FIRST MODIFICATION AGREEMENT

 

	THIS FIRST MODIFICATION AGREEMENT (the "Agreement") is made as of the 1stday of November, 2001, by and among E-LOAN, INC. (the "Borrower"), and GMACBank, a federal saving bank (the "Lender"). 

BACKGROUND

The Borrower and the Lender entered into a WarehouseCredit Agreement, dated as of November 1, 2001, as amended (as soamended, the "Warehouse Credit Agreement") pursuant to which the Lender agreedto make advances (the "Advances") to the Borrower in accordance with theprovisions of the Warehouse Credit Agreement. All capitalized terms used hereinand not otherwise defined shall have the meanings set forth in the WarehouseCredit Agreement.

The Advances are evidenced by the Borrower's Note, dated asof November 1, 2001 (the "Note") in the stated principal amount of $50,000,000and secured by, among other things, a Warehouse Security Agreement dated as ofNovember 1, 2001, as amended (as so amended, the "Warehouse Security Agreement")between the Borrower and the Lender granting the Lender a security interest incertain of the Borrower's assets.

The Borrower has requested that the Lender make certainmodifications to the terms of the Warehouse Credit Agreement, and the Lender hasagreed to such modification, subject to the terms and conditions of thisAgreement.

	

	NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,agree as follows:

	1.	Warehouse Credit Agreement. The Warehouse Credit Agreementis hereby amended as follows:

		(a)	The definition of "Borrowing Base" contained in Section 1.01of the Warehouse Credit Agreement is amended to read in full as follows:

""Borrowing Base" shall mean, as of any date, anamount that is the sum of the following, with respect to all Eligible MortgageLoans, Eligible Nonconforming Mortgage Loans, Eligible HELOCs and Liquid Assetspledged to the Lender as of such date: (1) the sum for all Conforming Loans thatare Committed Mortgage Loans and are the subject of an Interest Rate Commitmentof the product of (x) the Mortgage Loan Aging Percentage with respect tosuch Mortgage Loan and (y) 100% of the Market Value of such Mortgage Loan,(2) the sum for all other Conforming Loans that are Committed Mortgage Loans ofthe product of (x) the Mortgage Loan Aging Percentage with respect to suchMortgage Loan and (y) 99% of the Market Value of such Mortgage Loan,(3) the sum for all Jumbo Loans (each of which shall be a CommittedMortgage Loan) which are the subject of an Interest Rate Commitment of theproduct of (x) the Mortgage Loan Aging Percentage with respect to suchMortgage Loan and (y) 100% of the Market Value of such Mortgage Loan, (4)the sum for all other Jumbo Loans (each of which shall be a Committed MortgageLoan) of the product of (x) the Mortgage Loan Aging Percentage with respectto such Mortgage Loan and (y) 99% of the Market Value of such MortgageLoan, (5) the sum for all Mortgage Loans that are FHA Loans, VA Loans or StateLoans which are the subject of an Interest Rate Commitment of the product of(x) the Mortgage Loan Aging Percentage with respect to such Mortgage Loanand (y) 100% of the Market Value of such Mortgage Loan, (6) the sum for allother Mortgage Loans that are FHA Loans, VA Loans or State Loans of the productof (x) the Mortgage Loan Aging Percentage with respect to such MortgageLoan and (y) 99% of the Market Value of such Mortgage Loan, (7) 0% of theMarket Value of each Mortgage-backed Security, (8) an amount equal to theaggregate principal amount of the Liquid Assets, (9) the sum for all Credit A-Loans of the product of (x) the Nonconforming Mortgage Loan AgingPercentage with respect to such Mortgage Loan and (y) 97% of the MarketValue of such Mortgage Loan, (10) the sum for all Credit B Loans of the productof (x) the Nonconforming Mortgage Loan Aging Percentage with respect tosuch Mortgage Loan and (y) 97% of the Market Value of such Mortgage Loan,(11) the sum for all Credit C Loans of the product of (x) the NonconformingMortgage Loan Aging Percentage with respect to such Mortgage Loan and(y) 96% of the Market Value of such Mortgage Loan, (12) the sum for allCredit D Loans of the product of (x) the Nonconforming Mortgage Loan AgingPercentage with respect to such Mortgage Loan and (y) 0% of the MarketValue of such Mortgage Loan and (13) the sum for all Eligible HELOCs of theproduct of (x) the HELOC Aging Percentage with respect to such Eligible HELOCand (y) 95% of the Market Value of such Eligible HELOC."

		(b)	Clause (vi) of the definition of "CollateralDocuments" contained in Section 1.01 of the Warehouse Credit Agreement isrenumbered as clause (vii) and a new clause (vi) is inserted, which shall readin full as follows:

	"(vi)	If such Mortgage Loan is an Eligible HELOC, anexecuted HUD-1 settlement statement with respect thereto; and"

		(c)	The definition of "Commitment" contained inSection 1.01 of the Warehouse Credit Agreement is amended to read in full asfollows:

	""Commitment" shall mean the obligation of theLender to make Advances in an aggregate principal amount outstanding at any timenot to exceed $50,000,000, or such other amount as Lender, in its solediscretion, may determine from time to time."

		(d)	The definition of "Conforming Loan" contained in Section 1.01of the Warehouse Credit Agreement is amended to read in full asfollows:

	""Conforming Loan" shall mean a Mortgage Loan(other than a VA Loan, an FHA Loan, a State Loan or an Eligible HELOC) that isunderwritten in conformity with FHLMC or FNMA underwriting standards and isotherwise eligible for purchase by FNMA or FHLMC."

		(e)	The definition of "Credit A- Loan" contained in Section 1.01of the Warehouse Credit Agreement is amended to read in full asfollows:

	""Credit A- Loan" shall mean a Mortgage Loan(other than a Mortgage Loan that satisfies all the requirements of an EligibleMortgage Loan or an Eligible HELOC) the obligor of which has a Credit Score asdescribed on Exhibit G hereto."

		(f)	The definition of "Credit B Loan" contained in Section 1.01 ofthe Warehouse Credit Agreement is amended to read in full as follows:

	""Credit B Loan" shall mean a Mortgage Loan (otherthan a Mortgage Loan that satisfies all the requirements of an Eligible MortgageLoan or an Eligible HELOC) the obligor of which has a Credit Score as describedon Exhibit G hereto."

		(g)	The definition of "Credit C Loan" contained in Section 1.01 ofthe Warehouse Credit Agreement is amended to read in full as follows:

	""Credit C Loan" shall mean a Mortgage Loan (otherthan a Mortgage Loan that satisfies all the requirements of an Eligible MortgageLoan or an Eligible HELOC) the obligor of which has a Credit Score as describedon Exhibit G hereto."

		(h)	The definition of "Credit D Loan" contained in Section 1.01 ofthe Warehouse Credit Agreement is amended to read in full as follows:

	""Credit D Loan" shall mean a Mortgage Loan (otherthan a Mortgage Loan that satisfies all the requirements of an Eligible MortgageLoan or an Eligible HELOC) the obligor of which has a Credit Score as describedon Exhibit G hereto."

		

		(i)	There shall be added to Section 1.01 of theWarehouse Credit Agreement a definition of " Eligible HELOC" which shall read infull as follows:

	""Eligible HELOC" shall mean at the time of thedetermination thereof, a revolving credit home equity Mortgage Loan which atsuch time (i) is pledged as Collateral pursuant to the terms of this Agreementand the Warehouse Security Agreement and is not pledged as security for anyIndebtedness owing to, or otherwise subject to a Lien for the benefit of, anyperson other than the Lender, (ii) is a Second Mortgage Loan, (iii) has notpreviously been pledged as Collateral pursuant to the terms of this Agreementand the Warehouse Security Agreement, (iv) is subject to a Purchase Commitment,(v) has and has had no delinquency with respect to any payment due thereunder,(vi) has no deficiencies in respect of the documentation therefor, (vii) has aCredit Score as described on Exhibit G hereto, (viii) if not subject to a WetAdvance, has an Origination Date that is less than 20 calendar days prior tosuch time, (ix) if subject to a Wet Advance, has an Origination Date that is notmore than five Business Days prior to such time, (x) has a Combined Loan-to-Value Ratio of 100% or less, excluding in all such cases, however any EligibleHELOC about which any of the representations, warranties and agreementscontained in Section 6.18 is not true and correct."

		(j)	There shall be added to Section 1.01 of theWarehouse Credit Agreement a definition of "HELOC Aging Percentage" which shallread in full as follows:

	""HELOC Aging Percentage" shall mean, as of anydate, with respect to any Eligible HELOC, (i) 100% if such Eligible HELOC has anOrigination Date that is less than 60 days prior to such date, (ii) 50% if suchEligible HELOC has an Origination Date that is less than 90 days and more than59 days prior to such date, and (iii) 0% if such Eligible HELOC has anOrigination Date that is 90 days or more prior to such date."

		(k)	The definition of "Jumbo Loan" contained inSection 1.01 of the Warehouse Credit Agreement is amended to read in full asfollows:

	""Jumbo Loan" shall mean a Mortgage Loan (otherthan an FHA Loan, a VA Loan, a State Loan or an Eligible HELOC) that isunderwritten in accordance with standards approved by the Lender that aregenerally comparable to the standards established by FNMA or FHLMC in allrespects other than the original principal amount of the Mortgage Loan and thatwere established by an Investor (other than FHLMC, FNMA or GNMA)."

		(l)	The definition of "Market Value" contained inSection 1.01 of the Warehouse Credit Agreement is amended to read in full asfollows:

	""Market Value" shall mean as of any date at whichthe amount thereof is to be determined, (i) as to any Mortgage-backedSecurity, the purchase price therefor (exclusive of any accrued interestincluded in such purchase price) under the Purchase Commitment with respectthereto; (ii) as to any Mortgage Loan (other than an Eligible HELOC) anamount equal to the lower of (A) an amount equal to (1) with respectto a Mortgage Loan that was funded directly by the Borrower to the obligorthereunder, the outstanding principal amount of such Mortgage Loan or(2) with respect to a Mortgage Loan that was purchased by the Borrower, thelesser of (x) the purchase price paid by the Borrower therefor (exclusiveof any accrued interest or servicing release premium included in such purchaseprice) and (y) the outstanding principal amount of such Mortgage Loan, asapplicable, (B) the amount determined by the Lender, in its reasonablediscretion, as the price (exclusive of any accrued interest that would beincluded in such price) at which such Mortgage Loan could on the date of suchdetermination be sold in the secondary market to a bonafideinvestor in an arm's-length transaction and (C) the price at which anInvestor has committed to purchase such Mortgage Loan; and (iii) as to anyEligible HELOC, an amount equal to the lower of (A) the outstanding principalamount of such Mortgage Loan, (B) an amount equal to the principal amount of theoriginal advance to the obligor on such Eligible HELOC, (C) the amountdetermined by the Lender, in its reasonable discretion, as the price (exclusiveof any accrued interest that would be included in such price) at which suchEligible HELOC could on the date of such determination be sold in the secondarymarket to a bonafide investor in an arm's length transaction and(D) the price at which an Investor has committed to purchase such EligibleHELOC."

		(m)	The definition of "Origination Date" containedin Section 1.01 of the Warehouse Credit Agreement is amended to read in full asfollows:

	""Origination Date" shall mean, with respect toany Mortgage Loan that is not an Eligible HELOC, the date such Mortgage Loan wasfunded to the obligor thereon, and with respect to any Eligible HELOC, the datesuch Eligible HELOC was initially funded to the obligor thereon."

		(n)	The definition of "Wet Advance" contained inSection 1.01 of the Warehouse Credit Agreement is amended to read in full asfollows:

	""Wet Advance" shall mean an Advance made by theLender against the pledge of Eligible Mortgage Loans, Eligible NonconformingMortgage Loans or Eligible HELOCs with respect to which the Borrower hasdelivered to the Lender a Request for Advance in accordance with Section 2.04 inlieu of the delivery of the Mortgage Note related thereto; provided,however, that from and after the date on which the Mortgage Note withrespect to any such Mortgage Loan is received by the Lender, such Advance shallcease to be a Wet Advance."

(o)	Section 2.01 of the Warehouse Credit Agreement isamended to read in full as follows:

			

"2.01	Commitment. Subject to and upon the terms andconditions set forth herein, the Lender agrees, at any time and from time totime prior to the Expiry Date (or such earlier date as the Commitment shall havebeen terminated pursuant to the terms hereof), to make an advance or advances(each an "Advance" and, collectively, the "Advances") to the Borrower, whichAdvance: (i) shall be made at any time and from time to time in accordancewith the terms hereof on and after the Effective Date and prior to the ExpiryDate; (ii) shall bear interest as provided in Section 2.07;(iii) may be prepaid and reborrowed in accordance with the provisionshereof; and (iv) shall be made against the pledge by the Borrower ofEligible Mortgage Loans, Eligible Nonconforming Mortgage Loans, Eligible HELOCsor Liquid Assets as Collateral for such Advance as provided herein and in theWarehouse Security Agreement; provided, however, that (1) theaggregate principal amount of Advances outstanding at any time shall not exceedthe lesser of (x) the Commitment and (y) an amount equal to: the Borrowing Base,at such time minus (b) $1,000,000, (2) the aggregate principal amount ofAdvances outstanding at any time secured by Mortgage-backed Securities shall notexceed 0% of the Commitment, (3) the aggregate principal amount of Wet Advancesoutstanding at any time shall not exceed 40% of the Commitment, (4) theaggregate principal amount of Advances outstanding at any time secured by JumboLoans shall not exceed 40% of the Commitment, (5) the aggregate principal amountof Advances outstanding at any time secured by Eligible Nonconforming MortgageLoans shall not exceed $10,000,000 (the "Nonconforming Commitment"), (6) theaggregate principal amount of Advances outstanding at any time secured by CreditA- Loans shall not exceed 100% of the Nonconforming Commitment, (7) theaggregate principal amount of Advances outstanding at any time secured by CreditB Loans shall not exceed 100% of the Nonconforming Commitment, (8) theaggregate principal amount of Advances outstanding at any time secured by CreditC Loans shall not exceed 50% of the Nonconforming Commitment, (9) the aggregateprincipal amount of Advances outstanding at any time secured by Credit D Loansshall not exceed 0% of the Nonconforming Commitment, (10) the aggregateprincipal amount of Advances outstanding at any time secured by Eligible HELOCsshall not exceed $10,000,000 (the "HELOC Commitment") and (11) the aggregateprincipal amount of Advances outstanding at any time secured by EligibleNonconforming Mortgage Loans and Eligible HELOCs shall not exceed$10,000,000."

(p)	Section 2.07(a) of the Warehouse Credit Agreement isamended to read in full as follows:

	"2.07	Interest. The Borrower agrees to payinterest in respect of the outstanding principal amount of the Advances from thedate the proceeds thereof are made available to the Borrower until the maturitythereof (whether by acceleration or otherwise) (i) with respect to Advancessecured by Eligible Mortgage Loans, at a rate per annum equal to 1.50% in excessof the Libor Rate in effect from time to time and (ii) with respect toAdvances secured by Eligible Nonconforming Mortgage Loans or Eligible HELOCs, ata rate per annum equal to 2.00% in excess of the Libor Rate in effect from timeto time; provided, however, that with respect to any Advance whichis disbursed by cashier's check, the applicable rate of interest, calculated inaccordance with the provisions of this Section 2.07(a), shall be reduced by0.25% during the first fifteen (15) days that such Advance is outstanding; andprovided, further, that, with respect to any Advance secured by aMortgage Loan which is the subject of an Interest Rate Commitment, theapplicable rate of interest, calculated in accordance with the provisions ofthis Section 2.07(a), shall be reduced by 0.25%." 

(q)	The first sentence of Section 3.01(a) of the WarehouseCredit Agreement is amended to read in full as follows:

		"3.01	Fees.	(a) The Borrower shall paythe Lender an administration fee (the "Administration Fee") with respect to eachcalendar month during the term of this Agreement in an amount equal to the sumof $15.00 for each Mortgage Loan pledged as Collateral for the first time duringsuch calendar month."

(r)	The first sentence of Section 3.01(c) of the WarehouseCredit Agreement is amended to read in full as follows:

"(c)	The Borrower shall pay the Lender a non-use fee (the"Non-Use Fee") with respect to each calendar month during the term of thisAgreement during which the average outstanding principal amount of Advances isless than an amount equal to fifty percent (50%) of the Commitment, computed atthe rate of 0.25% per annum on the daily average unutilized Commitment."

(s)	Sections 4.02(a), 4.02(c) and 4.02(d) of the WarehouseCredit Agreement is amended to read in full as follows:

"(a) 	if on any date the aggregate principal amount ofAdvances outstanding (after giving effect to all other repayments thereof onsuch date) exceeds the lesser of (x) the Commitment or (y) an amount equal to:(i) the Borrowing Base as then in effect minus (ii) $1,000,000, the Borrowershall immediately prepay the principal of Advances in an aggregate amount equalto such excess;"

(c) if on any date the aggregate principal amount outstanding of Wet Advancesexceeds 40% of the Commitment, the Borrower shall immediately prepay theprincipal of Wet Advances in an aggregate amount equal to such excess;

(d)	if on any date the aggregate principal amount outstanding of Advancessecured by Jumbo Loans exceeds 40% of the Commitment, the Borrower shallimmediately prepay the principal of Advances secured by Jumbo Loans in anaggregate amount equal to such excess;"

		(t)	Section 4.02(f) of the Warehouse CreditAgreement is amended to read in full as follows:

"(f)	if the Lender shall have notified the Borrower or theBorrower otherwise becomes aware that any Mortgage Loan or Mortgage-backedSecurity originally included as an Eligible Mortgage Loan, an EligibleNonconforming Mortgage Loan or an Eligible HELOC no longer constitutes anEligible Mortgage Loan, an Eligible Nonconforming Mortgage Loan or an EligibleHELOC pursuant to the terms and standards set forth herein and in the WarehouseSecurity Agreement, the Borrower shall immediately prepay the principal ofAdvances in an aggregate amount equal to the Collateral Value of such MortgageLoan or Mortgage-backed Security;"

		(u)	Section 4.02(j) of the Warehouse CreditAgreement is amended to read in full as follows:

"(j)	if (1) there shall be a default in the payment ofprincipal or interest by the obligor under (x) an Eligible Mortgage Loan inrespect of which an Advance has been made hereunder and such default shall becontinuing for 60 days or more or (y) a Mortgage-backed Security in respectof which an Advance has been made hereunder and such default shall be continuingfor 3 Business Days or more or (z) an Eligible Nonconforming Mortgage Loanor an Eligible HELOC in respect of which an Advance has been made hereunder andsuch default shall be continuing for 60 days or more, (2) an Insolvency Eventshall occur in respect of an obligor on any Mortgage Loan in respect of which anAdvance has been made hereunder or (3) foreclosure or similar proceedings shallbe commenced in respect of the premises which secure any Mortgage Loan inrespect of which an Advance has been made hereunder, the Borrower shallimmediately prepay the principal of Advances in an aggregate amount equal to theCollateral Value of such Mortgage Loan or Mortgage-backed Security;"

		(v)	Sections 4.02(n), (o) and (p) of the WarehouseCredit Agreement are amended to read in full as follows:

	"(n)	if on any date the aggregate principal amount ofAdvances secured by Credit A- Loans exceeds 100% of the NonconformingCommitment, the Borrower shall immediately prepay the principal of Advancessecured by Credit A- Loans in an aggregate amount equal to such excess;

	(o)	if on any date the aggregate principal amount ofAdvances secured by Credit B Loans exceeds 100% of the Nonconforming Commitment,the Borrower shall immediately prepay the principal of Advances secured byCredit B Loans in an aggregate amount equal to such excess;

	(p)	if on any date the aggregate principal amount ofAdvances secured by Credit C Loans exceeds 50% of the Nonconforming Commitment,the Borrower shall immediately prepay the principal of Advances secured byCredit C Loans in an aggregate amount equal to such excess;"

(w) There shall be added to the Warehouse Credit Agreementnew subsections (r) and (s) which shall read in full as follows:

	"(r)	if on any date the aggregate principal amount ofAdvances secured by Eligible HELOCs exceeds the HELOC Commitment, the Borrowershall immediately prepay the principal of Advances secured by Eligible HELOCs inan aggregate amount equal to such excess; and

if on any date the aggregate principal amount of Advancessecured by Eligible Nonconforming Mortgage Loans and Eligible HELOCs exceeds$10,000,000, the Borrower shall immediately prepay the principal of Advancessecured by Eligible Nonconforming Mortgage Loans and Eligible HELOCs in anaggregate amount equal to such excess."

(x)	 Section 4.03(a) of the Warehouse Credit Agreement isamended to read in full as follows:

"(a) So long as no Default or Event of Default has occurredand is continuing or would result therefrom, upon the Borrower's requesttherefor accompanied by a prepayment by the Borrower of Advances in an amountsufficient to cause the amount of Advances outstanding to be less than or equalto: (x) the Borrowing Base (calculated without reference to any Collateralwhich the Borrower requests be released from the Lien granted pursuant to theWarehouse Security Agreement) minus (y) $1,000,000, and a deposit by theBorrower of such amount as the Lender shall designate as a reserve forapplication to any fees, accrued interest or breakage costs payable with respectto the calendar month in which such prepayment occurs, the Lender shall, withinone Business Day after the later of the receipt of such request or suchprepayment and deposit, release from the Lien granted pursuant to the WarehouseSecurity Agreement and deliver to the Borrower in accordance with the terms ofthe Warehouse Security Agreement (i) the Collateral corresponding to suchMortgage Loan(s) or Mortgage-backed Security(ies) and (ii) the CollateralDocuments pertaining thereto."

(y) Section 4.03(b) of the Warehouse Credit Agreement isamended to read in full as follows:

	"(b)	So long as no Default or Event of Default hasoccurred and is continuing in lieu of any required pre-payment of principalpursuant to Section 4.02, the Borrower may, subject to the terms and conditionshereof and the prior consent of the Lender, substitute and pledge additionalEligible Mortgage Loans, Eligible Nonconforming Mortgage Loans and/or EligibleHELOCs (together with all required Collateral Documents with respect thereto)having an aggregate Collateral Value in an amount such that immediately aftergiving effect to such substitution or addition, such prepayment is no longerrequired."

(z) Section 4.04(c) of the Warehouse Credit Agreement isamended to read in full as follows:

"(c)	The Borrower shall make a deposit in immediatelyavailable funds into the Warehouse Payment Account by 4:00 p.m. on the BusinessDay on which the release of the Lender's security interest in such Mortgage Loanor Mortgage-backed Securities is scheduled to occur pursuant to the purchase byan Investor under a Purchase Commitment, in an amount equal to the amount bywhich the aggregate amount of Advances outstanding exceeds: (i)  theBorrowing Base (calculated without reference to any such Mortgage Loan orMortgage-backed Security) minus (ii) $1,000,000."

		(aa)	Section 6.18 of the Warehouse CreditAgreement is amended to read in full as follows:

	"6.18	Representations Relating to the MortgageLoans. (a) At all times during which a Mortgage Loan is pledged MortgageLoan is pledged as Collateral for Advances hereunder, such Mortgage Loan will(i) be an FHA Loan, a VA Loan, a Conforming Loan, a Jumbo Loan, a StateLoan , a Credit A- Loan, a Credit B Loan, a Credit C Loan, a Credit D Loan or anEligible HELOC; (ii) be an Eligible Mortgage Loan, an EligibleNonconforming Mortgage Loan or an Eligible HELOC and be free of any default andthe Borrower will have had no notice of any event which has occurred which may,with the passage of time or the giving of notice, or both, become a default;(iii) comply with the terms of this Agreement and with the relevantPurchase Commitment and/or Master Commitment, if any; (iv) be a legal,valid and binding obligation of the mortgagor and the mortgagee thereunderenforceable in accordance with its terms and subject to no offset, defense orcounterclaim, obligating such mortgagor to make the payments specified therein,and each FHA Loan and each VA Loan will be fully eligible for, and the Borrowerwill have complied with all applicable requirements of law, rule or regulationin respect of, FHA insurance or VA guaranty, respectively; (v) if suchMortgage Loan is an Eligible Nonconforming Mortgage Loan or an Eligible HELOC,be subject to a Purchase Commitment, or if such Mortgage Loan is an EligibleMortgage Loan, be subject to a Purchase Commitment or Hedging Contract or, if itis a Mortgage Loan that bears interest at an adjustable rate, a MasterCommitment which Purchase Commitment or Master Commitment is a legal, valid andbinding obligation of the Investor party thereto, is enforceable against suchInvestor in accordance with its terms (subject to the effect of applicablebankruptcy and other similar laws affecting the rights of creditors generallyand the effect of equitable principles whether applied in an action at law or asuit in equity), and, except as is otherwise notified in writing by the Borrowerto the Lender, permits the assignment thereof to the Lender; (vi) be ownedby the Borrower and be subject to no Lien or claim whatsoever, either legal orequitable, other than that granted to the Lender; (vii) be fully disbursed, thefinal disbursement to the mortgagor in connection therewith having been made nomore than 30 days prior to the date of pledge if such disbursement was made bythe Borrower (unless such Mortgage Loan is delivered as Collateral securing theinitial Advance made to the Borrower hereunder or is an Eligible HELOC);(viii) not be modified (except as to correction of clerical or scrivenererrors), amended, superseded or otherwise subject to any other agreement orcontract of any kind with the relevant mortgagor under such Mortgage Loan exceptto the extent such amendment, modification or other agreement or contract hasbeen disclosed in writing to the Lender by the Borrower at the time of thepledge and does not affect the salability of such Mortgage Loan pursuant to anyapplicable Master Commitment or Purchase Commitment; (ix) be a valid firstor second lien on the mortgaged premises subject thereto; (x) if requiredby the Investor, have a title insurance policy or binder, in ALTA formsatisfactory to the Lender insuring the priority of the Borrower's first orsecond lien therein subject only to (1) the lien of the related firstmortgage, if any, (2) the lien of current real property taxes andassessments, (3) covenants, conditions and restrictions, rights of way,easements and other matters of public record as of the date of recording of therelated mortgage or deed of trust, such exceptions appearing of record beingacceptable to mortgage lending institutions generally in the area wherein theproperty subject thereto is located and (4) other matters to which likeproperties are commonly subject which do not materially interfere with thebenefits of the security intended to be provided by the related mortgage or deedof trust, (xi) not have been selected for pledge hereunder utilizingprocedures, other than those necessary to comply with the representations andwarranties set forth herein, which are adverse to the interests of the Lenderand (xii) if such Mortgage Loan is an Eligible HELOC, have had only one creditadvance disbursed to the obligor thereof."

		(bb)	Section 7.01(k) of the Warehouse CreditAgreement is amended to read in full as follows:

	"(k)	Capital Expenditures. Written notice notless than 10 days prior to any agreement by the Borrower pursuant to which theBorrower intends to make expenditures for fixed or capital assets (including,without limitation, expenditures for maintenance and repairs which should becapitalized in accordance with generally accepted accounting principles andincluding capitalized lease obligations) which will exceed $500,000."

		(cc)	The fifth sentence of Section 7.08(b) of theWarehouse Credit Agreement is amended to read in full as follows:

"All Eligible Nonconforming Mortgage Loans and EligibleHELOCs will comply in all respects with all applicable requirements for purchaseunder the Purchase Commitment relating thereto."

		(dd)	The first sentence of Section 7.13 of theWarehouse Credit Agreement is amended to read in full as follows:

"The Lender will prepare and deliver to the Borrower weekly,or more frequently as the Lender may from time to time determine, a report withrespect to all Eligible Mortgage Loans, Eligible Nonconforming Mortgage Loans,Eligible HELOCs and Liquid Assets pledged to the Lender as of such date (a"Borrowing Base Valuation Report")." 

(ee) There shall be added to Section 7 of the WarehouseCredit Agreement a new section 7.14 which shall read in full asfollows:

		"7.14	Additional Credit Facility. 	TheBorrower will at all times during the term of this Agreement maintain, inaddition to the Commitment hereunder, a mortgage loan funding facility of atleast $100,000,000 with another lender."

		(ff)	[Intentionally omitted]

(gg)	Section 8.07 of the Warehouse Credit Agreement isamended to read in full as follows:

	"8.07	Capital Expenditures. The Borrower willnot, and will not permit any of its Subsidiaries to, make expenditures for fixedor capital assets (including, without limitation, expenditures for maintenanceand repairs which should be capitalized in accordance with generally acceptedaccounting principles and including capitalized lease obligations) in an amountnot in excess of $1,000,000 per month."

		(hh)	Section 8.08 of the Warehouse CreditAgreement is amended to read in full as follows:

	"8.08	Maximum Adjusted Leverage Ratio. TheBorrower will not permit its Adjusted Leverage Ratio at any time during anyfiscal year to be greater than 10 to 1."

		(ii)	 Section 8.09 of the Warehouse CreditAgreement is amended  to read in full as follows:

	"8.09	Minimum Adjusted Tangible Net Worth. TheBorrower will not permit its Adjusted Tangible Net Worth at any time during anyfiscal year to be less than $25,000,000."

(jj) Section 8.15 of the Warehouse Credit Agreement isamended to read in full as follows:

"8.15	Portfolio Aging. The Borrower will not at anytime permit the aggregate principal amount of the Eligible Mortgage Loans thenpledged as Collateral that have an Origination Date that is more than 60 daysprior to such time, to exceed 12% of the aggregate principal amount of allEligible Mortgage Loans that are pledged as Collateral at such time and will notat any time permit the aggregate principal amount of the Eligible NonconformingMortgage Loans then pledged as Collateral that have an Origination Date that ismore than 60 days prior to such time to exceed 15% of the aggregate principalamount of all Eligible Nonconforming Mortgage Loans that are pledged asCollateral at such time."

(kk)	Section 8.16 of the Warehouse Credit Agreement isamended to read in full as follows:

"8.16	Minimum Current Ratio.	The Borrower willnot permit its Current Ratio to be less than 1.1 to 1.0 at any time during anyfiscal year."

(ll)	There shall be added to Section 8 of theWarehouse Credit Agreement a new section 8.17 which shall read in full asfollows:

"8.17	Cash On Hand. The Borrower will not permitits cash on hand to be less than $15,000,000 at any time during the term of thisAgreement."

		(mm)	Section 9.14 is hereby added to the WarehouseCredit Agreement in full as follows:

			"9.14	Consolidation, Merger, Sale ofAssets, etc.	The Borrower shall not, or shall not permit any of itsSubsidiaries which are engaged in the mortgage banking business to, wind up,liquidate or dissolve its affairs or enter into any transaction or merger orconsolidation (except mergers or consolidations of a Subsidiary into theBorrower, with the Borrower as the surviving corporation), or convey, sell,lease or otherwise dispose of (or agree to do any of the foregoing at any futuretime) all or any part of its property or assets which are material (including,but not limited to, any rights to service Mortgage Loans in the Borrower'sServicing Portfolio), individually or in the aggregate, other than obsolete orworn out property, whether now owned or hereafter acquired, other than in theordinary course of business as presently conducted and at fair market value,without the prior approval of the Lender (which approval shall not beunreasonably withheld), except that the Borrower and its Subsidiary may, in theordinary course of business, acquire Mortgage Loans for resale and sell MortgageLoans and Mortgage-backed Securities."

(nn)	Section 11.01(c)(i) of the Warehouse Credit Agreementis amended to read in full as follows:

"(i) the making of an Advance secured by a pledge of aMortgage Loan or Mortgage-backed Security which is not at the date of thecreation of such security interest an Eligible Mortgage Loan, an EligibleNonconforming Mortgage Loan or an Eligible HELOC or which thereafter ceases tobe an Eligible Mortgage Loan, an Eligible Nonconforming Mortgage Loan or anEligible HELOC;"

 

 

2.	Warehouse Security Agreement.	Section 4(a) ofthe Warehouse Security Agreement is amended to read in full as follows:

"(a)	So long as no Default or Event of Default hasoccurred and is continuing or would result therefrom, upon the Assignor'srequest therefor and a prepayment by the Assignor of Advances in an amountsufficient to cause the amount of Advances outstanding to be less than or equalto: (x) the Borrowing Base (calculated without reference to any Collateral whichthe Assignor requests be released from the Lien granted pursuant hereto) minus(y) $1,000,000, and a deposit by the Assignor of such amount as the Lender shalldesignate as a reserve for application to any fees, accrued interest or breakagecosts payable under the Warehouse Credit Agreement with respect to the calendarmonth in which such prepayment occurs, the Lender shall, within one Business Dayafter the later of the receipt of such request or such prepayment and deposit,release from the Lien granted pursuant hereto and deliver to the Assignor(i) the Collateral corresponding to such Mortgage Loan(s) or Mortgage-backed Security(ies) and (ii) the Collateral Documents pertainingthereto."

	3.	Warehouse Security Agreement. Section 4(b)of the Warehouse Security Agreement is hereby amended to read in full asfollows:

	"(b)	So long as no Default or Event of Default hasoccurred and is continuing, in lieu of any required prepayment of principalpursuant to Section 4.02 of the Warehouse Credit Agreement, the Assignor may,subject to the terms and conditions of the Warehouse Credit Agreement and theconsent of the Lender, substitute and pledge additional Eligible Mortgage Loans,Eligible Nonconforming Mortgage Loans and/or Eligible HELOCs (together with allrequired Collateral Documents with respect thereto) having a Collateral Value inan amount such that immediately after giving effect to such substitution oraddition, such prepayment is no longer required."

	4.	References to Credit Documents. Upon the effectiveness ofthis Agreement:

		(a)	Each reference in the Warehouse CreditAgreement to "this Agreement," "hereunder," "hereof," "herein" or words of likeimport, and each reference in the Restated Note and the Warehouse SecurityAgreement to the Warehouse Credit Agreement, shall mean and be a reference tothe Warehouse Credit Agreement as amended hereby;

		(b)	Each reference in the Warehouse CreditAgreement and the Warehouse Security Agreement to the Note shall mean and be areference to the Restated Note; and

		(c)	Each reference in the Warehouse CreditAgreement and the Note to the Warehouse Security Agreement shall mean and be areference to the Warehouse Security Agreement as amended hereby.

		

	5.	Ratification of Documents.

		(a)	Except as specifically amended herein oramended and restated in the Restated Note, the Warehouse Credit Agreement, theNote and the Warehouse Security Agreement shall remain unaltered and in fullforce and effect and are hereby ratified and confirmed.

		(b)	The execution, delivery and effectiveness ofthis Agreement and the Restated Note shall not, except as expressly providedherein, operate as a waiver of any right, power or remedy of the Lender underthe Warehouse Credit Agreement, the Note or the Warehouse Security Agreement norconstitute a waiver of any default or Event of Default under the WarehouseCredit Agreement, the Note or the Warehouse Security Agreement.

	6.	Representations and Warranties. The Borrowerhereby certifies that (i) the representations and warranties which it made inthe Warehouse Credit Agreement and the Warehouse Security Agreement are true andcorrect as of the date hereof and (ii) no Event of Default and no event whichcould become an Event of Default with the passage of time or the giving ofnotice, or both, under the Note, the Warehouse Credit Agreement or the WarehouseSecurity Agreement exists on the date hereof.

	7.	Miscellaneous.

		(a)	This Agreement shall be governed by andconstrued according to the laws of the State of Delaware without regard toprinciples of conflicts of laws and shall be binding upon and shall inure to thebenefit of the parties hereto, their successors and assigns.

		(b)	This Agreement may be executed in one or morecounterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument.

 

		(c)	This Agreement is intended to take effect as a document underseal.

	IN WITNESS WHEREOF, the parties hereto have executed this Agreement as ofthe day and year first above written.

	E-LOAN, INC.

 

	By:____________________________________

	 President

 

	GMAC Bank

 

	By:____________________________________

	 	

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