Exhibit 10.19

Subordination and Intercreditor Agreement

	

	

	This SUBORDINATION AND INTERCREDITOR AGREEMENT ("Agreement") ismade effective as of July 12, 2001, by and between **Bank One, N.A.**, anational banking association with principal offices in Columbus, Ohio("Bank" or "Senior Lender") and **Christian Larsen**("Larsen") and **The Charles Schwab Corporation**, a Delawarecorporation ("Schwab") (collectively, Larsen and Schwab shall bereferred to as the "Subordinated Lenders").  Larsen, Schwab and theBank or Senior Lender are hereinafter sometimes referred to individually as a"Lender" and collectively as "Lenders".

BACKGROUND

	

	

A. 	Obligations to the Senior Lender

	To provide financing to E-Loan, Inc., a Delaware corporation("Debtor"), the Senior Lender entered into a Loan Agreement dated asof April 2, 2001 (the "Loan Agreement") together with other transactiondocuments (collectively, the Loan Agreement and such other transaction documentsrelated thereto shall be referred to as the "Bank Credit Agreement").Under the Bank Credit Agreement, the Senior Lender agreed to lend to the Debtorup to the aggregate principal amount of Twenty-five Million and 00/100 Dollars($25,000,000) from time to time outstanding on a revolving credit basis.  Theobligations of the Debtor to the Senior Lender under the Bank Credit Agreementare secured by the grant by the Debtor of the first priority security interestin and assignment of property of the Debtor as described on **Exhibit A**hereto (the "Senior Lender's Collateral").  (The obligations of theDebtor under the Bank Credit Agreement and any and all other obligations of theDebtor to the Senior Lender, now existing or hereafter arising, shall bereferred to as the "Senior Obligations").

 

B.	Obligations to Larsen

	To provide additional financing to the Debtor, Larsen is entering into anAmended and Restated Loan Agreement dated as of July 12, 2001 (the "LarsenLoan Agreement") together with other transaction documents (collectively,the Larsen Loan Agreement and such other transaction documents shall be referredto as the "Larsen Credit Agreement").  Under the Larsen CreditAgreement, Larsen is agreeing to lend to the Debtor up to the aggregateprincipal amount of Two Million Five Hundred Thousand and 00/100 Dollars($2,500,000) from time to time outstanding on a revolving credit basis.  Theobligations of the Debtor to Larsen under the Larsen Credit Agreement aresecured by a grant by the Debtor of a second priority security interest in andassignment of property of the Debtor as described on **Exhibit B** hereto(the "Larsen Collateral").  (The obligations of the Debtor under theLarsen Credit Agreement and any and all other obligations of the Debtor toLarsen, now existing or hereafter arising, shall be referred to as the"Larsen Obligations".)

C.	Obligations to Schwab

	To provide additional financing to the Debtor, the Debtor issued toSchwab its eight percent (8%) convertible note due on January 19, 2003, in theaggregate principal amount of Five Million and 00/100 Dollars ($5,000,000) (the"Note"), which Note was purchased by Schwab pursuant to the terms andconditions of that certain Note Purchase Agreement dated as of July 12, 2001(the "Purchase Agreement") and which Note is convertible at the optionof holders into shares of the Debtor's common stock, $0.001 par value pursuantto the terms and conditions of the agreements between the Debtor and Schwab.(The Note, Purchase Agreement, Security Agreement, and other transactiondocuments relating thereto or arising therefrom shall be referred to as the"Schwab Credit Agreement"; the obligations of the Debtor under theSchwab Credit Agreement and any and all other obligations of the Debtor toSchwab, now existing or hereafter arising, shall be referred to as the"Schwab Obligations".)  Those Schwab Obligations that arise under theNote or Security Agreement are secured by a grant by the Debtor of a securityinterest in and assignment of property of the Debtor as described on **ExhibitC** hereto (the "Schwab Collateral").  

	(Collectively, the Larsen Obligations and the Schwab Obligations shall bereferred to as the "Subordinated Obligations"; collectively, theLarsen Credit Agreement and the Schwab Credit Agreement shall be referred to asthe "Subordinated Credit Agreements"; and, collectively, the LarsenCollateral and the Schwab Collateral shall be referred to as the"Subordinated Lenders' Collateral".)

D.	Identification of Collateral

	The Senior Lender's Collateral is comprised of the identical assets ofthe Debtor as is the Subordinated Lenders' Collateral.  Schwab and Larsen haveentered into an Intercreditor Agreement effective as of ___________, 2001 toprovide for the relationship of the Larsen Obligations to the Schwab Obligationsand to provide for the allocation of the collateral interests as between Schwaband Larsen ("Schwab-Larsen Intercreditor Agreement").  This Agreementis unaffected by the Schwab-Larsen Intercreditor Agreement.  

	(Collectively, the Senior Lender's Collateral, the Larsen Collateral andthe Schwab Collateral shall be referred to as the "Collateral".)

E. 	Debt Prohibitions

	The Bank Credit Agreement prohibits, interalia, the Debtorfrom incurring debt which is not subordinated to the Senior Obligations andprohibits any other liens on the Senior Lender's Collateral.  The purpose ofthis Agreement is to provide for the subordination of the SubordinatedObligations to the Senior Obligations and to provide for subordination of theinterests of Larsen and Schwab in the Collateral to those of the Senior Lender.The Debtor has requested that the Senior Lender consent to the SubordinatedObligations and the grants to the Subordinated Lenders of the SubordinatedLenders' Collateral.  The Senior Lender has consented to this request subject tothe provisions of this Agreement.  

 

STATEMENT OF AGREEMENT

	

	Section 1. 	Priority of Security Interests.

	Notwithstanding the time or the order of perfection of theirrespective security interests, any provision in the Subordinated CreditAgreements, any provision of the federal bankruptcy code, or any otherapplicable law, as between themselves, the Senior Lender and the SubordinatedLenders agree as follows:

	(a)	The Senior Lender shall have, claim and maintain a firstpriority lien on and first priority security interest in the Collateral.

	(b)	The Subordinated Lenders shall have, claim and maintain a secondpriority lien on and second priority security interest in the Collateral as theinterests in the Collateral of the Subordinated Lenders may be adjusted betweenthem pursuant to the Schwab-Larsen Intercreditor Agreement, fully subordinatedto all interests in the Collateral of the Senior Lender. 

	(c)	The parties hereto will execute and deliver all further agreementsand documents which may be reasonably required to implement or evidence theforegoing interests in favor of each such party.

	Section 2. 	Subordination by the Subordinated Lenders.

	Each of the Subordinated Lenders shall, and hereby does, subordinate theSubordinated Obligations in favor of the Senior Obligations.  Each SubordinatedLender may accept regularly scheduled payments of principal and/or interestunder their respective Credit Agreements so long as no event of default hasoccurred and is continuing under the Bank Credit Agreement or so long as suchpayment would not cause an event of default under the Bank Credit Agreement.Upon the occurrence of an event of default under the Bank Credit Agreement, noSubordinated Lender may accept any payments whatsoever on the SubordinatedObligations, from any source whatsoever, including, without limitation, paymentsfrom the Debtor or arising from or related to the Collateral.  Each SubordinatedLender acknowledges that the occurrence of an event of default under either theLarsen Credit Agreement or the Schwab Credit Agreement constitutes an event ofdefault under the Bank Credit Agreement.  Upon the occurrence of an event ofdefault under the Bank Credit Agreement, except events of default which areprecipitated by default by the Debtor under either the Larsen Credit Agreementor the Schwab Credit Agreement, the Senior Lender shall give written notice toeach of the Subordinated Lenders of such event of default under the Bank CreditAgreement (the "Default Notice"); provided, however, irrespective ofthe date of receipt of a Default Notice by a Subordinated Lender, the operativedate for all relevant purposes under this Agreement shall be that date on whichsuch event of default actually occurred under the Bank Credit Agreement (the"Default Date").  After a Default Date, all payments on account of theSubordinated Obligations accepted by any Subordinated Lender from whateversource, including, but not limited to, offsets, shall be received by suchSubordinated Lender in trust for the benefit of the Senior Lender, shall at alltimes be and remain the property of the Senior Lender and shall be promptly paidover by such Subordinated Lender to the Senior Lender in exactly the formreceived with appropriate endorsement at the direction of the Senior Lender.

	Section 3. 	Additional Terms Regarding Subordination.

	(a)	The Senior Lender may amend, revise, renew, substitute or replaceor otherwise modify any term under the Bank Credit Agreement, or any of theobligations owed to it by the Debtor; extend the maturity therefore or agree toforbearance thereon without notice to any Subordinated Lender and without suchaffecting the obligations, undertakings and agreements of each SubordinatedLender under this Agreement; and may extend additional loans to the Debtorwithout the prior consent of the Subordinated Lenders.

	(b)	After a Default Date, each Subordinated Lender agrees not to ask,demand, sue for, take or receive from the Debtor, directly or indirectly, byoffset, in any other name, the whole or any part of the Subordinated Obligationsunless and until the Senior Obligations have been fully and indefeasiblysatisfied and the Senior Lender has no further commitment to make loans to theDebtor under the Bank Credit Agreement.

	(c)	No Subordinated Lender shall have any right to possession of theCollateral or any part thereof or to foreclose upon any Collateral or any partthereof, to collect or enforce the Subordinated Obligation owed to it by theDebtor, whether by judicial action or otherwise, unless and until the SeniorObligations have been fully and indefeasibly satisfied and the Senior Lender hasno further commitment to make loans to the Debtor under the Bank CreditAgreement.

	(d)	No Subordinated Lender shall commence or join with any creditor ofthe Debtor other than the Senior Lender in commencing any proceeding to collector enforce the Subordinated Obligations owed to him or it or to file aninvoluntary petition in bankruptcy against the Debtor.

	(e)	In the event of any distribution of the assets or readjustments ofthe debt of the Debtor, whether by liquidation, bankruptcy, arrangement,receivership, assignment for the benefit of creditors or any other similaraction or proceeding, or the application of the assets to the payment orliquidation thereof, the Senior Lender shall be entitled to receive payment infull in cash of the Senior Obligations prior to any payment to any SubordinatedLender.  In the event of any distribution to any Subordinated Lender contrary tothe provisions of this subsection, such distribution shall be deemed to be heldby such Subordinated Lender in trust for the benefit of the Senior Lender, shallat all times be and remain the property of the Senior Lender and shall bepromptly paid over by such Subordinated Lender to the Senior Lender in exactlythe form received with appropriate endorsement at the direction of the SeniorLender.

	(f)	The Senior Lender may release, exchange, sell or otherwise dealwith the Collateral without impairing or affecting any of its rights under thisAgreement.

	(g)	The Senior Lender may continue, at any time and without notice tothe Subordinated Lenders, to extend credit or other financial accommodations orbenefits and loan monies to or for the account of the Debtor and such extensionsof credit, financial accommodations or benefits and loans to or for the accountof the Debtor shall be subject to the benefits and entitlements afforded theSenior Lender under this Agreement.

	(h)	This is a continuing agreement of subordination and shall continuein effect until the Senior Obligations have been fully and indefeasiblysatisfied and the Senior Lender has no further commitment to make loans to theDebtor under the Bank Credit Agreement.

	(i)	Each party hereto represents and warrants that it has notpreviously assigned any interest in the obligations owed to it or him by theDebtor, that no other party owns an interest in such obligations (whether asjoint holders, participants or otherwise).

	(j)	Each Subordinated Lender hereby expressly waives any right that itmay otherwise have to require the Senior Lender to marshall assets or to resortto Collateral in any particular order or manner, whether provided for by commonlaw or statute. 

	(k)	In the event that the Senior Lender shall be required by theUniform Commercial Code or any other applicable law to give notice to either ofthe Subordinated Lenders, such notice shall be given in accordance with Section5 hereof and of their respective interests in the Collateral in seven (7)business days' notice shall be deemed to be commercially reasonable.

	(l)	After a Default Date under the Bank Credit Agreement, eachSubordinated Lender will cooperate with the Senior Lender's efforts to collect,sell or otherwise dispose of the Collateral and shall provide to the SeniorLender, upon request, appropriate releases of their respective interests in theCollateral to permit such collection, sale or other disposition of theCollateral by the Senior Lender, free and clear of any Subordinated Lender'sinterest in the Collateral.

	(m)	For the limited purpose of perfection of the respective securityinterests of the Lenders in those types or items of Collateral in which asecurity interest may be perfected by possession, each Lender hereby appointsthe other as its agent for the limited purpose of possessing on its behalf anysuch Collateral that may come into the possession of such other Lender from timeto time, and each Lender agrees to act as the other's agent for such limitedpurpose of perfecting the other's security interest by possession through anagent, provided that neither Lender shall incur any liability to the otherLender by virtue of acting as the other's agent hereunder, and either Lender mayrelinquish possession of Collateral in its possession without the consent of theother Lender, and without incurring liability to the other Lender, unless thereis an express written agreement to the contrary in effect between theLenders.

	Section 5. 	Notices.

	Any and all notices required or permitted under this Agreement shall beeffective upon receipt (unless otherwise specified herein) and shall be given bytelecopy or courier to the following addresses unless such addresses are changedby notice given as provided herein.

If  to the Bank:

Bank One, NA-OH1-10091111 Polaris Parkway, #3JColumbus, OH  43240ATTENTION: Craig LarsonTelephone: (614) 248-7704Telefax: (614) 248-0156

With a copy to:

Arter & Hadden, LLP10 West Broad StreetColumbus, Ohio 43215ATTENTION: Yvette A. CoxTelephone: (614) 221-3155Telefax: (614) 221-0479

If to Larsen:

Christian Larsenc/o E-Loan, Inc.5875 Arnold Road, Suite 100Dublin, CA  94568Telephone: (925) 241-2400Telefax: (925) 803-3503

With a copy to:

Watson & Lanctot44 Montgomery Street, Suite 3585San Francisco, CA  94104Attention:  Lawrence LanctotTelephone: (415) 362-0900Telefax: (415) 362-2744

If to Schwab:

The Charles Schwab Corporation101 Montgomery StreetSan Francisco, CA  94104Attention: Christopher V. DoddsTelephone: (415) 636-5415Telefax: (415) 636-5877

With a Copy to:

Howard, Rice, Nemerovski, Canady, Falk & RabkinThree Embarcadero Center, Seventy FloorSan Francisco, CA  94111Attention:  Lawrence B. RabkinTelephone: (415) 434-1600Telefax: (415) 217-5910

	Section 6. 	No Third Party Beneficiary.

	The parties agree that this Agreement is solely for the benefit of theparties hereto and their successors and assigns, and not for the benefit of anythird party. Further, this Agreement does not create any joint venture betweenor among the parties.

	Section 7. 	Effective Date and Continuing Nature of theAgreement.

	This Agreement is executed and delivered to each party as of the date ofthe earlier of the Subordinated Obligations and shall be effective as of suchdate. Except to the extent specifically provided herein, this Agreement shallcontinue to be effective until the Senior Obligations have been fully andindefeasibly satisfied and the Senior Lender has no further commitment to makeloans to the Debtor under the Bank Credit Agreement.

	Section 8. 	No Contest of Security Interest.

	The parties agree that none of them will contest the security interest orlien of the other granted by the Debtor, or the perfection thereof, in anyproceeding or for any reason. This covenant shall be specifically enforceableagainst any party hereto.

	Section 9. 	Financial Information.

	Each party hereby assumes responsibility for keeping itself informed ofthe financial condition of the Debtor and of all other circumstances bearingupon risk of non-payment of any indebtedness that diligent inquiry would reveal.

	Section 10. 	Binding Effect.

	This Agreement shall be binding upon and inure to the benefit of thelegal representatives, successors and assigns of the respective parties hereto.This Agreement shall be applicable both before and after the filing of anypetition by or against the Debtor under the federal bankruptcy code, and allallocations of payments between the parties hereto shall continue to be madeafter the filing thereof on the same basis that payments were to be appliedprior to the date of filing the petition.

Section 11.	Dispute Resolution/Jury Waiver.

(a)	Each party to this Agreement hereby voluntarily,irrevocably and unconditionally waives any right to have a jury participate inresolving any dispute, whether sounding in contract, tort or otherwise, arisingout of, in connection with, related to, or incidental to this Agreement or thetransactions related hereto.  This provision is a material inducement to boththe Senior Lender and the Subordinated Lenders to enter into this Agreement.

(b)	This Agreement shall in all respects, be construedin accordance with and governed by the laws of the State of Ohio, without regardto provisions for conflicts of law; and, venue for any action arising of, inconnection, related to or incidental to this Agreement shall be in FranklinCounty, Ohio.

(c)	This Agreement constitutes the only agreement andunderstanding between the Senior Lender and the Subordinated Lenders andsupersedes any all prior agreements and understandings, oral or written,relating to the subject matter hereof.  Each party acknowledges that he or ithas not relied on any oral promises or representations from the other.  Nochange in the terms, modification or waiver of any provision of this Agreementshall be effective unless the same is in writing and signed by the Senior Lenderand the affected Subordinated Lender.  If the Senior Lender and one (but notboth) Subordinated Lender agree in a change in the term, amendment, modificationor waiver of a provision of this Agreement, such shall be effective as to theparties so agreeing and such shall not affect, limit or discharge the rights orthe obligations of any Subordinated Lender under this Agreement who or which maynot be a party to any such change in the terms, amendment, modification orwaiver of such provision of this Agreement.

	Section 12. 	General.

	The section titles contained in this Agreement are and shall be withoutsubstance or meaning or content of any kind whatsoever, and are not a part ofthe agreement between the parties. This Agreement contains the entire agreementbetween the parties with respect to the matters set forth herein and may not bealtered, modified or amended in any respect, nor may any right, power orprivilege of any party hereunder be waived, released or discharged except uponexecution by all parties of a written instrument so providing. If any provisionof this Agreement or the application thereof to any person or circumstances isheld invalid or unenforceable, the remainder of this Agreement will not beaffected thereby and such provision of this Agreement shall be severable in anysuch instance.  This Agreement may be executed in separate counterparts, each ofwhich shall be an original and all of which taken together shall constitute oneand the same instrument.  In the event of any dispute concerning the meaning orinterpretation of this Agreement that results in litigation, or in the event ofany litigation by a party to enforce the provisions hereof, each party shall beresponsible for its own attorneys' fees and disbursements, and any actual costsincurred.

 

	**In Witness Whereof**, the parties have caused this Agreementto be executed as of the day and year first above written.

 

 

 

 

[Balance of Page Intentionally Blank]

 

						BANK ONE, NA

 

 

						By:/s/ Craig M. Larson			
						Its:						
 

 

						/s/ Christian Larsen				
						**Christian Larsen**
 
**						THE CHARLES SCHWAB 

						CORPORATION**
						

						By: /s/ Christopher V. Dodds		
						Its: EVP, CFO				
 

 
**Acknowledgment and Consent

	E-Loan, Inc., a Delaware corporation, acknowledges that it has receivedand reviewed a copy of the foregoing Subordination and Intercreditor Agreementand hereby consents to the provisions of such agreement as it may be renewed,amended or otherwise modified by and between those parties; agrees to complywith its terms; and acknowledges that such agreement is a Loan Document asdefined in the Bank Credit Agreement.  

 

						**E-LOAN, INC.**
 

						By: /s/ Joseph J. Kennedy			
						Its: President andCOO			**