and other fees and expenses which are
then due and payable to Senior Agent and/or Senior Lender under or in 

 11
 

connection
with the RAL or which will become so due and payable on or before the last day
of the calendar month in which the Payment Date in question occurs;

(viii)                        Eighth,
to the payment to Agent, for the account of Lenders, an amount equal to all of
any fees, late charges and other fees and expenses which are then due and
payable to Agent and/or Lenders under this Agreement or any of the other Loan
Documents or which will become so due and payable on or before the last day of
the calendar month in which the Payment Date in question occurs;

(ix)                                Ninth,
to the payment to Senior Agent, for the account of Senior Lenders, as a
principal payment, an amount equal to the amount (if any) of any voluntary
prepayment which Borrower elects to pay pursuant to the RAL;

(x)                                   Tenth,
to the payment to Agent, for the account of Lenders, as a principal payment, an
amount equal to the amount (if any) of any voluntary prepayment which Borrower
elects to pay pursuant to Section 2.5;

(xi)                                Eleventh,
to the payment to Borrower of any remaining balance of the funds in the Cash
Flow Cash Collateral Account and the Cash Collateral Account-Servicing.

(b)                                 Upon the exercise by
Senior Agent or Agent, as the case may be, of its right to control the Cash
Flow Cash Collateral Account and the Cash Collateral Account-Servicing in
accordance with the Loan Documents, all funds in the Cash Flow Cash Collateral
Account and the Cash Collateral Account-Servicing may be applied by Senior
Agent or Agent, as the case may be, to Obligations in the following order of
priority:  (i) to any interest under the
RAL then due and owing, (ii) to any commitment fee under the RAL then due and
owing, (iii) to any other fees under the RAL then due and owing, (iv) to any
principal amount then due and owing under the RAL, (v) to any interest on the
Notes (pro rata according to the aggregate amount of interest then due and
payable on the Notes) then due and payable, (vi) to any Commitment Commission
then due and payable pursuant hereto, (vii) to any other fees then due and
payable pursuant to Section 4 of this Agreement, pro rata according to the
aggregate amount of fees then due and payable, (viii) to any principal amount
then due under the Notes, and (ix) to any amounts not otherwise listed in this Section
5.3 then due and payable by Borrower under this Agreement, the Notes or the
Security Documents.

5.4                                 Net
Payments; Application.

(a)                                  All payments
hereunder and under the Loan Documents (including, without limitation,
repayments and prepayments pursuant to Section 2) shall be made by Borrower to
Agent, except as otherwise provided in Section 5.1 in freely transferable U.S.
dollars, and in same day funds at the Closing Office without setoff or
counterclaim and in such amounts as may be necessary in order that all such
payments (after (i) withholding for or on account of any present or future
taxes, levies, imposts, duties or other similar charges of whatsoever nature
imposed on the amounts described above by any government or any political
subdivision or taxing authority thereof, other than any tax (other than such
taxes referred to in clause (ii) below) imposed on a Lender pursuant to the
income tax laws of the jurisdiction where such Lender’s principal or 

 12
 

lending office or offices are located (collectively, the “Taxes”)
and (ii) deduction of an amount equal to any taxes on or measured by the net
income payable to such Lender with respect to the amount by which the payments
required to be made by this Section 5.4 exceed the amount otherwise specified
to be paid under this Agreement and the Notes) shall not be less than the
amounts otherwise specified to be paid under this Agreement and the Notes.  With respect to each such deduction or
withholding imposed in respect of any payment by or on behalf of Borrower,
Borrower shall promptly (and in no event later than 30 days thereafter) furnish
to Agent such certificates, receipts and other documents as may be required to
establish any tax credit, exemption or reduction in rate to which any Lender or
holder of a Note may be entitled.  Each
Lender, other than a Lender organized and existing under the laws of the United
States of America or any political subdivision thereof, agrees to furnish
Borrower, as soon as practicable after any written request of Borrower to such
effect, any executed form reasonably requested by Borrower such as IRS Form
W-8BEN or W-8ECI, and any other applicable form as to such Lender’s
entitlement, if any, to exemption from, or a reduced rate of, or its subjection
to, United States withholding tax on amounts payable to it hereunder by
Borrower or under the Notes of Borrower and each such Lender undertakes to use
its best efforts promptly to notify Borrower of any material change in any
information, statement or form so furnished to Borrower; provided, however,
that any failure on the part of any Lender to furnish any such information,
statements or forms shall in no way affect the obligations of Borrower or the
rights of any Lender under the terms of this Agreement or of the Notes.

5.5                                 Distribution
by Agent.  All payments received by
Agent on behalf of Lenders on account of principal and interest under this
Agreement or the Notes or on account of any fees payable for the account of
Lenders shall be promptly distributed by Agent to Lenders (in the type of funds
received by Agent) as follows: (i) if in respect of principal of any Loans made
to Borrower then on a pro rata basis to each of Lenders holding the
Loans in respect of which such payment is being made; (ii) if in respect of
interest on the Loans, then to each Lender in the proportion that the aggregate
amount of such unpaid interest due on the Loans of each such Lender bears to
the aggregate amount of such unpaid interest due on all such Loans; (iii) if in
respect of fees, then to Lenders in accordance with their entitlement thereto
(based on each Lender’s share of the Total Loan Commitment, in the case the
Upfront Fee and the Commitment Commission; and (iv) if in respect of a
payment under Section 3 other than an interest payment hereof, to each Lender
in accordance with its entitlement thereto.

Section 6.                                            CONDITIONS
PRECEDENT TO EFFECTIVENESS

This Agreement shall become effective when and as of the date (the “Effective
Date”) that each of the following conditions have been satisfied to the
satisfaction of Agent (or waived by Agent). 
If the Effective Date shall not have occurred by the close of business
(New York time) on October 2, 2007 (or such later date as is agreed to by Agent
in writing), this Agreement shall not become effective and shall be deemed
rescinded, null and void.

6.1                                 Default,
etc.  On the Effective Date (both
before and after giving effect to the occurrence of the Effective Date) there
shall exist no Default or Event of Default and all representations and
warranties made by the Loan Parties herein or in the other Loan Documents or
otherwise by the Loan Parties in writing in connection herewith or therewith
shall be true and 

 13
 

correct in all material respects with the same effect as though such
representations and warranties have been made at and as of such time.

6.2                                 Notes.  Agent shall have received for each of Lenders
the Notes, each duly executed and completed by Borrower.

6.3                                 Supporting
Documents of Borrower.  There shall
have been delivered to Agent (with sufficient copies for each of Lenders) such
information and copies of documents (if any), approvals (if any) and records
(certified where appropriate) of corporate and legal proceedings (if any) in
addition to those listed on the Closing Checklist as Agent or any Lender may
have reasonably requested relating to the Loan Parties’ entering into and
performance of the Loan Documents or any other agreements or documents related
thereto.

6.4                                 Officer’s
Certificate.  There shall have been
delivered to Agent (with sufficient copies for each of Lenders) a certificate
of an Executive Officer of Borrower certifying, as of the Effective Date,
compliance with the conditions of Section 6.1 and also the absence of any
Material Adverse Changes of the type referred to in Section 6.8.

6.5                                 Certifications;
Financial Statements.  Borrower shall
have delivered to Agent such financial statements and certifications of
financial statements as Agent may have requested, which statements shall
include, in any event, month end financial statements of the type required by
Section 7.1(a) and certified by the CFO as of the most recent month ending 30
days prior to the Effective Date, the annual financial statements required by
Section 7.1(b) and 7.1(c) for the Fiscal Year most recently ended (or the prior
Fiscal Year, if less than 105 days have passed since the end of a Fiscal Year)
accompanied by the certifications required by Section 7.1(d).

6.6                                 Approvals
and Consents.  All orders,
permissions, consents, approvals, licenses, authorizations and validations of,
and filings, recordings and registrations with, and exemptions by (all of the
foregoing, “Requisite Consents”), any Government Authority, or any other
Person, required to authorize or required in connection with the execution,
delivery and performance of this Agreement or the other Loan Documents and the
transactions contemplated hereby and thereby by any Loan Party shall have been
obtained (and, if so requested, furnished to Agent, with sufficient copies for
Lenders).

6.7                                 Legal
Opinions.  Agent shall have received legal opinions (in sufficient
counterparts for each of Lenders) dated the Effective Date from Haynes and
Boone, LLP, counsel to Borrower and each other Loan Party, in form and
substance satisfactory to Agent.

6.8                                 Adverse
Change.  There shall have been, in
Agent’s opinion, no Material Adverse Change since June 30, 2007.  Neither Agent nor any Loan Party shall have
become aware of any previously undisclosed information with respect to any Loan
Party which, in Agent’s opinion, would have a Material Adverse Effect

6.9                                 Change
in Law; No Opposition.  (i) No change
shall have occurred in applicable law or in applicable regulations thereunder
or in the interpretations thereof by any Governmental Authority which, in the
opinion of any Lender, would make it illegal for such Lender to make one or
more Loans hereunder; and (ii) no suit, action or proceeding shall be pending
or 

 14
 

threatened before or by any Governmental Authority seeking to restrain
or prohibit the making of any Loan or the consummation of the transactions
contemplated hereby.

6.10                           All
Proceedings to be Satisfactory.  
All corporate, partnership, limited liability company and legal
proceedings and all instruments, documents and papers in connection with the
transactions contemplated by this Agreement and the other Loan Documents and
the other documents referred to herein shall be satisfactory in form and
substance to Agent, and Agent and each Lender shall have received all such
information and copies of all documents which Agent or such Lender may
reasonably have requested in connection herewith, such documents where
appropriate to be certified by proper corporate officials or governmental
authorities.

6.11                           Fees
and Expenses.  The fees referred to
in Section 4.1 and Section 4.2, the legal fees and expenses of Agent’s New York
counsel and (if any) local or special counsel in connection with the
transactions contemplated by this Agreement shall (to the extent demand for
payment thereof shall have been made) have been paid in full.

6.12                           Security
Documents, Schedules, etc.  There
shall have been executed and delivered by the parties thereto all Guaranties,
Security Documents and other instruments and documents required by this
Agreement, and Borrower shall have delivered to Agent all Schedules referenced
herein as being attached to this Agreement.

Section 6A.                                                                                  CONDITIONS
PRECEDENT

TO  ALL LOANS.

Lenders shall not be obligated to make any Loans on or after the
Effective Date unless, at the time of the making of such Loan (except as
hereinafter indicated) the following conditions (unless waived in writing by
the Majority Lenders) have been satisfied:

6A.1                       Certain
Conditions.  At the time of the
making of such Loan, and immediately after giving effect thereto, (a) all
deficiencies, if any, with respect to conditions precedent to any prior Loan
shall have been corrected to the satisfaction of Agent, (b) all of the
conditions specified in Sections 6.1, 6.6, 6.8, 6.9 and 6.10 (with any
reference in any such Section to the Effective Date being deemed to be a reference
to the date of such Loans) shall be satisfied to the satisfaction of Agent,
(c) each of the Notes, the Guaranties and the Security Documents shall be
in full force and effect and no party thereto shall have failed to perform in
any material respect any of its obligations thereunder, (d) no issuer of
any legal opinion issued in connection with any Loan Document or the making of
any Loan shall have rescinded or qualified any such legal opinion, (e) no
issuer thereof shall have rescinded or qualified any of the financial
statements, certificates, letters, reports, analyses, Requisite Consents or
other opinions referred to in Section 6, and (f) there shall have been, in
the Majority Lenders’ opinion, no Material Adverse Change since the Effective
Date.

6A.2                       Subsequent
Opinions of Counsel.  If reasonably
requested by Agent or Majority Lenders, Agent shall have received from any or
all of the counsel referred to in 6.7 (or other counsel satisfactory to Agent)
such favorable supplemental legal opinions addressed to Agent and Lenders and
dated the date of such Loan and covering such matters incidental to the 

 15
 

transactions contemplated by this Agreement as Agent or the Majority
Lenders shall reasonably request, each of which opinions shall be in form and
substance satisfactory to Agent and Lender requesting same.

6A.3                       Officer’s
Certificate.

(a)                                  If
requested by Agent, Agent shall have received a certificate of an Executive
Officer of Borrower certifying, as of the date of the Loan then being made,
compliance with the provisions of Section 6.1 (with the reference therein
to the Effective Date being deemed a reference to the date such Loans is being
made) and further to the effect that the conditions specified in
Section 6A.1 are satisfied at such time.

(b)                                 The
making of each Loan subsequent to the Effective Date shall constitute a
representation and warranty by Borrower to Agent that, at the time of said
subsequent Loan (and after giving effect thereto), (i) all representations and
warranties contained herein or in the other Loan Documents or otherwise made by
Borrower or any other Loan Party in connection herewith or therewith are true
and correct in all material respects with the same effect as though such
representations and warranties were being made at and as of such time, (ii) no
Default or Event of Default exists and (iii) the conditions specified in
Section 6A.1 are satisfied at such time.

6A.4                       Fees
and Expenses.  To the extent demand
therefor shall have been made, all legal fees and expenses of Agent’s New York
counsel and (if any) local or special counsel in connection with the
transactions contemplated by this Agreement shall have been paid in full.

Section 6B.                                                                                    ADDITIONAL
CONDITIONS

PRECEDENT TO ACQUISITION LOANS

Lenders shall not be obligated to make any Acquisition Loans unless, at
the time of making of such Loans, the following conditions (unless waived in
writing by the Majority Lenders), in addition to the conditions set forth in
Section 6A (unless waived in writing by the Majority Lenders), have been satisfied:

6B.1                         Eligible
Portfolio Entity.  (i) The
Portfolio Entity (the “Subject Portfolio Entity”) identified in the
related Asset Pool Acquisition Certificate as the entity which will acquire the
Asset Pool specified therein with a loan from Borrower or a loan and/or
contribution to its capital, directly or indirectly, from a Primary Obligor
(together with any other equity contributions made by the Person holding other
Equity Interests pursuant to Section 6B.2(a) and the proceeds of Indebtedness
(if any) incurred pursuant to Approved Portfolio Leverage Arrangements) shall
be an Eligible Portfolio Entity; (ii) there shall have been no change to the
Charter Documents of such Person or to any Shareholder Agreement relating to
such Person from the Charter Documents and Shareholder Agreement provided with
such Asset Pool Acquisition Certificate (or, if the Loans are being requested
in respect of an Asset Pool other than the first Asset Pool acquired by such
Subject Portfolio Entity, since the Charter Documents and Shareholder Agreement
delivered in connection with the acquisition of such first Asset Pool), except
for any such changes consented to in writing by Agent; (iii) such Charter
Documents and Shareholder Agreement shall be the sole agreements with respect to
equity 

 16
 

ownership arrangements
with respect to such Subject Portfolio Entity and such Charter Documents and
Shareholder Agreement shall evidence Permitted Shareholder Arrangements with
respect to such Subject Portfolio Entity; and (iv) all action contemplated by
Section 7.15 and Section 6B.11 in connection with such Subject Portfolio
Entity, including, without limitation, the amendment of Section 2 to the
Subsidiary Collateral Assignment or Subsidiary Pledge Agreement (as applicable)
to specify such Subject Portfolio Entity, and the delivery of any promissory
notes, stock certificates or other certificates or instruments issued by such
Subject Portfolio Entity and of an acknowledgement of lien by such Subject
Portfolio Entity, all in form and substance satisfactory to Agent, shall have
been taken and completed.

6B.2                         Capital
Structure.

(a)                                  No
Third Party Investor shall have greater rights with respect to such Subject
Portfolio Entity than Borrower or any Affiliate thereof (except to the extent
that, if such Third Party Investor has acquired more Equity Interests in such
Subject Portfolio Entity than Borrower or such Affiliate thereof (and was
permitted to do so pursuant to the terms hereof), such greater rights are
commensurate with and derive solely from, such larger holding of Equity
Interests).

(b)                                 No
Third Party Investor shall have acquired equity interests or voting rights in
such Subject Portfolio Entity on a basis more favorable to such Person than the
arrangements pursuant to which Borrower or relevant Primary Obligor directly or
indirectly acquired its equity interests in such Subject Portfolio Entity (and
without limiting the foregoing, no Third Party 
Investor shall have acquired its Equity Interests at a cash cost per
unit or interest lower than that paid by Borrower or such Primary Obligor) and
no Third Party Investor acquiring any Equity Interests in such Subject
Portfolio Entity shall have been given any consideration (other than issuance
of such Equity Interests) for making its equity contribution.

6B.3                         Consummation
of Asset Acquisition.  Except as to
any Asset Pool that consists of an Asset originated by a Crestone Portfolio
Entity, there shall have been delivered to Agent evidence satisfactory to Agent
that the acquisition of the Asset Pool described in the related Asset Pool
Acquisition Certificate shall have been consummated in accordance with the
terms of the applicable asset purchase agreement (without any waiver of any
material provision thereof by the Subject Portfolio Entity) and the Asset Pool
conforms to the description thereof contained in the Asset Pool Acquisition
Certificate as modified by revisions permitted by Section 6B.4, that the entire
amount of proceeds of such Loan were loaned or contributed by Borrower to the
Subject Portfolio Entity or a Primary Obligor which directly or indirectly
loaned or contributed such funds to the Subject Portfolio Entity simultaneously
with the closing of such acquisition, that the entire amount of the capital
contribution by other holders of the Equity Interests in such Subject Portfolio
Entity were contributed, and the proceeds of all Indebtedness incurred by such
Subject Portfolio Entity were received by such Subject Portfolio Entity, at the
same time as or before such Primary Obligor’s contribution or loan, and that
such Subject Portfolio Entity used all such loans or capital contributions
together with all such proceeds of Indebtedness to acquire such Asset
Pool.  As to any Asset Pool that consists
of an Asset originated by a Crestone Portfolio Entity, there shall have been
delivered to Agent evidence satisfactory to Agent that the origination of the
Asset Pool described in the related Asset Pool Acquisition Certificate shall
have been consummated in accordance with the terms set forth in the applicable
Asset Pool 

 17
 

Acquisition Certificate
(without any waiver of any material provision thereof by the Crestone Portfolio
Entity) and the Asset Pool conforms to the description thereof contained in the
Asset Pool Acquisition Certificate as modified by revisions permitted by
Section 6B.4, that the entire amount of proceeds of such Loan were loaned under
the Crestone Facility to the Crestone Portfolio Entity simultaneously with the
funding of the Asset Pool, and, and that such Crestone Portfolio Entity used
all such funds to originate the Asset Pool. 

6B.4                         Notices.

(a)                                  The
Final Asset Pool Acquisition Certificate in respect of the Asset Pool in
respect of which such Loans are requested shall have been delivered to Agent
not less than 5 Business Days prior to the Borrowing Date of such Loans; provided
that additional written revisions to the applicable Asset Pool Acquisition
Certificate may be delivered to Agent until 11:00 a.m. (Closing Office time) on
the day which is two Business Days preceding the Borrowing Date for such Loans
if such revisions relate only to the Acquisition Price, the amount of Loans
being requested (three Business Days notice being required if such Loans are to
be LIBOR Loans) or provide additional details as to the related Asset Pool which
do not result in the Asset Pool as so described being different in any material
respect from the Asset Pool as most recently described in the Final Asset Pool
Acquisition Certificate delivered on or prior to the fifth Business Day
preceding such Borrowing Date. 

(b)                                 A
Notice of Borrowing, Borrowing Base Certificate and Final NPV Pool Certificate
in respect of the related Asset Pool shall have been delivered to Agent, each
in accordance with Section 2.2.

(c)                                  Agent
shall have been provided with such other information as to the Asset Pool as it
shall have reasonably requested.

6B.5                         Asset
Pool.  The Asset Pool shall be an
Eligible Asset Pool.

6B.6                         Officer’s
Certificate.

(a)                                  Borrower
shall have delivered to Agent a certificate of an Executive Officer certifying
compliance with Sections 6B.1, 6B.2, 6B.3, 6B.5 and 6B.10.

(b)                                 In
addition to the representations and warranties applicable to the making of such
Loan set forth in Section 6A.3, the making of each such Loan shall constitute a
representation and warranty by Borrower to Agent that, at the time of said Loan
(and after giving effect thereto) all conditions specified Sections 6B.1, 6B.2,
6B.3, 6B.5 and 6B.10 are satisfied at such time.

6B.7                         Opinion
of Counsel.  If requested by Agent,
in the case of a Subject Portfolio Entity which is a US Person, Haynes and
Boone LLP or other counsel to Borrower satisfactory to Agent and, in the case
of any other Subject Portfolio Entity, counsel satisfactory to Agent, shall
have delivered to Agent an opinion of counsel as to matters relating to the
Subject Portfolio Entity or such other matters as Agent may reasonably request.

 18
 

6B.8                         Reserved.

6B.9                         Leverage
Arrangements.  Not less than five
Business Days prior to the proposed Borrowing Date for such Loans (or such
lesser period of time (if any) to which Agent consents in writing) Borrower
shall have delivered to Agent copies, certified by an Executive Officer as
complete and correct of each instrument, agreement and other document
evidencing any of the arrangements with respect to Indebtedness incurred and to
be incurred by the Subject Portfolio Entity as Approved Portfolio Leverage
Arrangements, or a certificate from an Executive Officer that such Subject
Portfolio Entity has not incurred any Indebtedness with respect to any other
Asset Pool and will not incur any Indebtedness with respect to the Asset Pool
in respect of which such Loans are requested.

6B.10                   Adverse
Waterfall Event.  No Adverse
Waterfall Event shall have occurred at any time during the preceding six months
with respect to any Asset Pool owned by the Subject Portfolio Entity.

6B.11                   Pledged
Shares and Notes.

(a)                                  Each
Primary Obligor shall have executed and delivered to Borrower a revolving
credit note payable to order of Borrower in a principal amount equal to the Total
Commitment, or if less the aggregate amount of Loans which may from time to
time be advanced by Borrower to such Primary Obligor, and Borrower shall have
delivered such notes to Agent in accordance with Section 7.15(b)

(b)                                 In
the event the proceeds of such Loans will be loaned by Borrower to the Subject
Portfolio Entity, no later than 90 days following the related Funding Date, the
Subject Portfolio Entity shall have executed and delivered to Borrower a note
payable to order of Borrower in principal amount equal to the amount of the
Loans, and Borrower shall have delivered such note to Agent in accordance with
Section 7.15(b).  In the event the
proceeds of such Loans shall be advanced by Borrower to a Primary Obligor and
loaned directly or indirectly by such Primary Obligor to the Subject Portfolio
Entity, no later than 90 days following the related Funding Date, such Subject
Portfolio Entity shall have executed and delivered, directly or indirectly, to
such Primary Obligor, a promissory note payable to the order of such Primary
Obligor in a principal amount equal to the amount of such Loans, and such
Primary Obligor shall have delivered such note to Agent in accordance with
Section 7.15(b).  In the event the
proceeds of such Loans shall be advanced by Borrower to a Primary Obligor and
directly or indirectly contributed by such Primary Obligor to the capital of
the Subject Portfolio Entity, no later than 90 days following the related
Funding Date, such Subject Portfolio Entity shall have issued and delivered to
such Primary Obligor, directly or indirectly, shares of its stock, partnership
interests, membership interests or similar equity interests evidencing such
capital contribution, and such Primary Obligor shall have delivered such shares
of stock, partnership interests, membership interests or similar equity
interests to Agent to the extent required pursuant to Section 7.15(a).

6B.12                   Minimum
Portfolio Leverage.   After giving
effect to such Loans, the sum of the Net Present Equity Values of all Portfolio
Entities which have an FC Percentage of 100% and which do not have an Approved
Portfolio Leverage Arrangement shall not be greater than 50% of the Aggregate
Net Present Equity Value.

 19

All documents, agreements, instruments, certificates, financial
statements, legal opinions, analyses, reports and other papers required to be
delivered by this Section 6B shall be in form and substance satisfactory to
Agent and shall be delivered (with sufficient copies for each of Lenders) to
Agent at its Closing Office or as Agent may otherwise direct.

Section 6C.                                    ADDITIONAL CONDITIONS

Notwithstanding any provision herein to the contrary no Lender shall be
obligated to make any Loans on or after the Effective Date unless the following
conditions (unless waived in writing by the Majority Lenders) have been
satisfied:

6C.1.  Checklist Documents.  The documentation set forth on the Closing
Checklist (Schedule 6C.1), including, without limitation, the Guaranties,
Pledge Agreements and Security Agreements listed thereon, satisfactory to Agent
in form and substance, shall have been delivered to Agent, and such other
actions referred to on such Schedule and in such documentation shall have been
taken.

6C.2.  Legal Opinions. 
Agent shall have received a legal opinion (in sufficient counterparts for each
of Lenders) from Haynes and Boone, LLP, counsel to Borrower and each other Loan
Party, in form and substance satisfactory to Agent.

6C.3.  Intercompany Security
Agreements.  Each Primary Obligor
shall have delivered (i) intercompany security agreements in form and substance
satisfactory to Agent securing each such Person’s obligations under its Pledged
Note together with such other documents and instruments relating thereto and
records of company proceedings and (ii) if requested by Agent, legal opinions,
as Agent may reasonably request.

6C.4.  Schedules.  All schedules to this Loan Agreement not
attached hereto on the Effective Date shall have been complete in a manner
satisfactory to Agent.

6C.5.  UCC Statements.  Lien search results confirming the absence of
any perfected Liens prior to Lenders’ and of any other Liens other than Liens
permitted hereunder shall have been delivered to Agent and all actions with
respect to the Liens created by the Security Documents as are necessary or
appropriate to perfect such Liens shall have been taken.

6C.6.  Equity in New Ventures.  Borrower shall deliver, or cause to be
delivered, to Agent evidence satisfactory to the Agent of the pledge of all
Equity Interests acquired by any Primary Obligor in any New Ventures to the
extent required pursuant to Section 7.15(a), together with all necessary
consents to such pledge.

Section 7.                                            AFFIRMATIVE
COVENANTS.

Borrower warrants and represents to and covenants to the Lenders and
Agent that, so long as this Agreement is in effect and until the Commitments
are terminated and all of the Loans, together with interest and all other
obligations (including Deemed Disbursements and Reimbursement Obligations and
fees and disbursements in connection therewith) are paid in full, Borrower will
(unless it shall have first procured the written consent of the Majority
Lenders to do otherwise) (i) perform the obligations set forth in this Section
7, (ii) cause each Primary 

 20
 

Obligor, Wholly-Owned Subsidiary and other Loan Party
to perform the obligations set forth in this Section 7 which are applicable to
such Person and (iii) exercise commercially reasonable efforts to cause each
Material Portfolio Entity to perform the obligations set forth in this Section
7 which are applicable to such Person.

7.1                                 Financial
Statements.  Borrower will furnish to
Agent and each Lender:

(a)                                  As
soon as available and in any event within 30 days after the close of each
calendar month, as at the end of such month and for the period commencing at
the end of the previous Fiscal Year and ending with the end of such month, a
consolidated and consolidating balance sheet of Borrower and the other members
of the Consolidated Group, and the related statement of operations for such
period, all certified by the CFO of Borrower and each other member of the
Consolidated Group as being prepared in accordance with GAAP and to present
fairly the financial position and results of operation of such Person for such
period;

(b)                                 As
soon as available but not later than one hundred five (105) days after the
close of each Fiscal Year of Borrower, as at the end of and for the Fiscal Year
just closed, an audited consolidated balance sheet of Borrower and the other
members of the Consolidated Group, the related statement of operations
(including income statement) and a reconciliation of capital for such year, all
certified on an unqualified basis by a firm of independent certified public
accountants selected by Borrower and acceptable to Agent in Agent’s sole and
absolute discretion;

(c)                                  As
soon as available but not later than one hundred five (105) days after the
close of each Fiscal Year of Borrower, as at the end of and for the Fiscal Year
just closed, an unaudited consolidating balance sheet of Borrower and the other
members of the Consolidated Group, the related statements of operations
(including income statement) and a reconciliation of capital for such year,
prepared by the CFO of Borrower;

(d)                                 Concurrently
with the delivery of the financial statements described in subsection (b)
above, a certificate of the aforesaid independent certified public accountants
certifying to Agent that based upon their examination of the affairs of
Borrower and the other members of the Consolidated Group, performed in
connection with the preparation of said financial statements, Borrower is in
compliance with the covenants set forth in Section 8.18 hereof, or, if Borrower
is not in compliance, the nature of the noncompliance therewith;

(e)                                  Concurrently
with delivery to its stockholders, copies of all financial and other
information delivered by Borrower to such Persons, including without
limitation, its proxy statements and annual reports to stockholders.  Within two (2) Business Days after delivery
to the SEC by Borrower, which in all cases shall be on a timely basis in
accordance with the applicable document and the Securities Laws, copies of all
reports and other filings filed by Borrower with the SEC, including without
limitation, all reports on Forms 10K, 10Q or 8K promulgated under the
Securities Exchange Act of 1934, as amended, and all registration statements
filed under the Securities Act of 1933, as amended;

(f)                                    Concurrently
with delivery of the financial statements required pursuant to Section 7.1(a)
and (b) hereof, a certificate executed by the President, Treasurer or CFO of
Borrower that (A) no Event of Default or Default has occurred and is continuing
under this 

 21
 

Agreement, (B) Borrower is in compliance with
the covenants set forth in Section 8.18 hereof, setting forth Borrower’s
calculations with respect to such compliance; and (C) no event of default and
no event or condition which, with the passage of time or the giving of notice
or both, would constitute an event of default has occurred and is continuing
under any other Indebtedness Instrument (“Other Indebtedness Instrument
Unmatured Default”) or, if an Event of Default or Default has occurred
under this Agreement or an event of default or Other Indebtedness Instrument
Unmatured Default has occurred under any other Indebtedness Instrument, setting
forth the details of such event and the action which Borrower proposes to take
with respect thereto;

(g)                                 Promptly
upon receipt thereof, copies of all detailed financial reports and Management
Letters, if any, submitted to any member of the Consolidated Group by the
Auditors, in connection with each annual or interim audit of their respective
books by such Auditors;

(h)                                 As
soon as possible and in any event (A) within 30 days after a Loan Party, or any
of the respective ERISA Affiliates of any Loan Party, knows that any
Termination Event described in clause (i) of the definition of Termination
Event with respect to any Pension Plan has occurred or is expected to occur and
(B) within 10 days after a Loan Party or any of its ERISA Affiliates knows that
any other Termination Event with respect to any Pension Plan has occurred or is
expected to occur, a statement of the CFO of Borrower describing such
Termination Event and the action, if any, which the affected Loan Party or
ERISA Affiliate proposes to take with respect thereto;

(i)                                     Promptly
and in any event within five Business Days after receipt thereof by a Loan
Party or any of its ERISA Affiliates from the PBGC, copies of each notice
received by such Person of the PBGC’s intention to terminate any Pension Plan
or to have a trustee appointed to administer any Pension Plan, any notice of
noncompliance issued by the PBGC with respect to a proposed standard
termination of a Pension Plan, and any notice issued by the PBGC with respect
to a proposed distress termination of a Pension Plan;

(j)                                     Promptly
and in any event within 30 days after the filing thereof with the IRS, copies
of each Schedule B (Actuarial Information) to the annual report (Form
5500 Series) with respect to each Pension Plan;

(k)                                  Promptly
and in any event within five Business Days after receipt thereof by a Loan
Party or any of its ERISA Affiliates from a Multiemployer Plan sponsor, a copy
of each notice received by such Person concerning (x) the imposition or amount
of withdrawal liability under Subtitle E of Title IV of ERISA or (y) any
determination by a Multiemployer Plan sponsor that such Multiemployer Plan is,
or is expected to be, in “reorganization” (within the meaning of Section 4241
of ERISA) or “insolvent” (within the meaning of Section 4245 of ERISA), or has
incurred or is expected to incur an “accumulated funding deficiency” (within
the meaning of Section 302 of ERISA or Section 412 of the Code);

(l)                                     Upon
request of Agent made from time to time, a copy of any Pension Plan sponsored,
contributed to, participated in or maintained by Borrower or any ERISA
Affiliate;

 22
 

(m)                               With
reasonable promptness, such other information respecting the business,
properties, operations, prospects or condition (financial or otherwise) of any
member of the Consolidated Group and any other Primary Obligor and, to the
extent reasonably available, any other Related Entity as Agent or any Lender
may from time to time in writing reasonably request provided,  that Borrower shall not be required to
furnish to Agent or any Lender any such information relating to a Portfolio
Entity if (i) the Charter Documents of, or Shareholder Agreement relating to,
such Person, in each case as in effect on the date of formation of such Person,
prohibit such disclosure and (ii) notice of such prohibition on disclosure is
provided to Agent within five days of formation of such Person (any such
restriction, a “Disclosure Restriction”); and

(n)                                 As
soon as available and in any event within 30 days after the close of each
calendar month, as at the end of such month and for the period commencing at
the end of the previous Fiscal Year and ending with the end of such month, a
balance sheet of each New Venture, and the related statement of operations for
such period, each certified by the CFO of such New Venture as being prepared in
accordance with GAAP and to present fairly the financial position and results
of operation of such New Venture for such period.

7.2                                 Other Required
Notices.

(a)                                  Borrower
shall notify Agent promptly after obtaining knowledge of:

(i)                                     except
as otherwise previously disclosed, any event or occurrence which Borrower has
determined could have a Material Adverse Effect as a result of a loss or
decline in value of the Assets of Borrower, any Primary Obligor, any Portfolio
Entity or any Related Entity due to casualty or any other adverse occurrence
and the estimated (or actual, if available) amount of such loss or decline;

(ii)                                  the
institution of (x) any suit or administrative proceeding which if determined
adversely to Borrower, any Primary Obligor, any Portfolio Entity or any Related
Entity is reasonably likely to or could reasonably be expected to result in a
Material Adverse Effect, and (y) any other suit or administrative proceeding
against Borrower, any Primary Obligor or any Portfolio Entity in which the
uninsured amount involved is $750,000 or more, such notice to be given on or
prior to the end of the calendar month in which the applicable event occurs;

(iii)                               Borrower,
any Primary Obligor or any Material Portfolio Entity becoming subject to any
Charge, restriction, judgment, decree or order which could reasonably be
expected to materially adversely affect the operations, financial conditions or
business of such Person, or any other Portfolio Entity or any Related Entity
becoming subject to any Charge, restriction, judgment, decree or order if the
same could reasonably be expected to materially adversely affect the
operations, financial conditions or business of Borrower, any Primary Obligor,
or any Material Portfolio Entity;

(iv)                              the
commencement of any lockout, strike or walkout relating to any labor contract
to which Borrower, any Primary Obligor, any Portfolio Entity or any Related 

 23
 

Entity is a party,
if the same could reasonably be expected to have a Material Adverse Effect;

(v)                                 except
as otherwise previously disclosed, any event or occurrence in respect of
Borrower, any Primary Obligor, any Portfolio Entity or any Related Entity which
could reasonably be expected to have a Material Adverse Effect;

(vi)                              (x)  the occurrence of a default by Borrower, any
Primary Obligor, any Portfolio Entity, any Related Entity or any other Loan
Party under any agreement, document or instrument to which such Person is a
party which could reasonably be expected to have a Material Adverse Effect, or
(y) the occurrence of any default by Borrower, any Primary Obligor or any other
Loan Party which could reasonably be expected to materially and adversely
affect any such Person’s ability to perform its respective obligations under
the Loan Documents;

(vii)                           the
filing of a petition by or against Borrower, any Primary Obligor, any Portfolio
Entity, any Related Entity or any other Loan Party under any section or chapter
of the United States Bankruptcy Code or any similar law or regulation or if any
such Person shall make an assignment for the benefit of its creditors or if any
case or proceeding is filed by or against any such Person for its dissolution
or liquidation;

(viii)                        the
making of an application for the appointment of a receiver, trustee or
custodian for any of the Assets of Borrower, any Primary Obligor, any Material
Portfolio Entity, any Related Entity or any other Loan Party, other than a
Non-Default Voluntary Custodial Arrangement;

(ix)                                the
exercise by any holder of any option, warrant or right to purchase any Equity
Interest in Borrower, any Primary Obligor or any Material Portfolio Entity; and

(x)                                   the
issuance or sale of any Securities by Borrower, any Primary Obligor or any
Portfolio Entity, whether or not permitted pursuant to the terms hereof.

(b)                                 On
the 25th day of each month or, if sooner, on the fourth
to last Business Day of each month, Borrower shall deliver to Agent (i)
Waterfall Certificates in respect of each Asset Pool and Portfolio Entity,
certified by an Executive Officer of Borrower; and (ii) a Summary Waterfall
Certificate in respect of all Asset Pools; and (iii) a report in the form
attached hereto as Exhibit B setting forth the computation of the Aggregate
Undistributed Funds of all Portfolio Entities.

(c)                                  Borrower
shall notify Agent of the occurrence of any Extraordinary Transaction no later
than 10 days prior to the occurrence of such event.

(d)                                 (i)  Borrower shall give Agent notice that a
Portfolio Entity has become a Material Portfolio Entity (due to the amount of
Assets contributed to it on the date of its formation or an increase in Assets
thereafter) within 30 days of such Person becoming a Material Portfolio Entity.

 24
 

(ii)                                  Borrower
shall give Agent notice that an Immaterial Entity has ceased to constitute an
Immaterial Entity (due to an increase in the fair market value of its assets or
such company engaging in any business) within 30 days of such Person ceasing to
constitute an Immaterial Entity and shall promptly deliver to Lender a revised Schedule
10.37 to reflect such change.

(iii)                               Borrower
shall give Agent notice of the dissolution or full liquidation of, or the
suspension or discontinuation of business by, any Portfolio Entity, not less
than 30 days prior to such dissolution, liquidation, suspension or
discontinuation.

(e)                                  Borrower
shall give Agent notice within 45 days after it or any Primary Obligor,
Material Portfolio Entity, Wholly-Owned Subsidiary or other Loan Party acquires
Equity Interests in any Person or forms a Subsidiary and, if requested in
writing by Agent, forthwith upon receipt of such request, shall deliver to
Agent an addendum to Schedule 10.22 reflecting the same and, if such
acquisition or formation is of an REO Affiliate, a new Schedule 10.40
reflecting the same.

(f)                                    On
or before the fourth to last Business Day of each month, Borrower shall deliver
to Agent a Portfolio Protection Expense Report in form and detail satisfactory
to Agent showing as of the close of business on the last Business Day of the
preceding calendar month the aggregate amount retained by Portfolio Entities as
Portfolio Protection Expenses to pay Portfolio Protection Expenses not
theretofore paid, the aggregate amount of Portfolio Protection Expenses theretofore
paid and the aggregate amount of Portfolio Protection Expenses withheld (in the
aggregate) by such Persons during the immediately preceding calendar
month.  Borrower shall provide to the
Agent such other information with respect thereto as Agent may reasonably
request.

(g)                                 On
or before the fourth to last Business Day of each month, Borrower shall deliver
to Agent a Borrowing Base Certificate.

(h)                                 Borrower
shall give Agent notice of the transfer of any property by a Portfolio Entity
to one of its REO Affiliates within 30 days of any such transfer and such other
information as Agent may request with respect thereto promptly following such
request.

(i)                                     Borrower
shall give Agent notice of the occurrence of an Adverse Waterfall Event within
thirty days of such occurrence.

(j)                                     Borrower
shall give Agent notice if the amount of Aggregate Undistributed Funds at any
time exceeds $5,000,000.

(k)                                  If
Borrower at any time has knowledge of any servicer default, servicing
termination event, amortization event or similar event or condition occurring
or existing under any agreement relating to the securitization of Assets of any
Primary Obligor or other Loan Party or securitization entity established by any
Primary Obligor or other Loan Party, Borrower shall immediately notify Agent
thereof.

(l)                                     Borrower
shall give Agent notice of any proposed amendment of or waiver under the RAL
not fewer than five Business Days before the effective date of any such
amendment or waiver, together with a copy of any such proposed amendment or
waiver.

 25
 

7.3                                 Payment of Charges.

(a)                                  Other
than Charges payable by First X or First B, Borrower, each Primary Obligor,
each Material Portfolio Entity, and each Wholly-Owned Subsidiary other than any
REO Affiliate shall pay promptly when due and discharge all Charges.  In the event Borrower, any Primary Obligor,
any Material Portfolio Entity or any Wholly-Owned Subsidiary other than an REO
Affiliate, at any time or times hereafter, shall fail to pay the Charges or to
obtain such discharges as required herein, Borrower shall so advise Agent
thereof in writing.  Agent may, without
waiving or releasing any obligation, covenant or agreement of Borrower or any
Event of Default or Default, in its sole and absolute discretion, at any time
or times thereafter, make such payment, or any part thereof, or obtain such
discharge and take any other action with respect thereto which Agent deems
advisable.  All sums so paid by Agent and
any expenses relating thereto, including reasonable attorneys’ fees, court
costs, expenses and other charges, shall be part of the Obligations, payable by
Borrower to Agent on demand. 
Notwithstanding the foregoing, Borrower, any Primary Obligor, any
Material Portfolio Entity or any Wholly-Owned Subsidiary may permit or suffer
the Charges to attach to its Assets on the conditions that: (i) Borrower or the
applicable Primary Obligor, Material Portfolio Entity or Wholly-Owned
Subsidiary, in good faith, shall be contesting the same in an appropriate
proceeding diligently pursued; (ii) enforcement thereof against any Assets of
Borrower or any applicable Material Portfolio Entity or Wholly-Owned Subsidiary
shall be stayed; and (iii) appropriate reserves therefor shall have been
established on the Records of Borrower or the applicable Primary Obligor,
Material Portfolio Entity or Wholly-Owned Subsidiary in accordance with GAAP.

7.4                                 Insurance.  Borrower, each Primary Obligor, each
Portfolio Entity (other than any Foreign Portfolio Entity), each REO Affiliate
and each Wholly-Owned Subsidiary at each of such respective Person’s sole cost
and expense, shall keep and maintain: (i) policies of insurance against all
hazards and risks ordinarily insured against by other owners or users of
properties in similar business or as reasonably requested in writing by Agent;
and (ii) public liability insurance relating to such Person’s ownership and use
of its Assets; provided, however, no such Person shall be
required to maintain the insurance referred to in clause (i) as to any Asset if
the Net Present Value of the Asset is less than $50,000.  All such policies of insurance shall be in
form, with insurers and in such amounts as may be satisfactory to Agent.  Borrower shall deliver to Agent the original
(or certified) copy of each policy of insurance, and evidence of payment of all
premiums for each such policy.  Such
policies of insurance of Borrower, Primary Obligors and Wholly-Owned
Subsidiaries (except those of public liability) shall contain an endorsement,
in form and substance acceptable to Agent, showing losses payable to Agent for
the ratable benefit of Lenders (excluding any losses payable to the lenders
under any Approved Portfolio Leverage Arrangement).  Such endorsement or an independent instrument
furnished to Agent, shall provide that all insurance companies will give Agent
at least thirty (30) days prior written notice before any such policy or
policies of insurance shall be altered or canceled and that no act or default
of Borrower or any other Person shall affect the right of Agent for the ratable
benefit of Lenders, to recover under such policy or policies of insurance in
case of loss or damage (excluding any losses payable to the lenders under any
Approved Portfolio Leverage Arrangement). 
Upon request by Agent and, whether or not such request is made, upon the
occurrence of an Event of Default or Default, Borrower hereby directs all
insurers under such policies of insurance (except those of public liability) to
pay all proceeds payable thereunder directly to Agent (excluding any losses
payable to the lenders under any Approved Portfolio 

 26
 

Leverage Arrangement).  Upon request by Agent and upon the occurrence
of an Event of Default or Default, Borrower, irrevocably, appoints Agent (and
all officers, employees or agents designated by Agent) as Borrower’s true and
lawful agent and attorney-in-fact for the purpose of making,
settling and adjusting claims under such policies of insurance, endorsing the
name of Borrower on any check, draft, instrument or other item of payment for
the proceeds of such policies of insurance and for making all determinations
and decisions with respect to such policies of insurance.  In the event Borrower, any Primary Obligor,
any Portfolio Entity, any REO Affiliate or any Wholly-Owned Subsidiary at any
time or times hereafter shall fail to obtain or maintain any of the policies of
insurance required above or to pay any premium in whole or in part relating
thereto, then Agent, without waiving or releasing any obligation, covenant or
agreement of Borrower or any Event of Default or Default, may at any time or
times thereafter (but shall be under no obligation to do so) obtain and
maintain such policies of insurance and pay such premium and take any other
action with respect thereto which Agent deems advisable.  All sums so disbursed by Agent, including
reasonable attorneys’ fees, court costs, expenses and other charges relating
thereto, shall be part of the Obligations, payable by Borrower to Agent on
demand.  Agent shall also be named as an
additional insured with respect to Borrower’s, each Primary Obligor’s and each
Wholly-Owned Subsidiary’s liability insurance.

7.5                                 Maintenance of
Records.  Borrower will keep, and
will cause each Primary Obligor and each Wholly-Owned Subsidiary other than REO
Affiliates to keep, at all times books of record and account in which full,
true and correct entries will be made of all dealings or transactions in
relation to its business and affairs, and each such Person will provide, and
will cause each such other Person to provide, adequate protection against loss
or damage to such books of record and account.

7.6                                 Preservation of
Existence.  Borrower, each Primary
Obligor, each Material Portfolio Entity, and each Subsidiary of Borrower other
than an Immaterial Entity, REO Affiliate or a Harbor Debtor, will maintain and
preserve its respective corporate, limited liability company or partnership
existence, rights, privileges and franchises in its jurisdiction of
organization, and qualify and remain qualified to do business in, and maintain
its rights, privileges and franchises in each other jurisdiction which in the
opinion of the respective board of directors, manager, general partner or other
governing Person thereof continue to be advantageous to it and shall comply in
all material respects with all applicable Legal Requirements.  Without limiting the generality of the
foregoing, Borrower agrees to (and to cause each such other Person to) qualify
to do business as a foreign corporation in each jurisdiction where the nature
of its business and the operations conducted by it therein require it to be so
qualified.

7.7                                 Preservation of
Assets.  Borrower and each Primary
Obligor will keep its property material to the conduct of its business in good
repair, working order and condition and from time to time make all needful and
proper repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, so that the business carried on by it may be conducted at
all times in accordance with prudent business management.

7.8                                 Inspection of Books
and Assets.  Borrower shall permit
Agent, Lenders and each of their respective representatives reasonable access
during normal business hours to its properties and personnel, and shall
disclose and make available to Agent and Lenders all books, papers and records
relating to the Assets, stock ownership, properties, operations, obligations, 

 27
 

and liabilities of Borrower and its
Subsidiaries (and shall use commercially reasonable efforts to cause each other
Portfolio Entity to do the same), including, but not limited to, all books of
account (including the general ledger), tax records, minute books of meetings
of boards of directors (and any committees thereof) and shareholders,
organizational documents, bylaws, material contracts and agreements, filings
with any regulatory authority, accountants’ work papers (other than those that
are the property of its independent outside auditors), litigation files, loan
files, plans affecting employees, and any other business or prospects in which
Lenders may have a reasonable interest in connection with the Loans, provided
that such access shall be reasonably related to the transactions contemplated
hereby and not unduly interfere with normal operations, and provided further
that in the event that any of the foregoing are in the control of any third
party, Borrower shall use its reasonable best efforts to cause such third party
to provide access to such materials to Agent and Lenders who shall request the
same.  In the event that Borrower is
prohibited by law from providing any of the access referred to in the preceding
sentence to Agent and Lenders, it shall use its commercially reasonable efforts
to obtain waivers thereof promptly so as to permit such access.  Borrower shall make the directors, officers,
employees and agents and authorized representatives (including counsel and
independent public accountants) of Borrower and its Subsidiaries (and shall use
its commercially reasonable efforts to cause each other Portfolio Entity to do
the same) to confer with Agent and Lenders and their respective
representatives, provided that (i) such access shall be reasonably related to
the transactions contemplated hereby and not unduly interfere with normal
operations and (ii) unless a Default or Event of Default exists, counsel to
Borrower shall be permitted to be present at any meeting between Borrower’s
independent public accountants and Agent or Lenders.

7.9                                 Payment of
Indebtedness.  Each of Borrower, each
Primary Obligor, each Material Portfolio Entity and, subject to the final
sentence of this Section 7.9, each Wholly-Owned Subsidiary will duly and
punctually pay, or cause to be paid, the principal of and the interest on all
Indebtedness heretofore or hereafter incurred or assumed by such Person, when
and as the same shall become due and payable, provided that neither
Borrower, nor any Primary Obligor, any Wholly-Owned Subsidiary or any Material
Portfolio Entity shall be required to pay any Indebtedness (other than
Indebtedness incurred under this Agreement or any other Loan Document) while
the same is being contested by it in good faith and by appropriate proceedings
so long as Borrower or such Primary Obligor or Wholly-Owned Subsidiary or
Material Portfolio Entity (as the case may be) shall have set aside on its
books appropriate reserves in accordance with GAAP with respect thereto and
title to any property of Borrower or the applicable Primary Obligor or
Wholly-Owned Subsidiary or Material Portfolio Entity is not jeopardized.  The provisions of this Section 7.9 do not
relate to Indebtedness of FC Capital or other Wholly-Owned Subsidiaries which
are REO Affiliates.

7.10                           Further Assurances.  Each of Borrower, each Primary Obligor, each
Wholly-Owned Subsidiary and each other Loan Party will, and will cause each of
its respective Subsidiaries to, make, execute or endorse, and acknowledge and
deliver or file, all such vouchers, invoices, notices, and certifications and
additional agreements, undertakings, conveyances, transfers, assignments, or
further assurances, and take any and all such other action, as Agent or any
Lender may, from time to time, deem necessary or proper in connection with this
Agreement, the obligations of such Person hereunder or under the Notes or any
of the other Loan Documents to which such Person is a party, or for the better
assuring and confirming 

 28
 

unto Agent on behalf of Lenders, with the
Requisite Priority, all or any part of the security for the Obligations.

7.11                           Notice of Default.  Forthwith and in any event within five days
after Borrower shall have obtained knowledge of the existence of a Default or
Event of Default, Borrower will deliver to Agent a certificate signed by an
Executive Officer of Borrower setting forth the details of such event, the
period of existence thereof, and what action Borrower proposes to take with
respect thereto.

7.12                           Reserves.  Each of Borrower, each Primary Obligor and,
subject to the last sentence of this Section 7.12, each Wholly-Owned
Subsidiary, will set up on its books of its earnings, reserves for bad debt in
accordance with GAAP and in an aggregate amount deemed adequate in the judgment
of such Person and accepted by the outside auditors in their annual audits and
Borrower shall use its commercially reasonable efforts to cause each other
Material Portfolio Entity to do the same.  The provisions of this Section 7.12 shall not
apply to any Wholly-Owned Subsidiary which is an REO Affiliate, or any
Immaterial Entity.

7.13                           Representation and
Warranties; Covenants as to Other Persons, Amendment of Schedules.

(a)                                  To
the extent any representation or warranty contained herein refers to an event
or state of facts which exists on or after the date hereof, on or after the
Execution Date or on or after the Effective Date or on or after the date of any
Loan and shall exist during the term hereof or at the time of any or each Loan
hereunder, to the extent not already a covenant, said representation or
warranty shall be deemed to be an affirmative covenant by Borrower to take all
actions, omit to take such actions or cause such actions to be taken which
shall be necessary or desirable to cause such representation or warranty to be
true and accurate at all times during the term hereof.  To the extent any representation, warranty or
covenant herein (including the covenants set forth in Section 8 and in this
Section 7) relates to any Primary Obligor, other Subsidiary or any other Loan
Party, it shall be deemed to be a covenant of Borrower to cause such Person to
comply with or otherwise perform such representation, warranty or covenant,
whether or not Borrower has the legal, corporate or other ability to cause such
compliance or performance.  To the extent
any representation, warranty or covenant herein (including the covenants set
forth in Section 8 and in this Section 7) relates to any Person other than a
Primary Obligor, other Subsidiary or any other Loan Party it shall be deemed to
be a covenant of Borrower to exercise commercially reasonable efforts to  cause such Person to comply with or otherwise
perform such representation, warranty or covenant, whether or not Borrower has
the legal, corporate or other ability to cause such compliance or performance.

(b)                                 No
delivery of any new or supplemented Schedule to this Agreement (whether or not
such delivery is required by this Agreement or any other Loan Document) shall
waive or cure any Default or Event of Default which would occur absent such
delivery (other than a Default or Event of Default arising solely from the
breach of an obligation to deliver such Schedule and other than as may be set
forth in writing in a consent or amendment (if any) pursuant to which any such
new or supplemented Schedule is delivered).

 29
 

7.14                           Perform Obligations.  Borrower and each other Loan Party shall duly
and punctually pay and perform each of its obligations under the Loan Documents
to which it is a party, in accordance with the terms hereof and thereof.

7.15                           New Debt and Equity
Interests.

(a)                                  Borrower
shall ensure that at the time that Borrower, any Primary Obligor or any
Wholly-Owned Subsidiary acquires an Equity Interest in any Person other than
Asset Servicing De México, S.A. de C.V. and Servicios Efectivos De
Recuperación, S.A. De C.V., or, in the case of a Wholly-Owned Subsidiary, an
REO Affiliate of such Wholly-Owned Subsidiary, such new Equity Interest is
subject to a perfected security interest of the Requisite Priority in favor of
Agent and Lenders and, in connection therewith, shall take such action and
execute and deliver such pledge agreements or amendments to pledge agreements
and such other instruments and agreements, including, without limitation,
delivery of notices of lien to the Pledged Entity, acknowledgement of such
notice from the Pledged Entity, delivery of the original certificates of
certificated securities to Collateral Agent, together with an assignment
separate from certificate therefor, in each case in form and substance
satisfactory to the Collateral Agent, as the Collateral Agent may require.  If requested in writing by Agent, Borrower
shall also deliver to Agent a supplement to Schedule 10.5(b) hereto to
reflect the acquisition of such new Equity Interest.  The provisions of this Section 7.15(a) are in
addition to, and not in limitation of, other provisions of this Agreement
limiting the investments, the acquisition of Equity Interests and the acquisition
of other Assets by Borrower, any Primary Obligor, any Wholly-Owned Subsidiary
or any other Loan Party.  Notwithstanding
the foregoing, no Primary Obligor, Wholly-Owned Subsidiary or other Loan Party
shall be required to pledge to Agent (x) shares of stock, partnership
interests, membership interests or other similar equity interests consisting of
more than 66.66% of the shares of stock, partnership interests, membership
interests or other similar equity interests in any Person which is not a US
Person or (y) any Equity Interest issued by an REO Affiliate.

(b)                                 Borrower
shall ensure that at the time that Borrower, any Primary Obligor or any
Wholly-Owned Subsidiary other than a Portfolio Entity or an REO Affiliate makes
any loan or acquires any rights to any other indebtedness or acquires any note,
bond or other indebtedness instrument (any such note, bond or other instrument,
a “Subject Debt Instrument”), all rights of Borrower, such Primary
Obligor or such Wholly-Owned Subsidiary with respect to such loan, other
indebtedness and Subject Debt Instrument are subject to a perfected security
interest of the Requisite Priority in favor of Agent and Lenders and, in
connection therewith, shall take such action and execute and deliver such
pledge agreements or amendments to pledge agreements and such other instruments
and agreements, including, without limitation, delivery of notices of pledge to
the issuer of such indebtedness, acknowledgement of such notice from such
issuer, delivery of the Subject Debt Instruments to Collateral Agent, together
with an assignment separate from such Subject Debt Instrument or an allonge
thereto, and estoppel certificates from the issuer thereof, in each case in
form and substance satisfactory to the Collateral Agent, as the Collateral
Agent may require.  The provisions of
this Section 7.15(b) are in addition to, and not in limitation of, other
provisions of this Agreement limiting the investments, the acquisition of
Equity Interests and the acquisition of other Assets by Borrower, Primary
Obligors, and Wholly-Owned Subsidiaries. 
If requested by Agent in writing, Borrower shall prepare a Schedule
10.20A setting forth the maker and holder of such Subject Debt Instrument, the
principal amount thereof and the payment terms thereof.

 30
 

7.16                           Cooperation.  At Agent’s request, Borrower will meet from
time to time with (and provide then available financial information to) other
financial institutions to which any Lender may wish to grant participations in
the Loans, including potential Lender Assignees and potential Purchasing
Lenders.

7.17                           Approvals and Consents.  In the event that any approval, consent or
non-objection need be obtained by Borrower, any Primary Obligor or other Loan
Party from, or a notice or other filing need be filed by Borrower or any such
other Person, with, any Governmental Authority in connection with the
execution, delivery and performance of this Agreement or any Loan Document by
Borrower or any such other Person, Borrower shall take and cause such other
Person (as applicable) to take, all actions reasonably necessary to obtain any
such approval, consent or non-objection or file such notice or other filing as
promptly as practicable, and Lenders agree to cooperate with Borrower in
obtaining or filing the same.

7.18                           Payment of Dividends from
Primary Obligors and Subsidiaries. 
In furtherance and not in limitation of other provisions hereof
(including Section 8.24) regarding required distributions, to the extent
necessary to enable it to make payments of the Obligations in accordance with
the terms hereof, unless prohibited by applicable law Borrower shall cause
dividends to be paid to it by each Primary Obligor and each other Wholly-Owned
Subsidiary of Borrower (whether in existence as of the date hereof or hereafter
formed or acquired) in amounts which are sufficient to enable Borrower to
satisfy its payment obligations under the terms hereof.

7.19                           Stay, Extension and Usury
Laws.  Borrower covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law or other law which would prohibit or forgive
it from paying all or any portion of the principal of, premium, if any, or
interest on the Notes, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of its obligations under
the Notes, and Borrower (to the extent it may lawfully do so) hereby expressly
waives all benefits or advantages of any such law.

7.20                           Compliance with Laws.  Borrower shall comply with, and shall cause
each Primary Obligor, each other Subsidiary and each other Loan Party to comply
with, and shall exercise commercially reasonable efforts to cause each
Portfolio Entity to comply with, all laws, rules, regulations and governmental
orders (federal, state and local), including all Environmental Laws, having
applicability to it or to the business or businesses at any time conducted by
it, where the failure to so comply would have, or could reasonably be expected
to have, a Material Adverse Effect.

7.21                           Payment of Extraordinary
Proceeds.  If any Extraordinary
Transaction otherwise permitted hereunder would cause Total Outstandings to
exceed the Borrowing Base, Borrower shall pay the amount of such excess to
Agent by wire transfer of immediately available funds on the date of the
closing of the applicable transaction, to be applied by Agent upon receipt
toward the prepayment obligation under Section 2.4(b).

7.22                           Amendment of Mexican Loan
Facility.  Borrower agrees that it
will cause FC Mexico, as a member of BMX Holding II, LLC (and not in its
capacity as the manager of BMX Holding II, LLC) to vote against or to refuse to
consent to any amendment, modification, 

 31
 

termination or waiver of Section 4(h) of the Loan Agreement dated as of
April 20, 2007, by and between MCS Trust, S.A. de C.V., SOFOM, E.N.R., as
borrower, and BMX Holding II, LLC, as lender, unless agent has given its prior
written consent to such action.

7.23                           Replacement of RAL.  If the Borrower shall refinance or otherwise
replace the RAL, the Borrower shall do so only with a financing facility in all
material respects the same as the RAL, including, without limitation, as to
term, amount, fees, interest and other covenants, and the Borrower shall give
the Agent notice of any such proposed new financing facility, together with
copies and a description thereof, not fewer than thirty (30) days before its
execution and delivery.

Section 8.                                            NEGATIVE
COVENANTS.

Borrower warrants and represents to and covenants to Lenders and Agent
that, so long as this Agreement is in effect and until the Commitments are
terminated and all of the Loans, together with interest and all other
obligations incurred hereunder are paid in full, Borrower will perform the
obligations set forth in this Section 8 (unless it shall have first procured
the written consent of the Majority Lenders to do otherwise), and will cause
each Primary Obligor, Subsidiary, and other Loan Party to, and will use commercially
reasonable efforts to cause each Portfolio Entity-50% and other Material
Portfolio Entity to, perform the obligations set forth in this Section 8 which
are applicable to such Person (unless it shall have first procured the written
consent of the Majority Lenders to do otherwise).

8.1                                 Amend Charter
Documents; Engage in Same Type of Business.

(a)                                  None
of Borrower, any Subsidiary or any Portfolio Entity-50%  shall (i) make or consent to any change: (i)
in its Charter Documents, in any Shareholder Agreement or in its capital
structure or (ii) make any change in any of its business objectives, purposes
and operations, including by undertaking additional business activities or
(iii) waive any material right under its Charter Documents or any Shareholder
Agreement.  None of Borrower, any
Subsidiary or any Portfolio Entity-50% 
shall engage in any business not of the same general type as those
conducted by it on the Execution Date or, in the case of a newly formed entity,
any business not of the same general type as those conducted by Borrower, any
Portfolio Entity-50% or any other Subsidiary (as the case may be) on the
Execution Date. Without limiting the foregoing, no Subsidiary which is a
Portfolio Entity and no Portfolio Entity-50% 
shall engage in any business other than purchasing Asset Pools in
accordance with the terms hereof and causing such Asset Pools to be serviced in
accordance with Section 8.26.

(b)                                 None
of Borrower, any Subsidiary or any Portfolio Entity-50% shall enter into any
Shareholder Agreement after the Execution Date other than a Permitted
Shareholder Agreement.

8.2                                 Liens.  None of Borrower, any Subsidiary (other than
an REO Affiliate) or any Portfolio Entity-50%, will grant, contract, create,
incur, assume or suffer or permit to exist any Lien upon or with respect to, or
by transfer or otherwise subject to the prior payment of any indebtedness
(other than the Loans), any of its Assets, whether now owned or hereafter
acquired, 

 32
 

except (i) Permitted Liens or (ii)  in the case of an REO Affiliate, Liens in
favor of its REO Owner and non-consensual Charges.

8.3                                 Other Indebtedness.  None of Borrower, any Subsidiary or any
Portfolio Entity-50% will contract, create, incur, assume or suffer to exist
any Indebtedness, except:

(i)                                     the
Loans and the obligations of Borrower in respect of the LC Obligations;

(ii)                                  other
Indebtedness existing on the Effective Date listed on Schedule 10.19 to
this Agreement;

(iii)                               Indebtedness
of any Portfolio Entity incurred under Approved Portfolio Leverage Arrangements
and Indebtedness of ABL incurred under the ABL Facility;

(iv)                              Indebtedness
of any Portfolio Entity to which no proceeds of any Loans were, directly or
indirectly, advanced or contributed;

(v)                                 Indebtedness
of FirstCity Denver Investment Corp. payable to FC Commercial related to loans
made by FC Commercial to enable FirstCity Denver Investment Corp. to fund loans
to Crestone Portfolio Entities under the Crestone Facility;

(vi)                              unsecured
trade payables incurred in the ordinary course of business;

(vii)                           in
the case of any REO Affiliates, Indebtedness owed to its REO Owner and trade
payables incurred in the ordinary course of business and, to the extent
constituting Indebtedness, Charges incurred by such REO Affiliate;

(viii)                        Indebtedness
to the extent permitted by Section 8.12(a)(i)-(iii);

(ix)                                Indebtedness
of Portfolio Entities in respect of loans permitted to be made by FC Servicing
and ASDM pursuant to Section 8.12(a)(iv);

(x)                                   Up
to $5,000,000 in aggregate principal Indebtedness incurred by FCS Creamer,
Ltd., FCS Wood Ltd. and FCS Wildhorse Ltd. or other REO Affiliates to finance
developmental expenses of real property owned by such entities;

(xi)                                Indebtedness
of any Subsidiary or Portfolio Entity-50% payable to Borrower or a Wholly-Owned
Subsidiary; and

(xii)                             Guaranty
Equivalents to the extent permitted under Section 8.12(b).

8.4                                 Sell Assets.  None of Borrower, any Subsidiary or any
Portfolio Entity-50% shall assign, sell or transfer any of its Assets to any
Person, other than in the ordinary course of business and for fair and adequate
consideration (and, in the case of Assets constituting Equity Interests, only
to the extent permitted by Section 8.8(a)); provided that the foregoing
shall not restrict (i) an REO Affiliate from transferring its Assets to
the Person which owns all of its equity interests or to any other Person which
is not a Subsidiary or Affiliate of Borrower or such 

 33
 

REO Affiliate or (ii) any Person which
owns all of the equity interests in an REO Affiliate from transferring
distressed notes secured by real estate (and such real estate security) to such
REO Affiliate.

8.5                                 Attachment.  None of Borrower, any Subsidiary or any
Portfolio Entity-50% shall permit or suffer any levy, attachment, seizure, or
restraint to be made of, upon or affecting any of its Assets or permit any of
its Assets to be subject to a writ of distress, if the same would have a
Material Adverse Effect.

8.6                                 Receiver.  None of Borrower, any Subsidiary or any
Portfolio Entity-50% shall permit or suffer any receiver, trustee or assignee
for the benefit of creditors, or any other custodian to be appointed to take
possession of all or any of its Assets, or for all or any of its Assets to come
within the possession of any receiver, trustee, assignee for the benefit of
creditors or custodian, other than a custodian pursuant to a Non-Default
Voluntary Custodial Arrangement, if the same would have a Material Adverse
Effect.

8.7                                 Mergers and
Acquisitions.  None of Borrower, any
Primary Obligor or any Material Portfolio Entity shall wind up, liquidate or
dissolve its affairs or merge or consolidate with any Person other than
Borrower or a Primary Obligor (or agree to do any of the foregoing at any
future time) or fail to maintain its corporate, partnership or limited
liability company or other formal existence.

8.8                                 Stock Transfers.

(a)                                  Except
as permitted pursuant to Section 8.8(b), none of Borrower, any Subsidiary or
any Portfolio Entity-50% shall (i) except for the ABL Options and common shares
of ABL issued upon exercise thereof, and any options, warrants or other rights
to purchase Equity Interests in Borrower pursuant to plans or instruments
described in Schedule 10.5(c) as amended from time to time with Majority
Lenders’ written consent and for Equity Interests in Borrower issued upon exercise
thereof, (x) grant any option, warrant or other right to purchase any Equity
Interest in Borrower, any Subsidiary or any Portfolio Entity-50% or (y) issue
any other Equity Interests other than (subject to Section 7.15) upon its
formation (or in the case of ABL, the 4% interest in common stock of ABL issued
to Amresco SBA Holdings LLC on or about December 15, 2006, and 500,000 shares
or additional preferred stock issued to FCBLC for a contribution of
$5,000,000.00 on February 27, 2007), or (ii) transfer any Equity Interests
(whether its own or Equity Interests issued by any Person other than itself)
without, in each case, the prior written consent of Majority Lenders.

(b)                                 Notwithstanding
anything to the contrary contained herein, Borrower shall have the right to
offer and sell equity Securities of Borrower under the following terms and
conditions: (w) Borrower shall deliver notice to Agent, within twenty-four (24)
hours of any filing with the SEC; (x) Borrower shall fully and timely comply
with all Securities Laws and with all terms and provisions of the underwriting
agreement pursuant to which such Securities are offered for sale; and (y) the
prospectus and all other selling materials used by Borrower in such offering
shall not contain any misstatement of material fact or omit to state any fact
which would render the statements contained therein false or misleading.

 34
 

8.9                                 Adverse
Transactions.  None of Borrower, any
Subsidiary or any Portfolio Entity-50% shall enter into any transaction which
materially and adversely affects its ability to perform its obligations under
the Loan Documents or to pay any other Indebtedness.

8.10                           Investments.

(a)                                  Subject
to the further limitations set forth in Sections 8.10(b), (c) and (d), after
the Execution Date, neither Borrower, any Subsidiary or any Portfolio
Entity-50% shall make any investment in Equity Interests of any Person, except
for (i) in connection with the acquisition by a Portfolio Entity of an Asset
Pool in accordance with the other terms hereof on the Funding Date of the
Acquisition Loans relating thereto in accordance with the Asset Pool
Acquisition Certificate relating thereto (or of any other asset pool in respect
of which no Loans have been requested if such acquisition is in the ordinary
course of business for the Consolidated Group and is not otherwise prohibited
hereunder), (ii) direct or indirect contributions by Primary Obligors to
capital of Portfolio Entities to be used by such entities (a) to pay
development expenses related to real estate or (b) to pay Portfolio Protection
Expenses, (iii) investments by any such Person (other than by a Portfolio
Entity) in the ordinary course of business, and (iv) investments, not to exceed
$15,000,000.00, by FCBLC in Equity Interests of ABL.

(b)                                 As
used in Sections 8.10(a),(c) and (d) “invest” shall include, but not be limited
to contributions to the capital of a Person.

(c)                                  In
furtherance and not in limitation of the other restrictions herein and in the
other Loan Documents under no circumstances shall Borrower, any Subsidiary or
any Portfolio Entity-50% at any time invest in any of the Harbor Debtors.

(d)                                 In
furtherance and not in limitation of other restrictions herein and in the other
Loan Documents on such contributions, loans, gifts, investments and Guaranty Equivalents
set forth, none of Borrower, any Subsidiary or any Portfolio Entity-50% shall
make capital contributions, loans or gifts to, investments in or enter into or
issue any Guaranty Equivalent with respect to the obligations of any entity
identified on Schedule 10.37 or any other Immaterial Entity at any time
during the term hereof.

8.11                           Dividends.  Borrower will not and will not permit any
Subsidiary or any Portfolio Entity-50% to authorize, declare, or pay any
dividends or return any capital to its stockholders as such or authorize or
make any other distribution, payments or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise acquire,
directly or indirectly, for a consideration any shares of any class of its
capital stock now or hereafter outstanding or any options, warrants or other
securities (now or hereafter outstanding) convertible into or exercisable for
any equity or other securities of Borrower, any Subsidiary or any Portfolio
Entity-50% or set aside funds for any of the foregoing and Borrower will not
permit any Subsidiary or any Portfolio Entity-50% to purchase any Equity
Interests of Borrower, or set aside funds for any of the foregoing (any such
authorization, declaration, payment, dividend, return of capital, distribution,
delivery, redemption, retirement, purchase, acquisition or setting aside of
funds, a “Dividend”), provided, that (i) any Subsidiary or
Portfolio Entity-50% may declare or pay Dividends to Borrower or any
Wholly-Owned Subsidiary and (ii) any Subsidiary or Portfolio Entity-50% may pay
cash Dividends to holders of its shares of stock, partnership interests, 

 35
 

limited liability company interests or
similar equity interests generally so long as Borrower or its respective
Subsidiaries which own such equity interests in the Person paying such
Dividends receives at least its proportionate share thereof (based on its
relative holdings of such equity interests in the Person paying such
Dividends).  

8.12                           Loan; Guaranty Debt.

(a)                                  Except
as set forth on Schedule 8.12(a), none of Borrower, any Subsidiary or
any Portfolio Entity-50% shall make any loan to any Person, or otherwise invest
in or acquire any note, bond, other debt instruments or obligations of or
issued by any Person except (subject to compliance with Section 7.15) (i) for
loans made by Borrower to any Primary Obligors which are evidenced by a Pledged
Note; (ii) for loans made by Borrower, any Subsidiary or any Portfolio
Entity-50% to any Portfolio Entity in the ordinary course of business, which
loans are evidenced by a Pledged Note in the case of a loan by the Borrower or
any Subsidiary or a note in the case of a loan by a Portfolio Entity-50%, or an
inter-company receivable; (iii) the accepting by a Subsidiary or a Portfolio
Entity-50% of a note from its 100% owned REO Affiliate evidencing the deferred
purchase price of a mortgage note sold to such REO Affiliate by such Subsidiary
or Portfolio Entity-50% or a portion of the purchase price for the real
property in the event that the REO Affiliate acquires the real property at a
foreclosure sale or otherwise by purchase from the Subsidiary or Portfolio
Entity-50%; (iv) the accepting by an REO Affiliate, a Latin American
Acquisition Entity or a European Acquisition Entity of a note from the
transferee of real property sold by such REO Affiliate, Latin American
Acquisition Entity or European Acquisition Entity (as the case may be) in the
ordinary course of business evidencing a portion of the deferred purchase price
of such property; (v) in the case of FC Servicing and ASDM, short term servicer
advances in the ordinary course of business with respect to portfolios which
they are servicing in aggregate principal amount at any one time outstanding
not in excess of $5,000,000, on a combined basis; (vi) direct or indirect loans by Primary Obligors to a Portfolio
Entity for the acquisition of an Asset Pool in accordance with the other terms
hereof on the Funding Date of the Acquisition Loans relating thereto in
accordance with the Asset Pool Acquisition Certificate relating thereto (or of
any other asset pool in respect of which no Loans have been requested if such
acquisition is in the ordinary course of business for the Consolidated Group
and is not otherwise prohibited hereunder); (vii) direct or indirect loans by
Primary Obligors to Portfolio Entities to be used by such entities (a) to pay
development expenses related to real estate or (b) to pay Portfolio Protection
Expenses; (viii) SBA Loans made by ABL in accordance with the SBA Rules and Regulations;
and (ix) loans made by FC Commercial to FirstCity Denver Investment
Corp. to enable FirstCity Denver Investment Corp. to fund loans to Crestone
Portfolio Entities under the Crestone Facility.

(b)                                 Except
as set forth on Schedule 8.12(b), none of Borrower, any Subsidiary or
any Portfolio Entity-50% shall enter into or issue any Guaranty Equivalents; provided
that any Primary Obligor shall be permitted to guaranty Indebtedness of any
other Primary Obligor, any Related Entity or any Portfolio Entity provided that
the outstanding balance of Indebtedness guaranteed pursuant to such guaranties
does not exceed $10,000,000.

8.13                           Issue Power of Attorney.  Except pursuant to the other provisions of
this Agreement or the Security Documents to which Agent is a party, none of
Borrower, any Subsidiary or any Portfolio Entity-50% shall issue any power of
attorney or other contract or 

 36
 

agreement giving any Person power or control
over the day-to-day operations of any such Person’s business; provided that,
any Primary Obligor, any Portfolio Entity, FirstCity do Brazil, Ltda.,
FirstCity Argentina Corporation, First South America LLC, FirstCity Recovery
S.A., Asset Servicing de Mexico and Servicios Efectivos de Recuperacion, S.A.
de C.V. shall have the right to grant powers of attorney necessary to conduct
business outside the United States, to pursue or consummate asset acquisitions
outside the United States and to collect or liquidate Assets or pursue
litigation related Assets outside the United States, which are undertaken in
the ordinary course of such respective company’s business.

8.14                           Amendment of Credit
Agreements.   None of Borrower, any
Subsidiary or any Portfolio Entity-50% shall amend, modify or extend (or agree
to amend, modify or extend or give any notice of any sort the result of which
would amend, modify or extend (whether or not, without limitation, any such
extension would occur pursuant to a renewal or extension option contained
therein or any other term thereof)) any note, credit agreement, security
agreement or other document, instrument or agreement evidencing or securing
Indebtedness of such entity; provided that Borrower, any Subsidiary or
any Portfolio Entity-50% may extend the term of any credit facilities or loans
permitted under the terms of this Agreement under financial terms no more
onerous than those provided for in the applicable existing credit facility or
then-existing market credit terms.

8.15                           Use of Proceeds.  The proceeds of Loans shall be used by
Borrower solely for the purposes described in Section 2.1(b) of this Agreement.

8.16                           Payments for Consent.  None of Borrower or any Subsidiary or any
Portfolio Entity-50% shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Lender as
an inducement to any consent, waiver or amendment of any of the terms or
provisions of any Loan Document unless such consideration is paid to all
Lenders.

8.17                           Limitations on Dividends
and Other Payment Restrictions Affecting Subsidiaries.  Borrower shall not, and shall not permit any
Subsidiary, or any Portfolio Entity-50% to, create, assume or otherwise cause
or suffer to exist or to become effective any consensual encumbrance or
restriction on the ability of any such Person to:

(i)                                     pay
any dividends or make any other distribution on its Stock or other Equity
Interests to Borrower or any of its Subsidiaries;

(ii)                                  make
payments on or in respect to any Indebtedness owed to Borrower, any Subsidiary;
or

(iii)                               make
loans or advances to Borrower or any of its Subsidiaries or to guarantee
Indebtedness of Borrower or any of its Subsidiaries;

other than, in the case
of (i), (ii) and (iii),

(1)                                  Permitted
Restrictions on payment of dividends by FC Holdings existing under agreements
listed on Schedule 8.17;

 37
 

(2)                                  restrictions
with respect to a Subsidiary other than a Portfolio Entity, a Primary Obligor
or an REO Affiliate imposed pursuant to an agreement which has been entered
into for the sale or disposition of all or substantially all the assets (which term
may include the capital stock) of such Subsidiary provided that such
restrictions terminate upon the closing of such sale or disposition or
termination of such agreement;

(3)                                  to
the extent the same result in a restriction of non-cash in-kind distributions
of such assets, restrictions on the transfer by any Subsidiary other than a
Portfolio Entity, a Primary Obligor or an REO Affiliate of non-cash assets
which are subject to Permitted Liens;

(4)                                  restrictions
existing under any agreement which refinances or replaces any of the agreements
containing the restrictions in clauses (1) or (5), provided that the terms and
conditions of any such restrictions are not materially less favorable to the
Lenders or materially more burdensome to the applicable Person bound thereby
than those under the agreement evidencing or relating to the Indebtedness
refinanced or replaced;

(5)                                  Permitted
Restrictions on payment of dividends by a Subsidiary of Borrower under a loan
agreement listed on Schedule 10.19 to which such  Subsidiary is a party;

(6)                                  restrictions
under this Agreement;

(7)                                  Permitted
Restrictions imposed under Approved Portfolio Leverage Arrangements;

(8)                                  Permitted
Restrictions on the payment of dividends by a Portfolio Entity-50% under credit
agreements under which such Portfolio Entity-50% is a borrower; and

(9)                                  restrictions
on the payment of dividends by ABL as set forth in the ABL Facility Agreement
and restrictions on the ability of ABL to make payments on Indebtedness
outstanding under the ABL Capital Note as set forth in the subordination
agreement referred to therein.

and other than in the
case of (iii), a consensual encumbrance or restriction on the ability of any
Subsidiary other than a Wholly-Owned Subsidiary or any Portfolio Entity-50% to
make a loan or advance to or guarantee Indebtedness of Borrower or any of its
Subsidiaries.

8.18                           Financial Covenants.

(a)                                  Borrower
and all other members of the Consolidated Group, on a consolidated basis,
shall, at the end of each fiscal quarter:

 38
 

(i)                                     maintain
a ratio of Indebtedness to Tangible Net Worth equal to or less than 3.50 to
1.00 for the last day of the fiscal quarter then ended;

(ii)                                  maintain
a ratio of EBITDA to Interest Coverage not less than 1.50 to 1.00 for the four
fiscal quarters then ended;

(iii)                               maintain
a Tangible Net Worth equal to or greater than $85,000,000 for the last day of
the fiscal quarter then ended; and

(iv)                              maintain
a ratio of Cumulative Current Recovered and Projected Collections to Cumulative
Original Projected Collections, of not less than 0.90 to 1.00.

(b)                                 All
covenants set forth in this Section 8.18 shall be measured quarterly, upon
receipt of the Financial Statements delivered to Agent pursuant to Section
7.1(a), and also upon receipt of the annual consolidated Financial Statements
delivered in accordance with Section 7.1(b).

(c)                                  In
the event that any Financial Statement required to be delivered pursuant to
Section 7.1(a) or Section 7.1(b) or any certificate required to be delivered
pursuant to Section 7.1(f) hereof (in the case of any such certificate required
in connection with monthly financial statements, at the end of any month which
is also a fiscal quarter end date) is not delivered within 10 days after the
date required therefor pursuant to such section, Borrower shall be deemed to be
in default of this Section 8.18 for purposes of Section 9.3 hereof.

8.19                           Accounting Changes.  None of Borrower, any Subsidiary or any
Portfolio Entity-50% will make any significant change in (x) accounting
treatment and reporting practices except as permitted or required by GAAP or
Legal Requirements or (y) unless Agent consents thereto in writing (which
consent shall not be unreasonably withheld), its Fiscal Year; provided that
in any such case, if any such change would affect any computation required by
Section 8.18 hereof or any amount required to be paid by Section 2.4 hereof,
appropriate amendment shall have been made to this Agreement with respect
thereto (or, in the case of change required at such time by a Legal
Requirement, appropriate amendment is made to this Agreement contemporaneous
with such change and, and if such amendment is not made, Borrower shall be
deemed in default under Section 8.18).

8.20                           Related Transactions.  Borrower has not and shall not, and shall not
permit any Subsidiary or any Portfolio Entity-50% to, enter into any
transactions with any Affiliate or Associate, including, without limitation,
agreements for the purchase, sale or exchange of property or the rendering of
any services to or by any Affiliate or Associate of Borrower or any Parent, or
enter into, assume or suffer to exist any employment, management,
administration, advisory or consulting contract with any Affiliate or Associate
of Borrower or any Parent or, in each of the foregoing cases, with any officer,
director or partner of any Affiliate or Associate of Borrower or any Parent or
modify any Fee Agreement unless, in any such case, such transaction (a) is
otherwise not in violation of this Agreement or any other Loan Document and (b)
is in the ordinary course of its business and is upon fair and reasonable terms
no less favorable to Borrower, such Subsidiary or such Portfolio Entity-50% (as
the case may be) than such Person would obtain in a comparable arm’s-length
transaction with a Person not an Affiliate or 

 39
 

Associate; provided, that the
foregoing shall not restrict a Subsidiary from entering into a transaction
contemplated by the definition of “REO Affiliate” to sell real estate
(or distressed notes secured by real estate) to its wholly owned REO Affiliate.

8.21                           Leasebacks.  None of Borrower, any Subsidiary or any
Portfolio Entity-50% will enter into any arrangement with any bank, insurance
company or other lender or investor providing for the leasing to any of the
foregoing Persons of real property (i) which at the time has been or is to be
sold or transferred by any of the foregoing Persons to such lender or investor,
or (ii) which has been or is being acquired from another Person by such lender
or investor or on which one or more buildings or facilities have been or are to
be constructed by such lender or investor for the purpose of leasing such
property to Borrower, any Subsidiary  or
any Portfolio Entity-50%.

8.22                           Compliance with ERISA.  Neither Borrower nor any Subsidiary (each, an
“Applicable Person”) will (i) terminate, or permit any of its
Subsidiaries to terminate, any Pension Plan so as to result in any material (in
the opinion of Agent or the Majority Lenders) liability of any such Person or
Subsidiary to the PBGC, (ii) permit to exist the occurrence of any Reportable
Event (as defined in Section 4043 of ERISA), or any other event or condition,
which presents a material (in the opinion of Agent or the Majority Lenders)
risk of such a termination by the PBGC of any Pension Plan, (iii) allow, or
permit any of its Subsidiaries to allow, the aggregate amount of “benefit
liabilities” (within the meaning of Section 4001(a)(16) of ERISA) under all
Pension Plans of which any Applicable Person or any ERISA Affiliate is a “contributing
sponsor” (within the meaning of Section 4001(a)(13) of ERISA) to exceed
$100,000, (iv) allow, or permit any of its Subsidiaries to allow, any Plan to
incur an “accumulated funding deficiency” (within the meaning of Section 302 of
ERISA or Section 412 of the Code), whether or not waived, (v) engage, or permit
any of its Subsidiaries or any Plan to engage, in any “prohibited transaction”
(within the meaning of Section 406 of ERISA or Section 4975 of the Code)
resulting in any material (in the opinion of Agent or the Majority Lenders and considered
by itself or together with all other such liabilities of Borrower and all ERISA
Affiliates) liability to any Applicable Person or any ERISA Affiliate, (vi)
allow, or permit any of its Subsidiary to allow, any Plan to fail to comply
with the applicable provisions of ERISA and the Code in any material respect,
(vii) fail, or permit any of its Subsidiaries to fail, to make any required
contribution to any Multiemployer Plan, or (viii) completely or partially
withdraw, or permit any of its Subsidiaries to completely or partially
withdraw, from a Multiemployer Plan, if such complete or partial withdrawal
will result in any material (in the opinion of Agent or the Majority Lenders)
withdrawal liability under Title IV of ERISA. 
No Loan Party or Subsidiary, other than Borrower and Subsidiaries that
are not Portfolio Entities has or shall at any time have any employees.

8.23                           [Reserved]

8.24                           Distributions to Primary
Obligors and Borrower.

(a)                                  Borrower
shall each calendar month (i) cause each Portfolio Entity and each REO
Affiliate to distribute to a Primary Obligor, on or prior the Payment Date
occurring in such month, the Portfolio Entity Proceeds, and (ii) cause each
such Primary Obligor to pay to Borrower, upon receipt, each such Dividend
received by such Primary Obligor under clause (i) 

 40
 

above by prepaying the applicable Pledged
Note or intercompany receivable and, if no amount then remains outstanding
thereunder, by distributing any remaining portion of such distribution as a
Dividend (in accordance with Section 8.11) to Borrower.

(b)                                 Borrower
shall cause each amount required to be distributed or paid to Borrower or any
Primary Obligor pursuant to this Section 8.24 to be distributed or paid to
Borrower or such Primary Obligor by deposit or wire transfer directly to the
Cash Flow Cash Collateral Account.

8.25                           Capital Expenditures.  Borrower will not make any Capital
Expenditures and will not permit any of its Subsidiaries to make any Capital
Expenditures, except that Borrower and its Subsidiaries may make Capital
Expenditures in an aggregate amount (excluding the capitalization of insurance
premiums) not in excess of $1,000,000 during each fiscal year.

8.26                           Servicing.

(a)                                  Borrower
shall ensure that FC Servicing or Minn Servicing is the servicer for each Subsidiary
and Portfolio Entity-50% which is a US Person, except as to (a) ABL,  which
will service all loans originated or acquired by ABL, and (b) each Crestone
Portfolio Entity, whose assets will be serviced by FirstCity Crestone LLC.

(b)                                 Borrower
shall (i) cause FC Servicing to deposit all fee income and all other funds
received by it not constituting Servicing Restricted Funds to the Cash
Collateral Account-Servicing upon receipt of each such amount and (ii) cause
Minn Servicing to distribute to FC Servicing all fee income and all other funds
received by it not constituting Servicing Restricted Funds by wiring all such
amounts directly to the Cash Collateral Account-Servicing upon receipt of each
such amount.

8.27                           Portfolio Entity
Ownership.  In furtherance and not in
limitation of Section 8.8(a), Borrower shall ensure (x) that there is no change
in the percentage of Equity Interests issued by any Portfolio Entity and owned
by any Subsidiary from that reflected on Schedule 10.5(b) and (y) that
with respect to any Portfolio Entity formed after the Effective Date, there is
no change in the percentage of Equity Interest issued by such Portfolio Entity
and owned by any Subsidiary from that set forth in the Final Asset Pool
Acquisition Certificate with respect to the acquisition of the initial Asset
Pool by such Portfolio Entity (as revised up to the time of the giving of the
Notice of Borrowing in respect of such Asset Pool), in each case unless
otherwise consented to in writing by Agent.

8.28                           Activities
of Portfolio Entity.  

In furtherance and not in limitation of the other restrictions set
forth in this Agreement, Borrower shall ensure that (i) no Subsidiary which is
a Portfolio Entity and no Portfolio Entity-50% engages in any activity other
than owning Asset Pools and shall have no Assets other than such Asset Pools,
collections thereon and interests in REO Affiliates of which it is the REO
Owner, or the ownership of Incidental Equity Interests, provided, that
(i) a Subsidiary or a Portfolio Entity-50% doing business outside the United
States may own the type of assets an REO Affiliate would own (if it had an REO
Affiliate of which it were the REO Owner); (ii) each 

 41
 

REO Affiliate shall be formed in respect of a specific
REO Owner and shall not hold assets other than from such REO Owner; (iii) WAMCO
III, Ltd. and WAMCO IX, Ltd. may continue to own Equity Interests in
FirstStreet Investment LLC; (iv) ABL may originate and service SBA Loans in
accordance with the SBA Rules and Regulations; and (iv) Crestone Portfolio
Entities may originate Assets and
engage in those activities described in Section 10.33.

Section 9.                                            EVENTS
OF DEFAULT.

Upon the occurrence of any of the following specified events (each an “Event
of Default”):

9.1                                 Principal and
Interest.  Borrower shall default in
the due and punctual payment of any principal, interest or other amount due
hereunder or under any Note or any other Loan Document; provided, that the
failure to make any interest payment when due shall not constitute an Event of
Default if such interest payment is made within three days of the date when due
and Borrower has not been late in making any other interest payment on any Note
more than once in the preceding 12 months; or

9.2                                 Representations and
Warranties.  Any representation,
warranty, statement, report or certificate made or delivered by Borrower or any
other Loan Party or any officer, director, manager or authorized employee or
agent thereof herein or in any other Loan Document or otherwise in writing by
such Person in connection with any of the foregoing or in any certificate,
report or other statement furnished pursuant to or in connection with any of
the foregoing, shall be breached or shall prove to be untrue in any material
respect; or

9.3                                 Negative and
Certain Other Covenants.  Borrower
shall fail to perform or observe, or shall fail to cause (or as to a Portfolio
Entity-50% use its commercially reasonable efforts to cause) any Subsidiary,
Portfolio Entity-50% or any other Loan Party or other Person covered thereby to
perform or observe, any term, covenant or agreement to be performed or observed
by Borrower or such Subsidiary, Portfolio Entity-50%, Loan Party or other
Person, as the case may be, pursuant to Section 7.11 or Section 8; or

9.4                                 Other Covenants.  Borrower shall fail to perform or observe, or
shall fail to cause Subsidiary, Portfolio Entity, other Loan Party or other
Person covered thereby to perform or observe, any term, covenant or agreement
to be performed or observed by Borrower or such Subsidiary, Portfolio Entity,
other Loan Party or other Person, as the case may be, pursuant to any of the
provisions of this Agreement (other than those referred to in Sections 9.1, 9.2
or 9.3) or any other Loan Document and such default (which shall be capable of
cure) shall continue unremedied for a period of thirty days, after the earlier
of the date on which (x) Agent or any Lender gives Borrower notice thereof, or
(y) Borrower obtains knowledge of such default; or

9.5                                 Other Indebtedness
of Borrower.  Any Applicable
Indebtedness of Borrower, including, without limitation, under the RAL, (i)
shall be declared to be or shall become due and payable prior to the stated
maturity thereof or (ii) shall not be paid as and when the same becomes due and
payable; or any other event of default shall occur and be continuing under any
other Indebtedness Instrument, including, without limitation, the RAL (but
other than a Loan Document) relating to any Indebtedness of Borrower in excess
of $15,000,000 and, if a cure 

 42
 

period is applicable thereto, such default
shall not be cured within 15 days after the occurrence thereof; or

9.6                                 Other Indebtedness
of other Loan Parties.

(a)                                  Any
Applicable Indebtedness of any Primary Obligor or other Loan Party (i) shall be
declared to be or shall become due and payable prior to the stated maturity
thereof or (ii) shall not be paid as and when the same becomes due and payable;
or any other event of default shall occur and be continuing under any other
Indebtedness Instrument (other than a Loan Document) relating to any
Indebtedness of such Person in excess of $15,000,000 and, if a cure period is
applicable thereto, such default shall not be cured within 15 days after the
occurrence thereof; or

9.7                                 [Reserved.]

9.8                                 Insolvency.  (i) Borrower, any Primary Obligor or any
other Loan Party (Borrower and each of the other foregoing Persons being a “Section
9.8 Entity”) shall make an assignment for the benefit of creditors or a
composition with creditors; or (ii) any Section 9.9 Entity shall admit in
writing its inability to pay its debts as they mature, shall file a petition in
bankruptcy, shall be adjudicated insolvent or bankrupt, shall petition or apply
to any tribunal for the appointment of any receiver, liquidator, trustee or
custodian of or for it or any of its Assets; or (iii) any application is
made by any other Person for the appointment of any receiver, liquidator,
trustee or custodian for any Section 9.8 Entity or for any of the Assets of any
Section 9.8 Entity; or (iv) any Section 9.8 Entity shall commence any
proceedings relating to it under any bankruptcy, reorganization, arrangement,
readjustment of debt, receivership, dissolution or liquidation law or statute
of any jurisdiction, whether now or hereafter in effect; or (v) there
shall be commenced against any Section 9.8 Entity any such proceeding which
shall remain undismissed for a period of 60 days or more, or any order,
judgment or decree approving the petition in any such proceeding shall be
entered; or (vi) any Section 9.8 Entity shall by any act or failure to act
indicate its consent to, approval of or acquiescence in, any such proceeding or
in the appointment of any receiver, liquidator, trustee or custodian (other
than a custodian under Non-Default Voluntary Custodial Arrangements) of or for
it or any of its Assets, or shall suffer any such appointment to exist; or
(vii) any Section 9.8 Entity shall take any action for the purpose of
effecting any of the foregoing; or any court of competent jurisdiction shall
assume jurisdiction with respect to any such proceeding or a receiver or
trustee or other officer or representative of a court or of creditors, or any
court, governmental officer or agency, shall under color of legal authority,
take and hold possession of any substantial part of the property or Assets of
any Section 9.8 Entity; or (viii) any Section 9.8 Entity shall become
insolvent (howsoever such insolvency may be evidenced) or shall be unable to
pay its debts as they mature (except that the occurrence of any condition set
forth in this clause (viii) with respect to FC Mexico, so long as FC Mexico is
paying its debts as they mature, shall not constitute an Event of Default under
this Section 9.8 unless the occurrence of any such condition with respect to FC
Mexico is an Event of Default under any other clause of this Section 9.8); or

9.9                                 Security Documents.  The breach by Borrower or any other Loan
Party of any term or provision of, or the occurrence of any default under, any
Security Document or other Loan Document (other than this Agreement) or other
agreement, instrument or document 

 43
 

delivered in connection therewith to which
such Person is a party, which breach or default is in the opinion of Agent,
material, or any other such breach or default (other than such a material
breach or default) occurs and is not cured within the time, if any, specified
therefor therein or fifteen days thereafter, if no such time is specified or
such time is less than 15 days; or if any such Security Document or Loan
Document is at any time not in full force and effect; or any of the Security
Documents shall fail to grant to Agent on behalf of Lenders the Liens (if any)
intended to be created thereby; or if any Loan Party shall assert that it is
not liable with respect to any Security Document to which it is a party; or any
Primary Obligor shall assert that it is not liable as a guarantor under the
Guaranty to which it is party; or

9.10                           Notice of Charge.  Except as expressly permitted pursuant to
Section 7.3, if a notice of any Charge is filed of record with respect to all
or any of the Assets of Borrower, any Primary Obligor, any Material Portfolio
Entity or any Wholly-Owned Subsidiary (other than any  REO Affiliate); or

9.11                           Judgments.

(a)                                  Any
final non-appealable judgment for the payment of money in excess of
$1,000,000 (after giving effect to any amount covered by insurance as to which
the insurer shall not have denied or questioned its obligation to pay) shall be
rendered against Borrower or any Primary Obligor; or

(b)                                 Final
judgment for the payment of money in excess of $1,000,000 shall be rendered
against Borrower or any Primary Obligor, and the same shall remain undischarged
for a period of 30 days during which execution shall not be effectively stayed
or diligently contested in good faith by appropriate proceedings; or

(c)                                  If
for the purpose of obtaining judgment in any court it is necessary to convert a
sum due from Borrower in the currency expressed to be payable herein (the “specified
currency”) into another currency, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be
that at which in accordance with normal banking procedures Agent could purchase
the specified currency with other such currency at Agent’s New York branch on
the Business Day that is on or immediately following the day on which final
judgment is given.  The obligations of
Borrower in respect of any sum due to any Lender or Agent hereunder shall,
notwithstanding any judgment in a currency other than the specified currency,
be discharged only to the extent that on the Business Day following receipt by
such Lender or Agent, as the case may be, of any sum adjudged to be so due in
such other currency such Lender or Agent as the case may be, may in accordance
with normal banking procedures purchase the specified currency with such other
currency.  If the amount of the specified
currency so purchased is less than the sum originally due to such Lender or
Agent, as the case may be, in the specified currency, Borrower agrees, to the
fullest extent it may effectively do so, as a separate obligation and
notwithstanding any such judgment, to indemnify such Lender or Agent, as the
case may be, against such loss, and if the amount of the specified currency so
purchased exceeds the sum originally due to any Lender or Agent, as the case
may be, in the specified currency, such Lender or Agent, as the case may be,
agrees to remit such excess to the appropriate Borrower; or  

 44

9.12         Stock Issuance or
Transfer.  Except as expressly
permitted pursuant to the terms hereof, if any Subsidiary or Portfolio
Entity-50% issues to (except upon formation of a Person permitted by this
Agreement) or transfers to any Person any Stock or other Equity Interests; or

9.13         ERISA.  Any ERISA Affiliate of Borrower or of any
other Applicable Person under Section 8.22 which is not a Subsidiary of
Borrower or such Applicable Person shall fail in the performance or observance
of any term, provision or agreement with respect to a Plan or Multiemployer
Plan set forth in Section 8.22 as if such ERISA Affiliate were a Subsidiary of
Borrower or an Applicable Person; or

9.14         Material Effect
Defaults.  To the extent that the
same does not constitute an Event of Default under any other provision of this
Section 9, a default by Borrower or any Primary Obligor shall occur under any
agreement, document or instrument (other than this Agreement or any of the
other Loan Documents) now or hereafter existing, to which Borrower or any
Primary Obligor is a party and the effect of such default could reasonably be
expected to have a Material Adverse Effect; or

9.15         Change in Control.  A Change in Control shall occur (for purposes
hereof, a Change in Control shall mean the occurrence of any of the following
events after the date hereof:  (i) any “person”
or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), is or becomes the “beneficial owner” (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly, or indirectly, of
more than fifty percent (50%) of the aggregate voting power of all classes of
Capital Stock of Borrower entitled to vote generally in an election of
directors; (ii) Borrower is merged with or into another corporation or another
corporation is merged with or into Borrower with the effect that immediately
after such transaction the stockholders of Borrower immediately prior to such
transaction hold less than a majority in interest of the total voting power
entitled to vote in the election of directors, managers or trustees of the
entity surviving the transaction; or (iii) to the extent not otherwise then
constituting an Event of Default, all or substantially all of the Assets of
Borrower or a Primary Obligor are sold to any person or persons (as an entirety
in one transaction or a series of related transactions).  For purposes of this Section 9.15, “Capital
Stock” of any Person means any and all shares, interests, participations or
other equivalents in the equity (however designated) of such Person and any
rights (other than debt securities convertible into an equity interest),
warrants or options to acquire an equity interest in such Person); or

9.16         Management.  If James Sartain ceases to be employed
full-time with Borrower and responsible for the day to day management of
Borrower.  Such occurrence shall be an
Event of Default without notice or cure period, unless Borrower employs a replacement
officer of Borrower having the duties of Mr. Sartain acceptable to Lenders in
their reasonable discretion within ninety (90) days after Mr. Sartain ceases to
be employed; or

9.17         Court Orders.  To the extent not otherwise constituting an
Event of Default, if Borrower, any Primary Obligor or any other Loan Party is
enjoined, restrained or in any way prevented by court order from conducting all
or any material part of its business or affairs and such Person consents (by
action, inaction or otherwise) to such order or such order remains in effect
for a period of 30 days; or

 45
 

9.18         Dissolution.  Borrower, any Primary Obligor or any other
Loan Party shall dissolve, fully liquidate or suspend or discontinue its
business; or

then, and in any such
event, and at any time thereafter, if any Event of Default shall then be
continuing, Agent may (and shall, if instructed in writing by the Majority
Lenders) by written notice to Borrower: (i) declare the principal of and
accrued interest on the Loans of Borrower to be, whereupon the same shall
forthwith become, due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by Borrower; and/or (ii)
declare the Commitments of Lenders terminated, whereupon such Commitments shall
forthwith terminate immediately; provided that if any Event of Default
described in Section 9.8 shall occur with respect to Borrower, the result which
would otherwise occur only upon the giving of written notice by Agent to
Borrower as herein described shall occur automatically, without the giving of
any such notice.

Section
10.             GENERAL
REPRESENTATIONS AND WARRANTIES AND RELATED COVENANTS.

In order to induce
Lenders to enter into this Agreement and to maintain the Loans provided for
herein, each Loan Party party hereto makes the following representations,
covenants and warranties, both as of the Execution Date and (after giving
effect to the transactions contemplated hereby to occur on the Effective Date)
as of the Effective Date (unless otherwise specified), which representations,
covenants and warranties shall survive the execution and delivery of this
Agreement and the other documents and instruments referred to herein:

10.1         Organization.

(a)           Borrower is and at all
times hereafter shall be a corporation, duly organized and validly existing and
in good standing under the laws of the State of Delaware and qualified or
licensed to do business and in good standing in all states in which the laws
thereof require Borrower to be so qualified and/or licensed and in which the
failure to so qualify could have a Material Adverse Effect, including, without
limitation, the State of Texas.  Schedule
10.1(a) identifies each jurisdiction in which Borrower has qualified or
been licensed to do business and describes the nature and current status of any
such qualification or license.

(b)           Each Primary Obligor
and each Portfolio Entity and each other Loan Party is a corporation or limited
liability company or a limited partnership, duly organized and validly existing
and in good standing under the laws of the state or foreign jurisdiction of its
organization.

(c)           Each Primary Obligor
and other Loan Party is and at all times hereafter shall be qualified or
licensed to do business and in good standing in all states in which the laws
thereof require such Primary Obligor, and other Loan Party to be so qualified
and/or licensed.

(d)           Each Portfolio Entity
is and at all times hereafter shall be qualified or licensed to do business and
in good standing in all states in which the laws thereof require such Portfolio
Entity to be so qualified and/or licensed and in which the failure to so
qualify could have a Material Adverse Effect. 
Schedule 10.1(d) identifies each jurisdiction in which each
Primary Obligor, Portfolio Entity, Related Entity and each other Loan Party has
qualified or been licensed to do business and describes the nature and current
status of any such qualification or license.

 46
 

(e)           Schedule 10.1(e)
lists all Shareholder Agreements to which Borrower, any Subsidiary, any
Portfolio Entity-50% or any other holder of any Equity Interest in a Pledged
Entity is a party.

10.2         Entity Power.

(a)           Borrower has the right,
power and capacity and is duly authorized and empowered to enter into, execute,
deliver and perform this Agreement and the other Loan Documents to which it is
a party.

(b)           Each Primary Obligor
and each other Loan Party has the right, power and capacity and is duly
authorized and empowered to enter into, execute, deliver and perform those Loan
Documents  to which it is a party.

10.3         Violation of Charter
Documents.

(a)           The execution, delivery
and/or performance by Borrower of this Agreement and the other Loan Documents
to which it is a party and the consummation of the transactions contemplated
hereunder have been duly authorized by all necessary corporate and shareholder
action and none of such execution, delivery, performance or consummation shall,
by the lapse of time, the giving of notice or otherwise, constitute a violation
of any Legal Requirement or a breach of any provision contained in the Charter
Documents of Borrower, or contained in any agreement, instrument or document to
which Borrower is now or hereafter a party or by which it or any of its Assets
is or may become bound, other than agreements, instruments or documents that
are immaterial to Borrower the breach of which could not have a Material
Adverse Effect.

(b)           The execution, delivery
and/or performance by each Primary Obligor and other Loan Party of each Loan
Document to which it is a party and the consummation of each such Person of the
transactions contemplated hereunder have been duly authorized by all necessary
corporate, partnership or limited liability company action (as the case may be)
and other action by the holders of the Equity Interests thereof and none of
such execution, delivery, performance or consummation shall, by the lapse of
time, the giving of notice or otherwise, constitute a violation of any Legal
Requirement or a breach of any provision contained in the Charter Documents of
such Primary Obligor or such other Loan Party, or contained in any agreement,
instrument or document to which such Primary Obligor or such other Loan Party
is now or hereafter a party or by which it or any of its Assets is or may
become bound, other than agreements, instruments or documents that are immaterial
to such Primary Obligor and other Loan Party the breach of which could not have
a Material Adverse Effect.

10.4         Enforceability.

(a)           This Agreement and the
other Loan Documents to which Borrower is a party are and will be the legal,
valid and binding agreements of Borrower, enforceable in accordance with their
respective terms, except as enforcement thereof may be subject to the effect of
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally, and to general principles of equity
(regardless of whether such enforcement is sought in a proceeding in equity or
at law); and

 47
 

(b)           Those other Loan
Documents to which each other Loan Party is a party are and will be the legal,
valid and binding agreements of such Loan Party, enforceable in accordance with
their respective terms, except as enforcement thereof may be subject to the
effect of applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ rights generally, and to general principles
of equity (regardless of whether such enforcement is sought in a proceeding in
equity or at law).

10.5         Ownership.

(a)           Schedule 10.5(a)
sets forth all classes of stock of Borrower, as of December 31, 2003, the
shareholders thereof (other than members of the general public), addresses of
each shareholder, and number of shares owned as of such date;

(b)           Schedule 10.5(b)
sets forth all classes of stock and/or other Equity Interests (other than
options, warrants and rights to acquire Stock or other Equity Interests) issued
by each Primary Obligor, each Portfolio Entity and each Related Entity, the
shareholders and other equity holders thereof, and the addresses, number of
shares and/or partnership interests owned.

(c)           Schedule  10.5(c) sets forth all options, warrants
and other rights to acquire Stock or other Equity Interests of Borrower, any
Primary Obligor, any Portfolio Entity, any Related Entity and any other Pledged
Entity, the nature of such option, warrant or right and the conditions for the
exercise thereof.  Lenders hereby
expressly consent to the transfer, issuance or conveyance of Stock and/or other
Equity Interests of Borrower in accordance with such options, warrants and
rights; provided that the same does not result in a Change of Control.

(d)           All Equity Interests of
Borrower, each Primary Obligor, each Portfolio Entity, each Related Entity and
each other Loan Party have been duly and validly issued, are fully paid and are
non-assessable.

10.6         Fictitious Names.

(a)           Each of the fictitious
names, if any, used by Borrower during the five (5) year period preceding the
Execution Date is set forth on Schedule 10.6 attached hereto (as amended
from time to time) and none of such fictitious names are registered trademarks
or tradenames with the U.S. Patent and Trademark Office, except as set forth in
Schedule 10.6;

(b)           Each of the fictitious
names, if any, used by each Primary Obligor, Material Portfolio Entity and any
other Loan Party, during the five (5) year period preceding the Execution Date
is set forth on Schedule 10.6 attached hereto (as amended from time to
time), and none of such fictitious names are registered trademarks or
tradenames with the U.S. Patent and Trademark Office; provided that,
variations on the corporate name of any Primary Obligor, Portfolio Entity or
any other Loan Party in states where used solely for qualifying to do business
therein shall and have been excluded from such schedule, with Lender’s consent
and approval.

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10.7         Title.

(a)           Schedule 10.7 is
a true, accurate and complete list of all Liens relating to the Collateral on
the Execution Date and Effective Date.

(b)           First X and First B
shall at all times own fee title to its real estate subject to no liens other
than the Permitted Liens.

(c)           Borrower, each Primary
Obligor, Portfolio Entity and other Loan Party shall at all times have
indefeasible and merchantable title to and ownership of all of its Assets
except to the extent the failure to do so could not reasonably be expected to
have a Material Adverse Effect.

10.8         Financial Warranty.  Except as set forth on Schedule 10.8,
Borrower (i) is paying its debts as they mature, (ii) owns property which, at a
fair valuation, is greater than the sum of its debt, and (iii) has capital
sufficient to carry on its business and transactions and all businesses and
transactions in which it is about to engage. Except as set forth on Schedule
10.8, each Primary Obligor and each Material Portfolio Entity: (i) is
paying its respective debts as they mature, (ii) owns property which, at a fair
valuation, is greater than the sum of its debt and (iii) has capital sufficient
to carry on its business and transactions and all businesses and transactions
in which it is about to engage.

10.9         Proceedings.  Except as set forth on Schedule 10.9,
there are no actions or proceedings which are pending or threatened against
Borrower, any Primary Obligor, any Material Portfolio Entity or any other Loan
Party which could reasonably be expected to have a Material Adverse Effect.  None of the actions or proceedings referred
to on Schedule 10.9 could have a Material Adverse Effect.

10.10       Government Contracts.  Except as set forth on Schedule 10.10,
neither Borrower, nor any Primary Obligor, Material Portfolio Entity or other
Loan Party has any government contracts.

10.11       Adequate Licenses.  Borrower, and each Primary Obligor, Portfolio
Entity and other Loan Party possesses adequate Assets, licenses, patents,
copyrights, trademarks and tradenames to continue to conduct its business as
previously conducted by it and as contemplated in the foreseeable future except
such licenses, patents, copyrights, trademarks and trade names the failure of
which to obtain could not be reasonably expected to have a Material Adverse
Effect.

10.12       Government Permits;  Approvals and Consents.

(a)           Except for matters
which could not result in a Material Adverse Effect, Borrower and each Primary
Obligor, each Portfolio Entity  and each
other Loan Party has been and is in good standing with respect to all governmental
permits, certificates, consents and franchises necessary to continue to conduct
its business as previously conducted prior to the date hereof and prior to the
Execution Date and to own or lease and operate its properties as now owned or
leased by it.  None of said permits,
certificates, consents or franchises contain any term, provision, condition or
limitation more burdensome than such as are generally applicable to Persons
engaged in the same or similar business as the applicable Person.

 49
 

(b)           Except for those consents
and other items set forth on Schedule 10.12, neither Borrower, nor any
Primary Obligor, Material Portfolio Entity or other Loan Party requires the
approval, consent, waiver, order, permission, license, authorization,
registration or validation of, or filing with or exemption by, any Government
Authority or any other Person (including but not limited to shareholders,
partners, members, equity owners, holders of Indebtedness Instruments, or any
owner of any lien upon the Assets of any one or more of them or their
Affiliates) for the execution and delivery of, and the consummation of the
transactions contemplated by, this Agreement and the other Loan Documents,
including but not limited to the borrowing of any Loans, the pledge of the
Collateral, and the payment and performance of all Obligations.  Borrower and each other Primary Obligor,
Material Portfolio Entity and other Loan Party have received the consents and
other items described on Schedule 10.12 and has delivered a copy thereof
to Agent, which consents are in full force and effect, unmodified and unamended
on the date hereof and on the Execution Date.

10.13       Charge; Restrictions.

(a)           On the Execution Date
and on the Effective Date, neither Borrower, nor any Primary Obligor nor any
Portfolio Entity or any other Loan Party is a party to (nor are any of such
Person’s Assets otherwise subject to) any contract or agreement or restriction,
judgment, decree or order that could have a Material Adverse Effect.

(b)           On the Execution Date
and on the Effective Date, none of Borrower, nor any Primary Obligor, Material
Portfolio Entity , or any other Loan Party is subject to (nor are any such
Person’s Assets otherwise subject to) any Charge (other than Charges owed by
First B or First X).

10.14       Compliance with Laws.  Except for matters which could not result in
a Material Adverse Effect, neither Borrower, nor any Primary Obligor nor any
Portfolio Entity  nor any other Loan
Party is in violation of any applicable statute, regulation, order or ordinance
of the United States of America, of any state, city, town, municipality, county
or of any other jurisdiction, or of any agency thereof, including the Federal
Reserve Board, in any respect.

10.15       Compliance with
Indebtedness Instruments.  Other than
those defaults set forth on Schedule 10.15, Borrower is not in default
under any Indebtedness Instrument or any other material agreement to which it
is a party.  Other than those defaults
set forth on Schedule 10.15, no Primary Obligor, Material Portfolio
Entity, or any other Loan Party is in default under any Indebtedness
Instrument.

10.16       Financials.  The Financial Statements delivered by
Borrower, any Primary Obligor, Material Portfolio Entity or any other Loan
Party to Agent, fairly and accurately present the Assets, liabilities and
financial conditions and results of operations of Borrower, and such other
Persons described therein as of and for the periods ending on such dates and
have been prepared in accordance with GAAP and such principles have been
applied on a basis consistently followed in all material respects throughout
the periods involved.

10.17       Tax Returns.  Borrower and each other member of the
Consolidated Group has filed or caused to be filed all tax returns which are
required to be filed, and has paid all Charges

 50
 

shown to be due and payable on said returns
or on any assessments made against it or any of its property, and all other
Charges imposed on it or any of its properties by any Governmental Authority,
except for Charges arising at any time after the Effective Date, which Borrower
is disputing in accordance with the final sentence of Section 7.3.

10.18       No Material Adverse
Change.  Except as set forth in Schedule
10.18, since June 30, 2007, no event or circumstance has occurred that had,
has or could reasonably be expected to have a Material Adverse Effect.

10.19       No Indebtedness.  None of Borrower, any Primary Obligor,
Portfolio Entity, Wholly-Owned Subsidiary or other Loan Party (i) has any
Indebtedness except for Indebtedness described in Schedule 10.19, Schedule
10.20 and Schedule 8.12(a) and except for Indebtedness permitted by
this Agreement which (other than in the case of MCS, any Latin American
Acquisition Entity  or any European
Acquisition Entity ) is reflected in the most recent Financial Statements
delivered pursuant to 7.1(a) or (b) (except for any such Indebtedness permitted
by this Agreement (x) incurred since such most recent Financial Statements were
delivered, or (y) constituting unsecured trade payables arising in the ordinary
course of business since the dates reflected in the June 30, 2004 Financial
Statements that is not Indebtedness for borrowed money or Indebtedness of any
REO Affiliate to its REO Parent evidenced by a note payable to such REO Parent,
in each case, to the extent, if any, not required by GAAP to be reflected in
Financial Statements) or (ii) has guaranteed any indebtedness or entered into
or issued any Guaranty Equivalent (other than as a result of the endorsement of
any instrument of items of payment for deposit or collection in the ordinary
course of business or as otherwise expressly permitted pursuant to the terms
hereof) in respect of the obligations of any Person.

10.20       Affiliate Notes.  Attached hereto as Schedule 10.20 is a
true, accurate and complete schedule of all promissory notes made by any
Affiliate payable to the order of a Borrower, a Wholly-Owned Subsidiary, a
Portfolio Entity or a Related Entity, other than the Pledged Notes and the
Excluded Notes.

10.21       No Liability on Lenders
or Agent.  None of the execution,
delivery and performance by Borrower or any other Loan Party of this Agreement
and/or the other Loan Documents will impose on or subject any of the Lenders or
the Agent to any liability, whether fixed or contingent, in respect of any
Environmental Law, whether relating to the operation of Borrower’s business or
otherwise.  None of the Lenders’ or the
Agent’s exercise of any of the rights or remedies described in this Agreement
or in any of the other Loan Documents shall constitute a breach of any provision
contained in any agreement, instrument or document concerning the assignment or
license of, or the payment of royalties for, any patents, patent rights,
tradenames, trademarks, trade secrets, know-how, copyrights or any other form
of intellectual property now or at any time or times hereafter protected as
such by any applicable law.

10.22       Affiliates.  Schedule 10.22 attached hereto is a
true, accurate and complete schedule of Borrower’s Affiliates as of the
Effective Date, together with a description of Borrower’s relationship to each
such Affiliate.

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10.23       Real Property;
Environmental Issues.  Except as set
forth on Schedule 10.23, neither Borrower, any Primary Obligor, any
Portfolio Entity or any Related Entity other than First X, First B, FCS Creamer,
Ltd., FCS Wood Ltd., and FCS Wildhorse Ltd., FCS Fischer Ltd., any REO
Affiliate, any Latin American Acquisition Entity or European Acquisition Entity
now owns or, in the case of US Persons, leases or at any time in the five (5)
years preceding the Execution Date has owned or leased any real property.  Neither Borrower, any Primary Obligor, any
Portfolio Entity, any Related Entity, any Immaterial Entity, or any other Loan
Party has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other Governmental Authority concerning
any action or omission resulting in the releasing, or otherwise disposing of
hazardous waste or hazardous substances into the environment with respect to
any real property.

10.24       Investment Company Act
and Public Utility Holding Company Act. 
Neither Borrower nor any Primary Obligor nor any other Loan Party or the
entering into of any Loan Documents, nor the issuance of the Notes is subject
to any of the provisions of the Investment Company Act of 1940, as
amended.  Neither Borrower, nor any
Primary Obligor or any other Loan Party is a “holding company” as defined in
the Public Utility Holding Company Act of 1935, as amended, or subject to any
other federal or state statute or regulation limiting its ability to incur
Indebtedness for money borrowed.

10.25       Disclosure.  Neither this Agreement nor any other Loan
Document nor any statement, list, certificate or other document or information,
nor any schedules to this Agreement or any other Loan Document, delivered or to
be delivered to Lenders or Agent, contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make statements contained herein or therein, in light of the circumstances in
which they are made, not misleading. 
Copies of all documents delivered to Lenders and/or Agent pursuant to
this Section 10 or any other provision of this Agreement are true, correct and
complete copies thereof and include all amendments, restatements, supplements
and other modifications thereto and thereof.

10.26       Qualification.

(a)           Solely by reason of
(and without regard to any other activities of Lenders and/or Agent in any
state in which Assets of the Borrower, any Primary Obligor, any Portfolio Entity,
any Related Entity or other Loan Party are located) the entering into and
performance of this Agreement, the Notes, the other Loan Documents and the
documents, instruments and agreements delivered in connection therewith by
Lenders and/or Agent will not constitute doing business by Lenders and/or Agent
in any of such states or result in any liability of Lenders and/or Agent for
taxes or other governmental charges; and qualification by Lenders and/or Agent
to do business in such jurisdiction is not necessary in connection with, and
the failure to so qualify will not affect, the enforcement of, or exercise of
any rights or remedies under, any of such documents.

(b)           No “business activity,”
“doing business” or similar report or notice is required to be filed by the
Lenders and/or Agent in any such jurisdiction in connection with the Loans or
the transactions contemplated by this Agreement or any other Loan Document, and
the failure to file any such report or notice will not affect the enforcement
of, or the exercise of any rights or remedies under, this Agreement or any of
the other Loan Documents.

 52
 

(c)           SEC Filings.  The Borrower has filed and made available to
the Agent and Lenders each form, registration statement, schedule, report,
proxy statement and document required to be filed by Borrower with the SEC
since January 1, 1995 (collectively, the “SEC Reports”).  Except
as set forth on Schedule 10.26, the SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Laws and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in the SEC Reports or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.  Borrower is
the only Loan Party required to file pursuant to the Exchange Act.  Since January 1, 1995, Borrower has made
all filings with the SEC in a timely manner (except as set forth on Schedule
10.26, each of which filing deficiencies was subsequently cured in a manner
that brought Borrower into full compliance with law) as required by law and no
event has occurred that requires an additional filing or any amendment to a
prior filing, which has not been made or filed.

10.27       Federal Reserve Margin
Regulations; Use of Proceeds

(a)           Neither Borrower, any
Primary Obligor, any Portfolio Entity, any Related Entity or any other Loan
Party or member of the Consolidated Group or Subsidiary of any of the foregoing
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System).  No part of the proceeds
of any Loan will be used to purchase or carry any such margin stock or to
extend credit to others for the purpose of purchasing or carrying any such
margin stock.

(b)           Neither the Loans nor
the use of proceeds therefrom will result in a violation of any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended), or any ruling issued thereunder or any
enabling legislation or Presidential Executive Order in connection therewith.

10.28       Intellectual Property.  All patents, trademarks, registered
copyrights and trade names of Borrower, each Primary Obligor, each Material
Portfolio Entity and each other Loan Party are listed in Schedule 10.28
to this Agreement; all of those so listed are in full force and effect.  If any member of the Consolidated Group at
any time acquires, establishes, invents or develops any patent, trademark,
copyright or trade name that is or becomes material to such Person’s business
or operations, it will promptly notify Agent of same and take such action as
Agent shall request to grant to Agent on behalf of Lenders a perfected, first priority
security interest in same.

10.29       Compliance with ERISA.  No Loan Party or Subsidiary, other than
Borrower and Subsidiaries that are not Portfolio Entities has or shall at any
time have any employees.  Schedule 10.29
describes the Pension Plans to which Borrower or any ERISA Affiliates may have
obligations.  Each Loan Party and each
ERISA Affiliate and each Plan and the trusts maintained pursuant to such plans
are in compliance in all material respects with the presently applicable
provisions of Sections 401 through and including 417 of the Code, and of ERISA
and (i) no event which constitutes a Reportable Event as defined in Section
4043 of ERISA has

 53
 

occurred and is continuing with respect to
any Plan which is or was covered by Title IV of ERISA, (ii) no Plan which is
subject to Part 3 of Subtitle B of Title 1 of ERISA has incurred any “accumulated
funding deficiency” (within the meaning of Section 302 of ERISA or Section 412
of the Code) whether or not waived, and (iii) no written notice of liability
has been received with respect to any Loan Party or any Subsidiary for any “prohibited
transaction” (within the meaning of Section 4975 of the Code or Section 406 of
ERISA), nor has any such prohibited transaction resulting in liability to any
Loan Party or ERISA Affiliate occurred.

Neither any Loan Party
nor any ERISA Affiliate (i) has incurred any liability to the PBGC (or any
successor thereto under ERISA), or to any trustee of a trust established under
Section 4049 of ERISA, in connection with any Plan (other than liability for
premiums under Section 4007 or ERISA), (ii) has incurred any withdrawal
liability under Subtitle E of Title IV of ERISA in connection with any Plan
which is a Multiemployer Plan, nor (iii) has contributed or has been obligated to
contribute on or after September 26, 1980, to any “multiemployer plan” (within
the meaning of Section 3(37) of ERISA) which is subject to Title IV of ERISA.

The consummation of the
transactions contemplated by this Agreement (i) will not give rise to any
liability on behalf of any Loan Party or any ERISA Affiliate under Title IV of
ERISA to the PBGC (other than ordinary and usual PBGC premium liability), to
the trustee of a trust established pursuant to Section 4049 of ERISA, or to any
Multiemployer Plan, and (ii) will not constitute a “prohibited transaction”
under Section 406 of ERISA or Section 4975 of the Code.

10.30       The Security Documents.

(a)           Each Security Document
heretofore delivered grants, and each Security Document hereafter delivered
when delivered will grant a Lien in the properties or rights intended to be
covered thereby (the “Collateral”) which (i) will constitute a valid and
enforceable security interest under the Uniform Commercial Code of the State
(x) in which the Collateral is located and (y) by which any Security Document
is governed (as applicable, the “UCC”), (ii) will be entitled to all of
the rights, benefits and priorities provided by the UCC, and (iii) when such
Security Documents or financing statements with respect thereto are filed and
recorded as required by the UCC, will be superior and prior to the rights of
all third Persons now existing or hereafter arising whether by way of mortgage,
pledge, lien, security interest, encumbrance or otherwise, except for Permitted
Liens, and will provide Agent and Lenders the Requisite Priority.  All such action as is necessary in law has
been taken, or prior to the Effective Date will have been taken, to establish
and perfect the security interest of Agent and Lenders in the Collateral and to
entitle Lenders or Agent on behalf of Lenders to exercise the rights and
remedies provided in each of the Security Documents and the UCC, as applicable,
and no filing, recording, registration or giving of notice or other action is
required in connection therewith except such as has been made or given or will
have been made or given prior to such dates. 
All filing and other fees and all recording or other tax payable with
respect to the recording of any of the Security Documents and UCC financing
statements have been paid or provided for.

(b)           In furtherance (and not
in limitation) of Section 10.30(a), after giving effect to the Pledge
Agreements and Security Agreements listed on Schedule 10.30(b), each
Borrower and each Primary Obligor will have granted Agent a Lien of the
Requisite Priority on

 54
 

(x) each Pledged Note and on
each other note, instrument or other evidence of indebtedness, other than any
Excluded Note, in which it has any right, title or interest; and (y) each
Equity Interest, other than Equity Interests in Excluded Entities, in which it
has any right, title or interest, including, without limitation, each Equity
Interest issued to it by any Portfolio Entity acquiring any Asset Pool.

10.31       Other Loan Documents.  All representations and warranties contained
in the other Loan Documents are true and correct.

10.32       Exclusion of Harbor
Debtors.  No representation, warranty
or covenant set forth in this Section 10 shall be deemed to be a
representation, warranty or covenant with respect to or by a Harbor Debtor.

10.33       Crestone Portfolio
Entities.

FC Commercial has
organized an eighty per cent (80%) owned subsidiary, FirstCity Denver
Investment Corp., in connection with Crestone Partners, LLC, which owns the
remaining twenty per cent (20%) ownership interest, for the purpose of
investing in (a) distressed debt, (b) special situation mezzanine and bridge
loan originations, (c) leveraged buyouts and (d) other special investment
opportunities to be determined by FC Commercial and Crestone Partners, LLC.  FirstCity Denver Investment Corp. has a
wholly owned subsidiary, FirstCity Crestone, LLC, which will service Assets
owned by Subsidiaries of FirstCity Denver Investment Corp.  FirstCity Denver Investment Corp. will provide
financing for the Crestone Portfolio Entities pursuant to the Crestone
Facility.  Borrower and Lenders agree
that the Loans made to Borrower to be advanced to FC Commercial and advanced by
FC Commercial to FirstCity Denver Investment Corp. to enable it to make loans
under the Crestone Facility shall constitute Acquisition Loans notwithstanding
any provision of this Agreement that limits Acquisition Loans to loans made to
a Portfolio Entity to acquire loans, Assets Pools or other Assets, and that the
Crestone Facility shall constitute an Approved Portfolio Leverage Arrangement
notwithstanding any provision of this Agreement that provides that an Approved
Portfolio Leverage Arrangement must be made by a financial institution or that
loans made under any Approved Portfolio Leverage Arrangement must be for
acquisition of loans or other Assets. 
Borrower and Lenders agree that the Crestone Portfolio Entities shall
constitute Eligible Portfolio Entities notwithstanding that the Assets of the
Crestone Portfolio Entities will be pledged to secure the Crestone Facility.

10.34       [Reserved].

10.35       Fee Agreements.  Attached hereto as Schedule 10.35
is a true, accurate and complete schedule, as of the Effective Date, of all Fee
Agreements to which Borrower or any Primary Obligor, or Material Portfolio
Entity is a party.

10.36       Securitization
Agreements.  Attached hereto as Schedule
10.36 is a true, accurate and complete schedule as of the Execution Date of
all sales and servicing agreements and similar agreements relating to
securitizations to which Borrower, any Primary Obligor or any other Subsidiary
of Borrower is a party.

 55
 

10.37       Immaterial Entities.  Schedule 10.37 lists each Affiliate of
Borrower that does not engage in any business and that has assets of with a
fair market value of less than $100,000. 
The aggregate fair market value of Assets of all entities listed on Schedule
10.37 does not exceed $1,500,000.

10.38       Waterfall Restrictions.  No loan agreement or other borrowing
arrangement of any Portfolio Entity contains any provision (x) pursuant to
which such agreement or arrangement would cross-default to a loan agreement or
other borrowing arrangement of any other Portfolio Entity or to a different
loan agreement or other borrowing arrangement of such Portfolio Entity or (y)
which would in any way restrict, reduce or prohibit distributions by a
Portfolio Entity on account of any event or condition with respect to any
Affiliate of such Portfolio Entity or with respect to that Portfolio Entity
under any other borrowing or credit arrangement.

10.39       Wholly Owned Subsidiary
Interests.  Attached as Schedule
10.39 hereto is a true and complete list, as of the Effective Date, of each
Wholly-Owned Subsidiary which owns Equity Interests issued by any other Person
other than an REO Affiliate of such Wholly-Owned Subsidiary,

10.40       REO Affiliates.  Attached as Schedule 10.40 hereto is a
true and complete list, as of the Effective Date, of each REO Affiliate.

10.41       Material Portfolio
Entities.  Attached hereto as Schedule
10.41 is a true and complete list, as of the Effective Date, of each
Material Portfolio Entity.

Section
11.             AGENT.

11.1         Appointment.  Lenders hereby irrevocably appoint BoS (USA)
Inc., to act as Agent hereunder and as Agent or Collateral Agent or “Assignee”
or “Secured Party” (or in any other similar representative capacity designated
in any Security Document) under the Security Documents (in such capacity, the “Agent”).  Each Lender hereby irrevocably authorizes,
and each holder of any Note by the acceptance of such Note shall be deemed
irrevocably to authorize, Agent to take such action on its behalf under the
provisions of this Agreement, the Notes, the Security Documents, the other Loan
Documents and any other instruments and agreements referred to therein and to
exercise such powers thereunder as are specifically delegated to or required of
it by the terms thereof and such other powers as are reasonably incidental
thereto; provided that Agent shall not take any action to realize upon
any security interest in any of the Collateral, or release any substantial
portion of the Collateral, without the consent of the Majority Lenders.  Agent may perform any of its duties under any
of the Loan Documents by or through its agents or employees.

11.2         Nature of Duties.  Agent shall have no duties or responsibilities
except those expressly set forth in the Loan Documents.  Neither Agent nor any of its officers,
directors, employees or agents shall be liable to any Lender for any action
taken or omitted by it under any of the Loan Documents, or in connection
therewith unless caused by its or their gross negligence or willful
misconduct.  Nothing in the Loan
Documents, expressed or implied, is intended to or shall be so construed as to
impose upon Agent any obligations in respect of the Loan Documents except as
expressly set forth therein.  The duties
of Agent under the Loan Documents shall be

 56
 

mechanical and administrative in nature and
Agent shall not have by reason of its duties under the Loan Documents a
fiduciary relationship in respect of any Lender.  Agent agrees to deliver promptly to each
Lender (i) copies of notices received by it pursuant to Sections 7.1, 7.2 and
7.11 of this Agreement, and (ii) copies of all documents required to be
delivered hereunder by Borrower to Lenders directly but that are not so delivered
to any Lender (but were delivered to Agent) if such Lender notifies Agent that
it has not received such document or documents, specifying same.

11.3         Lack of Reliance.  Independently and without reliance on Agent,
each Lender to the extent it deems appropriate has made and shall continue to
make (i) its own independent investigation of the financial condition and
affairs of the Loan Parties in connection with the making and the continuance
of the Loans and its Commitments hereunder and the taking or not taking of any
action in connection herewith, (ii) its own appraisal of the creditworthiness
of the Loan Parties and (iii) its own independent investigation and appraisal
of the Collateral; and, except as expressly provided in the Loan Documents,
Agent shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the date hereof or at any
time or times thereafter.  Agent shall
not be responsible to any Lender for any recitals, statements, representations
or warranties herein or in any certificate or other document delivered in
connection herewith or for the authorization, execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, or
sufficiency of any of the Loan Documents, the financial condition of the Loan
Parties or the condition of any of the Collateral, or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of any of the Loan Documents, the financial condition
of the Loan Parties or the existence or possible existence of any Event of
Default or Default.

11.4         Certain Rights.  If Agent requests instructions from Lenders
or Majority Lenders with respect to any interpretation, act or action
(including failure to act in connection with this Agreement or any of the other
Loan Documents) Agent shall be entitled to refrain from such act or taking such
actions unless and until it shall have received instructions from Lenders or
the Majority Lenders, as the case may be; and Agent shall not incur liability
to any Person by so refraining.  Without
limiting the foregoing, no Lender shall have any right of action whatsoever against
Agent as a result of Agent acting or refraining from acting hereunder or under
any of the other Loan Documents in accordance with the instructions of the
Majority Lenders (as to matters requiring the consent of the Majority Lenders)
or all Lenders (as to matters requiring the consent of all Lenders).  Agent shall be fully justified in failing or
refusing to take any action under any Loan Document unless, if it requests, it
shall first be indemnified to its satisfaction by Lenders against any and all liability
and expense which may be incurred by it by reason of taking, continuing to take
or not taking any such action.

11.5         Reliance.  Agent shall be entitled to rely upon any
written notice or any telephone message believed by it to be genuine or correct
and to have been signed, sent or made by the proper Person, and, with respect
to all legal matters pertaining to the Loan Documents and its duties
thereunder, upon advice of counsel selected by it.

11.6         Indemnification.  To the
extent Agent is not reimbursed or indemnified by Borrower, Lenders will
reimburse and/or indemnify Agent, in proportion to the aggregate

 57
 

amount of
their respective Commitments (or, if Commitments are terminated, Loans
outstanding) under this Agreement, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred or sustained by or asserted against Agent, acting pursuant hereto
or any of the other Loan Documents in its capacity provided for in this Section
11, in any way relating to or arising out of this Agreement, or any of the
other Loan Documents, provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
Agent’s gross negligence or willful misconduct.  The obligations of Lenders under this Section
11.6 shall survive the repayment of the Notes and the Loans and the termination
of this Agreement and the other Loan Documents.

11.7         Agent, Individually.  With respect to its Commitments under this
Agreement, the Loans made by it and any Note issued to or held by it, Agent
shall have and may exercise the same rights and powers hereunder and is subject
to the same obligations and liabilities as and to the extent set forth herein
for any other Lender or holder of a Note. 
The terms “Lender”, “holders of Notes” or any similar terms shall,
unless the context clearly otherwise indicates, not exclude Agent in its
individual capacity as a Lender or holder of a Note.  Agent may accept deposits from, lend money
to, and generally engage in any kind of banking, trust or other business with
the Loan Parties and their Subsidiaries as if it were not acting pursuant
hereto, and may accept fees and other consideration from the Loan Parties and
their Subsidiaries for services as Agent in connection with this Agreement and
the other Loan Documents and for services otherwise than as Agent without
having to account for the same to Lenders.

11.8         Holders of Notes.  Agent may deem and treat the payee of any
Note as the owner thereof for all purposes hereof unless and until a written
notice of the assignment or transfer thereof shall have been received by
Agent.  Any request, authority or consent
of any Person, who at the time of making such request or of giving such
authority or consent is the payee of any Note, shall be conclusive and binding
on any subsequent holder, transferee, assignee or payee of such Note or of any
Note or Notes issued in exchange therefor.

11.9         Resignation.  Agent may resign at any time from the
performance of all its functions and duties hereunder and under the other Loan
Documents by giving 30 days prior written notice to Borrower and each
Lender.  Such resignation shall take
effect upon the expiration of such 30-day period or upon the earlier
appointment of a successor. 
Notwithstanding any such resignation, the provisions of Sections 11.6
and 12.3 shall inure also to the benefit of each Agent who has so resigned with
respect to the period it served as Agent. 
In case of the resignation of Agent, the Majority Lenders, with the
prior consent of Borrower, which consent may not be unreasonably withheld, may appoint
a successor by a written instrument signed by the Majority Lenders.  Any successor shall execute and deliver to
Agent an instrument accepting such appointment, and thereupon such successor,
without further act, shall become vested with all the estates, properties,
rights, powers, duties and trusts of Agent hereunder and with like effect as if
originally named as “Agent” herein and therein, and upon request, the
predecessor Agent shall take all actions and execute all documents necessary to
give effect to the foregoing.  In the
event Agent’s resignation becomes effective at a time when no successor has
been named, all notices, other communications and payments hereunder required

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to be given by or to Agent shall be
sufficiently given if given by the Majority Lenders (or all Lenders, if the
consent of all Lenders is required therefor hereunder) or to each Lender, as
the case may be.  In such event, all
powers specifically delegated to Agent may be exercised by the Majority Lenders
and the Majority Lenders shall be entitled to all rights of Agent hereunder.

11.10       Reimbursement.  Without limiting the provisions of Section
11.6, Lenders and Agent hereby agree that Agent shall not be obligated to make
available to any Person any sum which Agent is expecting to receive for the
account of that Person until Agent has determined that it has received that
sum.  Agent may, however, disburse funds
prior to determining that the sums which Agent expects to receive have been
finally and unconditionally paid to Agent, if Agent wishes to do so.  If and to the extent that Agent does disburse
funds and it later becomes apparent that Agent did not then receive a payment
in an amount equal to the sum paid out, then any Person to whom Agent made the
funds available shall, on demand from Agent:

(a)           refund Agent the sum
paid to that Person; and

(b)           reimburse Agent for the
additional amount certified by Agent as being necessary to indemnify Agent
against any funding or other cost, loss, expense or liability sustained or
incurred by Agent as a result of paying out the sums before receiving it; provided,
however, that if such funds were made available to any Lender, such
additional amount shall be limited to interest on the sum to be repaid, for
each day from the date such amount was disbursed until the date repaid to
Agent, at (for the first three days) the customary rate set by Agent for
correction of errors among banks, and thereafter at the Base Rate (or, if
greater and in respect of a Loan, the rate from time to time prevailing on such
Loan).

Section
12.             MISCELLANEOUS.

12.1         Calculations and
Financial Data.  Calculations
hereunder (including, without limitation, calculations used in determining, or
in any certificate of any Loan Party delivered reflecting compliance by any
Loan Party with the provisions of this Agreement) shall be made and financial
data required hereby shall be prepared both as to classification of items and
as to amount in accordance with GAAP, consistent with the audited Financial
Statements described in Section 10.16; provided  that for purposes
of Section 8.18 no effect shall be given to any change in GAAP from those in
effect on December 31, 2003.

12.2         Amendment and Waiver.  Except as otherwise provided, no provision of
any of the Loan Documents may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the Majority Lenders (or
Agent on their behalf) and, if Borrower is a party thereto, Borrower, except
that waivers of provisions relating to a Loan Party’s performance or non-performance
of its obligations hereunder or thereunder need not be signed by such Loan
Party or any other Loan Party; provided  however that the written
consent of Agent shall also be required to change, waive, discharge or
terminate provisions of Section 11 and the written consent of the Issuing Bank
shall also be required to change, waive, discharge or terminate provisions of
Section 2A; and provided  further that without the consent of all
of Lenders (or Agent on their behalf) no change, waiver, discharge or
termination may be made that would increase the amount of any Commitment of any
Lender, decrease the principal of any Loan; decrease the interest rate payable
on any Loan; decrease the amount of any fee or

 59
 

Commitment Commission; extend the Maturity
Date of any Loan; change the definition of “Majority Lenders” or modify this
Section 12.2.  Any such change,
waiver, discharge or termination shall be effective only in the specific
instance and for the specific purposes for which made or given.

12.3         Expenses;
Indemnification.

(a)           Whether or not the
transactions hereby contemplated shall be consummated, Borrower shall pay all
out-of-pocket costs and expenses of (x) Agent incurred in
connection with the preparation, execution, delivery, administration, filing
and recording of, and (y) Agent and Lenders incurred in connection with the
amendment (including any waiver or consent) or modification of (including any
amendment, waiver, consent or modification at any time requested by Borrower,
whether or not same is finalized or executed), any failure of Borrower to
perform or observe any provision of, and enforcement of or preservation of any
rights under, this Agreement, the other Loan Documents, the making and
repayment of the Loans, and the payment of all interest and fees, including,
without limitation, (A) the fees and expenses of Sullivan & Worcester LLP,
counsel for Agent, and any special or local counsel retained by Agent or
Lenders, and with respect to enforcement, the reasonable fees and expenses of
counsel for Agent or any Lender, (B) the reasonable fees and expenses of
accountants, other consultants, appraisers and other professionals retained by
Agent in connection with the transactions contemplated hereunder, and (C)
printing, travel, title insurance, mortgage recording, filing, communication
and signing taxes and costs.

(b)           Borrower agrees to pay, and to save Agent and Lenders
harmless from (x) all present and future stamp, filing and other similar taxes,
fees or charges (including interest and penalties, if any), which may be
payable in connection with the Loan Documents or the issuance of the Notes or
any modification of any of the foregoing, and (y) all finder’s and broker’s
fees in connection with the transactions contemplated by this Agreement or the
other Loan Documents.

(c)           Borrower agrees to indemnify, pay and hold harmless
Agent, each Lender, any Lender Assignee and each holder of a Note and their
respective present and future officers, directors, employees and agents
(collectively, the “Indemnified Parties”) from and against all
liability, losses, damages and expenses (including, without limitation, legal
fees and expenses) arising out of, or in any way connected with, or as a result
of (i) the execution and delivery of this Agreement or the other Loan Documents
or the documents or transactions contemplated hereby and thereby or the
performance by the parties hereto or thereto of their respective obligations
hereunder and thereunder or relating thereto; or (ii) any claim, action, suit,
investigation or proceeding (in each case, regardless of whether or not the
Indemnified Party is a party thereto or target thereof) in any way relating to
Borrower, any Primary Obligor, any Portfolio Entity, any Related Entity or
Subsidiary of any thereof or any Collateral or any Affiliate of Borrower or any
Subsidiary of any such Affiliate or in any way relating to any of the foregoing
Persons or any other Loan Party, or any Affiliate of any of the foregoing in
respect of this Agreement, any other Loan Documents or any other document or
transaction in connection herewith or therewith or relating hereto or thereto;
or (iii) any actual or alleged violation by Borrower, any Primary Obligor, any
Portfolio Entity, any Related Entity, any Loan Party, any Affiliate of any of
the foregoing 

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Persons
or any Subsidiary of any of the foregoing Persons (or any predecessor in
interest of any of them) of any Environmental Law; provided  that
Borrower shall not be liable to an Indemnified Party for any portion of such
liabilities, losses, damages and expenses sustained or incurred as a direct
result of the gross negligence or willful misconduct of Agent, any Lender or
such Indemnified Party if such gross negligence or willful misconduct is
determined to have occurred by a final and non-appealable decision of a
court of competent jurisdiction.  Each
Lender shall endeavor to give Borrower notice of any material claim, action,
suit or proceeding (if not restricted by applicable law, regulation or Government
Authority from so doing or unless the same would be inconsistent with a request
from a Government Authority) referred to in clause (ii) which has been filed
against such Lender within a reasonable time after the loan officer of such
Lender with responsibility for this Agreement becomes aware of the same, but no
failure to give any such notice shall affect, or relieve Borrower of, any of
Borrower’s obligations under this Section 12.3 or under any other provision of
this Agreement or any other Loan Document or result in any obligation or
liability of Agent or any Lender to Borrower or any other Person.

(d)           All obligations
provided for in this Section 12.3  and Sections 3.4, 5.2 and 11.6 shall
survive any termination of this Agreement and the Commitments and the payment
in full of the Obligations.

12.4         Benefits of Agreement;
Descriptive Headings.

(a)           This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns, and, in particular, shall
inure to the benefit of the holders from time to time of the Notes; provided,
however, that no Loan Party that is party hereto may assign or transfer
any of its rights or obligations hereunder without the prior written consent of
Agent and Lenders and any such purported assignment or transfer shall be
void.  In furtherance of the foregoing,
each Lender shall be entitled at any time to grant participations in the whole
or any part of its rights and/or obligations under this Agreement, the Loan
Documents or any Loan or Note to any Person; provided, however, that no
Lender Assignee shall be permitted by the terms of its participation agreement
with the relevant Lender to require such Lender to take or omit to take any
action hereunder except to the extent that if Lender Assignee were a Lender
hereunder, its consent to taking or omitting to take such action would be
required by the terms of the second proviso of Section 12.2 hereto.  No such participation pursuant to this
Section 12.4(a) shall relieve any Lender from its obligations hereunder and
Borrower need deal solely with Agent and Lenders with respect to waivers,
modifications and consents to this Agreement, the Loan Documents or the
Notes.  Any such participant is referred
to in this Agreement as a “Lender Assignee”.  Borrower agrees that the provisions of
Sections 3.4, 5.4 and 12.3 shall run to the benefit of each Lender Assignee and
its participations or interests herein, and any Lender may enforce such
provisions on behalf of any such Lender Assignee; provided, however,
that if any Lender grants a participation in the whole or any part of its
rights and/or obligations pursuant to this Section 12.4(a), then the amounts
that Borrower is required to pay pursuant to this Agreement (including, without
limitation, additional amounts made pursuant to Section 5.4) shall not exceed
the amounts that Borrower would have been required to pay to such Lender
pursuant to this Agreement had such Lender not granted such participation.  Borrower hereby further agrees that any such
Lender Assignee may, to the fullest extent permitted by applicable law,
exercise the right of setoff with respect to such participation (and in an
amount up

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to the amount of such
participation) as fully as if such Lender Assignee were the direct creditor of
Borrower.  Upon a participation in
accordance with the foregoing, Borrower shall execute such documents and do
such acts as any Lender may reasonably request to effect such assignment.  Any Lender may furnish any information
concerning the Loan Parties in its possession from time to time to Lender
Assignees (including prospective Lender Assignees) and prospective Purchasing
Lenders.  Each Lender shall notify
Borrower of any participation granted by it pursuant to this Section 12.4(a)
but neither the approval of Borrower nor that of any other Loan Party shall be
required for any such participation. 
Borrower shall not be responsible for any due diligence costs or legal
expenses of such Lender Assignees in connection with their entering into such
participation.

(b)           The descriptive
headings of the various provisions of this Agreement and the other Loan
Documents are inserted for convenience of reference only and shall not be
deemed to affect the meaning or construction of any of the provisions hereof.

(c)           Any Lender may at any
time assign to any other Lender or any affiliate of any Lender, or (subject to
obtaining the prior written consent of Borrower (but no other Loan Party), such
consent not to be unreasonably withheld) to one or more additional banks or
financial institutions (“Purchasing Lenders”), all or any part of its
Commitments (and corresponding Loans and Note) pursuant to a Transfer
Supplement (“Transfer Supplement”), the form and substance satisfactory
to Agent; provided, however, that each such assignment shall be
for an amount not less than $1,000,000 (or, if Lender’s Loan or Commitment at
the time is less, such amount) and integral multiples of $500,000 above such
amount, or such other amount or multiple to which Agent may consent.  Upon (i) such execution of such Transfer
Supplement, (ii) delivery of an executed copy thereof to Borrower and Agent,
(iii) payment by such Purchasing Lender to such transferor Lender of an amount
equal to the purchase price agreed between such transferor Lender and such
Purchasing Lender, (iv) payment by the Purchasing Lender to Agent of a $3,000
processing fee, and (v) any consent of Borrower required by the first sentence
of this Section 12.4(c), such Purchasing Lender shall for all purposes be a
Lender party to this Agreement and shall have all the rights and obligations of
a Lender under this Agreement to the same extent as if it were an original
party hereto and thereto with the percentage share of the Commitment(s) set
forth in Schedule I to such Transfer Supplement, and no further consent or
action by Borrower, any other Loan Party, Lenders or Agent shall be
required.  Such Transfer Supplement shall
be deemed to amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Lender and the resulting
adjustment of the percentage of the Commitment(s), Notes and Loans (and related
rights and obligations) held by the transferor Lender and the Purchasing Lender
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender pursuant to the Transfer
Supplement.  Upon the consummation of any
transfer to a Purchasing Lender pursuant to this Section 12.4(c), the
transferor Lender, Agent and Borrower shall make appropriate arrangements so
that, if required, a replacement Note or Notes (dated the same date as the Note
or Notes being replaced) is issued to such transferor Lender and a new Note or
Notes (dated the same date as the Note or Notes being replaced) or, as
appropriate, a replacement Note or Notes (dated the same date as the Note or
Notes being replaced) is issued to such Purchasing Lender, in each case in
principal amounts reflecting their 
outstanding Loans and Commitment(s), as adjusted pursuant to such
Transfer Supplement.

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(d)           Notwithstanding
anything to the contrary contained herein or in any of the Loan Documents,
unless Agent, Borrower or a Lender otherwise request with respect to any
specific exhibit, exhibits to this Agreement shall not be required to be attached
to the execution or any other copy of this Agreement, and any references in
this Agreement or the other Loan Documents to such exhibits as “Exhibits
hereto,” “Exhibits to this Agreement” or words of similar effect shall be
deemed to refer to such document as executed by the parties thereto and
delivered on the Effective Date.

12.5         Notices, Requests,
Demands, etc.  Except as otherwise
expressly provided herein, all notices, requests, demands or other
communications to or upon the respective parties hereto shall be deemed to have
been duly given or made when delivered if sent by Federal Express or other
similar overnight delivery service, or three Business Days after mailing (when
mailed, postage prepaid, by registered or certified mail, return receipt requested)
or (in the case of telex, telegraphic, telecopier or cable notice) when
delivered to the telex, telegraph, telecopier or cable company, or (in the case
of telex or telecopier notice sent over a telex or telecopier owned or operated
by a party hereto) when sent; in each case addressed as follows, except that
notices and communications to Agent pursuant to Section 2 and Section 9 shall
not be effective until received by Agent: (i) if to Agent, at the Closing
Office, (ii) if to a Lender, at the address specified with its signature below
or (if a Purchasing Lender) on the applicable Transfer Supplement, and (iii) if
to a Loan Party, at its address specified with its signature below (Attention:
President), or to such other addresses as any of the parties hereto may
hereafter specify to the others in writing, provided that communications with
respect to a change of address shall be deemed to be effective when actually
received.

12.6         Governing Law.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE THAT WOULD RESULT IN
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION, except (as to any other
Loan Document) to the extent specifically set forth otherwise in that Loan
Document.

12.7         Counterparts;
Telecopies.  This Agreement and the
other Loan Documents may be executed in any number of counterparts, and by the
different parties hereto and thereto on the same or separate counterparts, each
of which when so executed and delivered shall be deemed to be an original; all
the counterparts for each such Loan Document shall together constitute one and
the same agreement.  Telecopied
signatures hereto and to the other Loan Documents shall be of the same force
and effect as an original of a manually signed copy.

12.8         Waiver; Remedies
Cumulative; Payment of Claims; Full Recourse.

(a)           No failure or delay on
the part of Agent or any Lender in exercising any right, power or privilege
under this Agreement or any other Loan Document, and no course of dealing
between Borrower, any Primary Obligor, any Portfolio Entity, any Related Entity
or any other Loan Party or any Subsidiary thereof and Agent or any Lender shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  No notice to or demand on Borrower, any
Primary Obligor, any Portfolio Entity, any Related Entity

 63
 

or any other Loan Party or any
Subsidiary thereof in any case shall entitle such Person to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the right of Agent or any Lender to any other or further action in
any circumstances without notice or demand.

(b)           The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which Agent or any Lender would otherwise have pursuant to such
documents or at law or equity.

(c)           In furtherance and not
in limitation of the other rights and remedies of Agent and the Lenders, upon
the occurrence of an Event of Default or Default, Agent, in its sole and
absolute discretion, without waiving or releasing any covenant, agreement or
other obligation of Borrower or any Default or Event of Default, may at any
time or times hereafter, but shall be under no obligation to, pay, acquire
and/or accept an assignment of any security interest, lien, encumbrance or
claim asserted by any Person against the Assets of Borrower, or any Primary
Obligor, or any Wholly-Owned Subsidiary. 
All sums paid by Agent in respect thereof and all reasonable costs and
expenses (including, without limitation, fees and expenses of counsel to Agent)
relating thereto incurred by Agent or for which Agent becomes obligated on
account thereof shall be part of the Obligations payable by a Borrower to Agent
on demand and any amount not paid on demand shall bear interest at the Past Due
Rate.

(d)           Borrower’s obligations
to pay principal, interest, fees and other amounts when due under this
Agreement and the other Loan Documents is absolute and unconditional and a full
recourse obligation of Borrower, notwithstanding any fact or circumstance and,
without limiting the generality of the foregoing, whether or not there are
funds available in the Cash Flow Cash Collateral Account for application to any
such obligation.

12.9         Recoveries; Pro Rata
Sharing.

(a)           Any Recoveries (after
deduction and payment of all expenses and costs permitted by this Agreement,
the Security Documents or applicable law) shall be applied against the Loans
held by Lenders until satisfaction in full of all amounts due thereunder.

(b)           Lenders agree among
themselves that, with respect to all sums received by Lenders applicable to the
payment of the principal of or interest on the Notes (except as otherwise
provided in Section 3.4, 5.4 or 5.5), equitable adjustment will be made between
Lenders so that, in effect, all such sums shall be shared ratably by each of
Lenders (in accordance with the outstanding principal amount of their
respective applicable Loans) whether received by voluntary payment, by
realization upon security, by the exercise of the right of set-off or
banker’s lien, by counterclaim or cross-action or by the enforcement of
any or all of the Notes or otherwise.  If
any Lender receives any payment on its Notes of a sum or sums in excess of its
pro rata portion (except as otherwise provided in Section 3.4, 5.4 or 5.5),
then such Lender receiving such excess payment shall purchase for cash from the
other Lenders with outstanding Loans to Borrower an interest in their Note or
Notes in such amount as shall result in a ratable participation by all of
Lenders in the aggregate unpaid amount of applicable Notes then outstanding; provided,
however, that if all or any portion of such excess payment is thereafter
recovered by such Lender, the purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but 

 64
 

without interest.  Borrower hereby agree that any Lender so
purchasing a participation from another Lender pursuant to this Section 12.9(b)
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of setoff) with respect to such participation as fully as
if such Lender were the direct creditor of Borrower in the amount of such
participation.

12.10       Jurisdiction.  BORROWER HEREBY AGREES THAT ANY LEGAL ACTION
OR PROCEEDING AGAINST IT WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OF
THE OTHER LOAN DOCUMENTS OR THE DOCUMENTS DELIVERED IN CONNECTION HEREWITH OR
THEREWITH MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AS AGENT OR ANY
LENDER MAY ELECT, AND, BY EXECUTION AND DELIVERY HEREOF, BORROWER ACCEPTS AND
CONSENTS FOR ITSELF AND IN RESPECT TO ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS AND AGREES THAT SUCH
JURISDICTION SHALL BE EXCLUSIVE, UNLESS WAIVED BY AGENT AND THE MAJORITY
LENDERS IN WRITING, WITH RESPECT TO ANY ACTION OR PROCEEDING BROUGHT BY IT
AGAINST AGENT OR ANY LENDER AND ANY QUESTIONS RELATING TO USURY.  BORROWER AGREES THAT SECTIONS 5-1401
AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK SHALL
APPLY TO THE LOAN DOCUMENTS AND WAIVES ANY RIGHT TO STAY OR TO DISMISS ANY
ACTION OR PROCEEDING BROUGHT BEFORE SAID COURTS ON THE BASIS OF FORUM  NON
CONVENIENS.  BORROWER HEREBY
IRREVOCABLY CONSENTS THAT ALL PROCESS SERVED OR BROUGHT AGAINST BORROWER WITH
RESPECT TO ANY SUCH PROCEEDING IN ANY SUCH COURT IN NEW YORK SHALL BE EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT IF SENT BY REGISTERED MAIL, OR (IF
PERMITTED BY LAW) BY FEDERAL EXPRESS OR OTHER SIMILAR OVERNIGHT COURIER
SERVICE, TO SUCH LOAN PARTY AT ITS ADDRESS SET FORTH ALONGSIDE ITS SIGNATURE
BELOW (OR SUCH OTHER ADDRESS AS AGENT IS NOTIFIED OF IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 12.5).  NOTHING
HEREIN SHALL AFFECT THE RIGHT OF AGENT OR LENDERS TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF AGENT OR ANY LENDER TO
BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER
JURISDICTION.

12.11       Severability.  If any provision of this agreement shall be
held or deemed to be or shall, in fact, be illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative or unenforceable to
any extent whatever.

12.12       Right of Set-off.  In addition to any rights now or hereafter
granted under applicable law or otherwise and not by way of limitation of any
such rights, upon the occurrence of an Event of Default each of Lenders is
hereby authorized at any time or from time to time, without notice to any Loan
Party or to any other Person, any such notice being hereby expressly waived, to
set-off and to appropriate and apply any and all deposits (general or
special, time or demand, provisional or final) and any other indebtedness at
any time held or owing by such Lender to or for the credit or the account of
such Loan Party against and on account of the obligations and liabilities of
such Loan Party now or hereafter existing under any of the Loan

 65
 

Documents irrespective of whether or not any
demand shall have been made thereunder and although said obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.  Lender or Lenders exercising any rights
granted under this Section 12.12 shall thereafter notify the affected Loan
Party and Agent of such action; provided  that the failure to give
such notice shall not affect the validity of such set-off and
application.

12.13       No Third Party
Beneficiaries.  This Agreement is
solely for the benefit of Agent and Lenders and Borrower and the respective
successors and assigns of Agent and Lenders and nothing contained herein shall
be deemed to confer upon anyone other than Borrower any right to insist on or
to enforce the performance or observance of any of the obligations of Agent or
Lenders contained herein.  All conditions
to the obligations of Lenders to make Loans hereunder are imposed solely and
exclusively for the benefit of Lenders and their respective successors and
assigns and no other Person shall have standing to require satisfaction of such
conditions in accordance with their terms and no other Person shall under any
circumstances be deemed to be beneficiary of such conditions.

12.14       Survival; Integration.

(a)           Each of the
representations, warranties, terms, covenants, agreements and conditions
contained in this Agreement shall specifically survive the execution and
delivery of this Agreement and the other Loan Documents and the making of the
Loans and shall, unless otherwise expressly provided, continue in full force
and effect until the Commitments have been terminated and the Loans together
with interest thereon, the Commitment Commissions,  the fees and compensation of Agent, and all
other sums payable hereunder or thereunder have been indefeasibly paid in full.

(b)           This Agreement,
together with the other Loan Documents, comprises the complete and integrated
agreement of the parties on the subject matter hereof and thereof and
supersedes  all prior agreements, written
or oral, on the subject matter hereof and thereof.  In the event of any direct conflict between
the provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control and govern; provided that the
inclusion of supplemental rights or remedies in favor of Agent or Lenders in
any other Loan Document shall not be deemed a conflict with this
Agreement.  Each Loan Document was
drafted with the joint participation of the respective parties thereto and
shall be construed neither against nor in favor of any party, but rather in
accordance with the fair meaning thereof.

12.15       Domicile of Loans.  Any Lender may make, maintain or transfer any
of its Loans hereunder to, or for the account of, any branch office, subsidiary
or affiliate of such Lender.

12.16       No Usury.  It is expressly stipulated and agreed to be
the intent of Agent, Lenders and Borrower to comply at all times with
applicable usury laws.  If at any time
such laws would ever render usurious any amount called for under any of the
Loan Documents, then it is the express intention of the parties hereto that
such excess amount be immediately credited on the applicable Notes, or if the
applicable Notes have been fully paid, refunded by Lenders (pro rata in
accordance with their respective principal amount of the affected Loans), to
Borrower (and Borrower shall accept such refund) and the provisions hereof and
thereof be immediately deemed to be reformed to comply with the then applicable
laws, without the necessity of the

 66
 

execution of any further documents, but so as
to permit the recovery to the fullest amount otherwise called for hereunder and
thereunder.  Any such crediting or
refunding shall not cure or waive any default by Borrower under the Loan
Documents.  If at any time following any
such reduction to the interest rate payable by Borrower there remains unpaid
any principal amounts under the Notes and the maximum interest rate permitted
by applicable law is increased or eliminated, then the interest rate payable to
Lenders shall be readjusted, to the full extent permitted by applicable law, so
that the total amount of interest thereunder payable by Borrower to Lenders
shall be equal to the amount of interest which would have been paid by Borrower
without giving effect to applicable usury laws. 
Borrower agree, however, that in determining whether or not any interest
payable under the Notes or any of the other Loan Documents exceeds the highest
rate permitted by law, any non-principal payment (except payments
specifically stated in the Notes or such other Loan Documents to be “interest”),
including fees and commissions and all other sums payable hereunder or
thereunder or in connection herewith or therewith, shall be deemed, to the full
extent permitted by law, to be an expense, fee, premium or penalty rather than
interest.

12.17       Waiver of Jury Trial.
 BORROWER, AGENT AND EACH LENDER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN),
OR ACTIONS OF BORROWER, ANY PARTNER THEREOF, ANY OTHER LOAN PARTY, AGENT OR
LENDERS.  THIS PROVISION IS A MATERIAL
INDUCEMENT FOR AGENT AND LENDERS ENTERING INTO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS.

12.18       Waiver by Borrower.  EXCEPT AS OTHERWISE PROVIDED FOR IN THIS
AGREEMENT OR REQUIRED BY LAW, BORROWER WAIVES (A) PRESENTMENT, DEMAND AND
PROTEST, NOTICE OF PROTEST, NOTICE OF PRESENTMENT, DEFAULT, NON-PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL
PAPER AND GUARANTIES AT ANY TIME HELD BY ANY OF LENDERS AND/OR AGENT ON WHICH
BORROWER MAY IN ANY WAY BE LIABLE; (B) ALL RIGHTS TO NOTICE AND A HEARING PRIOR
TO AGENT’S TAKING POSSESSION OR CONTROL OF, OR TO  REPLEVY, ATTACHMENT OR LEVY UPON THE
COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR
TO ALLOWING ANY OF LENDERS AND/OR AGENT TO EXERCISE ANY OF ITS RESPECTIVE
REMEDIES; AND (C) THE BENEFIT OF ALL VALUATION, APPRAISEMENT, EXTENSION AND
EXEMPTION LAWS.

12.19       Waiver of Marshaling.  All rights of marshaling of Assets of
Borrower, including any such right with respect to the Collateral, are hereby
waived by Borrower.

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12.20       Waiver of Claims;
Release by Borrower.

(a)           Borrower releases
Lenders and Agent from any and all causes of action or claims which Borrower
may now or hereafter have for any asserted loss or damage to Borrower claimed
to be caused by or arising from any act or omission to act on the part of any
Lenders and/or Agent, their respective officers, agents or employees, except,
in the case of any Lender or Agent, the willful misconduct or gross negligence
of such Lender or Agent (as the case may be). 

(b)           Borrower hereby
acknowledges, agrees and affirms, as of the Execution Date and as of the
Effective Date, that it possesses no claims, defenses, offsets, recoupment or
counterclaims of any kind or nature against or with respect to the enforcement
of this Agreement or any other Loan Document or any amendments thereto
(collectively, the “Claims”), nor
does Borrower now have knowledge of any facts that would or might give rise to
any Claims.  If facts now exist which
would or could give rise to any Claim against or with respect to the
enforcement of this Agreement or any other Loan Document, as may have been
amended by the amendments thereto, Borrower hereby unconditionally, irrevocably
and unequivocally waives and fully releases any and all such Claims as if such
Claims were the subject of a lawsuit, adjudicated to final judgment from which
no appeal could be taken and therein dismissed with prejudice.

12.21       Confidentiality.  Agent and each Lender, severally and with
respect to itself only, covenants and agrees that any information obtained by
Agent or such Lender pursuant to this Agreement shall be held in confidence (it
being understood that documents provided to Agent hereunder may in all cases be
distributed by Agent to Lenders) except that Agent or such Lender may disclose
such information (i) to its officers, directors, employees, agents, counsel,
accountants, auditors, advisors or representatives, (ii) to the extent such
information has become available to the public other than as a result of a
disclosure by or through Agent or such Lender, (iii) to the extent such
information was available to Agent or such Lender in a capacity other than
Agent or Lender hereunder or on a nonconfidential basis prior to its disclosure
to Agent or such Lender hereunder, (iv) with the consent of Borrower, (v) to
actual or prospective Lender Assignees or Purchasing Lenders or (vi) to the
extent Agent or such Lender should be (A) required in connection with any legal
or regulatory proceeding or (B) requested by any Government Authority to
disclose such information.

Section
13.             TEXAS
LANGUAGE.

THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT
TO THE MATTERS COVERED HEREBY AND THEREBY AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.

THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.

[remainder of page intentionally left blank]

 68

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

	
  

  	
  FIRSTCITY FINANCIAL CORPORATION

  	
   

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6400 Imperial Drive (delivery only)

  	
   

  
	
   

  	
  Waco, Texas 76710

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  P.O. Box 8216 (mail)

  	
   

  
	
   

  	
  Waco, Texas 76714-8216

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  254-761-2953 (telecopier)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BoS (USA) Inc., individually and as Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title: 

  	
   

  	
   

  
					

 

[signature
page to Revolving Credit Agreement]

“Person”
shall mean and include an individual, a partnership, a corporation (including a
business trust), a joint stock company, a limited liability company, a trust,
an unincorporated association, a joint venture or other entity or a government
or an agency or political subdivision thereof.

“Plan”
shall mean any “employee benefit plan” (within the meaning of Section 3(3) of
ERISA) maintained by any Loan Party or any ERISA Affiliate or any such plan to
which any Loan Party or any ERISA Affiliate is or has been required to
contribute on behalf of any of its employees, other than a Multiemployer Plan.

“Pledge
Agreement” means each of (or, as the context requires, any of) Borrower
Pledge Agreement, Subsidiary Pledge Agreement, Subsidiary Collateral Assignment
and any other pledge agreement made for the benefit of the Lenders.

“Pledged
Entity” shall mean any Person any Equity Interest in which has been pledged
to Agent to secure the Obligations.

“Pledged
Notes” shall mean those certain promissory notes listed on Schedule I–(PN)
and any other promissory notes which have been delivered to Agent and in which
the Collateral Agent holds a perfected security interest of the Requisite
Priority pursuant to a Pledge Agreement to which the Collateral Agent is party.

“Portfolio
Entity” shall mean any entity (other than an REO Affiliate or an Immaterial
Entity) in which Borrower or a Primary Obligor is directly or indirectly an
equity owner and which was formed for the purpose of acquiring Asset Pools, and
shall also include Bosque Leasing, L.P. (which is owned by Bosque Asset Corp.
and Bosque GP Corp.), FirstStreet Investment LLC (which is owned by FirstStreet
Investment Corporation, WAMCO III, Ltd. and WAMCO IX, Ltd.), ABL (which was formed for the purpose of
originating and acquiring SBA Loans) and each Crestone Portfolio Entity.

“Portfolio
Entity–50%” shall mean any Portfolio Entity of which Borrower or any
Subsidiary directly or indirectly owns exactly 50% of the voting interests or
any class of other Equity Interests of such Portfolio Entity.

“Portfolio
Entity Proceeds” for any Portfolio Entity in respect of any Payment Date
shall mean the sum of (I) the FC Percentage of the Net Collections, plus (II)
any proceeds from a sale or transfer of any Equity Interests issued by such
Portfolio Entity to FC Commercial or other Wholly Owned Subsidiary, as
applicable, plus (III) the FC Percentage of any proceeds of a sale or transfer
of any Equity Interests issued by any REO Affiliate related to such Portfolio
Entity; (it being understood that any reference in this definition to any sale
or transfer of Equity Interests issued by any Portfolio Entity or REO Affiliate
shall not be construed to affect or modify any prohibition thereof or
requirement for the obtaining of any consent relating thereto set forth
elsewhere in this Agreement).

“Portfolio
Protection Expense Report” – Section 7.2(f).

“Portfolio
Protection Expenses” with respect to a Portfolio Entity shall mean expenses
or other amounts which (w) such Portfolio Entity has reasonably determined are
necessary to advance to one of its REO Affiliates for reasonable and necessary
expenses to preserve or protect real property owned by such REO Affiliate, or
(x) constitute reasonable and customary, necessary leasing commissions,
reasonable and necessary tenant improvement costs paid by such Portfolio Entity
or REO Affiliate pursuant to a written lease or capital improvements to such
property required in order for the property to be so leased, or (y) such
Portfolio Entity has reasonably determined are necessary to protect other
Assets securing indebtedness owed to such Portfolio Entity, or (z) constitute
Obligor Funding Obligations, such expenses or other amounts to constitute
Portfolio Protection Expenses when amounts therefor are retained by such
Portfolio Entity or REO Affiliate or, if earlier, when such expenses or other
amounts are paid.

“Prepayment
Fee” shall mean 1.00% of the principal amount prepaid.

“Primary
Obligors” shall mean, collectively, (i) FC Commercial; (ii) FC Servicing;
(iii) FC Holdings; (iv) FC International; (v) FC Mexico; and (vi) FC Europe.

“Purchasing
Lenders” – Section 12.4(c).

“RAL”
shall mean the Revolving Credit Agreement dated as of November 12, 2004 among
Borrower, the financial institutions party thereto and Bank of Scotland, acting
through its New York Branch, as agent, as the same may be from time to time
amended, extended, restated, supplemented or otherwise modified.

“RAL
Borrowing Base Availability” shall mean the Borrowing Base Availability, as
defined in the RAL.

“Rate
of Borrowing” – Section 3.5.

“Records”
shall mean all books, records, computer records, computer software, ledger
cards, programs and other computer materials, customer and supplier lists,
invoices, orders and other property and general intangibles at any time
evidencing or relating to Assets.

“Recoveries”
shall mean any funds, or substitution of receipts or collateral, received by
the Lenders or Agent (a) from the sale, collection or other disposition of
Collateral pursuant to the Security Documents, or (b) from any distribution to
any of the Lenders or Agent, or abandonment to any of them, or substitute Liens
or payment given to any of them pursuant to events or proceedings of the nature
referred to in Section 9.8 of the Agreement, or otherwise, which distribution
or abandonment pertains to the Collateral.

“Regulatory
Change” means, relative to any Lender or Agent, any change after the
Effective Date in any (or the adoption after the Effective Date of any new):

(a)           United States Federal,
state or local law or foreign law applicable to Agent or such Lender; or

(b)           regulation,
interpretation, directive, or request (whether or not having the force of law)
applying to Agent or any Lender of any Government Authority charged with the
interpretation or administration of any law referred to in clause (a) or of any
fiscal, monetary, central bank or other authority having jurisdiction over
Agent or such Lender.

“Reimbursement
Obligation” Section 2A.4.

“Related
Asset Pool” with respect to any Acquisition Loan shall mean the Asset Pool
specified in the Notice of Borrowing with respect to such Acquisition Loan.

“Related
Entity” shall mean each entity identified on Schedule  I–(RE), as well as, subject to the final
sentence of this definition, any other entity, other than a Primary Obligor,
Portfolio Entity, or Immaterial Entity, any Equity Interest of which is owned
by Borrower, any Primary Obligor, any Portfolio Entity, any Immaterial Entity
or any other Related Entity. Notwithstanding the foregoing, no Immaterial
Entity or any Harbor Debtor shall constitute a Related Entity.

“REO
Affiliate” shall mean a Person, other than Borrower, a Primary Obligor or a
Material Portfolio Entity, which is a corporation, limited liability company or
partnership 100% of the Equity Interests in which are owned by a Portfolio
Entity (the “REO Owner”) (or, in the case of such an entity which is a
limited partnership, 100% of the limited partnership interest of which is owned
by the REO Owner and 100% of the interest in the general partner is owned by
the REO Owner), which Person has been established solely to acquire, from the
REO Owner or a seller from which the Portfolio Entity is acquiring other
Assets, title to (and owns no Assets other than) parcels of real property (or
distressed notes secured by real property for purposes of obtaining title to
real property securing such loans) in exchange for, with respect to each such
parcel, a promissory note in a principal amount no less than 96% of the value
(as reasonably determined by the REO Owner and the REO Affiliate) of the
property; provided  that no Person
shall constitute or continue to constitute an REO Affiliate if (A) such Person
acquires property from any Person other than (x) the REO Owner or a Person from
whom the REO Owner is acquiring other Assets, or (y) in the case where it has
acquired a note from the REO Owner solely for purposes of acquiring title to
the real property securing such note, the obligor of such note; or (B) engages
in any business other than business incidental to owning and selling the
parcels of real property so acquired by such REO Affiliate.

“REO
Excess Value Adjustment” shall mean the amount, if any, by which the Net
Present Equity Value of all REO Affiliates exceeds 25% of the Aggregate Net
Present Equity Value.

“Reportable
Event” shall mean a Reportable Event described in Section 4043 of ERISA and
the regulations issued thereunder.

“Requisite
Consents” – Section 6.6.

“Requisite
Priority” shall mean (x) except with respect to the Shared Collateral and
except as set forth in the Intercreditor Agreement, first priority and (y) with
respect to Shared Collateral second priority, subject only to the liens of CFSC
to which Agent and the Lenders are subordinate pursuant to the CFSC
Intercreditor Agreement.

“Reset
Date” – Section 2.7(a).

“SBA”
shall mean the United States Small Business Administration or any other federal
agency administering the SBA Act.

“SBA
Act” shall mean the Small Business Act of 1953, as in effect from time to
time.

“SBA
License” shall mean the license to originate, acquire and administer SBA
Loans, issued by the SBA to ABL.

“SBA
Loans” shall mean any loans made by ABL to small businesses and partially
guaranteed by SBA, all originated in accordance with the SBA Rules and
Regulations and pursuant to the authorization contained in Section 7(a) of the
SBA Act.

“SBA
Rules and Regulations” shall mean the SBA Act, any other legislation
binding on the SBA relating to financial transactions, and any loan guaranty
agreement and rules and regulations promulgated from time to time under the SBA
Act, and any SBA Standard Operating Procedures and Official Notices, all as
from time to time in effect.

“SEC”
shall mean the Securities and Exchange Commission.

“Securities”
shall have the meaning ascribed to that term in the Securities Act of 1934.

“Securities
Laws” shall mean all applicable Federal and state securities laws and
regulations promulgated pursuant thereto.

“Security
Agreements” shall mean any one or more of the security agreements delivered
pursuant to Section 6C and each other security agreement heretofore or from
time to time hereafter delivered in respect of the Obligations, as each such
agreement may be from time to time amended, extended, restated, supplemented or
otherwise modified.

“Security
Documents” shall be the collective reference to (x) each of the agreements
referred to in Section 6 (or on the document checklist referred to therein)
pursuant to which Collateral is or was granted or is or was intended to be
granted, directly or indirectly, to Agent on behalf of the Lenders, (y) each
agreement entered into after the Execution Date pursuant to which any
collateral is or was granted or is or was intended to be granted, directly or
indirectly, to Agent on behalf of the Lenders and any other Person (if any)
sharing an interest in such collateral, and (z) all amendments, supplements or
other modifications to such agreements or replacements thereof.  Without limiting the generality of the
foregoing, each Security Agreement, each Pledge Agreement, each cash collateral
agreement securing any Obligation, each depositary bank acknowledgement
relating to any bank account of any Loan Party, the CFSC Guaranty Subordination
Agreement, each other agreement pursuant to which any

obligations are
subordinated to any of the Obligations (whether pursuant to a subordination
agreement, subordination provisions in any other agreement or instrument or
otherwise), each Pledged Note, and each security agreement securing the
obligations under any Pledged Note shall constitute Security Documents.  However, as to a Loan Party, the term “Security
Document” shall not include any such document as to which such Loan Party is
released from all its obligations thereunder by Agent or the Lenders in
accordance with the terms hereof or thereof.

“Senior
Agent” shall mean Bank of Scotland, acting through its New York Branch,
acting as Agent under the Senior Indebtedness.

“Senior
Indebtedness” shall mean Indebtedness owing under the RAL.

“Senior
Lenders” shall mean the lenders from time to time party to the RAL.

“Servicing
Restricted Funds” means funds received by FC Servicing or Minn Servicing in
the ordinary course of such company’s servicing business for the account of
Persons other than FC Servicing, Minn Servicing, Borrower or any other
Subsidiary of Borrower.

“Shareholder
Agreement” shall mean any agreement (other than a certificate of
incorporation, customary by–laws, a limited liability company formation
certificate or a partnership formation certificate but including resolutions of
any Person owning any Equity Interests in such Person) among any holders of
Equity Interests issued by Borrower, any Primary Obligor or any Related Entity
relating to the management of any such Person or any of the rights or
privileges of any holders of Equity Interests of any such Person.

“Stated
Expiry Date” – Section 2A.1.

“Stock”
shall mean all shares and other Equity Interests issued by a corporation,
whether voting or non–voting, including but not limited to, common stock,
warrants, preferred stock, convertible debentures, and all agreements,
instruments and documents convertible, in whole or in part, into any one or
more or all of the foregoing.

“Subject
Debt Instrument” – Section 7.15(b).

“Subject
Portfolio Entity” – Section 6B.1.

“Subordination
Agreement” shall mean the Subordination Agreement dated the date hereof
among Borrower, the Agent, Senior Agent and the Senior Lenders, as the same may
be from time to time amended, extended, restated, supplemented or otherwise
modified.

“Subsidiary”
of any Person (the “First Person”) shall mean any other Person more than
50% of the indicia of equity rights (whether capital stock or otherwise) of
which is at the time owned, directly or indirectly by the First Person and/or
by one or more of such First Person’s Subsidiaries other than the Harbor
Debtors and Immaterial Related Entities. 
Unless otherwise indicated, references to Subsidiaries shall refer to
Subsidiaries of Borrower.

“Subsidiary
Collateral Assignment” shall mean the Partnership
Interest and Limited Liability Company Interest Collateral Assignment Agreement
made by certain Primary Obligors in favor of the Collateral Agent dated as of
the date hereof delivered pursuant to Section 6 and each other collateral
assignment from time to time hereafter delivered by one or more Primary
Obligors or other Loan Parties in respect of the Obligations., as each such
agreement may be from time to time amended, extended, restated, supplemented or
otherwise modified.

“Subsidiary
Pledge Agreement” shall mean the Pledge Agreement (Stock and Debt) made by
certain Primary Obligors in favor of the Collateral Agent dated as of the date
hereof delivered pursuant to Section 6 and each other pledge agreement from
time to time hereafter delivered by one or more Primary Obligors or other Loan
Parties in respect of the Obligations, as each such agreement may be from time
to time amended, extended, restated, supplemented or otherwise modified
(including, without limitation, by the addition of additional parties thereto).

“Summary
Waterfall Certificate” shall mean a certificate in a form approved by Agent
which sets forth summary information as to all Waterfall Certificates being
delivered on or about the same day as such certificate

“Tangible Net
Worth”, at any time, shall mean the total of shareholders’ equity
(including capital stock (both common and preferred), additional paid–in
capital and retained earnings after deducting treasury stock of a Person), less
the sum of the total amount of any intangible Assets, which, for purposes of
this definition, shall include, without limitation, general intangibles and, if
applicable, all accounts receivable not incurred in the ordinary course of
business from any Affiliate of such Person or any loans to directors or
officers of any Affiliate of such Person, unamortized deferred charges and good
will, all as determined in accordance with GAAP.

“Taxes”
– Section 5.4.

“Termination
Event” shall mean (i) a Reportable Event described in Section 4043 of ERISA
and the regulations issued thereunder (other than a Reportable Event not
subject to the provision for 30–day notice to the PBGC under such regulations),
or (ii) the withdrawal of any Loan Party or any of its ERISA Affiliates from a
Pension Plan during a plan year in which it was a “substantial employer” as
defined in Section 4001(a)(2) of ERISA, or (iii) the issuance of a notice of
intent to terminate a Pension Plan or the treatment of a Pension Plan amendment
as a termination under Section 4041 of ERISA, or (iv) receipt by any Loan Party
or any ERISA Affiliate of notice of the PBGC’s intention to terminate any
Pension Plan or to have a trustee or the PBGC appointed to administer any
Pension Plan or (v) any other event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan.

“Third
Party Investor” shall mean any Person other than Borrower or a Wholly–Owned
Subsidiary that has made a capital contribution to any Portfolio Entity.

“Total
Loan Commitment” shall mean the sum of the Loan Commitments of all of the
Lenders, as from time to time reduced pursuant to Section 2.6, which as of the
date of this Agreement shall be $25,000,000.

“Total
Outstandings” as of a particular date shall mean the sum of Loans
Outstandings on such date.

“Traditional
Borrowing Base” shall mean, as of any date of calculation an amount equal
to, determined as of the immediately
preceding Payment Date but giving effect to all subsequent Asset acquisitions
by Portfolio Entities and consequent changes in values determined pursuant to
clauses (A), (B) and (C) below:

The
Aggregate Net Present Equity Value less

(A)          the
sum of (i) the amount by which the Net Present Equity Value of all Portfolio
Entities located in, or with Assets which originated in Mexico exceeds
$40,000,000, (ii) the amount by which the Net Present Equity Value of all
Portfolio Entities located in, or with Assets which originated in Brazil
exceeds $10,000,000, (iii) the amount by which the Net Present Equity Value of
all Portfolio Entities located in, or with Assets which originated in Chile
exceeds $25,000,000, (iv) the amount by which the Net Present Equity Value of
all Portfolio Entities with Assets located in, or which originated in Argentina
or Uruguay exceeds $6,000,000, (v) reserves as Agent shall from time to time
deem, in good faith to be appropriate, which is not otherwise taken into
account in determining the Net Present Value of an Asset or the Net Present
Equity Value of a Portfolio Entity, (vi) the Aggregate Net Present Equity Value
of each Portfolio Entity whose Equity Interests are owned by any Subsidiary
which has undertaken or is subject to any event described in clauses (i)
through (vii) of Section 9.8 of the Agreement, and (vii) the REO Excess Value
Adjustment, and less 

(B)           the
sum of the Net Present Equity Values of each Portfolio Entity for which any
Loan Party has not completed all actions requested by Agent to ensure the
perfection and priority of its Liens on the Equity Interests issued by such
Portfolio Entity (including the perfection and priority of Liens on Equity
Interests in the country of organization of any Foreign Portfolio Entity,
including, if so requested, furnishing an opinion of counsel in such country
with respect to such perfection and priority, satisfactory to Agent in form and
substance) within ninety (90) days after the Funding Date of any Related
Acquisition Loan, plus

(C)           the
sum of (a) for the FC Commercial Real Property Financing Loan: the lesser of
$30,000,000, or the then outstanding balance thereof; (b) for the FC Holdings
Real Property Financing Loans, the sum of: (i) the lesser of $6,500,000, or the
then outstanding balance of the FCS Fischer Loan, and (ii) the lesser of
$3,650,000, or the then outstanding balance of the FCS Lancaster Loan, and (c)
the aggregate principal amount of the Crestone Notes then outstanding, reduced
by the outstanding balance of any working capital loans under the Crestone
Facility.

Once determined, the Traditional Borrowing
Base shall remain in effect until the earlier of the next Borrowing Date or the
next Payment Date.

“Transfer”
shall mean any sale, conveyance, lease or other disposition (and “Transferred”,
“Transferring” and other variations thereof shall have correlative meanings).

“Transfer
Supplement” – Section 12.4(c).

“UCC”
– Section 10.30.

“United
States”, “US” or “U.S.” shall mean the United States of
America.

“Unutilized
Loan Commitment” shall mean at any time, as to each Lender, the amount by
which the Loan Commitment of such Lender exceeds the aggregate outstanding
principal amount of Loans made by such Lender.

“Upfront
Fee” – Section 4.2.

“US
Person” shall mean a Person formed under the laws of the United States, any
of the 50 states or the District of Columbia or any territory of the United
States.

“Waterfall
Certificate” in respect of any Payment Date shall mean a completed
certificate in a form approved by Agent which sets forth information with
respect to Net Collections of an Asset Pool during the preceding period to which
such certificate is applicable and such other information as Agent shall
require.

“Wholly-Owned
Subsidiary” shall mean any Subsidiary of Borrower of which all of the
outstanding shares of stock, limited liability company interests or partnership
interests (as the case may be) are owned by Borrower and/or one or more wholly
owned direct or indirect Subsidiaries of Borrower.

“Working
Capital Loans” – Section 2.1(b).EXHIBIT
10.2

BANK OF SCOTLAND

NEW YORK BRANCH

565 Fifth Avenue

New York, New York
10017

September 5, 2007

FirstCity Financial Corporation

6400 Imperial Drive

Waco, Texas 76712

Gentlemen:

We refer to Amendment No.10 and Consent to Revolving Credit Agreement
dated as of August 22, 2007 (the “Amendment”) among FirstCity Financial
Corporation (the “Borrower”), the financial institutions which are parties to
the Agreement hereinafter referred to (the “Lenders”) and Bank of Scotland, as
agent (the “Agent”), for the Lenders under the Revolving Credit Agreement dated
as of November 12, 2004, among the Borrower, the Lenders and the Agent (as
amended to date, the “Agreement”).

The Agent and the Borrower hereby agree and confirm that the date in
Section 9.19 of the Agreement is amended to be October 2, 2007.

Except as expressly amended hereby, the Agreement remains in full force
and effect in accordance with its terms.

Please sign below to confirm the terms of this letter, which may be
executed in counterparts, which when taken together shall constitute one and
the same instrument.  This letter shall
be governed by, and construed in accordance with, the laws of the State of New
York without reference to choice of law doctrine that would result in the
application of the laws of another jurisdiction.  The execution and delivery of this letter
shall not obligate the Agent to agree to any further amendments, waivers or
consents.

On and after September 17, 2007, the “appointed day” for the
registration of the Bank of Scotland as a public limited company under the
United Kingdom Companies Act 1985, all references in this document to the Bank
of Scotland however expressed shall be deemed to be

references to Bank of Scotland plc.  Bank of Scotland plc is registered in
Scotland and has its registered office at The Mound, Edinburgh EH1 1YZ.

	
  

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  BANK OF
  SCOTLAND,

  
	
   

  	
  Individually and
  as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

AGREED:

FIRSTCITY FINANCIAL CORPORATION

	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  

 

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