MASTER CREDIT AND SECURITY AGREEMENT

Security Agreement

You are currently viewing:

This Security Agreement involves

SKY BANK| | FRANKLIN CREDIT MANAGEMENT CORPORATION

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: MASTER CREDIT AND SECURITY AGREEMENT
Governing Law: Ohio Date: 6/9/2005

MASTER CREDIT AND SECURITY AGREEMENT, Parties: sky bank, , franklin credit management corporation

<PAGE>

Exhibit 10.1

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

MASTER CREDIT AND SECURITY AGREEMENT

among

SKY BANK

and

FRANKLIN CREDIT MANAGEMENT CORPORATION

and

THOSE SUBSIDIARIES WHICH RECEIVE ADVANCES HEREUNDER

Dated as of October 13, 2004

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

<PAGE>

Master Credit and Security Agreement

This Master Credit and Security Agreement (the "Agreement") is entered

into as of October 13, 2004, between Franklin Credit Management

Corporation, a Delaware corporation (the "Company" ), having its principal

office at Six Harrison Street, New York, New York 10013, and Sky Bank, an

Ohio banking corporation (the "Bank"), having an office at 110 East Main

Street, Salineville, Ohio 43945. The Subsidiaries of the Company which

receive Company Subsidiary Loans under this Agreement or which have

heretofore received Company Subsidiary Loans will also become parties

hereto.

Whereas, the Bank, the Company and certain Company Subsidiaries have

previously entered into loan arrangements, whereby Bank and the Company and

each respective Company Subsidiary entered into a separate term loan and

security agreement and a promissory note;

Whereas the Bank, the Company and each Company Subsidiary which have

previously entered into a loan and security agreement, other than Tribeca

Lending Corporation, desire to amend and restate each such loan and

security agreement;

Whereas, at the request of the Company, the Bank has from time to time

extended credit to Company subsidiaries and to additional Subsidiaries of

the Company (i) to finance the purchase of residential mortgage loans, or

(ii) to consolidate and refinance such extensions of credit made earlier by

the Bank, with such extensions of credit having been secured by the loans

purchased by those Subsidiaries with the Bank's financing, and a list of

all such outstanding extensions of credit from the Bank is set forth on

Schedule I attached hereto; and

Whereas, the Company has requested the Bank, and the Bank is willing,

to amend and restate each such loan and security agreement and to continue

to extend credit to Subsidiaries of the Company from time to time to

finance the purchasing of residential mortgage loans, such extensions of

credit to be secured by the loans to be purchased with the Bank's

financing; and the parties now desire to set forth herein the terms and

conditions to which all such prior extensions of credit shall now be

subject, and under which all such future extensions of credit for those

purposes shall be made, and the security provided for the repayment

thereof;

Now, Therefore, the parties hereby agree to amended and restate each

previously existing loan and security agreement, other than any warehouse

arrangement or loan and security agreement with Tribeca Lending

Corporation, as follows:

Article I

Definitions

Section 1.1. Defined Terms. Capitalized terms defined below or

elsewhere in this Agreement (including the Exhibits hereto) shall have the

following meanings:

"Administrative Services Agreement" has the meaning set forth in Section

10.1 hereof.

"Administrative Servicing Fee" means an amount to be agreed to in writing

from time to time between the Bank and the Company in consideration of the

services provided under its Administrative Servicing Agreement with its

Company Subsidiary.

"Advance" means a disbursement by the Bank under a Company Subsidiary Loan.

"Affiliate" has the meaning set forth in Rule 12b-2 of the General Rules

and Regulations under the Exchange Act.

<PAGE>

"Agreement" means this Master Credit and Security Agreement, either as

originally executed or as it may from time to time be supplemented,

modified or amended.

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

Business Day" means any day excluding Saturday, Sunday and any day which

the principal offices of the Bank in Salineville, Ohio, or the Company in

New York, New York are closed for business.

"Collateral" has the meaning set forth in Section 3 hereof.

"Collateral Documents" has the meaning set forth in Exhibit D. The Bank

shall have the right, on not less than thirty (30) Business Days' prior

written notice to the Company to modify Exhibit D to conform to current

legal requirements or Bank practices, and, as so modified, said Exhibits

shall be deemed a part hereof

"Commitment" has the meaning set forth in Section 2.1(a) hereof.

"Company" has the meaning set forth in the first paragraph of this

Agreement.

"Company Subsidiary" means any Subsidiary of the Company, whether now

existing or hereafter organized and created, which becomes a party to this

Agreement and which has heretofore received or which hereafter receives a

Company Subsidiary Loan, provided, however, it is recognized that the

Company has as of the date of this Agreement at least one other Subsidiary

which has a "warehouse line of credit" facility from the Bank not covered

by this Agreement, and may in the future have one or more Subsidiaries

which do not have extensions of credit from the Bank.

"Company Subsidiary Loan" means a now existing or hereafter arising loan to

a Company Subsidiary pursuant to this Agreement and the related Note, to

finance the purchase of residential mortgage loans or to consolidate and

refinance loans which were granted by Bank to one or more Company

Subsidiaries to finance the purchase of residential mortgage loans.

"Company Subsidiary Loan Request" means the current form in use by the Bank

as set forth in Exhibit B hereto. The Bank shall have the right, on not

less than thirty (30) Business Days' prior written notice to the Company,

to modify Exhibit B to conform to current legal requirements or Bank

practices, and, as so modified, said Exhibits shall be deemed a part

hereof.

"Consolidated" refers to the consolidation of accounts in accordance with

GAAP.

"Conventional Mortgage Loan" means a Mortgage Loan other than a FHA-insured

or VA-guaranteed Mortgage Loan.

"Corporate Advances" means all customary, reasonable and necessary "out of

pocket" costs and expenses incurred in the performance by the Company or

any subservicer of its servicing obligations with respect to the

preservation, restoration and protection of the mortgaged property.

"Custodial Agreement" means that certain Custodial Agreement dated as of

October 22, 2003, among the Company, U.S. Bank National Association as

Custodian, the Bank, and those Subsidiaries of the Company who have become

parties to that Agreement and who may become parties to it in the future.

Furthermore, each Company Subsidiary that becomes a party to this Agreement

by executing a counterpart signature page shall also thereby become and be

deemed to be a party to the Custodial Agreement to the same extent as if

such Company Subsidiary had executed a counterpart signature page to the

Custodial Agreement, and such Company Subsidiary shall be bound by the

terms and provisions of the Custodial Agreement.

<PAGE>

"Custodian" means the organization which holds documents under the

Custodial Agreement relating to Mortgage Loans on the Company's behalf or

on behalf of a Company Subsidiary.

"Debt" means, with respect to any Person, at any date (a) all indebtedness

or other obligations of such Person which, in accordance with GAAP, would

be included in determining total liabilities as shown on the liabilities

side of a balance sheet of such Person at such date; (b) all indebtedness

or other obligations of such Person for borrowed money or for the deferred

purchase price of property or services; (c) all indebtedness or other

obligations of any other Person for borrowed money or for the deferred

purchase price of property or services in respect of which such Person is

liable, contingently or otherwise, to pay or advance money or property as

guarantor, endorser, or otherwise (except as endorser of negotiable

instruments for collection in the ordinary course of business), or which

such Person has agreed to purchase or otherwise acquire; and (d) all

indebtedness for borrowed money or for the deferred purchase price of

property or services secured by a Lien on any property owned or being

purchased by such Person (even though such Person has not assumed or

otherwise become liable for the payment of such indebtedness).

"Default" means the occurrence of any event or existence of any condition

which, but for the giving of notice, the lapse of time, or both, would

constitute an Event of Default.

"ERISA" means the Employee Retirement Income Security Act of 1974, as

amended from time to time and any successor statute.

"Escrow Payment" With respect to any Mortgage Loan, the amounts

constituting ground rents, taxes, assessments, water rates, sewer rents,

municipal charges, mortgage insurance premiums, fire and hazard insurance

premiums, condominium charges, and any other payments required to be

escrowed by the mortgagor with the mortgagee pursuant to the Mortgage or

any other document.

"Event of Default" means any of the conditions or events set forth in

Section 8.1 hereof.

"Exchange Act" means the Securities Exchange Act of 1934, as amended from

time to time, and any successor statute.

"FHA" means The Federal Housing Administration of the United States

Department of Housing and Urban Development and any successor thereto.

"FHLMC" means The Federal Home Loan Mortgage Corporation and any successor

thereto.

"Floating Rate" has the meaning set forth in Section 2.4(a) hereof.

"FNMA" means The Federal National Mortgage Association and any successor

thereto.

"GAAP" means generally accepted accounting principles set forth in the

opinions and pronouncements of the Accounting Principles Board and the

American Institute of Certified Public Accountants and statements and

pronouncements of the Financial Accounting Standards Board or in such other

statements by such other entity as may be approved by a significant segment

of the accounting profession, which are applicable to the circumstances as

of the date of determination.

<PAGE>

"GNMA" means Government National Mortgage Association or any successor

thereto.

"HUD" means the United States Department of Housing and Urban Development

or any successor thereto.

"Indemnified Liabilities" has the meaning set forth in Section 9.3 hereof.

"Index" has the meaning set forth in Section 2.4(a) hereof.

"Insurer" means FHA, VA or a private mortgage insurer, as applicable.

"Internal Revenue Code" means the Internal Revenue Code of 1986, or any

subsequent federal income tax law or laws, as any of the foregoing have

been or may from time to time be amended.

"Investor" means a financially responsible institution purchasing Mortgage

Loans from the Company or from a Company Subsidiary pursuant to a Purchase

Commitment.

"Lien" means any lien, mortgage, deed of trust, pledge, security interest,

charge or encumbrance of any kind, including without limitation any

conditional sale or other title retention agreement, any lease in the

nature thereof, and any agreement to give any security interest.

"Lock-box Agreement" has the meaning set forth in Section 3.4 hereof.

"Margin Stock" has the meaning assigned to that term in Regulation U of the

Board of Governors of the Federal Reserve System as in effect from time to

time.

"Mortgage" means either (1) a first-lien mortgage, deed of trust, security

deed or similar instrument on improved real property; or (2) a second-lien

mortgage, deed of trust, security deed or similar instrument on improved

real property.

"Mortgage Loan" means any loan evidenced by a Mortgage Note. A Mortgage

Loan, unless otherwise expressly stated herein, means a Residential

Mortgage Loan.

"Mortgage Loan Documents" means the Mortgage, Mortgage Note, credit and

closing packages, disclosures, and all other files, records and documents.

"Mortgage Loan Principal Balance" means, as of any date of determination,"

the outstanding principal balance of such Mortgage Loan as calculated

pursuant to the Mortgage Loan Documents.

"Mortgage Note" means a note secured by a Mortgage and evidencing a

Mortgage Loan.

"Multiemployer Plan" means a "multiemployer plan" as defined in

Section 4001(a)(3) of ERISA which is maintained for employees of the

Company or a Subsidiary of the Company.

<PAGE>

"Net Worth" mean, with respect to the Company and its Subsidiaries at any

date of determination, (a) Consolidated total assets of the Company and its

Subsidiaries at such date less (b) the sum of (i) Consolidated total

liabilities of the Company and its Subsidiaries at such date and (ii) the

liquidation value of any redeemable preferred stock of the Company and its

Subsidiaries at such date, in each case as determined in accordance with

GAAP.

"Note" has the meaning set forth in Section 2.3 hereof.

"Notices" has the meaning set forth in Section 11.3 hereof.

"Officers' Certificate" means a certificate executed on behalf of the

Company or of a Company Subsidiary by its vice president, cashier or other

appropriate officer.

"Person" means and includes natural persons, corporations, limited

liability companies, partnerships, joint stock companies, joint ventures,

associations, companies, trusts, banks, trust land trusts, business trusts

or other organizations, whether or not legal entities, and companies,

governmental agencies and political subdivisions thereof.

"Plans" has the meaning set forth in Section 5.1(l) hereof.

"Pledged Mortgage Loans" has the meaning set forth in Section 3.1(a)

hereof.

"Post-Default Rate" means in respect of any day (a "Post-Default Day") an

Event of Default has occurred and is continuing hereunder, a rate per annum

on a 360 day per year basis equal to 2% per annum plus the applicable

Floating Rate on such Post-Default Day.

"Purchase Commitment" means a written commitment, issued in favor of the

Company or of a Company Subsidiary by an Investor pursuant to which that

Investor commits to purchase one or more Mortgage Loans, or whole loan

purchase agreement by and between the Company or a Company Subsidiary and

the Investor, governing the terms and conditions of any such purchases.

"Redemption Amount" has the meaning set forth in Section 3.3 hereof.

"Residential Mortgage Loan" means a Mortgage Loan secured by a Mortgage

covering improved real property containing a one- to four-family residence.

"Statement Date" has the meaning set forth in Sections 4.1(h) and

6.1(b)(ii) hereof.

"Subsidiary" means any corporation, association or other business entity in

which more than fifty percent (50%) of the total voting power or shares of

stock entitled to vote in the election of directors, managers or trustees

thereof is at the time owned or controlled, directly or indirectly, by any

Person or one or more of the other Subsidiaries of that Person or a

combination thereof.

"Success Fees" has the meaning set forth in Section 2.10.

"Taxes" means an amount to be agreed to in writing from time to time

between the Bank and the Company to be used to pay income taxes for the

Company and/or Company Subsidiary.

<PAGE>

"Underwriting Standards" has the meaning set forth in Exhibits C. The Bank

shall have the right, on not less than thirty (30) Business Days' prior

written notice to the Company to modify Exhibits C to conform to current

legal requirements or Bank practices, and, as so modified, said Exhibits

shall be deemed a part hereof

"VA" means the Department of Veterans Affairs and any successor thereto.

Section 1.2. Other Definitional Provisions. (a) Accounting terms not

otherwise defined herein shall have the meanings given them under GAAP.

(b) Defined terms may be used in the singular or the plural, as the context

requires.

Article II

The Credit

Section 2.1. The Commitment. (a) Subject to the terms and conditions

of this Agreement and the Conditions Precedent described in Section 4.1

below, and provided no Default has occurred and is continuing, the Bank

agrees, from time to time during the period from the date hereof to the

expiration date as provided in Section 2.6 hereof, to make Company

Subsidiary Loans to, or on behalf of, Company Subsidiaries, provided,

however, that the total aggregate principal amount which is outstanding at

any one time of all such Company Subsidiary Loans shall not exceed the

lesser of (i) the aggregate approved principal amount of all Company

Subsidiary Loans which have been approved by Bank under this Agreement from

time to time, or (ii) the amount permitted by the lesser of (a) the loan

policy guidelines adopted by the Bank from time to time or (b) any

regulatory limitations applicable to the Bank which are now or hereafter in

effect (the "Commitment").

(b) Company Subsidiary Loans approved by Bank from time to time as

provided herein shall be used by Company Subsidiaries solely for the

purpose of funding or financing the purchase of Mortgage Loans, or for the

consolidation and refinancing of then existing Company Subsidiary Loans

against the pledge of such Mortgage Loans.

Agreement for the purpose of funding or financing the purchase of Pledged

Mortgage Loans shall be treated as having been issued under, and shall be

subject to the covenants of, this Agreement. The Company shall cause all of

its Subsidiaries which have such Company Subsidiary Loans outstanding to

become parties to this Agreement by executing counterpart signature pages

in the form of Exhibit E. In the event that the terms of this Agreement

shall conflict with the terms of the loan documentation for such a Company

Subsidiary Loan, the terms of this Agreement shall prevail, except for

interest rate terms, which shall not be affected by the terms of this

Agreement, and except that any Default under any such loan, which has not

been cured or waived, shall remain in effect.

(d) The warehousing credit line extended by the Bank to Tribeca

Lending Corporation, a New York corporation and a Subsidiary of the Company

shall be separate from and shall not be subject to this Agreement except as

specifically otherwise provided in this Agreement.

<PAGE>

Section 2.2. Procedures for Obtaining Advances. Each Company

Subsidiary Loan Request is subject to Bank's approval. Such Bank approval

is subject to the Conditions Precedent set forth in Section 4.1. Bank shall

reasonably endeavor to provide a conditional approval or denial within four

(4) Business Days for requests of less than $1,000,000.00 and within five

(5) Business Days for requests of $1,000,000.00 or more. Before providing

final approval and funding any Company Subsidiary Loan, the Bank shall have

a reasonable amount of time (not less than five (5) Business Days) to

examine the Collateral Documents required to be delivered to Bank or to

Custodian, as set forth in Section 4.1, and may reject such of them as do

not meet the requirements of this Agreement, and/or may reduce the amount

of such Company Subsidiary Loan. Bank, in all events, reserves the right to

reject any Company Subsidiary Loan Request to finance the purchase of, or

which includes Advances for the purchase of a "high cost mortgage" as

defined in Section 152(a) of the Home Ownership and Equity Protection Act

of 1994, or if it is in violation of any corresponding state or local law.

Section 2.3. Note. Each Company Subsidiary Loan, and the corresponding

Company Subsidiary's obligation to pay the principal of, and interest on

the Company Subsidiary Loan to it made by the Bank, shall hereafter be

evidenced by a promissory note of the Company Subsidiary payable to the

Bank, and being substantially in the form of Exhibit A attached hereto. All

existing promissory notes evidencing Company Subsidiary Loans heretofore

granted by Bank to a Company Subsidiary shall remain in full force and

effect. The term "Note" or "Notes" shall mean each and all such existing

promissory notes evidencing a Company Subsidiary Loan, and all promissory

notes hereafter executed and delivered by a Company Subsidiary to evidence

Company Subsidiary Loans granted hereunder, and shall include all

extensions, renewals and modifications, and all substitutions therefor.

Section 2.4. Interest and Transaction Fees. (a) The unpaid principal

balance of each Company Subsidiary Loan shall bear interest, payable

monthly, on the fifth (5th) day of each month, from the date of such

Advance until paid in full, at a floating per annum rate of interest (the

"Floating Rate") based upon an index which will be the Federal Home Loan

Bank of Cincinnati 30 day advance rate (the "Index"), plus the applicable

margin in accordance with the following matrix:

Base Rate Index Bank Margin

<201 350

201 - 475 325

Greater than 475 300

The interest rate charged herein shall be adjusted monthly, effective

on the first (1st) day of each month, based upon the Index in effect on the

last Business Day of the then prior month. The Federal Home Loan Bank of

Cincinnati 30 day advance rate shall mean the highest rate of interest as

published daily by Bloomberg under the symbol FHL5LBR1. If the Index

becomes unavailable during the term of this Agreement, the Bank may

designate a substitute Index which is reasonably comparable after notice to

the Company and each Company Subsidiary. Interest will be calculated on the

basis of actual days elapsed over a 360 day year (365/360 basis), and

principal and interest payments will be billed monthly and will be due on

the fifth day of each month.

If an Event of Defaults has occurred and is continuing hereunder, the

Company and Company Subsidiary shall be obligated to pay to Bank interest

on the outstanding principal balance of each Company Subsidiary Loan at a

rate per annum equal to the Post-Default Rate until such Company Subsidiary

Loan is paid in full or such Event of Default is cured or waived by the

Bank.

<PAGE>

(b) At the time of closing of each Company Subsidiary Loan, such

Company Subsidiary or the Company shall pay the Bank a transaction fee

equal to one percent (1.0%) of the amount of such Company Subsidiary Loan

(unless otherwise mutually agreed to by Bank and such Company Subsidiary).

constitute prima facie evidence of the principal balance of each Company

Subsidiary Loan and the date and amount of each payment of principal and

interest and applicable interest rates and other information with respect

thereto.

Section 2.5. Payments. (a) The Company and each Company Subsidiary

which becomes a party to this Agreement shall ensure that any and all

payments on the Pledged Mortgage Loans shall be made as specified in

Section 3.4. The Bank shall receive, record and forward to the Company or

the Company Subsidiary the record of all payments made by Pledged Mortgage

Loan obligors in accordance with the Lock Box Agreement. So long as no

Event of Default shall have occurred and be continuing, Pledged Mortgage

Loan payments with the exception of any Escrow Payments deposited in the

lockbox or otherwise received by the Company or the Company Subsidiary

shall be delivered to the Bank and shall be applied, on or about the 5th,

12th, 19th and 26th day of each month as follows:

First, (i) all amounts received in respect of a particular Mortgage Pool

shall be distributed to the related Mortgage Pool in the following order up

to an amount equal to:

(A) the related Pool Percentage Interest of any accrued and

unpaid Taxes, Administrative Servicing Fees and any Corporate Advances

for such month;

(B) any accrued and unpaid interest and Success Fees due on all

Company Subsidiary Loans related to such Mortgage Pool; and

(ii) all remaining amounts after the allocations set forth in

clauses 2.5(a)(i)(A) through (C) above from all Mortgage Pools in the

aggregate shall be distributed to all Mortgage Pools in the following order

, in each case to the extent not distributed to such Mortgage Pool pursuant

to clause 2.5(a)(i) above, up to an amount equal to:

(A) any accrued and unpaid Taxes, Administrative Servicing Fees

and any Corporate Advances for such month for each Mortgage Pool, pro

rata based on their remaining entitlement pursuant to clause

2.5(a)(i)(A) above after all allocations pursuant to clause

2.5(a)(i)(A) above;

(B) any accrued and unpaid interest and Success Fees due on all

Company Subsidiary Loans for each Mortgage Pool, pro rata based on

their remaining entitlement pursuant to clause 2.5(a)(i)(B) above

after all allocations pursuant to clause 2.5(a)(i)(B) above; and

rata based on their remaining entitlement pursuant to clause

2.5(a)(i)(C) above after all allocations pursuant to clause

2.5(a)(i)(C) above;

<PAGE>

(iii) all remaining amounts after the allocations set forth in

clauses 2.5(a)(i) through 2.5(a)(ii) above from all Mortgage Pools in the

aggregate shall be applied to pay all other accrued and unpaid sums due to

the Bank hereunder, and

(iv) all remaining amounts after the allocations set forth in

clauses 2.5(a)(i) through 2.5(a)(iii) above from all Mortgage Pools in

the aggregate shall be paid as determined by the Bank in its

reasonable discretion exercised in good faith and then,

Second, all amounts distributed to each Mortgage Pool pursuant to clauses

2.5(a)(i) through 2.5(a)(ii) above shall then be applied to the Company

Subsidiary Loans related to such Mortgage Pool in the following order to

pay:

(i) any accrued and unpaid interest and Success Fees due on each

Company Subsidiary Loan related to such Mortgage Pool pro rata based

on their entitlement thereto; and

(ii) to each Company Subsidiary Loan, the greater of the related

Required Amortization Payment and the Subsidiary

Undercollateralization Amount, pro rata, based on their respective

entitlement thereto.

"Pool Percentage Interest" means the related Mortgage Pool Value over the

aggregate Mortgage Pool Value of all Mortgage Pools.

"Principal Payment" for the related month and any Mortgage Pool means

an amount equal to the greater of (i) the Required Amortization

Payment on all Company Subsidiary Loans related to such Mortgage Pool

and (ii) the Pool Undercollateralization Amount.

"Company Subsidiary Loan Value" means, as of any date of

determination, the aggregate Mortgage Loan Principal Balance of all

Pledged Mortgage Loans owned by the related Company Subsidiary less an

amount equal to all Reserves in respect of such Company Subsidiary.

"Mortgage Pool" means the pool of Mortgage Loans comprised of the

Pledged Mortgage Loans owned by the Company Subsidiaries set forth on

Exhibit G.

"Mortgage Pool Value" means, as of any date of determination, the

aggregate Mortgage Loan Principal Balance of all Pledged Mortgage

Loans in the related Mortgage Pool less an amount equal to all

Reserves in respect of the Pledged Mortgage Loans comprising such

Mortgage Pool.

"Mortgage Pool Loan Amount" means the outstanding principal balance of

all Company Subsidiary Loans made by Company Subsidiaries that own

Pledged Mortgaged Loans in such Mortgage Pool.

"Pool LTV" means, as of any date of determination, the ratio of the

applicable Mortgage Pool Value to the outstanding principal balance of

all Notes that were funded in respect of Advances for such Mortgage

Pool.

"Pool Undercollateralization Amount" for each Mortgage Pool shall mean

the amount, if any, by which the (i) Mortgage Pool Loan Amount

immediately prior to making distributions on any payment date as

described above, exceeds (ii) the product of the applicable Required

Pool LTV multiplied by the Mortgage Pool Value, taking into account

all payments made and applied on the underlying Pledged Mortgage Loans

on or prior to such payment date.

<PAGE>

"Required Amortization Payment" means a payment of principal on the

related Company Subsidiary Loan as specified in the Note.

"Required Pool LTV" for each Mortgage Pool shall be as specified on

Exhibit G. On the 5th day of each calendar quarter (i.e., April 5,

July 5, October 5 and January 5) or if such day is not a Business Day,

the next succeeding Business Day, the Required Pool LTV for each

Mortgage Pool shall be reset (and Exhibit G automatically amended in

accordance herewith) as the weighted average of the Required Pool LTV

as of the last day of the preceding calendar month and the Required

Subsidiary LTV for each Company Subsidiary that was joined to Exhibit

G since the last reset of the Required Pool LTV's, weighted based on

the Mortgage Pool Value of the related Mortgage Pool as of the last

day of the preceding calendar month and the Company Subsidiary Loan

Value as of the date the related Advance was made, in each case

subject to the approval of the Bank with respect to such calculations.

"Required Subsidiary LTV" for each Company Subsidiary Loan shall be as

specified on Exhibit G. In the event any Company Subsidiary not a

party hereto on the date hereof becomes a party hereto, the Company

Subsidiary Loan Request in the form attached hereto as Exhibit B,

shall set forth the Required Subsidiary LTV as a percentage equal to

(A) (1) the amount of the Advance less (2) all accrued and unpaid

interest on such Mortgage Loans included in the purchase price of such

Mortgage Loan upon acquisition by the Company Subsidiary (or, in the

case of Mortgage Loans assigned to the Company Subsidiary by the

Company, by the Company) divided by (B) (1) the outstanding principal

balance of the Mortgage Loans in respect of which an Advance will be

made less (2) all Reserves for such Mortgage Loans in the aggregate

minus (C) if the Company Subsidiary Loan is to become part of the

Mortgage Pool designated as "A" or "B", 2%, (2) if the Company

Subsidiary Loan is to become part of the Mortgage Pool designated as

"C", 3% and (3) if the Company Subsidiary Loan is to become part of

any other Mortgage Pool, a percentage to be determined by the Bank and

the Company. Upon the making of the Advance with respect to any such

new Company Subsidiary, Exhibit G shall be automatically amended to

include such Company Subsidiary, the designation of the Mortgage Pool

(as set forth on the Company Subsidiary Loan Request) and the Required

Subsidiary LTV, as set forth on the Company Subsidiary Loan Request

and as calculated above, in each case subject to the approval of the

Bank with respect to such calculations.

"Reserves" means all reserve amounts in respect of a Pledged Mortgage

Loan as determined monthly.

"Subsidiary Undercollateralization Amount" for each Company Subsidiary

shall mean the amount, if any, by which the (i) outstanding principal

balance of the applicable Company Subsidiary Loan immediately prior to

making distributions on any payment date as described above, exceeds

(ii) the product of the applicable Required Subsidiary LTV multiplied

by the outstanding principal balance of the applicable Company

Subsidiary Loan Value, taking into account all payments made and

applied on the underlying Pledged Mortgage Loans on or prior to such

payment date.

<PAGE>

Notwithstanding the foregoing, the outstanding principal amount of

each Company Subsidiary Loan shall be payable: (i) in part, upon the

occurrence of any event described in Section 2.5(c) hereof with

respect to such Company Subsidiary Loan; or (ii) in full, upon an

uncured Event of Default. Furthermore, if an Event of Default has

occurred and is then continuing, the provisions of Section 8.3 shall

apply.

Notwithstanding the foregoing, for purposes of determining Defaults in

the payment of amounts due under this Agreement, (i) it shall not be a

Default in payment of principal so long as the amount of principal

paid to the Company Subsidiary Loans in the aggregate in any calendar

month is at least equal to the Required Amortization Payments due in

the aggregate on the Company Subsidiary Loans for such month and (ii)

it shall not be a payment Default under this Agreement unless all

amounts paid pursuant to the foregoing waterfalls in the aggregate for

all payment dates for such month are not at least equal to the

Administrative Servicing Fees due for such month, interest due on the

Company Subsidiary Loans for such month and the Required Amortization

Payments due for such month.

(b) Notwithstanding the general order of payments set forth in Section

2.5 above, and so long as the provisions of Sections 2.5(c) or 8.3 do

not apply, the Company or a Company Subsidiary may prepay a Company

Subsidiary Loan, in whole or in part at any time and from time to

time, without premium or penalty (but subject to the Success Fee),

provided, however, the Bank may, at its reasonable discretion,

determine in which order of priority that the then outstanding Company

Subsidiary Loans are prepaid so as not to have a detrimental impact on

any remaining Company Subsidiary Loans.

to the Bank, and the Company and the Company Subsidiary hereby

authorize the Bank to charge its account for, the amount of the

Advance for the purchase of such Mortgage Loan if the Company or the

Company Subsidiary (i) fails, to deliver the Collateral Documents

relating to the Mortgage Loan against which such Advance was made

within sixty (60) days after written notice by the Bank, or (ii)

fails, within sixty (60) days after the delivery of any Collateral

Documents to the Company Subsidiary for correction or completion,

without being returned to the Bank corrected or completed as

instructed by the Bank, or from the date a Collateral Document,

following examination by the Bank, is found not to be in compliance

with the requirements of this Agreement.

Section 2.6. Expiration and/or Termination of Commitment. (a) Unless

terminated earlier as permitted hereunder, the Commitment shall expire

of its own term, and without the necessity of action by the Bank, two

(2) years following the date of execution of this Agreement. No such

expiration, however, shall in and of itself operate to accelerate the

due date of any outstanding Company Subsidiary Loan, or otherwise

terminate the obligations, terms and covenants herein with respect to

any then outstanding Company Subsidiary Loans.

(b) Either party shall have the right, without cause, at any time to

terminate this Commitment on not less than six (6) months' prior

written notice to the other party. No such termination, however, shall

in and of itself operate to accelerate the due date of any outstanding

Company Subsidiary Loan, or otherwise terminate the obligations, terms

and covenants herein with respect to any then outstanding Company

Subsidiary Loans.

<PAGE>

Commitment upon or following the occurrence of a Event of Default as

specified in Section 8. No such termination, however, shall in and of

itself operate to accelerate the due date of any outstanding Company

Subsidiary Loan, or otherwise terminate the obligations, terms and

covenants herein with respect to any then outstanding Company

Subsidiary Loans.

(d) The Bank shall have the right from time to time and in its sole

discretion, to extend the term of this Agreement with prior written

agreement with the Company and each Company Subsidiary. The length of

any such extension shall also be determined in the Bank's sole

discretion. Such extension may be made subject to the renegotiation of

the terms hereunder and to any other such conditions as the Bank may

deem necessary. Under no circumstances shall such an extension by the

Bank be interpreted or construed as the Bank's waiver, release or

forfeiture of any of its rights, entitlements or interests created

hereunder. The Company and each Company Subsidiary acknowledges and

understands that the Bank is under no obligation whatsoever to extend

the term of this Agreement beyond its expiration date as originally

stated in this Agreement.

Section 2.7. Method of Making Payments. Except as otherwise

specifically provided herein, all payments under a Note shall be

received by the Bank on the date when due and shall be made in lawful

money of the United States of America in immediately available funds

at the office of the Bank, or such other place as the Bank from time

to time shall designate; provided that in any event such payments are

received no later than 12:00 p.m. New York City time. Whenever any

payment to be made under a Note shall be stated to be due on a day

which is not a Business Day, the due date thereof shall be extended to

the next succeeding Business Day, and, with respect to payments of

principal, the interest thereon shall be payable at the applicable

rate during such extension. Funds received by the Bank after 4:00 p.m.

New York City time on a Business Day shall be deemed to have been paid

on the next succeeding Business Day.

Section 2.8. Net Payments. All payments with respect to any Company

Subsidiary Loan shall be made without offset or counterclaim and free

from any present or future taxes, levies, imports, duties or other

similar charges of whatsoever nature imposed by any government or any

political subdivision or taxing authority hereof, other than any taxes

on or measured by the net income of the Bank.

Section 2.9. Direct Payments. Any and all payments received by the

Company or a Company Subsidiary on Pledged Mortgage Loans with respect

to which a Company Subsidiary Loan is made shall be deemed to have

been delivered in trust for the benefit of Bank and shall be promptly

delivered to the Bank for application to the Company Subsidiary Loans

and such other specified purposes in accordance with and as set forth

in Section 2.5.

Section 2.10. Success Fees. The Company or the Company Subsidiary

shall pay to Bank a "Success Fee" amounting to the lesser of (i) one

half of one percent (0.50%) of the original principal balance of the

Company Subsidiary Loan (provided further, however, that Company

Subsidiary acknowledges and agrees that the Success Fee for a Company

Subsidiary Loan listed on Schedule I attached hereto, shall be one

percent (1.0%) of the original principal balance of such Company

Subsidiary Loan), or (ii) fifty percent (50%) of the remaining

cashflows of the Pledged Mortgage Loans related to such Company

Subsidiary Loan received after the payoff of such Company Subsidiary

Loan.

<PAGE>

Article III

Collateral

Section 3.1. Assignments and Grants of Security Interest by Company

and Company Subsidiary. In consideration of the Commitment and as

security for (i) the payment of the Note made by it and the

performance of all of such Company Subsidiary's obligations under this

Agreement, (ii) the obligations of such Company Subsidiary under this

Agreement, (iii) the obligations of any other Company Subsidiary,

under that other Company Subsidiary's Note and under this Agreement,

whether such other Company Subsidiary is now existing or is hereafter

created, and whether such other Company Subsidiary's Loan was made

prior to or after the Company Subsidiary Loan to the Company

Subsidiary granting this security interest, the Company does hereby,

each Company Subsidiary which contemporaneously herewith becomes a

party to this Agreement does hereby, and each Company Subsidiary which

hereafter becomes a party to this Agreement shall, by executing a

counterpart signature page to this Agreement thereby, grant and convey

to the Bank a security interest in all rights, titles and interest of

the Company and the Company Subsidiary, respectively, in and to the

following described property (collectively, the "Collateral"), and

each Company Subsidiary which becomes a party hereto contemporaneously

herewith does hereby confirm and reaffirm its prior grant and

conveyance to the Bank of a security interest in all of its right,

title, and interest in the following described Collateral:

(a) All Mortgage Loans, including all Mortgage Notes and Mortgages

evidencing or securing such Mortgage Loans and all other related

Mortgage Loan Documents which from time to time are delivered, or

caused to be delivered, or which heretofore have been delivered to the

Bank (including delivery to a third party on behalf of the Bank)

pursuant hereto or in respect of which an Advance under a Company

Subsidiary Loan has been made by the Bank or which is hereafter made

by the Bank hereunder (the "Pledged Mortgage Loans"); each Company

Subsidiary hereafter obtaining a Company Subsidiary Loan shall deliver

a schedule, in form and detail acceptable to Bank, of the Mortgage

Loans being purchased from the proceeds of such Company Subsidiary

Loan and pledged hereunder, which schedule shall attached to the

Company Subsidiary's counterpart signature page to this Agreement and

shall be deemed to be a part of this Agreement.

(b) All rights, but not any obligations or liabilities under all

purchase agreements relating to the acquisition of Pledged Mortgage

Loans under which the Company or the Company Subsidiary is the

purchaser, and all rights, but not any obligations or liabilities

under all assignments to the Company Subsidiary by the Company of the

Company's rights under such agreements where the Company is the

purchaser.

<PAGE>

insure or guarantee any Pledged Mortgage Loans; and all personal

property, contract rights, servicing and servicing fees and income,

accounts and general intangibles of whatsoever kind relating to the

Pledged Mortgage Loans, said Insurer commitments and the Purchase

Commitments, and all other documents or instruments delivered to the

Bank in respect of the Pledged Mortgage Loans, including, without

limitation, the right to receive all insurance proceeds and

condemnation awards which may be payable in respect of the premises

encumbered by any Pledged Mortgage Loan;

(d) All right, title and interest of the Company and/or the Company

Subsidiary in and to all files, surveys, certificates, correspondence,

appraisals, computer programs, tapes, discs, cards, accounting

records, information and data of the Company and/or the Company

Subsidiary relating to the Pledged Mortgage Loans;

(e) All property of the Company and/or the Company Subsidiary, in any

form or capacity now or at any time hereafter in the possession or

direct or indirect control of the Bank relating to the Pledged

Mortgage Loans (including possession by a parent company, affiliate or

subsidiary of the Bank);

(f) The Company and the Company Subsidiary's rights (but not any

obligations or liabilities of the Company or the Company Subsidiary)

under all Purchase Commitments now held or hereafter acquired by the

Company and/or the Company Subsidiary covering Pledged Mortgage Loans

and all proceeds resulting from the sale of Pledged Mortgage Loans to

Investors pursuant thereto;

(g) All rights (but not any obligations or liabilities) of the Company

and of the Company Subsidiary under the Administrative Services

Agreements and under the Custodial Agreements; and

(h) All replacements, products and proceeds of any and all of the

foregoing.

Without limiting the foregoing, it is the express intention of

the Company, and of each Company Subsidiary that now or hereafter

becomes a party to this Agreement, that the security interest granted

above is and shall be a continuing security interest covering all now

present (or then present), and all future obligations of the Company

to Bank hereunder or arising hereunder; and all now present (or then

present), and all future obligations of each and every Company

Subsidiary to Bank hereunder or arising hereunder, and that the

security interests granted herein by the Company and each Company

Subsidiary shall remain in effect until all indebtedness secured

hereby has been paid in full and the Commitment has expired or has

been otherwise terminated.

Upon the request of the Bank, the Company and the Company

Subsidiaries shall execute any further document or instrument

reasonably requested by the Bank to further evidence or effectuate the

assignments and security interests set forth in this Section.

Furthermore, the Company and the Company Subsidiaries (a) hereby

authorize Bank to sign (if required) and file financing statements at

any time with respect to any of the Collateral, without such financing

statements being executed by, or on behalf of, the Company or the

Company Subsidiaries, (b) shall, at any time on request of Bank,

execute or cause to be executed financing statements in respect of any

Collateral and (c) shall reasonably cooperate to provide any

information reasonably required by the Bank in connection with the

filing of financing statements with respect to the Collateral. The

Company and the Company Subsidiaries agree to pay all filing fees,

including fees for filing continuation statements in connection with

such financing statements, and to reimburse Bank for all costs

incurred in connection therewith.

<PAGE>

Section 3.2 Mandatory Prepayment. In the event that the Bank

shall in good faith determine at any time that any Pledged Mortgage

Loan materially and adversely breaches the representations and

warranties contained in this Agreement, and the Company or the Company

Subsidiary fails to cure such breach of compliance upon thirty (30)

Business Days prior written notice from the Bank, the Company or the

Company Subsidiary shall partially prepay the Company Subsidiary Loan

Advance by paying the Bank the Redemption Amount with respect to such

Pledged Mortgage Loan and the Bank shall release such Pledged Mortgage

Loan from the Pledge of this Agreement.

Section 3.3. Right of Redemption from Pledge. Provided no Default

or Event of Default has occurred and is continuing, a Company and/or

Company Subsidiary may redeem a Pledged Mortgage Loan from pledge, by

either (i) paying, or causing an Investor to pay, to the Bank, for

application to prepayment of the principal balance of the Note, an

amount (the "Redemption Amount") equal to the price at which such

Mortgage Loan could readily be sold as determined by the Bank, or

(ii)delivering substitute Collateral which, in addition to being

acceptable to the Bank in its sole discretion, will when included with

the Collateral, result in an LTV for the applicable Mortgage Pool

which is equal to or less than the LTV of such Mortgage Pool at the

time of the redemption request.

Section 3.4. Collection and Servicing Rights. (a) The Company

Subsidiary and the Bank agree that the "Lock Box Terms" set forth on

Exhibit F shall be utilized by Company Subsidiary for the receiving,

collecting, and processing of all sums payable to the Company

Subsidiary in respect of the Collateral (the "Lock-box Agreement").

Under that Lock-box Agreement, the Bank shall be entitled to receive

all sums payable to the Company Subsidiary in respect of the

Collateral. All amounts payable to the Company Subsidiary for the

purchase by any Investor under a Purchase Commitment of any Pledged

Mortgage Loans shall also be paid directly to the Bank. The Company

Subsidiary shall instruct each Pledged Mortgage Loan obligor to direct

all payments due under the Pledged Mortgage Loans, and shall direct

each Investor to pay the amounts payable for the purchase of such

Pledged Mortgage Loans, directly to the Lockbox address at the Bank.

(b) In the event of any conflict between the terms of the

Lock-box Agreement and the terms of the Administrative Services

Agreement, the Lock-box Agreement terms shall prevail. The Bank shall

have the right on not less than thirty (30) days prior notice to the

Company and each Company Subsidiary to reasonably modify the Lock-box

Agreement to conform to then current Bank practices and/or banking

regulations.

Section 3.5. Return of Collateral. If no Company Subsidiary

Loans, interest or other amounts evidenced by a Note or due under a

Company Subsidiary Loan or under this Agreement shall be outstanding

and unpaid, the Bank shall promptly deliver or release all Collateral

in its possession to the Company or to the Company Subsidiaries, as

appropriate. The Bank shall also execute and deliver such assignments

and other instruments and documents reasonably requested by the

Company or by the Company Subsidiaries to vest title in the Collateral

to the Company or the Company Subsidiaries, as appropriate. The

receipt of the Company or of Company Subsidiaries, as appropriate, for

any Collateral released or delivered pursuant to any provision of this

Agreement shall be a complete and full acquittance for the Collateral

so returned, and the Bank shall hereafter be discharged from any

liability or responsibility therefor.

<PAGE>

Article IV

Conditions Precedent

Section 4.1. Relating to a Company Subsidiary Advance. The

obligation of the Bank to fund an approved Company Subsidiary Loan is

subject to (i) the receipt by the Bank by the date of an Advance

thereunder of the following documents, all of which must be

satisfactory in form and content to the Bank in its reasonable

discretion, and (ii) the satisfaction of the following conditions

precedent:

a) Requests for a Company Subsidiary Loan shall be initiated by

the Company or by a Company Subsidiary by delivering to the Bank a

completed and signed a Company Subsidiary Loan Request. The Bank shall

review such Company Subsidiary Loan Request and if the Bank does not

approve such designation of a Mortgage Pool, the Company or Company

Subsidiary shall revise such request and deliver a new completed and

signed Company Subsidiary Loan Request with a revised designation of a

Mortgage Pool for the Bank's approval.

b) The Company and/or the Company Subsidiary shall have delivered

the Collateral Documents to the Custodian within three (3) Business

Days after the date of the closing of the Company Subsidiary Loan;

c) The Bank shall have received the Tax Identification number of

each Company Subsidiary, as the case may be, and, when specifically

requested for a particular Company Subsidiary Loan, file-stamped

copies of the Company Subsidiary's articles of incorporation (dated no

less recently than one (1) month prior to the date of the Advance),

and operating agreement or by-laws;

d) When specifically requested for a particular Company

Subsidiary Loan, the Bank shall have received an original resolution

of the members/manager, or directors, of the Company and each Company

Subsidiary, as the case may be, certified by its manager or chief

executive officer authorizing the execution, delivery and performance

of this Agreement, the Note, and all other instruments or documents to

be delivered by the Company Subsidiary pursuant to this Agreement;

e) When specifically requested for a particular Company

Subsidiary Loan, the Bank shall have received a certificate of the

Company's and each Company Subsidiary's manager or chief executive

officer as to the incumbency and authenticity of the signatures of the

officers of the Company and the Company Subsidiary executing this

Agreement, the Note, the Company Subsidiary Loan Request, and all

other instruments or documents to be delivered pursuant hereto (the

Bank being entitled to rely thereon until a new such certificate has

been furnished to the Bank);

f) The Bank shall have received an original independently audited

financial statements of the Company for the most recent fiscal

year-end for which reports on Form 10-K have been filed with the

Securities and Exchange Commission (the "Statement Date") containing a

balance sheet and related statements of income and retained earnings

and changes in financial position for the period ended on the

Statement Date, all prepared in accordance with GAAP applied on a

basis consistent with prior periods and reasonably acceptable to the

Bank;

<PAGE>

g) [Reserved];

h) [Reserved];

i) The Bank shall have satisfied itself, in its discretion and

following due diligence, that the Underwriting Standards have been

satisfied. The Bank shall have received each of the following, which

must be satisfactory in form and content to the Bank in its reasonable

discretion: (i) The purchase agreement relating to the acquisition of

the Mortgage Loans, and the assignment to the Company Subsidiary by

the Company of the Company's rights under such purchase agreement when

the Company is the purchaser; (ii) a schedule, in form and detail

acceptable to Bank of the Mortgage Loans being purchased, (iii) the

Note, substantially in the form of Exhibit A hereto, duly executed by

the Company Subsidiary; (iv) counterpart signature page for this

Agreement, substantially in the form of Exhibit E hereto, duly

executed by the Company Subsidiary; and (v) if the Company, not the

Company Subsidiary, is the party to the purchase agreement covering

the Mortgage Loans and Mortgage Loan Documents to be acquired by the

Company Subsidiary and pledged to the Bank to secure the Advance, a

duly executed assignment by the Company to the Company Subsidiary of

all of the Company's rights in the purchase agreement and in the

Mortgage Loans and Mortgage Loan Documents covered by that agreement;

j) [Reserved];

k) The representations and warranties of the Company contained in

Article V hereof shall be true and correct in all material respects as

if made on and as of the date of each Advance unless the same relates

to an earlier date;

l) The representations and warranties of the Company Subsidiary

contained in Article V hereof shall be true and correct in all

material respects as if made on and as of the date of the Advance

unless the same relates to an earlier date;

m) The Company Subsidiary shall have performed all obligations to

be performed by it hereunder, and after giving effect to the requested

Advance, there shall exist no Default or Event of Default hereunder;

n) The Company Subsidiary shall have become a party to this

Agreement, shall have performed all obligations to be performed by it

under this Agreement, and under the Note, and, after giving effect to

the requested Advance, there shall exist no Default or Event of

Default under this Agreement or under any Note;

o) The Company shall not have experienced any other material

adverse change in its business or operations as reasonably determined

by the Bank in its reasonable discretion exercised in good faith; and

p) The Company Subsidiary, as reasonably determined by the Bank

in its reasonable discretion exercised in good faith, shall not have

(i) incurred any material liabilities, direct or contingent, other

than in the ordinary course of its business and other than under this

Agreement, or (ii) experienced any other material adverse change in

its business or operations as reasonably determined by the Bank in its

reasonable discretion exercised in good faith.

<PAGE>

Section 4.2. Acceptance of Proceeds. Acceptance of the proceeds

of the requested Advance by the Company Subsidiary shall be deemed a

representation by the Company and the Company Subsidiary that all

conditions set forth in this Article IV shall have been satisfied as

of the date of such Advance.

Article V

Representations and Warranties

Section 5.1. By the Company. In order to induce the Bank to enter

into this Agreement and make each Company Subsidiary Loan, the Company

hereby represents and warrants to the Bank, as of the date of this

Agreement and as of the date of each Company Subsidiary Loan Request

and of each Company Subsidiary Loan, that:

(a) Organization; Good Standing. The Company is a corporation

duly organized, validly existing, and in good standing under the laws

of the State of Delaware and is duly registered to do business and is

in good standing under the laws of the State of New York, has the full

legal power and authority to own its property and to carry on its

business as currently conducted, and is duly qualified as a foreign

corporation to do business in and is in good standing in each

jurisdiction in which the transaction of its business makes such

qualification necessary, except in jurisdictions, if any, where a

failure to be in good standing has no material adverse effect on the

business, operations, assets or financial condition of the Company.

(b) Authorization and Enforceability. The Company has the power

and authority to execute, deliver and perform this Agreement and all

other documents contemplated hereby or thereby. The execution,

delivery and performance by the Company of this Agreement and all

other documents contemplated hereby or thereby, have been duly and

validly authorized by all necessary corporate action on the part of

the Company (none of which actions have been modified or rescinded,

and all of which actions are in full force and effect) and do not and

will not conflict with or violate any provision of law or of the

articles of organization or bylaws of the Company, conflict with or

result in a breach of or constitute a default or require any consent

under, or result in the creation of any Lien upon any property or

assets of the Company (other than pursuant to this Agreement), or

result in or require the acceleration of any indebtedness of the

Company pursuant to any agreement, instrument or indenture to which

the Company is a party or by which the Company or its property may be

bound or affected. This Agreement and all other documents contemplated

hereby or thereby constitute legal, valid, and binding obligations of

the Company enforceable in accordance with their respective terms,

except as limited by bankruptcy, insolvency or other similar laws

affecting the enforcement of creditors' rights and by general

principles of equity.

(c)Approvals. The execution and delivery of this Agreement and

all other documents contemplated hereby or thereby and the performance

of the Company's obligations hereunder and thereunder do not require

any license, consent, approval or other action of any state or federal

agency or governmental or regulatory authority.

<PAGE>

(d)Financial Condition. The balance sheet of the Company as at

the Statement Date, and the related statements of income and cash

flows for the fiscal year ended on the Statement Date, heretofore

furnished to the Bank, fairly present the financial condition of the

Company as at the Statement Date and the results of its operations for

the fiscal period ended on the Statement Date. The Company had, on the

Statement Date, no known liabilities, direct or indirect, fixed or

contingent, matured or unmatured, or liabilities for taxes, long-term

leases or unusual forward or long-term commitments not disclosed by,

or reserved against in, said balance sheet and related statements,

except as heretofore disclosed to the Bank in writing, and except for

the Bank's extension(s) of credit to the Company and its Subsidiaries.

Except for financial statements prepared for interim periods between

the fiscal year-end, all financial statements were prepared in

accordance with GAAP applied on a consistent basis throughout the

periods involved. Since the Statement Date, there has been no material

adverse change in the business, operations, assets or financial

condition of the Company, nor is the Company aware of any state of

facts which (with or without notice or lapse of time or both) could

reasonably be expected to result in any such material adverse change.

(e) Litigation. There are no actions, claims, suits or

proceedings pending, or to the knowledge of the Company, threatened

against or affecting the Company in any court or before any arbitrator

or before any government commission, board, bureau or other

administrative agency which, if adversely determined, may reasonably

be expected to result in any material and adverse change in the

business, operations, assets, licenses, qualifications or financial

condition of the Company.

(f) Compliance with Laws. The Company is not in violation of any

provision of any law, or of any judgment, award, rule, regulation,

order, decree, writ or injunction of any court or public regulatory

body or authority which could reasonably be expected to have a

material adverse effect on the business, operations, assets or

financial condition, assets, licenses, qualifications or financial

condition of the Company.

(g) Regulation U. No part of the proceeds of any Advances made

hereunder will be used to purchase or carry any Margin Stock or to

extend credit to others for the purpose of purchasing or carrying any

Margin Stock.

(h) Investment Company Act. The Company is not an "investment

company," or a company controlled by an "investment company," within

the meaning of the Investment Company Act of 1940, as amended.

(i) Payment of Taxes. The Company has filed or caused to be filed

all federal, state, and local income, excise, property and other tax

returns with respect to the operations of the Company, which are

required to be filed, all such returns are true and correct in all

material respects, and the Company has paid or caused to be paid all

taxes as shown on such returns or on any assessment to the extent that

such taxes have become due, except in cases where the Company has

disputed in good faith the amount of said taxes.

<PAGE>

(j) Agreements. The Company is not a party to any agreement,

instrument or indenture or subject to any restriction materially and

adversely affecting its business, operations, assets or financial

condition, except as disclosed in the financial statements described

in Section 5.1(d) hereof. The Company is not in default in the

performance, observance or fulfillment of any of the obligations,

covenants or conditions contained in any agreement, instrument, or

indenture which default could reasonably be expected to have a

material adverse effect on the business, operations, properties or

financial condition of the Company. No holder of any indebtedness of

the Company has given notice of any asserted default thereunder, and

no liquidation or dissolution of the Company and no receivership,

insolvency, bankruptcy, reorganization or other similar proceedings

relative to the Company or any of its properties is pending, or to the

knowledge of the Company, threatened.

(k) Title to Properties. The Company or the applicable Company

Subsidiary has good, valid, insurable (in the case of real property)

and marketable title to all material portions of its properties and

assets (whether real or personal, tangible or intangible) reflected on

the financial statements described in Section 5.1(d) hereof, except

for such properties and assets as have been disposed of since the date

of such financial statements as no longer used or useful in the

conduct of its business or as have been disposed of in the ordinary

course of business, and all such properties and assets are free and

clear of all Liens except as disclosed in such financial statements.

(l) ERISA. All plans ("Plans") of a type described in

Section 3(3) of ERISA in respect of which the Company is an

"Employer," as defined in Section 3(8) of ERISA, are in substantial

compliance with ERISA, and none of such Plans is insolvent or in

reorganization, has an accumulated or waived funding deficiency within

the meaning of Section 412 of the Internal Revenue Code, and the

Company has not incurred any material liability (including any

material contingent liability) to or on account of any such Plan

pursuant to Sections 4062, 4063, 4064, 4201 or 4204 of ERISA; and no

proceedings have been instituted to terminate any such plan, and no

condition exists which presents a material risk to the Company of

incurring a material liability to or on account of any such Plan

pursuant to any of the foregoing Sections of ERISA. No Plan or trust

forming a part thereof has been terminated since September 1, 1974.

(m) Eligibility. The Company has all state and local permits,

licenses, approvals, registrations and qualifications which it is

required to have, in order to purchase, sell or service the Pledged

Mortgage Loans.

Section 5.2. By the Company Subsidiary. In order to induce the

Bank to make a Company Subsidiary Loan, each Company Subsidiary does

represent and warrant to the Bank, as of the date of each Company

Subsidiary Loan Request and each Company Subsidiary Loan, that:

(a) Organization; Good Standing; Subsidiaries. Such Company

Subsidiary is a duly organized, validly existing and in good standing

under the laws of the state of its jurisdiction of incorporation, and

is duly registered to do business in and is in good standing under the

laws of the state of its jurisdiction of incorporation, and has the

full legal power and authority to own its property and to carry on its

business as currently conducted, and is duly qualified as a foreign

corporation Company Subsidiary to do business in and is in good

standing in each jurisdiction in which the transaction of its business

makes such qualification necessary, except in jurisdictions, if any,

where a failure to be in good standing has no material adverse effect

on the business, operations, assets or financial condition of the

Company Subsidiary. Such Company Subsidiary has no Subsidiaries.

<PAGE>

(b)Authorization and Enforceability. Such Company Subsidiary has

the power and authority to execute, deliver and perform this

Agreement, and all other documents contemplated thereby. The

execution, delivery and performance by such Company Subsidiary of the

Note, this Agreement and all other documents contemplated thereby and

the making of the borrowing thereunder, have been duly and validly

authorized by all necessary corporate action on the part of such

Company Subsidiary (none of which actions have been modified or

rescinded, and all of which actions are in full force and effect) and

do not and will not conflict with or violate any provision of law or

of the articles of organization, bylaws or operating agreement of such

Company Subsidiary, conflict with or result in a breach of or

constitute a default or require any consent under, or result in the

creation of any Lien upon any property or assets of such Company

Subsidiary (other than pursuant to this Agreement), or result in or

require the acceleration of any indebtedness of such Company

Subsidiary pursuant to any agreement, instrument or indenture to which

such Company Subsidiary is a party or by which such Company Subsidiary

or its property may be bound or affected. This Agreement, and all

other documents contemplated hereby constitute legal, valid, and

binding obligations of such Company Subsidiary enforceable in

accordance with their respective terms, except as limited by

bankruptcy, insolvency or other similar laws affecting the enforcement

of creditors' rights and by general principles of equity.

Agreement, and all other documents contemplated thereby and the

performance of such Company Subsidiary's obligations thereunder do not

require any license, consent, approval or other action of any state or

federal agency or governmental or regulatory authority.

(d) Financial Condition. Any balance sheet of such Company

Subsidiary as at the Statement Date, and the related statements of

income and cash flows for the fiscal year ended on the Statement Date,

theretofore furnished to the Bank, fairly present the financial

condition of such Company Subsidiary as at the Statement Date and the

results of its operations for the fiscal period ended on the Statement

Date. Such Company Subsidiary had, on the Statement Date, no known

liabilities, direct or indirect, fixed or contingent, matured or

unmatured, or liabilities for taxes, long-term leases or unusual

forward or long-term commitments not disclosed by, or reserved against

in, said balance sheet and related statements except as theretofore

disclosed to the Bank in writing, and except for the Bank's

extension(s) of credit to such Company Subsidiary. Except for

financial statements prepared for interim periods between the fiscal

year end, all financial statements were prepared in accordance with

GAAP applied on a consistent basis throughout the periods involved.

Since the Statement Date, there has been no material adverse change in

the business, operations, assets or financial condition of such

Company Subsidiary, nor is such Company Subsidiary aware of any state

of facts which (with or without notice or lapse of time or both) would

or could result in any such material adverse change.

<PAGE>

(e) Litigation. There are no actions, claims, suits or

proceedings pending, or to the knowledge of such Company Subsidiary,

threatened against or affecting such Company Subsidiary in any court

or before any arbitrator or before any government commission, board,

bureau or other administrative agency which, if adversely determined,

may reasonably be expected to result in any material and adverse

change in the business, operations, assets, licenses, qualifications

or financial condition of such Company Subsidiary.

(f) Compliance with Laws. Such Company Subsidiary is not in

violation of any provision of any law, or of any judgment, award,

rule, regulation, order, decree, writ or injunction of any court or

public regulatory body or authority which might have a material

adverse effect on the business, operations, assets or financial

condition, assets, licenses, qualifications or financial condition of

such Company Subsidiary.

(g) Regulation U. No part of the proceeds of any Advance will be

used to purchase or carry any Margin Stock or to extend credit to

others for the purpose of purchasing or carrying any Margin Stock.

(h) Investment Company Act. Such Company Subsidiary is not an

"investment company," or a company controlled by an "investment

company," within the meaning of the Investment Company Act of 1940, as

amended.

(i) Payment of Taxes. Such Company Subsidiary has filed or caused

to be filed all federal, state, and local income, excise, property and

other tax returns with respect to the operations of such Company

Subsidiary, which are required to be filed, all such returns are true

and correct in all material respects, and such Company Subsidiary has

paid or caused to be paid all taxes as shown on

SITE SEARCH

AGREEMENTS / CONTRACTS

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates