**Exhibit 10.6**

 

**SUBORDINATION AGREEMENT**

 

**THISSUBORDINATION AGREEMENT**(the “Subordination Agreement”) ismade, entered into and effective as of the 29th day of June, 2005, by and among(a) **WASHTENAW MORTGAGE COMPANY,**a Michigancorporation (the “Company”), (b) **CHARLESHUFFMAN, SR.**, an individual resident of Naples, Florida (the “Shareholder-Creditor”),and (c) **NATIONAL CITY BANK OF KENTUCKY**,in its capacity as Agent for the hereinafter defined Senior Banks (in suchcapacity, the “Agent”).

 

**P R E L I M I N A R Y   S T A T E M E N T :**

 

**A.**                                    TheCompany, the Agent and the Senior Banks have heretofore established a warehouseline of credit (the “Warehouse Line”) in the current, maximum principal amountof SEVENTY MILLION DOLLARS ($70,000,000.00) pursuant to that certain SecondAmended and Restated Warehousing Credit Agreement dated as of August 30,2004, by and among the Company, the Banks described therein (the “Senior Banks”)and the Agent, as the same has heretofore been and may hereafter be amended,modified and supplemented from time to time (the “Warehousing Credit Agreement”).

 

**B.****                                   **TheCompany intends to become indebted to the Shareholder-Creditor (the “SubordinateLoan”) in the amount and pursuant to the subordinate promissory note and otherdocuments, if any, described on **Exhibit A**attached hereto and made a part hereof by this reference (the “Subordinate LoanDocuments”).

 

**C.**                                    TheSenior Banks and the Agent have agreed to consent to the execution and deliveryof such Subordinate Loan Documents on the condition that, among other things,the Company and the Shareholder-Creditor agree to subordinate all obligationsowed by the Company to the Shareholder-Creditor under the Subordinate LoanDocuments and otherwise, all pursuant to the terms of this Subordination Agreement.

 

**NOW,THEREFORE,** for good and valuable consideration, the receiptand sufficiency of which is hereby acknowledged by the Company and theShareholder-Creditor, the parties hereto hereby agree as follows:

 

**1.****                                      Definitions. **The obligations of the Company of everykind whatsoever, including but not limited to debt, contract, lease, tort,royalty and other obligations, howsoever created, arising, or evidenced,whether direct or indirect, absolute or contingent, several, or joint andseveral, now in existence or at any time hereafter arising, createdor acquired, and due or to become due, and secured or unsecured, and theinterest and fees, if any, thereon, are hereinafter collectively referred to asthe “Liabilities.”  All Liabilities owedto the Senior Banks and/or the Agent arising under (i) the WarehousingCredit Agreement, (ii) that certain Amended and Restated WarehousePromissory Note dated as of March 14, 2005 made by the Company payable tothe order of National City Bank of Kentucky (“National City”) in the current,maximum principal amount of THIRTY-ONE MILLION FIVE HUNDRED THOUSAND DOLLARS($31,500,000.00) (the “National City Warehouse Note”), (iii) that certainAmended and Restated Warehouse Promissory Note dated as of March 14, 2005made by the Company payable to the order of Comerica Bank (“Comerica”) in thecurrent, maximum principal amount of TWENTY-FOUR MILLION FIVE HUNDRED THOUSANDDOLLARS ($24,500,000.00) (the “Comerica Warehouse Note”), (iv) thatcertain Amended and Restated Warehouse Promissory Note dated as of March 14,2005 made by the Company payable to the order of Colonial Bank, N.A. (“Colonial”)in the current, maximum principal amount of FOURTEEN MILLION DOLLARS($14,000.000.00) (the “Colonial Warehouse Note”), and (v) that certain Amendedand Restated Swing Promissory Note dated as of August 30, 2004 made by theCompany payable to the order of National City Bank of Kentucky, as Agent, inthe current, maximum principal amount of TWENTY MILLION DOLLARS($20,000.000.00) (the “Swing Note”) (the National City Warehouse Note, ComericaWarehouse Note,

 

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Colonial Warehouse Note and the Swing Note are collectively referred toherein as the “Senior Notes”), and any and all renewals, extensions,substitutions, modifications, replacements and consolidations of theWarehousing Credit Agreement, the Senior Notes and all other Loan Documents (asdescribed in the Warehousing Credit Agreement) related thereto (collectively,the “Senior Loan Documents”) are hereinafter called, together with any otherLiabilities hereafter arising to the Agent or the Senior Banks from theCompany, the “Senior Liabilities”; and the Liabilities owed to theShareholder-Creditor by the Company under the Subordinate Loan Documents, arehereinafter called the “Subordinate Liabilities”.  To the extent that the Company should at anytime incur Liabilities to the Shareholder-Creditor in addition to theSubordinate Liabilities set forth on **Exhibit A**,then, in that event, the term “Subordinate Liabilities” shall mean collectivelyall Liabilities now existing and hereafter arising to the Shareholder-Creditorfrom the Company including, but not limited to, the existing SubordinateLiabilities set forth on **Exhibit A**attached hereto; providing, however, the foregoing does not constitute aconsent by the Senior Banks to any such future indebtedness.

 

**2.****                                      PromissoryNotes.** The Shareholder-Creditorhereby grants the Agent, for the benefit of the Senior Banks a securityinterest in all instruments, payment intangibles, accounts, accounts receivableand/or other sums owed by the Company to the Shareholder-Creditor to securepayment of the Senior Liabilities; and the Shareholder-Creditor agrees toexecute and deliver (and hereby names the Agent, for the benefit of the SeniorBanks, as his irrevocable attorney-in-fact for such purpose) all financingstatements covering same in favor of the Agent, for the benefit of the SeniorBanks, as are reasonably requested by the Agent to evidence such assignment andsecurity interest and to pay all filing and recording fees and taxes inconnection therewith.

 

**3.****                                      Subordination.    **The Subordinate Liabilities and all of the liens, security interests,rights, remedies, terms, covenants and conditions of the Subordinate LoanDocuments (including without limitation, provisions relating to payments,prepayments, assignment of rents, rights with respect to insurance proceeds andcondemnation awards) shall at all times be and remain in all respectsirrevocably and unconditionally subject, subordinate and junior to the SeniorLiabilities and all liens, security interests, rights, remedies, terms,covenants and conditions of the Senior Loan Documents and to the rights andinterests of the Agent and the Senior Banks therein.  To and until the Senior Liabilities have beenpaid in full in cash and the Senior Loan Documents terminated and released, ifany provision of the Subordinate Loan Documents are inconsistent with theprovisions hereof or of any Senior Loan Documents, the terms and conditionshereof and/or of the Senior Loan Documents shall govern and control.  The parties hereto covenant and agree that,except as specifically set forth in the immediately succeeding sentence and on **Exhibit B** attached hereto and made a parthereof by this reference, thepayment of all Subordinate Liabilities shall be postponed, deferred andsubordinated to the prior payment in full in cash of all the SeniorLiabilities, and no payments of any kind, or other distributions whatsoever onaccount of any Subordinate Liabilities, shall be made, nor shall any propertyor assets of the Company or any guarantor of the Subordinate Liabilities beapplied to the payment, purchase, reduction, other acquisition or retirement ofany Subordinate Liabilities until payment in full in cash of all the SeniorLiabilities.  Notwithstanding theforegoing restriction and anything else contained herein to the contrary, theCompany may make any and all regularly scheduled payments of interest on theSubordinate Liabilities, so long as, but only so long as, the Company isthen in compliance with each of the conditions for payment set forth on **Exhibit B** and each of the otherterms of this Subordination Agreement.

 

**4.****                                      Applicationof Payments on Subordinate Liabilities in Insolvency and Other Proceedings.**  In the event of any dissolution, winding up,liquidation, readjustment, arrangement, composition, reorganization,bankruptcy, insolvency or other similar proceedings relating to the Company orany guarantor of the Company’s Liabilities or to the Company’s or its guarantor’sproperty (whether voluntary or involuntary, partial or complete, and whether inbankruptcy, insolvency or receivership, or any other proceeding, or upon anassignment for the benefit of creditors, or any other marshalling of the assetsand

 

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liabilities of the Company, or any sale(s) of all or substantially allof the assets of the Company, any of their guarantors or otherwise), the SeniorLiabilities shall first be paid in full in cash therefrom or in connectiontherewith before the Shareholder-Creditor shall be entitled to receive and/orto retain for its own account any payment or distribution in respect of theSubordinate Liabilities, and, in order to implement the foregoing:  (a) all payments and distributions ofany kind or character in respect of the Subordinate Liabilities, to which theShareholder-Creditor would be entitled had the Subordinate Liabilities not beensubordinated to the Senior Liabilities pursuant to this Subordination Agreement,shall be made directly to the Agent, for the benefit of the Senior Banks, to beapplied against the Senior Liabilities, and if made to the Shareholder-Creditorthe same shall be received by the Shareholder-Creditor in trust and asfiduciary for the Senior Banks and shall be immediately remitted by theShareholder-Creditor to the Agent; and (b) the Agent may, in the name ofthe Shareholder-Creditor or otherwise, obtain, demand, sue for, collect,receive, receipt for, compromise, settle, discount or adjust any and all suchpayments or distributions and file, prove and vote or consent in any suchproceedings, as the Shareholder-Creditor’s irrevocable attorney-in-fact withrespect to any and all claims of the Shareholder-Creditor relating to theSubordinate Liabilities, without any liability whatsoever to theShareholder-Creditor.

 

**5.****                                      Applicationof Other Payments on Subordinate Liabilities.**  In the event that the Shareholder-Creditorreceives any payment or other distribution of any kind or character from the Companyor from any other source whatsoever on account of any of the SubordinateLiabilities, other than as permitted herein and other than normal and customarysalary payments, expense reimbursement payments and dividends paid by theCompany in the ordinary course of business to all shareholders of the Company,then such payment or other distribution shall be received by theShareholder-Creditor in trust and as fiduciary for the Agent and promptlyturned over by the Shareholder-Creditor to the Agent to be applied against theSenior Liabilities.  Additionally, in theevent that an “Event of Default” or “Unmatured Event of Default” occurs underthe Warehousing Credit Agreement or any of the other Senior Loan Documents, anypayment or other distribution of any kind or character which theShareholder-Creditor has received from the Company or from any other sourcewhatsoever on account of any of the Subordinate Liabilities, as permittedherein, within the sixty (60) day period immediately preceding the occurrenceof such “Event of Default” or “Unmatured Event of Default,” shall be deemed tohave been received by the Shareholder-Creditor in trust and as fiduciary forthe Agent and promptly turned over by the Shareholder-Creditor to the Agent tobe applied against the Senior Liabilities. The Company and the Shareholder-Creditor shall mark their respectivebooks and records so as to indicate conspicuously that the SubordinateLiabilities are subordinated in accordance with the terms of this SubordinationAgreement, and shall cause to be conspicuously inserted in eachandevery promissory note or other instrument, on the face thereof, whichnow or at any time hereafter evidences any of the Subordinate Liabilities,immediately prior to the issuance or delivery thereof, the following statement:

 

“The payment andcollateralization of this note has been fully subordinated to the prior paymentand collateralization of the Senior Liabilities in accordance with the terms ofthat certain Subordination Agreement dated as of June 29, 2005 among theAgent defined therein, the hereinafter defined Payee and the hereinafterdefined Maker.”

 

The Shareholder-Creditorshall execute such further documents or instruments and take such furtheractions as the Agent may from time to time reasonably request to effectuate theintent of this Subordination Agreement.  Any payments or distributions made under or pursuant to **Sections 4 and 5** hereof with respect to the SubordinateLiabilities shall, to the extent actually received as “collected” and “goodfunds” by the Agent be applied toward the payment of the Senior Liabilities.

 

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**6.****                                      Modifications to Senior Loan Documents andSubordinate Loan Documents**. The Agent and the Senior Banks may, at any time and from time to time,without the consent of or notice to Shareholder-Creditor and without releasingthe covenants and agreements of Shareholder-Creditor hereunder (a) changethe amount of credit extended under, change the manner, place or terms of paymentof, or change or extend the time of payment of, or renew or alter the SeniorLoan Documents, (b) extend, modify or amend the Senior Loan Documents, (c) sell,exchange, release or otherwise deal with any of the property pledged to theAgent for the pro rata benefit of the Senior Banks as collateral under theSenior Loan Documents (the “Senior Collateral”), whether now existing orhereafter created, (d) release anyone liable in any manner for the paymentor collection of any of the Senior Liabilities, (e) exercise or refrainfrom exercising any rights against the Company, the Senior Collateral or anyother person, or (f) take or refrain from taking any other actionwhatsoever, except as otherwise provided herein.  The Shareholder-Creditor may, but only withthe prior written consent of the Agent and the Senior Banks, (a) changethe amount of credit extended under, change the manner, place or terms ofpayment of, or change or extend the time of payment of, or renew or alter theSubordinate Loan Documents, (b) extend, modify or amend the SubordinateLoan Documents, (c) sell, exchange, release or otherwise deal with any ofthe property pledged to the Shareholder-Creditor as collateral under theSubordinate Loan Documents (the “Subordinate Collateral”), whether now existingor hereafter created, (d) release anyone liable in any manner for thepayment or collection of any of the indebtedness owed by the Company to theShareholder-Creditor, (e) exercise or refrain from exercising any rightsagainst the Company, the Subordinate Collateral or any other person, or (f) takeor refrain from taking any other action whatsoever, except as otherwiseprovided herein.

 

**7.****                                      Cross-Default.** Without limiting **Section 9** hereof, the commencement ofany foreclosure proceeding, or the enforcement of any other remedy under the Subordinate Loan Documents by theShareholder-Creditor, shall constitute a default under the Senior LoanDocuments at the time of such commencement or enforcement.

 

**8.**                                      **Waivers by Shareholder-Creditor.**  Shareholder-Creditor hereby waives: (a) noticeof acceptance by Agent of this Subordination Agreement; (b) all diligenceby Agent in collection or protection of or realization upon the SeniorLiabilities or any collateral or other security therefore; (c) marshallingof assets of the Company, (d) any rights to force Agent to seek remediesagainst any guarantor of the Senior Liabilities or any other collateraltherefor prior to seeking enforcement of its rights under the Senior LoanDocuments, (e) all defenses, offsets, credits to or against the SeniorLoan Documents, and (f) all claims and counterclaims against Agent andSenior Banks.

 

**9.****                                      NegativeCovenants.**  TheShareholder-Creditor will not, without the prior, express written consent ofthe Agent:  (a) transfer or assign,or attempt to enforce, accelerate, declare to be due or collect, any of theSubordinate Liabilities or subordinate to any Liabilities other than the SeniorLiabilities; (b) take any collateral security for any SubordinateLiabilities; (c) convert any Subordinate Liabilities into stock of theCompany;  (d) commence, or join withany other creditor in commencing, any action or suit against the Company or anyof its assets or guarantors; or (e) commence, or join with any othercreditor in commencing, any bankruptcy, reorganization, receivership,arrangement, composition, insolvency or other proceedings of any kind relatingto relief for debtors or affecting creditors’ rights, with respect to theCompany or any of its assets or any guarantor of the Company’sLiabilities.  The parties heretoacknowledge and agree that the provisions of this **Section 9** shall not in any manner limit or restrict theShareholder-Creditor’s ability to act in his capacity as a director of theCompany.

 

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**10.****                               ContinuingAgreement.** This SubordinationAgreement shall in all respects be a continuing agreement and shall remain infull force and effect so long as any portion of the Senior Notes and any andall extensions, renewals, replacements, modifications, consolidations and thelike thereto, or any other Senior Liabilities and any and all expenses paid orincurred by the Agent or the Senior Banks in endeavoring to collect or torealize upon any of the foregoing or any security therefor, shall remainunpaid; and all of the agreements and obligations of the Company and theShareholder-Creditor under this Subordination Agreement shall, notwithstandingany notice of discontinuance from the Shareholder-Creditor, remain in fullforce and effect and be fully binding until all Senior Liabilities shall havebeen paid in full to the Agent in collected funds that are not subject torecovery or disgorgement by any trustee in bankruptcy or any other Person.

 

**11.****                               TheAgent’s Remedies.**  The Agent may,from time to time and at any time, without notice to or consent of any of theCompany and without impairing or affecting the rights of the Agent hereunder orany agreements or obligations of the Company hereunder, under the WarehousingCredit Agreement, or under any other SeniorLoan Document, take all or any of the following actions:  (a) retain or obtain a security interestin any property to secure any of the Senior Liabilities; (b) retain orobtain, and release and/or terminate, the primary or secondary liability of anyparty or parties with respect to any of the Senior Liabilities; (c) extendor renew for any period (whether or not longer than the original period),alter, replace or exchange any of the Senior Liabilities or release orcompromise any obligation of any nature of any party with respect thereto; (d) surrender,release or exchange all or any part of any property securing any of the SeniorLiabilities, or compromise or extend or renew for any period (whether or notlonger than the initial period) any or all the Senior Liabilities.

 

**12.****                               TheShareholder-Creditor’s Remedies. **TheShareholder-Creditor shall give the Agent, at the address listed in theWarehousing Credit Agreement, notice of (i) any default by the Companyunder the Subordinate Loan Documents at the time notice of such default isgiven to the Company, (ii) copies of each further notice to the Companyrelating to such default, and (iii) copies of each pleading and otherdocument filed in connection with any foreclosure action by or on behalf of, oragainst, the Shareholder-Creditor and involving the Company, any obligor, orany of the Subordinate Collateral.  Solong as the Senior Liabilities shall remain unpaid, the Shareholder-Creditorwill not exercise any remedies under the Subordinate Loan Documents, includingwithout limitation, commencing or maintaining, or joining with any creditor incommencing or maintaining, any suit, action, or proceeding against the Company,unless consented to in writing by the Agent and the Senior Banks.

 

**13.****                               Rightof Bank To File Proof Of Claim For Shareholder-Creditor**. In order toenable the Agent to enforce any claims by the Shareholder-Creditor against anyobligor in any liquidation or dissolution of such obligor, or any executionsale, receivership, insolvency, bankruptcy, liquidation, readjustment,reorganization, or other similar proceeding relating to any obligor or itsproperty or any Collateral, the Agent is hereby irrevocably authorized andempowered in its discretion to make and present, for and on behalf of theShareholder-Creditor, such proofs of claims against any obligor on account ofthe Subordinate Loan, or pursuant to the Subordinate Loan Documents, as theAgent may deem expedient or proper, and to vote such proofs of claims in anysuch proceeding and to receive and collect any and all dividends or otherpayments or disbursements made on such proofs of claims in whatever form suchpayments or disbursements may be paid or issued.  The Shareholder-Creditor further agrees toexecute and deliver to the Agent such assignments or other instruments as maybe required by the Agent in order to enable the Agent to enforce any and allsuch claims and to collect any and all such payments or disbursements.

 

**14.****                               Transferabilityof Senior Liabilities.**  The Agent,for the benefit of the Senior Banks, may, from time to time, and at any time,without notice to the Shareholder-Creditor or the Company, assign or

 

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transfer any or all of the Senior Liabilities or any interest thereinand security therefor; and, notwithstanding any such assignment or transfer orany subsequent assignment or transfer thereof, such Senior Liabilities shall beand remain Senior Liabilities for all purposes of this Subordination Agreement,and any assignee or transferee of the Senior Liabilities or of any interesttherein shall, to the pro rata extent of the interest of such assignee ortransferee in the Senior Liabilities, be entitled to the benefits of thisSubordination Agreement, together with the Agent and/or other holders of any ofthe Senior Liabilities, to the same extent as if such assignee or transfereewere the Agent, pro rata in accordance with the outstanding balance of all theSenior Liabilities among themselves.

 

**15.****                               NoWaiver. **The Agent and the SeniorBanks shall not be prejudiced in their rights under this SubordinationAgreement by any act or failure to act of the Agent or the Senior Banks, theCompany or the Shareholder-Creditor, or any noncompliance by the Agent or the SeniorBanks, the Company or the Shareholder-Creditor with any agreement orobligation, regardless of any knowledge thereof which the Agent or the SeniorBanks may have or with which the Agent or the Senior Banks may be charged.  No delay on the part of the Agent or theSenior Banks in the exercise of any right, privilege or remedy shall operate asa waiver thereof or of any other right; and no single or partial exercise bythe Agent or the Senior Banks of any right, privilege or remedy shall precludeother or further exercise thereof or the exercise of any other right, privilegeor remedy, all from time to time, and no delay on the part of the Agent or theSenior Banks in enforcing its rights under any instruments securing orpertaining to the Senior Liabilities or otherwise shall impair or otherwiseaffect or release the rights of the Agent or the Senior Banks hereunder or theobligations and agreements of the Company and/or the Shareholder-Creditorhereunder; and no amendments to or modifications of this SubordinationAgreement shall be valid, nor shall any waiver by the Agent of any of theirrights hereunder be deemed to be made, unless the same shall be in writing dulysigned on behalf of the Agent and the Senior Banks.

 

**16.****                               Interpretation.**  **THIS SUBORDINATIONAGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THECOMMONWEALTH OF KENTUCKY.  ** Wherever possible each provision of thisSubordination Agreement shall be interpreted in such manner as to be effectiveand valid under applicable law, and the invalidity of any provision hereof orunder any particular circumstance shall not invalidate the remainder of thisSubordination Agreement or the application of such provision under othercircumstances, and this Subordination Agreement shall remain valid andenforceable to the greatest extent permitted by applicable law.

 

**17.****                               Subordinationof Guarantees and Collateral.** The Shareholder-Creditor hereby expressly subordinates theShareholder-Creditor’s interest, if any, in all guarantees and collateralwhatsoever now or hereafter held by or pledged or assigned to it or in whichthe Shareholder-Creditor has been or hereafter is granted a security interestas security for the Subordinate Liabilities, to the guarantee(s), securityinterests therein or liens thereon that have been granted or that hereafter aregranted by any of the Company and/or its guarantors or other parties, to theAgent and the Senior Banks, to secure the Senior Liabilities even if not dulyor properly perfected.  The Shareholder-Creditorrepresents to the Agent and the Senior Banks that, except for the subordinatedsecurity interest in servicing rights expressly provided for in the SubordinateLoan Documents, the Shareholder-Creditor does not have any such security as ofthe date hereof and agrees not to accept any such security while thisSubordination Agreement remains in effect.

 

**18.****                               Notices.** All notices, elections, requests,demands and other communications (“Communications”) required or permitted to begiven hereunder shall be given in writing and shall be personally delivered orsent by telecopier, by express courier service or by registered or certifiedUnited States

 

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mail, return receipt requested, postage prepaid, addressed as follows(or to such other address as to which any party hereto shall have given theother written notice):

 
| If to the  Company:               |   | Washtenaw Mortgage  Company                                                     |
|-----------------------------------|--------|---------------------------------------------------------------------------------|
|                              |   | 3767 Ranchero Drive                                                             |
|                              |   | Ann Arbor, Michigan  48108                                                      |
|                              |   | Attn:                                                                           | Nathan Howard |
|                              |   |                                                                            | Controller and CFO |
|                              |   | Ph:                                                                             | (734) 662-9733 (x611) |
|                              |   | Fax:                                                                            | (734) 741-5663 |
|                              |   |                                                                            |
| If to the  Shareholder-Creditor : |   | Charles  Huffman, Sr.                                                      |
|                              |   | 263 9th  Avenue                                                                 |
|                              |   | Naples, Florida 34102                                                           |
|                              |   | Ph:                                                                             | (231) 537-4444 |
|                              |   | Fax:                                                                            |   |
|                              |   |                                                                            |
| If to the Agent:                  |   | At the telecopy number  or address specified on Exhibit C attached hereto. |
|                              |   |                                                                            |
|                              |   | cc:                                                                             | Jeffrey A. Hamilton, Esq. |
|                              |   |                                                                            | Reed Weitkamp  Schell & Vice PLLC |
|                              |   |                                                                            | 500 West Jefferson  Street, Suite 2400 |
|                              |   |                                                                            | Louisville, KY 40202 |
|                              |   |                                                                            | Ph: | (502) 589-1000 |
|                              |   |                                                                            | Fax: | (502) 562-2200 |
|                              |   |                                                                            |
| If to the other  Senior Banks:    |   | At the telecopy number  or address specified on Exhibit C attached hereto. |
|                                   |        |                                                                                 |  |  |  |

 

All notices hereundershall be deemed given upon the earliest of (a) actual delivery in personor by telecopier, (b) one (1) Business Day after delivery to anexpress courier service, or (c) three (3) Business Days after havingbeen deposited in the United States mails, in accordance with theforegoing.  Any notice of an Event ofDefault to the Company shall be sent by personal delivery, express courierservice or by registered or certified mail in accordance with this **Section 18**.

 

**19.****                               BindingAgreement. **This SubordinationAgreement shall be binding upon and shall inure to the benefit of the partieshereto, and their respective heirs, representatives, successors and assigns, exceptas otherwise provided herein.  TheCompany and the Shareholder-Creditor shall comply with all the terms andprovisions of this Subordination Agreement. All obligations hereunder or in connection herewith of the Company andthe Shareholder-Creditor shall be joint and several.

 

**20.****                               Counterparts. **This Subordination Agreement may beexecuted in several counterparts, any of which shall be treated for allpurposes as an original, and all of which shall be treated as one and the sameagreement.

 

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**21.****                               EntireAgreement. **This SubordinationAgreement constitutes the entire agreement of the parties pertaining to thesubject matter and supersedes all prior or contemporaneous agreements,undertakings, and understandings of the parties in connection with the subjectmatter hereof, other than the Warehousing Credit Agreement, the other SeniorLoan Documents, the Senior Notes and other instruments pertaining thereto orsecuring same.

 

**22.****                               Timeof Essence.**  Time shall be of theessence in the performance of all obligations and agreement of the Company andthe Shareholder-Creditor hereunder.

 

**23.****                               Waiverof Jury Trial.  THE COMPANY, THESHAREHOLDER-CREDITOR AND THE AGENT HEREBY AGREE TO WAIVE THEIR RESPECTIVERIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISINGOUT OF THIS SUBORDINATION AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BEALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURTTHAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUTLIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHERCOMMON LAW AND STATUTORY CLAIMS.  THECOMPANY, THE SHAREHOLDER-CREDITOR AND THE AGENT ACKNOWLEDGE THAT THIS WAIVER ISA MATERIAL INDUCEMENT FOR EACH SUCH PARTY TO ENTER INTO A BUSINESSRELATIONSHIP, THAT THE COMPANY, THE SHAREHOLDER-CREDITOR AND THE AGENT HAVEALREADY RELIED ON THE WAIVER IN ITS RELATED FUTURE DEALINGS WITH THEOTHER.  THE COMPANY, THE SHAREHOLDER-CREDITORAND THE AGENT FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVERWITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURYTRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOTBE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANYSUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THISSUBORDINATION AGREEMENT.   IN THE EVENTOF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIALBY THE COURT.**

 

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**INWITNESS WHEREOF**, the parties hereto have executed thisSubordination Agreement as of the day, month and year first above written.

 
|   | **WASHTENAW  MORTGAGE COMPANY**                |
|--------|------------------------------------------------|
|   |                                           |
|   |                                           |
|   | By:                                            |   |   |
|   |                                           |
|   | Title:                                         |   |   |
|   |                                           |
|   | (“Company”)                          |   |
|   |                                           |
|   |                                           |   |
|   | **CHARLES  HUFFMAN, SR.**                      |
|   |                                           |
|   | (“Shareholder-Creditor”)             |   |
|   |                                           |
|   |                                           |
|   | **NATIONAL  CITY BANK OF KENTUCKY**,           |
|   | In its capacity as  Agent for the Senior Banks |
|   |                                           |
|   | By:                                            |   |   |
|   |                                           |
|   | Title:                                         |   |   |
|   |                                           |   |   |
|   |                                           | (“Agent”) |   |
|        |                                                |  |  |  |  |

 

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**EXHIBIT A**

 

Description ofIndebtedness to Shareholder-Creditor; Form of Subordinate Promissory Note

 

Effective as of June 30,2005, the Company shall become indebted to the Shareholder-Creditor in theamount of One Million Dollars ($1,000,000.00) pursuant to the terms of thatcertain Subordinate Promissory Note dated as of June 30, 2005, made by theCompany payable to the order of the Shareholder-Creditor.  A form of the Subordinate Promissory Note isattached hereto as part of this **Exhibit A**.

 

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**EXHIBIT B**

 

Permitted Paymentson Subordinate Liabilities

 

The Company shall bepermitted to make scheduled payments on the Subordinate Liabilities so long asthe Company shall be in full compliance with each of the conditions set forthin this **Exhibit B** andeach of the other terms of this Subordination Agreement.  Payments on the Subordinate Liabilities shallonly be made by the Company from the proceeds of the sale of servicing by theCompany, such sale to be approved by the Agent and the Senior Banks as providedin the Warehousing Credit Agreement, and only after the occurrence of each ofthe following events: (i) all of the Servicing Advances under theWarehousing Credit Agreement have been repaid in full by the Company, (ii) the2004 tax refund which is due to the Company has been received by the Companyand immediately deposited by the Company into the Collateral Proceeds Accountunder the Warehousing Credit Agreement, and (iii) all pending interestpayments due and payable under the Senior Loan Documents and other SeniorLiabilities have been fully paid by the Company through such date.

 

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