Document:

EX-10.1

 

EXHIBIT 10.1

 

Master Accounts Receivable Purchase Agreement

among

LaSalle Bank National Association

(the “Bank”)

and

The Scotts Company LLC

(the “Company”)

and

The Scotts Miracle-Gro Company

(the “Parent”)

Dated as of April 11, 2007

 

 

 

Table of Contents

	 	 	 	 	 	 	 
	Section	 	Heading	 	Page
	 
	Section 1.
	 	Definitions and Interpretation	 	 	1	 
	 
	 	 	 	 	 	 
	Section 2.
	 	The Agreement	 	 	7	 
	 
	 	 	 	 	 	 
	Section 3.
	 	Conditions Precedent	 	 	8	 
	 
	 	 	 	 	 	 
	Section 4.
	 	Purchase of Receivables	 	 	9	 
	 
	 	 	 	 	 	 
	Section 5.
	 	Limited Liability	 	 	15	 
	 
	 	 	 	 	 	 
	Section 6.
	 	The Company as Servicer and Agent of Bank	 	 	16	 
	 
	 	 	 	 	 	 
	Section 7.
	 	Payments	 	 	17	 
	 
	 	 	 	 	 	 
	Section 8.
	 	Changes in Circumstances	 	 	19	 
	 
	 	 	 	 	 	 
	Section 9.
	 	Further Assurances	 	 	20	 
	 
	 	 	 	 	 	 
	Section 10.
	 	Representations and Warranties	 	 	20	 
	 
	 	 	 	 	 	 
	Section 11.
	 	Covenants	 	 	24	 
	 
	 	 	 	 	 	 
	Section 12
	 	Partial Invalidity	 	 	26	 
	 
	 	 	 	 	 	 
	Section 13.
	 	No Bank Liability for Contract	 	 	27	 
	 
	 	 	 	 	 	 
	Section 14.
	 	Notices, Addresses, Language	 	 	27	 
	 
	 	 	 	 	 	 
	Section 15.
	 	Fees, Costs and Indemnity	 	 	28	 
	 
	 	 	 	 	 	 
	Section 16
	 	Calculations and Certificate	 	 	30	 
	 
	 	 	 	 	 	 
	Section 17.
	 	Set-Off	 	 	30	 

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	Section	 	Heading	 	Page
	 
	Section 18.
	 	Termination	 	 	31	 
	 
	 	 	 	 	 	 
	Section 19.
	 	Miscellaneous	 	 	33	 
	 
	 	 	 	 	 	 
	Section 20.
	 	Governing Law	 	 	35	 
	 
	 	 	 	 	 	 
	Section 21.
	 	Optional Repurchase	 	 	35	 
	 
	 	 	 	 	 	 
	Section 22.
	 	Guaranty	 	 	36	 
	 
	 	 	 	 	 	 
	Section 23.
	 	Removal; Reinstatement of Debtor	 	 	37	 
	 
	 	 	 	 	 	 
	Section 24.
	 	Confidentiality	 	 	37	 

	 	 	 	 	 
	Schedule 1

	 	—
	 	Purchase Request
	Schedule 2

	 	—
	 	Conditions Precedent
	Schedule 3

	 	—
	 	UCC Details Schedule
	Schedule 4

	 	—
	 	Form of Portfolio Report

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Master Accounts Receivable Purchase Agreement

     Master Accounts Receivable Purchase Agreement, dated as of April 11, 2007, among
The Scotts Company, LLC, a limited liability company organized under the laws of Ohio (the
“Company”), The Scotts Miracle-Gro Company, a company organized under the laws of Ohio
(the “Parent”), and LaSalle Bank National Association (the “Bank”), a bank organized under
the laws of the United States of America.

     Whereas, subject to the terms and conditions of this Agreement, the Company shall
sell to the Bank and the Bank shall purchase from the Company, on a revolving basis, certain
Purchased Receivables.

     Whereas, the transactions hereunder shall constitute a true sale of the Purchased
Receivables, providing the Bank with the full risks and benefits of ownership of the Purchased
Receivables without recourse to the Company, except as may otherwise be set forth herein.

     Now, Therefore, in consideration of the above premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:

Section 1. Definitions and Interpretation.

     In this Agreement and each Schedule:

     “Adverse Claim” means any Encumbrance on a Purchased Receivable other than those arising under
this Agreement.

     “Agreed Base Value” shall be an amount equal to the product of (a) the difference between (i)
the full Original Amount of the Receivable being purchased less (ii) the Trade Credit Amount times
(b) 100% less the Agreed Dilution Percentage.

     “Agreed Dilution Percentage” is equal to 5.0% or such other percentage agreed on, from time to
time, by the Bank and the Company.

     “Agreement Amount” means the maximum aggregate Funded Amounts of all Purchased Receivables as
set forth below during the relevant time periods, as such amount may be reduced from time to time
pursuant to the terms of Section 4.3(d) hereof:

	 	 	 	 	 
	January
	 	$	110,000,000	 
	February
	 	$	200,000,000	 
	March
	 	$	300,000,000	 
	April
	 	$	300,000,000	 
	May
	 	$	300,000,000	 
	June
	 	$	300,000,000	 
	July
	 	$	275,000,000	 
	August
	 	$	155,000,000	 
	September
	 	$	130,000,000	 
	October
	 	$	125,000,000	 
	November
	 	$	110,000,000	 
	December
	 	$	55,000,000	 

 

 

     “Agreement Office” means the office through which the Bank will perform its obligations under
this Agreement.

     “Approved Debtor” means each Person listed on the Approved Debtor Certificate, excluding any
Approved Debtor removed therefrom pursuant to the terms of Section 23 hereof and including any
Debtor reinstated therein as an Approved Debtor pursuant to the terms of Section 23 hereof.

     “Approved Debtor Certificate” means the Approved Debtor Certificate of even date herewith
executed by the Bank and the Company.

     “Approved Participant” means Calyon New York Branch.

     “Blocked Accounts” means each account opened by the Company in its name for each Approved
Debtor with JPMorgan Chase Bank, N. A. or such other bank approved by the Bank for the purpose of
collecting the Purchased Receivables of such Approved Debtor and which shall be subject to a
blocked account agreement with the Bank.

     “Business Day” means a day on which banks are open for business in Chicago, New York and, in
the case of the determination of LIBOR, London.

     “Closing Date” means the date of this Agreement or such later Business Day upon which each
condition described on Schedule 2 shall be satisfied or waived in a manner acceptable to the Bank
in its reasonable discretion.

     “Collections” means all payments made on each Purchased Receivable and any other payments,
receipts or recoveries (including any casualty insurance proceeds) by, or on behalf of, any Debtor
or otherwise with respect to any Purchased Receivable.

     “Contract” means a contract or purchase order between the Company and a Debtor, as the same
may be amended and supplemented from time to time in accordance with the terms hereof, out of which
has arisen one or more Purchased Receivables.

     “Cost of Funds” means, with respect to any Purchased Receivable(s), the rate, as determined by
the Bank as of the purchase date of such Purchased Receivable(s) (which determination shall be
conclusive and binding on the Company absent manifest error) at which Dollars of a term comparable
to the period of time from the purchase date to the Maturity Date for such Receivable(s) and in an
amount comparable to the Purchase Price for such Receivable(s) are generally available to the Bank.

     “Debtor” means a person obligated to make payments in respect of a Receivable.

     “Debtor Sublimits” means the sublimits for each Approved Debtor listed on the Approved Debtor
Certificate.

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     “Dilution” means any discount, adjustment, set-off, counterclaim, deduction, reduction,
warranty issue or refusal to pay not arising from such Debtor’s Financial Inability to Pay, which
would have the effect of reducing the amount of part or all of any Purchased Receivable owed by a
Debtor.

     “Dollar, USD” and “$” shall mean the lawful currency of the United States of America.

     “Downgrade” means each rating category reduction by a nationally recognized rating agency of
the long-term unsecured, unenhanced indebtedness rating of any Person, for example, a rating
reduction from “A-” (or its equivalent) to “BBB” (or its equivalent) would constitute two
Downgrades for purposes of this Agreement.

     “Encumbrance” means a mortgage, assignment, security interest, pledge, lien or other
encumbrance securing any obligation of any person or any other type of adverse claim or
preferential arrangement (including, without limitation, title transfer and retention arrangements)
having a similar effect.

     “Final Collection Date” means the date, following the termination of purchases under this
Agreement, on which all amounts to which the Bank shall be entitled in respect of Purchased
Receivables and all other amounts owing to the Bank hereunder and under the other Transaction
Documents are paid in full.

     “Financial Inability to Pay” means a Debtor’s failure to pay a Receivable as a result
of a deterioration in such Debtor’s credit quality as evidenced by an event where such Debtor
(A)(i) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (ii) becomes
insolvent or is unable to pay its debts or fails or admits in writing its inability generally to
pay its debts as they become due; (iii) makes a general assignment, arrangement or composition with
or for the benefit of its creditors; (iv) institutes or has instituted against it a proceeding
seeking judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency
law or other similar law affecting creditor’s rights, or a petition is presented for its winding-up
or liquidation, and, in the case of any such proceeding or petition instituted or presented against
it, such proceeding or petition (aa) results in a judgment of insolvency or bankruptcy or the entry
of an order for relief or the making of an order for its winding up or liquidation or (bb) is not
dismissed, discharged, stayed or restrained in each case within 30 days of the institution or
presentation thereof; (v) has a resolution passed for its winding-up, official management or
liquidation; (vi) seeks or becomes subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all
or substantially all of its assets; (vii) has a secured party take possession of all or
substantially all its assets or has a distress, execution, attachment, sequestration or other legal
process levied, enforced or sued on or against all or substantially all its assets and such secured
party maintains possession, or any such process is not dismissed, discharged, stayed or restrained,
in each case within 30 days thereafter, (viii) causes or is subject to any event with respect to it
which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events
specified in clauses (i) to (vii) (inclusive); (ix) takes any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the foregoing acts; or (x) at
any time that the long-term unenhanced, unsecured indebtedness rating

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of such Debtor is “CCC” (or its equivalent) or lower, fails to pay 10% or more of the
aggregate amount of Purchased Receivables owed by it, for more than 90 days beyond the relevant
Maturity Dates thereof (unless such Debtor claims, and the Company agrees, such failure to pay is a
result of a commercial dispute related to such Purchased Receivables), or (B) fails, after giving
effect to any applicable grace period for the relevant obligation(s) of such Debtor (other than
such Receivable), to make, when due, any payments equal to or exceeding $10,000,000 under such
obligations.

     “Funded Amount” means the aggregate amount of Purchase Prices paid by the Bank hereunder, less
the Collections, if any, theretofore paid to and received by the Bank.

     “Governmental Authority” means any nation or government, any state or other political
subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

     “Invoice” means an invoice issued by the Company to a Debtor for payment for goods or services
supplied pursuant to a Contract between the Company and such Debtor.

     “Law” means any law (including common law), constitution, statute, treaty, regulation, rule,
ordinance, order, injunction, writ, decree or award of any Governmental Authority.

     “LIBOR” means in relation to a Purchased Receivable for any period:

     (a) the applicable Screen Rate for the relevant period; or

     (b) (if no Screen Rate is available) the arithmetic mean of the rates (rounded upwards
to four decimal places) at which the Bank was offering deposits for the relevant period in
an amount comparable to the Purchased Receivables or overdue amount in Dollars to leading
banks in the London interbank market.

     “Margin” means 0.60% per annum, subject to the right of the Bank, upon the occurrence of a
Downgrade relating to the Parent, on 30 days’ prior written notice to the Company to revise the
margin applicable to subsequent purchases hereunder.

     “Maturity Date” means, with respect to a Purchased Receivable, the date on which such
Purchased Receivable becomes due and payable by the Debtor.

     “Monsanto Agreement” means the Amended and Restated Exclusive Agency and Marketing Agreement
by and between The Monsanto Company and the Company.

     “Monsanto Receivables” means accounts receivable (and all related proceeds) originated and
owned by The Monsanto Company of an Approved Debtor and otherwise subject to the terms of the
Monsanto Agreement.

     “Moody’s” means Moody’s Investors Service, Inc.

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     “Original Amount” means, in relation to a Purchased Receivable, the amount owing from the
Debtor in respect of such Purchased Receivable being the aggregate amount payable under the
relevant Invoice.

     “Outstanding Amount” means the aggregate amount from time to time in Dollars of the Original
Amounts of all Purchased Receivables which are outstanding. For the avoidance of doubt, the
Outstanding Amount of any Purchased Receivable shall not be reduced as a result of any write-down
or write-off of such Purchased Receivable by the Bank.

     “Outstanding Net Amount” means, as of any date of determination, the amount equal to the
difference between (x) the product of (a) the difference between (i) the aggregate Outstanding
Amount of Purchased Receivables less (ii) the aggregate Trade Credit Amounts times (b) 100% less
the most recently calculated Agreed Dilution Percentage less (y) the aggregate Discount as most
recently calculated for the Purchased Receivables.

     “Person” means an individual, partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.

     “Portfolio Report” means a report, substantially in the form of Schedule 4, signed by an
officer of the Company and which shall contain, inter alia, the list of Receivables which have been
determined to be Purchased Receivables hereunder as well as a list of all relevant Invoices.

     “Purchase Price” means, in relation to any Purchased Receivable, the purchase price computed
and payable in accordance with Section 4.1 hereof.

     “Purchased Receivable” means, at any time, any Receivable sold by the Company and acquired by
the Bank under this Agreement.

     “Purchase Request” means a request for purchase in the form attached hereto as Schedule 1.

     “Receivable” means the indebtedness of an Approved Debtor to the Company arising under a
Contract which is evidenced by an Invoice (including the right to receive payment of any interest
or finance charges or other liabilities of such Debtor under the Contract), all Related Assets with
respect thereto, and all Collections and other proceeds with respect to the foregoing.

     “Related Assets” means, with respect to the Receivables (i) all related rights and remedies
under or in connection with the Contract with respect thereto including bills of lading, bills of
exchange, promissory notes and accessions, (ii) all guaranties, suretyships, letters of credit,
security, liens and other arrangements supporting payment thereof, (iii) all Sales Records
(including electronic records) with respect thereto, (iv) all related insurance, and (v) all
proceeds of the foregoing.

     “Replacement Receivables” are Receivables purchased with the proceeds of Collections purchased
between two Settlement Dates as provided in Section 4.2.

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     “Repurchase Event” means, with respect to a Purchased Receivable:

     (i) any representation or warranty made by the Company in Section 10 of this Agreement
with respect to such Receivable is inaccurate, incorrect or untrue, in any material respect,
on any date as of which it is made or deemed to be made; or

     (ii) the Company fails to comply with any of its covenants with respect to such
Receivable set forth in Section 11 of this Agreement; or on any day the Original Amount of
such Purchased Receivable (i) is reduced or adjusted as a result of any defective, rejected,
returned, repossessed or foreclosed merchandise, any defective or rejected services, any
discount or other adjustment by the Company (including on account of credits, rebates,
chargebacks, inventory transfers, allowances for early payments and other allowances) or any
obligation of the Company owed to the applicable Debtor to make such a discount or
adjustment, (ii) is reduced or cancelled as a result of a setoff, deduction or counterclaim
in respect of any claim by the Debtor thereof against the Company (whether such claim arises
out of the same or a related or an unrelated transaction) or (iii) otherwise is less than
the amount reported by the Company in (or for purposes of) any settlement statement
delivered pursuant to this Agreement (for any reason other than receipt of Collections on
such Purchased Receivable or such Purchased Receivable being written off as uncollectible
based on Debtor’s Financial Inability to Pay); provided, however, that to the extent that
the occurrence of any matter described in the foregoing paragraphs (i) or (ii) would
otherwise result in a Repurchase Event, no Repurchase Event with respect to any such
Purchased Receivable shall occur if the amount of any such adjustment caused by the
occurrence of such event has already been included in the calculation of the Purchase Price
paid with respect to such Purchased Receivable.

     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

     “Sales Records” means the accounts, all sales ledgers, purchase and sales day books, sales
invoices, supply contracts and other related books and records of the Company relating to a Debtor
and on an individual Purchased Receivable basis for the purpose of identifying amounts paid or to
be paid in respect of such Purchased Receivable.

     “Screen Rate” means the interest rate for Dollar deposits for a three month period which is
displayed on the screen displays designated “LIBOR01” and “ICAP01” of the Reuters service (or such
other page which may replace them for the purpose of displaying British Bankers’ Association
Interest Settlement Rates or US Dollar Swaps Rates for Dollar deposits in the London interbank
market).

     “Settlement Date” means, in respect of any Settlement Period, the Wednesday of the calendar
week following such Settlement Period (or, if such Wednesday is not a Business Day, the immediately
succeeding Business Day) or such other date as the Bank and the Company may from time to time agree
to, provided that (i) with respect to the initial purchase hereunder, the

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date of such purchase shall be the initial Settlement Date and (ii) on or after the
Termination Date, the Bank may select Settlement Dates by notice to the Company.

     “Settlement Period” means (a) with respect to the initial purchase, a period from the date of
such purchase pursuant to Section 4.1 to the Wednesday of the calendar week following the calendar
week in which such purchase is made (or, if such Wednesday is not a Business Day, the immediately
succeeding Business Day) or as otherwise agreed between the Bank and the Company and (b)
thereafter, each period commencing on the last day of the immediately preceding such period and
ending on the next Settlement Date or as otherwise agreed between the Bank and the Company,
provided, however, that at any time the Bank and the Company may mutually agree to select any
different period as the Settlement Period; provided, further, however, that if such agreement is
not reached within 10 days, a Termination Event may be declared by the Bank.

     “Stated Termination Date” means April 10, 2008, or such later date as may be extended by
mutual agreement of the Bank and the Company.

     “Tax” means any present or future withholding tax, levy, impost, duty or other tax or charge
of any similar nature (including but not limited to any interest or penalty payable in connection
with any failure to pay any of the same); and Taxation shall be construed accordingly.

     “Termination Date” means the earliest to occur of (i) termination of this Agreement pursuant
to Section 18, (ii) the Stated Termination Date and (iii) the Business Day designated by the
Company with no less than thirty (30) days prior notice to the Bank.

     “Termination Event” means any of the events set forth in Section 18.

     “Trade Credit Amount” means, with respect to a Purchased Receivable, the Dollar amount from
time to time accrued on the books and records of the Company and as reported to the Bank on each
Portfolio Report as a trade credit, trade allowance, return allowance or similar arrangement
between the Company and the related Approved Debtor that might result in a reduction of such
Purchased Receivable in the future.

     “Transaction Document” means each of this Agreement, each Purchase Request, each Portfolio
Report, the blocked account agreements, the Approved Debtor Certificate and all related documents.

     “UCC” means the Uniform Commercial Code as from time to time in effect in the State of New
York.

Section 2. The Agreement.

   Section 2.1. Prior to the Termination Date, subject to the terms and conditions of this
Agreement, the Company hereby sells and assigns to the Bank, and the Bank hereby agrees to
purchase, in each case, up to the Agreement Amount and subject to the applicable Debtor

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Sublimits (it being understood that the Outstanding Amount of the Purchased Receivables when sold
and purchased will be greater than the Agreement Amount), a 100% interest in all of the present and
future Receivables of each Approved Debtor (subject to the removal of an Approved Debtor pursuant
to the terms of Section 23) and as identified in the most recent Portfolio Report delivered to the
Bank under this Agreement or as identified in such other manner acceptable to the Bank; provided,
however, that in any event the Receivables purchased and sold hereunder with respect to an Approved
Debtor shall be deemed to be the Receivables of such Approved Debtor with the earliest due date
(based upon their net invoice value excluding all accruals for any discounts).

Section 3. Conditions Precedent.

   Section 3.1. The Company shall not be entitled to request the Bank to make the initial
purchase of Purchased Receivables unless:

     (a) the Bank has received all of the documents listed in Schedule 2 in form and
substance reasonably satisfactory to it;

     (b) the representations and warranties made by the Company in Section 10 of this
Agreement are true and correct as of the Closing Date;

     (c) the Bank has received the fees and other amounts payable by the Company pursuant to
Section 15;

     (d) the Company shall have established the segregated Blocked Accounts for the
collection of the Purchased Receivables;

     (e) no Termination Event shall have occurred; and

     (f) the Closing Date falls at least one Business Day after the date of the delivery of
the initial Purchase Request and initial Portfolio Report to the Bank. Such Portfolio
Report shall list the Receivables requested to be purchased in a format and contain such
information as shall be reasonably satisfactory to Bank.

   Section 3.2. No purchase shall be made hereunder unless:

     (a) the Bank has received a Purchase Request in connection with the initial purchase
and any incremental purchase that increases the then current Funded Amount.

     (b) The aggregate of the Outstanding Net Amount of the Receivables referred to in the
Portfolio Report (after giving effect to such purchase) as of the applicable purchase date
will not exceed the Agreement Amount or the Debtor Sublimits on the applicable purchase
date.

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     (c) The Invoices referred to in the Portfolio Report each have a date certain for
payment which is no more than 90 days from the relevant purchase date, and are denominated
in Dollars.

Section 4. Purchase of Receivables.

   Section 4.1. The Bank shall pay a Purchase Price to the Company for the Purchased Receivables
sold to the Bank, equal to the Agreed Base Value less any other amounts owing to the Bank
hereunder. With respect to the payment of Discount by the Company, the Bank has agreed that
Discount will be payable in arrears in installments on each Settlement Date. The “Discount” will
equal the product of (1) the Agreed Base Value of the Purchased Receivables to be purchased on such
date, (2) the applicable LIBOR plus, the Margin (computed on the basis of a 360-day year), and (3)
a fraction the numerator of which is the weighted average number of days until Purchased
Receivables are due and the denominator of which is 360. Notwithstanding the foregoing, for only
the initial purchase hereunder, Discount shall be calculated using Cost of Funds (computed on the
weighted average tenor of the Purchased Receivables) and not the applicable LIBOR. Two Business
Days prior to each Settlement Date, the Bank shall determine the applicable LIBOR for the
subsequent Settlement Period. The Company shall be entitled, to the extent collected by the
Company, to receive and retain, an amount equal to Collections on the Purchased Receivables in
excess of the Agreed Base Value of such Purchased Receivables, such amounts to first be applied to
the delivery to the Company of any Trade Credit Amounts due to the Company, as applicable, with the
remainder of such amounts to be paid to the Company as a servicing fee. Without limiting the
liability and obligations of the Company hereunder, the Bank shall be entitled to offset against
and deduct from such excess all amounts owing by the Company to the Bank under this Agreement and
the Transaction Documents. So long as the Company is acting as servicer for the Purchased
Receivables, the Company will be entitled to retain such excess (less such offsets and deductions)
as the Purchased Receivables are collected. Should the Bank terminate the Company’s appointment as
servicer, the Bank will pay to the Company such excess over and above the amounts which the Bank is
entitled to offset, upon collection of all amounts owing in respect of the Purchased Receivables.

     The parties agree that the calculation of Agreed Base Value of Purchased Receivables included
Trade Credit Amounts which the Approved Debtors have historically been entitled to receive if
certain conditions in the future are met. To the extent that such Approved Debtors are not
entitled to receive any such Trade Credit Amounts, or in the event that any such Approved Debtors
are entitled to receive such Trade Credit Amounts but elect not to apply the corresponding Trade
Credit Amount to the reduction of any payment made on a Purchased Receivable, and the Collections
with respect to such Purchased Receivable include any such corresponding Trade Credit Amount, the
amount thereof shall be attributable to and paid to the Company.

   Section 4.2. Until the Termination Date, Collections may be used by the Company, as servicer,
and as agent for and on account of the Bank, to purchase from the Company Receivables of Approved
Debtors that meet all of the requirements contained herein applicable to the initial Purchased
Receivables (“Replacement Receivables”), which Replacement Receivables shall be held for the
exclusive benefit and account of the Bank to the same extent as

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the original Purchased Receivables and shall constitute Purchased Receivables for all purposes of
the Agreement. For purposes of maintaining the perfection of the Bank’s interest in any Purchased
Receivables and the proceeds thereof, the Bank hereby appoints the Company as its agent in respect
of any Collections prior to such Collections being used to purchase Replacement Receivables,
provided that the Company’s sole duty as such agent shall be to hold such Collections in trust for
the benefit of the Bank or to purchase Replacement Receivables as aforesaid.

   Section 4.3. (a) The Company will instruct all Debtors under the Purchased Receivables to make
all payments on account thereof to the relevant Blocked Accounts. Each Invoice shall also require
that payments be made to the relevant Blocked Accounts. All Collections will be received and held
in the Blocked Accounts in the name of and for the Bank as the owner thereof and, except as
otherwise provided in this Agreement, will be applied in the manner set forth in (b) below. The
Bank may suspend or terminate all of the Company’s right, power and interest in a Blocked Account
at any time upon the occurrence and during the continuance of a Termination Event.

     (b) Prior to the Termination Date, all of the Collections deposited into the Blocked Accounts
shall be swept daily and transferred into the Company’s operating account, as designated by the
Company to the financial institution maintaining such Blocked Accounts and the Bank hereby directs
the Company to, no later than on the Business Day following the day on which Collections are
received in such operating account, pay, apply or reserve for payment, as the case may be, such
Collections as follows:

     (i) first, reserve for payment to the Bank at the next Settlement Date, an amount on
account of the Discount equal to the portion of the Discount accrued (calculated prior to
the Collections of Purchased Receivables being distributed in accordance with this Section
4.3(b)) to such day for all Settlement Periods, to the extent any part thereof has not been
previously paid to the Bank, and the Company agrees to hold such amount in trust for the
Bank;

     (ii) second, with respect to any Collections of Purchased Receivables which include any
Trade Credit Amounts owing to the Company, reserve for payment to the Company for such
corresponding Trade Credit Amounts; and

     (iii) third, reserve for payment to the Bank at the next Settlement Date the amount of
any Dilutions which may have accrued or been granted in relation to the relevant Receivables
that were not otherwise accounted for in the calculation of Purchase Price and all other
amounts which may be owing to the Bank under this Agreement or any other Transaction
Document; and

     (iv) fourth, subject to the conditions precedent to each purchase set out in this
Agreement, pay to or for the account of the Company, on the Bank’s behalf, the remaining
balance of such Collections (“Net Daily Collections”) for the purchase of all right, title
and interest of the Company in Replacement Receivables at the price determined in accordance
with Section 4.1.

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     Notwithstanding the foregoing, the Bank may at any time upon the occurrence of any Termination
Event direct the Company to cease, and at all times after the Termination Date, the Company shall
cease, paying the Purchase Price for Replacement Receivables title to which has not yet transferred
to the Bank pursuant hereto with Net Daily Collections and, in each case, the Company shall remit
and hold all Collections (including, without limitation, Collections received relating to Trade
Credit Amounts) in the Blocked Accounts until the Final Collection Date all in accordance with and
subject to Section 18.4. The Company shall comply in all respects with each such direction. The
Company’s interest in any Collections relating to Trade Credit Amounts or that it would otherwise
receive as its servicing fee shall at all times following the occurrence of a Termination Event be
subordinate to the Bank’s interest in the Collections until the Final Collection Date.

     (c) While the Company is acting in the capacity of Servicer, any amounts in respect of the
payment of any Discount or Net Daily Collections shall be deemed to have been paid to the Company
and deposited into the Blocked Account immediately upon receipt thereof by the Company.

     (d) Without limiting any other rights of the Bank, the Company may upon five Business Days
prior written notice to the Bank request (a “Reduction Request”) that (i) the Aggregate Amount for
any particular month(s) be decreased in increments of $5,000,000 so long as the Aggregate Amount as
so reduced is no less than the Funded Amount as of the date of such reduction and/or (ii) the
purchase of Replacement Receivables from Net Daily Collections be suspended until such time as the
then current Funded Amount is reduced to the Agreement Amount stipulated in the Reduction Request.
Upon the expiry of such five Business Days, if in the Reduction Request the Company has requested a
suspension of the purchase of Replacement Receivables, Net Daily Collections shall not be used to
pay for any purchase of any Receivables in respect of which title has not already transferred to
the Bank pursuant hereto but shall be retained in the Blocked Account until the Funded Amount is so
reduced. Any amount so retained shall be paid to the Bank on each Settlement Date following the
date specified in the Reduction Request until the Funded Amount is so reduced.

     (e) The Company agrees to give and grant all conveyances, assignments and transfers, by way of
sale of title to and ownership in the Purchased Receivables as may be necessary to give effect to
the purchases hereunder. Except as set forth in Section 21, at no time shall the Company have any
right, title or interest in or to, or be the owner of, any Purchased Receivable. If any action is
required to be taken to effect such conveyances, assignments and transfers, such action shall be
taken at the expense of the Company. For the avoidance of doubt, it is hereby confirmed that the
sale, assignment and transfer of Purchased Receivables pursuant hereto is intended to be absolute
and unconditional and is not intended by the parties to be and should not be construed as a loan or
the grant of collateral security for a loan.

     (f) The Bank agrees that at no time shall the Bank have any rights or interest in any Monsanto
Receivables and that the Company shall at all times be entitled to any collections deposited into
the Blocked Accounts related to Monsanto Receivables; provided, however, that if at any time after
the Termination Date, an Approved Debtor does not make a full payment on the Purchased Receivables
and the Monsanto Receivables and the Approved Debtor shall have not

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otherwise stated to which accounts receivable the payment should be applied and the Company has
notified the Bank that the Company has not determined pursuant to the terms of this Agreement and
the Monsanto Agreement as to which accounts receivable the payment should be applied, the Bank
agrees that such payment shall be applied on a pro rata basis to the Purchased Receivables and the
Monsanto Receivables of such Approved Debtor.

   Section 4.4. (a) The Company and the Bank shall settle amounts owing as between them hereunder
on each Settlement Date.

     (b) The Company shall deliver to the Bank prior to the Closing Date the initial Portfolio
Report, in the form of a hard copy or electronically in a manner acceptable to the Bank, as at the
last day of the immediately preceding week.

     (c) Thereafter:

     (i) three Business Days prior to each Settlement Date; and

     (ii) within five Business Days following the Termination Date,

the Company shall deliver to the Bank, in the form of a hard copy or electronically in a manner
acceptable to the Bank, a Portfolio Report as at the following dates (or on the date otherwise
agreed between the Company and the Bank):

     (iii) as at the last day of the immediately preceding Settlement Period (in the case of
paragraph (i) above);

     (iv) as at the Company’s close of business on the day immediately preceding the
Termination Date (in the case of paragraph (ii) above).

     (d) To the extent available from Collections, if, on any Settlement Date, the Outstanding Net
Amount of all Purchased Receivables as at the last day of the immediately preceding Settlement
Period is less than the Funded Amount as at such day, the Company shall immediately (and in any
event by not later than 10:00 a.m. (New York time) on the Business Day immediately following such
Settlement Date) pay to the Bank by a deposit in US Dollars to the Bank’s account the amount by
which the Funded Amount exceeds the Outstanding Net Amount of all Purchased Receivables as at such
Settlement Date.

     (e) If, on any Settlement Date, the Outstanding Net Amount of all Purchased Receivables as at
the last day of the immediately preceding Settlement Period is more than the Funded Amount as at
such day, the Bank shall, subject to the terms and conditions set forth in this Agreement, pay by
deposit to the Company’s operating account the amount by which the Outstanding Net Amount of all
Purchased Receivables exceeds the Funded Amount as set forth in the related Purchase Request.

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     (f) On each Settlement Date, to the extent available from Collections:

     (i) the Company shall pay to the Bank by deposit to the Bank’s account an amount equal
to the portion of all Discount accrued (calculated prior to the Collections of Purchased
Receivables being distributed) to such Settlement Date for all Settlement Periods, to the
extent any part thereof has not been previously paid;

     (ii) the Company shall pay to the Bank by deposit to the Bank’s account an amount equal
to the aggregate amount of all Dilutions granted or accrued during the Settlement Period
ended on such Settlement Date that were not otherwise accounted for in the calculation of
Purchase Price; and

     (iii) to the extent that the Bank has received any Collections directly, so long as no
Termination Event has occurred, the Bank shall pay to the Company by deposit to the
Company’s operating account (as designated by the Company) an amount equal to the aggregate
amount of all Trade Credit Amounts that the Company is entitled to receive that have been
received by the Bank from such Collections.

     (g) At any time following the occurrence and continuation of a Termination Event, the Company
shall in any event on demand of the Bank pay to the Bank an amount equal to the amount by which the
Funded Amount at any time exceeds the Outstanding Net Amount of all Purchased Receivables at such
time. Such difference shall be paid by the Company to the Bank not later than the three Business
Days following notice from the Bank to the Company.

   Section 4.5. (a) On the date hereof, title to all currently existing Receivables of the
Approved Debtors set forth in the initial Portfolio Report originated by the Company shall, ipso
facto, and without any further action on the part of the Company or the Bank transfer to the Bank
to the extent necessary so that the Outstanding Net Amount of all Purchased Receivables is equal to
the Funded Amount (such Funded Amount being calculated as if the initial Purchase had been
completed).

     (b) On each Business Day following the date hereof, title to all Receivables of the Approved
Debtors originated by the Company, and not already transferred to the Bank pursuant hereto, shall,
ipso facto, and without any further action on the part of the Company or the Bank, to the extent
necessary so that at all times the Outstanding Net Amount of all Purchased Receivables is equal to
the Funded Amount. If at any time the sale of all of the Receivables by the Company hereunder is
limited by the Agreement Amount and/or the applicable Debtor Sublimit, the Receivables of such
Approved Debtor originated by the Company that are otherwise purchased and sold hereunder up to
such limitations shall be deemed to be the Receivables of such Approved Debtor with the earliest
due date (based upon their net invoice value excluding all accruals for any discounts).

   Section 4.6. (a) The Company will from time to time within 5 days following any request,
furnish the Bank with a calculation of the amounts paid or held for or in trust for the Bank by the
Company under this Agreement.

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       (b) The Company will provide the Bank with such other reports, information, documents, books
and records as the Bank may reasonably request and which may be lawfully disclosed or provided to
the Bank, including, without limitation, a certificate signed by its officers attesting to: the
balance owing on each Purchased Receivable, the maturity date of each Purchased Receivable and the
fact that the goods sold and/or services provided under the terms of the relevant Contracts were
shipped in accordance with the terms of such Contracts, a copy of the purchase order or sales order
and invoices relating to each Purchased Receivable, a copy of the bill of lading and any other
shipping document relating to the Purchased Receivable and all billings, statements, correspondence
and memoranda directed to the customer in relation to each Purchased Receivable and after the
Termination Date, a full accounting of daily Collections received.

     Section 4.7. The Bank is irrevocably authorized by the Company to keep records of all
purchases, which records shall be consistent with all information set forth in the Portfolio
Reports delivered to the Bank, and evidence the dates and amounts of purchases and the applicable
Discount in effect from time to time. Such records shall be presumptive evidence but the failure
to record any purchase shall not limit or otherwise affect any obligations of the Company hereunder
or the Debtor’s obligations to make payments on the Purchased Receivables when due.

     Section 4.8. The Company will, from time to time, at its expense, promptly execute and deliver
all instruments and documents and take all action that may be reasonably necessary and that the
Bank may reasonably request, in order to perfect, protect or more fully evidence the Bank’s
ownership of the Purchased Receivables, or to enable the Bank to exercise or enforce any of its
rights hereunder.

     Section 4.9. By effecting the payment under Section 4.1 and Section 4.2, the Bank shall
complete the purchase of all right, title and interest, whether now owned or hereafter acquired and
wherever located, in, to and under such Purchased Receivables, without recourse, except as set
forth in Sections 5.2, 7.2, 7.4, 8 and 15. By accepting such payment, the Company shall be
conclusively deemed to sell, set over, assign, transfer and convey to the Bank and its successors
and assigns, without recourse, except as set forth in Sections 5.2, 7.2, 7.4, 8 and 15, all of its
right, title and interest in, to and under such Purchased Receivable.

     Section 4.10. Any payment by a Debtor in respect of any indebtedness owed by it to the Company
in respect of Purchased Receivables shall, except as otherwise specified by such Debtor or required
by the related Contract or law, be applied, first, as a Collection of any Purchased Receivable or
Purchased Receivables then outstanding of such Debtor in the order of the age of such Purchased
Receivables, starting with the oldest of such Purchased Receivables and, second, to any other
indebtedness of such Debtor to the Company in respect of Purchased Receivables. The Company shall
direct each Debtor to make all payments in respect of Purchased Receivables to a Blocked Account
which shall be a special segregated account under the control of the Bank or its affiliates.

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Section 5. Limited Liability.

     Section 5.1. Except as set forth in Sections 5.2, 7.2, 7.4, 8 and 15, the purchase and sale of
Purchased Receivables under this Agreement shall be without recourse to the Company. The Company
and the Bank intend the transactions hereunder to constitute true sales of Purchased Receivables,
providing the Bank with the full risks and benefits of ownership of the Purchased Receivables (such
that the Purchased Receivables would not be property of the Company’s estate in the event of its
bankruptcy).

     Section 5.2. Deemed Collections/Repurchase Obligation.

          5.2.1 If a Repurchase Event with respect to a Purchased Receivable occurs under clause (ii) of
the definition thereof and the related reduction, adjustment, cancellation or setoff relates only
to a portion of the Outstanding Amount and not the entire Outstanding Amount, the Company shall be
deemed to have received on such day a Collection on such Purchased Receivable in the amount of such
reduction, adjustment, cancellation or setoff. All such Collections deemed received by the Company
under this Section 5.2.1 shall be remitted by the Company to such account, as directed by the Bank
in accordance with Section 6.1. On receipt of all amounts referred to above, the Bank shall (at
the cost and expense of the Company) execute such documents as may be necessary to re-assign that
portion of the applicable Purchased Receivables which represents the amounts so paid without
recourse, representation or warranty (except as to the title thereto by the Bank), to the Company.

          5.2.2 Except as set forth in Section 5.2.1 with respect to partial reductions, adjustments,
cancellations or setoffs of any Outstanding Amount, if a Purchased Receivable remains unpaid and a
Repurchase Event with respect to such Purchased Receivable has occurred, the Bank may, by written
notice, require the Company to pay to the Bank in respect of such Purchased Receivable, as directed
by the Bank, an amount equal to the Purchase Price of such Purchased Receivable (or so much of it
as was paid by the Bank to the Company and remains unpaid), less the amount of the unearned portion
of the related Discount, if any, if such Purchased Receivable is being repurchased by the Company
prior to the due date of such Purchased Receivable as computed pursuant to Section 4.1 hereof and
if such Purchased Receivable is being repurchased by the Company after the due date of such
Purchased Receivable, together with interest thereon at the interest rate specified in Section 7.6
from the due date to the date of the Company’ payment in full thereof, and any other amounts then
payable by the Company hereunder including breakage costs under Section 7.4, whereupon such amount
shall become due and payable from the Company to the Bank on the date specified in such notice and
shall be paid into an account specified by the Bank. On receipt of all amounts referred to above,
the Bank shall (at the cost and expense of the Company) execute such documents as may be necessary
to re-assign the applicable Purchased Receivables without recourse, representation or warranty
(except as to the title thereto by the Bank), to the applicable account of the Company.

     Section 5.3. True Sale. It is the intention of the parties hereto that such purchase made
hereunder shall constitute a sale and assignment of the related Purchased Receivable (and not
merely a pledge), which sale and assignment is absolute, irrevocable and without recourse except

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as set forth in Sections 5.2, 7.2, 7.4, 8 and 15 and shall provide the Bank with the full benefits
of ownership of such Purchased Receivable. In the event that, notwithstanding the intent of the
parties, such purchase is deemed by a court of competent jurisdiction to constitute a pledge rather
than a sale and assignment, the Company does hereby grant to the Bank, in order to secure all the
obligations of the Company to the Bank hereunder, a first priority security interest in, to and on,
the Purchased Receivables and the products and proceeds thereof including, without limitation, all
Collections, all Trade Credit Amounts, all Related Assets and all other monies, instruments,
securities, documents, investment property, financial assets and other property related to the
Purchased Receivables from time to time on deposit in or credited to the Blocked Accounts or any
other accounts and all other such property relating to the Purchased Receivables or any of them.

Section 6. The Company as Servicer and Agent of Bank.

   Section 6.1. Appointment of Servicer. Notwithstanding the sale of Purchased Receivables
pursuant to this Agreement, the Company shall continue to be responsible for the servicing and
administration of the Purchased Receivables sold by it as agent and trustee for the Bank, all on
the terms set out in this Agreement and, subject to the right of the Bank to terminate the Company
as servicer, agent and trustee pursuant to this Agreement at any time following the occurrence of a
Termination Event, subject to the termination provisions of Section 6.3. In its capacity as
servicer, the Company shall:

     (a) direct each Debtor of the Purchased Receivables to make all payments thereon to the
Blocked Accounts;

     (b) immediately pay over to the Blocked Accounts any Collections of Purchased
Receivables received by the Company which shall be received in trust for the Bank;

     (c) promptly upon becoming aware thereof, to notify the Bank in the event that all or
any part of any Purchased Receivable is not paid in full on the Maturity Date thereof;

     (d) comply with the terms and provisions of Section 4 hereof with regard to
Collections, actions to be taken at each Settlement Date and the purchase of Replacement
Receivables; and

     (e) provide the Bank with a weekly reconciliation and Portfolio Report setting forth
the list of Purchased Receivables and reconciling Collections made to the Blocked Accounts
pursuant to paragraph (a) above in form and in substance as agreed upon between the Bank and
the Company.

   Section 6.2. Effect of Agency. The possession by the Company or its transferee or agent of
products or proceeds (including Collections) of any Purchased Receivable shall be deemed to be
“possession by the secured party” for purposes of perfecting such security interest pursuant to the
UCC or other applicable law. Notifications to persons holding such property, and

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acknowledgments, receipts or confirmations from persons holding such property, shall be deemed to
be notifications to, or acknowledgments, receipts or confirmations from, bailees or agents (as
applicable) of, the Bank or its transferee for the purpose of perfecting such security interest
under the UCC as in force in the relevant jurisdiction and other applicable law.

     Section 6.3. Termination of Appointment. The Bank may at any time following the occurrence of
a Termination Event, or, immediately if upon the bankruptcy or insolvency of the Company or the
Parent (however evidenced), (i) at its discretion give notice to each Debtor and take any lawful
action to collect any Purchased Receivable sold from the Company directly from the respective
Debtor and (ii) by notice in writing terminate the appointment of the Company as its servicer and
agent for the servicing of Purchased Receivables, in which case the Company undertakes to the Bank
not to interfere with such servicing or collection of any Purchased Receivable nor attempt to
receive, nor itself make collection from the Debtor in respect of such Purchased Receivables. The
Company shall have the option to repurchase all, or any portion of, Purchased Receivables sold by
it upon any termination of the Company as servicer at the Repurchase Price as set forth in Section
21.1, provided no bankruptcy or insolvency (however evidenced) has occurred with respect to the
Company or the Parent. The Company hereby grants and conveys to the Bank an irrevocable power of
attorney (coupled with an interest) authorizing and permitting the Bank, at its option, with or
without notice to the Company, to do any one of the following: (a) endorsing the name of the
Company upon any checks or other Receivables, (b) endorsing the name of the Company on any freight
or express bill or bill of lading relating to any Purchased Receivables; (c) taking all action as
the Bank deems appropriate, including, without limitation, the execution and filing of financing
statements in the name of and on behalf of the Company to perfect any of the security interests
granted to the Bank herein. The Company agrees that neither the Bank nor the attorney-in-fact will
be liable for any acts of commission or omission nor for any error of judgment or mistake of fact
or law except to the extent the same constitutes gross negligence or willful misconduct.

     Section 6.4. Company Books and Records. The Company shall maintain its applicable books and
records, including but not limited to any computer files and master data processing records, or
written records thereof, so that such records that refer to Purchased Receivables sold hereunder
shall indicate clearly that the Company’s right, title and interest in such Receivables have been
sold to the Bank. Indication of the Bank’s ownership of Purchased Receivables shall be deleted
from or modified on the Company’s records when, and only when, the Purchased Receivables shall have
been paid in full or the Bank’s ownership of such Receivables shall have been repurchased by the
Company from the Bank.

Section 7. Payments.

     Section 7.1. Place and Time.

          7.1.1. All payments to be made by the Company to the Bank pursuant to this Agreement shall be
made on the date such amount is due by not later than 12:00 noon (eastern standard time at the
place of payment) to such account as specified by the Bank.

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          7.1.2. All payments to be made by the Bank pursuant to this Agreement shall be made on the
date such amount is due by not later than 3:00 p.m. (eastern standard time at the place of payment)
to the account of the Company notified to the Bank by the Company.

   Section 7.2. Deduction; Withholding; Grossing Up.

          7.2.1. Subject to Section 7.2.2, all sums payable by the Company to the Bank pursuant to or in
connection with any Transaction Document shall be paid in full, free and clear of all deductions,
set-off or withholdings whatsoever except only as may be required by law.

          7.2.2. If any deduction or withholding is required by law in respect of any payment due from
the Company to the Bank pursuant to or in connection with any Transaction Document, the Company
shall:

     (a) ensure that the deduction or withholding is made and that it does not exceed the
minimum legal requirement;

     (b) pay, or procure the payment of, the full amount deducted or withheld to the
relevant taxation or other authority in accordance with the applicable law;

     (c) increase the payment in respect of which the deduction or withholding is required
so that the net amount received by the Bank after the deduction or withholding (and after
taking account of any further deduction or withholding which is required to be made as a
consequence of the increase) shall be equal to the amount which the payee would have been
entitled to receive in the absence of any requirement to make any deduction or withholding;
and

     (d) promptly deliver or procure the delivery to the Bank of receipts evidencing each
deduction or withholding which has been made.

   Section 7.3. Payments in Dollars. All payments to be made by the Company and the Debtors in
respect of a Purchased Receivable, whether of interest or principal, shall be made in Dollars.

   Section 7.4. Breakage Cost Indemnity. The Company agrees to indemnify the Bank on demand
against any loss or expense (including, but not limited to, any loss of the Margin or any other
loss or expense sustained or incurred or to be sustained or incurred by the Bank in liquidating or
employing deposits acquired or contracted for to effect or maintain its acquisition of Purchased
Receivables or any part thereof) which the Bank has sustained or incurred as a consequence of (i) a
purchase of Receivables not being made following the delivery of any Purchase Request to the Bank
by reason of the non-fulfillment of any of the conditions precedent or otherwise or (ii) a
repurchase of Purchased Receivables by the Company prior to the end of the applicable Reset Period.

   Section 7.5. Business Days. Any amounts which but for this Section 7.5 would fall due for
payment under this Agreement on a day other than a Business Day shall be payable on the succeeding
Business Day unless such Business Day would fall into a new calendar month, then

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such payment shall be due on the preceding Business Day. Interest calculations shall, where
necessary, be adjusted accordingly.

   Section 7.6. Default Interest.

          7.6.1. In the event that any amount payable by the Company hereunder or under any of the other
Transaction Documents (including, without limitation, payment of Collections not paid to the Bank
when received) remains unpaid for five (5) Business Days after the Bank provides notice to the
Company that such amounts are past due, the Bank shall charge, and the Company shall pay, interest
(“Default Interest”) from time to time on any such unpaid amount due from the Company to the Bank
during the period from (and including) the due date thereof to, but excluding the date payment is
received by the Bank in full, at a rate equal to the aggregate of (i) the prime commercial rate as
from time to time quoted by the Bank, and (ii) 2% per annum.

          7.6.2. Such Default Interest shall be payable ON DEMAND and, if no prior demand is made, on
the last Business Day of each calendar month. The Bank is authorized to charge any such amount of
Default Interest due to any account of the Company on the books of the Bank or any affiliate
thereof and to deduct any such amount from any amount which would otherwise be due from the Bank to
the Company from time to time under this Agreement.

Section 8. Changes in Circumstances.

   Section 8.1. Increased Costs.

          8.1.1. The Company, shall, within three Business Days of a demand by the Bank, pay the amount
of any Increased Costs incurred by the Bank as a result of (i) the introduction of or any change in
(or in the interpretation, administration or application of) any law or regulation or (ii)
compliance with any law or regulation made after the date of this Agreement.

          8.1.2. In this Agreement “Increased Costs” means (i) a reduction in the rate of return for the
Bank from the transactions contemplated in the Transaction Documents or on the Bank’s overall
capital; (ii) an additional or increased cost imposed by regulatory or administrative action; or
(iii) a reduction of any amount due and payable under any Transaction Document or by the Debtor
under the Purchased Receivables, which in each case is incurred or suffered by the Bank to the
extent that it is attributable to the Bank having entered into any Transaction Document or funding
any purchase of Purchased Receivables or being exposed to any Debtor in respect of Purchased
Receivables and/or performing any of its obligations under any Transaction Document.

   Section 8.2. Increased Cost Claims.

          8.2.1. If the Bank intends to make a claim pursuant to Section 8.1 (“Increased Costs”) it
shall notify the Company of the event giving rise to such claim and provide a certificate
confirming the amount of its Increased Costs.

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   Section 8.3. Exceptions.

          8.3.1. Section 8.2 does not apply to the extent any Increased Cost is (i) attributable to a
Tax Deduction required by law to be made by the Company, (ii) compensated for by Section 7.2; or
(iii) attributable to the willful breach by the Bank of any law or regulation; or (iv) attributable
to increased costs as a result of the income tax, franchise tax or similar obligations of the Bank.

     In this Section 8.3 a “Tax Deduction” means a deduction or withholding for or on account of
Tax from a payment under a Transaction Document.

Section 9. Further Assurances.

   Section 9.1. The Company agrees that from time to time, at its expense, it will promptly
execute and deliver all further instruments and documents, and take all further action, that the
Bank may reasonably request in order to perfect, protect or more fully evidence the transactions
contemplated hereby, or to enable the Bank to exercise or enforce any of its rights with respect to
the Purchased Receivables. Without limiting the generality of the foregoing, upon the request of
the Bank, the Company will file such financing or continuation statements, or amendments thereto or
assignments thereof, and such other instruments or notices as required under U.S. or local law, as
may be necessary or appropriate to perfect and preserve the interests of the Bank in the Purchased
Receivables, free and clear of Adverse Claims.

   Section 9.2. The Company hereby authorizes the Bank or its designee to file one or more
financing or continuation statements, and amendments thereto and assignments thereof and such other
instruments or notices as referred to in Section 9.1, relative to all or any of the Purchased
Receivables now existing or hereafter arising in the name of the Company.

Section 10. Representations and Warranties.

   Section 10. General Representations and Warranties. The Company hereby makes, and on each
purchase date and Settlement Date shall be deemed to make, the following representations and
warranties for the benefit of the Bank as of the Closing Date and each subsequent purchase date and
Settlement Date with reference to the facts and circumstances then existing (with the understanding
that, with respect to any such representation or warranty which relates to any Purchased
Receivable, such representations and warranties are deemed to have been made by the Company only as
of the date of the purchase of such Purchased Receivable by the Bank):

     (a) It is duly organized and validly existing and registered under the laws of its
jurisdiction of organization and has the full right, power and authority to own its property
and assets and carry on its business as it is now being conducted, to enter into the
Transaction Documents, to perform and observe all of the matters and things provided for
therein, including the sale to the Bank of the Purchased Receivables and it has taken all
necessary steps to duly authorize the execution of this Agreement and the other Transaction
Documents and the transactions contemplated hereby.

     (b) This Agreement and each other Transaction Document has been duly authorized by the
Company and executed and delivered by the proper officer(s) of the

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Company and constitute or, as the case may be, will, when made, constitute its legal, valid
and binding obligations enforceable in accordance with its terms.

     (c) The Company is the legal and beneficial owner of each Purchased Receivable sold by
it and, on the date of the sale of the Purchased Receivables to the Bank, the Purchased
Receivables shall be transferred to the Bank free and clear as of the date of such sale, of
any Adverse Claim.

     (d) Each Purchased Receivable is generated from a sale to an Approved Debtor and shall
be freely assignable and shall constitute amounts due and payable by the Debtor on the
relevant Maturity Date (which shall not exceed 90 days from the earliest of (i) the date of
sale or (ii) dispatch of the goods by the Company) and each Contract, Purchased Receivable
and Invoice complies in all material respects with all applicable laws and regulations.

     (e) The making and performance of this Agreement and each Transaction Document and the
transactions contemplated hereby will not (as to the best of the Company’s knowledge as to
(i)) violate any provision of (i) any law, regulation, order or decree of any governmental
authority, agency or court or (ii) its organizational documents or (iii) any agreement,
mortgage, indenture or other agreement to which it is a party or affecting the Company or
any of its assets or properties nor will such making and performance with or without the
passage of time or the giving of notice or other conditions, constitute an event of default
or termination event (howsoever described) under any of the foregoing or result in the
creation, imposition or enforceability of any Encumbrance over any of its assets, except in
favor of the Bank.

     (f) Each Invoice as issued in respect of each Purchased Receivable sold by it was
properly issued in accordance with the Contract and evidences that the amount specified in
such invoice will be due and payable to the Company in Dollars on and as of the Purchase
Date without the need for any other action, delivery of goods or performance of services by
the Company with respect to the Outstanding Amount set forth in such Invoice.

     (g) Each Contract and Receivable was originated in the ordinary course of the Company’s
business and in accordance with the Company’s credit and collection policy.

     (h) The Company has performed all of its material obligations under the Contract
relating to Purchased Receivables and in particular and without limitation it has delivered
all goods and services to the country of the Debtor as are due and required under such
Contract with respect to the face amount set forth in such Invoice.

     (i) The obligations of the Debtor in respect of each Purchased Receivable have not, as
of the date of the Bank’s purchase thereof, been prepaid in whole or in part.

     (j) As of the date the sale of such Receivable to the Bank, the goods supplied under
the Contract giving rise thereto are not subject to any retention of title or equivalent
clauses exercisable by the Company or, to the Company’s knowledge, any third parties,

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which may adversely affect the interests of the Bank and at the time of sale by the Company
to the Bank, no Purchased Receivable is subject to a volume or other discount (except to the
extent that the amount of any Trade Credit Amount has already been taken into account in
determining the Funded Amount of the Purchased Receivable as set forth in the Portfolio
Report) or subject to any claim by, or dispute with, the Debtor.

     (k) As of the date the sale of such Receivable to the Bank, each applicable Contract
giving rise thereto is in full force and effect as of such date, and the Company is not in
breach thereof or in default thereunder in a manner that would result in the Debtor being
entitled to exercise any set off rights or counterclaim or to withhold, extend or delay
payment on any Purchased Receivable; and, as of such date, there are no disputes, offsets,
counterclaims or defenses of the Debtor known to the Company with respect to any Purchased
Receivable (if any Purchased Receivable is more than 60 days past due, other than as a
result of a Debtor’s Financial Inability to Pay, it shall be presumed that the Debtor has
asserted a contractual claim or dispute).

     (l) Under the laws of or applicable to the jurisdiction of its organization in force
as at the date hereof, the claims of the Bank against the Company in relation to each
Purchased Receivable will rank at least pari passu with the claims of all its other
unsecured creditors save those whose claims are preferred solely by any bankruptcy,
insolvency, liquidation or other similar laws of general application.

     (m) Under the laws of or applicable to the jurisdiction of organization in force as at
the date hereof, the Company will not be required to make any deduction or withholding from
any payment it makes to the Bank in respect of any Purchased Receivable or the Contract
giving rise thereto, and the Company has all consents and licenses necessary to perform its
obligations thereunder.

     (n) As of the date the sale of such Receivable to the Bank, neither the Company nor, to
the actual knowledge of the Company, any Approved Debtor, is insolvent nor has any
insolvency or bankruptcy event occurred with respect to the Company or such Debtor, nor is
the Debtor past due under any payment obligation to the Company with respect to any related
Purchased Receivable nor has the Debtor rescheduled or extended the due date of any such
Purchased Receivable.

     (o) The Company has indicated, or will indicate as of the date of such sale, on its
books and records, as appropriate, that the Purchased Receivables have been sold by the
Company to the Bank (or its successors and assigns).

     (p) The transactions contemplated by this Agreement are being consummated by the
Company in order to raise capital to carry out the Company’s ordinary business, with no
contemplation of being or becoming insolvent and with no intent to hinder, delay or defraud
any of its present or future creditors. By virtue of the Company’s right to receive any
payment of the Purchase Price for each Purchased Receivable as provided in Section 4 hereof,
the Company has received reasonably equivalent value for the Purchased Receivables sold by
it.

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     (q) On the date of the sale of each Purchased Receivable by the Bank, the Bank shall
acquire a valid ownership interest or a first perfected security interest in each Purchased
Receivable free and clear of any Adverse Claim; and, upon transfer of ownership of such
Purchased Receivable from the Company to the Bank, no financing statement or other similar
instrument or other filing or recordation covering any such Purchased Receivable or any
interest therein, is on file in any recording office except such as may be filed pursuant to
this Agreement or except as to which a release or disclaimer in form satisfactory to the
Bank has been provided, or as to which the Bank has consented.

     (r) The Company’s jurisdiction of organization and “location” for purposes of the UCC,
or other relevant local law, is the State of Ohio (or at such other location, notified to
the Bank in accordance with Section 11.1(n)), in a jurisdiction where all actions required
by Section 9.1 have been completed). Except as described in Schedule 3, (i) the Company has
no trade names, fictitious names, assumed names or “doing business as” names and (ii) the
Company has not changed its jurisdiction of organization or location or its name, identity
or corporate structure within the four months prior to the date of this Agreement. The
Company’s federal taxpayer identification number or other registration number is as set
forth in Schedule 3.

     (s) All information provided by the Company to the Bank with respect to the Purchased
Receivables (including without limitation relating to the applicable Debtor’s past payment
history and commercial relationship with such Debtor) is true and accurate in all material
respects and nothing has been given or withheld that would result in the information
provided being untrue or misleading in any material respect.

     (t) The representations made or deemed to be made by the Company in each Transaction
Document are and remain correct in all material respects as of the date made.

     (u) With respect to the Company’s obligations hereunder, no consent, license,
authorization, registration, legalization, notification to, declaration with, approval or
permit of, any governmental authority, agency or instrumentality (including any central
banking or other monetary authority) is required by the Company in connection with its
execution, delivery and performance, and the validity or enforceability of the Company’s
obligations under the Transaction Documents, the Company’s sale of the Purchased
Receivables, or the transactions contemplated thereby.

     (v) The sale of the Purchased Receivables by the Company to the Bank under the
Transaction Documents would, under the law applicable to the Company as of the date of the
sale thereof, constitute a true sale or other absolute transfer of the Purchased Receivables
by the Company (except to the extent set forth in Section 21) to the Bank and upon each
purchase by the Bank, the Bank shall acquire a legally valid ownership interest or a first
perfected security interest in each Purchased Receivable, free and clear of any lien, claim
or other encumbrance without any need on the part of the Company or the Bank to (i) except
as may be required under the applicable Contracts, notify the account debtors on the
Purchased Receivables or (ii) except as may be required under

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applicable disclosure requirements, file, register or record the Transaction Documents or
the sale of the Purchased Receivables under the laws applicable to the Company.

     (w) The obligation of the Company to remit payments received from the Debtors on the
Purchased Receivables in U.S. dollars to the Bank in the United States, either directly or
through the Blocked Accounts as designated by the Bank is legally valid under the laws
applicable to the Company and no foreign exchange registrations or approvals are necessary
to effectuate such U.S. dollar payments.

Section 11. Covenants.

   Section 11. General Covenants. The Company hereby agrees, at all times prior to the Final
Collection Date:

     (a) to duly perform all its obligations under the relevant Contract in respect of each
Purchased Receivable, so that each such Receivable remains a legal, valid and binding
obligation of the Debtor enforceable against the Debtor in accordance with its terms, to
inform the Bank of any material breach or default by the Company or the Debtor, within five
Business Days after it becomes aware of any such breach or default and to take all measures
necessary and consistent with the terms of the Contract to minimize or prevent any loss
which may be incurred by the Bank in the event of nonperformance of the Contract or
nonpayment of an invoice by the Company or the Debtor arising out of a dispute between the
Company and the Debtor thereunder;

     (b) after the date of the Company’s sale of the related Purchased Receivable, not to
amend any applicable Contract related thereto in any manner or have any dealing or other
arrangement with the Debtor that, as between the Company and the Debtor, is intended to, or
will, affect the collectibility of the Purchased Receivable or the Outstanding Amount or the
due date for payment of any Purchased Receivable, cancel or terminate such Contract and not
to, or purport to, terminate, revoke or vary any term or condition of or extend the Maturity
Date by more than 30 days (so long as in no event shall the Maturity Date be extended beyond
90 days from the date of purchase of such Purchased Receivable) of any Purchased Receivable
without the prior consent in writing of the Bank, if the same could adversely affect the
financial value or economic return to the Bank in respect of the Purchased Receivable;

     (c) not to create or suffer to exist any Adverse Claim over all or any of the Company’s
rights, title and interest in and to any Purchased Receivable or the Contract in respect of
such Purchased Receivable or any lock-box or other account to which any Collections of any
Purchased Receivables are sent (unless otherwise agreed to by the Bank) and not to, or
purport to, assign, transfer or otherwise deal with any of its rights in respect of any such
Contract or any Purchased Receivable other than in favor of the Bank, and Company shall
provide the Bank with a release or disclaimer of any Adverse Claim purportedly created by
any other Person over any Purchased Receivable;

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     (d) to ensure that it has shipped all goods in respect of each Purchased Receivable in
conformity with all applicable laws and regulations (including without limitation import and
export laws and regulations);

     (e) to keep and maintain proper accounts and Sales Records and Invoices in connection
with each Purchased Receivable in an up to date form (including details of each Invoice
specified in the Portfolio Report) and ensure that they are retained in suitable storage and
that they indicate:

     (i) which Receivables are Purchased Receivables;

     (ii) details of all Purchased Receivables which are specified in the Portfolio
Reports; and

     (iii) that such Purchased Receivables have been sold to the Bank, and to
provide the Bank with a quarterly report regarding a receivables aging, delinquency,
write-offs, Receivables rolled forward and dilution report in the form attached as
Appendix I as to the Purchased Receivables showing a loss to liquidation ratio
(monthly write-offs over collections), delinquency ratio (Receivables more than 90
days past due over closing Receivables balance) and dilution ratio (monthly credit
memos over sales) within 5 days of the close of each month in a form satisfactory to
the Bank, or as may otherwise be approved by the Bank;

     (f) to devote and assure that there is devoted to the servicing of Purchased
Receivables at least the same amount of time and attention and that there is exercised at
least the same level of skill, care and diligence in their servicing, as if it were
servicing those receivables legally and beneficially owned by it;

     (g) to comply with any reasonable directions, orders and instructions (including any
procedures for the administration and commencement and continuation of legal or other
proceedings against the Debtor to enforce payment of Purchased Receivables) given by the
Bank and to take such action on the Bank’s behalf as the Bank may request to procure the
ordinary course collection of such accounts as directed by the Bank;

     (h) to use all reasonable efforts to recover and enforce payment of any or all
Purchased Receivables and provide such reasonably requested information as to assist the
Bank to recover and enforce payment of any or all Purchased Receivables (including at the
request of the Bank joining in and being a party to any legal or other action which the Bank
has taken or wishes to take against the Debtor with the Bank being entitled to full control
of such action);

     (i) to take such action as may reasonably be required by applicable law to perfect a
full legal assignment to the Bank of such Purchased Receivable, such that, among other
things, the Bank shall be entitled to receive or take action to recover all

-25-

 

Purchased Receivables outstanding from the Debtor without the Company being required to join
in, being a party to or taking in its own name legal action against the Debtor;

     (j) to the extent required under this Agreement, to mark its accounting records
evidencing or relating to the Purchased Receivables with a legend evidencing that the
Purchased Receivables have been sold in accordance with this Agreement;

     (k) to provide information and reports as reasonably requested by the Bank reasonably
related to the transactions contemplated by this Agreement, of which information and reports
shall be complete and accurate in all material respects, including without limitation,
annual audited financial statements for the Company and its consolidated subsidiaries within
120 days after the end of each fiscal year or as soon as available if earlier and unaudited
financial statements for the Company and its consolidated subsidiaries within 60 days after
the end of each fiscal quarter or as soon as available if earlier;

     (l) (i) at any time during regular business hours and upon reasonable prior notice, to
permit the Bank or any of its agents or representatives, (A) to examine and make copies of
and abstracts from the Company’s records relating to Purchased Receivables, including the
Contracts and Sales Records, and (B) to visit the offices and properties of the Company for
the purpose of examining such records and to discuss matters relating to Purchased
Receivables or the Company’ performance hereunder with any of the officers or employees of
the Company having knowledge of such matters; and (ii) without limiting the provisions of
clause (i), from time to time on request of the Bank, permit certified public accountants or
other auditors acceptable to the Bank to conduct, at the Company’s expense, a review of the
Company’s books and records; provided that such examinations, visits and reviews by the Bank
or accountants shall occur no more than once a year during any period of time that there is
no default by the Company of its obligations hereunder; and

     (m) to keep its jurisdiction of organization and chief executive office at the location
referred to in Schedule 3 or, upon 30 days’ prior written notice to the Bank, at such other
location in a jurisdiction where all action required by Section 9.1 shall have been
completed; and not change its name except upon like notice and after all action required by
Section 9.1 shall have been completed.

Section 12. Partial Invalidity

     If at any time any provision of the Transaction Documents shall be adjudged by any court or
other competent tribunal to be illegal, invalid or unenforceable, the validity, legality, and
enforceability of the remaining provisions hereof shall not in any way be affected or impaired nor
shall the legality, validity or enforceability of such provisions under the law of any other
jurisdiction be in any way affected or impaired thereby and the parties hereto will use their best
efforts to revise the invalid provision so as to render it enforceable in accordance with the
intention expressed in this Agreement.

-26-

 

Section 13. No Bank Liability for Contract

     The Company hereby acknowledges and agrees that the Bank shall not be in any way responsible
for the performance of any Contract and the Bank shall not have any obligation to intervene in any
dispute arising out of the performance of any Contract. Any claim which the Company may have
against any Debtor or any other party, including any successors or assignees, and/or the failure of
the Debtor to fulfill its respective obligations under each Contract shall not affect the
obligations of the Company to perform its obligations and make payments under this Agreement and
shall not be used as a defense or as set-off, counterclaim or cross-complaint as against the
performance or payment of any of its obligations.

Section 14. Notices, Addresses, Language

   Section 14.1 Notices, Addresses. (a) All notices, requests and demands given or made under the
Transaction Documents shall be given or made in writing and unless otherwise stated shall be made
by telefax or letter using the address as specified below or such other address as the party may
designate to the other party:

	 	 	 
	To the Company

	 	The Scotts Company LLC
	     or the Parent:
	 	 
	 
	 	 
	Attention:

	 	Treasurer
	Street Address:

	 	14111 Scottslawn Road
	 

	 	Marysville, Ohio 43041
	 
	Facsimile:

	 	937-578-5754
	 
	 	 
	To the Bank:

	 	LaSalle Bank National Association
	Attention:

	 	Ted Lape
	Street Address:

	 	One Columbus
	 

	 	10 West Broad Street, Suite 2250
	 

	 	Columbus, Ohio
	 
	Facsimile:

	 	614-225-1631
	 
	 	 
	With a copy to:

	 	ABN AMRO Bank N.V.
	Attention:

	 	Mona Ghazzaoui
	Street Address:

	 	600 de Maisonneuve Boulevard, West
	 

	 	Suite 2810
	 

	 	Montreal Quebec Canada H3A 3J2
	 
	Facsimile:

	 	514-284-6717

     (b) All notices, requests and demands shall be deemed to have been duly given or made when
dispatched by telefax when the confirmation showing the completed transmission received or, if
mailed via a reputable international courier, when it has been left at the relevant address or five
(5) Business Days after being delivered to such reputable international courier, in an

-27-

 

envelope addressed to the applicable person at that address and to the attention of the person(s)
set forth above.

     (c) The Company and the Bank shall promptly inform each other of any changes in their
respective addresses or facsimile numbers specified hereabove.

   Section 14.2. English Language. Each communication and document made or delivered by one
party to another pursuant to this Agreement shall be in the English language or accompanied by a
translation thereof into English (certified by an officer of the person making or delivering the
same) as being a true and accurate translation thereof.

Section 15. Fees, Costs and Indemnity.

   Section 15.1. Fees. (a) The Company shall pay to the Bank, concurrent with its execution of
this Agreement, the set-up fee in the amount of $35,000.

     (b) The Company shall also pay to the Bank on the date of each purchase hereunder an
administrative fee equal to 0.05% per annum (computed on the basis of a year of 360-days and actual
days elapsed) on the Outstanding Amount of the Purchased Receivables.

     (c) The Company shall also pay to the Bank a fee equal to 0.125% per annum (computed on the
basis of a year of 360 days and actual days elapsed) on the amount by which the daily average of
the Agreement Amount exceeds the daily average of the Funded Amount, such fee to be payable
annually in arrears on each April 10 (commencing April 10, 2008) and on the Termination Date,
provided, however, that if the annual average daily Funded Amount during the preceding period shall
be 75% or more of the average daily Agreement Amount, such fee shall be waived by the Bank as to
such period.

     (d) The Company shall also pay to the Bank on the Termination Date a termination fee if the
Termination Date occurs prior to April 10, 2008, as a result of the Company exercising its
voluntary right to terminate by designating a Termination Date hereunder in an amount equal to the
lesser of (i) $120,000 and (ii) 0.125% times the daily average Agreement Amount for the period from
the Termination Date through April 10, 2008.

   Section 15.2. Costs and Expenses. All costs, charges and expenses, including reasonable fees
and expenses of legal counsel, audit and due diligence expenses, in relation to the preparation,
execution and enforcement of the Transaction Documents and each Purchased Receivable by the Bank
shall be paid by the Company to the Bank on demand on a full indemnity basis whether or not any
Receivables are purchased hereunder.

   Section 15.3. Duties and Taxes. All stamp, documentary, registration or other like Taxes
(excluding taxes upon or measured by the net income of the Bank), including withholding taxes and
any penalties, additions, fines, surcharges or interest relating thereto, or any notarial fees
which are imposed or chargeable on or in connection with this Agreement or any other Transaction
Document or any other document executed pursuant hereto or thereto shall be paid by the Company, it
being understood and agreed that the Bank shall be entitled but not obliged to

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pay any such Taxes (whether or not they are its primary responsibility), and the Company, jointly
and severally, shall on demand indemnify the Bank against those Taxes and against any costs and
expenses so incurred by it in discharging them.

   Section 15.4. Indemnity. The Company agrees to indemnify, defend and save harmless the Bank
(including each of its branches, affiliates, officers, directors, employees or other agents, the
“Indemnified Party”), other than for such Indemnified Party’s own gross negligence or wilful
misconduct, forthwith on demand, from and against any and all related losses, claims, damages,
liabilities, costs and expenses (including, without limitation, all attorneys’ fees and expenses,
expenses incurred by their respective credit recovery groups (or any successors thereto) and
expenses of settlement, litigation or preparation therefor) which any Indemnified Party may incur
or which may be asserted against any Indemnified Party by any person (including, without
limitation, any Debtor or any other person whether on its own behalf or derivatively on behalf of
the Company) arising from or incurred in connection with any of the following events:

     (i) the failure to vest in the Bank a first priority perfected ownership interest or
security interest in each Purchased Receivable, free and clear of any Adverse Claim;

     (ii) the commingling by the Company of Collections of Purchased Receivables at any time
with other funds of the Company or other Person, provided that the Bank hereby acknowledges
the lien on the Collections deposited in the Blocked Accounts of Receivables not sold under
this Agreement of JPMorgan Chase Bank, N.A., as Administration Agent under the terms of the
Amended and Restated Credit Agreement dated as of February 7, 2007, or the failure of the
Company to direct any Debtor to make payment on Purchased Receivables to the Blocked
Account;

     (iii) any representation or warranty made by the Company pursuant to this Agreement is
inaccurate, incorrect or untrue in any material respect;

     (iv) any failure of the Company to perform any of its duties or obligations hereunder;
or the violation of any applicable law, rule or regulation with respect to any Purchased
Receivable or the related Contract;

     (v) for failure to promptly execute when reasonably requested to do so by the Bank, of
any document or instrument confirming the sale to the Bank under applicable law with respect
to the Purchased Receivables;

     (vi) (1) any claim or dispute resulting from the sale of the merchandise or services
related to any Purchased Receivable or the furnishing or failure to furnish such merchandise
or services including, without limitation, any discount (other than a discount already taken
into account in determining the Purchase Price of a Purchased Receivable as set forth in a
Portfolio Report), (2) any adjustment, offset, withholding tax, deduction, counterclaim,
warranty issue or refusal of an Approved Debtor to pay not arising from the Financial
Inability to Pay of such Debtor; or (3) any products liability claim arising out of or in
connection with merchandise or services that are the subject of any Purchased Receivable (if
any Receivable is more than 60 days past due, other than as a result of the

-29-

 

Financial Inability to Pay of the Debtor, it shall be presumed that such Debtor has asserted
a contractual claim or dispute);

     (vii) any tax or governmental fee or charge (but not including taxes upon or measured
by net income of the Bank), all interest and penalties thereon or with respect thereto, and
all out-of-pocket costs and expenses, including the reasonable fees and expenses of counsel
in defending against the same, which may arise by reason of any act or omission by the
Company with respect to the purchase or ownership of any Purchased Receivable or in any
goods which secure any Purchased Receivable;

     (viii) any investigation, litigation or proceeding related to any act or omission by
the Company with respect to this Agreement or the transactions contemplated hereby except to
the extent that such investigation, litigation or proceeding arises due to the Bank’s gross
negligence or willful misconduct;

     (ix) any material defect in authenticity or any material discrepancy between the
records at the Company in respect of the Purchased Receivables or the documents issued by
the Company supporting the Purchased Receivables and the information provided to the Bank by
the Company or any failure by the Company to provide the Bank with information regarding the
Purchased Receivables;

     (x) any claim or dispute arising out of or in connection with the Monsanto Agreement;
and

     (xi) any and all reasonable out-of-pocket costs and expenses, including reasonable
legal fees and court costs, incurred by the Bank in enforcing the obligations of the Company
under this Agreement and the other Transaction Documents;

provided that nothing in this Section 15.4 shall be deemed to provide indemnity to the Bank for
credit losses resulting from the Financial Inability to Pay of any Debtor.

Section 16. Calculations and Certificate.

   Section 16.1. Accounts. Absent manifest error in any litigation or arbitration proceedings
arising out of or in connection with a Transaction Document or a Purchased Receivable, the entries
made in the accounts maintained by the Bank are presumptive evidence of the matters to which they
relate.

   Section 16.2. Certificates and Determinations. Any certification or determination by the Bank
of a rate or amount under any Transaction Document is, in the absence of manifest error, conclusive
evidence of the matters to which it relates.

Section 17. Set-Off. 

     The Company hereby authorizes the Bank to apply any credit balance (in whatever currency
denominated) on any account of the Company with the Bank or any affiliate of the

-30-

 

Bank in satisfaction of any sum due and payable by the Company pursuant to the terms of this
Agreement. For this purpose the Bank is authorized to purchase at its spot rate of exchange with
the moneys standing to the credit of any such account Dollars or such other currencies as may be
necessary to effect such application.

Section 18. Termination.

   Section 18.1. The following events or occurrences shall constitute Termination Events:

     (a) the Company or the Parent shall fail to pay, within five (5) calendar days of the
date when due, any amount greater than $100,000 under this Agreement, including, without
limitation, amounts payable by the Company in its capacity as servicer or under the
indemnity for breaches of any warranties or covenants contained in this Agreement;

     (b) the Company or the Parent is in default (i) beyond the period of grace, if any, in
the payment of any indebtedness exceeding $25,000,000, or (ii) under any agreement or
instrument relating to any such indebtedness the result of which would allow the holder
thereof to accelerate the payment of such indebtedness prior to its stated maturity;

     (c) the Company or the Parent (i) shall generally fail to pay its debts as they become
due, (ii) has commenced against it any bankruptcy or insolvency proceeding which is not
dismissed within 60 days or commences any bankruptcy or insolvency proceeding, (iii) has any
receiver, trustee, liquidator or other similar person appointed for itself or a substantial
portion of its property or (iv) takes any action to effectuate or authorize any of the
foregoing;

     (d) any Adverse Claim shall occur as to any of the Purchased Receivables or proceeds
thereof, which results in Collections thereof being reduced by an amount in excess of 10% of
the Funded Amount thereof;

     (e) (i) the Company or Parent, as applicable, breaches any covenant set forth in
Section 4, 5.2, 6.1, 9.1, 15.4 or 22 of this Agreement and such breach shall continue for
fifteen (15) calendar days after a responsible officer of the Company has knowledge thereof,
(ii) the Company breaches any covenant set forth in Section 11(c), (g), (i), (k), (l), or
(m) of this Agreement and such breach shall continue for thirty (30) calendar days after a
responsible officer of the Company has knowledge thereof or (iii) the Company breaches any
covenant set forth in Section 11(h) of this Agreement or any similar covenant which
requires, or upon the request of the Bank would require, the Company to file or join in any
lawsuit against, or take any other legal action against, any Approved Debtor and such breach
shall continue for thirty (30) calendar days after a responsible officer of the Company has
knowledge thereof;

     (f) the failure of the Company and the Bank to mutually agree to a more frequent
Settlement Period within five (5) calendar days of the Company’s receipt of written request
from the Bank;

-31-

 

     (g) the failure by the Parent to own 100% of the outstanding equity interests of the
Company;

     (h) the issuance by Moody’s or S&P of two or more Downgrades of its rating of the
Parent or the suspension or withdrawal of such rating;

     (i) the issuance by Moody’s or S&P of a Downgrade of its rating of an Approved Debtor
or the suspension or withdrawal of its rating of such Approved Debtor;

     (j) an Approved Debtor is in default due to a Financial Inability to Pay of an amount
equal to or greater than $3,000,000 with respect to its payment of any prior Purchased
Receivables; and

     (k) the final termination of any blocked account agreement relating to a Blocked
Account without the Bank’s prior written consent.

   Section 18.2. Upon the occurrence of any Termination Event, the Bank may immediately terminate
its agreement to purchase additional Receivables and the authority of the Company to purchase
Replacement Receivables. Notwithstanding any other provision hereof, this Agreement shall continue
in full force and effect with respect to Purchased Receivables already purchased and all other
rights, benefits and entitlements of the Bank expressed or implied to continue after such
termination until the Final Collection Date.

   Section 18.3. Upon the termination of this Agreement, the Bank will have, in addition to its
rights and remedies hereunder and under the other Transaction Documents, all other rights and
remedies under applicable laws and otherwise, which rights and remedies will be cumulative.

   Section 18.4. Without limiting the rights of the Bank, on the Termination Date, and on each
day thereafter, the Company, subject to the terms and conditions of this Agreement, will hold or
deposit in trust in the Blocked Accounts, for the benefit of the Bank, the Collections of Purchased
Receivables received by the Company on each such day and the Bank may withdraw all such amounts
from the Blocked Account upon giving the notice required under the relevant Blocked Account
Agreement. After the Bank has delivered any notice of termination under Section 18.1, Company
shall not exercise any right of set-off or compensation with respect to any sum owing to the Bank.

   Section 18.5. On the Termination Date, and at all times thereafter, all Purchased Receivables
described in Section 4.5(b), inclusive of those Purchased Receivables which are identified as
Purchased Receivables in the Portfolio Report to be delivered by the Company to the Bank as of the
Company’s close of business on the day immediately preceding the Termination Date shall, subject to
verification and approval by the Bank and this Section 18.5, be the Total Purchased Receivables
(the “Total Purchased Receivables”) for all purposes of this Agreement.

-32-

 

     If, on and at any time after the Termination Date and after the identification of the Total
Purchased Receivables, the Bank or the Company determines that, as of the Termination Date, the
Outstanding Net Amount of the Total Purchased Receivables is or was less than the Funded Amount at
such time, the Company shall immediately pay to the Bank by a deposit to Bank’s account the amount
by which the Funded Amount exceeds the Outstanding Net Amount of the Total Purchased Receivables as
at the Termination Date.

     If the Company fails to pay such amount, the list of the Total Purchased Receivables shall be
amended to include such amount of additional Receivables from the Approved Debtors as is necessary
to make the Outstanding Net Amount of the Total Purchased Receivables equal to the Funded Amount as
at the Termination Date.

   Section 18.6. Notwithstanding anything contained in this Agreement to the contrary, upon the
occurrence of a Termination Event under 18.1(i) or (j) with respect to a particular Approved
Debtor, the Bank’s agreement hereunder to purchase additional Receivables and the authority of the
Company to purchase Replacement Receivables hereunder shall not terminate pursuant to the terms of
Section 18.2 with respect to the other Approved Debtors.

Section 19. Miscellaneous

   Section 19.1. Assignments and Transfers. (a) The Bank may at any time assign, transfer or
participate (including by way of novation) any of its rights and obligations under the Transaction
Documents to another bank or financial institution; provided that the Bank shall notify the Company
in writing at least fifteen days prior to such assignment, transfer or participation and obtain the
Company’s written consent thereto (so long as no Termination Event has occurred and is continuing
and has not otherwise been waived or cured), which consent shall not be unreasonably withheld or
delayed, and, if the Company so elects, the Company shall have fifteen days from the date of such
notice to repurchase any outstanding Purchased Receivables from the Bank at the Purchase Price as
set forth in Section 21.1 with respect to any amounts outstanding from each Debtor in relation to
each Purchased Receivable, plus any other amounts outstanding from the Company to the Bank under
this Agreement, including breakage costs under Section 7.4. Any sub-participation by the Bank, the
Approved Participant or any other participant shall be subject to the notice and consent
requirements set forth in the prior sentence. The Company agrees that each participant shall be
entitled to the benefit of Sections 7.2, 7.4 and 8 to the same extent as if it were the Bank
hereunder; provided, however, that a participant shall not be entitled to receive any greater
payment under such Sections than the Bank would have been entitled to receive with respect to the
participation sold to such participant, unless the sale of the participation to such participant is
made with the Company’s prior written consent. Notwithstanding anything contained herein to the
contrary, the Company hereby consents to the Bank’s participation of its rights and obligations
under the Transaction Documents to the Approved Participant pursuant to the terms of the
Participation Agreement dated as of the date hereof between the Bank and the Approved Participant.

     (b) The Company may not assign or otherwise transfer its rights, benefits or obligations or
any of them under the Transaction Documents.

-33-

 

        (c) Subject to the foregoing, this Agreement shall be binding on and shall inure to the
benefit of each party hereto and its successors and assigns.

     Section 19.2. Waivers, Remedies Cumulative. No failure to exercise, nor any delay in
exercising, on the part of the Bank, any right or remedy under the Transaction Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy
prevent any further or other exercise thereof or the exercise of any other right or remedy. The
rights and remedies herein provided are cumulative and not exclusive of any rights or remedies
provided by law.

     Section 19.3. Accounting Treatment. The Company agrees and acknowledges that it is a
sophisticated party in relation to this Agreement and that it has taken independent legal and
accounting advice in relation to the accounting treatment to be applied to this Agreement. It is
agreed that the Company has not relied on any representation of the Bank in this regard.

     Section 19.4. Third Party Rights. Other than as approved in this Agreement, no person not a
party to this Agreement shall be deemed a third party beneficiary hereof.

     Section 19.5. Counterparts. Each Transaction Document may be executed in any number of
counterparts, and by the different parties thereto on separate counterparts; each such counterpart
shall be deemed an original and all of such counterparts taken together shall be deemed to
constitute one and the same instrument. A facsimile or electronic copy of an executed counterpart
of this Agreement shall be effective as an original for all purposes.

     Section 19.6. Entire Agreement. This Agreement constitutes the entire Agreement between the
parties hereto in relation to the Agreement and supersedes all previous proposals, agreements and
other written and oral communications in relation thereto.

     Section 19.7. Exclusion of Liability. In no event shall the Bank be liable for any loss of
profits, business, data or information or for any remote, incidental, indirect, special or
consequential damages.

     Section 19.8. Continuing Obligations. The Company shall remain liable to perform all
obligations assumed by it under each Contract, and the Bank shall be under no obligation of any
kind whatsoever thereunder or be under any liability whatsoever in the event of any failure by the
Company to perform its obligations thereunder.

     Section 19.9. USA Patriot Act. The Bank hereby notifies the Company that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify, and record information that identifies the
Company, which information includes the name and address of the Company and other information that
will allow the Bank to identify the Company in accordance with the Act.

-34-

 

Section 20. Governing Law

     Section 20.1. This Agreement shall be governed by and construed in accordance with the laws of
the State of New York without regard to the principles of conflicts of law thereof (other than
Section 5-1401 of the New York General Obligations Law).

     Section 20.2. Any litigation based hereon, or arising out of, under or in
connection with this Agreement, may be brought and maintained in the courts of the State of New
York sitting in New York County, New York or in the United States district court for the Southern
District of New York; provided that any suit seeking enforcement against any receivables or other
property may be brought, at the Bank’s option, in the courts of any jurisdiction where such
receivables or other property may be found. The Company and the Parent hereby expressly and
irrevocably submit to the jurisdiction of the courts of the State of New York sitting in New York
County, New York and of the United States district court for the Southern District of New York for
the purpose of any such litigation. The Company and the Parent further irrevocably consent to the
service of process by registered mail, postage prepaid, to the address specified in Section 14.1 of
this Agreement (or such other address as they shall have specified in writing to the Bank as their
address for notices hereunder) or by personal service within or without the State of New York. The
Company, the Parent and the Bank expressly and irrevocably waive, to the fullest extent permitted
by law, any objection which they may now or hereafter have to the laying of venue of any such
litigation brought in any such court and any claim that any such litigation has been brought in an
inconvenient forum.

     Section 20.3. The Company, the Parent and the Bank hereby waive any right to a
trial by jury in any action or proceeding to enforce or defend any rights under this Agreement or
any application, instrument, document, amendment or agreement delivered or which may in the future
be delivered in connection herewith or arising from any banking relationship existing in connection
with this Agreement, and agree that any such action or proceeding shall be tried before a court and
not before a jury.

Section 21. Optional Repurchase

     Section 21.1. In the event that (i) the Bank gives notice to the Company of its intention to
replace the Company as servicer and agent, (ii) the Bank informs the Company that it will not
purchase any other Receivables due to a Termination Event, (iii) a Purchased Receivable is past
due, or (iv) any bankruptcy or insolvency (however evidenced) of the Company or the Parent shall
occur, the Company may, at its option, repurchase all of the outstanding Purchased Receivables from
the Bank for an amount equal to the Purchase Price of such Purchased Receivables (or so much of it
as was paid by the Bank to the Company and remains unpaid), less the amount of the unearned portion
of the related Discount, if any, if such Purchased Receivable is being repurchased by the Company
prior to the due date of such Purchased Receivable as computed pursuant to Section 4.1 hereof and
if such Purchased Receivable is being repurchased

-35-

 

by the Company after the due date of such Purchased Receivable, together with interest thereon at
the interest rate specified in Section 7.6 from the due date to the date of the Company’s payment
in full thereof, and any other amounts then payable by the Company hereunder, including, breakage
costs under Section 7.4, whereupon such amount shall become due and payable from the Company to the
Bank on the date specified in such notice and shall be paid into such account specified by the
Bank.

   Section 21.2. In addition to the foregoing, the Company shall have the right at any time
before or after a Termination Event, at its option, to repurchase all or a portion of the
outstanding Purchased Receivables from the Bank for an amount equal to the Purchase Price of such
Purchased Receivables (or so much of it as was paid by the Bank to the Company and remains unpaid),
less the amount of the unearned portion of the related Discount, if any, if such Purchased
Receivable is being repurchased by the Company prior to the due date of such Purchased Receivable
as computed pursuant to Section 4.1 hereof and if such Purchased Receivable is being repurchased by
the Company after the due date of such Purchased Receivable, together with interest thereon at the
interest rate specified in Section 7.6 from the due date to the date of the Company’s payment in
full thereof, and any other amounts then payable by the Company hereunder, including, breakage
costs under Section 7.4, whereupon such amount shall become due and payable from the Company to the
Bank on the date specified in such notice and shall be paid into such account specified by the
Bank.

Section 22. Guaranty.

     Parent is the owner of the Company. Parent hereby unconditionally and irrevocably guarantees
to the Bank the due and punctual payment, performance and observance by the Company of all of the
terms, covenants, conditions, agreements, representations, warranties, indemnities and undertakings
on the part of the Company to be performed or observed under this Agreement, including, without
limitation, the punctual payment when due of all obligations of the Company now or hereafter
existing under this Agreement, whether for indemnification payments, fees, expenses, repurchase
obligations or otherwise (all of the foregoing being collectively referred to as the
“Obligations”). In the event that the Company shall fail in any manner whatsoever to perform or
observe any of the Obligations when the same shall be required to be performed or observed under
this Agreement (subject to any applicable cure periods), then upon the written demand of the Bank,
Parent shall perform, cause to be performed or make payment to allow such Obligations to be
performed.

     Parent further agrees that nothing contained herein shall prevent the Bank from foreclosing on
its security interest in or lien on any asset, if any, or from exercising any other rights
available to it under this Agreement or any other instrument of security, if any, and the exercise
of any of the aforesaid rights and the completion of any foreclosure proceedings shall not
constitute a discharge of any of Parent’s obligations hereunder; it being the purpose and intent of
Parent that its obligations hereunder shall be absolute, independent and unconditional under any
and all circumstances. Neither Parent’s obligations hereunder nor any remedy for the enforcement
thereof shall be impaired, modified, changed, released or limited in any manner whatsoever by an
impairment, modification, change, release or limitation of the liability of the Company or by
reason of the bankruptcy or insolvency of the Company. Parent waives any and

-36-

 

all notices of the creation, renewal, extension or accrual of or increase in any of the
Obligations and notice of or proof of reliance by Bank upon this Section 22 or acceptance of this
Section 22. This Agreement shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this Section 22. All dealings
between the Company and Parent, on the one hand, and the Bank, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon this Section 22.

     Parent hereby waives any and all presentments, demands, notices, and protests against Parent,
and any requirement that the Bank commence or exhaust any remedies against the Company or any
collateral securing the Obligations. Parent’s liability hereunder shall be unconditional
irrespective of (i) any lack of enforceability of the Obligations, (ii) any law, regulation rights
with respect thereto, and (iii) any other circumstance which might otherwise constitute a defense
available to, or discharge of, the Company or Parent. This guarantee is a guarantee of payment and
performance and not of collection and shall remain in full force and effect until payment in full
of the Obligations. The Obligations of Parent under this Section 22 does rank and will rank pari
passu in priority of payment with all other unsecured and unsubordinated obligations for borrowed
money of Parent.

     All payments under this Section 22 by Parent shall be made by Parent on the date when due and
shall be made in lawful currency of the United States of America and in immediately available and
freely transferable funds at the payment office of the Bank in the United States of America as from
time to time specified in writing by the Bank.

Section 23. Removal; Reinstatement of Debtor.

     From time to time, the Company may request that one or more Approved Debtors be removed as
“Approved Debtors” from the Approved Debtor Certificate hereunder by delivery to the Bank of
written notice of such request, which notice shall set forth the date on which such Approved
Debtors shall be removed therefrom (a “Removal Date”), which date shall be no earlier than ten days
after the date such notice was delivered. At any time after the applicable Removal Date for a
Debtor that was once an Approved Debtor and prior to the Termination Date, so long as no
Termination Event has occurred, the Company may reinstate such Debtor as an “Approved Debtor” in
the Approved Debtor Certificate by delivery to the Bank of written notice of such request, which
notice shall set forth the date on which such Debtor shall become an “Approved Debtor”, which date
shall be no earlier than ten days after the date such notice was delivered. Upon any such removal
or reinstatement of an Approved Debtor, a corresponding reduction or reinstatement, as applicable,
shall be made to the related Debtor Sublimit; provided, however, that with respect to any
reinstatement of the related Debtor Sublimit, such Debtor Sublimit shall not be reinstated in an
amount greater than the Debtor Sublimit in effect on the applicable Removal Date.

Section 24. Confidentiality.

     Each party hereto agrees to hold the Transaction Documents and all non-public information
received by it in connection therewith from any other party hereto or its agents or representatives
in confidence and agrees not to provide any Person with copies of any

-37-

 

Transaction Document or such non-public information other than to (i) any officers, directors,
members, managers, employees or outside accountants, auditors or attorneys thereof, (ii) any
prospective or actual assignee or participant which (in each case) has signed a confidentiality
agreement containing provisions substantively identical to this Section 24 or has agreed to be
subject to the terms of this Section 24, and (iii) Governmental Authorities with appropriate
jurisdiction (including filings required under securities laws). Notwithstanding the above stated
obligations, provided that the other parties hereto are given notice of the intended disclosure or
use, the parties hereto will not be liable for disclosure or use of such information which such
Person can establish by tangible evidence: (i) was required by law, including pursuant to a valid
subpoena or other legal process, (ii) was in such Person’s possession or known to such Person prior
to receipt or (iii) is or becomes known to the public through disclosure in a printed publication
(without breach of any of such Person’s obligations hereunder).

[Remainder of Page Intentionally Left Blank]

-38-

 

     In Witness Whereof, the parties have executed this Agreement by their
undersigned, duly authorized officers on the date first above written:

	 	 	 	 	 	 	 	 	 
	 	 	LaSalle Bank National Association
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Ted Lape
	 	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	SVP	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	The Scotts Company LLC
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David C. Evans
	 	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	CFO	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	The Scotts Miracle-Gro Company
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David C. Evans
	 	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	CFO	 	 

-39-

 

Schedule 1

Purchase Request

                    , 20___

LaSalle Bank National Association

                                                    

                                                    

Attn:                                           

     Re: Request for Purchase

Ladies and Gentlemen:

     We refer to the Master Accounts Receivable Purchase Agreement among LaSalle Bank National
Association, The Scotts Company LLC and The Scotts Miracle-Gro Company, dated as of April 11, 2007
(the “Purchase Agreement”). Terms defined in the Purchase Agreement shall have the same meaning
herein as defined in such Purchase Agreement.

     The undersigned Company hereby requests that the Bank purchase on                     , 20___, (the
“Purchase Date”), the Purchased Receivables set forth on Schedule I attached hereto, in accordance
with, and subject to, the terms and provisions of the Purchase Agreement. The undersigned Company
hereby makes the representations and warranties set forth in Section 10 of the Purchase Agreement
for the benefit of the Bank, as of the Purchase Date, and further state that such representations
and warranties are true and correct as of such Purchase Date.

     Executed and delivered by the undersigned Company as of the date first above written.

	 	 	 	 	 	 	 	 	 
	 	 	The Scotts Company LLC 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

 

 

Schedule 2

Conditions Precedent

the Bank shall have received each of the following, in form and substance satisfactory to it:

     (a) Executed counterparts of this Agreement and the other Transaction Documents.

     (b) Certified copies of resolutions of the Company’s and Parent’s board of directors or
members authorizing this Agreement and the Bank having received executed copies of this
Agreement and the other Transaction Documents and authorizing a person or persons to sign or
otherwise attest the due execution of those documents including any subsequent notices and
acknowledgements to be executed or delivered pursuant to this Agreement, the other
Transaction Documents and any other documents to be executed or delivered by the Company
pursuant hereto or thereto together with an officer incumbency and specimen signature
certificate, all in form satisfactory to the Bank.

     (c) Legal opinions of outside special counsel to the Company relating to the
enforceability of the Transaction Documents, and the perfection of the ownership and
security interests created hereby, and of outside special counsel or internal counsel to the
Company relating to the power and authority of Company to enter into the Transaction
Documents and its performance thereunder, in each case in form and in substance satisfactory
to it.

     (d) Blocked Account Agreements signed by the Company in form satisfactory to the Bank.

     (e) Acknowledgement copies of such UCC financing statements or other filings as are
required under Section 9.1, such lien search reports as the Bank shall deem advisable with
respect to the Company, and releases of any Adverse Claim on the Purchased Receivables shown
in such reports.

     (f) An acknowledgment from JPMorgan Chase Bank, N.A., as agent under the existing
working capital credit facility agreement (the “Credit Agreement”), that all Purchased
Receivables shall be deemed to be “Sold Receivables” under the Credit Agreement and that
this Agreement constitutes a “Receivables Purchase Agreement” under the Credit Agreement.

 

 

Schedule 3

UCC Details Schedule

	 	 	 
	UCC Information
	 	 
	 
	 	 
	(a) Name:
	 	The Scotts Company LLC
	 
	 	 
	(b) Chief Executive Office:
	 	14111 Scottslawn Road
	 
	 	Marysville, Ohio  43041
	 
	 	 
	(c) State of Organization:
	 	Ohio
	 
	 	 
	(d) Organizational ID No.:
	 	1503259
	 
	 	 
	(e) Tradenames:
	 	None
	 
	 	 
	(f) Changes in Location, Name and
Corporate Organization:
	 	None

 

 

Schedule 4

Form of Portfolio Report

 

 

The Scotts Miracle-Gro Company

Weekly Receivables Portfolio Report

Receivables Purchase Agreement

Sample Report

	 	 	 	 	 	 	 	 	 	 	 	 	 
	PRESENT WEEK	 	Debtor #1	 	 	Debtor #2	 	 	Total	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Gross Receivables
	 	$	110,000,000	 	 	$	110,000,000	 	 	$	220,000,000	 
	Less Receivables not Sold
	 	 	—	 	 	 	—	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Gross Receivables Sold
	 	$	110,000,000	 	 	$	110,000,000	 	 	$	220,000,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Less: Trade Accruals
	 	 	100,000	 	 	 	100,000	 	 	 	200,000	 
	Less: Returns Accruals
	 	 	50,000	 	 	 	50,000	 	 	 	100,000	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Net Receivables Sold
	 	$	109,850,000	 	 	$	109,850,000	 	 	$	219,700,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Less: 5% Dilution
	 	 	5,492,500	 	 	 	5,492,500	 	 	 	10,985,000	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Funded Amount
	 	$	104,357,500	 	 	$	104,357,500	 	 	$	208,715,000	 
	 
	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	PRIOR WEEK	 	Debtor #1	 	 	Debtor #2	 	 	Total	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Gross Receivables
	 	$	—	 	 	$	—	 	 	$	—	 
	Less Receivables not Sold
	 	 	—	 	 	 	—	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Gross Receivables Sold
	 	$	—	 	 	$	—	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Less: Trade Accruals
	 	 	—	 	 	 	—	 	 	 	—	 
	Less: Returns Accruals
	 	 	—	 	 	 	—	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Net Receivables Sold
	 	$	—	 	 	$	—	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Less: 5% Dilution
	 	 	—	 	 	 	—	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Funded Amount
	 	$	—	 	 	$	—	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Present Week Funded Amount
Higher/(Lower) than Prior Week
	 	 	 	 	 	 	 	 	 	$	208,715,000	 

 

Debtor #1

Sample Report

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Assignment	 	Doc. Date	 	 	Net Due dt.	 	 	Amount in DC	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	94498402
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498403
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498404
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498405
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498406
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498407
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498408
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498409
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498410
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498411
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498412
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	 	 	 	 	 	 	 	 	$	110,000,000	 

 

Debtor #2

Sample Report

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Assignment	 	Doc. Date	 	 	Net Due dt.	 	 	Amount in DC	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	94498402
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498403
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498404
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498405
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498406
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498407
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498408
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498409
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498410
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498411
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	94498412
	 	 	3/1/2007	 	 	 	4/15/2007	 	 	$	10,000,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	 	 	 	 	 	 	 	 	$	110,000,000Exhibit 10.1

                                COMPANY AGREEMENT

                                       OF

                            Canyon Ferry Capital LLC

                        A TEXAS LIMITED LIABILITY COMPANY

                        EFFECTIVE AS OF DECEMBER __, 2006

THE MEMBERSHIP  INTERESTS HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF
1933, AS AMENDED,  OR ANY APPLICABLE  STATE  SECURITIES ACTS. SUCH INTERESTS ARE
BEING ACQUIRED FOR INVESTMENT ONLY, AND MAY NOT BE SOLD, PLEDGED,  HYPOTHECATED,
DONATED OR OTHERWISE  TRANSFERRED  IN THE ABSENCE OF AN  EFFECTIVE  REGISTRATION
UNDER SUCH ACTS OR AN OPINION OF COUNSEL  SATISFACTORY  TO THE COMPANY THAT SUCH
REGISTRATION  IS NOT REQUIRED WITH RESPECT TO THE PROPOSED  DISPOSITION  THEREOF
AND THAT SUCH  DISPOSITION  WILL NOT CAUSE THE LOSS OF THE EXEMPTION  UPON WHICH
THE  ISSUER  RELIED  IN  SELLING  THESE  MEMBERSHIP  INTERESTS  TO THE  ORIGINAL
PURCHASER THEREOF.

THE MEMBERSHIP INTERESTS AND THE TRANSFER THEREOF ARE SUBJECT TO QUALIFICATIONS,
LIMITATIONS  AND  RESTRICTIONS  SET  FORTH IN THIS  COMPANY  AGREEMENT,  AND THE
MEMBERSHIP  INTERESTS  SHALL NOT BE  TRANSFERRED  UPON THE BOOKS OF THE  COMPANY
UNTIL THE TERMS AND CONDITIONS OF THIS AGREEMENT HAVE BEEN FULLY COMPLIED WITH.

Company Agreement Canyon Ferry Capital LLC
<PAGE>

                                TABLE OF CONTENTS

ARTICLE I.  FORMATION..........................................................1

   1.1.    FORMATION...........................................................1
   1.2.    PRINCIPAL PLACE OF BUSINESS.........................................1
   1.3.    REGISTERED AGENT OFFICE.............................................1
   1.4.    TERM................................................................1
   1.5.    PURPOSE.............................................................1

ARTICLE II.  RIGHTS AND DUTIES OF MANAGERS.....................................1

   2.1.    MANAGEMENT OF COMPANY VESTED IN THE MANAGERS........................1
   2.2.    CERTAIN POWERS OF MANAGERS..........................................2
   2.3.    LIABILITY FOR CERTAIN ACTS..........................................2
   2.4.    MEMBERS AND MANAGERS HAVE NO EXCLUSIVE DUTY TO COMPANY..............2
   2.5.    AUTHORITY OF MANAGERS TO DEAL WITH AFFILIATES.......................3
   2.6.    NUMBER OF MANAGERS..................................................3
   2.7.    COMPENSATION AND FEES...............................................3

ARTICLE III.  RIGHTS AND OBLIGATIONS OF MEMBERS................................3

   3.1.    LIMITATION OF MEMBERS' LIABILITIES..................................3
   3.2.    NO CONTROL OF BUSINESS OR RIGHT TO ACT FOR COMPANY..................3
   3.3.    PRIORITY AND RETURN OF CAPITAL......................................3
   3.4.    MEETINGS OF THE COMPANY; VOTING RIGHTS..............................4
   3.5.    POWERS RESERVED TO THE MEMBERS......................................4

ARTICLE IV.  COMPANY BOOKS AND RECORDS; AMENDMENT OF AGREEMENT;
             POWER OF ATTORNEY.................................................5

   4.1.    AMENDMENT OF AGREEMENT..............................................5
   4.2.    BOOKS AND RECORDS, ACCOUNTING, REPORTS, TAX ELECTIONS...............5

ARTICLE V.  CONTRIBUTIONS TO THE COMPANY; CAPITAL ACCOUNTS;
            SECURITIES MATTERS.................................................7

   5.1.    INITIAL CAPITAL CONTRIBUTIONS.......................................7
   5.2.    ADDITIONAL CONTRIBUTIONS; ADDITIONAL UNITS; PREEMPTIVE RIGHTS.......7
   5.3.    FAILURE TO CONTRIBUTE ADDITIONAL CONTRIBUTIONS......................7
   5.4.    CAPITAL ACCOUNTS....................................................7
   5.5.    SECURITIES MATTERS..................................................8

ARTICLE VI.  ALLOCATIONS, DISTRIBUTIONS........................................8

   6.1.    ALLOCATIONS OF PROFITS AND LOSSES...................................8
   6.2.    SPECIAL ALLOCATIONS.................................................8
   6.3.    DISTRIBUTIONS......................................................10

ARTICLE VII.  TRANSFERABILITY.................................................11

   7.1.    GENERAL............................................................11
   7.2.    TRANSFERS NOT REQUIRING PRIOR CONSENT..............................11
   7.3.    VOLUNTARY TRANSFER PROCEDURE.......................................11
   7.4.    PURCHASE PRICE.....................................................12
   7.5.    REMEDIES...........................................................13
   7.6.    EFFECT OF TRANSFER OF INTEREST.....................................13

ARTICLE VIII.  ADMISSION AND WITHDRAWAL OF MEMBERS............................13

   8.1.    ADMISSION OF MEMBERS...............................................13
   8.2.    WITHDRAWAL OF MEMBERS..............................................14

ARTICLE IX.  WINDING UP AND TERMINATION.......................................14

Company Agreement Canyon Ferry Capital LLC

                                       i
<PAGE>

   9.1.    EVENTS REQUIRING WINDING UP........................................14
   9.2.    WINDING UP, LIQUIDATION AND DISTRIBUTION OF ASSETS.................14
   9.3     RETURN OF CONTRIBUTION NONRECOURSE TO MEMBERS......................15

ARTICLE X.  MISCELLANEOUS.....................................................15

   10.1.   NOTICE.............................................................15

   10.2.   WAIVER OF NOTICE...................................................15

   10.3.   AUTHORITY TO BIND THE COMPANY......................................15

   10.4.   WAIVER OF ACTION FOR PARTITION.....................................15

   10.5.   INDEMNIFICATION BY COMPANY.........................................15

   10.6.   CONSTRUCTION.......................................................16

   10.7.   ARTICLES AND OTHER HEADINGS........................................16

   10.8.   SEVERABILITY.......................................................16

   10.9.   APPLICATION OF TEXAS LAW...........................................16

   10.10.  DISREGARDED ENTITY TAX TREATMENT INTENDED IF ONE MEMBER............16

   10.11.  PARTNERSHIP TAX TREATMENT INTENDED IF MORE THAN ONE MEMBER;
           TAX ADMINISTRATIVE MATTERS.........................................16

   10.12.  NO PARTNERSHIP INTENDED FOR NON-TAX PURPOSES.......................16

   10.13.  EXPENSES...........................................................17

CERTIFICATION.................................................................18

EXHIBIT A         MEMBER CAPITAL CONTRIBUTIONS................................21
---------         ----------------------------

EXHIBIT B        SERVICING CONTRACT...........................................23
---------        ------------------

Company Agreement Canyon Ferry Capital LLC

                                       ii
<PAGE>

This Company  Agreement  of CANYON FERRY  CAPITAL LLC is adopted by the Managers
and the  undersigned  Members,  for the purpose of forming and operating  CANYON
FERRY  CAPITAL LLC as a Texas limited  liability  company,  and the  undersigned
Managers and Members do each mutually acknowledge and agree as follows:

                                   DEFINITIONS

     The following terms used in this Company Agreement shall have the following
meanings unless otherwise expressly provided herein:

          (i)  "Agreement"  shall mean this  Company  Agreement,  as  originally
     executed,  and as  amended  from  time to time in  writing,  including  all
     exhibits and schedules  hereto,  which concerns the conduct of the business
     of the Company.

          (ii) "Capital  Account" shall mean the Capital Account  maintained for
     each Member in accordance with Section 5.4.

          (iii)  "Capital  Contribution"  shall  mean  any  contribution  to the
     capital of the Company in cash or property by a Member whenever made.

          (iv)   "Certificate  of  Formation"  shall  mean  the  Certificate  of
     Formation  filed  with the  Texas  Secretary  of State for the  purpose  of
     organizing the Company, as the same may be amended or restated from time to
     time.

          (v) "Code" shall mean the Internal  Revenue Code of 1986,  as amended,
     or corresponding provisions of subsequent superseding federal revenue laws.

          (vi)  "Company"  shall mean  Canyon  Ferry  Capital  LLC,  the Company
     organized pursuant to the Certificate of Formation and this Agreement.

          (vii) "Deficit Capital Account" shall mean with respect to any Member,
     the deficit balance, if any, in such Member's Capital Account as of the end
     of the taxable year, after giving effect to the following adjustments:

               (a) credit to such  Capital  Account any amount which such Member
          is  obligated to restore  under  Section  1.704-1(b)(2)(ii)(c)  of the
          Treasury Regulations,  as well as any addition thereto pursuant to the
          next to last  sentence  of  Sections  1.704-2(g)(1)  and (i)(5) of the
          Treasury Regulations, after taking into account thereunder any changes
          during such year in company  minimum gain (as determined in accordance
          with  Section  1.704-2(d)  of  the  Treasury  Regulations)  and in the
          minimum  gain   attributable  to  any  member   nonrecourse  debt  (as
          determined under Section  1.704-2(i)(3) of the Treasury  Regulations);
          and

               (b) debit to such Capital Account the items described in Sections
          1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations.

Company Agreement Canyon Ferry Capital LLC
                                      iii

<PAGE>

This definition of Deficit Capital Account is intended to comply with the
provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and 1.704-2, and
will be interpreted consistently with those provisions.

          (viii)  "Distributable  Cash" shall mean all cash,  revenues and funds
     received by the Company from Company operations, including from the sale of
     any asset to the extent not reinvested in replacement  assets, less the sum
     of the  following to the extent paid or set aside by the  Company:  (a) all
     principal  and  interest  payments on  indebtedness  of the Company and all
     other sums paid to lenders; (b) all cash expenditures  incurred incident to
     the purchase or sale of any asset and the normal operation of the Company's
     business;  (c) reimbursement of expenses and payment of compensation to any
     Manager; and (d) such Reserves as the Managers deem reasonably necessary to
     the proper operation of the Company's business.

          (ix) "Entity" shall mean any general partnership, limited partnership,
     limited liability  company,  corporation,  joint venture,  trust,  business
     trust, cooperative or association.

          (x) "Fair Market Value" shall mean, on the date such Fair Market Value
     is to be determined, the excess of the value of all of the Company's assets
     minus all of the Company's  liabilities.  For purposes of determining  Fair
     Market  Value,  (a) no value shall be placed on the goodwill or name of the
     Company or the  office  records,  files,  statistical  data or any  similar
     intangible  assets of the Company not normally  reflected in the  Company's
     accounting records, (b) there shall be taken into consideration any related
     items of income  earned but not  received,  expenses  incurred  but not yet
     paid,  liabilities fixed or contingent,  prepaid expenses to the extent not
     otherwise  reflected  in the books of account,  and the value of options or
     commitments to purchase  securities  pursuant to agreements entered into on
     or  prior  to  the  valuation  date,  (c)  determination  of  value  of any
     publicly-traded  security or bond,  shall be the most recent  closing  sale
     price quoted for such  security on the exchange on which it is traded,  (d)
     determination  of the  value  of  other  securities  shall  be based on all
     relevant  factors,   including  without   limitation,   type  of  security,
     marketability,  restrictions on disposition, and current financial position
     and operating  results,  (e) the value of real estate shall be deemed to be
     the most recent fair market  value of such real estate as  determined  by a
     real  estate  appraiser  selected  by  the  Managers;  and  (f)  as to  the
     liabilities and any other assets of the Company,  the book value carried on
     the books of the Company in accordance with Generally  Accepted  Accounting
     Principles, consistent with the Company's past practice.

          (xi) "Fiscal Year" shall mean the Company's  fiscal year,  which shall
     end on December 31, of each year.

          (xii)   "Initial   Capital   Contribution"   shall  mean  the  initial
     contribution to the capital of the Company pursuant to this Agreement.

          (xiii) "Invested Capital" means, at any point in time, for any Member,
     the  excess  of (i) the  aggregate  amount  of cash  Capital  Contributions
     contributed  to the Company by such Member over (ii) the  aggregate  amount
     distributed  (or deemed  distributed)  to such  Member  pursuant to Section
     6.3(a)(2).

Company Agreement Canyon Ferry Capital LLC
                                       iv

<PAGE>

          (xiv) "Investor Group" shall mean, collectively, GSSF Master Fund, LP,
     Hoak  Private  Equities  1, LP, C. A. Vose 1971 Trust fbo Lisa Vose  Combs,
     1991  Investment  Company,  and  Federated  North  Texas,  L.P.  (or  their
     respective assigns).

          (xv)  "Manager"  and  "Managers".  As used in this  Agreement the term
     "Manager"  shall  mean each  individual  Manager of the  Company.  The term
     "Managers"  shall  refer,  collectively,  to  all of  the  Managers  of the
     Company.  The  Company  shall at all times  have  three (3)  Managers.  The
     Members  and the  Company  shall take all action  within  their  respective
     power,  including,  without  limitation,  the voting of Units,  required to
     cause the  election  of:  (a) at all times  during  the period in which the
     Servicing Contract is in force and effect, (i) two (2) Managers  designated
     by  Mortgage  Assistance  Corp.,  a Texas  corporation  ("MAC"),  who shall
     initially  be Dan  Barnett  and  Fred  Brown,  and  (ii)  one  (1)  Manager
     designated by the Investor Group, who shall initially be Charles  Warltier;
     or (b) at all times after the date that the Servicing  Contract  expires or
     is otherwise  terminated,  (i) two (2) Managers  designated by the Investor
     Group,  and (ii) one (1)  Manager  designated  by MAC.  The  Members of the
     Company  hereby  elect and  appoint  Dan  Barnett,  Fred Brown and  Charles
     Warltier  as  Managers  of the  Company,  each to serve as such  until  his
     successor is elected or appointed in accordance  with this Agreement or, if
     earlier, until his death, resignation, or removal from office in accordance
     with  this  Agreement.  In the  event  that  any  Manager  (a  "Withdrawing
     Manager")  designated by MAC or the Investor  Group is unable to serve,  or
     once having commenced to serve, is removed or withdraws as a Manager,  such
     Withdrawing  Manager's  replacement  (the  "Substitute  Manager")  shall be
     designated by MAC or the Investor  Group,  as  applicable.  The Company and
     each of the Members agree to take all action within their  respective power
     to cause the election of such  designated  Substitute  Manager,  including,
     without  limitation  (A) the voting of Units to cause the  election of such
     Substitute  Manager as soon as practicable  following his designation,  and
     (B) the instructing of the Manager(s) it had previously designated to serve
     as a Manager,  as the first order of business at the first meeting  thereof
     after such Substitute Manager has been so designated,  to vote to seat such
     designated  Substitute  Manager  as a Manager  in place of the  Withdrawing
     Manager.  In the event  MAC or the  Investor  Group  fails to  designate  a
     Manager as  permitted  in this  definition,  such Manager seat shall remain
     vacant.

          (xvi)  "Member"  shall mean any  person  that signs in person or by an
     attorney-in-fact, or otherwise is a party to the Agreement at the time that
     the Company is formed and is  identified  as a Member in the  Agreement and
     any  Person  who is  subsequently  admitted  as a Member in the  Company in
     accordance  with the Texas Act and the  Agreement,  until such time as such
     Person  withdraws,  is removed,  or is  otherwise no longer a Member of the
     Company.

          (xvii) "Membership  Interest" shall mean a Member's entire interest in
     the Company,  including such Member's right to participate in the decisions
     of the Members,  as reflected  by the ratio of such  Member's  Units to the
     aggregate of the Units of all Members.

          (xviii) "Net  Profits" and "Net Losses"  shall mean the income,  gain,
     loss,  deductions and credits of the Company in the aggregate or separately
     stated,  as appropriate,  determined under the Company's  adopted method of
     accounting at the close of each Fiscal Year.

          (xix) "Offer" shall have the meaning  ascribed to such term in Section
     7.3 hereof.

Company Agreement Canyon Ferry Capital LLC
                                       v

<PAGE>

          (xx) "Offered  Interest" shall have the meaning  ascribed to such term
     in Section 7.3 hereof.

          (xxi)  "Percentage of Interest"  means,  for a Member,  the percentage
     equivalent  of a fraction,  the  numerator  of which is the number of Units
     owned by such Member and the  denominator  of which is the total  number of
     Units owned by all Members.

          (xxii)  "Persons" shall mean any  individuals,  partnerships,  limited
     liability  companies,  corporations,  trusts,  business trusts, real estate
     investment trusts, estates and other associations or business entities.

          (xxiii) "Priority Return" means, at any point in time, for any Member,
     that amount which,  when  considered  together with all amounts  previously
     distributed  (or deemed  distributed)  to such  Member  pursuant to Section
     6.3(a)(1),  will result in such Member having received a cumulative return,
     calculated  at the rate of interest  equal to nine  percent (9%) per annum,
     compounded annually, on such Member's weighted average Invested Capital.

          (xxiv) "Reserves" shall mean, with respect to any fiscal period, funds
     set aside or amounts  allocated  during such period to reserves which shall
     be  maintained  in amounts  deemed  sufficient  by the Managers for working
     capital  and to pay  taxes,  insurance,  debt  service  or  other  costs or
     expenses incident to the ownership or operation of the Company's business.

          (xxv)  "Securities  Acts" shall mean the Securities Act of 1933 or any
     other applicable state securities laws.

          (xxvi) "Selling Member" shall mean any Member who sells,  assigns,  or
     otherwise  transfers for consideration,  all or any portion of a Membership
     Interest.

          (xxvii)  "Servicing   Contract"  shall  mean  that  certain  Servicing
     Contract  between the  Company  and MAC in the form of Exhibit B,  attached
     hereto and incorporated herein by this reference.

          (xxviii)  "Texas Act" shall mean the Texas Limited  Liability  Company
     Law, part of the Texas Business Organizations Code, as amended.

          (xxix) A "Transfer" of all or any part of a Membership  Interest means
     any type of disposition of any right, title or interest  whatsoever in such
     Membership Interest, voluntarily or involuntarily,  directly or indirectly,
     including without limitation any sale, exchange,  assignment,  encumbrance,
     grant of security interest, pledge, hypothecation, gift, transfer by trust,
     transfer by will or intestate succession, or other disposition whatsoever.

          (xxx)  "Transferring  Person" shall have the meaning  ascribed to such
     term in Section 7.3.

Company Agreement Canyon Ferry Capital LLC
                                       vi

<PAGE>

          (xxxi) "Treasury  Regulations" shall mean the proposed,  temporary and
     final  regulations  promulgated  under the Code in effect as of the date of
     filing the Certificate of Formation and the  corresponding  sections of any
     regulations subsequently issued that amend or supersede such regulations.

          (xxxii) "Units" shall mean equity ownership in the Company represented
     by membership units  ("Units").  The Company may issue such total number of
     Units as the Managers shall determine, and may issue partial Units.

                              ARTICLE I. FORMATION

     1.1. Formation. On September 13, 2006, the Company was organized as a Texas
limited  liability company by execution and delivery of Certificate of Formation
to the Texas Secretary of State in accordance with the Texas Act.

     1.2.  Principal  Place Of Business.  The principal place of business of the
Company shall be located at 2614 Main Street,  Dallas,  Texas 75226. The Company
at any time may change the location of such  principal  office and may have such
other offices,  either within or without the State of Texas, as the Managers may
designate or as the business of the Company may require.

     1.3.  Registered Agent Office.  The initial registered agent of the Company
is MAC and the address of the initial  registered agent office of the Company is
2614 Main Street,  Dallas,  Texas  75226.  The  registered  agent office and the
registered  agent may be changed from time to time by the Managers by filing the
prescribed form with the Texas Secretary of State.

     1.4.  Term.  The  existence  of the  Company  shall  be  perpetual,  unless
terminated or dissolved as set forth herein.

     1.5.  Purpose.  The Company may conduct or promote any lawful businesses or
purposes for which limited liability  companies may be organized under the Texas
Act. The Company  shall  possess and may exercise all the powers and  privileges
necessary  or  convenient  to  the  conduct,  promotion,  or  attainment  of the
businesses or purposes of the Company.

                    ARTICLE II. RIGHTS AND DUTIES OF MANAGERS

     2.1. Management of Company Vested in the Managers. The business and affairs
of the Company  shall be managed by the  Managers.  The consent of a majority in
number  of the  Managers  then-serving  shall  be the act of the  Managers.  The
Managers  shall  direct,  manage and control the  business of the Company to the
best of their  ability.  Except  for  situations  in which the  approval  of the
Members is expressly  required  herein and as  specifically  provided in Section
3.5, the Managers shall have full and complete  authority,  power and discretion
to: (i) manage and control the  business,  affairs and  property of the Company;
(ii) make all  decisions  regarding  the  business,  affairs and property of the
Company;  and (iii) perform any and all other acts incident to the management of

Company Agreement Canyon Ferry Capital LLC
                                        1

<PAGE>

the Company's  business subject to the provisions of this Agreement.  Subject to
the limitations in the preceding  sentence,  the right,  power, and authority of
the  Managers  pursuant  to this  Agreement  shall  be  liberally  construed  to
encompass all acts and  activities in which a Company may engage under the Texas
Act.  Notwithstanding  the foregoing or any other provision of this Agreement to
the contrary,  the  Manager(s) of the Company who are designated by the Investor
Group shall have the sole and  exclusive  right and duty to act on behalf of the
Company  in  connection  with any matter  relating  to the  Servicing  Contract,
including,  without  limitation,  exercising  any right  (including the right to
terminate  the  Servicing  Contract  in  accordance  with its  terms)  or remedy
accruing to the Company under the Servicing Contract.

     2.2.  Certain  Powers of Managers.  Without  limiting the generality of the
provisions set forth in Section 2.1 above,  the Managers shall have the power to
act on behalf of the Company:

          (a)  To  enter  into  and  execute,  on  behalf  of the  Company,  all
     agreements, contracts, instruments and related documents in connection with
     the Company's business,  on such terms as the Managers, in their reasonable
     discretion, deem to be in the best interests of the Company.

          (b) To carry out the business of the Company.

          (c) To acquire and enter into, on behalf of the Company,  any contract
     of insurance,  which the Managers  reasonably deem necessary and proper for
     the protection of the Company, for the conservation of its property, or for
     any purpose beneficial to the Company.

          (d) To employ persons (including affiliates of any Manager, subject to
     the  restrictions  on  compensation  to such  affiliates  set forth in this
     Agreement)  in the  operation  of the  Company,  on such terms and for such
     compensation as the Managers shall reasonably determine.

          (e) To employ attorneys, accountants,  consultants, brokers, and other
     outside  entities or  individuals  (including  affiliates  of any  Manager,
     subject to the restrictions on compensation to such affiliates set forth in
     this Agreement) on behalf of the Company.

          (f) To pay, collect, compromise, arbitrate, resort to legal action for
     or otherwise adjust claims or demands of or against the Company.

          (g) To sell assets to another  investor as well as maintain  servicing
     and/or  obtain  other  incentives  as  deemed in the best  interest  of the
     company.

     2.3. Liability for Certain Acts. Each Manager shall perform his duties as a
Manager  in good  faith,  in a  manner  reasonably  believed  to be in the  best
interest of the Company, and with such care as an ordinarily prudent person in a
like position would use under similar circumstances.  If any Manager so performs
the duties as a Manager,  he shall not have any  liability by reason of being or
having  been a  Manager.  No  Manager  shall be liable to the  Company or to any

Company Agreement Canyon Ferry Capital LLC
                                       2
<PAGE>

Member for any loss or damage sustained by the Company or any Member, unless the
loss or damage shall have been the result of fraud,  deceit,  gross  negligence,
willful misconduct or a wrongful taking by such Manager.

     2.4. Members and Managers Have No Exclusive Duty to Company.  The Managers,
and  affiliates of the Managers,  shall not be required to manage the Company as
their  sole and  exclusive  function  and each  Member  and  Manager  and  their
affiliates may have other business  interests and may engage in other activities
in addition to those relating to the Company,  including  business  interests or
other activities that directly compete with the business of the Company.

     2.5.  Authority of Managers to Deal with  Affiliates.  The Managers may, on
behalf of the Company, contract with any person, firm or corporation, including,
without limitation,  any of the Members,  any entity in which any of the Members
or any Manager has a direct or indirect  interest and any  affiliated or related
corporation or other entity,  for the  performance of any and all services which
may at any time be  necessary,  proper,  convenient or advisable to carry on the
business of the Company;  provided that any such  transaction  shall be effected
only on terms  competitive  with those that may be  obtained  from  unaffiliated
persons.  Any goods or services  provided by  affiliates to the Company shall be
pursuant  to a written  contract  which sets forth the goods and  services to be
provided and the compensation to be paid.

     2.6.  Number of  Managers.  The Members by  unanimous  vote may increase or
decrease (but not below one (1)) the number of Managers  constituting all of the
Managers of the Company.

     2.7. Compensation and Fees. Each Manager shall be reimbursed by the Company
for all approved out of pocket expenses  incurred by such Manager in furtherance
of performing his obligations to the Company as Manager.  Except as specifically
provided in the Servicing  Contract,  no Manager shall receive any  compensation
other than  reimbursement of out-of-pocket  expenses incurred by such Manager in
furtherance  of the  business  of the  Company.  No Manager  shall  receive  any
additional compensation except as the Members shall decide.

                 ARTICLE III. RIGHTS AND OBLIGATIONS OF MEMBERS

     3.1. Limitation of Members'  Liabilities.  Based on the Texas Act, a Member
shall not be bound by, or be personally liable for, the expenses, liabilities or
obligations of the Company or the Managers, and such Member's liability shall be
limited  solely  to the  amount of its  Capital  Contributions,  whether  or not
returned to such Member, together with the undistributed share of the profits of
the Company from time to time credited to such Member's  Capital Account and any
money or other property wrongfully paid or conveyed to such Member on account of
its  Capital  Contributions,  including  but not limited to money or property to
which creditors were legally entitled,  paid or conveyed to a Member, and, under
certain circumstances, interest on returned capital.

     3.2. No Control of Business or Right to Act for  Company.  No Member  shall
have any right or authority to act for or bind the Company or to vote on matters
other  than the  matters  set forth in this  Agreement,  except as  specifically
required by applicable law.

Company Agreement Canyon Ferry Capital LLC
                                       3
<PAGE>

     3.3.  Priority and Return of Capital.  Except as provided herein, no Member
shall  have  priority  over  any  other  Member,  as to the  return  of  Capital
Contributions, Net Profits, Net Losses or distributions.

     3.4. Meetings of the Members; Voting Rights.

          (a) Meetings of the Members may be called by the Managers and shall be
     called  by the  Managers  upon the  written  request  of  Members  with the
     authority to vote an aggregate of not less than 49% Percentage of Interest.
     Upon receipt of such a written request, stating the purpose of the proposed
     meeting,  the Managers  shall provide each Member,  within ten (10) days of
     such  request,  with written  notification  of a meeting and the purpose of
     such meeting.  Such meetings  shall be held not less than fifteen (15) days
     or more than sixty (60) days after the receipt of such request and shall be
     held at the principal  place of business or principal  executive  office of
     the Company or such other place as the Members shall unanimously decide.

          (b) At all  meetings  of the  Members,  any  decision,  determination,
     consent,  approval or action by or of the Members  shall be effected by the
     favorable  vote of all of the Members of the Company,  unless the vote of a
     greater  or lesser  number is  otherwise  required  by the Texas  Act,  the
     Certificate of Formation or this Agreement.

          (c) At all  meetings  of the  Members,  a  Member  may  vote by  proxy
     executed in writing by the Member or by a duly authorized attorney-in-fact.
     Such proxy  shall be filed with the Company at least one (1) day before the
     meeting.  Unless  otherwise  provided  in the  proxy,  no  proxy  shall  be
     effective after eleven (11) months after the date of its execution.

          (d) Action  required or  permitted to be taken at a meeting of Members
     may be taken  without a meeting if the action is  evidenced  by one or more
     written  consents  describing  the  action  taken,  signed  by each  Member
     entitled to vote,  and  delivered to a Manager for inclusion in the minutes
     or for filing with the Company records.  Action taken under this section is
     effective when all Members  entitled to vote have signed a consent,  unless
     the consent specifies a different effective date.

          (e) When any notice is required to be given to any Member, a waiver of
     the notice in writing signed by the person entitled to the notice,  whether
     before,  at, or after the time stated  therein,  shall be equivalent to the
     giving of the notice.

     3.5.  Powers  Reserved to the  Members.  At all times  while the  Servicing
Contract is in full force and effect (but not from and after the  expiration  or
other termination of the Servicing  Contract),  each of the following actions on
behalf of the Company shall require the unanimous approval of the Members:

          (a)  the  acquisition  of any real  property in excess of $100,000 per
               parcel of real estate;

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<PAGE>

          (b)  the  acquisition of any asset or portfolio of assets in excess of
               $100,000 per asset;

          (c)  the  execution,  on  behalf  of the  Company,  of  the  Servicing
               Contract,   or  any  amendment  thereto,   to  service  the  REOs
               referenced  therein and any additional  portfolio of assets owned
               by the Company;

          (d)  the sale,  exchange or other  disposition of substantially all of
               the assets of the Company;

          (e)  the filing by the Company of any voluntary petition in bankruptcy
               or delivery of any assignment for the benefit of creditors;

          (f)  the lending of Company  funds to any Person  (except as otherwise
               set forth herein), or obligating the Company as surety, guarantor
               or accommodation  party, except that the Company shall be able to
               guarantee  credit  accounts with suppliers in the ordinary course
               of business;

          (g)  the  incurrence of any debt on behalf of the Company,  other than
               trade  debt  incurred  in the  ordinary  course of the  Company's
               business;

          (h)  the  investment  or  participation  by the  Company  in any other
               entity;

          (i)  the merger or consolidation of the Company;

          (j)  the   admission  of  new  Members  of  the  Company,   except  as
               specifically provided in Section 8.1;

          (k)  the  establishment of Reserves to help meet  anticipated  Company
               expenses and the investment of such Reserves pending utilization;
               or

          (l)  The opening of any bank or investment account;

ARTICLE IV. COMPANY BOOKS AND RECORDS; AMENDMENT OF AGREEMENT; POWER OF ATTORNEY

     4.1. Amendment of Agreement.

          (a)  Amendment.  Any amendment to this  Agreement  must be approved in
     writing by all of the Members and by the Managers.

          (b) Recording of Amendment.  In making any amendments,  there shall be
     prepared and filed for  recordation  by the  Managers  such  documents  and

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<PAGE>

     certificates,  if any, as shall be required to be prepared  and filed under
     the Texas Act and  under the laws of the other  jurisdictions  in which the
     Company is then formed or qualified.

     4.2. Books and Records, Accounting, Reports, Tax Elections.

          (a)  Availability.  At all times during the  existence of the Company,
     the Managers shall keep or cause to be kept full and true books and records
     of account.  Such books and records of account  shall be  maintained at the
     principal place of business of the Company or such other place or places as
     may be  determined  by the Managers  from time to time.  In  addition,  the
     Company shall  maintain at its  principal  office (i) a current list of the
     full name and last  known  business  address  of each  Member  set forth in
     alphabetical  order,  (ii) a copy of  this  Agreement  and  all  amendments
     thereto,  together with executed copies of any powers of attorney  pursuant
     to which this Agreement or any amendment has been executed, (iii) copies of
     the Company's federal, state and local tax returns and reports, if any, for
     the  three  (3) most  recent  years,  and (iv)  accounting  records  of the
     Company.  The Company shall keep all original titles to real property owned
     by the Company at a title  company to be designated by the Managers as soon
     as  commercially  practical.  Any Member or his, her or its duly authorized
     representative  shall  have the  right to  inspect  and copy the  books and
     records of the Company upon reasonable notice during business hours.

          (b)  Financial  Reports.  The Managers  shall cause to be prepared and
     delivered to each Member,  at the expense of the  Company,  such  financial
     reports as shall be decided by the Managers.

          (c)  Income Tax  Information.  The  Managers  shall  cause  income tax
     returns  for the Company to be prepared  by the  Company's  accountant  and
     filed with the  appropriate  authorities  and shall  furnish to each Member
     within ninety (90) days after the close of the taxable year of the Company,
     all tax information  with respect to the Company as may be required by each
     Member for the preparation of his, her or its individual  federal and state
     tax returns, at the expense of the Company.

          (d) Accounting Principles.  The Company's books shall be maintained in
     accordance with generally accepted accounting  principles determined by the
     Company's  accountants,  which accounting  principles shall be consistently
     applied.

          (e) Bank  Accounts.  The Managers are  authorized  to open one or more
     bank or investment accounts for and in the name of the Company and withdraw
     funds or sign checks  withdrawing  funds from each such bank or  investment
     account for the sole purpose of paying all ordinary and  necessary  charges
     and expenses incident to or arising out of the operations of the Company in
     the  ordinary  course of business  (including  expenses  arising out of the
     Servicing  Contract provided that the Servicing  Contract has been approved
     by  the  Members  as  required   herein)  or  to  make   distributions   of
     Distributable  Cash to the  Members,  and that such  banks  and  investment
     companies  be, and hereby are,  authorized  and directed to honor,  pay and
     charge to the  account of the Company all checks and orders for the payment
     of money so drawn when so signed; provided,  however, that the signature of
     at least one  Manager  designated  by the  Investor  Group and one  Manager
     designated  by MAC shall be required to withdraw  funds  (whether by check,

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                                       6
<PAGE>

     wire  transfer or  otherwise)  from any such account in any amount  greater
     than $2,000.  The Managers are  authorized  to certify to any bank or other
     investment  company  a copy of  this  Section  4.2(e)  and  the  names  and
     signatures of the Company's  Managers  authorized  and/or  required to sign
     checks  as  provided  in this  Section  4.2(e),  and  such  bank  or  other
     investment company is hereby authorized to rely upon such certificate until
     formally advised of any changes therein.

ARTICLE V. CONTRIBUTIONS TO THE COMPANY; CAPITAL ACCOUNTS; SECURITIES MATTERS

     5.1. Initial Capital  Contributions.  Each Member shall contribute the cash
amount set forth  opposite such Member's name on Exhibit A, attached  hereto and
incorporated herein, as his, her or its Initial Capital Contribution.  Exhibit A
shall  be  revised  from  time  to time  as  necessary  to  record  all  Capital
Contributions  and all  changes in the  Company  and  ownership  of the  Company
effected in accordance with this Agreement, and Exhibit A as so revised shall be
furnished to each Member.

     5.2. Additional Contributions; Additional Units; Preemptive Rights.

          (a) Unless  approved  by all of the  Members,  no  additional  Capital
     Contributions shall be required from any Members.  Upon such approval,  the
     Managers  shall  give  written  notice to each  Member of the amount of any
     required additional Capital Contributions, and each Member shall deliver to
     the Company his, her or its pro rata share thereof based upon such Member's
     Percentage of Interest no later than ten (10) days  following the date such
     notice is given.

          (b) Unless approved by all of the Members, the Company shall not offer
     additional  Units or any other  interest  in the  Company for sale to third
     parties.  If  authorized  by the  Members,  the  purchase  price  for which
     additional  Units shall be offered  shall be  determined  by the  Managers.
     Purchasers  of  additional  Units  pursuant to this  paragraph  who are not
     already  Members  shall be admitted to the Company as Members in accordance
     with  Section  8.1  hereof.  The  Managers  are  authorized  to adjust  the
     Percentages  of  Interest  of the  Members as  appropriate  to reflect  the
     issuance of additional Units.  Exhibit A shall be revised from time to time
     as necessary to record all changes in the ownership of the Company effected
     in  accordance  with this  section,  and  Exhibit A as so revised  shall be
     furnished to each Member.

          5.3. Failure to Contribute Additional Contributions. In the event that
     a Member does not  contribute  his,  her or its  portion of the  additional
     Capital  Contribution  provided for in Section  5.2(a) when due,  then such
     Member's Membership Interest shall be reduced pro-rata by the proportion of
     the unpaid additional Capital  Contribution of such Member to the aggregate
     of all  Capital  Contributions  actually  made by such  Member  pursuant to
     Sections 5.1 and 5.2.

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                                       7
<PAGE>

     5.4. Capital Accounts.

          (a) A Capital Account will be maintained for each Member in accordance
     with Section  1.704-1(b)(2)(iv) of the Treasury Regulations.  Each Member's
     Capital  Account will be increased  by: (i) the amount of money or the fair
     market value of property  contributed  by such Member to the Company;  (ii)
     allocations  to each Member of Net Profits;  and (iii)  allocations to each
     Member of income  described in Code  Section  705(a)(1)(B).  Each  Member's
     Capital  Account will be decreased by: (a) the amount of money  distributed
     to each  Member  by the  Company;  (b) the Fair  Market  Value of  property
     distributed to each Member by the Company,  net of  liabilities  secured by
     such distributed  property that such Member is considered to assume or take
     subject to, pursuant to Code Section 752; (c) allocations to the Member for
     expenditures  described in Code Section  705(a)(2)(B);  (d)  allocations to
     each  Member of Net  Losses;  and (e)  allocations  to the  account of such
     Member of other Company  losses and deductions as set forth in the Treasury
     Regulations.

          (b) In the  event of a  permitted  sale or  exchange  of a  Membership
     Interest in the Company, the Capital Account of the transferor shall become
     the  Capital  Account  of the  transferee  to the  extent it relates to the
     transferred  Membership  Interest in accordance  with Treasury  Regulations
     Section 1.704-1(b)(2)(iv).

          (c) A Member shall not receive out of the Company's  property any part
     of its Capital  Contribution  until all liabilities of the Company,  except
     liabilities to Members on account of their Capital Contributions, have been
     paid or there remains property of the Company sufficient to pay them.

     5.5. Securities Matters.  The undersigned Members understand:  (i) that the
Membership Interests evidenced by this Agreement have not been, and will not be,
registered  under the  Securities  Acts  because  the  Company is issuing  these
Membership  Interests  in reliance  upon the  exemptions  from the  registration
requirements  of the Securities  Acts; (ii) that the Company has relied upon the
fact that the Membership Interests are to be held by each Member for investment;
and (iii) that exemption from registrations  under the Securities Acts would not
be available if the  Membership  Interests were acquired by a Member with a view
to distribution.

                     ARTICLE VI. ALLOCATIONS, DISTRIBUTIONS

     6.1. Allocations of Profits and Losses.

          (a) Except as provided in Section  6.2, Net Profits of the Company for
     each Fiscal Year shall be allocated to each Member in  proportion  to their
     Percentage of Interests.

          (b) Except as provided in Section  6.2,  Net Losses of the Company for
     each Fiscal Year shall be allocated to the Members in  proportion  to their
     Percentage of Interests.

     6.2. Special Allocations.

     Notwithstanding any other provisions of this Agreement to the contrary:

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                                       8
<PAGE>

          (a) No allocation of loss, deduction, and/or expenditures described in
     Code Section  705(a)(2)(B)  shall be charged to the Capital  Account of any
     Member if such allocation would cause such Member to have a Deficit Capital
     Account.  The amount of the loss,  deduction and/or expenditure which would
     have caused a Member to have a Deficit  Capital  Account  shall  instead be
     charged to the Capital  Account of each Member who would not have a Deficit
     Capital  Account  as a  result  of the  allocation,  in  proportion  to its
     respective Capital Contributions.

          (b) In the event any Member  unexpectedly  receives  any  adjustments,
     allocations,  or  distributions  described in Treasury  Regulation  Section
     1.704-1(b)(2)(ii)(d)(4),(5),  or (6),  which  create or  increase a Deficit
     Capital  Account of such  Member,  then  items of  Company  income and gain
     (consisting of a pro rata portion of each item of Company income, including
     gross  income,  and gain for such year and, if  necessary,  for  subsequent
     years) shall be specially credited to the Capital Account of such Member in
     an amount and manner sufficient to eliminate, to the extent required by the
     Treasury Regulations,  the Deficit Capital Account so created as quickly as
     possible.  This  provision is intended to  constitute  a "qualified  income
     offset"    within   the    meaning   of   Treasury    Regulation    Section
     l.704-1(b)(2)(ii)(d)(3)  and shall be applied  and  interpreted  consistent
     therewith.

          (c) In the event any Member  would have a Deficit  Capital  Account at
     the end of any Fiscal Year which is in excess of the sum of any amount that
     such  Member  is  obligated  to  restore  to  the  Company  under  Treasury
     Regulations Section 1.704-l(b)(2)(ii)(c) and such Member's share of minimum
     gain as defined in Treasury Regulation Section  1.704-2(g)(1),  the Capital
     Account of such Member  shall be specially  credited  with items of Company
     income  (including  gross  income) and gain in the amount of such excess as
     quickly as possible.

          (d)  Notwithstanding  any other  provision  of this Section 6.2 to the
     contrary,  if there is a net  decrease  in the  Company's  minimum  gain as
     defined in Treasury  Regulation Section 1.704-2(d) during a taxable year of
     the Company, then each Member shall be allocated items of income (including
     gross  income)  and gain for such year  (and if  necessary  for  subsequent
     years) equal to that Member's share of the net decrease in Company  minimum
     gain.  This  Section  6.2(d) is intended  to comply  with the minimum  gain
     chargeback  requirement of Treasury Regulation Section 1.704-2(f) and shall
     be  interpreted  consistently  therewith.  If in any taxable  year that the
     Company has a net decrease in the Company's  minimum gain, the minimum gain
     chargeback requirement would cause a distortion in the economic arrangement
     among  the  Members  and it is not  expected  that the  Company  will  have
     sufficient  other  income to correct that  distortion,  the Managers may in
     their  discretion  (and shall,  if  requested to do so by a Member) seek to
     have the  Internal  Revenue  Service  waive  the  minimum  gain  chargeback
     requirements in accordance with Treasury Regulation Section 1.704-2(f)(4).

          (e) Items of Company  loss,  deduction and  expenditures  described in
     Code Section 705(a)(2)(B) which are attributable to any nonrecourse debt of
     the Company and are  characterized as member  nonrecourse  deductions under
     Treasury  Regulation  Section 1.704-2(i) shall be allocated to the Members'
     Capital Accounts in accordance with Treasury Regulation Section 1.704-2(i).

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<PAGE>

          (f) Beginning in the first taxable year in which there are allocations
     of "nonrecourse  deductions," as described in Treasury  Regulation  Section
     1.704-2(b), such deductions shall be allocated to the Members in accordance
     with,  and as a part of, the  allocations of Company Net Profit or Net Loss
     for such period.

          (g) In  connection  with a Capital  Contribution  by a new or existing
     Member as  consideration  for one or more Units,  or in connection with the
     liquidation  of the Company or a  distribution  of money or other  property
     (other  than a de minimis  amount) by the  Company to a retiring  Member as
     consideration  for one or more Units,  the Capital  Accounts of the Members
     shall be adjusted to reflect a revaluation  of Company  property  including
     intangible   assets  in  accordance   with  Treasury   Regulation   Section
     1.704-1(b)(2)(iv)(f).     If    under    Treasury     Regulation    Section
     1.704-1(b)(2)(iv)(f)  Company  property  that has been revalued is properly
     reflected in the Capital Accounts and on the books of the Company at a book
     value that  differs  from the  adjusted  tax basis of such  property,  then
     depreciation, depletion, amortization and gain or loss with respect to such
     property  shall be shared among the Members in a manner that takes  account
     of the  variation  between the adjusted tax basis of such  property and its
     book value, in the same manner as variations between the adjusted tax basis
     and Fair Market Value of property contributed to the Company are taken into
     account in determining  the Members' shares of tax items under Code Section
     704(c).

          (h) All  recapture  of income tax  deductions  resulting  from sale or
     disposition  of Company  property shall be allocated to the Members to whom
     the deduction that gave rise to such  recapture was allocated  hereunder to
     the extent  that such Member is  allocated  any gain from the sale or other
     disposition of such Company property.

          (i) Any credit or charge to the Capital  Accounts of the Members under
     this  section  6.2 shall be taken  into  account  in  computing  subsequent
     allocations  of  profits  and  losses,  so that the net amount of any items
     charged or  credited to Capital  Accounts  shall be equal to the net amount
     that would  have been  allocated  to the  Capital  Account  of each  Member
     pursuant  to the  provisions  of this  Article if the  special  allocations
     required by this Section 6.2 had not occurred.

          (j)  In  accordance  with  Code  Section   704(c)(1)(A)  and  Treasury
     Regulation Section 1.704-3,  if a Member  contributes  property with a fair
     market  value  that  differs  from  its  adjusted  basis  at  the  time  of
     contribution,  income,  gain,  loss  and  deductions  with  respect  to the
     property shall, solely for federal income tax purposes,  be allocated among
     the Members so as to take  account of any  variation  between the  adjusted
     basis of such property to the Company and its fair market value at the time
     of contribution.

     6.3. Distributions.

          (a)  Notwithstanding  anything  herein to the contrary,  Distributable
     Cash of the Company may be distributed to the Members, at such times and in
     such  amounts as the Managers may in their sole  discretion  determine,  as
     follows:

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<PAGE>

               1) First,  100% to all Members in proportion to their  respective
          amounts  of  Invested  Capital,  until they each have  received  their
          unpaid Priority Return;

               2) Second,  100% to all Members in proportion to their respective
          amounts  of  Invested  Capital,  until they have  received  cumulative
          distributions equal to their aggregate Invested Capital; and

               3) Third,  to the  Members in  accordance  with their  respective
          Percentages of Interest.

                          ARTICLE VII. TRANSFERABILITY

     7.1.  General.  Except as provided  herein or as otherwise  consented to in
writing  by the  Members,  a  Member  shall  not  Transfer  all or any part of a
Membership Interest. Any purported or attempted Transfer of all or any part of a
Membership  Interest in violation of this Article VII shall be null and void and
the purported  transferee of such invalid Transfer shall not be entitled to have
any interest in the Company  transferred  to such  purported  transferee  on the
books of the Company.

     7.2.  Transfers Not Requiring  Prior Consent.  A Member may,  without first
obtaining the written consents  required in Section 7.1 above,  Transfer by sale
or gift all or any undivided share of its Membership Interest to any one or more
of the following: (i) a partnership, limited liability company or corporation in
which fifty  percent  (50%) or more of the capital and profit  interests (in the
case of a partnership or a limited liability  company) or in which fifty percent
(50%) or more of the capital stock (in the case of a corporation) is owned by or
for the benefit of the Member;  (ii) the  Member's  partners (if the Member is a
partnership),  the  Member's  members  (if the  Member  is a  limited  liability
company) or the Member's  shareholders  (if the Member is a corporation);  (iii)
the Company;  and (iv) a Member or Members;  provided any such transferee  shall
agree in writing to be bound by the terms and  conditions  of this  Agreement as
they  applied  to the  transferring  Member  on the  date of  execution  of this
Agreement  in  the  same  manner  as if the  transferring  Member  had  retained
ownership of its Membership  Interest (upon meeting the foregoing  requirements,
such transferee shall be referred to as a "Permitted Transferee").

     7.3. Voluntary Transfer Procedure.

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                                       11
<PAGE>

          (a) A  Member  who  desires  to  Transfer  all  or  any  portion  of a
     Membership Interest (the "Transferring Person") to a third party, except as
     permitted under Section 7.2, shall obtain from such third party a bona fide
     written   offer  to  purchase  such   Membership   Interest  (the  "Offered
     Interest"),  stating the terms and conditions upon which the purchase is to
     be  made  and  the  consideration  offered  therefor  (the  "Offer").   The
     Transferring  Person  shall give written  notification  to the Managers and
     each of the Members, by certified mail or personal delivery, of his, her or
     its intention to Transfer the Offered Interest,  furnishing to the Managers
     and each Member a copy of the Offer.

          (b) Upon receipt of the written notice  required  under  paragraph (a)
     above,  the  Company  and the  Members  shall  comply  with  the  following
     procedure:

               (i) The  Company  shall  have  thirty  (30) days from the date of
          delivery of the notice  required by paragraph  (a) above to notify the
          Transferring Person in writing of the Company's election to redeem all
          or a part of the Offered  Interest at the purchase  price set forth in
          Section 7.4 of this Agreement,  which decision of the Company shall be
          made by an affirmative vote of all of the Members.

               (ii) If the  Company  does not elect to redeem all of the Offered
          Interest,  the other Members shall have the right,  within thirty (30)
          days of the  date of the  notice  of  nonelection  by the  Company  or
          election  as to less  than all of the  Offered  Interest,  to elect to
          purchase the remaining Offered Interest,  and the Transferring  Person
          shall sell such  interest to the other  Members at the purchase  price
          set forth in Section  7.4 of this  Agreement.  Any Member  desiring to
          acquire  any or  all of the  Offered  Interest  shall  deliver  to the
          Managers  and each of the Members a written  election to purchase  the
          Offered Interest.

               (iii) If two or more Members of the Company elect to exercise the
          option to purchase  the Offered  Interest  then,  in the absence of an
          agreement  between  them,  each Member shall have priority to purchase
          such   proportion  of  the  available   interest  that  such  Member's
          Percentage of Interest bears to the total Percentage of Interests held
          by all other Members electing to purchase.  The portion of the Offered
          Interest not purchased on such a priority  basis shall be allocated in
          one or more  successive  allocations  to  those  Members  electing  to
          purchase  more than the  proportion  of the  Percentage of Interest to
          which they have a priority  right, up to the proportion of the Offered
          Interest specified in their respective notices, in the proportion that
          the  Percentage  of Interests  held by each of them bears to the total
          Percentage of Interest held by all of them.

               (iv) If the Company and the Members do not exercise  their rights
          to redeem or purchase, as the case may be, all of the Offered Interest
          pursuant  to the terms  set forth in  Section  7.3(b)(i)  and  Section
          7.3(b)(ii)  above,  then  the  Transferring  Person  shall  be free to
          Transfer the remaining  part of the Offered  Interest to the bona fide
          purchaser set forth in the Offer under the terms of the Offer, subject
          to the  restrictions on such Transfer imposed by this Agreement or any
          other agreement or by law.

               (v) If the Company exercises its right to redeem all or a part of
          the Offered  Interest in accordance with Section  7.3(b)(i) above, the
          Transferring  Person shall be obligated to sell such Offered  Interest
          to the Company.  If any or all of the Members exercise their rights to
          purchase  all or a part of the  Offered  Interest in  accordance  with
          Section  7.3(b)(ii) above, the Transferring  Person shall be obligated
          to sell such Offered Interest to such exercising Members.  The closing
          of the Transfer of the Offered Interest from the  Transferring  Person
          to the Company or any Members  pursuant to this Section  shall be held
          at the  principal  offices of the  Company  not later than ninety (90)
          days after receipt of notice required by paragraph (a) above.

          (c) In the  event of the  Transfer  of all or any part of any  Offered
     Interest by a Transferring Person to any third party, and as a condition to

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                                       12
<PAGE>

     recognizing the effectiveness and binding nature of any such Transfer,  the
     Company may require the Transferring  Person or Transferring Person and the
     third party, as the case may be, to execute, acknowledge and deliver to the
     Members or Managers such instruments of transfer, assignment and assumption
     and such other certificates,  representations and documents, and to perform
     all such other acts which the Managers deem necessary or desirable.

     7.4. Purchase Price. The purchase price to be paid to a Transferring Person
for all or any part of such Transferring  Person's  Membership Interest redeemed
by the Company or purchased by a Member under Section  7.3(b) shall be the lower
of (i) the purchase price set forth in the Offer for such  Membership  Interest,
or (ii) the product of (A) the Percentage of Interest represented by the Offered
Interest  multiplied  by (B) the Fair Market Value of the Company as of the date
of such redemption or purchase.

     7.5.  Remedies.  The Members  agree that a violation by any of them of this
Article VII will cause such  damage to the  Company and to the other  Members as
will be  irreparable  and the  exact  amount  of  which  will be  impossible  to
ascertain. For this reason, the Members agree that the Company shall be entitled
as a matter of right to a decree of  specific  performance  of the terms of this
Article VII or for  temporary or permanent  injunctive  relief from any court of
competent  jurisdiction  restraining  any  attempted  or  purported  Transfer of
interest in the Company in  violation  of this  Article  VII. In  addition,  any
Member  attempting  or  purporting  to  Transfer  an  interest in the Company in
violation of this Article VII and the purported transferee  participating in the
attempted  or  purported  Transfer,  shall be jointly  and  severally  liable to
reimburse and pay the Company for any and all costs, fees and expenses including
without limitation any attorneys', accountants', and other professional fees and
expenses  actually  expended or incurred by the Company in  connection  with any
such violation, whether or not litigation ensues. The remedies set forth in this
Section 7.5 shall be  cumulative  and in addition to whatever  other  rights and
remedies the Company and the Members may have to protect their respective rights
in the event of a violation of the  provisions  of this  Article VII,  including
without limitation the right to recover damages including actual,  compensatory,
consequential, incidental and punitive damages.

     7.6.  Effect of Transfer of Interest.  Upon the Transfer of any interest in
the  Company  in  accordance  with  the  provisions  of this  Article  VII,  the
transferee of such interest shall own and hold such interest in the Company as a
transferee,  subject  to all the  terms,  conditions,  and  limitations  of this
Agreement,  including without limitation  restriction on any further Transfer of
such interest as provided in this Article VII.  Consent to such  Transfer  shall
not  constitute  consent to the  admission of the  transferee as a Member of the
Company. A transferee may become a Member only in accordance with the provisions
of Section 8.1.  Unless a  transferee  is admitted to the Company as a Member in
accordance  with the  provisions  of Section 8.1, such  transferee  shall not be
entitled to any of the rights or benefits of a Member hereunder except the right
to the share of  profits  and losses and  distributions  of assets  based on the
transferee's  Percentage  of Interest.  Without  limiting the  generality of the
preceding  sentence,  such  transferee  shall  have no right  (i) to vote  upon,
approve,  or consent to, any matter  requiring the vote,  approval or consent of
the Members,  or (ii) to receive any information from the Company of the kind to
which Members are entitled, or any other information.

Company Agreement Canyon Ferry Capital LLC

                                       13
<PAGE>

                ARTICLE VIII. ADMISSION AND WITHDRAWAL OF MEMBERS

     8.1.  Admission  of Members.  No  additional  Member may be admitted to the
Company,  except upon the prior  written  consent of all of the Members and upon
such additional Member signing, in person or by  attorney-in-fact,  or otherwise
becoming a party to this Agreement;  provided,  however, each Permitted Assignee
(as defined in Section 7.2) shall  automatically be deemed to be a Member of the
Company regardless of whether or not the Members consented to said transfer.  No
Member shall have the power to grant a transferee, and no transferee shall have,
the right to become a Member of the Company except as  specifically  provided in
the  preceding  sentence.  If a Member who is an  individual  dies or a court of
competent jurisdiction adjudges him or her to be incompetent to manage person or
property, the Member's executor, administrator,  guardian, conservator, or other
legal  representative may exercise all of the Member's rights for the purpose of
settling his estate or  administering  his property and shall have any power the
Member had to give his or her assignee a  Percentage  of Interest in Net Profits
and Net  Losses.  Said  assignee  may not be admitted as a Member of the Company
except upon the prior written consent of the Members.

     8.2.  Withdrawal of Members.  No Member shall have any right to withdraw or
resign as a Member of the Company prior to the dissolution and winding up of the
Company,  except  upon a  Transfer  of all of his,  her or its  interest  in the
Company in accordance with the terms and conditions of Article VII. A Member who
resigns or whose  Membership  Interest is otherwise  terminated  for any reason,
shall not be entitled to receive any  distributions  to which such Member  would
have been entitled had such Member remained a Member. Damages for breach of this
section 8.2 shall be monetary  damages  only and not specific  performance,  and
such damages may be offset  against  distributions  by the Company to which such
Member would otherwise be entitled.

                     ARTICLE IX. WINDING UP AND TERMINATION

     9.1.  Events  Requiring  Winding Up. The Company shall be wound up upon the
occurrence of any of the following events:

          (a) Unanimous written consent of the Members; or

          (b) The  consent of a majority in number of the  remaining  Members to
     wind up the Company  within  ninety (90) days after the Company is wound up
     in accordance with the Texas Act.

     9.2.  Winding  Up,  Liquidation  and  Distribution  of Assets.  If an event
requiring the winding up of the Company  occurs,  the Managers shall wind up the
business of the Company and shall apply or distribute the assets of the Company,
or shall  sell the  assets  of the  Company  and  apply or  distribute  proceeds
thereof, as promptly as practicable and in the following order of priority:

Company Agreement Canyon Ferry Capital LLC

                                       14
<PAGE>

          (a) First, if there are sufficient  assets  therefor,  to creditors of
     the Company,  including Members who are creditors,  to the extent permitted
     by law, in satisfaction  of liabilities of the Company  (whether by payment
     or the making of  reasonable  provision  for  payment  thereof)  other than
     liabilities for  distributions  to Members;  and if there are  insufficient
     assets, such claims and obligations shall be paid or provided for according
     to their  priority and,  among claims and  obligations  of equal  priority,
     ratably to the  extent of assets  available  therefor;  and if there is any
     contingent, conditional, or unmatured debt, claim, obligation, or liability
     known to the Company,  a reserve shall be established  for it in accordance
     with law, in an amount  determined  by the Managers to be  appropriate  for
     such purpose; and

          (b) Second,  any remaining  assets,  to the Members in accordance with
     the priorities set forth in Section 6.3(a).  The Company may offset damages
     for breach of this  Agreement  by a Member  against  the  amount  otherwise
     distributable to such Member hereunder.

          At  the  time  final  distributions,  exclusive  of any  reserves  for
     contingent,  conditional or unmatured  items,  are made in accordance  with
     clause  (c)  above,  the  Company  shall  terminate,  but,  if at any  time
     thereafter, any reserve is released because the Managers determine the need
     for such  reserve  is ended,  then such  reserve  shall be  distributed  in
     accordance with clause (c) above.

     9.3. Return of Contribution  Nonrecourse to Members.  Except as provided by
law or as  expressly  provided in this  Agreement,  upon winding up, each Member
shall look solely to the assets of the Company for the return of his, her or its
Capital  Contribution.  If the Company  property  remaining after the payment or
discharge of the debts and  liabilities of the Company is insufficient to return
the Capital  Contribution  of one or more Members,  such Member or Members shall
have no recourse against any other Member or any Manager.

                            ARTICLE X. MISCELLANEOUS

     10.1.  Notice. Any notice required or permitted to be given pursuant to the
provisions of the Texas Act or this Agreement  shall be effective as of the date
personally delivered,  delivered via facsimile with electronic confirmation,  or
delivered via  overnight  express  mail,  or if sent by certified  mail,  return
receipt  requested,  three (3) days after being deposited with the United States
Postal  Service,  prepaid and  addressed to the  intended  recipient at the last
known address as shown in the Company's records.

     10.2.  Waiver of Notice.  Whenever any notice is required to be given under
the provisions of the Texas Act or this Agreement, a waiver thereof, in writing,
signed by the person  entitled to such notice shall be deemed  equivalent to the
giving of such notice.

     10.3.  Authority to Bind the Company.  Unless  authorized  to do so by this
Agreement or by the Managers,  no  attorney-in-fact,  employee or other agent of
the Company shall have any power or authority to bind the Company in any way, to
pledge its credit or to render it liable  pecuniary  for any purpose.  No Member

Company Agreement Canyon Ferry Capital LLC

                                       15
<PAGE>

shall have any power or authority to bind the Company unless the Member has been
authorized by the Managers to act as an agent of the Company.

     10.4. Waiver of Action For Partition.  Each Member  irrevocably  waives any
right to maintain an action for  partition  with  respect to the property of the
Company during the term of the Company.

     10.5.  Indemnification By Company. The Company may indemnify any person who
was or is a party defendant or is threatened to be made a party defendant to any
threatened,  pending or completed  action,  suit or  proceeding,  whether civil,
criminal,  administrative,  or investigative  (other than an action by or in the
right of the Company) by reason of the fact that he is or was a Manager, Member,
employee  or agent of the  Company,  or is or was  serving at the request of the
Company,  against  expenses,  including  attorney's fees,  judgments,  fines and
amounts paid in settlement  actually and reasonably  incurred in connection with
such action,  suit or  proceeding if the Managers  determine  that he, she or it
acted  in good  faith  and in a  manner  reasonably  believed  to be in the best
interest of the Company,  and with respect to any criminal action or proceeding,
had no reasonable cause to believe the conduct was unlawful.  The termination of
any action, suit, or proceeding by judgment,  order, settlement,  conviction, or
upon a plea of nolo contendere or its  equivalent,  shall not in itself create a
presumption  that the  Person  did or did not act in good  faith and in a manner
which was  reasonably  believed to be in the best interest of the Company,  and,
with respect to any  criminal  action or  proceeding,  had  reasonable  cause to
believe the conduct was unlawful.

     10.6.  Construction.  Whenever  the  context  requires,  as  used  in  this
Agreement,  the singular shall include the plural and the masculine gender shall
include the feminine and neuter genders, and vice versa.

     10.7.  Articles  and Other  Headings.  The  Articles  and  headings in this
Agreement  are for  reference  purposes only and shall not affect the meaning or
interpretation thereof.

     10.8.  Severability.  If any  provision  of  this  Agreement  is held to be
invalid, illegal or unenforceable,  the remainder of this Agreement shall not be
affected.

     10.9. Application of Texas Law. This Agreement will be governed by the laws
of the  State  of  Texas,  without  giving  effect  to  its  conflicts  of  laws
provisions.

     10.10. Disregarded Entity Tax Treatment Intended If One Member. At any time
when the Company has only one (1) Member, the parties intend that the provisions
of this Agreement  will qualify the Company to be taxed as a disregarded  entity
under the Code and not as a corporation,  and the Managers and each Member shall
take such action from time to time as may be necessary or desirable to carry out
such intention.  The Managers may make any tax elections for the Company allowed
under the Code or the tax laws of any state or other jurisdiction  having taxing
jurisdiction over the Company.

     10.11.  Partnership  Tax  Treatment  Intended If More Than One Member;  Tax
Administrative  Matters.  At any time when  there is more than one Member of the

Company Agreement Canyon Ferry Capital LLC

                                       16
<PAGE>

Company,  the parties  intend that the provisions of this Agreement will qualify
the  Company  to  be  taxed  as a  partnership  under  the  Code  and  not  as a
corporation,  and the Managers  and Members  shall take such action from time to
time as may be necessary or desirable to carry out such intention.  The Managers
may make any tax  elections  for the Company  allowed  under the Code or the tax
laws of any state or other  jurisdiction  having  taxing  jurisdiction  over the
Company.  The Members  hereby  designate  MAC as the tax matters  partner of the
Company  pursuant to Section  6231(a)(7) of the Code. The person  designated tax
matters  partner shall not take any action  contemplated by Section 6222 through
6232 of the Code without the approval of the Members.

     10.12.  No  Partnership  Intended  For Non-Tax  Purposes.  The  undersigned
Members  have  formed the Company  under the Texas Act,  and as long as there is
more than one Member of the Company such parties  expressly do not intend hereby
to form a partnership  under either the Revised  Uniform  Partnership Act of the
State of Texas nor the Revised Uniform  Limited  Partnership Act of the State of
Texas.  The Members do not intend to be partners one to another,  or partners as
to any third party. To the extent any Member,  by word or action,  represents to
another  Person  that any other  Member is a partner  or that the  Company  is a
partnership,  the Member making such wrongful  representation shall be liable to
any other  Member  who  incurs  personal  liability  by reason of such  wrongful
representation.

     10.13 Expenses. Each party shall pay the fees and expenses of its advisors,
counsel, accountants and other experts, if any, and all other expenses, incurred
by such party incident to the negotiation,  preparation,  execution and delivery
of this Agreement;  provided,  however, that the Company shall pay a flat $5,000
to the Investor  Group to reimburse the Investor Group for the fees and expenses
(including  attorneys'  fees and  expenses)  incurred by the  Investor  Group in
connection  with its due  diligence  review of the Company and the  preparation,
negotiation, execution and delivery of this Agreement, which amount shall be due
and payable in cash promptly after the members of the Investor Group have funded
their Initial Capital Contributions.

            [The remainder of this page is intentionally left blank.]

Company Agreement Canyon Ferry Capital LLC

                                       17
<PAGE>

                                  CERTIFICATION

     THE  UNDERSIGNED  hereby  evidence their adoption and  ratification  of the
foregoing Company Agreement of Canyon Ferry Capital LLC as of the date indicated
below.

                                            Mortgage Assistance Corp., as Member

Date:  December __, 2006                    By:________________________________
                                            Name:
                                            Its:

Company Agreement Canyon Ferry Capital LLC

                                       18
<PAGE>

                                       GSSF MASTER FUND, LP, as Member

                                       By   Gryphon Special Situations Fund, LP,
                                            its general partner

                                       By   GSSF Management Partners, LP,
                                            its general partner

                                       By   GSSF, LLC, its general partner

                                       By:
                                          --------------------------------------
                                       Name:        Warren W. Garden
                                       Title:       Authorized Agent

                                       HOAK PRIVATE EQUITIES 1, LP, as Member

                                       By   Hoak Fund Management, L.P.,
                                            its general partner

                                       By   James M. Hoak & Co.,
                                            its general partner

                                       By:
                                          --------------------------------------
                                       Name:        J. Hale Hoak
                                       Title:       President

                                       C. A. VOSE 1971 TRUST FBO
                                       LISA VOSE COMBS, as Member

                                       By:
                                          --------------------------------------
                                                    Robert R. Swendson, Trustee

                                       1991 INVESTMENT COMPANY, as Member

                                       By: L. C. Vose 1965 Trust fbo
                                           C. A. Vose, Jr., its Managing Partner

                                       By:
                                          --------------------------------------
                                                    Robert R. Swendson, Trustee

Company Agreement Canyon Ferry Capital LLC

                                       19
<PAGE>

                                       SOUTHWEST FEDERATED NORTH TEXAS, L.P.,
                                       as Member

                                       By: Southwest Federated, Inc.,
                                           its general partner

                                       By:
                                          --------------------------------------
                                                  Charles A. Vose III, President

Company Agreement Canyon Ferry Capital LLC

                                       20
<PAGE>

                                    EXHIBIT A

                          MEMBER CAPITAL CONTRIBUTIONS

                             AS OF DECEMBER __, 2006

===================================== =================== ========== ===========
                MEMBER                  INITIAL CAPITAL    UNITS      PERCENTAGE
                                         CONTRIBUTION                OF INTEREST
------------------------------------- ------------------- ---------- -----------
Mortgage Assistance Corp., a Texas
Corporation                                None             50             50%
2614 Main Street
Dallas, TX 75226
Attn:  Dan Barnett
Fax No.:  (214) 670-0001
------------------------------------- ------------------- ---------- -----------
GSSF Master Fund, LP                       $931,253.52      19.230      19.230%
100 Crescent Court, Suite 475
Dallas, TX  75201
Attn:  J. Richard Rees
Fax No.:  (214) 871-6711
------------------------------------- ------------------- ---------- -----------
Hoak Private Equities 1, LP                $745,051.24      15.385      15.385%
500 Crescent Court, Ste 230
Dallas, TX  75201
Attn:  J. Hale Hoak
Fax No.:  (214) 960-4899
------------------------------------- ------------------- ---------- -----------
C. A. Vose 1971 Trust fbo Lisa Vose        $186,299.13       3.847       3.847%
Combs
9520 N. May, Suite 310
Oklahoma City, OK 73120
Attn:  Gene Furnish
Fax No.:  (405) 751-2278
------------------------------------- ------------------- ---------- -----------
1991 Investment Company                    $279,376.06       5.769       5.769%
9520 N. May, Ave Suite 310
Oklahoma City, OK  73120
Attn:  Gene Furnish
Fax No.:  (405) 751-2278
------------------------------------- ------------------- ---------- -----------
Southwest Federated North Texas, L.P.      $279,376.06       5.769       5.769%
8117 Preston Road, Suite 160
Dallas, TX  75225
Attn:  Chad Vose
Fax No.:  (214) 692-9520
------------------------------------- ------------------- ---------- -----------
                 Total                     $2,421,356.00     100       100%
===================================== =================== ========== ===========

Company Agreement Canyon Ferry Capital LLC

                                       21
<PAGE>

                                    EXHIBIT B

                               SERVICING CONTRACT

                        Mortgage Assistance Corporation
      2614 Main Street * Dallas Tx 75226 * 214-670-0005 * fax 214-670-0001
                  www.mac-tx.com       Trading Symbol: MTGC.OB

                               Servicing Contract

Owner:                     Canyon Ferry Capital LLC
Owner's Address:           2614 Main Street, Dallas, TX 75226
Servicer:                  Mortgage Assistance Corporation
Servicer Address:          2614 Main Street, Dallas, TX  75226
Notes and/or REOs:         Attachment A
------------------

This  servicing  agreement  was made and entered into this 14th day of December,
2006, by and between SERVICER and OWNER.

OWNER shall initial below where appropriate.

     Section 1. Servicing of Notes

Note Servicing:  OWNER hereby  authorizes and instructs  SERVICER,  and SERVICER
agrees to service the "NOTES" and in that connection, to do the following:

A.   To receive any and all payments due OWNER on the NOTES,  which includes but
     is not limited to all monthly  payments,  all late payments and all payoffs
     in full or in part. SERVICER is authorized to direct any payment to be made
     payable to SERVICER's Trust Account;

B.   To endorse to SERVICER's  Trust Account any checks or money orders  payable
     to OWNER and to immediately  deposit same in SERVICER's Trust Account which
     is to be  maintained  in  accordance  with such  laws and rules  applicable
     thereto and as to which SERVICER will not commingle its assets;

C.   To transmit  OWNER's  portion of such payments of principal and interest as
     required by laws,  rules and regulations  which are applicable.  There is a
     seven  day hold on all  checks to allow for  clearing  with the bank.  Good
     funds are  delivered to OWNER  without a hold at the address  shown herein.
     SERVICER will not use such payment for any other transaction other than the
     transaction for which the funds are received;

D.   To  provide  periodic  reporting  on the  OWNER's  NOTES that  SERVICER  is
     servicing per this contract;

E.   If the source of payment is not the maker of the NOTES, to so inform OWNER;

<PAGE>

F.   To cause  SERVICER's  Trust  Account  utilized for this  transaction  to be
     inspected as required by such laws, rules and regulations as are applicable
     thereto;

G.   To take any other action which  SERVICER  deems  necessary or convenient to
     the  collection  and  servicing of the NOTES  including  but not limited to
     instituting  foreclosure proceedings in the event of default or making such
     payments for OWNER's  account or taking such other action as SERVICER deems
     necessary or desirable to protect the security of the Security Agreement or
     the priority thereof;

H.   To execute and deliver on OWNER's  behalf and in OWNER's name any documents
     necessary  or  convenient  for the  exercise of any rights or duties  which
     OWNER may have under the NOTES,  including  but not  limited to Request for
     Reconveyance,  Payoff Demands,  Beneficiary  Statements,  Declarations  and
     Notices of Default,  bidding  authorizations  and other instructions to the
     Trustee of the NOTES;

I.   To receive Notices of Default of prior encumbrances and to promptly notifiy
     OWNER of any default upon the Notes and any prior encumbrances;

J.   To grant such extensions or loan modifications as SERVICER deems reasonably
     appropriate;

K.   THE FOLLOWING PROVISIONS (1) & (2) APPLY ONLY TO LOANS IN WHICH OWNER HOLDS
     AN UNDIVIDED FRACTIONAL INTEREST IN THE NOTES:

          1. A default upon any interest in the NOTES shall constitute a default
     upon all interests.  A simple majority in interest of lenders may determine
     and direct the actions to be taken on behalf of all lenders in the event of
     default  or with  respect  to other  matters  requiring  the  direction  or
     approval of lenders, and such majority may designate the SERVICER to so act
     in their behalf.

          2.  SERVICER  shall  furnish to OWNER a list of names and addresses of
     all lenders  holding an  interest  in the NOTES upon five (5) days  written
     notice.

Section 2 - Servicing of REOs
I. REO Servicing:  OWNER hereby authorizes and instructs SERVICER,  and SERVICER
agrees to service the "REOs" and in that connection, to do the following:

A.   Authorize SERVICER to act on behalf of OWNER as landlord to the REOs, where
     applicable;

B.   Authorize  SERVICER to manage,  operate,  control,  rent and lease  OWNER'S
     REOs.

C.   Authorize SERVICER to contract for or undertake the making of all necessary
     repairs and the  performance of all other necessary work for the benefit of
     the REOs  including  all required  alterations  to properly  carry out this
     agreement. SERVICER agrees to secure prior written approval of the OWNER on
     expenditures in excess of $1,000 except emergency  repairs in excess of the
     maximum if, in the opinion of  SERVICER,  such  repairs  are  necessary  to

                                       2
<PAGE>

     protect the property from damage, prevent damage to life or to the property
     of others;

D.   To collect  any and all  payments  due  OWNER,  which  includes  but is not
     limited to, all monthly RENT  payments and all LATE  payments.  SERVICER is
     authorized  to direct any payment to be made  payable to  SERVICER's  Trust
     Account. There is a seven day hold on all checks to allow for clearing with
     the bank.  Good funds are  delivered to OWNER without a hold at the address
     shown herein.  SERVICER will not use such payment for any other transaction
     other than the transaction for which the funds are received;

E.   Any trust  account  SERVICER  maintained  under  this  agreement  may be an
     interest-bearing or income producing account.

F.   To hold security deposits from tenants in escrow or trust account until the
     end of tenancy.

G.   To endorse to SERVICER's  Trust Account any checks or money orders  payable
     to OWNER and to immediately  deposit same in SERVICER's Trust Account which
     is to be  maintained  in  accordance  with such  laws and rules  applicable
     thereto and as to which SERVICER will not commingle its assets;

H.   To provide  weekly  sales  reports  and other  periodic  (but not less than
     monthly)  reports,  as  requested  from time to time by the  OWNER,  on the
     OWNER's REOs that SERVICER is servicing per this contract;

I.   To cause  SERVICER's  Trust  Account  utilized for this  transaction  to be
     inspected as required by such laws, rules and regulations as are applicable
     thereto;

J.   To take any other action which  SERVICER  deems  necessary or convenient to
     the  collection  and  servicing  of the REOs  including  but not limited to
     instituting  eviction proceedings in the event of default or selling of the
     REOs or making  such  payments  for  OWNER's  account or taking  such other
     action as SERVICER  deems  necessary  or  desirable  to protect the OWNER's
     interest in the  property.  To advertise  the  property  and display  signs
     thereon;  to rent and lease the property;  to sign, renew and cancel rental
     agreements  and  leases for the  property  or any part  thereof;  to sue or
     recover for rent and for loss or damage to any part of the property  and/or
     furnishings thereof; and, when expedient, to compromise, settle and release
     any such legal proceedings or lawsuits;

K.   To execute and deliver on OWNER's  behalf and in OWNER's name any documents
     necessary  or  convenient  for the  exercise of any rights or duties  which
     OWNER may have as to the REOs,  including  but not  limited  to  evictions,
     listing  the  property  for sale,  selling  the  property,  or renting  the
     property;

L.   To pay all operating  expenses and such other  expenses as requested by the
     OWNER from the rents  received.  This may  include the payment of taxes and
     insurance;

M.   OWNER hereby agrees to indemnify  and hold  SERVICER  harmless from any and
     all claims, charges, debts, demands and lawsuits, including attorney's fees

                                       3
<PAGE>

     related to SERVICER's  management  of OWNER's REOs,  and from any liability
     for injury on or about the properties which may be suffered by an employee,
     tenant or guest upon the properties;  provided,  however,  that OWNER shall
     have no such  indemnification  obligations  in respect of any such  claims,
     charges,  debts,  demands or lawsuits  resulting  primarily from SERVICER's
     gross negligence or willful misconduct.

Section 3 - General Provisions

FEES:  SERVICER  shall not be  entitled  to any fees or other  compensation  for
providing services hereunder,  and shall bear all costs and expenses incurred in
connection with providing services hereunder. Notwithstanding the foregoing, the
costs and expenses set forth on  Attachment B and incurred to third parties will
be paid by the OWNER directly or, if paid by SERVICER,  the OWNER will reimburse
the SERVICER without markup.

PERFORMANCE OF SERVICES: SERVICER shall, to the best of its ability, perform all
services required to be performed by it hereunder diligently, carefully and in a
good and workmanlike  manner as would a reasonable and prudent  person.  Without
limiting the  generality of the  foregoing,  SERVICER shall devote enough of its
time, attention and resources to providing services hereunder as is necessary to
adequately  perform its services  hereunder.  SERVICER shall, in connection with
the  performance  of the  services  hereunder,  obtain  all  permits,  licenses,
certificates  or other  administrative  or regulatory  authorizations  as may be
required by any governmental  authority from time to time or as may be necessary
or  incident  to  SERVICER's  performance  of its  obligations  in all  material
respects  under  this  agreement.  In  connection  with the  performance  of the
services,  SERVICER  shall comply with all applicable  material laws,  rules and
regulations,  and with all applicable material contracts and agreements that now
pertain,  or in the future may pertain, to the services.  In addition,  SERVICER
shall, in the performance of its obligations under this agreement,  abide by any
applicable restrictions contained in any indenture, loan agreement,  mortgage or
other  agreement to which OWNER or any of its  subsidiaries  or  affiliates is a
party and of which SERVICER has actual knowledge or receives notice.

TERM AND  TERMINATION:  Unless  terminated  earlier in accordance with the other
provisions of this paragraph, the term of this agreement shall begin on the date
of this agreement and shall end on the first anniversary of the date hereof, and
shall thereafter  automatically  renew for successive  three-month terms, unless
notice is given by either  party to the other at least 30 days before the end of
the then current term that this agreement  shall terminate as of the end of such
term.  Notwithstanding the foregoing,  this agreement may be terminated prior to
the  expiration  of the then current term (a) by the mutual  written  consent of
both parties,  or (b) by either party for  nonperformance  or material breach of
this  agreement by the other party after giving the  nonperforming  or breaching
party no less than 30 days  written  notice  (which  notice  shall  specify  the
nonperformance   and/or  material  breach)  and  an  opportunity  to  cure  such
nonperformance  or  material  breach  within  such  30  day  period.   Upon  any
termination of this agreement (including,  without limitation,  by expiration of
the term),  the  parties  shall have no further  rights,  duties or  obligations
hereunder, other than those accruing prior to the effective date of termination,
which shall survive any termination of this agreement. SERVICER acknowledges and
agrees that, in accordance with the Company  Agreement of OWNER,  the Manager(s)
of OWNER who are  designated  by the Investor  Group (as defined in such Company

                                       4
<PAGE>

Agreement)  have the sole and  exclusive  right  and  duty  under  such  Company
Agreement to act on behalf of OWNER in  connection  with any matter  relating to
this agreement,  including, without limitation,  exercising any right (including
the  right  to  terminate  this  agreement  in  accordance  with  the  foregoing
provisions of this paragraph) or remedy accruing to OWNER hereunder.

OWNER represents that all of the persons designated above are over the age of 18
and are competent.

         Make OWNER Check Payable To:  Canyon Ferry Capital LLC

         Address:  2614 Main Street

         City, State, Zip Code:  Dallas, Texas  75226

         Tax ID Number:  14-1976551

ATTORNEY'S  FEES:  If OWNER  or  SERVICER  is a  prevailing  party in any  legal
proceeding  brought  as a  result  of a  dispute  under  this  agreement  or any
transaction  related to or contemplated  by this  agreement,  such party will be
entitled to recover from the  non-prevailing  party all costs of such proceeding
and reasonable attorney's fees.

SPECIAL  PROVISIONS:  This  Agreement  may be  amended  from time to time by the
parties  pursuant to a written  agreement or addendum signed by the SERVICER and
the OWNER.

ENTIRE AGREEMENT: This document contains the entire agreement of the parties and
may not be changed except by written agreement.

ASSIGNMENTS: Neither party may assign this agreement without the written consent
of the other party.

BINDING EFFECT:  OWNER's obligations to SERVICER under this agreement is binding
upon OWNER and OWNER's heirs, executors, successors, and permitted assignees.

JOINT AND SEVERAL:  Parties  executing  this agreement are jointly and severally
liable for the performance of all its terms. Any act or notice to, refund to, or
signature  of,  any  one or  more  of the  parties  regarding  any  term of this
agreement or its termination is binding on all parties executing this agreement.

GOVERNING LAW: Texas law governs the interpretation,  validity, performance, and
enforcement of this agreement.

SEVERABILITY:  If a  court  finds  any  clause  in  this  agreement  invalid  or
unenforceable,  the  remainder  of this  agreement  will not be affected and all
other provisions of this agreement will remain valid and enforceable.

CONTEXT:  When the context  requires,  singular  nouns and pronouns  include the
plural.

                                       5
<PAGE>

NOTICES:  Notices  between the parties must be in writing and are effective when
sent to the receiving party's address as stated in this agreement.

OWNER:  Canyon Ferry Capital LLC
Signed: _______________________________              Date:  December 14, 2006
Print Name: ___________________________
Title:  ______________________________

SERVICER: Mortgage Assistance Corporation
Signed: _______________________________              Date:  December 14, 2006
Print Name: ___________________________
Title:  ________________________________

                                       6
<PAGE>
<TABLE>
<CAPTION>

                                                   Attachment A

------------------------------------------------------------------------------------------------------------------------------------
                                                                              Estimated       Minimum                       Prorated
                                                                   FC Sale   Redemption      Redemption     MAC's Updated   Purchase
     Address                         City           State   Zip      Date       Date          amount          Values         cost
------------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>               <C>   <C>     <C>          <C>            <C>          <C>            <C>

07794 Ferry Road                   EAST JORDAN       MI    49727   9/1/2006     3/1/2007  $    85,000  $    78,000.00    $ 35,726.75
------------------------------------------------------------------------------------------------------------------------------------

100 102 Cougar                     GWINN             MI    49841   9/7/2006     3/7/2007  $    54,400  $    68,000.00    $ 31,146.39
------------------------------------------------------------------------------------------------------------------------------------

1115 Gillette                      PORT HURON        MI    48060   8/17/2006    2/17/2007 $    52,000  $    60,000.00    $ 27,482.11
------------------------------------------------------------------------------------------------------------------------------------

11428 Grover Street                ROMULUS           MI    48174   8/10/2006    2/12/2007 $   154,770  $    150,000.00   $ 68,705.28
------------------------------------------------------------------------------------------------------------------------------------

118 Dunton Ave                     HOLLAND           MI    49424   7/6/2006     1/6/2007  $    80,750  $     87,600.00   $ 40,123.88
------------------------------------------------------------------------------------------------------------------------------------

1224 Wellington                    BAY CITY          MI    48706   9/8/2006     3/8/2007  $    67,915  $     92,000.00   $ 42,139.24
------------------------------------------------------------------------------------------------------------------------------------

1225 Bohmen Avenue                 PUEBLO            CO    81006   9/13/2006   11/27/2006 $    33,750  $     40,000.00   $ 18,321.41
------------------------------------------------------------------------------------------------------------------------------------

12381 Cloverlawn St                DETROIT           MI    48204   8/9/2006     2/9/2007  $    44,000  $     60,000.00   $ 27,482.11
------------------------------------------------------------------------------------------------------------------------------------

137 Baldwin Avenue                 PONTIAC           MI    48342   9/12/2006    3/12/2007 $    44,000  $    45,000.00    $ 20,611.58
------------------------------------------------------------------------------------------------------------------------------------

13916 Tacoma                       DETROIT           MI    48205   6/28/2006   12/28/2006 $    33,750  $    46,000.00    $ 21,069.62
------------------------------------------------------------------------------------------------------------------------------------

141 Post Avenue                    BATTLE CREEK      MI    49014   8 /11/2006   2/11/2007 $    30,000  $    55,500.00    $ 25,420.95
------------------------------------------------------------------------------------------------------------------------------------

14183 Steel Street                 DETROIT           MI    48227   8/23/2006    2/23/2007 $    37,500  $    55,000.00    $ 25,191.94
------------------------------------------------------------------------------------------------------------------------------------

14460 Rosemary                     DETROIT           MI    48213   8/2/2006     2/2/2007 $    52,000   $    55,000.00    $ 25,191.94
------------------------------------------------------------------------------------------------------------------------------------

14592 Stout St                     DETROIT           MI    48223   7/12/2006    1/12/2007 $    44,000  $    50,000.00    $ 22,901.76
------------------------------------------------------------------------------------------------------------------------------------

16210 Indiana Street               DETROIT           MI    48221   9/6/2006     3/6/2007  $    60,000  $    65,000.00    $ 29,772.29
------------------------------------------------------------------------------------------------------------------------------------

1650 Wiard Boulevard               YPSILANTI         MI    48198   6/15/2006   12/15/2006 $    96,050  $   100,000.00    $ 45,803.52
------------------------------------------------------------------------------------------------------------------------------------

1704 S. Pennsylvania               LANSING           MI    48910   6/1/2006     12/1/2006 $    55,920  $    65,000.00    $ 29,772.29
------------------------------------------------------------------------------------------------------------------------------------

172 174 Banshee Street             GWINN             MI   49841   6/15/2006     12/15/2006 $   59,200  $    64,000.00    $ 29,314.25
------------------------------------------------------------------------------------------------------------------------------------

17366 Clarann                      MELVINDALE        MI    48122   8/30/2006    2/28/2007 $    48,000  $    55,000.00    $ 25,191.94
------------------------------------------------------------------------------------------------------------------------------------

18469 Greenview                    DETROIT           MI    48219   7/5/2006     1/5/2007  $    94,925  $     78,000.00   $ 35,726.75
------------------------------------------------------------------------------------------------------------------------------------

19315 Gaylord                      REDFORD           MI    48240   8/16/2006    2/16/2007 $   107,741  $   104,000.00    $ 47,635.66
------------------------------------------------------------------------------------------------------------------------------------

19389 Albion                       DETROIT           MI    48234   8/3/2006     2/5/2007  $    56,000  $     55,000.00   $ 25,191.94
------------------------------------------------------------------------------------------------------------------------------------

19821 Joann St                     DETROIT           MI    48205   6/21/2006   12/21/2006 $    68,000  $    62,000.00    $ 28,398.18
------------------------------------------------------------------------------------------------------------------------------------

19937-39 Derby                     HIGHLAND PARK     MI    48203   5/31/2006   11/30/2006 $    33,750  $    50,000.00    $ 22,901.76
------------------------------------------------------------------------------------------------------------------------------------

19947 Fairport                     DETROIT           MI    48205   6/7/2006     12/7/2006 $    66,300  $    61,000.00    $ 22,901.76
------------------------------------------------------------------------------------------------------------------------------------

20224 Washburn                     DETROIT           MI    48221   7/5/2006     1/5/2007  $    73,728  $    65,000.00    $ 29,772.29
------------------------------------------------------------------------------------------------------------------------------------

20245 Anglin Street                DETROIT           MI    48234   8/31/2006    2/28/2007 $    77,350  $    88,000.00    $ 40,307.10
------------------------------------------------------------------------------------------------------------------------------------

20386 Fairview Drive               DEARBORN HEIGHTS  MI    48127   8/9/2006     2/9/2007  $   160,650  $   137,000.00    $ 62,750.82
------------------------------------------------------------------------------------------------------------------------------------

20500 Pelkey St                    DETROIT           MI    48205   6/14/2006   12/14/2006 $    68,000  $    66,000.00    $ 30,230.32
------------------------------------------------------------------------------------------------------------------------------------

22154 Brittany Ave                 EASTPOINTE        MI    48021   8/25/2006    2/25/2007 $    60,000  $    65,000.00    $ 29,772.29
------------------------------------------------------------------------------------------------------------------------------------

2364 Zinow                         HAMTRAMCK         MI    48212   5/31/2006    12/1/2006 $    68,850  $    65,000.00    $ 29,772.29
------------------------------------------------------------------------------------------------------------------------------------

244 East Grout Street              GLADWIN           MI    48624   9/8/2006     3/8/2007  $    67,150  $     64,000.00    $ 29,314.2
------------------------------------------------------------------------------------------------------------------------------------

245 Mckinley Street                OWATONNA          MI    55060   8/9/2006     2/9/2007  $   97,750  $     95,000.00    $ 43,513.34
------------------------------------------------------------------------------------------------------------------------------------

26 West Glenwood                   ECORSE            MI    48229   7/5/2006     1/5/2007  $   29,320  $     52,000.00    $ 23,817.83
------------------------------------------------------------------------------------------------------------------------------------

2606 Woodend Ave                   KANSAS CITY       KS    66106   8/22/2006    1/9/2007  $   83,725  $     89,000.00    $ 40,765.13
------------------------------------------------------------------------------------------------------------------------------------

2619 Chestnut St                   PORT HURON        MI    48060   6/22/2006   12/22/2006 $   54,400  $   63,000.00    $ 28,856.22
------------------------------------------------------------------------------------------------------------------------------------

2620 North Lorraine                WICHITA           KS    67219   9/6/2006     1/25/2007 $   33,750  $    45,000.00    $ 20,611.58
------------------------------------------------------------------------------------------------------------------------------------

26208 Colgate St                   INKSTER           MI    48141   6/21/2006   12/21/2006 $   44,800  $    7,000.00    $ 35,268.71
------------------------------------------------------------------------------------------------------------------------------------

26923 Ross St.                     INKSTER           MI    48141   5/25/2006   11/25/2006 $   64,600  $   55,000.00    $ 25,191.94
------------------------------------------------------------------------------------------------------------------------------------

27 James Street                    PONTIAC           MI    48341   9/12/2006    3/12/2007 $   46,400  $    40,000.00     $ 18,321.41
------------------------------------------------------------------------------------------------------------------------------------

2725 Norbert                       FLINT             MI    48504   5/31/2006   11/30/2006 $   80,325  $    45,000.00     $ 20,611.58
------------------------------------------------------------------------------------------------------------------------------------

                                       7

<PAGE>

28402 Longmeadow Lane              TRENTON           MI    48183   8/10/2006    2/10/2007 $   65,450  $    90,000.00     $ 41,223.17
------------------------------------------------------------------------------------------------------------------------------------

303 Fir Ave Northwest              MONTGOMERY        MN   56069   8/3/2006      2/3/2007 $   106,607  $     90,000.00    $ 41,223.17
------------------------------------------------------------------------------------------------------------------------------------

3135 Howden Street                 MUSKEGON          MI    49444   9/1/2006     3/1/2007 $    20,300  $     29,900.00    $ 13,695.25
------------------------------------------------------------------------------------------------------------------------------------

3340 Goldner                       DETROIT           MI    48210   8/2/2006     2/2/2007 $    48,600  $     50,000.00    $ 22,901.76
------------------------------------------------------------------------------------------------------------------------------------
3906 Prescott Street               HAMTRAMCK         MI    48212   9/6/2006     3/6/2007 $    70,550  $     60,000.00
------------------------------------------------------------------------------------------------------------------------------------

40 West St                         COOPERSVILLE      MI    49404   8/31/2006    3/1/2007 $    86,022  $     89,900.00    $ 41,177.36
------------------------------------------------------------------------------------------------------------------------------------

415 Saint Joseph Street            UNION CITY        MI    49094   7/6/2006     1/6/2007 $    48,000  $     75,000.00    $ 34,352.64
------------------------------------------------------------------------------------------------------------------------------------

416 Frederick Street               KALAMAZOO         MI    49048   6/22/2006   12/22/2006 $    68,000  $   102,000.00    $ 46,719.59
------------------------------------------------------------------------------------------------------------------------------------

424 Garland Street                 KALAMAZOO         MI    49001   7/6/2006     1/6/2007  $    73,950  $    84,500.00    $ 38,703.97
------------------------------------------------------------------------------------------------------------------------------------

4621 Berkshire Street              DETROIT           MI    48224   7/12/2006    1/12/2007 $    57,600  $    75,000.00    $ 34,352.64
------------------------------------------------------------------------------------------------------------------------------------

46217 Cavalier Dr                  MACOMB            MI    48044   7/21/2006    1/22/2007 $  112,200   $   120,000.00    $ 54,964.22
------------------------------------------------------------------------------------------------------------------------------------

4656 Brnadon St.                   DETROIT           MI    48209   7/13/2006    1/13/2007 $    36,000  $    35,000.00    $ 16,031.23
------------------------------------------------------------------------------------------------------------------------------------

5417 South Saint Francis Street    WICHITA           KS    67216   9/13/2006    1/11/2007 $    85,000  $    90,000.00    $ 41,223.17
------------------------------------------------------------------------------------------------------------------------------------

5561 Cedar Lake Road               OSCODA            MI    48750   6/7/2006     12/7/2006 $    68,000  $    80,000.00    $ 36,642.82
------------------------------------------------------------------------------------------------------------------------------------

5770 Grandel Ave                   MUSKEGON          M    49442   8/18/2006     2/18/2007 $    96,304  $    82,000.00    $ 37,558.89
------------------------------------------------------------------------------------------------------------------------------------

5772 Chalet Ct.                    OSCODA            M    48750   8/9/2006      2/9/2007  $    55,200  $    64,000.00    $ 29,314.25
------------------------------------------------------------------------------------------------------------------------------------

6051 Auburn St                     DETROIT           MI    48228   9/13/2006    3/13/2007 $    37,500  $    64,000.00    $ 29,314.25
------------------------------------------------------------------------------------------------------------------------------------

617 Baltic Street                  SAINT CHARLES     MI    48655   8/17/2006    2/17/2007 $    52,000  $    80,000.00    $ 36,642.82
------------------------------------------------------------------------------------------------------------------------------------

623 Barrie                         FLINT             MI    48507   8/30/2006    2/28/2007 $    44,000  $    30,000.00    $ 13,741.06
------------------------------------------------------------------------------------------------------------------------------------

633 Ruble Ave                      ALBERT LEA        MN    56007   8/22/2006    2/22/2007 $    65,450  $    93,000.00    $ 42,597.27
------------------------------------------------------------------------------------------------------------------------------------

6790 Griffore                      SAGINAW           MI    48604   6/1/2006     12/1/2006 $    77,073  $    98,000.00    $ 44,887.45
------------------------------------------------------------------------------------------------------------------------------------

6891 Rutherford Street             DETROIT           MI    48228   8/2/2006     2/2/2007  $    76,500  $    74,000.00    $ 33,894.61
------------------------------------------------------------------------------------------------------------------------------------

7 Dickinson Place                  MOUNT CLEMENS     MI    48043   9/8/2006     3/8/2007  $    80,750  $   121,000.00    $ 55,422.26
------------------------------------------------------------------------------------------------------------------------------------

7101 Gartner St                    DETROIT           MI    48209   8/30/2006    2/28/2007 $    37,500  $    35,000.00    $ 16,031.23
------------------------------------------------------------------------------------------------------------------------------------

7291 Greenview Ave                 DETROIT           MI    48228   8/30/2006    2/28/2007 $    75,650  $    73,000.00    $ 33,436.57
------------------------------------------------------------------------------------------------------------------------------------

806 S Mechanic St                  JACKSON           MI    49203   8/30/2006    2/27/2007 $    56,000  $    43,500.00    $ 19,924.53
------------------------------------------------------------------------------------------------------------------------------------

8082 Prospect                      WARREN            MI    48089   6/9/2006     12/9/2006 $    68,000  $    65,000.00    $ 29,772.29
------------------------------------------------------------------------------------------------------------------------------------

8261 Prest Street                  DETROIT           MI    48228   8/16/2006    2/16/2007 $    72,250  $    80,000.00    $ 36,642.82
------------------------------------------------------------------------------------------------------------------------------------

8377 Dyer Trail                    ATLANTA           MI    49709   9/14/2006    3/14/2007 $   104,970  $    90,000.00    $ 41,223.17
------------------------------------------------------------------------------------------------------------------------------------

8664 Stout Street                  DETROIT           MI    48228   9/6/2006     3/6/2007  $    48,000  $    60,000.00    $ 27,482.11
------------------------------------------------------------------------------------------------------------------------------------

8690 Epworth                       DETROIT           MI   48204   7/6/2006      1/27/2007 $    37,500  $     5,000.00    $ 25,191.94
------------------------------------------------------------------------------------------------------------------------------------

9111 Mendota Street                DETROIT           MI    48204   8/23/2006    2/23/2007 $    68,000  $     0,000.00    $ 32,062.46
------------------------------------------------------------------------------------------------------------------------------------
                                   BURLINGTON        KS    66839   8/31/2006    1/30/2007 $    52,000  $     0,000.00    $ 27,482.11
923 Des Moines
------------------------------------------------------------------------------------------------------------------------------------
                                                                                          $  4,821,445  $5,220,900.00  $2,391,356.00
                                                                                ----------------------------------------------------
                                       8
</TABLE>

<PAGE>

                                  Attachment B

o    Eviction fees and costs
o    Property   Preservation   (winterization,    lawn   maintenance,   property
     clean-outs,  board-up,  improvements  required by city to prevent fines and
     liens, re-key property, etc.)
o    Emergency Maintenance - flooding, break-ins, gas leak, etc.
o    Closing Costs from title company
o    Taxes and Insurance
o    Third-Party Management Fee to process listings and closings of REOs
o    Sales Commission
o    Seller  Concessions on behalf of Buyer (portion of Buyer's closing costs or
     credit for repairs, termite treatment, and/or inspections, etc.)
o    Title Work Costs
o    Recording fees and costs
o    Transfer Taxes
o    Cash for Keys to Occupants of REOs
o    Utilities and any liens on the property
o    Banking Service Fees
o    LLC formation costs
o    All  other  reasonable  expenses  approved  by the  Investor  Group,  which
     approval shall not be unreasonably withheld

                                       9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}]]