Exhibit 10.36

 

 

THIRD AMENDED AND RESTATED

WAREHOUSING CREDIT AND SECURITY AGREEMENT

(SINGLE-FAMILY MORTGAGE LOANS)

 

AMONG

 

SIRVA MORTGAGE, INC., an Ohio corporation

f/k/a COOPERATIVE MORTGAGE SERVICES, INC.

 

AND

 

WASHINGTON MUTUAL BANK, FA,

a federal association, as Lead Arranger and Agent

 

AND

 

NATIONAL CITY BANK OF KENTUCKY,

as Documentation Agent

 

AND

 

THE LENDERS PARTY HERETO

 

Dated as of September 30, 2002

 

 

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TABLE OF CONTENTS

 

1.

DEFINITIONS

 

 

1.1

Defined Terms

 

 

1.2

Other Definitional Provisions

 

 

 

 

 

2.

THE CREDIT

 

 

2.1

The Commitment

 

 

2.2

Procedures for Obtaining Advances

 

 

2.3

Notes

 

 

2.4

Interest

 

 

2.5

Principal Payments

 

 

2.6

Expiration of Commitment

 

 

2.7

Payment Procedure

 

 

2.8

Fees

 

 

2.9

Miscellaneous Charges

 

 

2.10

Bailee

 

 

2.11

Increased Costs; Capital Requirements

 

 

2.12

Restatement

 

 

 

 

 

3.

COLLATERAL

 

 

3.1

Grant of Security Interest

 

 

3.2

Security Interest in Mortgage-backed Securities

 

 

3.3

Delivery of Collateral Documents

 

 

3.4

Delivery of Additional Collateral; Mandatory Prepayments

 

 

3.5

Right of Redemption from Pledge

 

 

3.6

Collection and Servicing Rights

 

 

3.7

Return or Release of Collateral at End of Commitment

 

 

 

 

 

4.

CONDITIONS PRECEDENT

 

 

4.1

Initial Advance

 

 

4.2

Each Advance

 

 

 

 

 

5.

REPRESENTATIONS AND WARRANTIES

 

 

5.1

Organization; Good Standing; Subsidiaries

 

 

5.2

Authorization and Enforceability

 

 

5.3

Financial Condition.

 

 

5.4

Litigation

 

 

5.5

Compliance with Laws

 

 

5.6

Regulation U

 

 

5.7

Investment Company Act

 

 

5.8

Agreements

 

 

5.9

Title to Properties

 

 

5.10

ERISA

 

 

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5.11

Eligibility

 

 

5.12

Special Representations Concerning Collateral

 

 

5.13

RICO

 

 

5.14

Proper Names

 

 

5.15

Direct Benefit From Loans

 

 

5.16

Loan Documents Do Not Violate Other Documents

 

 

5.17

Consents Not Required

 

 

5.18

Material Fact Representations

 

 

5.19

Place of Business

 

 

5.20

Use of Proceeds; Business Loans

 

 

5.21

No Undisclosed Liabilities

 

 

5.22

Tax Returns and Payments

 

 

5.23

Subsidiaries

 

 

5.24

Holding Company

 

 

 

 

 

6.

AFFIRMATIVE COVENANTS

 

 

6.1

Payment of Notes

 

 

6.2

Financial Statements and Other Reports

 

 

6.3

Maintenance of Existence; Conduct of Business

 

 

6.4

Compliance with Applicable Laws

 

 

6.5

Inspection of Properties and Books

 

 

6.6

Notice

 

 

6.7

Payment of Debt, Taxes, etc

 

 

6.8

Insurance

 

 

6.9

Closing Instructions

 

 

6.10

Other Loan Obligations.

 

 

6.11

Use of Proceeds of Advances

 

 

6.12

Special Affirmative Covenants Concerning Collateral

 

 

6.13

Cure of Defects in Loan Documents

 

 

 

 

 

7.

NEGATIVE COVENANTS

 

 

7.1

Contingent Liabilities

 

 

7.2

Pledge of Servicing Contracts/Mortgage Loans

 

 

7.3

Merger; Acquisitions

 

 

7.4

Loss of Eligibility.

 

 

7.5

Adjusted Tangible Net Worth.

 

 

7.6

Debt to Adjusted Tangible Worth Ratio

 

 

7.7

Minimum Current Ratio

 

 

7.8

Transactions with Affiliates

 

 

7.9

Limits on Corporate Distributions

 

 

7.10

RICO

 

 

7.11

No Loans or Investments Except Approved Investments

 

 

7.12

Charter Documents and Business Termination

 

 

7.13

Changes in Accounting Methods

 

 

7.14

No Sales, Leases or Dispositions of Property

 

 

7.15

Changes in Business or Assets

 

 

7.16

Changes in Office or Inventory Location

 

 

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7.17

Special Negative Covenants Concerning Collateral

 

 

7.18

No Indebtedness

 

 

7.19

Ownership of the Company

 

 

7.20

Payments of Subordinated Debt

 

 

 

 

 

8.

DEFAULTS; REMEDIES

 

 

8.1

Events of Default

 

 

8.2

Remedies

 

 

8.3

Application of Proceeds

 

 

8.4

Agent Appointed Attorney-in-Fact

 

 

8.5

Right of Offset

 

 

8.6

Waivers

 

 

8.7

Performance by Agent

 

 

8.8

No Responsibility.

 

 

8.9

No Waiver

 

 

8.10

Cumulative Rights

 

 

8.11

Costs

 

 

 

 

 

9.

NOTICES

 

 

 

 

 

10.

REIMBURSEMENT OF EXPENSES; INDEMNITY

 

 

10.1

Reimbursement of Expenses and Indemnification by Company

 

 

10.2

INDEMNIFICATION BY THE LENDERS

 

 

 

 

 

11.

FINANCIAL INFORMATION

 

 

 

 

 

12.

AGREEMENTS CONCERNING THE AGENT AND THE LENDERS

 

 

12.1

Appointment

 

 

12.2

Employment of Others by the Agent

 

 

12.3

Exculpatory Provisions

 

 

12.4

Defaults

 

 

12.5

Reliance

 

 

12.6

Resignation of the Agent

 

 

12.7

Removal of the Agent

 

 

12.8

Effective Date of Resignation or Removal

 

 

12.9

Successor Agent

 

 

12.10

Credit Decisions

 

 

12.11

Merger of the Agent

 

 

12.12

Agent and Affiliates

 

 

12.13

Lender’s Cooperation

 

 

12.14

Withholding Tax

 

 

12.15

Sharing

 

 

12.16

Commitment Increases

 

 

12.17

Participation

 

 

12.18

Amendments and Modifications

 

 

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13.

MISCELLANEOUS

 

 

13.1

Assignment

 

 

13.2

The Register

 

 

13.3

Disclosures

 

 

13.4

Pledges

 

 

13.5

Governing Law

 

 

13.6

Relationship of the Parties

 

 

13.7

Severability

 

 

13.8

Usury

 

 

13.9

Consent to Jurisdiction

 

 

13.10

Arbitration.

 

 

13.11

ADDITIONAL INDEMNITY

 

 

13.12

No Waivers Except in Writing

 

 

13.13

WAIVER OF JURY TRIAL

 

 

13.14

Multiple Counterparts

 

 

13.15

No Third Party Beneficiaries

 

 

13.16

RELEASE OF LIABILITY

 

 

13.17

Entire Agreement; Amendment

 

 

13.18

NOTICE PURSUANT TO TX. BUS. & COMM. CODE § 26.02

 

 

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THIRD AMENDED AND RESTATED

WAREHOUSING CREDIT AND SECURITY AGREEMENT

 

THIS THIRD AMENDED AND RESTATED WAREHOUSING CREDIT AND SECURITY AGREEMENT (this
“Agreement”), is dated as of September 30, 2002, by and among SIRVA MORTGAGE,
INC., an Ohio corporation f/k/a Cooperative Mortgage Services, Inc. (the
“Company”), having its principal office at 6070 Parkland Boulevard, Mayfield
Heights, Ohio 44124, the lenders from time to time party hereto (together with
any successors and assigns thereof, being hereinafter referred to individually
as a “Lender” and collectively as the “Lenders”) and WASHINGTON MUTUAL BANK, FA,
a federal association, successor by merger to BANK UNITED, a federal savings
bank, in its capacity as one of the Lenders, as lead arranger, and as agent (it
and its successors in that capacity called the “Agent”) for the Lenders having
its principal office at 3200 Southwest Freeway, Suite 1922, Houston, Texas 77027
and NATIONAL CITY BANK OF KENTUCKY, as documentation agent (“Documentation
Agent”).

 

WHEREAS, the Company, the Agent, the Documentation Agent, and the Lenders
entered into that certain Second Amended and Restated Warehousing Credit and
Security Agreement (as amended, the “Existing Agreement”) dated April 18, 2002
whereby Lenders agreed, subject to the terms and conditions of the Existing
Agreement, to make certain loans to the Company to finance the origination or
purchase of Mortgage Loans (as that term is herein defined), which loans are for
the benefit of the Company;

 

WHEREAS, the Company and the Lenders desire to make certain amendments to the
Existing Agreement;

 

NOW, THEREFORE, for good and valuable consideration, the amount and sufficiency
of which are hereby acknowledged by the parties hereto, the parties hereto
hereby agree that the Existing Agreement is amended and restated in its entirety
as follows:

 

1.             DEFINITIONS.

 

1.1           Defined Terms. Capitalized terms defined below or elsewhere in
this Agreement (including the exhibits hereto) shall have the following
meanings:

 

“Additional Lender” means a Person admitted as a Lender under this Agreement by
the terms of an amendment hereto.

 

“Adjusted Tangible Net Worth” means with respect to Company at any date, the
Tangible Net Worth of Company at such date plus one percent (1%) of the unpaid
principal balances of Mortgage Loans at such date for which the Company owns the
Servicing Rights and that are serviced by Company for Persons other than Company
plus the unpaid principal amount of all Subordinated Debt of the Company at such
date, if any.

 

“Advance” means a disbursement by the Lenders under the Commitment pursuant to
Article 2 of this Agreement.

 

“Advance Date” means, for any Advance, the date it is disbursed.

 

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“Advance Request” has the meaning set forth in Section 2.2(a) hereof.

 

“Affiliate” means and includes, with respect to a specified Person, any other
Person:

 

(a)           that directly or indirectly through one or more intermediaries
controls, is controlled by or is under common control with the specified Person;

 

(b)           that is a director, trustee, general partner or executive officer
of the specified Person or serves in a similar capacity in respect of the
specified Person;

 

(c)           that, directly or indirectly through one or more intermediaries,
is the beneficial owner of ten percent (10%) or more of any class of equity
securities of the specified Person; or

 

(d)           of which the specified Person is directly or indirectly the owner
of ten percent (10%) or more of any class of equity securities.

 

Without limiting the generality of the foregoing, for the purposes of this
Agreement, SIRVA shall be deemed Affiliate of the Company.

 

“Aged Mortgage Loan” means (a) a HELOC Mortgage Loan that satisfies all of the
requirements of an Eligible Mortgage Loan except that it has been included in
Collateral for a period of more than sixty (60) days and (b) a Mortgage Loan,
other than a HELOC Mortgage Loan or a Repurchased Mortgage Loan, that satisfies
all of the requirements of an Eligible Mortgage Loan except it has been included
in Collateral for a period of more than ninety (90) days.

 

“Agent” means, at any time, Washington Mutual Bank, FA or its successors acting
as agent for Lenders under the Loan Documents.

 

“Agent’s Fee” has the meaning set forth in Section 2.8(c) hereof.

 

“Aggregate Commitment Amount” has the meaning set forth in the definition of
“Commitment” found in Section 1.1 hereof.

 

“Agreement” means this Third Amended and Restated Warehousing Credit and
Security Agreement (Single Family Mortgage Loans), either as originally executed
or as it may from time to time be supplemented, modified or amended.

 

“Applicable Law” means the laws of the State of Texas and the United States of
America in effect from time to time and applicable to the transactions among the
Agent, Lenders and the Company pursuant to this Agreement and the other Loan
Documents whichever permits the charging and collection of the highest
nonusurious rate of interest on such transactions. For purposes of determining
Texas law with respect to the highest nonusurious rate of interest, the weekly
ceiling permitted under Chapter 303 of the Texas Finance Code, as amended, shall
be controlling.

 

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“Approved Custodian” means a Person acceptable to the Agent from time to time in
its sole discretion, who possesses Mortgage Loans that secure Mortgaged-backed
Securities.

 

“Bailee Letter” has the meaning set forth in Section 3.3 hereof.

 

“Basic Rate” has the meaning set forth in Section 2.4(a)(3) hereof.

 

“Business Day” means any day excluding Saturday, Sunday and any day on which
Agent is closed for business.

 

“Capitalized Lease” means any lease under which rental payments are required to
be capitalized on a balance sheet of the lessee in accordance with GAAP.

 

“Capitalized Rentals” means the amount of aggregate rentals due and to become
due under all Capitalized Leases under which the Company is a lessee that would
be reflected as a liability on a balance sheet of the Company.

 

“Change of Control” means

 

(a)           a sale of substantially all of the Company’s assets to any Person
or related group of Persons; or

 

(b)           any merger or consolidation of the Company with or into another
Person with the effect that SIRVA holds (directly or indirectly) less than one
hundred percent (100%) of the total voting power entitled to vote in election of
directors, managers, or trustees of the survivor of such merger or
consolidation; or

 

(c)           the occurrence of any event after which SIRVA no longer owns
(directly or indirectly) voting stock having one hundred percent (100%) of the
total voting power entitled to vote in the election of directors of the Company.

 

“Collateral” has the meaning set forth in Section 3.1 hereof.

 

“Collateral Documents” means all of the documents and other items described on
Exhibit “C” hereto and required to be delivered to the Agent in connection with
an Advance.

 

“Collateral Value” means, at the time of any determination,

 

(a)           with respect to any Eligible Mortgage Loan, an amount equal to the
least of (i) the actual out-of-pocket cost of such Mortgage Loan to the Company,
i.e., the net amount actually funded against such Mortgage Loan or the net
purchase price of such Mortgage Loan, (ii) the Par Value thereof, (iii) the
amount which the Investor has committed to pay for such Mortgage Loan pursuant
to a Purchase Commitment, or (iv) the Fair Market Value of such Mortgage Loan;

 

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(b)           with respect to Mortgage-backed Securities, an amount equal to the
least of (i) the sum of the principal balances of the Mortgage Loans from which
such Mortgage-backed Securities were created, (ii) the amount which the Investor
has committed to pay for such Mortgage-backed Securities pursuant to a Purchase
Commitment, or (iii) the Fair Market Value of such Mortgage-backed Securities;

 

(c)           with respect to any Aged Mortgage Loan, an amount equal to the
least of (i) the Par Value thereof or (ii) the market value of such Mortgage
Loan as determined by Agent in its sole discretion;

 

(d)           with respect to Collateral that is not described in (a), (b), or
(c) the Collateral Value shall be equal to $0.00;

 

(e)           notwithstanding the foregoing, with respect to Mortgage Loans that
are not or cease to be Eligible Mortgage Loans, the Collateral Value thereof
shall equal $0.00.

 

“Combined Loan to Value Ratio” means, with respect to any Mortgage Loan, the
ratio expressed as a percentage that the sum of the original principal balance
of such Mortgage Loan at the time of any determination and if such Mortgage Loan
is secured by a Second Mortgage, the then current principal balance of any
related first priority mortgage bears to the appraised value of the related
mortgaged property at the time such Mortgage Loan was originated.

 

“Commitment” means the commitment of the Lenders to make Advances hereunder in
an aggregate principal amount at any time outstanding that shall not exceed
FIFTY-SIX MILLION AND NO/100 DOLLARS ($56,000,000.00) (“Aggregate Commitment
Amount”), provided, however, that (a) on July 30, 2003, the Aggregate Commitment
Amount shall be reduced to TWENTY-EIGHT MILLION AND NO/100 DOLLARS
($28,000,000.00) and (b) no Lender’s portion of such Advances may ever exceed
its Commitment Amount. The Commitment shall be composed of two tranches with the
first tranche (“Tranche A Commitment”) being in the amount of $28,000,000.00 and
having a Termination Date occurring on July 30, 2003 and the second tranche
(“Tranche B Commitment”) being in the amount of $28,000,000.00 and having a
Termination Date occurring on July 31, 2004.

 

“Commitment Amount” means, with respect to each Lender and the Tranche A
Commitment and the Tranche B Commitment, the amount set forth opposite its name
and so designated on Exhibit “O” hereto, as the same may be amended and as that
amount may be canceled or terminated under this Agreement.

 

“Commitment Percentage” means, at any time, for any Lender, the proportion
(stated as a percentage) that its Commitment Amount bears to the Aggregate
Commitment Amount subject to any adjustment by the Agent pursuant to the terms
of this Agreement.

 

“Company” has the meaning set forth in the first paragraph of this Agreement.

 

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“Conventional Mortgage Loan” means a Single-family Mortgage Loan, other than an
FHA Loan or VA Loan, that complies with all applicable requirements for purchase
under the FNMA or FHLMC standard form of conventional mortgage purchase
contract.

 

“Credit A Mortgage Loan” means a FHA Loan, VA Loan, Conventional Mortgage Loan,
or a Jumbo Loan.

 

“Current Assets” means, with respect to any Person, those assets set forth in
the consolidated balance sheet of a Person prepared in accordance with GAAP, as
current assets, defined as those assets that are now cash or will be by their
terms or disposition be converted to cash within one year of the date of
calculation; provided, however there shall be excluded from the assets of the
Company, any and all advances or loans to Affiliates of the Company, accounts
from Affiliates of the Company, and investments in Affiliates of the Company.

 

“Current Liabilities” means, with respect to any Person, those liabilities set
forth in the consolidated balance sheet of a Person prepared in accordance with
GAAP, as current liabilities, defined as those liabilities due upon demand or
within one year from the date of calculation.

 

“Current Ratio” means, with respect to any Person, the sum of the amounts set
forth in the consolidated balance sheet of the Person, prepared in accordance
with GAAP, on the date of calculation as Current Assets divided by the sum of
the amounts set forth in such consolidated balance sheet as Current Liabilities.

 

“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; and (b) all indebtedness or other
obligations of such Person for borrowed money or for the deferred purchase price
of property or services; provided that for purposes of this Agreement, there
shall be excluded from Debt at any date loan loss reserves, deferred taxes
arising from capitalized excess service fees, and operating leases. With respect
to the Company, the term “Debt” shall include all off balance sheet warehouse
loan obligations owed to any Person, including, without limitation, indebtedness
or other obligations of the Company under all repurchase arrangements. For the
purposes of calculating the Debt of the Company, Subordinated Debt of the
Company shall be excluded from Debt.

 

“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.

 

“Default Rate” has the meaning set forth in Section 2.4(c) hereof.

 

“Electronic Request” has the meaning set forth in Section 2.2(a) hereof.

 

“Eligible Mortgage Loan” means a Mortgage Loan, that, at all times during the
term of this Agreement, (a) is a Credit “A” Mortgage Loan, HELOC Mortgage Loan
or a

 

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Repurchased Mortgage Loan; (b) is evidenced by loan documents that are the
standard forms approved by FNMA or FHLMC or forms previously approved, in
writing, by the Agent in its sole discretion; (c) is made to a natural person or
persons; (d) is validly pledged to the Agent for the benefit of the Lenders,
subject to no other Liens; (e) is not in default in the payment of principal and
interest or in the performance of any obligation under the Mortgage Note or the
Mortgage evidencing or securing such Eligible Mortgage Loan for a period of
sixty (60) days or more; (f) has closed less than twenty-five (25) days prior to
the date of the Advance made in connection with such Eligible Mortgage Loan,
excluding Repurchased Mortgage Loans; (g) has a Combined Loan-to-Value Ratio not
greater than one hundred percent (100%); and (h) is covered by a Purchase
Commitment, excluding Repurchased Mortgage Loans.

 

“Eligible Mortgage Pool” means a pool of Mortgage Loans that will secure a
“mortgage related security,” as defined in Section  3(a)(41) of the Exchange Act
administered or to be administered by a trustee acceptable to Agent in its sole
discretion where the Mortgage, Mortgage Note and other documents relating to
such Mortgage Loans are held or to be held by an Approved Custodian.

 

“ERISA” means the Employee Retirement Income Security Act of 1974 and all rules
and regulations promulgated thereunder, as amended from time to time and any
successor statute.

 

“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.

 

“Extraordinary Servicing Expenses” means all out-of-pocket costs and expenses
(including, without limitation, reasonable attorneys’ fees and disbursements,
but excluding ordinary overhead expenses and salary expenses for the Agent’s
personnel), which are incurred by the Agent at any time or from time to time in
connection with: (a) the preparation, execution, delivery or modification of the
Loan Documents; (b) the preservation of Collateral; (c) the collection or
enforcement of the Company’s or any other Obligor’s liabilities to the Lenders
under the Loan Documents; (d) the sale, disposition, realization upon or the
recovery of possession of Collateral; or (e) the filing and prosecution of a
complaint or defense to a complaint with respect to any of the above matters, or
the defense of any claim, actual or threatened, by any Obligor, a receiver or
trustee in bankruptcy for any Obligor for, or on account of, or with respect to
the Commitment, or the Loan Documents.

 

“Fair Market Value” means, at any date, with respect to:

 

(a)           any Mortgage-backed Security, the bid price rate reflected on the
Telerate screen for a Mortgage-backed Security with the closest coupon rate that
does not exceed that of the Mortgage-backed Security in question multiplied by
the original face amount

 

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of such Mortgage-backed Security, and multiplied by the current pool factor for
such Mortgage-backed Security.

 

(b)           any Mortgage Loan, the market price rate reflected on the Telerate
screen for thirty (30) day mandatory future delivery of such Mortgage Loan
multiplied by the outstanding principal balance thereof.

 

In the event Telerate does not publish or ceases to publish either the market or
bid price rate for any Mortgage Loan or Mortgage-backed Security referenced in
(a) and (b) above, the average bid price rate quoted in writing to the Agent as
of the date of determination by any two nationally recognized dealers selected
by Agent that are making a market in similar Mortgage Loans or Mortgaged-backed
Securities shall be utilized in lieu of the market or bid price rate, as the
case may be.

 

“Federal Funds Rate” means for any day, the rate per annum (rounded upwards if
necessary, to the nearest 1/100th of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to Agent on such day on
such transactions from three Federal funds brokers of recognized standing.

 

“FHA” means the Federal Housing Administration and any successor thereto.

 

“FHA Loan” means a Single-family Mortgage Loan, payment of which is partially or
completely insured by the FHA under the National Housing Act or Title V of the
Housing Act of 1949 or with respect to which there is a current, binding and
enforceable commitment for such insurance issued by the FHA.

 

“FHLMC” means the Federal Home Loan Mortgage Corporation and any successor
thereto.

 

“FHLMC Guide” means the Freddie Mac Sellers’ and Servicers’ Guide, dated
September 17, 1984, applicable bulletins, the applicable MIDANET Users Guide (or
the MIDAPHONE User’s Guide) and any particular purchase documents as defined in
the Sellers’ and Servicers’ Guide, as revised prior to the date hereof.

 

“FICA” means the Federal Insurance Contributions Act or any successor statute.

 

“First Mortgage” means a mortgage or deed of trust which constitutes a first
Lien on improved property containing one-to-four family residences.

 

“First Mortgage Loan” means a Mortgage Loan secured by a First Mortgage.

 

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“FNMA” means the Federal National Mortgage Association and any successor
thereto.

 

“FNMA Guide” means the FNMA Servicing Guide dated June 30, 1990, as revised
prior to the date hereof.

 

“Funding Account” means the non-interest bearing demand checking account
established with, maintained by, and pledged to Agent for the benefit of Lenders
into which shall be deposited the proceeds of Advances, the proceeds from any
sale of Collateral, and from which funds shall be disbursed for the funding or
acquisition of Mortgage Loans.

 

“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.

 

“GNMA” means the Government National Mortgage Association and any successor
thereto.

 

“GNMA Guide” means the GNMA I Mortgage-Backed Securities Guide, Handbook GNMA
5500.1 REV. 6, as revised prior to the date hereof, and as may be revised from
time to time, and GNMA II Mortgage-Backed Securities Guide Handbook GNMA 5500.2,
as revised prior to the date hereof.

 

“Hedging Arrangements” means, with respect to the Company, any agreements or
other arrangement (including, without limitation, interest rate swap agreements,
interest rate cap agreements and forward sale agreements) entered into by the
Company to protect itself against changes in the value of any of the Collateral
or changes in the interest rate applicable to the Advances.

 

“HELOC Mortgage Loan” means a Single-family Mortgage Loan that evidences an
open-ended revolving line of credit.

 

“HUD” means the Department of Housing and Urban Development and any successor
thereto.

 

“Indebtedness” means and includes, without duplication, (1) all items which in
accordance with GAAP, consistently applied, would be included on the liability
side of a balance sheet on the date as of which Indebtedness is to be determined
(excluding shareholders’ equity), (2) Capitalized Rentals under any Capitalized
Lease, (3) guaranties, endorsements and other contingent obligations in respect
of, or any obligations to purchase or otherwise acquire, Indebtedness of others,
and (4) indebtedness secured by any mortgage, pledge, security interest or other
Lien existing on any property owned by the Person with respect to which
indebtedness is being determined, whether or not the indebtedness secured
thereby shall have been assumed.

 

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“Indemnified Liabilities” has the meaning set forth in Article 10 hereof.

 

“Ineligible Mortgage Loans” has the meaning set forth in Section 12.18 hereof.

 

“Interim Date” has the meaning set forth in Section 4.1(a)(4) hereof.

 

“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 FNMA, FHLMC, GNMA, any of the Persons listed in Exhibit “L”
hereto, or a financially responsible institution which is acceptable to Agent,
in its sole discretion; provided that at any time by written notice to Company
Agent may disapprove any Investor in its sole discretion, whether or not that
Person is named as an Investor in this definition or in Exhibit “L” or has been
previously approved as an Investor by Agent. Upon receipt of such notice, the
Persons named in Agent’s notice shall no longer be Investors from and after the
date of the receipt of such notice.

 

“Jumbo Loan” means a Single-family Mortgage Loan (other than a FHA Loan or VA
Loan) that complies with all applicable requirements for purchase under the FNMA
or FHLMC standard form of conventional mortgage purchase contract then in effect
except that the amount of such Mortgage Loan exceeds the maximum amount under
those requirements, but in no event shall the amount of such Single-family
Mortgage Loan exceed SIX HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($650,000.00).

 

“Loan” means the loan under this Agreement – the sum of all Advances made
pursuant to Article 2 of this Agreement – all of which shall be treated and
considered as one loan.

 

“Lender” has the meaning set forth in the first paragraph of this Agreement.

 

“LIBOR Rate” means a rate of interest equal to the London Interbank Offered Rate
for U. S. dollar deposits for an interest period of one month as quoted or
published by Telerate, Bloomberg or any other rate quoting service, selected by
Agent in its sole discretion for any day during a given month. In the event such
rate ceases to be published or quoted, LIBOR Rate shall mean a comparable rate
of interest reasonably selected by Agent. Agent’s determination of the LIBOR
Rate shall be conclusive and binding on the Company, absent manifest error.

 

“Lien” means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest).

 

“Loan Documents” means this Agreement, the Notes, and each other document,
instrument or agreement executed by the Company or any other Person in
connection

 

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herewith or therewith, as any of the same may be amended, restated, renewed or
replaced from time to time.

 

“Majority Lenders” means, at any date, (a) if there are only two (2) Lenders
party to this Agreement, Majority Lenders shall mean both Lenders and (b) if
there are more than two (2) Lenders party to this Agreement, Majority Lenders
shall mean the Lenders holding not less than sixty-six and two-thirds percent
(66-2/3%) of the Commitment or, if the Commitment has expired, the aggregate
outstanding principal balance of Advances.

 

“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.

 

“Market Value” means, with respect to any Mortgage Loan, at any time, an amount
determined by Agent, in its sole discretion, to be the market value of such
Mortgage Loan based upon (a) information then available to Agent regarding
quotes to dealers for the purchase of mortgage loans similar to such Mortgage
Loan or (b) sales prices actually received by Company for Mortgage Loans sold by
Company during the immediately preceding thirty (30) day period similar to such
Mortgage Loan.

 

“Maximum Rate” means the maximum lawful non-usurious rate of interest (if any)
that, under Applicable Law, any Lender may charge the Company on the Advances
from time to time. To the extent that the interest rate laws of the State of
Texas are applicable and unless changed in accordance with law, the applicable
rate ceiling shall be the weekly ceiling determined in accordance with Chapter
303 of the Texas Finance Code, as amended.

 

“Monthly Average LIBOR Rate” means the average of all LIBOR Rates quoted during
a given month. In the event (i) the Notes are paid in full and the Commitment is
terminated prior to a month end; or (ii) the initial Advance hereunder occurs on
a date other than the first day of that month on which LIBOR Rates are quoted,
the Monthly Average LIBOR Rate shall mean, in the case of clause (i), the
average of all LIBOR Rates quoted that month up to and including the last
Business Day prior to such payment in full; or, in the case of clause (ii), the
average of all LIBOR Rates quoted on the date of the initial Advance through the
end of that month.

 

“Mortgage” means a First Mortgage or Second Mortgage on improved real property
containing one-to-four family residences.

 

“Mortgage-backed Securities” means FHLMC, GNMA or FNMA securities that are
backed by Mortgage Loans.

 

“Mortgage Loan” means any loan evidenced by a Mortgage Note. A Mortgage Loan,
unless otherwise expressly stated herein, means a Single-family Mortgage Loan.

 

“Mortgage Note” means a note secured by a Mortgage.

 

“Mortgage Note Amount” means, as of the date of determination, the then
outstanding unpaid principal amount of a Mortgage Note.

 

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“Mortgage Pool” means a pool of Mortgage Loans that were warehoused with the
Agent, on the basis of which there is to be issued a Mortgage-backed Security.

 

“Mortgaged Property” means the property, real, personal, tangible or intangible,
securing a Mortgage Note.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in Section
4001(a)(3) of ERISA that is maintained for employees of the Company or a
Subsidiary of the Company.

 

“Non-Usage Fee” has the meaning set forth in Section 2.8(b) hereof.

 

“Note” means any promissory note delivered by Company to a Lender or Additional
Lender pursuant to Section 2.3 or Section 12.16 in the form attached hereto as
Exhibit “N” and all renewals, increases, modifications, replacements, and
extensions thereof. “Notes” means, collectively, each Lender’s and Additional
Lender’s Note.

 

“Notices” has the meaning set forth in Article 9 hereof.

 

“Obligations” means any and all indebtedness, obligations, and liabilities of
the Company to each Lender and the Agent (whether now existing or hereafter
arising, voluntary or involuntary, whether or not jointly owed with others,
direct or indirect, absolute or contingent, liquidated or unliquidated, and
whether or not from time to time decreased or extinguished and later increased,
created or incurred), arising out of or related to the Loan Documents, or any of
them, and any renewals, extensions, modifications, enlargements, reinstatements
or rearrangements thereof.

 

“Obligor” means the Company and any guarantor or other person liable for payment
or performance of the Obligations.

 

“Officer’s Certificate” means a certificate executed on behalf of the Company by
its chief financial officer or its treasurer or by such other officer as may be
designated herein, in substantially the form of Exhibit “F” hereto.

 

“Par Value” means, with respect to any Mortgage Loan at the time of any
determination, the unpaid principal balance of such Mortgage Loan on such date.

 

“Person” means and includes natural persons, corporations, limited partnerships,
general partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and federal and state governments
and agencies or regulatory authorities and political subdivisions thereof.

 

“Plans” has the meaning set forth in Section 5.10 hereof.

 

“Pledged Mortgages” has the meaning set forth in Section 3.1(a) hereof.

 

“Pledged Securities” has the meaning set forth in Section 3.1(b) hereof.

 

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“PMI” means any private mortgage insurance company which is acceptable to Agent,
in its sole discretion; provided that at any time by written notice to Company,
Agent may disapprove any PMI because it has determined in its sole discretion
and for any reason that it is no longer comfortable with that Person being a
PMI, whether or not that Person has been previously approved as a PMI by Agent.
Upon receipt of such notice, the Persons named in Agent’s notice shall no longer
be PMIs from and after the date of receipt of such notice.

 

“Purchase Commitment” means (a) a written commitment, in form and substance
satisfactory to the Agent, issued in favor of the Company by an Investor
pursuant to which that Investor commits to purchase Mortgage Loans or
Mortgage-backed Securities of a particular type and yield owned by Company at a
committed price, which commitment shall at all times be subject to approval by
Agent as to the terms and conditions or (b) a written master commitment or any
other written commitment on general terms and conditions approved by the Agent,
issued in favor of the Company by an Investor pursuant to which Investor commits
to purchase from Company from time to time up to a specified dollar amount of
Mortgage Loans without specification of the yield or purchase price of each such
Mortgage Loan.

 

“Redemption Amount” has the meaning set forth in Section 3.5 hereof.

 

“Repurchased Mortgage Loan” means a Wamu Mortgage Loan that Company is obligated
to repurchase from Washington Mutual under the terms of its Purchase Commitment
or other contractual obligation owed by Company to Washington Mutual for any
reason other than fraud of the Company or any other Person in the origination of
such Mortgage Loan.

 

“RICO” means the Racketeer Influenced and Corrupt Organizations Act of 1970, as
amended.

 

“Second Mortgage” means a mortgage or deed of trust which constitutes a second
Lien on improved property containing one-to-four family residences.

 

“Second Mortgage Loan” means a Single-family Mortgage Loan that is secured by a
Second Mortgage that (a) has a Combined Loan-to-Value Ratio not greater than one
hundred percent (100%) (ratio to be based upon all loans, including such Second
Mortgage Loan, secured by the Mortgaged Property securing such Second Mortgage
Loan); (b) is underwritten in accordance with standards approved by Agent so
that such Mortgage Loan is readily salable to an Investor; and (c) is covered by
a Purchase Commitment.

 

“Servicing Contract” means, with respect to any Person, the arrangement, whether
or not in writing, pursuant to which such Person has the right to service
Mortgage Loans.

 

“Servicing Rights” means (a) the rights, obligations, remedies, powers, and
responsibilities of a Person to service Mortgage Loans owned by that Person,
including without limitation the right to collect principal and interest
payments, administer escrow accounts, and the right to own and possess loan
files and all records, documents, and data

 

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relating to such Mortgage Loans, and (b) the obligations, rights, remedies,
powers, privileges, benefits and responsibilities of a Person to service
Mortgage Notes for GNMA, FNMA or FHLMC under and in accordance with the GNMA
Guide, the FNMA Guide and the FHLMC Guide, respectively or for any Investor
under any Servicing Contract, including, without limitation, (i) the right to
receive servicing fees, termination fees, net sales proceeds, late charges,
insufficient fund fees, and other ancillary income relating to the Mortgage
Notes (ii) the right to hold and administer the escrow accounts, and (iii) the
right to all loan files, insurance files, tax records, collection records,
documents, ledgers, computer printouts, computer tapes and other records, data
or information relating to the Mortgage Notes, the escrow accounts or the
servicing or otherwise necessary or proper to perform the obligations of
servicer.

 

“Shipped Mortgage Loans” means a Mortgage Loan for which Agent has shipped the
related Collateral Documents to an Investor for purchase by such Investor
pursuant to a Purchase Commitment. A Mortgage Loan shall be classified as a
Shipped Mortgage Loan for the period beginning on the date the Agent ships the
related Collateral Documents to an Investor and ending on the earliest to occur
of (a) the date the Agent receives the proceeds of such Mortgage Loan from the
Investor, (b) the date the Agent receives the related Collateral Documents from
the Investor and (c) thirty (30) days from the date Agent shipped the related
Collateral Documents to the Investor.

 

“Single-family Mortgage Loan” means a Mortgage Loan secured by a Mortgage
covering improved real property containing one to four family residences.

 

“SIRVA” means SIRVA, Inc., a Delaware corporation.

 

“Statement Date” has the meaning set forth in Section 4.1(a)(4) hereof.

 

“Subordinated Debt” means, with respect to any Person, all Indebtedness of such
Person, for borrowed money, which is, by its terms (which terms shall have been
approved by the Agent) or by the terms of a subordination agreement, in form and
substance satisfactory to the Agent, effectively subordinated in right of
payment to all other present and future obligations and all indebtedness of such
Person, of every kind and character, owed to the Agent.

 

“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.

 

“Tangible Net Worth” means, with respect to any Person at any date, the sum of
the total shareholders’ equity in such Person (including capital stock,
additional paid-in capital, and retained earnings, but excluding treasury stock,
if any), on a consolidated basis; less the aggregate book value of all
intangible assets of such Person (as determined in accordance with GAAP),
including without limitation, goodwill, trademarks, trade names, service marks,
copyrights, patents, licenses, franchises, and Servicing Rights,

 

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each to be determined in accordance with GAAP consistent with those applied in
the preparation of the financial statements referred to in Section 5.3 hereof;
provided that, for purposes of this Agreement, there shall be excluded from
total assets, advances or loans to shareholders, officers or Affiliates,
investments in Affiliates, assets pledged to secure any liabilities not included
in the Debt of such Person and those other assets which would be deemed by HUD
to be non-acceptable in calculating adjusted net worth in accordance with its
requirements in the Audit Guide for Audit of Approved Non-Supervised
Mortgagees”, as in effect as of such date. For the purposes of calculating the
Tangible Net Worth of such Person, Subordinated Debt of such Person shall be
excluded from the liabilities of such Person.

 

“Termination Date” means (a) with respect to Tranche A Commitment, July 30,
2003, or such earlier date upon which Lenders’ obligation to fund shall be
terminated pursuant to the terms of this Agreement and (b) with respect to
Tranche B Commitment, July 31, 2004, or such earlier date upon which Lenders’
obligation to fund shall be terminated pursuant to the terms of this Agreement.

 

“Texas Finance Code” is defined in the definition of “Applicable Law.”

 

“Tranche A Commitment” has the meaning set forth in the definition of
“Commitment” found in Section 1.1 hereof.

 

“Tranche B Commitment” has the meaning set forth in the definition of
“Commitment” found in Section 1.1 hereof.

 

“Tribunal” means any court or governmental department, commission, board,
bureau, agency, or instrumentality of any state, commonwealth, nation,
territory, possession, county, parish, or municipality, whether now or hereafter
constituted and/or existing.

 

“Unit Collateral Value” means, at the time of any determination, (a) with
respect to any Eligible Mortgage Loan that is a Wamu Mortgage Loan, but not an
Aged Mortgage Loan or a Repurchased Mortgage Loan, an amount equal to one
hundred percent (100%) of the Collateral Value of such Mortgage Loan as of such
date; (b) with respect to any Eligible Mortgage Loan that is not a Wamu Mortgage
Loan or a Repurchased Mortgage Loan or a HELOC Mortgage Loan, or an Aged
Mortgage Loan, an amount equal to ninety-eight percent (98%) of the Collateral
Value of such Mortgage Loan as of such date; (c) with respect to any Eligible
Mortgage Loan that is a HELOC Mortgage Loan but not a Repurchased Mortgage Loan
or Aged Mortgage Loan, an amount equal to ninety-six percent (96%) of the
Collateral Value of such Mortgage Loan as of such date; (d) with respect to any
Eligible Mortgage Loan that is a Repurchased Mortgage Loan, an amount equal to
eighty percent (80%) of the Collateral Value of such Mortgage Loan as of such
date; (e) with respect to each Repurchased Mortgage Loan, an amount equal to
eighty percent (80%) of the Collateral Value of such Repurchased Mortgage Loan
as of such date less five percent (5%) of the amount of the original Advance
made against such Repurchased Mortgage Loan for each thirty (30) days such
Repurchased Mortgage Loan is included in Collateral until such Repurchased
Mortgage

 

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Loan has been included in Collateral for one hundred eighty (180) days at which
time the Unit Collateral Value of such Repurchased Mortgage Loan shall be zero;
(f) with respect to each Aged Mortgage Loan included in the Collateral
(calculated from the date such Mortgage Loan was originally pledged to Agent)
for more than 91 days but not in excess of 120 days, an amount equal to ninety
percent (90%) of the Collateral Value of such Mortgage Loan as of such date; (g)
with respect to each Aged Mortgage Loan included in the Collateral (calculated
from the date such Mortgage Loan was originally pledged to Agent) for more than
121 days but not in excess of 150 days, an amount equal to eighty percent (80%)
of the Collateral Value of such Mortgage Loan as of such date; (h) with respect
to each Aged Mortgage Loan included in the Collateral (calculated from the date
such Mortgage Loan was originally pledged to Agent) for more than 151 days but
not in excess of 180 days, an amount equal to seventy percent (70%) of the
Collateral Value of such Mortgage Loan as of such date; (i) with respect to each
Aged Mortgage Loan included in the Collateral (calculated from the date such
Mortgage Loan was originally pledged to Agent) for more than 180 days, the Unit
Collateral Value of such Mortgage Loan shall be equal to zero, and (j) with
respect to any Mortgage Loan that is not an Eligible Mortgage Loan, its Unit
Collateral Value shall be zero.

 

“VA” means the Veterans Administration and any successor thereto.

 

“VA Loan” means a Single-family Mortgage Loan, payment of which is partially or
completely guaranteed by the VA under the Servicemen’s Readjustment Act of 1944
or Chapter 37 of Title 38 of the United States Code or with respect to which
there is a current binding and enforceable commitment for such a guaranty issued
by the VA or its delegated underwriter.

 

“Wamu Mortgage Loan” means an Eligible Mortgage Loan that Washington Mutual is
committed to purchase from the Company pursuant to the terms of a Purchase
Commitment.

 

“Washington Mutual” means Washington Mutual Bank, FA.

 

“Wet Settlement Advance” means a disbursement by a Lender under the Commitment
and pursuant to Section 2.2(a) of this Agreement, in respect of the closing or
settlement of a Single-family Mortgage Loan, prior to delivery and examination
of all Collateral Documents for such Mortgage Loan.

 

1.2           Other Definitional Provisions.

 

(a)           Accounting terms not otherwise defined herein shall have the
meanings given the terms under GAAP.

 

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

 

(c)           All references to time of day shall mean the then applicable time
in Houston, Texas, unless expressly provided to the contrary.

 

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(d)           References in any of the Loan Documents to any property being
pledged to the Agent or any Liens or security interests being granted to or held
by the Agent (or required so to be) shall mean, respectively, pledged to,
granted to or held by Agent for itself as Lender and as agent for the other
Lenders,

 

2.             THE CREDIT.

 

2.1           The Commitment.

 

(a)           Subject to the terms and conditions of this Agreement and provided
no Default or Event of Default has occurred and is continuing, each Lender
severally and not jointly agrees, from time to time during the period from the
date hereof to and including the Termination Date, to make Advances to the
Company, provided, however, that (1) the sum of the total aggregate principal
amount outstanding at any one time of all such Advances shall not exceed the
Aggregate Commitment Amount, and (2) no Lender’s portion of the Advances shall
exceed such Lender’s Commitment Amount.   Within the Commitment, the Company may
borrow, repay and reborrow.  All Advances under this Agreement shall constitute
a single indebtedness, and all of the Collateral shall be security for the Notes
and for the performance of all the Obligations of the Company.

 

(b)           Advances shall be used by the Company solely for the purpose of
funding the acquisition or origination of Eligible Mortgage Loans, as specified
in the Advance Request, and none other, and shall be made at the request of the
Company in the manner hereinafter provided in Section 2.2, against the pledge of
such Mortgage Loans, and such other collateral as is set forth in Section 3.1
hereof as Collateral therefor. Advances shall also be subject to the following
restrictions:

 

(1)      No Advance shall be made against Mortgage Loans which are not Eligible
Mortgage Loans.

 

(2)      The aggregate amount of Wet Settlement Advances outstanding at any one
time shall not exceed the lesser of (i) TWENTY-FOUR MILLION AND NO/100 DOLLARS
($24,000,000.00) or (ii) forty-three percent (43%) of the Aggregate Commitment
Amount.

 

(3)      The aggregate amount of Advances against Aged Mortgage Loans
outstanding at any one time shall not exceed ONE MILLION AND NO/100 DOLLARS
($1,000,000.00).

 

(4)      The aggregate amount of Advances against HELOC Mortgage Loans
outstanding at any one time shall not exceed TWO MILLION AND NO/100 DOLLARS
($2,000,000.00).

 

(5)      The aggregate amount of Advances against Repurchased Mortgage Loans
outstanding at any one time shall not exceed FIVE HUNDRED THOUSAND AND NO/100
DOLLARS ($500,000.00).

 

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(c)           No Advance against an Eligible Mortgage Loan shall exceed the
following amounts: (i) with respect to a Credit “A” Mortgage Loan that is not a
Wamu Mortgage Loan, an amount equal to ninety-eight percent (98%) of the
Collateral Value of such Mortgage Loan determined as of the date is pledged to
the Agent; (ii) with respect to a Wamu Mortgage Loan, an amount equal to one
hundred percent (100%) of the Collateral Value of such Mortgage Loan determined
as of the date it is pledged to the Agent; (iii) with respect to a HELOC
Mortgage Loan, an amount equal to ninety-six percent (96%) of the Collateral
Value of such Mortgage Loan determined as of the date it is pledged to the
Agent; and (iv) with respect to a Repurchased Mortgage Loan, an amount equal to
eighty percent (80%) of the Collateral Value of such Mortgage Loan determined as
of the date it is pledged to the Agent.

 

2.2           Procedures for Obtaining Advances.

 

(a)           The Company may obtain an Advance hereunder, subject to the
satisfaction of the conditions set forth in Sections 4.1 and 4.2 hereof, upon
compliance with the procedures set forth in this Section 2.2 and in Exhibit “C”
attached hereto and made a part hereof.  Requests for Advances shall be
initiated by the Company (i) by delivering to the Agent, by telecopy, a
completed and signed request for an Advance (an “Advance Request”) in the form
of Exhibit “A” attached hereto and made a part hereof, or (ii) by using the
electronic data transmission service provided by the Agent and its licensor,
MBMS Incorporated, to transmit to the Agent a request for Advance (“Electronic
Request”), which shall include all information required by Exhibit “A” through
the Warehouse Management System software provided by the Agent and its licensor,
MBMS Incorporated. The Agent shall have the right, on not less than three (3)
Business Days’ prior notice to the Company, to modify the Advance Request,
Electronic Request, or any exhibits hereto to conform to current legal
requirements or Agent practices, and, as so modified, said Advance Request,
Electronic Request or exhibits shall be deemed a part hereof.  In consideration
of the Lenders permitting the Company to make Electronic Requests for Advances
utilizing the Warehouse Management System software or Advance Requests by
telecopy, the Company covenants and agrees to assume liability for and to
protect, indemnify and save the Lenders and Agent harmless from, any and all
liabilities, obligations, damages, penalties, claims, causes of action, costs,
charges and expenses, including attorneys’ fees and expenses of employees, which
may be imposed, incurred by or asserted against the Lenders or Agent by reason
of any loss, damage or claim howsoever arising or incurred because of, out of or
in connection with (i) any action of any Lender or the Agent pursuant to
Electronic Requests or Advance Requests by telecopy, (ii) the breach of any
provisions of this Agreement by the Company, (iii) the transfer of funds
pursuant to such Electronic Requests or Advance Requests by telecopy, or (iv)
the Agent’s or any Lender’s honoring or failing to honor any Electronic Request
or Advance Request by telecopy for any reason or no reason whatsoever. The Agent
and each Lender are entitled to rely upon and act upon Electronic Requests or
Advance Requests by telecopy, and the Company shall be unconditionally and
absolutely estopped from denying (x) the authenticity and validity of any such
transaction so acted upon by any Lender once such Lender has advanced funds and
has deposited or transferred such funds as requested in any such Electronic
Request or Advance Request by telecopy, and (y) the Company’s liability and
responsibility therefor.

 

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(b)           In the case of any Wet Settlement Advances, the Company shall
follow the procedures and, at or prior to the Lenders’ making of such Wet
Settlement Advance, shall deliver to the Agent or its designee the documents set
forth in Section II of Exhibit “C” hereto.  In case of Collateral financed
through a Wet Settlement Advance, the Company shall cause all Collateral
Documents to be delivered to the Agent or its designee within five (5) Business
Days after the date of the Wet Settlement Advance relating thereto.

 

(c)           Before funding, the Agent and its designee shall have a reasonable
time to examine such Advance Request and the Collateral Documents to be
delivered prior to such requested Advance, as set forth in the applicable
Exhibit hereto, and may reject such of them as do not meet the requirements of
this Agreement or of the related Purchase Commitment.  The Advance Request and
the Collateral Documents must be received by Agent no later than 11:00 a.m.
Houston, Texas time in order for funding to occur the same day.

 

(d)           The Agent shall promptly, and in any case not later than 1:00 p.m.
on the date an Advance is to be made, notify each Lender of its receipt of an
Advance Request, the matters specified therein, and of such Lender’s Commitment
Percentage of the requested Advance.   If all conditions precedent to such
Advance have been met, each Lender shall remit its Commitment Percentage of any
Advance requested in an Advance Request to Agent’s principal office in Houston,
Texas, by wire transfer according to Agent’s wire instructions, in funds that
are available for immediate use by Agent by 4:00 p.m. on the date such Advance
is to be made.

 

(e)           Absent contrary written notice from a Lender received by Agent by
2:00 p.m. on the Advance Date, Agent may assume that each Lender has made its
Commitment Percentage of an Advance under an Advance Request available to Agent
on the Advance Date and may, but is not obligated to, make available to Company
a corresponding amount.   If a Lender fails to make its Commitment Percentage of
that Advance available to Agent on the Advance Date (whether because of that
Lender’s default, because that Lender is not open for business on that Business
Day, or otherwise) then Agent may recover that amount on demand (i) from that
Lender, together with interest at the Federal Funds Rate, during the period from
the Advance Date to the date Agent recovers that amount from that Lender  - 
which payment is deemed to be that Lender’s Commitment Percentage of that
Advance or (ii) if that Lender fails to pay that amount upon demand, then from
Company together with interest at an annual interest rate equal to the rate
applicable to the requested Advance during the period from the Advance Date to
the date Agent recovers that amount from Company.  If any Lender fails to fund
its Commitment Percentage in any Advance, the other Lenders shall be entitled,
but not obligated, to fund the defaulting Lender’s Commitment Percentage in such
Advance.  Thereafter, the Commitment Percentage of each Lender shall be adjusted
accordingly.  Nothing in these provisions changes or limits the obligation of
each Lender to lend its Commitment Percentage of each Advance.  Each Lender
assumes the credit risk for amounts lent by Agent pursuant to this Section
2.2(e) from the time the Advance is made available to or for the Company, and,
after Agent has recovered the amount of interest

 

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provided for in clause (i) above of this Section 2.2(e), is entitled to interest
on such amount lent from such time.

 

(f)            Although no Lender is responsible for the failure of any other
Lender to make its Commitment Percentage of any Advance, that failure does not
excuse any other Lender from making its Commitment Percentage of that Advance.

 

(g)           To make an Advance, the Agent shall credit the Company’s Funding
Account upon compliance by the Company with the terms of this Agreement.

 

2.3         Notes. The Company’s obligation to pay the principal of, and accrued
and unpaid interest on, all Advances made by the Lenders shall be evidenced by
the Notes of the Company in favor of each Lender. All terms and provisions of
the Notes are hereby incorporated herein.

 

2.4         Interest.

 

(a)           (1)           Except as provided in Section 2.4(c) below, the
unpaid amount of each Advance against Shipped Mortgage Loans that are not
Repurchased Mortgage Loans or Aged Mortgage Loans shall bear interest, from the
date such Mortgage Loans become Shipped Mortgage Loans until the earlier to
occur of (i) such Mortgage Loan ceases to be a Shipped Mortgage Loan or (ii)
such Advance is paid in full, at a rate of interest equal to 150 basis points
(1.50%) per annum over the Monthly Average LIBOR Rate.

 

(2)           Except as provided in Section 2.4(c) below, the unpaid amount of
each Advance against Mortgage Loans that are not Shipped Mortgage Loans, or
HELOC Mortgage Loans, or Repurchased Mortgage Loans, or Aged Mortgage Loans
shall bear interest, from the date of such Advance until paid in full, at a rate
of interest equal to the lesser of (i) the Maximum Rate, or (ii) a floating rate
of interest which is equal to 200 basis points (2.00%) per annum over the
Monthly Average LIBOR Rate.

 

(3)           Except as provided in Section 2.4(c) below, the unpaid amount of
each Advance against Repurchased Mortgage Loans or HELOC Mortgage Loans shall
bear interest, from the date of such Advance until paid in full, at a rate of
interest equal to the lesser of (i) the Maximum Rate, or (ii) a floating rate of
interest which is equal to 300 basis points (3.00%) per annum over the Monthly
Average LIBOR Rate.

 

(4)           Except as provided in Section 2.4(c) below, the unpaid amount of
each Advance outstanding against Aged Mortgage Loans or HELOC Mortgage Loans
shall bear interest, from the date such Mortgage Loans become Aged Mortgage
Loans until such Advance is paid in full, at a rate of interest equal to the
lesser of (i) the Maximum Rate or (ii) a floating rate of interest (“Basic
Rate”) which is equal to 300 basis points (3.00%) per annum over the Monthly
Average LIBOR Rate.

 

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(b)           Interest shall be computed on the basis of a 360-day year and
applied to the actual number of days elapsed in each interest calculation period
and shall be payable monthly in arrears, on the first day of each month,
commencing with the first month following the date of this Agreement, and
continuing on the 1st day of each calendar month thereafter until the
Termination Date when all outstanding and unpaid Advances plus all accrued and
unpaid interest shall be due and payable.

 

(c)           Obligations not paid when due (whether at stated maturity, upon
acceleration following the occurrence of an Event of Default or otherwise) shall
bear interest, from the date due until paid in full, at a rate of interest
(“Default Rate”) at all times equal to the lesser of (i) four percent (4%) per
annum over the Basic Rate; or (ii) the Maximum Rate, said interest to be payable
on demand by Agent.

 

2.5           Principal Payments.

 

(a)           The outstanding unpaid principal amount of all Advances shall be
payable in full upon Termination Date.

 

(b)           The Company shall have the right to prepay the outstanding
Advances in whole or in part, from time to time, without premium or penalty,
subject to the Company’s obligation to pay the Non-Usage Fee pursuant to Section
2.8 hereof.

 

(c)           The Company shall be obligated to pay to the Agent on behalf of
the Lenders, without the necessity of prior demand or notice from the Agent or
any Lender, and the Company authorizes the Agent on behalf of the Lenders to
charge the Funding Account or any other accounts of the Company (excluding any
monies held by Company in trust for third parties) in Agent’s possession for the
amount of any outstanding Advance against a specific Mortgage Loan upon the
earliest occurrence of any of the following events:

 

(1)           The expiration of ninety (90) days from the date of any Advance
for any Mortgage Loan (excluding Aged Mortgage Loans, HELOC Mortgage Loans, and
Repurchased Mortgage Loans);

 

(2)           The expiration of sixty (60) days from the date of any Advance for
any HELOC Mortgage Loan (excluding Aged Mortgage Loans);

 

(3)           The expiration of one hundred eighty (180) days from the date of
any Advance for any Repurchased Mortgage Loan;

 

(4)           The expiration of thirty (30) days from the date the Mortgage Loan
was delivered to an Investor for examination and purchase, without the purchase
being made, or upon rejection of the Mortgage Loan as unsatisfactory by an
Investor and without such Mortgage Loan being redelivered by such Investor to
the Agent and continuing thereafter to qualify as an Eligible Mortgage Loan
hereunder;

 

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(5)           The expiration of forty-five (45) days from the date Mortgage Loan
is delivered to the certificating custodian acceptable to the Agent for the
issuance of a Mortgage-backed Security;

 

(6)           The expiration of five (5) Business Days from the date a Wet
Settlement Advance was made without receipt of all Collateral Documents relating
to such Mortgage Loan, or such Collateral Documents, upon examination by the
Agent, are found not to be in compliance with the requirements of this Agreement
or the related Purchase Commitment;

 

(7)           The expiration of ten (10) calendar days from the date a
Collateral Document in connection with such Mortgage Loan was delivered to the
Company for correction or completion, without being returned to the Agent,
corrected or completed;

 

(8)           The Mortgage Loan is not or ceases to be an Eligible Mortgage
Loan;

 

(9)           The expiration of three (3) Business Days after the date on which
the related Purchase Commitment, if any, expires, is terminated or otherwise
canceled or no longer in full force and effect and the specific Mortgage Loan
was not delivered under the Purchase Commitment prior to such termination,
expiration or cancellation; and

 

(10)         Upon sale of the Mortgage Loan.

 

Upon receipt of such payment by the Agent, such Mortgage Loans or
Mortgage-backed Securities shall be considered to have been redeemed from
pledge, and the Collateral Documents relating thereto which have not been
delivered to the Investor or the pool custodian or pool trustee shall be
released by the Agent to the Company.

 

(d)           With respect to each Aged Mortgage Loan, the Company shall be
obligated to pay to the Agent on behalf of the Lenders without the necessity of
prior demand or notice from Agent or any Lender (and the Company authorizes the
Agent to charge the Funding Account or any other accounts of the Company
[excluding monies held by the Company in trust for third parties] in Agent’s
possession for the payment thereof) the principal payments in the amounts and on
the dates specified below:

 

(1)       On the date a Pledged Mortgage becomes an Aged Mortgage Loan, a
principal payment in an amount necessary to reduce the outstanding unpaid
Advances against such Aged Mortgage Loan to an amount equal to ninety percent
(90%) of the Collateral Value of such Aged Mortgage Loan as of such date;

 

(2)       Thirty (30) days following the date a Pledge Mortgage becomes an Aged
Mortgage Loan, a principal payment in an amount necessary to reduce the
outstanding unpaid Advances against such Aged Mortgage Loan to an amount equal
to eighty percent (80%) of the Collateral Value of such Aged Mortgage Loan as of
such date;

 

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(3)       Sixty (60) days following the date a Pledge Mortgage becomes an Aged
Mortgage Loan, a principal payment in an amount necessary to reduce the
outstanding unpaid Advances against such Aged Mortgage Loan to an amount equal
to seventy percent (70%) of the Collateral Value of such Aged Mortgage Loan as
of such date;

 

(4)       Ninety (90) days following the date a Pledge Mortgage becomes an Aged
Mortgage Loan, an amount equal to the balance of the aggregate outstanding
unpaid Advances against such Aged Mortgage Loan.

 

(e)           With respect to each Repurchased Mortgage Loan that is a Pledged
Mortgage, Company shall pay to the Lender a monthly mandatory principal payment
equal to five percent (5%) of the original Advance made against such Repurchased
Mortgage Loan commencing thirty (30) days after the date of such original
Advance against such Repurchased Mortgage Loan and every thirty (30) days
thereafter until one hundred eighty (180) days from the date of such original
Advance against such Repurchased Mortgage Loan when the entire principal balance
of all Advances outstanding against such Repurchased Mortgage Loan shall be
immediately due and payable.

 

2.6           Expiration of Commitment.  Unless extended or terminated earlier
as permitted hereunder, the Tranche A Commitment and the Tanche B Commitment
shall each expire of its own term, and without the necessity of action by the
Lenders or the Agent, at the close of business on the Termination Date. 
However, the remainder of this Agreement shall remain in full force and effect
until all amounts due on the Obligations have been paid in full. The Lenders
have not made, and do not hereby make, any commitment to renew, extend,
rearrange or otherwise refinance the outstanding and unpaid principal of the
Notes or accrued interest thereon.  In the event, however, the Lenders from time
to time renew, extend, rearrange, increase and/or otherwise refinance any
portion or all of any Obligation and any accrued interest thereon at any time,
such refinancing shall be evidenced by appropriate promissory notes in form and
substance satisfactory to the Lenders and, unless otherwise noted or modified at
such time or times by the terms of such promissory note or any agreements
executed in connection therewith, any such promissory notes and refinancing
evidenced thereby shall be governed in all respects by the terms of this
Agreement.

 

2.7           Payment Procedure.

 

(a)           Payments.  Except as otherwise specifically provided herein, all
payments hereunder shall be made to the Agent on behalf of the Lenders not later
than the close of business (Houston, Texas time) on the date when due unless
such date is a non-Business Day, in which case, such payment shall be due not
later than 2:00 p.m. (Houston, Texas time) on the first Business Day thereafter,
and shall be made in lawful money of the United States of America in immediately
available funds.  Any such payment made after 2:00 p.m. (Houston, Texas time)
shall be deemed to be received on the next Business Day and, if applicable,
interest thereon shall continue to accrue until such next Business Day. No
Lender directly invoices Company for – and only Agent invoices Company for –
interest under the Loan Documents.

 

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(b)           Distributions. When received under Section 2.7(a) above, Agent
shall distribute each payment to each Lender reasonably promptly after receipt
but by no later than 4:00 p.m. on the Business Day the payment is deemed to be
received by Agent under Section 2.7(a) above. If Agent fails to distribute any
payment to any Lender as required by this Section 2.7(b), then Agent shall pay
to that Lender on demand interest on that payment, from the date due under this
clause until paid, at any annual interest rate equal from day to day to the
Federal Funds Rate.

 

2.8           Fees.

 

(a)           In consideration of each Lender’s commitment to make Advances,
Company shall pay to Agent for the ratable account of each Lender in accordance
with their respective Commitment Percentage, a commitment fee  (“Commitment
Fee”) determined by applying a rate of twelve and one-half basis points (0.125%)
per annum (based on a 360 day-year and applied to the actual number of days
elapsed) on the Aggregate Commitment Amount commencing from August 1, 2002
through and including the Termination Date, which Commitment Fee shall be due
and payable quarterly in advance with the first quarterly payment being due on
the execution date hereof and each subsequent quarterly payment being due and
payable on the first day of each November, February, May, and August
thereafter.   If the Aggregate Commitment Amount is increased, Company shall pay
to Agent for the account of the Lenders, in accordance with their respective
Commitment Percentage in such increase, an additional commitment fee of 0.125%
per annum on the amount of such increase from the effective date of such
increase through and including the Termination Date, such additional commitment
fee shall be due and payable on the effective date of such increase.

 

(b)           At the end of each month during the term of this Agreement (i.e.,
from its effective date through the Termination Date), the Agent shall determine
average usage of the Commitment by calculating the arithmetic daily average of
the outstanding balance of Advances in that month.   The Agent shall then
subtract the average usage (the “Used Portion”) from the Commitment (the result
being called the “Unused Portion”) and the Company shall pay to the Agent on
behalf of the Lenders in arrears (without duplication of payment), on or before
five (5) days after the later of (a) the end of each month or (b) the Company’s
receipt of the bill for such monthly period, a Non-Usage Fee equal to 0.250% per
annum on the total amount of the Unused Portion of the Commitment for that
month, as compensation to the Lenders for their agreement to make the Commitment
available to the Company during that month and not as compensation for the use,
forbearance or detention of money (i.e., as a “true commitment fee” under Texas
law); provided that such fee shall be waived for any month if the Used Portion
for such month is equal to or greater than fifty percent (50%) of the
Commitment.  Each calculation by the Agent of the amount of any Non-Usage Fee
shall be conclusive and binding on the Company, absent manifest error.  Upon
receipt of any Non-Usage Fee, Agent shall distribute to each Lender its
Commitment Percentage in such Non-Usage Fee pursuant to Section 2.7(b) hereof.

 

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(c)           The Agent shall receive for its own account an agent’s fee
(“Agent’s Fee”) pursuant to the certain agreement of even date herewith among
the Agent and the other Lenders.

 

2.9           Miscellaneous Charges.  At the end of each month during the term
of this Agreement, the Company shall pay to the Agent in arrears on or before
five (5) days after the later of (a) the end of each calendar month or (b) the
Company’s receipt of the Agent’s bill for such monthly period, a transaction fee
equal to EIGHTEEN AND NO/100 DOLLARS ($18.00) per Pledged Mortgage held by Agent
during such month and for which Agent has not previously received a transaction
fee, for the handling and administration of Advances and Collateral.  For the
purposes hereof, Company shall, at its sole cost and expense, pay all
miscellaneous charges and expenses incurred by the Agent in connection with the
handling and administration of Advances and Collateral, including, without
limitation, all charges for security delivery fees, wiring fees, and charges for
overnight delivery of Collateral to Investors. Miscellaneous charges are due
when incurred, but shall not be delinquent if paid within ten (10) days after
receipt of an invoice or an account analysis statement from the Agent. No Lender
(other than a Lender acting as Agent) shall be entitled to share or participate
in the fees, sums and other amounts due and payable to the Agent under this
Section 2.9, Section 2.8(b), or any other agreement between the Company or any
Lender and Agent relating to an agent’s fee for the handling and administration
of Advances and Collateral and acting as Agent under this Agreement.

 

2.10         Bailee. Each Lender appoints Company -  and Company shall act - as
its bailee to (i) hold in trust for such Lender (A) the original recorded copy
of the mortgage, deed of trust, or trust deed securing each Pledged Mortgage,
(B) a mortgagee policy of title insurance (or binding unexpired and
unconditional commitment to issue such insurance if the policy has not yet been
delivered to Company) insuring the Company’s perfected, first priority Lien
created by that mortgage, deed of trust, or trust deed, (C) the original
insurance policies for each Pledged Mortgage, and (D) all other original
documents relating to each Pledged Mortgage, including any promissory notes, any
other loan documents, and supporting documentation, surveys, settlement
statements, closing instructions, and Mortgage-backed Securities, and (ii)
deliver to Agent any of the foregoing items as soon as reasonably practicable
upon Agent’s request.

 

2.11         Increased Costs; Capital Requirements.   In the event any
applicable law, order, regulation or directive issued by any governmental or
monetary authority, or any change therein or in the governmental or judicial
interpretation or application thereof, or compliance by any Lender with any
request or directive (whether or not having the force of law) by any
governmental or monetary authority:

 

(a)         Does or shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement or any Advances made hereunder, or change the
basis of taxation on payments to such Lender of principal, fees, interest or any
other amount payable hereunder (except for change in the rate of tax on the
overall gross or net income of such Lender by the jurisdiction in which such
Lender’s principal office is located);

 

(b)         Does or shall impose, modify or hold applicable any reserve, capital
requirement, special deposit, compulsory loan or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
advances or loans by, or other

 

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credit extended by, or any other acquisition of funds by, any office of such
Lender which are not otherwise included in the determination of the interest
rate as calculated hereunder;

 

and the result of any of the foregoing is to increase the cost to such Lender of
making, renewing or maintaining any Advance or to reduce any amount receivable
in respect thereof or to reduce the rate of return on the capital of such Lender
or any Person controlling such Lender as it relates to credit facilities in the
nature of that evidenced by this Agreement, then, in any such case, the Company
shall promptly pay necessary to compensate such Lender for reduced amounts
receivable or reduced rate by such Lender with respect to this Agreement
hereunder or such Lender’s obligations becomes entitled to claim any additional
amounts pursuant to this Section, it shall notify the Company through the Agent
of the event by reason of which it has become so entitled and the Company shall
pay such amount within fifteen (15) days thereafter. Notwithstanding the
foregoing, the Company shall not be obligated to pay any such additional amounts
attributable to the period (the “Excluded Period”) ending ninety (90) days prior
to the date the Company receives written notice of the law, order, regulation,
directive, change or request by reason of which such additional amounts are
payable, except to the extent such additional amounts accrued during the
Excluded Period due to the retroactive application of such law, order,
regulation, directive, change or request, in which case the limitation set forth
in this sentence shall not apply. A certificate as to any additional amount
payable pursuant to the foregoing sentence containing the calculation thereof in
reasonable detail submitted by a Lender, through the Agent, to the Company shall
be conclusive in the absence of manifest error. The obligations of the Company
under this Section shall survive the payment of all other Obligations and the
termination of this Agreement.

 

2.12         Restatement.  This Agreement amends and restates the Existing
Agreement in its entirety. All outstanding and unpaid advances under the
Existing Agreement and all other sums owing under the Existing Agreement shall
continue and be deemed Advances due and owing hereunder and evidenced by the
Notes (each Lender’s Note shall evidence its Commitment Percentage in such
Advances). The Notes are given in renewal and extension, but not extinguishment
of the outstanding unpaid balances of those certain promissory notes (“Prior
Notes”) executed by the Company and delivered to each of the Lenders as more
particularly described in the Notes. All liens, security interests, and
assignments securing the obligations of the Company under the Prior Notes and
the Existing Agreement are hereby ratified, confirmed, and brought forward as
security for the Obligations, in addition to and cumulative of all other
security.

 

3.             COLLATERAL.

 

3.1           Grant of Security Interest.  As security for the payment of the
Notes and for the payment and performance of all of the Company’s Obligations
hereunder, the Company hereby assigns and transfers all of its rights, titles
and interests in and to and grants a security interest to the Agent for the
benefit of the Lenders in the following described property, whether now owned or
hereafter acquired (the “Collateral”):

 

(a)           All Mortgage Loans which from time to time are delivered or caused
to be delivered to the Agent or its designee, come into the possession, custody
or control of the

 

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Agent for the purpose of assignment or pledge or in respect of which an Advance
has been made by the Agent hereunder, including all Mortgage Notes and Mortgages
evidencing such Mortgage Loans and all Mortgage Loans in respect of which Wet
Settlement Advances have been made by the Lender (the “Pledged Mortgages”).

 

(b)           All Mortgage-backed Securities which are from time to time
delivered or caused to be delivered to, or are otherwise in the possession of
the Agent, or its designee, its agent, bailee or custodian as assignee or
pledged to the Agent, or for such purpose are registered by book-entry in the
name of the Agent (the “Pledged Securities”).

 

(c)           All private mortgage insurance and all commitments issued by the
FHA or VA to insure or guarantee any Mortgage Loans included in the Pledged
Mortgages; all guaranties related to Pledged Securities; all Purchase
Commitments held by the Company covering the Pledged Mortgages or the Pledged
Securities and all proceeds resulting from the sale thereof to Investors
pursuant thereto; all personal property, contract rights, servicing and
servicing fees and income or other proceeds, amounts and payments payable to the
Company as compensation or reimbursement, accounts and general intangibles of
whatsoever kind relating to the Pledged Mortgages, the Pledged Securities, and
all other documents or instruments relating to the Pledged Mortgages, including,
without limitation, any interest of the Company in any fire, casualty or hazard
insurance policies and any awards made by any public body or decreed by any
court of competent jurisdiction for a taking or for degradation of value in any
eminent domain proceeding as the same relate to the Pledged Mortgages.

 

(d)           All right, title and interest of the Company in and to all escrow
accounts, documents, instruments, files, surveys, certificates, correspondence,
appraisals, computer programs, tapes, discs, cards, accounting records
(including all information, records, tapes, data, programs, discs and cards
necessary or helpful in the administration or servicing of the foregoing
Collateral) and other information and data of the Company relating to the
foregoing Collateral.

 

(e)           All now existing or hereafter acquired cash delivered to or
otherwise in the possession of the Agent or any Lender or its agent, bailee or
custodian or designated on the books and records of the Company as assigned and
pledged to the Agent for the benefit of the Lenders.

 

(f)            All money, property, deposit accounts, accounts, securities,
documents, chattel paper, claims, demands, instruments, items or deposits of the
Company now held or hereafter coming within Agent’s custody or control,
including, without limitation, the Funding Account.

 

(g)           All Accounts, Chattel Paper, Instruments, General Intangibles,
Certificated Securities, Uncertificated Securities, and Investment Property, as
those terms are defined in the Texas Uniform Commercial Code, arising from or
relating to any of the foregoing Collateral.

 

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(h)           All cash and non-cash proceeds of the foregoing Collateral,
including all dividends, distributions and other rights in connection with, and
all additions to, modifications of and replacements for, the foregoing
Collateral, and all products and proceeds of the foregoing Collateral, together
with whatever is receivable or received when the foregoing Collateral or
proceeds thereof are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, including, without
limitation, all rights to payment with respect to any cause of action affecting
or relating to the foregoing Collateral or proceeds thereof.

 

3.2          Security Interest in Mortgage-backed Securities.  The Company’s
ability to convert Mortgage Loans that are within the Collateral to
Mortgage-backed Securities are subject to the following conditions:

 

(a)           Pledged Mortgages that are to be transferred to a pool custodian
in connection with the issuance of Mortgage-backed Securities, shall be released
from the security interest granted hereunder only against payment to the Agent
of the amount due in connection with such Pledged Mortgages as determined in
accordance with Section 3.5 of this Agreement or against the issuance of such
Mortgage-backed Securities and the continuation of the Agent’s first priority,
perfected security interest in such Mortgage-backed Securities and the proceeds
thereof until payment due the Lenders, in respect of said Pledged Mortgages is
made to the Agent on behalf of the Lenders.

 

(b)           In the case of Mortgage-backed Securities created from Pledged
Mortgages, the Agent, for the benefit of the Lenders, shall have the exclusive
right to the possession of the Mortgage-backed Securities or, if the
Mortgage-backed Securities are not to be issued in certificated form, shall have
the right to have the book entries for the Mortgage-backed Securities issued in
the Agent’s name or the name or names of its designees, in each case, for the
benefit of the Lenders. Agent shall cause delivery of the Mortgage-backed
Securities to be made to the Investor or the book entries registered in the name
of the Investor or the Investor’s designee only against payment therefor.  The
Company acknowledges that the Agent may enter into one or more standing
arrangements with other financial institutions for the issuance of
Mortgage-backed Securities in book entry form in the name of such other
financial institutions, as agent for the Agent, and the Company agrees upon
request of the Agent, to execute and deliver to such other financial
institutions the Company’s written concurrence in any such standing
arrangements.

 

3.3         Delivery of Collateral Documents.  The Agent or its designee
exclusively shall deliver Pledged Mortgages or Pledged Securities to (a) an
Investor that has issued a Purchase Commitment with respect thereto for its
examination and purchase, or (b) an Approved Custodian for purposes of
examination or delivery in connection with the issuance of Mortgage-backed
Securities.  In such cases where the Agent must deliver documents to an Investor
or Approved Custodian, the Agent must receive signed shipping instructions (in
the form of Exhibit “D” attached hereto), no later than 2:00 p.m. Houston, Texas
time one (1) Business Day prior to the expiration of the appended Purchase
Commitment, in addition to any other documents listed in Section III of Exhibit
“C” in respect of the issuance of Mortgage-backed Securities. If shipping
instructions are received by Agent before 2:00 p.m. Houston, Texas time

 

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of any Business Day, Agent will ship the documents together with the Bailee
Letter (in form of Exhibit “K”) to the Investor or Approved Custodian on the
same Business Day, otherwise Agent will ship the documents the next Business Day
following receipt of shipping instructions. In any case in which an Advance has
been made hereunder against Pledged Mortgages, based on the existence of a
Purchase Commitment covering such Pledged Mortgages, the Company agrees that
such Pledged Mortgages will not be placed in any mortgage pool other than an
Eligible Mortgage Pool, unless such Pledged Mortgages have been redeemed from
pledge as permitted hereunder or other arrangements, satisfactory to the Agent
in its sole discretion, have been made for the redemption of such Pledged
Mortgages from pledge hereunder. The Agent may deliver any document relating to
the Collateral to the Company for correction or completion against a trust
receipt in the form of Exhibit “E” attached hereto executed by the Company. The
Company hereby represents and warrants to and agrees with the Agent that any
request by the Company for release of the Collateral consisting of or relating
to Mortgage Loans to the Company shall be solely for the purposes of correcting
clerical or non-substantial documentation problems in preparation for returning
such Collateral to the Agent for ultimate sale or exchange and the aggregate
Collateral Value of the Collateral released to the Company pursuant to this
Section 3.3 will not exceed FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($500,000.00); the Company shall request such release in compliance with all of
the terms and conditions of such release set forth herein; and the Company will
return to the Agent such documentation released to the Company pursuant to this
Section 3.3 within ten (10) calendar days after such delivery.

 

3.4         Delivery of Additional Collateral; Mandatory Prepayments.  At any
time that the aggregate sum of the Unit Collateral Values of all Pledged
Mortgages is less than the aggregate amount of the Advances then outstanding
hereunder, the Agent may request, and the Company shall immediately after Notice
by the Agent (a) deliver to the Agent or its designee for pledge hereunder
additional Mortgage Loans and/or cash, in aggregate amounts sufficient to cover
the difference between the aggregate Unit Collateral Values of all Pledged
Mortgages and the aggregate amount of Advances outstanding hereunder, or (b)
repay the Advances in an amount sufficient to reduce the aggregate balance
thereof outstanding to an amount equal to or below the aggregate Unit Collateral
Values of all Pledged Mortgages. If at any time or from time to time any of the
limitations of Section 2.1(b) hereof are exceeded, the Company shall immediately
pay to the Agent on behalf of the Lenders the amount of such excess for
application to the principal balance of the Notes.  If on July 30, 2003 the
aggregate amount of Advances then outstanding exceeds the new Aggregate
Commitment Amount of $28,000,000.00, the Company shall immediately pay to the
Agent on behalf of the Lenders the amount of such excess for application to the
principal balance of the Note.

 

3.5         Right of Redemption from Pledge.  So long as no Event of Default has
occurred, the Company may redeem a Mortgage Loan or Mortgage-backed Security, by
notifying the Agent of its intention to redeem such Mortgage Loan or
Mortgage-backed Security, from pledge and by paying, or causing an Investor to
pay, to the Agent, for application to prepayment of the principal balance of the
Notes as determined by the Agent in its reasonable discretion, an amount (the
“Redemption Amount”) equal to the aggregate amount of the outstanding, unpaid
Advances made with respect to or relating to such Mortgage Loan or
Mortgage-backed Security.

 

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3.6           Collection and Servicing Rights.  So long as no Event of Default
shall have occurred, the Company shall have a revocable and nontransferable
license to service and receive and collect directly all sums payable to the
Company in respect of the Collateral other than proceeds of any Purchase
Commitment or proceeds of the sale of any Collateral. Following the occurrence
of any Event of Default, the Agent or its designee may revoke such license by
notice to the Company (or its successor, trustee, or receiver) whereupon the
Company’s rights to so service the Collateral shall terminate. Agent or its
designee shall thereafter be entitled to service and receive and collect all
sums payable to the Company in respect of the Collateral, and in such case (a)
the Agent or its designee in its discretion may, in its own name or in the name
of the Company or otherwise, demand, sue for, collect or receive any money or
property at any time payable or receivable on account of or in exchange for any
of the Collateral, but shall be under no obligation to do so, (b) the Company
shall, if the Agent so requests, forthwith deliver the credit files and the
servicing files for the Collateral to the Agent or its designee and pay to the
Agent, on behalf of the Lenders, at its principal office all amounts thereafter
received by the Company upon or in respect of any of the Collateral, advising
the Agent as to the source of such funds, and (c) all amounts so received and
collected by the Agent shall be held by it for the benefit of the Lenders as
part of the Collateral.

 

3.7          Return or Release of Collateral at End of Commitment.  If (a) the
Commitment shall have expired or been terminated, and (b) no Advances, interest
or other Obligations evidenced by the Loan Documents or due under this Agreement
shall be outstanding and unpaid, the Agent shall deliver or release all
Collateral in its possession to the Company. The receipt of the Company for any
Collateral released or delivered to the Company pursuant to any provision of
this Agreement shall be a complete and full acquittance for the Collateral so
returned, and the Agent and the Lenders shall thereafter be discharged from any
liability or responsibility therefor.

 

4.             CONDITIONS PRECEDENT.

 

4.1           Initial Advance. The obligation of the Lenders to make any Advance
under this Agreement is subject to the satisfaction, in the sole discretion of
the Agent, on or before the date thereof, of the following conditions precedent:

 

(a)           The Agent shall have received the following, all of which must be
satisfactory in form and content to the Agent, in its sole discretion:

 

(1)           The Loan Documents dated as of the date hereof duly executed by
the Company;

 

(2)           Certified copies of the Company’s articles of incorporation and
bylaws and certificates of good standing dated no less recently than ninety (90)
days prior to the date of this Agreement and a certification from the taxing
authority of the state of incorporation stating that the Company is in good
standing with said taxing authority;

 

(3)           A certificate of corporate resolutions by the corporate secretary
of the Company in the form of Exhibit “J” attached hereto certifying the
resolutions authorizing the execution, delivery and performance of this
Agreement and the

 

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other Loan Documents, and all other instruments or documents to be delivered by
the Company pursuant to this Agreement;

 

(4)           Financial statements of the Company (and its Subsidiaries, on a
consolidated basis) containing a balance sheet as of December 31, 2001 (the
“Statement Date”) and related statements of income, changes in stockholders’
equity and cash flows for the period ended on the Statement Date and a balance
sheet as of July 31, 2002 (“Interim Date”) and related statement of income for
the period ended on the Interim Date, all prepared in accordance with GAAP
applied on a basis consistent with prior periods and in the case of the
statements as of the Statement Date, audited by independent certified public
accountants of recognized standing acceptable to the Agent, together with an
Officer Certificate prepared as of the Interim Date and executed by the
president or chief financial officer of the Company;

 

(5)           A favorable written opinion of counsel to the Company, dated as of
the Closing Date in form and substance satisfactory to the Agent, addressed to
the Agent and the Lenders

 

(6)           A tax, lien and judgment search of the appropriate public records
for the Company, including a search of Uniform Commercial Code financing
statements, which search shall not have disclosed the existence of any prior
Lien on the Collateral other than in favor of the Agent or as permitted
hereunder; and

 

4.2           Each Advance. The obligation of the Lenders to make any Advance
under this Agreement is subject to the satisfaction, in the sole discretion of
the Agent, as of the date of each such Advance, of the following additional
conditions precedent:

 

(a)           In connection with an Advance, the Company shall have delivered to
the Agent the Advance Request or the Electronic Request, Collateral Documents,
and documents required under and shall have satisfied the procedures set forth
in Section 2.2 and Exhibit “C”. All items delivered to the Agent or its designee
shall be satisfactory to the Agent in form and content, and the Agent may reject
such of them as do not meet the requirements of this Agreement or of the related
Purchase Commitment.

 

(b)           The representations and warranties of the Company contained in
Article 5 hereof shall be accurate and complete in all material respects as if
made on and as of the date of each Advance.

 

(c)           The Company shall have performed all agreements to be performed by
it hereunder, including without limitation, the payment of all Non-Usage Fees
when due hereunder, and, as of the date of the Advance Request, and after giving
effect to the requested Advance, there shall exist no Default or Event of
Default hereunder.

 

(d)           The Company shall not have incurred any material liabilities,
direct or contingent, except as approved by Agent in writing or permitted by
Section 7.18, since the dates of the Company’s most recent financial statements
theretofore delivered to the Agent.

 

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(e)        Such additional documents, instruments, and information as Agent or
its legal counsel may reasonably require, including, without limitation, all
documents, instruments and information required pursuant to Section 4.1 of this
Agreement.

 

Acceptance of the proceeds of the requested Advance by the Company shall be
deemed a representation by the Company that all conditions set forth in this
Article 4 shall have been satisfied as of the date of such Advance.

 

5.             REPRESENTATIONS AND WARRANTIES.

 

The Company hereby represents and warrants to the Agent and the Lenders, as of
the date of this Agreement and (unless otherwise notified in writing by the
Company and Agent, in its sole discretion, approves in writing) as of the date
of each Advance Request and the making of each Advance, that:

 

5.1          Organization; Good Standing; Subsidiaries.  The Company and each
Subsidiary of the Company is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, 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 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 or any such Subsidiary. For the purposes hereof, good standing shall
include qualification for any and all licenses and payment of any and all taxes
required in the jurisdiction of its incorporation and in each jurisdiction in
which the Company transacts business.  The Company has no Subsidiaries except as
set forth on Exhibit “G” hereto. Exhibit “G” sets forth with respect to each
such Subsidiary, its name, address, place of incorporation, each state in which
it is qualified as a foreign corporation, and the percentage ownership of the
Company in such Subsidiary.

 

5.2          Authorization and Enforceability.  The Company has all requisite
corporate power and authority to execute, deliver, create, issue, comply and
perform this Agreement, the Notes and all other Loan Documents to which the
Company is party and to make the borrowings hereunder.  The execution, delivery
and performance by the Company of this Agreement, the Notes and all other Loan
Documents to which the Company is party and the making of the borrowings
hereunder and thereunder, have been duly and validly authorized by all necessary
corporate action on the part of the Company (none of which actions has 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 incorporation or by-laws of the Company, conflict with or result in
a breach of or constitute a default or require any consent under any contracts
to which Company is a party, or result in the creation of any Lien upon any
property or assets of the Company other than the Lien on the Collateral granted
hereunder, 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, the Notes and all other Loan 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

 

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bankruptcy, insolvency or other such laws affecting the enforcement of
creditors’ rights generally.

 

5.3           Financial Condition.  The balance sheet of the Company provided to
Agent pursuant to Section 4.1(a)(5) hereof (and if applicable, its Subsidiaries,
on a consolidating and consolidated basis) as at the Statement Date, and the
related statements of income, changes in stockholders’ equity, and cash flows
for the fiscal year ended on the Statement Date, heretofore furnished to the
Agent, fairly present the financial condition of the Company and its
Subsidiaries as at the Statement Date and the Interim Date and the results of
its and their operations for the fiscal period ended on the Statement Date and
the Interim Date.   The Company had, on the Statement Date and the Interim Date,
no known material 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, and at the present time there are no material
unrealized or anticipated losses from any loans, advances or other commitments
of the Company except as heretofore disclosed to the Agent in writing.  Said
financial statements were prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved.   Since the Interim Date,
there has been no material adverse change in the business, operations, assets or
financial condition of the Company or its Subsidiaries, nor is the Company aware
of any state of facts particular to the Company which (with or without notice or
lapse of time or both) would or could result in any such material adverse
change.

 

5.4         Litigation. Except as disclosed on Exhibit “H”, there are no
actions, claims, suits or proceedings pending, or to the knowledge of the
Company, threatened or reasonably anticipated against or affecting the Company
or any Subsidiary of 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 or financial condition of
the Company or any of Company’s Subsidiaries, as a whole.

 

5.5         Compliance with Laws.  To the knowledge of Company, neither the
Company nor any Subsidiary of the Company is 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 of the Company or any of Company’s Subsidiaries, as a whole.

 

5.6         Regulation U. The Company is not engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock, and 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.

 

5.7         Investment Company Act. Neither the Company nor any of its
Subsidiaries is an “investment company” or controlled by an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.

 

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5.8           Agreements.  Neither the Company nor any Subsidiary of the Company
is 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 5.3 hereof.  The Company and each Subsidiary of the Company
are 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 have a material adverse effect on the business,
operations, properties or financial condition of the Company as a whole. No
holder of any Indebtedness of the Company or of any of its Subsidiaries has
given notice of any alleged default thereunder or, if given, the same has been
cured or will be cured by Company within the cure period provided therein, and
no liquidation or dissolution of the Company or any of its Subsidiaries and no
receivership, insolvency, bankruptcy, reorganization or other similar
proceedings relative to the Company or any of its Subsidiaries or any of their
respective properties is pending, or to the knowledge of the Company,
threatened.

 

5.9           Title to Properties. The Company and each Subsidiary of the
Company has good, valid, insurable (in the case of real property) and marketable
title to all of its properties and assets (whether real or personal, tangible or
intangible) reflected on the financial statements described in Section 5.3
hereof, and all such properties and assets are free and clear of all Liens
except as disclosed in such financial statements (other than Collateral which
shall be free and clear of all Liens other than those held by Agent), as
approved by Agent in writing, or permitted pursuant to this Agreement.

 

5.10          ERISA.  All plans (“Plans”) of a type described in Section 3(3) of
ERISA in respect of which the Company or any Subsidiary of the Company is an
“Employer,” as defined in Section 3(5) 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 neither the Company nor any Subsidiary of the
Company has 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 or a Subsidiary of the Company of incurring a 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 December 1, 1974.

 

5.11         Eligibility. The Company has all requisite corporate power and
authority and all necessary licenses, permits, franchises and other
authorizations to own and operate its property and to carry on its business as
now conducted. If approved now or hereafter as a lender or seller/servicer for
any one or more of the governmental agencies as set forth below, the Company
will remain at all times approved and qualified and in good standing and meet
all requirements applicable to such status:

 

(a)           FNMA approved seller/servicer of Mortgage Loans, eligible to
originate, purchase, hold, sell, and service Mortgage Loans to be sold to FNMA.

 

(b)           FHLMC approved seller/servicer of Mortgage Loans, eligible to
originate, purchase, hold, sell, and service Mortgage Loans to be sold to FHLMC.

 

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(c)           GNMA approved seller/servicer of Mortgage Loans, eligible to
originate, purchase, hold, sell, and service Mortgage Loans to be sold to GNMA.

 

(d)           HUD approved lender, eligible to originate, purchase, hold, sell
and service FHA-insured Mortgage Loans.

 

(e)           VA lender in good standing under the VA loan guarantee program
eligible to originate, purchase, hold, sell, and service VA-guaranteed Mortgage
Loans.

 

(f)            A lender in good standing with any Investor.

 

5.12         Special Representations Concerning Collateral.  The Company hereby
represents and warrants to the Agent and each Lender, as of the date of this
Agreement and as of the date of each Advance, that:

 

(a)           The Company is the legal and equitable owner and holder, free and
clear of all Liens (other than Liens granted hereunder), of the Pledged
Mortgages and the Pledged Securities.  All Pledged Mortgages, Pledged
Securities, and Purchase Commitments have been duly authorized and validly
granted or issued to the Company, and all of the foregoing items of Collateral
comply with all of the requirements of this Agreement, and have been validly
pledged or assigned to the Agent for the benefit of the Lenders, subject to no
other Liens.

 

(b)           The Company has, and will continue to have, the full right, power
and authority to pledge the Collateral pledged and to be pledged by it
hereunder.

 

(c)           Any Mortgage Loan and related documents included in the Pledged
Mortgages (1) has been duly executed and delivered by the parties thereto at a
closing held not more than twenty-five (25) days prior to such date except for
Repurchased Mortgage Loans; (2) has been made in compliance with all
requirements of the Real Estate Settlement Procedures Act, Equal Credit
Opportunity Act, the federal Truth-In-Lending Act, the Financial Institutions
Reform, Recovery and Enforcement Act, and all other applicable laws and
regulations; (3) is valid and enforceable in accordance with its terms, without
defense or offset; (4) has not been modified or amended except in writing, which
writing is part of the Collateral Documents, nor any requirements thereof
waived; and (5) complies with the terms of this Agreement and, if applicable,
with the related Purchase Commitment held by the Company.  Each Mortgage Loan
has been fully advanced in the face amount thereof and each First Mortgage
creates a Lien on the premises described therein; each Second Mortgage is a
second Lien on the premises described therein, and each Mortgage Loan has or
will have a title insurance policy, in American Land Title Association form or
equivalent thereof, from a recognized title insurance company, insuring the
priority of the Lien of the Mortgage and meeting the usual requirements of
Investor purchasing such Mortgage Loans.

 

(d)           Except for Repurchased Mortgage Loans, no monetary default, nor,
to the knowledge of the Company, any event which, with notice or lapse of time
or both, would become a default, has occurred and is continuing under any
Mortgage Loan included in the Pledged Mortgages; provided, however, that, with
respect to Pledged Mortgages

 

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which have already been pledged as Collateral hereunder, if any such default or
event has occurred, the Company will promptly notify the Agent and the same
shall not have continued for more than sixty (60) days.

 

(e)           The Company has complied with all laws, rules and regulations in
respect of the FHA insurance or VA guarantee of each Mortgage Loan included in
the Pledged Mortgages designated by the Company as an FHA insured or VA
guaranteed Mortgage Loans, and such insurance or guarantee is in full force and
effect. All such FHA insured and VA guaranteed Mortgage Loans comply in all
respects with all applicable requirements for purchase under the FNMA standard
form of selling contract for FHA insured and VA guaranteed loans and any
supplement thereto then in effect.

 

(f)            All fire and casualty policies covering Mortgaged Property
encumbered by a Pledged Mortgage (1) name the Company and its successors and
assigns as the insured under a standard mortgagee clause, (2) are and will
continue to be in full force and effect, and (3) afford and will continue to
afford insurance against fire and such other risks as are usually insured
against in the broad form of extended coverage insurance from time to time
available, as well as insurance against flood hazards if the same is required by
FHA or VA.

 

(g)           Pledged Mortgages encumbering Mortgaged Property located in a
special flood hazard area designated as such by the Secretary of HUD are and
shall continue to be covered by special flood insurance under the National Flood
Insurance Program.

 

(h)           Each FHA insured Mortgage Loan pledged hereunder meets all
applicable governmental requirements for such insurance. Each Mortgage Loan,
against which an Advance is made on the basis of a Purchase Commitment meets all
requirements of such Purchase Commitment. The Company shall assure that Mortgage
Loans pledged pursuant to this Agreement and intended to be used in the
formation of Mortgage-backed Securities shall comply, or prior to the formation
of any such Mortgage-backed Security, shall comply with the requirements of the
governmental instrumentality, department or agency guaranteeing such
Mortgage-backed Security.

 

(i)            For Pledged Mortgages which will be used to secure GNMA
Mortgage-backed Securities, the Company has received from GNMA a Confirmation
Notice or Confirmation Notices for Request Additional Commitment Authority and
for Request Pool Numbers, and there remains available thereunder a commitment on
the part of GNMA sufficient to permit the issuance of GNMA Mortgage-backed
Securities in an amount at least equal to the amount of such Pledged Mortgages
designated by the Company as the Mortgage Loans to be used to secure such GNMA
Mortgage-backed Securities; each such Confirmation Notice is in full force and
effect; each of such Pledged Mortgages has been assigned by the Company to one
of such Pool Numbers and a portion of the available GNMA Commitment has been
allocated thereto by the Company, in an amount at least equal to the principal
amount of each Mortgage Note secured by such Pledged Mortgages; and each such
assignment and allocation has been reflected in the books and records of the
Company.

 

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(j)            Each Pledged Mortgage in excess of TWO HUNDRED FIFTY THOUSAND AND
NO/100 DOLLARS ($250,000.00) is supported by an appraisal that meets the
appraisal requirements of FNMA or FHLMC (in the case of residential Mortgaged
Property), or the Office of Thrift Supervision for the type of Mortgaged
Property securing that Pledged Mortgage; or, alternatively, such Pledged
Mortgage is eligible for purchase or is guaranteed or insured by a U.S.
Government agency or a U.S. Government sponsored enterprise.

 

5.13         RICO.   The Company is not in violation of any laws, statutes or
regulations, including, without limitation, RICO, which contain provisions which
could potentially override Agent’s security interest in the Collateral.

 

5.14         Proper Names.  The Company does not operate in any jurisdiction
under a trade name, division, division name or name other than those names set
forth on Exhibit “I” attached hereto and all such names included on Exhibit “I”
are utilized by the Company only in the jurisdictions listed therein.

 

5.15         Direct Benefit From Loans.  The Company has received, or, upon the
execution and funding thereof, will receive (a) direct and indirect benefit from
the making and execution of this Agreement and the other Loan Documents to which
it is a party, and (b) fair and independent consideration for the entry into,
and performance of, this Agreement and the other Loan Documents to which it is a
party.  Contemporaneously with the disbursements of each Advance by the Lenders
to the Company, all such proceeds will be used to finance the origination or
purchase of Eligible Mortgage Loans.

 

5.16         Loan Documents Do Not Violate Other Documents.   Neither the
execution and delivery by the Company of this Agreement or any other Loan
Document to which it is a party nor the consummation of the transactions herein
and therein contemplated, nor the performance of, or compliance with, the terms
and provisions hereof and thereof, does or will contravene, breach or conflict
with any provision of either of its articles of incorporation or by-laws, or any
applicable law, statute, rule or regulation or any judgment, decree, writ,
injunction, franchise, order or permit applicable to the Company or its assets
or properties, or does or will conflict or be inconsistent with, or does or will
result in any breach or default of, any of the terms, covenants, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of any Lien upon any of the property or assets of the Company
pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement,
or other instrument to which the Company is a party or by which the Company or
any of its property may be bound, the contravention, conflict, inconsistency,
breach or default of which will have a materially adverse effect on the
Company’s condition, financial or otherwise, or affect its ability to perform,
promptly and fully, its obligations hereunder or under any of the other Loan
Documents.

 

5.17         Consents Not Required.   Except for those consents that have
already been obtained and delivered to Agent or required as a condition to any
Advance hereunder, no consent of any Person and no consent, license, permit,
approval, or authorization of, exemption by, or registration or declaration
with, any Tribunal is required in connection with the execution, delivery,
performance, validity, or enforceability of this Agreement or any of the Loan
Documents by the Company.

 

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5.18         Material Fact Representations.    Neither the Loan Documents nor
any other agreement, document, certificate, or written statement furnished to
the Agent or any Lender by or on behalf of the Company in connection with the
transactions contemplated in any of the Loan Documents contains any untrue
statement of a material adverse fact.  There are no material adverse facts or
conditions relating to the making of the Commitment, any of the Collateral,
and/or the financial condition and business of the Company known to the Company
which have not been fully disclosed, in writing, to the Agent and the Lenders,
it being understood that this representation is made as of, and shall be limited
to the date of this Agreement.  All writings heretofore or hereafter exhibited
or delivered to the Agent or any Lender by or on behalf of the Company are and
will be genuine and what they purport to be.

 

5.19         Place of Business.     The principal place of business of the
Company is 6070 Parkland Boulevard, Mayfield Heights, Ohio 44124 and the chief
executive office of the Company and the office where it keeps its financial
books and records relating to its property and all contracts relating thereto
and all accounts arising therefrom is located at the address set forth for the
Company in Section 9 hereof.

 

5.20         Use of Proceeds; Business Loans.   The Company will use the
proceeds of the Advances made pursuant to the Commitment solely as follows, and
for no other purpose: finance the origination and purchase of Eligible Mortgage
Loans.   All loans evidenced by the Note are and shall be “business loans”, as
such term is used in the Depository Institutions Deregulation and Monetary
Control Act of 1980, as amended, and such loans are for business or commercial
purposes and not primarily for personal, family, household or agricultural use,
as such terms are used or defined in Texas Revised Civil Statutes, Texas Finance
Code, Regulation Z promulgated by the Board of Governors of the Federal Reserve
System, and Titles I and V of the Consumer Credit Protection Act.   Section 346
of the Texas Finance Code which regulates revolving loans and revolving triparty
accounts shall not apply to this Agreement.

 

5.21         No Undisclosed Liabilities.    Other than as approved by Agent, in
writing or permitted in Section 7.18 hereof, the Company does not have any
liabilities or Indebtedness, direct or contingent, except for liabilities or
Indebtedness which, in the aggregate, do not exceed TWENTY-FIVE THOUSAND AND
NO/100 DOLLARS ($25,000.00).

 

5.22         Tax Returns and Payments.   All federal, state and local income,
excise, property and other tax returns required to be filed with respect to
Company’s operations and those of its Subsidiaries in any jurisdiction have been
filed on or before the due date thereof (plus any applicable extensions); all
such returns are true and correct; all taxes, assessments, fees and other
governmental charges upon the Company, and Company’s Subsidiaries and upon its
property, income or franchises, which are due and payable have been paid,
including, without limitation, all FICA payments and withholding taxes, if
appropriate, other than those which are being contested in good faith by
appropriate proceedings, diligently pursued and as to which the Company has
established adequate reserves determined in accordance with GAAP, consistently
applied. The amounts reserved, as a liability for income and other taxes
payable, in the financial statements described in Section 5.3 hereof are
sufficient for payment of all unpaid federal, state and local income, excise,
property and other taxes, whether or not disputed, of the Company and its
Subsidiaries, accrued for or applicable to the period and on the dates of such
financial statements and all years and periods prior thereto and for which the
Company, and Company’s

 

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Subsidiaries may be liable in their own right or as transferee of the assets of,
or as successor to, any other Person.

 

5.23         Subsidiaries.   The Company has not issued, and does not have
outstanding, any warrants, options, rights or other obligations to issue or
purchase any shares of its capital stock or other securities.  The outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable.

 

5.24         Holding Company.   The Company is not a “holding company” or a
“subsidiary company” of a “holding company” within the meaning of the Public
Utility Holding Company Act of 1935, as amended.

 

6.             AFFIRMATIVE COVENANTS.

 

The Company hereby covenants and agrees with the Agent and the Lenders that, so
long as the Commitment is outstanding or there remain any Obligations of the
Company to be paid or performed under this Agreement or under any other Loan
Document, the Company shall:

 

6.1           Payment of Notes. Punctually pay or cause to be paid the principal
of, interest on and all other amounts payable hereunder and under the Notes in
accordance with the terms thereof.

 

6.2           Financial Statements and Other Reports.   Deliver or cause to be
delivered to the Agent:

 

(a)           As soon as available and in any event within thirty (30) days
after the end of each calendar month, statements of income and changes in
stockholders’ equity and cash flow of the Company and, if applicable, Company’s
Subsidiaries, on a consolidated and consolidating basis for the immediately
preceding month, and related balance sheet as at the end of the immediately
preceding month, all in reasonable detail, prepared in accordance with GAAP
applied on a consistent basis, and certified as to the fairness of presentation
by the president and chief financial officer of the Company, subject, however,
to year-end audit adjustments.

 

(b)           As soon as available and in any event within ninety (90) days
after the close of each fiscal year: statements of income, changes in
stockholders’ equity and cash flows of the Company, and, if applicable,
Company’s Subsidiaries, on a consolidated and consolidating basis for such year,
the related balance sheet as at the end of such year (setting forth in
comparative form the corresponding figures for the preceding fiscal year), all
in reasonable detail, prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved, and accompanied by an opinion in form and
substance satisfactory to the Agent and prepared by an accounting firm
reasonably satisfactory to the Agent, or other independent certified public
accountants of recognized standing selected by the Company and acceptable to the
Agent, as to said financial statements and a certificate signed by the president
and chief financial officer of the Company stating that said financial
statements fairly present the financial condition and results of operations of
the Company and, if applicable, Company’s Subsidiaries as at the end of, and
for, such year.

 

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(c)           Together with each delivery of financial statements required in
this Section 6.2, an Officer’s Certificate by the president, chief financial
officer, or other officer of the Company acceptable to the Agent.

 

(d)           With respect to Aged Mortgage Loans, copies of the complete credit
and collateral file relating each Aged Mortgage Loan, an updated title opinion
covering the Mortgaged Property securing each Aged Mortgage Loan issued inform
and substance acceptable to Agent and issued by a title company acceptable to
Agent, a current appraisal or brokers price opinion certifying the current
market value of the Mortgaged Property securing each Aged Mortgage Loan in form
and substance acceptable to Agent and such other information or documentation
relating to the borrowers or Mortgaged Property of each Aged Mortgage Loan, all
of the foregoing to be provided as the Agent in its discretion may request at
any time or from time to time and at the sole cost and expense of the Company.

 

(e)           Reports in respect of the Pledged Mortgages and Pledged
Securities, in such detail and at such times as the Agent in its discretion may
request at any time or from time to time, including, without limitation, a
monthly pipeline report in form satisfactory to Agent, to be delivered with the
monthly financial statements required in Section 6.2(a).

 

(f)            Copies of all regular or periodic financial and other reports, if
any, which the Company shall file with the Securities and Exchange Commission or
any governmental agency successor thereto and copies of any audits completed by
GNMA, FHLMC, or FNMA. Copies of the Mortgage Bankers’ Financial Reporting Forms
(FNMA Form 1002) which the Company shall have filed with FNMA.

 

(g)           From time to time, with reasonable promptness, such further
information regarding the business, operations, properties or financial
condition of the Company as the Agent may reasonably request.

 

6.3           Maintenance of Existence; Conduct of Business.     Preserve and
maintain its corporate existence in good standing and all of its rights,
privileges, licenses and franchises necessary in the normal conduct of its
business, including, without limitation, its eligibility as lender,
seller/servicer and issuer described under Section 5.11 hereof; conduct its
business in an orderly and efficient manner; maintain a net worth of acceptable
assets as required by HUD at any and all times for maintaining the Company’s
status as a FHA approved mortgagee; and make no material change in the nature or
character of its business or engage in any business in which it was not engaged
on the date of this Agreement.

 

6.4           Compliance with Applicable Laws.     Comply with the requirements
of all applicable laws, rules, regulations and orders of any governmental
authority, a breach of which could materially adversely affect its business,
operations, assets, or financial condition, except where contested in good faith
and by appropriate proceedings, and with sufficient reserves established
therefor.

 

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6.5           Inspection of Properties and Books.    Permit authorized
representatives of the Agent and any Lender to (a) discuss the business,
operations, assets and financial condition of the Company and Company’s
Subsidiaries with their officers and employees and to examine their books of
account, records, reports and other papers and make copies or extracts thereof,
and (b) inspect all of the Company’s property and all related information and
reports at the expense of such Lender or Agent, as applicable, all at such
reasonable times as the Agent or any Lender may request. The Company will
provide its accountants with a copy of this Agreement promptly after the
execution hereof and will instruct its accountants to answer candidly any and
all questions that the officers of the Agent or any Lender or any authorized
representatives of the Agent or any Lender may address to them in reference to
the financial condition or affairs of the Company and Company’s Subsidiaries. 
The Company may have its representatives in attendance at any meetings between
the officers or other representatives of the Agent or any Lender and the Company
accountants held in accordance with this authorization.

 

6.6           Notice.    Give prompt written notice to the Agent of (a) any
action, suit or proceeding instituted by or against the Company or any of its
Subsidiaries in any federal or state court or before any commission or other
regulatory body (federal, state or local, domestic or foreign) which action,
suit or proceeding has at issue in excess of ONE HUNDRED THOUSAND AND NO/100
DOLLARS  ($100,000.00) (except for normal collection and foreclosure proceedings
initiated by the Company in connection with a Mortgage Loan or any other
Mortgage loan), or any such proceedings threatened against the Company, or any
of Company’s Subsidiaries in writing containing the details thereof, (b) the
filing, recording or assessment of any federal, state or local tax Lien against
it, or any of its assets or any of its Subsidiaries, (c) the occurrence of any
Event of Default hereunder or the occurrence of any Default and continuation
thereof for five (5) days, (d) the suspension, revocation or termination of the
Company’s eligibility, in any respect, as approved lender, seller/servicer or
issuer as described under Section 5.11 hereof, (e) the transfer, loss or
termination of any Servicing Contract to which the Company is a party, or which
is held for the benefit of the Company, and the reason for such transfer, loss
or termination, if known to the Company, and (f) any other action, event or
condition of any nature which may lead to or result in a material adverse effect
upon the business, operations, assets, or financial condition of the Company or
Company’s Subsidiaries or which, with or without notice or lapse of time or
both, would constitute a default under any other agreement instrument or
indenture to which the Company is a party or to which the Company its properties
or assets may be subject.

 

6.7           Payment of Debt, Taxes, etc.  Pay and perform all obligations and
Indebtedness of the Company, and cause to be paid and performed all obligations
and Indebtedness of its Subsidiaries in accordance with the terms thereof and
pay and discharge or cause to be paid and discharged all taxes, assessments and
governmental charges or levies imposed upon the Company or its Subsidiaries, or
upon their respective income, receipts or properties before the same shall
become past due, as well as all lawful claims for labor, materials and supplies
or otherwise which, if unpaid, might become a Lien or charge upon such
properties or any part thereof; provided, however, that the Company and its
Subsidiaries shall not be required to pay obligation, Indebtedness, taxes,
assessments or governmental charges or levies or claims for labor, materials or
supplies for which the Company or its Subsidiaries shall have obtained an
adequate bond or adequate insurance or which are being contested in good faith
and by proper proceedings which are being reasonably and diligently pursued if
such proceedings do not

 

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involve any likelihood of the sale, forfeiture or loss of any such property or
any interest therein while such proceedings are pending, and provided further
that book reserves adequate under generally accepted accounting principles shall
have been established with respect thereto and provided further that the owing
Person’s title to, and its right to use, its property is not materially
adversely affected thereby.

 

6.8           Insurance.  Maintain (a) errors and omissions insurance or
Mortgage impairment insurance and blanket bond coverage, with such companies and
in such amounts as satisfy prevailing FNMA and FHLMC requirements applicable to
a qualified Mortgage originating institution, and (b) liability insurance and
fire and other hazard insurance on its properties, with responsible insurance
companies approved by the Agent, in such amounts and against such risks as is
customarily carried by similar businesses operating in the same vicinity; and
(c) within thirty (30) days after notice from the Agent, obtain such additional
insurance as the Agent shall reasonably require, all at the sole expense of the
Company.   Copies of such policies shall be furnished to the Agent without
charge upon obtaining such coverage or any renewal of or modification to such
coverage.

 

6.9           Closing Instructions.   Indemnify and hold the Agent and the
Lenders harmless from and against any loss, including reasonable attorneys’ fees
and costs, attributable to the failure of a title insurance company, agent or
attorney to comply with the disbursement or instruction letter or letters of the
Company or of the Agent relating to any Mortgage Loan.  The Agent shall have the
right to pre-approve the closing instructions of the Company to the title
insurance company, agent or attorney in any case where the Mortgage Loan to be
created at settlement is intended to be warehoused by the Company pursuant
hereto.

 

6.10         Other Loan Obligations.   Perform all obligations under the terms
of each loan agreement, note, mortgage, security agreement or debt instrument by
which the Company is bound or to which any of its property is subject, and
promptly notify the Agent in writing of a declared default under or the
termination, cancellation, reduction or non-renewal of any of its other lines of
credit or financing agreements with any other lender.  Exhibit “B” hereto is a
true and complete list of all such lines of credit or financing agreements as of
the date hereof.

 

6.11         Use of Proceeds of Advances.   Use the proceeds of each Advance
solely for the purpose of financing or purchasing Eligible Mortgage Loans.

 

6.12         Special Affirmative Covenants Concerning Collateral.

 

(a)           Warrant and defend the right, title and interest of the Agent and
the Lenders in and to the Collateral against the claims and demands of all
Persons whomsoever.

 

(b)           Service or cause to be serviced all Pledged Mortgages in
accordance with the standard requirements of the issuers of Purchase Commitments
covering the same and all applicable FHA and VA requirements, including without
limitation taking all actions necessary to enforce the obligations of the
obligors under such Mortgage Loans.   The Company shall service or cause to be
serviced all Mortgage Loans backing Pledged Securities in accordance with
applicable governmental requirements and issuers of

 

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Purchase Commitments covering the same. The Company shall hold all escrow funds
collected in respect of Pledged Mortgages and Mortgage Loans backing Pledged
Securities in trust, without commingling the same with non-custodial funds, and
apply the same for the purposes for which such funds were collected.

 

(c)           Execute and deliver to the Agent such Uniform Commercial Code
financing statements with respect to the Collateral as the Agent may request. 
The Company shall also execute and deliver to the Agent such further instruments
of sale, pledge or assignment or transfer, and such powers of attorney, as
required by the Agent to secure the Collateral, and shall do and perform all
matters and things necessary or desirable to be done or observed, for the
purpose of effectively creating, maintaining and preserving the security and
benefits intended to be afforded the Lenders under this Agreement.  The Agent,
on behalf of the Lenders, shall have all the rights and remedies of a secured
party under the Uniform Commercial Code of Texas, or any other applicable law,
in addition to all rights provided for herein.

 

(d)           Notify the Agent within two (2) Business Days after receipt of
notice from an Investor of any default under, or of the termination of, any
Purchase Commitment relating to any Pledged Mortgage, Eligible Mortgage Pool or
Pledged Security.

 

(e)           Promptly comply in all respects with the terms and conditions of
all Purchase Commitments, and all extensions, renewals and modifications or
substitutions thereof or thereto.  The Company will cause to be delivered to the
Investor the Pledged Mortgages and Pledged Securities to be sold under each
Purchase Commitment not later than the expiration thereof.

 

(f)            Maintain, at its principal office or in a regional office
approved by the Agent, or in the office of a computer service bureau engaged by
the Company and approved by the Agent, and, upon request, shall make available
to the Agent, for the benefit of the Lenders, the originals, or copies in any
case where the originals have been delivered to the Agent, for the benefit of
the Lenders, or to an Investor, of its Mortgage Notes and Mortgages included in
Collateral, Mortgage-backed Securities delivered to the Agent, for the benefit
of the Lenders, as Pledged Securities, Purchase Commitments, and all related
Mortgage Loan documents and instruments, and all files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards, accounting
records and other information and data relating to the Collateral.

 

6.13         Cure of Defects in Loan Documents. Promptly cure and cause to be
promptly cured any defects in the creation, issuance, execution and delivery of
this Agreement and the other Loan Documents; and upon request of the Agent and
at the Company’s expense, the Company will promptly execute and deliver, and
cause to be executed and delivered, to the Agent or its designee, all such
additional documents, agreements and/or instruments in compliance with or in
accomplishment of the covenants and agreements of this Agreement and the other
Loan Documents, and/or to create, perfect, preserve, extend and/or maintain any
and all Liens created pursuant hereto or pursuant to any other Loan Document as
valid and perfected Liens (of a priority as set forth in this Agreement) in
favor of the Agent for the benefit of the Lenders to secure the Obligations, all
as reasonably requested from time to time by the Agent.

 

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7.            NEGATIVE COVENANTS.

 

The Company hereby covenants and agrees with the Agent and the Lenders that, so
long as the Commitment is outstanding or there remain any Obligations of the
Company to be paid or performed under this Agreement or any other Loan Document,
the Company shall not, either directly or indirectly, without the prior written
consent of the Agent:

 

7.1           Contingent Liabilities.   Assume, incur, create, guarantee,
endorse, or otherwise become or be liable for the obligation of any Person other
than the Company except by endorsement of negotiable instruments for deposit or
collection in the ordinary course of business and excluding the sale of Mortgage
Loans with recourse in the ordinary course of the company’s business.

 

7.2           Pledge of Servicing Contracts/Mortgage Loans.    Except for
Mortgage Loans pledged to lenders described on Exhibit “B hereto, pledge or
grant a security interest in any existing or future Mortgage Loans or Servicing
Rights acquired by the Company other than to the Agent, for the benefit of the
Lenders, except as otherwise expressly permitted in this Agreement; provided,
however, that if no Default or Event of Default has occurred and is continuing,
servicing on individual Mortgage Loans may be sold concurrently with and
incidental to the sale of such Mortgage Loans (with servicing released) in the
ordinary course of the Company’s business.

 

7.3           Merger; Acquisitions.   Liquidate, dissolve, consolidate or merge,
or acquire any substantial part of the assets of another, except for
transactions involving not more than FIFTY THOUSAND AND NO/100 DOLLARS
($50,000.00) each.

 

7.4           Loss of Eligibility.  Take any action that would cause the Company
to lose all or any part of its status as an eligible lender, seller/servicer and
issuer as described under Section 5.11 hereof.

 

7.5           Adjusted Tangible Net Worth.   Permit the sum of the Adjusted
Tangible Net Worth of Company (and its Subsidiaries, on a consolidated basis) to
be less than an amount equal to the sum of THREE MILLION AND NO/100 DOLLARS
($3,000,000.00) plus fifty percent of the Company’s net income for each calendar
month on a cumulative basis (in no event shall the foregoing amount be reduced
by any net loss of the Company realized at any time), computed as of the end of
each calendar month.

 

7.6           Debt to Adjusted Tangible Worth Ratio.   Permit the ratio of Debt
to Adjusted Tangible Worth of the Company (and its Subsidiaries, on a
consolidated basis) to exceed 15:1, such ratio to be computed as of the end of
each calendar month.

 

7.7           Minimum Current Ratio.  Permit the Current Ratio of the Company to
be less than 1.05 to 1.0 computed as of the end of each calendar month.

 

7.8           Transactions with Affiliates.   Directly or indirectly (a) make
any loan, advance, extension of credit or capital contribution to any of its
Affiliates except as permitted by Section 7.11 hereof, (b) transfer, sell,
pledge, assign or otherwise dispose of any of its assets to or on behalf of such
Affiliates, (c) merge or consolidate with or purchase or acquire assets from
such

 

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Affiliates, or (d) transfer, pledge, or assign or otherwise pay to or on behalf
of such Affiliates management fees; provided, however, Company may pay to its
Affiliates management fees not to exceed THREE MILLION AND NO/100 DOLLARS
($3,000,000.00) per annum in the aggregate; provided that, no Default, Event of
Default or violation of Sections 7.5, 7.6, or 7.7 hereof exists at the time of
any payment of such management fees or would result after the payment of such
management fees and provided further that the payment of such management fees
would not result in a net loss for the Company for any calendar quarter or
fiscal year.

 

7.9           Limits on Corporate Distributions.  Pay, make or declare or incur
any liability to pay, make or declare any dividend (excluding stock dividends)
or other distribution, direct or indirect, on or on account of any shares of its
stock or any redemption or other acquisition, direct or indirect, of any shares
of its stock or of any warrants, rights or other options to purchase any shares
of its stock nor purchase, acquire, redeem or retire any stock or ownership
interest in itself whether now or hereafter outstanding except that so long as
no Default, Event of Default or violation of Sections 7.5, 7.6, and 7.7 hereof
exists at such time, or would exist immediately thereafter, the Company may
declare and pay cash dividends to its shareholders; provided, that (a) such cash
dividends must be declared and paid within twenty (20) days after delivery to
Agent of the financial statements described in Section 6.2(a) hereof; and (b)
provided further that such dividends shall not exceed, in the aggregate during
any fiscal year, fifty percent (50%) of the Company’s net income for such fiscal
year.

 

7.10         RICO.   Violate any laws, statutes or regulations, whether federal
or state, for which forfeiture of its properties is a potential penalty,
including, without limitations, RICO.

 

7.11         No Loans or Investments Except Approved Investments.    Without the
prior written consent of Agent, make or permit to remain outstanding any loans
or advances to, or investments in, any Person, except that the foregoing
restriction shall not apply to:

 

(a)           investments in marketable obligations maturing no later than one
hundred eighty (180) days from the date of acquisition thereof by the Company
and issued and fully guaranteed, directly, by the full faith and credit of the
Government of the United States of America or any agency thereof; and

 

(b)           investments in certificates of deposit maturing no later than one
hundred eighty (180) days from the date of issuance thereof and issued by
commercial banks in the United States and such banks rated by Moody’s Investor
Service, Inc. and receiving a rating of Prime-2 or higher on Moody’s short term
debt rating or rated by Standard & Poor’s Corporation and receiving a rating of
AA-/A1+ or higher on S&P’s short term debt rating, it being acknowledged and
agreed that the foregoing requirements shall pertain to certificates of deposit
issued and/or received on a date on or after the date of this Agreement);

 

(c)           investments not to exceed FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($500,000.00) in the aggregate;

 

(d)           investments in the acquisition or origination of Mortgage Loans in
the ordinary course of business;

 

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(e)           marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having a rating of AA-/A1 + or higher
from Standard & Poor’s Rating Group, a Division of McGraw, Hill, Inc., or rated
P-l or higher by Moody’s Investors Service, Inc.;

 

(f)            commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having a rating of AA-/A1+ or
higher from Standard & Poor’s Rating Group, a Division of McGraw, Hill, Inc., or
rated P-l by Moody’s Investors Service, Inc.;

 

(g)           investments in mutual funds that invest substantially all of their
assets in Investments of the types described in subsections (a), (b), (c) and
(e) of this Section 7.11;

 

(h)           Investments consisting of loans, advances or extensions of credit
to Affiliates made in the ordinary course of business; and

 

(i)            Investments made pursuant to Hedging Arrangements.

 

7.12         Charter Documents and Business Termination.

 

(a)           Issue, sell or commit to issue or sell any shares of its capital
stock of any class, or other equity or investment security,

 

(b)           Amend or otherwise modify its corporate charter or otherwise
change its corporate structure in any manner which will have a materially
adverse effect on the Company’s condition, financial or otherwise, or which will
have a material adverse effect upon the Company’s ability to perform, promptly
and fully, its obligations hereunder or under any of the other Loan Documents,
or

 

(c)           Take any action with a view toward its dissolution, liquidation or
termination, or, in fact, dissolve, liquidate or terminate its existence.

 

7.13         Changes in Accounting Methods.   Make any change in its accounting
method as in effect on the date of this Agreement or change its fiscal year
ending date from December 31, unless such changes (a) are required for
conformity with generally accepted accounting principles and, in such event, the
Company will give prior written notice of each such change to the Agent or (b)
or if not so required, are in conformity with generally accepted accounting
principles and have the prior written approval of the Agent which approval shall
not be unreasonably withheld.

 

7.14         No Sales, Leases or Dispositions of Property.  Except in the
ordinary course of its business, sell, lease, transfer or otherwise dispose of
all or any material portion or portions or integral part of its properties or
assets, whether now owned or hereafter acquired (whether in a single transaction
or in a series of transactions), or enter into any arrangement, directly or
indirectly, with any person, whereby it shall sell or transfer any of its
properties or assets, whether now owned or hereafter acquired, and thereafter
rent or lease as lessee such property or

 

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any part thereof which it intends to use for substantially the same purpose or
purposes as the property sold or transferred.

 

7.15         Changes in Business or Assets.  Make any substantial change (a) in
the nature of its business as now conducted, or (b) in the use of its property
as now used and proposed to be used.

 

7.16         Changes in Office or Inventory Location.   Change the address
and/or location of its chief executive office or principal place of business or
the place where it keeps its books and records or its inventory to a location
outside the State of Ohio unless, prior to any such change, the Company shall
execute and cause to be executed such additional agreements and/or lien
instruments as the Agent may reasonably request to conform with the provisions
hereof and the transactions and perfected Liens in the Collateral contemplated
under this Agreement and the other Loan Documents.

 

7.17         Special Negative Covenants Concerning Collateral.

 

(a)           Amend or modify, or waive any of the terms and conditions of, or
settle or compromise any claim in respect of, any Pledged Mortgages or Pledged
Securities.

 

(b)           Sell, assign, transfer or otherwise dispose of, or grant any
option with respect to, or pledge or otherwise encumber any of the Collateral or
any interest therein.

 

(c)           Make any compromise, adjustment or settlement in respect of any of
the Collateral or accept other than cash in payment or liquidation of the
Collateral.

 

7.18         No Indebtedness.  Except for the Indebtedness described in Exhibit
“B” hereto, incur, create, assume or guarantee or in any manner become or be
liable or permit to be outstanding any Indebtedness (including obligations for
the payment of rentals other than provided for herein) nor guarantee any
contract or other obligation, and will not in any way become or be responsible
for obligations of any Person, whether by agreement to purchase the Indebtedness
of any other Person or agreement for the furnishing of funds to any other Person
through the purchase of goods, supplies or services (or by way of stock
purchase, capital contribution, advance or loan) for the purpose of paying or
discharging the Indebtedness of any other Person or otherwise, except that the
foregoing restrictions shall not apply to:

 

(a)           the Obligations.

 

(b)           liabilities for taxes, assessments, governmental charges or levies
which are not yet due and payable or which are being contested in good faith by
appropriate proceedings diligently conducted if reserves adequate under
generally accepted accounting principles have been established therefor.

 

(c)           endorsements of negotiable instruments for collection in the
ordinary course of business.

 

(d)           indebtedness incurred in the ordinary course of business in
connection with normal trade or business obligations which are payable within
ninety (90) days of

 

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the occurrence thereof, provided, however, that no such Indebtedness shall be
incurred by the Company to any Affiliate unless it is subordinated in all
respects to the Obligations in a form and substance acceptable to the Lenders,
and is incurred in the ordinary course of business and upon substantially the
same or better terms as it could obtain in an arm’s length transaction with a
Person who is not an Affiliate,

 

(e)           Indebtedness of less than TWO HUNDRED FIFTY THOUSAND AND NO/100
DOLLARS ($250,000.00), in the aggregate, incurred in the ordinary course of
business.

 

(f)            Indebtedness incurred in the ordinary course of business for the
purpose of leasing office space or equipment to be used in the conduct of the
business of the Company.

 

7.19         Ownership of the Company.    Permit any change in the legal or
beneficial ownership of any capital stock, instruments convertible to same, or
other equity instruments, of the Company that results or would result in a
Change of Control.

 

7.20         Payments of Subordinated Debt.     Make any payment of any kind on
any Subordinated Debt until the Commitments have terminated, all Obligations
have been paid and performed in full, and any applicable preference period has
expired.

 

8.             DEFAULTS; REMEDIES.

 

8.1           Events of Default.   The occurrence of any of the following
conditions or events shall be an event of default (“Event of Default”):

 

(a)           Failure to pay the principal of any Advance when due, whether at
stated maturity, by acceleration, or otherwise; or failure to pay any
installment of interest on any Advance or any other amount due under this
Agreement within ten (10) days after the due date (other than any amounts due
under Section 3.4 hereof which shall be due and payable on its due date); or
failure to pay, beyond any applicable grace period, the principal or interest on
any other indebtedness due any Lender; or

 

(b)           Failure of the Company or any of its Subsidiaries to pay, or any
default in the payment of any principal or interest on, any other Indebtedness
or in the payment of any contingent obligation beyond any period of grace
provided; or breach or default with respect to any other material term of any
other Indebtedness of any loan agreement, mortgage, indenture or other agreement
relating thereto, if the effect of such failure, default or breach is to cause,
or to permit the holder or holders thereof (or a trustee on behalf of such
holder or holders)  to cause, Indebtedness of the Company or its Subsidiaries in
the aggregate amount of TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS
($250,000.00) or more to become or be declared due prior to its stated maturity
(upon the giving or receiving of notice, lapse of time, both, or otherwise) or
failure of the Company to perform or comply with any term or condition
applicable to it contained in Sections 6.3, 6.11, and any Section in Article 7
hereof; or

 

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(c)           Any of the Company’s representations or warranties made or deemed
made herein or in any other Loan Document, or in any statement or certificate at
any time given by the Company in writing pursuant hereto or thereto shall be
inaccurate or incomplete in any materially adverse respect on the date as of
which made or deemed made; or

 

(d)           The Company shall default in the performance of or compliance with
any term or covenant contained in this Agreement and such default shall not have
been remedied or waived within thirty (30) days after receipt of written notice
from the Agent of such default other than those referred to above in Subsections
8.1 (a), 8.1(b), or 8.l(c); or

 

(e)           (1) A court having jurisdiction shall enter a decree or order for
relief in respect of the Company or any of Company’s Subsidiaries in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect in respect of the Company or any of Company’s
Subsidiaries, which decree or order is not stayed; or a filing of an involuntary
case under any applicable bankruptcy, insolvency or other similar law in respect
of the Company or any of Company’s Subsidiaries has occurred; or (2) any other
similar relief shall be granted under any applicable federal or state law; or a
decree or order of a court having jurisdiction for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over the Company or any of Company’s Subsidiaries, or over all or
a substantial part of their respective property, shall have been entered; or the
involuntary appointment of an interim receiver, trustee or other custodian of
the Company or any of Company’s Subsidiaries, for all or a substantial part of
their respective property; or the issuance of a warrant of attachment, execution
or similar process against any substantial part of the property of the Company
or any of Company’s Subsidiaries, and the continuance of any such events in
Subsections (1) and (2) above for sixty (60) days unless dismissed or
discharged; or

 

(f)            The Company or any of Company’s Subsidiaries shall have an order
for relief entered with respect to it or commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case, or to the conversion to an involuntary case, under any such law, or shall
consent to the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property; the making by the
Company or any of Company’s Subsidiaries of any assignment for the benefit of
creditors; or the failure of the Company or any of Company’s Subsidiaries, or
the admission by any of them of its inability, to pay its debts as such debts
become due; or

 

(g)           Any money judgment, writ or warrant of attachment, or similar
process involving in any case an amount in excess of TWO HUNDRED FIFTY THOUSAND
AND NO/100 DOLLARS ($250,000.00) shall be entered or filed against the Company
or any of its Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of thirty (30) days
or in any event no later than five (5) days prior to the date of any proposed
sale thereunder; or

 

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(h)           Any order, judgment or decree shall be entered against the Company
decreeing the dissolution or split up of the Company and such order shall remain
undischarged or unstayed for a period in excess of twenty (20) days; or

 

(i)            Any Plan maintained by the Company or any of Company’s
Subsidiaries shall be terminated within the meaning of Title IV of ERISA or a
trustee shall be appointed by an appropriate United States district court to
administer any Plan, or the Pension Benefit Guaranty Corporation (or any
successor thereto) shall institute proceedings to terminate any Plan or to
appoint a trustee to administer any Plan if as of the date thereof the Company’s
or any Subsidiary’s liability (after giving effect to the tax consequences
thereof) to the Pension Benefit Guaranty Corporation (or any successor thereto)
for unfunded guaranteed vested benefits under the Plan exceeds the then current
value of assets accumulated in such Plan by more than FIFTY THOUSAND AND NO/100
DOLLARS ($50,000.00) (or in the case of a termination involving the Company or
any of Company’s Subsidiaries as a “substantial employer” (as defined in Section
4001 (a)(2) of ERISA) the withdrawing employer’s proportionate share of such
excess shall exceed such amount); or

 

(j)            The Company or any of Company’s Subsidiaries as employer under a
Multiemployer Plan shall have made a complete or partial withdrawal from such
Multiemployer Plan and the plan sponsor of such Multiemployer Plan shall have
notified such withdrawing employer that such employer has incurred a withdrawal
liability in an annual amount exceeding FIFTY THOUSAND AND NO/100 DOLLARS
($50,000.00); or

 

(k)           The Company shall purport to disavow, in writing, its obligations
hereunder or shall contest, in writing, the validity or enforceability hereof,
or the Agent’s security interest on any portion of the Collateral shall become
unperfected, of less than a first priority, unenforceable or otherwise impaired;
or

 

(l)            The Company dissolves or terminates its existence, or
discontinues its usual business; or

 

(m)          Any court shall find or rule, or the Company shall assert or claim,
in writing, (i) that the Agent does not have a valid, first priority perfected,
enforceable Lien and security interest in the Collateral as represented in this
Agreement or in any other Loan Document, or (ii) that this Agreement or any of
the Loan Documents does not or will not constitute the legal, valid, binding and
enforceable obligations of the party or parties (as applicable) thereto, or
(iii) that any Person has a conflicting or adverse Lien, claim or right in, or
with respect to, the Collateral and the Company is unable within ten (10) days
to have such finding or ruling reversed or to have such adverse Lien, claim or
right removed; or

 

(n)           The Company shall have concealed, removed, or permitted to be
concealed or removed, any part of its property, with intent to hinder, delay or
defraud its creditors or any of them, or made or suffered a transfer of any of
its property which may be fraudulent under any bankruptcy, fraudulent conveyance
or similar law; or shall have

 

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made any transfer of its property to or for the benefit of a creditor at a time
when other creditors similarly situated have not been paid; or shall have
suffered or permitted, while insolvent, any creditor to obtain a Lien upon any
of its property through legal proceedings or other process which is not vacated
within sixty (60) days from the date thereof; or

 

(o)           There shall be a material adverse change in the financial
condition, business or operations of the Company; or

 

(p)           A Change of Control occurs.

 

8.2           Remedies.

 

(a)           Upon the occurrence of any Event of Default described in Sections
8.1(e), 8.1(f), 8.1(h) or 8.1(k), the Commitment shall automatically terminate
and all unpaid and accrued Obligations of the Company shall automatically become
due and payable, without presentment for payment, demand, notice of non-payment,
protest, notice of protest, notice of intent to accelerate, notice of
acceleration, maturity, or any other notices or requirements of any kind to the
Company or any other Person liable thereon or with respect thereto, all of which
are hereby expressly waived by the Company.

 

(b)           Upon the occurrence of any Event of Default, other than those
described in Sections 8.1(e), 8.1(f), 8.1(h) or 8.1(k), the Agent may, by
written notice to the Company, terminate the Commitment and/or declare all
unpaid and accrued Obligations of the Company to be immediately due and payable,
whereupon the same shall forthwith become due and payable, together with all
accrued and unpaid interest thereon, and the obligation of the Lenders to make
any Advances shall thereupon terminate.

 

(c)           Upon the occurrence of any Event of Default, the Agent may also do
any of the following:

 

(1)           Foreclose upon or otherwise enforce its security interest in and
Lien on the Collateral to secure all payments and performance of Obligations of
the Company in any manner permitted by law or provided for hereunder.

 

(2)           Notify all obligors, servicers or other Persons in respect of the
Collateral that the Collateral has been assigned to the Agent, for the benefit
of the Lenders, and that all payments thereon are to be made directly to the
Agent, for the benefit of the Lenders, or such other party as may be designated
by the Agent; settle, compromise, or release, in whole or in part, any amounts
owing on the Collateral, any such obligor or any Investor or any portion of the
Collateral, on terms acceptable to the Agent; enforce payment and prosecute any
action or proceeding with respect to any and all Collateral; and where any such
Collateral is in default, foreclose on and enforce security interests in, such
Collateral by any available judicial procedure or without judicial process and
sell property acquired as a result of any such foreclosure.

 

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(3)           Act, or contract with a third Person to act, as servicer or
subservicer of each item of Collateral requiring servicing and perform all
obligations required in connection with Purchase Commitments, such third party’s
fees to be paid by the Company.

 

(4)           Require the Company to assemble the Collateral and/or books and
records relating thereto and make such available to the Agent at a place to be
designated by the Agent.

 

(5)           Enter onto property where any Collateral or books and records
relating thereto are located and take possession thereof with or without
judicial process.

 

(6)           Prior to the disposition of the Collateral, prepare it for
disposition in any manner and to the extent the Agent deems appropriate.

 

(7)           Exercise all rights and remedies of a secured creditor under the
Uniform Commercial Code of Texas or other applicable law, including, but not
limited to, selling or otherwise disposing of the Collateral, or any part
thereof, at one or more public or private sales, whether or not such Collateral
is present at the place of sale, for cash or credit or future delivery, on such
terms and in such manner as the Agent may determine, including, without
limitation, sale pursuant to any applicable Purchase Commitment.  If notice is
required under such applicable law, the Agent will give the Company not less
than ten (10) days’ notice of any such public sale or of the date after which
private sale may be held. The Company agrees that ten (10) days’ notice shall be
reasonable notice.   The Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and such sale may be made
at any time or place to which the same may be so adjourned. The Agent is
authorized at any such sale, if the Agent deems it advisable so to do, to
restrict the prospective bidders or purchasers to Persons who will represent and
agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or resale of any of the
Collateral.  The Company specifically agrees that any such sale, whether public
or private, of any Collateral pursuant to the commitment of any investor to
purchase such Collateral that was obtained by (or with the approval of) the
Company will be commercially reasonable, and if such sale is for the price
provided for in such commitment, then such sale shall be held to be for value
reasonably equivalent to the value of the Collateral so sold. Upon any such
sale, the Agent shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold.   Each purchaser at any such sale
shall hold the property sold absolutely free from any claim or right of
whatsoever kind, including any equity or right of redemption, stay or appraisal
which the Company has or may have under any rule of law or statute now existing
or hereafter adopted. In any case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Agent until the selling price is paid by the purchaser, but the
Agent shall not incur any liability in

 

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case of such purchaser’s failure to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may again be sold upon like
notice. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by the Agent until
the selling price is paid by the purchaser thereof, but the Agent shall not
incur any liability in case of the failure of such purchaser to take up and pay
for the Collateral so sold and, in case of any such failure, such Collateral may
again be sold upon like notice. The Agent may, however, instead of exercising
the power of sale herein conferred upon it, proceed by a suit or suits at law or
in equity to collect all amounts due upon the Collateral or to foreclose the
pledge and sell the Collateral or any portion thereof under a judgment or decree
of a court or courts of competent jurisdiction, or both.

 

(8)           Proceed against the Company on the Notes.

 

(9)           Exercise any or all of its rights, remedies or recourses under any
other Loan Documents, at law, in equity, or otherwise.

 

The Agent shall follow the instructions of the Majority Lenders in exercising or
not exercising its rights under this Section 8.2(c), but (i) the Agent shall
have no obligation to take or not to take any action which it reasonably
believes may expose it to any liability unless the Agent shall be first
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action, and (ii) the Agent may, but shall be under no obligation to,
await instructions from the Majority Lenders before exercising or not exercising
its rights under this Section 8.2(c).

 

(d)           Neither the Agent nor any Lender shall incur any liability as a
result of the sale or other disposition of the Collateral, or any part thereof,
at any public or private sale or disposition.  The Company hereby waives (to the
extent permitted by law) any claims it may have against the Agent and the
Lenders arising by reason of the fact that the price at which the Collateral may
have been sold at such private sale was less than the price which might have
been obtained at a public sale or was less than the aggregate amount of the
outstanding Advances and the unpaid interest accrued thereon, even if the Agent
accepts the first offer received and does not offer the Collateral to more than
one offeree and none of the actions described herein shall render Agent’s
disposition of the Collateral in such a manner as commercially unreasonable. 
Any sale of Collateral pursuant to the terms of a Purchase Commitment, or any
other disposition of collateral arranged by the Company, whether before or after
the occurrence of an Event of Default, shall be deemed to have been made in a
commercially reasonable manner.

 

(e)           The Company specifically waives (to the extent permitted by law)
any equity or right of redemption, all rights of redemption, stay or appraisal
which the Company has or may have under any rule of law or statute now existing
or hereafter adopted, and any right to require the Agent to (1) proceed against
any Person, (2) proceed against or exhaust any of the Collateral or pursue its
rights and remedies as against the Collateral in any particular order, or (3)
pursue any other remedy in its power. The Agent shall not be required to take
any steps necessary to preserve any rights of the Company

 

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against holders of mortgages prior in lien to the Lien of any Mortgage included
in the Collateral or to preserve rights against prior parties.

 

(f)            The Agent and the Lenders may, but shall not be obligated to,
advance any sums or do any act or thing necessary to uphold and enforce the Lien
and priority of, or the security intended to be afforded by, any Mortgage
included in the Collateral, including, without limitation, payment of delinquent
taxes or assessments and insurance premiums.  All advances, charges, costs and
expenses, including reasonable attorneys’ fees and disbursements, incurred or
paid by the Lenders in exercising any right, power or remedy conferred by this
Agreement, or in the enforcement hereof, together with interest thereon, at the
Default Rate, from the time of payment until repaid, shall become a part of the
principal balance outstanding hereunder and under the Notes.

 

(g)           No failure on the part of the Agent to exercise, and no delay in
exercising, any right, power or remedy provided hereunder, at law or in equity
shall operate as a waiver thereof; nor shall any single or partial exercise by
the Agent of any right, power or remedy provided hereunder, at law or in equity
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy.  Without intending to limit the foregoing, all defenses
based on the statute of limitations are hereby waived by the Company to the
extent permitted by law.   The remedies herein provided are cumulative and are
not exclusive of any remedies provided at law or in equity.

 

8.3           Application of Proceeds.   The proceeds of any sale or other
enforcement of the security interest in all or any part of the Collateral shall
be applied by the Agent as follows:

 

First, to the payment of the costs and expenses of such sale or enforcement,
including reasonable compensation to the Agent’s agents and counsel, and all
expenses, liabilities and advances made or incurred by or on behalf of the Agent
in connection therewith;

 

Second, to the payment of all accrued and unpaid fees and other amounts due
(other than principal and interest) under the Notes or this Agreement -  payable
ratably to Lenders in the proportion that each Lender’s share of those amounts
bears to the total of those amounts for all Lenders;

 

Third, to the payment of interest accrued and unpaid on the Notes - payable
ratably to each Lender in accordance with its Commitment Percentage;

 

Fourth, to the payment of the outstanding principal balance of the Notes -
payable ratably to each Lender in accordance with its Commitment Percentage;

 

Fifth, to the payment of all other Obligations - payable ratably to Lenders in
the proportion that each Lender’s share of those amounts bears to the total of
those amounts for all Lenders; and

 

Finally, to the payment to the Company, or to its successors or assigns, or as a
court of competent jurisdiction may direct, of any surplus then remaining from
such proceeds.

 

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If the proceeds of any such sale, disposition or other enforcement are
insufficient to cover the costs and expenses of such sale, as aforesaid, and the
payment in full of all Obligations of the Company, the Company shall remain
liable for any deficiency and shall be obligated to pay it without notice or
demand.

 

8.4           Agent Appointed Attorney-in-Fact. The Agent is hereby appointed
the attorney-in-fact of the Company, with full power of substitution, for the
purpose of carrying out the provisions hereof and taking any action and
executing any instruments which the Agent may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attomey-in-fact is
irrevocable and coupled with an interest and shall remain in full force and
effect until the full and final payment and performance of all Obligations.
Without limiting the generality of the foregoing, the Agent shall have the right
and power, either in the name of the Company or in its own name, to (a) give
notices of its security interest in the Collateral to any Person, (b) endorse in
blank, to itself, or to a nominee all items of Collateral that are transferable
by endorsement and are payable to the order of the Company, including canceling,
completing or supplying any needed or incomplete or missing endorsement of the
Company and any related assignment, (c) change or cause to be changed the
book-entry registration or name of subscriber or Investor on any Pledged
Security, and (d) receive, endorse and collect all checks made payable to the
order of the Company representing any payment on account of the principal of or
interest on, or the proceeds of sale of, any of the Pledged Mortgages or Pledged
Securities and to give full discharge for the same.

 

8.5           Right of Offset.   Company hereby grants to Agent and to each
Lender a right of offset, to secure the repayment of the Obligations, upon any
and all monies, securities, or other property of Company, and the proceeds
therefrom now or hereafter held or received by or in transit to Agent or such
Lender from or for the account of Company, whether for safekeeping, custody,
pledge, transmission, collection, or otherwise, and also upon any and all
deposits (general or special, time or demand, provisional or final) and credits
of Company, and any and all claims of Company against Agent or such Lender, at
any time existing. Upon the occurrence of any Default, Agent and each Lender are
authorized at any time and from time to time, without notice to Company, to
offset, appropriate, and apply any and all of those items against the
Obligations.   Notwithstanding anything in this section or elsewhere in this
Agreement to the contrary, neither Agent nor any other Lender shall have any
right to offset, appropriate, or apply any accounts of Company which consist of
escrowed funds (except and to the extent of any beneficial interest which
Company have in such escrowed funds) which have been so identified by Company in
writing at the time of deposit thereof.

 

8.6           Waivers.  Company waives any right to require Agent to (a) proceed
against any Person, (b) proceed against or exhaust any of the Collateral or
pursue its rights and remedies as against the Collateral in any particular
order, or (c) pursue any other remedy in its power. Agent shall not be required
to take any steps necessary to preserve any rights of Company against any Person
from which Company purchased any Mortgage Loans or to preserve rights against
prior parties.   Company and each surety, endorser, guarantor, pledgor, and
other party ever liable or whose property is ever liable for payment of any of
the Obligations jointly and severally waive presentment and demand for payment,
protest, notice of intention to accelerate, notice of acceleration, and notice
of protest and on payment, and agree that their or their property’s liability
with respect to the Obligations, or any part thereof, shall not be affected by
any renewal

 

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or extension in the time of payment of the Obligations, by any indulgence, or by
any release or change in any security for the payment of the Obligations, and
hereby consent to any and all renewals, extensions, indulgences, releases, or
changes, regardless of the number thereof.

 

8.7           Performance by Agent.   Should any covenant, duty, or agreement of
Company fail to be performed in accordance with the terms of this Agreement or
of any document delivered under this Agreement, Agent may, at its option, after
notice to Company, as the case may be, perform, or attempt to perform, such
covenant, duty, or agreement on behalf of the Company and shall notify each
Lender that it has done so. In such event, Company shall jointly and severally,
at the request of Agent, promptly pay any amount expended by Agent in such
performance or attempted performance to Agent at its principal place of
business, together with interest thereon at the Maximum Rate from the date of
such expenditure by Agent until paid. Notwithstanding the foregoing, it is
expressly understood that Agent does not assume and shall never have, except by
express written consent of Agent, any liability or responsibility for the
performance of any duties of Company under this Agreement or under any other
document delivered under this Agreement.

 

8.8           No Responsibility.    Except in the case of fraud, gross
negligence, or willful misconduct, neither Agent nor any of its officers,
directors, employees, or attorneys shall assume or ever have any liability or
responsibility for, any diminution in the value of the Collateral or any part of
the Collateral.

 

8.9           No Waiver.  The acceptance by Agent or any Lender at any time and
from time to time of partial payment or performance by Company of any of their
respective obligations under this Agreement or under any Loan Document shall not
be deemed to be a waiver of any Default then existing.  No waiver by Agent or
any Lender shall be deemed to be a waiver of any other then existing or
subsequent Default. No delay or omission by Agent or any Lender in exercising
any right under this Agreement or under any other document required to be
executed under or in connection with this Agreement shall impair such right or
be construed as a waiver thereof or any acquiescence therein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof, or the exercise of any other right under this Agreement or otherwise.

 

8.10         Cumulative Rights.   All rights available to Agent and the Lenders
under this Agreement or under any other document delivered under this Agreement
shall be cumulative of and in addition to all other rights granted to Agent and
the Lenders at law or in equity, whether or not the Notes be due and payable and
whether or not Agent shall have instituted any suit for collection, foreclosure
or other action in connection with this Agreement or any other document
delivered under this Agreement.

 

8.11         Costs.   All court costs, reasonable attorneys’ fees, other costs
of collection, and other sums spent by Agent or any Lender in the exercise of
any right provided in any Loan Document is payable to Agent or that Lender, as
the case may be, on demand, is part of the Obligations, and bears interest at
the Default Rate from the date paid by Agent or any Lender to the date repaid by
Company.

 

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9.             NOTICES.

 

All notices, demands, consents, requests and other communications required or
permitted to be given or made hereunder (collectively, “Notices”) shall, except
as otherwise expressly provided hereunder, be in writing addressed to the
respective parties hereto at their respective addresses hereinafter set forth
and shall be either (a) delivered in person, or (b) mailed, by certified,
registered, or express mail, postage prepaid, or (c) delivered by overnight
courier, or (d) telecopied to their respective telecopy numbers (with a paper
copy mailed the same day as aforesaid) as hereinafter set forth; provided any
party may change its address for notice by designating such party’s new address
in a Notice to the sending party given at least five (5) Business Days before it
shall become effective. All Notices shall be conclusively deemed to have been
properly given or served when duly received, in person regardless of how sent.
Regardless of when received, all Notices shall be conclusively deemed given or
served if addressed in accordance with this Section and (1) if by overnight
courier, on the next Business Day or (2) if mailed, on the third Business Day
after being deposited in the mails, or (3) if telecopied, when telecopied to the
telecopy number set forth below (provided a paper copy is mailed the same day):

 

If to the Company:

 

SIRVA MORTGAGE, INC.

 

 

Attn: Paul Klemme, President

 

 

6070 Parkland Boulevard

 

 

Mayfield Heights, Ohio 44124

 

 

Fax No.: (440) 646-1835

 

 

 

If to Washington Mutual
Bank, FA as Agent:

 

Washington Mutual Bank, FA

 

 

Attn:    Ms. Leticia Ruiz

 

 

Syndicated Finance

 

 

3200 Park Center Drive

 

 

Costa Mesa, California 92626

 

 

Fax No.: (714) 800-2492

 

 

 

If to Washington Mutual
Bank, FA as Lender:

 

Washington Mutual Bank, FA

 

 

Attn:   Ms. Leticia Ruiz

 

 

Syndicated Finance

 

 

3200 Park Center Drive

 

 

Costa Mesa, California 92626

 

 

Fax No.: (714) 800-2492

 

 

 

with a copy to:

 

Washington Mutual Bank, FA

 

 

Attn:   Michael D. McAuley

 

 

Mortgage Banker Finance

 

 

3200 Southwest Freeway, Suite 1922

 

 

Houston, Texas 77027

 

 

Fax No.: (713)543-4292

 

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If to National City
Bank of Kentucky as
Lender:

 

NATIONAL CITY BANK OF KENTUCKY

 

 

Attn: Mary Jo Reiss, Vice President, Mortgage Banking

 

 

421 West Market Street

 

 

Louisville, Kentucky 40202

 

 

Tel: (502) 581.4197

 

 

Fax: (502) 581.4154

 

10.           REIMBURSEMENT OF EXPENSES; INDEMNITY.

 

10.1         Reimbursement of Expenses and Indemnification by Company. The
Company shall: (a) pay all out-of-pocket costs and expenses of the Agent,
including, without limitation, reasonable attorneys’ fees in connection with the
preparation, negotiation, documentation, enforcement and administration of this
Agreement, the Notes, and other Loan Documents and the making and repayment of
the Advances and the payment of interest thereon; (b) pay, and hold the Agent
and the Lenders and any owners or holders of the Notes harmless from and
against, any and all present and future stamp, documentary and other similar
taxes with respect to the foregoing matters and save them each harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission to pay such taxes; (c) INDEMNIFY, PAY AND HOLD HARMLESS THE AGENT, EACH
LENDER, AND ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS AND
ANY SUBSEQUENT OWNERS OR HOLDERS OF THE NOTES (COLLECTIVELY, THE “INDEMNIFIED
PARTIES”) FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY
KIND WHATSOEVER (THE “INDEMNIFIED LIABILITIES”) (INCLUDING, WITHOUT LIMITATION,
INDEMNIFIED LIABILITIES RESULTING, IN WHOLE OR IN PART, FROM ANY INDEMNIFIED
PARTY’S OWN NEGLIGENCE OR STRICT LIABILITY) WHICH MAY BE IMPOSED UPON, INCURRED
BY OR ASSERTED AGAINST SUCH INDEMNIFIED PARTY IN ANY WAY RELATING TO OR ARISING
OUT OF THIS AGREEMENT, THE NOTES, OR ANY OTHER LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY TO THE EXTENT THAT ANY SUCH
INDEMNIFIED LIABILITIES RESULT (DIRECTLY OR INDIRECTLY) FROM ANY CLAIMS MADE, OR
ANY ACTIONS, SUITS OR PROCEEDINGS COMMENCED OR THREATENED, BY OR ON BEHALF OF
ANY CREDITOR (EXCLUDING THE LENDERS AND THE HOLDER OR HOLDERS OF THE NOTES),
SECURITY HOLDER, SHAREHOLDER, CUSTOMER (INCLUDING, WITHOUT LIMITATION, ANY
PERSON HAVING ANY DEALINGS OF ANY KIND WITH THE COMPANY), TRUSTEE, DIRECTOR,
OFFICER, EMPLOYEE AND/OR AGENT OF THE COMPANY ACTING IN SUCH CAPACITY, THE
COMPANY OR ANY GOVERNMENTAL REGULATORY BODY OR AUTHORITY. THE FOREGOING
INDEMNITY SHALL NOT APPLY TO THE EXTENT THE INDEMNIFIED LIABILITIES RESULT FROM
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNIFIED PARTY OR ANY
INDEMNIFIED PARTY’S OWN VIOLATIONS OF REGULATIONS APPLICABLE TO IT. THE
AGREEMENT OF THE COMPANY CONTAINED IN THIS SUBSECTION (c) SHALL

 

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SURVIVE THE EXPIRATION OR TERMINATION OF THIS AGREEMENT AND THE PAYMENT IN FULL
OF THE NOTES. ATTORNEYS’ FEES AND DISBURSEMENTS INCURRED IN ENFORCING, OR ON
APPEAL FROM, A JUDGMENT PURSUANT HERETO SHALL BE RECOVERABLE SEPARATELY FROM AND
IN ADDITION TO ANY OTHER AMOUNT INCLUDED IN SUCH JUDGMENT, AND THIS CLAUSE IS
INTENDED TO BE SEVERABLE FROM THE OTHER PROVISIONS OF THIS AGREEMENT AND TO
SURVIVE AND NOT BE MERGED INTO SUCH JUDGMENT. WITHOUT LIMITING ANY OF THE
FOREGOING, THE COMPANY SHALL UPON DEMAND PROMPTLY REIMBURSE THE AGENT FOR ALL
EXTRAORDINARY SERVICING EXPENSES INCURRED BY IT.

 

10.2         INDEMNIFICATION BY THE LENDERS.   WHETHER OR NOT ANY ADVANCE IS
MADE HEREUNDER, THE LENDERS AGREE TO INDEMNIFY, PAY, DEFEND, AND HOLD HARMLESS
THE AGENT IN ITS RESPECTIVE CAPACITY AS SUCH (TO THE EXTENT NOT REIMBURSED BY
THE COMPANY AND WITHOUT LIMITING THE OBLIGATION OF THE COMPANY TO DO SO),
RATABLY ACCORDING TO THEIR RESPECTIVE COMMITMENT PERCENTAGES, FROM AND AGAINST
ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND WHATSOEVER,
INCLUDING WITHOUT LIMITATION LIABILITIES RESULTING IN WHOLE OR PART FROM THE
AGENT’S OWN ORDINARY NEGLIGENCE OR STRICT LIABILITY, WHICH MAY AT ANY TIME
(INCLUDING WITHOUT LIMITATION AT ANY TIME FOLLOWING THE PAYMENT OF THE
OBLIGATIONS) BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE AGENT IN ANY WAY
RELATING TO OR ARISING OUT OF THE LOAN DOCUMENTS OR ANY DOCUMENTS CONTEMPLATED
BY OR REFERRED TO HEREIN OR THEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY OR ANY ACTION TAKEN OR OMITTED BY THE AGENT UNDER OR IN CONNECTION WITH
ANY OF THE FOREGOING; PROVIDED THAT NO LENDER SHALL BE LIABLE FOR THE PAYMENT OF
ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM THE
AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE
FOREGOING, EACH LENDER SHALL REIMBURSE THE AGENT UPON DEMAND FOR ITS RATABLE
SHARE OF ANY COSTS OR OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEY COSTS) INCURRED
BY THE AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY,
ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH
NEGOTIATION, LEGAL PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF
RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR
ANY DOCUMENT CONTEMPLATED BY OR REFERRED TO HEREIN, AND ALL EXTRAORDINARY
SERVICING EXPENSES, TO THE EXTENT THAT THE AGENT IS NOT REIMBURSED FOR SUCH
EXPENSES BY OR ON BEHALF OF BORROWER. THE AGREEMENTS IN THIS SECTION SHALL
SURVIVE THE PAYMENT OF THE OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.
ATTORNEYS’ FEES AND DISBURSEMENTS INCURRED IN

 

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ENFORCING, OR ON APPEAL FROM, A JUDGMENT PURSUANT HERETO SHALL BE RECOVERABLE
SEPARATELY FROM AND IN ADDITION TO ANY OTHER AMOUNT INCLUDED IN SUCH JUDGMENT,
AND THIS CLAUSE IS INTENDED TO BE SEVERABLE FROM THE OTHER PROVISIONS OF THIS
AGREEMENT AND TO SURVIVE AND NOT BE MERGED INTO SUCH JUDGMENT.

 

TO THE EXTENT THAT, AFTER THE LENDERS HAVE MADE PAYMENTS TO AGENT PURSUANT TO
THIS SECTION 10.2, AGENT RECEIVES FROM THE COMPANY, THE COLLATERAL OR ANY OTHER
SOURCE (OTHER THAN THE LENDERS) ANY AMOUNT ON ACCOUNT OF THE LIABILITIES SO PAID
BY THE LENDERS, AGENT SHALL REIMBURSE SUCH AMOUNT RECEIVED FROM THE COMPANY, THE
COLLATERAL OR SUCH OTHER SOURCE TO THE LENDERS, RATABLY IN ACCORDANCE WITH THE
AMOUNTS RECEIVED FROM THEM PURSUANT TO SECTION 10.2 FOR PURPOSES OF THE
FOREGOING SENTENCE, AGENT MAY APPLY ANY AMOUNT RECEIVED FROM THE COMPANY OR ANY
SUCH OTHER SOURCE TO ANY OBLIGATIONS OWING TO IT UNDER ANY LOAN DOCUMENT.

 

11.          FINANCIAL INFORMATION.

 

All financial statements and reports furnished to the Agent hereunder shall be
prepared in accordance with GAAP, applied on a basis consistent with that
applied in preparing the financial statements as at, and for the period ended,
the Interim Date (except to the extent otherwise required to conform to good
accounting practice).

 

12.          AGREEMENTS CONCERNING THE AGENT AND THE LENDERS.

 

12.1         Appointment.  Each of the Lenders hereby irrevocably appoints
Washington Mutual Bank, FA as the Agent under this Agreement and the other Loan
Documents and authorizes the Agent to act on such appointing Lender’s behalf and
to exercise such powers under this Agreement and all other Loan Documents as are
specifically delegated to or required of the Agent by their terms, together with
all reasonably incidental powers. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities except those expressly set forth herein or in another Loan
Document, nor shall the Agent have or be deemed to have any fiduciary
relationship with any Lender or any participant. No implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Agent. Without limiting the generality of the foregoing, the use of the term
“agent” in this Agreement or the other Loan Documents with reference to the
Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law. Instead, such
term is used merely as a matter of market custom and is intended to create or
reflect only an administrative relationship between independent contracting
parties. Each Lender hereby agrees to assert no claim against the Agent on any
agency thereof or any other theory of liability for breach of fiduciary duty,
all of which claims are hereby expressly waived by each Lender.

 

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12.2         Employment of Others by the Agent.  The Agent may execute and
perform any of its duties under the Loan Documents by or through employees,
agents and attorneys other than (a) the Company or (b) any of the Company’s
Affiliates or (c) any of the Company’s attorneys or other agents, and the Agent
shall be entitled to rely (and shall be protected in reasonably relying) on the
advice of such employees, agents and attorneys concerning all matters pertaining
to its duties under the Loan Documents.   The Agent shall not be responsible for
the negligence or misconduct of any agent or attorney selected by it in the
absence of gross negligence, fraud or willful misconduct by the Agent.   Each
Lender recognizes and understands that if, after the occurrence of any Default
under this Agreement, the Agent services any Collateral consisting of loans
secured by mortgages and the Agent does not have adequate facilities (and the
Agent shall have no obligation to develop adequate facilities) to service such
Collateral, it will be necessary for the Agent to contract with a third party to
service such Collateral and the fees to be paid for such services will be
treated as expenses payable out of the income and proceeds realized from such
Collateral having priority over other applications of such income and proceeds
pursuant to the Loan Documents. The Agent will identify any such servicing agent
selected by the Agent for such purpose by written notice to the Lenders, and may
engage and continue to employ such servicing agent unless and until the other
Lenders notify the Agent in writing that they disapprove of such servicing agent
so selected, in which event the Agent shall promptly engage such other servicing
agent as shall be approved in writing by all of the Lenders and replace the
servicing agent so originally selected.

 

12.3         Exculpatory Provisions. Except in the case of its, his or her own
(or own agent’s) fraud, gross negligence, or willful misconduct, it being
specifically intended that the Released Persons  (as defined below) be hereby
released from liability for their own simple negligence, the “Agent, et al.”
(Meaning the Agent, its Affiliates and its  - and each of its Affiliates’  -
officers, shareholders, directors, employees and agents), (collectively, the
“Released Persons”) shall not be (a) liable for any action taken or omitted to
be taken by such Released Person (1) in the exercise of the discretion or power
conferred upon such Released Person by the Loan Documents or (2) with the
consent or at the request of all Lenders or the Majority Lenders (as
applicable), or (b) responsible for consequences of any error of judgment. It is
specifically intended that each Released Person is hereby released from
liability for his, her, or its own negligence to the maximum extent permitted by
law.   The Agent, et al., shall not be responsible in any manner to anyone for
(l) the effectiveness, enforceability, legality, genuineness, sufficiency,
validity, due execution, filing, registration or recording of any of the Loan
Documents, (2) any representation, warranty, document, certificate, report or
statement made or furnished in, under or in connection with the Loan Documents
other than its own representation, warranty, certificate, report or statement
furnished to one or more Lenders in or pursuant to any Loan Document, whether
deemed given pursuant to Article 4 of this Agreement or given in a separate
writing (and no certificate, report or statement so furnished that is prepared
in reliance upon information furnished by the Company or any source other than
the Agent itself shall be construed to be a certification, confirmation,
guaranty or undertaking of any kind by the Agent of the correctness or
completeness of any of the information so relied upon by the Agent), (3) the
value of any of the Collateral, (4) except to the extent the Agent is required
to hold Collateral or take or perform any other action with respect to it in
accordance with this Agreement and which action is required of such perfection,
the perfection of any Lien on any Collateral, (5) any delay, error, omissions or
default of any third party mail, telegraph, telecopy, electronic mail, cable or
wireless agency or operator or (6) any failure of the Company to

 

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perform its obligations hereunder or under any other Loan Document. The Agent,
et al, shall not be under any obligation to anyone to (a) ascertain or to
inquire as to the performance or observation of any of the terms, covenants, or
conditions of any of the Loan Documents on the part of the Company or any other
Person or (b) inspect the property (including the books and records) of the
Company.

 

12.4         Defaults.  Should any Event of Default or Default occur and be
continuing, any Lender having actual knowledge thereof shall notify Agent and
Company of the existence thereof, but the failure of any Lender to provide that
notice shall not prejudice that Lender’s rights under this Agreement. The Agent
shall not be deemed to have knowledge or notice of the occurrence of any Default
or Event of Default unless a Vice President or more senior officer of the
Mortgage Banker Finance Group of the Agent has actual knowledge of it or such an
officer shall have received notice from the Company or a Lender referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a “Notice of Default”. The Agent shall take such action with
respect to an Event of Default as shall be reasonably directed by the Majority
Lenders; provided that unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default, as the
Agent, in its sole discretion, may deem necessary or appropriate to protect the
rights and interest of the Agent and the Lenders and to realize the benefits of
the Collateral. The Agent shall be fully justified in failing or refusing to
take any action under this Agreement and the other Loan Documents unless it
shall first receive such advice or concurrence of the Majority Lenders as it
deems appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any Loan Document in accordance with a request
of the Majority Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon the Lenders, all participants, and all
future holders of the Obligations owing by Borrower hereunder. Where this
Agreement expressly permits or prohibits an action unless the Majority Lenders
otherwise determine, the Agent shall, and in all other instances the Agent may
but shall not be required to, initiate any solicitation for the consent or a
vote of the Lenders. Notwithstanding the foregoing, the Agent shall not be
required to take any action that it reasonably believes may expose it to
personal liability or be contrary to this Agreement or applicable law.

 

12.5         Reliance.  The Agent, et al., shall be entitled to rely - and shall
be fully protected in reasonably relying - upon any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telex or teletype
message, statement, order or other document or conversation believed by it, him
or her to be genuine and correct and to have been signed or made by the proper
Person. The Agent shall not be required in any way to determine the identity or
authority of any Person delivering or executing the same. If any order, writ,
judgment or decree (an “Order”) shall be made or entered by any court affecting
the rights, duties and obligations of the Agent under the Loan Documents, then
and in any of such events the Agent is authorized, in its sole discretion, to
rely upon and comply with such Order; and if the Agent complies with any such
Order, then the Agent, et al., shall not be liable to any Lender or to any other
Person by reason of such compliance, even though such Order may be subsequently
reversed, modified, annulled, set aside, held inapplicable or vacated.

 

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12.6         Resignation of the Agent.  The Agent, or any Agent or agents
hereafter appointed, at any time may resign by giving written notice of
resignation to the Company and the Lenders and complying with the applicable
provisions of this Section.   The Agent may be removed in accordance with the
applicable provisions of Section 12.7 and with written notice to the Company.  
Upon receiving such notice of resignation or removal, a successor Agent shall be
promptly appointed by unanimous action of the Lenders by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Agent and one copy to the successor Agent.   If no successor Agent shall have
been so appointed and have accepted the appointment within thirty (30) days
after such notice of resignation, then the resigning Agent may appoint a
successor Agent, which shall itself be subject, however, to removal by the
Lenders (other than any Lender which is then the Agent) without cause (i.e.,
notwithstanding the conditions to removal of the Agent stated in Section 12.7)
upon thirty (30) days’ written notice, provided that the removing Lenders
designate another successor Agent in such notice   -   or in a separate written
notice given on or before five (5) days thereafter -  to the Agent being
removed.   If the resigning Agent does not appoint a successor Agent as provided
in the preceding sentence, then the resigning Agent or the Lenders (other than
any Lender which is then the Agent) may petition any appropriate court for the
appointment of a successor Agent.  After such notices, if any, as it may deem
proper and prescribe, such court may appoint a successor Agent.

 

12.7         Removal of the Agent.  If (a) a receiver shall be appointed by any
Governmental Authority of competent jurisdiction and shall take charge or
control of the Agent or of its Property or affairs for the purpose of
rehabilitation, conservation or liquidation, or (b) the Agent shall be grossly
negligent in the performance of its material duties and obligations under this
Agreement or engage in willful misconduct concerning any such material duties
and obligations, then, in any such case, the Lenders (other than any Lender
which is then the Agent) may remove the Agent and appoint a successor by written
instrument, in duplicate, one copy of which shall be delivered to the Agent so
removed and one copy to the successor Agent; or the Lenders (other than any
Lender which is then the Agent) may petition any court of competent jurisdiction
for the removal of the Agent and the appointment of a successor Agent. After
such notice, if any, as it may deem proper and prescribe, such court may remove
the Agent and appoint a successor Agent.

 

12.8         Effective Date of Resignation or Removal.   No resignation or
removal of the Agent shall be effective until (a) a successor Agent is appointed
pursuant to the provisions of this Agreement and has accepted the appointment as
provided in this Agreement, with a copy of such acceptance to be provided by the
successor Agent to the predecessor Agent, the Company and the Lenders (but no
notice to any other Person shall be required), and (b) the resigning or removed
Agent has taken such actions (including the deliver to the successor Agent of
Collateral and the execution and delivery to the successor Agent of assignments)
as may be necessary or appropriate to cause the successor Agent to have a
perfected Lien in the collateral for the benefit of the Lenders (provided, that
the Lenders may elect to waive the requirements of this clause (b) to facilitate
succession, although no such waiver shall excuse the resigning or removed Agent
from its obligations under this clause (b) or otherwise), and the Agent agrees
to take any and all such actions as the successor Agent may reasonably
request.   Each Lender shall be responsible, ratably, for its share of all
reasonable expenses of the resigning or removed Agent and of the successor Agent
incurred in connection with the actions to be taken in accordance with the
provisions of this Section.

 

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12.9         Successor Agent.  Any successor Agent appointed as provided in this
Article shall execute and deliver to the Company and to its predecessor Agent an
instrument accepting such appointment, and thereupon the resignation or removal
of the predecessor Agent shall become effective and such successor Agent,
without any further act, deed or conveyance, shall become vested with all the
rights and obligations of its predecessor, with like effect as if originally
named as the Agent; provided, that upon the written request of the Company or
the successor Agent, the Agent ceasing to act shall execute and deliver (a) an
instrument transferring to such successor Agent all of the rights of the Agent
so ceasing to act and (b) to such successor Agent such instruments as are
necessary to transfer the Collateral to such successor Agent (including
assignments of all Collateral or Collateral Documents). Upon the request of any
such successor Agent made from time to time, the Company shall execute any and
all papers which the successor Agent shall request or require to more fully and
certainly vest in and confirm to such successor Agent all such rights.

 

12.10       Credit Decisions.  The Lenders expressly acknowledge that neither
the Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to
them and that no act by the Agent hereinafter taken, including any consent to or
acceptance of any assignment or any review of the affairs of Borrower, shall be
deemed to constitute any representation or warranty by the Agent to any
Lender.   Each Lender acknowledges and agrees that it has, independently and
without reliance upon the Agent or any other Lender and based upon the Financial
Statements of the Company and such other documents and information as it has
deemed appropriate (and such Lender represents and agrees that it has received
and reviewed all of the information which it requested and that it requested all
information which it considered material to its credit decision), made its
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of Borrower and into all
applicable banking regulatory laws relating to the transactions contemplated by
the Loan Documents, and such Lender has made its own decision to make Advances
hereunder and enter into this Agreement.   Each Lender also acknowledges and
agrees that it will, independently and without reliance upon the Agent, et al.
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, financial and other condition
and creditworthiness of Borrower.   Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
Borrower which may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.

 

12.11       Merger of the Agent.  Any Person into which the Agent may be merged
or converted or with which it may be consolidated, or any Person surviving or
resulting from any merger, conversion or consolidation to which the Agent shall
be a party or any Person succeeding to the commercial banking business of the
Agent, shall be the successor Agent without the execution or filing of any paper
or any further act on the part of any of the parties.

 

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12.12       Agent and Affiliates.   With respect to its own Notes, the Agent
shall have the same rights and powers under the Loan Documents as any other
Lender and may exercise the same as though it were not the Agent. Each of the
Agent and its Affiliates may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with the
Company, any of its Affiliates and any Person who may do business with or own
securities of any of them, all as if it was not the Agent and without any duty
to account therefor to the Lenders. The Lenders acknowledge that, pursuant to
such activities, the Agent or its affiliates or subsidiaries may receive
information regarding Borrower or its affiliates or subsidiaries (including
information that may be subject to confidentiality obligations in favor of
Borrower or such affiliate or subsidiary) and acknowledge that the Agent shall
be under no obligation to provide such information to them.  With respect to the
Advances made by it as a Lender, the Agent shall have the same rights and powers
under this Agreement and the other Loan Documents as any Lender and may exercise
the same as though it were not the Agent, and the terms “Lender” and “Lenders”
shall include the Agent in its individual capacity.

 

12.13       Lender’s Cooperation.   The Lenders agree to cooperate among
themselves and with the Agent and from time to time upon the Agent’s request, to
execute and deliver such papers as may be reasonably necessary to enable the
Agent, in its capacity as lead lender and servicer, to effectively administer
and service the Loan and each Lender’s Senior Credit Note in the manner
contemplated by this Agreement.

 

12.14       Withholding Tax.

 

(a)           If any Lender is a “foreign corporation, partnership or trust”
within the meaning of the Code and such Lender claims exemption from, or a
reduction of, United States withholding tax under Sections 1441 or 1442 of the
Code, such Lender agrees with and in favor of the Agent, to deliver to the
Agent:

 

(i)            if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS Forms
1001 and W-8 before the payment of any interest in the first calendar year and
before the payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;

 

(ii)           if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively connected
with a United States trade or business of such Lender, two properly completed
and executed copies of IRS Form 4224 before the payment of any interest is due
in the first taxable year of such Lender and in each succeeding taxable year of
such Lender during which interest may be paid under this Agreement, and IRS Form
W-9; and

 

(iii)          such other form or forms as may be required under the Code or
other laws of the United States as a condition to exemption from, or reduction
of, United States withholding tax.

 

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Such Lender agrees to notify the Agent and Borrower promptly of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.

 

(b)           If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or part of
its Commitment Percentage to any other Person, such Lender agrees to notify the
Agent and Borrower of the Commitment Percentage so assigned.   To the extent of
such assigned Commitment Percentage, the Agent will treat such Lender’s IRS Form
1001 as no longer valid.

 

(c)           If any Lender claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of its Commitment
Percentage to any other Person, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.

 

(d)           If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation in an amount equivalent to the applicable withholding tax.

 

(e)           If the IRS or any other taxing authority asserts a claim that the
Agent did not properly withhold tax from amounts paid to or for the account of
any Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify the Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this Section,
together with all costs and expenses (including attorneys’ fees and costs). The
obligations of the Lenders under this subsection shall survive the payment of
all amounts owing by Borrower under this Agreement, termination of the
Commitments, and the resignation or replacement of the Agent.

 

12.15       Sharing.   If any Lender obtains any amount - whether voluntary,
involuntary, or otherwise, including, without limitation, as a result of
exercising its rights under Section 8.5 - that exceeds the portion of that
amount it is otherwise entitled under the Loan Documents to receive, then that
Lender shall purchase from the other Lenders participations that result in the
purchasing Lender’s sharing the excess amount ratably with each Lender in
accordance with the portion it is entitled to receive under the Loan Documents. 
If all or any of that excess amount is subsequently recovered from that
purchasing Lender, then the purchase of participations in it is automatically
rescinded and the purchase price restored to that purchasing Lender to the
extent of the recovery. Any Lender purchasing a participation from another
Lender under this Section

 

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may, to the extent lawful, exercise all of its rights of payment (including the
right of offset) with respect to that participation as fully as if that Lender
were the direct creditor of Company in the amount of that participation.

 

12.16       Commitment Increases.

 

(a)           At any time and from time to time after the date hereof, the
Commitment may be increased either by an Additional Lender establishing a
Commitment Amount or by one or more then existing Lenders (“Increase Lender”)
increasing its Commitment Amount (each such increase by either means, a
“Commitment Increase”) provided that no Commitment Increase shall become
effective unless and until (i) the Company, the Agent and the Additional Lender
or the Increase Lender shall have executed and delivered an amendment with
respect to such Commitment Increase, and (ii) such Commitment Increase shall
have been consented to by each of the other Lenders. Prior to the effective date
of any Commitment Increase, the Company shall issue a Note to the Additional
Lender or, against surrender of its existing Note to an Increase Lender, in the
amount of such Lender’s Commitment Amount after giving effect to such Commitment
Increase. Such new promissory notes shall constitute a “Note” for the purpose of
the Loan Documents.

 

(b)           On the effective date of any Commitment Increase, the Agent shall
recompute the Commitment Percentage for each Lender following the Commitment
Increase, and within in two (2) Business Days, the Agent shall request Advances
of the affected category from or shall direct prepayments of such Advances to,
each Lender so that the total amount of all then outstanding Advances of the
affected category of each category are shared pro rata with each Lender,
pursuant to Section 2.1 hereof.

 

12.17       Participation.   Each Lender reserves the rights, with prior notice
to and consent of the Agent, to sell to any bank, savings and loan, savings
bank, credit union, other deposit-taking financial institution or commercial
lending institution, participations in all or any part of such Lender’s
Advances, Note or Commitment.  Participants shall have no rights under the Loan
Documents other than certain voting rights as provided below.  Each Lender shall
be entitled to obtain (on behalf of its participants) the benefits of this
Agreement with respect to all participants in its Advances outstanding from time
to time; provided that the Company shall not be obligated to pay any amount in
excess of the amount that would be due to such Lender calculated as though no
participation had been made.   No Lender shall sell any participating interest
of less than FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00) or under which the
participant shall have any rights to approve any amendment, modification or
waiver of any Loan Documents.   Except in the case of the sale of a
participating interest to a Lender, the relevant participation agreement shall
not permit the participant to transfer, pledge, assign, sell any
subparticipation in or otherwise alienate or encumber its participation interest
in the Loan.

 

12.18       Amendments and Modifications.

 

(1)           Without the written consent of all of the Lenders, including
Washington Mutual Bank, FA, the Agent shall not agree to any amendments or
modifications to the Loan Documents, or grant a written waiver of any provision

 

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of them, the effect of which would be to (a) change the amount or the due date
of any required payment other than in accordance with the express provisions of
the Loan Documents, (b) change the interest rate provisions of this Agreement,
(c) change the provisions of Sections 2.1 (a) of this Agreement; (d) extend the
maturity date of any Note on the Termination Date, (e) change any sharing ratio
applicable to the Lenders under this Agreement except pursuant to the express
provisions of this Agreement, (f) change the several nature of the Lenders’
respective obligations to make Advances this Agreement, (g) change the
conditions precedent to any Advance in any material respect, (h) release
Collateral other than pursuant to the express provisions of this Agreement, (i)
amend this Section or the definition of “Majority Lenders”, (j) amend the
definition of “Eligible Mortgage Loan” or amend any defined term used within the
definition of “Eligible Mortgage Loan” (provided that, (x) with the approval of
the Majority Lenders, the Agent may temporarily waive or suspend one or more of
this Agreement’s eligibility requirements or conditions for a particular
grouping of Mortgage Loans to qualify as Eligible Mortgage Loans where their
failure to so qualify is beyond the Company’s reasonable control and if the
Agent believes at the time of such temporary waiver or suspension that the
factors which apparently caused such disqualification will be eliminated in a
reasonably short time and (y) in addition to the provisions of the foregoing
subclause (x) Agent may, in its sole discretion, warehouse or continue to
warehouse Mortgage Loans (“Ineligible Mortgage Loans”) which fail to qualify as
Eligible Mortgage Loans or waive or temporarily suspend or delay any obligation
of the Company hereunder in connection with such Ineligible Mortgage Loans,
including, without limitation, suspension of any mandatory prepayment due in
connection with such Ineligible Mortgage Loans, so long as the aggregate
Advances outstanding at any one time against such Ineligible Mortgage Loans
shall not exceed FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00), or (k)
increase the amount of any Lender’s Commitment Amount.

 

(2)           Agent may agree to any amendments or modifications of the Loan
Documents or grant a written waiver of any provision therein provided that it
shall not, without the written consent of the Majority Lenders, agree to any
amendment or modification of the Loan Documents or grant a written waiver of any
provision therein the effect of which would be to (a) change the provisions of
Section 2.1(b) of this Agreement; (b) waive any material Event of Default under
the Loan Documents; or (c) change or modify any other provision of this
Agreement in any material respect.

 

13.          MISCELLANEOUS.

 

13.1         Assignment.  Any Lender may, in the ordinary course of its business
and in accordance with applicable law, at any time and from time to time assign
to any Lender or any Affiliate thereof or, with the consent of the Agent (which
shall not unreasonably be withheld), to any other Person (collectively,
“Purchasing Lenders”) all or any part of its rights and obligations under this
Agreement and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit “Q” (an “Assignment and Acceptance”)

 

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executed by such Purchasing Lender (and, in the case of a Purchasing Lender that
is not then a Lender or an Affiliate thereof, by the Agent) and delivered to the
Agent for its acceptance and recording in the Register (as defined in Section
13.2); provided, that, (a) assigning Lender shall pay to the Agent an assignment
fee in the amount of FIVE THOUSAND AND NO/100 DOLLARS ($5,000.00), and except in
the case of an assignment of all of a Lender’s rights and obligations under this
Agreement, (b) the amount of the Commitment of the assigning Lender being
assigned pursuant to each such assignment shall equal at least TEN MILLION AND
NO/100 DOLLARS ($10,000,000.00) and (c) after giving effect to each such
assignment, the amount of the remaining Commitment of the assigning Lender shall
equal at least TEN MILLION AND NO/100 DOLLARS ($10,000,000.00) (or, in each
case, such lesser amount to which the Agent may consent). Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Purchasing Lender thereunder
shall be a party hereto and, to the extent provided in such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder with a
Commitment Percentage as set forth therein, and (y) the assigning Lender
thereunder shall to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of such
assigning Lender’s rights and obligations under this Agreement, such assigning
Lender shall cease to be a party hereto). Such Assignment and Acceptance shall
be deemed to amend this Agreement to the extent, and only to the extent,
necessary to reflect the addition of such Purchasing Lender and the resulting
adjustment of Commitment Percentages arising from the purchase by such
Purchasing Lender of all or a portion of the rights and obligations of such
assigning Lender.

 

13.2         The Register.  The Agent, on behalf of Borrower, shall maintain at
the office of the Agent a copy of each Assignment and Acceptance delivered to it
and a register (the “Register”) for the recordation of the names and addresses
of the Lenders and the Commitment Percentage of, and principal amount of the
Advances owing to, each Lender from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and Borrower, the Agent
and the Lenders shall treat each Person whose name is recorded in the Register
as the percentage owner of an Advance or other Obligation hereunder as the owner
thereof for all purposes of this Agreement and the other Loan Documents,
notwithstanding any notice to the contrary.  The Register shall be available for
inspection by Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.  Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and a Purchasing Lender (and, in the
case of a Purchasing Lender that is not then a Lender or an Affiliate thereof,
by the Agent and the $5,000.00 assignment fee), the Agent shall (i) promptly
accept such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders and Borrower.

 

13.3         Disclosures.  Borrower authorizes each Lender to disclose to any
Purchasing Lender or to any participant (each, a “Transferee”), and any
prospective Transferee, any and all financial information in such Lender’s
possession concerning Borrower and its Affiliates which has been delivered to
such Lender by or on behalf of Borrower pursuant to this Agreement or which has
been delivered to such Lender by or on behalf of Borrower in connection with
such Lender’s credit evaluation of Borrower and its Affiliates prior to becoming
a party to this

 

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Agreement; provided, however, that such prospective Transferee agrees it shall
be subject to the same confidentiality requirements as any Lender hereunder with
respect to such information.

 

13.4         Pledges. Nothing herein shall prohibit any Lender from pledging or
assigning all or any portion of its interest in Advances to any Federal Reserve
Bank in accordance with applicable law.

 

13.5         Governing Law.  This Agreement and the other Loan Documents shall
be governed by the laws of the State of Texas, without reference to its
principles of conflicts of laws.

 

13.6         Relationship of the Parties. This Agreement provides for the making
of Advances by the Lenders, in their capacity as lenders, to the Company, in its
capacity as a borrower, and for the payment of interest, repayment of principal
by the Company to the Lenders, and for the payment of certain fees by the
Company to the Lenders and the Agent. The relationship between the Lenders and
the Company is limited to that of creditor/secured party, on the one hand, and
debtor, on the other hand.  The provisions herein for compliance with financial
covenants and delivery of financial statements are intended solely for the
benefit of the Lenders to protect their interests as lenders in assuring
payments of interest and repayment of principal and payment of certain fees, and
nothing contained in this Agreement shall be construed as permitting or
obligating the Agent or the Lenders to act as a financial or business advisor or
consultant to the Company, as permitting or obligating the Agent or the Lenders
to control the Company or to conduct the Company’s operations, as creating any
fiduciary obligation on the part of the Agent or the Lenders to the Company, or
as creating any joint venture, agency, or other relationship between the parties
hereto other than as explicitly and specifically stated in this Agreement. The
Company acknowledges that it has had the opportunity to obtain the advice of
experienced counsel of its own choosing in connection with the negotiation and
execution of this Agreement and to obtain the advice of such counsel with
respect to all matters contained herein, including, without limitation, the
provision for waiver of trial by jury. The Company further acknowledges that it
is experienced with respect to financial and credit matters and has made its own
independent decisions to apply to the Lenders for credit and to execute and
deliver this Agreement.

 

13.7         Severability. If any provision of this Agreement shall be declared
to be illegal or unenforceable in any respect, such illegal or unenforceable
provision shall be and become absolutely null and void and of no force and
effect as though such provision were not in fact set forth herein, but all other
covenants, terms, conditions and provisions hereof shall nevertheless continue
to be valid and enforceable.

 

13.8         Usury.  It is the intent of Lenders and the Company in the
execution and performance of this Agreement and the Notes or any Loan Document
to remain in strict compliance with Applicable Law from time to time in effect. 
In furtherance thereof, Lenders and the Company stipulate and agree that none of
the terms and provisions contained in the Notes, this Agreement or any Loan
Document shall ever be construed to create a contract to pay for the use,
forbearance or detention of money with interest at a rate or in an amount in
excess of the Maximum Rate or amount of interest permitted to be charged under
Applicable Law.  For purposes of this Agreement, the Notes and any other Loan
Document, “interest” shall include the

 

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aggregate of all charges which constitute interest under Applicable Law that are
contracted for, taken, charged, reserved, or received under this Agreement, the
Notes or any other Loan Document. The Company shall never be required to pay
unearned interest or interest at a rate or in an amount in excess of the Maximum
Rate or amount of interest that may be lawfully charged under Applicable Law,
and the provisions of this paragraph shall control over all other provisions of
this Agreement and the Notes or any Loan Document, which may be in actual or
apparent conflict herewith. If the Notes are prepaid, or if the maturity of the
Notes is accelerated for any reason, or if under any other contingency the
effective rate or amount of interest which would otherwise be payable under the
Notes would exceed the Maximum Rate or amount of interest any Lender or any
other holder of the Notes is allowed by Applicable Law to charge, contract for,
take, reserve or receive, or in the event any Lender or any holder of the Notes
shall charge, contract for, take, reserve or receive monies that are deemed to
constitute interest which would, in the absence of this provision, increase the
effective rate or amount of interest payable under the Notes to a rate or amount
in excess of that permitted to be charged, contracted for, taken, reserved or
received under Applicable Law then in effect, then the principal amount of the
Notes or the amount of interest which would otherwise be payable under the Notes
or both shall be reduced to the amount allowed under Applicable Law as now or
hereinafter construed by the courts having jurisdiction, and all such moneys so
charged, contracted for, taken, reserved or received that are deemed to
constitute interest in excess of the Maximum Rate or amount of interest
permitted by Applicable Law shall immediately be returned to or credited to the
account of the Company upon such determination. Lenders and the Company further
stipulate and agree that, without limitation of the foregoing, all calculations
of the rate or amount of interest contracted for, charged, taken, reserved or
received under the Notes which are made for the purpose of determining whether
such rate or amount exceeds the Maximum Rate, shall be made to the extent not
prohibited by Applicable Law, by amortizing, prorating, allocating and spreading
during the period of the full stated term of the Notes, all interest at any time
contracted for, charged, taken, reserved or received from the Company or
otherwise by any Lender or any other holder of the Notes.

 

13.9         Consent to Jurisdiction.  Subject to the provisions of Section
13.10 of this Agreement, the Company hereby agrees that any action or proceeding
under this Agreement, the Notes or any document delivered pursuant hereto may be
commenced against it in any court of competent jurisdiction within the State of
Texas, by service of process upon the Company by first class registered or
certified mail, return receipt requested, addressed to the Company at its
address last known to the Agent.  The Company agrees that any such suit, action
or proceeding arising out of or relating to this Agreement or any other such
document may be instituted in Harris County, State District Court or in the
United States District Court for the District of Texas at the option of the
Agent; and the Company hereby waives any objection to the venue, or any claim as
to inconvenient forum, of any such suit, action or proceeding.  Nothing herein
shall affect the right of the Agent to accomplish service of process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Company in any other jurisdiction or court.

 

13.10       Arbitration.  To the maximum extent not prohibited by law, any
controversy, dispute or claim arising out of, in connection with, or relating to
the Commitment or the Loan Documents or any transaction provided for therein,
including but not limited to any claim based on or arising from an alleged tort
or an alleged breach of any agreement contained in any of the

 

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Loan Documents, shall, at the request of any party to the Loan Documents (either
before or after the commencement of judicial proceedings), be settled by
arbitration pursuant to Title 9 of the United States Code, which the parties
hereto acknowledge and agree applies to the transaction involved herein, and in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (the “AAA”). If Title 9 of the United States Code is inapplicable to
any such claim, dispute or controversy for any reason, such arbitration shall be
conducted pursuant to the Texas General Arbitration Act and in accordance with
the Commercial Arbitration Rules of the AAA. In any such arbitration proceeding:
(i) all statutes of limitations which would otherwise be applicable shall apply;
and (ii) the proceeding shall be conducted in Houston, Texas, by a single
arbitrator, if the amount in controversy is ONE MILLION AND NO/100 DOLLARS
($1,000,000.00) or less, or by a panel of three arbitrators if the amount in
controversy is over ONE MILLION AND NO/100 DOLLARS ($1,000,000.00). All
arbitrators shall be selected by the process of appointment from a panel
pursuant to Section 13 of the AAA Commercial Arbitration Rules and each
arbitrator shall be either an active attorney, a mortgage banker or retired
judge with an AAA acknowledged expertise in the subject matter of the
controversy, dispute or claim. Any award rendered in any such arbitration
proceeding shall be final and binding, and judgment upon any such award may be
entered in any court having jurisdiction.

 

If any party to any Loan Document files a proceeding in any court to resolve any
such controversy, dispute or claim, such action shall not constitute a waiver of
the right of such party or a bar to the right of any other party to seek
arbitration under the provisions of this Section of that or any other claim,
dispute or controversy, and the court shall, upon motion of any party to the
proceeding, direct that such controversy, dispute or claim be arbitrated in
accordance with this Section.

 

Notwithstanding any of the foregoing, the parties hereto agree that no
arbitrator or panel of arbitrators shall possess or have the power to (i) assess
punitive damages, (ii) dissolve, rescind or reform (except that the arbitrator
may construe ambiguous terms) any Loan Document, (iii) enter judgment on the
debt, (iv) exercise equitable powers or issue or enter any equitable remedies
with respect to matters submitted to arbitration, or (v) allow discovery of
attorney/client privileged information. The Commercial Arbitration Rules of the
AAA are hereby modified to this extent for the purpose of arbitration of any
dispute, controversy or claim arising out of, in connection with, or relating to
the Loan or any Loan Document. The parties hereby further agree to waive, each
to the other, any claims for punitive damages and agree neither an arbitrator
nor any court shall have the power to assess such damages.

 

No provision of, or the exercise of any rights under, this Section shall limit
or impair the right of any party to any Loan Document before, during or after
any arbitration proceeding to: (i) exercise self-help remedies such as setoff or
repossession; (ii) foreclose (judicially or otherwise) any Lien on or security
interest in any real or personal Collateral; or (iii) obtain emergency relief
from a court of competent jurisdiction to prevent the dissipation, damage,
destruction, transfer, hypothecation, pledging or concealment of assets or of
Collateral securing any Indebtedness, obligation or guaranty referenced in any
Loan Document. Such emergency relief may be in the nature of, but is not limited
to: pre-judgment attachments, garnishments, sequestrations, appointments of
receivers, or other emergency injunctive relief to preserve the status quo.

 

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13.11      ADDITIONAL INDEMNITY.  IN ADDITION TO THE INDEMNITY PROVIDED IN
SECTION 10, THE COMPANY SHALL INDEMNIFY AND HOLD AGENT, LENDER, AND THEIR
RESPECTIVE SUCCESSORS, ASSIGNS, AGENTS, AND EMPLOYEES (COLLECTIVELY, THE
“INDEMNIFIED PARTIES”), HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, ACTIONS,
SUITS, PROCEEDINGS, COSTS, EXPENSES, DAMAGES, FINES, PENALTIES, AND LIABILITIES,
INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND COSTS, ARISING OUT OF,
CONNECTED WITH, OR RESULTING FROM (A) THE OPERATION OF THE COMPANY’S BUSINESSES,
(B) ANY INDEMNIFIED PARTY’S PRESERVATION OR ATTEMPTED PRESERVATION OF
COLLATERAL, AND (C) ANY FAILURE OF THE SECURITY INTERESTS AND LIENS IN THE
COLLATERAL GRANTED TO THE AGENT FOR THE BENEFIT OF THE LENDERS PURSUANT TO THIS
AGREEMENT TO BE OR TO REMAIN PERFECTED OR TO HAVE THE PRIORITY AS CONTEMPLATED
THEREIN REGARDLESS OF WHETHER THE CLAIM IS CAUSED BY OR ARISES OUT OF, IN WHOLE
OR IN PART, THE NEGLIGENCE OF ANY INDEMNIFIED PARTY OR MAY BE BASED ON THE
STRICT LIABILITY OF ANY INDEMNIFIED PARTY. THIS INDEMNITY SHALL NOT APPLY TO THE
EXTENT THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY INDEMNIFIED PARTY. AT THE REQUEST
OF ANY INDEMNIFIED PARTY, THE COMPANY SHALL, AT ITS OWN COST AND EXPENSE, DEFEND
OR CAUSE TO BE DEFENDED ANY AND ALL SUCH ACTIONS OR SUITS THAT MAY BE BROUGHT
AGAINST ANY INDEMNIFIED PARTY AND, IN ANY EVENT, SHALL SATISFY, PAY, AND
DISCHARGE ANY AND ALL JUDGMENTS, AWARDS, PENALTIES, COSTS, AND FINES THAT MAY BE
RECOVERED AGAINST ANY INDEMNIFIED PARTY IN ANY SUCH ACTION, PLUS ALL ATTORNEYS’
FEES AND COSTS RELATED THERETO TO THE EXTENT PERMITTED BY APPLICABLE LAW;
PROVIDED, HOWEVER, THAT SUCH INDEMNIFIED PARTY SHALL GIVE THE COMPANY (TO THE
EXTENT SUCH INDEMNIFIED PARTY SEEKS INDEMNIFICATION THEREFOR FROM THE COMPANY
UNDER THIS SECTION 13.10) WRITTEN NOTICE OF ANY SUCH CLAIM, DEMAND, OR SUIT
AFTER SUCH INDEMNIFIED PARTY HAS RECEIVED WRITTEN NOTICE THEREOF, AND SUCH
INDEMNIFIED PARTY SHALL NOT SETTLE ANY SUCH CLAIM, DEMAND, OR SUIT, IF SUCH
INDEMNIFIED PARTY SEEKS INDEMNIFICATION THEREFOR FROM THE COMPANY, WITHOUT FIRST
GIVING NOTICE TO THE COMPANY OF THE INDEMNIFIED PARTY’S DESIRE TO SETTLE AND
OBTAINING THE CONSENT OF THE COMPANY TO THE SAME, WHICH CONSENT THE COMPANY
HEREBY AGREES NOT TO UNREASONABLY WITHHOLD. ALL OBLIGATIONS OF THE COMPANY UNDER
THIS SECTION 13.10 SHALL SURVIVE THE PAYMENT OF THE NOTES AND THE OBLIGATIONS.

 

13.12       No Waivers Except in Writing.  No failure or delay on the part of
the Agent in exercising any power or right hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. No notice to or demand on

 

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the Company or any other Person in any case shall entitle the Company or such
other Person to any other or further notice or demand in similar or other
circumstances.

 

13.13      WAIVER OF JURY TRIAL.  AS TO THIS AGREEMENT THE COMPANY, THE AGENT
AND EACH OF THE LENDERS HEREBY (a) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY
JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY, AND (b) WAIVES ANY RIGHT TO TRIAL
BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST.
THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN, KNOWINGLY AND
VOLUNTARILY, BY THE COMPANY, THE AGENT AND EACH OF THE LENDERS, AND THIS WAIVER
IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
THE RIGHT OF A JURY TRIAL WOULD OTHERWISE ACCRUE. THE AGENT, THE LENDERS AND THE
COMPANY ARE HEREBY AUTHORIZED AND REQUESTED TO SUBMIT THIS AGREEMENT TO ANY
COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES HERETO, SO AS
TO SERVE AS CONCLUSIVE EVIDENCE OF THE FOREGOING WAIVER OF THE RIGHT TO JURY
TRIAL. FURTHER THE AGENT, THE COMPANY AND EACH OF THE LENDERS HEREBY CERTIFIES
THAT NO REPRESENTATIVE OR AGENT OF ANY OF THEM, RESPECTIVELY, HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, TO ANY OF THE UNDERSIGNED THAT EITHER OF THE AGENT, THE
COMPANY OR ANY OF THE LENDERS WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO
JURY TRIAL PROVISION.

 

13.14       Multiple Counterparts.  This Agreement may be executed in any number
of counterparts, all of which, taken together, shall constitute one and the same
instrument.

 

13.15       No Third Party Beneficiaries.  This Agreement is for the sole and
exclusive benefit of the Company, the Agent, and Lenders.  This Agreement does
not create, and is not intended to create, any rights in favor of or enforceable
by any other Person.  This Agreement may be amended or modified by the agreement
of the Company, the Agent, and Lenders, without any requirement or necessity for
notice to, or the consent of or approval of any other Person.

 

13.16      RELEASE OF LIABILITY.  TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW
FROM TIME TO TIME IN EFFECT, THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY (AND AFTER IT HAS CONSULTED WITH ITS OWN ATTORNEY) IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT NO CLAIM MAY BE MADE BY THE COMPANY AGAINST THE
AGENT, EACH LENDER, OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS, ACCOUNTANTS, AGENTS OR INSURERS, OR ANY OF THEIR SUCCESSORS AND
ASSIGNS, FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT
OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM IS BASED ON CONTRACT OR
TORT OR DUTY IMPOSED BY LAW) ARISING OUT OF, OR RELATED TO, THE TRANSACTIONS
CONTEMPLATED BY ANY OF THIS AGREEMENT, THE NOTES, OR ANY OTHER LOAN DOCUMENTS,
OR ANY ACT, OMISSION, OR EVENT OCCURRING IN

 

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CONNECTION HEREWITH OR THEREWITH. IN FURTHERANCE OF THE FOREGOING, THE COMPANY
HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR ANY SUCH
DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST
IN ITS FAVOR.

 

13.17       Entire Agreement; Amendment.  This Agreement, the Notes, and the
other Loan Documents referred to herein embody the final, entire Agreement among
the parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof.  The provisions of this Agreement and the other Loan
Documents to which the Company is a party may be amended or waived only by an
instrument in writing signed by the parties hereto.

 

13.18      NOTICE PURSUANT TO TX. BUS. & COMM. CODE § 26.02.  THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

 

COMPANY:

 

 

 

SIRVA MORTGAGE, INC.,

 

an Ohio corporation f/k/a

 

COOPERATIVE MORTGAGE SERVICES, INC.

 

 

 

 

 

By:

/s/ Paul Klemme

 

 

Paul Klemme, President

 

75

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AGENT:

 

 

 

WASHINGTON MUTUAL BANK, FA,

 

a federal association, as Agent for the Lenders

 

 

 

 

 

By:

/s/ Craig A. Moyer

 

Name:

CRAIG A. MOYER

 

Title:

FVP

 

 

 

 

 

DOCUMENTATION AGENT:

 

 

 

NATIONAL CITY BANK OF KENTUCKY,

 

as Documentation Agent

 

 

 

 

 

By:

/s/  Mary Jo Reiss

 

Name:

 

Mary Jo Reiss

 

Title:

 

Vice President

 

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LENDERS:

 

 

 

WASHINGTON MUTUAL BANK, FA,

 

a federal association, as a Lender

 

 

 

 

 

By:

/s/  Benson R. Culver

 

Name:

 

BENSON R. CULVER

 

Title:

 

V.P

 

 

 

 

 

NATIONAL CITY BANK OF KENTUCKY,

 

as a Lender

 

 

 

 

 

By:

/s/  Mary Jo Reiss

 

Name:

 

Mary Jo Reiss

 

Title:

 

Vice President

 

EXHIBITS:

 

A

 

-

 

Advance Request (Single Family Mortgage Loans)

B

 

-

 

Existing Company Indebtedness

C

 

-

 

Collateral Procedures and Documentation

D

 

-

 

Shipping Instructions

E

 

-

 

Trust Receipt

F

 

-

 

Officer’s Certificate

G

 

-

 

Subsidiaries

H

 

-

 

Litigation

I

 

-

 

Trade Names

J

 

-

 

Certificate of Corporate Resolutions

K

 

-

 

Bailee Letter

L

 

-

 

Investors

M

 

-

 

Legal Opinion

N

 

-

 

Promissory Note

O

 

-

 

Lenders, Aggregate Commitment Amount, and Commitment Amount

P

 

-

 

Intentionally deleted

Q

 

-

 

Form of Assignment and Acceptance

 

77

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EXHIBIT A

 

ADVANCE REQUEST FOR SINGLE-FAMILY MORTGAGE LOAN

 

Warehouse

 

Company:

SIRVA MORTGAGE, INC.

Sublimit:

o REGL

o WAMU

 

 

 

Loan ID#:

 

 

Mortgagor Name:

 

 

Address:

 

 

City/State/Zip:

 

 

County:

 

 

Social Security #:

 

 

 

 

 

 

Product:

Note $:

 

Wh $:

 

Prps- Units:

 

Check or Wire

 

Rate:

 

 

 

Closing Agent:

 

 

 

Clos. Agnt Contact:

 

Contact

 

 

 

 

 

Mortgage Date:

Investor:

 

 

 

Loan Closing Date:

Price:

 

 

 

 

Commitment #:

 

 

 

 

Expiration Date:

 

 

 

 

 

 

 

 

Prop Type:

Orig. LTV:

 

 

FICO Score:

 

Lien Type:

Orig CLTV:

 

 

Cred Grade:

 

Company:

 

SIRVA MORTGAGE, INC.

By (signature):

 

 

Name (printed or typed):

 

 

Phone (with area code)

 

 

 

 

 

 

Funding Method Details (if Wire, complete all sections)

 

Wireo

Checko             Check #:

Cashier’s Checko

 

Bank:

 

ABA #:

 

 

City & State :

 

Account #:

 

 

Closing

 

 

 

Agent/Beneficiary

 

 

 

Clos. Agnt/Benef.

 

 

 

Address:

 

 

 

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EXHIBIT B

 

LIST OF EXISTING INDEBTEDNESS OF COMPANY

 

LENDER

 

TYPE OF
FINANCING

 

COMMITMENT
AMOUNT

 

SECURITY

 

BALANCE
OUTSTANDING AS
OF
March 31, 2001

 

 

 

 

 

 

 

 

 

Washington Mutual

 

Warehouse Line

 

$

40,000,000.00

 

Whole Loans

 

$

28,669,800

 

79

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EXHIBIT C

 

PROCEDURES AND DOCUMENTATION FOR WAREHOUSING
SINGLE-FAMILY MORTGAGE LOANS

 

The following collateral procedures and documentation requirements must be
observed in all respects by SIRVA MORTGAGE, INC. (the “Company”). All documents
must be satisfactory to Agent in its sole discretion. Terms used below, which
are not otherwise defined, shall have the meanings given them in the Third
Amended and Restated Warehousing Credit and Security Agreement, as amended,
modified or renewed from time to time.

 

I.                                         Warehouse Advance against
Single-family Mortgage Loans (Dry Advance). Prior to Lenders making an Advance
that is not a Wet Advance, the Agent must receive the following, by 11:00 a.m.
Houston, Texas time for an Advance to be funded the same day:

 

(a)                                  Request for Advance against Single-Family
Mortgage Loans (Exhibit “A”) by fax or electronic means.

 

(b)                                 Original signed Mortgage Note with an
endorsement “in blank” on or attached to the Mortgage Note.

 

(c)                                  Copy of Mortgage (including, if requested
by Agent and at the Agent’s sole discretion, the original certification of
closing agent that such photocopy is a true copy of the original that has been
sent for recording),

 

(d)                                 Original Assignment of the Mortgage “in
blank,” in recordable form.

 

(e)                                  Copy of the intervening Assignment of the
Mortgage, whether recorded or unrecorded.

 

II.                                     Warehouse Advance against Single-family
Mortgage Loans (Wet Advances). Prior to Lenders making a Wet Advance, the Agent
must receive the following, by 11:00 a.m. Houston, Texas time for an Advance to
be funded the same day:

 

(a)                                  Request for Advance against Single-Family
Mortgage Loans (Exhibit “A”). (Form may be sent by facsimile or by electronic
means.)

 

The Mortgage Note and other supporting documents described in Section I must be
received by the Agent within five (5) Business Days of the date of the Wet
Advance.

 

III.                                 Delivery of Mortgage Loans and
Mortgage-backed Securities. The Agent exclusively shall deliver pledged Mortgage
Notes or Pledged Securities held by the Agent, if any, to an Investor or
Approved Custodian unless otherwise agreed in writing. The HUD, FNMA and FHLMC
forms referred to herein are for convenience only and the Company shall use the
equivalent forms required at the time of delivery of the pledged Mortgage Notes
or Pledged Securities.

 

A.                                   The following procedures are to be followed
for deliveries of pledged Mortgage Notes to Investors:

 

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No later than 2:00 p.m. Houston, Texas time one (1) Business Day prior to the
expiration date of the Purchase Commitment, the Agent must receive the
following:

 

(1)                                  Signed shipping instructions for the
delivery of the pledged Mortgage Note including the following (such shipping
instructions to be substantially in the form of Exhibit “D” to this Agreement):

 

(a)                                  Name and address of the office of the
Investor to which the Mortgage Note is to be shipped and the preferred method of
delivery;

 

(b)                                 Instructions for endorsement of the Mortgage
Note;

 

(c)                                  Name of Mortgagor or Mortgage Loan number
and Mortgage Note Amount.

 

(2)                                  For deliveries of pledged Mortgage Notes to
FNMA for cash purchase, the following additional documents are required:

 

Original Loan Schedule (FNMA approved form) showing the Agent’s designated FNMA
payee code as recipient of the loan purchase proceeds.

 

(3)                                  For deliveries of pledged Mortgage Notes to
FHLMC for cash purchase, the following additional documents are required:

 

(a)                                  Original completed Warehouse Lender Release
of Security Interest (FHLMC approved form ) to be executed by the Agent.

 

(b)                                 Original Wire Transfer Authorization for a
Cash Warehouse Delivery (FHLMC approved form), designating the Agent as the
Warehouse Lender and showing the cash collateral account designated by the Agent
as the receiving account for loan purchase proceeds.

 

B.                                     The following procedures are to be
followed for deliveries of pledged Mortgage Notes to Approved Custodians for the
issuance of Mortgage-backed Securities:

 

No later than one (1) Business Day prior to required delivery date to the
Approved Custodian, the Agent must receive the following:

 

(1)                                  Signed shipping instructions for the
delivery of the Mortgage Notes within the Collateral to the Approved Custodian
including the following (such shipping instructions to be in the form of Exhibit
“D” to this Agreement):

 

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(a)                                  Name and address of the office of the
Approved Custodian to which the Mortgage Notes are to be shipped and the
preferred method of delivery;

 

(b)                                 Instructions for endorsement of the Mortgage
Note; and

 

(c)                                  Names of Mortgagor or Mortgage Loan number
and Mortgage Note Amounts of pledged Mortgage Notes.

 

(2)                                  For FNMA Mortgage-backed Securities
issuance, the following additional documents are required:

 

(a)                                  Original Schedule of Mortgages (FNMA
approved form).

 

(b)                                 Original executed Security Release
Certification (FNMA approved form) to be executed by the Agent.

 

(c)                                  Original Delivery Schedule (FNMA approved
form), instructing FNMA to issue the Mortgage-backed Securities in the name of
the Company with the Agent as pledgee and to deliver the Mortgage-backed
Securities to the Agent’s custody account and bearing the following
instructions:  These instructions may not be changed without the prior written
consent of Washington Mutual Bank, FA.

 

(3)                                  For FHLMC Mortgage-backed Securities
issuance, the following additional documents are required:

 

Original Settlement Information and Delivery Authorization (FHLMC approved
form), designating the Agent as the Warehouse Lender and instructing FHLMC to
deliver the Mortgage-backed Securities to the Agent’s custody account.

 

(4)                                  For GNMA Mortgage-backed Securities
issuance, the following additional documents are required:

 

(a)                                  Signed original Schedule of Mortgages (HUD
approved form).

 

(b)                                 Signed original Schedule of Subscribers (HUD
approved form) instructing GNMA to issue the Mortgage-backed Securities in the
name of the Company and designating Washington Mutual Bank, FA as Agent for the
Lenders as the subscriber.  The following instructions must also be included on
the form: “These instructions may not be changed without the prior written
consent of Washington Mutual Bank, FA.”

 

(c)                                  Completed original Release of Security
Interest (HUD approved form) to be executed by the Agent.

 

(5)                                  No later than two (2) Business Days prior
to the Settlement Date for the Mortgage-backed Securities, the Agent must
receive signed securities delivery instructions in a form acceptable to the
Agent.

 

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Upon instruction by the Company, the Agent will complete the endorsement of the
pledged Mortgage Note and make arrangements for the delivery of the Mortgage
Note with the appropriate Bailee Letter to the Investor or Approved Custodian. 
Upon receipt of Mortgage-backed Securities, the Agent will cause such
Mortgage-backed Securities to be delivered to the Investor which issued the
Purchase Commitment. Mortgage-backed Securities will be released to the Investor
only upon payment of the purchase proceeds to the Agent. Cash proceeds of sales
of Mortgage Loans and Mortgage-backed Securities within the Collateral shall be
applied to related Advances outstanding under the Commitment.

 

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SCHEDULE II

 

CONFIRMATION LETTER

 

[On Take-out Investor’s Letterhead]

Sent via facsimile to (713) 543-6022

 

[Date]

Attn: Kay Thomas

Washington Mutual Bank, FA

3200 Southwest Freeway

PT1922

Houston TX 77027

Phone: (713) 543-6408

 

 

Re:

 

 

 

Mortgagor Name:

 

 

 

Mortgage Note Date:

 

 

 

Mortgage Note Amount:

 

$

 

 

[Investor Name] is in possession of the Mortgage Note(s) identified above [or on
the attached schedule] and has been asked to ship the Mortgage Note(s) to
Washington Mutual Bank, FA upon receipt of a wire greater than or equal to the
Mortgage Note Amount(s) stated herein.

 

Please wire funds to the following:

 

Receiving Bank:

 

 

 

Bank City & State:

 

 

 

ABA Number:

 

 

-

 

-

 

 

Account Name:

 

 

 

Account Number:

 

 

 

Reference:

 

 

 

 

Upon the receipt of funds pursuant to the above instructions, we will deliver
the Mortgage Note to you at the above address. Please contact the undersigned
with any questions.

 

Sincerely,

 

 

Signature:

 

 

Name:

 

 

Title:

 

 

Phone:

 

 

 

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EXHIBIT D

 

FORM OF SHIPPING REQUEST AND AUTHORIZATION

 

Date:

 

 

 

 

 

Attn: Loan Administrator

 

Fax: (713) 543-6022

Washington Mutual Bank, FA

 

Mortgage Banker Finance

3200 Southwest Freeway, HOU 1922

 

Houston TX 77027

 

This letter serves as authorization for Washington Mutual Bank, FA as Agent to
endorse and ship the Mortgage Note(s) listed below or on the attached schedule:

 

Mortgagor Name

 

Loan Number

 

Mortgage Note
Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Insert the following take-out investor name in the endorsement or allonge:

 

 

 

Deliver the Mortgage Note(s) as follows, using our overnight delivery account
mentioned below:

 

Date to be shipped:

 

Ship to this company:

 

Attn (person or dept.):

 

Street Address:

 

City/State/Zip

 

Telephone:

 

Overnight delivery provider:

 

Our overnight account #:

 

 

 

 

 

Company:

SIRVA MORTGAGE, INC.

By: (signature)

 

Name: (printed)

 

Phone: (printed)

 

 

Requests received after 2:00 p.m. Central will be processed the next Business
Day.

 

85

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EXHIBIT E

 

TRUST RECEIPT

 

Date:

 

 

 

 

 

Attn: Loan Administrator

 

Fax: (713) 543-6022

Washington Mutual Bank, FA

 

Mortgage Banker Finance

3200 Southwest Freeway, HOU 1922

 

Houston TX 77027

 

The undersigned, SIRVA MORTGAGE, INC., an Ohio corporation (the “Company”),
hereby requests that WASHINGTON MUTUAL BANK, FA, a federal association (“Agent”)
return to the Company the original mortgage note(s) for the mortgage loan(s)
listed below, for the reason(s) set forth below:

 

Mortgagor Name
(or Loan Number)

 

Mortgage Note
Amount

 

Reason(s)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company hereby acknowledges that (a) a security interest pursuant to the
Uniform Commercial Code in the Mortgage Notes and proceeds thereof has been
granted to the Agent; (b) the Company will hold these Mortgage Notes in trust
for Agent and Lenders as provided under and in accordance with all provisions of
the Third Amended and Restated Warehousing Credit and Security Agreement as same
may be amended from time to time (the “Agreement”); (c) the Company will return
the corrected Mortgage Notes to Agent no later than the close of business on the
tenth calendar day following the date of this letter; and (d) the aggregate
principal sum of all Mortgage Notes released to Company in trust does not exceed
$500,000. All capitalized terms appearing herein have the same meanings ascribed
to them in the Agreement.

 

 

COMPANY:

SIRVA MORTGAGE, INC.

By: (signature)

 

Name: (printed)

 

Phone: (printed)

 

 

***For optional Washington Mutual Bank, FA use only***

 

Date Washington Mutual Bank, FA
Delivers Mortgage Note to Company for
correction/completion

 

Initials

 

Date Loan Administrator receives
corrected/completed Mortgage Note from
Company

 

Initials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

86

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EXHIBIT F

 

COMPLIANCE CERTIFICATE

 

 

COMPANY:

 

SIRVA MORTGAGE, INC.

LENDER:

 

WASHINGTON MUTUAL BANK, FA,

TODAY’S DATE:

 

                                     , 20    

REPORTING PERIOD ENDED:

 

                                            ended                                    ,
20    

 

This certificate is delivered to Lender under the Third Amended Warehousing
Credit and Security Agreement dated effective as of September 30, 2002 between
the Company and the Lender (the “Agreement”), all the defined terms of which
have the same meanings when used herein.

 

I hereby certify that: (a) I am, and at all times mentioned herein have been,
the duly elected, qualified, and acting officer of Company designated below; (b)
to the best of my knowledge, the Financial Statements of Company from the period
shown about (the “Reporting Period”) and which accompany this certificate were
prepared in accordance with GAAP and present fairly the financial condition of
Company as f the end of the Reporting Period and the results of its operations
for Reporting Period; (c) a review of the Agreement and of the activities of the
Company during the Reporting Period has been made under my supervision with a
view to determining Company’s compliance with the covenants, requirements,
terms, and conditions of the Agreement, and such review has not disclosed the
existence during or at the end of the Reporting Period (and I have no knowledge
of the existence as of the date hereof) of any Default or Event of Default,
except as disclosed herein (which specifies the nature a d period of existence
of each Default or Event of Default, if any, and what action Company has taken,
is taking, and proposes to take with respect to each); (d) the calculations
described herein evidence that the Company is in compliance with the
requirements of the Agreement at the end of the Reporting Period (or if Company
is not in compliance, showing the extent of non-compliance and specifying the
period of non-compliance and what actions the Company proposes to take with
respect thereto); (e) the company was, as of the end of the Reporting Period, in
compliance and good standing with applicable FNMA, GNMA, FHLMC, and HUD net
worth requirements.

 

SIRVA MORTGAGE, INC.

By:

 

 

Name:

 

 

Title:

 

 

 

87

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COMPANY:

SIRVA MORTGAGE, INC.

 

REPORTING PERIOD ENDED:

 

 

 

All financial calculations set forth herein are as of the end of the Reporting
Period.

 

I.                                         TANGIBLE NET WORTH

 

The Tangible Net Worth of the Company is:

 

 

Shareholder’s Equity:

 

$

Minus: Intangible Assets, including Capitalized Servicing Rights:

 

$

Minus: Advances of loans to shareholders, officers or Affiliates:

 

$

Minus: Investments in Affiliates:

 

$

Minus: Assets pledged to secure liabilities not included in Debt:

 

$

Minus: Net Investment in Real Estate

 

$

Minus: Any other HUD nonacceptable assets:

 

$

TANGIBLE NET WORTH:

 

$

 

II.                                     ADJUSTED TANGIBLE NET WORTH

 

The Adjusted Tangible Net Worth of the Company is:

 

 

Tangible Net Worth (from above):

 

$

Plus: Subordinated Debt:

 

$

Plus: 1.00% times UPB of Servicing Rights:

 

$

ADJUSTED TANGIBLE NET WORTH:

 

$

REQUIRED MINIMUM through [insert covenant date change]

 

$

x,xxx,xxx

REQUIRED MINIMUM after [insert covenant date change]

 

$

x,xxx,xxx

In compliance?

 

[Yes or No]

 

88

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III.                                 DEBT OF THE COMPANY

 

Total Liabilities

 

$

Minus: Loan loss reserves:

 

$

Minus: Deferred taxes arising from capitalized excess servicing fees:

 

$

DEBT:

 

$

 

IV.                                DEBT TO ADJUSTED TANGIBLE NET WORTH

 

Debt (from above):

 

$

Adjusted Tangible Net Worth

 

$

RATIO OF ADJUSTED TANGIBLE NET WORTH:

 

   :1

Maximum permitted through [insert covenant date change]

 

xx:1

Maximum permitted after [insert covenant date change]

 

xx:l

In compliance?

 

[Yes or No]

 

V.                                    CURRENT RATIO

 

Current Assets (assets that are now cash or will be by their terms or
disposition be to cash within one year of the date of calculation)

 

$

Current Liabilities (liabilities due upon demand or within one year from the
date of calculation)

 

$

RATIO OF CURRENT ASSETS TO CURRENT LIABILITIES

 

   :1

Minimum required through [insert covenant date change]

 

xx:1

Minimum required after [insert covenant date change]

 

xx:1

In compliance?

 

[Yes or No]

 

VI.                                OWNER/OFFICER COMPENSATION

 

 

Current Month

 

Year-to-Date

 

Expensed Compensation

 

$

 

$

 

Plus: Dividends

 

$

 

$

 

Plus: Loans to Owners

 

$

 

$

 

Plus: Loans to Other Officers

 

$

 

$

 

TOTAL

 

$

 

$

 

 

89

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VII.                            PRODUCTION

 

 

 

Current Month

 

Year-to-Date

 

Total Mortgage Loans Funded

 

$

 

$

 

Wholesale as % of Total

 

 

%

 

%

Retail as% of Total

 

 

%

 

%

 

By Category

 

Current Month

 

Year-to-Date

 

Government as % of Total

 

 

%

 

%

Conventional as % of Total

 

 

%

 

%

Jumbo as % of Total

 

 

%

 

%

Subprime as % of Total

 

 

%

 

%

Second Mortgages as %

 

 

%

 

%

Other (Describe)

 

 

%

 

%

Total (Must = 100%)

 

 

%

 

%

 

VIII.                        TRANSACTIONS WITH AFFILIATES

 

Transactions with Affiliates (year-to-date)

 

$

 

Maximum permitted

 

$

[$ from credit agreement]

 

In compliance?

 

[Yes or No]

 

 

IX.                                THIRD PARTY REPORTS

 

All reports received from third parties (such as the SEC, FNMA, GNMA, FHLMC)
subsequent to the last reporting period are attached hereto. These reports
include the following (if none, write “None”):

 

X.                                    DEFAULTS OR EVENTS OF DEFAULT

 

Disclose nature and period of existence and action being taken in connection
therewith; if none, write “None”:

 

90

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EXHIBIT G

 

LIST OF SUBSIDIARIES

 

NAME

 

ADDRESS OF
PRINCIPAL OFFICE

 

STATE OF
ORGANIZATION

 

WHERE
QUALIFIED
FOREIGN CO.

 

COMPANY’S
PERCENTAGE
OWNERSHIP

 

 

 

 

 

 

 

 

 

 

 

None.

 

 

 

 

 

 

 

 

 

 

91

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EXHIBIT H

 

DISCLOSURE OF PENDING LITIGATION

 

(Include the caption of the case, including styling, cause number, and court in
which it is pending, date filed, status of the proceedings, and description of
claims, counterclaims and damages asserted.)

 

None.

 

92

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EXHIBIT I

 

TRADE NAMES OF COMPANY

 

 

Trade Name

 

Jurisdiction Used

 

 

 

Cooperative Mortgage Services, Inc.

 

AL; AK; AR; AZ; CA; CT; DE; FL; HI; ID;

 

 

IN; IA; KS; KY; LA; MD; ME; MN; MI; MIT;

 

 

NE; NV; NH; NM; ND; OH; O; PA; RI; SC;

 

 

SD; TN; TX; UT; VT; WA; WV; WY

CMS Mortgage Services, Inc.

 

DC; GA; NY; MI; MO; NJ; NC; OK; IL; VA

CMS Mortgage Services

 

MA; WI

 

93

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EXHIBIT J

 

CERTIFICATE OF CORPORATE RESOLUTIONS

AND INCUMBENCY OF OFFICERS

(BORROWING AUTHORITY)

 

I, the undersigned, hereby certify that I am the Secretary of SIRVA MORTGAGE,
INC., a corporation duly organized and existing under the laws of the State of
Ohio (the “Company”).

 

I further certify that true and correct copies of the Articles of Incorporation
and Bylaws of the Company together with all amendments thereto are attached
hereto as Exhibits “A” and “B”, respectively, and that such articles and bylaws
remain unaltered and in full force and effect.

 

I further certify that the following resolutions were duly adopted by the Board
of Directors of the Company at a meeting of the Board of Directors of the
Company, duly and legally called and held in accordance with the Articles of
Incorporation and Bylaws of the Company on the        day of             , 2002,
at which meeting a quorum was present and voting throughout, or (if the
foregoing date was not completed) pursuant to a written consent signed by all of
the Directors of the Company in accordance with the Articles of Incorporation
and Bylaws of the Company, and that such resolutions are now in full force and
effect and have not been amended, modified or revoked:

 

“RESOLVED, that the President, any Vice President (Senior, Executive, Assistant,
or otherwise) or Secretary of this Company acting alone without the joinder of
any other officer, is hereby authorized in the name and on behalf of this
Company (i) to borrow from and to otherwise incur liabilities to WASHINGTON
MUTUAL BANK, F.A. and NATIONAL CITY BANK OF KENTUCKY (collectively “Lenders”)
from time to time, in such amounts, for such periods of time, at such rates of
interest and payable in such manner as such officers may deem necessary or
proper, and (ii) as evidence of such indebtedness so incurred, to execute and
deliver to Lenders such promissory notes, loan agreements, credit and security
agreements, and other instruments, documents and agreements, including, but not
limited to that certain Third Amended and Restated Warehousing Credit and
Security agreement to be dated September 30, 2002 among the Company and the
Lenders and any other documents to be executed or required in connection
therewith, containing such terms and provisions as may be acceptable or
agreeable to any one of such officers, such acceptance and agreement to be
conclusively evidenced by the execution and delivery thereof by any one of such
officers;

 

FURTHER RESOLVED, that this Company grant to Lenders a lien and/or security
interest upon such assets of this Company as may be agreed upon between any one
of the above named officers and Lenders, as security for all present and future
indebtedness, obligations and liabilities of this Company to Lenders and that
each of said officers, acting alone without the joinder of any other officer, is
hereby authorized in the name and on behalf of this Company to execute and
deliver such security agreements, deeds of trust and other instruments,
documents and agreements as may be required by Lenders in

 

94

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connection with each such grant of a lien and/or security interest and
containing such terms and provisions as may be acceptable or agreeable to any
one of such officers, such acceptance and agreement to be conclusively evidenced
by the execution and delivery thereof by any one of such officers;

 

FURTHER RESOLVED, that any one of the above named officers, acting alone without
the joinder of any other officer, is hereby authorized in the name and on behalf
of this Company to take such further action and to do all things that any one of
such officers deems necessary in connection with any (i) increases, renewals,
extensions, rearrangements, retirements or compromises of any indebtedness,
obligations and liabilities owing to Lenders from time to time by this Company,
either directly or by assignment, and (ii) amendments to any of the provisions
contained in any instruments, documents or agreements evidencing, securing,
governing and/or pertaining to any indebtedness, obligations and liabilities
owing to Lenders by this Company from time to time;

 

FURTHER RESOLVED, that any one of the above named officers or any other person
or representative now or hereafter designated by the Company or any officers of
the Company acting alone without the joinder of any other officer or
representative, is hereby authorized in the name and on behalf of this Company
to (i) make requests for advances under any credit facility that this Company
may have with Lenders from time to time, and (ii) do or cause to be done all
such acts or things and to sign and deliver, or cause to be signed and
delivered, all such instruments, documents, agreements, requests, and
certificates (including without limitation, any and all shipping requests, trust
receipts, notices, and certificates required or permitted to be given or made to
Lenders under the terms of any of the instruments, documents or agreements
executed on behalf of this Company in connection with these resolutions), as any
and all of such officers or representatives may deem necessary, advisable or
appropriate to effectuate and carry out the purposes and intent of the foregoing
resolutions and to perform the obligations of this Company under all
instruments, documents, and agreements executed on behalf of this Company in
connection with any indebtedness, obligations or liabilities incurred by this
Company to Lenders from time to time;

 

FURTHER RESOLVED, that all acts, transactions or agreements with Lenders
undertaken prior to the adoption of the foregoing resolutions by any one or more
of the officers and/or representatives of this Company in its name and on its
behalf in connection with the. foregoing matters are hereby ratified, confirmed
and adopted by this Company; and

 

FURTHER RESOLVED, that each of the officers of this Company is hereby authorized
and directed to certify these resolutions to Lenders;

 

FURTHER RESOLVED, the foregoing resolutions shall continue in full force and
effect, and the Lenders is authorized to rely upon the foregoing resolutions
unless and until (i) countermanded by resolution of the Board of Directors of
this Company, and (ii) a copy of such resolution, properly certified by an
officer of this Company, has actually been received by Lenders.”

 

95

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I further certify that the foregoing resolutions do not conflict with the
Articles of Organization or Operating Agreement of the Company, or any
amendments thereto.

 

I further certify that neither the seal of the Company, nor the attestation by
the Secretary, Assistant Secretary or any other officer of the Company, is
necessary to make any instruments, documents or agreements executed by the
officers or representatives of this Company pursuant to the foregoing
resolutions, enforceable against the Company, unless such seal is affixed to, or
such attestation is provided on, such instruments, documents or agreements.

 

I further certify that the officers of the Company set forth below have been
duly elected and qualified and as of the date hereof hold the specified offices
with the Company, that the signature set forth beside each officer’s name is the
true signature of such officer, and that the signature set forth beside the name
of each of the representatives specified in the foregoing resolutions is the
true signature of such representative:

 

TITLE

 

TYPED NAME

 

SIGNATURE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IN WITNESS WHEREOF, I hereunto subscribe my name this    day of September, 2002.

 

 

 

By:

 

 

 

individually and as Secretary of
Sirva Mortgage, Inc.

 

96

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EXHIBIT K

 

BAILEE LETTER

 

[Washington Mutual Bank, FA to insert date and Investor name/address]

 

Re:          Purchase of Mortgage Loans from Sirva Mortgage, Inc.

 

Ladies and Gentlemen:

 

Pursuant to the terms and conditions set forth below, we hereby deliver to you
with this letter, the Mortgage Note evidencing each Mortgage Loan listed on the
attached schedule, to facilitate your purchase of these Mortgage Loans. Each
Mortgage Loan comprises a portion of the Collateral under that certain Third
Amended and Restated Warehousing Credit and Security Agreement dated September
30, 2002 among Sirva Mortgage, Inc. (the “Company”) , Washington Mutual Bank,
FA, a federal savings bank (the “Agent”), and The Lenders Party Thereto, as the
same may be amended, modified, extended, or renewed from time to time (the
“Credit Agreement”). Each capitalized term used herein has the meaning ascribed
to it in the Credit Agreement.

 

By taking physical possession of this letter and the Mortgage Notes attached
hereto, you hereby agree to each of the following:

You will hold the attached Mortgage Note(s) and all related Mortgage Loan files
in trust as custodian, agent, and bailee on behalf of Washington Mutual Bank, FA
until your status as bailee is terminated as set forth below;

You agree not to release or deliver the Mortgage Note or any other Mortgage Loan
document to any party except Washington Mutual Bank, FA, without Washington
Mutual Bank, FA’s written consent;

You will not take any action that may jeopardize the security interest of
Washington Mutual Bank, FA in the Collateral;

Within thirty (30) days of the date on this letter, you will either:

 

Wire the purchase funds as follows:

Receiving Bank:

 

Washington Mutual Bank, FA

Location:

 

Houston TX

ABA Number:

 

111-993-776

Account Name:

 

Sirva Mortgage, Inc.

Account Number:

 

93100000674646

Reference:

 

[Investor: Input Mortgagor Last Name or Loan Number]

 

OR

 

return the Mortgage Note and Mortgage Loan file to Teresa Earley, Washington
Mutual Bank, FA, Mortgage Banker Finance, 3200 Southwest Freeway, PT-1922,
Houston TX 77027, phone: (713) 543-6886. Washington Mutual Bank, FA hereby
agrees that upon receipt of the warehouse amount specified on the attached
schedule, remitted as specified above, our security interest in the Mortgage
Loan shall be fully released automatically and your responsibilities as bailee
shall terminate.

 

Sincerely,

 

WASHINGTON MUTUAL BANK, FA, a federal association

 

97

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EXHIBIT L

 

LIST OF INVESTORS

 

98

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EXHIBIT M

 

OPINION LETTER

 

                   , 2002

 

Washington Mutual Bank, FA

3200 Southwest Freeway

Suite 1922

Houston, Texas 77027

 

Re:  Third Amended and Restated Warehousing Credit and Security Agreement
(Single-Family Mortgage Loans)

 

Gentlemen:

 

We have acted as special counsel for SIRVA MORTGAGE, INC., an Ohio corporation
(the “Company”), in connection with the negotiation and execution of the
following documents (collectively, the “Credit Documents”):

 

1.             the Third Amended and Restated Warehousing Credit and Security
Agreement (Single-Family Mortgage Loans) dated effective as of September 30,
2002 (the “Loan Agreement”), among the Company, the lenders identified therein
(“Lenders”) and Washington Mutual Bank, FA as Agent for the Lenders (the
“Agent”);

 

2.             the Promissory Note dated effective as of September 30, 2002,
executed and delivered by the Company payable to the order of Washington Mutual
Bank, FA in the original principal amount of $35,000,000.00; and

 

3.             the Promissory Note dated effective as of September 30, 2002,
executed and delivered by the Company payable to the order of National City Bank
of Kentucky in the original principal amount of $21,000,000.00.

 

Unless otherwise provided herein, terms used herein which are defined in the
Credit Documents (including schedules and exhibits thereto) and not defined
herein shall have the meanings attributed thereto in the Credit Documents.

 

A.            Basis of Opinion.

 

As the basis for the conclusions expressed in this opinion letter, we have
examined, considered and relied upon the following:

 

1.             A copy of each of the Credit Documents executed by the Company;

 

2.             Recent Certificates of Domestic Status of the Company issued by
the Secretary of State of the State of Ohio;

 

3.             A copy of the Articles of Incorporation and amendments thereto,
and a copy of the Bylaws of the Company, in each case as certified to us by the
Company Certificate;

 

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4.             Such other documents and records as we have deemed relevant,
necessary or appropriate in connection with or as a basis for the opinions
hereafter set forth; and

 

5.             Such matters of law as we have considered necessary or
appropriate for the expression of the opinions contained herein.

 

For the purposes of this opinion letter, the documents and information referred
to in this Section A are herein collectively referred to as the “Documents”.

 

B.            Opinions.

 

Based upon our examination and consideration of the foregoing Documents, and
subject to the comments, assumptions, exceptions, qualifications and limitations
set forth in Section C below, we are of the opinion that:

 

1.             The Company (i) is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Ohio (ii) has the
full legal power and authority and all necessary licenses, permits, franchises,
and other authorizations to own and operate its property and assets and to
transact the business in which it is engaged, and (iii) is duly qualified to
transact business in each jurisdiction where the nature of the business it
transacts or the property it owns requires such qualification or licensing
except in such jurisdictions where the failure to be in good standing or be
licensed (as the case may be) would have no material adverse effect on the
Company.

 

2.             The Company has the requisite corporate power to execute,
deliver, and perform the terms and provisions of each of the Credit Documents
and has taken all necessary corporate action to authorize the execution,
delivery, and performance by it of each such Credit Document.  The Company has
duly executed each of the Credit Documents, and each such Credit Document
constitutes its legal, valid, and binding obligation enforceable in accordance
with its terms, except as the enforceability of the rights and remedies of the
Lender under each of the Credit Documents may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles
(regardless of whether the issue of enforceability is considered in a proceeding
in equity or at law) including requirements of reasonableness and good faith in
the exercise of rights and remedies under the Credit Documents.

 

3.             Neither the execution, delivery, or performance by the Company of
the Credit Documents, nor compliance by it with the terms and provisions
thereof, (i) will contravene any law, statute, rule, or regulation; (ii) to the
best of our knowledge, will contravene any order, writ, injunction, or decree of
any court or governmental instrumentality; (iii) to the best of our knowledge,
will conflict or be inconsistent with or result in any breach of any of the
material terms, covenants, conditions, or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to create
or impose) any lien upon any of the property or assets of the Company pursuant
to the terms of any agreement of the Company; (iv) will violate any provision of
the Articles of Incorporation or Bylaws of the Company.

 

4.             No order, consent, approval, license, authorization or validation
of, or filing, recording or registration with, or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with,

 

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(i) the execution, delivery and performance of any Credit Document, or (ii) the
legality, validity, binding effect or enforceability of any such Credit
Document.

 

5.             To the best of our knowledge, there are no actions, suits, or
proceedings pending or threatened (i) with respect to any Credit Document or
(ii) that could materially and adversely affect the business, operations,
property, assets, condition (financial or otherwise) or prospects of the
Company.

 

6.             The Company is not an “investment company” within the meaning of
the Investment Company Act of 1940, as amended.

 

7.             The Company is not a “holding company” or a “subsidiary company”
of a “holding company” within the meaning of the Public Utility Holding Company
Act of 1935, as amended.

 

8.             The execution and delivery of the Loan Agreement by the Company
is effective to create a valid and enforceable security interest in favor of the
Agent in the Collateral and the proceeds thereof.

 

9.             The Agent will have a valid and duly perfected security interest,
without further requirements for perfection, in (a) the Pledged Mortgages and
Pledged Securities upon the delivery thereof to the Agent and (b) the other
Collateral described in the Financing Statements to the extent that a security
interest therein may be perfected under Article 9 of the UCC solely by filing a
financing statement with the Secretary of State of Ohio, which lien shall be
superior to any other interests therein.

 

C.             Comments, Assumptions, Limitation, Qualifications and Exceptions.

 

The opinions expressed in Section B above are based upon, and subject to, the
further comments, assumptions, limitations, qualifications and exceptions set
forth below:

 

Respectfully submitted,

 

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EXHIBIT N

 

PROMISSORY NOTE

 

$                     .00

 

Houston, Texas

 

 

 

FOR VALUE RECEIVED, the undersigned, SIRVA MORTGAGE, INC., an Ohio corporation
(herein called the “Borrower”), hereby promises to pay to the order
of                                                                  (the
“Lender” or, together with its successors and assigns, the “Holder”) whose
principal place of business
is                                                                                             ,
or at such other place as the Holder may designate from time to time, the
principal sum of                              ($             .00) or so much
thereof as may be outstanding from time to time pursuant to the Third Amended
and Restated Warehousing Credit and Security Agreement (the “Agreement”) dated
September 30, 2002 among the Borrower and Washington Mutual Bank, FA, in its
capacity as one of the lenders and as Agent for the other lenders party thereto
and the lenders party thereto (including the Lender), as the same may be
amended, supplemented, or restated from time to time, and to pay interest on
said principal sum or such part thereof as shall remain unpaid from time to
time, from the date of each Advance until repaid in full, and all other fees and
charges due under the Agreement, at the rate and at the times set forth in the
Agreement. All payments hereunder shall be made in lawful money of the United
States and in immediately available funds. Capitalized terms used herein, unless
otherwise defined herein, shall have the meanings given them in the Agreement.

 

This Note is issued and delivered under the Agreement and is a Note as defined
therein and is entitled to the benefits thereof.  Reference is hereby made to
the Agreement (which is incorporated herein by reference as fully and with the
same effect as if set forth herein at length) for a description of the
Collateral, a statement of the covenants and agreements, a statement of the
rights and remedies and securities afforded thereby and other matters contained
therein.

 

[This Note is given in renewal and extension, but not extinguishment, of that
certain promissory note (“Prior Note”) dated                                in
the original principal amount of
                              ($                ) executed by the Borrower
payable to the order of Lender. All liens, security interests, and assignments
securing the Prior Note are hereby ratified, confirmed, renewed, extended, and
carried forward as security for the repayment of this Note, in addition to and
cumulative of all other security.]

 

The entire unpaid principal balance of this Note plus all accrued and unpaid
interest shall be due and payable in full on the Termination Date.

 

This Note may be prepaid in whole or in part at any time without premium or
penalty.

 

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Should this Note be placed in the hands of attorneys for collection, the
Borrower agrees to pay, in addition to principal and interest, fees and charges
due under the Agreement, and all costs of collecting this Note, including
reasonable attorneys’ fees and expenses.

 

This Note shall be construed and enforced in accordance with the laws of the
State of Texas, without reference to its principles of conflicts of law, and
applicable federal laws of the United States of America.

 

This Note is secured by all security agreements, collateral assignments, deeds
of trust and lien instruments executed by the Borrower in favor of the Agent for
the benefit of the Lenders, or executed by any other Person as security for this
Note, including any executed prior to, simultaneously with, or after the date of
this Note.

 

The Borrower and any and each co-maker, guarantor, accommodation party, endorser
or other Person liable for the payment or collection of this Note expressly
waive notice, presentment, demand for payment, protest, notice of protest and
non-payment or dishonor, notice of acceleration, notice of intent to accelerate,
notice of intent to demand, bringing of suit, and diligence in taking any action
to collect amounts called for hereunder and in the handling of Collateral at any
time existing as security in connection herewith, and shall be directly and
primarily liable for the payment of all sums owing and to be owing hereon,
regardless of and without any notice, diligence, act or omission as or with
respect to the collection of any amount called for hereunder or in connection
with any Lien at any time had or existing as security for any amount called for
hereunder.

 

It is the intention of the parties hereto to conform strictly to usury laws
applicable to the Lender. Accordingly, if the transactions contemplated hereby
would be usurious under applicable law (including the laws of the United Stales
of America and the State of Texas), then, in that event, notwithstanding
anything to the contrary herein or in the Agreement or in any other Loan
Document or agreement entered into in connection with or as security for this
Note, it is agreed as follows: (i) the aggregate of all consideration which
constitutes interest under law applicable to the Lender that is contracted for,
taken, reserved, charged, or received herein or under the Agreement or under any
of the other aforesaid Loan Documents or agreements or otherwise in connection
herewith shall under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be credited by the Lender on the principal
amount of the Obligations (or, if the principal amount of the Obligations shall
have been paid in full, refunded by the Lender to the Borrower, as required);
and (ii) in the event that the maturity of this Note is accelerated by reason of
an election of the Lender resulting from any Event of Default under the
Agreement or otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest under law applicable to the
Lender may never include more than the maximum amount allowed by such applicable
law, and excess interest, if any, provided for in the Agreement or otherwise
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by the Lender on the
principal amount of the Obligations (or, if the principal amount of the
Obligations shall have been paid in full, refunded by the Lender to the
Borrower, as required). Without limiting the foregoing, all calculations of the
rate of interest taken, reserved, contracted for, charged, received or provided
for under this Note or any of the Loan Documents which are made for the purpose
of determining whether the interest rate exceeds the Maximum Rate shall be

 

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made, to the extent allowed by law, by amortizing, prorating, allocating and
spreading in equal parts during the period of the full stated term of the loan
evidenced hereby, all interest at any time taken, reserved, contracted for,
charged, received, or provided for under this Note of any of the Loan Documents.
To the extent that Section 303 of the Texas Finance Code is relevant for
purposes of determining the Maximum Rate, the Lender hereby elects to determine
the applicable rate ceiling under such statute by the weekly rate ceiling from
time to time in effect, subject to the Lender’s right subsequently to change
such method in accordance with applicable law.

 

 

BORROWER:

 

 

 

SIRVA MORTGAGE, INC.,
an Ohio corporation f/k/a
Cooperative Mortgage Services, Inc.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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EXHIBIT O

 

LENDERS, AGGREGATE COMMITMENT AMOUNT,
AND COMMITMENT AMOUNT

 

 

 

COMMITMENT AMOUNT

 

NAME OF LENDER

 

Prior to
July 30, 2003

 

On and After
July 31, 2003

 

Washington Mutual Bank, FA
3200 Southwest Freeway, Suite 1922
Houston, Texas 77027

 

Tranche A Commitment:

 

$

17,500,000.00

 

-0

-

 

Tranche B Commitment:

 

$

17,500,000.00

 

$

17,500,000.00

 

 

 

 

 

 

 

 

 

National City Bank of Kentucky
101 South Fifth Street, T06K
Louisville, Kentucky 40202

 

Tranche A Commitment:

 

$

10,500,000.00

 

-0

-

 

Tranche B Commitment:

 

$

10,500,000.00

 

$

10,500,000.00

 

Aggregate Commitment Amount

 

$

56,000,000.00

 

$

28,000,000.00

 

 

105

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EXHIBIT P

 

(Intentionally deleted)

 

106

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EXHIBIT “Q”

 

FORM OF ASSIGNMENT AND ACCEPTANCE

 

Reference is made to the Third Amended and Restated Warehousing Credit and
Security Agreement (Single Family Home Loans) dated as of September 30, 2002 (as
the same may be further amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), by and among SIRVA MORTGAGE, INC., an Ohio
corporation (“Borrower”), WASHINGTON MUTUAL BANK, FA, a federal association,
successor by merger to Bank United, a federal savings bank, and the other
entities from time to time parties thereto as lenders (collectively, the
“Lenders”), WASHINGTON MUTUAL BANK, FA, a federal association, successor by
merger to Bank United, a federal savings bank, as agent for the Lenders (in such
capacity, the “Agent”) and NATIONAL CITY BANK OF KENTUCKY, as Documentation
Agent and a Lender. Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement.

 

             (the “Assignor”) and                   (the “Assignee”) agree as
follows:

 

1.             The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Assignment Effective Date (as defined below), an interest (the “Assigned
Interest”), as specified on SCHEDULE 1, in and to the Assignor’s rights and
obligations under the Credit Agreement with respect to the credit facilities
contained in the Credit Agreement as are set forth on SCHEDULE 1 (individually,
an “Assigned Facility”; collectively, the “Assigned Facilities”), in a principal
amount for each Assigned Facility as set forth on SCHEDULE 1.

 

2.             The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement, the other Loan Documents or any other instrument or
document furnished pursuant thereto, other than that the Assignor has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim; and (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower, any of its Affiliates or any other obligor or
the performance or observance by Borrower, any of its Affiliates or any other
obligor of any of their respective obligations under the Credit Agreement or any
of the other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto.

 

3.             The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of such of the
financial statements delivered pursuant to Section 6.2 thereof as it has
requested and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and
Acceptance; (c) agrees that it will, independently and without reliance upon the
Assignor, the Agent, or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement, the
other Loan Documents or any other instrument or document

 

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furnished pursuant hereto or thereto; (d) appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers and
discretion under the Credit Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto as are delegated to
the Agent by the terms thereof, together with such powers as are incidental
thereto; and (e) agrees that it will be bound by the provisions of the Credit
Agreement and will perform in accordance with its terms all the obligations
which by the terms of the Credit Agreement are required to be performed by it as
a Lender.

 

4.             The effective date of this Assignment and Acceptance shall
be               ,                           (the “Assignment Effective Date”). 
Following the execution of this Assignment and Acceptance, it will be delivered
to the Agent for acceptance by it and recording by the Agent pursuant to the
Credit Agreement, effective as of the Assignment Effective Date (which shall
not, unless otherwise agreed to by the Agent, be earlier than five Domestic
Business Days after the date of such acceptance and recording by the Agent).

 

5.             Upon such acceptance and recording, from and after the Assignment
Effective Date, the Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignee whether such amounts have accrued prior to the Assignment Effective
Date or accrue subsequent to the Assignment Effective Date. The Assignor and the
Assignee shall make all appropriate adjustments in payments by the Agent for
periods prior to the Assignment Effective Date or with respect to the making of
this assignment directly between themselves.

 

6.             From and after the Assignment Effective Date, (a) the Assignee
shall be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Loan Documents and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.

 

7.             This Assignment and Acceptance shall be governed by and construed
in accordance with the laws of the State of Texas without giving effect to
provisions or principles thereof relating to conflict of laws or choice of law.

 

8.             This Assignment and Acceptance may be executed by one or more of
the parties to this Assignment and Acceptance on any number of separate
counterparts (including by facsimile transmission), and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on SCHEDULE 1 hereto.

 

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SCHEDULE I

 

TO ASSIGNMENT AND ACCEPTANCE

RELATING TO THE CREDIT AGREEMENT,

DATED AS OF SEPTEMBER 30, 2002

AMONG

SIRVA MORTGAGE, INC., AS BORROWER

THE LENDERS PARTY THERETO (THE “LENDERS”)

AND

WASHINGTON MUTUAL BANK, FA, A FEDERAL ASSOCIATION, SUCCESSOR BY MERGER

TO BANK UNITED, A FEDERAL SAVINGS BANK,

AS AGENT FOR THE LENDERS

(IN SUCH CAPACITY, THE “AGENT”)

 

Name of Assignor:

 

Name of Assignee:

 

Effective Date of Assignment:

 

Credit
Facility Assigned

 

Principal
Amount Assigned

 

Commitment Percentage Assigned(1)

 

 

 

 

 

 

 

 

 

$

          

 

    .                   

%

 

 

[NAME OF ASSIGNEE]

[NAME OF ASSIGNOR]

 

 

 

 

By

 

 

By

 

 

Name:

Name:

Title:

Title:

 

 

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

(1)  Calculate the Commitment Percentage that is assigned to at least 15 decimal
places and show as a percentage of the Aggregate Commitment of all Lenders.

 

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Accepted for Recordation in the Register:

Consented To:

 

 

Washington Mutual Bank, FA, successor
by merger to Bank United, as the Agent

Sirva Mortgage, Inc., an Ohio corporation
f/k/a Cooperative Mortgage Services, Inc.
as Borrower

 

 

 

 

By

 

 

 

Name:

By

 

 

Title:

Name:

 

Title:

 

 

 

 

 

Washington Mutual Bank, FA, successor by
merger to Bank United, as the Agent

 

 

 

 

 

By

 

 

 

Name:

 

Title:

 

 

 

National City Bank of Kentucky,
as Document Agent

 

 

 

 

 

By

 

 

 

Name:

 

Title:

 

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