Document:

standbyequityagmtleaddog.htm

  
    STANDBY
EQUITY PURCHASE AGREEMENT

    

    Standby Equity Purchase
Agreement (this "Agreement"), dated as
of October 15, 2009, by and among Morgan Mining Corp., a Nevada corporation (the
“Company”), and
the undersigned investor (the “Investor”).

    

    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the
Investor shall invest up to $6,000,000 to purchase the Company’s common stock,
$.001 par value per share (the "Common
Stock”);

    

    WHEREAS, such investments will
be made in reliance upon the provisions of Section 4(2) under the Securities Act
of 1933, as amended (the “1933 Act”), Rule 506
of Regulation D, and the rules and regulations promulgated thereunder, and/or
upon such other exemption from the registration requirements of the 1933 Act as
may be available with respect to any or all of the investments in Common Stock
to be made hereunder;

    

    WHEREAS, the Company has
engaged Jesup & Lamont Securities Corp. (the “Placement Agent”), to
act as the Company’s exclusive placement agent in connection with the sale of
the Company’s Common Stock to the Investor hereunder pursuant to the Placement
Agent Agreement dated the date hereof by and among the Company, the Placement
Agent and the Investor (the “Placement Agent
Agreement”); and

     

    WHEREAS, contemporaneously
with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement substantially in the
form attached hereto as Exhibit A (the “Registration Rights
Agreement”) pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act, and the rules and regulations
promulgated thereunder, and applicable state securities laws.

    

    NOW THEREFORE, the Company and
the Investor hereby agree as follows:

    

    1.           Definitions. As used in this
Agreement, the following terms shall have the following meanings specified or
indicated, and such meanings shall be equally applicable to the singular and
plural forms of the defined terms.

    

    “1933
ACT” shall mean the Securities Act of 1933, as it may be amended.

    

    “1934
ACT” shall mean the Securities Exchange Act of 1934, as it may be
amended.

    

    “AFFILIATE”
shall have the meaning specified in Section 5(h).

    

    “AGREEMENT”
shall mean this Standby Equity Purchase Agreement.

    

    “BUY-IN”
shall have the meaning specified in Section 6.

    

    “BUY-IN
ADJUSTMENT AMOUNT” shall have the meaning specified in Section 6.

    

    “CLOSING”
shall have the meaning specified in Section 2(h).

    

    “CLOSING
DATE” shall mean, as defined in Section 2(h) and subject to the conditions set
forth in Section 2(h), the date which is six (6) Trading Days following the Put
Notice Date.

    

    “COMMON
STOCK” shall mean the Common Stock of the Company.

    

    “COMPANY
INDEMNITEES” shall have the meaning specified in Section 10(b).

     
 

    “CONTROL”
or “CONTROLS” shall have the meaning specified in Section 5(h).

    

    “COVERING
SHARES” shall have the meaning specified in Section 6.

    

    “EDGAR”
shall mean the Electronic Date Gathering Analysis and Retrieved
system.

    

     “EFFECTIVE
DATE” shall mean the date the SEC declares effective the Registration Statement
covering the transactions described in the Agreement.

    

    “ENVIRONMENTAL
LAWS” shall have the meaning specified in Section 4(m).

    

     “EXECUTION
DATE” shall mean the date all Transaction Documents are executed by the Company
and Investor.

    

     “INVESTOR
INDEMNITEES” shall have the meaning specified in Section 10(a).

    

    “INDEMNIFIED
LIABILITIES” shall have the meaning specified in Section 10(a).

    

    “INEFFECTIVE
PERIOD” shall mean any period of time that the Registration Statement becomes
ineffective or unavailable for use for the sale or resale, as applicable, of any
or all of the Registrable Securities (as defined in the Registration Rights
Agreement) for any reason (or in the event the prospectus under either of the
above is not current and deliverable) during any time period required under the
Registration Rights Agreement.

    

    “INVESTOR”
shall mean the undersigned investor.

    

    “MAJOR
TRANSACTION” shall have the meaning specified in Section 2(g).

    

    “MARKET
PRICE” shall mean the lowest daily VWAP of the Common Stock on the Principal
Market during the Pricing Period.

    

    “MATERIAL
ADVERSE EFFECT” shall have the meaning specified in Section 4(a).

    

     “MAXIMUM
COMMON STOCK ISSUANCE” shall have the meaning specified in Section
2(i).

    

    “MINIMUM ACCEPTABLE PRICE”
with respect to any Put Date shall mean 70% of the Volume Weighted
Average Price for the fifteen (15) Trading Day period immediately preceding such
Put Notice Date.

    

     “OPEN
PERIOD” shall mean the period beginning on and including the first Trading Day
immediately following the Effective Date and ending on the earlier of (i) the
date which is twenty-four (24) months from the Effective Date and (ii)
termination of the Agreement in accordance with Section 9.

    

    “PAYMENT
AMOUNT” shall have the meaning specified in Section 2(l).

    

    “PERSON”
shall mean an individual, a corporation, a partnership, an association, a trust
or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.

    

    “PLACEMENT
AGENT” shall mean the firm of Jesup & Lamont Securities Corp.

    

    “PLACEMENT
AGENT AGREEMENT” shall mean the agreement entered into by the Placement Agent
and the Company.

    

    “PRICING
PERIOD” shall mean the five (5) consecutive Trading Days after the Put Notice
Date.

    

    “PRINCIPAL
MARKET” shall have the meaning specified in Section 2(f).

    

    “PROSPECTUS”
shall mean the prospectus, preliminary prospectus and supplemental prospectus
used in connection with the Registration Statement.

    

    “PURCHASE
AMOUNT” shall mean the total amount being paid by the Investor on a particular
Closing Date to purchase the Shares.

    

    "PURCHASE
PRICE" shall mean 88% of Market Price during the Pricing Period.

    

    “PUT
AMOUNT” shall mean, up to a maximum of $200,000.

    

    “PUT
NOTICE” shall mean a written notice sent to the Investor by the Company stating
the Put Amount pursuant to the terms of the Agreement and stating the current
number of Shares issued and outstanding on such date.

    

    “PUT
NOTICE DATE” shall mean the Trading Day immediately following the day on which
the Investor receives a Put Notice, however a Put Notice shall be deemed
delivered on (x) the Trading Day it is received by facsimile or otherwise by the
Investor if such notice is received prior to 12:00 noon Eastern Time (receipt
being deemed to occur if the Company possess a facsimile confirmation showing
completed transmission by such time), or (y) the immediately succeeding Trading
Day if it is received by facsimile or otherwise after 12:00 noon Eastern Time on
a Trading Day (receipt being documented as described in (x)
above).  No Put Notice may be deemed delivered on a day that is not a
full Trading Day unless otherwise agreed by the Investor and Company in
writing.

    

    “REGISTRABLE
SECURITIES” shall have the meaning set forth in Registration Rights
Agreement.

    

    “REGISTRATION
OPINION DEADLINE” shall mean the date that is three (3) Trading Days prior to
each Put Notice Date.

    

    “REGISTRATION
PERIOD” shall have the meaning specified in Section 5(c).

    

    “REGISTRATION
RIGHTS AGREEMENT” shall mean the Agreement entered into by the Company with
Investor for the registration of this transaction.

    

    “REGISTRATION
STATEMENT” means the registration statement of the Company filed under the 1933
Act covering this transaction.

    

    “RELATED
PARTY” shall have the meaning specified in Section 5(h).

    

    “REPURCHASE
EVENT” shall have the meaning specified in Section 2(l).

    

    “RESOLUTION”
shall have the meaning specified in Section 8(f).

    

    “SEC”
shall mean the Securities & Exchange Commission.

    

    “SEC
DOCUMENTS” shall have the meaning specified in Section 4(f).

    

    “SECURITIES”
shall mean the shares of Common Stock issued pursuant to the terms of the
Agreement.

    

    “SHARES”
shall mean the shares of common stock of the Company having a par value of $.001
per share.

    

    “SOLD
SHARES” shall have the meaning specified in Section 6.

    

    “SUBSIDIARIES”
shall have the meaning specified in Section 4(a).

    

    “TRADING
DAY” shall mean any day on which the Principal Market for the Company’s common
stock is open for trading.

    

    “TRANSACTION
DOCUMENTS” shall mean this Agreement, Registration Rights Agreement, and each of
the other agreements entered into by the parties hereto in connection with the
Agreement.

    

    “VALUATION
EVENT” shall have the meaning specified in Section 2(k).

    

    “VOLUME
WEIGHTED AVERAGE PRICE” or “VWAP” shall be as reported by Bloomberg Financial
Markets (“Bloomberg”), or if
not available through Bloomberg because of delisting, then the average of the
bid prices of any market makers for the Company’s Common Stock as reported in
the “pink sheets” by the National Quotation Bureau, Inc.

    

    2.           Purchase And Sale Of Common
Stock

    

    a.           Purchase and Sale of Common
Stock.  Upon the terms and
conditions            set
forth herein, the Company shall issue and sell to the Investor, and the Investor
shall purchase from the Company, up to 4,000,000 Shares having an aggregate
Purchase Price of up to $6,000,000.

    

    b.           Delivery of Put
Notices.                                           Subject
to the terms and conditions of the Transaction Documents, and from time to time
during the Open Period the Company may, in its sole discretion, deliver a Put
Notice to the Investor which states the number of Shares which the Company
intends to sell to the Investor during the Pricing Period.  The Put
Amount may be a maximum of up to $200,000. Once the Put Notice is received by
the Investor, the Put Notice shall not be terminated, withdrawn or otherwise
revoked by the Company except as set forth in this Agreement.  During
the Open Period, the Company shall not be entitled to submit a Put Notice until
after the previous closing has been completed. The Purchase Price shall be equal
to 88% of the Market Price. The Market Price shall be equal to the lowest daily
VWAP of the Common Stock during the Pricing Period.

    

    The Company shall, in its sole
discretion, be entitled to terminate the balance of the current Put Notice, if
the closing bid price during the applicable Pricing Period with respect to that
Put Notice is less than seventy percent (70%) of the Volume Weighted Average
Price of the Common Stock for the fifteen (15) Trading Days prior to the Put
Notice (“Minimum
Acceptable Price”).  In the event that the closing bid price
for the applicable Pricing Period is less than the Minimum Acceptable Price, the
Company may elect, by sending written notice to the Investors via facsimile, to
cancel that portion of the Put Notice remaining for that number of Trading Days
remaining after the written cancellation notice is deemed received by the
Investors. The written notice shall be deemed received by the Investors on (i)
the Trading Day it is received by facsimile or otherwise by the Investors if
such notice is received on or prior to 12:00 noon New York time, or (ii) the
immediately succeeding Trading Day if it is received by facsimile after 12:00
noon New York time on a Trading Day or at anytime on a day which is not a
Trading Day.  The Company shall still be responsible however, for
delivering that number of shares of Common Stock that were sold by the Investors
through and including the end of the Trading Day the written cancellation notice
is deemed received by the Investors.

    

    Within
ten (10) calendar days after the commencement of each calendar quarter occurring
subsequent to the commencement of the Open Period, the Company undertakes to
notify Investor as to its reasonable expectations as to the Put Amount it
intends to raise during such calendar quarter, if any, through the issuance of
Put Notices. Such notification shall constitute only the Company's good faith
estimate with respect to such calendar quarter and shall in no way obligate the
Company to raise such amount during such calendar quarter or otherwise limit its
ability to deliver Put Notices during such calendar quarter. The failure by the
Company to comply with this provision can be cured by the Company's notifying
Investor at any time as to its reasonable expectations with respect to the
current calendar quarter.

    

    c.    Interest.   It
is the intention of the parties that only interest that may be payable under
this Agreement shall not exceed the maximum amount permitted under any
applicable law. If a law, which applies to this Agreement which sets the maximum
interest amount, is finally interpreted so that the interest in connection with
this Agreement exceeds the permitted limits, then: (i) any such interest shall
be reduced by the amount necessary to reduce the interest to the permitted
limit; and (ii) any sums already collected (if any) from the Company which
exceed the permitted limits will be refunded to the Company.  The
Investor may choose to make this refund by reducing the amount that the Company
owes under this Agreement or by making a direct payment to the
Company.  If a refund reduces the amount that the Company owes the
Investor, the reduction will be treated as a partial payment.  In case
any provision of this Agreement is held by a court of competent jurisdiction to
be excessive in scope or otherwise invalid or unenforceable, such provision
shall be adjusted rather than voided, if possible, so that it is enforceable to
the maximum extent possible, and the validity and enforceability of the
remaining provisions of this Agreement will not in any way be affected or
impaired thereby.

    

    d.           Investor’s Obligation to
Purchase Shares.  Subject to the conditions set forth in this
Agreement, following the Investor's receipt of a validly delivered Put Notice,
the Investor shall be required to purchase from the Company during the related
Pricing Period that number of Shares having an aggregate Purchase Price equal to
the lesser of (i) the Put Amount set forth in the Put Notice, and (ii) 20% of
the aggregate trading volume during the applicable Pricing Period multiplied by
the Purchase Price, but only if said Shares bear no restrictive legend, are not
subject to stop transfer instructions and are delivered to the Investor per its
written instructions, pursuant to Section 2(h), on or prior to the applicable
Closing Date.

    

    e.           Limitation on Investor's
Obligation to Purchase Shares.  Notwithstanding anything to the
contrary in this Agreement, in no event shall the Investor be required to
purchase, and the Company shall in no event sell to the Investor, that number of
Shares, which when added to the sum of the number of Shares beneficially owned,
(as such term is defined under Section 13(d) and Rule 13d-3 of the Securities
Exchange Act of 1934, as may be amended, (the “1934 Act”)), by the
Investor, would exceed 4.99% of the number of Shares outstanding on the Put
Notice Date for such Pricing Period, as determined in accordance with Rule
13d-1(j) under the 1934 Act. Each Put Notice shall include a representation of
the Company as to the number of Shares of Common Stock outstanding on the
related Put Notice Date as determined in accordance with Section 13(d) of the
1934 Act. In the event that the number of Shares of Common Stock outstanding as
determined in accordance with Section 13(d) of the 1934 Act is different on any
date during a Pricing Period than on the Put Notice Date associated with such
Pricing Period, then the number of Shares of Common Stock outstanding on such
date during such Pricing Period shall govern for purposes of determining whether
the Investor would be acquiring beneficial ownership of more than 4.99% of the
number of Shares of Common Stock outstanding during such period.

    

    f.           Conditions to Investor's
Obligation to Purchase Shares.  Notwithstanding anything to the
contrary in this Agreement, the Company shall not be entitled to deliver a Put
Notice and require the Investor to purchase any Shares at a Closing (as defined
in Section 2(h)) unless each of the following conditions are
satisfied:

    

    (i) a
Registration Statement shall have been declared effective and shall remain
effective and available for the resale of all the Registrable Securities (as
defined in the Registration Rights Agreement) at all times during the Pricing
Period;

    

    (ii) at
all times during the period beginning on the related Put Notice Date and ending
on and including the related Closing Date, the Common Stock shall have been
listed on The American Stock Exchange, Inc. or The New York Stock Exchange, Inc.
or designated on the Nasdaq National Market, The Nasdaq SmallCap Market, or the
National Association of Securities Dealer’s, Inc. OTC electronic bulletin board
(the "Principal
Market") and shall not have been suspended from trading thereon for a
period of five (5) consecutive Trading Days during the Open Period and the
Company shall not have been notified of any pending or threatened proceeding or
other action to delist or suspend the Common Stock;

    

     (iii)
the Company has complied with its obligations and is otherwise not in breach of
a material provision, or in default under, this Agreement, the Registration
Rights Agreement or any other agreement executed in connection herewith which
has not been corrected prior to delivery of the Put Notice Date;
and

    

     (iv)
no injunction shall have been issued, or action commenced by a governmental
authority, prohibiting the purchase or the issuance of the Common
Stock.

    

    If any of
the events described in clauses (i) through (iv) above occurs during a Pricing
Period, then the Investor shall have no obligation to purchase the Put Amount of
Common Stock set forth in the applicable Put Notice.

    

    g.  For purposes of this
Agreement, a "Major
Transaction" shall be deemed to have occurred at the closing of any of
the following events: (i) the consolidation, merger or other business
combination of the Company with or into another entity (other than pursuant to a
migratory merger effected solely for the purposes of changing the jurisdiction
of incorporation of the Company) (ii) the sale or transfer of all or
substantially all of the Company's assets; or (iii) the consummation of a
purchase, tender or exchange offer made to, and accepted by, the holders of more
than 30% of the economic interest in, or the combined voting power of all
classes of voting stock of, the Company.

    

    h.           Mechanics of Purchase of
Shares by Investor.  Subject to the satisfaction of the
conditions set forth in Sections 2(f), 7 and 8, the closing of the purchase by
the Investor of Shares (a "Closing") shall occur
on the date which is six (6) Trading Days following the Put Notice Date (a
"Closing
Date").  On or prior to each Closing Date, (i) the Company
shall deliver to the Investor per its written instructions, certificates
representing the Shares to be issued to the Investor on such date and registered
in the name of the Investor or deposit such Shares into the account(s) (with the
Investor receiving confirmation that the Shares are in such account(s))
designated by the Investor for the benefit of the Investor and (ii) the Investor
shall deliver to the Company the Purchase Price to be paid for such Shares
(after receipt of confirmation of delivery of such Shares), determined as
aforesaid, by wire transfer. In lieu of delivering physical certificates
representing the Common Stock and provided that the Transfer Agent then is
participating in The Depository Trust Company (“DTC”) Fast Automated
Securities Transfer (“Fast”) program, upon
request of the Investor, the Company shall use its commercially reasonable
efforts to cause the Transfer Agent to electronically transmit the shares of
Common Stock by crediting the account of Investors’ broker (which shall be
specified by that Investor a reasonably sufficient time in advance) with DTC
through its Deposit Withdrawal Agent Commission (“DWAC”) system, and
provide proof satisfactory to the Investor of such delivery.

    

    The
Company acknowledges that the Investor may sell shares of the Company’s Common
Stock corresponding with a particular Put Notice after the Put Notice is
received by the Investor.

    

    i.           Overall Limit on Common
Stock Issuable. Notwithstanding anything contained herein to the
contrary, if during the Open Period the Company becomes listed on an exchange
that limits the number of shares of Common Stock that may be issued without
shareholder approval, then the number of Shares issuable by the Company and
purchasable by the Investor, including the shares of Common Stock issuable to
the Investors pursuant to Section 11(b), shall not exceed that number of the
shares of Common Stock that may be issuable without shareholder approval,
subject to appropriate adjustment for stock splits, stock dividends,
combinations or other similar recapitalization affecting the Common Stock (the
"Maximum Common Stock
Issuance"), unless the issuance
of Shares, including any Common Stock to be issued pursuant to Section 11(b), in
excess of the Maximum Common Stock Issuance shall first be approved by the
Company's shareholders in accordance with applicable law and the By-laws and
Articles of Incorporation of the Company, if such issuance of shares of Common
Stock could cause a delisting on the Principal Market. The parties understand
and agree that the Company's failure to seek or obtain such shareholder approval
shall in no way adversely affect the validity and due authorization of the
issuance and sale of Shares hereunder or the Investor's obligation in accordance
with the terms and conditions hereof to purchase a number of Shares in the
aggregate up to the Maximum Common Stock Issuance limitation, and that such
approval pertains only to the applicability of the Maximum Common Stock Issuance
limitation provided in this Section 2(i).

    

    j. "Valuation Event"
shall mean an event in which the Company at any time during a “Pricing Period”
takes any of the following actions:

    

                          (i)           subdivides
or combines its Common Stock;

                          (ii)           pays
a dividend in Common Stock or makes any other Purchase

    of its
Common Stock, except for dividends paid with respect to the Preferred
Stock;

    
      	
               
      

            	
              (iii)

            	
              issues
      any options or other rights to subscribe for or purchase Common Stock and
      the price per share for which Common
Stock

            

    

    may at
any time thereafter be issuable pursuant to such options or

    other
rights shall be less than the Bid Price in effect

    immediately
prior to such issuance;

                          (iv)           issues
any securities convertible into or exchangeable for Common

                                    Stock
and the consideration per share for which shares of Common

                          Stock
may at any time thereafter be issuable pursuant to the terms

                                    of
such convertible or exchangeable securities shall be less than

    the Bid
Price in effect immediately prior to such issuance;

                          (v)           issues
shares of Common Stock otherwise than as provided in the

                                    foregoing
subsections (i) through (iv), at a price per share less, or

    for other
consideration lower, than the Bid Price in effect immediately prior to such
issuance, or without consideration;

                          (vi)           makes
a Purchase of its assets or evidences of indebtedness

                                    to
the holders of Common Stock as a dividend in liquidation or

    by way of
return of capital or other than as a dividend payable

    out of
earnings or surplus legally available for dividends under applicable law or any
Purchase to such holders made in respect of the sale of all or substantially all
of the Company's assets (other than under the circumstances provided for in the
foregoing subsections (i) through (v); or

    
      	
               
      

            	
              (vii)

            	
              takes
      any action affecting the number of shares of Common Stock outstanding,
      other than an action described in any of the foregoing subsections (i)
      through (vi) hereof, inclusive, which in the opinion of the Company's
      Board of Directors, determined in good faith, would have a materially
      adverse effect upon the rights of Investor at the time of a Put Notice is
      delivered to Investor.

            

    

     
 

    k.           The
Company agrees that it shall not take any action that would result in a
Valuation Event occurring during a Pricing Period.

    

    l.             Delisting;
Suspension.  If at any time during the Open Period or within
thirty (30) calendar days after the end of the Open Period, (i) the Registration
Statement, after it has been declared effective, shall not remain effective and
available for sale of all the Registrable Securities, (ii) the Common Stock
shall not be listed on the Principal Market or shall have been suspended from
trading thereon (excluding suspensions of not more than one trading day
resulting from business announcements by the Company) or the Company shall have
been notified of any pending or threatened proceeding or other action to delist
or suspend the Common Stock, (iii) there shall have occurred a Major Transaction
(as defined in Section 2(g)) or the public announcement of a pending Major
Transaction which has not been abandoned or terminated, or (iv) the Registration
Statement is no longer effective or stale for a period of more than five (5)
Trading Days as a result of the Company to timely file its financials, the
Company shall repurchase within thirty (30) calendar days of the occurrence of
one of the events listed in clauses (i), (ii), (iii) or (iv)above (each a “Repurchase Event”)
and subject to the limitations imposed by applicable federal and state law, all
or any part of the Shares issued to the Investor within the sixty (60) Trading
Days preceding the occurrence of the Repurchase Event and then held by the
Investor at a price per Share equal to the highest Volume Weighted Average Price
during the period beginning on the date of the Repurchase Event and ending on
and including the date on which the Investor is paid by the Company for the
repurchase of the Shares (the "Payment Amount"). If
the Company fails to pay to the Investor the full aggregate Payment Amount
within five (5) calendar days of the occurrence of a Repurchase Event, the
Company shall pay to the Investor, on the first Trading Day following such fifth
(5th)
calendar day, in addition to and not in lieu of the Payment Amount payable by
the Company to the Investor, an amount equal to 2% of the aggregate Payment
Amount then due and payable to the Investor, in cash by wire transfer, plus
compounded annual interest of 18% on such Payment Amount during the period,
beginning on the day following such fifth calendar day, during which such
Payment Amount, or any portion thereof, is outstanding.

    

    3.           Investor’s
Representations and Warranties.

    

    The Investor represents and warrants to
the Company that:

    

    a.           Sophisticated
Investor.  The Investor has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the
Securities.

    

    b.           Authorization;
Enforcement.                                                      This
Agreement has been duly and validly authorized, executed and delivered on behalf
of the Investor and is a valid and binding agreement of the Investor enforceable
against the Investor in accordance with its terms, subject as to enforceability
to general principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies..

    

    c.           Section 9 of the 1934
Act.  During the Open Period, the Investor will comply with the
provisions of Section 9 of the 1934 Act, and the rules promulgated thereunder,
with respect to transactions involving the Common Stock.

    

    d.   Accredited
Investor.  Investor is an “Accredited Investor” as that term is
defined in Rule 501(a)(3) of Regulation D of the 1933 Act.

    

    e.           No
Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Investor and the consummation by the Investor of
the transactions contemplated hereby and thereby will not (i) result in a
violation of the Articles of Incorporation or the By-laws or (ii) conflict with,
or constitute a material default (or an event which with notice or lapse of time
or both would become a material default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
contract, indenture mortgage, indebtedness or instrument to which the Investor
or any of its Subsidiaries is a party, or result in a violation of any law,
rule, regulation, order, judgment or decree applicable to the Investor or any of
its Subsidiaries or by which any property or asset of the Investor or any of its
Subsidiaries is bound or affected. The business of the Investor and its
Subsidiaries is not being conducted, and shall not be conducted, in violation of
any law, statute, ordinance, rule, order or regulation of any governmental
authority or agency, regulatory or self-regulatory agency, or court, except for
possible violations the sanctions for which either individually or in the
aggregate would not have a Material Adverse Effect.

    

    f.  Nothing contained in this
Agreement or any of the Transaction Documents creates or establishes a fiduciary
relationship on the part of the Investor or its principals. Nothing contained in
this Agreement or any of the Transaction Documents establishes a duty on the
part of the Investor or its principals not to trade on or otherwise use any
information disclosed to the Investor by the Company.

    

    g.   Trading Activities.
 The Investor’s trading activities with respect to the Company’s Common
Stock shall be in compliance with all applicable federal and state securities
laws, rules and regulations and the rules and regulations of the Principal
Market on which the Company’s Common Stock is listed or traded. Neither the
Investor nor its affiliates has an open short position in the Common Stock of
the Company, the Investor agrees that it shall not, and that it will cause its
affiliates not to, engage in any short sales of or hedging transactions with
respect to the Common Stock during the term of this Agreement and for a period
of ten (10) Trading Days following the termination of this Agreement, provided that the Company
acknowledges and agrees that upon receipt of an Put Notice the Investor has the
right to sell the shares to be issued to the Investor pursuant to the Put Notice
during the applicable Pricing Period.  

    

    h. Investment Purpose.
The Securities are being purchased by the Investor for its own account, and for
investment purposes.  The Investor agrees not to assign or in any way
transfer the Investor’s rights to the securities or any interest therein and
acknowledges that the Company will not recognize any purported assignment or
transfer except in accordance with applicable Federal and state securities laws.
 No other person has or will have a direct or indirect beneficial interest
in the Securities.  The Investor agrees not to sell, hypothecate or
otherwise transfer the Investor’s Securities unless the Securities are
registered under Federal and applicable state securities laws or unless, in the
opinion of counsel satisfactory to the Company, an exemption from such laws is
available.

    

    
      	
               
      

            	
              4.

            	
              Representations And
      Warranties Of The Company.

            

    

    

    Except as set forth in the Schedules
attached hereto, the Company represents and warrants to the Investor
that:

    

    a.           Organization and
Qualification.  The Company and its “Subsidiaries” (which
for purposes of this Agreement means any entity in which the Company, directly
or indirectly, owns capital stock or holds an equity or similar interest) (a
complete list of which is set forth in Schedule 4(a)) are corporations duly
organized and validly existing in good standing under the laws of the respective
jurisdictions of their incorporation, and have the requisite corporate power and
authorization to own their properties and to carry on their business as now
being conducted. Each of the Company and its Subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which its ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the failure to be
so qualified or be in good standing would not have a Material Adverse Effect. As
used in this Agreement, “Material Adverse
Effect” means any material adverse effect on the business, properties,
assets, operations, results of operations, financial condition or prospects of
the Company and its Subsidiaries, if any, taken as a whole, or on the
transactions contemplated hereby or by the agreements and instruments to be
entered into in connection herewith, or on the authority or ability of the
Company to perform its obligations under the Transaction Documents (as defined
in Section 1 and 4(b)below).

    

    b.           Authorization; Enforcement;
Compliance with Other Instruments.  (i) The Company has the
requisite corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement, the Placement Agent Agreement and
each of the other agreements entered into by the parties hereto in connection
with the transactions contemplated by this Agreement (collectively, the “Transaction
Documents”), and to issue the Shares in accordance with the terms hereof
and thereof, (ii) the execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby, including without limitation the reservation for issuance and the
issuance of the Shares pursuant to this Agreement, have been duly and validly
authorized by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors, or its
shareholders, (iii) the Transaction Documents have been duly and validly
executed and delivered by the Company, and (iv) the Transaction Documents
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and
remedies.

    

    c.           Capitalization.  As
of the date hereof, the authorized capital stock of the Company consists of (i)
75,000,000 shares of Common Stock, of which as of the date hereof, 18,000,000
shares are issued and outstanding, -0- shares of Preferred Stock and
approximately -0- shares of Common Stock are issuable upon the exercise of
options, warrants and conversion rights.  All of such outstanding
shares have been, or upon issuance will be, validly issued and are fully paid
and nonassessable.  Except as disclosed in Schedule 4(c) which is
attached hereto and made a part hereof, (i) no shares of the Company's capital
stock are subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company, (ii) there are no
outstanding debt securities, (iii) there are no outstanding shares of capital
stock, options, warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company or
any of its Subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its Subsidiaries, (iv) there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act (except the
Registration Rights Agreement), (v) there are no outstanding securities of the
Company or any of its Subsidiaries which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries, (vi) there
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities as described in this
Agreement, (vii) the Company does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement and (viii)
there is no dispute as to the class of any shares of the Company's capital
stock. The Company has furnished to the Investor, or the Investor has had access
through EDGAR to, true and correct copies of the Company's Articles of
Incorporation, as in effect on the date hereof (the “Articles Of
Incorporation”), and the Company's By-laws, as in effect on the date
hereof (the “By-laws”), and the
terms of all securities convertible into or exercisable for Common Stock and the
material rights of the holders thereof in respect thereto.

    

    d.           Issuance of
Shares.                                A
sufficient number of Shares issuable pursuant to this Agreement has been duly
authorized and reserved for issuance (subject to adjustment pursuant to the
Company's covenant set forth in Section 5(f) below) pursuant to this
Agreement.  Upon issuance in accordance with this Agreement, the
Securities will be validly issued, fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issue thereof. In the event the
Company cannot register all of the Registrable Securities, due to the remaining
number of authorized shares of Common Stock being insufficient, the Company will
use its best efforts to register the maximum number of shares it can based on
the remaining balance of authorized shares and will use its best efforts to
increase the number of its authorized shares as soon as reasonably
practicable.

    

    e.           No
Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby will not (i) result in a violation
of the Articles of Incorporation, any Certificate of Designations, Preferences
and Rights of any outstanding series of preferred stock of the Company or the
By-laws or (ii) conflict with, or constitute a material default (or an event
which with notice or lapse of time or both would become a material default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, contract, indenture mortgage,
indebtedness or instrument to which the Company or any of its Subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including United States federal and state securities laws and
regulations and the rules and regulations of the Principal Market or principal
securities exchange or trading market on which the Common Stock is traded or
listed) applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or
affected. Except as disclosed in Schedule 4(e), neither the Company nor its
Subsidiaries is in violation of any term of, or in default under, the Articles
of Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding series of preferred stock of the Company or the By-laws or their
organizational charter or by-laws, respectively, or any contract, agreement,
mortgage, indebtedness, indenture, instrument, judgment, decree or order or any
statute, rule or regulation applicable to the Company or its Subsidiaries,
except for possible conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations that would not individually or in
the aggregate have a Material Adverse Effect. The business of the Company and
its Subsidiaries is not being conducted, and shall not be conducted, in
violation of any law, statute, ordinance, rule, order or regulation of any
governmental authority or agency, regulatory or self-regulatory agency, or
court, except for possible violations the sanctions for which either
individually or in the aggregate would not have a Material Adverse
Effect.  Except as specifically contemplated by this Agreement and as
required under the 1933 Act, the Company is not required to obtain any consent,
authorization, permit or order of, or make any filing or registration (except
the filing of a registration statement)  with, any court, governmental
authority or agency, regulatory or self-regulatory agency or other third party
in order for it to execute, deliver or perform any of its obligations under, or
contemplated by, the Transaction Documents in accordance with the terms hereof
or thereof. All consents, authorizations, permits, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof and are
in full force and effect as of the date hereof. Except as disclosed in Schedule
4(e), the Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing. The Company is not, and will not
be, in violation of the listing requirements of the Principal Market as in
effect on the date hereof and on each of the Closing Dates and is not aware of
any facts which would reasonably lead to delisting of the Common Stock by the
Principal Market in the foreseeable future.

    

    f.           SEC Documents; Financial
Statements.  The Company is not delinquent in its filing of any
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC pursuant to the reporting requirements of the 1934 Act (all
of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the "SEC Documents"). The
Company has delivered to the Investor or its representatives, or they have had
access through EDGAR to, the SEC Documents. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other written information provided by or on behalf of the
Company to the Investor which is not included in the SEC Documents, including,
without limitation, information referred to in Section 4(d) of this Agreement,
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the statements therein, in the light of the circumstance
under which they are or were made, not misleading. Neither the Company nor any
of its Subsidiaries or any of their officers, directors, employees or agents
have provided the Investor with any material, nonpublic information which was
not publicly disclosed prior to the date hereof and any material, nonpublic
information provided to the Investor by the Company or its Subsidiaries or any
of their officers, directors, employees or agents prior to any Closing Date
shall be publicly disclosed by the Company prior to such Closing Date. Nothing
contained herein creates or establishes a fiduciary relationship on the part of
the Investor or its principals. Nothing contained herein establishes a duty on
the part of the Investor or its principals not to trade on or otherwise use any
information disclosed to the Investor by the Company.

    

    g.           Absence of Certain
Changes.  Except as disclosed in Schedule 4(g) or the SEC
Documents filed at least five (5) days prior to the date hereof, there has been
no change or development in the business, properties, assets, operations,
financial condition, results of operations or prospects of the Company or its
Subsidiaries which has had or reasonably could have a Material Adverse Effect.
The Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy law nor does the Company or
its Subsidiaries have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings.

    

    h.           Absence of
Litigation.  Except as set forth in Schedule 4(h), there is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the executive officers of Company or any of its
Subsidiaries, threatened against or affecting the Company, the Common Stock or
any of the Company's Subsidiaries or any of the Company's or the Company's
Subsidiaries' officers or directors in their capacities as such, in which an
adverse decision could have a Material Adverse Effect.

    

    i.           Acknowledgment Regarding
Investor's Purchase of Shares.  The Company acknowledges and
agrees that the Investor is acting solely in the capacity of arm's length
purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby. The Company further acknowledges that the
Investor is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and any advice given by the
Investor or any of its respective representatives or agents in connection with
the Transaction Documents and the transactions contemplated hereby and thereby
is merely incidental to the Investor's purchase of the Securities. The Company
further represents to the Investor that the Company's decision to enter into the
Transaction Documents has been based solely on the independent evaluation by the
Company and its representatives.

    

    j.           No Undisclosed Events,
Liabilities, Developments or Circumstances.  No event,
liability, development or circumstance has occurred or exists, or to its
knowledge is contemplated to occur, with respect to the Company or its
Subsidiaries or their respective business, properties, assets, prospects,
operations or financial condition, that would be required to be disclosed by the
Company under applicable securities laws on a registration statement filed with
the SEC relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly announced.

    

    k.           Employee
Relations.  Neither the Company nor any of its Subsidiaries is
involved in any union labor dispute nor, to the knowledge of the Company or any
of its Subsidiaries, is any such dispute threatened. Neither the Company nor any
of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that relations with their employees are
good. No executive officer (as defined in Rule 501(f) of the 1933 Act) has
notified the Company that such officer intends to leave the Company's employ or
otherwise terminate such officer's employment with the Company.

    

    l.           Intellectual Property
Rights.  The Company and its Subsidiaries own or possess
adequate rights or licenses to use all trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now conducted. Except
as set forth on Schedule 4(l), none of the Company's trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, government authorizations,
trade secrets or other intellectual property rights necessary to conduct its
business as now or as proposed to be conducted have expired or terminated, or
are expected to expire or terminate within two years from the date of this
Agreement. The Company and its Subsidiaries do not have any knowledge of any
infringement by the Company or its Subsidiaries of trademark, trade name rights,
patents, patent rights, copyrights, inventions, licenses, service names, service
marks, service mark registrations, trade secret or other similar rights of
others, or of any such development of similar or identical trade secrets or
technical information by others and, except as set forth on Schedule 4(l), there
is no claim, action or proceeding being made or brought against, or to the
Company's knowledge, being threatened against, the Company or its Subsidiaries
regarding trademark, trade name, patents, patent rights, invention, copyright,
license, service names, service marks, service mark registrations, trade secret
or other infringement; and the Company and its Subsidiaries are unaware of any
facts or circumstances which might give rise to any of the foregoing. The
Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual
properties.

    

    m.           Environmental
Laws.  The Company and its Subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"),
(ii) have received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective businesses and
(iii) are in compliance with all terms and conditions of any such permit,
license or approval where, in each of the three foregoing cases, the failure to
so comply would have, individually or in the aggregate, a Material Adverse
Effect.

    

    n.           Title.  The
Company and its Subsidiaries have good and marketable title in fee simple to all
real property and good and marketable title to all personal property owned by
them which is material to the business of the Company and its Subsidiaries, in
each case free and clear of all liens, encumbrances and defects except such as
are described in Schedule 4(n) or such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company or any of its Subsidiaries. Any real property and
facilities held under lease by the Company or any of its Subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its Subsidiaries.

    

    o.           Insurance.  The
Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in the businesses
in which the Company and its Subsidiaries are engaged. Neither the Company nor
any such Subsidiary has been refused any insurance coverage sought or applied
for and neither the Company nor any such Subsidiary has any reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have a Material
Adverse Effect.

    

    p.           Regulatory
Permits.  The Company and its Subsidiaries have in full force
and effect all certificates, approvals, authorizations and permits from the
appropriate federal, state, local or foreign regulatory authorities and
comparable foreign regulatory agencies, necessary to own, lease or operate their
respective properties and assets and conduct their respective businesses, and
neither the Company nor any such Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such certificate,
approval, authorization or permit, except for such certificates, approvals,
authorizations or permits which if not obtained, or such revocations or
modifications which, would not have a Material Adverse Effect.

    

    q.           Internal Accounting
Controls.  The Company and each of its Subsidiaries agrees to
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

    

    r.           No Materially Adverse
Contracts, Etc.  Neither the Company nor any of its
Subsidiaries is subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which in the judgment of the
Company's officers has or is expected in the future to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is a party to any
contract or agreement which in the judgment of the Company's officers has or is
expected to have a Material Adverse Effect.

    

    s.           Tax
Status.  The Company and each of its Subsidiaries has made or
filed all United States federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its Subsidiaries has
set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Company know of no basis for any such
claim.

    

    t.           Certain
Transactions.  Except as set forth on Schedule 4(t) and in the
SEC Documents filed at least ten days prior to the date hereof and except for
arm's length transactions pursuant to which the Company makes payments in the
ordinary course of business upon terms no less favorable than the Company could
obtain from third parties and other than the grant of stock options disclosed on
Schedule 4(c), none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company or any of its Subsidiaries
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any corporation, partnership,
trust or other entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or
partner.

    

    u.           Dilutive
Effect.  The Company understands and acknowledges that the
number of shares of Common Stock issuable upon purchases pursuant to this
Agreement will increase in certain circumstances including, but not necessarily
limited to, the circumstance wherein the trading price of the Common Stock
declines during the period between the Effective Date and the end of the Open
Period.  The Company’s executive officers and directors have studied
and fully understand the nature of the transactions contemplated by this
Agreement and recognize that they have a potential dilutive
effect.  The board of directors of the Company has concluded, in its
good faith business judgment that such issuance is in the best interests of the
Company.

    

    v.   Right of First
Refusal. The Company shall not, directly or indirectly, without the prior
written consent of Investor offer, sell, grant any option to purchase, or
otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition) any of its Common Stock or securities convertible
into Common Stock at a price that is less than the market price of the Common
Stock at the time of issuance of such security or investment (a "Subsequent
Financing") for a period of one year after the Effective Date, except (i)
the granting of options or warrants to employees, officers, directors and
consultants, and the issuance of shares upon exercise of options granted, under
any stock option plan heretofore or hereinafter duly adopted by the Company,
(ii) shares issued upon exercise of any currently outstanding warrants or
options and upon conversion of any currently outstanding convertible debenture
or convertible preferred stock, in each case disclosed pursuant to Section 4(c),
(iii) securities issued in connection with the capitalization or creation of a
joint venture with a strategic partner, (iv) shares issued to pay part or all of
the purchase price for the acquisition by the Company of another entity (which,
for purposes of this clause (iv), shall not include an individual or group of
individuals), and (v) shares issued in a bona fide public offering by the
Company of its securities, unless (A) the
Company delivers to Investor a written notice (the "Subsequent Financing
Notice") of its intention to effect such Subsequent Financing, which
Subsequent Financing Notice shall describe in reasonable detail the proposed
terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder, the person with whom such Subsequent Financing shall be effected,
and attached to which shall be a term sheet or similar document relating thereto
and (B) Investor shall not have notified the Company by 5:00 p.m. (New York
time) on the fifth (5th) Trading Day after its receipt of the Subsequent
Financing Notice of its willingness to provide, subject to completion of
mutually acceptable documentation, financing to the Company on substantially the
terms set forth in the Subsequent Financing Notice. If Investor shall fail to
notify the Company of its intention to enter into such negotiations within such
time period, then the Company may effect the Subsequent Financing substantially
upon the terms set forth in the Subsequent Financing Notice; Provided That the
Company shall provide Investor with a second Subsequent Financing Notice, and
Investor shall again have the right of first refusal set forth above in this
Section, if the Subsequent Financing subject to the initial Subsequent Financing
Notice shall not have been consummated for any reason on the terms set forth in
such Subsequent Financing Notice within thirty (30) Trading Days after the date
of the initial Subsequent Financing Notice. The rights granted to Investor in
this Section are not subject to any prior right of first refusal given to any
other person except as disclosed on Schedule 4(c).

    

    w.   Lock-up.  The
Company agrees to use its best efforts to have its officers, directors and
affiliates refrain from selling Common Stock during each Pricing
Period.

    

    x.   No General
Solicitation.  Neither the Company, nor any of its affiliates,
nor any person acting on its behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with the offer or sale of the Common Stock offered
hereby.

    

    y.   Opinion of Counsel.
 Investor shall receive an opinion letter from counsel to the Company on or
before the Execution Date, which opinion letter shall be attached as Exhibit
C.

    

    z.    Opinion of Counsel.
 The Company will obtain for the Investor, at the Company’s expense, any
and all opinions of counsel which may be reasonably required in order to sell
the securities issuable hereunder without restriction. (See Exhibit E attached
hereto.)

    

    
      	
               
      

            	
              5.

            	
              Covenants Of The
      Company

            

    

    

    a.           Best
Efforts.  The Company shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Section 7 of
this Agreement.

    

    b.           Blue
Sky.  The Company shall, at its sole cost and expense, on or
before each of the Closing Dates, take such action as the Company shall
reasonably determine is necessary to qualify the Securities for, or obtain
exemption for the Securities for, sale to the Investor at each of the Closings
pursuant to this Agreement under applicable securities or "Blue Sky" laws of
such states of the United States, as specified by Investor, and shall provide
evidence of any such action so taken to the Investor on or prior to the Closing
Date. The Company shall, at its sole cost and expense, make all filings and
reports relating to the offer and sale of the Securities required under the
applicable securities or “Blue Sky” laws of such states of the United States
following each of the Closing Dates.

    

    c.           Reporting
Status.  Until the earlier of (i) the first date which is after
the date this Agreement is terminated pursuant to Section 9 and on which the
Holders (as that term is defined in the Registration Rights Agreement) may sell
all of the Securities acquired pursuant to this Agreement without restriction
pursuant to Rule 144 promulgated under the 1933 Act (or successor thereto), or
(ii) the date on which (A) the Holders shall have sold all the Securities
issuable hereunder and (B) this Agreement has been terminated pursuant to
Section 9 (the "Registration
Period"), the Company shall file all reports required to be filed with
the SEC pursuant to the 1934 Act.

    

    d.           Use of
Proceeds.  The Company will use the proceeds from the sale of
the Shares (excluding amounts paid by the Company for fees as set forth in the
Transaction Documents) for general corporate and working capital
purposes.

    

    e.           Financial
Information.  The Company agrees to use its best efforts to
timely file all reports on EDGAR as may be applicable.

    

    f.           Reservation of
Shares.  Subject to the following sentence, the Company shall
take all action necessary to at all times have authorized, and reserved for the
purpose of issuance, a sufficient number of shares of Common Stock to provide
for the issuance of the Securities hereunder. In the event that the Company
determines that it does not have a sufficient number of authorized shares of
Common Stock to reserve and keep available for issuance as described in this
Section 5(f), the Company shall use its best efforts to increase the number of
authorized shares of Common Stock by seeking shareholder approval for the
authorization of such additional shares.

    

    g.           Listing.  The
Company shall promptly secure the listing of all of the Registrable Securities
(as defined in the Registration Rights Agreement) upon the Principal Market and
each other national securities exchange and automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all Registrable Securities from time to time
issuable under the terms of the Transaction Documents. The Company shall
maintain the Common Stock's authorization for quotation on the Principal Market.
Neither the Company nor any of its Subsidiaries shall take any action which
would be reasonably expected to result in the delisting or suspension of the
Common Stock on the Principal Market (excluding suspensions of not more than one
trading day resulting from business announcements by the Company). The Company
shall promptly provide to the Investor copies of any notices it receives from
the Principal Market regarding the continued eligibility of the Common Stock for
listing on such automated quotation system or securities exchange. The Company
shall pay all fees and expenses in connection with satisfying its obligations
under this Section 5(g).

    

    h.           Transactions With
Affiliates.  Except as set forth in Schedule 4(t) attached
hereto, the Company shall not, and shall cause each of its Subsidiaries not to,
enter into, amend, modify or supplement, or permit any Subsidiary to enter into,
amend, modify or supplement, any agreement, transaction, commitment or
arrangement with any of its or any Subsidiary's officers, directors, persons who
were officers or directors at any time during the previous two years,
shareholders who beneficially own 5% or more of the Common Stock, or affiliates
or with any individual related by blood, marriage or adoption to any such
individual or with any entity in which any such entity or individual owns a 5%
or more beneficial interest (each a “Related Party”),
except for (i) customary employment arrangements and benefit programs on
reasonable terms, (ii) any agreement, transaction, commitment or arrangement on
an arms-length basis on terms no less favorable than terms which would have been
obtainable from a person other than such Related Party, or (iii) any agreement,
transaction, commitment or arrangement which is approved by a majority of the
disinterested directors of the Company. For purposes hereof, any director who is
also an officer of the Company or any Subsidiary of the Company shall not be a
disinterested director with respect to any such agreement, transaction,
commitment or arrangement. “Affiliate” for
purposes hereof means, with respect to any person or entity, another person or
entity that, directly or indirectly, (i) has a 5% or more equity interest in
that person or entity, (ii) has 5% or more common ownership with that person or
entity, (iii) controls that person or entity, or (iv) shares common control with
that person or entity.  “Control” or "Controls" for
purposes hereof means that a person or entity has the power, direct or indirect,
to conduct or govern the policies of another person or entity.

    

    i.           Filing of Form
8-K.  On or before the date which is three (3) Trading Days
after the Execution Date, the Company shall file a Current Report on Form 8-K
with the SEC describing the terms of the transaction contemplated by the
Transaction Documents in the form required by the 1934 Act, if such filing is
required.

    

    j.           Corporate
Existence.  The Company shall use its best efforts to preserve
and continue the corporate existence of the Company.

    

    k.  Notice of Certain Events
Affecting Registration; Suspension of Right to Make a Put. The Company
shall promptly notify Investor upon the occurrence of any of the following
events in respect of a Registration Statement or related prospectus in respect
of an offering of the Shares: (i) receipt of any comments or
a  request for additional information by the SEC or any other federal
or state governmental authority either prior to or  during the period
of effectiveness of the Registration Statement for amendments or supplements to
the Registration Statement or related prospectus; (ii) the issuance by the SEC
or any other federal or state governmental authority of any stop order
suspending the effectiveness of any Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) the happening of any event that makes any
statement made in such Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the case of
a Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case of
the related prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (v) the Company's reasonable
determination that a post-effective amendment to the Registration Statement
would be appropriate, and the Company shall promptly make available to Investor
any such supplement or amendment to the related prospectus. The Company shall
not deliver to Investor any Put Notice during the continuation of any of the
foregoing events.

    

    l. The Company is aware and
acknowledges that it may not be able to issue Put Notices under this Agreement
if it can not obtain an effective Registration Statement or if any issuances of
Common Stock pursuant to any Put Notices would violate any rules of the
Principal Market.  The Company further is aware and acknowledges that any
fees paid or shares issued pursuant to this Agreement shall be earned on the
date hereof and not refundable or returnable under any
circumstances.

    

    m. Reimbursement. If (i)
Investor, other than by reason of its gross negligence or willful misconduct,
becomes involved in any capacity in any action, proceeding or investigation
brought by any shareholder of the Company, in connection with or as a result of
the consummation of the transactions contemplated by the Transaction Documents,
or if Investor is impleaded in any such action, proceeding or investigation by
any person, or (ii) Investor, other than by reason of its gross negligence or
willful misconduct or by reason of its trading of the Common Stock in a manner
that is illegal under the federal securities laws, becomes involved in any
capacity in any action, proceeding or investigation brought by the SEC against
or involving the Company or in connection with or as a result of the
consummation of the transactions contemplated by the Transaction Documents, or
if Investor is impleaded in any such action, proceeding or investigation by any
person, then in any such case, the Company will reimburse Investor for its
reasonable legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith, as such expenses are incurred. In
addition, other than with respect to any matter in which Investor is a named
party, the Company will pay to Investor the charges, as reasonably determined by
Investor, for the time of any officers or employees of Investor devoted to
appearing and preparing to appear as witnesses, assisting in preparation for
hearings, trials or pretrial matters, or otherwise with respect to inquiries,
hearing, trials, and other proceedings relating to the subject matter of this
Agreement. The reimbursement obligations of the Company under this section shall
be in addition to any liability which the Company may otherwise have, shall
extend upon the same terms and conditions to any affiliates of Investor that are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees, attorneys, accountants, auditors and controlling
persons (if any), as the case may be, of Investor and any such affiliate, and
shall be binding upon and inure to the benefit of any successors of the Company,
Investor and any such affiliate and any such person.

    

    n.  Transfer Agent
Instructions.  Upon effectiveness of the Registration Statement the
Company shall deliver instructions to its transfer agent to issue shares of
Common Stock to the Investor free of restrictive legends on or before each
Closing Date pursuant to the blanket legal opinion to be delivered in accordance
with the terms of Section 3(k) of the Registration Rights
Agreement.

    

    o.  Non-disclosure of Non-public
Information.

    

    (i)  The
Company covenants and agrees that neither it nor any other Person acting on its
behalf will provide the Investor or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto the Company identifies such information as being material
non-public information and provides one of the principals of the Investor with
the opportunity to accept or refuse to accept such material non-public
information for review.  The Company acknowledges that only Chris Messalas
or Joseph B. LaRocco shall have the authority to accept the receipt of material
non-public information from the Company.  The Company acknowledges that any
information provided to the Investor without first being accepted by these two
designated individuals will be deemed not to be material non-public information
and the Investor shall be under no duty to maintain the confidentiality of such
information.  The Company understands and confirms that the Investor shall
be relying on the foregoing representations in effecting transactions in
securities of the Company.  

     
 

    (ii)  Nothing
herein shall require the Company to disclose non-public information to the
Investor or its advisors or representatives, and the Company represents that it
does not disseminate non-public information to any investors who purchase stock
in the Company in a public offering, to money managers or to securities
analysts, provided, however, that notwithstanding anything herein to the
contrary, the Company will, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and, if any, underwriters, of any
event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Registration Statement
would cause such prospectus to include a material misstatement or to omit a
material fact required to be stated therein in order to make the statements,
therein, in light of the circumstances in which they were made, not misleading.
 Nothing contained in this Section shall be construed to mean that such
persons or entities other than the Investor (without the written consent of the
Investor prior to disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in accordance with the
terms of this Agreement and nothing herein shall prevent any such persons or
entities from notifying the Company of their opinion that based on such due
diligence by such persons or entities, that the Registration Statement contains
an untrue statement of material fact or omits a material fact required to be
stated in the Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.

    

    (iii)  Nothing contained
herein creates or establishes a fiduciary relationship on the part of the
Investor or its principals. Nothing contained herein establishes a duty on the
part of the Investor or its principals not to trade on or otherwise use any
information disclosed to the Investor by the Company.

    

    6.  Cover.  If, the number of
Shares represented by any Put Notices become restricted or are no longer freely
trading for any reason, and after the applicable Closing Date, the Investor
purchases, in an open market transaction or otherwise, the Company’s Common
Stock (the “Covering
Shares”) in order to make delivery in satisfaction of a sale of Common
Stock by the Investor (the “Sold Shares”), which
delivery such Investor anticipated to make using the Shares represented by the
Put Notice  (a “Buy-In”), the Company
shall pay to the Investor the Buy-In Adjustment Amount (as defined
below).  The “Buy-In Adjustment
Amount” is the amount equal to the excess, if any, of (a) the Investor’s
total purchase price (including brokerage commissions, if any) for the Covering
Shares over (b) the net proceeds (after brokerage commissions, if any) received
by the Investor from the sale of the  Sold Shares.  The
Company shall pay the Buy-In Adjustment Amount to the Investor in immediately
available funds immediately upon demand by the Investor.  By way of
illustration and not in limitation of the foregoing, if the Investor purchases
Common Stock having a total purchase price (including brokerage commissions) of
$11,000 to cover a Buy-In with respect to the Common Stock it sold for net
proceeds of $10,000, the Buy-In Adjustment Amount which the Company will be
required to pay to the Investor will be $1,000.

    

    
      	
               
      

            	
              7.

            	
              Conditions Of The
      Company's Obligation To
Sell.

            

    

    

    The obligation hereunder of the Company
to issue and sell the Shares to the Investor is further subject to the
satisfaction, at or before each Closing Date, of each of the following
conditions set forth below. These conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole
discretion.

    

    a.           The
Investor shall have executed each of this Agreement and the Registration Rights
Agreement and delivered the same to the Company.

    

    b.           The
Investor shall have delivered to the Company the Purchase Price for the Shares
being purchased by the Investor at the Closing (after receipt of confirmation of
delivery of such Shares) by wire transfer of immediately available funds
pursuant to the wire instructions provided by the Company.

    

    c.           The
representations and warranties of the Investor shall be true and correct as of
the date when made and as of the applicable Closing Date as though made at that
time (except for representations and warranties that speak as of a specific
date), and the Investor shall have performed, satisfied and complied with the
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Investor at or prior to such
Closing Date.

    

    d.           No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.

    

    
      	
              e.  

            	
              No
      Valuation Event shall have occurred since the applicable Pricing
      Period.

            

    

    

    
      	
               
      

            	
              8.

            	
              Further Conditions Of
      The Investor's Obligation To
Purchase.

            

    

    

    The obligation of the Investor
hereunder to purchase Shares is subject to the satisfaction, on or before each
Closing Date, of each of the following conditions set forth below.

    

    a.           The
Company shall have executed each of the Transaction Documents and delivered the
same to the Investor.

    

    b.           The
Common Stock shall be authorized for quotation on the Principal Market and
trading in the Common Stock shall not have been suspended by the Principal
Market or the SEC, at any time beginning on the date hereof and through and
including the respective Closing Date (excluding suspensions of not more than
one Trading Day resulting from business announcements by the Company, provided
that such suspensions occur prior to the Company's delivery of the Put Notice
related to such Closing).

    

    c.           The
representations and warranties of the Company shall be true and correct as of
the date when made and as of the applicable Closing Date as though made at that
time (except for (i) representations and warranties that speak as of a specific
date and (ii) with respect to the representations made in Sections 4(g), (h) and
(j) and the third sentence of Section 4(k) hereof, events which occur on or
after the date of this Agreement and are disclosed in SEC filings made by the
Company at least ten (10) Trading Days prior to the applicable Put Notice Date)
and the Company shall have performed, satisfied and complied with the covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company on or before such Closing
Date.  The Investor may request an update as of such Closing Date
regarding the representation contained in Section 4(c) above.

    

    d.           
The Board of Directors of the Company shall have adopted resolutions consistent
with Section 4(b)(ii) above and in a form reasonably acceptable to the Investor
(the “Resolutions”) and
such Resolutions shall not have been amended or rescinded prior to such Closing
Date.

    

    e.           Investor
shall have received a copy of the Company’s Resolutions authorizing this
offering which shall be attached hereto as Exhibit
B.

     
 

    f.           The
Company shall have executed and delivered to the Investor the certificates
representing, or have executed electronic book-entry transfer of, the Shares (in
such denominations as such Investor shall request) being purchased by the
Investor at such Closing.

    

    g.           No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by this Agreement.

    

    h.           The
Registration Statement shall be effective on each Closing Date and no stop order
suspending the effectiveness of the Registration statement shall be in effect or
shall be pending or threatened. Furthermore, on each Closing Date (i) neither
the Company nor Investor shall have received notice that the SEC has issued or
intends to issue a stop order with respect to such Registration Statement or
that the SEC otherwise has suspended or withdrawn the effectiveness of such
Registration Statement, either temporarily or permanently, or intends or has
threatened to do so (unless the SEC's concerns have been addressed and Investor
is reasonably satisfied that the SEC no longer is considering or intends to take
such action),and (ii) no other suspension of the use or withdrawal of the
effectiveness of such Registration Statement or related prospectus shall
exist.

    

    i.           At
the time of each Closing, the Registration Statement (including information or
documents incorporated by reference therein) and any amendments or supplements
thereto shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading or which would require public disclosure or an
update supplement to the prospectus.

    

    j.           There
shall have been no filing of a petition in bankruptcy, either voluntarily or
involuntarily, with respect to the Company and there shall not have been
commenced any proceedings under any bankruptcy or insolvency laws, or any laws
relating to the relief of debtors, readjustment of indebtedness or
reorganization of debtors, and there shall have been no calling of a meeting of
creditors of the Company or appointment of a committee of creditors or
liquidating agents or offering of a composition or extension to creditors by,
for, with or without the consent or acquiescence of the Company.

    

    k.           If
applicable, the shareholders of the Company shall have approved the issuance of
any Shares in excess of the Maximum Common Stock Issuance in accordance with
Section 2(i).

    

    l.           The
conditions to such Closing set forth in Section 2(f) shall have been satisfied
on or before such Closing Date.

    

    m.           The
Company shall have delivered to such Investor such other documents relating to
the transactions contemplated by this Agreement as such Investor or its counsel
may reasonably request upon reasonable advance notice.

    

    9.           Termination.  This
Agreement shall terminate upon any of the following events:

    

    (i) the
earlier of the date upon which the Investor has purchased pursuant to this
Agreement 4,000,000 shares or the Company’s Common Stock or an aggregate of
$6,000,000 of the Common Stock of the Company; provided that the Company’s
representations, warranties and covenants contained in this Agreement insofar as
applicable to the transactions consummated hereunder prior to such termination,
shall survive the termination of this Agreement for the period of any applicable
statute of limitations,

    

    (ii) on
the date which is twenty-four (24) months after the Effective Date;

    

    (iii)           if
the Company shall file or consent by answer or otherwise to the entry of an
order for relief or approving a petition for relief, reorganization or
arrangement or any other petition in bankruptcy for liquidation or to take
advantage of any bankruptcy or insolvency law of any jurisdiction, or shall make
an assignment for the benefit of its creditors, or shall consent to the
appointment of a custodian, receiver, trustee or other officer with similar
powers of itself or of any substantial part of its property, or shall be
adjudicated a bankrupt or insolvent, or shall take corporate action for the
purpose of any of the foregoing, or if a court or governmental authority of
competent jurisdiction shall enter an order appointing a custodian, receiver,
trustee or other officer with similar powers with respect to the Company or any
substantial part of its property or an order for relief or approving a petition
for relief or reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or insolvency law, or an
order for the dissolution, winding up or liquidation of the Company, or if any
such petition shall be filed against the Company; or

    

    (iv)           if
the Company shall issue or sell any equity securities or securities convertible
into, or exchangeable for, equity securities (other than the current convertible
debenture offering) or enter into any other equity financing facility during the
Open Period, other than in compliance with Section 4(v).

    

    Upon the
occurrence of one of the above-described events, the Company shall send written
notice of such event to the Investor.

    

    10.  Indemnification.

    

    (a)  In
consideration of the Investor’s execution and delivery of this Agreement, and in
addition to all of the Company’s other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless the Investor, and all
of its officers, directors, partners, employees and agents (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Investor
Indemnitees”) from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such Investor
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified
Liabilities”), incurred by the Investor Indemnitees or any of them as a
result of, or arising out of, or relating to (i) any misrepresentation or breach
of any representation or warranty made by the Company in this Agreement or the
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, (ii) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement or the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, or (iii) any cause of action, suit or claim brought or made against
such Investor Indemnitee not arising out of any action or inaction of an
Investor Indemnitee, and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement or any other instrument,
document or agreement executed pursuant hereto by any of the Investor
Indemnitees.  To the extent that the foregoing undertaking by the Company
may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.

    

    (b)  In
consideration of the Company’s execution and delivery of this Agreement, and in
addition to all of the Investor’s other obligations under this Agreement, the
Investor shall defend, protect, indemnify and hold harmless the Company and all
of its officers, directors, shareholders, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the “Company Indemnitees”)
from and against any and all Indemnified Liabilities incurred by the Company
Indemnitees or any of them as a result of, or arising out of, or relating to (i)
any misrepresentation or breach of any representation or warranty made by the
Investor in this Agreement, the Registration Rights Agreement, or any instrument
or document contemplated hereby or thereby executed by the Investor, (ii) any
breach of any covenant, agreement or obligation of the Investor(s) contained in
this Agreement,  the Registration Rights Agreement or any other
certificate, instrument or document contemplated hereby or thereby executed by
the Investor, or (iii) any cause of action, suit or claim brought or made
against such Company Indemnitee based on  misrepresentations or due to a
 breach by the Investor and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement or any other instrument,
document or agreement executed pursuant hereto by any of the Company
Indemnitees.  To the extent that the foregoing undertaking by the Investor
may be unenforceable for any reason, the Investor shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.

    

    (c)  The
obligations of the parties to indemnify or make contribution under this Section
10 shall survive termination of this Agreement.

    

    
      	
               
      

            	
              11.

            	
              Governing Law;
      Miscellaneous.

            

    

    

    a.           Governing Law. This
Agreement shall be governed by and interpreted in accordance with the laws of
the State of New York without regard to the principles of conflict of laws. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.  If any provision of
this Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.

    

    
      	
              b.  

            	
              Commitment Fees;
      Structuring Fees; Placement Agent Fees; and Legal
    Fees.

            

    

    

    (i)  As
an inducement to LeadDog Capital, L.P. to enter into this Agreement, the Company
has agreed to issue to LeadDog Capital, L.P. as a commitment fee a Warrant to
purchase 150,000 shares of its Common Stock.  The shares underlying
the Warrant will be registered in the current offering and issued to LeadDog
Capital, L.P. in certificate form no later than five (5) Trading Days after the
Execution Date.

    

    
      	
               
      

            	
               (ii)   The
      Company has agreed to issue to LeadDog Capital Markets, LLC as a
      structuring fee a Warrant to purchase 150,000 shares of its Common Stock.
      The shares underlying the Warrant will be registered in the current
      offering and issued to LeadDog Capital Markets, LLC in certificate form no
      later than five (5) trading days after the Execution
  Date.

            

    

    

    (iii)  The
Company shall be solely responsible for paying the Placement Agent its fee
pursuant to the Placement Agent Agreement.

    

    (iv)  The
Company and the Investor shall be responsible for their own attorney’s fees
involved in the preparation and review of the Transaction Documents and the
closing of the transaction.

    

    (v)     Except
as otherwise set forth herein, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. Any attorneys' fees and expenses
incurred by either the Company or by the Investor in connection with the
preparation, negotiation, execution and delivery of any amendments to this
Agreement or relating to the enforcement of the rights of any party, after the
occurrence of any breach of the terms of this Agreement by another party or any
default by another party in respect of the transactions contemplated hereunder,
shall be paid on demand by the party which breached the Agreement and/or
defaulted, as the case may be. The Company shall pay all stamp and other taxes
and duties levied in connection with the issuance of any Securities issued
pursuant hereto.

    

    c.           Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.

    

    d.           Headings;
Singular/Plural. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.  Whenever required by the context of this Agreement, the
singular shall include the plural and masculine shall include the
feminine.

    

    e.           Severability. If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.

    

    f.           Entire Agreement;
Amendments. This Agreement supersedes all other prior oral or written
agreements between the Investor, the Company, their affiliates and persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement and the instruments referenced herein (including the other Transaction
Documents) contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Investor makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be amended other than by an instrument in writing signed by
the Company and the Investor, and no provision hereof may be waived other than
by an instrument in writing signed by the party against whom enforcement is
sought.

    

    g.           Notices. Any notices
or other communications required or permitted to be given under the terms of
this Agreement must be in writing and will be deemed to have been delivered (i)
upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one
(1) day after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:

    

    If to the
Company:

    

    Morgan
Mining Corp.

    29377
Rancho California Road

    Suite
204

    Temecula,
CA 92591

    

    Attention:  W.
Scott Lawler, Esq.

    Telephone:

    Facsimile:

    

    If to the
Investor:

    

    At the address listed in the
Questionnaire.

    

    Each party shall provide five (5) days'
prior written notice to the other party of any change in address or facsimile
number.

    

    
      	
              h.  

            	
              No Assignment.
      This Agreement may not be assigned.

            

    

    

    i.           No Third Party
Beneficiaries. This Agreement is intended for the benefit of the parties
hereto and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

    

    j.           Survival. The
representations and warranties of the Company and the Investor contained in
Sections 2 and 3, the agreements and covenants set forth in Sections 4 and 5,
and the indemnification provisions set forth in Section 10, shall survive each
of the Closings. The Investor shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.

    

    k.           Publicity.  The
Company and Investor shall consult with each other in issuing any press releases
or otherwise making public statements with respect to the transactions
contemplated hereby and no party shall issue any such press release or otherwise
make any such public statement without the prior written consent of the other
parties, which consent shall not be unreasonably withheld or delayed, except
that no prior consent shall be required if such disclosure is required by law,
in which such case the disclosing party shall provide the other parties with
prior notice of such public statement. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of Investor without the prior
written consent of such Investor, except to the extent required by law. Investor
acknowledges that this Agreement and all or part of the Transaction Documents
may be deemed to be "material contracts" as that term is defined by Item
601(b)(10) of Regulation S-K, and that the Company may therefore be required to
file such documents as exhibits to reports or registration statements filed
under the Securities 1933 Act or the 1934 Act. Investor further agrees that the
status of such documents and materials as material contracts shall be determined
solely by the Company, in consultation with its counsel.

    

    l.           Further Assurances.
Each party shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated
hereby.

    

    m.           Placement Agent.
Except as set forth in the Placement Agent Agreement, no fees or commissions
will be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other person or entity, with
respect to the transactions contemplated by the Transaction
Documents.  The Investor shall have no obligation with respect to any
fees or with respect to any claims made by or on behalf of other persons or
entities for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by the Transaction
Documents.  The Company shall indemnify and hold harmless the
Investor, their employees, officers, directors, agents, and partners, and their
respective affiliates, from and against all claims, losses, damages, costs
(including the costs of preparation and attorney’s fees) and expenses incurred
in respect of any such claimed or existing fees, as such fees and expenses are
incurred.

    

    n.           No Strict
Construction. The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any party.

    

    o.           Remedies. The
Investor and each holder of the Shares shall have all rights and remedies set
forth in this Agreement and the Registration Rights Agreement and all rights and
remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any default or breach of any
provision of this Agreement, including the recovery of reasonable attorneys fees
and costs, and to exercise all other rights granted by law.

    

    p.           Payment Set Aside. To
the extent that the Company makes a payment or payments to the Investor
hereunder or the Registration Rights Agreement or the Investor enforces or
exercises its rights hereunder or thereunder, and such payment or payments or
the proceeds of such enforcement or exercise or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise
restored to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

    

    [Balance
of this page intentionally left blank.]

    MORGAN
MINING CORP.

    QUESTIONNAIRE

    

    

    The information contained in this
Questionnaire is being furnished in order to determine whether the undersigned’s
subscription to purchase the Shares described in this Agreement may be
accepted.

    

    All Information Contained In
This Questionnaire Will Be Treated Confidentially.  The
undersigned understands, however, that the Company may present this
Questionnaire to such parties as it deems appropriate if called upon to
establish that the proposed offer and sale of the Securities is exempt from
registration under the 1933 Act, as amended.  Further, the undersigned
understands that the offering may be required to be reported to the Securities
and Exchange Commission, NASDAQ and to various state securities and “blue sky”
regulators.

    

    In Addition To Signing The
Signature Page, If Requested By The Company, The Undersigned Must Complete Form
W-9.

    

    I.           Please Check Each Of The
Statements Below That Applies.

    

    
      	 	
              1.

            	
              The
      undersigned: (a) has total assets in excess of $5,000,000; (b) was not
      formed for the specific purpose of acquiring the securities and (c) has
      its principal place of business in
___________.

            

    

    

    
      	 	
              2.

            	
              The
      undersigned is a natural person whose individual net worth* or joint net
      worth with his or her spouse exceeds
$1,000,000.

            

    

    

    
      	 	
              3.

            	
              The
      undersigned is a natural person who had an individual income* in excess of
      $200,000 in each of the two most recent years and who reasonably expects
      an individual income in excess of $200,000 in the current
      year.  Such income is solely that of the undersigned and
      excludes the income of the undersigned’s
spouse.

            

    

    

    
      	 	
              4.

            	
              The
      undersigned is a natural person who, together with his or her spouse, has
      had a joint income* in excess of $300,000 in each of the two most recent
      years and who reasonably expects a joint income in excess of $300,000 in
      the current year.

            

    

    

    *           For
purposes of this Questionnaire, the term “net worth” means the excess of total
assets over total liabilities.  In determining “income”, an investor
should add to his or her adjusted gross income any amounts attributable to
tax-exempt income received, losses claimed as a limited partner in any limited
partnership, deductions claimed for depletion, contributions to IRA or Keogh
retirement plan, alimony payments and any amount by which income from long-term
capital gains has been reduced in arriving at adjusted gross
income.

    

    

    

    

    5.           The
undersigned is:

    

    
      	
               
      

            	
              (a)

            	
              a
      bank as defined in Section 3(a)(2) of the 1933 Act;
  or

            

    

    

    
      	 	
              (b)

            	
              a
      savings and loan association or other institution as defined in Section
      3(a)(5)(A) of the 1933 Act whether acting in its individual or fiduciary
      capacity; or

            

    

    

    
      	
               
      

            	
              (c)

            	
              a
      broker or dealer registered pursuant to Section 15 of the 1934
      Act;  or

            

    

    

    
      	
               
      

            	
              (d)

            	
              an
      insurance company as defined in Section 2(13) of the 1933 Act;
      or

            

    

    

    
      	
               
      

            	
              (e)

            	
              An
      investment company registered under the Investment Company Act of 1940 or
      a business development company as defined in Section 2(a)(48) of the
      Investment Company Act of 1940; or

            

    

    

    
      	
               
      

            	
              (f)

            	
              a
      small business investment company licensed by the U.S. Small Business
      Administration under Section 301 (c) or (d) of the Small Business
      Investment Act of 1958; or

            

    

    

    
      	
               
      

            	
              6.

            	
              The
      undersigned is an entity in which all of the equity owners are “accredited
      investors”, as that term is defined in Rule 501(a)(3) of Regulation D of
      the 1933 Act.

            

    

    

    
      	
              II.

            	
              INVESTOR
      INFORMATION.

            

    

    

    
      	
               
      

            	
              (a)

            	
              IF
      THE UNDERSIGNED IS AN INDIVIDUAL:

            

    

    

    
      	
               
      

            	
              Name
      _______________________________________________

            

    

    

    
      	
               
      

            	
              Street
      Address
________________________________________

            

    

    

    
      	
               
      

            	
              City,
      State, Zip Code
  ___________________________________

            

    

    

    
      	
               
      

            	
              Phone
      ____________________ Fax
_______________________

            

    

    

    

    
      	
               
      

            	
              Send
      Correspondence to:

            

    

    _____________________________________________________

    
      	
               
      

            	
              _____________________________________________________

            

    

    
      	
               
      

            	
              _____________________________________________________

            

    

    

    

    
      	
               
      

            	
              (b)

            	
              IF
      THE UNDERSIGNED IS NOT AN
INDIVIDUAL:

            

    

    

    
      	
               
      

            	
              Name
      of Entity
  ________________________________________

            

    

    

    Person’s
Name ___________________ Title_________________

    

    
      	
               
      

            	
              State
      of Organization
  ___________________________________

            

    

    

    
      	
               
      

            	
              Principal
      Business Address
______________________________

            

    

    

    
      	
               
      

            	
              City,
      State, Zip Code
  ___________________________________

            

    

    

    

    
      	
               
      

            	
              Phone
      ____________________ Fax
_______________________

            

    

    

    
      	
               
      

            	
              Send
      Correspondence to:

            

    

    _____________________________________________________

    
      	
               
      

            	
              _____________________________________________________

            

    

    
      	
               
      

            	
              _____________________________________________________

            

    

    

    

    

    

    

    

    MORGAN
MINING CORP.

    SIGNATURE
PAGE

    

    Your signature on this Signature Page
evidences your agreement to be bound by this Agreement, the Questionnaire, and
the Registration Rights Agreement.

    

    1.           The
undersigned hereby represents that (a) the information contained in the
Questionnaire is complete and accurate and (b) the undersigned will notify Morgan Mining Corp.
immediately if any material change in any of the information occurs prior to the
acceptance of the undersigned’s subscription and will promptly send Morgan Mining Corp.
written confirmation of such change.

    

    2.           The
undersigned signatory hereby certifies that he/she has read and understands this
Agreement and Questionnaire, and the representations made by the undersigned in
this Agreement and Questionnaire are true and accurate.

    

           ____________________________

       Date

    

    

    By:
____________________________

    (Signature)

    

    Name:
_________________________

    (Please Type or Print)

    Title:
___________________________

    (Please Type or Print)

    

    -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

    

    COMPANY ACCEPTANCE
PAGE

    

    

    This  Agreement
accepted and agreed

    to
this 15th day of October, 2009.

    

    

    MORGAN
MINING CORP.

    

    

    

    By__________________________________

          Robert
W. Thayer, its President

     
 

    

    

    

    

    LIST OF
EXHIBITS

    -----------------

    

    

    
      	
              EXHIBIT
      A

            	
              Registration
      Rights Agreement

            

    

    
      	
              EXHIBIT
      B

            	
              Board
      Resolution

            

    

    
      	
              EXHIBIT
      C

            	
              Opinion
      of Company’s Counsel (Closing)

            

    

    
      	
              EXHIBIT
      D

            	
              Put
      Notice

            

    

    
      	
              EXHIBIT
      E

            	
              Opinion
      of Company’s Counsel (Post Closing)

            

    

    

    

    LIST OF
SCHEDULES

    -----------------

    

    Schedule
4(a)                 Subsidiaries

    Schedule
4(c)                 Capitalization

    Schedule
4(e)                 Conflicts

    Schedule
4(g)                 Material
Changes

    Schedule
4(h)                 Litigation

    Schedule
4(l)                 Intellectual
Property

    Schedule
4(n)                 Liens

    Schedule
4(t)                 Certain
Transactions

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

     

    EXHIBIT
D

     

     

    PUT
NOTICE NO._________

     

     

    MORGAN
MINING CORP.

     

    The
undersigned, _______________________ hereby certifies, with respect to the sale
of shares of Common Stock of MORGAN MINING CORP. (the
“Company”)
issuable in connection with this Advance Notice, delivered pursuant to the
Standby Equity Purchase Agreement (the “Agreement”), as
follows:

     

    1.  The
undersigned is the duly elected ______________ of the Company.

    

    2.  There
are no fundamental changes to the information set forth in the Registration
Statement which would require the Company to file a post effective amendment to
the Registration Statement.

    

    3.   The
Company has performed in all material respects all covenants and agreements to
be performed by the Company and has complied in all material respects with all
obligations and conditions contained in the Agreement on or prior to the Put
Notice Date, and shall continue to perform in all material respects all
covenants and agreements to be performed by the Company through the applicable
Put Date.  All conditions to the delivery of this Put Notice are satisfied
as of the date hereof.

    

    4.  The
undersigned hereby represents, warrants and covenants that it has made all
filings (“SEC
Filings”) required to be made by it pursuant to applicable securities
laws (including, without limitation, all filings required under the Securities
Exchange Act of 1934, which include Forms 10-Q or 10-QSB, 10-K or 10-KSB, 8-K,
etc.).  All SEC Filings and other public disclosures made by the Company,
including, without limitation, all press releases, analysts meetings and calls,
etc. (collectively, the “Public Disclosures”),
have been reviewed and approved for release by the Company’s attorneys and, if
containing financial information, the Company’s independent certified public
accountants.  None of the Company’s Public Disclosures contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

    

     5.  The
Advance requested is $_____________________.

    The
undersigned has executed this Put Notice this ____ day of
_________________.

     

    MORGAN
MINING CORP.

    

    By:

    Name:

    Title:

    

    

    

     (a)  SUBSIDIARIES

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    SCHEDULE
4(c)  CAPITALIZATION

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    SCHEDULE
4(e) CONFLICTS

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    SCHEDULE
4(g)  MATERIAL CHANGES

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    SCHEDULE
4(h)  LITIGATION

    

     
 

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    SCHEDULE
4(l)  INTELLECTUAL PROPERTY

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    SCHEDULE
4(n)  LIENS

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    SCHEDULE
4(t)  CERTAIN TRANSACTIONSExhibit 10.17

 

 

 

$33,850,000

 

CREDIT AGREEMENT

 

dated as of October 30, 2009,

 

among

 

IMPAC MORTGAGE HOLDINGS, INC.,

IMPAC FUNDING CORPORATION, 

IMPAC WAREHOUSE LENDING GROUP, INC., and

INTEGRATED REAL ESTATE SERVICE CORP.

 

as Borrowers,

 

UBS REAL ESTATE SECURITIES, INC.,

 

as Lender

 

 

 

 

TABLE
OF CONTENTS

 

	
  Section

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
   

  
	
  DEFINITIONS

  
	
   

  
	
  SECTION 1.01 Defined Terms

  	
   

  	
  1

  
	
  SECTION 1.02 Classification of Loans and Borrowings

  	
   

  	
  17

  
	
  SECTION 1.03 Terms Generally

  	
   

  	
  17

  
	
  SECTION 1.04 Accounting Terms; GAAP

  	
   

  	
  18

  
	
  SECTION 1.05 Resolution of Drafting Ambiguities

  	
   

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  
	
   

  
	
  THE LOANS

  
	
   

  
	
  SECTION 2.01 Loans

  	
   

  	
  18

  
	
  SECTION 2.02 Evidence of Debt; Repayment of Loans

  	
   

  	
  18

  
	
  SECTION 2.03 Interest on Loans

  	
   

  	
  19

  
	
  SECTION 2.04 Amortization of Term Borrowings

  	
   

  	
  19

  
	
  SECTION 2.05 Optional and Mandatory Prepayments of
  Loans

  	
   

  	
  20

  
	
  SECTION 2.06 Alternate Rate of Interest

  	
   

  	
  21

  
	
  SECTION 2.07 Yield Protection

  	
   

  	
  22

  
	
  SECTION 2.08 [Reserved.]

  	
   

  	
  23

  
	
  SECTION 2.09 Payments Generally

  	
   

  	
  23

  
	
  SECTION 2.10 Taxes

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  
	
   

  
	
  REPRESENTATIONS
  AND WARRANTIES

  
	
   

  
	
  SECTION 3.01 Organization; Powers

  	
   

  	
  25

  
	
  SECTION 3.02 Authorization; Enforceability

  	
   

  	
  25

  
	
  SECTION 3.03 No Conflicts

  	
   

  	
  25

  
	
  SECTION 3.04 Financial Statements

  	
   

  	
  26

  
	
  SECTION 3.05 Properties

  	
   

  	
  26

  
	
  SECTION 3.06 [Reserved]

  	
   

  	
  27

  
	
  SECTION 3.07 Equity Interests and Subsidiaries

  	
   

  	
  27

  
	
  SECTION 3.08 Litigation; Compliance with Laws

  	
   

  	
  27

  
	
  SECTION 3.09 Agreements

  	
   

  	
  27

  
	
  SECTION 3.10 [Reserved]

  	
   

  	
  27

  
	
  SECTION 3.11 [Reserved]

  	
   

  	
  27

  
	
  SECTION 3.12 [Reserved]

  	
   

  	
  27

  
	
  SECTION 3.13 Taxes

  	
   

  	
  27

  
	
  SECTION 3.14 No Material Misstatements

  	
   

  	
  28

  
	
  SECTION 3.15 [Reserved]

  	
   

  	
  28

  
	
  SECTION 3.16 Solvency

  	
   

  	
  28

  

 

i

 

	
  Section

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 3.17 [Reserved]

  	
   

  	
  28

  
	
  SECTION 3.18 [Reserved]

  	
   

  	
  28

  
	
  SECTION 3.19 [Reserved]

  	
   

  	
  28

  
	
  SECTION 3.20 Anti-Terrorism Law

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV

  
	
   

  
	
  CONDITIONS
  TO EFFECTIVENESS

  
	
   

  
	
  SECTION 4.01 Conditions to Effectiveness

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  
	
  AFFIRMATIVE
  COVENANTS

  
	
   

  
	
  SECTION 5.01 Financial Statements, Reports, etc.

  	
   

  	
  31

  
	
  SECTION 5.02 Litigation and Other Notices

  	
   

  	
  32

  
	
  SECTION 5.03 Existence; Businesses and Properties

  	
   

  	
  33

  
	
  SECTION 5.04 [Reserved]

  	
   

  	
  34

  
	
  SECTION 5.05 Obligations and Taxes

  	
   

  	
  34

  
	
  SECTION 5.06 Re-Warehousing Business

  	
   

  	
  34

  
	
  SECTION 5.07 Maintaining Records; Access to Properties
  and Inspections

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  
	
   

  
	
  NEGATIVE
  COVENANTS

  
	
   

  
	
  SECTION 6.01 Indebtedness

  	
   

  	
  35

  
	
  SECTION 6.02 Liens

  	
   

  	
  36

  
	
  SECTION 6.03 Sale and Leaseback Transactions

  	
   

  	
  38

  
	
  SECTION 6.04 Investments, Loans and Advances

  	
   

  	
  38

  
	
  SECTION 6.05 Mergers and Consolidations

  	
   

  	
  39

  
	
  SECTION 6.06 Asset Sales

  	
   

  	
  39

  
	
  SECTION 6.07 Acquisitions

  	
   

  	
  39

  
	
  SECTION 6.08 Dividends

  	
   

  	
  40

  
	
  SECTION 6.09 Transactions with Affiliates

  	
   

  	
  40

  
	
  SECTION 6.10 Financial Covenants

  	
   

  	
  41

  
	
  SECTION 6.11 Prepayments of
  Other Indebtedness; Settlement of Repurchase Obligations; Modifications of
  Organizational Documents and Other Documents, etc.

  	
   

  	
  41

  
	
  SECTION 6.12 Limitation on Certain Restrictions on
  Subsidiaries

  	
   

  	
  41

  
	
  SECTION 6.13 Limitation on Issuance of Capital Stock

  	
   

  	
  42

  
	
  SECTION 6.14 [Reserved.]

  	
   

  	
  42

  
	
  SECTION 6.15 Business

  	
   

  	
  42

  
	
  SECTION 6.16 Limitation on Accounting Changes

  	
   

  	
  43

  
	
  SECTION 6.17 Fiscal Year

  	
   

  	
  43

  
	
  SECTION 6.18 Anti-Terrorism Law; Anti-Money Laundering

  	
   

  	
  43

  
	
  Embargoed Person43

  	
   

  	
   

  

 

ii

 

	
  Section

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII

  
	
   

  
	
  EVENTS OF
  DEFAULT

  
	
   

  
	
  SECTION 7.01 Events of Default

  	
   

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII

  
	
   

  
	
  [Reserved]

  
	
   

  
	
  ARTICLE
  IX

  
	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01 Notices

  	
   

  	
  46

  
	
  SECTION 9.02 Waivers; Amendment

  	
   

  	
  47

  
	
  SECTION 9.03 Expenses; Indemnity; Damage Waiver

  	
   

  	
  48

  
	
  SECTION 9.04 Successors and Assigns

  	
   

  	
  49

  
	
  SECTION 9.05 Survival of Agreement

  	
   

  	
  50

  
	
  SECTION 9.06 Counterparts; Integration; Effectiveness

  	
   

  	
  51

  
	
  SECTION 9.07 Severability

  	
   

  	
  51

  
	
  SECTION 9.08 Right of Setoff

  	
   

  	
  51

  
	
  SECTION 9.09 Governing Law; Jurisdiction; Consent to
  Service of Process

  	
   

  	
  51

  
	
  SECTION 9.10 Waiver of Jury Trial

  	
   

  	
  52

  
	
  SECTION 9.11 Headings

  	
   

  	
  52

  
	
  SECTION 9.12 Treatment of Certain Information;
  Confidentiality

  	
   

  	
  52

  
	
  SECTION 9.13 USA PATRIOT Act Notice

  	
   

  	
  53

  
	
  SECTION 9.14 Interest Rate Limitation

  	
   

  	
  53

  
	
  SECTION 9.15 Structure of Re-Warehousing Transaction.

  	
   

  	
  53

  
	
  SECTION 9.16 Obligations Absolute

  	
   

  	
  54

  
	
  SECTION 9.17 Enforcement

  	
   

  	
  54

  
	
  SECTION 9.18 Lender Consents

  	
   

  	
  54

  
	
  SECTION 9.19 Waiver of Deemed Guarantor Rights

  	
   

  	
  54

  
	
  SECTION 9.20
  Pledge of Re-Warehousing SPV

  	
   

  	
  55

  

 

iii

 

	
  ANNEXES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Annex
  I

  	
   

  	
  Applicable
  Margin

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule
  1

  	
   

  	
  Non-recourse
  securitization trusts that have entered into hedge transactions

  
	
  Schedule
  3.07

  	
   

  	
  Equity
  Interests

  
	
  Schedule
  6.01(b)

  	
   

  	
  Existing
  Indebtedness

  
	
  Schedule
  6.02(c)

  	
   

  	
  Existing
  Liens

  
	
  Schedule
  6.04(b)

  	
   

  	
  Existing
  Investments

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  [Reserved]

  
	
  Exhibit B

  	
   

  	
  Form of
  Solvency/Financial Covenant Compliance Certificate

  
	
  Exhibit C-1

  	
   

  	
  Form of
  Tranche A Term Note 

  
	
  Exhibit C-2

  	
   

  	
  Form of
  Tranche B Term Note

  

 

iv

 

CREDIT
AGREEMENT

 

This CREDIT AGREEMENT (this “Agreement”)
dated as of October 30, 2009, among IMPAC MORTGAGE HOLDINGS, INC. (“Holdings”), IMPAC FUNDING CORPORATION (“IFC”),
IMPAC WAREHOUSE LENDING GROUP, INC. (“IWLG” and,
together with Holdings and IFC, each, an “ARMRA Borrower”
and, collectively, the “ARMRA Borrowers”),
INTEGRATED REAL ESTATE SERVICE CORP.  (“IRES” and, together with the ARMRA Borrowers, each, a “Borrower” and, collectively, the “Borrowers”)
and UBS REAL ESTATE SECURITIES, INC. (“UBS RESI”) or  any other Lender, as assignee of UBS RESI.

 

WITNESSETH:

 

WHEREAS, the ARMRA Borrowers and UBS RESI were
parties to that certain Amended and Restated Master Repurchase Agreement dated September 11,
2008 (the “ARMRA”).

 

WHEREAS, in connection with the ARMRA, the ARMRA
Borrowers and UBS RESI have entered into that certain Settlement Agreement
dated as of the date hereof (the “Settlement Agreement”)
pursuant to which the ARMRA Borrowers are required to make certain payments and
to take certain other actions described therein.

 

WHEREAS, each of the Borrowers and UBS RESI
acknowledge and agree that the ARMRA Borrowers will owe UBS RESI $33,850,000 in
connection with the full and complete satisfaction of the ARMRA Borrowers’
obligations under the ARMRA after the making of the payments pursuant to the
Settlement Agreement, and the taking of such other actions, required on the
date hereof pursuant to the Settlement Agreement and that such $33,850,000
obligation shall be deemed to be, and shall be evidenced as, two term loans (a
Tranche A Loan in the initial principal amount of $23,850,000 and a Tranche B
Loan in the initial principal amount of $10,000,000), payable by each of the
Borrowers pursuant to the terms hereof.

 

WHEREAS, IRES is a subsidiary of Holdings and will
obtain substantial benefits from the settlement provided under the Settlement
Agreement.

 

NOW, THEREFORE, in consideration of the agreements
set forth in the Settlement Agreement, UBS RESI, as the initial Lender, and
each of the Borrowers are willing to evidence the aforementioned $33,850,000
owed to UBS RESI by the ARMRA Borrowers as two term loans extended to, and
payable by, each of the Borrowers, on a joint and several basis and otherwise
on the terms and subject to the conditions set forth herein.  Accordingly, the parties hereto agree as follows:

 

ARTICLE
I

 

DEFINITIONS

 

SECTION 1.01      Defined Terms.  As used in this Agreement, the following
terms shall have the meanings specified below:

 

“ABR”, when used
in reference to any Loan or Borrowing, is used when such Loan, or the Loans
comprising such Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.

 

 

“ABR Borrowing”
shall mean a Borrowing comprised of ABR Loans.

 

“ABR Loan” shall
mean any Loan bearing interest at a rate determined by reference to the
Alternate Base Rate in accordance with the provisions of Article II.

 

“Acquisitions”
shall have the meaning assigned to such term in Section 6.07(b).

 

“Adjusted LIBOR Rate”
shall mean, with respect to any Eurodollar Borrowing for any Interest Period,
an interest rate per annum (rounded upward, if necessary, to the nearest
1/100th of 1%) determined by the Lender to be equal to the sum of (i) (a) the
LIBOR Rate for such Eurodollar Borrowing in effect for such Interest Period
divided by (b) 1 minus the
Statutory Reserves (if any) for such Eurodollar Borrowing for such Interest
Period plus (ii) the Applicable Margin.

 

“Affiliate”
shall mean, when used with respect to a specified person:

 

(A) an
entity that directly or indirectly owns, controls, or holds with power to vote,
20 percent or more of the outstanding voting securities of such specified
person, other than an entity that holds such securities -

 

(i) in a fiduciary or agent capacity without sole discretionary
power to vote such securities; or

 

(ii) solely to secure a debt, if such entity has not in fact
exercised such power to vote;

 

(B) a
person 20 percent or more of whose outstanding voting securities are directly
or indirectly owned, controlled or held with power to vote, by such specified
person, or any an entity that directly or indirectly owns, controls, or holds
with power to vote, 20 percent or more of the outstanding voting securities of
such specified person, other than an entity that holds such securities -

 

(i) in
a fiduciary or agency capacity without sole discretionary power to vote such
securities; or

 

(ii) solely
to secure a debt, if such entity has not in fact exercised such power to vote;

 

(C) a
person whose business is operated under a lease or operating agreement by such
specified person, or a person substantially all of whose property is operated
under an operating agreement with such specified person; or

 

(D) an entity that
operates the business or substantially all of the property of such specified person
under a lease or operating agreement.

 

“Agency” means
Ginnie Mae, Fannie Mae or Freddie Mac, as applicable.

 

“Agency Eligible Mortgage
Loan” means, a mortgage loan that is in compliance with the eligibility
requirements for swap or purchase by the designated Agency under the applicable
Agency Guide and designated Agency Program, a mortgage loan that is insured by
a FHA Mortgage Insurance Contract or a mortgage loan that is guaranteed by a VA
Loan Guaranty Agreement.

 

“Agency Guide”
means in respect of Ginnie Mae, the Ginnie Mae Mortgage-Backed Securities
Guide; in respect of Fannie Mae, the Fannie Mae Selling Guide and the Fannie
Mae Servicing 

 

2

 

Guide; and in respect of
Freddie Mac, the Freddie Mac Sellers’ and Servicers’ Guide; in each case as any
of the foregoing may be amended from time to time.

 

“Agency Program”
means the specific mortgage-backed securities swap or purchase program under
the relevant Agency Guide or as otherwise approved by the relevant Agency.

 

“Agreement”
shall have the meaning assigned to such term in the preamble hereto.

 

“Alternate Base Rate”
shall mean, for any day, a rate per annum (rounded upward, if necessary, to the
nearest 1/100th of 1%) equal to the sum of (i) the greater of (a) the
Base Rate in effect on such day and (b) the Federal Funds Effective Rate
in effect on such day plus 0.50% plus
(ii) the Applicable Margin.  If the
Lender shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective Rate
for any reason, including the inability of the Lender to obtain sufficient
quotations in accordance with the terms of the definition thereof, the
Alternate Base Rate shall be determined without regard to clause (i)(b) of
the preceding sentence until the circumstances giving rise to such inability no
longer exist.  Any change in the
Alternate Base Rate due to a change in the Base Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in the
Base Rate or the Federal Funds Effective Rate, respectively.

 

“Anti-Terrorism Laws”
shall have the meaning assigned to such term in Section 3.20.

 

“Applicable Margin”
shall mean, with respect to any Tranche A Loan or Tranche B Loan , as
the case may be, the applicable percentage set forth in Annex I
under the appropriate caption.

 

“Approved Fund”
shall mean any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

“ARMRA” shall
have the meaning assigned to such term in the first recital hereto.

 

“ARMRA Borrower”
and “ARMRA Borrowers” shall have the
meanings assigned to such term in the preamble hereto.

 

“Asset Sale”
shall mean any conveyance, sale, lease, sublease, assignment, transfer or other
disposition (including by way of merger or consolidation and including any Sale
and Leaseback Transaction) of any property excluding (i) sales of mortgage
loans originated or acquired by a Company after the Closing Date (and related
servicing rights) and real estate owned by a Company relating to any such
mortgage loan (including, without limitation, any such sales of mortgage loans
related to the Re-Warehousing Business), (ii) sales of mortgage loans
originated or acquired by a Company before the Closing Date (and related
servicing rights) and real estate owned by a Company relating to any such
mortgage loan  (provided that the
exclusion contained in this clause (ii) shall apply only to the first
$2,000,000 of such sales (determined based on purchase price received)) and (iii) inventory
and dispositions of cash and Cash Equivalents, in each case, in the ordinary
course of business, by any Borrower or any of its Subsidiaries.

 

“Assignment and Assumption”
shall mean an assignment and assumption entered into by a Lender and an
Eligible Assignee.

 

“Attributable Indebtedness”
shall mean, when used with respect to any Sale and Leaseback Transaction, as at
the time of determination, the present value (discounted at a rate equivalent
to 

 

3

 

Borrower’s then-current
weighted average cost of funds for borrowed money as at the time of determination,
compounded on a semi-annual basis) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in any such
Sale and Leaseback Transaction.

 

“Base Rate”
shall mean, for any day, a rate per annum that is equal to the corporate base
rate of interest established by the Lender from time to time; each change in
the Base Rate shall be effective on the date such change is effective.  The corporate base rate is not necessarily
the lowest rate charged by the Lender to its customers.

 

“Board” shall
mean the Board of Governors of the Federal Reserve System of the United States.

 

“Board of Directors”
shall mean, with respect to any person, (i) in the case of any corporation,
the board of directors of such person, (ii) in the case of any limited
liability company, the board of managers of such person, (iii) in the case
of any limited partnership, the Board of Directors of the general partner of
such person and (iv) in any other case, the functional equivalent of the foregoing.

 

“Borrower” and “Borrowers” shall have the meanings assigned to such term in
the preamble hereto.

 

“Borrowing”
shall mean Loans of the same Class and Type, made, converted or continued
on the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.

 

“Business Day”
shall mean any day other than a Saturday, Sunday or other day on which banks in
New York City or the State of California are authorized or required by law to
close; provided, however,
that when used in connection with a Eurodollar Loan, the term “Business Day”
shall also exclude any day on which banks are not open for dealings in dollar
deposits in the London interbank market.

 

“Capital Assets” shall mean,
with respect to any person, all equipment, fixed assets and Real Property or
improvements of such person, or replacements or substitutions therefor or
additions thereto, that, in accordance with GAAP, have been or should be
reflected as additions to property, plant or equipment on the balance sheet of
such person.

 

“Capital Lease Obligations”
of any person shall mean the obligations of such person to pay rent or other
amounts under any lease of (or other arrangement conveying the right to use)
real or personal property, or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a balance
sheet of such person under GAAP, and the amount of such obligations shall be
the capitalized amount thereof determined in accordance with GAAP.

 

“Cash Equivalents”
shall mean, as to any person, (a) securities issued, or directly, unconditionally
and fully guaranteed or insured, by the United States or any agency or
instrumentality thereof (provided that
the full faith and credit of the United States is pledged in support thereof)
having maturities of not more than one year from the date of acquisition by
such person; (b) time deposits and certificates of deposit of the Lender
or any commercial bank having, or which is the principal banking subsidiary of
a bank holding company organized under the laws of the United States, any state
thereof or the District of Columbia having, capital and surplus aggregating in
excess of $500.0 million and a rating of “A” (or such other similar equivalent
rating) or higher by at least one nationally recognized statistical rating
organization (as defined in Rule 436 under the Securities Act) with
maturities of not more than one year 

 

4

 

from the date of acquisition
by such person; (c) repurchase obligations with a term of not more than
30 days for underlying securities of the types described in clause (a) above
entered into with any bank meeting the qualifications specified in clause (b) above,
which repurchase obligations are secured by a valid perfected security interest
in the underlying securities; and (d) investments in money market funds substantially
all of whose assets are comprised of securities of the types described in
clauses (a) through (d) above; and (f) demand deposit accounts
maintained in the ordinary course of business with a commercial bank meeting
criteria set forth in clause (b) above.

 

“Casualty Event”
shall mean any involuntary loss of title, any involuntary loss of, damage to or
any destruction of, or any condemnation or other taking (including by any
Governmental Authority) of, any property of any Borrower or any of its
Subsidiaries.  “Casualty Event” shall include
but not be limited to any taking of all or any part of any Real Property of any
person or any part thereof, in or by condemnation or other eminent domain
proceedings pursuant to any Requirement of Law, or by reason of the temporary
requisition of the use or occupancy of all or any part of any Real Property of
any person or any part thereof by any Governmental Authority, civil or
military, or any settlement in lieu thereof.

 

A “Change in Control”
shall be deemed to have occurred if:

 

(a)                                  Holdings at any time ceases
to own 100% of the Equity Interests of the other three Borrowers;

 

(b)                                 any “person” or “group” (as
such terms are used in Sections 13(d) and 14(d) of the Exchange
Act) becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that for purposes of this clause such person or
group shall be deemed to have “beneficial ownership” of all securities that
such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or indirectly,
of Voting Stock of Holdings representing more than 50% of the voting power of
the total outstanding Voting Stock of Holdings; or

 

(c)                                  the existing directors of
Holdings for any reason cease to constitute a majority of the board of
directors of Holdings.

 

“Change in Law”
shall mean the occurrence, after the date of this Agreement, of any of the
following:  (a) the adoption or
taking into effect of any law, treaty, order, policy, rule or regulation, (b) any
change in any law, treaty, order, policy, rule or regulation or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any Governmental
Authority.

 

“Charges” shall
have the meaning assigned to such term in Section 9.14.

 

“Class,” when
used in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are Tranche A Loans or Tranche B
Loans.

 

“Closing Date”
shall mean the date hereof.

 

“Code” shall
mean the Internal Revenue Code of 1986.

 

“Companies”
shall mean Holdings and its Subsidiaries; and “Company”
shall mean any one of them.

 

5

 

“Consolidated Assets”
shall mean, as at any date of determination, the total assets of the Companies
which may properly be classified as assets on a consolidated balance sheet of
the Companies in accordance with GAAP.

 

“Consolidated Liabilities”
shall mean, as at any date of determination, the total liabilities of the
Companies which may properly be classified as liabilities on a consolidated balance
sheet of the Companies in accordance with GAAP.

 

“Contested Lien Conditions”
shall mean, with respect to any Permitted Lien of the type described in
clauses (a), (b), (e) and (f) of Section 6.02, the
following conditions:

 

(a)                                  Borrowers shall cause any
proceeding instituted contesting such Lien to stay the sale or forfeiture of
any portion of the property related to such Lien; and

 

(b)                                 at the option and at the
request of the Lender, to the extent such Lien is in an amount in excess of
$1,000,000, the appropriate Borrower shall maintain cash reserves in an amount
sufficient to pay and discharge such Lien and the Lender’s reasonable estimate
of all interest and penalties related thereto.

 

“Contingent Obligation”
shall mean, as to any person, any obligation, agreement, understanding or
arrangement of such person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations (“primary
obligations”) of any other person (the “primary obligor”)
in any manner, whether directly or indirectly, including any obligation of such
person, whether or not contingent, (a) to purchase any such primary
obligation or any property constituting direct or indirect security therefor; (b) to
advance or supply funds (i) for the purchase or payment of any such
primary obligation or (ii) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor; (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation; (d) with respect to bankers’ acceptances, letters of credit
and similar credit arrangements, until a reimbursement obligation arises (which
reimbursement obligation shall constitute Indebtedness); or (e) otherwise
to assure or hold harmless the holder of such primary obligation against loss
in respect thereof; provided, however, that the term “Contingent Obligation” shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business, any servicer advances reimbursable by a Person other than
one of the Companies or any product warranties. 
The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Contingent Obligation is made (or, if less, the maximum amount of
such primary obligation for which such person may be liable, whether singly or
jointly, pursuant to the terms of the instrument evidencing such Contingent
Obligation) or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such person is required to
perform thereunder) as determined by such person in good faith.

 

“Control” shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled”
shall have meanings correlative thereto.

 

“Debt Issuance”
shall mean the incurrence by Holdings or any of its Subsidiaries of any
Indebtedness after the Closing Date (other than as permitted by Section 6.01).

 

6

 

“Default” shall
mean any event, occurrence or condition which is, or upon notice, lapse of time
or both would constitute, an Event of Default.

 

“Default Rate”
shall have the meaning assigned to such term in Section 2.03(c).

 

“Disqualified Capital Stock”
shall mean any Equity Interest which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the happening of any event, (a) matures (excluding any maturity as the
result of an optional redemption by the issuer thereof) or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the option
of the holder thereof, in whole or in part, on or prior to the Final Maturity
Date, (b) is convertible into or exchangeable (unless at the sole option
of the issuer thereof) for (i) debt securities or (ii) any Equity
Interests referred to in (a) above, in each case at any time on or prior
to the Final Maturity Date, or (c) contains any repurchase obligation
which may come into effect prior to payment in full of all Obligations; provided, however, that
any Equity Interests that would not constitute Disqualified Capital Stock but
for provisions thereof giving holders thereof (or the holders of any security
into or for which such Equity Interests is convertible, exchangeable or exercisable)
the right to require the issuer thereof to redeem such Equity Interests upon
the occurrence of a change in control or an asset sale occurring prior to the
Final Maturity Date shall not constitute Disqualified Capital Stock if such
Equity Interests provide that the issuer thereof will not redeem any such
Equity Interests pursuant to such provisions prior to the repayment in full of
the Obligations.

 

“Dividend” with
respect to any person shall mean that such person has declared or paid a dividend
or returned any equity capital to the holders of its Equity Interests or
authorized or made any other distribution, payment or delivery of property
(other than Qualified Capital Stock of such person) or cash to the holders of
its Equity Interests as such, or redeemed, retired, purchased or otherwise
acquired, directly or indirectly, for consideration any of its Equity Interests
outstanding (or any options or warrants issued by such person with respect to
its Equity Interests), or set aside any funds for any of the foregoing
purposes, or shall have permitted any of its Subsidiaries to purchase or
otherwise acquire for consideration any of the Equity Interests of such person
outstanding (or any options or warrants issued by such person with respect to its
Equity Interests).  Without limiting the
foregoing, “Dividends” with respect to any person shall also include all
payments made or required to be made by such person with respect to any stock
appreciation rights, plans, equity incentive or achievement plans or any
similar plans (other than any stock appreciation rights, plans, equity
incentive or achievement plans or any similar plans offered solely to employees
of one or more of the Companies) or setting aside of any funds for the
foregoing purposes.

 

“dollars” or “$” shall mean lawful money of the United States.

 

“Eligible Assignee”
shall mean (i) an Affiliate of the Lender, (ii) an Approved Fund and (iii) any
other person so long as, in the case of clause (iii), (a) an agreement has
been executed between such person and UBS RESI pursuant to which UBS RESI is
appointed as administrative agent for such person with respect to this
Agreement or (b) this Agreement has been amended to provide for an administrative
agent and UBS RESI remains as administrative agent after an assignment to such
person (and each of the parties hereto agrees to cooperate in the execution of
any such amendment at the request of UBS RESI).

 

“Embargoed Person”
shall have the meaning assigned to such term in Section 6.19.

 

7

 

“Equity Interest”
shall mean, with respect to any person, any and all shares, interests, participations
or other equivalents, including membership interests (however designated,
whether voting or nonvoting), of equity of such person, including, if such
person is a partnership, partnership interests (whether general or limited) and
any other interest or participation that confers on a person the right to
receive a share of the profits and losses of, or distributions of property of,
such partnership, whether outstanding on the date hereof or issued after the
Closing Date, but excluding debt securities convertible or exchangeable into
such equity.

 

“Equity Issuance”
shall mean, without duplication, (i) any issuance or sale by Holdings
after the Closing Date of any Equity Interests in Holdings (including any
Equity Interests issued upon exercise of any warrant or option other than any
warrant or option (a) issued solely to employees of one or more of the
Companies prior to the Closing Date or (b) issued to Experience 1, Inc.
(or any other entity) or any employee or officer thereof as payment for
services rendered by Experience 1, Inc. or such other entity to a Company
(as long as not more than 10% of the amount of outstanding shares of Holdings,
as of the Closing Date, are issued, in aggregate over term of Credit Agreement,
to Experience 1, Inc. or such other entity or any employee or officer
thereof) or (ii) any contribution to the capital of Holdings; provided, however, that
an Equity Issuance shall not include any Preferred Stock Issuance or Debt Issuance.

 

“Eurodollar Borrowing”
shall mean a Borrowing comprised of Eurodollar Loans.

 

“Eurodollar Loan”
shall mean any Loan bearing interest at a rate determined by reference to the
Adjusted LIBOR Rate in accordance with the provisions of Article II.

 

“Event of Default”
shall have the meaning assigned to such term in Section 7.01.

 

“Excess Amount”
shall have the meaning assigned to such term in Section 2.05(g).

 

“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended.

 

“Excluded Taxes” shall mean, with respect to the Lender or any
other recipient of any payment to be made by or on account of any obligation of
any Borrower hereunder, (a) taxes imposed on or measured by its overall
net income (however denominated), franchise taxes imposed on it (in lieu of net
income taxes) and branch profits taxes imposed on it, by a jurisdiction (or any
political subdivision thereof) as a result of the recipient being organized or having
its principal office or, in the case of the Lender, its applicable lending
office in such jurisdiction and (b) in the case of a Foreign Lender, any
U.S. federal withholding tax that (i) is imposed on amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a party hereto (or
designates a new lending office) or (ii) is attributable to such Foreign
Lender’s failure to comply with Section 2.10(e).

 

“Executive Order” shall have the meaning
assigned to such term in Section 3.20(a).

 

“Existing Lien”
shall have the meaning assigned to such term in Section 6.02(c).

 

“Fannie Mae”
means the Federal National Mortgage Association and its successors in interest.

 

“Federal Funds Effective
Rate” shall mean, for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System
of the United States arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the 

 

8

 

average of the quotations
for the day for such transactions received by the Lender from three federal
funds brokers of recognized standing selected by it.

 

“FHA” shall mean
the Federal Housing Administration, an agency within the United States
Department of Housing and Urban Development, or any successor thereto.

 

“FHA Mortgage Insurance
Contract” shall mean the contractual obligation of the FHA with
respect to the insuring of a mortgage loan.

 

“Final Maturity Date”
shall mean the Tranche A Maturity Date.

 

“Financial Officer”
of any person shall mean the chief financial officer, principal accounting officer,
treasurer or controller of such person.

 

“FIRREA” shall
mean the Financial Institutions Reform, Recovery and Enforcement Act of 1989,
as amended.

 

“Foreign Lender”
shall mean the Lender if it is not, for United States federal income tax
purposes, (i) an individual who is a citizen or resident of the United
States, (ii) a corporation, partnership or other entity treated as a
corporation or partnership created or organized in or under the laws of the
United States, or any political subdivision thereof, (iii) an estate whose
income is subject to U.S. federal income taxation regardless of its source or (iv) a
trust if a court within the United States is able to exercise primary supervision
over the administration of such trust and one or more United States persons
have the authority to control all substantial decisions of such trust.

 

“Freddie Mac”
means the Federal Home Loan Mortgage Corporation and its successors in
interest.

 

“Fund” shall
mean any person that is (or will be) engaged in making, purchasing, holding or
otherwise investing in commercial loans and similar extensions of credit in the
ordinary course of its business.

 

“GAAP” shall
mean generally accepted accounting principles in the United States applied on a
consistent basis.

 

“Ginnie Mae”
means the Government National Mortgage Association and its successors in
interest.

 

“Governmental Authority”
shall mean the government of the United States or any other nation, or of any
political subdivision thereof, whether state, provincial or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).

 

“Hedging Agreement”
shall mean any swap, cap, collar, forward purchase or similar agreements or arrangements
dealing with interest rates, currency exchange rates or commodity prices,
either generally or under specific contingencies.

 

“Hedging Obligations”
shall mean obligations under or with respect to Hedging Agreements.

 

9

 

“Holdings” shall
have the meaning assigned to such term in the preamble hereto.

 

“IFC” shall have
the meaning assigned to such term in the preamble hereto.

 

“Indebtedness”
of any person shall mean, without duplication, (a) all obligations of such
person for borrowed money or advances; (b) all obligations of such person
evidenced by bonds, debentures, notes or similar instruments; (c) all
obligations of such person upon which interest charges are customarily paid or
accrued; (d) all obligations of such person under conditional sale or
other title retention agreements relating to property purchased by such person;
(e) all obligations of such person issued or assumed as the deferred
purchase price of property or services (excluding trade accounts payable and accrued
obligations incurred in the ordinary course of business on normal trade terms
and not overdue by more than 90 days); (f) all Indebtedness of others
secured by any Lien on property owned or acquired by such person, whether or
not the obligations secured thereby have been assumed, but limited to the fair
market value of such property; (g) all Capital Lease Obligations, Purchase
Money Obligations and synthetic lease obligations of such person; (h) all
Hedging Obligations to the extent required to be reflected on a balance sheet
of such person; (i) all Attributable Indebtedness of such person; (j) all
obligations of such person for the reimbursement of any obligor in respect of
letters of credit, letters of guaranty, bankers’ acceptances and similar credit
transactions; (k) all obligations under any repurchase agreement and (l) all
Contingent Obligations of such person in respect of Indebtedness or obligations
of others of the kinds referred to in clauses (a) through (k) above.  The Indebtedness of any person shall include
the Indebtedness of any other entity (including any partnership in which such
person is a general partner) to the extent such person is liable therefor as a
result of such person’s ownership interest in or other relationship with such
entity, except (other than in the case of general partner liability) to the
extent that terms of such Indebtedness expressly provide that such person is
not liable therefor.  Indebtedness shall
not include the hedge transactions of the Companies constituting non-recourse
securitization trusts listed on Schedule 1 hereto.

 

“Indemnified Taxes”
shall mean all Taxes other than Excluded Taxes.

 

“Indemnitee”
shall have the meaning assigned to such term in Section 9.03(b).

 

“Information”
shall have the meaning assigned to such term in Section 9.12.

 

“Interest Period”
shall mean, (a) in the case of the initial Interest Period for the Loans,
the period commencing on the Closing Date and ending on (and including) the day
preceding the next Payment Date and (b) in the case of each subsequent
Interest Period for the Loans, the period commencing on (and including) the
current or most recent Payment Date and ending on (and including) the day
preceding the next Payment Date.

 

“Investments”
shall have the meaning assigned to such term in Section 6.04.

 

“IRES” shall
have the meaning assigned to such term in the preamble hereto.

 

“IWLG” shall have
the meaning assigned to such term in the preamble hereto.

 

“Joint Venture”
shall have the meaning assigned to such term in Section 6.04(d).

 

“Leases” shall
mean any and all leases, subleases, tenancies, options, concession agreements,
rental agreements, occupancy agreements, franchise agreements, access
agreements and any other agreements (including all amendments, extensions,
replacements, renewals, modifications and/or guaran-

 

10

 

tees thereof), whether or
not of record and whether now in existence or hereafter entered into, affecting
the use or occupancy of all or any portion of any Real Property.

 

“Lender” shall
mean (a) UBS RESI or (b) any financial institution that has become a
party hereto pursuant to an Assignment and Assumption, other than, in each
case, any financial institution that has ceased to be a party hereto pursuant
to an Assignment and Assumption.

 

“LIBOR Rate”
shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the
rate per annum determined by the Lender to be the arithmetic mean of the offered
rates for deposits in dollars with a term comparable to such Interest Period
that appears on the Telerate British Bankers Assoc. Interest Settlement Rates Page (as
defined below) at approximately 11:00 a.m., London, England time, on the
second full Business Day preceding the first day of such Interest Period; provided, however, that (i) if
no comparable term for an Interest Period is available, the LIBOR Rate shall be
determined using the weighted average of the offered rates for the two terms
most nearly corresponding to such Interest Period and (ii) if there shall
at any time no longer exist a Telerate British Bankers Assoc. Interest
Settlement Rates Page, “LIBOR Rate” shall mean, with respect to each day during
each Interest Period pertaining to Eurodollar Borrowings comprising part of the
same Borrowing, the rate per annum equal to the rate at which the Lender is
offered deposits in dollars at approximately 11:00 a.m., London, England
time, two Business Days prior to the first day of such Interest Period in the
London interbank market for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable to its
portion of the amount of such Eurodollar Borrowing to be outstanding during
such Interest Period.  “Telerate British Bankers Assoc. Interest Settlement Rates Page”
shall mean the display designated as Reuters Screen LIBOR01 Page (or such
other page as may replace such page on such service for the purpose
of displaying the rates at which dollar deposits are offered by leading banks
in the London interbank deposit market).

 

“Lien” shall
mean, with respect to any property, (a) any mortgage, deed of trust, lien,
pledge, encumbrance, claim, charge, assignment, hypothecation, security
interest or encumbrance of any kind or any arrangement to provide priority or
preference or any filing of any financing statement under the UCC or any other
similar notice of lien under any similar notice or recording statute of any
Governmental Authority, including any easement, right-of-way or other
encumbrance on title to Real Property, in each of the foregoing cases whether
voluntary or imposed by law, and any agreement to give any of the foregoing; (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing lease having substantially
the same economic effect as any of the foregoing) relating to such property;
and (c) in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities.

 

“Loans” shall
mean the Tranche A Loan and the Tranche B Loan, collectively.

 

“Material Adverse Effect”
shall mean (a) a material adverse effect on the business, property,
results of operations, prospects or condition, financial or otherwise, or
material agreements of a Borrower and its Subsidiaries, taken as a whole; (b) material
impairment of the ability of the Borrowers to fully and timely perform any of
their obligations under any Transaction Document; or (c) a material impairment
of the rights of or benefits or remedies available to the Lender under any
Transaction Document.

 

“Material Indebtedness”
shall mean any Indebtedness of Holdings or any of its Subsidiaries in an
aggregate outstanding principal amount exceeding $1 million.  For purposes of determining Material
Indebtedness, the “principal amount” in respect of any Hedging Obligations of
any Borrower at 

 

11

 

any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that such Borrower
would be required to pay if the related Hedging Agreement were terminated at
such time.

 

“Maximum Rate”
shall have the meaning assigned to such term in Section 9.14.

 

“Monthly Payment”
shall have the meaning assigned to such term in Section 2.04.

 

“Net Cash Proceeds”
shall mean:

 

(a)                                  with respect to any Asset
Sale, (1) the cash proceeds received by Holdings or any of its
Subsidiaries (including cash proceeds subsequently received (as and when
received by Holdings or any of its Subsidiaries) in respect of non-cash
consideration initially received) net of (i) selling expenses (including
reasonable brokers’ fees or commissions, legal, accounting and other
professional and transactional fees, transfer and similar taxes and Holding’s
good faith estimate of income taxes actually paid or payable in connection with
such sale); (ii) amounts provided as a reserve, in accordance with GAAP,
against (x) any liabilities under any indemnification obligations
associated with such Asset Sale or (y) any other liabilities retained by
Holdings or any of its Subsidiaries associated with the properties sold in such
Asset Sale (provided that, to the extent and at the
time any such amounts are released from such reserve, such amounts shall
constitute Net Cash Proceeds); (iii) Holding’s good faith estimate of
payments required to be made with respect to unassumed liabilities relating to
the properties sold within 90 days of such Asset Sale (provided that, to the extent such cash proceeds are not used
to make payments in respect of such unassumed liabilities within 90 days
of such Asset Sale, such cash proceeds shall constitute Net Cash Proceeds); and
(iv) the principal amount, premium or penalty, if any, interest and other
amounts on any Indebtedness for borrowed money which is secured by a Lien on
the properties sold in such Asset Sale (so long as such Lien was permitted to
encumber such properties under the Transaction Documents at the time of such
sale) and which is repaid with such proceeds (other than any such Indebtedness
assumed by the purchaser of such properties); plus (2) the amount of any
non-cash consideration received (including, without limitation, the amount of
any indebtedness or other obligations forgiven, terminated or set off against
in connection with such Asset Sale);

 

(b)                                 with respect to any Equity
Issuance, any Preferred Stock Issuance or any other issuance or sale of Equity
Interests by Holdings or (in case of a Subsidiary’s breach of the negative
covenants in Section 6.13(b) hereof) any of its Subsidiaries, (1) the
cash proceeds thereof, net of customary fees, commissions, costs and other
expenses incurred in connection therewith; plus (2) the amount of any
non-cash consideration received (including, without limitation, the amount of
any indebtedness or other obligations forgiven, terminated or set off against
in connection with such Equity Issuance, Preferred Stock Issuance or other
issuance or sale of Equity Interests); and

 

(c)                                  with respect to any Debt
Issuance, the cash proceeds thereof, net of customary fees, commissions, costs
and other expenses incurred in connection therewith.

 

“Obligations”
shall mean obligations of Borrowers from time to time arising under or in
respect of the due and punctual payment of (i) the principal of and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise and (ii) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, 

 

12

 

fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of Borrowers under this Agreement and
the other Transaction Documents.

 

“OFAC” shall
have the meaning assigned to such term in Section 3.20.

 

“Organizational Documents”
shall mean, with respect to any person, (i) in the case of any corporation,
the certificate of incorporation and by-laws (or similar documents) of such
person, (ii) in the case of any limited liability company, the certificate
of formation and operating agreement (or similar documents) of such person, (iii) in
the case of any limited partnership, the certificate of formation and limited
partnership agreement (or similar documents) of such person, (iv) in the
case of any general partnership, the partnership agreement (or similar
document) of such person and (v) in any other case, the functional
equivalent of the foregoing.

 

“Other Taxes”
shall mean all present or future stamp or documentary taxes or any other excise
or property taxes, charges or similar levies arising from any payment made hereunder
or under any other Transaction Document or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other
Transaction Document.

 

“Participant”
shall have the meaning assigned to such term in Section 9.04(d).

 

“Patriot Act”
shall have the meaning assigned to such term in Section 4.01(i).

 

“Payment Date”
shall mean with respect to each Loan, the last day of each calendar month; or,
if such day is not a Business Day, the immediately preceding Business Day.

 

“Permitted Liens”
shall have the meaning assigned to such term in Section 6.02.

 

“Permitted Tax
Distributions” shall mean payments, dividends or distributions by
any other Borrower to Holdings in order to pay consolidated or combined federal,
state or local taxes not payable directly by such Borrower or any of its
Subsidiaries which payments by such Borrower are not in excess of the tax
liabilities that would have been payable by such Borrower and its Subsidiaries
on a stand-alone basis.

 

“Permitted Residual
Financing” shall mean a Debt Issuance (i) the repayment of
which is secured by the Residual Interests of Holdings or any of its
Subsidiaries and (ii) the Net Cash Proceeds of which are sufficient to
pay, and are applied to pay, in full of all principal and accrued interest with
respect to the Tranche B Loan.

 

“person” shall
mean any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.

 

“Preferred Stock”
shall mean, with respect to any person, any and all preferred or preference
Equity Interests (however designated) of such person whether now outstanding or
issued after the Closing Date.

 

“Preferred Stock Issuance”
shall mean the issuance or sale by Holdings or any of its Subsidiaries of any
Preferred Stock after the Closing Date.

 

13

 

“Pro Forma Basis”
shall mean on a basis in accordance with GAAP and Regulation S-X and otherwise
reasonably satisfactory to the Lender.

 

“property” shall
mean any right, title or interest in or to property or assets of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible
and including Equity Interests or other ownership interests of any person and
whether now in existence or owned or hereafter entered into or acquired,
including all Real Property.

 

“Purchase Money Obligation”
shall mean, for any person, the obligations of such person in respect of
Indebtedness (including Capital Lease Obligations) incurred for the purpose of
financing all or any part of the purchase price of any property (including
Equity Interests of any person) or the cost of installation, construction or
improvement of any property and any refinancing thereof; provided, however, that (i) such Indebtedness is incurred within
one year after such acquisition, installation, construction or improvement of
such property by such person and (ii) the amount of such Indebtedness does
not exceed 100% of the cost of such acquisition, installation, construction or
improvement, as the case may be.

 

“Qualified Capital Stock”
of any person shall mean any Equity Interests of such person that are not Disqualified
Capital Stock.

 

“Real Property”
shall mean, collectively, all right, title and interest (including any leasehold,
mineral or other estate) in and to any and all parcels of or interests in real
property owned, leased or operated by any person, whether by lease, license or
other means, together with, in each case, all easements, hereditaments and
appurtenances relating thereto, all improvements and appurtenant fixtures and
equipment, all general intangibles and contract rights and other property and
rights incidental to the ownership, lease or operation thereof.

 

“Regulation D” shall
mean Regulation D of the Board as from time to time in effect and all official
rulings and interpretations thereunder or thereof.

 

“Regulation S-X”
shall mean Regulation S-X promulgated under the Securities Act.

 

“Related Party”
shall mean, with respect to any person, such person’s Affiliates and the
partners, directors, officers, employees, agents and advisors of such person
and of such person’s Affiliates.

 

“Repurchase Obligation”  has the meaning assigned to such term in Section 6.11(b).

 

“Requirements of Law”
shall mean, collectively, any and all requirements of any Governmental
Authority including any and all laws, judgments, orders, decrees, ordinances,
rules, regulations, statutes or case law.

 

“Residual Interests”
shall mean the right, title and interest in a subordinated tranche of
securities issued in a securitization transaction (including, without
limitation, any payments received in connection with such securities) and/or
the ownership interest in the issuer of such securities.

 

“Responsible Officer”
of any person shall mean any executive officer or Financial Officer of such
person and any other officer or similar official thereof with responsibility
for the administration of the obligations of such person in respect of this
Agreement.

 

14

 

“Re-Warehousing Business”
shall mean a new mortgage loan re-warehousing business described to the Lender
by Holdings which shall include the formation of the Re-Warehousing SPV and the
Re-Warehousing Originator and the entry into of one or more new credit
facilities by such Subsidiary that shall provide financing for such business.

 

“Re-Warehousing
Indebtedness” has the meaning assigned to such term in Section 6.01(i).

 

“Re-Warehousing SPV”
has the meaning assigned to such term in Section 6.01(i).

 

“Re-Warehousing Originator”
has the meaning assigned to such term in Section 6.01(j).

 

“Re-Warehousing Reserve
Account” has the meaning assigned to such term in Section 6.02(o).

 

“Re-Warehousing Reserve
Account Investment” has the meaning assigned to such term in Section 6.04(f).

 

“Sale and Leaseback
Transaction” has the meaning assigned to such term in Section 6.03.

 

“Sarbanes-Oxley Act”
shall mean the United States Sarbanes-Oxley Act of 2002, as amended, and all rules and
regulations promulgated thereunder.

 

“Securities Act”
shall mean the Securities Act of 1933, as amended, and all rules and
regulations promulgated thereunder.

 

“Settlement Agreement”
shall have the meaning assigned to such term in the second recital hereto.

 

“Shareholders’ Equity”
shall mean, as at any date of determination, Consolidated Assets, as at such
date of determination, minus Consolidated Liabilities,  as
at such date of determination.

 

“Solvency/Financial
Covenant Compliance Certificate” shall mean a certificate of a
Financial Officer substantially in the form of Exhibit B.

 

“Statutory Reserves”
shall mean for any Interest Period for any Eurodollar Borrowing, the average
maximum rate at which reserves (including any marginal, supplemental or emergency
reserves) are required to be maintained during such Interest Period under
Regulation D by member banks of the United States Federal Reserve System in New
York City with deposits exceeding one billion dollars against “Eurocurrency
liabilities” (as such term is used in Regulation D).  Eurodollar Borrowings shall be deemed to
constitute Eurodollar liabilities and to be subject to such reserve requirements
without benefit of or credit for proration, exceptions or offsets which may be
available from time to time to the Lender under Regulation D.

 

“Subsidiary”
shall mean, with respect to any person (the “parent”)
at any date, (i) any person the accounts of which would be consolidated
with those of the parent in the parent’s consolidated financial statements if
such financial statements were prepared in accordance with GAAP as of such
date, (ii) any other corporation, limited liability company, association
or other business entity of which securi-

 

15

 

ties or other ownership
interests representing more than 50% of the voting power of all Equity
Interests entitled (without regard to the occurrence of any contingency) to
vote in the election of the Board of Directors thereof are, as of such date,
owned, controlled or held by the parent and/or one or more subsidiaries of the
parent, (iii) any partnership (a) the sole general partner or the
managing general partner of which is the parent and/or one or more subsidiaries
of the parent or (b) the only general partners of which are the parent
and/or one or more subsidiaries of the parent and (iv) any other person
that is otherwise Controlled by the parent and/or one or more subsidiaries of
the parent.  Unless the context requires
otherwise, “Subsidiary” refers to a Subsidiary of Borrower.

 

“Tax Return”
shall mean all returns, statements, filings, attachments and other documents or
certifications required to be filed in respect of Taxes.

 

“Taxes” shall
mean all present or future taxes, levies, imposts, duties, deductions, withholdings,
assessments, fees or other charges imposed by any Governmental Authority,
including any interest, additions to tax or penalties applicable thereto.

 

“Term Notes”
shall mean the promissory notes evidencing the Loans, substantially in the form
of Exhibit C-1 or Exhibit C-2.

 

“Tranche A Lender”
shall mean UBS RESI or another Lender with an outstanding Tranche A Loan.

 

“Tranche A Loan”
shall mean the term loans made by the Lender to Borrowers pursuant to Section 2.01(a)(i).

 

“Tranche A Maturity
Date” shall mean the day that is eighteen (18) months after the
Closing Date or, if such date is not a Business Day, the immediately preceding
Business Day.

 

“Tranche B Lender”
shall mean UBS RESI or another Lender with an outstanding Tranche B Loan.

 

“Tranche B Loan”
shall mean the term loans made by the Lender to Borrowers pursuant to Section 2.01(a)(ii).

 

“Tranche B Maturity
Date” shall mean the day that is six (6) months after the
Closing Date or, if such date is not a Business Day, the immediately preceding
Business Day.

 

“Transaction Documents”
shall mean this Agreement, the Term Notes and the Settlement Agreement.

 

“Transactions”
shall mean, collectively, the transactions to occur on or prior to the Closing
Date pursuant to the Transaction Documents, including the making of all
payments, and the taking of all actions, required under the Settlement
Agreement on or prior to the Closing Date.

 

“Treasury Services
Agreement” shall mean any agreement relating to treasury, depositary
and cash management services or automated clearinghouse transfer of funds.

 

“Trust Preferred Securities”
shall mean the trust preferred securities of Impac Capital Trust #4 which are
outstanding on the Closing Date.

 

16

 

“Type,” when
used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined
by reference to the Adjusted LIBOR Rate or the Alternate Base Rate.

 

“UBS RESI” shall
have the meaning assigned to such term in the preamble hereto.

 

“UCC” shall mean
the Uniform Commercial Code as in effect from time to time (except as otherwise
specified) in any applicable state or jurisdiction.

 

“United States”
shall mean the United States of America.

 

“VA” shall mean
the United States Department of Veterans Affairs or any successor thereto.

 

“VA Loan Guaranty Agreement”
shall mean the obligation of the United States to pay a specific percentage of
a mortgage loan (subject to a maximum amount) upon default of the mortgagor
pursuant to the Servicemen’s Readjustment Act, as amended.

 

“Voting Stock”
shall mean, with respect to any person, any class or classes of Equity Interests
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the Board of Directors
of such person.

 

“Wholly Owned Subsidiary”
shall mean, as to any person, (a) any corporation 100% of whose capital
stock (other than directors’ qualifying shares) is at the time owned by such
person and/or one or more Wholly Owned Subsidiaries of such person and (b) any
partnership, association, joint venture, limited liability company or other
entity in which such person and/or one or more Wholly Owned Subsidiaries of
such person have a 100% equity interest at such time.

 

SECTION 1.02      Classification
of Loans and Borrowings.  For purposes of this Agreement, Loans may be
classified and referred to by Class (e.g., a “Tranche A
Loan”) or by Type (e.g., a “Eurodollar
Loan”).

 

SECTION 1.03      Terms
Generally.  The
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.”  The word “will” shall be
construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise (a) any
definition of or reference to any Transaction Document, agreement, instrument
or other document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), (b) any reference herein to any person
shall be construed to include such person’s successors and assigns, (c) the
words “herein,” “hereof” and “hereunder,” and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement, (e) any reference to any
law or regulation herein shall refer to such law or regulation as amended, modified
or supplemented from time to time and (f) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights

 

17

 

SECTION 1.04      Accounting
Terms; GAAP.  Except as
otherwise expressly provided herein, all financial statements to be delivered
pursuant to this Agreement shall be prepared in accordance with GAAP as in
effect from time to time and all terms of an accounting or financial nature
shall be construed and interpreted in accordance with GAAP, as in effect on the
date hereof unless otherwise agreed to by Borrowers and the Lender.

 

SECTION 1.05      Resolution
of Drafting Ambiguities.  Each Borrower acknowledges and agrees that it
was represented by counsel in connection with the execution and delivery of the
Transaction Documents to which it is a party, that it and its counsel reviewed
and participated in the preparation and negotiation hereof and thereof and that
any rule of construction to the effect that ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation hereof
or thereof.

 

ARTICLE
II

 

THE
LOANS

 

SECTION 2.01      Loans.

 

(a)                                  (i) Without any further
action, the Tranche A Lender shall be deemed to have advanced Tranche A
Loans, in an aggregate principal amount equal to $23,850,000, to Borrowers on
the Closing Date.

 

(ii)                                  Without any
further action, the Tranche B Lender shall be deemed to have advanced
Tranche B Loans, in an aggregate principal amount equal to $10,000,000, to
Borrowers on the Closing Date.

 

(b)                                 Amounts paid or prepaid in
respect of Loans may not be reborrowed.

 

(c)                                  Each Loan shall be a
Eurodollar Loan unless, pursuant to Section 2.06, the Lender
notifies Borrowers that the Loans shall be converted to ABR Loans, in which
case the Loans shall be converted to ABR Loans as of the date designated for
such conversion by the Lender.

 

(d)                                 The initial Interest Period
for the Loans shall commence on the Closing Date and end on (and include) the
day preceding the next Payment Date. 
Each subsequent Interest Period for the Loans shall commence on (and
include) the current or most recent Payment Date and end on (and include) the
day preceding the next Payment Date.

 

SECTION 2.02      Evidence of Debt; Repayment of Loans.

 

(a)                                  Promise to Pay.  Borrowers hereby unconditionally promise to
pay, on a joint and several basis, to the Lender, the principal amount of each
Loan of the Lender as provided in Section 2.04.  Borrowers hereby promise to pay, on a joint
and several basis, to the Lender all other amounts payable by the Borrowers, or
any single Borrower, hereunder.

 

(b)                                 Lender Records.  The Lender shall maintain accounts in which
it will record (i) the amount of each Loan made, or deemed made, hereunder,
and the Type and Class thereof; (ii) the amount of any principal or
interest due and payable or to become due and payable from Borrowers to the
Lender hereunder; and (iii) the amount of any sum received by the Lender
hereunder .  The entries made in the
accounts maintained pursuant to this paragraph shall be prima facie evidence of the existence and amounts of the
obligations therein recorded; provided that
the failure of the Lender to maintain such ac-

 

18

 

counts or any error therein shall not in any
manner affect the obligations of Borrowers to repay the Loans in accordance
with their terms.

 

(c)                                  Promissory
Notes.  On the Closing Date, Borrowers
shall execute and deliver to (i) each Tranche A Lender a promissory note
payable to the order of such Tranche A Lender (or, if requested by such Tranche
A Lender, to such Tranche A Lender and its registered assigns) substantially in
the form of Exhibit C-1 and (ii) each Tranche B Lender a
promissory note payable to the order of such Tranche B Lender (or, if requested
by such Tranche B Lender, to such Tranche B Lender and its registered assigns)
substantially in the form of Exhibit C-2.  The Loans evidenced by such promissory notes
and interest thereon shall at all times (including after assignment pursuant to
Section 9.04) be represented by one or more promissory notes in
such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).

 

SECTION 2.03      Interest on Loans.

 

(a)                                  ABR Loans.  Subject to the provisions of Section 2.03(c),
the Loans comprising each ABR Borrowing, if any, shall bear interest at a rate
per annum equal to the Alternate Base Rate in effect from time to time.

 

(b)                                 Eurodollar
Loans.  Subject to the provisions of Section 2.03(c),
the Loans comprising each Eurodollar Borrowing shall bear interest at a rate
per annum equal to the Adjusted LIBOR Rate for the Interest Period in effect
for such Borrowing.

 

(c)                                  Default Rate.  Notwithstanding the foregoing, if any
principal of or interest on any Loan or any fee or other amount payable by any
Borrower hereunder is not paid when due, whether at stated maturity, upon
acceleration or otherwise, such overdue amount shall, to the extent permitted
by applicable law, bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of amounts constituting principal of or
interest on any Loan, 4% plus the rate
otherwise applicable to such Loan as provided in the preceding paragraphs of
this Section 2.03 or (ii) in the case of any other amount, 4% plus the rate applicable to Loans as provided in Section 2.03(b) (in
either case, the “Default Rate”).

 

(d)                                 Interest
Payment Dates.  Accrued
interest on each Loan shall be payable in arrears on each Payment Date for such
Loan; provided that (i)  in the
event of any repayment or prepayment of any Loan, accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such repayment
or prepayment and (ii) in the event of any conversion of any Eurodollar
Loan prior to the end of the current Interest Period therefor, accrued interest
on such Loan shall be payable on the effective date of such conversion.  Each Monthly Payment received by the Lender
shall be applied first to the payment of accrued interest on the Tranche A Loan
and the Tranche B Loan, on a pro rata basis, and the remainder of such Monthly
Payment shall be applied to the payment of principal on the Tranche A Loan.

 

(e)                                  Interest
Calculation.  All
interest hereunder shall be computed on the basis of a year of 360 days,
except that interest computed by reference to the Alternate Base Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).  The applicable Alternate Base Rate or
Adjusted LIBOR Rate shall be determined by the Lender in accordance with the
provisions of this Agreement and such determination shall be conclusive absent
manifest error.

 

SECTION 2.04      Amortization
of Term Borrowings. 
Borrowers agree to pay to the 
Lender, on each Payment Date an amount equal to $1,500,000 (the “Monthly Payment”). 
Each Monthly 

 

19

 

Payment received by the
Lender shall be applied first to the payment of accrued interest on the Tranche
A Loan and the Tranche B Loan, on a pro rata basis, and the remainder of such
Monthly Payment shall be applied to the payment of principal on the Tranche A
Loan.  To the extent not previously paid,
the entire principal balance of the Tranche A Loan (together with all
accrued interest thereon) shall be due and payable on the Tranche A
Maturity Date and the Borrowers agree to pay such amount on the Tranche A
Maturity Date. The entire principal balance of the Tranche B Loan
(together with all accrued interest thereon) shall be due and payable on the
Tranche B Maturity Date and the Borrowers agree to pay such amount on the
Tranche B Maturity Date.

 

SECTION 2.05      Optional and Mandatory Prepayments of
Loans.

 

(a)                                  Optional
Prepayments.  (i) 
Borrowers shall have the right at any time and from time to time to prepay any
Borrowing, in whole or in part, subject to the requirements of this Section 2.05;
provided that each partial prepayment
shall be in an amount that is an integral multiple of $250,000 and not less
than $1.0 million or, if less, the outstanding principal amount of such
Borrowing.

 

(ii)  Notwithstanding
any other provision hereof, if the Borrowers elect to repay to the Lender the
entire outstanding principal balance of the Tranche A Loan and the
Tranche B Loan (together with all accrued interest thereon and any other
amounts payable by the Borrowers hereunder) on or before December 31,
2009, then the Borrowers may pay the Lender, on or before December 31,
2009, an amount equal to the entire outstanding principal balance of the
Tranche A Loan and the Tranche B Loan (together with all accrued
interest thereon and any other amounts payable by the Borrowers hereunder) minus
$5,000,000.

 

(b)                                 Asset Sales.  Unless otherwise agreed in writing by the
Lender, not later than one Business Day following the receipt of any Net Cash
Proceeds of any Asset Sale by Holdings or any of its Subsidiaries, Borrowers
shall make prepayments of principal of Loans in accordance with Sections 2.05(e) and
(f) in an aggregate amount equal to 100% of such Net Cash Proceeds
or, if less, the outstanding amount of the Obligations.

 

(c)                                  Debt Issuance;
Preferred Stock Issuance; Permitted Residual Financing.  Not later than one Business Day following the
receipt of any Net Cash Proceeds of any Debt Issuance (excluding, for purposes
of clarification, any Permitted Residual Financing and any Re-Warehousing
Indebtedness) or Preferred Stock Issuance by Holdings or any of its
Subsidiaries, Borrowers shall make prepayments of principal of Loans in
accordance with Sections 2.05(e) and (f) in an
aggregate amount equal to 100% of such Net Cash Proceeds (it being understood
and agreed that payment of Net Cash Proceeds of any Debt Issuance shall not
limit any remedies available to the Lender with respect to any breach of Section 6.01)
or, if less, the outstanding amount of the Obligations.  Not later than one Business Day
following the receipt of any Net Cash Proceeds of any Permitted Residual
Financing by Holdings or any of its Subsidiaries, Borrowers shall prepay the
entire outstanding principal of the Tranche B Loan, and all accrued interest
related thereto.

 

(d)                                 Equity Issuance.  Until all outstanding principal of the
Tranche B Loan, and all accrued interest related thereto, has been paid in
full, not later than one Business Day following the receipt of any Net Cash
Proceeds of any Equity Issuance, Borrowers shall make prepayments of principal
of the Tranche B Loan in accordance with Sections 2.05(e) and (f) in
an aggregate amount equal to 100% of such Net Cash Proceeds or, if less, the
outstanding principal of the Tranche B Loan. 
At any time after the occurrence, and during the continuance, of an
Event of Default, not later than one Business Day following the receipt of any
Net Cash Proceeds of any Equity Issuance, Borrowers shall make prepayments of
prin-

 

20

 

cipal of Loans in accordance with Sections 2.05(e) and
(f) in an aggregate amount equal to 100% of such Net Cash Proceeds
or, if less, the outstanding amount of the Obligations.

 

(e)                                  Application of
Prepayments.  Subject to
the last sentence of Section 2.05(c) and the first sentence of Section 2.05(d),
in the event of any optional or mandatory prepayment of Loans made at a time
when Loans of more than one Class remain outstanding, the aggregate amount
of such prepayment shall be allocated first to the Tranche A Loans and
second to the Tranche B Loans.  Any
prepayments of Loans pursuant to this Section 2.05 shall not change
the Borrowers obligation to pay the Monthly Amount on each Payment Date other
than that no Monthly Amounts need to be paid after the entire principal amount
of the Tranche A Loan and all interest on the Tranche A Loan has been paid and
no Monthly Amount need be in excess of the amount needed to pay the entire
principal amount of the Tranche A Loan and all interest on the Tranche A Loan
and, if applicable, the Tranche B Loan; provided, that,
if the Tranche B Loan remains outstanding after the entire principal amount of
the Tranche A Loan and all interest on the Tranche A Loan has been paid, the
Borrowers shall pay a Monthly Amount on each Payment Date equal to the accrued
interest on the Tranche B Loan.

 

Amounts to be applied pursuant to this Section 2.05 to the
prepayment of Loans shall be applied, as applicable, first to reduce
outstanding ABR Loans, if any, of the applicable Class of Loans being
paid.  Any amounts remaining after each
such application, if any, shall be applied to prepay Eurodollar Loans of the
applicable Class of Loans being paid. 
Notwithstanding the foregoing, if the amount of any prepayment of Loans
required under this Section 2.05 shall be in excess of the amount
of the applicable ABR Loans at the time outstanding (an “Excess
Amount”), only the portion of the amount of such prepayment as is
equal to the amount of such outstanding ABR Loans shall be immediately prepaid
and, at the election of Borrowers, the Excess Amount shall be either (A) deposited
in an escrow account on terms satisfactory to the Lender and applied to the
prepayment of applicable Eurodollar Loans on the last day of the then
next-expiring Interest Period for such Eurodollar Loans; provided
that (i) interest in respect of such Excess Amount shall continue to
accrue thereon at the rate provided hereunder for the Loans which such Excess
Amount is intended to repay until such Excess Amount shall have been used in
full to repay such Loans and (ii) at any time while a Default has occurred
and is continuing, the Lender may apply any or all proceeds then on deposit to
the payment of such Loans in an amount equal to such Excess Amount or (B) prepaid
immediately.

 

(f)                                    Notice of
Prepayment.  Borrowers
shall notify the Lender by written notice of any prepayment hereunder (i) in
the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m.,
New York City time, three Business Days before the date of prepayment and (ii) in
the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New
York City time, one Business Day before the date of prepayment.  Each such notice shall be irrevocable.  Each such notice shall specify the prepayment
date, the principal amount of each Borrowing or portion thereof to be prepaid
and, in the case of a mandatory prepayment, a reasonably detailed calculation
of the amount of such prepayment.  Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing and otherwise in accordance with this Section 2.05.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.03.

 

SECTION 2.06      Alternate
Rate of Interest.  If, prior
to the commencement of any Interest Period for a Eurodollar Borrowing, the
Lender determines (which determination shall be final and conclusive absent
manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBOR Rate for such Interest Period, then the Lender
shall give written notice thereof to Borrowers as promptly as practicable
thereafter and, until the Lender notifies Borrowers that the circums-

 

21

 

tances giving rise to such
notice no longer exist, each Eurodollar Borrowing shall be converted to an ABR
Borrowing.

 

SECTION 2.07      Yield Protection.

 

(a)                                  Increased Costs
Generally. If any Change in Law shall:

 

(i)                  impose, modify
or deem applicable any reserve, special deposit, compulsory loan, insurance
charge or similar requirement against assets of, deposits with or for the
account of, or credit extended or participated in, by the Lender (except any
reserve requirement reflected in the Adjusted LIBOR Rate);

 

(ii)               subject the
Lender to any tax of any kind whatsoever with respect to this Agreement or any
Eurodollar Loan made by it, or change the basis of taxation of payments to the
Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered
by Section 2.10 and the imposition of, or any change in the rate
of, any Excluded Tax payable by the Lender); or

 

(iii)            impose on the
Lender or the London interbank market any other condition, cost or expense
affecting this Agreement or Eurodollar Loans made by the Lender;

 

and the result of any of the foregoing shall
be to increase the cost to the Lender of making or maintaining any Eurodollar
Loan (or of maintaining its obligation to make any such Loan) or to reduce the
amount of any sum received or receivable by the Lender hereunder (whether of
principal, interest or any other amount), then, upon request of the Lender,
Borrowers will pay to the Lender, as the case may be, such additional amount or
amounts as will compensate the Lender, as the case may be, for such additional
costs incurred or reduction suffered.

 

(b)                                 Capital
Requirements.  If the
Lender determines (in good faith, but in its sole absolute discretion) that any
Change in Law affecting the Lender or any lending office of the Lender or the
Lender’s holding company, if any, regarding capital requirements has or would
have the effect of reducing the rate of return on the Lender’s capital or on
the capital of the Lender’s holding company, if any, as a consequence of this
Agreement or the Loans made by the Lender, to a level below that which the Lender
or the Lender’s holding company could have achieved but for such Change in Law
(taking into consideration the Lender’s policies and the policies of the Lender’s
holding company with respect to capital adequacy), then from time to time
Borrowers will pay to the Lender such additional amount or amounts as will
compensate the Lender or the Lender’s holding company for any such reduction suffered.

 

(c)                                  Certificates
for Reimbursement.  A
certificate of a Lender setting forth the amount or amounts necessary to
compensate the Lender or its holding company, as the case may be, as specified
in paragraph (a) or (b) of this Section 2.07
and delivered to Borrowers shall be conclusive absent manifest error.  Borrowers shall pay the Lender, as the case
may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.

 

(d)                                 Delay in
Requests.  Failure or
delay on the part of the Lender to demand compensation pursuant to this Section 2.07
shall not constitute a waiver of the Lender’s right to demand such
compensation; provided that Borrowers shall not
be required to compensate a Lender pursuant to this Section for any
increased costs incurred or reductions suffered more than three (3) months
prior to the date that the Lender, as the case may be, notifies Borrowers of
the Change in Law giving rise to such increased costs or reductions and of the
Lender’s intention to claim compensation therefor (except that, if the 

 

22

 

Change in Law giving rise to such increased
costs or reductions is retroactive, then the four-month period referred to
above shall be extended to include the period of retroactive effect thereof).

 

SECTION 2.08      [Reserved.].

 

SECTION 2.09      Payments Generally.

 

(a)                                  Payments
Generally.  Borrowers
shall make each payment required to be made by it hereunder or under any other
Transaction Document (whether of principal, interest or amounts otherwise
payable) on or before the time expressly required hereunder or under such other
Transaction Document for such payment (or, if no such time is expressly
required, prior to 2:00 p.m., New York City time), on the date when due,
in immediately available funds, without setoff, deduction or counterclaim.  Any amounts received after such time on any
date may, in the discretion of the Lender, be deemed to have been received on
the next succeeding Business Day for purposes of calculating interest
thereon.  All such payments shall be made
to the Lender at its offices at  677
Washington Boulevard, Stamford, CT 06901, and except that payments pursuant to Sections 2.07,
2.08, 2.10 and 9.03 shall be made directly to the persons
entitled thereto and payments pursuant to other Transaction Documents shall be
made to the persons specified therein. 
The Lender shall distribute any such payments received by it for the
account of any other person to the appropriate recipient promptly following
receipt thereof.  If any payment under
any Transaction Document shall be due on a day that is not a Business Day,
unless specified otherwise, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension.  All payments under each Transaction Document
shall be made in dollars, except as expressly specified otherwise.

 

(b)                                 [Reserved].

 

(c)                                  Insufficient
Funds.  If at any time insufficient
funds are received by and available to the Lender to pay fully all amounts of
principal, interest and fees then due hereunder, such funds shall be applied (i) first, toward payment of interest then due hereunder, and (ii) second, toward payment of principal then due hereunder.  It is understood that the foregoing does not
apply to any adequate protection payments under any federal, state or foreign
bankruptcy, insolvency, receivership or similar proceeding, and that the Lender
may, subject to any applicable federal, state or foreign bankruptcy,
insolvency, receivership or similar orders, distribute any adequate protection
payments it receives in its sole discretion (i.e., whether to pay the
earliest accrued interest, all accrued interest on a pro rata basis or otherwise).

 

SECTION 2.10      Taxes.

 

(a)                                  Payments Free
of Taxes.  Any and all
payments by or on account of any obligation of the Borrowers hereunder or under
any other Transaction Document shall be made free and clear of and without
reduction or withholding for any Indemnified Taxes or Other Taxes; provided that if the Borrowers shall be required by
applicable Requirements of Law to deduct any Indemnified Taxes (including any
Other Taxes) from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the Lender
receives an amount equal to the sum it would have received had no such deductions
been made, (ii) the applicable Borrower shall make such deductions and (iii) the
applicable Borrower shall timely pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable Requirements of Law.

 

23

 

(b)                                 Payment of
Other Taxes by Borrowers. 
Without limiting the provisions of paragraph (a) above, Borrowers
shall timely pay any Other Taxes to the relevant Governmental Authority in
accordance with applicable Requirements of Law.

 

(c)                                  Indemnification
by Borrowers.  Borrowers
shall indemnify the Lender, within 10 days after demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) paid by the Lender and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. 
A certificate as to the amount of such payment or liability delivered to
Borrowers by the Lender shall be conclusive absent manifest error.

 

(d)                                 Evidence of
Payments.  As soon as
practicable after any payment of Indemnified Taxes or Other Taxes by Borrowers
to a Governmental Authority, Borrowers shall deliver to the Lender the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Lender.

 

(e)                                  Status of
Lender.  Any Foreign Lender shall, to
the extent it may lawfully do so, 
deliver to Borrowers (in such number of copies as shall be requested) on
or prior to the date on which such Foreign Lender becomes the Lender under this
Agreement (and from time to time thereafter upon the request of Borrowers, but
only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:

 

(i)                  duly completed
copies of Internal Revenue Service Form W-8BEN claiming eligibility for
benefits of an income tax treaty to which the United States of America is a
party,

 

(ii)               duly completed
copies of Internal Revenue Service Form W-8ECI,

 

(iii)            in the case of
a Foreign Lender claiming the benefits of the exemption for portfolio interest
under Section 881(c) of the Code, (x) a certificate to the
effect that such Foreign Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of
the Code, (B) a “10 percent shareholder” of any Borrower within the
meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled
foreign corporation” described in Section 881(c)(3)(C) of the Code
and (y) duly completed copies of 
Internal Revenue Service Form W-8BEN, or

 

(iv)           any other form
prescribed by applicable Requirements of Law as a basis for claiming exemption
from or a reduction in United States Federal withholding tax duly completed
together with such supplementary documentation as may be prescribed by
applicable Requirements of Law to permit Borrowers to determine the withholding
or deduction required to be made.

 

(f)                                    Treatment of
Certain Refunds.  If the
Lender determines, in its sole discretion, that it has received a refund of any
Indemnified Taxes or Other Taxes as to which it has been indemnified by a
Borrowers or with respect to which such Borrower has paid additional amounts
pursuant to this Section, it shall pay to such Borrower an amount equal to such
refund (but only to the extent of indemnity payments made, or additional
amounts paid, by such Borrower under this Section with respect to the Indemnified
Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses of the Lender, as the case may be, and without interest (other than
any interest paid by the relevant Governmen-

 

24

 

tal Authority with respect to such refund); provided that such Borrower, upon the request of the Lender,
agrees to repay the amount paid over to such Borrower (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to
the Lender in the event the Lender is required to repay such refund to such
Governmental Authority.  This paragraph
shall not be construed to require the Lender to make available its tax returns
(or any other information relating to its taxes that it deems confidential) to
any Borrower or any other person. 
Notwithstanding anything to the contrary, in no event will the Lender be
required to pay any amount to any Borrower the payment of which would place the
Lender in a less favorable net after-tax position than the Lender would have
been in if the additional amounts giving rise to such refund of any Indemnified
Taxes or Other Taxes had never been paid.

 

ARTICLE
III

 

REPRESENTATIONS
AND WARRANTIES

 

Each Borrower represents and warrants to the Lender
(with references to the Companies being references thereto after giving effect
to the Transactions unless otherwise expressly stated) that:

 

SECTION 3.01      Organization; Powers.  Each Company (a) is duly organized and
validly existing under the laws of the jurisdiction of its organization, (b) has
all requisite power and authority to carry on its business as now conducted and
to own and lease its property and (c) is qualified and in good standing
(to the extent such concept is applicable in the applicable jurisdiction) to do
business in every jurisdiction where such qualification is required, except in
such jurisdictions where the failure to so qualify or be in good standing,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.  There is no
existing default under any Organizational Document of any Company or any event
which, with the giving of notice or passage of time or both, would constitute a
default by any party thereunder.

 

SECTION 3.02      Authorization;
Enforceability.  The Transactions
to be entered into by each Borrower are within such Borrower’s powers and have
been duly authorized by all necessary action on the part of such Borrower.  This Agreement has been duly executed and
delivered by each Borrower and constitutes, and each other Transaction Document
to which any Borrower is to be a party, when executed and delivered by such
Borrower, will constitute, a legal, valid and binding obligation of such Borrower,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.

 

SECTION 3.03      No
Conflicts.  The
Transactions (a) do not require any consent or approval of, registration
or filing with, or any other action by, any Governmental Authority, except (i) such
as have been obtained or made and are in full force and effect, (ii) filings
necessary to perfect Liens created by the Transaction Documents and (iii) consents,
approvals, registrations, filings, permits or actions the failure to obtain or
perform which could not reasonably be expected to result in a Material Adverse
Effect, (b) will not violate the Organizational Documents of any Company, (c) will
not violate any Requirement of Law, (d) will not violate or result in a
default or require any consent or approval under any indenture, agreement or
other instrument binding upon any Company or its property, or give rise to a
right thereunder to require any payment to be made by any Company, except for
violations, defaults or the creation of such rights that could not reasonably
be expected to result in a Material Adverse Effect,

 

25

 

and (e) will not result
in the creation or imposition of any Lien on any property of any Company,
except Liens created by the Transaction Documents and Permitted Liens.

 

SECTION 3.04      Financial Statements.

 

(a)                                  Historical
Financial Statements.  Borrowers
have heretofore delivered to the Lender (or the Lender has otherwise obtained)
the consolidated balance sheets and related statements of income, stockholders’
equity and cash flows of Holdings (i) as of and for the fiscal years ended
December 31, 2006, December 31, 2007 and December 31, 2008,
audited by and accompanied by the unqualified opinion of  independent public accountants, and (ii) as
of and for the three-month period ended March 31, 2009 and for the
comparable period of the preceding fiscal year, in each case, certified by the
chief financial officer of Holdings. 
Borrowers have heretofore delivered to the Lender the consolidated
balance sheets and related statements of income, stockholders’ equity and cash
flows of Holdings as of and for the six-month period ended June 30, 2009
(prepared on a Pro Forma Basis and giving effect to the transactions
contemplated under the Settlement Agreement and the Loans under this Agreement)
and for the comparable period of the preceding fiscal year, in each case,
certified by the chief financial officer of Holdings.  All financial statements described in this
Clause (a) and all financial statements delivered pursuant to Sections 5.01(a),
(b) and (c) have been prepared in accordance with GAAP
and present fairly and accurately in all material respects the financial
condition and results of operations and cash flows of Holdings as of the dates
and for the periods to which they relate.

 

(b)                                 No Liabilities.  Except as set forth in the financial
statements referred to in Section 3.04(a), there are no liabilities
of any Company of any kind, whether accrued, contingent, absolute, determined,
determinable or otherwise, which could reasonably be expected to result in a
Material Adverse Effect, and there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in such a
liability, other than liabilities under the Transaction Documents.  Since December 31, 2008, there has been
no event, change, circumstance or occurrence that, individually or in the aggregate,
has had or could reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.05      Properties.

 

(a)                                  Generally.  Each Company has good title to, or valid leasehold
interests in, all its property material to its business, free and clear of all
Liens except for Permitted Liens and minor irregularities or deficiencies in
title that, individually or in the aggregate, do not interfere with its ability
to conduct its business as currently conducted or to utilize such property for
its intended purpose.  The property of
the Companies, taken as a whole, (i) is in good operating order, condition
and repair (ordinary wear and tear excepted) and (ii) constitutes all the
property which is required for the business and operations of the Companies as
presently conducted.

 

(b)                                 No Casualty
Event.  No Company has received any
notice of, nor has any knowledge of, the occurrence or pendency or
contemplation of any Casualty Event affecting all or any portion of its
property.

 

(c)                                  Property.  Each Company owns or has rights to use all of
the property used in, necessary for or material to each Company’s business as
currently conducted.  The use by each Company
of such property and all such rights with respect to the foregoing do not infringe
on the rights of any person other than such infringement which could not,
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.  No claim has
been made and remains outstanding that any 

 

26

 

Company’s use of any property does or may
violate the rights of any third party that could, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.06      [Reserved].

 

SECTION 3.07      Equity Interests and Subsidiaries.

 

(a)                                  Equity
Interests.  Schedule
3.07 hereto sets forth a list of all the Subsidiaries of Holdings and their
jurisdictions of organization as of the Closing Date.  All Equity Interests of each Company are duly
and validly issued and are fully paid and non-assessable, and are owned by
Holdings, directly or indirectly through Wholly Owned Subsidiaries.  Each Company is the record and beneficial
owner of, and has good and marketable title to, the Equity Interests that it
owns, free of any and all Liens, rights or claims of other persons, and there
are no outstanding warrants, options or other rights to purchase, or
shareholder, voting trust or similar agreements outstanding with respect to, or
property that is convertible into, or that requires the issuance or sale of,
any such Equity Interests.

 

SECTION 3.08      Litigation;
Compliance with Laws. 
Except as otherwise publicly disclosed in Holdings’ filings with the
Securities and Exchange Commission, there are no actions, suits or proceedings
at law or in equity by or before any Governmental Authority now pending or, to
the knowledge of any Company, threatened against or affecting any Company or
any business, property or rights of any Company (i) that involve any
Transaction Document or any of the Transactions or (ii) as to which there
is a reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.  No
Company or any of its property is in violation of, nor will the continued
operation of its property as currently conducted violate, any Requirements of
Law (including any zoning or building ordinance, code or approval or any
building permits) or any restrictions of record or agreements affecting any
Company’s Real Property or is in default with respect to any Requirement of
Law, where such violation or default, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.

 

SECTION 3.09      Agreements.  No Company is a party to any agreement or
instrument or subject to any corporate or other constitutional restriction that
has resulted or could reasonably be expected to result in a Material Adverse
Effect.  No Company is in default in any
manner under any provision of any indenture or other agreement or instrument
evidencing Indebtedness, or any other agreement or instrument to which it is a
party or by which it or any of its property is or may be bound, where such
default could reasonably be expected to result in a Material Adverse Effect,
and no condition exists which, with the giving of notice or the lapse of time
or both, would constitute such a default.

 

SECTION 3.10      [Reserved].

 

SECTION 3.11      [Reserved].

 

SECTION 3.12      [Reserved].

 

SECTION 3.13      Taxes.  Each Company has (a) timely filed or
caused to be timely filed all federal Tax Returns and all material state, local
and foreign Tax Returns or materials required to have been filed by it and all
such Tax Returns are true and correct in all material respects and (b) duly
and timely paid, collected or remitted or caused to be duly and timely paid,
collected or remitted all Taxes (whether or not shown on any Tax Return) due
and payable, collectible or remittable by it and all assessments received by
it, except Taxes (i) that are being contested in good faith by appropriate
proceedings 

 

27

 

and for which such Company
has set aside on its books adequate reserves in accordance with GAAP and (ii) which
could not, individually or in the aggregate, have a Material Adverse Effect.  Each Company has made adequate provision in
accordance with GAAP for all Taxes not yet due and payable.  Each Company is unaware of any proposed or
pending tax assessments, deficiencies or audits that could be reasonably
expected to, individually or in the aggregate, result in a Material Adverse
Effect.  Except as could not be
reasonably expected to, individually or in the aggregate, result in a Material
Adverse Effect, no Company has ever (a) been a party to any understanding
or arrangement constituting a “tax shelter” within the meaning of Section 6662(d)(2)(C)(ii) of
the Code, or within the meaning of Section 6111(c) or Section 6111(d) of
the Code as in effect immediately prior to the enactment of the American Jobs
Creation Act of 2004, or (b) “participated” in a “reportable transaction”
within the meaning of Treasury Regulation Section 1.6011-4.

 

SECTION 3.14      No
Material Misstatements.  No information, report, financial statement,
certificate, exhibit or schedule furnished by or on behalf of any Company to
the Lender in connection with the negotiation of any Transaction Document or
the Settlement Agreement, or included therein or delivered pursuant thereto,
taken as a whole, contained or contains any material misstatement of fact or
omitted or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were or are made,
not misleading as of the date such information is dated or certified; provided that to the extent any such information, report,
financial statement, exhibit or schedule was based upon or constitutes a
forecast or projection, each Company represents only that it acted in good
faith and utilized reasonable assumptions and due care in the preparation of
such information, report, financial statement, exhibit or schedule.

 

SECTION 3.15      [Reserved].

 

SECTION 3.16      Solvency.  Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the deemed
making of each Loan and after giving effect to each payment and other action
contemplated under the Settlement Agreement, (a) the assets (determined in
accordance with GAAP) of Holdings (on a consolidated basis with its
Subsidiaries) will exceed its debts and liabilities (each determined in
accordance with GAAP), subordinated, contingent or otherwise; (b) the
present fair saleable value of the assets of Holdings (on a consolidated basis
with its Subsidiaries) will be greater than the amount that will be required to
pay the probable liability of its debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute
and matured; (c) Holdings (on a consolidated basis with its Subsidiaries)
will be able to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; and (d) Holdings
(on a consolidated basis with its Subsidiaries) will not have unreasonably
small capital with which to conduct its business in which it is engaged as such
business is now conducted and is proposed to be conducted following the Closing
Date.

 

SECTION 3.17      [Reserved].

 

SECTION 3.18      [Reserved].

 

SECTION 3.19      [Reserved].

 

SECTION 3.20      Anti-Terrorism
Law.  (a)  No Borrower and, to
the knowledge of the Borrowers, none of its Affiliates is in violation of any
Requirement of Law relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224
on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and the Uniting and Strengthening America

 

28

 

by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law
107-56.

 

(b)                                 No Borrower and
to the knowledge of the Borrowers, no Affiliate or broker or other agent of any
Borrower acting or benefiting in any capacity in connection with the Loans is
any of the following:

 

(i)                  a person that
is listed in the annex to, or is otherwise subject to the provisions of, the Executive
Order;

 

(ii)               a person owned
or controlled by, or acting for or on behalf of, any person that is listed in
the annex to, or is otherwise subject to the provisions of, the Executive
Order;

 

(iii)            a person with
which the Lender is prohibited from dealing or otherwise engaging in any transaction
by any Anti-Terrorism Law;

 

(iv)           a person that
commits, threatens or conspires to commit or supports “terrorism” as defined in
the Executive Order; or

 

(v)              a person that
is named as a “specially designated national and blocked person” on the most
current list published by the U.S. Treasury Department Office of Foreign Assets
Control (“OFAC”) at its official website or any
replacement website or other replacement official publication of such list.

 

(c)                                  No Borrower
and, to the knowledge of the Borrowers, no broker or other agent of any
Borrower acting in any capacity in connection with the Loans (i) conducts
any business or engages in making or receiving any contribution of funds, goods
or services to or for the benefit of any person described in paragraph (b) above,
(ii) deals in, or otherwise engages in any transaction relating to, any
property or interests in property blocked pursuant to the Executive Order, or (iii) engages
in or conspires to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law.

 

ARTICLE
IV

 

CONDITIONS
TO EFFECTIVENESS

 

SECTION 4.01      Conditions
to Effectiveness.  The
effectiveness of this Agreement shall be subject to the prior or concurrent
satisfaction of each of the conditions precedent set forth in this Section 4.01.

 

(a)                                  Transaction
Documents.  All legal
matters incident to this Agreement and the other Transaction Documents shall be
satisfactory to the Lender and there shall have been delivered to the Lender an
executed counterpart of each of the Transaction Documents.

 

(b)                                 Corporate
Documents.  The Lender
shall have received:

 

(i)                  a certificate
of the secretary or assistant secretary of each Borrower dated the Closing
Date, certifying (A) that attached thereto is a true and complete copy of
each Organizational Document of such Borrower certified (to the extent
applicable) as of a recent date by the Secretary of State of the state of its
organization, (B) that attached thereto is a true and complete 

 

29

 

copy
of resolutions duly adopted by the Board of Directors of such Borrower
authorizing the execution, delivery and performance of the Transaction
Documents to which such person is a party and the borrowings hereunder, and
that such resolutions have not been modified, rescinded or amended and are in
full force and effect and (C) as to the incumbency and specimen signature
of each officer executing any Transaction Document or any other document
delivered in connection herewith on behalf of such Borrower (together with a
certificate of another officer as to the incumbency and specimen signature of
the secretary or assistant secretary executing the certificate in this
clause (i));

 

(ii)               a certificate
as to the good standing of each Borrower (in so-called “long-form” if
available) as of a recent date, from the Secretary of State (or other
applicable Governmental Authority) of the jurisdiction of formation or
incorporation of such Borrower; and

 

(iii)            such other
documents as the Lender may reasonably request.

 

(c)                                  Other
Transactions, etc.

 

(i)                  The
Transactions shall have been consummated or shall be consummated simultaneously
on the Closing Date, in each case in all material respects in accordance with
the terms hereof and the terms of the other Transaction Documents, without the
waiver or amendment of any such terms not approved by the Lender.

 

(d)                                 Opinions of
Counsel.  The Lender shall have received
a favorable written opinions of external and internal counsel for the Borrowers
satisfactory to the Lender, (A) dated the Closing Date, (B) addressed
to the Lender and (C) covering such matters relating to the Transaction
Documents and the Transactions as the Lender shall reasonably request.

 

(e)                                  Requirements of
Law.  The Lender shall be satisfied
that Holdings, its Subsidiaries and the Transactions shall be in full
compliance with all material Requirements of Law, including Regulations T, U
and X of the Board, and shall have received satisfactory evidence of such compliance
reasonably requested by them.

 

(f)                                    Consents.  The Lender shall be satisfied that all
requisite Governmental Authorities and third parties shall have approved or
consented to the Transactions, and there shall be no governmental or judicial
action, actual or threatened, that has or would have, singly or in the
aggregate, a reasonable likelihood of restraining, preventing or imposing
burdensome conditions on the Transactions or the other transactions
contemplated hereby.

 

(g)                                 Litigation.  The Lender shall be satisfied that there
shall be no litigation, public or private, or administrative proceedings,
governmental investigation or other legal or regulatory developments, actual or
threatened, that, singly or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect, or could materially and adversely affect
the ability of Borrowers to fully and timely perform their respective
obligations under the Transaction Documents, or the ability of the parties to
consummate the financings contemplated hereby or the other Transactions.

 

(h)                                 Payments and
Expenses.  The Lender
shall have received all amounts due and payable on or prior to the Closing
Date, including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses (including the legal fees and expenses of Kaye
Scholer LLP, special counsel to 

 

30

 

the Lender) required to be reimbursed or paid
by Borrowers hereunder or under any other Transaction Document.

 

(i)                                     USA Patriot Act.  The Lender shall have received, sufficiently
in advance of the Closing Date, all documentation and other information that
may be required by the Lender in order to enable compliance with applicable “know
your customer” and anti-money laundering rules and regulations, including
the United States PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Patriot Act”) including the
information described in Section 9.13.

 

ARTICLE
V

 

AFFIRMATIVE
COVENANTS

 

Each Borrower warrants, covenants and agrees with
the Lender that so long as this Agreement shall remain in effect and until the
principal of and interest on each Loan and all other expenses or amounts
payable under any Transaction Document shall have been paid in full, unless the
Lender shall otherwise consent in writing, each Borrower will, and will cause
each of its Subsidiaries to:

 

SECTION 5.01      Financial
Statements, Reports, etc.  Furnish to the Lender:

 

(a)                                  Annual Reports.  As soon as available and in any event within
90 days (or such earlier date on which Holdings is required to file a Form 10-K
under the Exchange Act) after the end of each fiscal year, beginning with the
fiscal year ending December 31, 2009 the consolidated balance sheet of
Holdings as of the end of such fiscal year and related consolidated statements
of income, cash flows and stockholders’ equity for such fiscal year, in
comparative form with such financial statements as of the end of, and for, the
preceding fiscal year, and notes thereto (including a note with a consolidating
balance sheet and statements of income and cash flows separating out Holdings,
the other Borrowers and the other Subsidiaries), all prepared in accordance
with Regulation S-X and accompanied by an opinion of independent public
accountants of recognized national standing (which opinion shall not be
qualified as to scope or contain any going concern or other qualification), stating
that such financial statements fairly present, in all material respects, the
consolidated financial condition, results of operations and cash flows of
Holdings as of the dates and for the periods specified in accordance with GAAP
(it being understood that the information required by this clause (a) may
be furnished in the form of a Form 10-K);

 

(b)                                 Quarterly
Reports.  As soon as available and in
any event within 45 days (or such earlier date on which Holdings is
required to file a Form 10-Q under the Exchange Act) after the end of each
of the first three fiscal quarters of each fiscal year, beginning with the
fiscal quarter ending June 30, 2009, the consolidated balance sheet of
Holdings as of the end of such fiscal quarter and related consolidated
statements of income and cash flows for such fiscal quarter and for the then
elapsed portion of the fiscal year, in comparative form with the consolidated
statements of income and cash flows for the comparable periods in the previous
fiscal year (provided that with respect to any fiscal quarter that ends on or
prior to the first anniversary of the Closing Date, the foregoing requirement
that such financial statements be presented in comparative form shall only
apply to the extent financial statements of Holdings or the Acquired Business
exist for such comparable periods in the previous fiscal year), and notes
thereto (including a note with a consolidating balance sheet and statements of
income and cash flows separating out Holdings, the other Borrower and the other
Subsidiaries), all prepared in accordance with Regulation S-X under the
Securities Act and accompanied by a certificate of a Financial Officer stating
that such financial statements fairly present, in all material respects, the
consolidated financial condition, results of operations and cash flows of
Holdings as of the date and for the periods specified in accordance with GAAP 

 

31

 

consistently applied, and on a basis consistent
with audited financial statements referred to in clause (a) of this
Section, subject to normal year-end audit adjustments (it being understood that
the information required by this clause (b) may be furnished in the form
of a Form 10-Q);

 

(c)                                  Quarterly
Repurchase Obligations. As soon as possible and in any event within
5 days after the end of each calendar quarter a written report, in
reasonable detail, describing each instance during such calendar quarter in
which any Company agreed upon the amount of, or paid any amount with respect
to, any Repurchase Obligations;

 

(d)                                 Solvency/Financial
Covenant Compliance Certificate. As soon as possible and in
any event within 15  calendar days after the end of each month a
Solvency/Financial Covenant Compliance Certificate;

 

(e)                                  Public Reports.  Promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and other
materials filed by Holdings or any of its Subsidiaries with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities exchange, or
distributed to holders of its Indebtedness pursuant to the terms of the
documentation governing such Indebtedness (or any trustee, agent or other representative
therefor), as the case may be;

 

(f)                                    Management
Letters.  Promptly after the receipt
thereof by any Company, a copy of any “management letter” received by any such
person from its certified public accountants and the management’s responses
thereto;

 

(g)                                 Organizational
Documents.  Promptly
provide copies of any Organizational Documents that have been amended or modified
in accordance with the terms hereof and deliver a copy of any notice of default
given or received by any Company under any Organizational Document within 15
days after such Company gives or receives such notice; and

 

(h)                                 Other
Information.  Promptly,
from time to time, such other information regarding the operations, business
affairs and financial condition of any Company, or compliance with the terms of
any Transaction Document, as the Lender may reasonably request.

 

SECTION 5.02      Litigation
and Other Notices. 
Furnish to the Lender written notice of the following promptly (and, in
any event, within three (3) Business Days after the occurrence thereof
with respect to (a), (b)(ii), (c), (d) and (e) below and fifteen (15)
Business Days after the occurrence thereof with respect to (b)(i) below):

 

(a)                                  any Default,
specifying the nature and extent thereof and the corrective action (if any)
taken or proposed to be taken with respect thereto;

 

(b)                                 the filing or
commencement of any action, suit, litigation or proceeding, whether at law or
in equity by or before any Governmental Authority, (i) against any Company
or any Affiliate thereof that could reasonably be expected to result in a
Material Adverse Effect or (ii) with respect to any Transaction Document;

 

(c)                                  any development
that has resulted in, or could reasonably be expected to result in a Material Adverse
Effect; and

 

32

 

(d)                                 (i) the
incurrence of any Lien (other than Permitted Liens) on, or claim asserted against
any material property of the Borrowers or (ii) the occurrence of any other
event which could materially affect the value of such property; and

 

(e)                                  any Investments
described in Section 6.04 (e) or Section 6.04 (f),
any Asset Sales described in Section 6.06 (d) and any
Acquisitions described in Section 6.07 (b), in each case to the
extent such Investment, Asset Sale or Acquisition exceeds $1,000,000, together
with the dates, amounts and descriptions thereof.  Any Investments described in Section 6.04(e) or
Section 6.04 (f), any Asset Sales described in Section 6.06(d) and
any Acquisitions described in Section 6.07(b) that are less
than $1,000,000 shall be included in the monthly certificate described in Section 5.01(d) above
together with all prior Investments described in Section 6.04(e)or Section 6.04
(f), any Asset Sales described in Section 6.06(d) and any
Acquisitions described in Section 6.07(b) since the Closing
Date, together, in each case, with the dates, amounts and descriptions thereof.

 

SECTION 5.03      Existence; Businesses and Properties.  Except for IFC and IWLG,

 

(a)                                  Do or cause to
be done all things necessary to preserve, renew and maintain in full force and
effect its legal existence; provided, that
the legal existence of any Company other than a Borrower need not be maintained
if the termination of such legal existence could not reasonably be expected to
result in a Material Adverse Effect.

 

(b)                                 In the case of
Holdings, do or cause to be done all things necessary for Holdings to remain a
publicly traded company required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.

 

(c)                                  Do or cause to
be done all things necessary to obtain, preserve, renew, extend and keep in
full force and effect the rights, licenses, permits, privileges, franchises,
authorizations, patents, copyrights, trademarks and trade names material to the
conduct of its business; maintain and operate such business in substantially
the manner in which it is presently conducted and operated; comply with all
applicable Requirements of Law (including any and all zoning, building,
environmental law, ordinance, code or approval or any building permits or any
restrictions of record or agreements affecting the Real Property) and decrees
and orders of any Governmental Authority, whether now in effect or hereafter enacted,
except where the failure to comply, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect; pay and perform
its obligations under all Leases and Transaction Documents; and at all times
maintain, preserve and protect all property material to the conduct of such
business and keep such property in good repair, working order and condition
(other than wear and tear occurring in the ordinary course of business) and
from time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times; provided that nothing in this Section 5.03(c) shall
prevent (i) sales of property, consolidations or mergers by or involving
any Company in accordance with Section 6.05 or Section 6.06;
(ii) the withdrawal by any Company of its qualification as a foreign
corporation in any jurisdiction where such withdrawal, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect; or (iii) the abandonment by any Company of any rights, franchises,
licenses, trademarks, trade names, copyrights or patents that such person reasonably
determines are not useful to its business or no longer commercially desirable.

 

33

 

SECTION 5.04      [Reserved].

 

SECTION 5.05      Obligations
and Taxes.

 

(a)                                  Payment of
Obligations.  Pay its
Indebtedness and other obligations promptly and in accordance with their terms
(except in the case of IFC and IWLG)   and pay and discharge promptly when due all
Taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property, before the same shall
become delinquent or in default, as well as all lawful claims for labor,
services, materials and supplies or otherwise that, if unpaid, might give rise
to a Lien other than a Permitted Lien upon such properties or any part thereof;
provided that such payment and discharge
shall not be required with respect to any such Tax, assessment, charge, levy or
claim so long as (x)(i) the validity or amount thereof shall be contested
in good faith by appropriate proceedings timely instituted and diligently
conducted and the applicable Company shall have set aside on its books adequate
reserves or other appropriate provisions with respect thereto in accordance
with GAAP, (ii) such contest operates to suspend collection of the
contested obligation, Tax, assessment or charge and enforcement of a Lien other
than a Permitted Lien and (iii) the applicable Company shall have
otherwise complied with the Contested Lien Conditions and (y) the failure
to pay could not reasonably be expected to result in a Material Adverse Effect.

 

(b)                                 Filing of
Returns.  Timely and correctly file all
material Tax Returns required to be filed by it.  Withhold, collect and remit all Taxes that it
is required to collect, withhold or remit.

 

(c)                                  Tax Shelter
Reporting.  Borrowers
do not intend to treat the Loans as being a “reportable transaction” within the
meaning of Treasury Regulation Section 1.6011-4.  In the event Borrowers determine to take any
action inconsistent with such intention, it will promptly notify the Lender
thereof.

 

SECTION 5.06      Re-Warehousing
Business. Originate, fund, finance, purchase or otherwise
include only Agency Eligible Mortgage Loans in the Re-Warehousing Business; provided, that the applicable Subsidiary or Subsidiaries of
any Borrower may originate, fund, finance, purchase or otherwise include
mortgage loans other than Agency Eligible Mortgage Loans in the Re-Warehousing
Business with the written consent of the Lender, which consent shall not be
unreasonably withheld.

 

SECTION 5.07      Maintaining
Records; Access to Properties and Inspections.

 

Keep proper books of record and account in which
full, true and correct entries in conformity with GAAP and all Requirements of
Law are made of all dealings and transactions in relation to its business and activities.  Each Company will permit any representatives
designated by the Lender to visit and inspect the financial records and the
property of such Company at reasonable times and as often as reasonably
requested and to make extracts from and copies of such financial records, and
permit any representatives designated by the Lender to discuss the affairs,
finances, accounts and condition of any Company with the officers and employees
thereof and advisors therefor (including independent accountants).

 

34

 

ARTICLE
VI

 

NEGATIVE
COVENANTS

 

Each Borrower warrants, covenants and agrees with
the Lender that, so long as this Agreement shall remain in effect and until the
principal of and interest on each Loan and all other expenses or amounts
payable under any Transaction Document have been paid in full, unless the
Lender shall have otherwise consented in writing, no Borrower will, nor will
they cause or permit any Subsidiaries thereof to:

 

SECTION 6.01      Indebtedness.  Incur, create, assume or permit to exist,
directly or indirectly, any Indebtedness, except

 

(a)                                  Indebtedness
incurred under this Agreement and the other Transaction Documents;

 

(b)                                 (i) Indebtedness
outstanding on the Closing Date and listed on Schedule 6.01(b) and
(ii) refinancings or renewals thereof; provided that (A) any
such refinancing Indebtedness is in an aggregate principal amount not greater
than the aggregate principal amount of the Indebtedness being renewed or
refinanced, plus the amount of any premiums required
to be paid thereon and reasonable fees and expenses associated therewith, (B) such
refinancing Indebtedness has a later or equal final maturity and longer or
equal weighted average life than the Indebtedness being renewed or refinanced
and (C) the covenants, events of default, subordination and other
provisions thereof (including any guarantees thereof) shall be, in the
aggregate, no less favorable to the Lender than those contained in the Indebtedness
being renewed or refinanced.

 

(c)                                  Indebtedness in
respect of accounts payable arising in the ordinary course of business;

 

(d)                                 Indebtedness in
respect of workers’ compensation claims, insurance obligations and licensing
bonds and related indemnity agreements arising in the ordinary course of
business;

 

(e)                                  Contingent
Obligations of any Borrower in respect of Indebtedness otherwise permitted
under this Section 6.01;

 

(f)                                    Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of
business; provided, however,
that such Indebtedness is extinguished within five Business Days of incurrence;

 

(g)                                 Indebtedness
arising in connection with endorsement of instruments for deposit in the ordinary
course of business;

 

(h)                                 Indebtedness
arising in connection with a Permitted Residual Financing; and

 

(i)                                     Indebtedness,
in an aggregate amount not in excess of $500,000,000, incurred by a new special
purpose Subsidiary of a Borrower (the “Re-Warehousing SPV”)
to finance the Re-Warehousing Business (the “Re-Warehousing
Indebtedness”); provided, that,
there will be no recourse to any other Company (or assets thereof) other than
the Re-Warehousing SPV with respect to the Re-Warehousing Business Indebtedness.

 

35

 

(j)                                     Indebtedness
incurred by a new Subsidiary of a Borrower (the “Re-Warehousing
Originator”) when it enters into a repurchase transaction with the
Re-Warehousing SPV to fund its origination of residential mortgage loans which
will later be sold to the Re-Warehousing SPV in connection with the
Re-Warehousing Business.

 

(k)                                  Indebtedness of
one Borrower to another Borrower;

 

(l)                                     Indebtedness
constituting Investments permitted by Section 6.04;

 

(m)                               Indebtedness in
connection with Acquisitions permitted by Section 6.07; and

 

(n)                                 Indebtedness
incurred in connection with the acquisition of equipment in the ordinary course
of business; provided, that any Lien in
connection with such Indebtedness shall attach solely to the equipment
acquired.

 

SECTION 6.02      Liens.  Create, incur, assume or permit to exist,
directly or indirectly, any Lien on any property now owned or hereafter
acquired by it or on any income or revenues or rights in respect of any
thereof, except the following (collectively, the “Permitted
Liens”):

 

(a)                                  inchoate Liens
for taxes, assessments or governmental charges or levies not yet due and
payable or delinquent and Liens for taxes, assessments or governmental charges
or levies, which (i) are being contested in good faith by appropriate
proceedings for which adequate reserves have been established in accordance
with GAAP, which proceedings (or orders entered in connection with such proceedings)
have the effect of preventing the forfeiture or sale of the property subject to
any such Lien, and (ii) such Lien and the contest thereof shall satisfy
the Contested Lien Conditions;

 

(b)                                 Liens in
respect of property of any Company imposed by Requirements of Law, which were
incurred in the ordinary course of business and do not secure Indebtedness for
borrowed money, such as carriers’, warehousemen’s, materialmen’s, landlords’,
workmen’s, suppliers’, repairmen’s and mechanics’ Liens and other similar Liens
arising in the ordinary course of business, and (i) which do not in the
aggregate materially detract from the value of the property of the Companies,
taken as a whole, and do not materially impair the use thereof in the operation
of the business of the Companies, taken as a whole, (ii) which, if they
secure obligations that are then due and unpaid, are being contested in good
faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP, which proceedings (or orders entered in
connection with such proceedings) have the effect of preventing the forfeiture
or sale of the property subject to any such Lien, and (iii)  such Lien and
the contest thereof shall satisfy the Contested Lien Conditions;

 

(c)                                  any Lien in
existence on the Closing Date and set forth on Schedule 6.02(c) and
any Lien granted as a replacement or substitute therefor; provided
that any such replacement or substitute Lien (i) except as permitted by Section 6.01(b)(ii)(A),
does not secure an aggregate amount of Indebtedness, if any, greater than that
secured on the Closing Date and (ii) does not encumber any property other
than the property subject thereto on the Closing Date (any such Lien, an “Existing Lien”);

 

(d)                                 easements,
rights-of-way, restrictions (including zoning restrictions), covenants,
licenses, encroachments, protrusions and other similar charges or encumbrances,
and minor title deficiencies on or with respect to any Real Property owned by
any Company, in each case whether now or hereafter in existence, not (i) securing
Indebtedness, (ii) individually or in the aggregate materially impairing 

 

36

 

the value or marketability of such Real
Property or (iii) individually or in the aggregate materially interfering
with the ordinary conduct of the business of the Companies at such Real
Property;

 

(e)                                  Liens arising
out of judgments, attachments or awards not resulting in a Default and in
respect of which such Company shall in good faith be prosecuting an appeal or
proceedings for review in respect of which there shall be secured a subsisting
stay of execution pending such appeal or proceedings and such Lien and the
contest thereof shall satisfy the Contested Lien Conditions;

 

(f)                                    Liens (x) imposed
by Requirements of Law or deposits made in connection therewith in the ordinary
course of business in connection with workers’ compensation, unemployment insurance
and other types of social security legislation, (y) incurred in the
ordinary course of business to secure the performance of tenders, statutory obligations
(other than excise taxes), surety, stay, customs and appeal bonds, statutory
bonds, bids, leases, government contracts, trade contracts, performance and
return of money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money) or (z) arising by virtue of deposits
made in the ordinary course of business to secure liability for premiums to
insurance carriers; provided that (i) with
respect to clauses (x), (y) and (z) of this paragraph (f),
such Liens are for amounts not yet due and payable or delinquent or, to the
extent such amounts are so due and payable, such amounts are being contested in
good faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP, in connection with which proceedings
orders have been entered that have the effect of preventing the forfeiture or
sale of the property subject to any such Lien, (ii) to the extent such
Liens are not imposed by Requirements of Law, such Liens shall in no event
encumber any property other than cash and Cash Equivalents and (iii) such
Lien and the contest thereof shall satisfy the Contested Lien Conditions;

 

(g)                                 Leases of the
properties of any Company granted by such Company to third parties, in each
case entered into in the ordinary course of such Company’s business so long as
such Leases do not, individually or in the aggregate, (i) interfere in any
material respect with the ordinary conduct of the business of any Company or (ii) materially
impair the use (for its intended purposes) or the value of the property subject
thereto;

 

(h)                                 Liens arising
out of conditional sale, title retention, consignment or similar arrangements
for the sale of goods entered into by any Company in the ordinary course of
business in accordance with the past practices of such Company;

 

(i)                                     Liens securing
Indebtedness incurred pursuant to Section 6.01(n); provided that any such Liens attach only to the property
being financed pursuant to such Indebtedness and do not encumber any other property
of any Company;

 

(j)                                     bankers’ Liens,
rights of setoff and other similar Liens existing solely with respect to cash
and Cash Equivalents on deposit in one or more accounts maintained by any Company,
in each case granted in the ordinary course of business in favor of the bank or
banks with which such accounts are maintained, securing amounts owing to such
bank with respect to cash management and operating account arrangements,
including those involving pooled accounts and netting arrangements; provided that, unless such Liens are non-consensual and
arise by operation of law, in no case shall any such Liens secure (either
directly or indirectly) the repayment of any Indebtedness;

 

(k)                                  Liens on
property of a person existing at the time such person is acquired or merged
with or into or consolidated with any Company to the extent permitted hereunder
(and not created in anticipation or contemplation thereof); provided that such Liens do not extend to property not subject

 

37

 

to such Liens at the time of acquisition (other
than improvements thereon) and are no more favorable to the lienholders than
such existing Lien;

 

(l)                                     licenses of
intellectual property granted by any Company in the ordinary course of business
and not interfering in any material respect with the ordinary conduct of
business of the Companies;

 

(m)                               the filing of
UCC financing statements solely as a precautionary measure in connection with operating
leases or consignment of goods;

 

(n)                                 Liens on
Residual Interests securing a Permitted Residual Financing;

 

(o)                                 Liens incurred
by the Re-Warehousing SPV to secure the Re-Warehousing Indebtedness including
the Lien on a cash collateral/reserve account which will be initially funded in
an amount not to exceed $10,000,000 and thereafter be increased by a percentage
of excess income of the Re-Warehousing SPV (the “Re-Warehousing
Reserve Account”); and

 

(p)                                 Liens incurred
in connection with the transactions permitted by Sections 6.01(j), (l) and
(m).

 

SECTION 6.03      Sale
and Leaseback Transactions.  Enter into any arrangement, directly or
indirectly, with any person whereby it shall sell or transfer any property,
real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other
property which it intends to use for substantially the same purpose or purposes
as the property being sold or transferred (a “Sale and
Leaseback Transaction”) unless (i) the sale of such property is
permitted by Section 6.06 and (ii) any Liens arising in
connection with its use of such property are permitted by Section 6.02.

 

SECTION 6.04      Investments,
Loans and Advances. 
Directly or indirectly, lend money or credit (by way of guarantee or
otherwise) or make advances to any person, or purchase or acquire any stock,
bonds, notes, debentures or other obligations or securities of, or any other
interest in, or make any capital contribution to, any other person, or purchase
or own a futures contract or otherwise become liable for the purchase or sale
of currency or other commodities at a future date in the nature of a futures
contract (all of the foregoing, collectively, “Investments”),
except that the following shall be permitted:

 

(a)                                  the Companies
may consummate the Transactions in accordance with the provisions of the
Transaction Documents;

 

(b)                                 Investments
outstanding on the Closing Date and identified on Schedule 6.04(b);

 

(c)                                  the Companies
may endorse negotiable instruments held for collection in the ordinary course
of business;

 

(d)                                 Investments in
any entity that would not be considered a Subsidiary pursuant to the definition
of such term (a “Joint Venture”); provided, that, during the period commencing on the date
hereof and ending on the day that the principal of and interest on each Loan
and all other expenses or amounts payable under any Transaction Document have
been paid in full, the aggregate amount of such Investments, shall not exceed
$2,000,000 without the prior written consent of the Lender;

 

38

 

(e)                                  Investments
with respect to Subsidiaries of the Borrowers (other than the Re-Warehousing
Reserve Account Investment); provided, that,
during the period commencing on the date hereof and ending on the day that the
principal of and interest on each Loan and all other expenses or amounts
payable under any Transaction Document have been paid in full, the aggregate
amount of such Investments, together with Investments described in Section 6.04
(d), and the aggregate consideration paid in connection with Acquisitions described
in Section 6.07 (b), shall not exceed $10,000,000.  For the purpose of calculating compliance
with the $10,000,000 limitation contained herein and in Section 6.07(b),
Borrowers shall count each transaction only once, regardless of whether such
transaction constitutes a transaction that meets the requirements of more than
one of Sections 6.04(d), 6.04(e) and 6.07(b); and

 

(f)                                    Investments
with respect to the Re-Warehousing SPV in an amount not to exceed $10,000,000
which shall be used by the Re-Warehousing SPV for the initial funding of the
Re-Warehousing Reserve Account (the “Re-Warehousing Reserve
Account Investment”) and any additional amounts thereafter added
thereto from, and as a percentage of, excess income of the Re-Warehousing SPV;

 

(g)                                 Investments in
mortgage loans in the ordinary course of business; and

 

(h)                                 Investments in
Cash Equivalents.

 

SECTION 6.05      Mergers
and Consolidations. 
Except for IFC and IWLG, wind up, liquidate or dissolve its affairs or
enter into any transaction of merger or consolidation (or agree to do any of
the foregoing at any future time), except that any Company may merge or
consolidate with or into a Borrower (as long as such Borrower is the surviving
person in the case of any merger or consolidation involving such Borrower).

 

SECTION 6.06      Asset
Sales.  Effect any
Asset Sale, or agree to effect any Asset Sale, except that the following shall
be permitted:

 

(a)                                  disposition of
used, worn out, obsolete or surplus property by any Company in the ordinary
course of business and the abandonment or other disposition of intellectual
property that is, in the reasonable judgment of Borrower, no longer
economically practicable to maintain or useful in the conduct of the business
of the Companies taken as a whole;

 

(b)                                 the
Transactions as contemplated by the Transaction Documents;

 

(c)                                  mergers and
consolidations in compliance with Section 6.05; and

 

(d)                                 other Asset
Sales; provided, that, (i) no such Asset
Sale may be to a Company or any Affiliate thereof and (ii) not later than
one Business Day following the receipt of any Net Cash Proceeds of any such
Asset Sale, Borrowers shall make prepayments of principal of Loans in
accordance with Sections 2.05(b) in an aggregate amount equal
to 100% of such Net Cash Proceeds or, if less, the outstanding amount of the
Obligations.

 

SECTION 6.07      Acquisitions.  Purchase or otherwise acquire (in one or a
series of related transactions) any part of the property (whether tangible or
intangible) of any person (or agree to do any of the foregoing at any future
time) (excluding in all cases acquisitions of furniture, fixtures, equipment
and supplies in the ordinary course of business), except that the following
shall be permitted:

 

39

 

(a)                                  the
Transactions as contemplated by the Transaction Documents; and

 

(b)                                 other purchases
or acquisitions of property (“Acquisitions”);
provided, that, during the period
commencing on the date hereof and ending on the day that the principal of and interest
on each Loan and all other expenses or amounts payable under any Transaction
Document have been paid in full, the aggregate consideration paid in connection
with such Acquisitions, together with the aggregate amount of Investments
described in Section 6.04 (d) and Section 6.04 (e),
shall not exceed $10,000,000.  For the
purpose of calculating compliance with the $10,000,000 limitation contained
herein and in Section 6.04(e), Borrowers shall count each transaction only
once, regardless of whether such transaction constitutes a transaction that
meets the requirements of more than one of Sections 6.04(d), 6.04(e) and
6.07(b).

 

SECTION 6.08      Dividends.  Authorize, declare or pay, directly or
indirectly, any Dividends with respect to any Company, except that the following
shall be permitted:

 

(a)                                  Dividends to a
Borrower from a Subsidiary of such Borrower;

 

(b)                                 purchases by
Holdings of its 9.375% Series B Cumulative Redeemable Preferred Stock
(Pink Sheets: IMPHP) and/or 9.125% Series C Cumulative Redeemable Preferred
Stock (Pink Sheets: IMPHO); provided, that the aggregate purchase price
for such purchases shall not exceed $601,750 (with such purchase price amount,
as so limited, to constitute the sole consideration for the purchase of such
securities and/or the payment or extinguishment of accrued and unpaid dividends
related to such securities);

 

(c)                                  the payment of
quarterly dividends on Trust Preferred Securities in an amount not to exceed
$560,000 for any quarter; and

 

(d)                                 purchases by
Holdings or any Subsidiary thereof of all, but not less than all, of the
outstanding Trust Preferred Securities for an aggregate purchase price not to
exceed $1,650,000.

 

SECTION 6.09      Transactions
with Affiliates.  Enter into,
directly or indirectly, any transaction or series of related transactions,
whether or not in the ordinary course of business, with, or make any payments
to, any Affiliate of any Company or any director, officer or employee of any Company,
except that the following shall be permitted:

 

(a)                                  Dividends
permitted by Section 6.08;

 

(b)                                 reasonable and
customary director, officer and employee compensation and other benefits
(including retirement, health, stock option and other benefit plans) and
indemnification arrangements, in each case approved by the Board of Directors
of the applicable Borrower;

 

(c)                                  transactions on
terms and conditions at least as favorable to such Company as would reasonably
be obtained by such Company at that time in a comparable arm’s-length transaction;

 

(d)                                 transactions
between the Re-Warehousing SPV and the Re-Warehousing Originator related to the
Re-Warehousing Business; and

 

(e)                                  the
Transactions as contemplated by the Transaction Documents.

 

40

 

SECTION 6.10      Financial Covenants.

 

(a)                                  Shareholders
Equity.  Permit the Shareholders’
Equity, as at any date of determination, to be less than zero; provided,
that, the effect of any increase or decrease in the amount of the obligations
under the Trust Preferred Securities will be excluded for the purpose of calculating
Shareholders’ Equity.

 

(b)                                 Cash and Cash
Equivalents.  Permit the
unrestricted and unencumbered Cash and Cash Equivalents owned and held by the
Borrowers, plus 50% of the fair value of Holdings’ investment in the JAM
Special Opportunities Fund L.P. (determined in accordance with GAAP), as at any
date of determination, to be less than $10,000,000.

 

SECTION 6.11      Prepayments
of Other Indebtedness; Settlement of Repurchase Obligations; Modifications of
Organizational Documents and Other Documents, etc.  Directly or indirectly:

 

(a)                                  make (or give
any notice in respect thereof) any payment or prepayment of principal on or
redemption or acquisition for value of, or any prepayment or redemption as a
result of any asset sale, change of control or similar event of, any
Indebtedness outstanding under any Indebtedness of any Borrower or any of its
Subsidiaries except (i) any payment of principal at scheduled maturity or (ii) a
refinancing permitted by Section 6.01(b);

 

(b)                                 agree upon the
amount of, or pay any amount (or transfer any assets) with respect to, any
liquidated or unliquidated repurchase, substitution or similar obligations
(other than ordinary scheduled repurchases under master repurchase agreements
which are not related to breaches of representations) of any Borrower or any
Subsidiary thereof under any agreement to which it is a party (collectively, “Repurchase Obligation”); provided, that
any Company can agree upon the amount of, or pay any amount with respect to,
any Repurchase Obligations with the written consent of the Lender, which
consent shall not be unreasonably withheld and; provided,
further, that any Company can agree upon
the amount of, or pay any amount with respect to, any Repurchase Obligations
without the consent of the Lender if such amount is not in excess of $500,000
and such amount together with all other amounts paid by any Company to the same
Person or its Affiliates with respect to Repurchase Obligations after the
Closing Date does not exceed $1,000,000;

 

(c)                                  amend or
modify, or permit the amendment or modification of, any provision of any
Transaction Document or any document governing any Material Indebtedness in any
manner that is adverse in any material respect to the interests of the Lender;
or

 

(d)                                 terminate,
amend or modify any of its Organizational Documents or any agreement to which
it is a party with respect to its Equity Interests (including any stockholders’
agreement), or enter into any new agreement with respect to its Equity
Interests, other than any such amendments or modifications or such new
agreements which are not adverse in any material respect to the interests of
the Lender; provided that Holdings may issue such
Equity Interests, so long as such issuance is not prohibited by Section 6.13
or any other provision of this Agreement, and may amend or modify its
Organizational Documents to authorize any such Equity Interests.

 

SECTION 6.12      Limitation
on Certain Restrictions on Subsidiaries.  Directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction 

 

41

 

on the ability of any
Subsidiary of a Borrower (other than a Subsidiary of a Borrower that is a
special purpose vehicle created in connection with the Re-Warehousing Business)
to (a) pay dividends or make any other distributions on its capital stock
or any other interest or participation in its profits owned by a Borrower, or
pay any Indebtedness owed to a Borrower, (b) make loans or advances to a
Borrower  or (c) transfer any of its
properties to a Borrower, except for such encumbrances or restrictions existing
under or by reason of (i) applicable Requirements of Law; (ii) this
Agreement and the other Transaction Documents; (iii) customary provisions
restricting subletting or assignment of any lease governing a leasehold
interest of a Subsidiary; (iv) customary provisions restricting assignment
of any agreement entered into by a Subsidiary in the ordinary course of
business; (v) customary restrictions and conditions contained in any
agreement relating to the sale of any property permitted under Section 6.06
pending the consummation of such sale; (vi) any agreement in effect at the
time such Subsidiary becomes a Subsidiary of a Borrower, so long as such
agreement was not entered into in connection with or in contemplation of such
person becoming a Subsidiary of a Borrower; (vii) customary provisions in
partnership agreements, limited liability company organizational governance documents,
asset sale and stock sale agreements and other similar agreements entered into
in the ordinary course of business that restrict the transfer of ownership
interests in such partnership, limited liability company or similar person; or (viii) restrictions
on cash or other deposits or net worth imposed by suppliers or landlords under
contracts entered into in the ordinary course of business.

 

SECTION 6.13      Limitation on Issuance of Capital
Stock.

 

(a)                                  With respect to
Holdings, issue any Equity Interest that is not Qualified Capital Stock.

 

(b)                                 With respect to
any other Borrower or any Subsidiary thereof, issue any Equity Interest
(including by way of sales of treasury stock) or any options or warrants to
purchase, or securities convertible into, any Equity Interest, except (i) for
stock splits, stock dividends and additional issuances of Equity Interests
which do not decrease the percentage ownership of a Borrower or any such
Subsidiaries in any class of the Equity Interest of such Subsidiary; (ii) Subsidiaries
of a Borrower formed after the Closing Date may issue Equity Interests to a
Borrower or the Subsidiary of a Borrower which is to own such Equity Interests;
(iii) a Borrower may issue common stock that is Qualified Capital Stock to
Holdings and (iv) any Borrower or any Subsidiary thereof may issue to any
Person other than a Company, or any Affiliate thereof, options or warrants to
purchase Equity Interests as compensation for services rendered or to be
rendered to such Borrower or Subsidiary.

 

SECTION 6.14      [Reserved.].

 

SECTION 6.15      Business.

 

With respect to the Borrowers, engage (directly or
indirectly) in any business other than those businesses in which Borrowers are
engaged on the Closing Date; provided that (A) the
foregoing shall not prohibit (i) a Subsidiary of a Borrower from
originating residential mortgage loans or engaging in the Re-Warehousing
Business or (ii) Investments in Joint Ventures that are otherwise
permitted hereunder and (B) notwithstanding any other provision hereof,
this Section 6.15 shall cease to be in effect after the entire
principal balance of the Tranche B Loan has been repaid in full (together
with all accrued interest thereon).

 

42

 

SECTION 6.16      Limitation
on Accounting Changes.  Make
or permit any change in accounting policies or reporting practices, without the
consent of the Lender, which consent shall not be unreasonably withheld, except
changes that are required by GAAP.

 

SECTION 6.17      Fiscal
Year.  Change its
fiscal year-end to a date other than December 31.

 

SECTION 6.18      Anti-Terrorism
Law; Anti-Money Laundering.

 

(a)                                  Directly or
indirectly, (i) knowingly conduct any business or engage in making or
receiving any contribution of funds, goods or services to or for the benefit of
any person described in Section 3.20, (ii) knowingly deal in,
or otherwise engage in any transaction relating to, any property or interests
in property blocked pursuant to the Executive Order or any other Anti-Terrorism
Law, or (iii) knowingly engage in or conspire to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts
to violate, any of the prohibitions set forth in any Anti-Terrorism Law (and
the Borrowers shall deliver to the Lender any certification or other evidence
requested from time to time by the Lender in its reasonable discretion,
confirming the Borrowers’ compliance with this Section 6.18.

 

(b)                                 Cause or permit
any of the funds of such Borrower that are used to repay the Loans to be
derived from any unlawful activity with the result that the making of the Loans
would be in violation of any Requirement of Law.

 

Embargoed Person.  Cause or permit (a) any of the funds or
properties of the Borrowers that are used to repay the Loans to constitute
property of, or be beneficially owned directly or indirectly by, any person
subject to sanctions or trade restrictions under United States law (“Embargoed Person” or “Embargoed Persons”)
that is identified on (1) the “List of Specially Designated Nationals and
Blocked Persons” maintained by OFAC and/or on any other similar list maintained
by OFAC pursuant to any authorizing statute including, but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or Requirement of Law
promulgated thereunder, with the result that the investment in the Borrowers
(whether directly or indirectly) is prohibited by a Requirement of Law, or the
Loans made by the Lender would be in violation of a Requirement of Law, or (2) the
Executive Order, any related enabling legislation or any other similar
Executive Orders or (b) any Embargoed Person to have any direct or indirect
interest, of any nature whatsoever in the Borrowers, with the result that the
investment in the Borrowers (whether directly or indirectly) is prohibited by a
Requirement of Law or the Loans are in violation of a Requirement of Law.

 

 

ARTICLE
VII

 

EVENTS
OF DEFAULT

 

SECTION 7.01      Events
of Default.  Upon the
occurrence and during the continuance of the following events (“Events of Default”):

 

(a)                                  default shall
be made in the payment of any principal of any Loan when and as the same shall
become due and payable, whether at the due date thereof (including a
Tranche A 

 

43

 

Maturity
Date or Tranche B Maturity Date) or at a date fixed for prepayment
(whether voluntary or mandatory) thereof or by acceleration thereof or
otherwise (including, without limitation, the Borrowers failure to pay the
Monthly Payment to the Lender on any Payment Date);

 

(b)                                 default shall
be made in the payment of any interest on any Loan or any other amount (other
than an amount referred to in paragraph (a) above) due under any
Transaction Document, when and as the same shall become due and payable, and
such default shall continue unremedied for a period of two Business Days;

 

(c)                                  any
representation or warranty made or deemed made in or in connection with any Transaction
Document or the borrowings hereunder, or any representation, warranty, statement
or information contained in any report, certificate, financial statement or
other instrument furnished in connection with or pursuant to any Transaction
Document, shall prove to have been false or misleading in any material respect
when so made, deemed made or furnished;

 

(d)                                 default shall
be made in the due observance or performance by any Borrower of any covenant,
condition or agreement contained in Section 5.02, 5.03(a) or
(b), or in Article VI;

 

(e)                                  default shall
be made in the due observance or performance by any Borrower of any covenant,
condition or agreement contained in any Transaction Document (other than those
specified in paragraphs (a), (b) or (d) immediately above) and
such default shall continue unremedied or shall not be waived for a period of
30 days;

 

(f)                                    any Company
(other than IFC and IWLG) shall (i) fail to pay any principal or interest,
regardless of amount, due in respect of any Indebtedness (other than the
Obligations), when and as the same shall become due and payable beyond any
applicable grace period, or (ii) fail to observe or perform any other
term, covenant, condition or agreement contained in any agreement or instrument
evidencing or governing any such Indebtedness or (iii) fail to pay any
other amount due and payable; provided that
it shall not constitute an Event of Default pursuant to this paragraph (f) unless
the aggregate amount of all such Indebtedness referred to in clauses (i) and
(ii) and/or all other amount referred to in clause (iii) exceeds
$1,000,000 at any one time (provided that,
in the case of Hedging Obligations, the amount counted for this purpose shall
be the amount payable by all Companies if such Hedging Obligations were
terminated at such time and provided  further that for the purposes of this subsection (f) Repurchase
Obligations shall not be included under clauses (i), (ii) or (iii) hereof);

 

(g)                                 an involuntary
proceeding shall be commenced or an involuntary petition shall be filed in a
court of competent jurisdiction seeking (i) relief in respect of any
Company (other than IFC and IWLG), or of a substantial part of the property of
any Company (other than IFC and IWLG), under Title 11 of the U.S. Code, as now
constituted or hereafter amended, or any other federal, state or foreign bankruptcy,
insolvency, receivership or similar law; (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
any Company (other than IFC and IWLG) or for a substantial part of the property
of any Company (other than IFC and IWLG); or (iii) the winding-up or
liquidation of any Company (other than IFC and IWLG); and such proceeding or
petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall be entered;

 

(h)                                 any Company
(other than IFC and IWLG) shall (i) voluntarily commence any proceeding or
file any petition seeking relief under Title 11 of the United States Code,
as now 

 

44

 

constituted
or hereafter amended, or any other federal, state or foreign bankruptcy,
insolvency, receivership or similar law; (ii) consent to the institution
of, or fail to contest in a timely and appropriate manner, any proceeding or
the filing of any petition described in clause (g) above; (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for any Company (other than IFC
and IWLG) or for a substantial part of the property of any Company (other than
IFC and IWLG); (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding; (v) make a general assignment
for the benefit of creditors; (vi) become unable, admit in writing its
inability or fail generally to pay its debts as they become due; (vii) take
any action for the purpose of effecting any of the foregoing; or (viii) wind
up or liquidate;

 

(i)                                     one or more
judgments, orders or decrees for the payment of money in an aggregate amount in
excess of $1,000,000 shall be rendered against any Company (other than IFC and
IWLG) or any combination thereof and the same shall remain undischarged,
unvacated or unbonded for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to levy upon properties of any Company to enforce any
such judgment;

 

(j)                                     any Transaction
Document or any material provisions thereof shall at any time and for any
reason be declared by a court of competent jurisdiction to be null and void, or
a proceeding shall be commenced by any Borrower or any other person, or by any
Governmental Authority, seeking to establish the invalidity or unenforceability
thereof (exclusive of questions of interpretation of any provision thereof), or
any Borrower shall repudiate or deny any portion of its liability or obligation
for the Obligations or any other obligations hereunder or under any other
Transaction document;

 

(k)                                  there shall
have occurred a Change in Control; or

 

(l)                                     any Company
(other than IFC and IWLG) shall be prohibited or otherwise restrained from
conducting the business theretofore conducted by it in any manner that has or
could reasonably be expected to result in a Material Adverse Effect by virtue
of any determination, ruling, decision, decree or order of any court or
Governmental Authority of competent jurisdiction;

 

then, and in every such event (other than an
event with respect to Holdings or another Borrower described in paragraph (g) or
(h) above), and at any time thereafter during the continuance of such
event, the Lender may by notice to Borrower, take the following actions, at the
same or different times:  declare the
Loans then outstanding to be forthwith due and payable in whole or in part,
whereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and any unpaid accrued Fees and all
other Obligations of Borrowers accrued hereunder and under any other
Transaction Document, shall become forthwith due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by Borrowers, anything contained herein or in any other
Transaction Document to the contrary notwithstanding; and in any event, with
respect to Holdings or a Borrower described in paragraph (g) or (h) above,
the principal of the Loans then outstanding, together with accrued interest
thereon and all other Obligations of Borrowers accrued hereunder and under any
other Transaction Document, shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by Borrowers, anything contained herein or in any other
Transaction Document to the contrary notwithstanding.

 

45

 

ARTICLE
VIII

 

[Reserved]

 

ARTICLE
IX

 

MISCELLANEOUS

 

SECTION 9.01      Notices.

 

(a)           Generally. 
Except in the case of notices and other communications expressly
permitted to be given by telephone (and except as provided in paragraph (b) below),
all notices and other communications provided for herein shall be in writing
and shall be delivered by hand or overnight courier service, or sent by email
as follows:

 

	
  (i)

  	
   

  	
  if to any Borrower, to such Borrower at:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  19500 Jamboree Road

  
	
   

  	
   

  	
  Irvine, California 92612

  
	
   

  	
   

  	
  Attention: Ronald Morrison

  
	
   

  	
   

  	
  Telecopier No.: (949)
  706-6208

  
	
   

  	
   

  	
  Email:

  	
  ron.morrison@impaccompanies.com

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  if
  to the Lender, to it at:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  677
  Washington Boulevard

  
	
   

  	
   

  	
  Stamford,
  Connecticut 06901

  
	
   

  	
   

  	
  Attention:
  Jeffrey Mayer, Joseph Pigott, Greg Walker and Christopher Scolaro

  
	
   

  	
   

  	
  Telecopier
  No.: (212) 882-3597

  
	
   

  	
   

  	
  Email:

  	
  jeffrey.mayer@ubs.com,
  joseph.pigott@ubs.com, greg.walker@ubs.com,

  
	
   

  	
   

  	
   

  	
  christopher.scolaro@ubs.com

  

 

 

Notices sent by hand or overnight courier
service, shall be deemed to have been given when received; notices sent by
email shall be deemed to have been given when receipt thereof is confirmed
(electronically or otherwise).  Notices
delivered through electronic communications to the extent provided in paragraph (b) below,
shall be effective as provided in said paragraph (b).

 

(b)           Electronic Communications.  Notices and other communications to the
Lender hereunder may (subject to Section 9.01(d)) be delivered or
furnished by electronic communication (including e-mail and Internet or
intranet websites) pursuant to procedures approved by the Lender; provided that the foregoing shall not apply to notices to
the Lender pursuant to Article II if the Lender has notified 

 

46

 

the Borrowers that it is incapable of
receiving notices under such Article by electronic communication.  The Lender or Borrowers may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it (including as
set forth in Section 9.01(d)); provided that
approval of such procedures may be limited to particular notices or communications.

 

Unless the Lender otherwise prescribes, (i) notices
and other communications sent to an e-mail address shall be deemed received
upon the sender’s receipt of an acknowledgement from the intended recipient
(such as by the “return receipt requested” function, as available, return
e-mail or other written acknowledgement); provided that
if such notice or other communication is not sent during the normal business
hours of the recipient, such notice or communication shall be deemed to have
been sent at the opening of business on the next business day for the
recipient, and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the intended
recipient at its e-mail address as described in the foregoing clause (i) of
notification that such notice or communication is available and identifying the
website address therefor.

 

(c)           Change of Address, etc.  Any party hereto may change its address or
telecopier number for notices and other communications hereunder by notice to
the other parties hereto.

 

(d)           Posting.  
Each Borrower hereby agrees that it will provide to the Lender all information,
documents and other materials that it is obligated to furnish to the Lender
pursuant to this Agreement and any other Transaction Document, including all
notices, requests, financial statements, financial and other reports,
certificates and other information materials, but excluding any such communication
that (i) relates to the payment of any principal or other amount due under
this Agreement prior to the scheduled date therefor, (ii) provides notice
of any Default under this Agreement or (iii) is required to be delivered
to satisfy any condition precedent to the effectiveness of this Agreement
and/or any borrowing or other extension of credit hereunder (all such
non-excluded communications, collectively, the “Communications”),
by transmitting the Communications in an electronic/soft medium in a format reasonably
acceptable to the Lender at such e-mail address(es) as are provided by the
Lender to Borrowers from time to time or in such other form, including hard copy
delivery thereof, as the Lender shall require. 
In addition, each Borrower agrees to continue to provide the
Communications to the Lender in the manner specified in this Agreement or any
other Transaction Document or in such other form, including hard copy delivery
thereof, as the Lender shall require. 
Nothing in this Section 9.01 shall prejudice the right of
the Lender or any Borrower to give any notice or other communication pursuant
to this Agreement or any other Transaction Document in any other manner
specified in this Agreement or any other Transaction Document or as any such
Lender shall require.

 

To the extent consented to by the Lender in writing
from time to time, Lender agrees that receipt of the Communications by the
Lender at its e-mail address(es) set forth above shall constitute effective
delivery of the Communications to the Lender for purposes of the Transaction
Documents.

 

SECTION 9.02      Waivers; Amendment.

 

(a)           Generally. 
No failure or delay by the Lender in exercising any right or power hereunder
or under any other Transaction Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies
of the Lender hereunder and under the other Transaction Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of 

 

47

 

any provision of any Transaction Document or
consent to any departure by any Borrower therefrom shall in any event be
effective unless the same shall be permitted by this Section 9.02,
and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. 
Without limiting the generality of the foregoing, the making of, or
deemed making of, a Loan shall not be construed as a waiver of any Default,
regardless of whether the Lender may have had notice or knowledge of such
Default at the time.  No notice or demand
on any Borrower in any case shall entitle such Borrower to any other or further
notice or demand in similar or other circumstances.

 

(b)           Required Consents. 
Neither this Agreement nor any other Transaction Document nor any
provision hereof or thereof may be waived, amended, supplemented or modified
except pursuant to an agreement or agreements in writing entered into by Borrowers
and the Lender.

 

SECTION 9.03      Expenses; Indemnity; Damage Waiver.

 

(a)           Costs and Expenses. 
Each party hereto shall bear its own expenses in connection with the
preparation, negotiation, execution, delivery and administration of this
Agreement and the other Transaction Documents or any amendment, amendment and
restatement, modification or waiver of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be consummated).  Borrowers shall pay all out-of-pocket
expenses incurred by the Lender (including the fees, charges and disbursements
of any counsel for the Lender), in connection with the enforcement or protection
of its rights (A) in connection with this Agreement and the other
Transaction Documents, including its rights under this Section 9.03,
or (B) in connection with the Loans made, or deemed made, hereunder,
including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans.

 

(b)           Indemnification by Borrowers.  Borrowers shall, on a joint and several
basis, indemnify the Lender and each Related Party thereof  (each such person being called an “Indemnitee”) against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses
(including the fees, charges and disbursements of any counsel for any
Indemnitee) incurred by any Indemnitee or asserted against any Indemnitee by
any party hereto or any third party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other
Transaction Document, or any amendment, amendment and restatement, modification
or waiver of the provisions hereof or thereof, or any agreement or instrument
contemplated hereby or thereby, the performance by the parties hereto of their
respective obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or thereby, or (ii) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by any Borrower, and regardless of whether any
Indemnitee is a party thereto; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such losses, claims, damages, liabilities or related expenses (x) are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of such
Indemnitee or (y) result from a claim brought by any Borrower against an
Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder
or under any other Transaction Document, if such Borrower has obtained a final
and nonappealable judgment in its favor on such claim as determined by a court
of competent jurisdiction.

 

(c)           [Reserved]

 

(d)           Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable
Requirements of Law, no Borrower shall assert, and each Borrower hereby waives,
any claim 

 

48

 

against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any other Transaction Document or any agreement or
instrument contemplated hereby, the transactions contemplated hereby or thereby
or the use of the proceeds thereof.  No
Indemnitee referred to in paragraph (b) above shall be liable for any
damages arising from the use by unintended recipients of any information or
other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or the
other Transaction Documents or the transactions contemplated hereby or thereby.

 

(e)           Payments. 
All amounts due under this Section shall be payable not later than
3 Business Days after demand therefor.

 

SECTION 9.04      Successors and Assigns.

 

(a)           Successors and Assigns Generally.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that no Borrower may
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of the Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an
Eligible Assignee in accordance with the provisions of paragraph (b) of
this Section 9.04, (ii) by way of participation in accordance
with the provisions of paragraph (d) of this Section 9.04
or (iii) by way of pledge or assignment of a security interest subject to
the restrictions of paragraph (f) of this Section (and any other
attempted assignment or transfer by any Borrower or the Lender shall be null
and void).  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in paragraph (d) of this Section and,
to the extent expressly contemplated hereby, the other Indemnitees) any legal
or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)           Assignments by Lender.  Any Lender may at any time assign to one (but
not more than one) Eligible Assignee all (but not less than all) of its rights
and obligations under this Agreement and both of the Term Notes (including all
of the Loans at the time owing to it); provided that
the parties to such assignment shall execute an Assignment and Assumption.  From and after the effective date specified
in any Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Agreement and have all of the rights and obligations of the
Lender under this Agreement, and the assigning Lender thereunder shall be
released from its obligations, if any, under this Agreement (and such Lender
shall cease to be a party hereto) but shall continue to be entitled to the
benefits of Sections 2.07, 2.08, 2.10 and 9.03
with respect to facts and circumstances occurring prior to the effective date
of such assignment.  Any assignment or
transfer by the Lender of rights or obligations under this Agreement that does
not comply with this paragraph shall be treated for purposes of this Agreement
as a sale by the Lender of a participation in such rights and obligations in accordance
with paragraph (d) of this Section 9.04.

 

(c)           [Reserved].

 

(d)           Participations. 
The Lender may at any time, without the consent of, or notice to,
Borrowers, sell participations to any person (each, a “Participant”)
in all or a portion of the Lender’s rights and/or obligations under this
Agreement (including all or a portion of 
the Loans owing to it); provided that (i) the
Lender’s obligations under this Agreement shall remain unchanged, (ii) the
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and 

 

49

 

(iii) Borrowers shall continue to deal
solely and directly with the Lender in connection with the Lender’s rights and
obligations under this Agreement.

 

Any agreement or instrument pursuant to which the
Lender sells such a participation shall provide that the Lender shall retain
the sole right to enforce the Transaction Documents and to approve any
amendment, modification or waiver of any provision of the Transaction
Documents; provided that such agreement or
instrument may provide that the Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in clause
(i), (ii) or (iii) of the first proviso to Section 9.02(b) that
affects such Participant.  Subject to
paragraph (e) of this Section, each Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.07, 2.08
and 2.10 (subject to the requirements of those Sections) to the same
extent as if it were the Lender and had acquired its interest by assignment
pursuant to paragraph (b) of this Section.  To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 9.08 as though it
were the Lender, provided such Participant agrees to be subject to Section 2.09
as though it were the Lender.

 

(e)           Limitations on Participant Rights.  A Participant shall not be entitled to
receive any greater payment under Sections 2.07, 2.08 and 2.10
than the Lender 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 Borrower’s prior written consent.

 

(f)            Certain Pledges. 
The Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of the
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that no such pledge or
assignment shall release the Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for the Lender as a party hereto.  In the case the Lender is a fund that invests
in bank loans, the Lender may, without the consent of Borrowers, collaterally
assign or pledge all or any portion of its rights under this Agreement,
including the Loans and Term Notes or any other instrument evidencing its
rights as the Lender under this Agreement, to any holder of, trustee for, or
any other representative of holders of, obligations owed or securities issued,
by such fund, as security for such obligations or securities.

 

(g)           Electronic Execution of Assignments.  The words “execution,” “signed,” “signature,”
and words of like import in any Assignment and Assumption shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of
which shall be of the same legal effect, validity or enforceability as a
manually executed signature or the use of a paper-based recordkeeping system,
as the case may be, to the extent and as provided for in any applicable
Requirement of Law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records
Act, or any other similar state laws based on the Uniform Electronic Transactions
Act.

 

SECTION 9.05      Survival
of Agreement.  All
covenants, agreements, representations and warranties made by the Borrowers in
the Transaction Documents and in the certificates or other instruments
delivered in connection with or pursuant to this Agreement or any other
Transaction Document shall be considered to have been relied upon by the other
parties hereto and shall survive the execution and delivery of the Transaction
Documents and the making of any Loans, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the Lender may
have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on
any Loan or any fee or any other amount payable under this Agreement is
outstanding.  The provisions of 

 

50

 

Sections 2.07, 2.08, 2.10
and Article IX (other than Section 9.12) shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans or the termination
of this Agreement or any provision hereof.

 

SECTION 9.06      Counterparts; Integration;
Effectiveness.  This
Agreement may be executed in counterparts (and by different parties hereto in
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.  This Agreement and the other Transaction
Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01,
this Agreement shall become effective when it shall have been executed by the
Lender and when the Lender shall have received counterparts hereof that, when
taken together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopier or other electronic
transmission (i.e. a “pdf” or “tif” document) shall be effective as delivery of
a manually executed counterpart of this Agreement.

 

SECTION 9.07      Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

SECTION 9.08      Right
of Setoff.  If an Event
of Default shall have occurred and be continuing, the Lender and each of its
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by applicable Requirements of Law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final, in whatever currency) at any time held and other obligations (in
whatever currency) at any time owing by the Lender or any such Affiliate to or
for the credit or the account of any Borrower against any and all of the obligations
of such Borrower now or hereafter existing under this Agreement or any other
Transaction Document to the Lender, irrespective of whether or not the Lender
shall have made any demand under this Agreement or any other Transaction
Document and although such obligations of such Borrower may be contingent or
unmatured or are owed to a branch or office of the Lender different from the
branch or office holding such deposit or obligated on such indebtedness.  The rights of the Lender and its Affiliates under
this Section are in addition to other rights and remedies (including other
rights of setoff) that the Lender or its Affiliates may have.  The Lender agrees to notify Borrowers
promptly after any such setoff and application; provided
that the failure to give such notice shall not affect the validity of such
setoff and application.

 

SECTION 9.09      Governing Law; Jurisdiction; Consent
to Service of Process.

 

(a)           Governing Law. 
This Agreement and the transactions contemplated hereby, and all
disputes between the parties under or relating to this Agreement or the facts
or circumstances leading to its execution, whether in contract, tort or
otherwise, shall be construed in accordance with and governed by the laws
(including statutes of limitation) of the State of New York, without regard to
conflicts of law principles that would require the application of the laws of
another jurisdiction.

 

(b)           Submission to Jurisdiction.  Each Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
personal jurisdiction of the Supreme Court of the State of New York sitting in
New York County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in any action or
proceeding arising out of 

 

51

 

or relating to any Transaction Document, or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
court or, to the fullest extent permitted by applicable law, in such Federal
court.  Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.  Nothing in this
Agreement or any other Transaction Document shall affect any right that the
Lender may otherwise have to bring any action or proceeding relating to this
Agreement or any other Transaction Document against any Borrower or its
properties in the courts of any jurisdiction.

 

(c)           Waiver of Venue. 
Each Borrower hereby irrevocably and unconditionally waives, to the
fullest extent permitted by applicable Requirements of Law, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other
Transaction Document in any court referred to in Section 9.09(b).  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by applicable Requirements of Law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.

 

(d)           Service of Process. 
Each party hereto irrevocably consents to service of process in any
action or proceeding arising out of or relating to any Transaction Document, in
the manner provided for notices (other than telecopier) in Section 9.01.  Nothing in this Agreement or any other Transaction
Document will affect the right of any party hereto to serve process in any
other manner permitted by applicable Requirements of Law.

 

SECTION 9.10      Waiver
of Jury Trial.  Each
Borrower hereby waives, to the fullest extent permitted by applicable
Requirements of Law, any right it may have to a trial by jury in any legal
proceeding directly or indirectly arising out of or relating to this Agreement,
any other Transaction Document or the transactions contemplated hereby (whether
based on contract, tort or any other theory). 
Each party hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver and (b) acknowledges that it and the other parties hereto have been
induced to enter into this Agreement by, among other things, the mutual waivers
and certifications in this Section.

 

SECTION 9.11      Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.

 

SECTION 9.12      Treatment
of Certain Information; Confidentiality.  The Lender agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates and to its and its Affiliates’
respective partners, directors, officers, employees, agents, advisors and other
representatives (it being understood that the persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent
requested by any Governmental Authority or regulatory authority (including any
self-regulatory authority, such as the National Association of Insurance Commissioners),
(c) to the extent required by applicable Requirements of Law or by any subpoena
or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other
Transaction Document or any action or proceeding relating to this Agreement or
any other Transaction Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section 9.12, to (i) any
assignee of or 

 

52

 

Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement, (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to any Borrower and
its obligations or (iii) any rating agency for the purpose of obtaining a
credit rating applicable to the Lender, (g) with the consent of Borrowers
or (h) to the extent such Information (x) becomes publicly available
other than as a result of a breach of this Section or (y) becomes
available to the Lender or any of its Affiliates on a nonconfidential basis
from a source other than a Borrower.  For
purposes of this Section, “Information”
means all information received from a Borrower or any of its Subsidiaries
relating to a Borrower or any of its Subsidiaries or any of their respective
businesses, other than any such information that is available to the Lender on
a nonconfidential basis prior to disclosure by any Borrower or any of its
Subsidiaries; provided that, in the case of
information received from any Borrower or any of its Subsidiaries after the
date hereof, such information is clearly identified at the time of delivery as
confidential.  Any person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such person has
exercised the same degree of care to maintain the confidentiality of such Information
as such person would accord to its own confidential information.

 

SECTION 9.13      USA
PATRIOT Act Notice.  The
Lender hereby notifies Borrowers that pursuant to the requirements of the
Patriot Act it is required to obtain, verify and record information that
identifies Borrowers, which information includes the name, address and tax
identification number of Borrowers and other information regarding Borrowers
that will allow the Lender to identify Borrowers in accordance with the Patriot
Act.  This notice is given in accordance
with the requirements of the Patriot Act and is effective as to the Lender.

 

SECTION 9.14      Interest
Rate Limitation. 
Notwithstanding anything herein to the contrary, if at any time the
interest rate applicable to any Loan, together with all fees, charges and other
amounts which are treated as interest on such Loan under applicable
Requirements of Law (collectively, the “Charges”),
shall exceed the maximum lawful rate (the “Maximum Rate”)
which may be contracted for, charged, taken, received or reserved by the Lender
holding such Loan in accordance with applicable Requirements of Law, the rate
of interest payable in respect of such Loan hereunder, together with all
Charges payable in respect thereof, shall be limited to the Maximum Rate and,
to the extent lawful, the interest and Charges that would have been payable in
respect of such Loan but were not payable as a result of the operation of this Section shall
be cumulated and the interest and Charges payable to the Lender in respect of
other Loans or periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate to the date of repayment, shall have been received
by the Lender.

 

SECTION 9.15      Structure
of Re-Warehousing Transaction. The Lender
acknowledges that the transactions involving the Re-Warehousing Business and
the Re-Warehousing SPV are still being structured with the potential
re-warehousing counterparty and that such transactions may take a form other
than the back-to-back master repurchase agreement structure currently
contemplated.  The Lender agrees that so
long as the final structure does not involve an Investment by any Company or by
the Companies in the aggregate in excess of the amount permitted pursuant to Section 6.04(f),
and provided that except for such Investment the structure is non-recourse to
each Company except the Re-Warehousing SPV, and provided further that the
Lender shall have had a reasonable opportunity to review near final and final
drafts of the documentation evidencing such structure and has confirmed the
foregoing is correct, such structure and the transactions contemplated thereby
shall be deemed approved by the Lender hereunder and Lender and the Borrowers
shall work in good faith to amend Article VI hereof to reflect that the
Re-Warehousing Business is in all respects permitted in its final form and not
subject to 

 

53

 

any  restrictions  not  applicable  thereto  on  the  Closing  Date  because  of  any  change  in  form  of  the  re-warehousing  transactions.  ]

 

SECTION 9.16      Obligations
Absolute.  To the
fullest extent permitted by applicable Requirements of Law, all obligations of
the Borrowers hereunder shall be absolute and unconditional irrespective of:

 

(a)           any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Borrower;

 

(b)           any lack of validity or enforceability of any Transaction
Document or any other agreement or instrument relating thereto against any
Borrower;

 

(c)           any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from any Transaction Document or any
other agreement or instrument relating thereto;

 

(d)           any exchange, release or non-perfection of any property,
or any release or amendment or waiver of or consent to any departure from any
guarantee, for all or any of the Obligations;

 

(e)           any exercise or non-exercise, or any waiver of any right,
remedy, power or privilege under or in respect hereof or any Transaction
Document; or

 

(f)            any other circumstances which might otherwise constitute
a defense available to, or a discharge of, the Borrowers.

 

SECTION 9.17      Enforcement  Notwithstanding anything to the contrary contained
herein or in any other Transaction Document, the authority to enforce rights
and remedies hereunder and under the other Transaction Documents against the
Borrowers or any of them shall be vested exclusively in, and all actions and
proceedings at law in connection with such enforcement shall be instituted and
maintained exclusively by, the Lender.

 

SECTION 9.18      Lender Consents  To the extent that the any action described
herein requires the consent of the Lender, the Lender shall use commercially
reasonable efforts to deliver its consent, or refusal to consent, within five (5) Business
days of receipt of a written request for such consent.

 

SECTION 9.19      Waiver of Deemed Guarantor Rights  To the extent that any Borrower is deemed to
be a guarantor of the obligations of the other Borrowers (“Guaranteed
Obligations”), and not a borrower itself, then such Borrower shall
be deemed to have waived, and hereby expressly waives, (i) diligence, presentment,
demand of payment, protest and all notices whatsoever, and any requirement that
the Lender exhaust any right, power or remedy or proceed against such other Borrowers
under this Agreement or any other Transaction Document or against any other Person
and (ii) any and all notice of the creation, renewal, extension, waiver,
termination or accrual of any of the Guaranteed Obligations and notice of or
proof of reliance by the Lender upon such Borrower’s deemed guarantee or
acceptance of such deemed guarantee, and the Guaranteed Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred
in reliance upon such deemed guarantee, and all dealings between the other
Borrowers and the Lender shall likewise be conclusively presumed to have been
had or consummated in reliance upon such deemed guarantee.

 

54

 

SECTION 9.20      Pledge of Re-Warehousing SPV

 

Each Borrower agrees to (if it becomes the
owner of any Equity Interests in the Re-Warehousing SPV), and to cause each of
its Subsidiaries to (if it becomes the owner of any Equity Interests in the
Re-Warehousing SPV) work diligently and in good faith to, (i) grant a
first priority, perfected security interest in 100% of its Equity Interests in
the Re-Warehousing SPV to the Lender to secure the payment of the Obligations
and the performance of all other obligations under the Transaction Documents,
pursuant to documentation satisfactory in form and substance to the Lender and (ii) deliver
legal opinions satisfactory in form and substance to the Lender with respect to
such first priority, perfected security interest.  In the event the provisions of Section 9.15
are applicable because the structure of the Re-Warehousing Business changes in
a manner such that no the Re-Warehousing SPV is created (or, if despite working
diligently and in good faith to comply with the preceding sentence, it is not
possible to grant the contemplated security interest in 100% of the Equity
Interests in the Re-Warehousing SPV, including because of the refusal of the
applicable financing source or structuring agent to consent to such a grant),
the Borrowers will work diligently and in good faith to ensure that the Lender
receives a security interest and/or has such other rights as may be reasonably
necessary to ensure that the Lender has substantially similar rights and
protections as it would have if it had obtained a security interest in 100% of
the Equity Interests in the Re-Warehousing SPV. 
Each of the Lender and each Borrower agrees that the purpose of this
provision is to ensure that in the event any Borrower or any Subsidiary of any
Borrower is entitled to a return of any portion of the initial $10,000,000
investment in the Re-Warehousing SPV, in whatever form such investment may
take, that such returned investment is subject to a security interest in favor
of the Lender and the parties agree to work together in good faith to
accomplish that purpose.

 

[Signature Pages Follow]

 

55

 

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

 

	
   

  	
  IMPAC
  MORTGAGE HOLDINGS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ronald Morrison

  
	
   

  	
   

  	
  Name:

  	
  Ronald
  Morrison

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  IMPAC
  FUNDING CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ronald Morrison

  
	
   

  	
   

  	
  Name:

  	
  Ronald
  Morrison

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  IMPAC
  WAREHOUSE LENDING GROUP, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ronald Morrison

  
	
   

  	
   

  	
  Name:

  	
  Ronald
  Morrison

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INTEGRATED
  REAL ESTATE SERVICE CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Todd Taylor

  
	
   

  	
   

  	
  Name:

  	
  Todd
  Taylor

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
					

 

S-1

 

	
   

  	
  UBS
  REAL ESTATE SECURITIES, INC. as a

  
	
   

  	
  Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert Carpenter

  
	
   

  	
   

  	
  Name:

  	
  Robert
  Carpenter

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Arnold John

  
	
   

  	
   

  	
  Name:

  	
  Arnold
  John

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
					

 

S-2

 

Annex I

 

Applicable
Margin

 

Tranche
A Loans:

 

3.50%

 

Tranche
B Loans:

 

3.50%

 

 

Schedule 1

 

Non-recourse securitization trusts that have

entered into hedge transactions

 

[See Attached]

 

 

Schedule 3.07

 

Equity Interests

 

[See Attached]

 

 

Schedule 6.01(b)

 

Existing Indebtedness

 

[See Attached]

 

 

Schedule 6.02(c)

 

Existing Liens

 

[See Attached]

 

 

Schedule 6.04(b)

 

Existing Investments

 

[See Attached]

 

 

Exhibit A

 

[Reserved]

 

 

Exhibit B

 

Form of Solvency/Financial Covenant

Compliance Certificate

 

[See attached]

 

 

Exhibit C-1

 

Form of Tranche A Term Note

 

[See Attached]

 

 

Exhibit C-2

 

Form of Tranche B Term Note

 

[See Attached]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}]]