Document:

Exhibit 10.37

 

	
  

  	
  1501 Fourth Ave.,
  Ste. 1900, Seattle, WA 98101-1693  206.340.2300
  tel  206.340.2485 fax  www.fhlbsea.com

  

 

 

	
  Advances, Security and
  Deposit Agreement

  

 

	
  This
  Advances, Security and Deposit Agreement (“Agreement”), dated as of 

  	
  December 1,

  	
  20

  	
  04

  	
  is
  entered

  
	
   

  	
  (Date of Agreement)

  	
   

  	
   

  	
   

  
	
  between

  	
  GMAC Commercial Mortgage Bank

  	
    having
  its principal place of business at

  
	
   

  	
  (Full Corporate Name of Customer)

  	
   

  
	
  6955 Union
  Park Center,  #330, Midvale, UT 84047

  	
  (“Customer”)
  and the Federal Home Loan Bank of

  
	
  (Full Address of Customer’s Executive Offices)

  	
   

  
	
   

  
	
   Seattle, 1501 Fourth Avenue,
  Suite 1900, Seattle, WA 98101 (“Seattle Bank”).

  
							

 

RECITALS

 

Whereas,
Customer is a Member of Seattle Bank and desires from time to time to apply for
extensions of credit, deposit accounts and other services from Seattle Bank in
accordance with the terms and conditions of this Agreement; and 

 

Whereas,
Seattle Bank requires that all existing and future indebtedness of Customer to
Seattle Bank be secured pursuant to this Agreement.

 

AGREEMENT

 

NOW
THEREFORE, Customer and Seattle Bank agree as follows:

 

Article I. Definitions

 

Section 1.1 Definitions  As used in this Agreement,
the following terms will have the following meanings:

 

	
  1.1.1

  	
   

  	
  “Account”
  or “Accounts” means Customer’s deposit account(s) with Seattle Bank,
  including demand and time deposit accounts.

  
	
   

  	
   

  	
   

  
	
  1.1.2

  	
   

  	
  “Act”
  means the Federal Home Loan Bank Act, as amended from time to time.

  
	
   

  	
   

  	
   

  
	
  1.1.3

  	
   

  	
  “Advance”
  or “Advances” means any loans heretofore, now or hereafter made to Customer
  by Seattle Bank.

  
	
   

  	
   

  	
   

  
	
  1.1.4

  	
   

  	
  “Advance
  Master Application” means a writing executed by Customer and accepted by
  Seattle Bank, in form and content satisfactory to Seattle Bank, under which
  Customer may make Requests from time to time to receive Advances, subject to
  the terms of this Agreement, the Seattle Bank’s Credit Policy, the Act and
  the Regulations.

  
	
   

  	
   

  	
   

  
	
  1.1.5

  	
   

  	
  “Advances
  Note” means any promissory note executed by Customer and accepted by Seattle
  Bank, in form and content satisfactory to Seattle Bank, relating to Advances
  or Other Credit Accommodations.

  
	
   

  	
   

  	
   

  
	
  1.1.6

  	
   

  	
  “Advance
  Confirmation Advice” means a writing or an electronic transmission issued at
  any time by Seattle Bank, in form and content satisfactory to Seattle Bank,
  confirming particular terms of an Advance made at the Request of Customer.

  
	
   

  	
   

  	
   

  
	
  1.1.7

  	
   

  	
  “Borrowing
  Capacity” means the maximum amount of Advances, Commitments and Other Credit Accommodations
  which Borrower may have outstanding at any time. Borrowing Capacity is
  limited by the Act and Regulations, the Stock Ownership Requirement and
  Collateral Maintenance Requirement of the Credit Policy, and by Customer’s
  creditworthiness and the quality of Customer’s Eligible Collateral, as
  determined by Seattle Bank from time to time.

  

 

1

 

	
  1.1.8

  	
   

  	
  “Capital
  Plan” means the Capital Plan of the Federal Home Loan Bank of Seattle,
  adopted March 5, 2002, as amended November 22, 2002 and as
  hereafter amended.

  
	
   

  	
   

  	
   

  
	
  1.1.9

  	
   

  	
  “Capital
  Stock” means all of Customer’s capital stock in Seattle Bank.

  
	
   

  	
   

  	
   

  
	
  1.1.10

  	
   

  	
  “Collateral”
  means all property, including the proceeds thereof, heretofore, now or
  hereafter assigned, transferred or pledged to Seattle Bank by Customer as
  security for Indebtedness.

  
	
   

  	
   

  	
   

  
	
  1.1.11

  	
   

  	
  “Collateral
  Coverage Factor” means the percentage of value, as determined by Seattle Bank
  from time to time, of various types of Eligible Collateral which will support
  the aggregate amount of all outstanding

  
	
   

  	
   

  	
  Advances,
  Commitments or Other Credit Accommodations made to Customer against such
  Eligible Collateral.

  
	
   

  	
   

  	
   

  
	
  1.1.12

  	
   

  	
  “Collateral
  Manual” means the Collateral Manual of the Seattle Bank, as published and
  revised by the Seattle Bank from time to time.

  
	
   

  	
   

  	
   

  
	
  1.1.13

  	
   

  	
  “Collateral
  Maintenance Requirement” means the minimum level of aggregate Eligible
  Collateral, discounted by applicable Collateral Coverage Factors, which
  Customer must pledge to Seattle Bank, and maintain at or above such minimum
  level, to secure Customer’s outstanding Advances, Commitments or Other Credit
  Accommodations, as determined by Seattle Bank from time to time.

  
	
   

  	
   

  	
   

  
	
  1.1.14

  	
   

  	
  “Commitment”
  means any written agreement under which Seattle Bank is contractually
  obligated to make Advances to Customer, or payments on behalf of or for the
  account of Customer, at a future date, irrespective of whether Seattle Bank’s
  obligation under such agreement is contingent upon the occurrence or
  non-occurrence of a condition subsequent. Commitments include, without
  limitation, Letters of Credit, firm commitments, guarantees or other
  financial arrangements made by Seattle Bank in writing to facilitate
  transactions between Customer and third parties. This Agreement is neither a
  Commitment nor an undertaking or obligation to provide any Commitment.

  
	
   

  	
   

  	
   

  
	
  1.1.15

  	
   

  	
  “Credit
  Policy” means the credit and collateral policies of Seattle Bank, including
  without limitation the credit and collateral policies set forth in the Users
  Guide and the Collateral Manual, as published and revised by the Seattle Bank
  from time to time. In addition to the Users Guide and Collateral Manual, the
  Credit Policy includes other policies adopted from time to time by Seattle
  Bank. The Credit Policy is subject to the Act and Regulations, and in the
  event of any inconsistency between the Credit Policy and the Act or
  Regulations, the more restrictive statute, regulation or policy shall be
  controlling.

  
	
   

  	
   

  	
   

  
	
  1.1.16

  	
   

  	
  “De-Pledge”
  means the partial release, re-assignment and/or re-delivery by Seattle Bank
  or its approved custodian of any part of the Collateral pledged to Seattle
  Bank for Indebtedness.

  
	
   

  	
   

  	
   

  
	
  1.1.17

  	
   

  	
  “Eligible
  Collateral” means Collateral other than Capital Stock which:
  (i) qualifies as security for Advances or Other Credit Accommodations
  under the Act and Regulations; (ii) qualifies as security for Advances
  or Other Credit Accommodations under the Credit Policy, as amended by Seattle
  Bank from time to time, which may be more restrictive than the Act or
  Regulations; (iii) is owned by Customer free and clear of any liens,
  encumbrances or other interests, other than the pledge of such Collateral to
  Seattle Bank under this Agreement; and (iv) is not a home mortgage on
  which any director, officer, employee, attorney or agent of Customer or any
  federal home loan bank is personally liable, unless acceptance of such
  mortgage is specifically approved by formal resolution of the Seattle Bank’s
  board of directors, and the Finance Board has endorsed such resolution.

  
	
   

  	
   

  	
   

  
	
  1.1.18

  	
   

  	
  “Eligible
  CFI Collateral” means, if Customer is a community financial institution as
  defined in the Regulations, certain small agri-business loans, small farm
  loans or small business loans which meet the requirements of Eligible
  Collateral described in Subsection 1.1.17 above.

  
	
   

  	
   

  	
   

  
	
  1.1.19

  	
   

  	
  “Eligible
  Securities Collateral” means securities, now owned or hereafter acquired by
  Customer, whether certificated or uncertificated, which meet the requirements
  of Eligible Collateral described in Subsection 1.1.17 above.

  
	
   

  	
   

  	
   

  
	
  1.1.20

  	
   

  	
  “Eligible
  Mortgage Collateral” means Mortgage Collateral which meets the requirements
  of Eligible Collateral described in Subsection 1.1.17 above.

  
	
   

  	
   

  	
   

  
	
  1.1.21

  	
   

  	
  “Finance
  Board” means the Federal Housing Finance Board, or any successor agency
  thereto.

  

 

2

 

	
  1.1.22

  	
   

  	
  “Funds”
  means money maintained in Customer’s Account(s) with Seattle Bank.

  
	
   

  	
   

  	
   

  
	
  1.1.23

  	
   

  	
  “Indebtedness”
  means all obligations of Customer to Seattle Bank, defined in the broadest
  and most comprehensive sense, to mean all primary, secondary, direct,
  indirect, fixed or contingent, debts, duties, agreements, undertakings,
  obligations, covenants and conditions now or at any time in the future to be
  paid or performed by Customer in connection with or relating to Advances,
  Other Credit Accommodations, Commitments, Accounts or Other Obligations,
  including, without limitation, all of Customer’s obligations to pay
  principal, interest, fees (including, without limitation, loan fees and
  prepayment fees), charges (including, without limitation, overdraft charges),
  costs, reimbursements (including, without limitation, attorneys fees) and
  losses (including, without limitation, damages for Customer’s breach of any
  contractual obligations to Seattle Bank), which at any time may be owing
  under or in connection therewith.

  
	
   

  	
   

  	
   

  
	
  1.1.24

  	
   

  	
  “Letter
  of Credit” means any standby letter of credit issued by Seattle Bank for the
  account of Customer.

  
	
   

  	
   

  	
   

  
	
  1.1.25

  	
   

  	
  “Listed
  Collateral” is defined in Section 3.4 below.

  
	
   

  	
   

  	
   

  
	
  1.1.26

  	
   

  	
  “Master
  Backup Support Agreement” means any agreement now or hereafter made by
  Seattle Bank and one or more other federal home loan bank(s) under which
  such other federal home loan bank(s) may make Advances or Other Credit
  Accommodations to Customer in the event of a loss of power, communications or
  computer failure, property damage or other forms of business interruption
  adversely affecting Seattle Bank’s normal operations.

  
	
   

  	
   

  	
   

  
	
  1.1.27

  	
   

  	
  “Member”
  means an owner of Capital Stock in Seattle Bank.

  
	
   

  	
   

  	
   

  
	
  1.1.28

  	
   

  	
  “Member
  Advance Stock Purchase Requirement” is described in Section 6.10 of this
  Agreement and in the Capital Plan.

  
	
   

  	
   

  	
   

  
	
  1.1.29

  	
   

  	
  “MERS”
  means Mortgage Electronic Registration Systems, Inc., a corporation
  organized and existing under the laws of the State of Delaware, or any
  successor thereto.

  
	
   

  	
   

  	
   

  
	
  1.1.30

  	
   

  	
  “MERS
  Mortgages” means mortgages registered with MERS, in which the Mortgage
  Documents name MERS as mortgagee, solely as nominee, for the originators of
  such mortgages and their successors and assigns.

  
	
   

  	
   

  	
   

  
	
  1.1.31

  	
   

  	
  “Mortgage
  Collateral” means Mortgage Documents (excluding participation or other
  fractional interests therein) and all ancillary security agreements, policies
  and certificates of insurance, guarantees, indemnities, evidences of
  recordation, applications, underwriting materials, surveys, appraisals,
  notices, opinions of counsel and loan servicing data and all other
  electronically stored and written records or materials relating to the loans
  evidenced or secured by the Mortgage Documents.

  
	
   

  	
   

  	
   

  
	
  1.1.32

  	
   

  	
  “Mortgage
  Documents” means mortgages and deeds of trust (in this Agreement,
  “mortgages”) and all notes, bonds or other instruments evidencing loans
  secured thereby (in this Agreement, “mortgage notes”) and any endorsements
  and assignments thereof to Customer.

  
	
   

  	
   

  	
   

  
	
  1.1.33

  	
   

  	
  “Mortgage
  Purchase Program” means any program offered by Seattle Bank for the purchase
  from a Member of mortgage notes and related mortgages.

  
	
   

  	
   

  	
   

  
	
  1.1.34

  	
   

  	
  “Other
  Credit Accommodations” means credit products, other than Advances, authorized
  under the terms and conditions of the Act and the Regulations and offered
  from time to time by Seattle Bank under its Credit Policy, including, without
  limitation, Swap Transactions, Letters of Credit and other Commitments.

  
	
   

  	
   

  	
   

  
	
  1.1.35

  	
   

  	
  “Other
  Eligible Collateral” means property, other than Eligible Mortgage Collateral
  or Eligible Securities Collateral, which meets the requirements of Eligible
  Collateral described in Subsection 1.1.17 above, including, if Customer is a
  community financial institution as defined in the Regulations, any Eligible
  CFI Collateral.

  
	
   

  	
   

  	
   

  
	
  1.1.36

  	
   

  	
  “Other
  Obligations” means obligations of Customer to Seattle Bank other than those
  relating to Advances or Other Credit Accommodations, including, without
  limitation, any repurchase obligations of Customer under a Mortgage Purchase
  Program, if applicable; overdraft charges, wire charges, Account fees and
  charges for other miscellaneous services provided to Customer by Seattle
  Bank; and all other amounts, of any nature whatsoever, now or hereafter owed
  to the Seattle Bank by Customer.

  

 

3

 

	
  1.1.37

  	
   

  	
  “Physical
  Possession Collateral” is defined in Section 3.5 below.

  
	
   

  	
   

  	
   

  
	
  1.1.38

  	
   

  	
  “Regulations”
  means the regulations of the Finance Board, as amended from time to time.

  
	
   

  	
   

  	
   

  
	
  1.1.39

  	
   

  	
  “Request”
  or “Requests” means any request(s) made by Customer via telephone, or
  other means made available by Seattle Bank from time to time, for Advances.

  
	
   

  	
   

  	
   

  
	
  1.1.40

  	
   

  	
  “Stock
  Ownership Requirement” means the obligation of Customer to own minimum
  amounts of Capital Stock in accordance with the Capital Plan.

  
	
   

  	
   

  	
   

  
	
  1.1.41

  	
   

  	
  “Swap
  Transaction” means an interest rate swap, cap or collar, currency exchange
  transaction, or any other similar transaction (including any option to enter
  into any of the foregoing) or any combination of the foregoing, entered into
  between the Seattle Bank and Customer pursuant to the terms of the Credit
  Policy, this Agreement or other related documentation, including without
  limitation any form of master agreement published by the International Swaps
  and Derivatives Association, Inc.

  
	
   

  	
   

  	
   

  
	
  1.1.42

  	
   

  	
  “UCC”
  means the Uniform Commercial Code, as amended from time to time, of the State
  of Washington or the state of formation of Customer, as applicable under
  Section 6.13 of this Agreement.

  
	
   

  	
   

  	
   

  
	
  1.1.43

  	
   

  	
  “Users
  Guide” means the Financial Products and Services Users Guide of the Seattle
  Bank, as published and revised by Seattle Bank from time to time.

  

 

Article II. Advances and Other Credit Accommodations

 

Section 2.1 Procedures for Advances  The terms and conditions of
this Agreement shall govern each Advance heretofore, now or hereafter made by
Seattle Bank to Customer. The Credit Policy of the Seattle Bank is an integral
part of the terms and conditions of all such Advances and is incorporated in
this Agreement by this reference as if fully set forth herein. Additional terms
and conditions of Advances may be set forth in an Advance Master Application
and/or Advances Note, which Seattle Bank may require Customer to sign and
deliver to Seattle Bank from time to time. Any additional, particular terms and
conditions of an Advance orally quoted by Seattle Bank and accepted by Customer
at the time of the Customer’s Request for an Advance, including, without
limitation, the principal amount, applicable interest rate or due date of the
Advance, will be confirmed by Seattle Bank in an Advance Confirmation Advice
or, if no Advance Confirmation Advice is issued, will be evidenced by the books
and records of the Seattle Bank. In cases in which a Request for an Advance is
made orally by Customer of Seattle Bank in an electronically recorded telephone
conversation, and a question arises concerning any particulars of such Advance,
Customer agrees that such recording or a transcript thereof will be an integral
part of the Seattle Bank’s books and records and may be used as evidence of
such particulars. In cases in which an Advance requested orally by Customer is
made by another federal home loan bank, on behalf of Seattle Bank, under a
Master Backup Support Agreement, the books and records of such other federal
home loan bank will establish any additional, particular terms of such Advance.
If such Advance is requested by Customer of such other federal home loan bank
in an electronically recorded telephone conversation, and a question arises
concerning any particulars of such Advance, Customer agrees that such recording
or a transcript thereof will be an integral part of the such other federal home
loan bank’s books and records and may be used as evidence of such particulars.
Unless otherwise agreed by Seattle Bank, each Advance will be made by crediting
Customer’s demand deposit Account(s) with Seattle Bank. In all cases, funding
of any Request for an Advance will be subject to compliance by Customer with
the terms and provisions of the Act, the Regulations, the Credit Policy and
this Agreement, including, without limitation, the Stock Ownership Requirement
and Collateral Maintenance Requirement. In the event that Customer’s access to
Advances is subsequently restricted pursuant to the Act, the Regulations or any
other provision of applicable law, Seattle Bank will not be required to fund
any outstanding Commitment for Advances not funded prior to the effective date
of such restriction.

 

Section 2.2 Repayment of Advances  Customer agrees to repay each
Advance in accordance with its terms and conditions. Customer will maintain in
Customer’s demand deposit Account(s) with Seattle Bank an amount at least
equal to the amounts then currently due and payable to Seattle Bank with
respect to Advances, and Customer hereby authorizes Seattle Bank to debit
Customer’s Account(s) with Seattle Bank for all amounts due and payable with
respect to any Advance and for all other amounts due and payable under this
Agreement. Customer agrees that, in the event any such debit results in
Customer’s demand deposit Account being overdrawn, Customer will pay overdraft
charges thereon at the rate that Seattle Bank normally assesses for overdrafts
on general demand deposit accounts. In the event that the balance in such
demand deposit Account(s) is, at any time, insufficient to pay such due
and payable amounts, Seattle Bank may in its discretion and without notice to
Customer: (i) make a “flexible

 

4

 

balance”
or other similar Advance, as provided in the Credit Policy, in the amount of
and for the purpose of paying such due and payable amounts; or (ii) apply
any other deposits, credits, Funds or other monies of Customer then in the
possession of Seattle Bank to the payment of such due and payable amounts. All
payments with respect to Advances will be applied to any fees, costs or charges
applicable thereto, to interest due thereon and to any principal amount thereof
that is then due and payable, in such order and priority as Seattle Bank may
determine.

 

Section 2.3 Estoppel  For any Advance evidenced by
an Advance Confirmation Advice, failure of Customer, within ten (10) business
days of Customer’s receipt of the Advance Confirmation Advice, to deliver
written notice to Seattle Bank specifying any disputed particulars thereof,
including without limitation the principal amount, applicable interest rate or
due date of the Advance, will constitute the final agreement and acknowledgment
by Customer that the particulars of the Advance Confirmation Advice are
accurate and are those that Customer requested and by which Customer agreed to
be bound, and Customer will thereafter be estopped from asserting any claim or
defense with respect thereto. For any Advance which has such particular terms
established by the books and records of the Seattle Bank or another federal
home loan bank rather than by an Advance Confirmation Advice, such books and
records shall be conclusive in the absence of manifest error. Seattle Bank
reserves the right to correct its scrivener’s errors, if any, in any Advance
Confirmation Advice or such books and records, and no such errors shall affect
Customer’s obligations in respect to the affected Advance.

 

Section 2.4 Interest  Customer agrees to pay
interest on each Advance at a rate per annum determined on the basis described
in the Credit Policy, Advance Master Application, Advances Note, Advance
Confirmation Advice or the books and records of Seattle Bank or other federal
home loan bank, as the case may be, pertaining to such Advance.

 

Section 2.5 Commitment and Cancellation Fees  Customer agrees to pay when
due any commitment fees and any cancellation fees applicable to any Commitments
issued by Seattle Bank for Advances, determined on the basis described in the
Credit Policy, the Commitment documentation or the books and records of Seattle
Bank or other federal home loan bank, as the case may be, pertaining to such
Commitment.

 

Section 2.6 Other Credit Accommodations

 

	
  2.6.1

  	
   

  	
  Customer
  may apply to Seattle Bank for the issuance of other credit products,
  including without limitation Letters of Credit, firm commitments for Advances
  and Swap Transactions, provided such other credit products, and Customer’s
  intended use thereof, are authorized under the Act, the Regulations and the
  Credit Policy. The terms and conditions of such Other Credit Accommodations
  shall be governed by the Act, the Regulations, the Credit Policy, this
  Agreement and such other documentation as Seattle Bank may require from time
  to time.

  
	
   

  	
   

  	
   

  
	
  2.6.2

  	
   

  	
  The
  Borrowing Capacity of Customer shall be reduced by Seattle Bank’s outstanding
  obligations under any Letter of Credit, Swap Transaction, Commitment or Other
  Credit Accommodation, as determined by Seattle Bank from time to time, in the
  same manner as outstanding Advances.

  
	
   

  	
   

  	
   

  
	
  2.6.3

  	
   

  	
  In
  the event any Commitment, including without limitation a Letter of Credit, is
  outstanding at the time of an Event of Default under Section 4.1 of this
  Agreement, Seattle Bank may at its option make an Advance by crediting a
  special Account with Seattle Bank in an amount equal to the outstanding
  Commitment. Amounts credited to such special Account will be utilized by
  Seattle Bank for the purpose of satisfying Seattle Bank’s obligations under
  the outstanding Commitment. When all such obligations have expired or have
  been satisfied, Seattle Bank will disburse the balance, if any, in such
  special Account first to the satisfaction of any Indebtedness then owing by
  Customer to Seattle Bank and then to Customer or its successors in interest.
  Advances made pursuant to this Subsection 2.7.3 will be payable on demand and
  will bear interest at the rate in effect and being charged by Seattle Bank
  from time to time on overdrafts on demand deposit accounts of its Customers.

  

 

Section 2.7 Prepayment Fees  Customer agrees to pay a
prepayment fee upon the prepayment of all or any portion of any Advance or
Other Credit Accommodation, made before the due date thereof, whether such
prepayment is made voluntarily or involuntarily, including, without limitation,
any prepayment resulting from acceleration under Section 4.1 hereof upon
an Event of Default. The amount of the prepayment fee shall not be less than
zero and shall be determined by the Seattle Bank on the basis described in the
Regulations, the Credit Policy and any applicable Advance Master Application,
Advances Note, Advance Confirmation Advice or Swap Transaction, as the case may
be, pertaining to prepayment of such Advance or Other Credit Accommodation. Any
applicable illustrations and examples of prepayment fees in the Users Guide, as
published and revised by the Seattle Bank from time to time, are

 

5

 

an
integral part of the terms and conditions of this Agreement and are
incorporated herein by this reference as if fully set forth at length.

 

Section 2.8 Compliance with the Credit Policy, Act and
Regulations  Customer hereby
agrees to comply with the terms and provisions of the Credit Policy, the Act
and the Regulations, including, without limitation, any reporting requirements,
application procedures or eligibility requirements imposed by the Credit
Policy, the Act or the Regulations with respect to particular types of
Advances, Commitments or Other Credit Accommodations. In the event of any
inconsistency between the Credit Policy and the Act or the Regulations,
Customer hereby agrees to comply with the more restrictive statute, regulation
or policy. In the event any provision of the Credit Policy, the Act or the
Regulations is amended, Customer agrees to comply with the terms and provisions
of the Credit Policy, the Act and the Regulations as so amended from time to
time, provided that, to the extent permitted by the Act and the Regulations,
any particular terms of outstanding Advances or Commitments existing at the
time of any such amendment, including, without limitation, interest rates or
prepayment fees, will continue to be governed by the terms and provisions of
the Advance Master Application, Advances Note, Advance Confirmation Advice or
Commitment documentation which applied to such outstanding Advances or Commitments
at the time such Advances or Commitments were made. Notwithstanding the
foregoing, Seattle Bank shall retain the right to amend from time to time the
Borrowing Capacity, Collateral Coverage Factors and Collateral Maintenance
Requirements applicable to Customer and its Eligible Collateral, and Customer
agrees to comply with such changes upon Seattle Bank’s notice thereof to
Customer.

 

Section 2.9 Additional Covenants by Customer  Customer will maintain a copy
of this Agreement in its official records at all times. Customer will give
Seattle Bank notice of any material event that would cause Customer, pursuant
to the provisions of the Act, the Regulations, the Credit Policy or this
Agreement, to be ineligible to become a Customer of Seattle Bank or ineligible
to obtain Advances, Commitments or Other Credit Accommodations. Any obligation
of Seattle Bank to fund any Advance or Other Credit Accommodation, including
any Commitment, shall be conditioned upon the satisfaction of each of the
following conditions precedent as of the date hereof and at the time of funding
of each Advance or Other Credit Accommodation: (a) all representations and
warranties of Customer contained this Agreement, or otherwise made by Customer
to Seattle Bank, are and continue to be correct; (b) no Event of Default
under this Agreement, or other documentation relating to the Advance or Other
Credit Accommodation, has occurred or would result from such Advance; (c) the
Seattle Bank has received such approvals, opinions or documents that the
Seattle Bank may request in connection with the Advance or Other Credit
Accommodation; (d) Customer satisfies all membership and borrowing
eligibility criteria under the Act, the Regulations, this Agreement and the
Credit Policy; (e) Customer, in the judgment of Seattle Bank, is not
engaging or has not engaged in unsafe or unsound banking practices, has
adequate capital, is not sustaining operating losses, does not have financial
or managerial deficiencies that bear on the Customer’s creditworthiness, and
has no other deficiencies as determined by Seattle Bank; (f) there has
been in Seattle Bank’s judgment no material adverse change in Customer, the
Collateral or any financial or other information submitted by Customer to
Seattle Bank in connection with an Advance, Other Credit Accommodations or any
Other Obligations; and (g) there has been in Seattle Bank’s judgment no
change in governmental laws or regulations that materially affects the Seattle
Bank’s power, right, authority, or ability to fund the Advance or Other Credit
Accommodation.

 

Article III. Security Agreement

 

Section 3.1 Creation of Security Interest As security for
the timely payment of all Indebtedness and outstanding Commitments, Customer
hereby assigns, transfers, and pledges to Seattle Bank, and grants to Seattle
Bank a security interest in all of the following Collateral now owned or
hereafter acquired by Customer, and all proceeds thereof:

 

3.1.1              All promissory notes and
other instruments, all mortgages, deeds of trust and other supporting
obligations, all mortgage-backed securities, stock and other investment
property, and all accounts, general intangibles, payment intangibles, chattel
paper, letter of credit rights, deposit accounts, money, goods, software,
commercial tort claims, equipment and inventory, now owned or hereafter
acquired by Customer, including without limitation:

 

(a)                         All Capital
Stock now owned or hereafter acquired by Customer in Seattle Bank, including
all payments which have been or hereafter are made on account of subscriptions
to and all unpaid dividends on such stock;

 

6

 

(b)                        All Funds of
Customer now or hereafter on deposit with Seattle Bank;

 

(c)                         All Eligible Mortgage
Collateral and related Mortgage Documents now owned or hereafter acquired by
Customer;

 

(d)                        All Eligible
Securities Collateral now owned or hereafter acquired by Customer; and

 

(e)                         All Other
Eligible Collateral now owned or hereafter acquired by Customer.

 

	
  3.1.2

  	
   

  	
  It
  is the intention of Seattle Bank and Customer that the Collateral shall
  include all assets now owned or hereafter acquired by Customer in which a
  security interest can be created under the UCC, specifically including but
  not limited to the property types and categories set forth in Subsection
  3.1.1 and Subparagraphs 3.1.1(a)–(e) above. All of the Collateral shall
  secure the Indebtedness, irrespective of whether only part of the Collateral
  constitutes Eligible Collateral for purposes of satisfying the Collateral
  Maintenance Requirements of Section 3.3 below.

  

 

Section 3.2 Customer’s Representations and Warranties
Regarding Collateral  Customer
represents and warrants to Seattle Bank, as of the date of this Agreement and
the date of each Advance, Commitment or Other Credit Accommodation made under
this Agreement, as follows:

 

	
  3.2.1

  	
   

  	
  Customer
  owns and has marketable title to all Collateral and has the right and
  authority to grant a security interest in the Collateral and to subject all
  of the Collateral to this Agreement, and Customer covenants that it will
  defend the Collateral against the claims and demands of all persons;

  
	
   

  	
   

  	
   

  
	
  3.2.2

  	
   

  	
  With
  respect to any Eligible Mortgage Collateral originated by any party (whether
  affiliated or unaffiliated) other than Customer, the Mortgage Documents
  contain either a complete chain of endorsements (either on the mortgage note
  or a related allonge) from the originating party to Customer, a complete
  chain of endorsements in blank from each successive holder of the Mortgage
  Collateral or are MERS Mortgages for which Customer’s ownership has been
  registered with MERS;

  
	
   

  	
   

  	
   

  
	
  3.2.3

  	
   

  	
  The
  information contained in any financial report, call report, certification,
  audit, confirmation, report, schedule, or other documents required under this
  Agreement and any other information given from time to time by Customer as to
  each item of Eligible Collateral, and any information provided by Customer to
  its supervising state or federal agency in call reports or other reports, from
  which Seattle Bank obtains information related to Collateral, is true,
  accurate and complete in all material respects;

  
	
   

  	
   

  	
   

  
	
  3.2.4

  	
   

  	
  All
  Eligible Collateral meets the standards and requirements from time to time
  established by the Credit Policy, the Act and the Regulations and, in any
  case of variances among the Act, the Regulations and the Credit Policy, the
  most restrictive of such standards and requirements;

  
	
   

  	
   

  	
   

  
	
  3.2.5

  	
   

  	
  To
  Customer’s knowledge, no part of any real property encumbered by Mortgage
  Collateral contains or is subject to the effects of any hazardous materials
  or other hazardous substances, except as may have been disclosed to and
  reasonably approved by Customer in its underwriting of Mortgage Collateral,
  and Customer will indemnify and hold Seattle Bank harmless, and, at the
  option of Seattle Bank, defend Seattle Bank (with counsel satisfactory to
  Seattle Bank) from all liabilities, costs, damages, claims or expenses
  (including attorneys’ fees and environmental consultants’ fees) suffered,
  paid or incurred by Seattle Bank resulting from or arising out of any
  requirement under any applicable federal, state or local law, regulation,
  ordinance, order, judgment or decree relating to the release or cleanup of
  any such hazardous material or hazardous substance;

  
	
   

  	
   

  	
   

  
	
  3.2.6

  	
   

  	
  Except
  as permitted under Section 3.3 of this Agreement, Customer will not
  (i) sell, offer to sell or otherwise transfer Eligible Collateral, nor
  pledge, mortgage or create or suffer to exist a lien, claim of lien,
  encumbrance, right of set-off or other security interest or collateral
  assignment of any kind whatsoever in Eligible Collateral or the proceeds
  thereof in favor of any person other than Seattle Bank, or (ii) transfer
  physical possession of the Mortgage Documents evidencing Eligible Mortgage
  Collateral to any third party or affiliate without the prior written consent
  of Seattle Bank;

  
	
   

  	
   

  	
   

  
	
  3.2.7

  	
   

  	
  All
  taxes, assessments and governmental charges levied or assessed or imposed
  upon or with respect to Eligible Collateral, including any real property
  subject to Eligible Mortgage Collateral, will be paid and if

  

 

7

 

	
   

  	
   

  	
  Customer
  fails to promptly pay such taxes, assessments or governmental charges,
  Seattle Bank may (but will not be required to) pay the same and any such
  expense will be an obligation under this Agreement; and

  
	
   

  	
   

  	
   

  
	
  3.2.8

  	
   

  	
  Customer
  will notify Seattle Bank promptly in writing of any change in the location of
  the Eligible Collateral and of any change in location of its principal place
  of business or jurisdiction of incorporation, organization or formation.

  

 

Section 3.3 Collateral Maintenance Requirement

 

	
  3.3.1

  	
   

  	
  Customer
  will at all times maintain an amount of Eligible Collateral, pledged to
  Seattle Bank under this Agreement, which, after discounting by the Collateral
  Coverage Factor(s) applicable to such Eligible Collateral, has a value,
  as determined by Seattle Bank, of not less than the aggregate amount of all
  Advances, Commitments and Other Credit Accommodations then outstanding. This
  Collateral Maintenance Requirement may be increased or decreased by Seattle
  Bank at any time, based upon Customer’s creditworthiness or the quality of
  Customer’s Eligible Collateral, as determined by Seattle Bank from time to
  time. Customer will not, without prior written consent of Seattle Bank,
  assign, pledge, transfer, create any security interest in, sell, or otherwise
  dispose of any Eligible Collateral if: (i) such Eligible Collateral is
  Physical Possession Collateral under Section 3.5 of this Agreement;
  (ii) immediately after such action, Customer’s remaining Eligible
  Collateral would be insufficient to comply with the Collateral Maintenance
  Requirement; or (iii) at the time of such action, there is an
  outstanding Event of Default under Section 4.1 of this Agreement.

  
	
   

  	
   

  	
   

  
	
  3.3.2

  	
   

  	
  All
  Eligible Collateral (other than Physical Possession Collateral held by
  Seattle Bank or its custodian) will be held by Customer in trust for the
  benefit of, and subject to the direction and control of Seattle Bank, and
  will be physically safeguarded by Customer with at least the same degree of
  care as Customer would ordinarily use in prudently safeguarding its property.
  Without limiting the foregoing, Customer will take all action necessary or
  desirable to protect and preserve Eligible Collateral held by Customer,
  including without limitation the maintaining of insurance on property
  securing mortgages constituting Eligible Collateral (such policies and
  certificates of insurance relating to such mortgages are in this Agreement
  called “insurance”), the collection of payments under all such mortgages and
  under all such insurance, and otherwise assuring that loans comprising
  Eligible Mortgage Collateral are serviced in accordance with the standards of
  a reasonable and prudent mortgagee. Customer, as Seattle Bank’s agent, will
  collect all payments when due on all Eligible Collateral held by Customer in
  trust for the benefit of Seattle Bank. If Seattle Bank requests, all such
  collections shall be held separate from Customer’s other monies in one or
  more designated Accounts maintained at Seattle Bank. At Seattle Bank’s sole
  discretion, Seattle Bank may then apply such collections to the payment of
  Indebtedness as it becomes due; otherwise, and provided there is no
  outstanding Event of Default under Section 4.1 of this Agreement,
  Customer may use and dispose of such collections in the ordinary course of
  its business.

  
	
   

  	
   

  	
   

  
	
  3.3.3

  	
   

  	
  Subject
  to the Collateral Maintenance Requirement of Subsection 3.3.1 above, and
  provided there is no outstanding Event of Default under Section 4.1 of
  this Agreement, Customer may use or dispose of all or part of the Collateral
  and proceeds thereof in the ordinary course of its business. Notwithstanding
  the foregoing, Customer may not use or dispose or all or part of Physical
  Possession Collateral or the proceeds thereof, except upon the De-Pledging of
  such Physical Possession Collateral in accordance with Section 3.6
  below.

  
	
   

  	
   

  	
   

  
	
  3.3.4

  	
   

  	
  Customer
  will, upon request of Seattle Bank, immediately take such actions and execute
  such documentation as Seattle Bank may deem necessary or appropriate to
  create and perfect Seattle Bank’s security interest in the Collateral or
  otherwise to obtain, preserve, protect, enforce or collect the Collateral;
  including, without limitation, executing any agreements, instructions or
  other documents that Seattle Bank deems necessary to establish control of
  Collateral by Seattle Bank or by its custodian on Seattle Bank’s behalf.

  
	
   

  	
   

  	
   

  
	
  3.3.5

  	
   

  	
  Any
  Collateral that is not satisfactory to Seattle Bank may be rejected at any
  time as Eligible Collateral by Seattle Bank, or in Seattle Bank’s discretion
  may at any time be discounted by a Collateral Coverage Factor that is less
  than the Collateral Coverage Factor normally ascribed thereto under the
  Credit Policy. Seattle Bank may require, before or during the period when any
  Advance is made to Customer, that Customer make any or all Eligible
  Securities Collateral, all Mortgage Documents for Eligible Mortgage
  Collateral and any 

  

 

8

 

	
   

  	
   

  	
  other
  documents pertaining to Eligible Collateral, including without limitation any
  agreements between Customer and its servicing agents, available to Seattle
  Bank for its inspection and approval.

  
	
   

  	
   

  	
   

  
	
  3.3.6

  	
   

  	
  In
  the case of any Eligible Collateral which is physically possessed by
  Customer, Customer will grant, upon Seattle Bank’s written request, an
  irrevocable license to Seattle Bank, in form and content satisfactory to
  Seattle Bank (and if requested by Seattle Bank, joined in by any real
  property owner or landlord of the premises where such Eligible Collateral is
  located), that will allow representatives of Seattle Bank to enter the
  premises of Customer in order to inspect from time to time and/or remove and
  take possession of the Eligible Collateral.

  
	
   

  	
   

  	
   

  
	
  3.3.7

  	
   

  	
  In
  the case of Eligible Collateral which is physically possessed by any
  affiliate or servicing agent of Customer, Customer will, upon Seattle Bank’s
  written request, cause Customer’s affiliate or servicing agent to
  (i) grant an irrevocable license to Seattle Bank, in form and content
  satisfactory to Seattle Bank (and if requested by Seattle Bank, joined in by
  any real property owner or landlord of the premises where such Eligible
  Collateral is located), that will allow representatives of Seattle Bank to
  enter the premises of Customer’s affiliate or servicing agent in order to
  inspect from time to time and/or remove and take possession of the Eligible
  Collateral; and/or (ii) establish custodial or control agreements, in
  form and content satisfactory to Seattle Bank, under which the affiliate’s or
  servicing agent’s physical possession will be held for the benefit of Seattle
  Bank as secured party. Seattle Bank may require such arrangements
  irrespective of whether the Eligible Collateral has been designated as Listed
  Collateral or Physical Possession Collateral under Sections 3.4 or 3.5 below.

  
	
   

  	
   

  	
   

  
	
  3.3.8

  	
   

  	
  Seattle
  Bank’s acceptance as Eligible Collateral of any Mortgage Collateral relating
  to multifamily or commercial properties may, in the discretion of Seattle
  Bank, be conditioned upon Customer’s execution and delivery of
  Rider(s) to this Agreement containing warranties and representations
  required of Customer by Seattle Bank for any Mortgage Collateral relating to
  multifamily or commercial properties.

  
	
   

  	
   

  	
   

  

Section 3.4 Listed Collateral

 

	
  3.4.1

  	
   

  	
  At
  any time that Customer’s Eligible Mortgage Collateral or Eligible CFI
  Collateral becomes subject to mandatory listing requirements under the Credit
  Policy, or at any other time, at the sole discretion of Seattle Bank,
  Customer will deliver to Seattle Bank, upon Seattle Bank’s written request, a
  status report and accompanying schedules, all in form and content acceptable
  to Seattle Bank, specifying and describing any mortgage loan pledged to
  Seattle Bank as Eligible Mortgage Collateral and any item of Eligible CFI
  Collateral pledged to Seattle Bank (collectively, “Listed Collateral”). At
  such other times as Seattle Bank may request, Customer will deliver to
  Seattle Bank periodic status reports and accompanying schedules, in form and
  content acceptable to Seattle Bank, describing the status of the Listed
  Collateral.

  
	
   

  	
   

  	
   

  
	
  3.4.2

  	
   

  	
  Upon
  Seattle Bank’s written request, Customer will physically segregate the
  mortgages, loan packages and other property comprising Listed Collateral from
  all other property of Customer in a manner satisfactory to Seattle Bank.
  Until particular items of Listed Collateral are De-Pledged in accordance with
  the Credit Policy, the physical segregation of such items shall be
  maintained.

  
	
   

  	
   

  	
   

  
	
  3.4.3

  	
   

  	
  Upon
  Seattle Bank’s written request, Customer will hold each loan package included
  in Listed Collateral in a separate file folder, with each file folder clearly
  labeled with the loan identification number and the name of the mortgagor.
  Upon written request of Seattle Bank, the file folder for each package of
  loan documents included within Listed Collateral will be clearly marked or
  stamped with the statement: “The Instrument(s) and Security Relating to this
  Loan Have Been Pledged to the Federal Home Loan Bank of Seattle.”

  

 

Section 3.5 Physical Possession Collateral

 

	
  3.5.1

  	
   

  	
  At
  any time that Customer becomes subject to mandatory physical possession
  requirements under the Credit Policy, or at any other time, at the sole
  discretion of Seattle Bank, Customer will deliver to Seattle Bank, or to a
  custodian approved by Seattle Bank in its discretion, upon Seattle Bank’s
  written request, the mortgage loans pledged to Seattle Bank as Eligible
  Mortgage Collateral, securities pledged to Seattle Bank as Eligible
  Securities Collateral, loans pledged to Seattle Bank as Eligible CFI
  Collateral and each item of Other Eligible Collateral pledged to Seattle Bank
  (collectively, “Physical Possession Collateral”).

  
	
   

  	
   

  	
   

  
	
  3.5.2

  	
   

  	
  Eligible
  Mortgage Collateral delivered to Seattle Bank or its approved custodian as
  Physical Possession Collateral will be endorsed or assigned by Customer in
  blank or, if requested by Seattle Bank, to Seattle 

  

 

9

 

	
   

  	
   

  	
  Bank.
  For MERS Mortgages, Customer will execute a notification to MERS of its
  assignment of the MERS Mortgage in blank or, if requested by Seattle Bank, to
  Seattle Bank. Regardless of whether any endorsement is stated to be “without
  recourse,” Customer shall be liable for any deficiency remaining after any
  exercise by the Bank of its remedies in respect of Collateral, as provided in
  Section 4.2 below.

  
	
   

  	
   

  	
   

  
	
  3.5.3

  	
   

  	
  With
  respect to certificated Eligible Securities Collateral pledged to Seattle
  Bank as Physical Possession Collateral, the delivery requirements contained
  in this Section 3.5 will be satisfied, at the election of Seattle Bank,
  by one of more of: (i) transfer of physical possession of such
  certificated securities to Seattle Bank; (ii) re-registration of such
  securities in Seattle Bank’s name; or (iii) possession of such
  certificated securities, on Seattle Bank’s behalf, by a custodian approved by
  Seattle Bank. Any such possession of certificated securities by an approved
  custodian, on Seattle Bank’s behalf, will be effected and evidenced by
  documentation acceptable to Seattle Bank in form and content, establishing
  Seattle Bank’s control of such certificated securities under the provisions
  of the UCC.

  
	
   

  	
   

  	
   

  
	
  3.5.4

  	
   

  	
  With
  respect to uncertificated Eligible Securities Collateral pledged to Seattle
  Bank as Physical Possession Collateral, satisfaction of the delivery
  requirements contained in this Section 3.5 will be effected and
  evidenced by agreements, instructions or other documentation acceptable to
  Seattle Bank in form and content, establishing Seattle Bank’s control of such
  uncertificated securities under the provisions of the UCC.

  
	
   

  	
   

  	
   

  
	
  3.5.5

  	
   

  	
  Concurrently
  with the initial delivery of Physical Possession Collateral, and at such
  other times as Seattle Bank may request, Customer will deliver to Seattle
  Bank a status report and accompanying schedules, in form and content
  acceptable to Seattle Bank, describing the status of the Physical Possession
  Collateral held by Seattle Bank or its custodian. At such other times as Seattle
  Bank may request, Customer will deliver to Seattle Bank periodic status
  reports and accompanying schedules, in form and content acceptable to Seattle
  Bank, describing the status of the Physical Possession Collateral. Until
  Physical Possession Collateral is De-Pledged in accordance with
  Section 3.6 below, such physical possession by Seattle Bank or its
  approved custodian shall be maintained with respect to such Physical
  Possession Collateral. At Seattle Bank’s sole discretion, all proceeds the Physical
  Possession Collateral, including without limitation all payments made under
  the loans or securities constituting Physical Possession Collateral, shall be
  held separate from Customer’s other monies in one or more designated Accounts
  maintained at Seattle Bank. Seattle Bank may apply such monies to the payment
  of Indebtedness as it becomes due, or hold such monies as part of its
  Physical Possession Collateral, subject to De-Pledging under the terms and
  conditions of Section 3.6 below.

  
	
   

  	
   

  	
   

  
	
  3.5.6

  	
   

  	
  Customer
  agrees to pay to Seattle Bank such reasonable fees and charges as may be
  assessed by Seattle Bank to cover Seattle Bank’s overhead and other costs
  relating to the receipt, holding, De-Pledge, redelivery and reassignment of
  Physical Possession and to reimburse Seattle Bank upon request for all filing
  or recording fees and other reasonable expenses, disbursements and advances
  incurred or made by Seattle Bank in connection therewith, including without
  limitation reasonable attorneys fees and costs of legal counsel of Seattle
  Bank. Customer shall pay the fees and expenses, including, without
  limitation, reasonable attorneys fees and costs, of any custodian approved or
  retained by Seattle Bank with respect to Collateral. Any such sums owed to
  Seattle Bank or to such custodian may be collected by Seattle Bank, at its
  option, by debiting Customer’s Account(s) with Seattle Bank.

  

 

Section 3.6 De-Pledging of Collateral  Upon receipt by Seattle Bank
of a written request from Customer, in form and content acceptable to Seattle
Bank, for the De-Pledge of any part of the Collateral or proceeds thereof in
which Seattle Bank has perfected its security interest, setting forth (i) a
sufficient description of the Collateral to be withdrawn or reassigned; and (ii) a
certificate of an authorized officer of Customer certifying that the
immediately after such De-Pledge, Customer’s remaining Eligible Collateral will
be sufficient to comply with the Collateral Maintenance Requirement, Seattle
Bank will promptly return, reassign or partially release to Customer, at
Customer’s expense, the Collateral specified in said request. Notwithstanding
anything to the contrary contained in this Agreement, Customer may not obtain
any such withdrawal or reassignment (a) while an Event of Default under this
Agreement has occurred and is continuing; (b) at any time that Seattle
Bank’s records indicate that immediately after such De- Pledge, Customer’s
remaining Eligible Collateral would be insufficient to comply with the
Collateral Maintenance Requirement as determined by Seattle Bank; or (c) at
any time that Seattle Bank reasonably and in good faith deems itself insecure.
Customer will pay upon request for all filing or recording fees and other
reasonable expenses incurred by Seattle Bank or any approved custodian in
connection with De-Pledging of any Collateral, including without

 

10

 

limitation reasonable attorneys fees and
costs of legal counsel of Seattle Bank or such custodian. Any such sums owed to
Seattle Bank or to such custodian may be collected by Seattle Bank, at its
option, by debiting Customer’s demand or time deposit Account(s) with
Seattle Bank.

 

Section 3.7 Reports, Collateral Audits; Access

 

3.7.1        If requested by Seattle Bank at any time, Customer will furnish to
Seattle Bank an audit report prepared in accordance with generally accepted
auditing standards by an external auditor acceptable to Seattle Bank,
certifying the book value of the Eligible Collateral owned by Customer. If
requested by Seattle Bank at any time, Customer will furnish to Seattle Bank a
written report covering such matters regarding Eligible Collateral as Seattle
Bank may require, including without limitation a listing of mortgages
comprising Eligible Mortgage Collateral or loans comprising Eligible CFI
Collateral, the unpaid principal balances thereof, the status of payments
thereon and of taxes and insurance on the property encumbered thereby;
securities and the publicly listed market value thereof, and any other
information requested by Seattle Bank regarding the Eligible Collateral.
Customer will give Seattle Bank access at all reasonable times to Collateral in
Customer’s possession and to Customer’s books and records of account relating
to such Collateral, for the purpose of Seattle Bank’s examining, verifying or
reconciling the Collateral and Customer’s report to Seattle Bank thereon.

 

3.7.2        All Collateral and the satisfaction by Customer of the Collateral
Maintenance Requirement will be subject to audit and verification by or on
behalf of Seattle Bank. Such audits and verifications may occur without notice
during Customer’s normal business hours or upon reasonable notice at such other
times as Seattle Bank may reasonably request. Customer will provide access to,
and will make adequate working facilities available to, the representatives or
agents of Seattle Bank for purposes of such audits and verifications. Customer
agrees to pay to Seattle Bank such reasonable fees and charges as may be
assessed by Seattle Bank to cover overhead and other costs relating to such
audit and verification.

 

Section 3.8 Additional Documentation  Customer will make, execute, record and deliver to Seattle Bank such
notices, instructions, assignments, listings, powers, and other documents with
respect to the Collateral and Seattle Bank’s security interest therein in such
form as Seattle Bank may require. Customer authorizes Seattle Bank to file such
financing statements as Seattle Bank deems necessary with respect to the
Collateral, and Customer hereby ratifies any financing statements previously
filed by Seattle Bank with respect to the Collateral.

 

Section 3.9 Seattle Bank’s Responsibilities as to
Collateral  In the event that Seattle Bank takes
possession of any Collateral pursuant to the terms of this Agreement, Seattle
Bank’s duty as to the Collateral will be solely to use reasonable care in the
custody and preservation of the Collateral in its possession, which will not
include any steps necessary to preserve Customer’s rights against any third
parties nor the duty to send notices, perform services, or take any action in
connection with management of the Collateral. Seattle Bank will not have any
responsibility or liability for the form, sufficiency, correctness, genuineness
or legal effect of any instrument or document constituting a part of the
Collateral, or any signature thereon or the description or misdescription, or
value of property represented, or purported to be represented, by any such
document or instrument. Customer agrees that any and all Collateral may be
removed by Seattle Bank from the state or location where situated, and may
there be dealt with by Seattle Bank as provided in this Agreement.

 

Section 3.10 Seattle Bank’s Rights as to Collateral  At any time or times, at the expense of Customer, Seattle Bank will have
the right, before or after the occurrence of an Event of Default as set forth
in Section 4.1 of this Agreement, but shall not have the obligation, to do
any or all things and take any and all actions that are deemed necessary or
convenient by Seattle Bank to the protection of its rights and interests under
this Agreement and are lawful under the Act, the Regulations and the laws of
the State of Washington, including, but not limited to, the following:

 

3.10.1      Terminate
any consent given under this Agreement;

 

3.10.2      Notify
obligors on any Collateral to make payments thereon directly to Seattle Bank;

 

3.10.3      Endorse
any Collateral that is in Customer’s name or that has been endorsed by others
to Customer’s name;

 

3.10.4      Enter into
any extension, compromise, settlement, or other agreement relating to or
affecting any Collateral;

 

11

 

3.10.5      Take
any action Customer is required to take or which is otherwise necessary to: (i) file
a financing statement or otherwise perfect a security interest in any or all of
the Collateral; or (ii) to obtain, preserve, protect, enforce or collect
the Collateral;

 

3.10.6      Take
control of any funds or other proceeds generated by the Collateral and use the
same to reduce Indebtedness as it becomes due; and

 

3.10.7      Cause the
Collateral to be transferred to Seattle Bank’s name or the name of its nominee.

 

Section 3.11 Power of Attorney  Customer hereby appoints Seattle Bank as its true and lawful attorney,
for and on behalf of Customer and in its name, place and stead, to prepare,
execute and record endorsements and assignments to Seattle Bank of all or any
item of Collateral, giving or granting to Seattle Bank, as such attorney, full
power and authority to do or perform every lawful act necessary or proper in
connection therewith as fully as Customer might or could do. Customer hereby
ratifies and confirms all that Seattle Bank will lawfully do or cause to be
done by virtue of this special power of attorney. This special power of
attorney is granted for a period commencing on the date of this Agreement and
continuing until the discharge of all Indebtedness and Commitments and all
obligations of Customer under this Agreement regardless of any Event of Default
by Customer, is coupled with an interest and is irrevocable for the period
granted. As Customer’s true and lawful attorney-in-fact, Seattle Bank has no
responsibility to take any steps necessary to preserve rights against prior
parties nor the duty to send notices, perform services, or take any action in
connection with the management of the Collateral.

 

Article IV. Default; Remedies

 

Section 4.1 Events of Default;  Acceleration Upon the occurrence of and during the
continuation any of the following events or conditions of default (“Event of
Default’), Seattle Bank may at its option, by a notice to Customer, declare all
Indebtedness and accrued interest thereon, including any prepayment fees or
charges which are payable in connection with the payment prior to the
originally scheduled maturity of any Advance or Other Credit Accommodation, to
be immediately due and payable without presentment, demand, protest or any
further notice and/or terminate any obligation on the part of Seattle Bank in
respect of any Commitment to make or continue making any Advances:

 

4.1.1        Failure
of Customer to pay when due any interest on or principal of any Advance or
Other Credit Accommodation; or

 

4.1.2        Failure
of Customer to perform any promise or obligation or to satisfy any condition or
liability contained in this Agreement, the Credit Policy or any Advances Note,
Advance Master Application or Advance Confirmation Advice, or in any other
agreement to which Customer and Seattle Bank are parties, whether pertaining to
any Advance, Other Credit Accommodation or Other Obligations; or

 

4.1.3        Evidence
coming to the attention of Seattle Bank that any representations, statements,
or warranty made or furnished in any manner to Seattle Bank by or on behalf of
Customer in connection with any Advance or Other Credit Accommodation, any
specification of Eligible Collateral or any certification of Fair Market Value
were false, misleading or incomplete in any material respect when made or, with
the passage of time, have become untrue in any material respect; or

 

4.1.4        Failure
of Customer to maintain adequate Eligible Collateral free of any encumbrances
or claims as required in this Agreement, or any material damage to or loss of
Eligible Collateral, or any sale or encumbrance of any Eligible Collateral
except as permitted by this Agreement

 

4.1.5        The
issuance of any tax, levy, seizure, attachment, garnishment, levy of execution,
or other process with respect to any of the Collateral; or

 

4.1.6        Any
suspension of payment by Customer to any creditor of sums due or the occurrence
of any event which results in another creditor having the right to accelerate
the maturity of any indebtedness of Customer under any security agreement,
indenture, loan agreement, or comparable undertaking; or

 

4.1.7        Any
taking over of the Customer or any of its assets or affiliates by a supervising
agency, or an application for or appointment of a conservator or receiver for
Customer or any affiliate of Customer or Customer’s property, entry of a
judgment or decree adjudicating Customer or any affiliate of Customer insolvent
or bankrupt, an assignment by Customer or any affiliate of Customer for benefit
of creditors, or the entry of any

 

12

 

supervisory
or consent order pertaining to Customer or any affiliate of Customer by any
regulatory body or by any court at the request of such regulator; or

 

4.1.8        Sale by
Customer of all or a material part of Customer’s asset or the taking of any
other action by Customer to liquidate or dissolve; or

 

4.1.9        Termination
of Customer’s membership in Seattle Bank, or Customer’s ceasing to be a type of
financial institution that is eligible under the Act or the Regulations to
become a Customer of Seattle Bank; or

 

4.1.10      Merger,
consolidation or other combination of Customer with an entity which is not a
Customer of Seattle Bank if the non-Customer entity is the surviving entity; or

 

4.1.11      Seattle
Bank determines in good faith that a material adverse change has occurred in
the financial condition of Customer from that disclosed at the time of the
making of any Advance or from the condition of Customer as theretofore most
recently disclosed to Seattle Bank; or

 

4.1.12      Seattle
Bank in good faith deems itself insecure even though Customer is not otherwise
in default; or

 

4.1.13      Customer
has borrowed, or committed to borrow, from any source an amount that is greater
than the amount Customer is permitted to borrow under applicable law.

 

Section 4.2 Remedies  Upon the occurrence of any Event of Default, Seattle Bank will have all
of the rights and remedies provided by applicable law, including but not be
limited to all of the remedies of a secured party under the UCC. In addition,
Seattle Bank may take immediate possession of any of the Collateral or any part
thereof wherever the same may be found. Seattle Bank may sell, assign and
deliver the Collateral or any part thereof at public or private sale for such
price as Seattle Bank deems appropriate without any liability for any loss due
to decrease in the market value of the Collateral during the period held.
Seattle Bank will have the right to purchase all or part of the Collateral at
such sale. If the Collateral includes insurance or securities which will be
redeemed by the issuer upon surrender, or any accounts or deposits in the
possession of Seattle Bank, Seattle Bank may realize upon such Collateral
without notice to Customer. If any notification of intended disposition of any
of the Collateral is required by applicable law, then, if no greater period of
notification is required by applicable law, such notification will be deemed
reasonable and properly given if mailed, postage prepaid, at least 10 days
before any such disposition to the address of Customer appearing on the records
of Seattle Bank. The proceeds of any sale will be applied in the order that
Seattle Bank, in its sole discretion, may choose. Customer agrees to pay all
the costs and expenses of Seattle Bank in the collection of the Indebtedness
and enforcement of Seattle Bank’s rights and remedies in case of default,
including, without limitation, reasonable attorneys’ fees. Seattle Bank will,
to the extent required by law, apply any surplus after payment of the
Indebtedness, provision for repayment to Seattle Bank of any amounts to be paid
or advanced under outstanding Commitments, and all costs of collection and
enforcement to third parties claiming a secondary security interest in the
Collateral, with any remaining surplus paid to Customer. Customer will be
liable to Seattle Bank for any deficiency remaining.

 

Section 4.3 Payment of Prepayment
Charges  Any prepayment fees
or charges for which provision is made, whether under the Regulations, the
Credit Policy, or any applicable Advance Master Application, Advances Note,
Advance Confirmation Advice or Swap Transaction, as the case may be, with
respect to any Advances or Other Credit Accommodations, will be payable at the
time of any voluntary or involuntary payment of the principal of such Advances
or Other Credit Accommodations prior to the originally scheduled maturity
thereof, including, without limitation, payments that are made as a part of a
liquidation of Customer or that become due as a result of an acceleration
pursuant to Section 4.1 of this Agreement, whether such payment is made by
Customer, by a conservator, receiver, liquidator or trustee of or for Customer,
or by any successor to or any assignee of Customer.

 

Article V. Accounts

 

Section 5.1 Deposit Accounts  The Customer may open Accounts with the Seattle Bank subject to the Act,
the Regulations, the Credit Policy and any other policies adopted by the
Seattle Bank from time to time in respect to Accounts and related services,
including without limitation the wire transfer of funds. Any Customer’s funds
deposited in Accounts shall be subject to withdrawal or charge at any time and
from time to time upon wire transfers or any other orders for the payment of money
when made and drawn on behalf of the Customer by a person or persons authorized
by Resolution of the Customer under Section 6.7 below. The Seattle Bank is
authorized to pay any such wire transfers or other orders, provided they are in
the form prescribed by it, and to charge the Customer’s Accounts

 

13

 

therefor,
without inquiry as to the circumstances of issue or the disposition of the
proceeds, even if drawn to the individual order of any authorized person or
payable to others for his account.

 

Section 5.2 Bank’s Reliance  The Seattle Bank, if it acts in good faith and with ordinary care (and
without liability if it does so act), can charge the Accounts with orders
received by the Seattle Bank by telephone, or otherwise orally, from any person
acting for or purporting to act for the Customer as its officer or employee,
for the transfer of funds to others, including the person giving such
instructions or payable to others for his account, or between Accounts of the
Customer. All scheduled charges and fees adopted by the Seattle Bank from time
to time in respect to Accounts and related services will be charged monthly to
such Accounts.

 

Section 5.3 Positive Balance Requirement  The Customer shall maintain a net positive collected balance in all of
its Accounts. The Seattle Bank shall have the option of closing or restricting
the use of Accounts in which positive balances are not maintained. For each day
the aggregate collected balance of an Account is negative, the Customer shall
pay such overdraft charges as are consistent with the scheduled charges and
fees adopted by the Seattle Bank from time to time in respect to Accounts and
related services.

 

Article VI.
Miscellaneous

 

Section 6.1 General Representations and Warranties by
Customer. Customer
hereby represents and warrants that, as of the date of this Agreement and the
date of each Advance or Other Credit Accommodation, including any Commitment,
made pursuant to this Agreement:

 

6.1.1        Customer
is not, and neither the execution of nor the performance of any of the
transactions or obligations of Customer under this agreement will, with the
passage of time, the giving of notice or otherwise, cause Customer to be: (i) in
violation of its charter or articles of incorporation, by-laws, the Act, or the
Regulations, any other law or administrative regulation, or any court decree;
or (ii) in default under or in breach of any indenture, contract, or other
instrument or agreement to which Customer is a party or by which it or any of
its property is bound.

 

6.1.2        Customer
has full corporate power and authority and has received all corporate and
governmental authorizations and approvals (including without limitation those
required under the Act and the Regulations) as may be required to enter into
and perform its obligations under this Agreement, to borrow each Advance and to
obtain each Other Credit Accommodation.

 

6.1.3        The
information given by Customer in any document provided, or in any oral
statement made, in connection with any application or request for an Advance or
Other Credit Accommodation, is true, accurate and complete in all material
respects.

 

Section 6.2 Assignment  Seattle Bank may assign or negotiate to any other federal home loan bank
or to any other person or entity, with or without recourse, any Indebtedness of
Customer or participations therein, and Seattle Bank may assign or transfer all
or any part of Seattle Bank’s right, title, and interest in and to this
Agreement and may assign and deliver the whole or any part of the Collateral to
the transferee, which will succeed to all the powers and rights of Seattle Bank
in respect thereof, and Seattle Bank will thereafter be forever relieved and
fully discharged from any liability or responsibility with respect to the
transferred Collateral. Customer hereby acknowledges and agrees that any such
disposition will give rise to a direct obligation of Customer to the
participant. Customer hereby authorizes Seattle Bank and each participant, in
case of default by Customer under this Agreement, to proceed directly, by right
of setoff or otherwise, against any assets of Customer which may at the time of
such default be in the respective hands of Seattle Bank or any such
participant. Customer further agrees that Seattle Bank may furnish any
information pertaining to Customer which is in the possession of Seattle Bank
to any prospective participant to assist it in evaluating such participation
provided that any non-pubic information reasonably designated in writing to Seattle
Bank by Customer as constituting non-public information will be furnished to
such prospective participant on a confidential basis. Customer may not assign
or transfer any of its rights or obligations under this Agreement without the
express prior consent of Seattle Bank, which may be granted or withheld in
Seattle Bank’s sole discretion.

 

Section 6.3 Discretion of Seattle Bank to Grant or Deny
Advances  Nothing contained in this Agreement or in any
documents describing or setting forth the Credit Policy or any other policy of
Seattle Bank will be construed as an agreement or commitment on the part of
Seattle Bank to grant Advances or extend Commitments or Other Credit
Accommodations under this Agreement, the right and power of Seattle Bank in its
discretion to either grant or deny any of the foregoing being herein expressly
reserved.

 

14

 

Section 6.4 Amendment; Waivers  No modification, amendment or waiver of any provision of this Agreement
or consent to any departure therefrom will be effective unless executed by the
party against whom such change is asserted and will be effective only in the
specific instance and for the purpose for which given. No notice to or demand
on Customer in any case will entitle Customer to any other or further notice or
demand in the same, or similar or other circumstances. Any forbearance, failure
or delay by Seattle Bank in exercising any right, power or remedy under this
Agreement will not be deemed to be a waiver thereof, and any single or partial
exercise by Seattle Bank of any right, power or remedy under this Agreement
will not preclude the further exercise thereof. Every right, power and remedy
of Seattle Bank will continue in full force and effect until specifically waived
by Seattle Bank in writing.

 

Section 6.5 Exceptions to Credit Policy  Customer acknowledges and agrees that no exception to the Credit Policy
requested of Seattle Bank by Customer shall be binding upon the Seattle Bank
unless (i) approved in writing by the Seattle Bank’s authorized
representative and (ii) authorized by the Act and Regulations.

 

Section 6.6 Jurisdiction; Legal Fees  In any
action or proceeding brought by Seattle Bank or Customer in order to enforce
any right or remedy under this Agreement, the parties hereby consent to, and
agree that they will submit to, the jurisdiction of the United States District
Court for the Western District of Washington, or, if such action or proceeding
may not be brought in federal court, the jurisdiction of the courts of King
County, Washington. Customer agrees that, if any action or proceeding is
brought by Customer seeking to obtain any legal or equitable relief against
Seattle Bank under or arising out of this Agreement or any transaction
contemplated hereby, and such relief is not granted by the final decision,
after any and all appeals, of a court of competent jurisdiction, Customer will
pay all attorneys’ fees and other costs incurred by Seattle Bank in connection
therewith. Customer agrees to reimburse Seattle Bank for all costs and expenses
(including reasonable fees and out-of-pocket expenses of counsel for Seattle
Bank) incurred by Seattle Bank in connection with (i) the administration,
enforcement, interpretation or preservation of Seattle Bank’s rights under this
Agreement including, but not limited to, its rights in respect of any
Collateral or the audit or possession thereof, whether or not an Event of
Default has occurred or any suit has been brought; (ii) Seattle Bank’s
rights in any litigation, arbitration or supervisory, receivership, bankruptcy
or other insolvency or regulatory proceedings affecting Customer, any
Collateral or any Advances, Other Credit Accommodations or Other Obligations;
or (iii) Seattle Bank’s preparation of additional documentation for
Advances, Other Credit Accommodations or Other Obligations or any Collateral,
or any amendments, approvals, consents, waivers or releases requested,
required, proposed or done from time to time.

 

Section 6.7 Notices  Except as provided in Subsection 6.8.3 below, any notice, advice,
request, consent or direction given, made or withdrawn pursuant to this
Agreement must be in writing or by machine-readable electronic transmission,
and will be deemed to have been given to and received by a party to this
Agreement when mailed to such party at its address given above by first class
mail, or if given by hand or by electronic transmission, when actually received
by such party at its principal office.

 

Section 6.8 Signatures of Customer; Resolution; Oral
Requests

 

6.8.1        The
Secretary or the Assistant Secretaries of Customer will from time to time
certify to Seattle Bank on forms provided by Seattle Bank the names and
specimen signatures of the persons authorized to apply on behalf of Customer to
Seattle Bank for Advances and otherwise act for and on behalf of Customer in
accordance with this Agreement. Such certifications are incorporated in this
Agreement and made a part of this Agreement and will continue in effect until
expressly revoked by Customer notwithstanding that subsequent certifications
may authorize additional persons to act for and on behalf of Customer.

 

6.8.2        Prior to
or at the time of the execution and delivery of this Agreement, the Secretary
or the Assistant Secretaries of Customer shall provide the Seattle Bank with a
certified copy of a resolution adopted by the Customer’s Board of Directors or
other governing body (“Resolution”) approving this Agreement and authorizing
designated officers or employees of the Customer to obtain Advances and Other
Credit Accommodations, open and use Accounts, and incur Other Obligations. The
Seattle Bank may rely upon, and the Customer is estopped from denying, the
authority of the persons designated in the Resolution or of the persons to whom
such authority has been delegated pursuant to the terms of the Resolution.

 

6.8.3        Notwithstanding
the preceding or any other provision of this Agreement, the Seattle Bank may,
but is not obligated to, honor, and Customer shall be bound by, any form of
request, including an oral request, for Advances, Other Credit Accommodations
or other services from Seattle Bank, whenever such requests are

 

15

 

made
by persons purporting to act as officers or employees of Customer, if Seattle
Bank acts in good faith and with ordinary care (and without liability if it
does so act).

 

Section 6.9 Recording Conversations. Customer for itself and its employees hereby authorizes
and consents to Seattle Bank’s electronic recording of, transcription of and
use of all telephone conversations made by Customer’s employees to the Seattle
Bank for the purpose of requesting Advances or Other Credit Accommodations. The
period of time for which such recordings are stored or whether transcriptions
are made shall be determined by Seattle Bank.

 

Section 6.10 Stock Ownership Requirement  The Seattle Bank and the Customer acknowledge and agree that the Customer is
subject to the Member Advance Stock Purchase Requirement and other terms and
conditions set forth in the Capital Plan of the Seattle Bank. The Member
Advance Stock Purchase Requirement provides that the Customer hold a specified
amount capital stock in the Seattle Bank in connection with Advance
transactions. Currently, each Customer is required to hold Class B (1) stock
with a par value equal to three and one-half percent (3.5%) of the unpaid
principal balances of Advances As set forth in the Capital Plan, the Board of
Directors of the Seattle Bank may change the above percentage within a range of
not less than two and one-half percent (2.5%) or not greater than four and
one-half percent (4.5%). The Customer agrees to be bound by any such change in
the Member Advance Stock Purchase Requirement percentage. Any such change in
the Member Advance Stock Purchase Requirement will be applied as of the
implementation date of the change to all new Advances made by the Seattle Bank
to the Customer. In addition, the Customer agrees and acknowledges that it will
be subject to all amendments to the Capital Plan, that may be made from time to
time.

 

Section 6.11 Force Majeure  Any obligations of the Seattle Bank in connection with this Agreement,
any Commitment, or  otherwise arising in connection
with any Advance, Other Credit Accommodation, Account, Mortgage Purchase Program
or other service, shall be excused to the extent delayed or prevented by reason
of computer, communications system or power failure, labor disturbances,
governmental laws, orders or regulations, riots, insurrection, acts of terror,
war or any other causes beyond the reasonable control of the Seattle Bank. In
addition, the Seattle Bank shall not be liable for the failure of any wire
transfer, fedwire or other such system.

 

Section 6.12 Limitation of Damages  If Seattle Bank, in connection with this Agreement, any Commitment, or
any Advance, Other Credit Accommodation, Account, Mortgage Purchase Program or
other service, breaches any obligation of Seattle Bank to Customer not
otherwise excused by this Agreement or applicable law, Seattle Bank will be obligated
to Customer only for Customer’s actual, direct damages, if any. Under no
circumstances shall Seattle Bank be liable for, and Customer hereby forever
waives, any special, indirect or consequential damages or any punitive or
exemplary damages.

 

Section 6.13 Applicable Law; Severability  In addition to the terms and conditions specifically set forth in this
Agreement and any other related documentation, this Agreement, and all Advances
granted and Commitments extended under this Agreement, will be governed by the
statutory and common law of the United States and, to the extent Federal law
incorporates or defers to state law, the laws (exclusive of the choice of law
provisions) of the State of Washington. Notwithstanding the foregoing, the UCC
of the State of Washington, as amended from time to time, will be deemed
applicable to this Agreement and to any Advance or Other Credit Accommodation
made or Collateral pledged under this Agreement, except as otherwise required
by the provisions of RCW 62A.9A-301 through 307. In the event
that any portion of this Agreement conflicts with applicable law, such conflict
will not affect other provisions of this Agreement that can be given effect
without the conflicting provision, and to this end the provisions of this Agreement
are declared to be severable.

 

Section 6.14 Successors and Assigns  This Agreement will be binding upon and inure to the benefit of the
successors and permitted assigns of Customer and Seattle Bank.

 

Section 6.15 Amendment and Restatement of Any Prior
Agreement  This Agreement amends and restates the terms
of, and is not a novation of, any previous agreements between the parties or
their predecessors entitled “Advances, Security and Deposit Agreement,” “Deposit
Account Resolution” or “Advances Agreement, Pledge Agreement and Security
Agreement.” This Agreement shall not release or impair the priority position of
any existing Collateral for any existing Collateral securing any existing
Indebtedness.

 

NOTICE:
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, TO EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.

 

16

 

IN
WITNESS WHEREOF, Customer and Seattle Bank have caused this Agreement to be signed in their names by
their duly authorized officers as of the date first above mentioned.

 

 

	
  GMAC Commercial Mortgage Bank

  	
   

  
	
  (Full Corporate Name of Customer)

  	
   

  

 

 

	
  By:

  	
  /s/ M. Danny Wall

  	
   

  
	
   

  	
  (Signature of Authorized Officer)

  	
   

  
	
   

  	
  M.
  Danny Wall

  	
   

  
	
   

  	
  (Name of Authorized Officer)

  	
   

  
	
   

  	
  President

  	
   

  
	
   

  	
  (Title of Authorized
  Officer)

  	
   

  
	
   

  	
   

  	
   

  
	
  and

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Cheri Landgren

  	
   

  
	
   

  	
  (Signature of Authorized Officer)

  	
   

  
	
   

  	
  Cheri
  Landgren

  	
   

  
	
   

  	
  (Name of Authorized Officer)

  	
   

  
	
   

  	
  SVP-COO/CFO

  	
   

  
	
   

  	
  (Title of Authorized Officer)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  FEDERAL
  HOME LOAN BANK OF SEATTLE

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Dale Jeschke

  	
   

  
	
   

  	
  (Signature of Authorized Officer)

  	
   

  
	
   

  	
  Dale Jeschke

  	
   

  
	
   

  	
  (Name of Authorized Officer)

  	
   

  
	
   

  	
  Vice - President

  	
   

  
	
   

  	
  (Title of Authorized Officer)

  	
   

  

 

17

 

CORPORATE ACKNOWLEDGMENT

 

	
  STATE
  OF

  	
  Utah

  	
  )

  
	
   

  	
  (State Where Signed)

  	
   

  
	
   

  	
   

  	
  )
  ss.

  
	
   

  	
   

  	
   

  
	
  COUNTY
  OF

  	
  Salt Lake

  	
  )

  
	
   

  	
  (County Where Signed)

  	
   

  
	
   

  	
   

  	
   

  
	
  I certify that I know or have satisfactory evidence that 

  	
  M.
  Danny Wall

  	
  is
  the person who 

  
	
   

  	
  (Name of Authorized Officer of Customer)

  	
   

  
	
  appeared
  before me, and said person acknowledged that [he/she] signed this instrument,
  on oath stated that [he/she] was authorized 
  

  
	
  to
  execute the instrument and acknowledge it as the

  	
  President

  	
  of

  
	
   

  	
  (Title of Authorized Officer)

  	
   

  
	
  GMAC
  Commercial Mortgage Bank

  	
  to
  be the free and voluntary act of such party for the uses and purposes mentioned
  in

  
	
  (Full Corporate Name of Customer)

  	
   

  
	
  the
  instrument.

  
	
   

  
	
   

  	
  /s/
  Tillie Jo Kasteler

  
	
   

  	
  (Signature
  of Notary)

  
	
   

  	
   

  
	
  SEAL

  	
   

  	
  Tillie
  Jo Kasteler

  
	
  (Date of Notary Acknowledgement)

  	
  (Please
  print notary’s name legibly.)

  
	
   

  	
   

  
	
   

  	
  NOTARY
  PUBLIC in and for the State of

  	
  Utah

  	
  ,

  
	
   

  	
  residing
  at 

  	
  Salt
  Lake City

  	
  .

  
	
   

  	
   

  	
  (City
  Where Notary Resides)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  My
  commission expires:

  	
  7.03.2007

  	
   

  
	
  (Include notary seal in space above this line.)

  	
   

  	
   

  	
   

  	
   

  
																		

 

CORPORATE ACKNOWLEDGMENT

 

	
  STATE
  OF

  	
  Utah

  	
  )

  
	
   

  	
  (State Where Signed)

  	
   

  
	
   

  	
   

  	
  )
  ss.

  
	
   

  	
   

  	
   

  
	
  COUNTY
  OF

  	
  Salt Lake

  	
  )

  
	
   

  	
  (County Where Signed)

  	
   

  
	
   

  	
   

  	
   

  
	
  I
  certify that I know or have satisfactory evidence that

  	
  Cheri
  Landgren

  	
  is
  the person who

  
	
   

  	
  (Name of Authorized Officer of Customer)

  	
   

  
	
  appeared
  before me, and said person acknowledged that [he/she] signed this instrument,
  on oath stated that [he/she] was authorized

  
	
  to
  execute the instrument and acknowledge it as the

  	
  SVP-COO/CFO

  	
  of

  	
  GMAC
  Commercial Mortgage Bank

  
	
   

  	
  (Title of Authorized Officer)

  	
   

  	
  (Full Corporate Name of Customer)

  
	
  to
  be the free and voluntary act of such party for the uses and purposes mentioned
  in the instrument.

  
	
   

  
	
   

  
	
   

  	
  /s/
  Tillie Jo Kasteler

  
	
   

  	
  (Signature
  of Notary)

  
	
   

  	
   

  
	
  SEAL

  	
   

  	
  Tillie
  Jo Kasteler

  
	
  (Date of Notary Acknowledgement)

  	
  (Please
  print notary’s name legibly.)

  
	
   

  	
   

  
	
   

  	
  NOTARY
  PUBLIC in and for the State of

  	
  Utah

  	
  ,

  
	
   

  	
  residing
  at 

  	
  Salt
  Lake City

  	
  .

  
	
   

  	
   

  	
  (City
  Where Notary Resides)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  My
  commission expires:

  	
  7.03.2007

  	
   

  
	
  (Include notary seal in space above this line.)

  	
   

  	
   

  	
   

  	
   

  
																		

 

18Exhibit 10.38

 

 

 

 

 

ASP
AGREEMENT

 

between

 

ENABLEUS,
INC.

 

&

 

CAPMARK
FINANCE INC.

 

Dated as of April 26,
2007

 

 

ASP
Agreement

 

Table of
Contents

 

	
  1.  DEFINITIONS

  	
   

  	
  1

  
	
  2.  TERM

  	
   

  	
  1

  
	
  2.01  Initial
  Term.

  	
   

  	
  1

  
	
  2.02  Renewal.

  	
   

  	
  1

  
	
  3.  VENDOR
  SERVICES

  	
   

  	
  2

  
	
  3.01  
  Services.

  	
   

  	
  2

  
	
  3.02  Additional
  Services.

  	
   

  	
  2

  
	
  3.03  Hosting;
  Vendor Service Centers, Security & Backup.

  	
   

  	
  2

  
	
  3.04  Access
  to New Technology

  	
   

  	
  4

  
	
  3.05  Third
  Parties & Subcontractors.

  	
   

  	
  4

  
	
  3.06  Access
  to Server.

  	
   

  	
  4

  
	
  4.  CUSTOMER
  RESPONSIBILITIES

  	
   

  	
  5

  
	
  4.01  Generally.

  	
   

  	
  5

  
	
  4.02  Dedicated
  Equipment & Software.

  	
   

  	
  5

  
	
  4.03  Customer’s
  Use of Third Parties.

  	
   

  	
  5

  
	
  5.  FEES &
  PAYMENTS

  	
   

  	
  5

  
	
  5.01  Fees.

  	
   

  	
  5

  
	
  5.02  Service
  Levels and Remedies.

  	
   

  	
  6

  
	
  5.03  Invoices;
  Interest.

  	
   

  	
  6

  
	
  5.04  Audits.

  	
   

  	
  7

  
	
  6.  MANAGEMENT

  	
   

  	
  7

  
	
  6.01  Vendor
  Personnel.

  	
   

  	
  7

  
	
  6.02  Staff.

  	
   

  	
  7

  
	
  6.03  Subcontractors.

  	
   

  	
  7

  
	
  6.04  Conduct
  of Vendor Personnel.

  	
   

  	
  7

  
	
  6.05  Change
  Control Procedures.

  	
   

  	
  8

  
	
  6.06  Physical
  Relocation of Vendor Service Center.

  	
   

  	
  8

  
	
  7.  REPRESENTATIONS &
  WARRANTIES

  	
   

  	
  9

  
	
  7.01  By
  Each of Customer & Vendor.

  	
   

  	
  9

  
	
  7.02  By
  Vendor.

  	
   

  	
  9

  
	
  7.03  Exclusion.

  	
   

  	
  9

  
	
  8.  CONFIDENTIALITY &
  PROPRIETARY RIGHTS

  	
   

  	
  9

  
	
  8.01  Confidential
  Information.

  	
   

  	
  9

  
	
  8.02  Customer
  Data and Customer Software

  	
   

  	
  10

  
	
  8.03  Vendor
  Software & Documentation.

  	
   

  	
  11

  
	
  8.04  Changes.

  	
   

  	
  12

  
	
  8.05
  Upgrades.

  	
   

  	
  12

  
	
  8.06
  New Functionality.

  	
   

  	
  12

  
	
  9.  INDEMNIFICATION

  	
   

  	
  12

  
	
  9.01  By
  Customer.

  	
   

  	
  12

  
	
  9.02  By
  Vendor.

  	
   

  	
  13

  
	
  9.03  Indemnification
  Procedures.

  	
   

  	
  13

  
	
  9.04  Exclusive
  Remedy.

  	
   

  	
  13

  
	
  10.
  INSURANCE

  	
   

  	
  13

  
	
  11.    ADDITIONAL
  PROJECTS & SERVICES

  	
   

  	
  14

  
	
  12.    FORCE MAJEURE

  	
   

  	
  15

  
	
  12.01  Force
  Majeure.

  	
   

  	
  15

  
	
  12.02  Allocation
  of Resources.

  	
   

  	
  15

  
	
  13.    TERMINATION,
  DEFAULT & REMEDIES

  	
   

  	
  15

  
	
  13.01  Termination
  for Convenience.

  	
   

  	
  15

  

 

i

 

	
  13.02  Termination
  for Default.

  	
   

  	
  15

  
	
  13.03  Limitation
  of Liability.

  	
   

  	
  16

  
	
  13.04  Exclusion
  of Damages.

  	
   

  	
  16

  
	
  14.01  Termination
  Assistance.

  	
   

  	
  16

  
	
  14.02  De-conversion
  Fees.

  	
   

  	
  16

  
	
  14.03  Instructions.

  	
   

  	
  17

  
	
  15.
    APPLICABLE LAW, VENUE

  	
   

  	
  17

  
	
  16.    GENERAL PROVISIONS

  	
   

  	
  17

  
	
  16.01
  Assignment and Sublicense.

  	
   

  	
  17

  
	
  16.02  Notices.

  	
   

  	
  17

  
	
  16.03  Counterparts.

  	
   

  	
  18

  
	
  16.04  Construction &
  Interpretation of Documents.

  	
   

  	
  18

  
	
  16.05  Relationship.

  	
   

  	
  18

  
	
  16.06  Consents,
  Approvals and Requests.

  	
   

  	
  18

  
	
  16.07  Severability.

  	
   

  	
  18

  
	
  16.08  Waiver.

  	
   

  	
  18

  
	
  16.09 Entire Agreement.

  	
   

  	
  19

  
	
  16.10  Amendments.

  	
   

  	
  19

  
	
  16.11  Survival.

  	
   

  	
  19

  
	
  16.12  Third
  Party Beneficiaries.

  	
   

  	
  19

  
	
  16.13  Acknowledgment.

  	
   

  	
  19

  
	
  16.14  Covenant
  of Further Assurances.

  	
   

  	
  19

  
	
  16.15  Compliance
  with Laws.

  	
   

  	
  19

  
	
  16.16  Solicitation.

  	
   

  	
  19

  
	
  SCHEDULE
  1 - DEFINITIONS

  	
   

  	
  1

  
	
  SCHEDULE
  3.01 - SERVICES

  	
   

  	
  6

  
	
  SCHEDULE
  4.02 - DEDICATED EQUIPMENT AND SOFTWARE

  	
   

  	
  8

  
	
  SCHEDULE
  5.01 - FEES

  	
   

  	
  9

  
	
  SCHEDULE
  13.01 - ASSUMED EXPENSES

  	
   

  	
  10

  
	
  Exhibit A - Performance
  Standards and Service Levels

  	
   

  	
   

  
	
  Exhibit B - Backup,
  Archival and Purge Schedule

  	
   

  	
   

  
	
  Exhibit C – Vendor Information
  Security Standards

  	
   

  	
   

  
	
  Exhibit D - Disaster
  Recovery

  	
   

  	
   

  
	
  EXHIBIT E - THIRD PARTY
  SOFTWARE

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

ii

 

EXECUTION COPY

 

 

 

ENABLEUS,
INC.

ASP
AGREEMENT

 

                This ASP AGREEMENT (the Agreement) dated as of the 26th day of April, 2007 (the Effective
Date) is by and between EnableUs, Inc. (Vendor), a Delaware
corporation with offices at 8 Suburban Park Drive, Billerica, MA 01821 and
Capmark Finance Inc. (Customer),
a California corporation with offices at 116 Welsh Road, Horsham, PA 19044.

 

                WHEREAS, pursuant to that certain License
Agreement for McCracken Program Products between McCracken Financial Services, Inc.
and GMAC Mortgage Corporation of PA dated May 10, 1991, as amended (the Pre-Existing License), which the
parties confirm has previously been assigned to Customer and Vendor, Customer
currently utilizes and seeks to continue to have uninterrupted access to the
Strategy ASP (as herein defined) service bureau to perform certain data
processing and related services pertaining to servicing commercial loans, and
Vendor offers to provide such services;

 

                WHEREAS, Vendor
is a software developer and an application service provider for, among other
things, the Strategy ASP service bureau;

 

                WHEREAS,
MFS Acquisition Corp. (Buyer) and
Capmark Financial Group Inc. (Seller),
the parent of Customer and the present parent of the Vendor, entered into that
certain Stock Purchase Agreement, dated as of the date hereof (the Stock Purchase Agreement) pursuant to which Buyer has agreed to purchase from Seller
all of the issued and outstanding shares of capital stock of Vendor; and

 

                WHEREAS,
the Stock Purchase Agreement contemplates that Vendor and Customer shall enter
into this Agreement as a condition precedent to the obligation of either Buyer
or Seller to consummate the transactions contemplated by the Stock Purchase
Agreement.

 

                NOW,
THEREFORE, in consideration of the agreements of the parties set
forth below and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Vendor and Customer agree as
follows:

 

1.  DEFINITIONS

 

Capitalized terms
used in this Agreement shall have the respective meanings set forth in Schedule  1
annexed hereto.

 

2.  TERM

 

2.01  Initial
Term.  The
initial term of this Agreement shall commence on the Effective Date and unless
extended or terminated earlier pursuant to this Agreement shall continue until
12:00 midnight (Eastern Time) on the third anniversary of the Effective Date
(the Initial Term).

 

2.02  Renewal.  Provided that Customer has not received
notice from Vendor of the breach of any material provision of this Agreement
and then failed to cure such breach within the applicable cure period, Customer
shall have the option to renew this Agreement for two (2) successive one (1) year
increments (each, a Renewal Term and together
with the Initial Term, the Term) by
providing Vendor with written notice of its intent to renew no fewer than
ninety (90) days prior to the expiration of the Initial Term or the then
current Renewal Term.

 

 

 

3.  VENDOR
SERVICES

 

3.01  
Services.    Commencing on the Effective Date and
continuing throughout the Term, Vendor will perform the services described in Schedule  3.01
(the Services) in exchange for
Customer’s payment of the Monthly Service Fee as set forth in Section 5.01.  Services do not include support for software
modified by or on behalf of Customer other than as by Vendor in connection with
its provision of Services to Customer.

 

3.02  Additional
Services.  
 From time to time, Customer and Vendor
may agree that additional services outside the scope of the Services (the Additional Services) shall be
performed.  Additional Services may
include, without limitation, additional training, and/or any customization or
interfaces.  Additional Services will be
invoiced at the hourly rates set forth on Schedule 5.01 and shall be
governed by Section 11.

 

3.03  Hosting;
Vendor Service Centers, Security & Backup.

 

(a) 
Information Security Review.   So long as
Customer operates in a dedicated environment and network, Customer reserves the
right to perform periodic information security reviews on any dedicated
environment, applications and/or facilities used by Vendor to provide Services
to Customer hereunder (Reviews)
such right being contingent upon Customer providing Vendor with written notice
of each such Review and a description of all tests to be conducted during such
Review at least five (5) days prior to the occurrence of each such
Review.  The Reviews shall include, but
not be limited to, physical inspection, external scan, internal scan, code
review, process reviews and reviews of system configurations.  The Reviews shall be conducted in Customer’s
discretion, by Customer or its designee (who will be a nationally known
security firm), and at Customer’s expense in accordance with and based upon SAS
70 Type II requirements and standards. 
Vendor hereby grants permission to Customer to perform the Reviews.  To the fullest extent permitted by law,
Vendor hereby waives the benefit of any state or Federal law which may provide
a cause of action against Customer based on actions permitted under this
Section.  Should any Review result in the
discovery of material security risks under SAS 70 Type II standards to (a) the
network used by Vendor to perform Services for Customer (excluding Customer’s
network), (b) the application used by Vendor to perform Services for
Customer, or (c) any Vendor Service Center used by Vendor to perform
services for Customer, Customer shall immediately notify Vendor of such risks
and Vendor shall respond to Customer in writing within three (3) days with
Vendor’s plan to promptly correct, repair or modify the said network or
application or facility to effectively eliminate the risk (each a Remediation Plan).  Any such Remediation Plan shall call for the
security risk to be corrected, repaired or modified, as applicable, in
accordance with SAS 70 Type II standards, within thirty (30) days.  Should Vendor fail to remedy any identified
security risk within the time frame agreed upon by the parties, and in any
event within thirty (30) days, Customer may withhold payment of all Fees.  Customer must pay Fees withheld upon remediation
of the identified risk with no accumulated interest.  Should Customer identify any material
security risk other than those under SAS 70 Type II standards, Vendor’s
Remediation Plan shall call for Vendor to use commercially reasonable best
efforts to correct, repair or modify, as applicable, such security risk, as
soon as practicable.

 

(b) 
Third Party Security Review.   Vendor has acquired through a third
party and will maintain on an annual basis throughout the Term SAS 70 Type II
certification performed in accordance with the standards developed by the
American Institute of Certified Public Accountants (AICPA)
or such other industry accepted third party audit for hosting services of at
least comparable scope.  On an annual
basis, Vendor shall provide to Customer the full and complete SAS 70 Type II
audit.  Should Vendor fail to remedy a
risk identified in a qualified SAS 70 Type II report within thirty (30) days of
receipt of such qualified report, or fail to maintain a SAS 70 Type II
certification, Customer may withhold payment of all Fees. Customer must pay
Fees withheld upon remediation of the identified risk with no accumulated
interest.

 

(c)  Information Security
Standards.  The Vendor Information Security Standards
are set forth in Exhibit C. 
For the avoidance of doubt, Customer is “Customer 202” identified in
such Exhibit C.  Within thirty (30)
days of the Effective Date, Vendor shall, in the performance by Vendor of
Services under this Agreement, ensure that all Services meet the standards for
such Services as set forth in the Vendor Information 

 

2

 

 

Security Standards. 
Vendor shall also use commercially reasonable efforts to comply with any
additional information security requirements as requested by Customer.  Any information security standards requested
by Customer that exceed the then-current criteria set forth in SAS 70 Type II
will be implemented at the sole expense of Customer.  With respect to any such
information security standard that becomes a standard SAS 70 Type II
requirement before the end of the calendar year following the calendar year in
which such security standard was requested by Customer, Vendor shall credit
Customer for all related costs incurred by Customer as of the date of the
increased SAS 70 Type II requirement. 
Such credit shall be made available to Customer as of the date on which
any Customer-requested information security standard becomes a standard SAS 70
Type II requirement.

 

(d)  Electronic Incident
Reporting.  Vendor shall report to Customer all known or
suspected Electronic Incidents. If an Electronic Incident occurs, the Vendor
shall promptly notify Customer’s Incident Management Center at telephone number
215-328-3018, and provide the following information, if known:

 

1.               Nature and impact of the Electronic
Incident;

 

2.               Actions already taken by Vendor to remedy
an Electronic Incident;

 

3.               Vendor’s assessment of immediate risk
posed by Electronic Incident; and

 

4.               Corrective measures to be taken, evaluation
of alternatives, and next steps in resolution of an Electronic Incident.

 

In addition to the
foregoing, Vendor shall continue providing appropriate status reports to
Customer regarding the resolution of the Electronic Incident until it has been
fully resolved and prevention of future such Electronic Incidents has been
reasonably ensured.  In response to any
Electronic Incident, Customer may require that the Services be suspended,
connectivity with Vendor be terminated, or other appropriate action be taken
pending such resolution of such Electronic Incident.

 

(e)   Vendor Service Center;
Shared/Dedicated System.  The Services shall be provided
from the Vendor Service Center at 8 Suburban Park Drive, Billerica, MA 
01821. Vendor shall provide the Services using hardware and software and
personnel in a dedicated environment.  Vendor shall be responsible for
maintaining adequate security so that other customers of Vendor do not access
or receive Customer’s Confidential Information, including, without limitation,
Customer Data. Customer’s environment is currently on a dedicated server. In
the event that Vendor requests that Customer change to a dedicated environment
on a shared server, Vendor shall seek approval from Customer and provide at
least six (6) months notice prior to making such change.

 

(f) 
Physical Security Procedures.  Vendor shall maintain and enforce at the Vendor
Service Center(s) safety and physical security procedures that are
commensurate with industry standards and at least as rigorous as those
procedures in effect at the Vendor Service Center(s) as of the Effective
Date.  In addition, Vendor shall use
commercially reasonable efforts to comply with additional information security
standards as reasonably requested by Customer, and Customer shall be
responsible for the associated costs. 
Vendor shall cause its employees and agents to obey all reasonable
instructions and directions issued by Customer concerning its business
operations when Vendor’s employees and agents are on Customer’s premises.  When Vendor’s personnel are on Customer’s
premises or have remote access to Customer’s systems, Vendor shall comply with
Customer’s building security, information security, safety, and fire protection
procedures.  If Vendor is provided keys
or other access devices, including without limitation codes and passwords, to
Customer’s premises, equipment, or systems, Vendor shall protect such keys or
access devices, shall maintain a log book of the names of personnel and times
when they have possession of such keys or access to the systems or equipment,
shall account for all such keys and access devices whenever requested to do so
by Customer, and shall return and discontinue use of all such keys and access
devices upon request or upon termination of its obligations hereunder.  Customer may require Vendor’s personnel to
carry or display identification cards when on Customer’s premises.  Customer shall have the right to inspect the
contents of all containers or packages being brought onto or removed from
Customer’s premises.

 

(g)  Backup.  Vendor will be responsible for backup and
archiving of data consistent with the Services described in Exhibit B.

 

 

3

 

 

(h)  Purges/Archiving. Customer will be responsible for
purging and archiving all data for paid-off loans.

 

(i)   Disaster Recovery:  Vendor will consistently maintain a disaster
recovery plan for recovery of the Vendor System that satisfies or exceeds the
requirements set forth in Exhibit D.  Upon Customer’s request, Vendor will provide
a complete copy of its disaster recovery plan and certify in writing that the
back up platform and Services (collectively, the Disaster
Recovery Platform) to be provided pursuant to such disaster
recovery plan are consistent with the parameters set forth in Exhibit D
and are operational.  Vendor shall
participate in tests of the Disaster Recovery Platform no less than once per
year.  If Vendor fails to demonstrate in
any test of the Disaster Recovery Platform that it meets or exceeds the disaster
recovery plan’s recovery requirements, Vendor will deliver to Customer within
thirty (30) days of such failure, a project plan identifying the corrective
action(s) to be taken and applicable completion date(s).  The project plan shall be to the reasonable
satisfaction of Customer and shall comply with the requirements set forth in Exhibit D.  Customer will notify Vendor at least ninety
(90) days in advance of any scheduled test of the Disaster Recovery Platform,
and provide Vendor with the opportunity to participate in the portions of such
test that address the Services provided to Customer.  Vendor will implement its disaster recovery
plan and make the Disaster Recovery Platform operational as soon as reasonably
practicable upon the occurrence of a Disaster and in any event within the time
frames set forth in the Nature of Outage Matrix in Exhibit D.  If a Disaster causes Vendor to allocate
limited resources between or among its customers, Customer will receive at
least the same priority as such other customers in respect of such allocation.

 

3.04  Access to New Technology. From time to time, Vendor may also
develop new technology employing additional functionality.  Vendor will provide to Customer for Customer’s
evaluation and testing in connection with the Services any new commercially
available Vendor technology developments, including new software, in accordance
with Sections 8.05 and 8.06.

 

3.05  Third
Parties & Subcontractors.  It
is understood that Vendor reserves the right to provide the Services itself or
through a third party service provider; provided, however, that Vendor
has sole responsibility for furnishing the Services contemplated by any
agreement between Customer and Vendor, and Customer shall look solely to Vendor
for the performance of any such Services or agreement.  Any third party service provider providing
Services must agree to be bound by all applicable terms and conditions of this
Agreement and any other applicable agreement.

 

3.06  Access
to Server.  Upon
the reasonable prior written request of Vendor, Customer shall provide Vendor
reasonable access, accompanied by a representative of Customer, to the IBM iSeries Server,
serial #10DA96A, located at Customer’s facilities in Dallas, TX utilized in the
provision of the Services hereunder, when necessary to allow Vendor to provide
the Services hereunder.  Customer shall
bear all risk of loss of such IBM iSeries server located at Customer’s
facilities, except to the extent such loss is caused, directly or indirectly,
by the acts or omissions of Vendor. Customer shall not grant any security
interest in or permit any liens to attach to such IBM iSeries server
located at Customer’s facilities.

 

3.07  Acknowledgment; Mutual Waiver.  Customer acknowledges that, as of the Effective Date, (a) Vendor
and the Services satisfy or exceed the Vendor Information Security Standards, (b) the
Disaster Recovery Platform satisfies or exceeds the requirements set forth in Exhibit D,
(c) Vendor’s provision of the Services satisfies or exceeds the Performance
Standards and Service Levels set forth in Exhibit A, and (d) the
Vendor Service Center satisfies or exceeds the security requirements imposed
upon Vendor under this Agreement.  Each
party hereby waives any claim or action against the other party based on an
assertion that subsections (a) through (d) above are
untrue; provided, however, that such waiver shall have no effect
on and shall not apply to any claims or actions arising out of either party’s
failure to perform its obligations in accordance with the terms and conditions
of this Agreement.

 

 

4

 

 

4.  CUSTOMER
RESPONSIBILITIES

 

4.01  Generally.  During the Term, Customer
shall on a timely basis and at its sole expense be responsible for:

 

(a)  Dedicated
Equipment & Software:  Maintaining and, as
necessary, acquiring, the Dedicated Equipment & Software in accordance
with Section 4.02.

 

(b)  Customer
Data Accuracy & Completeness.  The accuracy and
completeness of the Customer Data and any errors or inaccuracies in and with
respect to data obtained from Vendor because of any inaccurate or incomplete
Customer Data.

 

4.02  Dedicated
Equipment & Software. The minimum requirements of the computer hardware,
software and telecommunications equipment that will be required to use the
Vendor Software (the Dedicated Equipment &
Software) are attached as Schedule 4.02. Customer’s
Dedicated Equipment & Software shall meet or exceed such minimum
hardware requirements during the Term. 
Customer shall bear the cost of the Dedicated Equipment &
Software, including, without limitation, procurement, acquisition,
installation, configuration, cabling and maintenance.

 

4.03  Customer’s
Use of Third Parties.  Customer
shall have the right to contract with a third party to perform any service
outside the scope of, or in addition to, the Services, including systems
operations and related services to augment or supplement the Services or to
interface with the Vendor System (collectively, the Customer
Third Party Services). In the event Customer contracts with a
third party to perform any Customer Third Party Service, Vendor shall cooperate
with Customer and any such third party to the extent reasonably required by
Customer, including by providing (a) to the extent available, written requirements,
standards, and policies for systems operations so that the developments of such
third party may be operated by Vendor, (b) assistance and support services
to such third party in connection with the Vendor System and (c) to the
extent permitted by the applicable third party agreements, third party access
to the Vendor System in connection with such Customer Third Party Service.
Customer shall require any such third party to comply with Vendor’s
requirements regarding operations, confidentiality and security.  Vendor shall charge Customer in respect of
all of the foregoing at Vendor’s hourly rates.

 

5.  FEES &
PAYMENTS

 

5.01  Fees.

 

(a)  Invoicing and
Payment.  Customer shall be responsible for the payment of all
fees set forth on Schedule 5.01, including, but not limited to, the
Monthly Service Fees, the Asset Surveillance License Fees and the Additional
Service Fees (collectively, the Fees).  Vendor invoices shall separately itemize and
reasonably identify all Fees and taxes assessed in respect of this
Agreement.  Customer agrees to pay all
undisputed Fees, subject to any applicable Service Level Credits (as defined in
Section 5.02), within thirty (30) days after receipt of the
applicable invoice in United States dollars at Vendor’s notice address; provided,
however, that the Customer’s responsibility for the Fees shall be automatically
reduced by $47,064 for each month during which Customer makes payments to IBM
for the costs and expenses of the Capmark-Only Servers or any successor servers
pursuant to clause (c) of the immediately following paragraph.

 

Customer shall pay
directly to International Business Machines Corp. (IBM)
the costs and expenses for only the IBM iSeries Server, serial #109969E,
located in Billerica, MA, and the IBM iSeries Server, serial #10DA96A,
located in Dallas, TX (collectively, the Capmark-Only Servers)
in accordance with the Term Lease Master Agreement, dated March 27, 2002,
as amended and modified from time to time, including without limitation all
addenda and term lease supplements thereto, by and between IBM and Vendor
(formerly known as McCracken Financial Software, Inc.) (the IBM Term Lease).  For the avoidance of doubt, the payments for
the Capmark-Only Servers under the IBM Term Lease as of the date hereof are
$40,278 per month until March 31, 2008 for Server #109969E and $20,547 per
month until March 31, 

 

 

5

 

 

2009 for Server
#10DA96A.  When the IBM Term Lease or a
schedule, supplement or similar addendum thereto governing the lease of a
Capmark-Only Server is due for renewal or expiration, Customer shall (a) enter
into a lease agreement for such Capmark-Only Server directly with IBM or (b) have Vendor renew such
IBM Term Lease or schedule on behalf of Customer for an additional term, in
which case, Vendor shall consult with Customer regarding duration and pricing
terms of such renewal and shall work diligently and in good faith to negotiate
favorable pricing terms with IBM, and Capmark shall have the right to participate
in such negotiations, or (c) if
Customer does not elect either of the foregoing options (a) or (b),
Customer shall, at its sole expense, make arrangements for the use of other
suitable server(s) to replace the Capmark-Only Servers, in which case
Vendor shall assist Customer in the transition of the Services to such other
suitable servers and Vendor shall be entitle to invoice Customer for such
assistance at the Additional Services rate set forth in Schedule 5.01.  For the avoidance of doubt, any reduction in
the amounts payable by Customer to IBM with respect to the Capmark-Only Servers
or any successor servers pursuant to the foregoing clause (c) of this
paragraph shall inure solely to the benefit of Customer.  Additionally, if Vendor acquires the right pursuant
to the IBM Term Lease to purchase either of the Capmark-Only Servers, Vendor
will offer such right to Customer, or work in good faith with Customer to
exercise such right on Customer’s behalf, provided that such actions are not
prohibited under the terms of the IBM Term Lease.

 

(b)   Expenses.  In the event that Customer
requires Vendor to perform any Additional Services during the Term, Customer
shall pay or reimburse Vendor for any reasonable and actual documented out of
pocket expenses, including shipping charges, travel and travel-related
expenses, incurred by Vendor in connection with its performance of any
Additional Services, all as approved by Customer in advance.

 

(c)  Fee Adjustments. 
All Fees payable by Customer under this Agreement may only be adjusted
by Vendor once in any given twelve (12) month period.  In any such event, Vendor may increase the
Fees by no more than two percent (2%).

 

(d)  Taxes.  Customer
agrees to pay all state and local sales, use, property or other taxes (except
for taxes on Vendor’s property or net income) that may be assessed against
Vendor or Customer with respect to this Agreement, the Services or any
equipment, products or services provided hereunder.  Customer shall also be responsible for paying
all personal property or use taxes due on or with respect to the customer
system, as well as all taxes, assessments, and other real property-related
levies on its owned or leased real property, including all customer
locations.  All taxes shall be separately
itemized on each invoice, indicating the tax and the charges against which such
tax was calculated. Should Vendor obtain tax reimbursement for such taxes that
were passed through to Customer, Vendor will reimburse Customer for amount(s) paid
by Customer.

 

5.02  Service
Levels and Remedies.

 

Vendor will meet or
exceed the service levels applicable to each Service as set forth on Exhibit A
(each, a Service Level). Vendor acknowledges that its failure to
meet one or more Service Levels may have a material adverse effect on the
business and operations of Customer and that the actual amount of damage
sustained by Customer because of such failure would be impracticable or
extremely difficult to determine. 
Accordingly, if Vendor fails to meet a Service Level other than those caused
by Customer’s failure to satisfy its obligations as set forth in this
Agreement, Customer shall have the option, but not the obligation, to recover
the applicable amounts specified on Exhibit A (each a Service Level Credit).  In the event that Customer exercises its
option to recover Service Level Credits with respect to any particular Service
Level failure, such Service Level Credit shall be Customer’s exclusive remedy
with respect to that particular Service Level failure.  Provided that Customer does not exercise its
option to recover a Service Level Credit with respect to a particular Service
Level failure, Customer shall have any remedies available to Customer at law or
in equity, including, without limitation, the right, depending on the circumstances,
to terminate this Agreement.

 

5.03  Invoices;
Interest.

 

Vendor invoices
shall separately itemize and reasonably identify all fees, charges and taxes
assessed in respect of this Agreement. 
Customer agrees to pay all invoices within 30 days after the date of the

 

6

 

 

invoice in United
States dollars at Vendor’s notice address. All amounts due Vendor under this
Agreement shall accrue interest from the first day following the due date until
paid in full at the annual rate of eighteen (18%) percent (the  Interest Rate).

 

5.04  Audits.

 

(a)  Regulatory
Audits.  
Upon thirty (30) days notice from Customer, Vendor shall provide, and shall
cause its subcontractors to provide, to such auditors and inspectors as Customer
may from time to time engage, at Customer’s expense, access to the Vendor
System (excluding source code) and the Vendor Service Center(s) for the
purpose of performing audits or inspections of the Services and the business of
Customer relating to the Services (including data processing, application
development, the procurement of new systems, disaster recovery, maintenance and
support, telecommunications, and the systems and physical environments on or in
which the Services are performed) pursuant to any law or regulation applicable
to Customer or the customers of Customer. Vendor shall provide, and shall cause
its subcontractors to provide, such auditors and inspectors any assistance that
they may require.  If any audit by an
auditor designated by Customer or a regulatory authority results in Vendor
being notified that it or its subcontractors are not in compliance with any
law, regulation, audit requirement, or generally accepted accounting principle
relating to the Services, Vendor shall, and shall cause its subcontractors to,
take actions to comply with such audit. Customer shall bear the expense of any
such compliance that is (1) required by a law, regulation, or other audit
requirement relating to Customer’s business or (2) necessary due to Customer’s
noncompliance with any law, regulation, or audit requirement imposed on
Customer.  Vendor shall bear the expense
of any such response that is (X) required by a law, regulation, or other
audit requirement relating to Vendor’s business or (Y) necessary due to
Vendor’s noncompliance with any law, regulation, or audit requirement imposed
on Vendor.  Other than as provided in the
previous sentence, Vendor shall be entitled to charge the hourly rates set
forth in Schedule 5.01(c) for all assistance provided to Customer’s
auditors under this subsection.

 

(b)  Disruption.  Customer acknowledges that
audits may disrupt Vendor’s operations. 
Customer will ensure that its auditors schedule any audits with seven (7) days
notice and conduct audits in a manner that causes minimum disruption.

 

(c)  Financial
Statements.  Should Vendor’s holding company’s financials
become unavailable to the public domain, or should Vendor become owned by a
private entity, Vendor agrees to provide Customer with an audit report prepared
by independent certified public accountants, or other financial statements
acceptable to Customer, within one hundred twenty (120) days after the close of
each fiscal year of Vendor occurring after the date hereof, and from time to
time such other information relating to the financial condition of Vendor as
Customer may reasonably request.

 

6.  MANAGEMENT

 

6.01  Vendor
Personnel.  Vendor
will appoint a Strategy ASP representative (the Vendor
Strategy ASP Representative) who will act as the primary
contact under this Agreement and will work closely with Customer in resolving
any problems that may arise during the Term.

 

6.02  Staff.  Subject to the terms of this Section 6,
Vendor shall appoint and manage all the personnel it appoints to provide
Service to Customer, including all subcontractor personnel.

 

6.03  Subcontractors.  Vendor shall be responsible
for the work and activities of each of its subcontractors, including compliance
with the terms of this Agreement. Vendor shall be responsible for all payments
to its subcontractors.

 

6.04  Conduct
of Vendor Personnel.  Vendor’s personnel working at Customer locations shall
comply with the rules and requirements of Customer as may be in effect
from time to time, regarding the conduct, appearance, cleanliness, work history
and qualifications, and personal history (including without limitation, violent
or criminal conduct for persons working at Customer locations).  Vendor shall perform all background and
credit checks, and other procedures required by any Customer corporate policy
provided 

 

 

7

 

to Vendor.  At the request of Customer, Vendor shall
provide assurances to Customer satisfactory to Customer, that Vendor’s
personnel comply with the rules and requirements of Customer provided to
Vendor pertaining to work history and qualifications and personal history.  Vendor shall not assign any personnel to work
hereunder who would under current Customer policy be disqualified from
employment with Customer due to a relationship by blood or marriage with a
Customer employee, and shall also apply said policy to its own personnel
assigned to work hereunder.  Customer
shall disclose the above employment rules, requirements, and policies to
Vendor, and Vendor shall screen its personnel to ensure compliance.  Vendor shall provide Customer with the name,
address, date of birth, and social security number of each person assigned to
work on Customer’s premises, and shall update such information whenever changes
occur.  Upon the request of Customer,
which request may be made without reason, Vendor shall reassign or otherwise
arrange so that a particular employee or agent of Vendor does not work at any
Customer location.

 

6.05  Change
Control Procedures.  All Vendor Changes shall be made pursuant to the
following Change Control Procedures. Vendor Changes shall be implemented only
with Customer’s approval (a) upon no less than sixty (60)  days notice or (b) as may be necessary on a temporary
basis to maintain the continuity of the Services. Vendor shall (1) schedule
all Vendor Changes so as not to unreasonably interrupt Customer’s business
operations, (2) monitor the status of Vendor Changes against the
applicable schedule, (3) in the case of Vendor Changes performed on a
temporary basis to maintain the continuity of the Services, document and
provide to Customer notification no later than the next day after the Change is
made (which notice may be given orally provided that such oral notice is
confirmed in writing to Customer within five (5) days) of all Vendor
Changes, and (4) once every year during the Term, review and modify as
appropriate the Change Control Procedures, based upon mutual agreement.  The parties acknowledge that certain changes
are necessary and beyond the complete control of the parties as to
scheduling.  For example, in order to
maintain currency in an “IBM” environment, Vendor must install upgrades and
service packs.  Vendor will notify
Customer in writing of its plans to implement such changes and will indicate in
the notice the period of time within which Customer must obtain and implement,
at its own expense, changes in the Dedicated Equipment & Software to
remain compatible with the software installed at the Vendor Service Centers. In
the case of “IBM” service packs and upgrades, the time within which Customer
must implement such changes will be no less than forty-five (45) days after the
written notification.

 

6.06  Physical
Relocation of Vendor Service Center.   Vendor will
notify Customer in writing as soon as practicable, but in no event less than
three (3) months, prior to an intended commitment to relocate the Vendor
Service Center.  Vendor must provide
Customer a documented relocation plan and permit Customer to perform a physical
security site review of the intended relocation facility. Prior to Vendor
entering into a commitment to relocate the Vendor Service Center, Customer must
approve the intended relocation facility by ensuring the intended facility’s
security standards meet or exceed the current facility’s security standards. It
is understood that Vendor will utilize customer space in Dallas, TX, to house a
disaster recovery environment.  If either party deems it necessary to move
such disaster recovery environment, they will provide the other party with written
notice of intent to move as soon as practicable, but in no event less than
three (3) months, prior to the requested move date, and such environment
shall not be moved until both parties have approved the new location in writing (such
approvals not to be unreasonably withheld or delayed). 
Customer shall be responsible for all costs attributable to relocation
of the disaster recovery environment as required by Customer, and all Services
provided by Vendor in connection with such relocation shall be invoiced to
Customer on a time and materials basis. 
Customer shall provide Vendor as much notice as reasonably practicable,
but in no event less than three (3) months, prior to vacating the premises
where the disaster recovery environment currently resides.  In the event Customer moves to premises that
cannot support the disaster recovery environment, Vendor shall make reasonable
efforts to provision space for the disaster recovery environment in a Vendor
facility at the expense of Customer. The Service Levels referred to in Section 5.02
shall not apply to the period during which the disaster recovery environment is
being relocated or for the period of seven (7) days immediately following
such relocation.

 

 

8

 

 

7.  REPRESENTATIONS &
WARRANTIES

 

7.01  By
Each of Customer & Vendor.   Each of Customer and Vendor represents
and warrants that: (a) it is a corporation duly incorporated, validly
existing and in good standing under the laws of its state of incorporation; (b) it
has all the requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement; (c) the execution, delivery,
and performance of this Agreement have been duly authorized by it; (d) no
approval, authorization, or consent of any governmental or regulatory
authority, or any other third party, is required to be obtained or made by it
in order for it to enter into and perform its obligations under this Agreement;
(e) in connection with its obligations under this Agreement, it shall
comply with all applicable Federal, state, and local laws and regulations and
shall obtain all applicable permits and licenses; and (f) it has not
disclosed as of the Effective Date any Confidential Information relating to the
other party.

 

7.02  By
Vendor.  Vendor represents and warrants that (a) Services
will be performed in a workman like manner satisfying mutually agreed upon
service levels, and or acceptance language; and (b) any Vendor Created
Software provided to Customer does not and will not infringe upon the
intellectual property rights or other proprietary rights of any third party.

 

7.03  Exclusion.  EXCEPT AS SPECIFIED
IN THIS SECTION 7, NEITHER VENDOR NOR CUSTOMER MAKES ANY OTHER
REPRESENTATIONS OR WARRANTIES OF ANY KIND TO THE OTHER PARTY. EACH PARTY
EXPLICITLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE
IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE IN RESPECT OF THE SERVICES AND THE SYSTEMS, AS WELL AS ALL
OBLIGATIONS ARISING OUT OF COURSE OF DEALING OR USAGE OF TRADE.

 

8.  CONFIDENTIALITY &
PROPRIETARY RIGHTS

 

8.01  Confidential
Information.

 

(a)  Nondisclosure.  Each party agrees that information
concerning the other party’s business (including that of all corporate
affiliates and subcontractors) provided before or after the Effective Date and
regardless of the manner, form or medium in which such information is or has
been provided is “Confidential Information” and
proprietary to each party and shall be maintained in confidence and not
disclosed, used or duplicated, except as described in this Section 8.01.
Confidential Information shall include, without limitation, Customer Data,
lists of, or other information relating to and identified with customers,
former or prospective customers or applicants, business volumes or usage,
financial information, pricing information, information related to mergers or
acquisitions, systems, software, software documentation, software source
documents, manuals, formulas, security procedures, practices, specifications,
information concerning business plans or business strategy, presentations,
proposals, technical and non-technical information including patent, copyright,
trade secret, and proprietary information, techniques, sketches, drawings,
models, samples, data, inventions, know-how, processes, apparatus, equipment,
algorithms, formulae, and all information related to the party’s current,
future, and proposed products and services, and the subject matter of this
Agreement.  Each party may use
Confidential Information of the other only in connection with performance under
this Agreement. Except as described in this Agreement, the parties shall not
copy Confidential Information or disclose Confidential Information to persons
who do not need Confidential Information in order to perform under this
Agreement.  Each party shall maintain an
appropriate information security program to prevent the unauthorized
disclosure, misuse, alteration or destruction of Confidential Information.
Confidential Information shall be destroyed or returned to the party owning
such Confidential Information upon request of such party, provided that the
other party may maintain an archive copy of such Confidential Information if
required for regulatory compliance, if required to perform obligations
hereunder or as part of back-up data. Confidential Information does not include
information that is generally known or available to the public or that is not
treated as confidential by the party claiming such information to be
confidential, provided, however, that this exception shall not
apply to any publicly available information to the extent that the disclosure
or sharing of the information by one or both parties is subject to any
limitation, 

 

9

 

 

restriction,
consent, or notification requirement under any applicable federal or state
information privacy law or regulation then in effect.  Vendor may disclose Customer’s Confidential
Information to IBM and other third parties engaged to provide maintenance and
support services to Vendor, provided that Vendor shall disclose to IBM and such
other third parties only such Confidential Information as is necessary for such
third party to perform its obligations to Vendor, and IBM and such other third
parties shall first enter into a written agreement protecting the
confidentiality of such Confidential Information.  In the event that it is necessary for Vendor
to disclose Confidential Information of Customer to any other third party in
order to perform Vendor’s duties hereunder, Vendor shall disclose only such
Confidential Information as is necessary for such third party to perform its
obligations to Vendor and shall, before such further disclosure is made: (a) obtain
Customer’s written consent (which shall not be unreasonably withheld or
delayed); and (b) deliver to Customer upon Customer’s request a copy,
certified by Vendor as being true and correct, of an agreement, acceptable to
Customer, protecting the confidentiality of such Confidential Information and
prohibiting the third party’s re-disclosure, duplication or reuse of any
Confidential Information.  A breach of
either party’s confidentiality obligations may cause the aggrieved party to
suffer irreparable harm in an amount not easily ascertained.  The parties agree that such breaches, whether
threatened or actual, will give the non-breaching party the right to terminate
this Agreement immediately, obtain equitable relief, i.e.,
obtain an injunction to restrain such disclosure or use without the requirement
of posting a bond, and pursue all other remedies said party may have at law or
in equity.  For the avoidance of doubt,
Customer acknowledges and agrees that all Confidential Information relating to
the Vendor System, Vendor Software, Documentation, and Vendor’s business and
operations shall be Confidential Information of Vendor after the Effective
Date, notwithstanding that Vendor was owned by Customer prior to the Effective
Date.

 

(b)  Use
of Name.  Vendor
may list Customer’s name on Vendor’s customer list. Otherwise, neither party
shall advertise, market or otherwise make known to others any information
relating to the subject matter of this Agreement, including mentioning or
implying the name of the other, without the prior written approval of the other
party.

 

(c)  Permitted
Disclosures.  Notwithstanding anything hereinto the
contrary, it shall not be a breach of this Agreement for Vendor in connection
with any capital raising effort, potential sale or corporate restructuring to
provide a copy of this Agreement and aggregated data regarding Customer and its
usage of the Vendor System and Services to any bona fide potential investor,
purchaser or potential restructuring entity; provided, however,
that (a) Vendor obtains Customer’s prior written consent to such
disclosure, such consent not to be unreasonably withheld and (b) that any
such potential investor, purchaser or potential restructuring entity shall
first execute a written confidentiality agreement with Vendor protecting the
confidentiality of Customer’s Confidential Information.

 

8.02  Customer
Data and Customer Software

 

(a)  Ownership
of Customer Data and Customer Software.  Customer Data and Customer Software are
and shall remain the sole and exclusive property of Customer.  Customer Data, in any form, shall not be (1) used
by Vendor other than in connection with providing the Services, or (2) disclosed,
sold, assigned, leased, or otherwise provided to third parties by Vendor,
including, without limitation, any of Vendor’s parents, subsidiaries,
affiliates, officers, directors, shareholders, representatives, employees or
agents (except as provided for in this Agreement and all subject to Section 8.01).

 

(b)  Return
of Data.  At no cost to Customer, Vendor shall, upon (1) request
by Customer at any time or (2) the cessation of all Termination Assistance
Services: (i) promptly return to Customer, in the format and on the media
in use by Vendor as of the date of the request, all (or the portion so
designated by Customer) of the Customer Data; and (ii) erase or destroy
all (or the portion so designated by Customer) of the Customer Data in Vendor’s
possession upon the cessation of all Services, in either case, other than
retention of a copy for audit purposes. Archival tapes containing any Customer
Data shall be used solely for back-up or audit purposes.  At no cost to Vendor, Customer shall, within
a reasonable time after expiration or termination of all Termination Assistance
Services: (i) promptly return to Vendor all Vendor Confidential
Information (except software licensed to Customer pursuant to Section 8.03(a))
or verify in

 

 

10

 

Customer’s
possession, other than retention of a copy for audit purposes. Archival tapes
containing any Vendor Confidential Information shall be used solely for audit
purposes.

 

(c) 
Third Party Access.  Except as provided in Section 8.01(a),
Vendor shall prohibit and prevent access to Customer Data and Customer Software
by third parties, including, without limitation, any affiliate of Vendor,
unless expressly approved by Customer in its sole discretion on a case-by-case
basis.  For the avoidance of doubt, under
no circumstances and not withstanding anything to the contrary shall Vendor
provide or permit Wachovia Securities, Inc. or its parent or any of their
affiliates (except Vendor) to access or use, or direct access to or use of,
Customer Data and/or Customer Software without Customer’s prior written
consent, which consent may be granted or withheld in Customer’s sole
discretion.  Pursuant to that certain
letter agreement between Wachovia Bank, N.A. (Wachovia)
and Seller dated as of the date hereof, any time Wachovia acquires a majority
of the voting capital stock of the Buyer, or otherwise has the power to elect a
majority of the directors of the Buyer, Wachovia (a) will establish and
maintain, and cause Vendor to establish and maintain, safeguards against the
use by Wachovia of the Customer Data and Customer Software and (b) will
not request or require Vendor to make available any such Customer Data or
Customer Software to Wachovia Corporation and any of its subsidiaries, other
than Vendor.

 

8.03  Vendor
Software & Documentation.

 

(a) 
Perpetual
License to Strategy ASP and Asset Surveillance.  The parties hereby terminate the Pre-Existing License
and release each other from any obligations in the Pre-Existing License that
may survive such termination.  Vendor’s
rights to use the Vendor Software after the Effective Date shall be governed
solely by this Agreement. 
Notwithstanding anything to the contrary set forth herein, Vendor
hereby grants to Customer a perpetual, irrevocable, worldwide, assignable (subject
to Section 16.01), royalty-free right and license to use, modify
and support for its internal purposes or in connection with the business of
Customer, its subsidiaries or its affiliates under common control of Customer’s parent company
with respect to servicing and supporting (other than the provision of
technology services substantially similar to those provided by Vendor) or
sub-servicing (collectively, Servicing)
the mortgage assets and portfolios of any third party (including any affiliate
of Customer) (the Servicing Business), the
source code and object code for the release of Strategy ASP being utilized by
Customer as of the Effective Date together with any and all applicable
Documentation.  Vendor hereby
acknowledges and consents to Customer possession of and perpetual and
irrevocable right to retain and use complete copies of the source code and
object code for such release of Strategy ASP and Asset Surveillance.  If, after the Effective Date, Customer has a good
faith belief that it is not in possession of any portion of such source code or
object code, Vendor will use commercially reasonable efforts to deliver such
portions to Customer as soon as reasonably practicable.  In the event that Customer chooses, pursuant to
Sections 8.05 and/or 8.06, to have to have any Upgrades or additional modules
installed into or integrated with Customer’s Strategy ASP platform or Asset
Surveillance module, Vendor shall provide Customer with the source code and
object code applicable to such Upgrade and/or additional module under the same
terms and conditions set forth in this Section 8.03.

 

(b) 
Ownership.  The Vendor Software (including, without
limitation, all Developed Software) and the Documentation shall be and shall
remain the exclusive property of Vendor and Customer shall have no rights or
interests in the Vendor Software except as set forth in this Agreement.

 

(c) 
License of Intellectual Property; 365(n).  The parties agree that Customer, as licensee
of the Strategy ASP and Asset Surveillance pursuant to this Agreement, shall
retain and may fully exercise all of its rights under the United States
Bankruptcy Code, as may be amended or supplemented from time to time (the Code).  The parties further agree that, in the event
of the commencement of bankruptcy proceedings by or against Vendor under the
Code, Customer shall be entitled to retain all of its rights under this
Agreement.  Without limiting the
foregoing, the parties agree that Strategy ASP and Asset Surveillance are “intellectual
property” as defined in 11 U.S.C. § 101(35A) which have been licensed hereunder
in a contemporaneous exchange for value and that this Agreement shall be
governed by 11 

 

11

 

 

U.S.C. § 365(n), as the same may be amended or supplemented from time
to time, if Vendor files for bankruptcy.

 

8.04  Changes.  Except as may be approved by
Vendor, Customer may not make any changes or modifications to Customer’s system
that would have an adverse effect on the functionality or performance of the
Vendor Software or the Vendor System. 
Except as may be approved by Customer, Vendor may not make any changes
or modifications to the Vendor System that would have an adverse effect on the
functionality or performance of Services provided by Vendor to Customer.

 

8.05  Upgrades.  Vendor shall from time to time make
available to Customer for test and evaluation purposes only: (a) all
generally offered releases of the Vendor Software that Vendor periodically
makes available to any of its customers; (b) generally offered
enhancements to the Vendor Software and the Vendor System that Vendor
periodically makes available to any of its customers; and (c) generally
offered corrections to the Vendor Software that Vendor periodically makes
available to any of its customers (each, an Upgrade).  Customer acknowledges that such Upgrades may
not be compatible with the version of the Vendor Software used to provide Services to Customer
as of the Effective Date.  Upon
request, Vendor will perform services necessary to create a test environment
for Customer to test such Upgrades, and Customer shall be invoiced for such
services at the Additional Services rate. 
In the event that Customer determines to accept any Upgrade, Customer shall
so notify Vendor and the parties shall promptly negotiate, in good faith and
under terms no less favorable than those provided to other similarly situated
customers, the terms pursuant to which such Upgrades will be provided to and
used by Customer, including (i) the appropriate fees to be paid by
Customer for license of such Upgrade, (ii) the appropriate adjustments, if
any, to the Monthly Service Fee and/or Asset Surveillance License Fee and (iii) an
implementation schedule for loading such Upgrade and making any required
adjustments to the Customer’s system and/or the Vendor System configuration to
enable Customer’s end users to access and use the Vendor System.  Unless Customer indicates by notice to Vendor
that it has determined to accept an Upgrade, Vendor shall refrain from
incorporating such Upgrade into the version of Strategy ASP being supported for
Customer and shall continue to support the then-current version of the Strategy
ASP being supported for Customer.  For
the avoidance of doubt, Customer may choose to remain on the current version of
Strategy ASP and shall in no event be required to upgrade the Vendor
System.  All Upgrades acquired by
Customer during the Term will be included in the license grant set forth in Section 8.03(a) and
subject to the terms contained therein.

 

8.06  New Functionality. 
Vendor shall from time to time offer Customer additional modules to the
Vendor Software that provide new functionality to Strategy ASP as generally
provided to any of its customers. 
Customer acknowledges that such additional modules may not be compatible
with the version of the Vendor
Software used to provide Services to Customer as of the Effective Date.  At Customer’s
option, Customer may, with notice to Vendor, purchase such additional
modules.  In the event that Customer
determines to purchase any additional module, Customer shall so notify Vendor
and the parties shall promptly negotiate, in good faith and under terms no less
favorable than those provided to other similarly situated customers, the terms
pursuant to which such additional module will be provided to and used by
Customer, including (i) the appropriate fees to be paid by Customer for
license and use of such additional module, (ii) the appropriate
adjustments, if any, to the Monthly Service Fee and/or Asset Surveillance License
Fee and (iii) an implementation schedule for loading such additional
module and making any required adjustments to the Customer’s system and/or the
Vendor System configuration to enable Customer’s end users to access and use
the Vendor System.  All additional
modules acquired by Customer during the Term will be included in the license
grant set forth in Section 8.03(a) and subject to the terms
contained therein.

 

9.  INDEMNIFICATION

 

9.01  By
Customer.  Customer
shall indemnify Vendor Group from, and defend Vendor Group against any
liability or expenses arising out of or relating to (a) any amounts
actually due and owing that are the obligations of Customer, including such
amounts identified in Section 4 and Section 5.01
(including amounts owed to IBM) and taxes, interest, and penalties assessed
against Vendor, (b) the inaccuracy or untruthfulness of any representation
or warranty made by Customer pursuant to Section 7, (c) Customer

 

12

 

 

Employment Claims,
(d) any claim by a third party that the Customer Software infringes upon
the proprietary rights of a third party, and (e) any bodily injury
(including death) or tangible property damage resulting from Customer’s acts or
omissions (other than such claims as may be covered by Vendor’s workers’
compensation).  Customer shall be
responsible for any costs and expenses incurred by Vendor in connection with
the enforcement of this Section 9.01.

 

9.02  By
Vendor.  Vendor
shall indemnify Customer Group from, and defend Customer Group against, any
liability or expenses arising out of or relating to (a) any claim by a
third party that (i) the Services, (ii) the Vendor Created Software,
or (iii) the Developed Software infringes upon the proprietary rights of
any third party, (b) any failure to meet the Vendor Service Center
security requirements imposed upon Vendor under this Agreement, (c) any
amounts (including taxes, interest, and penalties) assessed against Customer
which are obligations of Vendor pursuant to this Agreement, (d) the
inaccuracy or untruthfulness of any representation or warranty made by Vendor
pursuant to Section 7, (e) any Vendor Employment Claims, (f) any
bodily injury (including death) or tangible property damage resulting from
Vendor’s acts or omissions (other than such claims as may be covered by
Customer’s workers’ compensation), and (g) any loss of Customer Data
directly attributable to an act or omission of Vendor. Vendor shall be
responsible for any costs and expenses incurred by Customer in connection with
the enforcement of this Section 9.02.

 

9.03  Indemnification
Procedures.  If
any third party makes a claim covered by Section 9.01 or Section 9.02
against an Indemnitee with respect to which such Indemnitee intends to seek
indemnification under this Section 9, such Indemnitee shall give
notice of such claim to the Indemnitor, including a brief description of the
amount and basis therefor, if known. Upon giving such notice, the Indemnitor
shall be obligated to defend such Indemnitee against such claim, and shall be
entitled to assume control of the defense of the claim with counsel chosen by
the Indemnitor, reasonably satisfactory to the Indemnitee. Indemnitee shall
cooperate fully with, and assist, the Indemnitor in its defense against such
claim in all reasonable respects. The Indemnitor shall keep the Indemnitee
fully apprised at all times as to the status of the defense. Notwithstanding
the foregoing, the Indemnitee shall have the right to employ its own separate
counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such Indemnitee; provided, however, that (a) if
the parties agree that it is advantageous to the defense for the Indemnitee to
employ its own counsel or (b) in the reasonable judgment of the
Indemnitee, based upon an opinion of counsel which shall be provided to the
Indemnitor, representation of both the Indemnitor and the Indemnitee would be
inappropriate under applicable standards of professional conduct due to actual
or potential conflicts of interest between them, then reasonable fees and
expenses of the Indemnitee’s counsel shall be at the expense of the Indemnitor,
subject to the  Indemnitor’s reasonable
approval of such counsel. Neither the Indemnitor nor any Indemnitee shall be liable
for any settlement of any action or claim effected without its written
consent.  Notwithstanding the foregoing,
the Indemnitee shall retain, assume, or reassume sole control over, all
expenses relating to, every aspect of the defense that it believes is not the
subject of the indemnification provided for in Section 9.01 or Section 9.02,
as applicable. Until both (i) the Indemnitee receives notice from the
Indemnitor that it will defend; and (ii) the Indemnitor assumes such
defense, the Indemnitee may, at any time after ten days from the date notice of
claim is given to the Indemnitor by the Indemnitee, resist or otherwise defend
the claim or, after consultation with and consent of the Indemnitor, settle or
otherwise compromise or pay the claim. The Indemnitor shall pay all costs of
the Indemnitee arising out of or relating to that defense and any such
settlement, compromise, or payment. The Indemnitee shall keep the Indemnitor
fully apprised at all times as to the status of the defense. Following indemnification
as provided in Section 9, the Indemnitor shall be subrogated to all
rights of the Indemnitee with respect to the matters for which indemnification
has been made.

 

9.04  Exclusive
Remedy.  Indemnification
pursuant to this Section 9 shall be the exclusive remedy for any
claim within the scope of this Section 9.

 

10.  INSURANCE

 

For the Term of this Agreement, Vendor will
carry insurance which will include, at a minimum, the following coverages:

 

 

13

 

 

(i)            Worker’s
Compensation Insurance at the statutory limits in all states of operation;

 

(ii)           Employer’s
Liability coverage of one million ($1,000,000) for each employee for bodily
injury by accident and one million ($1,000,000) each employee for bodily injury
by disease;

 

(iii)          Commercial
General Liability Insurance covering liability arising from premises,
operations, independent contractors, products-completed operations, personal
and advertising injury of three million dollars ($3,000,000). Such coverage
maybe provided through a primary policy or in conjunction with an umbrella or
excess policy;

 

(iv)          Business
Automobile Liability Insurance covering all owned, hired and non-owned vehicles
of three million dollars ($3,000,000) per occurrence, including all statutory
coverage for all states of operation;

 

(v)           Professional/Errors
and Omissions Insurance appropriate to Vendor’s industry providing coverage for
a professional error, omission or act arising out of the scope of services
provided by the contract for a minimum of three million dollars ($3,000,000)
per occurrence; and

 

(vi)          Fidelity/Crime
Insurance including employee dishonesty covering liability against direct and
verifiable losses of money, securities, other property of Customer caused by
theft or forgery by identifiable employees of the vendor acting alone or in
collusion with others for a minimum of one million dollars ($1,000,000).

 

All insurance will be with companies which are
authorized to do business under the laws of New York. All required policies
(excepting Workers Compensation, Employer’s Liability, Fidelity/Crime, and the
Professional/Errors and Omissions coverage) will name Customer as an additional
insured. All insurance policies will contain a complete waiver of subrogation
by the insurer against Customer, and will allow for claims between Customer and
Vendor. Vendor’s coverage will be the primary coverage with respect to all
claims arising from this Agreement. Vendor will pay the premiums for such
insurance and deliver to Customer a certificate of insurance evidencing the
above coverages (preferably using an “ACORD 25” form or the then current
successor form as amended from time to time). Vendor agrees to provide Customer
and its assigns thirty (30) days’ prior written notice before any alteration or
cancellation of such policy. Amounts required by this Agreement are not a
representation of the adequacy of protection of Vendor, nor will it be
considered a release of the Vendor from its respective obligations or
liabilities under the Agreement.

 

11.   ADDITIONAL
PROJECTS & SERVICES

 

Customer may, from
time to time during the Term, request that Vendor perform Additional Services
that are outside the scope of the Services, as then defined.  Within five (5) business days of written
receipt of request, Vendor shall either decline the request or in the first
occurrence of fifteen (15) business days or 
a mutually agreed upon timeframe provide Customer with (a) a
written Statement of Work of the work Vendor anticipates performing in
connection with such Additional Service, as applicable, including delivery date
to Customer accessible test environment, (b) Vendor’s Additional Services
Fees, (c) when appropriate, a description of any software to be developed
or modified by Vendor (the New Application(s))
or hardware to be provided by Vendor in connection with such Additional
Service, (d) when appropriate, the software, hardware, human and other
resources, and run-time requirements necessary to develop and operate any New
Applications, (e) when appropriate, the human resources of Customer that
will be necessary to operate or use the product or services, (f) when
appropriate, a list of any existing applications or hardware included in or to
be used in connection with such Additional Service, and (g) when
appropriate, acceptance test criteria and procedures in respect of any New
Applications or any products or services ((a) through (g) collectively,
an Additional Services Proposal). In
the event Customer elects to have Vendor perform the Additional Service,
Customer shall return the signed Statement of Work provided by Vendor as their
consent to proceed. Vendor shall not begin 

 

 

14

 

 

performing any
Additional Service until the signed Statement of Work has been received.  Phase I of the Statement of Work will be to
provide a fixed cost to Customer for the Additional Service. Customer will then
approve the expenditure prior to Vendor performing Additional Services.

 

12.  FORCE
MAJEURE

 

12.01  Force
Majeure.  Any failure or delay by Customer or Vendor in the performance of
its obligations pursuant to this Agreement shall not be deemed a default of
this Agreement or a ground for termination hereunder (except as provided in
this Section 12.01) if such failure or delay is caused by a Force
Majeure Event, could not have been prevented by reasonable precautions and
cannot reasonably be circumvented by the non-performing party through the use
of alternate sources, work-around plans, or other commercially reasonable means.
Upon the occurrence of a Force Majeure Event, the non-performing party shall be
excused from any further performance of its obligations pursuant to this
Agreement affected by the Force Majeure Event for as long as (a) such
Force Majeure Event continues and (b) such party continues to use
commercially reasonable efforts to recommence performance whenever and to
whatever extent possible without delay. 
The party delayed by a Force Majeure Event shall immediately notify the
other party by telephone (to be confirmed in a notice within ten (10) days
of the inception of such delay) of the occurrence of a Force Majeure Event and
describe in reasonable detail the nature of the Force Majeure Event.  Upon receipt of such notice, performance of
the affected obligations under this Agreement shall be temporarily suspended
for the duration of the Force Majeure Event. 
If the period of nonperformance exceeds thirty (30) days from the
receipt of such notice, the party whose ability to perform has not been so
affected may, by giving written notice, terminate this Agreement.  A delay in delivery due to a Force Majeure
Event shall automatically extend the delivery date for a period equal to the
duration of such Force Majeure Event. 
Any warranty period affected by a Force Majeure Event shall likewise be
extended for a period equal to the duration of such Force Majeure Event.

 

12.02  Allocation
of Resources.  Whenever
a Force Majeure Event or a Disaster causes Vendor to allocate limited resources
between or among Vendor’s customers and affiliates, Customer shall receive at
least the same priority in respect of such allocation as Vendor’s affiliates
and Vendor’s other commercial customers.

 

13.  TERMINATION,
DEFAULT & REMEDIES

 

13.01  Termination
for Convenience.  Customer
may terminate this Agreement in its entirety or in part at any time after the
date that is eighteen (18) months after the Effective Date upon at least six (6) months
prior written notice thereof to Vendor. 
For the avoidance of doubt, no such termination shall be effective prior
to the date that is twenty-four (24) months from the Effective Date.  Such termination shall be without
any penalty or cost to Customer except that Customer will be responsible for
assuming (or causing the assumption of) the licenses of any software that is
then being licensed by Vendor for the sole purpose of providing Services to
Customer as set forth in Schedule 13.01 (the Assumed
Expenses).  Schedule
13.01 sets forth the Assumed Expenses as of the Effective Date and Vendor
will not procure any additional Assumed Expenses without obtaining Customer’s
prior written consent.

 

13.02  Termination
for Default.  If
either party Defaults, the other party may terminate this Agreement upon at
least sixty (60) days notice after the Default. 
Default means any of the
following:

 

(a)  Failure
to Provide the Critical Services.  Any failure by Vendor to provide the Services that
results in a failure of a Critical Service (other than arising from a Force
Majeure Event) that Vendor does not, within thirty (30) days of its receipt of
a notice (which may be given orally but shall be subsequently confirmed in
writing) of the failure of such Critical Service, either (1) cure, or (2) if
such failure cannot be cured within such thirty (30) day period, provide Customer
with a work-around that reinstitutes such Critical Service.  For the avoidance of doubt, the failure to
provide Critical Services includes (i) the failure to provide disaster
recovery in accordance with the terms and conditions of this Agreement; and (ii) includes
failure to provide or maintain:

 

(A)  The SAS
70 Type II annual audit report, and

 

15

 

 

(B)  Provide
remediation of Customer identified risk as required herein.

 

(b)  Payment
Default.  Any
failure by either party to pay any amount due hereunder, if such failure is not
cured within sixty (60) days after notice of such default;

 

(c)  Insolvency,
Etc.  Any
federal or state bankruptcy, insolvency or receivership proceeding or the like
(including out-of-court arrangements involving a party that cannot pay its
debts as they mature) is commenced by or against such party unless, in the case
of an involuntary proceeding, it is dismissed within sixty (60) days; and

 

(d)  Material
Default.  Any
failure by a party to perform any of its material obligations under this
Agreement, if such default is not cured within sixty (60) days after notice is
received by the defaulting party specifying, in reasonable detail, the nature
of the default; provided, however, that the time to cure a
default shall extend for up to sixty (60) additional days if the defaulting
party has promptly commenced to cure the default and continues to use
commercially reasonable efforts to cure such default during the additional
sixty (60)-day period.

 

13.03  Limitation
of Liability.  EXCEPT FOR DAMAGES (a) ARISING UNDER SECTION 8,
(b) PAYABLE IN RESPECT OF A THIRD PARTY INDEMNIFICATION CLAIM UNDER SECTION 9,
(c) ARISING OUT OF A PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR (d) ANY
PERSONAL INJURY OR PROPERTY DAMAGE CAUSED BY AN ACT OR OMISSION OF A PARTY, IN
NO EVENT SHALL EITHER PARTY’S LIABILITY FOR ANY CLAIMS EXCEED THE GREATER OF (1) THE
TOTAL AMOUNT OF FEES RECEIVED BY VENDOR FROM CUSTOMER PURSUANT TO THIS
AGREEMENT DURING THE TWELVE MONTH PERIOD IMMEDIATELY PRECEDING THE
DATE UPON WHICH SUCH CLAIM FIRST AROSE OR (2) $500,000.

 

13.04  Exclusion
of Damages.  EXCEPT FOR DAMAGES (a) ARISING UNDER SECTION 8,
(b) PAYABLE IN RESPECT OF A THIRD PARTY INDEMNIFICATION CLAIM UNDER SECTION 9,
(c) ARISING OUT OF EITHER PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT,
OR (d) ANY PERSONAL INJURY OR PROPERTY DAMAGE CAUSED BY AN ACT OR OMISSION
OF EITHER PARTY, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INCIDENTAL,
INDIRECT, SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR SIMILAR DAMAGES OF ANY
KIND INCLUDING WITHOUT LIMITATION, ANTICIPATED LOSS OF PROFITS, WHETHER SUCH
LIABILITY IS PREDICATED ON CONTRACT, STRICT LIABILITY OR ANY OTHER THEORY AND
IRRESPECTIVE OF WHETHER SUCH PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.

 

14.  EXIT/TRANSITION
SERVICES

 

14.01  Termination
Assistance.   Should this Agreement terminate or expire for
any reason, Vendor
shall,  upon
the written request of Customer which notice shall contain information
sufficient for Vendor to determine the scope of the Termination Assistance
Services required by Customer, perform the Termination Assistance Services for
up to six (6) months following notice and prior to the expiration or
termination of this Agreement (the Termination Assistance
Period).  Upon written
notice by Customer, which notice shall contain information sufficient for
Vendor to determine the scope and duration of the Termination Assistance
Services required by Customer, Vendor will continue to offer Termination
Assistance Services for up to eighteen (18) months following the Termination
Assistance Period.  Termination
Assistance Services provided during the Termination Assistance Period shall be
provided at the Additional Services hourly rate and after the Termination
Assistance Period shall be provided at Vendor’s then-current hourly rates.  For the avoidance of doubt, Customer shall
pay the Monthly Service Fee and Asset Surveillance License
Fee, both during the Termination Assistance Period and after termination of
this Agreement, for each month during which Customer utilizes any portion of
the Transaction Services set forth in Schedule 3.01.

 

14.02  De-conversion
Fees.  Upon the termination of this Agreement for any reason,
if Customer so requests, Vendor will provide to Customer De-conversion Services
including but not limited to translation 

 

16

 

 

of data for
transmittal to Customer.  The Fees for
such De-conversion Services will be at Vendor’s hourly rates for Additional
Services set forth Schedule 5.01(c).

 

14.03  Instructions.  If Customer fails, within ninety (90)
days after termination of this Agreement, to provide any written instructions
to Vendor regarding disposition of Customer Data, Vendor may, without any
liability to Customer, dispose of the Customer Data and provide certification
signed by an officer of Vendor to Customer of the destruction of Customer Data.

 

15.  APPLICABLE
LAW, VENUE

 

THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS TO THE CONTRARY. The parties
irrevocably submit to jurisdiction and further agree that any cause of action
arising under this Agreement may be brought exclusively in the state or federal
courts located in New York, New York. 
Each party in any judicial action or proceeding shall be responsible for
its own costs, including, without limitation, its filing fees, attorneys’ fees,
witness fees, expert fees and travel expenses.

 

16.  GENERAL
PROVISIONS

 

16.01  Assignment and Sublicense. 
Subject to
the following, neither party may, without the other party’s prior written
consent, assign, sublicense, or otherwise transfer this
Agreement or any of its rights or obligations under this Agreement to any third
party.  Notwithstanding the foregoing,
Customer may: (A) assign or sublicense all or any part of its rights and
benefits under this Agreement to Customer’s parent company or an affiliate
controlled by Customer or its parent company or (B) assign or sublicense
its rights and benefits under this Agreement to any third party who prior to or
concurrently with such assignment or sublicense acquires, in any manner, all or
any part of the assets used by Customer in connection with the Servicing
Business, in which case Customer shall provide written notice of such
assignment to Vendor within a reasonable time after such assignment, or (C) assign
or sublicense all or any part of its rights and benefits under this Agreement
to any third party who Customer may elect to engage in order to provide
Servicing in connection with Customer’s Servicing Business, and who agrees in
writing to be bound by the terms and conditions of this Agreement.

 

(a)           Any
sublicense pursuant to this Section 16.01 shall not itself be
sublicensable.

 

(b)                                 Any
attempt or any purported act or attempted act to do any of the things
prohibited by this Section 16.01 will be void ab initio
and of no force and effect.

 

(c)                                 This
Agreement will inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties.

 

16.02  Notices.  Except as otherwise specified in this
Agreement, all notices, requests, consents, approvals, and other communications
required or permitted under this Agreement shall be in writing and shall be
sent by fax to the number specified below and by registered express mail on the
date such notice is transmitted by fax to the address specified below.  All such notices shall be effective on the
first day that a complete copy of such notice is received by the recipient,
unless such day is a weekend or federal holiday, in which case such notice
shall be effective on the first working day after receipt of a complete copy of
such notice by recipient.

 

	
  In the case of
  Customer:

  
	
   

  
	
  Capmark Finance
  Inc.

  
	
  118 Welsh Road

  
	
  Horsham, PA
  19044

  
	
  Attention:

  	
  Michael Lipson

  
	
  Telephone:

  	
  215-328-3866

  

 

 

17

 

 

	
  Fax:

  	
  215-328-3719

  
	
  With a copy to:

  
	
  Capmark Finance
  Inc.

  
	
  116 Welsh Road

  
	
  Horsham, PA 19044

  
	
  Attention:

  	
  General Counsel

  
	
  Telephone:

  	
  215-328-3674

  
	
  Fax:

  	
  215-328-0438

  
	
   

  	
   

  
	
  In the case of Vendor:

  
	
   

  	
   

  
	
  EnableUs, Inc.

  
	
  8 Suburban Park Drive

  
	
  Billerica MA 01821-3903

  
	
  Telephone:

  	
  978-439-9000

  
	
  Fax:

  	
  978-439-9068

  
	
  Attention:

  	
  Frank H.
  McCracken, Jr.

  

 

Either party may
change its address or fax number for notification purposes by giving the other
party notice of the new address or fax number and the date upon which such
change will become effective.

 

16.03  Counterparts.  This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one single
agreement between the parties.

 

16.04  Construction &
Interpretation of Documents.

 

Captions of the sections
and subsections of this Agreement are for reference purposes only and do not
constitute terms or conditions of this Agreement, and shall not limit or affect
the terms and conditions hereof.  Words
such as herein, hereinafter,
hereof and hereunder
refer to this Agreement as a whole and not merely to a  section or paragraph in which such words
appear, unless the context otherwise requires. 
The singular shall include the plural and each masculine, feminine and
neuter reference shall include and refer also to the others, unless the context
otherwise requires.  Whenever the words include, includes or including are used in this Agreement, they shall be deemed
to be followed by the words without limitation.

 

16.05  Relationship.  The performance by Vendor of its duties
and obligations under this Agreement shall be that of an independent contractor
and nothing contained in this Agreement, except for the limited agency
expressly provided for herein, shall create or imply an agency relationship
between Customer and Vendor, nor shall this Agreement be deemed to constitute a
joint venture or partnership between Customer and Vendor. Vendor agrees and
represents that it is an independent contractor and its personnel are not
Customer’s agents or employees for federal tax purposes, and are not entitled
to any Customer employee benefits. Vendor assumes sole and full responsibility
for its acts and the acts of its personnel. Vendor and its personnel have no
authority to make commitments or enter into contracts on behalf of, bind, or
otherwise obligate Customer in any manner whatsoever, except for the limited
agency expressly provided for herein.

 

16.06  Consents,
Approvals and Requests.  Unless
otherwise specified in this Agreement, all consents and approvals, acceptances,
or similar actions to be given by either party under this Agreement shall not
be unreasonably withheld, conditioned or delayed.

 

16.07  Severability.  If any provision of this
Agreement (other than a term or provision relating to any payment obligation)
is held by a court of competent jurisdiction to be contrary to law, then the
remaining provisions of this Agreement or the application of such provision to
persons or circumstances other than those as to which it is invalid or
unenforceable shall not be affected thereby, and each such provision of this
Agreement shall be valid and enforceable to the extent permitted by law.

 

18

 

 

16.08  Waiver.  No delay or omission by either party to
exercise any right or power it has under this Agreement shall impair or be
construed as a waiver of such right or power. A waiver by any party of any 

 

breach or covenant
shall not be construed to be a waiver of any succeeding breach or any other
covenant. All waivers must be in writing and signed by the party waiving its
rights.

 

16.09  Entire Agreement.  This
Agreement, together with the schedules and exhibits referenced herein, which
are hereby incorporated by reference into this Agreement, is the entire
agreement between the parties with respect to its subject matter and supersedes
any prior agreements, representations, understandings, or agreements between
the parties relative to such subject matter. 
The parties hereby acknowledge that (a) the MFS Updates Agreements
dated May 10, 1991 between Customer and Vendor and the System Engineering
Services Agreement between Vendor and Customer that is referred to in the
Pre-Existing License have both expired without breach thereof by Vendor and
without any surviving obligations; and (b) the Pre-Existing License is the
only agreement between Vendor and Customer as of immediately prior to the
Effective Date pursuant to which Customer accesses or uses the Vendor Software
or receives Services, and Vendor is not in breach of the Pre-Existing
License.  Each party hereby waives any
claim or action against the other party based on asserting any breach of the
MFS Updates Agreements, System Engineering Services Agreement or Pre-Existing
License.

 

16.10  Amendments.  No amendment to, or change, waiver, or
discharge of, any provision of this Agreement shall be valid unless in writing
and signed by an authorized representative of the party against which such
amendment, change, waiver, or discharge is sought to be enforced.

 

16.11  Survival.  The following Sections of this Agreement
shall survive the expiration or termination of this Agreement for any
reason:  Section 1, Section 7.03,
Section 8.01, Section 8.02, Section 8.03, Section 9,
Section 13.03, Section 13.04, Section 14, Section 15
and Section 16.

 

16.12  Third
Party Beneficiaries.  Each
party intends that this Agreement shall not benefit, or create any right or
cause of action in or on behalf of, any person or entity other than Customer or
Vendor.

 

16.13  Acknowledgment.  Customer and Vendor each acknowledge that
the limitations and exclusions contained in this Agreement have been the
subject of active and complete negotiation between the parties and represent
the parties’ agreement based upon the level of risk to Customer and Vendor
associated with their respective obligations under this Agreement and the
payments to be made to Vendor and credits to be issued to Customer pursuant to
this Agreement. The parties agree that the terms and conditions of this
Agreement shall not be construed in favor of or against any party by reason of
the extent to which any party or its professional advisors participated in the
preparation of this Agreement.

 

16.14  Covenant
of Further Assurances.  Customer
and Vendor covenant and agree that, subsequent to the execution and delivery of
this Agreement and without any additional consideration, each of Customer and
Vendor will execute and deliver any further legal instruments and perform any
acts which are or may become reasonably necessary to effectuate this Agreement.

 

16.15  Compliance
with Laws.  Each
party is in compliance, and during the Term, will continue to comply with all
laws, rules and regulations of any federal, state or governmental body,
any subdivision, agency, commission or authority thereof, domestic or foreign,
applicable to its business and to its activities relating to this Agreement.

 

16.16  Solicitation.  Section 6.12
of the Stock Purchase Agreement is incorporated herein by reference as fully
and completely as if set forth herein in full.

 

The
remainder of this page is intentionally left blank.

 

 

19

 

 

 

IN WITNESS
WHEREOF, each of Customer and Vendor has caused this Agreement to be executed
and delivered by its duly authorized representative.

 

	
   

  	
  ENABLEUS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
   

  
	
   

  	
  Name

  
	
   

  	
   

  
	
   

  	
  Title

  
	
   

  	
   

  
	
   

  	
  Date

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAPMARK FINANCE INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
   

  
	
   

  	
  Name

  
	
   

  	
   

  
	
   

  	
  Title

  
	
   

  	
   

  
	
   

  	
  Date

  

 

 

 

20

 

EnableUs, Inc.

 

 

 

SCHEDULE 1 - DEFINITIONS

 

For purposes of
the Agreement to which this Schedule is attached, the following defined terms
shall have the meanings specified below:

 

Additional
Services has
the meaning set forth in Section 3.02.

 

Additional
Services Fees
means the fees for Additional Services as set forth in Schedule 5.01(c).

 

Additional
Services Proposal has the meaning set forth in Section 11.

 

Agreement has the meaning set forth in the first
paragraph of this Agreement.

 

AICPA means the American Institute of
Certified Public Accountants.

 

Application
Support has
the meaning set forth in Exhibit A; Section 1.6.

 

ASP
Operational has
the meaning set forth in Exhibit A; Section 1.5.

 

Asset
Surveillance License Fee has the meaning set forth on Schedule 5.01(b).

 

Assumed
Expenses  has the
meaning set forth in Section 13.01.

 

Buyer has the meaning set forth in the recitals hereto.

 

Capmark-Only
Servers has the meaning set forth in Section 5.01(a).

 

Change
Control Procedures has the meaning set forth in Section 6.05.

 

Confidential
Information
has the meaning set forth in Section 8.01.

 

Critical
Service is a
process or system that supports the operation or accessibility to Strategy ASP
or a major module, as well as insuring the integrity of Customer Data.  A Severity Level 1 (Critical Service) will be
assigned to a help desk call that reports the inability to use Strategy ASP,
the unavailability of a major module, or continued use of Strategy ASP would
result in data corruption.

 

Customer has the meaning set forth in the first
paragraph of this Agreement.

 

Customer
Data means
all data and information submitted to Vendor by or on behalf of Customer for
processing in connection with the Services and all data generated by Vendor
Software from data and information submitted by or on behalf of Customer.

 

Customer
Group means
Customer, its subsidiaries, parent corporations, affiliates, officers,
directors, independent contractors, partners, shareholders, employees, agents,
customers and successors and permitted assigns.

 

Customer
Software
means any software or applications developed by or on behalf of Customer (by
parties other than Vendor) for use in connection with Strategy ASP or Asset
Surveillance after the Effective Date.

 

Customer
Third Party Services has the meaning set forth in Section 4.03.

 

De-conversion
Services
means data conversion and preparation services requested by Customer to move to
another system.

 

 

 

1

 

 

Dedicated
Equipment & Software has the meaning set forth in Section 4.02.

 

Default
has the
meaning set forth in Section 13.02.

 

Developed
Software
means any software and related documentation developed after the Effective Date
pursuant to this Agreement by Vendor, its contractors or agents, including any
software developed specifically for Customer in the course of any Services and
any New Applications. Developed Software may be comprised of Vendor Proprietary
Software or Third Party Software or both.

 

Development
Fees at Risk has
the meaning set forth in Exhibit A; Section 1.2.8.

 

Disaster means a Force Majeure Event or act of
God rendering Vendor unable to conduct business via the then operational Vendor
Service Center.

 

Disaster
Recovery Center
means such other location where Vendor will do business in the event of a
Disaster.

 

Disaster
Recovery Platform has the meaning set forth in Section 3.03(i).

 

Documentation means all documentation, materials, work
papers, configurations, manuals, and other work product in written or
electronic format, (a) relating to the operation, maintenance,
capabilities or functioning of the Vendor Software or Vendor System or (b) otherwise
used by Vendor, its subcontractors or agents in connection with providing the
Services, other than the Customer Data and information produced using the
Customer Data.

 

Effective
Date has the
meaning set forth in the recitals hereto.

 

Electronic Incident  means any
unauthorized action by a known or unknown third party which, whether
successfully completed, attempted or threatened, should reasonably be
considered one of the following with regard to the Customer site, Customer
technology, Services, Vendor System, Vendor Service Center, or Strategy ASP: an
attack, penetration, denial of service, disclosure of confidential customer or
other sensitive information, misuse of Vendor System access, unauthorized
access or intrusion (hacking), virus intrusion, scan of Vendor’s systems or
networks, or any other activity that could affect Customer Data.  For purposes of this definition, “Vendor”
shall include the systems, networks, technology, content or web sites of third
party vendors used by Vendor for the provision of Services but shall not
include Customer’s network.

 

Employment
Claims means
as to either party, (i) any violation of Federal, state, or other laws or
regulations for the protection of persons or members of a protected class or
category of persons by such party or its employees, subcontractors or agents, (ii) sexual
discrimination or harassment by such party, its employees, subcontractors or
agents, (iii) work-related injury except as may be covered by the other
party’s workers’ compensation, or death caused by such party, its employees,
subcontractors, or agents, (iv) vested employee benefits of any kind not
expressly assumed by Vendor, and (v) any representations, oral or written,
made by such party to its employees, subcontractors or agents.  For the avoidance of doubt, neither party
shall be deemed to be a subcontractor or agent of the other party for the
purposes of the definition of “Employment Claims.”

 

Excused
Downtime has
the meaning set forth in Exhibit A; Section 1.2.5.

 

Fees  have the meaning set forth in Section 5.01.

 

Force
Majeure Event
means any failure or delay caused, directly or indirectly, by fire, flood,
earthquake, elements of nature or acts of God, acts of war, terrorism, riots,
civil disorders, rebellions or revolutions in the United States, strikes,
lockouts, or labor difficulties, court order, or any other similar cause beyond
the reasonable control of such party and without the fault or negligence of
such party.

 

 

 

2

 

 

IBM has the meaning set forth
in Section 5.01(a).

 

IBM Amount has the meaning set forth
in Section 5.01(a)

 

IBM Term Lease has the meaning set forth in
Section 5.01(a).

 

Indemnitor means as to claims under Section 9.01,
Customer, and as to claims under Section 9.02, Vendor.

 

Indemnitee means as to claims under Section 9.01,
Vendor, and as to claims under Section 9.02, Customer.

 

Interest
Rate has the meaning set forth in Section 5.03.

 

Initial
Term has the
meaning set forth in Section 2.01.

 

Monthly
Service Fee has
the meaning set forth in Schedule 5.01(a).

 

New
Application(s) has the meaning set forth in Section 11.

 

Performance
Standards
mean those standards attributable to Vendor’s provision of Services as set
forth in Exhibit A.

 

Planned
Downtime has
the meaning set forth in Exhibit A; Section 1.2.4.

 

Pre-Existing
License has
the meaning set forth in the recitals hereto.

 

Prime Time Vendor System Availability has the meaning set forth in Exhibit A;
Section 1.2.1.

 

Production
Fees at Risk
has the meaning set forth in Exhibit A; Section 1.2.7.

 

Remediation Plan  has the meaning set forth in Section 3.03(a).

 

Remote User(s) means Customer and third parties accessing Services on
behalf of Customer who do not reside at Customer’s offices at 116 Welsh Road,
Horsham, PA 19044.

 

Renewal
Term(s) has
the meaning set forth in Section 2.02.

 

Reviews have the meaning set forth in Section 3.03(a).

 

Scheduled
Maintenance Downtime has the meaning set forth in Exhibit A; Section 1.2.2.

 

Scheduled
Downtime during Prime Time Vendor System Availability has the meaning set forth in Exhibit A;
Section 1.2.3.

 

Seller has the meaning set forth in the
recitals hereto.

 

Services have the meaning set forth in Section 3.01.

 

Service
Failure has
the meaning set forth in Exhibit A; Section 1.3.1.

 

Service
Level has the
meaning set forth in Section 5.02.

 

Service
Level Credit has
the meaning set forth in Section 5.02.

 

 

 

3

 

 

Servicing  has the meaning set forth in Section 8.03(a).

 

Servicing
Business has
the meaning set forth in Section 8.03(a).

 

Severity
Levels and Resolution has the meaning set forth in Exhibit A; Section 1.2.6.

 

Strategy
ASP means the
proprietary Strategy CS ASP software solution hosted and maintained by Vendor.

 

Statement
of Work means
any statement of work executed by the parties under this Agreement for the
provision of Additional Services.

 

Stock
Purchase Agreement  has the
meaning set forth in the recitals hereto.

 

Term has the meaning set forth in Section 2.02.

 

Termination
Assistance Period has the meaning set forth in Section 14.01.

 

Termination
Assistance Services means the cooperation of Vendor with Customer in effecting the orderly
transfer of the Services to a third party or the resumption of the Services by
Customer upon request by Customer.

 

Third
Party Software
means all software and related documentation that is licensed or leased from a
third party by Vendor (a) prior to the Effective Date which will be used
in connection with the Services or (b) after the Effective Date used in
connection with the Services, in each case including all updates, upgrades and
replacement versions.  The Third Party
Software in use by Vendor as of the Effective Date is set forth on Exhibit E.

 

Upgrade has the meaning set forth in Section 8.05.

 

Vendor has the meaning set forth in the first
paragraph of this Agreement.

 

Vendor
Change(s) means
all changes to the Vendor System or Vendor Software that would alter the
functionality or technical environment of the Services.

 

Vendor
Created Software
means any software and related documentation used in connection with the
Services which (a) Vendor creates or acquires ownership of after the Effective
Date; or (b) that is developed by or on behalf of Vendor after the
Effective Date, in each case including all updates, additional modules,
enhancements and replacement versions thereto.

 

Vendor
Group means
Vendor, its subsidiaries, parent corporations, affiliates, officers, directors,
independent contractors, partners, shareholders, employees, agents, customers
and successors and permitted assigns.

 

Vendor
Proprietary Software  means (a) Strategy
ASP, Asset Surveillance Upgrades, and any other software and related
documentation owned by Vendor prior to the Effective Date, and (b) any
Vendor Created Software, including all updates, additional modules,
enhancements, modifications and replacement versions thereto.

 

Vendor
Service Center
means the service location(s) owned, leased, or under the control of
Vendor, presently at 8 Suburban Park Drive, Billerica, MA  01821-3903; provided, however,  that during any Disaster, the Disaster Recovery Center
shall be used as a Vendor Service Center.

 

Vendor
Strategy ASP Representative has the meaning set forth in Section 6.01.

 

Vendor
Software  means
the Vendor Proprietary Software and the Third Party Software.

 

 

 

4

 

 

Vendor
System  means the computer system(s) and
networks operating at the Vendor Service Center through which Customer inputs
Customer Data and exchanges information to facilitate delivery of the Services.

 

Wachovia has the meaning set forth in Section 8.02(c).

 

 

 

 

 

 

 

5

 

 

SCHEDULE 3.01 - SERVICES

 

(1) TRANSACTION SERVICES

 

(A) Strategy ASP Related Services

Basic Strategy ASP Transaction Services include the
following services:

(1)          Operation of the AS/400 Services

(a)          Security

(i)             AS/400 Security - (Customer is responsible for AS/400
security model)

(ii)          Creation of User Profile as requested by Customer

(b)         Device Creation and assignment

(c)          Answering system messages on AS/400

(d)         Error message handling and assistance

(e)          Installing software releases (at no additional charge other
than as set forth in Sections 8.05 and 8.06)

(f)            Installing bug fixes

(g)         Creation of test environments

(2)          Vendor System Functionality

(a)          Proper logon ability

(b)         Menu navigation

(c)          Data input

(d)         Report generation

(e)          Enable customer to print all reports, documents, bills,
notices, statements, etc.

(f)            Query

(g)         Screen access

(3)          Perform Backup Archiving and Purge as defined in Exhibit B

(4)          Provide Disaster Recovery services as defined in Exhibit D

 

(B) Asset Surveillance Related Services

Basic Asset Surveillance Transaction Services include the
following services:

(1)          Operation of the ASUR Servers

(a)          Security

(i)             Security — (Customer is responsible for AS/400 security
model)

(b)         Answering system messages

(c)          Error message handling and assistance

(d)         Installing software releases (at no additional charge other
than as set forth in Sections 8.05 and 8.06)

(e)          Installing bug fixes

(f)            Creation of test environments

(2)          Vendor System Functionality

(a)          Proper logon ability

(b)         Menu navigation

(c)          Data input

(d)         Report generation

(e)          Screen access

 

(3)          Provide Disaster Recovery services as defined in Exhibit D

 

(C) Maintenance and Support Services

1)             Requirements

Vendor will
provide the following Maintenance and Support Services:

a)              Assignment of resources to Customer
account

b)             Upgrades (as defined in Section 8.05)

 

 

 

6

 

 

(1)   Vendor will provide Customer and install
Upgrades in accordance with Section 8.05.

(2)   Vendor will assist with implementation of
Upgrades in accordance with Section 8.05.

c)              Test environments

Vendor will
establish test environments as requested by Customer in accordance with Section 8.05.

d)             Recovery from Vendor System
Unavailability

Vendor will
perform tasks necessary to resume normal system operations of the Vendor System
following any unscheduled downtime.

 

2)             Other Benefits

a)              Access to ongoing education classes

Vendor offers a
variety of education classes offered on site or at our headquarters in
Billerica to assist you in getting the most out of the Vendor System.  These classes are offered on a per attendee
basis (for a fee) and are scheduled periodically through out the year.  Complete listings of our education offerings
are available upon request.

b)             Bulletins and Newsletters

Periodic bulletins
and newsletters keep users informed of Upgrade issues, upcoming events and
future Upgrades.

c)              Annual Vendor User Conference

Vendor users may
attend an annual meeting in October (for a fee) to view the latest changes
in the Vendor Software as well as the opportunity to meet with other users to
discuss industry trends and future requirements.

d)             Vendor Advisory Council

Customer will be
asked to participate in the “Vendor Advisory Council.”  This user-founded group is a valuable tool to
help ascertain the needs of the client base. 
The group is regionally divided and each region meets quarterly to
discuss all aspects of servicing loans using Vendor Software.  Regional representatives meet quarterly with
Vendor representatives to keep Vendor informed on the needs and concerns of the
client base.  Actively involved in the
prioritization of enhancements, the Vendor Advisory Council allows users to
actively steer the direction of the Vendor Software.

 

 

 

 

 

7

 

 

SCHEDULE 4.02 -
DEDICATED EQUIPMENT AND SOFTWARE

 

1)              Customer Communication Hardware:

a)            CISCO
Router (IP only)

b)            T-1
Line  (if
Customer determines that such is required)

c)              Appropriate cables

 

2)              Customer Communication Lines:

a)              Appropriate
Circuit provisioning as determined by Customer

b)             Hardware
Requirements:

(1)          Pentium Based Machine or better/newer

(2)          1 GHz Processor or greater (recommended)

(3)          256 MB RAM or higher (recommended)

(4)          350 MB Disk Space Available (only if
doing a Customer Based Install)

c)              Software
Requirements:

(1)          Windows 95, 98, 2000 or XP

(2)          Windows NT 4.0 or higher,

(3)          Client Access 95/NT, V3R2M0 (with Service
Pack SF51617 or higher)

(4)          A valid Client Access ODBC Connection

(5)          TCP/IP

(6)          STRATEGY CS Release 1.00 or higher

 

3)              Disaster Recovery Application Server for
Asset Surveillance

 

 

 

 

 

 

8

 

 

SCHEDULE 5.01 - FEES

 

(a)           Monthly Service Fee.

 

Subject to the Service Level
Credits described in Section 5.02, on a monthly basis in arrears,
Customer will pay to Vendor the monthly fee of one hundred thousand dollars
($100,000) (the Monthly Service Fee).

 

(b)           Asset
Surveillance License Fee

 

Subject to the Service
Level Credits described in Section 5.02, on a monthly basis in
arrears, Customer will pay to Vendor the monthly license fee of five thousand
eight hundred and thirty three dollars ($5,833) for the use and support of the “Asset
Surveillance” software module (the Asset Surveillance License
Fee).

 

(c)           Additional Service Fees:

 

Customer shall pay
any Additional Services Fees for Additional Services requested by Customer at
the following rates:

 

(1)   Consultation Fees:                                               $150/hour

(2)   Programming Fees:                                              $150/hour

 

 

 

 

 

9

 

 

SCHEDULE 13.01 - ASSUMED
EXPENSES

 

Software Licenses:

 

	
  Software Product (Vendor)

  	
   

  	
  Renewal Period/

  Next Expiration

  	
   

  	
  Cost Last Renewal

  	
   

  
	
  Mimix
  (Lakeview)

  	
   

  	
  2 years/ 10/7/2007

  	
   

  	
  $

  	
  79,800.00

  	
   

  
	
  DataMirror

  	
   

  	
  1 Year/ 6/29/2007

  	
   

  	
  $

  	
  52,853.05

  	
   

  
	
  MPlus & StandGuard (Byteware)

  	
   

  	
  1 Year/ 4/30/2007

  	
   

  	
  $

  	
  3,677.00

  	
   

  
	
  SOQ (WRSI)

  	
   

  	
  1 Year/ 9/30/2007

  	
   

  	
  $

  	
  325.00

  	
   

  

 

 

 

 

 

 

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}]]