Exhibit 10.1

 

WAREHOUSE LOAN AND SECURITY AGREEMENT

 

 

BETWEEN

 

 

WALKER & DUNLOP, LLC,

a Delaware limited liability company

AS BORROWER

 

 

and

 

 

PNC BANK, NATIONAL ASSOCIATION

a national banking association

AS LENDER

 

 

DATED AS OF JUNE 24, 2011

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

1.

THE LOAN

1

 

 

 

 

 

1.1

The Loan

1

 

1.2

Note

1

 

 

 

 

2.

INTEREST, PRINCIPAL AND FEES

2

 

 

 

 

 

2.1

Interest

2

 

2.2

Interest Limitation

2

 

2.3

Principal Payments

2

 

2.4

Loan Fee

3

 

2.5

Method of Making Payments

3

 

2.6

Billings

3

 

2.7

Late Charges

3

 

2.8

Additional Provisions Relating to Interest Rate

4

 

 

 

 

3.

COLLATERAL

5

 

 

 

 

 

3.1

Grant of Security Interest

5

 

3.2

Maintenance of Collateral Records

6

 

3.3

Release of Security Interest in Pledged Loans and Pledged Securities

6

 

3.4

Collection and Servicing Rights

7

 

3.5

Return of Collateral

7

 

3.6

Delivery of Collateral Documents

7

 

3.7

Borrower Remains Liable

8

 

 

 

 

4.

CONDITIONS PRECEDENT

8

 

 

 

 

 

4.1

Loan Advance

8

 

 

 

 

5.

GENERAL REPRESENTATIONS AND WARRANTIES

9

 

 

 

 

6.

AFFIRMATIVE COVENANTS

9

 

 

 

 

 

6.1

Payment of Obligations

9

 

6.2

Other Affirmative Covenants

9

 

6.3

Use of Loan Proceeds

9

 

6.4

Investor Instructions

9

 

 

 

 

7.

NEGATIVE COVENANTS

9

 

 

 

 

8.

SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL

10

 

 

 

 

9.

DEFAULTS; REMEDIES

10

 

 

 

 

 

9.1

Events of Default

10

 

9.2

Remedies

10

 

9.3

Insufficiency of Proceeds

12

 

9.4

Lender Appointed Attorney-in-Fact

12

 

9.5

Right of Set-Off

13

 

 

 

 

10.

MISCELLANEOUS

13

 

 

 

 

 

10.1

Notices

13

 

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10.2

Reimbursement Of Expenses; Indemnity

13

 

10.3

Financial Information

14

 

10.4

Terms Binding Upon Successors; Survival of Representations

14

 

10.5

Pledge to Federal Reserve Banks

14

 

10.6

Governing Law

14

 

10.7

Amendments

14

 

10.8

Relationship of the Parties

15

 

10.9

Severability

15

 

10.10

Consent to Credit References

15

 

10.11

Counterparts

15

 

10.12

Headings/Captions

15

 

10.13

Entire Agreement

15

 

10.14

Consent to Jurisdiction

15

 

10.15

Waiver of Jury Trial

16

 

10.16

Waiver of Punitive, Consequential, Special or Indirect Damages

16

 

10.17

U.S. Patriot Act

16

 

10.18

Confidentiality Provisions

16

 

 

 

 

11.

DEFINITIONS

16

 

 

 

 

 

11.1

Defined Terms

16

 

11.2

Other Definitional Provisions; Terms of Construction

19

 

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EXHIBITS

 

Exhibit A

 

Procedures and Documentation for Fannie Mae DUS Loans and Other Fannie Mae
Mortgage Loans

 

 

 

Exhibit B-1

 

Form of Joint Escrow and Bailee Letter

 

 

 

Exhibit B-2

 

Form of Escrow Letter

 

 

 

Exhibit B-3

 

Form of Bailee Letter

 

 

 

Exhibit C

 

Form Loan Disbursement Authorization

 

 

 

Exhibit D

 

Form of Assignment of Mortgage Note and Mortgage

 

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WAREHOUSE LOAN AND SECURITY AGREEMENT

 

THIS WAREHOUSE LOAN AND SECURITY AGREEMENT, dated as of June 24, 2011, is made
between Walker & Dunlop, LLC, a Delaware limited liability company (“Borrower”)
and PNC Bank, National Association, a national banking association (“Lender”).

 

Preliminary Statement

 

A.                                   Borrower has requested, and Lender has
agreed, to make a loan to Borrower pursuant to the terms and conditions set
forth herein, for the sole purpose of facilitating Borrower’s funding of a
mortgage loan originated under Fannie Mae’s Delegated Underwriting and Servicing
program and delivered to Fannie Mae pursuant to Fannie Mae’s As Soon As Pooled
(ASAP) PLUS program.

 

B.                                     Borrower and Lender are parties to that
certain Warehousing Credit and Security Agreement, dated as of June 30, 2010, as
amended pursuant to that certain First Amendment to Warehousing Credit and
Security Agreement, dated as of May 12, 2011 (the Warehousing Credit and
Security Agreement, as amended, is herein, the “Credit Agreement”).  Terms used
in this Agreement but not otherwise defined shall have the meaning ascribed in
the Credit Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Agreement agree as
follows:

 

1.                                      THE LOAN

 

1.1                               The Loan

 

1.1(a)                  On the terms and subject to the conditions and
limitations of this Agreement, the Lender agrees to make a loan (the “Loan”) to
Borrower in the principal amount of up to One Hundred Seventy-Eight Million
Dollars ($178,000,000) (the “Principal Amount”).  Borrower covenants and agrees
that it shall use any and all proceeds of the Loan to fund that certain mortgage
loan to Ford Island Housing, LLC, which loan shall be originated by Borrower
under Fannie Mae’s Delegated Underwriting and Servicing program and delivered to
Fannie Mae pursuant to Fannie Mae’s As Soon As Pooled (ASAP) PLUS program
(herein, the “Eligible Loan”).  The Eligible Loan shall be secured by a first
mortgage lien against a 1,449 unit multi-family housing project located in Ewa
Beach, Hawaii, and commonly known as “Waterfront at Pu’uloa.”

 

1.1(b)                 Lender hereby acknowledges and agrees that the making of
the Loan and the creation of the Borrower’s obligations under this Agreement and
the Note shall not constitute an Event of Default under the Credit Agreement.

 

1.2                               Note

 

The Loan shall be evidenced by Borrower’s promissory note, payable to the Lender
in a form reasonably acceptable to Lender (the “Note”).

 

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2.                                      INTEREST, PRINCIPAL AND FEES

 

2.1                               Interest

 

2.1(a)                  Except as otherwise provided in this Section, the
Borrower must pay interest on the unpaid Principal Amount from the Funding Date
until the Loan is paid in full, at the Applicable Rate as in effect from time to
time.  The Borrower must pay the Lender all accrued interest on the Maturity
Date or upon prepayment of the Loan.

 

2.1(b)                 The Lender computes interest on the basis of the actual
number of days in each month and a year of 360 days.

 

2.1(c)                  If, for any reason the Borrower repays the Loan on the
Funding Date, the Borrower agrees to pay to the Lender, without limiting the
provisions of Section 2.8 for the account of the Lender, interest thereon at the
Applicable Rate for one day notwithstanding repayment prior to the cut-off time
specified in Section 2.5(a) (unless the reason for such repayment is due to the
failure of the underlying transaction to close).  The Borrower must pay all such
administrative fees and interest within five (5) Business Days after the date of
the Lender’s notice thereof.

 

2.1(d)                 After an Event of Default occurs, the unpaid Principal
Amount will bear interest at the Default Rate until paid in full.

 

2.1(e)                  The Lender will adjust the rates of interest provided
for in this Agreement as of the effective date of each change in the applicable
Reference Rate.  The Lender’s determination of such rates of interest as of any
date of determination is conclusive and binding, absent manifest error.

 

2.2                               Interest Limitation

 

If, at any time, the rate of interest, together with all amounts which
constitute or are deemed under any applicable law to constitute interest and
which are reserved, charged or taken by the Lender as compensation for fees,
services or expenses incidental to the making, negotiating or collecting of the
Loan. shall be deemed by any competent court of law, governmental agency or
tribunal to exceed the maximum rate of interest permitted to be charged by the
Lender to the Borrower under applicable law, then, during such time as such rate
of interest would be deemed excessive, that portion of each sum paid
attributable to that portion of such interest rate that exceeds the maximum rate
of interest so permitted shall be deemed a voluntary prepayment of principal
(or, if no Obligations are then outstanding, shall be repaid to the Borrower). 
As used herein, the term “applicable law” shall mean the law in effect as of the
date hereof; provided, however, that in the event there is a change in the law
which results in a higher permissible rate of interest, then this Agreement
shall be governed by such new law as of its effective date.

 

2.3                               Principal Payments

 

2.3(a)                  The Borrower must pay the Lender the unpaid Principal
Amount together with all accrued and unpaid interest thereon, and any unpaid
costs and expenses, on the Maturity Date.

 

2.3(b)                 Except as otherwise provided in Section 2.1, the Borrower
may prepay the Loan in whole but not in part, together with all accrued and
unpaid interest, without premium or penalty at any time.

 

2.3(c)                  The proceeds of the sale or other disposition of the
Pledged Loan or Pledged Security must be paid directly by the Investor to the
Borrower’s Cash Collateral Account.  The Borrower must give Notice to the Lender
in writing of the Pledged Loan or Pledged Security for which proceeds have been
received (including Notice to the Lender in writing of any prepayment).  Upon
receipt of such Notice, the Lender will apply any proceeds deposited into the
applicable Cash Collateral Account with respect to such Pledged Loan or Pledged
Security to the payment of the Obligations, and such Pledged Loan or Pledged
Security will be considered to have been redeemed from pledge to the extent the
Obligations have been paid in full.  The Lender is entitled to rely upon the
Borrower’s affirmation that deposits in the applicable

 

2

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Cash Collateral Account represent payments from Investors for the purchase of
the Pledged Loan or Pledged Security specified by the Borrower in its Notice. 
If the payment from an Investor for the purchase of a Pledged Loan or Pledged
Security is less than the outstanding Loan, the Borrower must pay to the Lender,
and the Borrower authorizes the Lender to charge the Borrower’s Operating
Accounts for, an amount equal to that deficiency.  As long as no Default or
Event of Default exists, the Lender will return to the Borrower any excess
payment from an Investor for such Pledged Loan or Pledged Security.

 

2.4                               Loan Fee

 

The Borrower shall pay to the Lender a Loan fee in the amount of Thirty-Five
Thousand Dollars ($35,000.00) to be paid on the Closing Date.

 

2.5                               Method of Making Payments

 

2.5(a)                  All payments of interest, principal and fees shall be
made in lawful money of the United States in immediately available funds,
without counterclaim or setoff and free and clear of, and without any deduction
or withholding for, any taxes or other payments by wire transfer to Lender, or
as otherwise provided in this Agreement.  Payments shall be credited on the
Business Day on which immediately available funds are received prior to
2:00 p.m.; payments received after 2:00 p.m. shall be credited on the next
Business Day.  All payments shall be applied first to the payment of all fees,
expenses, and other amounts due to Lender (excluding principal and interest),
then to accrued interest, and the balance on account of outstanding principal,
provided, however, that, after the occurrence and during the continuation of an
Event of Default, payments will be applied to the Obligations as Lender
determines.  If the due date is not a Business Day, payment is due on, and
interest will accrue to, the next Business Day.

 

2.5(b)                 The Borrower authorizes the Lender to charge the
Borrower’s Operating Accounts for any interest or fees due and payable to
Lender.

 

2.5(c)                  While a Default or Event of Default exists, the Borrower
authorizes the Lender to charge Borrower’s Operating Accounts for any
Obligations due and payable to the Lender, without the necessity of prior demand
or Notice from the Lender.

 

2.5(d)                 All payments made on account of the Obligations shall be
made by the Borrower to the Lender.  No principal payments resulting from the
refinancing, sale or other disposition of the Pledged Loan or Pledged Securities
shall be deemed to have been received by the Lender until the Lender has also
received the Notice required under Section 2.3(c).

 

2.6                               Billings

 

Any changes in the interest rate and in the outstanding amount of the
Obligations which occur between the date of any billing and the due date of any
payment may be reflected in adjustments in the billing for a subsequent month. 
Neither the failure of the Lender to submit a bill, nor any error in any such
bill shall excuse the Borrower from the obligation to make full payment of all
Borrower’s payment obligations when due.

 

2.7                               Late Charges

 

The Borrower shall pay, upon billing therefor, a “Late Charge” equal to three
percent (3%) of the amount of any payment of principal (other than principal due
at the Maturity Date or the date on which the Lender accelerates the time for
payment of the Loan after the occurrence of an Event of Default), interest, or
fees, which fees are not paid within ten (10) days of the due date thereof. 
Late Charges are: (a) payable in addition to, and not in limitation of, the
Default Rate; (b) intended to compensate the Lender for administrative and
processing costs incident to late payments; (c) not interest; and (d) not
subject to refund or rebate or credit against any other amount due.

 

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2.8                               Additional Provisions Relating to Interest
Rate

 

2.8(a)                  If the Lender has determined, after the date hereof,
that the adoption or the becoming effective of, or any change in, or any change
by any Governmental Authority, central bank or comparable agency charged with
the interpretation or administration thereof in the interpretation or
administration of, any applicable law, rule or regulation regarding capital
adequacy, or compliance by the Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on the Lender’s capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which Lender could
have achieved but for such adoption, effectiveness, change or compliance (taking
into consideration Lender’s policies with respect to capital adequacy), then,
upon notice from the Lender to the Borrower and delivery by the Lender of a
statement setting forth the reduction in the rate of return experienced by the
Lender and the amount necessary to compensate the Lender under this
Section 2.8(a), the Borrower shall be obligated to pay to the Lender such
additional amount or amounts as will compensate Lender for such reduction.  Each
determination by Lender of amounts owing under this Section shall, absent
manifest error, be conclusive and binding on the parties hereto.

 

2.8(b)                 If Lender determines (which determination shall be
conclusive) that (i) by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Applicable Daily
Floating LIBO Rate for any day; or (ii) the Daily LIBO Rate will not adequately
and fairly reflect the cost to Lenders of funding the Loan, then Lender shall
give the Borrower prompt notice thereof, and, so long as such condition remains
in effect, the Loan shall bear interest at the Applicable Base Rate.

 

2.8(c)                  Any and all payments by the Borrower to or for the
account of the Lender hereunder shall be made free and clear of and without
deduction for any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on Lender’s income, and franchise taxes imposed on it,
by the jurisdiction under the laws of which Lender is organized or any political
subdivision thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings, and liabilities being hereinafter referred to
as “Taxes”).  If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable under this Agreement to Lender, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.8(c)) the Lender receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions, (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law, and (iv) the Borrower shall furnish to the Lender the original or a
certified copy of a receipt evidencing payment thereof.

 

2.8(d)                 The Borrower also agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this Agreement
or from the execution or delivery of, or otherwise with respect to, this
Agreement (hereinafter referred to as “Other Taxes”).  Further, if the Borrower
shall be required to deduct or pay any Taxes or Other Taxes from or in respect
of any sum payable under this Agreement to Lender, the Borrower shall also pay
to Lender, at the time interest is paid, such additional amount that Lender
specifies is necessary to preserve the after-tax yield (after factoring in all
taxes, including taxes imposed on or measured by net income) that Lender would
have received if such Taxes or Other Taxes had not been imposed.

 

2.8(e)                  The Borrower agrees to indemnify the Lender for (i) the
full amount of Taxes and Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 2.8) paid by any of them and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto; (ii) any
other amounts payable under Section 2.8; and (iii) any liability (including
additions to tax, penalties, interest and expenses) arising therefrom or with
respect thereto, in each case whether or not such Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority.  Payment under this Section 2.8(e) shall be made within 30 days after
the date that the Lender makes a demand therefor.

 

4

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2.8(f)                    Notwithstanding anything to the contrary contained
elsewhere in this Agreement, if (x) any change in law shall make it unlawful for
the Lender to maintain the Loan at the Daily LIBO Rate or to give effect to its
obligations as contemplated hereby or (y) at any time Lender reasonably
determines that the maintenance of the Loan at the Daily LIBO Rate has become
impracticable as a result of a contingency occurring after the date hereof which
adversely affects the London interbank market, the Lender may, by written notice
to the Borrower require that the Daily LIBO Rate be converted to the Applicable
Base Rate as of the effective date of such notice.

 

3.                                      COLLATERAL

 

3.1                               Grant of Security Interest

 

As security for the payment of its obligations under the Note and for the
payment and performance of all of the Obligations, the Borrower grants a
security interest to Lender, in all of the Borrower’s right, title and interest
in and to the following described property, whether now owned or whether
acquired or arising after the date of this Agreement (“Collateral”):

 

3.1(a)                  All amounts advanced by Lender to or for the account of
the Borrower under this Agreement to fund the Eligible Loan until the Eligible
Loan is closed and those funds disbursed.

 

3.1(b)                 The Eligible Loan, including all Mortgage Notes,
Mortgages and Security Agreements evidencing or securing the Eligible Loan, that
are delivered or caused to be delivered to Lender (including delivery to a third
party on behalf of the Lender), or that otherwise come into the possession,
custody or control of the Lender (including the possession, custody or control
of a third party on behalf of the Lender), in each case made by Borrower with
funds advanced under this Agreement (collectively, “Pledged Loan”).

 

3.1(c)                  All Mortgage-backed Securities that are created in whole
or in part on the basis of Pledged Loan or that are delivered or caused to be
delivered to Lender or that otherwise come into the possession, custody or
control of the Lender, or its agent, bailee or custodian as assignee, or that
are pledged to Lender or, for such purpose are registered by book-entry in the
name of the Lender (including registration in the name of a third party on
behalf of the Lender), in each case in respect of the Loan or the Pledged Loan
(collectively, “Pledged Securities”).

 

3.1(d)                 All Purchase Commitments held by the Borrower covering
the Pledged Loan or Pledged Securities, and all proceeds from the sale of
Pledged Loan or Pledged Securities to Investors pursuant to those Purchase
Commitments and all personal property, contract rights, servicing rights or
contracts and servicing fees and income or other proceeds, amounts and payments
payable to Borrower as compensation or reimbursement, accounts, payments,
intangibles and general intangibles of every kind relating to Pledged Loan,
Pledged Securities, Purchase Commitments and commitments relating to Pledged
Loan and Pledged Securities, and all other documents or instruments relating to
Pledged Loan and Pledged Securities, including any interest of the Borrower 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
Pledged Loan.

 

3.1(e)                  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 Collateral) and other information and data of the Borrower
relating to the Collateral.

 

3.1(f)                    The Operating Accounts, the Cash Collateral Accounts,
and all cash, whether now existing or acquired after the date of this Agreement,
delivered to or otherwise in the possession of the Lender, or Lender’s agent,
bailee or custodian or designated on the books and records of the Borrower as
assigned and pledged to Lender, including all cash deposited in the Cash
Collateral Account.

 

5

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3.1(g)                 All Hedging Arrangements related to the Collateral
(“Pledged Hedging Arrangements”) and the Borrower’s accounts in which those
Hedging Arrangements are held (“Pledged Hedging Accounts”), including all rights
to payment arising under the Pledged Hedging Arrangements and the Pledged
Hedging Accounts, except that Lender’s security interest in the Pledged Hedging
Arrangements and Pledged Hedging Accounts applies only to benefits, including
rights to payment, related to the Collateral.

 

3.1(h)                 All cash and non-cash proceeds of the Collateral,
including all dividends, distributions and other rights in connection with, and
all additions to, modifications of and replacements for, the Collateral, and all
products and proceeds of the Collateral, together with whatever is receivable or
received when the Collateral or proceeds of Collateral are sold, collected,
exchanged or otherwise disposed of, whether such disposition is voluntary or
involuntary, including all rights to payment with respect to any cause of action
affecting or relating to the Collateral or proceeds of Collateral.

 

3.2                               Maintenance of Collateral Records

 

As long as there remain any Obligations to be paid or performed under this
Agreement or under any other Loan Document, the Borrower must preserve and
maintain, at its chief executive office and principal place of business or in a
regional office approved by Lender, and, promptly upon request, make available
to Lender the originals, or copies in any case where the originals have been
delivered to Lender or to an Investor, of the Mortgage Notes, Mortgages and
Security Agreements included in the Pledged Loan, Mortgage-backed Securities
delivered to Lender as Pledged Securities, Purchase Commitments relating to the
Pledged Loans or Pledged Securities, 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.

 

3.3                               Release of Security Interest in Pledged Loans
and Pledged Securities

 

3.3(a)                  Except as provided in Section 3.3(b), Lender will
release its security interest in the Pledged Loan and all of the Collateral
related to the Pledged Loan, as such Collateral is described in Section 3.1,
only against payment to Lender in full of all Obligations.  If the Pledged Loan
is transferred to a pool custodian or an Investor for inclusion in a mortgage
pool and Lender’s security interest in the Pledged Loan and all of the
Collateral related to the Pledged Loan, as such Collateral is described in
Section 3.1 is not released before the issuance of the related Mortgage-backed
Security, then that Mortgage-backed Security, when issued, is a Pledged
Security, Lender’s security interest continues in the Pledged Loan and all of
the Collateral related to the Pledged Loan, as such Collateral is described in
Section 3.1, backing that Pledged Security and Lender is entitled to possession
of the Pledged Security in the manner provided in this Agreement.

 

3.3(b)                 If the Pledged Loan is transferred to an Approved
Custodian and included in a mortgage pool, Lender’s security interest in the
Pledged Loan and all of the Collateral related to the Pledged Loan, as such
Collateral is described in Section 3.1, included in the mortgage pool will be
released upon the delivery of the Agency Security to Lender (including delivery
to or registration in the name of a third party on behalf of the Lender) and
that Agency Security is a Pledged Security.  Lender’s security interest in that
Pledged Security will be released only against payment to Lender in full of all
Obligations then outstanding.

 

3.3(c)                  Lender has the exclusive right to possession of all
Pledged Securities or, if Pledged Securities are issued in book-entry form or
issued in certificated form and delivered to a clearing corporation (as that
term is defined in the Uniform Commercial Code of Pennsylvania) or its nominee,
Lender has the right to have the Pledged Securities registered in the name of a
securities intermediary (as that term is defined in the Uniform Commercial Code
of Pennsylvania) in an account containing only customer securities and credited
to an account of the Lender.  Lender has no duty or obligation to deliver
Pledged Securities to an Investor or to credit Pledged Securities to the account
of an Investor or an Investor’s designee except against payment for those
Pledged Securities.  The Borrower acknowledges that Lender may enter into one or
more standing arrangements with securities intermediaries with respect to
Pledged Securities issued in book entry form or issued in certificated form and
delivered to a clearing corporation or its designee, under which the Pledged
Securities are registered in the name of the securities intermediary,

 

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and the Borrower agrees, upon request of the Lender, to execute and deliver to
those securities intermediaries their respective written concurrence in any such
standing arrangements.

 

3.3(d)                 If no Default or Event of Default occurs (or, if a
Default or Event of Default has occurred, such Default or Event of Default has
been cured or waived), the Borrower may redeem the Pledged Loan and all of the
Collateral related to the Pledged Loan, as such Collateral is described in
Section 3.1, or Pledged Security from Lender’s security interest by notifying
Lender of its intention to redeem the Pledged Loan or Pledged Security from
pledge and paying, or causing an Investor to pay, to Lender, all Obligations
then outstanding.

 

3.3(e)                  After a Default or Event of Default occurs, Lender may,
with no liability to the Borrower or any other Person, continue to release its
security interest in the Pledged Loan and all of the Collateral related to the
Pledged Loan, as such Collateral is described in Section 3.1, or Pledged
Security against payment in full of all Obligations then outstanding.

 

3.3(f)                    The amount to be paid by the Borrower to obtain the
release of the Lender’s security interest in the Pledged Loan and all of the
Collateral related to the Pledged Loan, will be (1) in connection with the sale
of the Pledged Loan by Lender while an Event of Default exists, the amount paid
to Lender in a commercially reasonable disposition of the Pledged Loan and
(2) otherwise, the unpaid Principal Amount together with all accrued and unpaid
interest thereon.

 

3.4                              Collection and Servicing Rights

 

3.4(a)                  If no Event of Default exists, the Borrower may service
and receive and collect directly all sums payable to the Borrower in respect of
the Collateral other than proceeds of any Purchase Commitment relating thereto
or proceeds of the sale of any Collateral.  All proceeds of any Purchase
Commitment relating thereto or any other sale of Collateral must be paid
directly to the Cash Collateral Account for application as provided in this
Agreement.

 

3.4(b)                 After an Event of Default occurs and remains continuing,
Lender or its designee is entitled to service and receive and collect all sums
payable to Borrower in respect of the Collateral, and in such case, subject to
any applicable requirements of the relevant Federal Agency, (1) Lender or its
designee in its discretion may, in its own name, in the name of Borrower 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 Lender has no obligation to do so, (2) Borrower must, if Lender requests it
to do so, hold in trust for the benefit of the Lender and immediately pay to
Lender at its office designated by Notice, all amounts received by Borrower upon
or in respect of any of the Collateral, advising Lender as to the source of
those funds, and (3) all amounts so received and collected by Lender will be
held by it as part of the Collateral and applied by Lender as provided in this
Agreement.

 

3.5                              Return of Collateral

 

If no Obligations are outstanding and unpaid, Lender will release its security
interest and will deliver all Collateral in its possession to the Borrower at
Borrower’s expense.  Borrower’s acknowledgement or receipt for any Collateral
released or delivered to Borrower under any provision of this Agreement is a
complete and full acquittance for the Collateral so returned, and the Lender is
discharged from any liability or responsibility for that Collateral.

 

3.6                              Delivery of Collateral Documents

 

3.6(a)                  The Lender may deliver documents relating to the
Collateral to Borrower for correction or completion under a Trust Receipt.

 

3.6(b)                 If no Default or Event of Default exists, upon delivery
by Borrower to Lender of shipping instructions pursuant to the Exhibit A, Lender
will deliver the Mortgage Notes evidencing the Pledged Loan or Pledged
Securities together with all related loan documents and pool documents
previously received by

 

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Lender under the requirements of Exhibit A to the designated Investor or
Approved Custodian or to another party designated by Borrower and acceptable to
Lender in its sole discretion.

 

3.6(c)                  If a Default or Event of Default exists, Lender may,
without liability to Borrower or any other Person, continue to deliver the
Pledged Loan or Pledged Securities, together with all related loan documents and
pool documents in Lender’s possession, to the applicable Investor or Approved
Custodian or to another party acceptable to Lender in its sole discretion.

 

3.7                              Borrower Remains Liable

 

Anything herein to the contrary notwithstanding, the Borrower shall remain
liable under each item of the Collateral granted by it to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms thereof and any other agreement
giving rise thereto, and in accordance with and pursuant to the terms and
provisions thereof.  Whether or not the Lender has exercised any rights in any
of the Collateral, the Lender shall not have any obligation or liability (other
than for gross negligence or willful misconduct) under any of the Collateral (or
any agreement giving rise thereto) by reason of or arising out of this Agreement
or the receipt by the Lender of any payment relating thereto, nor shall the
Lender be obligated in any manner to perform any of the obligations of the
Borrower under or pursuant to any of the Collateral (or any agreement giving
rise thereto) to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any of the Collateral (or any agreement giving
rise thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

 

4.                                      CONDITIONS PRECEDENT

 

4.1                               Loan Advance

 

The effectiveness of this Agreement is subject to the satisfaction, in the sole
discretion of the Lender, of the following conditions precedent:

 

4.1(a)                   Lender must receive the following, all of which must be
satisfactory in form and content to Lender, in its sole discretion:

 

(i)                                    The Note and this Agreement, duly
executed by the Borrower.

 

(ii)                                 The Borrower’s organizational documents,
certified as true and complete by an appropriate officer or other Person.

 

(iii)                              Certificates of legal existence and good
standing from the Secretary of State of Delaware for Borrower, dated within
thirty (30) days of the date of this Agreement.

 

(iv)                             Such certificates of resolutions or other
action, incumbency certificates and/or other certificates of responsible
officers of the Borrower as Lender may require evidencing (A) the authority of
the Borrower to enter into this Agreement and the other Loan Documents and
(B) the identity, authority and capacity of each Authorized Representative
thereof authorized to act as an Authorized Representative in connection with
this Agreement and the other Loan Documents.

 

(v)                                An opinion from counsel for the Borrower in
form and substance satisfactory to Lender concerning, among other matters
(i) the legal existence, good standing and qualification to do business of the
Borrower, (ii) the power and authority of the Borrower to enter into and perform
the Loan Documents, (iv) the authorization of the individuals executing and
delivering Loan Documents on behalf of the Borrower to do so, (v) the
enforceability of the Borrower’s obligations under the Loan Documents, (vi) the
absence of any pending or threatened material litigation against the Borrower,
(vii) the validity and perfection of the Lender’s security interest

 

8

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in the Collateral, (viii) the non-contravention of the Borrower’s obligations
under the Loan Documents, under the Borrower’s charter documents or under any
material agreements or legal proceedings to which it is a party or by which it
is bound, and (ix) such other matters as Lender reasonably shall request
consistent with loan facilities similar to the loan facility established by this
Agreement.

 

(vi)                             Such other documents as Lender reasonably may
require, duly executed and delivered, and evidence satisfactory to Lender of the
occurrence of any further conditions precedent to the funding of the Loan.

 

4.1(b)                 Lender shall have filed Uniform Commercial Code financing
statements in such jurisdictions as Lender shall have determined to be
appropriate in order to perfect the security interest in the Collateral granted
by Borrower pursuant to this Agreement or any other Loan Document.

 

4.1(c)                  Borrower shall have (i) paid to the Lender, as
applicable, all amounts due as of the Closing Date, and (ii) paid or reimbursed
the Lender for all its attorneys’ fees and expenses incurred in connection with
this Agreement and the other Loan Documents.

 

5.                                      GENERAL REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Lender, as of the date of this
Agreement that the representations and warranties set forth in Article 6 of the
Credit Agreement are true and correct, and incorporated herein by reference.

 

6.                                      AFFIRMATIVE COVENANTS

 

As long as there remain any Obligations to be paid or performed under this
Agreement or under any other Loan Document, the Borrower must, unless the Lender
consents in writing:

 

6.1                               Payment of Obligations

 

Punctually pay or cause to be paid all Obligations, including the Obligations
payable under this Agreement and the Note in accordance with their terms.

 

6.2                               Other Affirmative Covenants

 

Comply with the Affirmative Covenants set forth under Section 7.2 through and
including Section 7.12 of the Credit Agreement.

 

6.3                               Use of Loan Proceeds

 

Use the Loan proceeds solely for the purpose of funding the Eligible Loan and
against the pledge of the Eligible Loan as Collateral.

 

6.4                               Investor Instructions.

 

Upon any Event of Default prior to purchase of the Pledged Loan by the Investor,
and upon direction by the Lender, the Borrower shall immediately direct the
Investor to provide any documents in its possession related to the Pledged Loan
to the Lender.

 

7.                                      NEGATIVE COVENANTS

 

The negative covenants set forth in Article 8 of the Credit Agreement are herein
incorporated by reference.

 

9

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8.                                      SPECIAL REPRESENTATIONS, WARRANTIES AND
COVENANTS CONCERNING COLLATERAL

 

The special representations, warranties and covenants concerning collateral set
forth in Article 9 of the Credit Agreement are incorporated herein by reference.

 

9.                                      DEFAULTS; REMEDIES

 

9.1                               Events of Default

 

The occurrence of any of the following is an event of default (“Event of
Default”):

 

9.1(a)                  The Borrower fails to pay the unpaid Principal Amount
when due, whether at stated maturity, by acceleration, or otherwise; or fails to
pay interest on the unpaid Principal Amount when due hereunder; or fails to pay,
within any applicable grace period, any other amount due under this Agreement or
any other Obligation of the Borrower to Lender.

 

9.1(b)                 Any representation or warranty made or deemed made by the
Borrower under this Agreement, whether expressly or by incorporation by
reference, in any other Loan Document or in any written statement or certificate
at any time given by the Borrower is inaccurate or incomplete in any material
respect on the date as of which it is made or deemed made.

 

9.1(c)                  An “Event of Default” exists under the Credit Agreement.

 

9.2                               Remedies

 

9.2(a)                  If an Event of Default described in Section 10.1(h) of
the Credit Agreement occurs with respect to the Borrower, the unpaid Principal
Amount and accrued interest on the Note and the unpaid Principal Amount and
accrued interest on the Note and all other Obligations will automatically become
due and payable, without presentment, demand or other Notice or requirements of
any kind, all of which the Borrower expressly waives.

 

9.2(b)                 If an Event of Default described in Section 9.1(a) of
this Agreement occurs with respect to the Borrower, the Lender may declare the
Obligations to be immediately due and payable.

 

9.2(c)                  If any other Event of Default occurs, the Lender may, by
Notice to the Borrower, declare the Obligations to be immediately due and
payable.

 

9.2(d)                 If any Event of Default occurs, the Lender may, also take
any of the following actions:

 

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

 

(ii)                                  Notify all obligors under any of the
Collateral that the Collateral has been assigned to the Lender (or to another
Person designated by the Lender) and that all payments on that Collateral are to
be made directly to the Lender (or such other Person); settle, compromise or
release, in whole or in part, any amounts any obligor or Investor owes on any of
the Collateral on terms acceptable to the Lender; enforce payment and prosecute
any action or proceeding involving any of the Collateral; and where any
Collateral is in default, foreclose on and enforce any Liens securing that
Collateral in any manner permitted by law and sell any property acquired as a
result of those enforcement actions.

 

10

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(iii)                              Prepare and submit for filing Uniform
Commercial Code amendment statements evidencing the assignment to Lender or its
designee of any Uniform Commercial Code financing statement filed in connection
with any item of Collateral.

 

(iv)                             Act, or contract with a third party to act at
the Borrower’s expense, as servicer or subservicer of Collateral requiring
servicing and perform all obligations required under any Collateral, including
Servicing Contracts and Purchase Commitments.

 

(v)                                Require the Borrower to assemble and make
available to the Lender the Collateral and all related books and records at a
place designated by the Lender.

 

(vi)                             Enter onto property where any Collateral or
related books and records are located and take possession of those items with or
without judicial process; and obtain access to the Borrower’s respective data
processing equipment, computer hardware and software relating to the Collateral
and use all of the foregoing and the information contained in the foregoing in
any manner the Lender deems necessary for the purpose of effectuating its rights
under this Agreement and any other Loan Document.

 

(vii)                          Before the disposition of the Collateral, prepare
it for disposition in any manner and to the extent the Lender deems appropriate.

 

(viii)                       Exercise all rights and remedies of a secured
creditor under the Commercial Code of Pennsylvania or other applicable law,
including selling or otherwise disposing of all or any portion of the Collateral
at one or more public or private sales, whether or not the Collateral is present
at the place of sale, for cash or credit or future delivery, on terms and
conditions and in the manner as the Lender may determine, including sale under
any applicable Purchase Commitment.  The Borrower waives any right it may have
to prior notice of the sale of all or any portion of the Collateral to the
extent allowed by applicable law.  If notice is required under applicable law,
the Lender will give the Borrower not less than 10 days’ notice of any public
sale or of the date after which any private sale may be held.  The Borrower
agrees that 10 days’ notice is reasonable notice.  The Lender may, without
notice or publication, adjourn any public or private sale one or more times by
announcement at the time and place fixed for the sale, and the sale may be held
at any time or place announced at the adjournment.  In the case of a sale of all
or any portion of the Collateral on credit or for future delivery, the
Collateral sold on those terms may be retained by the Lender until the purchaser
pays the selling price or takes possession of the Collateral.  The Lender has no
liability to the Borrower if a purchaser fails to pay for or take possession of
Collateral sold on those terms, and in the case of any such failure, the Lender
may sell the Collateral again upon notice complying with this Section.

 

(ix)                               The Lender may proceed by suit at law or in
equity to collect all amounts due on the Collateral, or to foreclose the
Lender’s Lien on and sell all or any portion of the Collateral pursuant to a
judgment or decree of a court of competent jurisdiction.

 

(x)                                  Proceed against the Borrower on the Note.

 

9.2(e)                  The Lender will not incur any liability as a result of
the commercially reasonable sale or other disposition of all or any portion of
the Collateral at any public or private sale or other disposition.  The Borrower
waives (to the extent permitted by law) any claims it may have against the
Lender or any Lender arising by reason of the fact that the price at which the
Collateral may have been sold at a private sale was less than the price that
might have been obtained at a public sale, or was less than the unpaid Principal
Amount, accrued and unpaid interest thereon, and unpaid fees owing hereunder,
even if the Lender accepts the first offer received and does not offer the
Collateral to more than one offeree.  The Borrower agrees that any sale of
Collateral under the terms of a Purchase Commitment, or any other disposition of
Collateral arranged by Borrower, whether before or after the occurrence of an
Event of Default, will be deemed to have been made in a commercially reasonable
manner.

 

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9.2(f)                    The Borrower acknowledges that the Eligible Loan is
collateral of a type that is the subject of widely distributed standard price
quotations and that Mortgage-backed Securities are collateral of a type that is
customarily sold on a recognized market.  The Borrower waives any right it may
have to prior notice of the sale of Pledged Securities, and agrees that the
Lender or any lender may purchase the Pledged Loan and Pledged Securities at a
private sale of such Collateral.

 

9.2(g)                 The Borrower specifically waives and releases (to the
extent permitted by law) any equity or right of redemption, stay or appraisal
that the Borrower has or may have under any rule of law or statute now existing
or adopted after the date of this Agreement, and any right to require the Lender
or any Lender to (1) proceed against any Person, (2) proceed against or exhaust
any of the Collateral or pursue its rights and remedies against the Collateral
in any particular order or (3) pursue any other remedy within its power.  The
Lender is not required to take any action to preserve any rights of the Borrower
against holders of mortgages having priority to the Lien of any Mortgage or
Security Agreement included in the Collateral or to preserve the Borrower’s
rights against other prior parties.

 

9.2(h)                 The Lender may, but is not obligated to, advance any sums
or do any act or thing necessary to uphold or enforce the Lien and priority of,
or the security intended to be afforded by, any Mortgage or Security Agreement
included in the Collateral, including 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 Lender in
exercising any right, power or remedy conferred by this Agreement, or in the
enforcement of this Agreement, together with interest on those amounts at the
Default Rate, from the time paid by the Lender until repaid by the Borrower, are
deemed to be principal outstanding under this Agreement and the Note.

 

9.2(i)                     No failure or delay on the part of the Lender or any
Lender to exercise any right, power or remedy provided in this Agreement or
under any other Loan Document, at law or in equity, will operate as a waiver of
that right, power or remedy.  No single or partial exercise by the Lender or any
Lender of any right, power or remedy provided under this Agreement or any other
Loan Document, at law or in equity, precludes any other or further exercise of
that right, power or remedy by the Lender, or the Lender’s exercise of any other
right, power or remedy.  Without limiting the foregoing, the Borrower waives all
defenses based on the statute of limitations to the extent permitted by law. 
The remedies provided in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any remedies provided at law or in equity.

 

9.2(j)                     The Borrower grants the Lender a license or other
right to use, without charge, Borrower’s computer programs, other programs,
labels, patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in advertising for sale and
selling any of the Collateral and the Borrower’s rights under all licenses and
all other agreements related to the foregoing inure to the Lender’s benefit
until the Obligations are paid in full.

 

9.3                               Insufficiency of Proceeds

 

Nothing herein shall require the Lender to look to all or any portion of the
Collateral prior to, or in lieu of, pursuing any other right or remedy, any or
all of which may be pursued in any order and at any time, including at the same
time.

 

9.4                               Lender Appointed Attorney-in-Fact

 

The Borrower appoints the Lender its attorney-in-fact, with full power of
substitution, for the purpose of carrying out the provisions of this Agreement,
the Note and the other Loan Documents and taking any action and executing any
instruments that the Lender deems necessary or advisable to accomplish that
purpose.  The Borrower’s appointment of the Lender as attorney-in-fact is
irrevocable and coupled with an interest.  Without limiting the generality of
the foregoing, the Lender may give notice of its security interest in and Lien
on the Collateral to any Person, either in the Borrower’s name or in its own
name, endorse the Pledged Loan or Pledged Securities payable

 

12

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to the order of the Borrower, change or cause to be changed the book-entry
registration or name of subscriber or Investor on any Pledged Security, prepare
and submit for filing Uniform Commercial Code amendment statements with respect
to any Uniform Commercial Code financing statements filed in connection with any
item of Collateral or receive, endorse and collect all checks made payable to
the order of the Borrower representing payment on account of the principal of or
interest on, or the proceeds of sale of, the Pledged Loan or Pledged Securities
and give full discharge for those transactions.  The foregoing appointment shall
be effective immediately with respect to ministerial matters, and upon the
occurrence of an Event of Default with respect to all other matters.

 

9.5                               Right of Set-Off

 

The Borrower hereby grants to the Lender a continuing lien, security interest
and right of setoff as security for all liabilities and obligations to the
Lender, whether now existing or hereafter arising, upon and against all
deposits, credits, collateral and property, now or hereafter in the possession,
custody safekeeping or control of the Lender or any entity under the control of
the Lender, and their respective successors and assigns or in transit to any of
them, other than third-party custodial accounts maintained by Borrower at
Lender.  Upon occurrence of an Event of Default with respect to the payment of
any Obligation or in the performance of any of its duties under the Loan
Documents, the Lender may, without Notice to or demand on the Borrower (which
Notice or demand the Borrower expressly waives), set-off, appropriate or apply
any property of the Borrower held at any time by the Lender, or any indebtedness
at any time owed by the Lender to or for the account of a Borrower, against the
Obligations, whether or not those Obligations have matured.  ANY AND ALL RIGHTS
TO REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH NON-CUSTODIAL DEPOSITS, CREDITS OR OTHER PROPERTY OF THE
BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

10.                               MISCELLANEOUS

 

10.1                        Notices

 

Any and all notices to be given under this Agreement shall be given in the
manner set forth in Section 11.1 of the Credit Agreement.

 

10.2                        Reimbursement Of Expenses; Indemnity

 

10.2(a)            Whether or not the transactions contemplated hereby shall be
consummated, the Borrower agrees to pay promptly: (i) all the actual and
reasonable out-of-pocket costs and expenses of the Lender for preparation of the
Loan Documents and any consents, amendments, waivers, or other modifications
thereto; (ii) the reasonable fees, expenses, and disbursements of counsel to the
Lender in connection with the negotiation, preparation, execution, and
administration of the Loan Documents and any consents, amendments, waivers, or
other modifications thereto and any other documents or matters requested by the
Borrower; (iii) all other actual and reasonable out-of-pocket costs and expenses
incurred by the Lender in connection with the establishment of the facility, and
the negotiation, preparation, and execution of the Loan Documents and any
consents, amendments, waivers, or other modifications thereto and the
transactions contemplated thereby; and (iv) all reasonable out-of-pocket
expenses (including reasonable attorneys fees and costs, which attorneys may be
employees of the Lender and the fees and costs of appraisers, brokers,
investment bankers or other experts retained by the Lender) incurred by the
Lender in connection with (x) the enforcement of or preservation of rights under
any of the Loan Documents against the Borrower or any other Person, or the
administration thereof, (y) any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work out” or
pursuant to any insolvency or bankruptcy proceedings, and (z) any litigation,
proceeding or dispute whether arising hereunder or otherwise, in any way related
to the Lender’s relationship with the Borrower, except to the extent arising out
of such Person’s gross negligence or willful misconduct as finally determined by
a court of competent jurisdiction.  The covenants of this Section shall survive
payment or satisfaction of payment of amounts owing with respect to the Note. 
The amount of all such expenses shall, until paid, bear interest at the rate

 

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applicable to principal hereunder (including the Default Rate) and be an
Obligation secured by any Collateral.

 

10.2(b)           The Borrower shall indemnify and hold harmless the Lender and
its respective parents, affiliates, officers, directors, employees, attorneys,
and agents (“Indemnified Party”) from and against any and all claims, actions
and suits whether groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature and character arising
out of this Agreement or any of the other Loan Documents or the transactions
contemplated hereby (“Damages”) including, without limitation (i) any actual or
proposed use by the Borrower of the proceeds of the Loan, (ii) the Borrower
entering into or performing this Agreement or any of the other Loan Documents,
or (iii) with respect to the Borrower and its properties and assets, the
violation of any applicable law, in each case including, without limitation, the
reasonable fees and disbursements of counsel and allocated costs of internal
counsel incurred in connection with any such investigation, litigation or other
proceeding; provided, however, that no Indemnified Party shall be entitled to
indemnification if a court of competent jurisdiction finally determines (all
appeals having been exhausted or waived) that such Indemnified Party acted with
willful misconduct or gross negligence.  In litigation, or the preparation
therefor, the Lender shall be entitled to select their respective own counsel
and, in addition to the foregoing indemnity, the Borrower agrees to pay promptly
the reasonable fees and expenses of such counsel.  If, and to the extent that
the obligations of the Borrower under this Section 10.2(b) are unenforceable for
any reason, the Borrower agrees to make the maximum contribution to the payment
in satisfaction of such obligations which is permissible under applicable law. 
The provisions of this Section 10.2(b) shall survive the repayment of the Loan
and the termination of the obligations of the Lender hereunder.

 

10.3                        Financial Information

 

All financial statements and reports furnished to the Lender under this
Agreement must be prepared in accordance with GAAP, applied on a basis
consistent with that applied in preparing the most recent Audited Financial
Statement of the Borrower provided to Lender.

 

10.4                        Terms Binding Upon Successors; Survival of
Representations

 

The terms and provisions of this Agreement are binding upon and inure to the
benefit of the Borrower, the Lender, and their respective successors and
permitted assigns.  All of the Borrower’s representations, warranties, covenants
and agreements survive the making of the Loan, and, except where a longer period
is set forth in this Agreement, remain effective for as long as there remain any
Obligations to be paid or performed.

 

10.5                        Pledge to Federal Reserve Banks

 

The Lender may at any time pledge or assign all or any portion of its rights
under the Loan Documents (including, without limitation, any portion of the
Note) to any of the Federal Reserve Banks organized under Section 4 of the
Federal Reserve Act, 12 U.S.C. Section 341.  No such pledge or assignment or
enforcement thereof shall release Lender from its obligations under any of the
Loan Documents.

 

10.6                        Governing Law

 

This Agreement and the rights and obligations of the parties hereunder shall be
construed and interpreted in accordance with the laws of the Commonwealth of
Pennsylvania (excluding the laws applicable to conflicts or choice of law).

 

10.7                        Amendments

 

This Agreement may not be amended, modified, or supplemented except by a written
agreement signed by the Borrower and the Lender.

 

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10.8                        Relationship of the Parties

 

The relationship between the Lender and Borrower is limited to that of creditor
and secured party on the part of the Lender and of debtor on the part of
Borrower.  The provisions of this Agreement and the other Loan Documents for
compliance with financial covenants and the delivery of financial statements and
other operating reports are intended solely for the benefit of the Lender to
protect their interests as creditors and secured party.  Nothing in this
Agreement creates or may be construed as permitting or obligating the Lender to
act as a financial or business advisor or consultant to the Borrower, as
permitting or obligating the Lender to control the Borrower or to conduct the
Borrower’s operations, as creating any fiduciary obligation on the part of the
Lender or to the Borrower, or as creating any joint venture, partnership, agency
or other similar relationship between the Lender and the Borrower.  The Borrower
acknowledges that it has had the opportunity to obtain the advice of experienced
counsel of its own choice in connection with the negotiation and execution of
the Loan Documents and to obtain the advice of that counsel with respect to all
matters contained in the Loan Documents, including the waivers of jury trial and
of punitive, consequential, special or indirect damages contained in Sections
10.15 and 10.16, respectively.  The Borrower further acknowledges that it is
experienced with respect to financial and credit matters and has made its own
independent decisions to apply to the Lender for credit and to execute and
deliver this Agreement.

 

10.9                        Severability

 

If any provision of this Agreement or any other Loan Document is declared to be
illegal or unenforceable in any respect, that provision is null and void and of
no force and effect to the extent of the illegality or unenforceability, and
does not affect the validity or enforceability of any other provision of the
Agreement or such other Loan Document.

 

10.10                 Consent to Credit References

 

The Borrower consents to the disclosure of information regarding the Borrower
and its Subsidiaries and their relationships with the Lender to Persons making
credit inquiries to the Lender.  This consent is revocable by the Borrower at
any time upon Notice to the Lender as provided in Section 10.1.

 

10.11                 Counterparts

 

This Agreement may be executed in any number of counterparts, each of which will
be deemed an original, but all of which together constitute but one and the same
instrument.

 

10.12                 Headings/Captions

 

The captions or headings in this Agreement and the other Loan Documents are for
convenience only and in no way define, limit or describe the scope or intent of
any provision of this Agreement or any other Loan Document.

 

10.13                 Entire Agreement

 

This Agreement, the Note and the other Loan Documents are intended by the
parties as the final, complete and exclusive statement of the transactions
evidenced by thereby.  All prior or contemporaneous promises, agreements and
understandings, whether oral or written, are deemed to be superseded by this
Agreement, the Note and the other Loan Documents, and no party is relying on any
promise, agreement or understanding not set forth in this Agreement, the Note or
the other Loan Documents.

 

10.14                 Consent to Jurisdiction

 

THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
PENNSYLVANIA OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT

 

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BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS PROVIDED FOR HEREIN.  THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT FORUM.

 

10.15                 Waiver of Jury Trial

 

THE BORROWER AND THE LENDER (BY ACCEPTANCE OF THIS AGREEMENT) MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN
CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT
LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF
THE LENDER RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT OF THE
LOAN DOCUMENTS, AND AGREE THAT NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.

 

10.16                 Waiver of Punitive, Consequential, Special or Indirect
Damages

 

THE BORROWER WAIVES ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL OR INDIRECT DAMAGES FROM LENDER OR ANY OF LENDER’S AFFILIATES, OFFICERS,
DIRECTORS, EMPLOYEES, ATTORNEYS, OR AGENTS WITH RESPECT TO ANY AND ALL ISSUES
PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY THE
BORROWER AGAINST THE LENDER OR ANY OF THE LENDER’S AFFILIATES, OFFICERS,
DIRECTORS, EMPLOYEES, ATTORNEYS, OR AGENTS WITH RESPECT TO ANY MATTER ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.  THIS
WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES
IS KNOWINGLY AND VOLUNTARILY GIVEN BY THE BORROWER, AND IS INTENDED TO ENCOMPASS
EACH INSTANCE AND EACH ISSUE FOR WHICH THE RIGHT TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES WOULD OTHERWISE APPLY.  THE LENDER IS
AUTHORIZED AND DIRECTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES TO THIS AGREEMENT AS
CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL OR INDIRECT DAMAGES.

 

10.17                 U.S. Patriot Act

 

The Lender hereby notifies the Borrower that pursuant to the requirements of the
USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Act”), it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the
Borrower and other information that will allow Lender to identify the Borrower
in accordance with the Act.

 

10.18                 Confidentiality.

 

The terms and conditions of this Agreement shall be subject to the terms of that
certain Confidentiality Agreement, dated as of June 30, 2010, by and between the
Borrower and the Lender.

 

11.                               DEFINITIONS

 

11.1                        Defined Terms

 

In addition to terms defined elsewhere in this Agreement, when used in this
Agreement and, unless otherwise defined therein, in any other Loan Document (and
including, unless otherwise defined therein, in any Schedules or

 

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Exhibits to this Agreement and to the other Loan Documents), capitalized terms
defined below or elsewhere in this Agreement have the following meanings:

 

“Agreement” means this Warehouse Loan and Security Agreement, either as
originally executed or as it may be amended, restated, renewed or replaced, and
including all Exhibits hereto.

 

“Applicable Base Rate” means for any day, a fluctuating per annum rate of
interest equal to the sum of (a) the higher of (i) the Prime Rate and (ii) the
Federal Funds Open Rate plus fifty (50) basis points and (b) one and one half
percent (1.5%).  The calculation and determination of the Applicable Base Rate
shall be made daily by the Lender and such determination shall, absent manifest
error, be final, conclusive and binding upon the Borrower and the Lender. 
Changes in the Applicable Base Rate shall become effective on the same day as
the Lender changes its Prime Rate or a change occurs in the Federal Funds Open
Rate, depending upon which rate is applicable on that day to the determination
of the Base Rate.

 

“Applicable Daily Floating LIBO Rate” means, for any day, a rate per annum equal
to the Daily LIBO Rate for such day, plus two percent (2.00%).

 

“Applicable Rate” means, for any day (a) except as otherwise required from time
to time pursuant to Section 2.8(b) or 2.8(f), the Applicable Daily Floating LIBO
Rate for such day, or (b) if, and only for as long as, required from time to
time pursuant to Section 2.8(b) or 2.8(f), the Applicable Base Rate for each
applicable day.

 

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

 

“Business Day” means any (a) day other than Saturday or Sunday, or (b) day of
the year on which offices of the Lender are not required or authorized by law to
be closed for business in Pittsburgh, Pennsylvania.  If any day on which a
payment is due is not a Business Day, then the payment shall be due on the next
day following which is a Business Day.  Further, if there is no corresponding
day for a payment in the given calendar month (e.g., there is no
“February 30th”), the payment shall be due on the last Business Day of the
calendar month.

 

“Closing Date” means, subject to the Borrower’s satisfaction of the conditions
set forth in Article 4, the date as of which this Agreement is executed as first
above written.

 

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

 

“Collateral Documents” means, with respect to the Eligible Loan, (a) the
documents set forth in Exhibit A attached hereto and (b) all other documents
including, if applicable, any Security Agreement, executed in connection with or
relating to the Eligible Loan.

 

“Daily LIBO Rate” for any day shall mean, the rate per annum determined by the
Lender by dividing (a) the Published Rate by (b) a number equal to 1.00 minus
the LIBOR Reserve Percentage.

 

“Default” means the occurrence of any event or existence of any condition that,
but for the giving of Notice, the lapse of time or both would constitute an
Event of Default.

 

“Default Rate” means, on any day, a rate per annum equal to the Applicable Rate
on such day plus four percent (4%).

 

“Funding Date” means the date the Loan proceeds are disbursed to or on behalf of
Borrower pursuant to the terms of this Agreement.

 

“Investor” means (a) a Federal Agency, or (b) a financially responsible private
institution that the Lender deems acceptable from time to time, in its sole
discretion, to issue Purchase Commitments with respect to the Eligible Loan.

 

“Late Charge” has the meaning set forth in Section 2.7.

 

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

 

“LIBOR Loan” means the Loan at any time it is being maintained at a rate of
interest based upon the Daily LIBO Rate (the Applicable Rate for which shall be
the Applicable Daily Floating LIBO Rate).

 

“LIBOR Reserve Percentage” shall mean the maximum effective percentage in effect
on such day as prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the reserve requirements (including,
without limitation, supplemental, marginal and emergency reserve requirements)
with respect to eurocurrency funding (currently referred to as “Eurocurrency
liabilities”).

 

“Loan” shall have the meaning set forth in Section 1.1.

 

“Loan Documents” means this Agreement, the Note, and each other document,
instrument or agreement executed by the Borrower in connection with any of those
documents, instruments and agreements, or establishing or evidencing an
Obligation, including, without limitation, pursuant to a Hedging Arrangement
with the Lender or an Affiliate as the counterparty, to the extent specifically
hedging the Borrower’s interest bearing obligations under this Agreement, each
as originally executed or as any of the same may be amended, restated, renewed
or replaced.

 

“Maturity Date” means the fifteenth (15th) day following the Funding Date.

 

“Mortgage” means a mortgage or deed of trust executed and delivered in
connection with the Eligible Loan, on real property that is improved and
substantially completed.

 

“Mortgage-backed Securities” means securities that are secured or otherwise
backed by the Eligible Loan.

 

“Mortgage Note” means a promissory note executed in connection with the Eligible
Loan and secured by one or more Mortgages and, if applicable, one or more
Security Agreements.

 

“Obligations” means all indebtedness, obligations and liabilities of the
Borrower to Lender pursuant to the terms of this Agreement (whether now existing
or arising after the date of this Agreement, voluntary or involuntary, joint or
several, direct or indirect, absolute or contingent, liquidated or unliquidated,
or decreased or extinguished and later increased and however created or
incurred), including, without limitation, Borrower’s obligations and liabilities
to Lender (a) under the Loan Documents, (b) for disbursements made by the Lender
for the Borrower’s account, (c) for overdrafts (which, if permitted, shall be at
Lender’s sole discretion), (d) for automated clearinghouse exposure, and
(e) under Hedging Arrangements with Lender or an Affiliate as the counterparty,
to the extent specifically hedging Borrower’s interest bearing obligations under
this Agreement and of which Hedging Arrangement Lender had been provided Notice
(and all details thereof) prior to its establishment.

 

“Operating Accounts” means the demand deposit accounts maintained at Lender in
the Borrower’s name, as account no. 4212867739.

 

“Prime Rate” means on any day, the rate of interest per annum then most recently
established by the Lender as its “prime rate,” it being understood and agreed
that such rate is set by the Lender as a general reference rate of interest,
taking into account such factors as the Lender may deem appropriate, that it is
not necessarily the lowest or best rate actually charged to any customer or a
favored rate, that it may not correspond with future increases or decreases in
interest rates charged by other lenders or market rates in general, and that
Lender may make various business or other loans at rates of interest having no
relationship to such rate.  If Lender ceases to exist or to establish or publish
a prime rate from which the Prime Rate is then determined, the applicable
variable rate from which the Prime Rate is determined thereafter shall be
instead the prime rate reported in The Wall Street Journal (or the average prime
rate if a high and a low prime rate are therein reported), and the Prime Rate
shall change without notice with each change in such prime rate as of the date
such change is reported.

 

“Published Rate” shall mean the rate of interest published each Business Day in
The Wall Street Journal “Money Rates” listing under the caption “London
Interbank Offered Rates” for a one-month period (or, if no such rate is

 

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published therein for any reason, then the Published Rate shall be the
eurodollar rate for a one-month period as published in another publication
determined by the Lender).

 

“Reference Rate” means, as applicable for determining the Applicable Rate for
any day, the Daily LIBO Rate or the Applicable Base Rate for such day.

 

“Security Agreement” means a security agreement or other agreement that creates
a Lien on personal property, including furniture, fixtures and equipment, to
secure repayment of the Eligible Loan.

 

11.2                        Other Definitional Provisions; Terms of Construction

 

11.2(a)            Accounting terms not otherwise defined in this Agreement have
the meanings given to those terms under GAAP.

 

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

 

11.2(c)            All references to time of day mean the then applicable time
in Pittsburgh, Pennsylvania, unless otherwise expressly provided.

 

11.2(d)           References to Sections, Exhibits, Schedules and like
references are to Sections, Exhibits, Schedules and the like of this Agreement
unless otherwise expressly provided.

 

11.2(e)            The words “include,” “includes” and “including” are deemed to
be followed by the phrase “without limitation.”

 

11.2(f)             Unless the context in which it is used otherwise clearly
requires, the word “or” has the inclusive meaning represented by the phrase
“and/or.”

 

11.2(g)           All incorporations by reference of provisions from other
agreements are incorporated as if such provisions were fully set forth into this
Agreement, and include all necessary definitions and related provisions from
those other agreements.  All provisions from other agreements incorporated into
this Agreement by reference survive any termination of those other agreements
until the Obligations of the Borrower under this Agreement and the Note is
irrevocably paid in full.

 

11.2(h)           All references to the Uniform Commercial Code are deemed to be
references to the Uniform Commercial Code in effect on the date of this
Agreement in the applicable jurisdiction.

 

11.2(i)               Unless the context in which it is used otherwise clearly
requires, all references to days, weeks and months mean calendar days, weeks and
months.

 

[Signature pages follow]

 

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

 

 

WALKER & DUNLOP, LLC,

 

a Delaware limited liability company

 

 

 

By:

William M. Walker

 

Name:

William M. Walker

 

Title:

President and Chief Executive Officer

 

 

 

 

 

PNC BANK, NATIONAL ASSOCIATION

 

 

 

 

 

By:

/s/ Terri Wyda

 

Name:

Terri Wyda

 

Title:

Senior Vice President

 

S-1

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