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SERVICING & CUSTODIAL AGREEMENT

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Sectors: Financial Services
Governing Law: New York, View New York State Laws
Effective Date: January 08, 1997
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EXECUTION VERSION





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EXHIBIT 10.6





BANKERS TRUST COMPANY,



Custodian and Servicer,





ATHERTON CAPITAL PARTNERS, L.P.,



Servicing Advisor and Owner,





FRANCHISE FINANCE CORP.,









SERVICING AND CUSTODIAL AGREEMENT



Dated as of January 8, 1997





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THIS SERVICING AND CUSTODIAL AGREEMENT, dated as of January 8, 1997 (this "Agreement"), is hereby executed by and between ATHERTON CAPITAL PARTNERS, L.P., a California limited partnership, in its capacity as owner of the Collateral Loans defined below (the "Owner") and in its capacity as servicing advisor (the "Servicing Advisor"), BANKERS TRUST COMPANY, a New York banking corporation, in its capacity as custodian, acting either directly or through an agent (the "Custodian"), and in its capacity as servicer (the "Servicer"), and FRANCHISE FINANCE CORP., a Delaware corporation, in its capacity as a lender to the Owner and, if applicable, in its capacity as agent for lenders to the Owner (the "Lender").



PRELIMINARY STATEMENT



A. The Owner will originate, purchase or finance Collateral Loans (as defined herein) using, in part, funds borrowed from the Lender pursuant to a Warehouse Credit Agreement dated the date hereof (as such agreement may be amended, modified or supplemented from time to time, the "Credit Agreement"), between the Owner and the Lender.



B. The Collateral Loans will be pledged to the Lender to secure the Owner's obligations under the Credit Agreement.



C. The Owner and the Lender wish to engage (1) the Custodian to hold custody of the Collateral Loans and the Servicer to service the Collateral Loans on behalf of the Owner and the Lender as specified herein and (2) the Servicing Advisor to provide servicing advice with respect to the Collateral Loans as specified herein.



AGREEMENT:



In consideration of the mutual agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the parties hereto, the Servicer, the Custodian, the Servicing Advisor, the Owner and the Lender agree as follows:



Section 1. Definitions. The following terms shall have the

----------- respective meanings specified below.



"Additional Servicing Advisor Standards and Procedures": The additional standards and procedures of the Servicing Advisor, as set forth in Exhibit B and incorporated and made a part of this Agreement as though set forth herein.



"Agreement" is defined in the preamble hereto.



"Applicable Servicing Fee Rate" is defined in Section 6 hereof.



"Approved Concepts" shall mean those concepts specified in Exhibit C hereto and such additional concepts as are approved in writing by the Owner and the Lender.



"Business Day" means any day other than a Saturday, Sunday, legal holiday or other day on which commercial banks are authorized or required by law to close in San Francisco, California, Wichita, Kansas, or New York, New York.

"Cash Equivalent Investments" means, at any time:



(a) any evidence of direct indebtedness, maturing not more than

one year after such time, issued or guaranteed by the United States

government;



(b) commercial paper, maturing not more than nine months from the

date of issue, which is issued by a corporation organized under the

laws of any state of the United States and rated at least A-1/P-1 (or

the equivalent) by at least two rating agencies;



(c) any certificate of deposit or bankers acceptance, maturing

not more than one year after such time, which is issued by (i) a

commercial banking institution that is a member of the Federal Reserve

System and has a combined capital and surplus and undivided profits of

not less than $500,000,000 that has a long-term debt rating of at

least A+ (or the equivalent) by at least one rating agency, or (ii) a

commercial banking institution that is organized in a jurisdiction

outside the United States and has a combined capital and surplus and

undivided profits of not less than $500,000,000 that has a long-term

debt rating of at least A+ (or the equivalent) by at least one rating

agency; or



(d) any money market fund having a rating from a rating agency in

the highest investment category granted thereby at the time of the

purchase of such money market fund, including any funds for which the

Servicer may be a manager.



"Collateral" is defined in the Collateral Loan Agreement relating to each Collateral Loan.



"Collateral Borrower" means the borrowers to whom Collateral Loans are made.



"Collateral Loan" means those loans originated, purchased or financed by Atherton Capital Partners, L.P. or The Atherton Group Incorporated that are serviced pursuant to this Agreement.



"Collateral Loan Agreement" means the loan agreement between a Collateral Borrower and the Originator relating to a Collateral Loan.



"Collateral Loan Documentation" means, with respect to each Collateral Loan:



(1) the original Note (as defined in the Collateral



Agreement) executed by the Collateral Borrower and endorsed

to the Owner and endorsed "Pay to the order of

___________________, without recourse" and signed by the Owner;



(2) an executed original of the Collateral Loan

Agreement;



(3) an executed original of the Security Agreement (as

defined in the Collateral Loan Agreement);



(4) the original Mortgage, if applicable, with evidence

of recording thereon, or a duplicate original Mortgage, if

applicable, together with a certificate of an officer of the

settlement agent stating that such Mortgage will be dispatched to

the appropriate public recording office for recordation and that

the original Mortgage, with evidence of recording thereon, will

be promptly delivered to the Custodian upon receipt thereof by

the settlement agent;



(5) the original Leasehold Mortgage, if applicable, in

appropriate form for recording (with the possible exception of

the obtaining of a landlord signature) or with evidence of

recording thereon;



(6) an executed original Guaranty, if applicable;



(7) the UCC-1 Financing Statement, with evidence of

filing thereon, or a copy of the original UCC-1 Financing

Statement, together with a certificate of an officer of the

settlement agent or the Originator stating that such UCC-1

Financing Statement will be dispatched to the appropriate public

filing office and that the original UCC-1 Financing Statement,

with evidence of filing thereon, will be promptly delivered to

the Custodian upon receipt thereof by the settlement agent;



(8) one or more UCC-2 or UCC-3 Assignments assigning

the UCC-1 to the Owner and then executed by the Owner in blank

but otherwise in form and substance acceptable for filing;



(9) an executed original of each landlord, mortgagee or

prior lien or estoppel, if applicable;



(10) an executed original of a Franchisor Intercreditor

Agreement, if applicable;

(11) an executed original of a Franchisor Subordination

of Lessor's Lien, if applicable;



(12) the original title insurance policy, if applicable;



(13) copies of the insurance policies indicated in the

Collateral Loan Documentation Checklist;



(14) the environmental indemnity, if applicable;



(15) an assignment of Mortgage, if applicable;



(16) a general assignment of the Collateral Loan

Documentation to the Owner and then in blank by the Owner (the



"Loan Assignment"), assigning all of the grantor's right, title

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

and interest in the Collateral Loan, including but not limited

to, the Collateral Loan Agreement, the Note, the Security

Agreement, the Mortgage, the Leasehold Mortgage, the Franchisor

Intercreditor Agreement, the Franchisor Subordination of Lessor's

Lien, the origination escrow agreement and the Guaranty, as

applicable; and



(17) any other credit or security document, if any,

necessary for the documentation and enforcement of such

Collateral Loan.



"Collateral Loan Event of Default": With respect to any Collateral Loan, an "Event of Default" as defined in the related Collateral Loan Agreement.



"Collateral Loan Documentation Checklist" is defined in Section 4(c).



"Collection Account" means a segregated account maintained by the Servicer for the benefit of and in the name of Franchise Finance Corp., as Lender, which shall be an Eligible Account.



"Condemnation": Any condemnation or other taking or temporary or permanent requisition of a Mortgaged Property, any interest therein or right appurtenant thereto, or any change of grade affecting the Mortgaged Property as a result of the exercise of any right of condemnation or eminent domain. A transfer in lieu or anticipation of condemnation shall be deemed to be a Condemnation.



"Condemnation Proceeds": All compensation, awards and proceeds received by or on behalf of a Collateral Borrower as a result of condemnation (which term shall include any damage or taking by any governmental or quasi-governmental authority and any transfer by private sale in lieu thereof).



"Default Rate" is the Default Rate as defined in the Collateral Loan Agreement relating to each Collateral Loan.



"Delinquent Collateral Loan" means any Collateral Loan with respect to which any payment of principal or interest is overdue as of the relevant Distribution Date.



"Determination Date" means the eighth day of each month, or if such day is not a Business Day, the next succeeding Business Day.



"Distribution Date" means the twelfth day of each month, or if such day is not a Business Day, the next succeeding Business Day.



"Eligible Account": One or more accounts that are maintained with a depository institution (i) whose long-term debt obligations (or, in the case of a depository institution which is part of a holding company structure, the long- term debt obligations of such holding company) at the time of deposit therein are rated at least "AA" (or the equivalent) by Duff & Phelps or, if Duff & Phelps does not rate such obligations of such Person, by at least two other rating agencies or (ii) a trust account or accounts maintained with the trust department of a federal or state chartered depository institution or trust company acting in its fiduciary capacity subject to regulations relating to fiduciary funds on deposit substantially similar to those set forth in 12 C.F.R. ' 9.10(b).



"Escrow Account" is defined in Section 3(b) of the Servicing Standards and Procedures.



"Escrow Payments": All payments that a Collateral Borrower may be required to pay into escrow pursuant to a Mortgage or a Leasehold Mortgage.



"Franchisor Intercreditor Agreement" means, with respect to certain Collateral Loan Agreements, a related intercreditor or similar agreement among a Franchisor, the Originator and the Collateral Borrower, as such agreement may be amended, supplemented or otherwise modified from time to time.



"Franchisor Subordination of Lessor's Lien" means, with respect to certain Collateral Loan Agreements, the related subordination of lessor's lien or similar agreement between a Franchisor and the Originator, as such agreement may be amended, supplemented or otherwise modified from time to time.

"Franchisor" shall mean any franchisor of an Approved Concept.



"Guaranty" means, with respect to a Collateral Loan, the related guaranty, if any, as such guaranty may be amended, supplemented or otherwise modified from time to time.



"Hazardous Substances": Any hazardous or toxic substance or waste that is regulated as such or may form the basis of liability under any present or future law or regulation including, but not limited to, any substance or waste: (a) defined as a "hazardous substance" under Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time, and (b) petroleum or any by-products or fractions thereof, any form of natural gas, asbestos and asbestos-containing materials, PCBs and PCB-containing equipment, radon, mutagenic or etiologic agents, pesticides, defoliants, explosives and flammables.



"Independent": When used with respect to any specified Person, such Person who (a) is not an Affiliate of or controlled by and is in fact independent of each of the Lender, the Servicer, the Custodian, the Servicing Advisor, the Owner and any Collateral Borrower with respect to any Collateral Loan, (b) does not have any direct financial interest or any material indirect financial interest in the Lender, the Servicer, the Custodian, the Servicing Advisor, the Owner, any Collateral Borrower with respect to any Collateral Loan, or an Affiliate thereof, and (c) is not connected with the Lender, the Servicer, the Custodian, the Servicing Advisor, the Owner or any Collateral Borrower with respect to any of the Collateral Loans as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions.



"Insurance Policy: Any insurance policy required to be maintained by a Collateral Borrower with respect to a Collateral Loan.



"Insurance Proceeds": With respect to a Collateral Loan, any amounts received upon settlement of a claim filed under an Insurance Policy.



"Leasehold Mortgage": With respect to a Collateral Loan, the related leasehold mortgage or deed of trust (in recordable form, with the possible exception of the obtaining of a landlord signature) from the related Collateral Borrower to the Originator that has been executed and delivered in connection with the Note evidencing such Collateral Loan, if any, as such leasehold mortgage or deed of trust may be amended, supplemented or otherwise modified from time to time.



"Liquidated Collateral Loan": Any Collateral Loan as to which the Servicer has determined in accordance with customary servicing practices that all amounts expected by the Servicer to be recovered from or on account of such Collateral Loan, whether from scheduled loan payments, Condemnation Proceeds, Insurance Proceeds, Liquidation Proceeds or otherwise, following final liquidation of such Collateral Loan and the disposition of the Collateral, have been recovered. The determination by the Servicer that a Collateral Loan has become a Liquidated Collateral Loan shall be evidenced by a Responsible Officer's Certificate of the Servicer delivered to the Owner, the Lender and the Servicing Advisor, detailing the reasons for such determination and the aggregate amount of Liquidation Proceeds, Liquidation Expenses and Net Liquidation Proceeds with respect to such Liquidated Collateral Loan, and specifying any Realized Loss with respect thereto.



"Liquidation Expenses": Reasonable out-of-pocket expenses incurred by the Servicer in connection with the liquidation of any Collateral Loan with respect to which a Collateral Loan Event of Default has occurred, Collateral, or other property acquired in respect thereof (including, without limitation, reasonable legal fees and expenses).



"Liquidation Proceeds": Amounts received by the Servicer or the Servicing Advisor in connection with the liquidation of a Collateral Loan with respect to which a Collateral Loan Event of Default has occurred, Collateral or other property acquired in respect thereof, whether through foreclosure, sale or otherwise, including Net Condemnation Proceeds, Net Insurance Proceeds and payments in connection with s
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