EXHIBIT 10.2
SECURITY AGREEMENT
     THIS SECURITY AGREEMENT (“Agreement”) is made as of September 11, 2007, by
Origen Financial L.L.C., a Delaware limited liability company (“Debtor”), whose
principal place of business is located at 27777 Franklin Rd., Suite 1700,
Southfield, Michigan 48034, Origen Servicing, Inc., a Delaware corporation
(“Servicer”, and together with Debtor, each a “Pledgor” and together the
“Pledgors”), whose principal place of business is located at 27777 Franklin Rd.,
Suite 1700, Southfield, Michigan 48034, and the William M. Davidson Trust u/a/d
12/13/04 (“Secured Party”), whose address is 2300 Harmon Road, Auburn Hills,
Michigan 48326, Attention: Jonathan S. Aaron. Pledgors hereby agree with Secured
Party as follows:
     1. Definitions. As used in this Agreement, the following terms shall have
the meanings indicated below:

  (a)   The term “Code” shall mean the Uniform Commercial Code as in effect in
the State of Michigan, as from time to time, or, if so required with respect to
any particular Collateral by mandatory provisions of applicable law, as in
effect in the jurisdiction in which such Collateral is located.     (b)   The
term “Collateral” shall mean each Pledgor’s right, title and interest in and to
servicing and/or sub-servicing fees payable to such Pledgor (“Servicing Fees”)
under the servicing agreements, master servicing agreements and/or sub-servicing
agreements in respect of the loans included in the trust securitizations listed
on Schedule 1 hereto (the “Servicing Agreements”) and all proceeds from the sale
thereof.     (c)   The term “Indebtedness” shall mean: (i) all indebtedness,
liabilities and obligations of Debtor to Secured Party of any kind or character,
now existing or hereafter arising, whether direct, indirect, related, unrelated,
fixed, contingent, liquidated, unliquidated, joint, several or joint and
several, arising under or pursuant to the Senior Secured Loan Agreement of even
date herewith (the “Loan Agreement”) between Debtor and Secured Party; (ii) all
indebtedness, liabilities and obligations of Debtor to Secured Party now
existing or hereafter arising under the Senior Secured Promissory Note of even
date herewith, in the aggregate original principal amount of $10,000,000 (the
“Term A Bridge Loan Note”), payable to Secured Party, and the Senior Secured
Convertible Promissory Note of even date herewith, in the aggregate original
principal amount of $5,000,000 (the “Term B Bridge Loan Note”), payable to
Secured Party; (iii) all obligations of Debtor to Secured Party under any
documents evidencing, securing, governing and/or pertaining to all or any part
of the indebtedness described in clauses (i) and (ii) above; (iv) all costs and
expenses incurred by Secured Party in connection with the collection of all or
any part of the indebtedness and obligations described in clauses (i) through
(iii) above or the protection or preservation of, or realization upon, the
Collateral, including without limitation all reasonable attorneys’

 

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

 

      fees; and (v) all renewals, extensions, modifications and rearrangements
of the indebtedness and obligations described in clauses (i) through (iv) above.
    (d)   The term “Loan Documents” shall mean the Loan Agreement, this
Agreement, the Term A Bridge Loan Note, the Term B Bridge Loan Note, and all
other instruments and documents evidencing, securing, governing, guaranteeing
and/or pertaining to the Indebtedness.     (e)   The term “Obligated Party”
shall mean any party other than the Pledgors who secures, guarantees and/or is
otherwise obligated to pay all or any portion of the Indebtedness.     (f)   All
words and phrases used herein which are expressly defined in Section 1.201 or
Chapter 9 of the Code shall have the meaning provided for therein. Other words
and phrases defined elsewhere in the Code shall have the meaning specified
therein except to the extent such meaning is inconsistent with a definition in
Section 1.201 or Chapter 9 of the Code.

     2. Security Interest. As security for the prompt payment and performance of
the Indebtedness, each Pledgor, for value received, hereby pledges and grants to
Secured Party a continuing security interest in the Collateral.
     3. Representations and Warranties. In addition to any representations and
warranties of Debtor set forth in the Loan Documents, which are incorporated
herein by this reference, each Pledgor hereby represents and warrants the
following to Secured Party:

  (a)   Authority. The execution, delivery and performance of this Agreement and
all of the other Loan Documents to which Pledgor is a party have been duly
authorized by all necessary action of Pledgor.     (b)   Accuracy of
Information. The exact legal name of Pledgor is correctly shown on the first
page hereof.     (c)   Enforceability. This Agreement and the other Loan
Documents to which Pledgor is a party constitute legal, valid and binding
obligations of Pledgor, enforceable in accordance with their respective terms,
except as limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors’ rights and except to the
extent specific remedies may generally be limited by equitable principles.    
(d)   Ownership and Liens. Pledgor has good and defensible title to the
Collateral free and clear of all liens, security interests, encumbrances or
adverse claims, except for the security interest created by this Agreement and
except as otherwise disclosed in writing to Secured Party prior to the date of
this Agreement. No dispute, right of setoff, counterclaim or defense exists
that, if decided adversely to Pledgor, would adversely affect

2

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

 

      Pledgor’s title to all or any part of the Collateral. Except as disclosed
in writing to Secured Party, Pledgor has not executed any other security
agreement currently affecting the Collateral and no effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office except as may have been executed
or filed in favor of Secured Party.     (e)   No Conflicts or Consents. Neither
the ownership or intended use of the Collateral by Pledgor, the grant of the
security interest by Pledgor to Secured Party herein nor the exercise by Secured
Party of its rights or remedies hereunder, will (i) conflict with any provision
of (A) any federal, state or local law, statute, rule or regulation, (B) the
organizational documents of Pledgor, or (C) any material agreement, judgment,
license, order or permit applicable to or binding upon Pledgor, or (ii) result
in or require the creation of any lien, charge or encumbrance upon any of the
Collateral except as may be expressly contemplated in the Loan Documents. Except
as expressly contemplated in the Loan Documents, no consent, approval,
authorization or order of, and no notice to or filing with, any court,
governmental authority or third party is required in connection with the grant
by Pledgor of the security interest herein or the exercise by Secured Party of
its rights and remedies hereunder.     (f)   Security Interest. This Agreement
creates a legal, valid and binding security interest in favor of Secured Party
in the Collateral securing the Indebtedness, such security interest will be
properly perfected under the Code upon the filing of appropriate financing
statements and will be a first priority security interest in the Collateral.    
(g)   Location/Identity. Pledgor’s principal place of business and chief
executive office (as those terms are used in the Code), is located at the
address set forth on the first page hereof. Except as specified elsewhere
herein, all Collateral and records concerning the Collateral shall be kept at
such address. Pledgor’s organizational structure and state of organization (the
“Organizational Information”) are as set forth on the first page hereof. Except
as specified herein, the Organizational Information shall not change.

     4. Affirmative Covenants. In addition to all covenants and agreements of
Debtor set forth in the Loan Documents, which are incorporated herein by this
reference, each Pledgor will comply with the covenants contained in this
Section 4 at all times during the period of time this Agreement is effective
unless Secured Party shall otherwise consent in writing.

  (a)   Ownership and Liens. Pledgor will maintain good and defensible title to
all Collateral free and clear of all liens, security interests, encumbrances or
adverse claims, except for the security interest created by this Agreement and
the security interests and other encumbrances expressly permitted herein or by
the other Loan Documents.

3

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

 

  (b)   Further Assurances. Pledgor will from time to time, at its expense and
at Secured Party’s request, promptly execute and deliver all further instruments
and documents and take all further action reasonably necessary or appropriate in
order (i) to perfect and protect the security interest created or purported to
be created hereby and the priority of such security interest contemplated
hereby, (ii) to enable Secured Party to exercise and enforce its rights and
remedies hereunder in respect of the Collateral, and (iii) to otherwise effect
the purposes of this Agreement, including without limitation: (A) executing (if
requested) and filing such financing or continuation statements, or amendments
thereto; and (B) furnishing to Secured Party from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral, all in reasonable detail satisfactory
to Secured Party.     (c)   Payment of Taxes. Pledgor will timely pay all
property and other taxes, assessments and governmental charges or levies imposed
upon the Collateral or any part thereof. Pledgor may, however, delay paying or
discharging any such taxes, assessments or charges so long as the validity
thereof is contested in good faith by proper proceedings and provided Pledgor
has set aside on its books adequate reserves therefor.

     5. Negative Covenants. Each Pledgor will comply with the covenants
contained in this Section 5 at all times during the period of time this
Agreement is effective, unless Secured Party shall otherwise consent in writing.

  (a)   Transfer or Encumbrance. Pledgor will not (i) sell, assign (by operation
of law or otherwise), transfer, exchange, lease or otherwise dispose of any of
the Collateral, except as permitted by the Loan Agreement, or (ii) grant a lien
or security interest in or execute, authorize, file or record any financing
statement or other security instrument with respect to the Collateral to any
party other than Secured Party, except for financing statements filed in
connection with leases of equipment.     (b)   Financing Statement Filings.
Pledgor recognizes that a financing statement pertaining to the Collateral has
been or may be filed in the jurisdiction of organization of Pledgor. Without
limitation of any other covenant herein, Pledgor will neither cause nor permit
any change in the location of (i) any Collateral, (ii) any records concerning
any Collateral, or (iii) Pledgor’s place of business, or the location of the
Pledgor’s chief executive office to a jurisdiction other than as represented in
Subsection 3(g), nor will Pledgor change its name or the Organizational
Information as represented in Subsection 3(g), unless Pledgor shall have
notified Secured Party in writing of such change at least thirty (30) days prior
to the effective date of such change, and shall have first taken all action
reasonably requested by Secured Party for the purpose of further perfecting or
protecting the security interest in favor of Secured Party in the Collateral.

4

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

 

     6. Rights of Secured Party. Secured Party shall have the rights contained
in this Section 6 at all times during the period of time this Agreement is
effective.

  (a)   Financing Statements Filings. Each Pledgor hereby authorizes Secured
Party to file, without the signature of such Pledgor, one or more financing or
continuation statements, and amendments thereto, relating to the Collateral.
Each Pledgor further agrees that a carbon, photographic or other reproduction of
this Security Agreement or any financing statement describing any Collateral is
sufficient as a financing statement and may be filed in any jurisdiction Secured
Party may deem appropriate.     (b)   Power of Attorney. Each Pledgor hereby
irrevocably appoints Secured Party as such Pledgor’s attorney-in-fact, such
power of attorney being coupled with an interest, with full authority in the
place and stead of such Pledgor and in the name of such Pledgor or otherwise,
after the occurrence of an Event of Default, to take any action and to execute
any instrument that Secured Party may deem necessary or appropriate to
accomplish the purposes of this Agreement, including without limitation: (i) to
demand, collect, sue for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of the Collateral;
(ii) to receive, endorse and collect any drafts or other instruments, documents
and chattel paper in connection with clause (i) above; and (iii) to file any
claims or take any action or institute any proceedings that Secured Party may
deem necessary or appropriate for the collection and/or preservation of the
Collateral or otherwise to enforce the rights of Secured Party with respect to
the Collateral.

     7. Events of Default. Each of the following constitutes an “Event of
Default” under this Agreement:

  (a)   Non-Performance of Covenants. The failure of either Pledgor or any
Obligated Party to timely and properly observe, keep or perform any covenant,
agreement, warranty or condition required herein or in any of the other Loan
Documents and such failure is not cured within ten (10) days after written
notice by Secured Party to the Pledgors thereof; or     (b)   Default Under Loan
Agreement. The occurrence of an Event of Default under the Loan Agreement; or  
  (c)   Default Under Notes. The occurrence of an Event of Default under the
Term A Bridge Loan Note or the Term A Bridge Loan Note, including, but not
limited to, a default by Debtor to pay principal or interest thereunder when
due; or     (d)   Execution on Collateral. The Collateral or any portion thereof
is taken on execution or other process of law in any action against either
Pledgor; or

5

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

 

  (e)   Action by Other Lienholder. The holder of any lien or security interest
on any of the Collateral (without hereby implying the consent of Secured Party
to the existence or creation of any such lien or security interest on the
Collateral not otherwise permitted hereunder), declares a default thereunder or
institutes foreclosure or other proceedings for the enforcement of its remedies
thereunder.

     8. Remedies and Related Rights. Until the occurrence of an Event of
Default, the appropriate Pledgor shall be entitled to collect and retain 100% of
the Servicing Fees under the Servicing Agreements. If an Event of Default shall
have occurred and be continuing, Secured Party shall have the rights and
remedies provided in this Section.

  (a)   Remedies. For so long as the Pledgors do not sell or otherwise dispose
of the Collateral, Secured Party shall be entitled to receive 45% of the
Servicing Fees collected pursuant to the Servicing Agreements and the
appropriate Pledgor shall be entitled to collect and retain 55% of the Servicing
Fees collected pursuant to the Servicing Agreements; provided that if the amount
of the Servicing Fees collected by Secured Party for any twelve month period
(commencing with the twelve month period ending on the first anniversary of the
occurrence of the Event of Default) does not equal or exceed $4 million, Secured
Party shall be entitled to collect and retain an incremental amount (in addition
to the 45%) equal to 35% of the Servicing Fees until Secured Party has collected
a minimum of $4 million in Servicing Fees for such twelve month period. If the
Pledgors sell or otherwise dispose of the Collateral (with the consent of the
Secured Party), Secured Party shall be entitled to collect and retain 100% of
the proceeds received from the sale of the Collateral until the Term A Bridge
Loan Note, and all accrued but unpaid interest thereon, and the Term B Bridge
Loan Note, and all accrued but unpaid interest thereon, is paid in full.     (b)
  Deficiency. In the event that the proceeds of any sale of, collection from, or
other realization upon, all or any part of the Collateral by Secured Party are
insufficient to pay all amounts to which Secured Party is legally entitled,
Pledgors and any party who guaranteed or is otherwise obligated to pay all or
any portion of the Indebtedness shall be liable for the deficiency, together
with interest thereon as provided in the Loan Documents, to the full extent
permitted by the Code.     (c)   Other Recourse. Each Pledgor waives any right
to require Secured Party to proceed against any third party, exhaust any
Collateral or other security for the Indebtedness, or to have any third party
joined with such Pledgor in any suit arising out of the Indebtedness or any of
the Loan Documents, or pursue any other remedy available to Secured Party. Each
Pledgor further waives any and all notice of acceptance of this Agreement and of
the creation, modification, rearrangement, renewal or extension of the
Indebtedness. Each Pledgor further waives any defense arising by reason

6

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

 

      of any disability or other defense of any third party or by reason of the
cessation from any cause whatsoever of the liability of any third party.     9.
  Miscellaneous.     (a)   Entire Agreement. This Agreement contains the entire
agreement of Secured Party and the Pledgors with respect to the Collateral.    
(b)   Amendment. No modification, consent or amendment of any provision of this
Agreement or any of the other Loan Documents shall be valid or effective unless
the same is set forth in a written instrument signed by the party against whom
it is sought to be enforced, provided that any amendments specifically permitted
by the Code without authentication by the Pledgors shall not require a written
instrument, signature or authentication.     (c)   Actions by Secured Party. The
lien, security interest and other security rights of Secured Party hereunder
shall not be impaired by (i) any renewal, extension, increase or modification
with respect to the Indebtedness, (ii) any surrender, compromise, release,
renewal, extension, exchange or substitution that Secured Party may grant with
respect to the Collateral, or (iii) any release or indulgence granted to any
endorser, guarantor or surety of the Indebtedness. The taking of additional
security by Secured Party shall not release or impair the lien, security
interest or other security rights of Secured Party hereunder or affect the
obligations of the Pledgors hereunder.     (d)   Waiver by Secured Party.
Secured Party may waive any Event of Default without waiving any other prior or
subsequent Event of Default. Neither the failure by Secured Party to exercise,
nor the delay by Secured Party in exercising, any right or remedy upon any Event
of Default shall be construed as a waiver of such Event of Default or as a
waiver of the right to exercise any such right or remedy at a later date. No
single or partial exercise by Secured Party of any right or remedy hereunder
shall exhaust the same or shall preclude any other or further exercise thereof,
and every such right or remedy hereunder may be exercised at any time. No waiver
of any provision hereof or consent to any departure by either Pledgor therefrom
shall be effective unless the same shall be in writing and signed by Secured
Party and then such waiver or consent shall be effective only in the specific
instances, for the purpose for which given and to the extent therein specified.
No notice to or demand on either Pledgor in any case shall of itself entitle
such Pledgor to any other or further notice or demand in similar or other
circumstances.     (e)   Costs and Expenses. Debtor will upon demand pay to
Secured Party the amount of any and all costs and expenses (including without
limitation, reasonable attorneys’ fees and expenses), which Secured Party may
incur

7

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

 

      in connection with the enforcement of any of the rights of Secured Party
under the Loan Documents in connection with any Event of Default.     (f)  
GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF MICHIGAN, EXCEPT TO THE EXTENT PERFECTION AND THE
EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF
A JURISDICTION OTHER THAN THE STATE OF MICHIGAN.     (g)   Severability. If any
provision of this Agreement is held by a court of competent jurisdiction to be
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable, shall not impair or invalidate the remainder of this
Agreement and the effect thereof shall be confined to the provision held to be
illegal, invalid or unenforceable.     (h)   Notices. All notices, requests,
demands and other communications required or permitted hereunder shall be in
writing, and shall be deemed to be given or delivered when actually received by
the party to whom directed, or, if earlier and regardless of whether actually
received, on the third day after deposit in a regularly maintained receptacle
for the United States mail, registered or certified, postage fully prepaid,
addressed to the party to whom directed at its address set forth in the Loan
Agreement or at such other address as such party may have previously specified
by notice actually received by the other party, or by fax transmission with a
confirmation of receipt generated by the sender’s facsimile machine.     (i)  
Binding Effect and Assignment. This Agreement (i) creates a continuing security
interest in the Collateral, (ii) shall be binding on each Pledgor and its
successors and assigns, and (iii) shall inure to the benefit of Secured Party
and its successors and assigns. No party’s rights and obligations hereunder may
be assigned or otherwise transferred without the prior written consent of the
other party, except that Secured Party’s rights under the Agreement may be
assigned to any person to whom the Indebtedness is validly assigned in
accordance with the Loan Documents.     (j)   Cumulative Rights. All rights and
remedies of Secured Party hereunder are cumulative of each other and of every
other right or remedy that Secured Party may otherwise have at law or in equity
or under any of the other Loan Documents, and the exercise of one or more of
such rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of any other rights or remedies. Further, except as
specifically noted as a waiver herein, no provision of this Agreement is
intended by the parties to this Agreement to waive any rights, benefits or
protection afforded to Secured Party under the Code.

8

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

 

  (k)   Gender and Number. Within this Agreement, words of any gender shall be
held and construed to include the other gender, and words in the singular number
shall be held and construed to include the plural and words in the plural number
shall be held and construed to include the singular, unless in each instance the
context requires otherwise.     (l)   Descriptive Headings. The headings in this
Agreement are for convenience only and shall in no way enlarge, limit or define
the scope or meaning of the various and several provisions hereof.     (m)  
Facsimile and Electronic Copies. If this document is transmitted by facsimile or
other electronic transmission, it shall be treated for all purposes as an
original document. Additionally, the signature of any party on this document
transmitted by way of a facsimile machine or other electronic communication
shall be considered for all purposes as an original signature. Any such faxed
document or electronic document shall be considered to have the same binding
legal effect as an original document.

[Signature Page Follows]

9

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

 

This Security Agreement is executed as of the date first written above.

                        DEBTOR:       SECURED PARTY:
 
                    ORIGEN FINANCIAL, L.L.C.   WILLIAM M. DAVIDSON TRUST U/A/D
12/13/04
 
                    By:     /s/ Ronald A. Klein   By:    /s/ William M. Davidson
 
  Name:     Ronald A. Klein       Name:     William M. Davidson
 
  Title:     Manager       Title:     Trustee     SERVICER:

ORIGEN SERVICING, INC.
      By:     /s/ Ronald A. Klein          Name:     Ronald A. Klein         
Title:     Chief Executive Officer and President       

Signature page to Security Agreement

10

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

 

         

Schedule 1
Trust Securitizations
Origen Manufactured Housing Contract Trust 2004-A
Origen Manufactured Housing Contract Trust 2004-B
Origen Manufactured Housing Contract Trust 2005-A
Origen Manufactured Housing Contract Trust 2005-B
Origen Manufactured Housing Contract Trust 2006-A
Origen Manufactured Housing Contract Trust 2007-A

11