Document:

EXECUTION COPY

 

LOAN PURCHASE AGREEMENT

 

THIS LOAN PURCHASE AGREEMENT, dated June 3, 2005, is entered into by and among DLJ Mortgage Capital, Inc., a Delaware corporation (“Seller”), Credit Suisse First Boston Mortgage Acceptance Corp., a Delaware corporation (“Purchaser”), U.S. Bank National Association, as indenture trustee (the “Indenture Trustee”) and Irwin Whole Loan Home Equity Trust 2005-B (the “Issuer”):

WITNESSETH:

WHEREAS, Seller, in the ordinary course of its business acquires and originates mortgage loans and acquired or originated all of the mortgage loans listed on the Loan Schedule attached as Exhibit A hereto (the “Loans”);

WHEREAS, the parties hereto desire that: (i) the Seller sell the Loans to the Purchaser on the Closing Date and thereafter all Additional Balances relating to the Loans created on or after the Cut-off Date pursuant to the terms of this Loan Purchase Agreement together with the Basic Documents and (ii) the Seller make certain representations and warranties on the Closing Date;

WHEREAS, pursuant to the Trust Agreement, the Purchaser will sell the Loans and transfer all of its rights under this Loan Purchase Agreement to the Issuer on the Closing Date;

NOW, THEREFORE, for and in consideration of the sale of the Loans from Seller to the Purchaser on the date hereof, the Purchaser shall pay to Seller on the date hereof by wire transfer of immediately available funds the net proceeds to the Purchaser of the sale of the Notes, together with the Certificates, the parties hereto hereby agree as follows:

Section 1.   Transfer of Loans.  (a) Seller hereby sells, transfers, assigns and otherwise conveys to Purchaser (A) the Loans and all Additional Balances thereafter arising, including the Mortgage Notes, the Mortgages, any related insurance policies and all other documents in the related Loan Files and including any Eligible Substitute Loans; (B) all pool insurance policies, hazard insurance policies, and bankruptcy bonds relating to the foregoing, and (C) all amounts payable after the Cut-off Date to the holders of the Loans in accordance with the terms thereof.  In addition, Seller has delivered to the Purchaser or the Custodian, as directed by the Purchaser, the Loan Schedule and the documents listed on Exhibit C; provided, however, that the Purchaser does not assume the obligation under each Loan Agreement
relating to a HELOC to fund Draws to the Mortgagor thereunder, and the Purchaser shall not be obligated or permitted to fund any such Draws, it being agreed that the Seller will retain the obligation to fund future Draws.  Such conveyance shall be deemed to be made: (1) with respect to the Cut-off Date Principal Balances, as of the Closing Date; and (2) with respect to the amount of each Additional Balance created on or after the Cut-off Date, as of the later of the Closing Date and the date that the corresponding Draw was made pursuant to the related Loan Agreement, subject to the receipt by the Servicer of consideration therefor as provided in Section 3.16 of the Servicing Agreement and 3.05 of the Indenture.

 

 

 

 

(b)   Based on the Initial Certification of the Custodian, the Indenture Trustee acknowledges receipt by the Custodian of the documents identified in the Initial Certification and declares that the Custodian holds such documents and the other documents delivered to the Custodian constituting the applicable Loan Files, in trust for the exclusive use and benefit of all present and future Noteholders. The Indenture Trustee acknowledges that it or the Custodian will maintain possession of the Loans and the Loan Files in the State of Illinois, as directed by the Purchaser, unless otherwise permitted by the Rating Agencies.

(c)   The Indenture Trustee agrees to deliver on the Closing Date to the Purchaser and the Servicer an Initial Certification from the Custodian (to the extent received by the Indenture Trustee from the Custodian). Based on its review and examination, and only as to the documents identified in such Initial Certification, the Custodian, pursuant to the terms of the Custodial Agreement, will acknowledge that such documents appear regular on their face and relate to such Loan. Neither the Indenture Trustee nor the Custodian shall be under any duty or obligation to inspect, review or examine said documents, instruments, certificates or other papers to determine that the same are genuine, enforceable, recordable or appropriate for the represented purpose or that they have actually been recorded in the real estate records or that they are
other than what they purport to be on their face; provided, however, that neither the Indenture Trustee nor the Custodian shall make any determination as to whether (i) any endorsement is sufficient to transfer all right, title and interest of the party so endorsing, as noteholder or assignee thereof, in and to that Mortgage Note or (ii) any assignment is in recordable form or is sufficient to effect the assignment of and transfer to the assignee thereof under the mortgage to which the assignment relates.  Not later than 90 days after the Closing Date, upon receipt of a Final Certification from the Custodian provided for in the Custodial Agreement, the Indenture Trustee shall deliver to the Purchaser, the Seller and the Servicer such Final Certification, with any applicable exceptions noted thereon.

(d)   If, in the course of such review, the Indenture Trustee is notified by the Custodian that any document constituting a part of a Loan File does not meet the requirements of Exhibit C hereto, the Indenture Trustee shall cause the Custodian to list such as an exception in the Final Certification.  

(e)   The Seller shall promptly correct or cure such defect within 90 days from the date it is so notified of such defect and, if the Seller does not correct or cure such defect within such period, the Seller shall either (i) substitute for the related Loan an Eligible Substitute Loan, which substitution shall be accomplished in the manner and subject to the conditions set forth in Section 2(d), or (ii) purchase such Loan within 90 days from the date the Seller was notified of such defect in writing at the Repurchase Price of such Loan if such defect materially and adversely affects the value of the related Loan or interests of the Noteholders or the Certificateholders; provided, however, that if the cure, substitution or repurchase of a Loan pursuant to this provision is required by reason of a delay in delivery of any documents
by the appropriate recording office, then the Seller shall be given 270 days from the Closing Date to cure such defect or substitute for, or repurchase such Loan; and further provided, that the Seller shall have no liability for recording any Assignment of Mortgage in favor of the Indenture Trustee or for the Servicer’s failure to record such Assignment of Mortgage, and the Seller shall not be obligated to repurchase or cure any Loan as to which such Assignment of Mortgage is not recorded. The Indenture Trustee shall deliver written notice to each Rating Agency within 

 

 

	
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270 days from the Closing Date indicating each Mortgage (a) which has not been returned by the appropriate recording office or (b) as to which there is a dispute as to location or status of such Mortgage. Such notice shall be delivered every 90 days thereafter until the related Mortgage is returned to the Custodian. Any substitution shall not be effected prior to the additional delivery to the Indenture Trustee or the Custodian, of a Request for Release and the Loan File for any such Eligible Substitute Loan. The Repurchase Price for any such Loan shall be deposited by the Seller in the Payment Account on or prior to the Business Day immediately preceding such Payment Date in the month following the month of repurchase and, upon receipt of such deposit, the Custodian, pursuant to the terms of the Custodial Agreement, will release the related Loan File to the Seller and will execute and deliver at the
Seller’s request such instruments of transfer or assignment prepared by the Seller, in each case without recourse, representation and warranty or as shall be necessary to vest in the Seller, or its designee, the interest of the Purchaser, the Issuer, and the Indenture Trustee in any Loan released pursuant hereto.  It is understood and agreed that the obligation of the Seller to cure, substitute for or to repurchase any Loan which does not meet the requirements of this Section shall constitute the sole remedy respecting such defect available to the Indenture Trustee, the Purchaser and any Certificateholder against the Seller.

(f)   All of the Loan Files are being held pursuant to the Custodial Agreement. Notwithstanding anything to the contrary contained herein, the parties hereto acknowledge that the functions of the Indenture Trustee with respect to the custody, acceptance, inspection and release of the Loan Files pursuant to Sections 1 and 2 hereof shall be performed by the Custodian.  In connection with the assignment of any Loan registered on the MERS® System, the Indenture Trustee shall cause, at the Servicer’s expense, as soon as practicable after the Closing Date, the MERS® System to indicate that such Loans have been assigned by the Seller to the Indenture Trustee in accordance with this Loan Purchase Agreement, the Trust Agreement and the Indenture for the benefit of the Noteholders by including (or deleting, in the case of Loans
which are repurchased in accordance with this Agreement) in such computer files (a) the code “[IDENTIFY INDENTURE TRUSTEE SPECIFIC CODE]” in the field “[IDENTIFY THE FIELD NAME FOR INDENTURE TRUSTEE]” which identifies the Indenture Trustee and (b) the code “[IDENTIFY SERIES SPECIFIC CODE NUMBER]” in the field “Pool Field” which identifies the series of the Notes issued in connection with such Loans.  Indenture Trustee agrees that it will not alter the codes referenced in this paragraph with respect to any Loan during the term of this Loan Purchase Agreement unless and until such Loan is repurchased in accordance with the terms of this Loan Purchase Agreement..

	
            Section 2.
 	
            Representations and Warranties.  
 

(a)   Representations and Warranties as to Seller.  Seller represents and warrants to the Purchaser, the Indenture Trustee and the Issuer that as of the Closing Date:

(i)   Organization and Good Standing; Licensing.  Seller is a company duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and has all licenses necessary to carry out its business as now being conducted, and is licensed and qualified to transact business in and is in good standing under the laws of its state of jurisdiction;

 

 

	
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(ii)                Power, Authority and Binding Obligations. Seller has the power and authority to make, execute, deliver and perform this Loan Purchase Agreement and all of the transactions contemplated under this Loan Purchase Agreement, and has taken all necessary action to authorize the execution, delivery and performance of this Loan Purchase Agreement.  When executed and delivered, this Loan Purchase Agreement will constitute the legal, valid and binding obligation of Seller enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and by the availability of equitable remedies;

(iii)             No Conflicts.  Neither the execution and delivery of this Loan Purchase Agreement, nor the consummation of the transactions herein contemplated hereby, nor compliance with the provisions hereof, will conflict with or result in a breach of, or constitute a default under, any of the provisions of any law, governmental rule, regulation, judgment, decree or order binding on Seller or its properties or the certificate of incorporation or by-laws of Seller, except those conflicts, breaches or defaults which would not reasonably be expected to have a material adverse effect on Seller’s ability to enter into this Loan Purchase Agreement and to consummate the transactions contemplated hereby;

(iv)                No Consent.  The execution, delivery and performance by Seller of this Loan Purchase Agreement and the consummation of the transactions contemplated hereby do not require the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, any state, federal or other governmental authority or agency, except those consents, approvals, notices, registrations or other actions as have already been obtained, given or made and conveyance of the Loans by Seller are not subject to bulk transfer or any similar statutory provisions in effect in any applicable jurisdiction;

(v)   Enforceability.  This Loan Purchase Agreement has been duly executed and delivered by Seller and, assuming due authorization, execution and delivery by the Purchaser, the Indenture Trustee and the Issuer, constitutes a valid and binding obligation of Seller enforceable against it in accordance with its terms (subject to applicable bankruptcy and insolvency laws and other similar laws affecting the enforcement of the rights of creditors generally) and general principles of equity; 

(vi)                No Litigation.  There are no actions, litigation, suits or proceedings pending or threatened against Seller before or by any court, administrative agency, arbitrator or governmental body (i) with respect to any of the transactions contemplated by this Loan Purchase Agreement, (ii) on the sale of the Loans, or (iii) with respect to any other matter which in the judgment of Seller if determined adversely to Seller would reasonably be expected to materially and adversely affect Seller’s ability to perform its obligations under this Loan Purchase Agreement; and Seller is not in default with respect to any order of any court, administrative agency, arbitrator or governmental body so as to materially and adversely affect the
transactions contemplated by this Loan Purchase Agreement; and

(vii)             Solvent.  Seller does not believe, nor does it have any cause or reason to believe, that it cannot perform each and every covenant contained in this Loan Purchase Agreement.  Seller is solvent and the sale of the Loans by it will not cause Seller to 

 

 

	
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become insolvent.  The sale of the Loans by Seller is not undertaken with the intent to hinder, delay or defraud any of Seller’s creditors.

(b)   Representations and Warranties as to Loans.  Seller hereby represents and warrants, as to each Loan, that the representations and warranties set forth on Exhibit B attached hereto are true and correct as of the Cut-off Date, except where otherwise indicated in Exhibit B.

(c)   Representations and Warranties as to Purchaser.  Purchaser warrants and represents to, and covenants with, Seller that:

(i)    Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has all requisite corporate power and authority to acquire, own and purchase the Loans;

(ii)                 Purchaser has full corporate power and authority to execute, deliver and perform under this Loan Purchase Agreement, and to consummate the transactions set forth herein.  The execution, delivery and performance by Purchaser of this Loan Purchase Agreement, and the consummation by it of the transactions contemplated hereby, have been duly authorized by all necessary corporate action of Purchaser.  This Loan Purchase Agreement has been duly executed and delivered by Purchaser and constitutes the valid and legally binding obligation of Purchaser enforceable against Purchaser in accordance with its respective terms;

(iii)              To the best of Purchaser’s knowledge, no material consent, approval, order or authorization of, or declaration, filing or registration with, any governmental entity is required to be obtained or made by Purchaser in connection with the execution, delivery or performance by Purchaser of this Loan Purchase Agreement, or the consummation by it of the transactions contemplated hereby;

(iv)                 Purchaser understands that the Loans have not been registered under the 1933 Act or the securities laws of any state:

(v)   Purchaser is acquiring the Loans for investment for its own account only and not for any other person;

(vi)                 Purchaser considers itself a substantial, sophisticated institutional investor having such knowledge and financial and business matters that it is capable of evaluating the merits and the risks of investment in the Loans;

(vii)              Purchaser has been furnished with all information regarding the Loans that it has requested from Seller;

(viii)           Neither Purchaser nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise disposed of the Loans, an interest in the Loans or any other similar security to, or solicited any offer to buy or accept a transfer, pledge or other disposition of the Loans, any interest in the Loans or any other similar security from, or otherwise approached or negotiated with respect to the Loans, any interest in the Loans or any other similar security with, any person in any manner, or made any general solicitation by means of general advertising or in any other manner, or taken any other action which would constitute a 

 

 

	
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distribution of the Loans under the 1933 Act or which would render the disposition of the Loans a violation of Section 5 of the 1933 Act or require registration pursuant thereto, nor will it act, nor has it authorized or will it authorize any person to act, in such manner with respect to the Loans; and

(ix)                 Either:  (A) Purchaser is not an employee benefit plan (“Plan”) within the meaning of section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or a plan (also “Plan”) within the meaning of section 4975(e)(1) of the Internal Revenue Code of 1986 as amended (“Code”), and Purchaser is not directly or indirectly purchasing the Loans on behalf of, investment manager of, as named fiduciary of, as trustee of, or with assets of, a Plan; or (B) Purchaser’s purchase of the Loans will not result in a prohibited transaction under section 406 of ERISA or section 4975 of the Code.

(d)   Upon discovery by Seller or upon notice from Purchaser, the Issuer, the Owner Trustee, the Indenture Trustee or any Custodian, as applicable, of a breach of any representation or warranty of the Seller set forth in Section 2(a) above which materially and adversely affects the interests of the Securityholders in any Loan, Seller shall, within 90 days of its discovery or its receipt of notice of such breach, either (i) cure such breach in all material respects or (ii) to the extent that such breach is with respect to a Loan or a Basic Document, either (A) repurchase such Loan from the Trust at the Repurchase Price, or (B) substitute one or more Eligible Substitute Loans for such loan, in each case in the manner and subject to the conditions and limitations set forth below.

Upon discovery by Seller or upon notice from Purchaser, the Issuer, the Servicer, the Owner Trustee, the Indenture Trustee or any Custodian, as applicable, of a breach of any representation or warranty set forth in Exhibit B attached hereto pursuant to Section 2(b) above with respect to any Loan that materially and adversely affects the interests of the Securityholders or of Purchaser in such Loan (notice of which shall be given to Purchaser by Seller, if it discovers the same), notwithstanding Seller’s lack of knowledge with respect to the substance of such representation and warranty, Seller shall, within 90 days after the earlier of its discovery or receipt of notice thereof; either cure such breach in all material respects or either (i) repurchase such Loan from the Trust at the Repurchase Price, or (ii) substitute one or more Eligible Substitute Loans for such Loan, in each case
in the manner and subject to the conditions set forth below.  The Repurchase Price for any such Loan repurchased by Seller shall be deposited or caused to be deposited by the Servicer in the Custodial Account maintained by it pursuant to Section 3.02 of the Servicing Agreement.

Seller shall also deliver to the Custodian on behalf of the Issuer, with respect to such Eligible Substitute Loan or Loans, the original Mortgage Note and all other documents and agreements as are required herein, with the Mortgage Note endorsed as required herein.  No substitution will be made in any calendar month after the Determination Date for such month.  Monthly Payments due with respect to Eligible Substitute Loans in the month of substitution shall not be property of the Issuer and if received by the Servicer will be retained by the Servicer and remitted by the Servicer to Seller on the next succeeding Payment Date, provided that a payment at least equal to the applicable Monthly Payment has been received by the Issuer, for such month in respect of the Deleted Loan.  For the month of substitution, distributions to the Custodial Account pursuant to the Servicing Agreement will
include the Monthly Payment due 

 

 

	
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on a Deleted Loan for such month and thereafter Seller shall be entitled to retain all amounts received in respect of such Deleted Loan.  The Indenture Trustee shall amend or cause to be amended the Loan Schedule to reflect the removal of such Deleted Loan and the substitution of the Eligible Substitute Loan or Loans.  Upon such substitution, the Eligible Substitute Loan or Loans shall be subject to the terms of this Loan Purchase Agreement in all respects, and Seller shall be deemed to have made the representations and warranties with respect to the Eligible Substitute Loan contained herein and set forth in paragraphs (b) through (p) of Exhibit B attached hereto as of the date of substitution, and Seller shall be obligated to repurchase or substitute for any Eligible Substitute Loan as to which a Repurchase Event has occurred as provided herein.  Seller shall deposit any related Substitution Amount (as
calculated by the Servicer pursuant to the Servicing Agreement) into the Custodial Account on the day of substitution, without any reimbursement therefor.

Upon receipt by the Indenture Trustee on behalf of the Issuer and the Custodian of written notification, signed by a Servicing Officer, of the deposit of such Repurchase Price or of such substitution of an Eligible Substitute Loan (together with the complete related Loan File) and deposit of any applicable Substitution Adjustment Amount as provided above, the Custodian, pursuant to the terms of the Custodial Agreement and on behalf of the Indenture Trustee, will release to Seller the related Loan File for the Loan being repurchased or substituted for and the Indenture Trustee shall execute and deliver such instruments of transfer or assignment prepared by the Servicer, in each case without recourse, representation or warranty as shall be necessary to vest in Seller or its designee such Loan released pursuant hereto and thereafter such Loan shall not be an asset of the Issuer.

It is understood and agreed that the obligation of Seller to cure any breach, or to repurchase or substitute for, any Loan as to which such a breach has occurred and is continuing shall constitute the sole remedy respecting such breach available to Purchaser, the Servicer, the Issuer, the Certificateholders (or the Owner Trustee on behalf of the Certificateholders) and the Noteholders (or the Indenture Trustee on behalf of the Noteholders) against Seller.

It is understood and agreed that (i) representations and warranties set forth in this Section 2 and (ii) the representations and warranties set forth on Exhibit B attached hereto, shall survive delivery of the respective Loan Files to the Indenture Trustee or the Custodian.

Section 3.   Definitions.  For all purposes of this Loan Purchase Agreement, except as otherwise expressly provided herein or unless the context otherwise requires, capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Definitions contained in Appendix A to the Indenture, dated June 3, 2005 (as it may be amended or modified, the “Indenture”), between the Issuer and the Indenture Trustee, as in effect on the date hereof.  All other capitalized terms used herein shall have the meanings specified herein.

Section 4.   GOVERNING LAW.  THIS LOAN PURCHASE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

 

	
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Section 5.   Counterparts.  This Loan Purchase Agreement may be executed in counterparts, each of which, when so executed, shall be deemed to be an original and together shall constitute one and the same instrument.

Section 6.   Limitation of Liability of Owner Trustee.  It is expressly understood and agreed by the parties hereto that (a) this Loan Purchase Agreement is executed and delivered by Wilmington Trust Company, not individually or personally, but solely as Owner Trustee of the Irwin Whole Loan Home Equity Trust 2005-B, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by Wilmington Trust Company, but is made and intended for the purpose for binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust Company, individually or personally, to
perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto and (d) under no circumstances shall Wilmington Trust Company be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Loan Purchase Agreement or any other related documents.

Section 7.   Successors and Assigns.  This Loan Purchase Agreement shall inure to the benefit of and be binding upon Seller, Purchaser, the Indenture Trustee and the Issuer and their respective successors and assigns.

Section 8.     Intention of the Parties.  (a) It is the express intent of the parties hereto that the conveyance by the Seller to the Purchaser pursuant to this Loan Purchase Agreement of the Loans (including any Additional Balances) be, and be construed as, an absolute sale and assignment by the Seller to the Purchaser.  Further, it is not intended that the conveyance be deemed to be the grant of a security interest in the Loans by the Seller to the Purchaser to secure a debt or other obligation.  However, in the event that the Loans are held to be property of the Seller, or if for any reason this Loan Purchase Agreement is held or deemed to create a security interest in the Loans, then (i) this Loan Purchase Agreement shall be a security agreement within the meaning of Article 9 of
the New York Uniform Commercial Code and the Uniform Commercial Code of any other applicable jurisdiction; (ii) the conveyances provided for in Section shall be a grant by the Seller to the Purchaser of, and the Seller does hereby grant to the Purchaser, a security interest in all of the Seller’s right, title and interest, whether now owned or hereafter acquired, in and to (A) the Loans, including the Mortgage Notes, the Mortgages, any related insurance policies and all other documents in the related Loan Files and including any Eligible Substitute Loans; (B) all pool insurance policies, hazard insurance policies and bankruptcy bonds relating to the foregoing, (C) all amounts payable after the Cut-off Date to the holders of the Loans in accordance with the terms thereof; (D) all income, payments, proceeds and products of the conversion, voluntary or involuntary, of the foregoing into cash, instruments, securities or other property; (E) all accounts, chattel paper,
deposit accounts, documents, general intangibles, goods, instruments, investment property, letter-of-credit rights, letters of credit, money, and oil, gas, and other minerals, consisting of, arising from, or relating to, any of the foregoing; and (F) all proceeds of any of the foregoing; (iii) the possession or control by the Purchaser or any other agent of the Purchaser of any of the foregoing property 

 

 

	
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shall be deemed to be possession or control by the secured party, or possession or control by a purchaser, for purposes of perfecting the security interest pursuant to the Uniform Commercial Code (including, without limitation, Sections 9-104, 9-106, 9-313 or 9-314 thereof); and (iv) notifications to persons holding such property, and acknowledgments, receipts or confirmations from persons holding such property, shall be deemed notifications to, or acknowledgments, receipts or confirmations from, securities intermediaries, bailees or agents of, or persons holding for, the Purchaser, as applicable, for the purpose of perfecting such security interest under applicable law.

(b) The parties hereto, shall, to the extent consistent with this Loan Purchase Agreement, take such reasonable actions as may be necessary to ensure that, if this Loan Purchase Agreement were deemed to create a security interest in the Loans, such security interest would be a perfected security interest of first priority.  

 

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

DLJ MORTGAGE CAPITAL, INC., 

as Seller

	
            By:
 	
            _____________________________
 

Name:  

	
            Title:  
 

 

CREDIT SUISSE FIRST BOSTON MORTGAGE ACCEPTANCE CORP.,

as Purchaser

	
            By:
 	
            _____________________________
 

Name:  

	
            Title:  
 

 

U.S. BANK NATIONAL ASSOCIATION,

as Indenture Trustee

 

	
            By:
 	
            _____________________________
 

Name:  

	
            Title:  
 

 

IRWIN WHOLE LOAN HOME EQUITY TRUST 2005-B, as Issuer

	
            By:
 	
            WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee
 

 

	
            By:
 	
            _____________________________
 

Name:  

	
            Title:  
 

 

 

 

 

 

EXHIBIT A-1

GROUP 1 LOAN SCHEDULE

 

[TO BE PROVIDED UPON REQUEST]

 

 

 

 

 

 

 

 

 

 

	
            A-1-1
 

 

 

 

 

EXHIBIT A-2

GROUP 2 LOAN SCHEDULE

 

[TO BE PROVIDED UPON REQUEST]

 

 

 

 

 

 

 

 

 

 

 

	
            A-2-1
 

 

 

 

 

EXHIBIT B

 

REPRESENTATIONS AND 

WARRANTIES WITH RESPECT TO LOANS

(a)   Sole Owner.  As of the Closing Date, immediately prior to the sale, transfer and assignment to Purchaser, Seller is the sole owner of record and holder of the Loan and the indebtedness evidenced by the Loan, the Loan was not subject to an assignment or pledge and Seller had good and marketable title to and was the sole owner thereof and had full right to transfer and sell the Loan to the Purchaser free and clear of any encumbrance, equity, lien, pledge, charge, claim or security interest and has the full right and authority subject to no interest or participation of, or agreement with, any other party, to sell and assign the Loan and following the sale of the Loan, the Purchaser will own such Loan free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest;

(b)   Compliance With Laws.  Any and all requirements of any federal, state or local law including, without limitation, anti-predatory or abusive lending, usury, truth-in-lending, real estate settlement procedures, consumer credit protection, equal credit opportunity or disclosure laws applicable to the Loan have been complied with in all material respects;

(c)   No Waivers.  Except for one Loan, which is subject to the Soldier and Sailor’s Civil Relief Act of 1940, the terms of each Loan have not been impaired, waived, altered or modified in any respect, except by written instruments which have been recorded to the extent any such recordation is required by law, or, necessary to protect the interest of the Purchaser.  No instrument of waiver, alteration or modification has been executed, and no Mortgagor has been released, in whole or in part, from the terms thereof except in connection with an assumption agreement, the terms of which are reflected in the Loan Schedule;

(d)   Underwriting Standards.  The Loan complies with all the terms, conditions and requirements of the Originator’s underwriting standards in effect at the time of origination of such Loan;

(e)   Loan Schedule.  The information set forth in the Loan Schedule is complete, true and correct in all material respects as of the Cut-off Date;

(f)   Valid Security Interest.  The Loan is a valid, subsisting, enforceable and perfected first, second or third lien on the Mortgaged Property (as described on the Loan Schedule), including all buildings and improvements on the Mortgaged Property, and such lien of is subject only to the following:

(i)             real estate taxes and special assessments not yet delinquent (provided, that property taxes may be delinquent up to one year);

(ii)             as to any Loan identified as a junior lien on the Loan Schedule, any senior liens secured by the Mortgaged Property related to such Loan;

 

 

	
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(iii)             covenants, conditions and restrictions, rights of way, easements and other matters of public record as of the date of recording that are acceptable to mortgage lending institutions generally; 

(iv)             liens verified as paid;

(v)             liens and judgments of $5,000 or less, including (A) sewer or maintenance liens, mechanics' liens, (B) liens resulting from UCC filings that have been included in the first mortgage balance for the purpose of calculating the combined-loan-to-value ratio for any related Loan, and (C) liens relating to other matters to which like properties are commonly subject that do not materially interfere with the benefits of the security intended to be provided to, among others, the Originator by the related mortgage documents.

Any security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Loan establishes and creates a valid, subsisting, enforceable and perfected second lien and second priority security interest on the property described therein and Seller has full right to sell and assign the same to Purchaser, provided, however, that any representation as to the enforceability of any security interest or lien is subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally and general principles of equity (whether considered in a proceeding at law or equity);

(g)   Mechanics’ Liens.  To the best of Seller’s knowledge there are no mechanics’ or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under law could give rise to such liens) affecting the related collateral which are or may be liens prior to or equal to the lien of the related Loan;

(h)   Unpaid Taxes.  To the best of Seller’s knowledge all taxes, governmental assessments, insurance premiums, water, sewer and municipal charges, leasehold payments or ground rents which previously became due and owing have been paid, or escrow funds have been established in an amount sufficient to pay for every such escrowed item which remains unpaid and which has been assessed but is not yet due and payable;

(i)   No Defenses.  The Loan is not subject to any right of rescission, set-off, counterclaim or defense, including, without limitation, the defense of usury, nor will the operation of any of the terms of the Loan, or the exercise of any right thereunder, render the Loan unenforceable, in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including the defense of usury, and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto;

(j)   No Damage. To the best of Seller’s knowledge the Mortgaged Property is not subject to any material damage by waste, fire, earthquake, windstorm, flood or other casualty.  At origination of the Loan there was, and there currently is, no proceeding pending for the total or partial condemnation of the Mortgaged Property;

(k)   Improvements. To the best of Seller’s knowledge all improvements subject to any Mortgage which were considered in determining the appraised value of the Mortgaged Property lie wholly within the boundaries and building restriction lines of the 

 

 

	
            B-2
 

 

 

Mortgaged Property (and wholly within the project with respect to a condominium unit) and no improvements on adjoining properties encroach upon the related Mortgaged Property except those which are insured against by a title insurance policy and all improvements on the property comply with all applicable zoning and subdivision laws and ordinances;

(l)   Recordation.  Seller has delivered or caused to be delivered to the Purchaser or the Custodian on behalf of the Purchaser the original Mortgage bearing evidence that such instruments have been recorded in the appropriate jurisdiction where the Mortgaged Property is located as determined by Seller (or, in lieu of the original of the Mortgage or the assignment thereof, a duplicate or conformed copy of the Mortgage or the instrument of assignment, if any, together with a certificate of receipt from Seller or the settlement agent who handled the closing of the Loan, certifying that such copy or copies represent true and correct copy(ies) of the originals and that such original(s) have been or are currently submitted to be recorded in the appropriate governmental recording office of the jurisdiction where
the Mortgaged Property is located) or a certification or receipt of the recording authority evidencing the same;

(m)   Delinquencies.  As of the Cut-off Date, (a) no more than 0.37% of the Group 1 Loans (by aggregate Cut-ff Date Principal Balances of the Group 1 Loans) and 0.08% of the Group 2 Loans (by aggregate Cut-ff Date Principal Balances of the Group 2 Loans) are more than 30 days delinquent and (b) none of the Loans are more than 60 days delinquent;

(n)   Original.  The Loan is original and genuine and is the legal, valid and binding obligation of the maker thereof, enforceable in all respects in accordance with its terms subject to bankruptcy, insolvency, moratorium, reorganization and other laws of general application affecting the rights of creditors and by general equitable principles;

(o)   Closed End.  Each of the Group 2 Loans constitutes a “qualified mortgage” under Section 860G(a)(3)(A) of the Code and Treasury Regulation Section 1.860G-2(a)(1); 

(p)   REMIC Ineligible.  As of the Cut-off Date, not less than 65% of the Group 1 Loans (by aggregate Cut-off Date Principal Balances of the Group 1 Loans) are REMIC Ineligible Loans;

(q)   High Cost Loans.  Approximately 1.29% of the Loans underlying the Securities are covered by the Home Ownership and Equity Protection Act of 1994 (“HOEPA”).  None of these loans are in violation of HOEPA or any comparable state law.  With respect to these HOEPA-covered loans, the originator has procedures in place to ensure that they comply with the requirements of HOEPA or such state law and these loans were originated in compliance with such procedures and requirements.  None of the remaining Loans sold are classified as (a) a “high cost mortgage” loan under HOEPA or (b) a “high cost home,” “covered,” “high cost,” “high risk home” or “predatory” loan under any other applicable state, federal or local law; 

(r)   Georgia Loans.  No Loan was originated on or after October 1, 2002 and before March 7, 2003, which is secured by property located in the State of Georgia; and

 

 

	
            B-3
 

 

 

 

(s)   Group 2 REMIC.  Each Group 2 Loan at the time of its origination was secured by a mortgage or deed of trust with respect to real property that had at the time of the origination of such Group 2 Loan a value at least equal to 80% of the original principal balance of such Group 2 Loan, calculated by subtracting the principal balance of any loans that are secured by liens that are senior to the Group 2 Loan and a proportionate amount of any loans that are secured by a lien of equal priority as the Group 2 Loan from the Appraised Value of the property when the Group 2 Loan was originated and by treating the original principal balance of the Group 2 Loan as the maximum permitted principal balance for such Group 2 Loan.

 

	
            B-4
 

 

 

 

EXHIBIT C

 

CONTENTS OF EACH LOAN FILE

With respect to each Loan, the Loan File shall include each of the following items, which shall be delivered to the Purchaser or its designee pursuant to the terms of the Loan Purchase Agreement to which this Exhibit is attached:

Section 1.   The original Mortgage Note endorsed “Pay to the order of ___________________ without recourse,” and signed in the name of the Seller by an authorized officer, with all intervening endorsements showing a complete chain of title from the originator to the Seller.  If the Loan was acquired by the Seller in a merger, the endorsement must be by “[Seller], successor by merger to the [name of predecessor]”.  If the Loan was acquired or originated by the Seller while doing business under another name, the endorsement must be by “[Seller] formerly known as [previous name]”.  If the original note is unavailable, Seller will provide an affidavit of lost note (in form acceptable to the Purchaser) stating that the original Mortgage Note was lost or destroyed, together with a copy of such Mortgage Note
and indemnifying the Purchaser against any and all claims arising as a result of any person or entity claiming they are the holder of the note or that the note has been paid off and returned.

Section 2.   Except as provided below and for each Loan that is not a Loan registered with MERS, the original Mortgage with evidence of recording thereon, or a copy thereof certified by the public recording office in which such mortgage has been recorded or, if the original Mortgage has not been returned from the applicable public recording office, a true certified copy, certified by the title insurer, of the original Mortgage together with a certificate of the Seller certifying that the original Mortgage has been delivered for recording in the appropriate public recording office of the jurisdiction in which the Mortgaged Property is located and in the case of each Loan registered with MERS, the original Mortgage, noting the presence of the MIN of the Loans and either language indicating that the Loan is a MOM Loan or if the Loan
was not a MOM Loan at origination, the original Mortgage and the assignment thereof to MERS, with evidence of recording indicated thereon, or a copy of the Mortgage certified by the public recording office in which such Mortgage has been recorded.

Section 3.   In the case of each Loan that is not Loan registered with MERS, the original Assignment of Mortgage, from the Seller in accordance with Purchaser’s instructions, which Assignment of Mortgage shall, but for any blanks requested by the Purchaser, be in form and substance acceptable for recording, or a copy certified by the Seller as a true and correct copy of the original Assignment of Mortgage which has been sent for recordation.  If the Loan was acquired or originated by the Seller while doing business under another name, the Assignment of Mortgage must be by “[Seller] formerly known as [previous name]”.

Section 4.   With respect to Loans that are not cooperative loans, any original policy of title insurance, if applicable, including riders and endorsements thereto, or if any such policy has not yet been issued, a written commitment or interim binder or preliminary report of title issued by the title insurance or escrow company.

 

 

	
            C-1
 

 

 

 

Section 5.   Originals of all recorded intervening Assignments, or copies thereof, certified by the public recording office in which such Assignments of Mortgage have been recorded showing a complete chain of title from the originator to the Seller, with evidence of recording thereon, or a copy thereof certified by the public recording office in which such Assignment has been recorded or, if the original Assignment of Mortgage has not been returned from the applicable public recording office, a true certified copy, certified by the title insurer of the original Assignment together with a certificate of the title insurer certifying that the original Assignment of Mortgage has been delivered for recording in the appropriate public recording office of the jurisdiction in which the Mortgaged Property is located.

Section 6.   Originals, or copies thereof certified by the public recording office in which such documents have been recorded, of each assumption, extension, modification, written assurance or substitution agreements, if applicable, or if the original of such document has not been returned from the applicable public recording office, a true certified copy, certified by the title insurer, of such original document together with certificate of Seller certifying the original of such document has been delivered for recording in the appropriate recording office of the jurisdiction in which the Mortgaged Property is located. 

Section 7.   If the Mortgage Note or Mortgage or any other material document or instrument relating to the Loan has been signed by a person on behalf of the Mortgagor, the original power of attorney or other instrument that authorized and empowered such person to sign bearing evidence that such instrument has been recorded, if so required in the appropriate jurisdiction where the Mortgaged Property is located (or, in lieu thereof, a duplicate or conformed copy of such instrument, together with a certificate of receipt from the recording office, certifying that such copy represents a true and complete copy of the original and that such original has been or is currently submitted to be recorded in the appropriate governmental recording office of the jurisdiction where the Mortgaged Property is located), or if the original power of
attorney or other such instrument has been delivered for recording in the appropriate public recording office of the jurisdiction in which the Mortgaged Property is located.

Section 8.   The original of any guarantee executed in connection with the Mortgage Note.

 

 

C-2Exhibit 10.01

 

LAUREATE EDUCATION, INC.

2005 STOCK INCENTIVE PLAN

 

1.        Purpose.

 

The purpose of the Laureate
Education, Inc. 2005 Stock Incentive Plan is to promote the long-term
growth and profitability of the Company by (i) providing key people with
incentives to improve stockholder value and to contribute to the growth and
financial success of the Company through their future services, and (ii) enabling
the Company to attract, retain and reward the best talent.

 

2.        Definitions.

 

Wherever the following capitalized
terms are used in the Plan, they shall have the meanings specified below:

 

“Affiliate” means any entity, whether now or hereafter
existing, which controls, is controlled by, or is under common control with,
the Company (including, but not limited to, joint ventures, limited liability
companies, and partnerships).  For this
purpose, “control” shall mean ownership of 50% or more of the total combined
voting power or value of all classes of stock or interests of the entity.

 

“Award” means an award of a Stock Option, Stock Appreciation Right, Restricted
Stock Award, Restricted Stock Unit Award, Performance Share Award, Performance
Unit Award or Stock Award granted under the Plan.

 

 “Award Agreement” means a written or electronic document setting forth the terms and
conditions of an Award granted to a Participant.

 

“Board” means the Board of
Directors of the Company.

 

 “Change in Control” means (i) the
acquisition (other than from the Company) in one or more transactions by any
Person, as defined below, of the beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of (A) the then
outstanding shares of the securities of the Company, or (B) the combined
voting power of the then outstanding securities of the Company entitled to vote
generally in the election of directors (the “Company Voting Stock”); (ii) the
closing of a sale or other conveyance of all or substantially all of the assets
of the Company; or (iii) the effective time of any merger, share exchange,
consolidation, or other business combination involving the Company if
immediately after such transaction persons who hold a majority of the
outstanding voting securities entitled to vote generally in the election of
directors of the surviving entity (or the entity owning 100% of such surviving
entity) are not persons who, immediately prior to such transaction, held the
Company Voting Stock; provided, however, that for
purposes of any Award or subplan that constitutes a “nonqualified deferred
compensation plan,” within the meaning of Section 409A of the Code, the
Committee may specify a different definition of Change in Control in order to
comply with the provisions of Section 409A of the Code.  For purposes of this definition, a “Person”
means any individual, entity or group within the meaning
of Section

13(d)(3) or 14(d)(2) of the Exchange Act, other than employee benefit
plans sponsored or maintained by the Company and by entities controlled by the Company.

 

“Code” means the Internal
Revenue Code of 1986, as amended, and any regulations promulgated thereunder.

 

 

“Common Stock” means the Company’s
common stock, par value of one cent ($0.01) per share.

 

“Committee” means the
Compensation Committee of the Board, or such other committee of the Board
appointed by the Board to administer the Plan.

 

“Company” means Laureate
Education, Inc., a Maryland corporation.

 

“Date of Grant” means the date on
which an Award under the Plan is made by the Committee, or such later date as
the Committee may specify to be the effective date of an Award.

 

 “Eligible Person” means any person who
is an employee of the Company or any Affiliate or any person to whom an offer
of employment with the Company or any Affiliate is extended, as determined by
the Committee, or any person who is a Non-Employee Director.

 

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

 

“Fair Market Value”
means, with respect to a share of the Company’s Common Stock for any purpose on
a particular date, the value determined by the
Committee in good faith.  However, if the Common Stock is registered
under Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended, and listed for trading on a national exchange or market, “Fair
Market Value” means, as applicable, (i) either the closing price or the
average of the high and low sale price on the relevant date, as determined in
the Committee’s discretion, quoted on the New York Stock Exchange, the American
Stock Exchange, or the NASDAQ National Market; (ii) the last sale price on
the relevant date quoted on the NASDAQ SmallCap Market; (iii) the average
of the high bid and low asked prices on the relevant date quoted on the NASDAQ
OTC Bulletin Board Service or by the National Quotation Bureau, Inc. or a
comparable service as determined in the Committee’s discretion; or (iv) if
the Common Stock is not quoted by any of the above, the average of the closing
bid and asked prices on the relevant date furnished by a professional market
maker for the Common Stock, or by such other source, selected by the
Committee.  If no public trading of the
Common Stock occurs on the relevant date but the shares are so listed, then
Fair Market Value shall be determined as of the next preceding date on which
trading of the Common Stock does occur. 
For all purposes under this Plan, the term “relevant date” as used in
this definition of Fair Market Value means either the date as of which Fair
Market Value is to be determined or the next preceding date on which public
trading of the Common Stock occurs, as determined in the Committee’s
discretion.

 

“Incentive Stock Option” means a Stock Option
granted under Section 6 hereof that is intended to meet the requirements
of Section 422 of the Code and the regulations thereunder.

 

“Non-Employee Director” means any member of
the Board who is not an employee of the Company.

 

“Nonqualified Stock Option” means a Stock Option
granted under Section 6 hereof that is not an Incentive Stock Option.

 

“Participant” means any Eligible
Person who holds an outstanding Award under the Plan.

 

“Performance
Awards” means Performance Share Awards and Performance Unit Awards,
as applicable.

 

“Performance Share Award” means a contractual
right granted to an Eligible Person under Section 10 hereof representing
notional unit interests equal in value to a share of Common Stock that is
forfeitable until the achievement of pre-established performance objectives
over a performance period of not less than one year in duration, as set forth
in the Plan and the applicable Award Agreement.

 

 

“Performance Unit Award” means a contractual
right granted to an Eligible Person under Section 10 hereof representing
notional unit interests equal to a pre-determined dollar amount that is
forfeitable until the achievement of pre-established performance objectives
over a performance period of not less than one year in duration as set forth in
the Plan and the applicable Award Agreement.

 

“Plan” means the Laureate Education, Inc.
2005 Stock Incentive Plan as set forth herein, as amended from time to time.

 

“Qualified Performance
Award” means a Restricted Stock Award,
Restricted Stock Unit Award, Performance Share Award or Performance Unit Award
intended to comply with Section 11 hereof.

 

“Restricted Stock Award” means a grant of
shares of Common Stock to an Eligible Person under Section 8 hereof that
are issued subject to vesting and transfer restrictions, as are set forth in
the Plan and the applicable Award Agreement.

 

“Restricted Stock Unit
Award” means a contractual right
granted to an Eligible Person under Section 9 hereof representing notional
unit interests equal in value to a share of Common Stock to be paid or
distributed at such times, and subject to such conditions, as are set forth in
the Plan and the applicable Award Agreement.

 

“Service” means a Participant’s
employment or other bona fide service
relationship with the Company or any Affiliate
or a Participant’s service as a Non-Employee Director with the Company, as
applicable.

 

“Stock Award” means a grant of
shares of Common Stock to an Eligible Person under Section 10 hereof that
are issued free of transfer restrictions and forfeiture conditions.

 

“Stock Appreciation Right” means a contractual
right granted to an Eligible Person under Section 7 hereof entitling such
Eligible Person to receive a payment, representing the difference between the
base price and the Fair Market Value of a share of Common Stock, at such time,
and subject to such conditions, as are set forth in the Plan and the applicable
Award Agreement.

 

“Stock Option” means a contractual
right granted to an Eligible Person under Section 6 hereof to purchase
shares of Common Stock at such time and price, and subject to such conditions,
as are set forth in the Plan and the applicable Award Agreement.

 

3.        Administration.

 

3.1          Committee Members.  The Plan shall be administered by a Committee
comprised of no fewer than two members of the Board. It is intended that each
Committee member shall satisfy the requirements for (i) an “independent
director” under rules adopted by the NASDAQ National Market or other
applicable exchange or securities market, (ii) a “non-employee director”
for purposes of Rule 16b-3 under the Exchange Act and (iii) an “outside
director” under Section 162(m) of the Code. No member of the Committee
shall be liable for any action or determination made in good faith by the
Committee with respect to the Plan or any Award thereunder.

 

3.2          Committee Authority.  The Committee shall have such powers and
authority as may be necessary or appropriate for the Committee to carry out its
functions as described in the Plan. Subject to the express limitations of the
Plan, the Committee shall have authority in its discretion to determine the
Eligible Persons to whom, and the time or times at which, Awards may be
granted, the number of shares, units or other rights subject to each Award, the
exercise, base or purchase price of an Award (if any), the time or times at
which an Award will become vested,

 

 

exercisable or payable, the performance goals and other conditions of an
Award, the duration of the Award, and all other terms of the Award.  The Committee shall also have discretionary authority to administer, construe and
interpret the Plan, Award Agreements and all other documents relevant to the
Plan and Awards issued hereunder, to make factual determinations under the Plan
and Award Agreements, and to make all other determinations necessary or
advisable for Plan administration, including, without limitation, to correct
any defect, to supply any omission or to reconcile any inconsistency in the Plan
or any Award Agreement hereunder.  The
Committee may prescribe, amend, and rescind rules and regulations relating
to the Plan.  The Committee’s
determinations under the Plan need not be uniform and may be made by the
Committee selectively among Participants and Eligible Persons, whether or not
such persons are similarly situated.  The
Committee shall, in its discretion, consider such factors as it deems relevant
in making its interpretations, determinations and actions under the Plan
including, without limitation, the recommendations or advice of any officer or
employee of the Company or such attorneys, consultants, accountants or other
advisors as it may select.  All
interpretations, determinations and actions by the Committee shall be final,
conclusive, and binding upon all parties.

 

3.3          Delegation of Authority. 
The Committee shall be permitted
to delegate, to any appropriate officer or employee of the Company,
responsibility for performing certain ministerial functions under the Plan. In
the event that the Committee’s authority is delegated to officers or employees
in accordance with the foregoing, all provisions of the Plan relating to the
Committee shall be interpreted in a manner consistent with the foregoing by
treating any such reference as a reference to such officer or employee for such
purpose.  Any action undertaken in
accordance with the Committee’s delegation of authority hereunder shall have
the same force and effect as if such action was undertaken directly by the
Committee and shall be deemed for all purposes of the Plan to have been taken
by the Committee.

 

3.4          Grants to Non-Employee Directors.  Any Awards or formula for granting Awards
under the Plan made to Non-Employee Directors shall be approved by the Board.
With respect to Awards to such directors, all
rights, powers and authorities vested in the Committee under the Plan shall
instead be exercised by the Board, and all provisions of the Plan relating to
the Committee shall be interpreted in a manner consistent with the foregoing by
treating any such reference as a reference to the Board for such purpose.

 

4.        Shares Subject to the
Plan.

 

4.1          Maximum Share Limitations.  Subject to adjustment pursuant to Section 4.3
hereof, the maximum aggregate number of shares of Common Stock that may be
issued under the Plan shall be 1,250,000 shares. Of such aggregate Plan limit,
the maximum number of shares of Common Stock that may be issued as Awards of
Restricted Stock, Restricted Stock Units, Performance Awards and Stock Awards
under the Plan shall be limited to 312,500 shares.  With respect to Stock Appreciation Rights that are settled in
stock, the aggregate number of measurement shares to which the Award relates
shall be counted against the maximum aggregate number of shares of Common Stock
that may be issued under the Plan, irrespective of the number of shares that
are issued upon such stock settlement.  Shares of Common Stock issued and sold under
the Plan may be either authorized but unissued shares or shares acquired on the open market or obtained through any other proper source.
To the extent that any Award involving the issuance of
shares of Common Stock is forfeited, cancelled, returned to the Company for
failure to satisfy vesting requirements or other conditions of the Award, or
otherwise terminates without an issuance of shares of Common Stock being made
thereunder, the shares of Common Stock covered thereby will no longer be
counted against the foregoing maximum share limitations and may again be made
subject to Awards under the Plan pursuant to such limitations.  Any Awards that are settled in cash and not
in shares of Common Stock shall not be counted against the foregoing maximum
share limitations.

 

4.2          Individual Participant Limitations.  The maximum number of shares of Common Stock
that may be subject to Stock Options and Stock Appreciation Rights in the

 

 

aggregate granted to any one Participant under this Plan during any calendar year shall be 750,000
shares.  The maximum number of shares of
Common Stock that may be subject to Qualified Performance Share Awards in the
aggregate granted to any one Participant under this Plan during any calendar
year period shall be 750,000 shares.  The
maximum amount payable to any Participant
with respect to all Qualified Performance
Unit Awards granted in any calendar year to him or
her under this Plan is $2,000,000 per each
year of the applicable performance periods, and no performance period shall be
longer than five years.

 

4.3          Adjustments.  If there shall occur any change with respect
to the outstanding shares of Common Stock by reason of any recapitalization,
reclassification, stock dividend, extraordinary dividend, stock split, reverse
stock split or other distribution with respect to the shares of Common Stock,
or any merger, reorganization, consolidation, combination, spin-off or other
similar corporate change, or any other change affecting the Common Stock, the
Committee may, in the manner and to the extent that it deems appropriate and
equitable to the Participants and consistent with the terms of the Plan, cause
an adjustment to be made in (i) the maximum number and kind of shares
provided in Section 4.1 and Section 4.2 hereof, (ii) the number
and kind of shares of Common Stock, units, or other rights subject to then
outstanding Awards, (iii) the exercise or base price for each share or
unit or other right subject to then outstanding Awards, and (iv) any other
terms of an Award that are affected by the event.  Notwithstanding the foregoing, in the case of
Incentive Stock Options, any such adjustments shall, to the extent practicable,
be made in a manner consistent with the requirements of Section 424(a) of
the Code.

 

5.        Participation and Awards.

 

5.1          Designations of Participants.  All Eligible Persons are eligible to be
designated by the Committee to receive Awards and become Participants under the
Plan. The Committee has the authority, in its discretion, to determine and
designate from time to time those Eligible Persons who are to be granted
Awards, the types of Awards to be granted and the number of shares of Common
Stock or units subject to Awards granted under the Plan.  In selecting Eligible Persons to be
Participants and in determining the type and amount of Awards to be granted
under the Plan, the Committee may consider any and all factors that it deems
relevant or appropriate.

 

5.2          Determination of Awards.  The Committee shall determine the terms and
conditions of all Awards granted to Participants in accordance with its
authority under Section 3.2 hereof. 
An Award may consist of one type of right or benefit hereunder or of two
or more such rights or benefits granted in tandem or in the alternative.  In the case of any fractional share or unit
resulting from the grant, vesting, payment or crediting of dividends or
dividend equivalents under an Award or adjustments made under Section 4.3
hereof, the Committee shall have the
discretionary authority to (i) disregard such fractional share or unit, (ii) round
such fractional share or unit to the nearest lower or higher whole share or
unit, or (iii) convert such fractional share or unit into a right to
receive a cash payment.  To the extent
deemed necessary by the Committee, an Award shall be evidenced by an Award
Agreement as described in Section 15.1 hereof.

 

6.        Stock Options.

 

6.1          Grant of Stock Options.  A Stock Option may be granted to any Eligible
Person selected by the Committee. 
Subject to the provisions of Section 6.8 hereof and Section 422
of the Code, each Stock Option shall be designated, in the discretion of the
Committee, as an Incentive Stock Option or as a Nonqualified Stock Option.

 

6.2          Exercise Price.  The exercise price per share of a Stock
Option shall not be less the Fair Market Value of a share of Common Stock on
the Date of Grant.

 

6.3          Vesting of Stock Options.  The Committee shall in its discretion
prescribe the time or times at which, or the conditions upon which, a Stock
Option or portion thereof shall become vested and/or exercisable, and may
accelerate or provide for the acceleration of the

 

 

vesting or exercisability of any Stock Option at any time.  The requirements for vesting and
exercisability of a Stock Option may be based on the continued Service of the
Participant with the Company or Affiliates for a specified time period (or
periods) or on the attainment of specified performance goals established by the
Committee in its discretion.

 

6.4          Term of Stock Options.  The Committee shall in its discretion
prescribe in an Award Agreement the period during which a vested Stock Option
may be exercised, provided that the maximum term of a Stock Option shall be
seven years from the Date of Grant.

 

6.5          Post-Termination of Service Exercise Period.  The Committee shall in its discretion
prescribe in an Award Agreement the period during which a vested Stock Option
may be exercised by any Participant whose Service with the Company or one of
its Affiliates is terminated for any reason.

 

6.6          Stock Option Exercise; Tax Withholding.  Subject to such terms and conditions as shall
be specified in an Award Agreement, a Stock Option may be exercised in whole or
in part at any time during the term thereof by notice in the form required by
the Committee, together with payment of the aggregate exercise price therefor
and applicable withholding tax.  Payment
of the exercise price shall be made in any manner set forth in the Award
Agreement or otherwise acceptable to the Committee in its discretion.

 

6.7          Additional Rules for Incentive Stock Options.

 

(a)          Eligibility.  An Incentive Stock Option may only be granted
to an Eligible Person who is considered an employee for purposes of Treasury
Regulation §1.421-1(h) with respect
to the Company or any Affiliate that qualifies as a “subsidiary corporation”
with respect to the Company for purposes of Section 424(f) of the
Code.

 

(b)          Designation. 
No Stock Options shall be an Incentive Stock Option unless so designated
by the Committee at the time of grant or in the Award Agreement evidencing such
Stock Option.

 

(c)           Other Terms and Conditions; Nontransferability.  Any Incentive Stock Option granted hereunder
shall contain such additional terms and conditions, not inconsistent with the
terms of the Plan, as are deemed necessary or desirable by the Committee, which
terms, together with the terms of the Plan, shall be intended and interpreted
to cause such Incentive Stock Option to qualify as an “incentive stock option”
under Section 422 of the Code.  An
Award Agreement for an Incentive Stock Option may provide that such Stock
Option shall be treated as a Nonqualified Stock Option to the extent that
certain requirements applicable to “incentive stock options” under the Code
shall not be satisfied.  An Incentive
Stock Option shall by its terms be nontransferable other than by will or by the
laws of descent and distribution, and shall be exercisable during the lifetime
of a Participant only by such Participant or the Participant’s legal representative.

 

6.8          Repricing Prohibited.  Subject to the anti-dilution adjustment
provisions contained in Section 4.3 hereof, without the prior approval of
the Company’s shareholders, neither the Committee nor the Board shall cause the
cancellation, substitution or amendment of a Stock Option that would have the
effect of reducing the exercise price of such a Stock Option previously granted
under the Plan, or otherwise approve any modification to such a Stock Option
that would be treated as a “repricing” under the then applicable rules,
regulations or listing requirements adopted by the NASDAQ National Market or
other applicable exchange or securities market.

 

7.        Stock Appreciation Rights.

 

7.1          Grant of Stock Appreciation Rights.  A Stock Appreciation Right may be granted to
any Eligible Person selected by the Committee. 
Stock Appreciation Rights may be granted on a basis that allows for the
exercise of the right by the Participant or that provides for

 

 

the automatic payment of the right upon a specified date or event.  Stock Appreciation Rights shall be
exercisable or payable at such time or times and upon conditions as may be
approved by the Committee, provided that the Committee may provide for the
acceleration of or accelerate the exercisability or payment of a Stock
Appreciation Right at any time.

 

7.2          Freestanding Stock Appreciation Rights.  A Stock Appreciation Right may be granted
without any related Stock Option and may be subject to such vesting and
exercisability requirements as specified by the Committee in an Award
Agreement.  Such vesting and
exercisability requirements may be based on the continued Service of the
Participant with the Company or its Affiliates for a specified time period (or
periods) or on the attainment of specified performance goals established by the
Committee in its discretion.  A Stock
Appreciation Right will be exercisable or payable at such time or times as determined
by the Committee, provided that the maximum term of a Stock Appreciation Right
shall be seven years from the Date of Grant. 
The base price of a Stock Appreciation Right granted without any related
Stock Option shall be determined by the Committee in its sole discretion;
provided, however, that the base price per share of any such freestanding Stock
Appreciation Right shall not be less than the Fair Market Value of a share of
Common Stock on the Date of Grant.

 

7.3          Tandem Stock Option/Stock Appreciation Rights.  A Stock Appreciation Right may be granted in
tandem with a Stock Option, either at the time of grant or at any time
thereafter during the term of the Stock Option. 
A tandem Stock Option/Stock Appreciation Right will entitle the holder
to elect, as to all or any portion of the number of shares subject to such
Stock Option/Stock Appreciation Right, to exercise either the Stock Option or
the Stock Appreciation Right, resulting in the reduction of the corresponding
number of shares subject to the right so exercised as well as the tandem right
not so exercised.  A Stock Appreciation
Right granted in tandem with a Stock Option hereunder shall have a base price
per share equal to the per share exercise price of the Stock Option, will be
vested and exercisable at the same time or times that a related Stock Option is
vested and exercisable, and will expire no later than the time at which the
related Stock Option expires.

 

7.4          Payment of Stock Appreciation Rights.  A Stock Appreciation Right will entitle the
holder, upon exercise or other payment of the Stock Appreciation Right, as
applicable, to receive an amount determined by multiplying: (i) the excess
of the Fair Market Value of a share of Common Stock on the date of exercise or
payment of the Stock Appreciation Right over the base price of such Stock
Appreciation Right, by (ii) the number of shares as to which such Stock
Appreciation Right is exercised or paid. 
Subject to the requirements of Section 409A of the Code, payment of
the amount determined under the foregoing may be made, as approved by the
Committee and set forth in the Award Agreement, in shares of Common Stock
valued at their Fair Market Value on the date of exercise or payment, in cash, or in a
combination of shares of Common Stock and cash, subject to applicable tax
withholding requirements.

 

7.5          Post-Termination of Service Exercise Period.  The Committee shall in its
discretion prescribe in an Award Agreement the period during which a vested
Stock Appreciation Right may be exercised by any Participant whose Service with
the Company or one of its Affiliates is terminated for any reason.

 

7.6          Exercise; Tax Withholding.  Subject to such terms and
conditions as shall be specified in an Award Agreement, a Stock Appreciation
Right may be exercised in whole or in part at any time during the term thereof
by notice in the form required by the Committee. At the time of exercise, the
Participant shall pay to the Company the full amount of any and all applicable
withholding tax in any manner set forth in the Award Agreement or otherwise acceptable to the
Committee in its discretion.

 

7.7           Repricing
Prohibited. 
Subject to the anti-dilution adjustment provisions contained in Section 4.3
hereof, without the prior approval of the Company’s shareholders neither the
Committee nor the Board shall cause the cancellation, substitution or amendment
of a Stock Appreciation Right that would have the effect of reducing the base
price of such a Stock

 

 

Appreciation Right previously granted under the Plan, or otherwise
approve any modification to such a Stock Appreciation Right that would be
treated as a “repricing” under the then applicable rules, regulations or
listing requirements adopted by the NASDAQ National Market or other applicable
exchange or securities market.

 

8.        Restricted Stock Awards.

 

8.1          Grant of Restricted Stock Awards.  A Restricted Stock Award may be granted to
any Eligible Person selected by the Committee. 
The Committee may require the payment by the Participant of a specified
purchase price in connection with any Restricted Stock Award.

 

8.2          Vesting Requirements.  The restrictions imposed on shares granted
under a Restricted Stock Award shall lapse in accordance with the vesting
requirements specified by the Committee in the Award Agreement.   Such vesting requirements may be based on
the continued Service of the Participant with the Company or its Affiliates for
a specified time period (or periods) or on the attainment of specified
performance goals established by the Committee in its discretion.  Notwithstanding the foregoing, the Committee may accelerate the
vesting of, or
lapse of restrictions on, a Restricted Stock Award at any time If the
vesting requirements or other applicable restrictions of
a Restricted Stock Award shall not be satisfied or waived, the Award shall be forfeited and the
shares of Common Stock subject to the Award shall be returned to the Company.

 

8.3          Restrictions.  Shares granted under any Restricted Stock
Award may not be transferred, assigned or subject to any encumbrance, pledge,
or charge until all applicable restrictions are removed or have expired.  The Committee may require in an Award
Agreement that certificates representing the shares granted under a Restricted
Stock Award bear a legend making appropriate reference to the restrictions
imposed, and that certificates representing the shares granted or sold under a
Restricted Stock Award will remain in the physical custody of an escrow holder
until all restrictions are removed or have expired.

 

8.4          Rights as Shareholder.  Subject to the foregoing provisions of this Section 8
and the applicable Award Agreement, the Participant shall have all rights of a
shareholder with respect to the shares granted to the Participant under a
Restricted Stock Award, including the right to vote the shares and receive all
dividends and other distributions paid or made with respect thereto.  The Committee may provide in an Award
Agreement for the payment of dividends and distributions to the Participant at
such times as paid to shareholders generally or at the times of vesting or
other payment of the Restricted Stock Award.

 

8.5          Qualified
Performance Award.  To the
extent a Restricted Stock Award is designated as a Qualified Performance Award,
it shall be subject to the additional provisions set forth in Section 11.

 

9.        Restricted Stock Unit
Awards.

 

9.1          Grant of Restricted Stock Unit Awards.  A Restricted Stock Unit Award may be granted
to any Eligible Person selected by the Committee.  The value of each stock unit under a
Restricted Stock Unit Award is equal to the Fair Market Value of the Common
Stock on the applicable date or time period of determination, as specified by
the Committee.  A Restricted Stock Unit
Award shall be subject to such restrictions and conditions as the Committee shall
determine.  A Restricted Stock Unit Award
may be granted together with a dividend equivalent right with respect to the
shares of Common Stock subject to the Award, which may be accumulated and may
be deemed reinvested in additional stock units, as determined by the Committee
in its discretion.

 

 

9.2          Vesting Requirements.  On the Date of Grant, the Committee shall in
its discretion determine any vesting requirements with respect to a Restricted
Stock Unit Award, which shall be set forth in the Award Agreement.  Such vesting requirements may be based on the
continued Service of the Participant with the Company or its Affiliates for a
specified time period (or periods) or on the attainment of specified
performance goals established by the Committee in its discretion.   Notwithstanding the foregoing, the Committee
may accelerate the vesting of a Restricted Stock Unit Award at any time.  A Restricted Stock Unit Award may also be
granted on a fully vested basis, with a deferred payment date.

 

9.3          Payment of Restricted Stock Unit Awards.  A Restricted Stock Unit Award shall become
payable to a Participant at the time or times determined by the Committee and
set forth in the Award Agreement, which may be upon or following the vesting of
the Award.  Payment of a Restricted Stock
Unit Award may be made, at the discretion of the Committee, in cash or in
shares of Common Stock, or in a combination thereof, subject to applicable tax
withholding requirements.  Any cash
payment of a Restricted Stock Unit Award shall be made based upon the Fair
Market Value of the Common Stock, determined on such date or over such time
period as determined by the Committee.

 

9.4          No Rights as Shareholder.  The Participant shall not have any rights as
a shareholder with respect to the shares subject to a Restricted Stock Unit Award
until such time as shares of Common Stock are issued to the Participant pursuant to the terms of
the Award Agreement.

 

9.5           Qualified Performance Award.  To the extent a Restricted Stock Unit Award
is designated as a Qualified Performance Award, it shall be subject to the
additional provisions set forth in Section 11.

 

10.      Performance Awards.

 

10.1        Grant of Performance Awards.  Performance Share Awards and Performance Unit
Awards (collectively, “Performance Awards”) may be granted to any Eligible
Person selected by the Committee. 
Performance Awards shall be subject to such restrictions and conditions,
as the Committee shall determine.  Unless
otherwise determined by the Committee at grant, a Performance Share Award shall
not be granted with a dividend equivalent right with respect to the shares of
Common Stock subject to the Award.

 

10.2        Vesting
Requirements.  On the Date of
Grant, the Committee shall in its discretion determine any vesting requirements
with respect to a Performance Award, which shall be set forth in the Award
Agreement.  Vesting requirements shall be
based on the continued Service of the Participant with the Company or its
Affiliates for a specified time period (or periods) and on the attainment of specified
performance goals established by the Committee in its discretion, but in no
case may the service period or performance period be less than 12 months.  Notwithstanding the foregoing, the Committee may accelerate
the vesting of a Performance Award at any time. 
The Committee may provide that if performance relative to
the performance goals exceeds targeted levels, then the number of Performance
Awards earned shall be a multiple of those that would be earned for target
performance.

 

10.3        Payment of Performance Awards.  A Performance Award shall become payable to a
Participant at the time or times determined by the Committee and set forth in
the Award Agreement, which may be upon or following the vesting of the
Award.  Payment of a Performance Award
may be made, at the discretion of the Committee, in cash or in shares of Common
Stock, or in a combination thereof, subject to applicable tax withholding
requirements.  Any cash payment of a
Performance Award shall be made based upon the Fair Market Value of the Common
Stock, determined on such date or over such time period as determined by the
Committee.

 

 

10.4        No Rights as Shareholder.  The Participant shall not have any rights as
a shareholder with respect to the shares subject to a Performance Share Award
until such time as shares of Common Stock are issued to the Participant pursuant to the terms of
the Award Agreement.

 

10.5        Qualified
Performance Award.  To the
extent a Performance Award is designated as a Qualified Performance Award, it
shall be subject to the additional provisions set forth in Section 11.

 

11.      Qualified Performance
Awards.

 

11.1        Designation as Qualified Performance Award.  The Committee may designate whether any
Restricted Stock, Restricted Stock Unit or Performance Award granted to an
employee is intended to qualify as “performance-based compensation”, within the
meaning of Section 162(m) of the Code.

 

11.2        Performance Measures.  Any Award designated as intended to be
performance-based compensation shall be, to the extent required by Section 162(m)
of the Code, either (1) conditioned upon the achievement of one or more of
the following performance measures or (2) granted based upon the
achievement of one or more of the following performance measures: (i) net earnings or net income (before
or after taxes); (ii) basic or diluted earnings per share (before or after
taxes); (iii) net revenue or net revenue growth; (iv) gross profit or
gross profit growth; (v) net operating profit (before or after taxes);
(vi)return measures (including, but not limited to, return on assets, capital,
invested capital, equity, or sales); (vii) cash flow (including, but not
limited to, operating cash flow, free cash flow, and cash flow return on
capital); (viii) earnings before or after taxes, interest, depreciation
and/or amortization; (ix) gross or operating margins; (x) productivity
ratios; (xi) share price (including, but not limited to, growth measures and
total stockholder return); (xii) expense targets; (xiii) margins; (xiv)
operating efficiency; (xv) objective measures of customer satisfaction; (xvi)
working capital targets; (xvii) measures of economic value added; (xviii)
inventory control; (xix) enterprise value; (xx) enrollment metrics; (xxi)
retention metrics; and (xxii)graduation metrics.  Performance goals may be established on a
Company-wide basis or with respect to one or more business units or divisions
or Affiliates.  The targeted level or
levels of performance (which may include minimum, maximum and target levels of
performance) with respect to such performance measures may be established at
such levels and in such terms as the Committee may determine, in its
discretion, including in absolute terms, as a goal relative to performance in
prior periods, or as a goal compared to the performance of one or more
comparable companies or an index covering multiple companies.  When establishing performance goals for a
performance period, the Committee may exclude any or all “extraordinary items”
as determined under U.S. generally accepted accounting principles including,
without limitation, the charges or costs associated with restructurings of the
Company, discontinued operations, other unusual or nonrecurring items, and the
cumulative effects of accounting changes.

 

11.3      Additional Requirements. 
Any Award that is intended to
qualify as “performance-based compensation” shall also be subject to the
following:

 

(a)           No
later than 90 days following the commencement of each performance period (or
such other time as may be required or permitted by Section 162(m) of the
Code), the Committee shall, in writing, (1) grant a target number of
shares or units, (2) select the performance goal or goals applicable to
the performance period and (3) specify the relationship between
performance goals and the number of shares or units that may be earned by a
Participant for such performance period.

 

(b)           Following
the completion of each performance period, the Committee shall certify in
writing, which may include a resolution
of the Committee, whether the applicable
performance targets have been achieved and the number of units or shares, if
any, earned by a Participant for such performance period.

 

 

(c)           In
determining the number of units or shares earned by a Participant for a given
performance period, the Committee shall have the right to reduce (but not
increase) the amount earned at a given level of performance to take into
account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the performance period.

 

12.      Stock Awards.

 

12.1        Grant of Stock Awards.  A Stock Award may be granted to any Eligible
Person selected by the Committee.  A
Stock Award may be granted for past services, in lieu of bonus or other cash
compensation or for any other valid purpose as determined by the
Committee.  A Stock Award granted to an
Eligible Person represents shares of Common Stock that are issued without
restrictions on transfer and other incidents of ownership and free of
forfeiture conditions, except as otherwise provided in the Plan and the Award
Agreement.  The Committee may, in
connection with any Stock Award, require the payment of a specified purchase
price.

 

12.2        Rights as Shareholder.  Subject to the foregoing provisions of this Section 12
and the applicable Award Agreement, upon the issuance of the Common Stock under
a Stock Award the Participant shall have all rights of a shareholder with
respect to the shares of Common Stock, including the right to vote the shares
and receive all dividends and other distributions paid or made with respect
thereto.

 

13.      Change in Control.

 

13.1        Effect of Change in Control.  In the event of any transaction resulting in
a Change in Control of the Company, outstanding stock options and other Awards
that are payable in or convertible into Common Stock under this Plan will
terminate upon the effective time of such Change in Control unless provision is
made in connection with the transaction for the continuation or assumption of
such Awards by, or for the substitution of the equivalent awards of, the
surviving or successor entity or a parent thereof.  In the event of such termination, the holders
of stock options and other Awards under the Plan will be permitted, immediately
before the Change in Control, to exercise or convert all portions of such stock
options or other Awards under the Plan that are then exercisable or convertible
or which become exercisable or convertible upon or prior to the effective time
of the Change in Control. 
Notwithstanding anything in the Plan or an Award Agreement to the contrary,
the Committee may, in its discretion, upon or in advance or contemplation of a
Change in Control, accelerate the vesting, lapse of restrictions, payment or
settlement of any or all Awards, in whole or in part.

 

14.      Forfeiture Events.

 

14.1        General. 
The Committee may specify in an Award Agreement at the time of the Award
that the Participant’s rights, payments and benefits with respect to an Award
shall be subject to reduction, cancellation, forfeiture or clawback upon the
occurrence of certain specified events, in addition to any otherwise applicable
vesting or performance conditions of an Award. 
Such events may include, but shall not be limited to, violation of
material Company policies, breach of noncompetition, confidentiality or other
restrictive covenants that may apply to the Participant, or other conduct by
the Participant that is detrimental to the business or reputation of the
Company or its Affiliates.

 

15.      General Provisions.

 

15.1        Award Agreement.  To the extent deemed necessary by the
Committee, an Award under the Plan shall be evidenced by an Award Agreement in
a written or electronic form approved by the Committee setting forth the number
of shares of Common Stock or units subject to the Award, the exercise price,
base price, or purchase price of the Award, if any, the time or

 

 

times at which an Award will become vested, exercisable or payable and
the term of the Award.  The Award
Agreement may also set forth the effect on an Award of termination of Service
under certain circumstances.  The Award
Agreement shall be subject to and incorporate, by reference or otherwise, all
of the applicable terms and conditions of the Plan, and may also set forth
other terms and conditions applicable to the Award as determined by the
Committee consistent with the limitations of the Plan.  The grant of an Award under the Plan shall
not confer any rights upon the Participant holding such Award other than such
terms, and subject to such conditions, as are specified in the Plan as being
applicable to such type of Award (or to all Awards) or as are expressly set
forth in the Award Agreement.  The
Committee need not require the execution of an Award Agreement by a
Participant, in which case, acceptance of the Award by the Participant shall
constitute agreement by the Participant to the terms, conditions, restrictions
and limitations set forth in the Plan and the Award Agreement as well as the
administrative guidelines of the Company in effect from time to time.

 

15.2        Transferability
of Awards. 
Except as otherwise determined by the Committee, no Award granted under
the Plan shall be transferable by a Participant otherwise than by will or the
laws of descent and distribution.  Unless
otherwise determined by the Committee in accord with the provisions of the immediately
preceding sentence, an Award may be exercised during the lifetime of the
Participant, only by the Participant or, during the period the Participant is
under a legal disability, by the Participant’s guardian or legal
representative.

 

15.3        Deferrals of Payment.  The Committee may in its discretion permit a
Participant to defer the receipt of payment of cash or delivery of shares of
Common Stock that would otherwise be due to the Participant by virtue of the
exercise of a right or the satisfaction of vesting or other conditions with
respect to an Award.  If any such
deferral is to be permitted by the Committee, the Committee shall establish rules and
procedures relating to such deferral in a manner intended to comply with the
requirements of Section 409A of the Code, including, without limitation,
the time when an election to defer may be made, the time period of the deferral
and the events that would result in payment of the deferred amount, the
interest or other earnings attributable to the deferral and the method of
funding, if any, attributable to the deferred amount.

 

15.4        Rights as Shareholder.  A Participant shall have no rights as a
holder of shares of Common Stock with respect to any unissued securities
covered by an Award until the date the Participant becomes the holder of record
of such securities.  Except as provided
in Section 4.3 hereof, no adjustment or other provision shall be made for
dividends or other shareholder rights, except to the extent that the Award
Agreement provides for dividend payments or dividend equivalent rights.

 

15.5        Employment
or Service.  Nothing in
the Plan, in the grant of any Award or in any Award Agreement shall confer upon
any Eligible Person any right to continue in the Service of the Company or any
of its Affiliates, or interfere in any way with the right of the Company or any
of its Affiliates to terminate the Participant’s employment or other service
relationship for any reason or for
no reason at any time and whether or not such termination results in (i) the
failure of any Award to vest; (ii) the forfeiture of any unvested or
vested portion of any Award; and/or (iii) any other adverse effect on the
individual’s interests under the Plan or an Award.

 

15.6        Securities Laws.  No shares of Common Stock will be issued or
transferred pursuant to an Award unless and until all then applicable
requirements imposed by Federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction, and by any
exchanges upon which the shares of Common Stock may be listed, have been fully
met.  As a condition precedent to the
issuance of shares pursuant to the grant or exercise of an Award, the Company
may require the Participant to take any reasonable action to meet such
requirements.  The Committee may impose
such conditions on any shares of Common Stock issuable under the Plan as it may
deem advisable, including, without limitation, restrictions under

 

 

the Securities Act of 1933, as amended, under the requirements of any
exchange upon which such shares of the same class are then listed, and under
any blue sky or other securities laws applicable to such shares.  The Committee may also require the
Participant to represent and warrant at the time of issuance or transfer that
the shares of Common Stock are being acquired only for investment purposes and
without any current intention to sell or distribute such shares.

 

15.7        Tax Withholding.  The Participant shall be responsible for
payment of any taxes or similar charges required by law to be withheld from an
Award or an amount paid in satisfaction of an Award, which shall be paid by the
Participant on or prior to the payment or other event that results in taxable
income in respect of an Award.  The Award
Agreement may specify the manner in which the withholding obligation shall be
satisfied with respect to the particular type of Award, which may include
procedures to permit or require a Participant to satisfy such obligation in
whole or in part (but only up to the statutory minimum) by having the Company
withhold shares of Common Stock from the shares to which the Participant is
entitled.  The number of shares to be
withheld shall have a Fair Market Value as of the date that the amount of tax
to be withheld is determined as nearly equal as possible to (but not exceeding)
the amount of such obligations being satisfied. 
Notwithstanding the foregoing, the Company, in its sole discretion, may
withhold all such required taxes from any amount otherwise payable to a
Participant.

 

15.8        Unfunded Plan.  The adoption of the Plan and any reservation
of shares of Common Stock or cash amounts by the Company to discharge its
obligations hereunder shall not be deemed to create a trust or other funded
arrangement.  Except upon the issuance of
Common Stock pursuant to an Award, any rights of a Participant under the Plan
shall be those of a general unsecured creditor of the Company, and neither a
Participant nor the Participant’s permitted transferees or estate shall have
any other interest in any assets of the Company or any Affiliate by virtue of the Plan or an Award issued thereunder.  Notwithstanding the foregoing, the Company
shall have the right to implement or set aside funds in a grantor trust,
subject to the claims of the Company’s creditors or otherwise, to discharge its
obligations under the Plan.

 

15.9        Other Compensation and Benefit Plans.  The adoption of the Plan shall not affect any
other share incentive or other compensation plans in effect for the Company or
any Affiliate, nor shall the Plan preclude the Company from establishing any
other forms of share incentive or other compensation or benefit program for
employees of the Company or any Affiliate. 
The amount of any compensation deemed to be received by a Participant
pursuant to an Award shall not constitute includable compensation for purposes
of determining the amount of benefits to which a Participant is entitled under
any other compensation or benefit plan or program of the Company or an
Affiliate, including, without limitation, under any pension or severance
benefits plan, except to the extent specifically provided by the terms of any
such plan.

 

15.10      Plan Binding on Transferees.  The Plan shall be binding upon the Company,
its Affiliates, its transferees and assigns, and the Participant, the
Participant’s executor, administrator and permitted transferees and
beneficiaries.

 

15.11      Severability.  If
any provision of the Plan or any Award Agreement shall be determined to be
illegal or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction.

 

15.12      Foreign Jurisdictions.  The Committee may adopt, amend and terminate
such arrangements and grant such Awards, not inconsistent with the intent of
the Plan, as it may deem necessary or desirable to comply with any tax,
securities, regulatory or other laws of other jurisdictions with respect to
Awards that may be subject to such laws. 
The terms and conditions of such Awards may vary from the terms and
conditions that would otherwise be required by the Plan solely to the extent
the Committee deems necessary for such purpose. 
Moreover, the Board may approve such supplements to or amendments,
restatements or alternative versions of the Plan,

 

 

not inconsistent with the intent of the Plan, as it may consider
necessary or appropriate for such purposes, without thereby affecting the terms
of the Plan as in effect for any other purpose.

 

15.13      Substitute Awards in Corporate
Transactions. 
Nothing contained in the Plan shall be construed to limit the right of
the Committee to grant Awards under the Plan in connection with the
acquisition, whether by purchase, merger, consolidation or other corporate transaction,
of the business or assets of any corporation or other entity.  Without limiting the foregoing, the Committee
may grant Awards under the Plan to an employee or director of another entity who becomes an Eligible Person by reason of any such
corporate transaction in substitution for awards previously granted by such
entity or an affiliate of such entity to such person.  The terms and conditions of the substitute
Awards may vary from the terms and conditions that would otherwise be required
by the Plan solely to the extent the Committee deems necessary or appropriate
for such purpose to conform the substitute Awards to the provisions of the
awards for which they are substituted.

 

15.14      Governing Law.  The Plan and all rights hereunder shall be
subject to and interpreted in accordance with the laws of the State of
Maryland, without reference to the principles of conflicts of laws, and to
applicable Federal securities laws.

 

15.15      Section 409A of the Code.  Notwithstanding
anything in the Plan or an Award Agreement to the contrary, the Committee is authorized to modify Awards, and the Board is authorized to
modify or terminate the Plan, in either case without the consent of any Participant, to the extent the Committee or the Board determines to be necessary or appropriate to avoid the imposition on thea Participant of additional tax or interest under Section 409A of the
Code.

 

16.      Effective Date; Amendment
and Termination.

 

16.1        Effective Date.  The Plan shall become effective, following its
adoption by the Board upon
its approval by the Company’s shareholders at the 2005 Annual Meeting of Shareholders.

 

16.2        Amendment of Outstanding Awards.  Except as provided in
Sections 6.8 and 7.7, the Committee may modify, amend, extend or renew
outstanding Awards at any time.  Notwithstanding the foregoing, except as provided in Section 15.15,
no amendment or modification shall materially adversely affect any Award without the
consent of the Participant or the permitted transferee of the Award.

 

16.3        Plan Amendment.  The Board may at any time and from time to
time and in any respect, amend or modify the Plan.  The Board may seek the approval of any
amendment or modification of
the Plan by the Company’s shareholders to the extent it deems
necessary or advisable in its discretion for purposes of compliance with Section 162(m)
or Section 422 of the Code, the listing requirements of the NASDAQ
National Market or other exchange or securities market or for any other
purpose.  Except as provided under Section 15.15 of the Plan, no amendment or modification of
the Plan shall materially
adversely affect any Award theretofore granted without the consent of the
Participant or the permitted transferee of the Award.

 

16.4        Termination.  The Plan
shall terminate on April 25, 2015. 
The Board may, in its discretion and at any earlier date, terminate the
Plan.  Notwithstanding the foregoing,
except as provided under Section 15.15 of the Plan, no termination of the
Plan shall materially adversely affect any Award theretofore granted without
the consent of the Participant or the permitted transferee of the Award.

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