**EXHIBIT10.20**

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**[Pursuantto Rule 24b-2, certain information has been deleted and filed separately withthe Commission.]**

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**AGREEMENTOF LIMITED LIABILITY COMPANY OF**

**COMMUNITYFIRST MORTGAGE, LLC**

 

ThisAgreement of Limited Liability Company (the "Agreement"), is enteredinto June 15, 2001 by and between Wells Fargo Ventures, LLC, with its principalplace of business at 1 Home Campus, Des Moines, Iowa 50328-0001, ("WellsFargo Member") and Community First Home Mortgage, Inc. with its principalplace of business at 520 Main, Fargo, ND 58124-0001, (“Community Member”) whodo hereby form the limited liability company agreement of Community FirstMortgage, LLC (the "Company"), pursuant to the Delaware LimitedLiability Company Act, upon the following terms and conditions:

 

ARTICLE I

Definitions and Glossaryof Terms

 

Section 1.1 Definitions. The following terms used in theAgreement shall have (unless otherwise expressly provided herein or unless thecontext otherwise requires) the following respective meanings:

 

"Accountants" means KPMG Peat Marwick, or such othercertified public accountants as the Operating Committee may select.

 

"Act" shall mean the Delaware Limited LiabilityCompany Act, 6 Del, C. §18-101 through §18-1107, as amended from time totime.

 

"Affiliate" means any person or entity that directlyor indirectly, through one or more intermediaries, controls, or is controlledby, or is under common control with, the person or entity specified.

 

“Agreement” shall mean this Agreement of Limited Liability Companyof Community First Mortgage, LLC.

 

"Budget" means the budget established annuallypursuant to Section 8.3.

 

“Capital Account” means, with respect to any Unit Holder, theaccount maintained for such Unit Holder in accordance with the provisions ofSection 4.1 hereof.

 

“Capital Contribution" shall mean any contribution to thecapital of the Company in cash or property by a Member whenever made.

 

“Certificate” means the Certificate of Formation of the Companyand any and all amendments thereto and restatements thereof filed on behalf ofthe Company with the office of the Secretary of State of the State of Delawarepursuant to the Delaware Act.

 

“Closing Date” shall mean the date of execution of thisAgreement.

 

"Code" shall mean the Internal Revenue Code of 1986,as amended.  Any reference to anyspecific provision of the Code or any regulations thereunder shall be deemed torefer also to any successor provisions thereto.

 

"Company" shall mean Community First Mortgage, LLC,the Delaware limited liability company governed by this Agreement.

 

"Company Distributions" shall mean cash or propertywhich is distributed pursuant to Section 5.4 or Section 11.7 of this Agreement.

 

"Company Expenses" shall mean all expenditures andcosts paid out by the Company in the course of the conduct of its business.

 

"Company Revenues" shall mean all receipts fromoperations and use of assets received by the Company and all other income,receipts, or gain received by the Company in the course of the conduct of itsbusiness.

 

“Fiscal Year” means (i) the period commencing upon the formationof the Company and ending on December 31, of the year of formation, (ii) anysubsequent twelve (12) month period commencing on January 1 and ending onDecember 31, or (iii) any portion of the period described in Clause (ii) ofthis sentence for which the Company is required to allocate Profits, Losses andother items of company income, gain, loss or deduction pursuant to Article Vhereof.

 

"Intercompany Net Cash Balance" means the net of theCompany's funds on deposit with Wells Fargo and any amounts owed by the Companyto Wells Fargo excluding advances by Wells Fargo pursuant to Section 8.8.

 

"Interest" shall mean the personal property ownershipright of a Member in the Company and shall entitle such Member to an allocationof Company Revenues and Company Expenses pursuant to Article V of the Agreementand to a share of the Company Distributions pursuant to Article V of theAgreement.  Each Member's Interest isevidenced by and composed of the Units owned by that Member, and suchallocation and share of Company Revenues, Company Expenses, and CompanyDistributions shall be determined based upon the number of Units owned by suchMember.

 

"Loan Policies" shall mean thosepolicies, standards and procedures of Wells Fargo, as amended from time totime, relating to residential mortgage loan origination by Retail Officesincluding the All-Office Memos, Loan Production Memos, Product Catalogs,Conventional Loan Standards Manual, VA Handbook, FHA Underwriting Manual,Compliance Manual, Disclosure Manual, Code of Ethics, Ncyclopedia and othercommunications with their terminology adjusted to apply to the Company ratherthan to Retail Offices.

 

"Losses" shall mean the taxable loss of the Company asdetermined for federal income tax purposes under Code section 703(a) includingitems separately stated pursuant to section 703(a)(1).

 

“Managing Officer” means the individualresponsible for the day to day operation of the Company.

 

"Member" shall mean a person who has been admitted tothe Company as a member as provided in the Agreement and section 18-301 of theAct.

 

"Net Cash Available" means cash ondeposit or cash equivalents which includes the Intercompany Net Cash Balanceless amounts required to maintain minimum regulatory net worth requirements (inexcess of other Company assets if otherwise insufficient, or if cash isrequired) and less such other amounts the Operating Committee may determine arerequired to be set aside in reserve to fund future operating and capitalexpenditures.

 

“Wells Fargo” shall mean Wells Fargo HomeMortgage, Inc., a California corporation.

 

“Operating Committee” means the OperatingCommittee of the Company, constituted as provided in Section 6.1.

 

“Person” includes any individual, association,partnership (general or limited), joint venture, trust, estate, limitedliability company, corporation or partnership, or other legal entity ororganization.

 

"Profits" shall mean the taxable income of the Companyas determined for federal income tax purposes under Code section 703(a)including items separately stated pursuant to section 703(a)(1).

 

"Retail Offices" means Wells Fargo'swholly-owned loan production offices in operation from time to time.

 

"Units" with respect to any Member, shall mean theownership interests of the particular Member which quantify the share of thatparticular Member in the right, privilege, or interest being addressed.

 

“Unit Holder” means any person who holds one (1) or more Units,regardless of whether such Person is a Member and regardless of whether suchUnits were initially acquired by such Person from the Company or by assignmentfrom another Unit Holder.

 

ARTICLE II

Formation, Name andRegistered Agent

 

Section 2.1  Formation.  Wells Fargo Member and Community Member, byexecution of this Agreement and the filing of the Certificate with the DelawareSecretary of State, hereby enter into and form the Company as a limitedliability company under and pursuant to the Delaware Act.  The name and mailing address of each Memberor Unit Holder shall be listed on the Schedule of Capital Contributionsattached hereto.  The Company shall berequired to update the names and addresses on the Schedule of CapitalContributions from time to time as necessary to accurately reflect theinformation therein.  Any amendment orrevision to the names and addresses on the Schedule of Capital Contributionsmade in accordance with this Agreement shall not be deemed an amendment to thisAgreement.  Any reference in thisAgreement to the Schedule of Capital Contributions shall be deemed to be areference to the Schedule of Capital Contributions as amended and in effectfrom time to time.  The Members agreethat the rights, powers, duties and liabilities of the Members and ManagingOfficer shall be as provided in the Delaware Act, except as otherwise providedin this Agreement.

 

Section 2.2  Name andRegistered Agent.  The name of theCompany is Community First Mortgage, LLC. Its registered agent is Corporation Service Company or such other agentas the Members may hereafter determine.

 

ARTICLE III

Business Purpose

 

Section 3.1  Character of theBusiness.  The purpose of theCompany shall be to carry on the business of residential mortgage lending.

 

Section 3.2  OtherQualifications.  The Members agreethat the Company shall file or record such documents and take such otheractions under the laws of any jurisdiction as are necessary or desirable topermit the Company to do business in any such jurisdiction as is selected bythe Company and to promote the limitation of liability for the Members in anysuch jurisdiction.

 

Section 3.3  ProhibitedActivities.  The Company shall notparticipate in any activity that violates the Real Estate Settlement ProceduresAct of 1974 or any other law or regulation. The Company shall not engage in any prohibited activities for a nationalbank or its subsidiaries and shall obtain any required regulatory approvals fora national bank subsidiary before commencing any activity.

 

Section 3.4  Limitationson Other Activities.

 

(a)  Except as provided in this section, **[ConfidentialTreatment Requested]**

 

(b)  While it is a Member, subject to theexceptions stated below**[Confidential Treatment Requested]**

 

(c) **[Confidential Treatment Requested]**

 

(d)  Neither Member shall be accountable toCompany or to the other Member for any activity or business permitted underthis Article 3 except for the business of Company.  Neither Member shall have any right by virtue of this Agreementor by their status as a Member to be apprised of the independent business oractivities of the other Member, nor to be allowed to participate therein or tothe income or profits derived therefrom. Neither Member shall be required to devote full time to Company, butonly so much time as may be necessary to accomplish the purposes of Company andthe duties specifically set forth in any agreements related to Company.

 

Section 3.5  TransactionsInvolving the Members.

 

(a) Community Membershall cooperate with and promote Company and its loan products to customers ofCommunity Member or its Affiliates consistent with all applicable legalrequirements. **[Confidential Treatment Requested]**

 

(b)  Except as may be expressly provided for inthis Agreement or in any agreements executed between Company and any Member oras approved by the Operating Committee, no payment will be made by Company toany Member for the services of such Member or the employees of such Member.

 

(c) **[Confidential Treatment Requested]**

 

ARTICLE IV

Capital Accounts

 

Section 4.1  Capital Accounts.  A separate capital account shall bemaintained for each Member of the Company. Each Member’s Capital Contributions and its share of all CompanyRevenues shall be credited to its capital account and each Member’s share ofall costs, expenses, losses and Distributions (including return of capital) ofthe Company shall be debited to its account, all as allocated under thisAgreement. Each Member's initial CapitalContribution, as reflected on Exhibit A, is due and payable upon execution ofthis Agreement.  Any subsequent CapitalContribution pursuant to Section 8.8 shall be due and payable within 15 days ofreceipt of notice of the need for the additional Capital Contribution.

 

Section 4.2  Units.  A Unit Holder’s limited liability companyinterest in the Company shall be represented by the “Unit” or “Units” held bysuch Unit Holder.  Each Unit Holder’srespective Units shall be set forth on the Schedule of Capital Contributionsattached hereto.  Each Unit Holderhereby agrees that its limited liability company interest in the Company andits Units shall for all purposes be personal property.  A Unit Holder has no interest in specificCompany property.

 

Section 4.3  Status ofCapital Contributions.

 

(a) Except as otherwise provided in this Agreement, the amount of a UnitHolder’s Capital Contributions may be returned to it, in whole or in part, atany time, but only with the consent of all Members.  Any such returns of Capital Contributions shall be made to allUnit Holders in proportion to the number of Units then held by each UnitHolder.  Notwithstanding the foregoing,no return of a Unit Holder’s Capital Contributions shall be made hereunder ifsuch distribution would violate applicable state law.  Under circumstances requiring a return of any Capital Contribution,no Unit Holder shall have the right to demand or receive property other thancash, except as may be specifically provided in this Agreement.

 

(b)  Except asprovided in Section 8.8 and by applicable state law, the Members shall beliable only to make their capital contributions pursuant to Section 4.1 hereof,and no Member or Assignee shall be required to lend any funds to the Companyor, after a Member’s Capital Contributions have been fully paid pursuant toSection 4.1 hereof, to make any additional capital contributions to theCompany.  No Unit Holder shall have anypersonal liability for the repayment of any Capital Contribution of any otherMember or Assignee.

 

ARTICLE V

Allocation of Revenues,Expenses, Profits and Losses

 

Section 5.1  Allocation ofRevenues and Expenses.  All CompanyRevenues and Company Expenses shall be allocated among the Members inproportion to their respective Units.

 

Section 5.2  Allocation ofProfits and Losses.  All Profits andLosses shall be allocated among the Members in proportion to their respectiveUnits.

 

Section 5.3  Allocation ofItems for Federal Income Tax Purposes. To the extent permitted by law, all items of Company taxable income,gain, loss, credit, and deduction recognized or allowable for Federal incometax purposes shall be allocated and credited or charged to the Members in thesame manner as the revenues, income, receipts, costs, or expenses giving riseto such items of taxable income, gain, loss, credit, or deduction are allocatedand credited or charged.  Any Memberallocated and charged a particular cost or expense shall be entitled to suchdeductions or credits as are attributable to such cost or expense in computingsuch Member's taxable income or tax liability to the exclusion of any other Member.  Upon the sale or other transfer of any assetof the Company, any recapture of depreciation deductions or other deductionspreviously taken shall be allocated to the Member to whom such deductions wereoriginally allocated, and any recapture of investment tax credit shall beallocated to the Member to whom such credit was originally allocated.

 

Section 5.4. Distribution of Cash.  All Company Distributions shall be made among the Members inproportion to their respective Units. Cash of the Company which is not required, in the judgment of theMembers, to meet obligations of the Company nor reasonably necessary for futureCompany operations shall be distributed not less frequently thanquarter-annually to the Members in proportion to their respective Units, notlater than ninety (90) days after the end of each quarter-annual period withrespect to which such distribution is being made.

 

Section 5.5 **[Confidential Treatment Requested]**

 

ARTICLE VI

###### Management of the Company

 

Section 6.1  General.  The overall management and control of thebusiness and affairs of the Company shall be vested in the Operating Committeeconsisting of four individuals, with each Member appointing individuals to theOperating Committee in proportion to their respective Units.  The Company may have a Managing Officerappointed by the Operating Committee. The Managing Officer of the Company shall not be appointed to theOperating Committee.  The number ofindividuals on the Operating Committee may be reset by the Operating Committeefrom time to time, provided that each Member shall appoint individuals to theOperating Committee in proportion to its respective Units.  Each Member may remove and replace theindividuals appointed by it at any time and for any reason.  Any vacancy on the Operating Committee shallbe filled by the Member that had appointed the individual to the position thathas become vacant.

 

Section 6.2  OperatingCommittee Procedures.  Except whereherein expressly provided to the contrary, all decisions with respect to themanagement and control of the Company shall be made and agreed to by theOperating Committee and shall be binding on the Company.  **[Confidential Treatment Requested]**  Action may be taken by the OperatingCommittee by telephone conference, by meeting in person, by written action inlieu of a meeting or in such other manner approved by all Members.

 

Section 6.3  LoanPolicies.  The Company expresslyadopts the Loan Policies effective on the Closing Date as provided to theCompany by Wells Fargo.  Any updates tothe Loan Policies issued by Wells Fargo shall automatically be adopted by theCompany unless the Operating Committee expressly decides not to adopt aparticular policy.  Any employee whoviolates the Loan Policies shall be subject to termination unless the OperatingCommittee expressly decides not to terminate the employee.

 

Section 6.4  MajorDecisions.  No act shall be taken orfunds expended or obligation incurred by the Company, any individual on theOperating Committee, or the Managing Officer with respect to a matter withinthe scope of any of the major decisions ("Major Decisions") affectingthe Company, as defined below, unless such Major Decision has been approved bythe Operating Committee.  A decisionshall be a Major Decision if it satisfies one of the following:

 

(a)  Decisions relating to the selection,evaluation, retention and compensation of the Managing Officer or any otherexecutive officers of the Company as may be appointed by the OperatingCommittee;

 

(b)  Decisions regarding new business venturesand material deviations by the Company from the Loan Policies in effect fromtime to time;

 

(c)  Decisions relating to the hiring policy,compensation, terms of employment or termination of non–clerical or non–supportstaff employees of the Company;

 

(d)  Decisions relating to matters involvingtransactions, expenditures, commitments or other contractual obligations (orgroups of similar transactions or such other events) in an amount in excess of **[ConfidentialTreatment Requested]** except transactions to originate, fund and sellresidential real estate mortgage loans that are in the day–to–daycourse of the Company's business;

 

(e)  Decisions relating to obtaining anyfinancing for the Company pursuant to Section 8.8;

 

(f)  Decisions relating to the terms, conditions,limits and deductibles of any risk financing program in addition to the programprovided by Wells Fargo or its Affiliate pursuant to the Service Agreementreferenced under Section 6.9;

 

(g)  Decisions related to establishing ormaintaining cash, cash equivalents or reserves for the Company;

 

(h)  Decisions relating to amendment ortermination of the Service Agreement referenced under Section 6.9 and obtaininga substitute service provider upon termination of such Service Agreements; and

 

(i)  Any other decision or action referred to theOperating Committee by an individual on the Operating Committee which by anyprovision of this Agreement or by law is required to be approved by theOperating Committee.

 

Section 6.5  ManagingOfficer. The Managing Officer shall be responsible for the implementationof the decisions of the Operating Committee and for conducting the ordinary andusual day–to–day business and affairs of the Company, as limited bythis Agreement.  The Managing Officer ofthe Company, shall in good faith use his or her best efforts to implement orcause to be implemented all Major Decisions approved by the Operating Committeeand to conduct or cause to be conducted the ordinary and usual business of theCompany in accordance with and subject to the direction of the OperatingCommittee and the Loan Policies and in accordance with the business plan andcurrent Budget approved by the Members. The Managing Officer may, except as otherwise determined by theOperating Committee, delegate in writing to other officers, employees or agentsof the Company matters for which the Managing Officer may be responsible inaccordance with this section, but the Managing Officer shall continue to beresponsible for such matters. The initial and successor managing officers arelisted on the Schedule of Initial and Successor Managing Officers.

 

Section 6.6  FHAMatters.  Section 6.6 shall belimited in application solely to any and all matters involving the FederalHousing Administration ("FHA") of the United States Department ofHousing and Urban Development and FHA–insured loans.  In the event of any conflict between theprovisions set forth in this Section and any other provision of this Agreement,the provisions set forth in this Section will take precedence over all otherprovisions of this Agreement with respect to all FHA matters.  The Managing Officer is designated to dealexclusively with FHA in all aspects of the FHA mortgage insurance program,including, without limitation, the making of applications for mortgageinsurance claims and collecting the benefits of mortgage insurance for theCompany.  The Managing Officer is herebyappointed as the managing agent (the "Managing Agent") of the Companywith respect to FHA matters.  The OperatingCommittee may choose a person other than the Managing Officer as Managing Agenton the condition that there will at any time be one and only one Managing Agentwith which FHA deals exclusively.  Anysuch substitute person shall have the rights and responsibilities of theManaging Officer as Managing Agent under this Section.  If (a) the Managing Agent resigns or (b)another Managing Agent is appointed, FHA will be immediately advised of suchevent and, if applicable, the name of the new Managing Agent.  The Company shall inform FHA of anyamendment to this Agreement it intends to make that could affect the Company'sdealings with FHA and FHA–insured mortgages.  Upon dissolution of the Company, any FHA–insured mortgagesowned or serviced by the Company may only be transferred to another FHA–approvedmortgage lender.

 

Section 6.7  OfficeSpace.  The Members shall lease tothe Company in each of their offices as determined by the Operating Committee,space from which the Company will conduct the business of the Company.  Such space shall be separately identifiedand segregated in a manner required by all applicable laws andregulations.  Rental rates charged tothe Company by a Member shall be set at rates that reflect actual market ratesfor comparable space in the area in which each office used by the Company islocated.  The foregoing leasearrangements, which shall terminate automatically upon the dissolution of theCompany subject to an additional period as necessary to wind down the businessof the Company, shall be set forth in separate written lease agreements to beagreed upon and executed between the lessor Member and the Company.

 

Section 6.8  ComputerNetwork.  If the Company willprocess its own loans or otherwise needs access to a loan origination system,Wells Fargo, or one of its Affiliates, shall lease to the Company (and theCompany shall be required to utilize), the computer software and computernetwork used by Retail Offices to conduct a residential mortgage business.  The terms and conditions of these leasearrangements, which shall terminate automatically upon any dissolution of theCompany subject to an additional period as necessary to wind down the businessof the Company, shall be set forth in a separate written lease agreement to beagreed upon and executed by the Wells Fargo or its Affiliate and the Company(attached as Exhibit 1).  Terms of thelease agreement shall be set at rates that reflect actual rates charged RetailOffices for Wells Fargo's internal reporting purposes for similar software andnetwork access as adjusted from time to time.

 

Section 6.9  ServiceAgreement.  Wells Fargo, or itsAffiliate, shall provide to the Company, certain services required by theCompany in conducting a residential mortgage lending business, as set forth inthe Service Agreement (attached as Exhibit 2) to be executed between WellsFargo and the Company.

 

Section 6.10  LoanSales.  The Company shall provideresidential mortgage loan financing to its customers.  Wells Fargo, or one of its Affiliates, shall purchase mortgageloans if offered by the Company in accordance with the terms of a separatewritten Loan Purchase Agreement (attached as Exhibit 3) to be executed by WellsFargo or one of its Affiliates, and the Company.  The Company shall sell at least **[Confidential Treatment Requested]**of its annual loan production to investors other than Wells Fargo.

 

Section 6.11  CreditAgreement.  The Company shall fundits loans through a warehouse line of credit provided by Wells Fargo (attachedas Exhibit 4) or such other source as determined by the Operating Committee.

 

ARTICLE VII

Other Rights, Liabilitiesand Obligations of Members

 

Section 7.1  Liability ofMembers.  No Member shall bepersonally liable for the expenses, liabilities, debts, or obligations of theCompany except as specifically set forth in this Agreement or as provided inthe Act.

 

Section 7.2  Other ProvisionsApplicable to Members.  Except asotherwise specifically provided in this Agreement, no Member shall have theright to withdraw or retire from, or reduce its contribution to the capital of,the Company.  No Member shall have theright to demand or receive property other than cash in return for its CapitalContribution.  No Member shall havepriority over any other Member either as to the return of its CapitalContribution or as to profits or distributions except as specifically set forthin this Agreement.

 

ARTICLE VIII

Accounting and FiscalMatters

 

Section 8.1  Maintenance ofand Access to Records.  Wells Fargoor its Affiliate on behalf of the Company shall keep complete and accuratebooks of account and records relative to the Company's business based oninformation submitted to it by the Company. The accrual method of accounting shall be used by the Company forfinancial and income tax purposes.  TheCompany's books and records shall at all times be maintained at the principalbusiness office of Wells Fargo, or the Accountants, or such other place agreedupon by the Members, and shall be available for inspection by each of theMembers or their duly authorized representatives during reasonable businesshours.  The fiscal year of the Companyshall end on December 31 of each year or such other date as determined by theOperating Committee and allowed by the Code. Wells Fargo shall cause to beprepared financial statements in accordance with the Service Agreement attachedas Exhibit 2.

 

Section 8.2  BankAccounts.  Wells Fargo shall depositall of the funds of the Company into one or more bank accounts for theCompany.  Unless otherwise required byregulatory authority, each such account shall be established with an Affiliateof Wells Fargo that holds deposits insured by the Federal Deposit InsuranceCorporation.  Wells Fargo shall separatelyaccount for all funds of the Company. The Company may withdraw its funds only to pay the Company's debts, payexpenses or to be distributed to the Members or as directed by the OperatingCommittee pursuant to this Agreement.

 

Section 8.3  Budget.  The Company shall prepare a preliminary annualBudget for the first partial fiscal year of the Company.  At least thirty (30) days prior to the endof each fiscal year of the Company, the Managing Officer will develop anddeliver to the Operating Committee for its review and approval a Budget for theCompany for the next fiscal year.  Asset forth in Section 6.4(d), approval of the Budget shall be a Major Decision.

 

Section 8.4  Company TaxReturns.  Wells Fargo, itsAffiliate, or such other person agreed upon by the Members, shall, for eachfiscal year, cause to be prepared and filed on behalf of the Company suchfederal, state and city tax returns as may be required by law, and inconnection therewith, shall make any elections deemed advisable; provided,however, the Company shall be given prior written notice thereof.  Copies of such tax returns shall bedelivered to each Member within 10 days after each such filing.  The Company's federal and state income taxreturns shall be approved by the Operating Committee in advance of filing.

 

Section 8.5  TaxAudits.  Wells Fargo or itsAffiliate is hereby designated to manage administrative tax proceedingsconducted by the Internal Revenue Service or state tax authorities with respectto the Company.  The taking of anyaction or the failure to take any action in connection with any suchproceeding, except to the extent required by law, is a matter for Wells Fargo,subject to the direction of the Operating Committee.  Wells Fargo shall give prompt written notice to the Members ofany such administrative proceeding.  AnyMember has the right to participate in such administrative proceedings relatingto the determination of tax items at the Company level.  Expenses of such administrative proceedingsundertaken by Wells Fargo will be paid for out of the assets of theCompany.  If any Member elects toparticipate in such proceedings, the Member will be responsible for itsexpenses incurred in connection with such participation.  Further, the cost of any adjustments to aMember and the cost of any resulting audits or adjustments of a Member’s taxreturn, will be borne solely by the affected Member.

 

Section 8.6  InternalAudit.  The ongoing activities ofthe Company shall be subject to regulatory audit by Wells Fargo Audit Services,Inc. at no direct cost to the Company. Wells Fargo Audit Services, Inc. shall have no liability with respect tothe Company.  A copy of any regulatoryaudit report prepared by Wells Fargo Audit Services, Inc. related to theCompany shall be provided to the Operating Committee.

 

Section 8.7  TheAccountants.  Any services providedby the Accountants under this Agreement shall be an expense of theCompany.  The Accountants shall prepareannual audited financial statements as set forth in Exhibit 2.

 

Section 8.8 **[Confidential Treatment Requested]**

 

ARTICLE IX

Limitations onDispositions of Members' Interests

 

Section 9.1  BasicRestrictions.  Except as otherwiseprovided in this Article IX, no Member may sell, assign, give, hypothecate,pledge, transfer, bequeath, or otherwise dispose of any or all of its Interest,in whole or in part, voluntarily, involuntarily, by operation of law, orotherwise, to any other person or entity.

 

Section 9.2  Representationsand Warranties.  Each Member herebyrepresents and warrants to the Company and to the other Members that itsacquisition of its Interest is made as principal for its account for investmentpurposes only and not with a view to the resale or distribution of suchInterest.  Each Member agrees that itwill not sell, assign, give, hypothecate, pledge, transfer, bequeath, orotherwise dispose of any or all of its Interest to any person or entity who orwhich does not similarly represent and warrant and agree as provided in thisSection 9.2.

 

Section 9.3  Disposition ofInterests.  The sale, assignment,gift, hypothecation, pledge, transfer, or other disposition("Transfer") of Interests by or in respect of a Member shall besubject to the following conditions and restrictions in addition to any otherswhich are provided for in this Agreement:

 

(a)  No Membermay Transfer any or all of its Interest without the consent of all of theMembers.

 

(b)  No Membermay Transfer any or all of its Interest if such Transfer would cause thetermination of the Company for Federal income tax purposes.  Any purported Transfer which would cause thetermination of the Company for Federal income tax purposes shall be void abinitio.  Counsel for the Companyshall give to the Company its opinion, at the expense of the Member seeking toeffect such Transfer, as to whether such Transfer would cause the terminationof the Company for Federal income tax purposes.

 

(c)  NoTransfer of, or offer to Transfer, any Interest may be made unless the Companyshall have received, at the expense of the Member seeking to effect such Transferan opinion of counsel satisfactory to the Members that such proposed Transfer(i) may be effected without registration of the Interest under the SecuritiesAct of 1933, as amended, and (ii) would not be in violation of any applicablestate securities or "Blue Sky" law (including investment suitabilitystandards).

 

Section 9.4  Admission ofTransferee as Additional or Substitute Member.  Any person to whom any Interest or portion thereof is Transferred("Transferee") shall be entitled to be admitted as a Member hereunderand to have all of the rights herein conferred upon a Member only if

 

(a)  suchtransferee's admission as a Member will not violate, nor cause the Company toviolate, any applicable laws, rules, or regulations, including federal andstate securities laws, and either such transferee shall have delivered anopinion of counsel satisfactory to the Members, or counsel for the Companyshall have delivered an opinion, to such effect;

 

(b)  theconsent of all of the Members shall have been given, which consent may beevidenced by the execution by all of the Members of a Certificate evidencingthe admission of such transferee as a Member;

 

(c)  thetransferee shall have accepted and agreed to be bound by the terms andprovisions of this Agreement by executing a counterpart thereof and such otherdocuments or instruments as the Members may require in order to effect theadmission of such transferee as a Member;

 

(d)  suchtransferee qualifies and becomes a Member within the meaning of the Act by theprocedures set forth in the Act;

 

(e)  suchtransferee shall have delivered to the Members a letter containing arepresentation and an agreement in the form set forth in Section 9.2 of thisAgreement;

 

(f)  if thetransferee is not an individual, the transferee shall have provided the Memberswith evidence satisfactory to counsel for the Company of its authority tobecome a Member under the terms and provisions of this Agreement;

 

(g)  suchtransferee pays to the Company a sum which is sufficient to cover all expenses(including legal fees) connected with the admission of the transferee as aMember pursuant to this Agreement and the Act, including without limitation thecost of any opinion of counsel referred to above.

 

Section 9.5  Execution ofDocuments, Etc.  Each Member herebyconsents to the execution and recordation on its behalf by the Company of anyamendment hereto required for the purpose of admitting as a Member thetransferee of any or all of the Interest of a Member in the Company in thisArticle IX and to the execution and recordation on its behalf of any otherinstruments required in connection therewith, and the Company is hereby grantedthe right to admit any such transferee upon all of the terms set forth above.  In addition, each Member agrees to executeat the request of the Company any and all documents required to be executed bysuch Member to effect the admission as a Member of the transferee of any or allof the Interest of a Member in the Company pursuant to this Article IX.

 

Section 9.6  Filings ByCompany.  The Company shallcooperate with any transferee seeking to become a Member by preparing thedocumentation required by this Article IX and making all official filings andpublications.

 

Section 9.7  Pledges.  No Member shall mortgage, pledge, orotherwise encumber all or any part of such Member's Interest in the Company atany time.

 

Section 9.8  No WithdrawalRights Prior to Dissolution.  Priorto the dissolution of the Company, no Member may withdraw from the Company orreceive any return of capital or other distribution of Company assets inrespect of any withdrawal or attempted withdrawal.

 

ARTICLE X

Amendment of Agreement

 

Section 10.1  Amendment.  Any amendment or supplement to thisAgreement shall only be effective if in writing and if the same shall beconsented to by all of the Members.

 

Section 10.2  Procedure forAmendment.  Any Member may proposean amendment or supplement to this Agreement, and any such amendment orsupplement may be proposed by mailing to all of the Members a written requestfor consent to such amendment or supplement, accompanied by the text of theproposed amendment or supplement, and a written statement of the reasons forsuch proposal.  A Member shall be deemedto have voted its Interest in consent to any amendment or supplement hereto ifsuch Member does not respond in writing, sent to all Members, to such writtenrequest for consent within thirty days from the date of mailing of the same tosuch Member.

 

ARTICLE XI

Dissolution

 

Section 11.1  NoDissolution.  The Company shall notbe dissolved by the admission of additional or substitute Members in accordancewith the terms of this Agreement or by the death, retirement, resignation,expulsion, bankruptcy or dissolution of a Member or the occurrence of any otherevent under the Act that terminates the continued membership of a Member in theCompany except as expressly provided in the Agreement.

 

Section 11.2  Term.  The Company shall be in effect for a termbeginning on the date the Certificate of Formation of the Company is filed withthe Delaware Secretary of State in accordance with the provisions of the Actand shall continue for a minimum of ten (10) years unless sooner dissolved andliquidated in accordance with the provisions of this Article.

 

Section 11.3  **[ConfidentialTreatment Requested]**

 

Section 11.4  Bankruptcy.  If:

 

(a)  any Member shall file a voluntary petitionin bankruptcy, or shall be adjudicated a bankrupt or insolvent, or shall fileany petition or answer seeking any reorganization, arrangement, composition,readjustment, liquidation, dissolution or similar relief for itself under thepresent or any future Federal Bankruptcy Act, or any other present or futureapplicable Federal, state or other statute or law relative to bankruptcy, insolvency,or other relief for debtors, or shall seek or consent to or acquiesce in theappointment of any trustee, receiver, conservator or liquidator of said Memberor of all or any substantial part of its properties or its interest in theCompany (the term "acquiesce" includes, but is not limited to, thefailure to file a petition or motion to vacate or discharge any order, judgmentor decree providing for such appointment within ten (10) days after theappointment); or

 

(b)  a court of competent jurisdiction shallenter an order, judgment or decree approving a petition filed against anyMember seeking any reorganization, arrangement, composition, readjustment,liquidation, dissolution or similar relief under the present or any futureFederal Bankruptcy Act, or any other present or future applicable Federal,state or other statute or law relative to bankruptcy, insolvency, or otherrelief for debtors, and said Member shall acquiesce in the entry of such orderjudgment or decree (the term "acquiesce" includes, but is not limitedto, the failure to file a petition or motion to vacate or discharge any order,judgment or decree within ten (10) days after the entry of the order, judgmentor decree), or such order, judgment or decree shall remain unvacated and unstayedfor an aggregate of ninety (90) days (whether or not consecutive from the dateof entry thereof), or any trustee, receiver, conservator or liquidator of saidMember or of all or any substantial part of its property or its interest in theCompany shall be appointed without the consent or acquiescence of said Memberand such appointment shall remain unvacated and unstayed for an aggregate ofsixty (60) days (whether or not consecutive); or

 

(c)  any Member shall give notice to anygovernmental body of insolvency or pending insolvency, or suspension or pendingsuspension of operations.

 

then, and in any such event such Member shall bedeemed, as of the date of occurrence of the respective event, to be the"Electing Member" for purposes of Section 11.8.  The filing date of the  bankruptcy petition shall be the"Section 11.4 Termination Date" and the Company shall be liquidatedin accordance with Section 11.7.

 

## ***Section11.5  Automatic Termination.***

## *** ***

## ***(a) In the event:***

 

(1)  anyMember, or its Affiliate, is prohibited by a change of law or regulation or anadministrative action or judicial decree subsequent to this Agreement(including the application or interpretation of the change of law or regulationor the subsequent administrative action or judicial decree by opinion ofcounsel) from participating in the Company substantially upon the materialterms and conditions of this Agreement and the prohibition cannot be correctedby amendment of the Agreement to put the Members in substantially the samefinancial position as prior to the prohibition; or

 

(2) **[Confidential Treatment Requested]**

 

(b) **[Confidential Treatment Requested]**  In order for Community Member to elect towithdraw pursuant to this Section 11.5(b), Community Member must **[ConfidentialTreatment Requested]**.  In theevent that Community Member elects to withdraw pursuant to this Section11.5(b), no Member shall be deemed an “Electing Member”, **[Confidential Treatment Requested]**.

 

(c) **[Confidential Treatment Requested]**  In order to withdraw pursuant to thisSection 11.5(c), the Member not subject **[Confidential Treatment Requested]**.  In the event the Member not subject **[ConfidentialTreatment Requested]**, no Member shall be deemed an “ElectingMember”, the expiration of the thirty day notice period shall be thetermination date (“Section 11.5(c) Termination Date”), and the Company shall beliquidated pursuant to Section 11.7.

 

Section 11.6  Default.

 

(a)  If any Member fails to perform any of itsobligations set forth in this Agreement, any other Member ("Non–defaultingMember") shall have the right within 30 days of the date of the default togive the defaulting party ("Defaulting Member") a written notice ofthe default ("Notice of Default"). The Notice of Default shall set forth in detail the obligation(s) thatthe Defaulting Member has not performed.

 

(b)  If, within a 15–day period followingreceipt of the Notice of Default, the Defaulting Member cures such default, itshall be deemed that the Notice of Default was not given and the DefaultingMember shall lose no rights hereunder. If, within such 15–day period, the Defaulting Member does not curesuch default, the Non–Defaulting Member hereunder shall have the rightwithin 30 days of the expiration of the 15 day cure period to terminate thisCompany by giving the Defaulting Member written notice thereof “TerminationNotice”).  The Company shall terminateon the date of the Termination Notice ("Section 11.6(b) TerminationDate").  The remedy of theNon-Defaulting Member shall be limited to the damages provisions provided forunder Section 11.8.

 

(c)  If a Defaulting Member disputes the basisset forth in the Notice of Default, the Defaulting Member must file forarbitration pursuant to Section 13.9 below within thirty (30) days of theSection 11.6 (b) Termination Date.  Ifit is ultimately determined by the arbitrator that the Defaulting Member wasnot in default as specified in the Notice of Default, then the Non–DefaultingMember shall be deemed an "Electing Member" under Section 11.8.  The Company shall be deemed to haveterminated on the date of the Termination Notice ("Section 11.6(c)Termination Date").  The Companyshall be liquidated pursuant to Section 11.7. The remedy of the Non-Electing Member shall be limited to the damagesprovisions provided for under Section 11.8.

 

Section 11.7 Liquidation.

 

(a)  In the event the Company is terminated, theCompany shall be liquidated as described below.  Upon the earlier of a Section 11.3 Termination Date, a Section11.4 Termination Date, a Section 11.5(a) Termination Date, a Section 11.5(b)Termination Date, a Section 11.5(c) Termination Date, a Section 11.6(b)Termination Date, or a Section 11.6(c) Termination Date:

 

(1)  the Company shall not take any additionalloan applications;

 

(2 **[ConfidentialTreatment Requested]**;

 

(3) **[ConfidentialTreatment Requested]**;

 

(4)  any restrictions on the activities of theMembers contained in this Agreement shall cease unless the restrictionspecifically provides that it shall continue after termination; and

 

(5) the Accountants or other third party mutually agreed to between theMembers shall be retained to handle the liquidation consistent with theprovisions of this Agreement.

 

(b)  The assets of the Company shall be paid ordistributed in the following order of priority, unless otherwise required byapplicable law:

 

(1)  To pay (or make provision for the paymentof) all creditors of the Company, including the Members, in the order ofpriority provided by law; and

 

(2)  To distribute to the Members in accordancewith (or in direct proportion to if less than) their respective Units, asadjusted for item (1) above and all Company operations up to and including suchliquidation.

 

**[ConfidentialTreatment Requested]**

 

Section 11.8  LiquidatedDamages.

 

(a)  It is understood that in the course ofoperation of the Company, the Members will contribute to the Companysignificant funds, resources and knowledge, including information, techniques,processes and business clientele, the value of which cannot be calculated.  As a material inducement to enter into thisAgreement and to develop and disclose such information, the Members agree tothe liquidated damages provisions set forth in this Section 11.8. **[ConfidentialTreatment Requested]**

 

(1) **[ConfidentialTreatment Requested]**

 

(2) **[ConfidentialTreatment Requested]**.

 

(b) **[Confidential Treatment Requested]**

 

ARTICLE XII

#### Representations and Warranties; ClosingRequirements

 

Section 12.1  MemberRepresentations and Warranties. Community Member represents and warrants asof the Closing Date that:

 

(a)  Community Member is a corporation dulyorganized, validly existing and in good standing under the laws of the State ofNorth Dakota and has all requisite power and authority and licenses to own orlease its property and to carry on its business as it is now beingconducted.  The execution, delivery andperformance of this Agreement by Community Member have been duly authorized byall proper action on the part of Community Member, and are within its powersand will not conflict with or be in violation of Community Member'sorganizational documents.  ThisAgreement constitutes the legal, valid and binding obligation of CommunityMember, enforceable against Community Member in accordance with its terms.

 

(b)  The performance of this Agreement by CommunityMember will not violate or result in a breach of, constitute a default under,give rise to any right of acceleration or termination under any law or anycontract, agreement, note, bond, license, indenture, mortgage, lease agreementor other instrument or obligation to which Community Member is a party or bywhich it is bound or affected or violate any rule or regulation of anyadministrative agency, or order, writ, injunction, judgment or decree of anycourt, administrative agency or governmental body applicable to it.

 

(c) Community Member hasobtained and kept in force all material governmental licenses and permitsnecessary to conduct its business as it is now being conducted.

 

(d)  The balance sheet of Community Member or itsaffiliate group provided to Wells Fargo Member and the related statements ofearnings, stockholders' equity and changes in financial position for the yearprovided, with notes thereto, reported upon or reviewed by independentcertified public accountants, present fairly the financial position ofCommunity Member or its affiliate group as of the date thereof and the resultsof operations, stockholders' equity and changes in financial position thereoffor the year then ended, in accordance with GAAP applied on a consistent basisthroughout such period.

 

(e)  Except as has been disclosed in writing toWells Fargo Member, Community Member is not a party to any pending or, to thebest knowledge of Community Member, threatened, claim, action suit,investigation or proceeding, nor is subject to any order, judgment or decreewhich may have a materially adverse effect on the Community Member's assets orbusiness as currently conducted.

 

(f)  There areno claims for brokerage or other commissions or finder's or other similar feesin connection with the transactions covered by this Agreement insofar as suchclaims shall be based on arrangements or agreements made by or on behalf ofCommunity Member, and Community Member hereby agrees to indemnify and holdharmless Wells Fargo Member from and against all liabilities, costs, damagesand expenses from any such claim.

 

Section 12.2  Wells FargoMember Representations and Warranties. Wells Fargo Member represents and warrants as of the Closing Date that:

 

(a)  Wells Fargo Member is a limited liabilitycompany, duly organized, validly existing and in good standing under the lawsof the State of Delaware and has all requisite corporate power and authorityand licenses to own or lease its property and to carry on its business as it isnow being conducted.  The execution,delivery and performance of this Agreement by Wells Fargo Member have been dulyauthorized by all proper action on the part of Wells Fargo Member, and arewithin its powers and will not conflict with, result in the breach or violationof, constitute a default under, give rise to any right of acceleration ortermination under Wells Fargo Member's organizational documents or anyindenture, mortgage, lease agreement, contract, order, injunction, judgment,decree or other instrument, rule or regulation to which Wells Fargo Member is aparty or by which Wells Fargo Member is bound. This Agreement constitutes the legal, valid and binding obligation ofWells Fargo Member, enforceable against Wells Fargo Member in accordance withits terms.

 

(b)  The performance of this Agreement by WellsFargo Member will not violate or result in a breach of any law or any contract,agreement, note, bond, license or other instrument or obligation to which WellsFargo Member is a party or by which it is bound or affected or violate any ruleor regulation of any administrative agency, or order, writ, injunction ordecree of any court, administrative agency or governmental body applicable toit.

 

(c)  Wells Fargo Member has obtained and kept inforce all material governmental licenses and permits necessary to conduct itsbusiness as it is now being conducted.

 

(d)  The balance sheet of Wells Fargo Member orits affiliate group provided to Community Member and the related statements ofearnings, stockholders' equity and changes in financial position for the yearprovided, with notes thereto, reported upon or reviewed by independentcertified public accountants, present fairly the financial position of WellsFargo Member or its affiliate group as of the date thereof and the results ofoperations, stockholders' equity and changes in financial position thereof forthe year then ended, in accordance with GAAP applied on a consistent basisthroughout such period.

 

(e)  Except as has been disclosed in writing toCommunity Member, Wells Fargo Member is not a party to any pending or, to thebest knowledge of Wells Fargo Member, threatened, claim, action suit,investigation or proceeding, nor is subject to any order, judgment or decreewhich may have a materially adverse effect on the Wells Fargo Member's assetsor business as currently conducted.

 

(f)  There areno claims for brokerage or other commissions or finder's or other similar feesin connection with the transactions covered by this Agreement insofar as suchclaims shall be based on arrangements or agreements made by or on behalf ofWells Fargo Member, and Wells Fargo Member hereby agrees to indemnify and holdharmless Community Member from and against all liabilities, costs, damages andexpenses from any such claim.

 

Section 12.3  ClosingRequirements.  On the Closing Date,the Members shall each deliver to the other the following:

 

(a)  a certified copy of an authorization toenter into this Agreement by the appropriate authority of the other party.

 

(b)  a certificate, dated as of the Closing Date,signed by the president or any vice president and by the Secretary of the other party as to the matters set forth inSection 12.1 or 12.2 respectively.

 

(c)  an opinion of counsel, dated as of theClosing Date, in form and substance satisfactory to counsel for such party, tothe effect that:

 

(1)                The other party is a corporationor limited liability company, duly organized, validly existing and in goodstanding under the laws of its state of incorporation or organization and hasthe power and authority to own and operate its properties and to carry on itsbusiness as now being conducted.

 

(2)The other party has the requisite power andauthority to execute, deliver and perform this Agreement and to consummate thetransactions contemplated by this Agreement; all necessary action required tobe taken under the other Member’s organizational documents has been taken toauthorize and approve this Agreement and the transactions contemplated hereby;and this Agreement has been duly executed and delivered.

 

(3)The execution, delivery and performance of thisAgreement by the other party and consummation by the other party of thetransactions contemplated by this Agreement will not result in a breach orviolation of, or constitute a default under, the organizational documents ofthe other party or any judgment, decree, order, governmental permit or license,agreement, trust agreement, indenture or instrument actually known to suchcounsel to which the other is a party or by which it is bound, the breach orviolation of which would have a material adverse effect on the other party;

 

(4)To the best of such counsel's knowledge withoutindependent investigation, there is no legal action or governmental proceedingor investigation pending or threatened against or affecting the other party orwhich prevents the other party from entering into or being bound by thisAgreement or prevents the other party from consummating the transactionscontemplated by this Agreement or which questions the validity of thisAgreement or the transactions contemplated by this Agreement and there is nobankruptcy or other insolvency proceeding pending against or affecting theother party.

 

ARTICLE XIII

Miscellaneous Provisions

 

Section 13.1  Notices.  Notices, requests, reports, payments, callsor other communications required to be given or made to any Member hereundershall be in writing and shall be deemed to be given or made when properlyaddressed and delivered.  Delivery maybe by registered or certified mail, postage prepaid, or by overnight courier tosuch Member at such Member's last known address.  Addresses shown on the Schedule of Capital Contributions for eachMember shall be considered the last known address of such Member unless anduntil the Company is otherwise notified by such Member in the manner set forthin this Section 13.1.

 

Section 13.2  Nature ofInterest of Members.  The Interestof each Member in the Company is personal property.

 

Section 13.3  Applicable Law.  Notwithstanding the place where thisAgreement may be executed by any of the parties hereto, this Agreement, therights and obligations of the parties hereto, and any claims and disputesrelating thereto, shall be subject to and governed by the Act and the otherlaws of the State of Delaware as applied to agreements among Delaware residentsto be entered into and performed entirely within the State of Delaware, andsuch laws shall govern the limited liability company aspects of this Agreement.

 

Section 13.4  Execution inCounterparts.  This Agreement may beexecuted in one or more counterparts with the effect as if the partiesexecuting the several counterparts had all executed one counterpart, but insuch event each such counterpart shall constitute an original and all of suchcounterparts shall constitute one and the same agreement.

 

Section 13.5  Successors inInterest.  Each and all of thecovenants, agreements, terms, and provisions of this Agreement shall be bindingupon and inure to the benefit of each of the Members and, to the extentpermitted by this Agreement, their respective heirs, executors, administrators,personal representatives, successors and assigns.

 

Section 13.6  Severability.  Any provision of this Agreement which isinvalid, illegal, or unenforceable in any respect in any jurisdiction shall, asto such jurisdiction, be ineffective to the extent of such invalidity,illegality, or unenforceability without in any way affecting the validity,legality, or enforceability of the remaining provisions hereof, and any such invalidity,illegality, or unenforceability in any jurisdiction shall not invalidate or inany way affect the validity, legality, or enforceability of such provisions inany other jurisdiction.

 

Section 13.7  Headings.  The headings in this Agreement are insertedfor convenience and identification only and are in no way intended to describe,interpret, define or limit the scope, extent or intent of this Agreement or anyprovision hereof.

 

Section 13.8  Waiver of Rightto Partition.  Each of the Membersirrevocably waives during the term of the Company any right that such Membermay have to maintain any action for partition with respect to the property andassets of the Company.

 

Section 13.9  Arbitration.

 

(a)  The Members agree to take all reasonablesteps to resolve disputes between them without resorting to arbitration.  The Members agree to submit to bindingarbitration any and all claims, disputes and controversies between or amongthem which cannot be resolved without arbitration, whether in tort, contract orotherwise (and their respective employees, officers, directors, attorneys, andother agents) arising out of or relating in any way to this Agreement, anyrelated ancillary documents and their negotiation, execution, administration,modification, extension, substitution, formation, inducement, enforcement,default or termination.  However,"Core proceedings" under the United States Bankruptcy Code shall beexempted from arbitration.  Should theneed arise for such arbitration, the Members agree that the determination ofthe arbitrator shall be final and shall not be capable of being appealed to anyother court or form of resolution. Notwithstanding this prohibition, the Members do agree that the decisionof any arbitrator shall be capable of being enforced through an action filed inthe appropriate court having jurisdiction.

 

(b) Arbitration under this Agreement shall be governed by the FederalArbitration Act (Title 9 of the U.S. Code), and shall be conducted inaccordance with the Commercial Arbitration Rules of the American ArbitrationAssociation ("AAA").  When theneed for selection of an arbitrator shall arise, the Members shall request AAAto supply them with a list of no less than seven (7) arbitrators having no lessthan five (5) years experience in arbitrating complex businessarrangements.  Upon receipt of that listof potential arbitrators, each Member shall communicate within 7 days to AAAfour (4) arbitrators from the list they would agree to use or their right toparticipate in the selection of the arbitrator shall be forfeited.  As soon as AAA receives the selections fromboth Members, AAA shall review the selected arbitrators and appoint one ofthose arbitrators whose name appears on both Members’ lists of acceptablearbitrators.  AAA shall have thediscretion to select the arbitrator from those arbitrators approved by bothMembers based upon availability and experience and AAA’s selection shall befinal.  The arbitrator shall give effectto statutes of limitation in determining any claim.  Any controversy concerning whether an issue is arbitrable shallbe determined by the arbitrator. Each Member shall each pay its own costs andexpenses of the arbitration proceeding and the cost of the arbitrator shall bedivided equally between the Members.

 

Section 13.10 Confidentiality.

 

(a)  The parties agree that the terms of thisAgreement shall be maintained in confidence, and shall not be disclosed to anythird party, except (i) as is required by law, (ii) pursuant to court orderduring the course of litigation after notice to the other Member, (iii) forinternal communications purposes, (iv) as necessary for tax, accounting, andother regulatory purposes and, (v) as necessary or desirable to facilitateprocurement of insurance protection. This clause shall not restrict the release of financial statements ofthe Company by either party to any third party for regulatory requirements.

 

(b)  Community Member will hold in confidence alldocuments and information concerning Wells Fargo Member and its Affiliatesfurnished to it and its representatives in connection with this Agreement.  Community Member will not release ordisclose such information to any other person, except as required by law or inconnection with any proceedings to enforce or construe this Agreement andexcept its advisers in connection with this Agreement, with the sameundertaking from such advisers.  If theCompany shall not commence operation, such confidence shall be maintained andsuch information shall not be used in competition with Wells Fargo Member,unless Community Member can show that that such information was previouslyknown to Community Member, in the public domain, or later acquired from otherlegitimate sources.  Upon request, allsuch documents and any copies thereof and extracts therefrom shall immediatelythereafter be returned to Wells Fargo Member. Upon termination of this Agreement, all confidential documents andinformation shall be returned upon completion of the liquidation of theCompany.

 

(c)  Wells Fargo Member will hold in confidenceall documents and information concerning Community Member and its Affiliatesfurnished to it and its representatives in connection with this Agreement.  Wells Fargo Member will not release ordisclose such information to any other person, except as required by law or inconnection with any proceedings to enforce or construe this Agreement andexcept its advisers in connection with this Agreement, with the sameundertaking from such advisers.  If theCompany shall not commence operation, such confidence shall be maintained andsuch information shall not be used in competition with Community Member, unlessWells Fargo Member can show that that such information was previously known toWells Fargo Member, in the public domain, or later acquired from otherlegitimate sources.  Upon request, allsuch documents and any copies thereof and extracts therefrom shall immediatelythereafter be returned to Community Member. Upon termination of this Agreement, all confidential documents and informationshall be returned upon completion of the liquidation of the Company.

 

Section 13.11  Publicity.  The Members shall consult with each other asto the form and substance of any proposed press release or other proposedpublic disclosure of matters related to this Agreement or any of thetransactions contemplated hereby.

 

Section 13.12 Survival. The provisions of Sections 13.9 and 13.10 shall continue to bind theMembers should either withdraw from or otherwise leave the Company and shallsurvive any termination of this Agreement.

 

IN WITNESS WHEREOF, the Members hereto have executed and delivered thisAgreement of Limited Liability Company the day and year first above written.

 
| **WELLS FARGO VENTURES, LLC** | **COMMUNITY FIRST HOME MORTGAGE, INC.** |
|-------------------------------|-----------------------------------------|
|                          |                                    |   |   |   |   |
| By:                           |                                    |   | By: |   |
|                          |                                    |   |   |   |   |
| Printed Name:                 |                                    |   | Printed Name: |   |
|                          |                                    |   |   |   |   |
| Title:                        |                                    |   | Title: |   |
|                               |                                         |  |  |  |  |  |  |  |  |  |

 

SCHEDULE OF CAPITALCONTRIBUTIONS

 
| Name & Address                  |   | Amount of Capital  Contribution        |   | Units  |
|-------------------------------------|--------|----------------------------------------|--------|--------|
|                                |   |                                   |   |   |
| Wells Fargo Ventures, LLC           |   | **[Confidential Treatment Requested]** |   | 50     |
| 1 Home Campus, X2406-011            |   |                                   |   |   |
| Des Moines, IA 50328-0001           |   |                                   |   |   |
|                                |   |                                   |   |   |
| Community First Home Mortgage, Inc. |   | **[Confidential Treatment Requested]** |   | 50     |
| 520 Main Avenue                     |   |                                   |   |   |
| Fargo, ND 58124-0001                |   |                                   |   |   |

 

SCHEDULE OF INITIAL ANDSUCESSOR MANAGING OFFICERS

 

Exhibit 1

 

**COMPUTERACCESS AGREEMENT**

 

This Computer Access Agreement ("Agreement") is entered intoeffective November 1, 2001 (the "Effective Date") by and betweenCommunity First Mortgage, LLC ("Company") and Wells Fargo Home Mortgage, Inc.("WFHM").

 

RECITALS

 

WHEREAS, WFHM is willing to offer and provide Company with access toits residential mortgage origination computer system in operation from time totime, including the programs necessary for its operation (the"System") subject to the terms and limitations of this Agreement.

 

NOW, therefore, in consideration of the covenants contained herein,WFHM and Company agree as follows:

 

1.             WFHMResponsibilities. WFHM shall provide Company access to the System under thesame terms and conditions which WFHM gives its loan production offices("Retail Franchisees") access. The System will be available to Company during the same hours as it isavailable to Retail Franchisees in the Company's market area.  In the event of any System outage, theCompany's access shall be restored on the same basis as the Retail Franchiseesin the Company's marketplace.  Accessshall consist of allowing the Company to:

 

(a)                prequalify applicants;

(b)               register residential mortgage loanapplications ("Applications") under WFHM's various loan programs ineffect from time to time;

(c)                price protect interest rates onregistered Applications according to WFHM's price protection guidelines;

(d)               process registered Applications;

(e)                prepare documents required to closeApplications which have been approved by WFHM's underwriting department; and

(f)                 approve funding of closed Applicationsfor which WFHM has provided price protection.

 

2.                Ownership.  The System is proprietary to WFHM.  Company shall not sell, transfer, publish,disclose, display, or otherwise make access to the System or information regardingthe System available to any third parties without the express written consentof WFHM other than disclosure or display through the normal course of themortgage origination business.  Companyagrees to secure and protect the System in a manner consistent with WFHM'srights therein and to take appropriate action by instruction or agreement withits employees or consultants who are permitted access to the System to satisfyits obligations hereunder.  Upon terminationof this Agreement, all information regarding the System, including all manuals,shall be returned to WFHM.  Violation ofany provision of this section shall be basis for immediate termination of thisAgreement.

 

3.             Fees And Taxes.

 

3.1                Fees.  For each Company office location providedwith access to the System pursuant to this Agreement, the Company shall payWFHM a fee of **[Confidential Treatment Requested]** per month.  The fee due under this Agreement shall beadjusted by the amount of any adjustment by WFHM applicable for RetailFranchisees for internal accounting purposes. All fees due under this Agreement shall be paid on the last day of themonth during which the fees accrue. This monthly fee includes all costs of maintaining the System.

 

3.2                Taxes.  Where applicable, Company shall beresponsible for payment of any applicable taxes, however designated, exclusiveof taxes based on the net income.

 

4.             Term.  Except as otherwise provided herein, thisAgreement shall commence on the Effective Date and remain in effect until theagreement which established Company (“Joint Company Agreement”) is terminatedincluding any period necessary to wind down the affairs of the Company.

 

5.                Confidentiality.WFHM acknowledges that during the term of this Agreement, WFHM will be requiredto access certain information relating to the Company's customers prior topurchase of the customers' closed loans ("Information"). WFHMrecognizes that such Information is of a confidential and proprietary nature tothe Company until 30 days after WFHM purchases the closed loans except WFHM mayuse the Information with respect to its own business in regard to theLoans.  Both parties agree to:  (1) use at least the  same degree of care to maintain theconfidentiality of the Information as it uses in maintaining the confidentialityof its own confidential and proprietary information; (2) use the Informationonly for the origination of residential mortgage loans through the Company; and(3) upon termination of this Agreement, immediately cease using theInformation, erase the Information from storage in each computer system inwhich it has been installed except where retention is required for regulatorypurposes, maintain in confidence all knowledge of the Information gainedpursuant to the contract and, either return or destroy all physical embodimentsof the Information.

 

6.             Liability.  Each party shall be liable to the otherparty for any loss or damage proximately caused by the gross negligence orwillful misconduct of its officers, employees or agents.  WFHM shall begranted the same level of discretion in operating the System as it exercises inregard to providing similar services to its Retail Franchisees.

 

7.                Inspection.  All documents and records produced by orstored on the System under this Agreement shall be made available from time totime to and at the reasonable request of (i) regulatory authorities havingjurisdiction over either of the parties, (ii) officers, employees and agents ofeither party and (iii) WFHM & Company’s auditors.

 

8.             Notices.  All notices and other communications inconnection with this Agreement to a party hereto shall be in writing and shallbe deemed to have been duly given when delivered by hand or when deposited inthe United States mail with first class postage prepaid or when delivered toany nationally recognized overnight courier with delivery charges paid to suchparty at its address set forth below, or to such other person or address assuch other party may specify by similar notice to the other party hereto:

 
| If to WFHM:                      |   | If to Company (Both  Companies): |   |                                 |
|----------------------------------|--------|----------------------------------|--------|--------------------------------------|
| Wells Fargo Home  Mortgage, Inc. |   | Wells Fargo Home  Mortgage, Inc. |   | Community First Home  Mortgage, Inc. |
| 1 Home Campus,  X2401-06T        |   | 1 Home Campus,  X2401-06T        |   | 520 Main Avenue                      |
| Des Moines, IA  50328-0001       |   | Des Moines, IA  50328-0001       |   | Fargo, ND 58124-0001                 |
| Attn:  General Counsel      |   | Attn:  General Counsel      |   | Attn:                                |

 

9.             General

 

9.1                ApplicableLaw.  This Agreement and performancehereunder shall be governed by the laws of the State of Delaware.

 

9.2                Amendment,Modification, or Waiver.  No amendment,modification, or waiver of any condition, provision, or term of this Agreementshall be valid or of any effect unless made in writing, signed by the party orparties to be bound or its duly authorized representative and specifying withparticularity the extent and nature of such amendment, modification, orwaiver.  No waiver of any term ofcondition set forth in this Agreement shall constitute a waiver of any otherterm or condition; nor shall it affect or impair any right arising from anysubsequent default.

 

9.3                Assignmentand Delegation.  No rights orinterest in this Agreement may be assigned. Nor, unless otherwise provided in this Agreement, may any obligations bedelegated without the prior written consent of the other party, such consentnot to be unreasonably withheld.

 

9.4                Severability.  Any invalidity, in whole or in part, of anyprovision of this Agreement, shall not affect the validity of any otherprovision of this Agreement.

 

9.5                ParagraphHeading.  Paragraph headings areprovided for convenience of reference and do not constitute a part of thisAgreement.

 

9.6                ForceMajeure.  The parties shall beexcused for delays in performing and failures to perform the obligations ofthis Agreement to the extent that any such delay or failure results from anycause beyond their reasonable control, including, solely by way of example andwithout limitation, delays caused by the other party, acts of God, strikes, andother labor disputes, civil disorder, catastrophes of nature, fire, explosion,natural or man–made floods or any severe weather, war, failure of acommunications or computer system, nuclear attack, embargoes, actions orinactions of governmental authorities. Each party agrees to make reasonable efforts to prevent such occurrencesfrom affecting the performance of this Agreement.

 

9.7                Theparties agree to submit to binding arbitration any and all claims, disputes andcontroversies between or among them which cannot be resolved withoutarbitration, whether in tort, contract or otherwise (and their respectiveemployees, officers, directors, attorneys, and other agents) arising out of orrelating in any way to this Agreement, and its negotiation, execution,administration, modification, extension, substitution, formation, inducement,enforcement, default or termination. Arbitration under this Agreement shall be governed by the provisionsregarding arbitration set forth in the Agreement of Limited Liability Companyof Community First Mortgage, LLC as amended from time to time.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to beexecuted and do each hereby warrant and represent that their respectivesignatory, whose signature appears below, has been and is on the date of thisAgreement duly authorized by all necessary and appropriate corporate action toexecute this Agreement.

 
| AGREED TO AND ACCEPTED BY:           | AGREED TO AND ACCEPTED BY:         |
|--------------------------------------|------------------------------------|
|                                 |                               |   |   |
| **WELLS  FARGO HOME MORTGAGE, INC.** | **COMMUNITY  FIRST MORTGAGE, LLC** |
| (WFHM)                               | (Company)                          |
|                                 |                               |   |   |
| By:                                  |                               |   | By: |   |
| Printed Name:                        |                               |   | Printed Name: |   |
|                                 |                               |   |   |
| Its:                                 |                               |   | Its: |   |
|                                      |                                    |  |  |  |  |  |  |  |

 

Exhibit 2

 

**SERVICEAGREEMENT**

 

ThisService Agreement ("Agreement") entered into effective November 1,2001 (the "Effective Date") by and between Community First Mortgage,LLC ("Venture") and Wells Fargo Home Mortgage, Inc. ("WFHM").

 

RECITALS

 

WHEREAS, WFHM is willing to offer and provide certainsupport services to Venture; and

 

WHEREAS, Venture desires to retain WFHM to providecertain support services.

 

NOW, therefore, WFHM and Venture agree as follows:

 

1.  RESPONSIBILITIES.

 

1.1     Scope of Services. WFHM shallperform the services for Venture as set forth in this Agreement and anyamendments or addenda that may from time to time be made a part of thisAgreement (the "Services"), by mutual agreement.

 

1.2          Performance of Services. WFHMshall perform the Services for Venture under this Agreement in accordance withreasonable commercial standards; generally accepted accounting principles(GAAP) except as otherwise contemplated by the Joint Venture Agreement whichestablished Venture ("Joint Venture Agreement"); in conformity withregulations or laws governing their activities; and in accordance with StandardOperating Procedures established from time to time pursuant to Section 1.3below.

 

1.3     Standard Operating Procedures. WFHMhas established (or may from time to time establish) internal policies, rulesand procedures ("Standard Operating Procedures"), which will governhow the Services are provided and which do not directly and materially affectthe daily operation of the Venture as determined by the Operating Committee.  Any change in Standard Operating Procedureswhich directly and materially affects the daily operation of the Venture issubject to approval by the Operating Committee.  For example, the elimination of regional underwriting coulddirectly and materially affect the daily operation of the Venture.  If the Operating Committee decides not toadopt such a change, the Venture shall bear the added incremental cost ofproviding the Services without the change. Any other changes by WFHM in the Standard Operating Procedures are notsubject to review by the Venture.

 

1.4          Designate Contact Person.  Each party shall designate a person orpersons to respond to other party's inquiries regarding activities related tothe Services.

 

1.5          Confidentiality.  The parties acknowledge that during the termof this Agreement, the parties will be required to access certain informationrelating to the other party's customers ("Information").  The parties recognize that such Informationis of a confidential and proprietary nature to the other party.  Both parties agree to: (1) use at least thesame degree of care to maintain the confidentiality of the Information as ituses in maintaining the confidentiality of its own confidential and proprietaryinformation; (2) use the Information only for the purpose of performing theServices agreed to in this Agreement; and (3) upon termination of thisAgreement, immediately cease using the Information, erase same from storage ineach computer system in which same has been installed except where retention isrequired for regulatory purposes, maintain in confidence all knowledge of samegained pursuant to the contract and, either return or destroy all physicalembodiments of such Information.

 

1.6          Compliance with State and FederalLaws.  Both parties shall takereasonable steps to ensure that the Services performed under this Agreement areperformed in compliance with applicable Federal and State laws.  Such steps may include, by way of exampleand not by way of limitation, ensuring that its employees are properly licensedto perform any Services that require such licensing.

 

2.  SERVICES.

 

2.1     Legal. WFHM will provide legalservices required by Venture including litigation management, regulatorycompliance and general corporate legal advice. The Venture shall be responsiblefor the expense of outside counsel and adverse judgments.

 

2.2          Accounting. WFHM will provideall accounting services required by Venture consistent with the Joint VentureAgreement including preparation of complete and accurate books of accounts andrecords, tax return preparation, regulatory reporting and preparation of incomestatements, balance sheets and commission reports.  In providing the accounting services required by this paragraph,WFHM may contract with a certified public accountant acceptable to the Venturefor the performance of services.  Theexpense of the certified public accountant for performing any of WFHM’sresponsibilities under this Agreement shall be paid by WFHM except that theVenture shall be responsible for the cost of preparing annual audited financialstatements.

 

The books shall beprepared in accordance with generally accepted accounting principles (except asotherwise contemplated in the Joint Venture Agreement), consistently applied,utilizing the accrual method of accounting. The accrual method of accounting shall also be used by the Venture forincome tax purposes.  The Venture'sbooks and records shall at all times be maintained at the principal businessoffice of WFHM, or the Accountants, or such other place agreed upon by theVenturers, and shall be available for inspection by each of the Venturers ortheir duly authorized representatives during reasonable business hours. WFHMshall use its reasonable best efforts to preserve the books and records for thesame period of time that WFHM preserves its own records, and each Venturershall have the right to copy any and all such books and records at its ownexpense prior to the destruction thereof. WFHM shall not be liable for thedestruction of the books and records resulting from any cause beyond itsreasonable control, including, solely by way of example and without limitation,delays caused by the other party, acts of God, strikes, and other labordisputes, civil disorder, catastrophes of nature, fire, explosion, natural orman–made floods or any severe weather, war, failure of a communicationsor computer system, nuclear attack, embargoes, actions or inactions ofgovernmental authorities.

 

Withinninety (90) days after the end of each fiscal year, WFHM shall cause to beprepared and furnished to the Venturers at the expense of the Venture, abalance sheet of the Venture (dated as of the end of the fiscal year thenended), a related statement of earnings for the Venture for the same year, a statementof cash flows for the Venture for such year, related footnotes to the financialstatements and all other financial information reasonably requested by eitherVenturer.  Such financial informationshall reflect the beginning balance in each Venturer's Capital Account as ofthe first day of such year, increases due to Capital Contributions orallocations of Profits, decreases due to allocations of Losses or distributionsof profit made to each Venturer during the year, and the ending balance in eachVenturer's Capital Account as of the last day of such year. WFHM shall also ona monthly basis distribute to the Venturers (i) profit and loss statementshowing revenue and expenses of the Venture for the previous calendar month,(ii) report showing the number and loan amount of loan applications and loansclosed during the previous calendar month, (iii) a balance sheet for theVenture, and (iv) any other information with respect to the operations of theVenture for the previous calendar month which either Venturer may reasonablyrequest.

 

2.3     Human Resources. WFHM or a thirdparty vendor will provide employee relations services required by the employeesof the Venture including representation at administrative hearings, assistancein handling personnel matters, and administration of the benefits program andpayroll for employees of the Venture. The Venture shall be responsible for the expense of the third partyvendor’s services in providing the benefits program and payroll for employeesof the Venture and any third party representation at any administrationhearings.

 

2.4     Data Processing and ManagementInformation. WFHM will provide data processing and management informationservices as agreed between Venture and WFHM. Such services shall consist of those data processing services currentlyprovided by WFHM to its 100% owned loan production offices ("RetailOffices"), and such additions and modifications as are  provided by WFHM.

 

2.5          Assignment Processing. WFHMwill safeguard Venture's loan files until such time as the loans are purchasedby WFHM or other investors and will properly assign and endorse mortgages andnotes as directed by Venture.

 

2.6     Post Closing. WFHM will provide allpost closing services on Venture's files purchased by WFHM or other investorsas directed by Venture including loan file review, pooling and delivery.

 

2.7          Underwriting. WFHM willunderwrite loans that Venture elects to sell to WFHM. For loans approved by anautomated underwriting system without review by an underwriter, there will beno separate charge to the Venture.  Forloans which must be reviewed by an underwriter, there shall be a charge to theVenture of **[Confidential Treatment Requested]** per file (“UnderwritingFee”).  In the event WFHM adjusts theamount of or how the Underwriting Fee is calculated for its Retail Offices, theUnderwriting Fee amount or calculation for the Venture shall be similarlyadjusted.

 

2.8     Facilities Management.  To the extent requested by the OperatingCommittee, WFHM will provide facilities management services for the officelocations used by the Venture including supplying office equipment, andarranging long distance service.

 

2.9     Quality Control. WFHM will providequality control services for loans that Venture elects to sell to WFHM as partof its normal quality control review. Any additional quality control services required in order for theVenture to maintain its approval as a HUD Loan Correspondent shall beseparately provided and billed.

 

2.10     ManagementConsulting. WFHM will provide the part time consulting services of its inmarket Regional and/or Divisional Manager and Regional Operations Specialist.

 

2.11  Risk Management. WFHM will establisha risk management program for the Venture with terms, conditions, limits anddeductibles as WFHM and the Venture determine to be appropriate from time totime. WFHM shall provide the Venture with a schedule of coverage for the riskmanagement program in effect from time to time.  The Venture shall pay the premiums and deductibles, if any, on anyinsurance policies obtained by WFHM for the Venture as part of the riskmanagement program.

 

2.12.  Promotions, Public Relations andAdvertising. WFHM shall make available to the Venture all promotionalmaterials, promotions and public relations services which are provided toRetail Offices.  The Venture shall payany incremental cost of modifying or using the material in excess to the basecost charged to Retail Offices.  Programsinvolving WFHM trademarks may only be used if the Venture executes a writtenagreement with WFHM governing use of the trademarks.  The Venture shall be responsible for the cost of any employee ofthe Venture who qualifies to attend the WFHM sales conference, the WFHM serviceconference or any similar promotional event held by WFHM.

 

2.13.  Compliance with Credit Agreements.WFHM shall take all steps within its responsibilities under this Agreementwhich are necessary to ensure that the Venture complies with all terms of anycredit or financing agreements to which it is a party.

 

2.14.  Loan Processing. WFHM shall processall mortgage loan applications taken by Venture in accordance with thestandards set forth in Paragraph 2.15 below and shall comply with the covenantsset forth in Paragraph 2.16 below.

 

2.15     ServiceStandards. WFHM shall conduct mortgage loan processing activities inaccordance with the Standard Operating Procedures in a manner that is no lessfavorable to Venture customers than those applied by WFHM to customers ofWFHM’s Retail Offices. WFHM shall meet the following service standards:

 

(a)          Establishing non-discriminatorypractices consistent with federal, state and local equal opportunity and fairlending laws and regulations pertaining to such practices;

 

(b)          Periodically assessing and measuringcustomer satisfaction with the Venture through the use of customer satisfactionsurveys and reporting the results to the Operating Committee;

 

(c)          Applying the same standards andefforts WFHM applies with respect to its own customers.

 

2.16     Covenants.  In conducting mortgage loan processingactivities for Venture, WFHM shall:

 

(a)     comply in all material respects with alllaws, statutes, regulations, orders and/or ordinances, whether federal, stateor local or of any governmental agency, applicable to the activities contemplated,the Service Agreement, the Partnership Agreement and any agreements referred toherein or therein, including but not limited to, assuring that all creditpractices and all preprinted forms and/or computer generated forms used by theVenture will be in compliance in all material respects with such laws,statutes, regulations, orders and/or ordinances;

 

(b)          periodically perform the normal andcustomary audits which WFHM performs for WFHM’s Retail Offices, the results ofwhich shall be reported to the Operating Committee.

 

2.17  Processing Fee.  The Venture shall pay WFHM a processing feefor each mortgage loan processed by WFHM equal to the processing fee paid byWFHM's Retail Offices which use the same processing center (the “ProcessingFee”).  In the event the Processing Feefor WFHM's Retail Offices is adjusted, the Processing Fee for the Venture shallbe similarly adjusted.  There shall beadded to the Processing Fee any applicable taxes payable by WFHM for providingthe processing services, however designated, exclusive of taxes based on netincome, required by law to be added to the Processing Fee.  Except as otherwise expressly providedherein or agreed in writing by the Venture, WFHM shall be responsible for allfees, costs, and expenses associated or in connection with the processing ofthe mortgage loans.  All Processing Feesshall be payable in arrears within 15 days following the end of the calendarmonth during which such Processing Fees accrue.

 

3.  TERM.

ThisAgreement shall commence on the Effective Date and remain in effect until theJoint Venture Agreement is terminated subject to such period as required towind down the affairs of the Venture.

 

4.  RELATIONSHIPOF THE PARTIES.

 

4.1     Agency.  Venture does hereby designate WFHM as its agent solely for thepurpose of performing the Services.

 

4.2     Officer of Party.

 

4.2.1                Designating Officers.  Either party may, with the consent of theother, from time to time designate certain employees or officers of the otherparty as officers of the designating party with such authority and to performsuch duties as set forth in this Agreement or as the designating party shallfrom time to time designate in writing.

 

4.2.2                Performance Of Duties AsOfficer.  When an employee orofficer of the other party is performing duties as an officer of thedesignating party, such employee or officer shall be responsible andaccountable directly to the designating party.

 

5.  FEES ANDTAXES.

 

5.1          Management Fees.  Venture agrees to pay WFHM for its servicesrendered pursuant to this Agreement a Management Fee pursuant to the sameformula used for WFHM’s Retail Offices, except as otherwise agreed in writingbetween WFHM and the Venture.  In theevent WFHM adjusts the Management Fee formula for its Retail Offices, the ManagementFee formula for the Venture shall be similarly adjusted, subject to anyseparate written agreements between WFHM and the Venture.

 

5.2     Taxes.  Where applicable, there shall be added to the Management Feeamounts equal to any applicable taxes, however designated, exclusive of taxesbased on the net income of the Venture.

 

5.3          Payment.  All Management Fees shall be paid on thelast day of the month during which the fees accrue.

 

5.4     Annual Fee.  The Venture shall pay an annual jointventure administration fee in addition to its Management Fee.  During the first year of operation, thejoint venture administration fee shall be **[Confidential Treatment Requested]**.  Subsequent to the first year, WFHM may notincrease the amount of the joint venture administration fee by more than **[ConfidentialTreatment Requested]**.

 

6.  LIABILITY.

Eachparty shall be liable to the other party for any loss or damage proximatelycaused by the gross negligence or willful misconduct of its officers, employeesor agents. WFHM shall be granted the same level of discretion in providing theServices to the Venture as it exercises in regard to its Retail Offices.

 

7.  INSPECTION.

Thedocuments and records relating to Services performed under this Agreement shallbe made available from time to time to and at the reasonable request of (i)regulatory authorities having jurisdiction over either of the parties and (ii)officers, employees and agents of either party and (iii) WFHM & Company’sAuditors.

 

8.  NOTICES.

All notices and other communications in connectionwith this Agreement to a party hereto shall be in writing and shall be deemedto have been duly given when delivered by hand or when deposited in the UnitedStates mail with first class postage prepaid or when delivered to any nationallyrecognized overnight courier with delivery charges paid to such party at itsaddress set forth below, or to such other person or address as such other partymay specify by similar notice to the other party hereto:

 

Ifto WFHM:

Wells Fargo Home Mortgage, Inc.

1 Home Campus, X2401-06T

Des Moines, IA 50328-0001

Attn:  GeneralCounsel

 

Ifto Venture: (Both Venturers)

Wells Fargo Home Mortgage, Inc.,        Community First Home Mortgage, Inc.

1 Home Campus, X2401-06T             520 Main Avenue

Des Moines, IA 50328-0001                        Fargo,ND 58124-0001

Attn:  GeneralCounsel                 Attn: ______________

 

9.   GENERAL.

 

9.1  Applicable Law.  This Agreement and performance hereundershall be governed by the laws of the State of Delaware.

 

9.2 Amendment,Modification, or Waiver.  No amendment,modification, or waiver of any condition, provision, or term of this Agreementshall be valid or of any effect unless made in writing, signed by the party orparties to be bound or its duly authorized representative and specifying withparticularity the extent and nature of such amendment, modification, orwaiver.  No waiver of any term orcondition set forth in this Agreement shall constitute a waiver of any otherterm or condition; nor shall it affect or impair any right arising from anysubsequent default.

 

9.3    Assignment and Delegation.  No rights or interest in this Agreement maybe assigned.  Nor, unless otherwiseprovided in this Agreement, may any obligations be delegated without the priorwritten consent of the other party, such consent not to be unreasonablywithheld.

 

9.4    Severability.  Any invalidity, in whole or in part, of anyprovision of this Agreement, shall not affect the validity of any otherprovision of this Agreement.

 

9.5    Paragraph Heading.  Paragraph headings are provided for convenienceof reference and do not constitute a part of this Agreement.

 

9.6    Force Majeure.  The parties shall be excused for delays inperforming and failures to perform their obligations under this Agreement tothe extent that any such delay or failure results from any cause beyond theirreasonable control, including, solely by way of example and without limitation,delays caused by the other party, acts of God, strikes, and other labordisputes, civil disorder, catastrophes of nature, fire, explosion, natural orman–made floods or any severe weather, war, failure of a communicationsor computer system, nuclear attack, embargoes, actions or inactions ofgovernmental authorities.  Each partyagrees to make reasonable efforts to prevent such occurrences from affectingthe performance of this Agreement.

 

9.7    Arbitration.  The parties agree to submit to bindingarbitration any and all claims, disputes and controversies between or amongthem which cannot be resolved without arbitration, whether in tort, contract orotherwise (and their respective employees, officers, directors, attorneys, andother agents) arising out of or relating in any way to this Agreement, and itsnegotiation, execution, administration, modification, extension, substitution,formation, inducement, enforcement, default or termination.  Arbitration under this Agreement shall begoverned by the provisions regarding arbitration set forth in the Agreement ofLimited Liability Company of Community First Mortgage, LLC as amended from timeto time.

 

IN WITNESS WHEREOF, the parties have caused thisAgreement to be executed and do each hereby warrant and represent that theirrespective signatory, whose signature appears below, has been and is on thedate of this Agreement duly authorized by all necessary and appropriatecorporate action to execute this Agreement.

 
| AGREED TO AND ACCEPTED BY           |   | AGREED TO AND ACCEPTED BY         |
|-------------------------------------|--------|-----------------------------------|
|                                |   |                              |
| **WELLS FARGO HOME MORTGAGE, INC.** |   | **COMMUNITY FIRST MORTGAGE, LLC** |
| (WFHM)                              |   | (Venture)                         |
|                                |   |                              |
| By:                                 |   |                              | By: |   |
| Printed Name:                       |   |                              | Printed Name: |   |
|                                |   |                              |   |
| Its:                                |   |                              | Its: |   |
|                                     |        |                                   |  |  |  |  |  |  |  |

 

Exhibit 3

 

LOAN PURCHASEAGREEMENT

 

 

THIS AGREEMENT, entered into effective November 1,2001 between Wells Fargo Home Mortgage, Inc. (hereinafter called"WFHM") and Community First Mortgage, LLC (hereinafter called the"Venture").

 

1.   Procedures

 

a)     The Venture will be provided with the same price blast thatWFHM's wholly owned retail branches ("Retail Offices") receive,containing information with respect to the types and prices of mortgage loansWFHM will commit to buy and the Venture may register a loan for delivery toWFHM by following WFHM's procedures as set forth below.  Any loan type information provided to theVenture shall be subject to change at any time prior to registration by the Venture.  Notwithstanding anything herein to thecontrary, WFHM shall be under no obligation or commitment to approve or buy anyMortgage Loan which does not meet its underwriting criteria.

 

b)    Interest rates and prices currently offered by WFHM will be madeavailable to the Venture by distribution of the price blast on a dailybasis.  Interest rate and prices aresubject to change at any time prior to "lock-in" ("lock-in"means to obtain a guaranteed rate and price for a specified period oftime).  The Venture may"lock-in" a previously registered loan for an agreed length of time(the "lock-in period") by following the procedure set forth in theWFHM procedures and guidelines for its Retail Offices as amended from time totime by WFHM ("Guidelines"). The terms of the Guidelines are incorporated herein by reference.

 

c)     If a lock-in expires, the Venture may relock at a renegotiatedprice and rate as set forth in the Guidelines.

 

d)    WFHM may, in its sole discretion, reduce or waive any of the feesprovided for herein under extraordinary circumstances.

 

e)     WFHM shall purchase loans at par and the Venture shall receivean interest income credit for the per diem interest which accrues between thedate of loan closing and purchase by WFHM.

 

f)    WFHM will pay the Venture the same servicerelease premiums for delivered loans as WFHM pays its Retail Offices asadjusted from time to time.

 

2.   General

 

a)     All loan applications submitted to WFHM will be prepared inaccordance with the Guidelines and the Venture will use its best efforts toinsure that any loan application registered with WFHM will be sold to WFHM asprovided below.

 

b)    The Venture shall obtain all data necessary to insure the properand accurate completion of the loan application including signed authorizationsfor written verification of employment, income, assets and other materialinformation requiring verification. Appraisals, credit reports and mortgage insurance must be done by WFHMapproved vendors.

 

c)     The Venture shall control closing and funding of each approvedloan. WFHM will be paid at funding its required fees and discount as agreedwhen Venture locked in the loan with WFHM. Any sums collected in excess of WFHM’s required fees and discount shallbe retained by the Venture as income. The Venture shall not be required to broker loans to WFHM which have notbeen "locked-in" with WFHM.

 

d)    WFHM portfolio products which are not deemed high risk productsby WFHM may be made available to the Venture, but at different pricing fromWFHM’s Retail Offices. WFHM portfolio products which are deemed high riskproducts by WFHM may be made available to the Venture if WFHM’s partner in theVenture agrees to share equally in any losses incurred by WFHM from high riskproducts originated by the Venture.

 

3.   Representations and Indemnities

 

a)     The Venture, WFHM and their respective officers, agents,employees and representatives will comply with all federal, state and locallaws with regard to this Agreement and the duties and obligations imposed andthe conduct and activities permitted, authorized or contemplated hereby and usetheir best efforts to obtain and retain all approvals and licenses required bythe Venture, or WFHM by this Agreement.

 

b)    The Venture will indemnify and hold WFHM, and its affiliates,their officers, agents, representatives and employees harmless from any and allcosts, claims, charges, actions, causes of action, losses or liability,including attorney's fees, arising either directly or indirectly by reason of abreach of the terms of this Agreement by the Venture, its officers, agents,employees or representatives or in any way as a result of an inaccurate orincomplete loan application or other documentation prepared by or at thedirection of the Venture and submitted to WFHM.  The provisions of this paragraph shall remain effective and inureto the benefit of WFHM, and its affiliates, their officers, agents, employees,affiliates or representatives notwithstanding the expiration, cancellation,termination or completion of this Agreement.

 

c)     WFHM will indemnify and hold the Venture, its officers, agents,employees and representatives harmless from any and all costs, claims, charges,actions, causes of action, losses or liability including attorneys fees,arising either directly or indirectly by reason of a breach of the terms ofthis Agreement by WFHM, its affiliates, officers, agents, employees orrepresentatives.  The provisions of thisparagraph shall remain effective and inure to the benefit of the Venture, itsofficers, agents, employees or representatives notwithstanding the expiration,cancellation, termination or completion of this Agreement.

 

d)    The Venture agrees that it will not participate in or receive anyform of compensation from any other lender (including itself) closing a loanthat has been "locked-in" with WFHM unless the loan was denied byWFHM or WFHM approved the sale to the other lender.

 

4.   Transfer and Termination

 

a)     No sale, transfer or assignment of this Agreement or of anyinterest herein shall be valid without the prior written consent of WFHM.

 

b)    This agreement will automatically terminate upon termination orexpiration of any approval or license of the Venture or WFHM required by law toperform the services required of the Venture or WFHM by this Agreement.  Any such termination shall not affectapplications, if any, which have been registered with WFHM prior to terminationexcept to the extent required by termination or expiration of the approval orlicense.

 

c)     This Agreement shall be terminated upon termination of the JointVenture Agreement.  Any such terminationwill not affect applications, if any, that have been locked-in with WFHM priorto termination.

 

5.   Governing Law

ThisAgreement will be governed by and construed in accordance with the laws of theState of Delaware.

 

6.   Arbitration

The parties agree to submit to bindingarbitration any and all claims, disputes and controversies between or amongthem which cannot be resolved without arbitration, whether in tort, contract orotherwise (and their respective employees, officers, directors, attorneys, andother agents) arising out of or relating in any way to this Agreement, and itsnegotiation, execution, administration, modification, extension, substitution,formation, inducement, enforcement, default or termination.  Arbitration under this Agreement shall begoverned by the provisions regarding arbitration set forth in the Agreement ofLimited Liability Company of Community First Mortgage, LLC, as amended fromtime to time.

 

IN WITNESS WHEREOF, the parties hereto have executedthis Agreement on the date first above written.

 
|                                 |   |                               |
|--------------------------------------|--------|------------------------------------|
| **WELLS  FARGO HOME MORTGAGE, INC.** |   | **COMMUNITY  FIRST MORTGAGE, LLC** |
| (WFHM)                               |   | (Venture)                          |
|                                 |   |                               |
| By:                                  |   |                               | By: |   |
| Printed Name:                        |   |                               | Printed Name: |   |
|                                 |   |                               |
| Its:                                 |   |                               | Its: |   |
|                                      |        |                                    |  |  |  |  |

 

Exhibit 4

 

CREDIT AGREEMENT

 

THISAGREEMENT, entered into effective November 1, 2001 by and between CommunityFirst Mortgage, LLC (the "Borrower"), and Wells Fargo Home Mortgage,Inc., a California Corporation ("WFHM"), provides as follows:

 

ARTICLE I

Definitions

 

Section 1.1                Definitions.  For all purposes of this Agreement, exceptas otherwise expressly provided or unless the context otherwise requires:

 

"Advance" means an advance by WFHM to the Borrowerpursuant to Article II.

 

"Agreement" means this Credit Agreement, as the samemay from time to time be supplemented or amended.

 

"Business Day" means a day on which banks aregenerally open for business in the State of Delaware.

 

"Collateral" has the meaning given to that term in thePledge and Security Agreement.

 

"Collateral Account" means the account of the Borrowerwith Wells Fargo Bank Minnesota, N.A.

 

"Collateral Account Agreement" means that certainCollateral Account Agreement of even date herewith pursuant to which theBorrower and WFHM establish the Collateral Account with Wells Fargo BankMinnesota, N.A. attached hereto as Exhibit A.

 

"Commitment" means WFHM's commitment to make advancesunder Article II.

 

"Commitment Amount" means **[Confidential Treatment Requested]**unless said amount is reduced pursuant to Section 2.5, in which event it meansthe amount to which said amount is reduced.

 

"Commitment Termination Date" means the date oftermination in whole of the Commitment pursuant to Section 2.5 or 5.2.

 

"Default" means an event that, with the giving ofnotice, the passage of time or both, would constitute an Event of Default.

 

"Eligible Mortgage Loan" has the meaning specified inSection 2.10.

 

"Event of Default" has the meaning specified inSection 5.1.

 

"FHA" means the Federal Housing Administration and anysuccessor thereto.

 

"GAAP" means generally accepted accounting principles.

 

"GNMA" means the Government National MortgageAssociation and any successor thereto.

 

"Interest Rate" means the interest rate specified inthe Mortgage Note.

 

"Investor" means Wells Fargo Home Mortgage, Inc. andany other investor approved in writing from time to time by WFHM.  Approval of any investor can be withdrawn atany time by WFHM with 10 days written notice.

 

"Loan Documents" means this Agreement, the Note, thePledge and Security Agreement and all other agreements, instruments,certificates and other documents executed and delivered pursuant to or inconnection therewith, as the same may from time to time be supplemented oramended.

 

"Mortgage" means a mortgage or deed of trust on realproperty which has been improved by a completed single family (one to fourfamily units) dwelling unit (i.e., a detached house, townhouse or condominium).

 

"Mortgage Loan" means a Mortgage Note and the relatedMortgage.

 

"Mortgage Note" means a promissory note which has aterm not exceeding 30 years evidencing a loan or advance which is secured by aMortgage.

 

"Note" has the meaning specified in Section 2.2.

 

"Person" means any individual, corporation,partnership, joint venture, association, joint–stock company, trust,unincorporated organization or government or any agency or politicalsubdivision thereof.

 

"Pledge and Security Agreement" means the pledge andsecurity agreement of the Borrower in the form of Exhibit B.

 

"System" means WFHM residential mortgage loanorigination computer system used by Borrower.

 

"VA" means the Department of Veterans Affairs and anysuccessor thereto.

 

ARTICLE II

Amount and Terms of theLoans

 

Section 2.1  RevolvingAdvances. WFHM agrees, upon the terms and subject to the conditionshereinafter set forth, to make Advances to the Borrower from time to timeduring the period from the date hereof to and including the CommitmentTermination Date in an aggregate outstanding amount not to exceed at any timeoutstanding the Commitment Amount. Within the limits of the Commitment Amount, the Borrower may borrow,prepay pursuant to Section 2.6 and reborrow under this Section 2.1.

 

Section 2.2  The Note.  The Advances made by WFHM shall be evidencedby and repayable with interest in accordance with a single demand note of theBorrower (the "Note") payable to the order of WFHM, substantially inthe form of Exhibit C hereto, dated the date hereof.  The Note shall bear interest on the unpaid principal amountthereof from the date thereof until paid as set forth in Section 2.4.

 

Section 2.3  Making theRevolving Advances.  In order toobtain an Advance, Borrower shall electronically provide WFHM through theSystem with the following:

 

(a)                verifiedpersonal and credit information regarding the borrower(s);

 

(b)                loanregistration information;

 

(c)                propertyand appraisal information;

 

(d)                underwritingapproval information; and

 

(e)                arequest for funding.

 

Upon fulfillment of the applicable conditions set forth in Article IIIhereof, WFHM shall disburse the amount of the requested Advance by creditingthe same to the Collateral Account or in such other manner as WFHM and theBorrower may from time to time agree. The Borrower shall be obligated to repay all Advances made based onBorrower's submission of the above–referenced information.  Any request for an Advance, whether writtenor telephonic, shall be deemed to be a representation that the statements setforth in Section 3.2 are correct to the best of Borrower’s knowledge.

 

Section 2.4  Interest.  The Borrower shall pay interest on theunpaid principal balance of the Advances from time to time outstanding at theInterest Rate.  Interest accruing on theunpaid principal balance of the Advances during a month shall be payable on thefifteenth day of the month following the date of the Advance.

 

Section 2.5  Termination orReduction of the Commitment. WFHM shall have the right at any time uponwritten notice to the Borrower to permanently terminate the Commitment for newregistrations upon ten days written notice and demand payment in full of theoutstanding principal balance of the Note and all accrued and unpaid interestthereon, for any reason or for no reason whatsoever, whether or not a Defaultor Event of Default has occurred. Nothing contained in this Section 2.5 shall preclude or limit WFHM fromterminating the Commitment and demanding payment of the Note upon theoccurrence of an Event of Default as provided in Article V.

 

Section 2.6  Voluntary andMandatory Prepayments.

 

(a)                The Borrower may prepay theprincipal balance of the Note then outstanding in whole or in part, withoutpenalty or premium, at any time and from time to time; provided that anyprepayment of the full amount of the Note shall include accrued interestthereon.

 

(b)                If the outstanding Advancesshall on any date exceed the Commitment Amount, the Borrower shall immediatelymake a principal prepayment of the Note in an amount equal to the amount ofsuch excess.

 

(c)                Any outstanding Advance must berepaid on the date the sale proceeds for the related Mortgage Loan are receivedfrom the Investor.

 

Section 2.7  Computation ofInterest and Fees.  Interest underthe Note and the fees hereunder shall be computed on the basis of actual numberof days elapsed in a year of 360 days.

 

Section 2.8  Payment.  All payment of principal and interest underthe Note and of the fees hereunder shall be made to WFHM in immediatelyavailable funds.  The Borrower agreesthat the amount shown on the books and records of WFHM as being the aggregateamount of Advances outstanding shall be prima facie evidence of the principalamount of the Note then outstanding. Borrower agrees that the Investor will transmit the sale proceeds foreach Eligible Mortgage Loan directly to WFHM.

 

Section 2.9  Payment onNonbusiness Days.  Whenever any paymentto be made hereunder or under the Note shall be stated to be due on a day whichis not a Business Day, such payment may be made on the next succeeding BusinessDay, and such extension of time shall in each case be included in thecomputation of payment of interest on the Note or the fees hereunder, as thecase may be.

 

Section 2.10  Use of Proceeds.  The proceeds of each Advance shall be usedby the Borrower only to make, originate or acquire Mortgage Loans which havebeen registered for sale to any Investor ("Eligible Mortgage Loans").

 

ARTICLE III

Conditions of Lending

 

Section 3.1  InitialConditions Precedent.  Theobligation of WFHM to make any Advance is subject to the condition precedentthat WFHM shall have received on or before the day of the first Advance all ofthe following, each dated (unless otherwise indicated) as of the date hereof,in form and substance satisfactory to WFHM:

 

(a)                The Note, properly executed onbehalf of the Borrower.

 

(b)                The Pledge and SecurityAgreement, properly executed on behalf of the Borrower.

 

(c)                The Collateral AccountAgreement, properly executed on behalf of the Borrower.

 

(d)                A Certificate of a member of theBorrower, certifying as to (i) the resolutions of the Operating Committee ofthe Borrower authorizing the execution, delivery and performance of the LoanDocuments, (ii) true and correct copies of the Borrower's limited liabilitycompany or partnership agreement, and (iii) the signatures of the officers ofthe Borrowers authorized to execute and deliver such documents and otherdocuments or certificates to be delivered pursuant to this Agreement on behalfof the Borrower, including requests for Advances. WFHM may conclusively rely onany such certificate until it shall receive a further certificate of the Secretaryor member of the Borrower canceling or amending the prior certificate andsubmitting the signature of the officers named in such further certificate.

 

Section 3.2  ConditionsPrecedent to All Advances.  Theobligation of WFHM to make any advance (including the initial Advance) shall bethe subject to the further conditions precedent that on the date of suchAdvance:

 

(a)                the representations andwarranties contained in Article IV hereof are correct on and as of the date ofsuch Advance as though made on and as of such date, except to the extent thatsuch representations and warranties relate solely to an earlier date;

 

(b)                no event has occurred and iscontinuing, or would result from such Advance, which constitutes a Default oran Event of Default; and

 

(c)                the aggregate outstandingAdvances after such Advance is made would not exceed the Commitment Amount asof the date of such Advance.

 

ARTICLE IV

Representations andWarranties

 

The Borrower represents and warrants to WFHM as follows:

 

Section 4.1  Existence andPower.  The Borrower is a limitedliability company validly organized, existing and in good standing under thelaws of the State of Delaware and is duly licensed or qualified to transactbusiness in all jurisdictions where the character of the property owned orleased or the nature of the business transacted by it makes such licensing orqualification necessary. The Borrower has all requisite power and authority,corporate or otherwise, to conduct its business, to own its properties and toexecute and deliver, and to perform all of its obligations under, the LoanDocuments.

 

Section 4.2  Authorization ofBorrowing; No Conflict as to Law or Agreements.  The execution, delivery and performance by the Borrower of theLoan Documents and the borrowings from time to time hereunder have been dulyauthorized by all necessary company action and do and will not (i) require anyconsent or approval of the Borrower's members or any authorization, consent orapproval by any governmental authority or regulatory body, (ii) violate anyprovision of any law, rule or regulation (including, without limitation,Regulation X of the Board of Governors of the Federal Reserve System) or of anyorder, writ, injunction or decree presently in effect having applicability to theBorrower, (iii) result in a breach of or constitute a default under anycontract binding on or affecting the Borrower, or (iv) result in, or require,the creation, lien, security interest or other charge or encumbrance of anynature (other than the Pledge and Security Agreement) upon or with respect toany of the properties now owned or hereafter acquired by the Borrower.

 

Section 4.3  Legal Agreements.  This Agreement constitutes, and the otherLoan Documents, when executed and delivered by the Borrower hereunder, willconstitute, the legal, valid and binding obligations of the Borrowerenforceable against the Borrower in accordance with their respective terms,except to the extent that enforcement thereof may be limited by any applicablebankruptcy, insolvency or similar laws now or hereafter in effect affectingcreditor's rights generally (other than fraudulent conveyance laws andpreference laws) and by general principles of equity.

 

Section 4.4  FinancialCondition.  The Borrower hasheretofore furnished to WFHM its current financial statements. Those financialstatements fairly present the financial condition of the Borrower on the datesthereof and the results of its operations for the periods then ended, and wereprepared in accordance with GAAP except as otherwise contemplated by Borrower’soperating agreement.

 

Section 4.5  Adverse Change.  There has been no material adverse change inthe business, properties or condition (financial or otherwise) of the Borrowersince the date of the latest financial statement referred to in Section 4.4.

 

Section 4.6  Litigation.  There are no actions, suits or proceedingspending or, to the knowledge of the Borrower, threatened against or affectingthe Borrower or the properties of the Borrower before any court, governmentalagency or regulatory body or arbitrator, which may materially adversely affectthe financial condition or operations of the Borrower.

 

Section 4.7  Licenses andPermits.  The Borrower has allfederal, state and local licenses and permits required to be maintained inconnection with the operation of its businesses, and all such licenses andpermits are valid and fully effective. The Borrower is fully approved tooriginate FHA, VA and conventional Mortgage Loans.

 

ARTICLE V

Events of Default, Rightsand Remedies

 

 

Section 5.1  Events ofDefault.  "Event ofDefault", wherever used herein, means any one of the following events:

 

(a)                Default in the payment of anyprincipal or interest on the Note when it becomes due and payable.

 

(b)                Default in the payment of anyfees required under this Agreement, when the same become due and payable.

 

(c)                Default in the performance, orbreach, of the covenant of the Borrower contained in Section 2.6(b) or (c).

 

(d)                Default in the performance, orbreach, of any material covenant or agreement of the Borrower in this Agreementor in any other Loan Document (other than a covenant or agreement a default inwhose performance or whose breach is elsewhere in this Section specificallydealt with), and the continuance of such default or breach for a period of 30days after WFHM has given notice to the Borrower specifying such default orbreach and requiring it to be remedied.

 

(e)                Any representation or warrantymade by the Borrower in any Loan Document or by the Borrower (or any of itsofficers) in any certificate, instrument, or statement contemplated by or madeor delivered pursuant to or in connection with any Loan Document, shall proveto have been incorrect in any material respect when made.

 

(f)                A default under any bond, debenture,note or other evidence of Debt of the Borrower (other than to WFHM) or underany indenture or other instrument under which any such evidence of debt hasbeen issued or by which it is governed and the acceleration of payment of suchDebt.

 

(g)                Default in the payment of anyamount owed by the Borrower to WFHM other than hereunder or under the Note.

 

(h)                The Borrower shall be insolvent,or admit in writing its inability to pay its debts as they mature, or make anassignment for the benefit of creditors; or the Borrower shall apply for orconsent to the appointment of any receiver, trustee, or similar officer for itor for all or any substantial part of its property; or such receiver, trusteeor similar officer shall be appointed without the application or consent of theBorrower and such appointment shall continue undischarged for a period of 30days; or the Borrower shall institute (by petition, application, answer,consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement,readjustment of debt, dissolution, liquidation or similar proceeding relatingto it under the laws of any jurisdiction; or any such proceeding shall beinstituted (by petition, application or otherwise) against the Borrower; or anyjudgment, writ, warrant of attachment or execution or similar process shall beissued or levied against a substantial part of the property of the Borrower andsuch judgment, writ, or similar process shall not be released, vacated or fullybonded within 30 days after its issue or levy.

 

(i)A petition shall be filed by or against theBorrower under the United States Bankruptcy Code naming the Borrower as debtor.

 

(j)                The rendering against theBorrower of a final judgment, decree or order for the payment of money inexcess of **[ConfidentialTreatment Requested]** and such judgment, decree or order shall remainunsatisfied and in effect for any period of 30 consecutive days without a stayof execution.

 

(k)                A writ of attachment,garnishment, levy or similar process shall be issued against or served uponWFHM with respect to (i) any property of the Borrower in the possession ofWFHM, or (ii) any indebtedness of WFHM to the Borrower.

 

Section 5.2  Rights andRemedies.  Upon the occurrence of anEvent of Default or at any time thereafter until such Event of Default is curedto the written satisfaction of WFHM, WFHM may exercise any or all of thefollowing rights and remedies:

 

(a)                WFHM may declare the Commitmentto be terminated, whereupon the same shall forthwith terminate.

 

(b)                WFHM may, by notice to theBorrower, declare the entire unpaid principal amount of the Note thenoutstanding, all interest accrued and unpaid thereon, and all other amountspayable under this Agreement to be forthwith due and payable, whereupon suchNote, all such accrued interest and all such amounts shall become and beforthwith due and payable, without presentment, demand, protest or furthernotice of any kind, all of which are hereby expressly waived by the Borrower.

 

(c)                WFHM may exercise and enforceits rights and remedies under the Loan Documents.

 

Notwithstanding the foregoing, upon the occurrence of an Event ofDefault described in Section 5.1(i) or 5.1(k) hereof, the entire unpaidprincipal amount of the Note then outstanding, all interest accrued and unpaidthereon, and all other amounts payable under this Agreement shall beimmediately due and payable without presentment, demand, protest or notice ofany kind. NOTHING CONTAINED IN THIS ARTICLE V OR IN ANY OTHER PROVISION OF THISAGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL PRECLUDE OR LIMIT WFHM FROMTERMINATING ITS COMMITMENT FOR NEW REGISTRATIONS UPON TEN DAYS WRITTEN NOTICEAND DEMANDING PAYMENT OF THE NOTE AT ANY TIME AND FOR ANY REASON OR FOR NOREASON AS PROVIDED IN SECTION 2.5.

 

ARTICLE VI

Miscellaneous

 

Section 6.1  No Waiver;Cumulative Remedies.  No failure ordelay on the part of WFHM in exercising any right, power or remedy under theLoan Documents shall operate as a waiver thereof; nor shall any single orpartial exercise of any such right, power or remedy preclude any other orfurther exercise thereof or the exercise of any other right, power or remedyunder the Loan Documents.  The remediesprovided in the Loan Documents are cumulative and not exclusive of any remediesprovided by law.

 

Section 6.2  Amendments, Etc.  No amendment, modification, termination orwaiver of any provision of any Loan Document or consent to any departure by theBorrower therefrom shall be effective unless the same shall be in writing andsigned by WFHM and then such waiver or consent shall be effective only in thespecific instance and for the specific purpose for which given. No notice to ordemand on the Borrower in any case shall entitle the Borrower to any other orfurther notice or demand in similar or other circumstances.

 

Section 6.3  Notice.  Except as otherwise expressly providedherein, all notices and other communications hereunder shall be in writing andshall be (i) personally delivered, (ii) sent by certified mail, postageprepaid, (iii) delivery by overnight courier, or (iv) transmitted by telecopyif followed with a hard copy by regular mail, in each case addressed to theparty to whom notice is being given at its address as set forth below and, iftelecopied, transmitted to that party at its telecopier number set forth below:

 

Ifto WFHM:

Wells Fargo Home Mortgage, Inc.

1 Home Campus, X2401-06T

Des Moines, IA 50328-0001

Attn:  GeneralCounsel

 

If to the Borrower (Both Members):

Wells Fargo Home Mortgage, Inc.,        Community First Home Mortgage, Inc.

1 Home Campus, X2401-06T             520 Main Avenue

Des Moines, IA 50328-0001                        Fargo,ND 58124-0001

Attn:  GeneralCounsel                 Attn: ______________

 

or, as to each party, at such other address or telecopier number as mayhereafter be designated in a notice by that party to the other party complyingwith the terms of this Section.  Allsuch notices or other communications shall be deemed to have been given on (i)the date received if delivered personally, (ii) two Business Days after thedate of posting if delivered by mail, (iii) one Business Day after deposit withan overnight courier for next Business Day Delivery, or (iv) the date oftransmission if delivered by telecopy, except that notice or requests to WFHMpursuant to any of the provisions of Article II shall not be effective untilreceived by WFHM.

 

Section 6.4  Costs andExpenses.  Each party agrees to payto the other party all costs and expenses incurred (including the reasonablefees and out–of–pocket expenses of counsel) in connection with theenforcement during the term hereof or thereafter of any of the rights orremedies under any of the foregoing documents, instruments or agreements orunder applicable law, whether or not arbitration is filed with respect,thereto.  All costs and expenses shallbe payable on demand.

 

Section 6.5  Execution inCounterparts.  This Agreement andthe Pledge and Security Agreement may be executed in any number ofcounterparts, each of which when so executed and delivered shall be deemed tobe an original and all of which counterparts of this Agreement or the Pledgeand Security Agreement, as the case may be, taken together, shall constitutebut one and the same instrument.

 

Section 6.6  Binding Effect,Assignment.  This Agreement shall bebinding upon and inure to the benefit of the Borrower and WFHM and theirrespective successors and assigns, except that the Borrower shall not have theright to assign its rights hereunder or any interest herein without the priorwritten consent of WFHM.

 

Section 6.7  Governing Law.  The Loan Documents shall be governed by, andconstrued in accordance with, the substantive laws (other than conflict laws)of the State of Delaware.

 

Section 6.8  Arbitration.The parties agree to submit to binding arbitration any and all claims, disputesand controversies between or among them which cannot be resolved withoutarbitration, whether in tort, contract or otherwise (and their respectiveemployees, officers, directors, attorneys, and other agents) arising out of orrelating in any way to this Agreement or any exhibits hereto, and theirnegotiation, execution, administration, modification, extension, substitution,formation, inducement, enforcement, default or termination.  Arbitration under this Agreement and itsexhibits shall be governed by the provisions regarding arbitration set forth inthe Agreement of Limited Liability Company of Community First Mortgage, LLC, asamended from time to time.

 

Section 6.9  Severability ofProvisions.  Any provision of thisAgreement which is prohibited or unenforceable shall be ineffective to theextent of such prohibition or unenforceability without invalidating theremaining provisions hereof.

 

Section 6.10  EntireAgreement.  This Agreement and theother Loan Documents and related documents described herein embody the entireagreement and understanding between the Borrower and WFHM and supersede allprior agreements and understandings, oral or written, between WFHM and theBorrower.

 

Section 6.11  Acceptable toWFHM.  As used in this Agreement,the phrases "to the satisfaction of WFHM," "acceptable toWFHM," "acceptable to WFHM in WFHM's sole discretion" or anysimilar phrase shall mean acceptable to WFHM in WFHM's reasonable discretion.

 

Section 6.12  Headings.  Article and Section headings in thisAgreement are included herein for convenience of reference only and shall notconstitute a part of this Agreement for any other purpose.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to beexecuted by their respective officers thereunto duly authorized as of the datefirst above written.

 

 
| **WELLS  FARGO HOME MORTGAGE, INC.** |   | **COMMUNITY  FIRST MORTGAGE, LLC** |
|--------------------------------------|--------|------------------------------------|
| (WFHM)                               |   | (Borrower)                         |
|                                 |   |                               |
| By:                                  |   |                               | By: |   |
| Printed Name:                        |   |                               | Printed Name: |   |
|                                 |   |                               |
| Its:                                 |   |                               | Its: |   |
|                                      |        |                                    |  |  |  |  |  |

 

Exhibit A

 

**COLLATERAL ACCOUNT AGREEMENT**

 

ThisCollateral Account Agreement, entered into effective November 1, 2001 is by andbetween Community First Mortgage, LLC (the "Borrower"), and WellsFargo Bank Minnesota, National Association (the "Bank") and WellsFargo Home Mortgage, Inc. ("WFHM").

 

WFHM and the Borrower have entered into a Credit Agreement datedcontemporaneously herewith pursuant to which WFHM has agreed to make revolvingadvances to the Borrower in an aggregate principal amount not to exceed **[ConfidentialTreatment Requested]** (as the same may from time to time be amended,modified or supplemented, the "Credit Agreement").  All terms used herein have the same meaningsascribed to such terms in the Credit Agreement.

 

The parties desire to establish the Collateral Account into whichAdvances will be deposited and payments and other proceeds of Collateral (asthat term is defined in the Credit Agreement) will be received and held by theBank.

 

Accordingly, the parties hereto agree as follows:

 

1.             There shall be opened and maintained with the Bank acollateral bank account designated " Community First Mortgage, LLC -Collateral Account" or similarly designated to WFHM's and the Bank'ssatisfaction (the "Collateral Account").

 

2.             The Collateral Account and all funds at any time ondeposit therein shall constitute collateral security for any and allindebtedness now or hereafter at any time owing by the Borrower to WFHM underthe Credit Agreement, whether or not then due. WFHM, through its agent theBank, shall have full and exclusive dominion of and control over the CollateralAccount and all funds at any time on deposit therein.

 

3.             WFHM shall deposit all Advances made under the CreditAgreement into the Collateral Account, which Advances shall be used solely forthe origination of Eligible Mortgage Loans by the Borrower.  The Borrower shall deposit into theCollateral Account, or shall direct the Bank to debit its operating accountfor, any additional funds necessary for the origination or acquisition of theEligible Mortgage Loans to be funded with the deposited Advances.  Provided the Borrower is in compliance withthe applicable conditions set forth in Article III of the Credit Agreement, theBank shall payout all such Advances and other funds deposited into theCollateral Account pursuant to this paragraph according to the terms of theCredit Agreement.

 

4.             The Borrower shall direct the Investor to make allpayments with respect to Eligible Mortgage Loans, and shall promptly depositall other proceeds of Collateral, by wire or other acceptable transfer, to theBank for deposit in the Collateral Account. To the extent the Borrower is in possession of any proceeds ofCollateral, the Borrower will hold such proceeds separately in trust for WFHMuntil deposited in the Collateral Account.

 

5.             WFHM may, from time to time, in its sole discretion,instruct the Bank to do any of the following or any combination thereof withrespect to funds on deposit in the Collateral Account: (a) charge theCollateral Account and credit WFHM’s account to be applied as a payment of theunpaid principal amount of the outstanding Advances and accrued interestthereon; (b) retain the funds on deposit in the Collateral Account; or (c)release and transfer the funds to the Borrower's operating account with theBank for the Borrower's general use.

 

6.             The Borrower shall have no right to withdraw any fundsfrom the Collateral Account at any time and shall have no dominion or controlover the funds at any time on deposit in the Collateral Account.

 

7.             WFHM hereby acknowledges that it is responsible for thepayment of all charges relating to the Collateral Account, including but notlimited to account maintenance charges, fees for incoming and outgoing wiretransfers and for any other credits or debits in accordance with Bank'sstandard fee schedule.

 

 
| **WELLS  FARGO HOME MORTGAGE, INC.** |   | **COMMUNITY  FIRST MORTGAGE, LLC** |
|--------------------------------------|--------|------------------------------------|
|                                 |   | (Borrower)                         |
|                                 |   |                               |
| By:                                  |   |                               | By: |   |
| Printed Name:                        |   |                               | Printed Name: |   |  
 

 

 

Its:

 

 

Its:

 

 
**WELLS FARGO BANK MINNESOTA,**
**NATIONAL  ASSOCIATION**

 

By:

 

 

Printed Name:

 

 

 

Its:

 

 

 

Exhibit B

 

**PLEDGE AND SECURITY AGREEMENT**

 

This Pledge and Security Agreement (the "Agreement") enteredinto effective November 1, 2001 by and between Community First Mortgage, LLC, alimited liability company with its principal place of business in Fargo, NorthDakota (the "Pledgor"), and Wells Fargo Home Mortgage, Inc.("WFHM").

 
***RECITALS***
 

The Pledgor and WFHM have entered into a Credit Agreement datedcontemporaneously herewith (as amended or modified from time to time, the"Credit Agreement"), pursuant to which WFHM has agreed to extend arevolving credit facility to the Pledgor, on the condition, among others, thatthe Pledgor execute and deliver this Agreement to WFHM; and

 

The Pledgor finds it advantageous, desirable and in its best interestto comply with the condition that it execute and deliver this Agreement.

 

ACCORDINGLY, in consideration of the premises and of the mutualcovenants herein contained and in order to induce WFHM to become a party to,and to extend credit under, the Credit Agreement, the parties hereto agree asfollows:

 

Section 1. DEFINITIONS

Each capitalized term used herein which is not otherwise defined hereinshall have the meaning ascribed to such term in the Credit Agreement.  In addition, the following terms shall havethe following respective meanings:

 

"Collateral" has the meaning specified in Section 2hereof.

 

"Investor" means Wells Fargo Home Mortgage, Inc. andany other investor approved in writing from time to time by WFHM.  Approval of any investor can be withdrawn atany time by WFHM with 10 days written notice.

 

"Obligations" means all obligations of the Pledgor toWFHM now or hereafter existing under any Loan Document.

 

"Obligor" means a person or other entity who now orhereafter is or becomes liable to the Pledgor with respect to any of theCollateral.

 

"Pledged Mortgage Loans" means Mortgage Loans deemedto have been delivered to WFHM as provided in Section 4.

 

Section 2.  PLEDGE

As collateral security for the due and punctual payment of theObligations, and to secure performance of each obligation and the observance ofeach term and condition by the Pledgor to be performed or observed under theCredit Agreement, this Agreement and the other Loan Documents, the Pledgor doeshereby pledge, hypothecate, assign, transfer and convey to WFHM, and assignsand grants to WFHM a security interest in and to the following describedproperty now owned or hereafter acquired by the Pledgor (the"Collateral"):

 

(a)           all right, title and interest of thePledgor in and to the Pledged Mortgage Loans and all promissory notes, or otherinstruments or agreements which evidence the Pledged Mortgage Loans;

 

(b)           all right, title and interest of thePledgor in and to all notes, real estate mortgages, deeds of trust, securityagreements, chattel mortgages, assignments of rent and other securityinstruments whether now or hereafter owned, acquired or held by the Pledgorwhich secure (or constitute collateral for any note, instrument or agreementsecuring) any of the Pledged Mortgage Loans;

 

(c)           all right, title and interest of thePledgor in and to all financing statements perfecting the security interest ofany of the Pledged Mortgage Loans or property securing any Pledged MortgageLoans;

 

(d)           all right, title and interest of thePledgor in and to all guaranties and other instruments by which the persons orentities executing the same guarantee, among other things, the payment orperformance of the Pledged Mortgage Loans;

 

(e)           all right, title and interest of thePledgor in and to all title insurance policies, title insurance binders, commitmentsor reports insuring or relating to any Pledged Mortgage Loan or propertysecuring any Pledged Mortgage Loan;

 

(f)            all right, title and interest of thePledgor in and to all surveys, bonds, hazard and liability insurance, policies,and any other agreement, instrument or document pertaining to, affecting,obtained by the Pledgor in connection with, or arising out of, the PledgedMortgage Loans;

 

(g)           all right, title and interest of thePledgor in and to all agreements to purchase any Pledged Mortgage Loans;

 

(h)           all right, title and interest of thePledgor in and to all collections on, and proceeds of or from, any and all ofthe foregoing (hereinafter collectively called "Collections");

 

(i)            all right, title and interest of thePledgor in and to any other asset of the Pledgor which has been or hereafter atany time is delivered to WFHM hereunder;

 

(j)            all files, surveys, certificates,correspondence, appraisals, tapes, discs, cards, accounting records, and otherrecords, information, and data of the Pledgor relating to the Pledged MortgageLoans (including all information, data, tapes, discs and cards necessary toadminister and service such Pledged Mortgage Loans);

 

(k)           all balances, credits and deposits ofthe Pledgor maintained in the Collateral Account; and

 

(l)            any and all balances, credits,deposits, accounts or moneys of, or in the name of, the Pledgor representing orevidencing the foregoing.

 

Section 3.  REPORTSCONCERNING EXISTING COLLATERAL AND HEREAFTER ACQUIRED COLLATERAL

From time to time hereafter as reasonably requested by WFHM, thePledgor will promptly give a written report to WFHM describing and listing eachdocument, instrument or other paper which evidences, secures, guarantees,insures or pertains to any item of the Collateral whether now or hereafterowned, acquired or held by the Pledgor that the Pledgor has not theretoforedelivered to an Investor.  Such writtenreport shall contain sufficient information to enable WFHM to identify each suchdocument, instrument or other paper.  ThePledgor (a) upon the request of WFHM, shall promptly provide additionalinformation concerning, or a more complete description of, each such document,instrument or other paper and (b) at the request of WFHM, shall promptlydeliver the same to WFHM.

 

Section 4.  DELIVERY OFCOLLATERAL DOCUMENTS

(a)           A Mortgage Loan closed and fundedwith the proceeds of an Advance shall be deemed to have been delivered underthis Agreement when there shall have been electronically delivered to WFHM theinformation required by the Credit Agreement. The Pledgor shall also comply with its obligation under this Pledge andSecurity Agreement to deliver to WFHM the instruments and documents describedin the Transmittal Form.  The documentsto be delivered pursuant to this Section 4(a) shall be delivered (includingdelivery by telecopy, as provided for above) to WFHM no later than 9:00 a.m.(Minneapolis time) on the Business Day on which the Advance is to be made forthe purpose of funding such Mortgage Loan.

 

(b)           Within five Business Days afterreceiving a written request from WFHM to deliver the same, the Pledgor shalldeliver to WFHM the following:

 

(i)                if any such exist, originalguaranties, assignments of rents and other instruments and documents relatingto security for and payment of such Mortgage Loan, together with duly executedassignments thereof;

 

(ii)                a mortgagee's title insurancepolicy (or commitment therefor) in the form of an American Land TitleAssociation standard policy (revised coverage, most recent form) from asubstantial and reputable title insurance company acceptable to FNMA and FHLMCin favor of the Pledgor insuring the lien of the mortgage securing suchMortgage Loan (subject only to such liens and encumbrances as are generallyacceptable to reputable lending institutions, mortgage investors and securitiesdealers) or, if such a mortgagee's title policy (or commitment therefor) isgenerally not available in the state in which the real property subject to suchmortgage is located, an opinion of an attorney reasonably acceptable to WFHM tothe effect that the mortgage securing such Mortgage Loan is a valid first lienfree and clear of all other liens, encumbrances and restrictions, except suchas are generally acceptable to reputable lending institutions, mortgageinvestors and securities dealers;

 

(iii)                evidence satisfactory to WFHMthat the premises covered by the Mortgage securing such Mortgage Loan isinsured against fire and perils of extended coverage for an amount at leastequal to the lesser of the full insurable value of such premises and theCollateral Value of such Mortgage Loan;

 

(iv)                with respect to each MortgageLoan secured by a Mortgage which is insured by FHA, insured by a privatemortgage insurer or guaranteed by the VA, a certificate signed by an officer ofthe Pledgor that, as of the date of delivery thereof, the Pledgor either haspossession of the applicable FHA insurance certificate, private mortgageinsurance certificate or VA guarantee covering such Mortgage Loan, or hascomplied with all requirements and conditions for obtaining possession of suchapplicable FHA insurance certificate, private mortgage insurance certificate orVA guarantee;

 

(v)                originals or photocopies, asWFHM may reasonably request, of surveys (or plat maps, if surveys are notavailable) and all other instruments, documents and other papers pertaining toeach such Pledged Mortgage Loan; and

 

(vi)                the original of each Mortgagereferred to in Section 2(b) hereof, together with satisfactory evidence of itsrecordation.

 

(c)           All assignments executed anddelivered by the Pledgor shall be in form and substance acceptable to andapproved by WFHM.

 

(d)           Any Transmittal Form delivered toWFHM hereunder, together with the documents accompanying any such TransmittalForm, shall conclusively be presumed to have been delivered to WFHM on behalfof the Pledgor notwithstanding that any such Transmittal Form shall not besigned or submitted by a person who has been authorized in writing to do so bythe Pledgor through its Operating Committee or otherwise.

 

(e)           The Pledgor will from time to timewhenever an Event of Default exists, upon the request of WFHM, endorse anddeliver to WFHM any draft, check, note, assignment or other writing whichevidences a right to the payment of money which constitutes Collateral fordeposit to the Collateral Account.

 

Section 5.  REPRESENTATIONS AND WARRANTIES

The Pledgor herebyrepresents and warrants that:

 

(a)           All of the representations andwarranties set forth in the Credit Agreement are true and correct;

 

(b)           The Pledgor is the legal andequitable owner of the Collateral and its interests therein are free and clearof all liens, security interests, charges and encumbrances of every kind andnature (other than as created hereunder or under commitments to purchase by theInvestor);

 

(c)           No financing statement or otherevidence of lien covering any of the Collateral is on file in any publicoffice;

 

(d)           The Pledgor has good right, power andlawful authority to pledge, assign and deliver the Collateral in the mannerhereby done or contemplated;

 

(e)           No consent or approval (other thanany consents which may be incidental to any filing which may be necessary toperfect the security interests in the Collateral) of any governmental body,regulatory authority, person, trust, or entity is or will be (i) necessary tothe validity of the rights created hereunder or (ii) required prior to theassignment, transfer and delivery of any of the Collateral to the Investor.

 

(f)            To the Pledgor's knowledge, nomaterial dispute, right of setoff, counterclaim or defense exists with respectto all or any part of the Collateral;

 

(g)           This Agreement constitutes the legal,valid and binding obligation of the Pledgor enforceable against the Pledgor andthe Collateral in accordance with its terms (subject to limitations as toenforceability which might result from bankruptcy, reorganization, arrangement,insolvency or other similar laws affecting creditors' rights generally) and bygeneral principles of equity;

 

(h)           In making and closing each PledgedMortgage Loan, the Pledgor has fully complied with, and all collateraldocuments delivered with respect to such Pledged Mortgage Loans comply with,all applicable federal, state and local laws, regulations and rules, including,but not limited to, (i) usury laws, (ii) the Real Estate Settlement proceduresAct of 1974, (iii) the Equal Credit Opportunity Act, (iv) the Federal Truth inLending Act, (v) Regulation Z of the Board of Governors of the Federal ReserveSystem; and (vi) all other consumer protection and truth-in-lending laws whichmay apply, and in each case with the regulations promulgated in connectiontherewith, as the same may be amended from time to time; and the Pledgor shallmaintain sufficient documentary evidence in its files with respect to suchPledged Mortgage Loans to substantiate such compliance; and

 

(i)                Immediately upon (A) theexecution and delivery of the Credit Agreement, the Note and the other LoanDocuments, (B) the delivery of the Collateral to the Investor as contemplatedherein and (C) the filing of an appropriate financing statement in theappropriate filing office or offices, WFHM shall have a valid, first prioritysecurity interest and lien in the Collateral.

 

Section 6.  EVENTS OF DEFAULT; REMEDIES

If one or more Events of Default shall exist, then WFHM, in addition toany and all other rights and remedies which it may then have hereunder, underthe Credit Agreement or any other Loan Document, under the Uniform CommercialCode of the State of Minnesota or of any other pertinent jurisdiction (the"Code"), or under any other instrument, or which WFHM may have atlaw, in equity or otherwise, may, at its option (a) in the name of the Pledgor,or otherwise, demand, collect, receive and receipt for, compound, compromise,settle and give acquittance for, and prosecute and discontinue any suits orproceedings in respect of any or all of the Collateral; (b) take any actionwhich WFHM may deem necessary or desirable in order to realize on theCollateral, including without limitation, the power to perform any contract,endorse in the name of the Pledgor without recourse to the Pledgor any checks,drafts, notes or other instruments or documents received in payment of or onaccount of the Collateral; (c) enter upon the premises where any of theCollateral not in the possession of WFHM is located and take possession thereofand remove the same, with or without judicial process; (d) reduce the claims ofWFHM to judgment or foreclosure or otherwise enforce the security interests hereingranted and assigned, in whole or in part, by any available judicial procedure;(e) after notification, if any, provided for herein, sell, lease, or otherwisedispose of, at the office of WFHM, on the premises of the Pledgor, orelsewhere, all or any part of the Collateral, in its then condition orfollowing any commercially reasonable preparation or processing, and any suchsale or other disposition may be as a unit or in parcels, by public or privateproceedings, and by way of one of more contracts (it being agreed that the saleof any part of the Collateral shall not exhaust the power of sale grantedhereby, but sales may be made from time to time, and at any time, until all theCollateral has been sold or until all Obligations have been fully paid andperformed), and at any such sale it shall not be necessary to exhibit any ofthe Collateral; (f) at its discretion, retain the Collateral in satisfaction ofthe Obligations whenever the circumstances are such that WFHM is entitled to doso under the Code or otherwise; and (g) exercise any and all other rights,remedies and privileges which WFHM may have under this Agreement, or any of theother promissory notes, assignments, transfers of lien, and any otherinstruments, documents, and agreements executed and delivered pursuant to theterms hereof or pursuant to the terms of the Credit Agreement.  The Pledgor acknowledges and agrees that asale of the Collateral to the Investor in accordance with its standard programshall be deemed commercially reasonable and preferable, and the Collateral isintended to be sold and that none of the Collateral is a type or kind intendedby the Pledgor to be held for investment or any purpose other than for sale.

 

Section 7.  NOTICES

Reasonable notification of the time and place of any public sale of anyCollateral, or reasonable notification of the time after which any private saleor other intended disposition of any of the Collateral is to be made shall besent to the Pledgor and to any other person entitled under the Code to notice;provided, that if any of the Collateral threatens to decline speedily in value,or is of a type customarily sold on a recognized market, WFHM may sell orotherwise dispose of the Collateral without notification, advertisement, orother notice of any kind.  It is agreedthat notice sent or given not less than fifteen (15) calendar days prior to thetaking of the action to which the notice relates is reasonable notification andnotice of the purposes of this Section 7 and that such notice is sufficient ifit states only the number of Pledged Mortgage Loans to be sold and theiraggregate outstanding principal balance, average interest rate, and averagebalance together with the time and place of sale.  All notices and other communications provided for in thisAgreement shall be given to the parties at their respective addresses set forthin the Credit Agreement or, as to each such party, at such other address asshall be designated by such party in a written notice to the other parties.  All such notices and other communicationsshall be given by one or more of the means specified in Section 6.3 of theCredit Agreement, and upon being so given, shall be deemed to have been givenas of the earliest time specified in said Section 6.3 for the means so used.

 

Section 8.  APPLICATION OFPROCEEDS

Until all Obligations owed to WFHM have been paid in full, any and allproceeds ever received by WFHM from any sale or other disposition of theCollateral, or any part thereof, or the exercise of any other remedy pursuantto Section 6 hereof, shall be applied by WFHM as follows:

 

First,to the payment of the out-of-pocket expenses of WFHM and the reasonable feesand out-of-pocket expenses of counsel employed in connection therewith, and tothe payment of all costs and expenses reasonably incurred by WFHM in connectionwith the administration and enforcement of this Agreement (including, withoutlimitation, the sale or other disposition of the Collateral) and to the paymentof all advances made by WFHM for the account of the Pledgor hereunder to theextent that such costs and expense have not been reimbursed to WFHM, as thecase may be;

 

Second,to the payment in full of the other Obligations; and

 

Third,the balance (if any) of such proceeds shall be paid to the Pledgor, itssuccessors or assigns, or as a court of competent jurisdiction may direct,provided, that if such proceeds are not sufficient to satisfy the Obligationsin full, the Pledgor shall remain liable to WFHM for any deficiency.

 

Section 9.  INDEMNIFICATION AND COSTS AND EXPENSES

The Pledgor will (a) pay all reasonable out-of-pocket expenses,including, without limitation, any recording or filing fees, fees of titleinsurance companies in connection with records or filings, costs of mortgageinsurance policies and endorsements thereof and mortgage registration taxes (orany similar fees or taxes), incurred by WFHM in connection with the enforcementand administration of this Agreement (whether or not the transactions herebycontemplated shall be consummated), the Credit agreement and the other LoanDocuments, and including, without limitation, the reasonable fees anddisbursements of outside counsel for WFHM, (b) pay, and hold WFHM harmless fromand against, any and all present and future stamp and other similar taxes withrespect to the foregoing matters and save WFHM harmless from and against anyand all liabilities with respect to or resulting from any delay or omission topay by Borrower such taxes; and (c) indemnify, pay and hold harmless WFHM fromand against any and all liabilities, obligations, losses, damages, penalties,judgments, suits, costs, expenses and disbursements of any kind whatsoever (the"Indemnified Liabilities") which may be imposed on, incurred by orasserted against it in any way relating to or arising out of this Agreement,the Credit Agreement, the Loan Documents or any of the transactionscontemplated hereby or thereby, unless the same are caused by the grossnegligence or willful misconduct of WFHM. The undertakings of the Pledgor set forth in this Section 9 shallsurvive the payment in full of the Note and the termination of this Agreement,the Credit Agreement and the other Loan Documents.

 

Section 10.  TERMINATION

This Agreement shall terminate when all the Obligations have been fullypaid and performed and WFHM has no further Commitment under the CreditAgreement, at which time WFHM shall reassign and redeliver, without recourseupon, or representation or warranty by, WFHM and at the expense of the Pledgor,to the Pledgor, or to such other person or persons as the Pledgor shalldesignate, against receipt, such of the Collateral (if any) as shall not havebeen sold or otherwise disposed of by WFHM pursuant to the terms hereof, of theCredit Agreement or of the other Loan Documents, and shall still be held byWFHM, together with the appropriate instruments of reassignment and release;provided, however, that this Agreement shall continue to be effective or bereinstated, as the case may be, if at any time payment of any of the Obligationsis rescinded or must otherwise be returned by WFHM or any other Person upon theinsolvency, bankruptcy or reorganization of the Pledgor or otherwise, all asthough such payment had not been made.

 

Section 11.  NON-ASSUMPTIONOF LIABILITY; NO FIDUCIARY RESPONSIBILITY

Nothing herein contained shall relieve the Pledgor from performing anycovenant, agreement or obligation on the part of the Pledgor to be performedunder or in respect of any of the Collateral or from any liability to any partyor parties having an interest therein or impose any liability on WFHM for theacts or omissions of the Pledgor in connection with any of the Collateral. WFHMshall not assume or become liable for, nor shall it be deemed or construed tohave assumed or become liable for, any obligation of the Pledgor with respectto any of the Collateral, or otherwise, by reason of the grant to WFHM of asecurity interest in the Collateral. While WFHM shall use reasonable care in the custody and preservation ofthe Collateral, WFHM shall not have any fiduciary responsibility to the Pledgorwith respect to the holding, maintenance or transmittal of the Collateraldelivered hereunder.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to beexecuted as of the day and year first above written.

 

 

**WELLS  FARGO HOME MORTGAGE, INC.**

 

**COMMUNITY  FIRST MORTGAGE, LLC**

(WFHM)

 

(Venture)

 

 

 

By:

 

 

By:

 

Printed Name:

 

 

Printed Name:

 

 

 

 

Its:

 

 

Its:

 

 

Exhibit C

 

**DEMAND NOTE**

 

Bloomington, Minnesota

November 1, 2001

 

For value received the undersigned, Community First Mortgage, LLC, alimited liability company with its principal place of business in Fargo, NorthDakota hereby promises to pay ON DEMAND to the order of Wells Fargo HomeMortgage, Inc. ("Lender"), at its office in Bloomington, Minnesota orat any other place designated at any time by the holder hereof, in lawful moneyof the United States of America and in immediately available funds, theprincipal sum of **[Confidential Treatment Requested]** or, if less, the aggregateunpaid principal amount of all advances made by Lender to the undersignedhereunder, together with interest on the principal amount of all Advanceshereunder remaining unpaid from time to time computed on the basis of theactual number of days elapsed and a 360-day year, from the date hereof untilthis Note is fully paid at the rate or rates set forth in Section 2.4 of theCredit Agreement referred to below. Interest accruing each month shall be payable on the first Business Dayof the next succeeding month and at maturity or earlier if prepaid infull.  Interest accruing under this Noteis subject to any restrictions contained in the Service Agreement betweenLender and the undersigned.

 

This Note may be prepaid in whole at any time or from time to time inpart, without penalty or premium, provided that any prepayment of the fullamount of the Note shall include accrued interest thereon.

 

This Note is issued pursuant to, and is subject to, a Credit Agreementof even date herewith, by and between the undersigned and Lender, which, amongother things, provides for acceleration of the maturity hereof upon theoccurrence of an Event of Default (as defined in that Credit Agreement) and formandatory prepayment hereof upon the occurrence of certain events.

 

All outstanding Advances under this Note are secured by a Pledge andSecurity Agreement of even date herewith from the undersigned to Lender, andmay now or hereafter be secured by one or more other security agreements,mortgages, deeds of trust, assignments, or other instruments or agreements.

 

This Note shall be immediately due and payable (including unpaidinterest accrued hereon) without demand or notice thereof upon filing of apetition by or against the undersigned under the United States Bankruptcy Code.

 

The undersigned hereby agrees to pay all costs of collection, includingreasonable attorneys' fees and legal expenses, in the event this Note is notpaid when due, whether or not legal proceedings are commenced.

 

Presentment or other demand for payment, notice of dishonor and protestare expressly waived.

 

 

COMMUNITY FIRST MORTGAGE, LLC

By:

 

 

Printed Name:

 

 

 

Its:

 

 

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