Common use of Compliance with Investment Company Act Clause in Contracts

Compliance with Investment Company Act. The Board of Directors shall use commercially reasonable efforts to ensure that the Company is not treated as an “investment company” within the meaning of the Investment Company Act of 1940. Among other things (i) the Board of Directors shall use commercially reasonable efforts to ensure that at least ninety five percent (95%) of the assets of the Company will consist of mortgages and other liens on and interests in real estate; (ii) for each loan originated by the Company, the Board of Directors must have a reasonable belief, supported by appraisals or other evidence of value, that the entire amount of the loan is secured by a lien on real estate; and (iii) in the event the Company purchases (as opposed to originates) any loans (A) the Board of Directors shall form a reasonable believe that one hundred percent (100%) of the acquisition cost of the loan is secured by real estate at the time of purchase, for at least ninety five percent (95%) of such purchased loans; (B) no fewer than ninety five percent (95%) of the mortgage loans purchased by the Company, by value, will include a written indication in the historic file that the loan was one hundred percent (100%) secured by real estate at the time of origination; and (C) the Company will not purchase any mortgage loan where there is written indication in the historic file that the loan was not one hundred percent (100%) secured by real estate at the time of origination.