Document:

Exhibit 10.17

AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

BY AND AMONG

CATHAY BANK

AND

SILICON STORAGE
TECHNOLOGY, INC.

a
California corporation,

SST INTERNATIONAL LTD,

a
cayman islands corporation,

SST RG LLC,

a
delaware limited liability company,

AND

SST COMMUNICATIONS CORP.,

a
delaware corporation

DATED
AS OF AUGUST 11, 2006

 

TABLE OF CONTENTS

 

	
  

  	
   

  	
   

  	
  Page

  
	
  1.

  	
  Accounting And Other Terms

  	
   

  	
  1

  
	
  2.

  	
  Loan And Terms Of Payment

  	
   

  	
  1

  
	
   

  	
  2.1

  	
   

  	
  Promise to Pay

  	
   

  	
  1

  
	
   

  	
  2.2

  	
   

  	
  Overadvances

  	
   

  	
  2

  
	
   

  	
  2.3

  	
   

  	
  Interest Rate, Payments

  	
   

  	
  2

  
	
   

  	
  2.4

  	
   

  	
  Fees

  	
   

  	
  2

  
	
  3.

  	
  Conditions Of Loans

  	
   

  	
  3

  
	
   

  	
  3.1

  	
   

  	
  Conditions Precedent to Initial Credit Extension

  	
   

  	
  3

  
	
   

  	
  3.2

  	
   

  	
  Conditions Precedent to all Credit Extensions

  	
   

  	
  3

  
	
  4.

  	
  Creation Of Security Interest

  	
   

  	
  3

  
	
   

  	
  4.1

  	
   

  	
  Grant of Security Interest

  	
   

  	
  3

  
	
  5.

  	
  Representations And Warranties

  	
   

  	
  4

  
	
   

  	
  5.1

  	
   

  	
  Due Organization and Authorization

  	
   

  	
  4

  
	
   

  	
  5.2

  	
   

  	
  Collateral

  	
   

  	
  4

  
	
   

  	
  5.3

  	
   

  	
  Litigation

  	
   

  	
  4

  
	
   

  	
  5.4

  	
   

  	
  No Material Adverse Change in Financial Statements

  	
   

  	
  4

  
	
   

  	
  5.5

  	
   

  	
  Solvency

  	
   

  	
  4

  
	
   

  	
  5.6

  	
   

  	
  Regulatory Compliance

  	
   

  	
  4

  
	
   

  	
  5.7

  	
   

  	
  Subsidiaries

  	
   

  	
  5

  
	
   

  	
  5.8

  	
   

  	
  Full Disclosure

  	
   

  	
  5

  
	
  6.

  	
  Affirmative Covenants

  	
   

  	
  5

  
	
   

  	
  6.1

  	
   

  	
  Government Compliance

  	
   

  	
  5

  
	
   

  	
  6.2

  	
   

  	
  Financial Statements, Reports, Certificates, Audits

  	
   

  	
  5

  
	
   

  	
  6.3

  	
   

  	
  Inventory; Returns

  	
   

  	
  6

  
	
   

  	
  6.4

  	
   

  	
  Taxes

  	
   

  	
  6

  
	
   

  	
  6.5

  	
   

  	
  Insurance

  	
   

  	
  6

  
	
   

  	
  6.6

  	
   

  	
  Primary Accounts

  	
   

  	
  6

  
	
   

  	
  6.7

  	
   

  	
  Financial Covenants

  	
   

  	
  6

  
	
   

  	
  6.8

  	
   

  	
  Further Assurances

  	
   

  	
  7

  
	
  7.

  	
  Negative Covenants

  	
   

  	
  7

  
	
   

  	
  7.1

  	
   

  	
  Dispositions

  	
   

  	
  7

  
	
   

  	
  7.2

  	
   

  	
  Changes in Business, Ownership, Management or
  Business Locations

  	
   

  	
  7

  
	
   

  	
  7.3

  	
   

  	
  Mergers or Acquisitions

  	
   

  	
  7

  
	
   

  	
  7.4

  	
   

  	
  Indebtedness

  	
   

  	
  7

  
	
   

  	
  7.5

  	
   

  	
  Encumbrance

  	
   

  	
  7

  
	
   

  	
  7.6

  	
   

  	
  Distributions; Investments

  	
   

  	
  7

  
	
   

  	
  7.7

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  7

  
	
   

  	
  7.8

  	
   

  	
  Subordinated Debt

  	
   

  	
  8

  
	
   

  	
  7.9

  	
   

  	
  Compliance

  	
   

  	
  8

  

 

 i
 

 

 

	
  8.

  	
  Events Of Default

  	
   

  	
  8

  
	
   

  	
  8.1

  	
   

  	
  Payment Default

  	
   

  	
  8

  
	
   

  	
  8.2

  	
   

  	
  Covenant Default

  	
   

  	
  8

  
	
   

  	
  8.3

  	
   

  	
  Material Adverse Change

  	
   

  	
  8

  
	
   

  	
  8.4

  	
   

  	
  Attachment

  	
   

  	
  8

  
	
   

  	
  8.5

  	
   

  	
  Insolvency

  	
   

  	
  9

  
	
   

  	
  8.6

  	
   

  	
  Other Agreements

  	
   

  	
  9

  
	
   

  	
  8.7

  	
   

  	
  Judgments

  	
   

  	
  9

  
	
   

  	
  8.8

  	
   

  	
  Misrepresentations

  	
   

  	
  9

  
	
  9.

  	
  Bank’s Rights And Remedies

  	
   

  	
  9

  
	
   

  	
  9.1

  	
   

  	
  Rights and Remedies

  	
   

  	
  9

  
	
   

  	
  9.2

  	
   

  	
  Power of Attorney

  	
   

  	
  10

  
	
   

  	
  9.3

  	
   

  	
  Accounts Collection

  	
   

  	
  10

  
	
   

  	
  9.4

  	
   

  	
  Bank Expenses

  	
   

  	
  10

  
	
   

  	
  9.5

  	
   

  	
  Bank’s Liability for Collateral

  	
   

  	
  10

  
	
   

  	
  9.6

  	
   

  	
  Remedies Cumulative

  	
   

  	
  11

  
	
   

  	
  9.7

  	
   

  	
  Demand Waiver

  	
   

  	
  11

  
	
  10.

  	
  Notices

  	
   

  	
  11

  
	
  11.

  	
  Choice Of Law , Venue And Jury Trial Waiver

  	
   

  	
  11

  
	
  12.

  	
  General Provisions

  	
   

  	
  11

  
	
   

  	
  12.1

  	
   

  	
  Successors and Assigns

  	
   

  	
  11

  
	
   

  	
  12.2

  	
   

  	
  Indemnification

  	
   

  	
  11

  
	
   

  	
  12.3

  	
   

  	
  Time of Essence

  	
   

  	
  12

  
	
   

  	
  12.4

  	
   

  	
  Severability of Provision

  	
   

  	
  12

  
	
   

  	
  12.5

  	
   

  	
  Amendments in Writing, Integration

  	
   

  	
  12

  
	
   

  	
  12.6

  	
   

  	
  Counterparts

  	
   

  	
  12

  
	
   

  	
  12.7

  	
   

  	
  Survival

  	
   

  	
  12

  
	
   

  	
  12.8

  	
   

  	
  Confidentiality

  	
   

  	
  12

  
	
   

  	
  12.9

  	
   

  	
  Attorneys’ Fees, Costs and Expenses

  	
   

  	
  12

  
	
  13.

  	
  Definitions

  	
   

  	
  12

  

 

 ii

 

AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

This Amended and Restated Loan and Security Agreement
(this “Agreement”) is made and entered into as of August 11, 2006, by and
between CATHAY BANK (“Bank”), and SILICON STORAGE TECHNOLOGY, INC., a California
corporation, SST INTERNATIONAL LTD, SST RG, LLC, and SST COMMUNICATIONS
CORP.  (Collectively “Borrower”).

RECITALS

A.            Borrower
wishes to obtain credit from Bank in the amount of up to Forty Million Dollars
($40,000,000), with a sublimit of a maximum of $8,000,000 of such $40,000,000
to be extended to SST China Ltd.

B.            Subject
to the representations and warranties of Borrower herein and upon the terms and
conditions set forth in this Agreement, Bank is willing to extend credit to
Borrower.

AGREEMENT

NOW THEREFORE, in consideration of the foregoing
recitals and the terms and conditions and agreements contained herein, the
parties hereby agree as follows:

1.             Accounting And Other Terms.

Accounting terms not defined in this Agreement will be
construed following GAAP. Calculations and determinations must be made
following GAAP.  The term “financial
statements” includes the notes and schedules. 
The terms “including” and “includes” always mean “including (or
includes) without limitation,” in this or any Loan Document.

2.             Loan And Terms Of Payment

2.1           Promise to Pay.  Borrower promises to pay Bank the unpaid
principal amount of all Credit Extensions and interest on the unpaid principal
amount of the Credit Extensions.

2.1.1        Revolving Advances.

(a)           Bank will make Advances not exceeding
(i) the lesser of (A) the amount of the Revolving Line; (B) the Borrowing Base
(however, no Borrowing Base is needed if borrowing is less than $20,000,000).
Amounts borrowed under this Section may be repaid and reborrowed during the term
of this Agreement.

(b)           To obtain an Advance, Borrower must
notify Bank by facsimile or telephone by 11:00 a.m. Pacific time on the
Business Day the Advance is to be made if the advance is to be wired out of the
Bank and by 3:00 p.m. Pacific time for disbursement to an account within Cathay
Bank.  Borrower must promptly confirm the
notification by delivering to

 1
 

 

 

Bank the Payment/Advance Form attached as Exhibit
B.  Bank will credit Advances to Borrower’s
deposit account.  Bank may make Advances
under this Agreement based on instructions from a Responsible Officer or his or
her designee or without instructions if the Advances are necessary to meet
Obligations which have become due.  Bank
may rely on any telephone notice given by a person whom Bank believes is a
Responsible Officer or designee. Borrower will indemnify Bank for any loss Bank
suffers due to such reliance.

(c)           The Revolving Line terminates on the
Revolving Maturity Date, when all Advances and interest accrued are immediately
payable.

(d)           Bank’s obligation to lend the
undisbursed portion of the Obligations will terminate if, in Bank’s sole
discretion, there has been a material adverse change in the general affairs,
management, results of operation, condition (financial or otherwise) or the
prospect of repayment of the Obligations, or there has been any material
adverse deviation by Borrower from the most recent business plan of Borrower
presented to and accepted by Bank prior to the execution of this Agreement.

2.2           Overadvances.  If Borrower’s Obligations under Section
2.1.1, exceed the lesser of either (i) the Revolving Line or (ii) the Borrowing
Base, Borrower must immediately pay Bank the excess.

2.3           Interest Rate, Payments.

(a)           Interest Rate.  Advances accrue interest on the outstanding
principal balance at a per annum rate of 1 percentage point below the Prime
Rate as published in the Wall Street Journal’s West Coast Edition (and if the
Wall Street Journal is not published, as published in any other reputable
financial publication), floating daily. 
After an Event of Default, as defined in Section 8, Obligations accrue
interest at 5 percent above the Prime Rate effective immediately before the
Event of Default. The interest rate increases or decreases when the Prime Rate
changes.  Interest is computed on a 360
day year for the actual number of days elapsed.

(b)           Payments.  Interest due on the Revolving Line is payable
on the 25th of each month.  Bank may
debit any of Borrower’s deposit accounts including Account Number 12016209 for
principal and interest payments owing or any amounts Borrower owes Bank.  Bank will promptly notify Borrower when it
debits Borrower’s accounts.  These debits
are not a set-off.  Payments received
after 11:00 a.m. Pacific time are considered received at the opening of business
on the next Business Day.  When a payment
is due on a day that is not a Business Day, the payment is due the next
Business Day and additional fees or interest accrue.

2.4           Fees.

Borrower
will pay:

(a)           Loan Fee.  A loan fee of $40,000.

(b)           Maintenance Fee.  A maintenance fee of $20,000 to be paid at
the end of each calendar quarter during the term of this Agreement, such
maintenance fee to be waived if Borrower meets any one of the following
conditions:

 2
 

 

 

(i)            Borrower’s average borrowing during
the quarter equals or exceeds twenty percent (20%) of the total commitment of
$40,000,000 during the relevant calendar quarter, of which including Letter of
Credit outstanding.

(ii)           Borrower’s deposits at Bank exceed
$40,000,000 [on average during the relevant calendar quarter], or

(iii)          Or Borrower’s total deposits at Bank
exceed $20,000,000 [on average during the relevant calendar quarter] and fee
income generated by Bank from offering foreign exchange services and
international letter of credit services to Borrower exceed $10,000 during the
relevant calendar quarter.

(iv)          Total maintenance fee will be waived
when total Fee income generated by Bank from offering international letter of
credit services to Borrower equal or exceed $72,000 a year.

(c)           Bank Expenses.  All Bank Expenses (including reasonable
attorneys’ fees and reasonable expenses) incurred through and after the date of
this Agreement, are payable when due.

(d)           Late Fee.  A late fee of five percent (5%) of any
Obligation due if such Obligation is not paid within the time frame set forth
in Section 8.1 hereof.

3.             Conditions Of Loans.

3.1           Conditions Precedent to Initial
Credit Extension.  Bank’s obligation
to make the initial Credit Extension is subject to the condition precedent that
it receive the agreements, documents and fees it requires.

3.2           Conditions Precedent to all Credit
Extensions.  Bank’s obligations to
make each Credit Extension, including the initial Credit Extension, is subject
to the following:

(a)           timely receipt of any Payment/Advance
Form; and

(b)           the representations and warranties in
Section 5 must be materially true on the date of the Payment/Advance Form and
on the effective date of each Credit Extension and no Event of Default may have
occurred and be continuing, or result from the Credit Extension. Each Credit
Extension is Borrower’s representation and warranty on that date that the
representations and warranties of Section 5 remain true.

4.             Creation Of Security Interest.

4.1           Grant of Security Interest.  Borrower and each Borrower Subsidiary grants
Bank a continuing security interest in all presently existing and later
acquired Collateral to secure all Obligations and performance of each of
Borrower’s duties under the Loan Documents and each of them hereby authorizes
Bank to execute and file any and all documents necessary to perfect such
security interest granted hereunder. 
Except for Permitted Liens, any security interest will be a first
priority security interest in the Collateral. 
Bank may place a “hold” on any

 3
 

 

 

deposit account pledged as Collateral. If this
Agreement is terminated, Bank’s lien and security interest in the Collateral
will continue until Borrower fully satisfies its Obligations.

5.             Representations And Warranties.  Borrower represents and warrants as follows:

5.1           Due Organization and Authorization.  Borrower is duly existing and in good
standing in its state of formation and qualified and licensed to do business
in, and in good standing in, any state in which the conduct of its business or
its ownership of property requires that it be qualified, except where the
failure to do so could not reasonably be expected to cause a Material Adverse
Change.

The execution, delivery and performance of the Loan
Documents have been duly authorized, and do not conflict with Borrower’s formation
documents, nor constitute an event of default under any material agreement by
which Borrower is bound.  Borrower is not
in default under any agreement to which or by which it is bound in which the
default could reasonably be expected to cause a Material Adverse Change.

5.2           Collateral.  Borrower has good title to the Collateral,
free of Liens except Permitted Liens. 
The Accounts are bona fide, existing obligations, and the service or
property has been performed or delivered to the account debtor or its agent for
immediate shipment to and unconditional acceptance by the account debtor.  Borrower has no notice of any actual or
imminent Insolvency Proceeding of any account debtor whose accounts are an
Eligible Account in any Borrowing Base Certificate.  All Inventory is in all material respects of
good and marketable quality, free from material defects.

5.3           Litigation.  Except as shown in the Schedule, there are no
actions or proceedings pending or, to the knowledge of Borrower’s Responsible
Officers, threatened by or against Borrower or any Subsidiary  in which a likely adverse decision could
reasonably be expected to cause a Material Adverse Change.

5.4           No Material Adverse Change in
Financial Statements.  All
consolidated financial statements for Borrower, and any Subsidiary, delivered
to Bank fairly present in all material respects Borrower’s consolidated
financial condition and Borrower’s consolidated results of operations.  There has not been any material deterioration
in Borrower’s consolidated financial condition since the date of the most
recent financial statements submitted to Bank.

5.5           Solvency.  The fair salable value of Borrower’s assets
(including goodwill minus disposition costs) exceeds the fair value of its
liabilities and Borrower is able to pay its debts (including trade debts) as
they mature.

5.6           Regulatory Compliance.  Borrower is not an “investment company” or a
company “controlled” by an “investment company” under the Investment Company
Act.  Borrower is not engaged as one of
its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors).  Borrower has complied in all material
respects with the Federal Fair Labor Standards Act.  Borrower has not violated any laws, ordinances
or rules, the violation of which could reasonably be expected to cause a
Material Adverse Change.  None of
Borrower’s or any Subsidiary’s properties or assets has been used by Borrower
or any Subsidiary or, to the best of Borrower’s knowledge, by

 4
 

 

 

previous Persons, in disposing, producing, storing,
treating, or transporting any hazardous substance other than legally.  Borrower and each Subsidiary has timely filed
all required tax returns and paid, or made adequate provision to pay, all
material taxes, except those being contested in good faith with adequate
reserves under GAAP.  Borrower and each
Subsidiary has obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all government authorities
that are necessary to continue its business as currently conducted, except
where the failure to do so could not reasonably be expected to cause a Material
Adverse Change.

5.7           Subsidiaries.  Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments.

5.8           Full Disclosure.  No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank
(taken together with all such written certificates and written statements to
Bank) contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading.  It being recognized
by Bank that the projections and forecasts provided by Borrower in good faith
and based upon reasonable assumptions are not viewed as facts and that actual
results during the period or periods covered by such projections and forecasts
may differ from the projected and forecasted results.

6.             Affirmative Covenants.  Borrower will do all of the following for so
long as Bank has an obligation to lend, or there are outstanding Obligations:

6.1           Government Compliance.  Borrower will maintain its and all
Subsidiaries’ legal existence and good standing in its jurisdiction of
formation and maintain qualification in each jurisdiction in which the failure
to so qualify would reasonably be expected to cause a material adverse effect
on Borrower’s business or operations. 
Borrower will comply, and have each Subsidiary comply, with all laws,
ordinances and regulations to which it is subject, noncompliance with which
could have a material adverse effect on Borrower’s business or operations or
would reasonably be expected to cause a Material Adverse Change.

6.2           Financial Statements, Reports,
Certificates, Audits.

(a)           Borrower will deliver to Bank:  (i) as soon as filed with the Securities
and Exchange Commission, but no later than 5 days after the date on which they
are due to be filed with the Securities and Exchange Commission, any and all
quarterly and annual reports filed on Forms 10Q and 10K; (ii) a prompt report
of any legal actions pending or threatened against Borrower or any Subsidiary
that could result in damages or costs to Borrower or any Subsidiary of $100,000
or more; and (iii) budgets, sales projections, operating plans or other
financial information Bank reasonably requests.

(b)           Whenever the balance of the Revolving
Line exceeds $20,000,000 or the Borrower’s liquidity ratio falls below 1.0:1.0,
within 20 days after the last day of each month thereafter, Borrower will
deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in
the form of Exhibit C, with aged listings of accounts receivable and accounts
payable.

 5
 

 

 

(c)           Within 45 days after the last day of
each quarter, Borrower will deliver to Bank a Compliance Certificate signed by
a Responsible Officer in the form of Exhibit D.

(d)           Borrower will allow Bank’s internal
auditor to audit Borrower’s Collateral and Borrower’s books and records at
Borrower’s expense (not to exceed $2,000) within 60 days of the Closing
Date.  Such audit will be conducted no
more often than once every 12 months unless an Event of Default has occurred
and is continuing.

6.3           Inventory; Returns.  Borrower will keep all Inventory in good and
marketable condition, free from material defects.  Returns and allowances between Borrower and
its account debtors will follow Borrower’s customary practices as they exist at
execution of this Agreement.  Borrower
must promptly notify Bank of all credit only returns, recoveries, disputes and
claims, that involve more than $1,000,000.

6.4           Taxes.  Borrower will make, and cause each Subsidiary
to make, timely payment of all material federal, state, and local taxes or
assessments (other than taxes and assessments which Borrower is contesting in
good faith, with adequate reserves maintained in accordance with GAAP) and will
deliver to Bank, on demand, appropriate certificates attesting to the payment.

6.5           Insurance.  Borrower will keep its business and the
Collateral insured for risks and in amounts standard for Borrower’s industry,
and as Bank may reasonably request. 
Insurance policies will be in a form, with companies, and in amounts
that are satisfactory to Bank in Bank’s reasonable discretion.  All property policies will have a lender’s
loss payable endorsement showing Bank as an additional loss payee and all
liability policies will show the Bank as an additional insured and provide that
the insurer must give Bank at least 20 days notice before canceling its
policy.  At Bank’s request, Borrower will
deliver certified copies of policies and evidence of all premium payments.
Proceeds payable under any policy will, at Bank’s option, be payable to Bank on
account of the Obligations.

6.6           Primary Accounts.  Borrower and SST International, Ltd. will
maintain their primary depository and operating accounts, other than their
primary accounts receivable account, with Bank with the understanding that they
will maintain such arrangement with Bank.

6.7           Financial Covenants.  Borrower will maintain as of the last day of
each month:

(a)           Current Ratio.  A ratio of Current Assets to Current
Liabilities of at least 1.75 to 1.00.

(b)           Maximum Leverage Ratio.  A ratio of Total Liabilities excluding
deferred revenues divided by Tangible Net Worth of no more than 1.50:1.0.

(c)           Minimum Liquidity Ratio.  A ratio of 100% of unrestricted cash (and
equivalents) plus 95% of any government securities held by Borrower and 85% of
investment grade corporate bonds held by Borrower all divided by Indebtedness
of not less than 1.00 to 1.00.

 6
 

 

 

6.8           Further Assurances.  Borrower will execute any further instruments
and take further action as Bank reasonably requests to perfect or continue Bank’s
security interest in the Collateral or to effect the purposes of this
Agreement.

7.             Negative Covenants.  Borrower will not do any of the following
without Bank’s prior written consent, which will not be unreasonably withheld,
for so long as Bank has an obligation to lend or there are any outstanding
Obligations:

7.1           Dispositions.  Convey, sell, lease, transfer or otherwise
dispose of (collectively “Transfer”), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property if the value of transfer
exceeds $1,000,000, except for Transfers (i) of Inventory in the ordinary
course of business; (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business; (iii) of worn out or obsolete Equipment.

7.2           Changes in Business, Ownership,
Management or Business Locations. 
Engage in or permit any of its Subsidiaries to engage in any business
other than the businesses currently engaged in by Borrower or reasonably
related thereto or have a material change in its ownership or management of
greater than 25% (other than by the sale of Borrower’s equity securities in a
public offering or to venture capital investors so long as Borrower identifies
the venture capital investors prior to the closing of the investment).  Borrower will not, without at least 30 days
prior written notice, relocate its chief executive office.

7.3           Mergers or Acquisitions.  Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person, except where (i) no Event of
Default has occurred and is continuing or would result from such action during
the term of this Agreement and (ii) such transaction would not result in a
decrease of more than 25% of Tangible Net Worth. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.

7.4           Indebtedness.       Create,
incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to
do so, other than Permitted Indebtedness.

7.5           Encumbrance.  Create, incur, or allow any Lien on any of
its Intellectual Property or the Intellectual Property of any Borrower
Subsidiary, except for Permitted Liens, or permit any Collateral not to be
subject to the first priority security interest granted here, subject to
Permitted Liens.

7.6           Distributions; Investments.  Directly or indirectly acquire or own any
Person, or make any Investment in any Person, other than Permitted Investments,
or permit any of its Subsidiaries to do so for amount exceed $5,000,000.  Pay any dividends or make any distribution or
payment or redeem, retire or purchase any capital stock for aggregate amount
exceed $5,000,000.

7.7           Transactions with Affiliates.  Directly or indirectly enter into or permit
to exist any material transaction with any Affiliate of Borrower except for
transactions that are in the ordinary course of Borrower’s business, upon fair
and reasonable terms that are no less

 7
 

 

 

favorable to Borrower than would be obtained in an arm’s
length transaction with a nonaffiliated Person.

7.8           Subordinated Debt.  Make or permit any payment on any
Subordinated Debt, without Bank’s prior written consent.

7.9           Compliance.  Become an “investment company” or a company
controlled by an “investment company,” under the Investment Company Act of 1940
or undertake as one of its important activities extending credit to purchase or
carry margin stock, or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation could reasonably be expected to have a material
adverse effect on Borrower’s business or operations or would reasonably be
expected to cause a Material Adverse Change, or permit any of its Subsidiaries
to do so.

8.             Events Of Default.  Any one of the following is an Event of
Default:

8.1           Payment Default.  If Borrower fails to pay any of the
Obligations within 3 days after their due date (10 days in the case of payment
of interest). Borrower has an additional period of 27 days (an additional 20
days in the case of payment of interest) to attempt to cure the default.  During the additional period the failure to
cure the default is not an Event of Default (but no Credit Extension will be
made during the cure period);

8.2           Covenant Default.  If Borrower does not perform any obligation
in Section 6 or violates any covenant in Section 7; or

If Borrower does not
perform or observe any other material term, condition or covenant in this
Agreement, any Loan Documents, or in any agreement between Borrower and Bank
and as to any default under a term, condition or covenant that can be cured,
has not cured the default within 10 days after it occurs, or if the default
cannot be cured within 10 days or cannot be cured after Borrower’s attempts
within 10 day period, and the default may be cured within a reasonable time,
then Borrower has an additional period (of not more than 30 days) to attempt to
cure the default.  During the additional
time, the failure to cure the default is not an Event of Default (but no Credit
Extensions will be made during the cure period);

8.3           Material Adverse Change.  If there (i) occurs a material adverse change
in the business, operations, or condition (financial or otherwise) of the
Borrower, or (ii) is a material impairment of the prospect of repayment of any
portion of the Obligations or (iii) is a material impairment of the value or
priority of Bank’s security interests in the Collateral.

8.4           Attachment.  If any material portion of Borrower’s assets
is attached, seized, levied on, or comes into possession of a trustee or
receiver and the attachment, seizure or levy is not removed in 10 days, or if
Borrower is enjoined, restrained, or prevented by court order from conducting a
material part of its business or if a judgment or other claim becomes a Lien on
a material portion of Borrower’s assets, or if a notice of lien, levy, or
assessment is filed against any of Borrower’s assets by any government agency
and not paid within 10 days after Borrower

 8
 

 

 

receives notice. 
These are not Events of Default if stayed or if a bond is posted pending
contest by Borrower (but no Credit Extensions will be made during the cure
period);

8.5           Insolvency.  If Borrower becomes insolvent or if Borrower
begins an Insolvency Proceeding or an Insolvency Proceeding is begun against
Borrower and not dismissed or stayed within 30 days (but no Credit Extensions
will be made before any Insolvency Proceeding is dismissed);

8.6           Other Agreements.  If there is a default in any agreement
between Borrower and a third party that gives the third party the right to
accelerate any Indebtedness exceeding $100,000 or that could cause a Material
Adverse Change;

8.7           Judgments.  Except in connection with litigation
identified on the Litigation Schedule, if a money judgement(s) in the aggregate
of at least $500,000 is rendered against Borrower and is unsatisfied and
unstayed for 10 days (but no Credit Extensions will be made before the judgment
is stayed or satisfied);

8.8           Misrepresentations.  If Borrower or any Person acting for Borrower
makes any material misrepresentation or material misstatement now or later in
any warranty or representation in this Agreement or in any writing delivered to
Bank or to induce Bank to enter this Agreement or any Loan Document; or

9.             Bank’s Rights And Remedies.

9.1           Rights and Remedies.  When an Event of Default occurs and continues
Bank may, without notice or demand, do any or all of the following:

(a)           Declare all Obligations immediately
due and payable (but if an Event of Default described in Section 8.5 occurs all
Obligations are immediately due and payable without any action by Bank);

(b)           Stop advancing money or extending
credit for Borrower’s benefit under this Agreement or under any other agreement
between Borrower and Bank;

(c)           Settle or adjust disputes and claims
directly with account debtors for amounts, on terms and in any order that Bank
considers advisable;

(d)           Make any payments and do any acts it
considers necessary or reasonable to protect its security interest in the
Collateral.  Borrower will assemble the
Collateral if Bank requires and make it available as Bank designates.  Bank may enter premises where the Collateral
is located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior
to its security interest and pay all expenses incurred. Borrower grants Bank a
license to enter and occupy any of its premises, without charge, to exercise
any of Bank’s rights or remedies;

(e)           Apply to the Obligations any (i)
balances and deposits of Borrower it holds, or (ii) any amount held by Bank
owing to or for the credit or the account of Borrower;

 

 9

 

(f)            Ship, reclaim, recover, store,
finish, maintain, repair, prepare for sale, advertise for sale, and sell the
Collateral.  Bank is granted a
non-exclusive, royalty-free license or other right to use, without charge, Borrower’s
labels, Patents, Copyrights, Mask Works, rights of use of any name, trade
secrets, trade names, Trademarks, service marks, and advertising matter, or any
similar property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank’s
exercise of its rights under this Section, Borrower’s rights under all licenses
and all franchise agreements inure to Bank’s benefit; and

(g)           Dispose of the Collateral according
to the Code and, as to any Cayman Islands Borrower Subsidiary, any other
applicable Cayman Islands laws.

9.2           Power of Attorney.  Effective only when an Event of Default
occurs and continues, Borrower and each Borrower Subsidiary irrevocably
appoints Bank as its lawful attorney to: 
(i) endorse Borrower’s or any Borrower Subsidiary’s name on any checks
or other forms of payment or security; (ii) sign Borrower’s or any Subsidiary’s
name on any invoice or bill of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower’s or any
Borrower Subsidiary’s insurance policies; (iv) settle and adjust disputes and
claims about the Accounts directly with account debtors, for amounts and on
terms Bank determines reasonable; and (v) transfer the Collateral into the name
of Bank or a third party as the Code or, as to any Cayman Islands Borrower
Subsidiary, any applicable Cayman Islands laws permit.  Bank may exercise the power of attorney to
sign Borrower’s or any Borrower Subsidiary’s name on any documents necessary to
perfect or continue the perfection of any security interest regardless of
whether an Event of Default has occurred. 
Bank’s appointment as Borrower’s and each Borrower Subsidiary’s attorney
in fact, and all of Bank’s rights and powers, coupled with an interest, are
irrevocable until all Obligations have been fully repaid and performed and Bank’s
obligation to provide Credit Extensions terminates.

9.3           Accounts Collection.  When an Event of Default occurs and
continues, Bank may notify any Person owing Borrower or any Borrower Subsidiary
money of Bank’s security interest in the funds and verify the amount of the
Account.  Borrower and each Borrower
Subsidiary must collect all payments in trust for Bank and, if requested by
Bank, immediately deliver the payments to Bank in the form received from the
account debtor, with proper endorsements for deposit.

9.4           Bank Expenses.  If Borrower fails to pay any amount or
furnish any required proof of payment to third persons, Bank may make all or
part of the payment or obtain insurance policies required in Section 6.5, and
take any action under the policies Bank deems prudent.  Any amounts paid by Bank are Bank Expenses
and immediately due and payable, bearing interest at the then applicable rate
and secured by the Collateral.  No
payments by Bank are deemed an agreement to make similar payments in the future
or Bank’s waiver of any Event of Default.

9.5           Bank’s Liability for Collateral.  If Bank complies with reasonable banking
practices and the Code, it is not liable for: (a) the safekeeping of the
Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the
value of the Collateral; or (d) any act or

 10
 

 

default of any
carrier, warehouseman, bailee, or other person. 
Borrower and the Borrower Subsidiaries bear all risk of loss, damage or
destruction of the Collateral.

9.6           Remedies Cumulative.  Bank’s rights and remedies under this
Agreement, the Loan Documents, and all other agreements are cumulative.  Bank has all rights and remedies provided
under the Code, and, as to any Cayman Islands Borrower Subsidiary, by any
applicable Cayman Islands law, by any other law, or in equity. Bank’s exercise
of one right or remedy is not an election, and Bank’s waiver of any Event of
Default is not a continuing waiver. Bank’s delay is not a waiver, election, or
acquiescence. No waiver is effective unless signed by Bank and then is only
effective for the specific instance and purpose for which it was given.

9.7           Demand Waiver.  Borrower and each Borrower Subsidiary waives demand,
notice of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guarantees held
by Bank on which Borrower or any Borrower Subsidiary is liable.

10.           Notices.  All notices or demands by any party about
this Agreement or any other related agreement must be in writing and be
personally delivered or sent by an overnight delivery service, by certified
mail, postage prepaid, return receipt requested, or by telefacsimile to the
addresses set forth at the beginning of this Agreement.  A party may change its notice address by
giving the other party written notice.

11.           Choice Of Law , Venue And Jury
Trial Waiver.  California law governs
the Loan Documents without regard to principles of conflicts of law.  Borrower, Bank and each Borrower Subsidiary
each submit to the exclusive jurisdiction of the State and Federal courts in
Santa Clara County, California.

TO THE EXTENT PERMITTED BY LAW, BORROWER, BANK AND
EACH BORROWER SUBSIDIARY EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS.
THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT.  EACH PARTY HAS REVIEWED THIS
WAIVER WITH ITS COUNSEL.

12.           General Provisions.

12.1         Successors and Assigns.  This Agreement binds and is for the benefit
of the successors and permitted assigns of each party.  Borrower and each Subsidiary may not assign
this Agreement or any rights under it without Bank’s prior written consent
which may be granted or withheld in Bank’s discretion.  Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank’s obligations, rights and benefits
under this Agreement.

12.2         Indemnification.  Borrower will indemnify, defend and hold
harmless Bank and its officers, employees, and agents against:  (a) all obligations, demands, claims, and
liabilities asserted by any other party in connection with the transactions
contemplated by the

 11
 

 

Loan Documents;
and (b) all losses or Bank Expenses incurred, or paid by Bank from, following,
or consequential to transactions between Bank and Borrower (including
reasonable attorneys fees and expenses), except for losses caused by Bank’s
gross negligence or willful misconduct.

12.3         Time of Essence.  Time is of the essence for the performance of
all obligations in this Agreement.

12.4         Severability of Provision.  Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.

12.5         Amendments in Writing, Integration.  All amendments to this Agreement must be in
writing and signed by Borrower, each Borrower Subsidiary and Bank.  This Agreement represents the entire
agreement about this subject matter, and supersedes prior negotiations or
agreements.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement merge into this Agreement
and the Loan Documents.

12.6         Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, are an original, and all taken together,
constitute one Agreement.

12.7         Survival.  All covenants, representations and warranties
made in this Agreement continue in full force while any Obligations remain
outstanding.  The obligations of Borrower
in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.

12.8         Confidentiality.  In handling any confidential information,
Bank will exercise the same degree of care that it exercises for its own
proprietary information, but disclosure of information may be made (i) to Bank’s
subsidiaries or affiliates in connection with their business with Borrower,
(ii) to prospective transferees or purchasers of any interest in the loans
(provided, however, Bank shall use commercially reasonable efforts in obtaining
such prospective transferee or purchasers agreement of the terms of this
provision), (iii) as required by law, regulation, subpoena, or other order,
(iv) as required in connection with Bank’s examination or audit and (v) as Bank
considers appropriate exercising remedies under this Agreement.  Confidential information does not include
information that either: (a) is in the public domain or in Bank’s possession
when disclosed to Bank, or becomes part of the public domain after disclosure
to Bank; or (b) is disclosed to Bank by a third party, if Bank does not know
that the third party is prohibited from disclosing the information.

12.9         Attorneys’ Fees, Costs and Expenses.  In any action or proceeding between Borrower
and Bank arising out of the Loan Documents, the prevailing party will be
entitled to recover its reasonable attorneys’ fees and other reasonable costs
and expenses incurred, in addition to any other relief to which it may be
entitled.

13.           Definitions.  In this Agreement:

“Accounts” are all
existing and later arising accounts, contract rights, and other obligations
owed Borrower in connection with its sale or lease of goods (including
licensing

 12
 

 

software and other
technology) or provision of services, all credit insurance, guaranties, other
security and  all merchandise returned or
reclaimed by Borrower and Borrower’s Books relating to any of the foregoing.

“Advance” or “Advances”
is a loan advance (or advances) under the Committed Revolving Line.

“Affiliate” of a Person
is a Person that owns or controls directly or indirectly the Person, any Person
that controls or is controlled by or is under common control with the Person,
and each of that Person’s senior executive officers, directors, partners and,
for any Person that is a limited liability company, that Person’s managers and
members.

“Bank Expenses” are all
UCC search and filing expenses, audit and maintenance fees and expenses and
reasonable costs and expenses (including reasonable attorneys’ fees and
expenses) for preparing, negotiating, administering, defending and enforcing
the Loan Documents (including appeals or Insolvency Proceedings).

“Borrower’s Books” are
all Borrower’s books and records including ledgers, records regarding Borrower’s
assets or liabilities, the Collateral, business operations or financial
condition and all computer programs or discs or any equipment containing the
information.

“Borrowing Base” is 80%
of Eligible Accounts as determined by Bank from Borrower’s most recent
Borrowing Base Certificate plus 25% of Inventory (finished goods only and up to
$10,000,000 of inventory financing); provided, however, that Bank
may lower the percentage of the Borrowing Base after performing an audit of
Borrower’s Collateral.

“Borrower Subsidiary”
shall mean SST International Ltd, SST RG LLC, SST Communications Corp. and SST
China Ltd.

“Business Day” is any day
that is not a Saturday, Sunday or a day on which the Bank is closed.

“Closing Date” is the
date of this Agreement.

“Code” is the Uniform
Commercial Code, as applicable.

“Collateral” is the
property described on Exhibit A.

“Contingent Obligation”
is, for any Person, any direct or indirect liability, contingent or not, of
that Person for (i) any indebtedness, lease, dividend, letter of credit or
other obligation of another such as an obligation directly or indirectly
guaranteed, endorsed, co made, discounted or sold with recourse by that Person,
or for which that Person is directly or indirectly liable; (ii) any obligations
for undrawn letters of credit for the account of that Person; and (iii) all
obligations from any interest rate, currency or commodity swap agreement,
interest rate cap or collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices;  but “Contingent
Obligation” does not include endorsements in the ordinary course of
business.  The amount of a Contingent
Obligation is the stated or determined amount of the primary obligation for
which the

 13
 

 

Contingent Obligation is
made or, if not determinable, the maximum reasonably anticipated liability for
it determined by the Person in good faith; but the amount may not exceed the
maximum of the obligations under the guarantee or other support arrangement.

“Copyrights” are all
copyright rights, applications or registrations and like protections in each
work or authorship or derivative work, whether published or not (whether or not
it is a trade secret) now or later existing, created, acquired or held.

“Credit Extension” is
each Advance or any other extension of credit by Bank for Borrower’s benefit.

“Current Assets” are
amounts that under GAAP should be included on that date as current assets on
Borrower’s consolidated balance sheet.

“Current Liabilities” are
the aggregate amount of Borrower’s Total Liabilities which mature within one
(1) year.

“Eligible Accounts” are
Accounts in the ordinary course of Borrower’s business that meet all Borrower’s
representations and warranties in Section 5; but Bank may change
eligibility standards by giving Borrower notice.  Unless Bank agrees otherwise in writing,
Eligible Accounts will not include:

(a)           Accounts
that the account debtor has not paid within 61 days of invoice date;

(b)           Accounts
for an account debtor, 50% or more of whose Accounts have not been paid within
61 days of invoice date;

(c)           Credit
memos over 61 days from invoice date;

(d)           Accounts
for an account debtor, including Affiliates, whose total obligations to
Borrower exceed 15% of all Accounts (net of inter company, Affiliates accounts,
and returned bad debt reserves and adjustments), for the amounts that exceed
that percentage, unless the Bank approves in writing except for those certain
Accounts from Silicon Professional Technology, for which the percentage may be
up to 50% ;

(e)           Accounts
for which the account debtor is a federal, state or local government entity or
any department, agency, or instrumentality;

(f)            Accounts
for which Borrower owes the account debtor, but only up to the amount owed
(sometimes called “contra” accounts, accounts payable, customer deposits or
credit accounts);

(g)           Accounts
for demonstration or promotional equipment, or in which goods are consigned,
sales guaranteed, sale or return, sale on approval, bill and hold, or other
terms if account debtor’s payment may be conditional;

 14
 

 

(h)           Accounts
for which the account debtor is Borrower’s Affiliate, officer, employee, or
agent;

(i)            Accounts
in which the account debtor disputes liability or makes any claim and Bank
believes there may be a basis for dispute (but only up to the disputed or
claimed amount), or if the Account Debtor is subject to an Insolvency
Proceeding, or becomes insolvent, or goes out of business;

(j)            Intercompany
accounts; and

(k)           Accounts
for which Bank reasonably determines collection to be doubtful.

“Equipment” is all
present and future machinery, equipment, tenant improvements, furniture,
fixtures, vehicles, tools, parts and attachments in which Borrower has any
interest.

“ERISA” is the Employment
Retirement Income Security Act of 1974, and its regulations.

“GAAP” is generally
accepted accounting principles.

“Indebtedness” is
(a) indebtedness for borrowed money or the deferred price of property or
services, such as reimbursement and other obligations for surety bonds and
letters of credit, (b) obligations evidenced by notes, bonds, debentures or
similar instruments, (c) capital lease obligations and (d) Contingent
Obligations.

“Insolvency Proceeding”
are proceedings by or against any Person under the United States Bankruptcy
Code, or any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, compositions, extensions generally with its creditors, or
proceedings seeking reorganization, arrangement, or other relief.

“Intellectual
Property” is:

(a)           Copyrights,
Trademarks, Patents, and Mask Works including amendments, renewals, extensions,
and all licenses or other rights to use and all license fees and royalties from
the use;

(b)           Any
trade secrets and any intellectual property rights in computer software and
computer software products now or later existing, created, acquired or held;

(c)           All
design rights which may be available to Borrower now or later created, acquired
or held;

(d)           Any
claims for damages (past, present or future) for infringement of any of the
rights above, with the right, but not the obligation, to sue and collect damages
for use or infringement of the intellectual property rights above;

 15
 

 

All proceeds and products of the foregoing, including
all insurance, indemnity or warranty payments.

“Inventory” is present and future inventory in which
Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or later owned by or in the custody or
possession, actual or constructive, of Borrower, including inventory
temporarily out of its custody or possession or in transit and including
returns on any accounts or other proceeds (including insurance proceeds) from
the sale or disposition of any of the foregoing and any documents of title.

“Investment” is any beneficial ownership of (including
stock, partnership interest or other securities) any Person, or any loan,
advance or capital contribution to any Person.

“Lien” is a mortgage, lien, deed of trust, charge,
pledge, security interest or other encumbrance.

“Loan Documents” are, collectively, this Agreement,
any note, or notes or guaranties executed by Borrower or Guarantor, and any
other present or future agreement between Borrower and/or for the benefit of
Bank in connection with this Agreement, all as amended, extended or restated.

“Mask Works” are all mask works or similar rights
available for the protection of semiconductor chips, now owned or later
acquired.

“Material Adverse Change” is described in Section 8.3.

“Obligations” are debts, principal, interest, Bank
Expenses and other amounts Borrower owes Bank now or later, including cash
management services, letters of credit and foreign exchange contracts, if any
and including interest accruing after Insolvency Proceedings begin and debts,
liabilities, or obligations of Borrower assigned to Bank.

“Patents” are patents, patent applications and like
protections, including improvements, divisions, continuations, renewals,
reissues, extensions and continuations in part of the same.

“Permitted Indebtedness” is:

(e)           Borrower’s
indebtedness to Bank under this Agreement or any other Loan Document;

(f)            Indebtedness
existing on the Closing Date and shown on the Schedule;

(g)           Subordinated
Debt;

(h)           Indebtedness
to trade creditors incurred in the ordinary course of business; and

 16
 

 

(i)            Indebtedness
secured by Permitted Liens.

(j)            Other Indebtedness,
excluding listed above, not exceeding an aggregate of US$1,000,000

“Permitted Investments” are:

(k)            Investments shown on the Investment
Schedule and existing on the Closing Date; and

(l)             marketable
direct obligations issued or unconditionally guaranteed by the United States or
its agency or any State maturing within 1 year from its acquisition, (ii) commercial
paper maturing no more than 1 year after its creation and having the highest
rating from either Standard & Poor’s Corporation or Moody’s Investors
Service, Inc., and (iii) Bank’s certificates of deposit issued maturing no more
than 1 year after issue.

“Permitted Liens” are:

(j)            Liens
existing on the Closing Date and shown on the Schedule or arising under this
Agreement or other Loan Documents;

(k)           Liens
for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrower maintains
adequate reserves on its Books, if they have no priority over any of Bank’s
security interests;

(l)            Purchase
money Liens (i) on Equipment acquired or held by Borrower or its Subsidiaries
incurred for financing the acquisition of the Equipment, or (ii) existing on
equipment when acquired, if the Lien is confined to the property and
improvements and the proceeds of the equipment;

(m)          Licenses
or sublicenses granted in the ordinary course of Borrower’s business and any
interest or title of a licensor or under any license or sublicense, if the
licenses and sublicenses permit granting Bank a security interest;

(n)           Leases
or subleases granted in the ordinary course of Borrower’s business, including
in connection with Borrower’s leased premises or leased property;

(o)           Liens
incurred in the extension, renewal or refinancing of the indebtedness secured
by Liens described in (a) through (c), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness may not increase.

“Person” is any individual, sole proprietorship,
partnership, limited liability company, joint venture, company association,
trust, unincorporated organization, association, corporation, institution,
public benefit corporation, firm, joint stock company, estate, entity or
government agency.

 17
 

 

“Prime Rate” is the variable rate of interest, per
annum, that is reported by the Wall Street Journal, Western Edition, from time
to time as the “Prime Rate.”

“Responsible Officer” is each of the Chief Executive
Officer, the President, and the Chief Financial Officer of Borrower.

“Revolving Line” is a Credit Extension of up to
$40,000,000 (subject to an $8,000,000 sublimit maximum for SST China Ltd.)
subject to participation of $20,000,000.

“Revolving Maturity Date” is August 11, 2007.

“Schedule” is any attached schedule of exceptions.

“Subordinated Debt” is debt incurred by Borrower
subordinated to Borrower’s indebtedness owed to Bank and which is reflected in
a written agreement in a manner and form acceptable to Bank and approved by
Bank in writing.

“Subsidiary” is for any Person, or any other business
entity of which more than 50% of the voting stock or other equity interests is
owned or controlled, directly or indirectly, by the Person or one or more
Affiliates of the Person.

“Tangible Net Worth” is, on any date, the consolidated
total assets of Borrower and its Subsidiaries minus, (i) any amounts
attributable to (a) goodwill, (b) intangible items such as unamortized debt
discount and expense, Patents, trade and service marks and names, Copyrights
and research and development expenses except prepaid expenses, and (c) reserves
not already deducted from assets, and (ii) Total Liabilities.

“Total Liabilities” is on any day, obligations that
should, under GAAP, be classified as liabilities on Borrower’s consolidated
balance sheet, including all Indebtedness.

 18
 

 

“Trademarks” are trademark and servicemark rights,
registered or not, applications to register and registrations and like
protections, and the entire goodwill of the business of Assignor connected with
the trademarks.

	
  

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
  SILICON STORAGE TECHNOLOGY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Art Whipple

  
	
   

  	
   

  	
  Art Whipple

  
	
   

  	
  Title:

  	
  Vice President Finance & CFO

  
	
   

  	
   

  	
   

  
	
   

  	
  SST INTERNATIONAL LTD

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Art Whipple

  
	
   

  	
   

  	
  Art Whipple

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  SST RG, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Art Whipple

  
	
   

  	
   

  	
  Art Whipple

  
	
   

  	
  Title:

  	
  CFO & Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  SST COMMUNICATIONS CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Art Whipple

  
	
   

  	
   

  	
  Art Whipple

  
	
   

  	
  Title:

  	
  CFO & Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK:

  
	
   

  	
   

  	
   

  
	
   

  	
  CATHAY BANK

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

 19

 

EXHIBIT A

The Collateral consists
of all of the right, title and interest of Borrower and each Borrower
Subsidiary in and to the following:

All goods and equipment
now owned or hereafter acquired, including, without limitation, all machinery,
fixtures, vehicles (including motor vehicles and trailers), and any interest in
any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing, wherever located;

All inventory, now owned
or hereafter acquired, including, without limitation, all merchandise, raw
materials, parts, supplies, packing and shipping materials, work in process and
finished products including such inventory as is temporarily out of Borrower’s
custody or possession or in transit and including any returns upon any accounts
or other proceeds, including insurance proceeds, resulting from the sale or
disposition of any of the foregoing and any documents of title representing any
of the above;

All contract rights and general
intangibles now owned or hereafter acquired, including, without limitation,
goodwill, trademarks, servicemarks, trade styles, trade names, patents, patent
applications, leases, license agreements, franchise agreements, blueprints,
drawings, purchase orders, customer lists, route lists, infringements, claims,
computer programs, computer discs, computer tapes, literature, reports,
catalogs, design rights, income tax refunds, payments of insurance and rights
to payment of any kind;

All now existing and
hereafter arising accounts, contract rights, royalties, license rights and all
other forms of obligations owing to Borrower or any Borrower Subsidiary,
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower  or any
Borrower Subsidiary, whether or not earned by performance, and any and all
credit insurance, guaranties, and other security therefor, as well as all
merchandise returned to or reclaimed by Borrower or by any Borrower Subsidiary;

All documents, cash,
deposit accounts, securities, securities entitlements, securities accounts,
investment property, financial assets, letters of credit, certificates of
deposit, instruments and chattel paper now owned or hereafter acquired and
Borrower’s or any Borrower Subsidiary’s Books relating to the foregoing;

All Borrower’s or any
Borrower Subsidiary’s Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.

Notwithstanding the
foregoing, the Collateral shall not be deemed to include any copyrights,
copyright applications, copyright registration and like protection in each work
of authorship and derivative work thereof, whether published or unpublished,
now owned or hereafter acquired; any patents, patent applications and like
protections including without limitation improvements, divisions,
continuations, renewals, reissues, extensions and continuations-in-part of the
same, trademarks, servicemarks and applications therefor, whether registered or
not, and the goodwill of the business of Borrower or of any Borrower
Subsidiary,

 1
 

 

connected with and
symbolized by such trademarks, any trade secret rights, including any rights to
unpatented inventions, know-how, operating manuals, license rights and
agreements and confidential information, now owned or hereafter acquired; or
any claims for damage by way of any past, present and future infringement of
any of the foregoing (collectively, the “Intellectual Property”), except that
the Collateral shall include the proceeds of all the Intellectual Property that
are accounts, (i.e. accounts receivable) of Borrower or of any Borrower
Subsidiary or general intangibles consisting of rights to payment, if a judicial
authority (including a U.S. Bankruptcy Court) holds that a security interest in
the underlying Intellectual Property is necessary to have a security interest
in such accounts and general intangibles of Borrower or of any Borrower
Subsidiary that are proceeds of the Intellectual Property, then the Collateral
shall automatically, and effective as of the Closing Date, include the
Intellectual Property to the extent necessary to permit perfection of Bank’s
security interest in such accounts and general intangibles of Borrower or of
any Borrower Subsidiary that are proceeds of the Intellectual Property.

 2

 

Loan
Payment/Advance Request Form

DEADLINE FOR SAME DAY PROCESSING IS 11:00 A.M.
P.S.T.

	
  FAX TO:

  	
   

  	
  DATE:

  	
   

  	
   

  

 

○ Loan Payment:

 

Sample documents  Silicon Storage Technology, Inc. (Borrower)

 

	
  From Account # 

  	
   

  	
   

  	
  To Account # 

  	
   

  
	
   

  	
  (Deposit Account
  #)

  	
   

  	
   

  	
  Loan Account #)

  

 

Principal
$                                
and/or Interest
$                                

 

All Borrower’s
representation and warranties in the Loan and Security Agreement are true,
correct and complete in all material respects to on the date of the telephone
transfer request for and advance, but those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of the date:

 

	
  Authorized Signature:

  	
   

  	
   

  	
  Phone Number:

  	
   

  

 

 

○  LOAN ADVANCE:

 

Complete Outgoing Wire Request
section below if all or a portion of the funds from this loan advance are for
an outgoing wire.

 

	
  From Account #

  	
   

  	
   

  	
  To Account # 

  	
   

  
	
   

  	
  (Deposit Account
  #)

  	
   

  	
   

  	
  (Loan Account #)

  

 

Principal
$                                
and/or Interest
$                                

 

All Borrower’s
representation and warranties in the Loan and Security Agreement are true,
correct and complete in all material respects to on the date of the telephone
transfer request for and advance, but those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of the date:

 

	
  Authorized Signature:

  	
   

  	
   

  	
  Phone Number:

  	
   

  

 

 

OUTGOING WIRE REQUEST

 

Complete only if all or a portion
of funds from the loan advance above are to be
wired.

 

Deadline for same day processing is 11:00 am, P.S.T.

 

	
  Beneficiary Name:

  	
   

  	
   

  	
  Amount of Wire: 

  	
  $

  	
   

  
	
  Beneficiary Bank:

  	
   

  	
   

  	
  Account Number:

  	
   

  	
   

  
	
  City and Sate:

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Beneficiary Bank Transit (ABA) #:

  	
   

  	
   

  	
   

  	
  Beneficiary Bank Code (Swift, Sort, Chip, etc.):

  	
   

  

 

(For
International Wire Only)

 

	
  Intermediary
  Bank:

  	
   

  	
   

  	
  Transit (ABA) #:

  	
   

  

 

	
  For Further Credit to:

  	
   

  
	
  Special Instruction:

  	
   

  

 

By signing below, I (we) acknowledge and agree that
my (our) funds transfer request shall be processed in accordance with and subject
to the terms and conditions set forth in the agreements(s) covering funds
transfer service(s), which agreements(s) were previously received and executed
by me (us).

 

	
  Authorized Signature:

  	
   

  	
   

  	
  2nd Signature (If
  Required):

  	
   

  
	
  Print Name/Title:

  	
   

  	
   

  	
  Print Name/Title:

  	
   

  
	
  Telephone #

  	
   

  	
   

  	
  Telephone #

  	
   

  

 

 

	
  Telephone #

  	
   

  	
   

  	
  Facsimile #

  	
   

  

 

EXHIBIT C

BORROWING BASE CERTIFICATE

	
  

  
	
   

  
	
  Borrower: Silicon Storage Technology, Inc.

  	
   

  	
  Bank:

  	
   

  	
  Cathay Bank

  20195 Stevens Creek Boulevard

  Suite 100

  Cupertino, California 95014

  
	
  Commitment Amount:       $40,000,000
  (Subject to reduction and sublimits)

  	
   

  	
   

  	
   

  	
   

  
	
   

  

 

	
  ACCOUNTS RECEIVABLE

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Accounts Receivable
  Book Value as of          

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Additions (please
  explain on reverse)

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  TOTAL ACCOUNTS
  RECEIVABLE

  	
   

  	
   

  	
   

  	
  $

  	
                    

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS RECEIVABLE
  DEDUCTIONS (without duplication)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Amounts over 61 days
  due

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Balance of 50% over 61
  day accounts

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Credit balances over 61
  days

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Concentration Limits*

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Contra Accounts

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Promotion or Demo
  Accounts

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Intercompany/Employee
  Accounts

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Consignment Accounts

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Government Accounts

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Other (please explain
  on reverse)

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  TOTAL ACCOUNTS
  RECEIVABLE DEDUCTIONS

  	
   

  	
   

  	
   

  	
  $

  	
                    

  	
   

  
	
  15.

  	
   

  	
  Total Eligible Accounts
  Receivable (Line 3 minus Line 14)

  	
   

  	
   

  	
   

  	
  $

  	
                    

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INVENTORY

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Total Inventory as of:           

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Ineligible Inventory

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  Total Eligible
  Inventory (Line 16 minus Line 17)

  	
   

  	
   

  	
   

  	
  $

  	
                    

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  Account Receivable
  Availability at 80% of Line 15

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  Inventory Availability
  at 25% of Line 18 and up to $10,000,000

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  Maximum Loan Amount

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  22.

  	
   

  	
  Total Funds Available
  (Lesser of Line 19 + Line 20 or Line 21)

  	
   

  	
   

  	
   

  	
  $

  	
                    

  	
   

  
	
  23.

  	
   

  	
  Present balance owing
  on Line of Credit

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  24.

  	
   

  	
  Outstanding under
  Sublimits (LC or FX)

  	
   

  	
  $

  	
                    

  	
   

  	
   

  	
   

  
	
  25.

  	
   

  	
  RESERVE POSITION (Line 22 minus Line 230 and Line 0)

  	
   

  	
   

  	
   

  	
  $

  	
                    

  	
   

  

 

The
undersigned represents and warrants that this is true, complete and correct,
and that the information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the
undersigned and Cathay Bank.

	
  

  	
  BANK
  USE ONLY

  
	
   

  	
   

  	
   

  
	
   

  	
  Rec'd By:

  	
   

  
	
   

  	
   

  	
  Auth. Signer

  
	
   

  	
  Date:

  	
   

  
	
   

  	
  Verified:

  	
   

  
	
   

  	
   

  	
  Auth. Signer

  
	
   

  	
  Date:

  	
   

  

 

 

COMMENTS:

 

Silicon Storage Technology, Inc.

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signer

  	
   

  

 

*The amounts of accounts of any customer in excess
of 15% of net accounts receivable (net of inter-company, affiliates’ accounts,
return of bad debt reserve and adjustments), with an exception allowed up to
50% for Silicon Professional Technology.

 

 2

 

EXHIBIT D

COMPLIANCE CERTIFICATE

	
  TO:

  	
   

  	
  Cathay Bank

  
	
   

  	
   

  	
  20195 Stevens Creek Boulevard, Suite 100

  
	
   

  	
   

  	
  Cupertino, California 95014

  
	
  FROM:

  	
   

  	
  Silicon Storage Technology, Inc.

  

 

The undersigned
authorized officer of Silicon Storage Technology, Inc. (“Borrower”) certifies
that under the terms and conditions of the Loan and Security Agreement between
Borrower and Bank (the “Agreement”), (i) Borrower is in complete
compliance for the period ending                                 
with all required covenants except as noted below and (ii) all
representations and warranties in the Agreement are true and correct in all
material respects on this date.  Attached
are the required documents supporting the certification.  The Officer certifies that these are prepared
in accordance with Generally Accepted Accounting Principles (GAAP) consistently
applied from one period to the next except as explained in an accompanying
letter or footnotes.  The Officer
acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered.

Please indicate compliance status by circling
Yes/No under “Complies” column.

	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly financial statements + CC

  	
   

  	
  Quarterly within 45 days

  	
   

  	
  Yes     No

  
	
  10-K (Audited)

  	
   

  	
  FYE within 120 days

  	
   

  	
  Yes     No

  
	
  A/R & A/P
  Agings

  	
   

  	
  Monthly within 20 days*

  	
   

  	
  Yes     No

  
	
  A/R Audit

  	
   

  	
  Annual

  	
   

  	
  Yes     No

  
	
  Borrowing Base Certificate

  	
   

  	
  Monthly within 20 days*

  	
   

  	
  Yes     No

  

 

	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintain on a Monthly Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Current
  Ratio

  	
   

  	
  1.75:1.00

  	
   

  	
            :1.00

  	
   

  	
  Yes     No

  
	
  Minimum
  Liquidity Ratio

  	
   

  	
  1.00:1.00

  	
   

  	
            :1.00

  	
   

  	
  Yes     No

  
	
  Maximum Leverage
  Ratio

  	
   

  	
  1.50:1.00

  	
   

  	
            :1.00

  	
   

  	
  Yes     No

  

 

	
  Have there been updates to
  Borrower’s intellectual property, if appropriate?

  	
   

  	
  Yes  /  No

  	
   

  

 

 

 

	
  

  	
   

  	
  BANK
  USE ONLY

  
	
  Comments Regarding Exceptions:  See Attached.

  	
   

  	
   

  
	
   

  	
   

  	
  Received by:

  	
   

  
	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
  Sincerely,

  	
   

  	
   

  
	
   

  	
   

  	
  Date: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Silicon Storage Technology, Inc.

  	
   

  	
  Verified: 

  	
   

  
	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
  BY:

  	
   

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
  Date: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Compliance Status:

  	
  Yes    No

  
	
  TITLE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  DATE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
								

 

 

Litigation Schedule

In
January and February 2005, multiple putative shareholder class action
complaints were filed against SST and certain directors and officers, in the
United States District Court for the Northern District of California, following
our announcement of anticipated financial results for the fourth quarter of
2004.  On March 24, 2005, the putative
class actions were consolidated under the caption In re Silicon Storage
Technology, Inc., Securities Litigation, Case No. C 05 00295 PJH (N.D. Cal.).  On May 3, 2005, the Honorable Phyllis J.
Hamilton appointed the “Louisiana Funds Group,” consisting of the Louisiana
School Employees’ Retirement System and the Louisiana District Attorneys’
Retirement System, to serve as lead plaintiff and the law firms of Pomeranz
Haudek Block Grossman & Gross LLP and Berman DeValerio Pease Tabacco Burt
& Pucillo to serve as lead counsel and liason counsel, respectively, for
the class.  The lead plaintiff filed a
Consolidated Amended Class Action Complaint on July 15, 2005.  The complaint seeks unspecified damages on
alleged violations of federal securities laws during the period from April 21,
2004 to December 20, 2004.  Responses to
the Consolidated Amended Class Action Complaint are presently scheduled to be
due on September 16, 2005.  We intend to
take all appropriate action in response to these lawsuits.  The impact related to the outcome of these
matters is undeterminable at this time.

In
January and February 2005, following the filing of the putative class actions,
multiple shareholder derivative complaints were filed in California Superior
Court for the County of Santa Clara, purportedly on behalf of SST against
certain directors and officers.  The
factual allegations of these complaints are substantially identical to those
contained in the putative shareholder class actions filed in federal
court.  The derivative complaints assert
claims for, among other things, breach of fiduciary duty and violations of the
California Corporations Code.  These
derivative actions have been consolidated under the caption In Re Silicon
Storage Technology, Inc. Derivative Litigation, Lead Case No. 1:05CV034387
(Cal. Super. Ct., Santa Clara Co.).  We
intend to take all appropriate action in response to these lawsuits.  The impact related to the outcome of these
matters is undeterminable at this time.

On July
13, 2006, a shareholder derivative complaint was filed in the United States
district Court for the Northern district of California by Mike Brien under the
caption Brien v. Yeh, et al., Case No. C06-04310 JF (N.D. Cal.).  On July 18, 2006, a shareholder derivative
complaint was filed in the United States District court for the northern
District of California by Behrad Bazargani under the caption Bazargani v. Yeh,
et al., Case No. C06-04388 HRL (N.D. Cal.). 
Both complaints were brought purportedly on behalf of us against certain
of our current and former officers and directors and allege among other things,
that the named officers and directors: (a) breached their fiduciary duties as they
colluded with each other to backdate stock options, (b) violated Rule 10b-5 of
the Securities Exchange Act of 1934 through their alleged actions, and (c) were
unjustly enriched by their receipt and retention of such stock options.  We intend to take all appropriate action in
responding to the complaints.

 

Investment Schedule

Silicon
Storage Technology, Inc.

Investment
at June 30, 2006

	
   

  	
   

  	
  # shares

  	
   

  	
  Carried

  	
   

  	
  Carried

  	
   

  	
  Closing Price

  	
   

  
	
   

  	
   

  	
  SST owned

  	
   

  	
  Investment

  	
   

  	
  Investment

  	
   

  	
  in NT$ @

  	
   

  
	
   

  	
   

  	
  Total

  	
   

  	
  in Total $

  	
   

  	
  Per Share in US$

  	
   

  	
  6/30/2006

  	
   

  
	
  Common Shares

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KYE (King Yuan
  Electronics Corp.)

  	
   

  	
  3,937,828

  	
   

  	
  $

  	
  1,299,460

  	
   

  	
  $

  	
  0.3300

  	
   

  	
  NTD 27.20

  	
   

  
	
  PTI (Powertech
  Technology, Inc.)

  	
   

  	
  5,482,580

  	
   

  	
  $

  	
  1,759,986

  	
   

  	
  $

  	
  0.3210

  	
   

  	
  NTD 96.10

  	
   

  
	
  PCT Limited
  (Professional Computer Technology, Limited)

  	
   

  	
  7,346,226

  	
   

  	
  $

  	
  2,330,262

  	
   

  	
  $

  	
  0.3172

  	
   

  	
  NTD 33.80

  	
   

  
	
  Insyde Software Corp.

  	
   

  	
  1,533,401

  	
   

  	
  $

  	
  455,513

  	
   

  	
  $

  	
  0.2971

  	
   

  	
  NTD 31.20

  	
   

  
	
  Silicon Technology Co.,
  Ltd.

  	
   

  	
  250,000

  	
   

  	
  $

  	
  938,967

  	
   

  	
  $

  	
  3.7559

  	
   

  	
   

  	
   

  
	
  APACER (Apacer
  Technology Inc.)

  	
   

  	
  9,927,280

  	
   

  	
  $

  	
  4,357,240

  	
   

  	
  $

  	
  0.4389

  	
   

  	
   

  	
   

  
	
  GSMC (Grace
  Semiconductor Manufacturing Corporation)

  	
   

  	
  113,000,000

  	
   

  	
  $

  	
  83,150,000

  	
   

  	
  $

  	
  0.7358

  	
   

  	
   

  	
   

  
	
  Acorn Campus Asia Fund
  I, L.P.

  	
   

  	
  666,666

  	
   

  	
  $

  	
  866,872

  	
   

  	
  $

  	
  1.3003

  	
   

  	
   

  	
   

  
	
  ACET (Advanced Chip
  Engineering Technology, Inc.)

  	
   

  	
  6,056,391

  	
   

  	
  $

  	
  1,772,036

  	
   

  	
  $

  	
  0.2926

  	
   

  	
   

  	
   

  
	
  EoNex (EoNex
  Technologies, Inc.)

  	
   

  	
  19,950

  	
   

  	
  $

  	
  3,000,000

  	
   

  	
  $

  	
  150.3759

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Convertible Bonds

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PCT Limited
  (Professional Computer Technology, Limited)

  	
   

  	
  1,485,493

  	
   

  	
  $

  	
  1,721,376

  	
   

  	
  $

  	
  1.16

  	
   

  	
  NTD 33.80

  	
   

  
	
  Insyde Software Corp.

  	
   

  	
   

  	
   

  	
  $

  	
  132,705

  	
   

  	
   

  	
   

  	
  NTD 31.20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note:
SST has a pending investment project of NT $520M for ACET in Q3, 2006Exhibit
10.14

INTEREST PURCHASE AND
SALE AGREEMENT

by and among

BIDMEX HOLDING, LLC,

as
Buyer,

and

THE COMPANIES LISTED ON
EXHIBIT A,

STRATEGIC MEXICAN
INVESTMENT PARTNERS, L.P.,

and

CARGILL FINANCIAL
SERVICES

INTERNATIONAL, INC.,

as
Sellers,

and

NATIONAL
UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA.,

AMERICAN GENERAL LIFE
INSURANCE COMPANY,

and

AMERICAN GENERAL LIFE AND
ACCIDENT INSURANCE COMPANY

August 8, 2006

 

TABLE OF CONTENTS

	
  1.

  	
  Purchase
  and Sale of Membership Interests

  	
   

  	
  1

  
	
   

  	
  1.1

  	
  Purchase
  and Sale of Membership Interests

  	
   

  	
  1

  
	
   

  	
  1.2

  	
  Purchase
  Consideration

  	
   

  	
  1

  
	
   

  	
  1.3

  	
  Verification
  Procedure; Adjustment

  	
   

  	
  2

  
	
   

  	
  1.4

  	
  Closing

  	
   

  	
  3

  
	
   

  	
  1.5

  	
  Further Assurances

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Representations
  and Warranties of Each Company

  	
   

  	
  3

  
	
   

  	
  2.1

  	
  Existence;
  Good Standing; Authority of Each Company

  	
   

  	
  4

  
	
   

  	
  2.2

  	
  Existence;
  Authority of Subsidiaries

  	
   

  	
  4

  
	
   

  	
  2.3

  	
  Capitalization
  of the Company

  	
   

  	
  5

  
	
   

  	
  2.4

  	
  Capitalization
  of Subsidiary

  	
   

  	
  5

  
	
   

  	
  2.5

  	
  Assets of Subsidiary

  	
   

  	
  5

  
	
   

  	
  2.6

  	
  No
  Conflict

  	
   

  	
  5

  
	
   

  	
  2.7

  	
  Financial Statements

  	
   

  	
  6

  
	
   

  	
  2.8

  	
  Absence of
  Undisclosed Liabilities

  	
   

  	
  6

  
	
   

  	
  2.9

  	
  Absence of
  Certain Changes

  	
   

  	
  6

  
	
   

  	
  2.10

  	
  Consents and
  Approvals

  	
   

  	
  9

  
	
   

  	
  2.11

  	
  Litigation

  	
   

  	
  9

  
	
   

  	
  2.12

  	
  Taxes

  	
   

  	
  9

  
	
   

  	
  2.13

  	
  Employees;
  Employee Benefit Plan

  	
   

  	
  11

  
	
   

  	
  2.14

  	
  Title to
  and Sufficiency of Assets

  	
   

  	
  11

  
	
   

  	
  2.15

  	
  Real
  Property

  	
   

  	
  12

  
	
   

  	
  2.16

  	
  Labor and Employment
  Matters

  	
   

  	
  12

  
	
   

  	
  2.17

  	
  Permits;
  Compliance with Laws

  	
   

  	
  12

  
	
   

  	
  2.18

  	
  Contracts
  and Commitments of the Company and Subsidiary

  	
   

  	
  12

  
	
   

  	
  2.19

  	
  Intellectual
  Property

  	
   

  	
  15

  
	
   

  	
  2.20

  	
  No Illegal Payments

  	
   

  	
  15

  
	
   

  	
  2.21

  	
  Transactions
  with Related Persons

  	
   

  	
  15

  
	
   

  	
  2.22

  	
  Solvency

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Representations
  and Warranties of Sellers

  	
   

  	
  15

  
	
   

  	
  3.1

  	
  Membership Interests

  	
   

  	
  15

  
	
   

  	
  3.2

  	
  Authority

  	
   

  	
  16

  
	
   

  	
  3.3

  	
  Brokers

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Representations
  and Warranties of Buyer

  	
   

  	
  17

  
	
   

  	
  4.1

  	
  Investment Intent

  	
   

  	
  17

  
	
   

  	
  4.2

  	
  Authority

  	
   

  	
  17

  
	
   

  	
  4.3

  	
  Brokers

  	
   

  	
  18

  

 

 i
 

 

 

	
  5.

  	
  Certain
  Covenants of Buyer, AIG and SMIP, the Companies and Sellers

  	
   

  	
  18

  
	
   

  	
  5.1

  	
  Regulatory
  and Other Authorizations; Consents

  	
   

  	
  18

  
	
   

  	
  5.2

  	
  Further
  Action

  	
   

  	
  18

  
	
   

  	
  5.3

  	
  Press
  Releases

  	
   

  	
  19

  
	
   

  	
  5.4

  	
  No Solicitation

  	
   

  	
  19

  
	
   

  	
  5.5

  	
  Preparation
  of Tax Returns; Payment of Taxes; Refunds.

  	
   

  	
  19

  
	
   

  	
  5.6

  	
  Conveyance Taxes;
  Costs

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Conditions To Closing

  	
   

  	
  20

  
	
   

  	
  6.1

  	
  Conditions
  to the Buyer’s Obligations

  	
   

  	
  20

  
	
   

  	
  6.2

  	
  Conditions
  to the Sellers’ Obligations

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Survival of
  Representations and Warranties; Indemnification

  	
   

  	
  24

  
	
   

  	
  7.1

  	
  Survival

  	
   

  	
  24

  
	
   

  	
  7.2

  	
  Indemnification
  by Sellers

  	
   

  	
  24

  
	
   

  	
  7.3

  	
  Treatment of
  Indemnity Payments

  	
   

  	
  26

  
	
   

  	
  7.4

  	
  Remedies Not Exclusive

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  General Provisions

  	
   

  	
  26

  
	
   

  	
  8.1

  	
  Notices

  	
   

  	
  26

  
	
   

  	
  8.2

  	
  Fees and Expenses

  	
   

  	
  28

  
	
   

  	
  8.3

  	
  Interpretation

  	
   

  	
  28

  
	
   

  	
  8.4

  	
  Counterparts

  	
   

  	
  29

  
	
   

  	
  8.5

  	
  Amendments

  	
   

  	
  29

  
	
   

  	
  8.6

  	
  Entire
  Agreement; Severability

  	
   

  	
  29

  
	
   

  	
  8.7

  	
  Third Party
  Beneficiaries

  	
   

  	
  29

  
	
   

  	
  8.8

  	
  Governing
  Law

  	
   

  	
  29

  
	
   

  	
  8.9

  	
  Assignment

  	
   

  	
  30

  
	
   

  	
  8.10

  	
  Consent to Jurisdiction

  	
   

  	
  30

  
	
   

  	
  8.11

  	
  Mutual Drafting

  	
   

  	
  30

  
	
   

  	
  8.12

  	
  Acknowledgment

  	
   

  	
  30

  
	
   

  	
  8.13

  	
  Remedies

  	
   

  	
  30

  
	
   

  	
  8.14

  	
  Waiver

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Definitions

  	
   

  	
  31

  
	
   

  	
  9.1

  	
  Definitions

  	
   

  	
  31

  
	
   

  	
  9.2

  	
  Other Definitions

  	
   

  	
  35

  

 

 ii
 

 

EXHIBITS

 

	
  Exhibit A

  	
   

  	
  Sellers; Membership Interests; Purchase Price
  Allocation

  
	
  Exhibit B

  	
   

  	
  Form of Closing Reconciliation

  
	
  Exhibit C

  	
   

  	
  Comprehensive Transaction Documents

  
	
  Exhibit D

  	
   

  	
  Contributed Subsidiary Loans

  
	
  Exhibit E

  	
   

  	
  Refinanced Subsidiary Loans

  
	
  Exhibit F

  	
   

  	
  Assumed Loans

  
	
  Exhibit G

  	
   

  	
  Subsidiary Portfolios

  

SCHEDULES

	
  Schedule 2.2

  	
   

  	
  Subsidiaries

  
	
  Schedule 2.4

  	
   

  	
  Capitalization of Subsidiary

  
	
  Schedule 2.5

  	
   

  	
  Assets of Subsidiary

  
	
  Schedule 2.7

  	
   

  	
  Financial Statements

  
	
  Schedule 2.8

  	
   

  	
  Absence of Undisclosed Liabilities

  
	
  Schedule 2.9

  	
   

  	
  Absence of Certain Changes

  
	
  Schedule 2.10(a)

  	
   

  	
  Government Consents

  
	
  Schedule 2.10(b)

  	
   

  	
  Third-Party Consents

  
	
  Schedule 2.12

  	
   

  	
  Taxes

  
	
  Schedule 2.14

  	
   

  	
  Loans to the Company

  
	
  Schedule 2.15

  	
   

  	
  Real Property

  
	
  Schedule 2.17

  	
   

  	
  Permits

  
	
  Schedule 2.18(a)

  	
   

  	
  Contracts and Commitments of the Company

  
	
  Schedule 2.18(a)(x)

  	
   

  	
  Subservicing Agreements of the Company

  
	
  Schedule 2.18(a)(xi)

  	
   

  	
  Pledges/Promissory Notes of the Company

  
	
  Schedule 2.18(b)

  	
   

  	
  Contracts and Commitments of the Subsidiary

  
	
  Schedule 2.18(b)(ix)

  	
   

  	
  Subservicing Agreements of the Subsidiary

  
	
  Schedule 2.19

  	
   

  	
  Intellectual Property

  
	
  Schedule 2.21

  	
   

  	
  Transactions with Related Persons

  

 

 iii

Table of Contents

THIS INTEREST PURCHASE AND SALE AGREEMENT
(this “Agreement”) is made and entered into as of August 8, 2006, by and
among Bidmex Holding, LLC, a Delaware limited liability company (“Buyer”),
the Delaware limited liability companies listed on Exhibit A attached
hereto (each individually, a “Company,” and, collectively, the “Companies”),
Strategic Mexican Investment Partners, L.P., a Texas limited partnership, on
its behalf and on behalf of its Affiliates (“SMIP”), and Cargill
Financial Services International, Inc., a Delaware corporation (“Cargill”
and, together with SMIP, the “Sellers”). 
The Sellers and the Companies shall be collectively referred to as the “Seller
Entities.”  National Union Fire
Insurance Company of Pittsburgh, Pa., a corporation incorporated under the laws
of Pennsylvania, American General Life Insurance Company, a corporation
incorporated under the laws of Texas; and American General Life and Accident
Insurance Company, a corporation incorporated under the laws of Tennessee
(collectively referred to as “AIG”), are each a party to this Agreement.

WHEREAS, the Sellers are the
sole members of the Companies and collectively own beneficially and of record
100% of the membership interests in each of the Companies, as set forth on Exhibit
A attached hereto (collectively, the “Membership Interests”);

WHEREAS, the Sellers desire to
sell to Buyer, and Buyer desires to purchase from the  Sellers, 100% of the Membership Interests on
the terms and conditions set forth herein;

NOW, THEREFORE, in consideration
of the foregoing and the mutual covenants and agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:

1.                                      Purchase
and Sale of Membership Interests

1.1                                 Purchase
and Sale of Membership Interests.  Subject to the terms and conditions set forth
in this Agreement and in reliance on the representations and warranties made by
each of the Seller Entities, at the Closing (as defined below), Buyer agrees to
purchase from each Seller, and each Seller severally agrees to sell to Buyer,
all of such Seller’s Membership Interests (as set forth under such Seller’s name
on Exhibit A) for the aggregate consideration, in respect of such Seller’s
Membership Interests, equal to the sum of (i) the cash purchase price and (ii)
15% of the membership interests in Buyer, in each case attributable to such
Seller’s Membership Interests in each Company set forth opposite such Company’s
name on Exhibit A.  The sum of the
consideration payable to each Seller pursuant to this Section 1.1 shall equal
the aggregate consideration set forth in Section 1.2 below.

1.2                                 Purchase Consideration.  In consideration of
the sale by Sellers to Buyer of the Membership Interests pursuant to
Section 1.1, Buyer (i) will pay or cause to be paid a
cash purchase price to Cargill and (ii)(a) will pay or cause to be paid a cash
purchase price and (b) immediately prior to the execution of this
Agreement, has issued a 15% membership interest in the Buyer, in the case of
clauses (ii)(a) and (b) to SMIP.  The
aggregate cash purchase price payable to Sellers will be equal to $MxPs
1,298.82 million (the “Closing Purchase Price”), as (i) reduced by the
AIG Asset Purchase Price and the AIG Escrowed Funds and (ii) further reduced by
the SMIP Asset Purchase Price and the value calculated in Mexican Pesos of 15%
of the membership interests in the Buyer and (iii) as adjusted, if necessary,
pursuant to Section 1.3, to be converted at the Exchange Rate and paid in U.S.
Dollars (the “Purchase Price”).  The

 

Table
of Contents

Purchase Price will be paid by Buyer at, or within two
(2) Business Days of, the Closing in U.S. Dollars by wire transfer of
immediately available funds and the release of the AIG Escrowed Funds in
accordance with the terms and conditions of the Escrow Agreement.  Buyer will deliver to
Cargill a portion of the Purchase Price which is equal to the consideration to
which such Seller is entitled in respect of the Membership Interests held by
such Seller as of the Closing as set forth on Exhibit A to the account
designated by Cargill in writing to the Buyer at least two (2) Business Days
prior to the Closing.  Buyer will deliver to SMIP the remainder of
the Purchase Price.

1.3                                 Verification Procedure; Adjustment.

(a)                                  Within
45 days after the Closing Date, the Buyer and its manager shall prepare and
deliver to Cargill and AIG a statement detailing a reconciliation of the cash
flows generated by, and distributions (including debt service), if any, made
by, the Portfolios during the period from the Valuation Date through the
Closing Date on a Portfolio by Portfolio basis measured against the cash
balance set forth in the unaudited balance sheets of the Companies and the
unaudited balance sheets of the Subsidiaries as of the close of business on the
Valuation Date (together, the “Closing Reconciliation”).  Each Closing Reconciliation shall be prepared
in accordance with the methodology set forth in
the form attached as Exhibit B hereto.  Unless Cargill delivers the Dispute Notice
(as defined below) to Buyer within 15 days after receipt of the Closing
Reconciliation, the Closing Reconciliation shall be deemed the “Final Closing
Reconciliation,” shall be binding upon all parties and shall not be subject to
dispute or review.  If Cargill disagrees
with the Closing Reconciliation, Cargill may, within 15 days after receipt
thereof, notify the Buyer in writing (the “Dispute Notice”), which
Dispute Notice shall provide reasonable detail of the nature of each disputed
item on the Closing Reconciliation, including all supporting documentation
thereto.  The Sellers and Buyer shall
first use commercially reasonable efforts to resolve such dispute between
themselves and, if the parties are able to resolve such dispute, the Closing
Reconciliation shall be revised to the extent necessary to reflect such
resolution, shall be deemed the “Final Closing Reconciliation” and shall
be conclusive and binding upon all parties and shall not be subject to dispute
or review.  If the parties are unable to
resolve the dispute within 30 days after receipt by the Buyer of the Dispute
Notice, the parties shall submit the dispute to a mutually acceptable
internationally recognized accounting firm at such firm’s New York, New York
office (the “Accountants”).  The
Accountants shall act as experts and not arbiters and shall determine only
those items in dispute on the Closing Reconciliation.  Promptly, but no later than 30 days after
engagement, the Accountants shall deliver a written report to the Sellers and
Buyer as to the resolution of the disputed items.  The Closing Reconciliation as determined by
the Accountants shall be deemed the “Final Closing Reconciliation,”
shall be conclusive and binding upon all parties and shall not be subject to
dispute or review.  The fees and expenses
of the Accountants in connection with the resolution of disputes pursuant to
this Section 1.3(a) shall be borne equally by Sellers, on the one hand, and
Buyer, on the other hand.

(b)                                 As
provided in Section 1.2 hereof, the portion of the Closing Purchase Price
applicable to the Company or the Companies whose Portfolio was the subject of
the dispute, shall be adjusted, dollar for dollar (in U.S. Dollars converted
from Mexican Pesos at the Exchange Rate), up or down, as appropriate, to
reflect (x) any distributions (including debt

 2
 

 

Table of Contents

service) made
subsequent to the Valuation Date not in respect of pre-Valuation Date cash
flows or (y) other necessary corrections of errors or omissions with respect to
the Estimated Closing Date Balance Sheet as corrected in the Final Closing
Statement. Within five (5) Business Days following the determination of a Final
Closing Statement in accordance with Section 1.3(a), (i) if an adjustment
is required in Buyer’s favor, each Seller shall pay to Buyer an amount equal to
such Seller’s pro rata portion (as set forth under such Seller’s name opposite
the applicable Company name in column 4 of Exhibit A) of the amount
of the required adjustment and, (ii) if an adjustment is required in Sellers’
favor, Buyer shall pay to each Seller an amount equal to such Seller’s pro rata
portion (as set forth under such Seller’s name opposite the applicable Company
name in column 4 of Exhibit A) of the amount of the required adjustment,
in each case by wire transfer of immediately available funds to the account
designated by the receiving party at least two (2) Business Days in
advance.  If any payment required under
this Section 1.3(b) is not made in full within such three (3) Business Day
period, such payment will thereafter bear simple interest at an annual rate
equal to the prime rate published in the Wall Street Journal plus two percent
(2%) until paid in full.

(c)                                  To the extent Buyer, on the one hand, and
Sellers, on the other, are each obligated to pay to the other an amount pursuant
to this Section 1.3, such amounts may be set off against each other and the
remaining balance shall be paid by the applicable party or parties in
accordance with this Section 1.3.

1.4                                 Closing.  The closing (the “Closing”) of the purchase and sale of the Membership Interests
and the other transactions contemplated by this Agreement shall be held at the
offices of Goodwin Procter LLP,
599 Lexington Avenue, New York, New York (or at such other place as the Buyer and the Sellers may
mutually determine), on a date mutually determined by the Buyer and the
Sellers on or after the date on which the conditions to Closing set forth in
Sections 6.1 and 6.2 of this Agreement have been satisfied or waived.  The date on which the Closing actually occurs
is sometimes referred to herein as the “Closing Date.”  It is understood and
agreed that if all the transactions contemplated herein do not happen on the
Closing Date, including without limitation the transactions contemplated by the
Asset Sale and Purchase Agreement, the transactions that were effected will be
reversed, the Closing Purchase Price shall be returned to the Buyer and the
Membership Interests shall be returned to the Sellers.

1.5                                 Further Assurances. 
Sellers shall, from time to time after the Closing at the reasonable
request of Buyer, execute and deliver such further instruments of transfer and
take such other action as may be reasonably required to more effectively
transfer and vest in Buyer the Membership Interests and all rights thereto, and
to fully implement the provisions of this Agreement.

2.                                      Representations
and Warranties of Each Company.  In order to induce Buyer to enter into this
Agreement and consummate the transactions contemplated hereby, each Company,
severally and only with respect to itself, and each Seller, severally with
respect to each and every Company, hereby makes the following representations
and warranties to Buyer.  For the avoidance of doubt, no Company is
making any representation or warranty about any other

 3
 

 

Table
of Contents

Company and no Seller is
making any representation or warranty about any membership interests other than
the membership interests which it is selling.

2.1                                 Existence; Good Standing; Authority of Each Company.

(a)                                  The Company is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware.  The Company has all requisite
limited liability company power and authority under the Delaware Limited Liability
Company Act, as amended from time to time, to conduct the businesses in which
it is engaged, to own, operate, lease, encumber and use its properties and
assets that it purports to own or use, to perform its obligations and carry on
its business as currently conducted.  The
Company is duly licensed or qualified to do business as a foreign limited
liability company under the laws of each other jurisdiction in which the
character of its properties or in which the transaction of its business makes
such qualification necessary, except where the failure to be so licensed or
qualified would not, individually or in the aggregate, have a Material Adverse
Effect.  Copies of the Company’s
Certificate of Formation (the “Company Certificate”) and Limited Liability
Company Agreement (the “Company LLC Agreement”), each as amended to date
and made available to Buyer’s counsel, are complete and correct and the Company
is not in violation of its Company Certificate or Company LLC Agreement.

(b)                                 The
Company has the limited liability company power and authority to execute and
deliver this Agreement and the other Comprehensive Transaction Documents to
which it is a party and to perform its obligations hereunder and
thereunder.  The execution and delivery
of this Agreement and the other Transaction Documents, the performance by the
Company of its obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite action on the part of the Company. 
This Agreement has been duly executed and delivered by the Company and,
assuming the due authorization, execution and delivery of this Agreement by
Buyer, this Agreement constitutes a legal, valid and binding obligation of the
Company, enforceable against each Company in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights
generally and by general equitable principles.

2.2                                 Existence; Authority of Subsidiaries.  Except for the Person set forth on Schedule
2.2 opposite the name of each Company (in each case, the “Subsidiary”
and together with the subsidiaries of each other Company, the “Subsidiaries”),
the Company does not own, directly or indirectly, any capital stock of or other
equity interest in, or control, directly or indirectly, another Person, and the
Company is not, directly or indirectly, a party to, member of or participant in
any partnership, joint venture or similar business entity.  The Subsidiary is duly organized and
validly existing as a limited liability partnership with variable capital (“sociedad de responsabilidad limitada de capital variable”)
under the laws of Mexico.  The Subsidiary
has all requisite limited liability partnership power and authority under the
laws of Mexico, as amended from time to time, to conduct the businesses in
which it is engaged, to own, operate, lease, encumber and use its properties
and assets that it purports to own or use, to perform its obligations and carry
on its business as currently conducted. 
The Subsidiary is duly licensed or qualified to do business as a foreign
corporation or foreign limited liability partnership under the

 4
 

 

Table
of Contents

laws of each other jurisdiction in which the character
of its properties or in which the transaction of its business makes such
qualification necessary, except where the failure to be so licensed or
qualified would not, individually or in the aggregate, have a Material Adverse
Effect.  Copies of the constituent
documents of the Subsidiary, as amended to date and made available to Buyer’s
counsel, are complete and correct.

2.3                                 Capitalization of the Company.

(a)                                  As
of the date of this Agreement, the Sellers are the only members of the Company
and the Membership Interests owned by the Sellers, as set forth on Exhibit A,
constitute all of the outstanding membership interests of such Company.  The Company has no outstanding subscriptions,
options, warrants, agreements, arrangements or commitments of any kind for or
relating to the issuance or sale of, any membership interests of the
Company.  The Company has no obligation
to purchase, redeem, or otherwise acquire any of their membership interests or
any interests therein.  All of the
Membership Interests have been duly and validly authorized and issued.

(b)                                 There
are no preemptive rights, rights of first refusal, put or call rights or
obligations or anti-dilution rights with respect to the issuance, sale or
redemption of the Membership Interests, other than rights waived
hereunder.  There are no rights to have
the Membership Interests registered for sale to the public pursuant to the laws
of any jurisdiction, and there are no agreements relating to the voting or
restricting the transfer of the Membership Interests.

2.4                                 Capitalization of Subsidiary.  Except for the Subsidiary, the Company does
not own or control, directly or indirectly, any interest in any other
corporation, partnership, limited liability company, association or other
business entity.  Except as set forth on Schedule
2.4, the Company owns beneficially and of record all of the issued and
outstanding equity interests of the Subsidiary.

2.5                                 Assets of Subsidiary. 
The Subsidiary of each Company has been the sole owner of the Portfolio
attributable to such Company as set forth on Schedule 2.5 opposite the
Subsidiary’s name since the Valuation Date.

2.6                                 No Conflict.  Neither the execution and delivery by the
Company of this Agreement and the other Comprehensive Transaction Documents to
which it is a party, nor the consummation by the Company of the transactions in
accordance with the terms hereof and thereof, conflicts with or results in a
breach of any provisions of the Company LLC Certificate, the Company LLC
Agreement or the organizational documents of the Subsidiary.  Assuming the consents, approvals and
authorizations contemplated by Section 2.11 are obtained, the execution and
delivery by the Company of this Agreement and the other Comprehensive
Transaction Documents to which it is a party and the consummation by the
Company and Sellers of the transactions in accordance with the terms hereof and
thereof do not and will not (i) violate, or conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default), or give rise to a
right of termination, cancellation or acceleration of any obligation or loss of
any material benefit, require

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any notice to, declaration or filing with, or consent
or waiver, constitute a change of control, require the payment of a penalty
under or result in the imposition of any encumbrance on the Company’s or it
Subsidiary’s assets under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, lease, permit, license,
authorization, contract or other agreement to which the Company or its Subsidiary
is a party or by which the Company, its Subsidiary or any of their respective
properties or assets is bound and (ii) violate, conflict with or result in a
violation of, or constitute a default (whether after the giving of notice,
lapse of time or both) under, any provision of any law, regulation or rule, or
any order of, or any restriction imposed by, any court or governmental agency
applicable to the Company or its Subsidiary.

2.7                                 Financial Statements. 
The Company has delivered to Buyer on the date hereof the following
financial statements:

(a)                                  Unaudited
balance sheet of the Company and the audited balance sheet of the Subsidiary as
of December 31, 2005 (collectively, the “Balance Sheet”) and statements
of income, changes in equity, and cash flow for the fiscal year then ended for
each of the Company and the Subsidiary, together with the notes thereto and the
reports thereon of the Subsidiary’s independent certified public accountants;
and

(b)                                 Unaudited
balance sheet of the Company and unaudited balance sheet of the Subsidiary
(collectively, the “Unaudited Balance Sheet”) as of close of business on
February 28, 2006 (the “Valuation Date”) and the related statements of
income and cash flow as of such date for each of the Company and the
Subsidiary.

The financial statements described in clauses (a) and
(b) above, together with the unaudited balance sheet of the Company and the
unaudited balance sheet of the Subsidiary as of the last day of each fiscal
month ended after the Valuation Date and the related statements of income and
cash flow for each such fiscal month for each of the Company and the
Subsidiary, are collectively referred herein as the financial statements (the “Financial
Statements”) and are hereby delivered as Schedule 2.7.

Subject to the absence of footnotes, narrative
disclosures and year-end audit adjustments with respect to any unaudited
Financial Statements, the Financial Statements have been prepared in accordance
with U.S. GAAP with respect to the Companies and Mexican GAAP with respect to
the Subsidiaries consistently applied, and present fairly in all material
respects the consolidated financial condition of the Company.

2.8                                 Absence of Undisclosed Liabilities.  Except as may be disclosed on Schedule 2.8
or shown on the Balance Sheet, and except for liabilities incurred in the
ordinary course of business, consistent with past practices, since the date of
the Balance Sheet, the Company and, to Seller’s Knowledge, the Subsidiaries
have no liabilities or obligations of any nature, whether accrued, absolute,
contingent, asserted or unasserted, liquidated or unliquidated, matured or
unmatured, or otherwise (each, a “Liability”).

2.9                                 Absence of Certain Changes. 
Except as contemplated by the Transaction Documents or as set forth on Schedule
2.9, from the Valuation Date to the date of this

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Agreement, the Company has operated only in the
ordinary course of business consistent with past practices and there has not
been any:

(a)                                  change
in the Company’s authorized or issued Membership Interests or the Subsidiary’s
authorized and issued equity interests; grant of any option, right to purchase
or similar right regarding the Membership Interests of the Company or equity
interests of the Subsidiary; purchase, redemption, retirement, or other
acquisition by the Company of any such Membership Interests or by the
Subsidiary of any such equity interests; declaration or payment of any dividend
or other distribution or payment (including debt service) in respect of the
Membership Interests of the Company or equity interests of the Subsidiary since
the Valuation Date; split, combination or reclassification of any of the
Membership Interests of the Company or equity interests of the Subsidiary or
issuance or authorization for the issuance of any other securities in respect
of, in lieu of, or in substitution for any of the Company’s or the Subsidiary’s
other securities, or granted any options, warrants or other rights to purchase
or obtain (including upon conversion, exchange or exercise) any of the Company’s
Membership Interests or the Subsidiary’s equity interests; or purchase,
redemption or other acquisition of any of the Company’s Membership Interests or
the Subsidiary’s equity interests or any rights warrants or options to acquire
any such Membership Interests or equity interests;

(b)                                 damage
to or destruction or loss of any asset or property of the Company whether or
not covered by insurance, which has had or could be reasonably likely to,
individually or in the aggregate, have a Material Adverse Effect;

(c)                                  incurrence
of indebtedness or guarantee of debt or other liability of any third party by
the Company, or incurrence of indebtedness or guarantee of debt of any third
party by the Subsidiary;

(d)                                 change
in the accounting policies, procedures, methods or principles, collection
policies, pricing policies or payment policies used by the Company, other than
(i) write-downs or write-offs in the value of assets as required by U.S.
GAAP, or (ii) such adjustments as may be required by U.S. GAAP as a result
of the transactions contemplated by this Agreement, or change in the accounting
policies, procedures, methods or principles, collection policies, pricing
policies or payment policies used by the Subsidiary, other than
(x) write-downs or write-offs in the value of assets as required by
Mexican GAAP, or (y) such adjustments as may be required by Mexican GAAP as a
result of the transactions contemplated by this Agreement;

(e)                                  change
in the assets, liabilities, condition (financial or other), properties,
business, operations or prospects of the Company, which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has had or could be reasonably likely to, individually or
in the aggregate, have a Material Adverse Effect;

(f)                                    mortgage,
lien or other encumbrance placed on any of the properties of the Company or, to
the Sellers’ knowledge, its Subsidiaries, other than purchase money liens and
liens for taxes not yet due and payable;

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(g)                                 purchase,
sale or other disposition, or any agreement or other arrangement for the
purchase, sale or other disposition, of any properties or assets by the Company
involving the payment or receipt of more than $50,000, or purchase, sale or
other disposition of any properties or assets by the Subsidiaries involving the
payment or receipt of any amount, in either case from the Valuation Date
through June 30, 2006;

(h)                                 payment
or discharge of a lien or liability of the Company which was not shown on the
Balance Sheet or incurred in the ordinary course of business thereafter;

(i)                                     contingent
liability incurred by the Company as guarantor or otherwise with respect to the
obligations of others or any cancellation of any material debt or claim owing
to, or waiver of any material right of, the Company, including any write-off or
compromise of any accounts receivable other than in the ordinary course of
business consistent with past practice;

(j)                                     obligation
or liability incurred by the Company or the Subsidiary to any of its directors
or the Sellers, or any loans or advances made by the Company or the Subsidiary
to any of its directors or the Sellers;

(k)                                  amendment
or termination of any material contract or agreement to which the Company is a
party or by which it is bound;

(l)                                     change
in magnitude or method of determination of the servicing fee under the existing
servicing agreements or in the Servicing Costs and Asset Level Expenses, each
as defined in the Servicing Agreement;

(m)                               other
transaction entered into by the Company or the Subsidiary other than
transactions in the ordinary course of business;

(n)                                 except
as provided in this Agreement, any amendment to the Company Certificate or
Company LLC Agreement or the Subsidiary’s Deed of Incorporation or Bylaws;

(o)                                 change
in collection practices of the Subsidiary with respect to its Portfolio;

(p)                                 made
any Tax election with respect to the Company or any Subsidiary, settled or
compromised any Tax liability, extended any statute of limitations with respect
to Taxes, or otherwise changed in any material respect the tax policies of the
Company or any of its Subsidiaries;

(q)                                 prepayment
of any loans from its Subsidiary, members, managers, officers, or directors to
any Person affiliated with any of the foregoing, (ii) change in its borrowing
arrangements, (iii) modification, amendment or termination of any of its or the
Subsidiary’s material contracts, except as specifically provided in this
Agreement, or (iv) waiver, release or assignment of any material rights or
claims; and

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(r)                                    entering
into any written agreement to do any of the actions described in clauses (a)
through (q).

2.10                           Consents
and Approvals.

(a)                                  Except
as set forth on Schedule 2.10(a), the execution, delivery and
performance of this Agreement by the Company and Sellers will not, as of the
Closing Date, require any consent, approval, authorization or other action by,
or filing with or notification to, any federal, state, local, or any foreign
government, governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body (a “Governmental Authority”).

(b)                                 Except
as set forth on Schedule 2.10(b), the execution, delivery and
performance of this Agreement by the Company and Sellers will not, as of the
Closing Date, require any third-party consents, approvals, authorizations
or actions.

2.11                           Litigation.  There is no litigation or governmental or
administrative proceeding or investigation pending or, to the Knowledge of the
Company, threatened against the Company or affecting the properties or assets
of the Company, or, as to matters related to the Company, against any director
or member of the Company in their respective capacities in such positions, nor,
to the Knowledge of the Company, has there occurred any event nor does there
exist any condition on the basis of which any such claim may be asserted, which
could reasonably be expected to adversely impact the ability of Sellers to
consummate the transactions contemplated in this Agreement and the other
Comprehensive Transaction Documents to which each such Seller is a party or
cause any representation or warranty made by the Sellers hereunder to be
untrue.

2.12                           Taxes.

(a)                                              (i)                                     The
Companies and their Subsidiaries have paid or caused to be paid all Taxes
required to be paid by them.  All Taxes
required to be withheld by the Companies or any of their Subsidiaries including, but not limited to,
Taxes arising as a result of payments to foreign persons or to employees of the
Companies or any of their Subsidiaries, have been collected and withheld, and
have either been paid to the respective governmental agencies, set aside in
accounts for such purpose, or accrued, reserved against, and entered on the
books and records of the particular Company or such Subsidiary;

(ii)                                  each Company and each
Subsidiary of a Company have, in accordance with applicable law, duly filed
with the appropriate federal, state, local, foreign and any other Taxing Authorities all material Tax Returns required
to be filed by or with respect to such Company and each of its Subsidiaries
(including with respect to the Seller Loans, the Portfolio and all other
assets, liabilities, and business of such Company or any of its Subsidiaries),
and such Tax Returns are complete and accurate in all material respects.  Schedule 2.12(a)(ii) lists all of the
income and other material Tax Returns filed with respect to each Company and
each of its Subsidiaries for taxable

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periods
ended on or after January 1, 2001, and said Schedule indicates those Tax
Returns that have been audited or currently are the subject of an audit.  For each taxable period ending after January
1, 2001, Sellers have delivered to Buyer correct and complete copies of all
income and other material Tax Returns filed by, and all material examination
reports and material statements of deficiencies, in each case relating to
income and other material Taxes, assessed against or agreed to by, each Company
or any of its Subsidiaries;

(iii)                               neither the IRS nor any
other Taxing Authority is now asserting or threatening to assert against any
Company or any Subsidiary of a Company any deficiency or claim for additional
Taxes.  No claim has ever been made by a
Taxing Authority in a jurisdiction where a Company or any of its Subsidiaries
does not file Tax Returns that such Company or any Subsidiary of such Company
is or may be subject to taxation by that jurisdiction.  There are no security interests on any of the
assets of any Company or any Subsidiary of such Company that arose in
connection with any failure (or alleged failure) to pay any Taxes.  No Company and no Subsidiary of a Company has
ever entered into a closing agreement pursuant to Section 7121 of the Code (or
any similar provision of foreign, state or local law);

(iv)                              except as set forth on Schedule
2.12(a)(iv), no Company and no Subsidiary of a Company has received any
written notice of deficiency or assessment from any federal, state, local,
foreign or any other Taxing Authority with respect to liabilities for Taxes which
have not been paid or finally settled;

(v)                                 except as set forth on
Schedule 2.12(a)(v), no audit or examination of any Tax Return
concerning any Company or any Subsidiary of a Company is pending, being
conducted or threatened in writing by a Taxing Authority;

(vi)                              no extension or waiver of
the statute of limitations for the assessment or collection of any Taxes has
been granted by any Company or any Subsidiary of a Company;

(vii)                           no Company and no Subsidiary
of a Company has ever been (or has ever had any liability for unpaid Taxes
because it once was) a member of an “affiliated group” (as defined in Section
1504(a) of the Code).  None of the
Companies and their Subsidiaries has ever filed, or has ever been required to
file, a consolidated, combined or unitary tax return with any other
entity.  None of the Companies and their
Subsidiaries is a party to, nor has any obligation under, any tax sharing
agreement.  None of the Companies and
their Subsidiaries has any liability for the Taxes of any Person as a transferee
or successor, by contract or otherwise;

(viii)                        except as set forth on Schedule
2.12(a)(viii), for all Tax periods since formation, each Company and each
Subsidiary has been properly classified for all federal, state and local income
tax purposes as a partnership and not as an association or a publicly traded
partnership within the meaning of Section 7704(b) of the Code and the

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Treasury Regulations thereunder, and none of the Companies, their
Subsidiaries and the Sellers has ever taken any position inconsistent with the
such classifications;

(ix)                                except as set forth on Schedule
2.12(a)(ix), there are no outstanding powers of attorney enabling any
Person that is a current or former employee, agent or representative of Cargill
or any of its Affiliates to represent any Company or any of the Companies’
Subsidiaries with respect to Tax matters;

(x)                                   For purposes of this
Agreement, all references to Sections of the Code shall include any predecessor
provisions to such Sections.

(b)                                 For
the purposes of this Agreement:

(i)                                     “Tax” or “Taxes”
means any federal, state, local or foreign income, gross receipts, capital
gains, franchise, alternative or add-on minimum, estimated, sales, use, goods
and services, transfer, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, environmental, customs,
duties, real property, special assessment, personal property, capital stock,
social security, unemployment, employment, disability, payroll, license,
employee or other withholding, contributions or other tax, of any kind
whatsoever, including any interest, penalties or additions to tax or additional
amounts in respect of the foregoing.

(ii)                                  “Taxing Authority”
shall mean any governmental authority, body or entity (including, without
limitation, any administrative and regulatory authority, agency, department,
board, commission or instrumentality) having jurisdiction over the assessment,
determination, collection or other imposition of any Tax.

(iii)                               “Tax Returns” means returns, declarations, reports, claims for
refund, information returns or other documents (including any related or
supporting schedules, statements or information) filed or required to be filed
in connection with the determination, assessment or collection of Taxes of any
party or the administration of any laws, regulations or administrative
requirements relating to any Taxes.

2.13                           Employees; Employee Benefit Plan.  The Company does not currently have and has
never had any employees.  The Company
does not maintain or contribute to and has never maintained or contributed to,
any employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), any fringe benefit, stock
option, equity-based compensation, phantom stock, bonus or incentive plan,
severance pay policy or agreement, retirement, pension, profit sharing or
deferred compensation plan or agreement, or any similar plan or agreement or
any plan or arrangement providing compensation to employees or non-employee
directors.

2.14                           Title to and Sufficiency of Assets.  Each Company has good, valid and marketable
title to all assets material to its business and to those assets reflected on
the Balance Sheet or acquired by it after the date thereof (except for
properties disposed of since that date in the ordinary course of business),
free and clear of any claims, mortgage, pledge, lien, conditional

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sale agreement, security
title, Encumbrance or other charge, except for liens for Taxes not yet due and
payable and liens expressly contemplated by the Transaction Documents.  All loans set forth on Schedule 2.14
opposite the Company’s name have been contributed to the Company.  The assets of the Company are sufficient for
the conduct of its business as presently conducted.

2.15                           Real Property.  The Company does not own or
lease any real property.  To the Seller’s
Knowledge, the real property owned and leased by the Subsidiaries is listed on Schedule
2.15.

2.16                           Labor and Employment Matters.  Neither the Company nor the
Subsidiary is a party to any employment, severance or consulting agreements
with any manager, agent, director, officer or consultant, except as set forth
on Schedule 2.18(b).

2.17                           Permits; Compliance with Laws.  Each of the Company and the Subsidiary has
all franchises, authorizations, approvals, orders, consents, licenses,
certificates, permits, registrations, qualifications or other rights and
privileges (collectively “Permits”) necessary to permit it to own its
property and to conduct its business as it is presently conducted or proposed
to be conducted and all such Permits are valid and in full force and effect,
except where the failure to maintain or obtain any such Permit could not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.  No Permit is subject to
termination as a result of the execution of this Agreement or consummation of
the transactions contemplated hereby.  Schedule
2.17 contains a complete and accurate list of all material Permits held by
the Company or the Subsidiary, as the case may be.  Each of the Company and the Subsidiary is now
and has heretofore been in compliance with all applicable statutes, judgments,
decrees, ordinances, orders, rules and regulations promulgated by any U.S.
federal, state, municipal, non-U.S. or other governmental authority, which
apply to the conduct of its business or by which any property or asset of the
Company or the Subsidiary, as the case may be, is bound, except where the
failure to be in compliance could not reasonably be expected to, individually
or in the aggregate, have a Material Adverse Effect.  The Company has never entered into or been
subject to any judgment, consent decree, compliance order or administrative
order with respect to any aspect of the business, affairs, properties or assets
of the Company or received any request for information, notice, demand letter,
administrative inquiry or formal or informal complaint or claim from any
regulatory agency with respect to any aspect of the business, affairs,
properties or assets of the Company.

2.18                           Contracts and Commitments of the Company and
Subsidiary.

(a)                                  Except
as expressly contemplated by the Transaction Documents or as set forth on Schedule
2.18(a) (with true and correct copies of each agreement referred to therein
provided to Buyer), the Company is not a party or subject to or bound by:

(i)                                     any
contract or agreement involving a potential commitment or payment by the
Company in excess of $50,000;

(ii)                                  any
contract, lease or agreement which is not cancelable by the Company without
penalty on not less than 90 days notice;

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(iii)                               any
contract containing covenants directly or explicitly limiting in any respect
the freedom of the Company to compete in any line of business or with any
person or entity;

(iv)                              any
indenture, mortgage, promissory note, loan agreement, guaranty or other
agreement or commitment for borrowing or any pledge or security arrangement;

(v)                                 any
redemption or purchase agreements or other agreements affecting or relating to
the Membership Interests of the Company, other than the limited liability
company operating agreement of such Company, including, without limitation, any
agreement with any member of the Company which includes anti-dilution rights,
registration rights, voting arrangements, operating covenants or similar
provisions;

(vi)                              any
royalty, dividend or similar arrangement based on the revenues or profits of
the Company or any contract or agreement involving fixed price or fixed volume
arrangements;

(vii)                           any
joint venture or partnership agreement or other agreement which involves a
sharing of revenues, profits, losses, costs or liabilities by the Company with
any other Person;

(viii)                        any
acquisition, merger or similar agreement;

(ix)                                any
contract with any Governmental Authority;

(x)                                   any
subservicing agreements other than those set forth on Schedule 2.18(a)(x);

(xi)                                any
pledge or promissory note other than those set forth on Schedule 2.18(a)(xi)
with respect to the Assumed Loans;

(xii)                             any
contract not executed in the ordinary course of business; or

(xiii)                          any
other material contract.

All such
contracts, agreements, leases and instruments are in full force and effect and
constitute legal, valid and binding obligations of the Company and, to the
Knowledge of the Company, of the other parties thereto, and are enforceable
against the Company in accordance with their respective terms (except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally and by general
equitable principles).  The Company has
no Knowledge of any notice or threat to terminate any such contracts,
agreements, leases or instruments. 
Neither the Company nor, to the Knowledge of the Company, any other
party is in default in complying with any provisions of any such contract,
agreement, lease or instrument, or any other contract, agreement, lease or
instrument, and no condition or event or fact exists which, with notice, lapse
of time or both, could constitute a default thereunder on the part of the
Company, except for any such default,

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condition, event or fact
that, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

(b)                                 Except
as (i) expressly contemplated by the Transaction Documents, (ii) set forth
on Schedule 2.18(b) (with true and correct copies of each agreement
referred to therein provided to Buyer), or (iii) to any contracts, commitments
or any indenture, mortgage, promissory note, loan agreement, guaranty or other
agreement or commitment for borrowing or any pledge or security arrangement
relating to a specific loan or asset or group of loans, or property derived
therefrom, that are included in the Portfolio owned by the Subsidiary, the
Subsidiary is not a party or subject to or bound by:

(i)                                     any
contract or agreement involving a potential commitment or payment by the
Subsidiary in excess of $50,000;

(ii)                                  any
contract, lease or agreement which is not cancelable by the Subsidiary without
penalty on not less than 90 days notice;

(iii)                               any
contract containing covenants directly or explicitly limiting in any respect
the freedom of the Subsidiary to compete in any line of business or with any
person or entity;

(iv)                              any
redemption or purchase agreements or other agreements affecting or relating to
the equity interests of the Subsidiary, including, without limitation, any
agreement which includes anti-dilution rights, registration rights, voting
arrangements, operating covenants or similar provisions;

(v)                                 any
royalty, dividend or similar arrangement based on the revenues or profits of
the Subsidiary or any contract or agreement involving fixed price or fixed
volume arrangements;

(vi)                              any
joint venture or partnership agreement or other agreement which involves a
sharing of revenues, profits, losses, costs or liabilities by the Subsidiary
with any other Person;

(vii)                           any
acquisition, merger or similar agreement;

(viii)                        any
contract with any Governmental Authority;

(ix)                                any
subservicing agreements other than those set forth on Schedule 2.18(b)(ix);

(x)                                   any
pledge or promissory note evidencing indebtedness of the Subsidiary;

(xi)                                any
contract not executed in the ordinary course of business; or

(xii)                             any
other material contract.

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All contracts,
agreements, leases and instruments listed on Schedule 2.18(b), except as
noted thereon, are in full force and effect and constitute legal, valid and
binding obligations of the Subsidiary and, to the Knowledge of the Subsidiary,
of the other parties thereto, and are enforceable against the Subsidiary in
accordance with their respective terms (except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally and by general equitable
principles).  The Subsidiary has no
Knowledge of any notice or threat to terminate any such contracts, agreements,
leases or instruments.  Neither the
Subsidiary nor, to the Knowledge of the Subsidiary, any other party is in
default in complying with any provisions of any such contract, agreement, lease
or instrument, or any other contract, agreement, lease or instrument, and no
condition or event or fact exists which, with notice, lapse of time or both,
could constitute a default thereunder on the part of the Subsidiary, except for
any such default, condition, event or fact that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

2.19                           Intellectual Property. 
Except as set forth on Schedule 2.19, the Company
is the owner of, or has an unlimited, royalty-free, sublicenseable right to
use, the name of the Subsidiary in Mexico.

2.20                           No Illegal Payments. 
At all times, the Company and the Subsidiary have
complied with all applicable anti-money laundering and similar laws including,
without limitation, the USA Patriot Act and the Foreign Corrupt Practices Act.

2.21                           Transactions with Related Persons.  Except as set forth on Schedule
2.21, neither Seller nor any Affiliate of either Seller, or any Person
controlled by such Seller or Affiliate (a) owns any interest in any asset
used in the business of any Company or any Subsidiary or (b) is a party to
any executory contract with any Company or Subsidiary which calls for any
portion of the contract performance to occur on or after the Closing Date.

2.22                           Solvency.  Neither the Company nor the
Subsidiary: (a) has made a general assignment for the benefit of creditors; (b)
has filed any voluntary petition in bankruptcy or suffered the filing of any
involuntary petition by its creditors; (c) has suffered the appointment of a
receiver to take possession of all, or substantially all, of its assets; (d)
has suffered the attachment or other judicial seizure of all, or substantially
all, of its assets; (e) with respect to the Company, is unable to pay its debts
as they come due; or (f) has made an offer of settlement, extension or
composition to its creditors generally.

3.                                      Representations and Warranties of Sellers.  In order to induce
Buyer to enter into this Agreement and consummate the transactions contemplated
hereby, each Seller hereby, severally makes to Buyer the following
representations and warranties with respect to such Seller.

3.1                                 Membership Interests. 
Seller owns of record and beneficially the percentage of
Membership Interests set forth under such Seller’s name on Exhibit A
attached hereto, which Membership Interests, when combined with the other Seller’s
Membership Interests, constitute 100% of the Membership Interests in the
Companies.  Such Membership Interests
are, and when delivered by such Seller to Buyer pursuant to this Agreement will
be, free and clear of any and all Encumbrances.

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3.2                                 Authority.

(a)                                  Seller
has full right, power and authority either individually or under its governing
documents to execute and deliver this Agreement, the other Comprehensive
Transaction Documents to which such Seller is a party and each agreement,
document and instrument to be executed and delivered by or on behalf of such
Seller pursuant to hereto or thereto and to carry out the transactions
contemplated hereby and thereby.  This
Agreement and the other Comprehensive Transaction Documents to which such
Seller is a party and each agreement, document and instrument executed and
delivered by such Seller pursuant hereto or thereto constitutes a valid and
binding obligation of such Seller, enforceable in accordance with their
respective terms (except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general equitable principles), and has been duly
authorized by all necessary action under each Seller’s charter, by-laws, or
governing partnership agreement, as applicable, and such Seller has full power
and authority to transfer, sell and deliver the Membership Interests to Buyer
pursuant to this Agreement.

(b)                                 Neither
the execution and delivery by Seller of this Agreement, the other Comprehensive
Transaction Documents to which Seller is a party and the other agreements,
documents and instruments contemplated hereby or thereby, nor the consummation
by such Seller of the transactions in accordance with the terms hereof and
thereof, conflicts with or results in a breach of any provisions of such Seller’s
organizational documents.  The execution
and delivery by Seller of this Agreement, the other Comprehensive Transaction
Documents to which such Seller is a party and the other agreements, documents
and instruments contemplated hereby and thereby, and the consummation by such
Seller of the transactions in accordance with the terms hereof and thereof, will
not (i) violate, or conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default), or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material benefit,
require any notice to, declaration or filing with, or consent or waiver,
constitute a change of control, require the payment of a penalty under or
result in the imposition of any encumbrance on such Seller under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, lease, permit, license, authorization, contract or other agreement to
which such Seller is a party or by which such Seller or any of such Seller’s
respective properties or assets is bound or (ii) violate, conflict with or
result in a violation of, or constitute a default (whether after the giving of
notice, lapse of time or both) under, any provision of any law, regulation or
rule, or any order of, or any restriction imposed by, any court or governmental
agency applicable to such Seller.

3.3                                 Brokers.  Neither the Sellers nor any of
their respective Affiliates (including the Companies and the Subsidiaries) have
incurred or become liable for any broker’s commission or finder’s fee relating
to or in connection with this Agreement or the other Comprehensive Transaction
Documents to which any such Seller is a party or the transactions contemplated
hereby or thereby other than the fees owed to Stephens Cori Capital, for which
fees the Sellers and their Affiliates (but excluding the Companies and the
Subsidiaries) are and shall be liable to Stephens Cori Capital.

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4.                                      Representations and Warranties of Buyer.  In order to induce
each Company and Sellers to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer and each of AIG and SMIP, as members of
Buyer and in accordance with their respective percentage membership interests
in Buyer, hereby makes to Sellers the following representations and warranties.

4.1                                 Investment Intent. 
Buyer is acquiring the Membership Interests solely for
the purpose of investment and not with a view to, or for offer or sale in
connection with, any distribution thereof. 
Buyer is an “accredited investor” as such term is defined in Rule 501
under the Securities Act of 1933 (the “Securities Act”).  Buyer acknowledges that the Membership
Interests to be acquired by Buyer pursuant to the transactions contemplated
hereby have not been registered under the Securities Act or the securities laws
of any state or other jurisdiction and cannot be disposed of unless they are
subsequently registered under the Securities Act and the securities laws of any
applicable state or other jurisdiction or an exemption from such registration
is available.

4.2                                 Authority.

(a)                                  Buyer
has full right, power and authority either individually or under its governing
documents to execute and deliver this Agreement, the other Comprehensive
Transaction Documents to which Buyer is a party and each agreement, document
and instrument to be executed and delivered by or on behalf of Buyer pursuant
hereto and thereto and to carry out the transactions contemplated hereby and
thereby.  This Agreement, the other
Comprehensive Transaction Documents to which Buyer is a party and each
agreement, document and instrument executed and delivered by Buyer pursuant to
this Agreement constitutes a valid and binding obligation of Buyer, enforceable
in accordance with their respective terms (except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ rights generally and by general equitable principles), and
has been duly authorized by all necessary action under Buyer’s governing
operating agreement and Buyer has full power and authority to purchase the
Membership Interests from Sellers pursuant to this Agreement.

(b)                                 Neither
the execution and delivery by Buyer of this Agreement, the other Comprehensive
Transaction Documents to which Buyer is a party and the other agreements,
documents and instruments contemplated hereby, nor the consummation by Buyer of
the transactions in accordance with the terms hereof and thereof, conflicts
with or results in a breach of any provisions of Buyer’s organizational
documents.  The execution and delivery by
Buyer of this Agreement, the other Comprehensive Transaction Documents to which
Buyer is a party and the other agreements, documents and instruments
contemplated hereby, and the consummation by Buyer of the transactions in
accordance with the terms hereof and thereof, will not (i) violate, or conflict
with, or result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default),
or give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any material benefit, require any notice to, declaration
or filing with, or consent or waiver, constitute a change of control, require
the payment of a penalty under or result in the imposition of any encumbrance
on Buyer under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of

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trust, lease,
permit, license, authorization, contract or other agreement to which Buyer is a
party or by which Buyer or any of Buyer’s respective properties or assets is
bound and (ii) violate, conflict with or result in a violation of, or
constitute a default (whether after the giving of notice, lapse of time or
both) under, any provision of any law, regulation or rule, or any order of, or
any restriction imposed by, any court or governmental agency applicable to
Buyer.

4.3                                 Brokers.  Buyer has not incurred or
become liable for any broker’s commission or finder’s fee relating to or in
connection with this Agreement or the other Comprehensive Transaction Documents
to which Buyer is a party and the transactions contemplated hereby and thereby.

5.                                      Certain Covenants of Buyer, AIG and SMIP, the
Companies and Sellers

5.1                                 Regulatory and Other Authorizations; Consents.

(a)                                  The
Companies and Buyer shall, and Sellers, on the one hand, and AIG and SMIP on
the other hand, shall cause the Companies and Buyer, respectively, to use their
good faith commercially reasonable efforts to obtain the authorizations,
consents, orders and approvals necessary for their execution and delivery of,
and the performance of their obligations pursuant to, this Agreement, including
any filings with the Mexican Antitrust Commission, the Mexican National Banking
and Securities Commission or the Central Bank of Mexico, as applicable.  If required by the Foreign Competition Statutes
and if the appropriate filing pursuant to the Foreign Competition Statutes has
not been filed prior to the date hereof, each party hereto agrees to make an
appropriate filing with respect to the transactions contemplated by this
Agreement within five (5) Business Days after the date hereof and to supply
promptly any additional information and documentary material that may be
requested pursuant to the Foreign Competition Statutes.  The parties hereto will not take any action
that will have the effect of delaying, impairing or impeding the receipt of any
required approvals and shall promptly respond to any requests for additional
information from any Governmental Authority or filings in respect thereof.  Buyer, on the one hand, and Sellers, on the
other, shall share equally all filing and related fees in connection with any
such filings which must be made by any of the parties under the Foreign
Competition Statutes.

(b)                                 Sellers
shall use their good faith reasonable efforts to assist the Companies in
obtaining the consents of third parties listed on Schedule 2.10 (a) and
with respect to third parties listed on Schedule 2.10(b), including (i)
providing to such third parties such financial statements and other financial
information as such third parties may reasonably request, and
(ii) agreeing to good faith commercially reasonable adjustments to the
terms of the agreements with such third parties (provided that neither party
hereto shall be required to agree to any increase in the amount payable with
respect thereto).

5.2                                 Further Action.  Each of the parties hereto
shall use its respective commercially reasonable efforts to take or cause to be
taken all appropriate action, do or cause to be done all things necessary,
proper or advisable, and execute and deliver such documents and other papers,
as may be required to carry out the provisions of this Agreement and consummate
and make effective the transactions contemplated by this Agreement.

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5.3                                 Press Releases.  The parties hereto will, and
will cause each of their Affiliates and representatives to, maintain the
confidentiality of this Agreement and will not, and will cause each of their
Affiliates not to, issue or cause the publication of any press release or other
public announcement with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other parties
hereto which consent shall not be unreasonably withheld; provided, however,
that a party may, without the prior consent of the other parties hereto, issue
or cause publication of any such press release or public announcement to the
extent that such party reasonably determines, after consultation with outside
legal counsel, such action to be required by law or by the rules of any
applicable self-regulatory organization, in which event such party will use its
commercially reasonable efforts to allow the other parties hereto reasonable
time to comment on such press release or public announcement in advance of its
issuance.

5.4                                 No Solicitation.  Except as otherwise provided
herein, unless and until this Agreement shall have been terminated in
accordance with its terms, each Company and Sellers agree and covenant that
neither Sellers nor any Company will, directly or indirectly, initiate, solicit
or encourage any inquiries or the making or implementation of any proposal or
offer with respect to a merger, acquisition, or similar transaction involving
the purchase of the Companies, the Subsidiaries or the Portfolios, all or
substantially all of the Companies’ or the Subsidiaries’ assets, or the
Membership Interests, except for the sale of loans of the Portfolios, or assets
derived from such loans, in the ordinary course of business.

5.5                                 Preparation of Tax Returns; Payment of Taxes;
Refunds.

(a)                                  Responsibility
for Filing Tax Returns.

(i)                                     Sellers
shall prepare or cause to be prepared at their own cost, all federal and state
income Tax Returns for the Companies that are required to be filed after the
Closing Date with respect to periods that end on or prior to the Closing
Date.  Sellers shall provide draft
versions of such Tax Returns to the Buyer not later than thirty (30) days prior
to the extended due date for filing such Tax Returns.  The Buyer shall notify Sellers of any
proposed changes not later than fifteen (15) days after delivery of such draft
Tax Returns pursuant to the preceding sentence. 
Sellers shall make changes to such draft Tax Returns that are reasonably
requested by the Buyer to the extent that such changes (A) are with respect to
a position or item that was initially reported on such draft Tax Returns in a
manner inconsistent with the past practices of the applicable Company, (B) if
accepted, would cause such position or item to be consistent with the past
practices of such Company.  To the extent
that Buyer prepares and files (or causes to be prepared and filed) Tax Returns
that include a Pre-Closing Period and which shows or could show an amount of
Taxes due on such Tax Return for which Sellers may be liable thereunder, Buyer
shall cause such Tax Returns to be prepared in a manner consistent with past
practices.

(ii)                                  Sellers
(and their Subsidiaries and Affiliates) shall not amend any Tax Returns of any
Company or any Subsidiary for any Pre-Closing Period without the prior written
consent of Buyer, which shall be withheld only if such amendment could
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expected to
have an adverse effect on the Tax Liability or a Tax position of any of Buyer,
the Companies, the Subsidiaries and their Affiliates with respect to a period
after the Closing Date.

(b)                                 Tax
Refunds.  Any refund received by a
Company or a Subsidiary (after the Closing) with respect to Taxes of the
Company or a Subsidiary for a period other than a Pre-Closing Period shall be
paid over to the Buyer.  Any refund
received by the Company or a Subsidiary with respect to Taxes of a Company or a
Subsidiary attributable to a Pre-Closing Period shall be paid over to the
Sellers.

(c)                                  Cooperation.  Buyer and Sellers shall cooperate fully, as
and to the extent reasonably requested by the other parties, in connection with
the filing of Tax Returns, any Tax audits, proceedings or other claims, the authorization
and execution of any appropriate powers of attorney to accomplish the
foregoing, and other Tax related matters. 
Such cooperation shall include, upon the Buyer’s request, providing
records and information that are reasonably relevant to any such matters,
making employees available on a mutually convenient basis to provide additional
information, and explaining any materials provided pursuant to this Section.

(d)                                 Tax-Sharing
Agreements.  All tax sharing
agreements, tax indemnification agreements, or similar agreements with respect
to or involving any Company or any Subsidiaries shall be terminated as of the
Closing Date and, after the Closing Date, no Company and no Subsidiary shall be
bound thereby or have any liability thereunder.

(e)                                  Statutes
of Limitation.  Buyer agrees to
notify Sellers of any extension of any statute of limitation relating to Tax
Returns of a Company or a Subsidiary in respect of periods prior to the Closing
Date.

5.6                                 Conveyance Taxes; Costs. 
Buyer, on the one hand, and Sellers, on the other, shall
be equally liable for any transfer, value added, excise, stock transfer, stamp,
recording, registration and any similar taxes that become payable in connection
with the acquisition by Buyer of the Membership Interests, and the applicable
parties shall file such applications and documents as shall permit any such tax
to be assessed and paid on or prior to the Closing Date in accordance with any
available pre-sale filing procedure; provided, that Sellers shall
pay any such Taxes with respect to the contribution of the Seller Loans.

6.                                      Conditions To Closing

6.1                                 Conditions to the Buyer’s Obligations.  The Buyer’s obligation to
perform the actions required to consummate this Agreement contemplated to be
performed on or before the Closing Date is subject to satisfaction, or written
waiver by the Buyer, of each of the following conditions:

(a)                                  Comprehensive
Transaction Documents.  Buyer shall
have received evidence reasonably satisfactory to Buyer, in its sole discretion
exercised in good faith, of the agreement, completion, and delivery, if
applicable, of the Comprehensive Transaction Documents.

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(b)                                 Amendment
and Restatement of LLC Agreements. 
Buyer shall have received evidence reasonably satisfactory to Buyer, in
its sole discretion, of the amendment and restatement of the limited liability
company operating agreement of each Company, respectively, effective as of the
Closing in form mutually acceptable to Buyer and the Sellers.

(c)                                  SRL
Master.  SRL Master shall have been
formed by the MKM Entities and have constituent documents acceptable to the
members of Buyer, in each member’s sole discretion.

(d)                                 Subsidiary
Loans.  Buyer shall have received
evidence reasonably satisfactory to Buyer, in its sole discretion, that, at
least one day prior to the Closing Date, each of the Subsidiary loans listed on
Exhibit D was contributed to its respective Company and each of the
loans listed on Exhibit E was or is to be refinanced (contemporaneously
with the Closing) by the Subsidiaries through the issuance of new notes to the
SRL Master.

(e)                                  Completion
of Due Diligence.  Buyer shall have
received evidence to its satisfaction, exercised in good faith, that all
outstanding due diligence matters have been resolved by each Company, each
Subsidiary and the Sellers.

(f)                                    Asset
Sale and Purchase Agreement.  The
satisfaction or waiver by the parties to the Asset Sale and Purchase Agreement
of the conditions to the obligations of the Sellers’ and Buyers’ Affiliates to
close under the Asset Sale and Purchase Agreement.

(g)                                 Certificates
of Sellers.  (i) All of the
representations and warranties regarding each Company or Subsidiary in Article
2 and each Seller in Article 3 (A) that are qualified as to “materiality” (or
as to “Material Adverse Effect”) will be true and correct in all respects as of
the date hereof and must be true and correct in all respects as if made on the
Closing Date, and (B) that are not qualified as to “materiality” (or as to
“Material Adverse Effect”) will be true and correct in all material respects as
of the date hereof and must be true and correct in all material respects as if
made on the Closing Date; (ii) the Companies, the Subsidiaries and each Seller
must have performed and complied in all material respects with all of its
covenants and agreements to be performed prior to or at the Closing; and (iii)
each Seller must deliver to the Buyer at the Closing a certificate, in form and
substance reasonably satisfactory to the Buyer, confirming satisfaction of the
conditions in clauses (i) and (ii) above.

(h)                                 Injunctions.  No action or proceeding will have been
instituted or threatened prior to or on the Closing Date before any
Governmental Authority pertaining to the transactions contemplated by this
Agreement or the Asset Sale and Purchase Agreement, the result of which would
prevent or make illegal the consummation of this Agreement or the Asset Sale
and Purchase Agreement.  No Governmental
Authority will have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and has the effect of prohibiting
the consummation of the transactions contemplated by this Agreement or the
Asset Sale and Purchase Agreement.

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(i)                                     Governmental
Approvals.  Each Governmental
Authority, including without limitation the Mexican Antitrust Commission, Mexican
National Banking and Securities Commission and the Central Bank of Mexico, that
is required to consent, authorize or approve under any applicable law, rule,
order or regulation the consummation of this Agreement or the Asset Sale and
Purchase Agreement will have consented to, authorized, permitted or approved
the transactions, and waiting periods (and any extensions thereof) under the
Foreign Competition Statutes applicable to the transactions contemplated by
this Agreement will have expired or been terminated.

(j)                                     Consents.  The Companies will have obtained all Consents
set forth on Schedule 2.10.

(k)                                  No
Material Adverse Change.  There shall
not have been any event, fact, circumstance or effect that, individually or in
the aggregate, resulted in, caused or would reasonably be expected to cause a
Material Adverse Effect, taken as a whole, and servicing costs from
March 1, 2006 to the
Closing Date shall have been no greater than the pro rata service costs for
such period from the prior year.

(l)                                     Opinions
of Counsel.  The Companies and
Sellers will have furnished the Buyer with the opinions of James Dingel, Rick
Vander Woude, Haynes and Boone, LLP and Kuri Breña, Sánchez Ugarte, Corcuera y
Aznar, S.C., special counsel to the Companies, Sellers and Residencial Oeste,
in forms mutually acceptable to Buyer and the Sellers.

(m)                               FIRPTA
Certificate.  Sellers will have
delivered to the Buyer a certificate meeting the requirements of Treasury
Regulations Section 1.1445-2(c)(3).

(n)                                 Assignment
of Membership Interests.  The Buyer
will have received (i) an Assignment of Membership Interests, in form
mutually acceptable to Buyer and the Sellers, executed by each Seller, and
(ii) a power of attorney from Residencial Oeste, in a form reasonably
satisfactory to the Buyer, authorizing Buyer or its designee to act on behalf
of Residencial Oeste, and (iii) a power of attorney from Residencial Oeste in a
form reasonably satisfactory to Buyer, authorizing Enrique Benedicto Jimenez
Moran to act on behalf of Residencial Oeste.

(o)                                 Resignations.  The Buyer will have received a written
assignment of Cargill’s rights as agents for the lenders of each Company, and
resignations from the owner’s representative for each Subsidiary and the sole
manager of each Subsidiary, effective as of the Closing Date.

(p)                                 Secretary’s
Certificates.  The Buyer will have
received a certificate executed by the manager of Residencial Oeste and each of
the Companies certifying (i) the names of the employees of the manager for
such entity authorized to sign this Agreement, the Asset Sale and Purchase
Agreement and the other Comprehensive Transaction Documents to which it is a
party, together with the true signatures of such employees; (ii) copies of
resolutions duly adopted by the manager of such entity authorizing the
transactions and the appropriate employees of the manager for such entity to
execute and deliver this Agreement and all

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agreements, documents and instruments executed by such entity pursuant
hereto, and to consummate the transactions; (iii) certificates issued by
the Secretary of State of Delaware, dated within ten (10) Business Days of the
Closing Date, stating that each such entity has legal existence and is in good
standing in the State of Delaware; and (iv) the Buyer will have received
satisfactory evidence, issued by the applicable Mexican Public Registry of
Commerce, which shall be dated not more than fifteen Business Days prior to the
Closing Date, stating that Residencial Oeste and each Subsidiary has legal
existence in its jurisdiction of organization.

(q)                                 Guarantee.  The Buyer will have received from FirstCity
Financial Corporation the unconditional guarantee in favor of the Buyer in form
mutually acceptable to Buyer and the Sellers (the “Guarantee”).  At all times after the date hereof until
satisfaction of all obligations of SMIP hereunder and under the Asset Sale and
Purchase Agreement and payment in full of all amounts due hereunder and under
the Asset Sale and Purchase Agreement, the Guarantee shall remain in full force
and effect.

(r)                                    Entity
Classification.  Prior to the Closing
Date, Sellers shall have filed IRS Forms 8832 to change the classification of
each Seller SRL that is classified as an association (and not as a partnership)
for U.S. tax purposes and shall have provided a copy of each such form to
Buyer.  Effective prior to the Closing
Date, each Seller SRL shall be classified as a partnership for U.S. tax
purposes.

6.2                                 Conditions to the Sellers’
Obligations.  The Sellers’ obligation to
perform the actions required to consummate this Agreement contemplated to be
performed on or before the Closing Date is subject to satisfaction, or written
waiver by the Sellers, of each of the following conditions:

(a)                                  Certificate of
Buyer.  (i) All of the
representations and warranties of the Buyer in Article 4 (A) that are qualified
as to “materiality” (or as to “Material Adverse Effect”) will be true and
correct in all respects as of the date hereof and must be true and correct in
all respects as if made on the Closing Date, and (B) that are not qualified as
to “materiality” (or as to “Material Adverse Effect”) will be true and correct
in all material respects as of the date hereof and must be true and correct in
all material respects as if made on the Closing Date; (ii) the Buyer must
have performed and complied in all material respects with all of its covenants
and agreements to be performed prior to or at the Closing and (iii) the
Buyer must deliver to the Sellers at the Closing a certificate, in form and
substance reasonably satisfactory to the Sellers confirming satisfaction of the
conditions in clauses (i) and (ii) above.

(b)                                 Payment of Purchase
Price.  Delivery of the payments
required pursuant to Sections 1.2 shall have been made.

(c)                                  Governmental
Approvals.  Each Governmental
Authority, including the Mexican Antitrust Commission, Mexican National Banking
and Securities Commission and the Central Bank of Mexico, that is required to
consent, authorize or approve under any applicable law, rule, order or
regulation the consummation of this Agreement will have consented to,
authorized, permitted or approved the transactions, and any waiting periods
(and any extensions

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thereof) under the Foreign Competition Statutes applicable to the
transactions contemplated by this Agreement will have expired or been
terminated.

(d)                                 Opinion of Counsel.  The Buyer will have furnished the Sellers
with the opinions of Goodwin Procter LLP
and Mijares, Angoitia, Cortés y Fuentes, S.C., special Mexican counsel to the
Buyer, in substantially the form attached hereto as Exhibit H.

(e)                                  Secretary’s
Certificate.  The Sellers will have
received a certificate executed by the manager of the Buyer certifying
(i) the names of the employees of manager of the Buyer authorized to sign
this Agreement and the other Comprehensive Transaction Documents to which it is
a party, together with the true signatures of such employees; (ii) copies
of resolutions duly adopted by the manager of Buyer authorizing the
transactions contemplated by this Agreement and the appropriate employees of
the manager of the Buyer to execute and deliver this Agreement and all
agreements, documents and instruments executed by the Buyer pursuant hereto,
and to consummate the transactions; and (iii) certificates issued by the Secretary
of State of Delaware, dated within ten (10) Business Days of the Closing Date,
stating that Buyer has legal existence and is in good standing in the State of
Delaware.

7.                                      Survival of Representations and Warranties;
Indemnification

7.1                                 Survival.

(a)                                  Subject to the
limitations and other provisions of this Agreement, the representations and
warranties of the parties hereto contained herein and in the other Transaction
Documents to which it is a party or in any writing or certificate delivered
pursuant to or in connection herewith or therewith, as the case may be, shall
survive the Closing and shall remain in full force and effect (i) with respect
to Sections 2.1, 2.2, 2.3, 2.4 and 2.12
hereof for the period established in the applicable statute of limitations, and
(ii) with respect to all other representations and warranties for two (2)
years, except that in the case of fraud with respect to any representation or
warranty contained herein, clauses (i) and (ii) above shall not apply to any
limitation set forth in this Agreement (whether a temporal limitation, a dollar
limitation or otherwise).

(b)                                 The covenants of each
party set forth in this Agreement shall survive forever.

7.2                                 Indemnification by Sellers.

(a)                                  Sellers agree,
subject to the other terms and conditions of this Agreement, to severally
indemnify Buyer and its members, managers, officers and directors (each a “Buyer
Indemnified Party”) against and hold them harmless to the extent of any
Losses resulting from (i) any and all Tax liabilities for any Pre-Closing
Period relating to the Companies, the Subsidiaries, the Portfolios, the Seller
Loans and Sellers’ ownership of the Membership Interests, (ii) any breach of
any representation or warranty, (iii) the termination fees payable under any
subservicing agreement, (iv) any equity transfers in respect of the ownership
of the Portfolios,

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(v) any breach of any covenant or agreement of the Companies or
Sellers contained in this Agreement, and (vi) in respect of any amounts
owed by Sellers as contemplated in Section 3.3.

(b)                                 Except in the case of
fraud, the indemnification obligations of Sellers pursuant to Section
7.1(a)(ii) shall be limited as follows:

(i)                                     Sellers
shall have no obligation to provide any indemnification until the aggregate
dollar amount of all Losses that would otherwise be indemnifiable pursuant to
Section 7.2(a), together with all Losses that are or would be indemnifiable
pursuant to Clause Twelfth of the Asset Sale and Purchase Agreement, exceeds
$250,000 (the “Deductible”), and once the Deductible has been reached,
the Sellers shall indemnify the Buyer Indemnified Parties for all Losses,
including the amount of those Losses below the amount of the Deductible.

(ii)                                  Sellers
shall not be obligated to indemnify any Buyer Indemnified Party pursuant to
Section 7.2(a) for any amount of indemnifiable Losses in excess of the sum of
the Closing Purchase Price and the purchase price of the assets purchased
pursuant to the Asset Sale and Purchase Agreement (without duplication of
amounts recovered pursuant to Clause Twelfth of the Asset Sale and Purchase
Agreement).

(iii)                               In
addition to the limitations set forth in clauses (i) and (ii) above, the
indemnification obligation with respect to any Loss suffered by Buyer with
respect to a particular Company or Subsidiary shall be apportioned between the
Sellers in accordance with the pro rata percentage interests set forth on
Exhibit A hereto, provided, that if any Loss suffered by Buyer does not
directly relate to a specific Company or Subsidiary and cannot be apportioned
between the Sellers in accordance with Exhibit A, the indemnification
obligation with respect to such Loss shall be apportioned between the Sellers
with Cargill bearing 80% of such indemnification obligation and SMIP bearing
20% of such indemnification obligation.

(c)                                  A Buyer Indemnified
Party, with respect to itself only and not any other Buyer Indemnified Party,
except that each of National Union Fire Insurance Company of Pittsburgh, Pa.,
American General Life Insurance Company and American General Life and Accident
Insurance Company may act on behalf of each other, shall give the Sellers
written notice of any claim, assertion, event or proceeding by or in respect of
a third party as to which such Buyer Indemnified Party may request
indemnification hereunder or as to which the Deductible may be applied as soon
as is practicable and in any event within thirty (30) days of the time that
such Buyer Indemnified Party learns of such claim, assertion, event or
proceeding; provided, however, that the failure to so notify the
Sellers shall not affect rights to indemnification hereunder except to the
extent that Sellers (or any indemnifying Seller) are prejudiced by such failure.  The Sellers shall have the right to direct,
through counsel of its own choosing, the defense or settlement of any such
claim or proceeding at the expense of such Sellers.  If the Sellers elect to assume the defense of
any such claim or proceeding, the Sellers shall consult with the Buyer
Indemnified Party for the purpose of allowing the Buyer Indemnified Party to
participate in such defense.  A Buyer
Indemnified Party shall provide and shall cause the Companies to provide, as
applicable, the Sellers and counsel with access to its

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records and personnel relating to any such claim, assertion, event or
proceeding during normal business hours and shall otherwise cooperate with the
Sellers in the defense or settlement thereof, and Sellers shall reimburse Buyer
Indemnified Party for all its reasonable out-of-pocket expenses in
connection therewith in accordance with this Agreement.  If the Sellers elect to direct the defense of
any such claim or proceeding, Buyer Indemnified Party shall not pay, or permit
to be paid, any part of any claim or demand arising from such asserted
liability unless the Sellers consent in writing to such payment or unless the
Sellers, subject to the last sentence of this Section 7.2(c), withdraw from the
defense of such asserted liability or unless a final judgment from which no
appeal may be taken by or on behalf of Sellers is entered against Buyer
Indemnified Party for such liability.  If
the Sellers fail to defend or if, after commencing or undertaking any such
defense, the Sellers fail to prosecute or withdraw from such defense, Buyer
Indemnified Party shall have the right to undertake the defense or settlement
thereof, at Sellers’ expense.  If the Buyer
Indemnified Party assumes the defense of any such claim or proceeding pursuant
to this Section 7.2(c) and proposes to settle such claim or proceeding prior to
a final judgment thereon or to forego any appeal with respect thereto, then the
Buyer Indemnified Party shall give the Sellers prompt written notice thereof,
and the Sellers shall have the right to participate in the settlement or assume
or reassume the defense of such claim or proceeding.  Sellers shall not be entitled to settle or
dispose of any third-party claim if such settlement or disposition would
reasonably be expected to have an adverse effect on a Buyer Indemnified Party
for any period after the Closing Date, without the prior written consent of the
Buyer, which consent shall not be unreasonably withheld or delayed.

7.3                                 Treatment of Indemnity Payments.  All payments made by Sellers
or Buyer, as the case may be, to or for the benefit of the other parties
pursuant to this Article 7 shall be treated as adjustments to the purchase
price for tax purposes, and such agreed treatment shall govern for purposes of
this Agreement.

7.4                                 Remedies Not Exclusive. 
Notwithstanding anything herein or the other Transaction
Documents to the contrary, no party hereto or thereto shall have the right to
seek rescission of this Agreement or the other Transaction Documents, except in
the case of fraud, in which case such remedy shall be available.  Subject to the immediately preceding
sentence, nothing in this Agreement or the other Transaction Documents,
including any indemnification to which Buyer is entitled pursuant to this
Article 7, shall be construed to limit any right of Buyer to seek any remedy
available at law or in equity, provided, that Buyer only shall be entitled to
seek money damages pursuant to the terms of this Article 7 (except in the case
of fraud, in which case the Buyer shall continue to have the right to any
remedy available at law or in equity).

8.                                      General Provisions

8.1                                 Notices.  All notices, requests, claims,
demands and other communications under this Agreement will be in writing and
will be deemed given if delivered personally, sent by overnight courier
(providing proof of delivery), or via facsimile to the parties at the following
addresses (or at such other address for a party as specified by like notice):

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If to each
Company, to:

c/o FirstCity Mexico,
Inc.

6400 Imperial Drive (Delivery only)

P.O. Box 8216

Waco, Texas 76712-8216

Attn:  Legal Department

Facsimile: 254-761-2953

with copy to:

Haynes and Boone, LLP

901 Main Street, Suite 3100

Dallas, Texas  75202

Attn:  Paul H. Amiel

Facsimile: 214-200-0555

If to SMIP, to:

c/o FirstCity Mexico,
Inc.

6400 Imperial Drive (Delivery only)

P.O. Box 8216

Waco, Texas 76712-8216

Attn:  Legal Department

Facsimile: 254-761-2953

with copy to:

Haynes and Boone, LLP

901 Main Street, Suite 3100

Dallas, Texas  75202

Attn:  Paul H. Amiel

Facsimile:  214-200-0555

If to Cargill, to:

Cargill Financial
Services International, Inc.

12700 Whitewater Drive

Minnetonka, Minnesota 55343-9439

Attn:  Adam Bernier

Facsimile:  952-984-3905

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with a copy to:

Cargill Financial
Services International, Inc.

12700 Whitewater Drive

Minnetonka, Minnesota 55343-9439

Attn:  James D. Dingel

Facsimile:  952-404-6344

If to Buyer, to:

Bidmex Holding, LLC

c/o FirstCity Mexico, Inc.

6400 Imperial Drive (Delivery only)

P.O. Box 8216

Waco, Texas 76712-8216

Attn:  Legal Department

Facsimile: 254-761-2953

with a copy to:

AIG Global Investment
Group

599 Lexington Avenue, 25th Floor

New York, New York 10022

Attn:  Afsar Farman-Farmaian, Esq.

General Counsel, AIG Capital Recovery Group

Facsimile: 866-729-7836

and

Goodwin Procter  LLP

599 Lexington Avenue

New York, NY 10022

Attn:  Andrew Weidhaas/Alyssa Grikscheit

Facsimile:  212-355-3333

8.2                                 Fees and Expenses.  Except
as provided otherwise herein, in the Commitment Letter or in the Escrow
Agreement, each of Buyer, on the one hand, and Sellers, on the other hand,
shall bear its own expenses in connection with the negotiation and the
consummation of the transactions contemplated by this Agreement.

8.3                                 Interpretation.  When
a reference is made in this Agreement to an Article, Section, Schedule or Exhibit,
such reference will be to an Article or Section of, or a Schedule or Exhibit
to, this Agreement unless otherwise indicated. 
Any Schedule hereto may be delivered on a CD-ROM disc provided that such
disc is in a user-friendly format as agreed by the parties hereto.  The table of contents and headings contained
in this Agreement are for reference purposes only and will not affect in any
way the meaning or interpretation of this Agreement.

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Whenever the words
“include,” “includes” or “including” are used in this Agreement, they will be
deemed to be followed by the words “without limitation.”  The words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement will refer to this
Agreement as a whole and not to any particular provision of this
Agreement.  All terms used herein with
initial capital letters have the meanings ascribed to them herein and all terms
defined in this Agreement will have such defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.  The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. 
Any agreement, instrument or statute defined or referred to herein or in
any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated
therein.  References to a Person are also
to its permitted successors and assigns.

8.4                                 Counterparts.  This
Agreement may be executed in one or more counterparts, all of which will be
considered one and the same agreement and will become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties.

8.5                                 Amendments.  This
Agreement may not be amended or modified, nor may compliance with any condition
or covenant set forth herein be waived, except by a writing duly and validly
executed by Buyer, each Company and the Sellers, or in the case of a waiver,
the party waiving compliance.

8.6                                 Entire Agreement; Severability.  This Agreement (including the
exhibits, schedules, documents and instruments referred to herein), the Funds
Flow Memorandum, the Put Option Agreement, the Escrow Agreement and Section 4
of the Commitment Letter as incorporated into the Escrow Agreement, constitute
the entire agreement, and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter of
this Agreement.  If any term, condition
or other provision of this Agreement is found to be invalid, illegal or
incapable of being enforced by virtue of any rule of law, public policy or
court determination, all other terms, conditions and provisions of this
Agreement shall nevertheless remain in full force and effect.

8.7                                 Third Party Beneficiaries. 
Except as expressly provided in this Agreement, each
party hereto intends that this Agreement shall not benefit or create any right
or cause of action in or on behalf of any Person other than the parties
hereto.  Notwithstanding the foregoing,
any member of the Buyer that is also a party to this Agreement may enforce any
or all of Buyer’s rights hereunder.

8.8                                 Governing Law.  This
Agreement will be governed by, and construed in accordance with, the internal
laws of the State of New York, United States of America (without giving effect
to any choice of law or conflict of law provision or rule that would cause the
application of the laws of any other jurisdiction), and any dispute hereunder
shall be subject to resolution solely in any court of competent jurisdiction in
the State of New York.

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8.9                                 Assignment.  Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement may be assigned, in whole or in part, by operation of law or
otherwise by the parties hereto without the prior written consent of each
Company, the Sellers and the Buyer.  Any
assignment in violation of the preceding sentence will be void.  Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.

8.10                           Consent to Jurisdiction. 
Each of the parties hereby consents to personal
jurisdiction, service of process and venue in the federal or state courts of
the State of New York, United States for any claim, suit or proceeding arising
under this Agreement, or in the case of a third party claim subject to
indemnification hereunder, in the court where such claim is brought.

8.11                           Mutual Drafting.  The
parties hereto are sophisticated and have been represented by attorneys
throughout the transactions contemplated hereby who have carefully negotiated
the provisions hereof.  As a consequence,
the parties do not intend that the presumptions of laws or rules relating to
the interpretation of contracts against the drafter of any particular clause
should be applied to this Agreement or any agreement or instrument executed in
connection herewith, and therefore waive their effects.

8.12                           Acknowledgment.  The
parties hereto acknowledge that AIG Equity Sales Corp., an Affiliate of AIG,
has been retained as a placement agent for the 4(2) Notes and its fees are
payable by SRL Master.

8.13                           Remedies.  It
is specifically understood and agreed that any breach of the provisions of this
Agreement or any other agreement executed and delivered pursuant to this
Agreement by any party hereto will result in irreparable injury to the other
parties hereto, that the remedy at law alone will be an inadequate remedy for
such breach, and that, in addition to any other remedies which they may have,
such other parties may enforce their respective rights by actions for specific
performance (to the extent permitted by Law).

8.14                           Waiver.

(a)                                  For and in
consideration of the amount to be paid to each Seller under this Agreement
(provided the same is paid), and the additional covenants and promises set
forth in this Agreement, from and after the Closing Date, each Seller, on
behalf of itself and its assigns, heirs, beneficiaries, creditors,
representatives, agents and Affiliates involved in the transactions
contemplated by this Agreement and the Comprehensive Transaction Documents to
which it is a party (collectively, the “Releasing Parties”), hereby
fully, finally and irrevocably releases, acquits and forever discharges Buyer,
each Company and the managers, officers, directors, partners, general partners,
limited partners, managing directors, members, trustees, shareholders,
representatives, employees, principals, agents, Affiliates, parents,
subsidiaries, joint ventures, predecessors, successors, assigns, beneficiaries,
heirs, executors, personal or legal representatives, insurers and attorneys of
any of them involved in the transactions contemplated by this Agreement and the
Comprehensive Transaction Documents to which it is a party (collectively, the “Released
Parties”) from any and all commitments, actions, debts, claims,
counterclaims, suits, causes of action, damages, demands, liabilities,
obligations, costs, expenses,

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and compensation of every kind and nature whatsoever, past, present, or
future, at law or in equity, whether known or unknown, contingent or otherwise,
which such Releasing Parties, or any of them, had, has, or may have had at any
time in the past until and including the date of this Agreement against the
Released Parties, or any of them, which relate to or arise out of such
Releasing Party’s prior relationship with the Companies or the Subsidiaries or
their lenders or its rights or status as a member, officer, employee or
director of the Companies and further including any claims of fraud or
fraudulent inducement in connection with the negotiation, execution and
performance of this Agreement and the other Comprehensive Transaction Documents
set forth on Exhibit C hereto to which such Seller is a party in
connection with the transactions contemplated by this Agreement (collectively,
for the purposes of this Section 8.13 “Causes of Action”).

(b)                                 Each Seller hereby
represents to the Released Parties that such Seller (i) has not assigned
any Causes of Action or possible Causes of Action against any Released Party,
(ii) fully intends to release all Causes of Action against the Released Parties
including unknown and contingent Causes of Action, and (iii) has consulted with
counsel with respect to the execution and delivery of this general release and
has been fully apprised of the consequences hereof.  Furthermore, each Seller further agrees not
to institute any litigation, lawsuit, claim or action against any Released
Party with respect to the released Causes of Action.

(c)                                  Each Seller hereby
represents and warrants that it has access to adequate information regarding
the terms of this Agreement, the scope and effect of the releases set forth
herein, and all other matters encompassed by this Agreement to make an informed
and knowledgeable decision with regard to entering into this Agreement.  Each Seller further represents and warrants
that it has not relied upon any Company, Buyer or any of the Released Parties
in deciding to enter into this Agreement and has instead made its own
independent analysis and decision to enter into this Agreement.

(d)                                 Each Seller hereby
irrevocably waives any rights of first refusal, preemptive rights, rights to
purchase or other rights that such Seller may have with respect to any
securities of any of the Companies or the Subsidiaries, whether under Law, LLC
operating agreements, certificates of formation or other organizational
documents, by contract or otherwise.

9.                                      Definitions

9.1                                 Definitions.  For
purposes of this Agreement, the following terms shall have the meanings set
forth below:

“4(2)
Notes”:  the notes to be issued by
SRL Master to Buyer in a private placement pursuant to Section 4(2) of the
Securities Act, the terms of which notes shall provide for follow-on issuances
of such notes;

An “Affiliate”
of any Person means with respect to any Person, any other Person that directly
or indirectly, through one or more intermediaries, controls, is controlled by
or is under common control with such Person; provided, however, that for
purposes of this Agreement

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American
International Group, Inc. is an independent entity and is not controlled by or
under the control of any Person.  For
purposes of this definition, the term “control” (including the terms “controlled
by” and “under common control with”) means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise.

“Acquired
Assets” means (i) the Portfolio owned by Residencial Oeste as of the close
of business on the Valuation Date including all cash flow from such Portfolio
arising after the Valuation Date reduced by (x) Asset Level Expenses (as
defined in the Servicing Agreement) incurred with respect to the assets
comprising that Portfolio, and (y) Servicing Fees (as defined in the
Servicing Agreement) related to that Portfolio, in each
instance incurred after the Valuation Date;

“AIG
Asset Purchase Price” means 85% of the agreed upon value, in Mexican Pesos,
of the Acquired Assets to be paid in U.S. Dollars at the Exchange Rate to
acquire the Acquired Assets pursuant to the Asset Sale and Purchase Agreement,
dated as of the date hereof;

“AIG
Escrowed Funds” means US$5,000,000 deposited by AIG Global Asset Management
Holdings Corp. with Escrow Agent pursuant to the Escrow Agreement, plus any
interest thereon;

“Asset
Sale and Purchase Agreement” means the Asset Sale and Purchase Agreement,
among Cargill, SMIP, Bidmex Acquisition, LLC, Residencial Oeste 2 and
Residencial Oeste, in form mutually acceptable to Buyer and the Sellers;

“Assumed
Loans” means each Seller Loan to the Sellers SRLs set forth on Exhibit F
hereto;

“Balance
Sheet” means the unaudited balance sheet of the Company along with the
audited balance sheet of the Subsidiaries as of December 31, 2005;

“Business
Day” means any calendar day that is not Saturday, Sunday or a day on which
banking institutions in New York, New York, Waco, Texas or, to the extent
applicable, Mexico City, Mexico are authorized or obligated by Law or executive
order to be closed;

“Cargill
Escrowed Funds” means US$3,000,000 deposited by Cargill with the Escrow
Agent pursuant to the Escrow Agreement, plus any interest thereon;

“Code”
means the Internal Revenue Code of 1986, as amended;

“Commitment
Letter” means the letter agreement entered among the Sellers and AIG Global
Asset Management Holdings Corp., dated as of May 30, 2006, establishing the
terms of this Agreement and the other transaction documents;

“Comprehensive
Transaction Documents” means the documents listed on Exhibit C
hereto;

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“Contract”
means any agreement, arrangement, bond, insurance policy, commitment,
franchise, indemnity, indenture, instrument, lease, license, insurance policy
or understanding, whether or not in writing;

“Encumbrances”
means any and all mortgages, charges (fixed or floating), pledges, liens,
options, rights to acquire, assignments by way of security, trust arrangements
for the purpose of providing security or any other security interest of any
kind;

“Escrow
Agent” means Chicago Title Insurance Company;

“Escrow
Agreement” mean the escrow agreement entered among the Sellers and AIG,
dated as of May 30, 2006, establishing the terms of the Cargill Escrowed Funds
and AIG Escrowed Funds;

“Exchange
Rate” means the U.S. Dollar/Mexican Peso exchange rate used for payment of
obligations denominated in foreign currency payable in Mexico published by
Mexican Central Bank (Banco de México) in the Federal Official Gazette (Diario
Oficial de la Federación) (or equivalent daily authoritative public source if
the Diario Oficial de la Federación should cease publication or cease
publishing exchange rate data) on the business day immediately preceding the
Closing Date;

“Foreign
Competition Statutes” means the Mexican Ley
Federal de Competencia Economica;

“Funds
Flow Memorandum” means the funds flow memorandum, dated as of the date
hereof, detailing the fund transfers in the connection with the transactions
contemplated hereby;

“Knowledge”
means (i) with respect to the Companies, the actual knowledge after reasonable
inquiry of the Sellers and/or the manager or employees of the manager of the
Companies, (ii) with respect to the Sellers, the actual knowledge after
reasonable inquiry of key employees of the Sellers or its Affiliates and (ii)
with respect to the Subsidiaries, the actual knowledge after reasonable inquiry
of the manager or employees of the manager of Companies or the manager or
employees of the manager of the Subsidiaries, including in each case Buddy
Leigh, Terry DeWitt, Rick Vander Woude, Enrique Moran, Joe Greak, Tomas Ennis,
Michael Smithers, Ernesto Elorduy, Sergio Rivas and Bryan Baker;

“Law”
means any constitutional provision, statute or other law, rule, regulation,
ordinance or interpretation of any Governmental Authority and any Order;

“Losses”
means any and all losses, liabilities, damages, claims, awards, judgments,
costs and expenses (including, without limitation, reasonable attorneys’ fees)
actually suffered or incurred by such Person;

“Material
Adverse Effect” means a material adverse effect on the assets, liabilities,
condition (financial or other), business, results of operations or prospects of
the Companies, the Subsidiaries or the Portfolios;

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“Mexican GAAP” means Mexican generally accepted
accounting principles, consistently applied;

“MKM Entities” means MKM III Corp. and MKM IV Corp., either of
which shall be the owner of 100% of the equity interests in SRL Master;

“Order” means any
decree, injunction, judgment, order, ruling, assessment or writ of any
Governmental Authority;

“Person” means an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity;

“Portfolio” means each of the 11 residential
and commercial, Mexican Peso-denominated, non-performing loan portfolios, and
any cash and other assets derived from such portfolios (including without
limitation real or personal property), purchased by the Seller SRLs owned by SMIP
and Cargill from financial institutions in Mexico during the period from
December 1998 to March 2005 as listed on Exhibit G;

“Pre-Closing Period” shall mean any taxable
year or period that ends on or before the Closing Date and, with respect to any
taxable year or period beginning before and ending after the Closing Date, the
portion of such taxable year or period ending on and including the Closing Date. 
For purposes of this Agreement, in the case of any taxable year or
period of a Company or a Subsidiary which includes the Closing Date (but does
not end on that day), (i) Property Taxes allocable to the Pre-Closing Period
shall be equal to the amount of such Property Taxes for the entire taxable year
or period multiplied by a fraction, the numerator of which is the number of
days during the taxable year or period that are in the Pre-Closing Period and
the denominator of which is the number of days in the entire taxable year or
period, and (ii) Taxes (other than Property Taxes) of a Company or a Subsidiary
for the Pre-Closing Period shall be computed as if such taxable year or period
(and the taxable year or period of any entity taxable as a partnership in which
the Company or the Subsidiary owns a direct or indirect interest) ended as of
the close of business on the Closing Date;

“Property Taxes”
means real, personal and
intangible ad valorem property Taxes;

“Put Option Agreement”
means the Put Option Agreement, dated as of the date hereof, by and
among the Buyer, Recuperación de
Carteras Mexicanas, S. de R.L. de C.V., Bidmex 6, LLC, Strategic Mexican
Investment Partners 2, L.P. and Cargill;

“Residencial Oeste” means Residencial Oeste, S. de R.L. de C.V.;

“Residencial Oeste 2” means Residencial Oeste 2, S. de R.L. de C.V.;

“Seller Loans” means any outstanding
indebtedness of any Seller SRL to any Seller or any Company;

“Seller SRL” means each of the Subsidiaries and
Residencial Oeste, which hold a Portfolio (collectively, the “Seller SRLs”);

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“Servicing Agreement” means the Servicing
Agreement among the Subsidiaries and FirstCity Mexico, S.A. de C.V., in form mutually
acceptable to Buyer and the Sellers;

“SMIP Asset Purchase Price” means 15% of the
agreed upon value, in Mexican Pesos, of the Acquired Assets to be paid in U.S.
Dollars at the Exchange Rate to acquire the Acquired Assets pursuant to the
Asset Sale and Purchase Agreement, dated as of the date hereof;

“SRL Master” means Notmex, S. de R.L. de C.V.,
a sociedad de responsabilidad limitada de capital
variable which will issue the 4(2) Notes and the equity interests of
which will be approximately 100% owned by the MKM Entities;

“SRL Notes” means the notes evidencing the
Seller Loans;

“Transaction Documents” means, including,
without limitation, collectively, this Agreement and (i) the Asset Sale and
Purchase Agreement among Bidmex Acquisition, LLC, Residencial Oeste 2 and
Residencial Oeste, (ii) Buyer’s Limited Liability Company Agreement, (iii)
the amendment and restatements to each Company’s LLC Agreement, (iv) the
Servicing Agreement among the Subsidiaries and FirstCity Mexico, S.A. de C.V.,
(v) the Escrow Agreement; (vi) and Section 4 of the Commitment Letter
as incorporated into the Escrow Agreement;

“U.S. GAAP” means U.S. generally accepted
accounting principles, consistently applied; and

“Valuation Date” means the close of business as
of February 28, 2006, the cut off date used to value the cash flows generated
by the Portfolios.

9.2           Other
Definitions.  Each of the following defined terms has the
meaning given such term in the Section set forth opposite such defined term:

	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Accountants

  	
   

  	
  1.3(a)

  
	
  AIG

  	
   

  	
  Preamble

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Balance Sheet

  	
   

  	
  2.7(a)

  
	
  Buyer

  	
   

  	
  Preamble

  
	
  Buyer
  Indemnified Party

  	
   

  	
  7.2(a)

  
	
  Cargill

  	
   

  	
  Preamble

  
	
  Causes of Action

  	
   

  	
  8.13(a)

  
	
  Closing

  	
   

  	
  1.4

  
	
  Closing Date

  	
   

  	
  1.4

  
	
  Closing Purchase
  Price

  	
   

  	
  1.2

  
	
  Closing
  Reconciliation

  	
   

  	
  1.3(a)

  
	
  Companies

  	
   

  	
  Preamble

  
	
  Company

  	
   

  	
  Preamble

  
	
  Company
  Certificate

  	
   

  	
  2.1(a)

  

 

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  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Company LLC
  Agreement

  	
   

  	
  2.1(a)

  
	
  Deductible

  	
   

  	
  7.2(b)

  
	
  Dispute Notice

  	
   

  	
  1.3(a)

  
	
  ERISA

  	
   

  	
  2.13

  
	
  Financial
  Statements

  	
   

  	
  2.7

  
	
  Final Closing
  Reconciliation

  	
   

  	
  1.3(a)

  
	
  Foreign
  Competition Statutes

  	
   

  	
  2.10(a)

  
	
  Governmental
  Authority

  	
   

  	
  2.10(a)

  
	
  Guarantee

  	
   

  	
  6.1(q)

  
	
  Liability

  	
   

  	
  2.8

  
	
  Membership
  Interests

  	
   

  	
  Recitals

  
	
  Permits

  	
   

  	
  2.17

  
	
  Purchase Price

  	
   

  	
  1.2

  
	
  Released Parties

  	
   

  	
  8.13(a)

  
	
  Releasing
  Parties

  	
   

  	
  8.13(a)

  
	
  SEC

  	
   

  	
  2.25

  
	
  Securities Act

  	
   

  	
  4.1

  
	
  Seller Entities

  	
   

  	
  Preamble

  
	
  Sellers

  	
   

  	
  Preamble

  
	
  SMIP

  	
   

  	
  Preamble

  
	
  Subsidiaries

  	
   

  	
  2.2

  
	
  Subsidiary

  	
   

  	
  2.2

  
	
  Tax

  	
   

  	
  2.12

  
	
  Taxes

  	
   

  	
  2.12

  
	
  Taxing Authority

  	
   

  	
  2.12

  
	
  Tax Returns

  	
   

  	
  2.12

  
	
  Unaudited
  Balance Sheet

  	
   

  	
  2.7(b)

  
	
  Valuation Date

  	
   

  	
  2.7(b)

  

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 36

 

Table of Contents

IN WITNESS WHEREOF, the parties hereto have caused
this Interest Purchase and Sale Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first written above.

	
  

  	
   

  	
  COMPANIES:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NAMEX, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: FirstCity
  Mexico, Inc., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: James T.
  Sartain

  
	
   

  	
   

  	
   

  	
  Title:   President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BIDMEX, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: FirstCity
  Mexico, Inc., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: James T.
  Sartain

  
	
   

  	
   

  	
   

  	
  Title:   President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BIDMEX II, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: FirstCity
  Mexico, Inc., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: James T.
  Sartain

  
	
   

  	
   

  	
   

  	
  Title:   President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BIDMEX 3, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: FirstCity
  Mexico, Inc., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: James T.
  Sartain

  
	
   

  	
   

  	
   

  	
  Title:   President

  

 

Signature page to Interest
Purchase and Sale Agreement

 

 

Table of Contents

 

	
  

  	
   

  	
  BIDMEX 4, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: FirstCity
  Mexico, Inc., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: James T.
  Sartain

  
	
   

  	
   

  	
   

  	
  Title:   President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BIDMEX 5, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: FirstCity
  Mexico, Inc., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: James T.
  Sartain

  
	
   

  	
   

  	
   

  	
  Title:   President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BIDMEX 7, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: FirstCity
  Mexico, Inc., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: James T.
  Sartain

  
	
   

  	
   

  	
   

  	
  Title:   President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BIDMEX 8, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: FirstCity
  Mexico, Inc., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: James T.
  Sartain

  
	
   

  	
   

  	
   

  	
  Title:   President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BIDMEX 9, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: FirstCity
  Mexico, Inc., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: James T.
  Sartain

  
	
   

  	
   

  	
   

  	
  Title:   President

  

 

Signature page to Interest
Purchase and Sale Agreement

 

 

Table of Contents

 

	
  

  	
   

  	
  BIDMEX 10, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: FirstCity
  Mexico, Inc., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: James T.
  Sartain

  
	
   

  	
   

  	
   

  	
  Title:   President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BIDMEX XI, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: FirstCity
  Mexico, Inc., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: James T.
  Sartain

  
	
   

  	
   

  	
   

  	
  Title:   President

  

 

Signature page to Interest
Purchase and Sale Agreement

 

 

Table of Contents

 

	
  

  	
   

  	
  SELLERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CARGILL
  FINANCIAL SERVICES

  INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Richard
  Luke Toft

  
	
   

  	
   

  	
   

  	
  Title:   Assistant
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  STRATEGIC
  MEXICAN INVESTMENT

  PARTNERS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: FirstCity
  Mexico, Inc., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: James T.
  Sartain

  
	
   

  	
   

  	
   

  	
  Title:   President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BUYER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BIDMEX HOLDING,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: FirstCity
  Mexico, Inc., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: James T.
  Sartain

  
	
   

  	
   

  	
   

  	
  Title:   President

  
							

 

Signature page to Interest
Purchase and Sale Agreement

 

 

Table of Contents

 

	
  

  	
   

  	
  AIG
  ENTITIES:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NATIONAL UNION
  FIRE INSURANCE

  COMPANY OF PITTSBURGH, PA.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: AIG Global Investment Corp.,

  
	
   

  	
   

  	
   

  	
  its investment
  adviser

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AMERICAN GENERAL
  LIFE INSURANCE

  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: AIG Global Investment Corp.,

  
	
   

  	
   

  	
   

  	
  its investment
  adviser

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AMERICAN GENERAL
  LIFE AND ACCIDENT

  INSURANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: AIG Global Investment Corp.,

  
	
   

  	
   

  	
   

  	
  its investment
  adviser

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  

 

Signature page to Interest
Purchase and Sale Agreement

 

Table of Contents

EXHIBIT A

 

Sellers; Membership
Interests; Purchase Price Allocation

Cargill Financial
Services International, Inc.

	
  Name

  	
   

  	
  Membership

  Interests

  Owned

  	
   

  	
  Membership

  Interests To

  Be Sold

  	
   

  	
  Purchase

  Price Allocation

  	
   

  	
  Pro Rata

  Percentage

  Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Namex, LLC

  	
   

  	
  68.055556

  	
  %

  	
  68.055556

  	
  %

  	
  $

  	
  MxP 3,042,764

  	
   

  	
  68.055556

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex, LLC

  	
   

  	
  78.979525

  	
  %

  	
  78.979525

  	
  %

  	
  $

  	
  MxP 169,931,557

  	
   

  	
  78.979525

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex II, LLC

  	
   

  	
  82.643072

  	
  %

  	
  82.643072

  	
  %

  	
  $

  	
  MxP 125,443,919

  	
   

  	
  82.643072

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex 3, LLC

  	
   

  	
  77.478494

  	
  %

  	
  77.478494

  	
  %

  	
  $

  	
  MxP 102,892,990

  	
   

  	
  77.478494

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex 4, LLC

  	
   

  	
  70.000000

  	
  %

  	
  70.000000

  	
  %

  	
  $

  	
  MxP 72,670,564

  	
   

  	
  70.000000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex 5, LLC

  	
   

  	
  70.000000

  	
  %

  	
  70.000000

  	
  %

  	
  $

  	
  MxP 40,380,606

  	
   

  	
  70.000000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex 7, LLC

  	
   

  	
  70.000000

  	
  %

  	
  70.000000

  	
  %

  	
  $

  	
  MxP 28,356,275

  	
   

  	
  70.000000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex 8, LLC

  	
   

  	
  70.000000

  	
  %

  	
  70.000000

  	
  %

  	
  $

  	
  MxP 29,665,300

  	
   

  	
  70.000000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex 9, LLC

  	
   

  	
  85.000000

  	
  %

  	
  85.000000

  	
  %

  	
  $

  	
  MxP 318,310,048

  	
   

  	
  85.000000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex 10, LLC

  	
   

  	
  75.000000

  	
  %

  	
  75.000000

  	
  %

  	
  $

  	
  MxP 31,479,750

  	
   

  	
  75.000000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex XI, LLC

  	
   

  	
  75.000000

  	
  %

  	
  75.000000

  	
  %

  	
  $

  	
  MxP 18,178,664

  	
   

  	
  75.000000

  	
  %

  

 

Exhibit A to Interest
Purchase and Sale Agreement

 

Table of Contents

Strategic
Mexican Investment Partners, L.P.

 

	
   

  	
   

  	
  Membership

  Interests

  Owned

  	
   

  	
  Membership

  Interests To

  Be Sold

  	
   

  	
  Purchase

  Price Allocation

  	
   

  	
  Pro Rata

  Percentage

  Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Namex, LLC

  	
   

  	
  31.944444

  	
  %

  	
  31.944444

  	
  %

  	
  $

  	
  MxP 1,428,236

  	
   

  	
  31.944444

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex, LLC

  	
   

  	
  21.020475

  	
  %

  	
  21.020475

  	
  %

  	
  $

  	
  MxP 45,227,444

  	
   

  	
  21.020475

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex II, LLC

  	
   

  	
  17.356928

  	
  %

  	
  17.356928

  	
  %

  	
  $

  	
  MxP 26,346,081

  	
   

  	
  17.356928

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex 3, LLC

  	
   

  	
  22.521506

  	
  %

  	
  22.521506

  	
  %

  	
  $

  	
  MxP 29,909,010

  	
   

  	
  22.521506

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex 4, LLC

  	
   

  	
  30.000000

  	
  %

  	
  30.000000

  	
  %

  	
  $

  	
  MxP 31,144,528

  	
   

  	
  30.000000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex 5, LLC

  	
   

  	
  30.000000

  	
  %

  	
  30.000000

  	
  %

  	
  $

  	
  MxP 17,305,974

  	
   

  	
  30.000000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex 7, LLC

  	
   

  	
  30.000000

  	
  %

  	
  30.000000

  	
  %

  	
  $

  	
  MxP 12,152,689

  	
   

  	
  30.000000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex 8, LLC

  	
   

  	
  30.000000

  	
  %

  	
  30.000000

  	
  %

  	
  $

  	
  MxP 12,713,700

  	
   

  	
  30.000000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex 9, LLC

  	
   

  	
  15.000000

  	
  %

  	
  15.000000

  	
  %

  	
  $

  	
  MxP 56,172,361

  	
   

  	
  15.000000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex 10, LLC

  	
   

  	
  25.000000

  	
  %

  	
  25.000000

  	
  %

  	
  $

  	
  MxP 10,493,250

  	
   

  	
  25.000000

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bidmex XI, LLC

  	
   

  	
  25.000000

  	
  %

  	
  25.000000

  	
  %

  	
  $

  	
  MxP 6,059,555

  	
   

  	
  25.000000

  	
  %

  

 

 

Table of Contents

EXHIBIT B

Form of Closing
Reconciliation

Exhibit B to Interest
Purchase and Sale Agreement

 

Table of Contents

 

EXHIBIT C

Comprehensive Transaction
Documents

1.                                       The
Agreement

2.                                       Asset
Sale and Purchase Agreement

3.                                       Put
Option Agreement

4.                                       Guarantee

5.                                       Funds Flow Memorandum

6.                                       Limited
Liability Company Agreement of Buyer

7.                                       Offering
Circular with respect to issuance of 4(2) Notes

8.                                       The
4(2) Notes

9.                                       The
SRL Notes

10.                                 The
Escrow Agreement (including, by incorporation, Section 4 of the Commitment
Letter)

11.                                 Amended
and Restated Company LLC Agreements

12.                                 Servicing
Agreement between FirstCity Mexico, S.A. de C.V. and the Subsidiaries

13.                                 Termination
of all existing servicing agreements among FirstCity Mexico, S.A. de C.V. and
the Subsidiaries

14.                                 Powers
of Attorney from Residencial Oeste, S.
de R.L. de C.V. to Residencial Oeste 2, S. de R.L. de C.V., and from
Residencial Oeste 2, S. de R.L. de C.V. to the relevant authorized person

15.                                 Evidence
of ownership of shares and loan interests formerly held by Other Investors and
lack of encumbrances or liabilities with respect thereto

16.                                 Evidence
of contribution of all Seller Loans

17.                                 Evidence
of assignment (and release, if any) of the pledges for the promissory notes
with respect to the Seller Loans

18.                                 Good
standing certificates for the Companies

Exhibit C to Interest Purchase and Sale Agreement

 

Table of Contents

 

19.           Officers’
certificates required by this Agreement and the Asset Sale and Purchase
Agreement

 

20.                                 Closing
opinions

21.                                 Resolutions
and consents evidencing AIG, Cargill and SMIP approval for the transactions
contemplated by this Agreement and the Asset Sale and Purchase Agreement

22.                                 Document
notifying transaction before the Mexican Antitrust Commission

23.                                 Evidence
of approval of the registration of the 4(2) Notes with Comisíon Nacional
Bancaria y de Valores (National Banking and Securities Commission)

24.                                 Constituent
documents of SRL Master, Bidmex Acquisition, LLC and Residencial Oeste 2, S. de
R.L. de C.V.

 

Table
of Contents

EXHIBIT D

Contributed Subsidiary
Loans

Nafin

Santander

Serfin

Cremi

Bancrecer

Bital

Intervened

Intervened 2

Banamex

Bancomext

Intervened 3

Exhibit D to Interest Purchase and Sale Agreement

 

Table
of Contents

EXHIBIT E

Refinanced Subsidiary
Loans

Bancrecer

Bital

Intervened

Intervened 2

Banamex

Bancomext

Intervened 3

Exhibit E to Interest Purchase and Sale Agreement

 

Table of Contents

EXHIBIT F

Assumed Loans

Nafin

Santander

Serfin

Cremi

Exhibit F to Interest Purchase and Sale Agreement

 

Table of Contents

EXHIBIT G

Subsidiary Portfolios

Exhibit G to
Interest Purchase and Sale Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00112-of-00352.parquet"}]]