Exhibit 10.6


 


SUBORDINATION AGREEMENT


 


THIS
SUBORDINATION AGREEMENT (the “Subordination Agreement”) is
made, entered into and effective as of the 29th day of June, 2005, by and among
(a) WASHTENAW MORTGAGE COMPANY, a Michigan
corporation (the “Company”), (b) CHARLES
HUFFMAN, 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 such
capacity, the “Agent”).


 


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


 


A.                                    The
Company, the Agent and the Senior Banks have heretofore established a warehouse
line of credit (the “Warehouse Line”) in the current, maximum principal amount
of SEVENTY MILLION DOLLARS ($70,000,000.00) pursuant to that certain Second
Amended 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.                                    The
Company intends to become indebted to the Shareholder-Creditor (the “Subordinate
Loan”) in the amount and pursuant to the subordinate promissory note and other
documents, if any, described on Exhibit A
attached hereto and made a part hereof by this reference (the “Subordinate Loan
Documents”).


 


C.                                    The
Senior Banks and the Agent have agreed to consent to the execution and delivery
of such Subordinate Loan Documents on the condition that, among other things,
the Company and the Shareholder-Creditor agree to subordinate all obligations
owed by the Company to the Shareholder-Creditor under the Subordinate Loan
Documents and otherwise, all pursuant to the terms of this Subordination Agreement.


 


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


 


1.                                      Definitions.  The obligations of the Company of every
kind 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 and
several, now in existence or at any time hereafter arising, created
or acquired, and due or to become due, and secured or unsecured, and the
interest and fees, if any, thereon, are hereinafter collectively referred to as
the “Liabilities.”  All Liabilities owed
to the Senior Banks and/or the Agent arising under (i) the Warehousing
Credit Agreement, (ii) that certain Amended and Restated Warehouse
Promissory Note dated as of March 14, 2005 made by the Company payable to
the 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 certain
Amended and Restated Warehouse Promissory Note dated as of March 14, 2005
made by the Company payable to the order of Comerica Bank (“Comerica”) in the
current, maximum principal amount of TWENTY-FOUR MILLION FIVE HUNDRED THOUSAND
DOLLARS ($24,500,000.00) (the “Comerica Warehouse Note”), (iv) that
certain 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 Amended
and Restated Swing Promissory Note dated as of August 30, 2004 made by the
Company payable to the order of National City Bank of Kentucky, as Agent, in
the current, maximum principal amount of TWENTY MILLION DOLLARS
($20,000.000.00) (the “Swing Note”) (the National City Warehouse Note, Comerica
Warehouse Note,


 





















 


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


 


2.                                      Promissory
Notes.  The Shareholder-Creditor
hereby grants the Agent, for the benefit of the Senior Banks a security
interest in all instruments, payment intangibles, accounts, accounts receivable
and/or other sums owed by the Company to the Shareholder-Creditor to secure
payment of the Senior Liabilities; and the Shareholder-Creditor agrees to
execute and deliver (and hereby names the Agent, for the benefit of the Senior
Banks, as his irrevocable attorney-in-fact for such purpose) all financing
statements covering same in favor of the Agent, for the benefit of the Senior
Banks, as are reasonably requested by the Agent to evidence such assignment and
security interest and to pay all filing and recording fees and taxes in
connection therewith.


 


3.                                      Subordination.     The Subordinate Liabilities and all of the liens, security interests,
rights, remedies, terms, covenants and conditions of the Subordinate Loan
Documents (including without limitation, provisions relating to payments,
prepayments, assignment of rents, rights with respect to insurance proceeds and
condemnation awards) shall at all times be and remain in all respects
irrevocably and unconditionally subject, subordinate and junior to the Senior
Liabilities and all liens, security interests, rights, remedies, terms,
covenants and conditions of the Senior Loan Documents and to the rights and
interests of the Agent and the Senior Banks therein.  To and until the Senior Liabilities have been
paid in full in cash and the Senior Loan Documents terminated and released, if
any provision of the Subordinate Loan Documents are inconsistent with the
provisions hereof or of any Senior Loan Documents, the terms and conditions
hereof 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 part
hereof by this reference, the
payment of all Subordinate Liabilities shall be postponed, deferred and
subordinated to the prior payment in full in cash of all the Senior
Liabilities, and no payments of any kind, or other distributions whatsoever on
account of any Subordinate Liabilities, shall be made, nor shall any property
or assets of the Company or any guarantor of the Subordinate Liabilities be
applied to the payment, purchase, reduction, other acquisition or retirement of
any Subordinate Liabilities until payment in full in cash of all the Senior
Liabilities.  Notwithstanding the
foregoing restriction and anything else contained herein to the contrary, the
Company may make any and all regularly scheduled payments of interest on the
Subordinate Liabilities, so long as, but only so long as, the Company is
then in compliance with each of the conditions for payment set forth on Exhibit B and each of the other
terms of this Subordination Agreement.


 


4.                                      Application
of 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 or
any guarantor of the Company’s Liabilities or to the Company’s or its guarantor’s
property (whether voluntary or involuntary, partial or complete, and whether in
bankruptcy, insolvency or receivership, or any other proceeding, or upon an
assignment for the benefit of creditors, or any other marshalling of the assets
and


 


2





















 


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


 


5.                                      Application
of Other Payments on Subordinate Liabilities.  In the event that the Shareholder-Creditor
receives any payment or other distribution of any kind or character from the Company
or from any other source whatsoever on account of any of the Subordinate
Liabilities, other than as permitted herein and other than normal and customary
salary payments, expense reimbursement payments and dividends paid by the
Company in the ordinary course of business to all shareholders of the Company,
then such payment or other distribution shall be received by the
Shareholder-Creditor in trust and as fiduciary for the Agent and promptly
turned over by the Shareholder-Creditor to the Agent to be applied against the
Senior Liabilities.  Additionally, in the
event that an “Event of Default” or “Unmatured Event of Default” occurs under
the Warehousing Credit Agreement or any of the other Senior Loan Documents, any
payment or other distribution of any kind or character which the
Shareholder-Creditor has received from the Company or from any other source
whatsoever on account of any of the Subordinate Liabilities, as permitted
herein, within the sixty (60) day period immediately preceding the occurrence
of such “Event of Default” or “Unmatured Event of Default,” shall be deemed to
have been received by the Shareholder-Creditor in trust and as fiduciary for
the Agent and promptly turned over by the Shareholder-Creditor to the Agent to
be applied against the Senior Liabilities. 
The Company and the Shareholder-Creditor shall mark their respective
books and records so as to indicate conspicuously that the Subordinate
Liabilities are subordinated in accordance with the terms of this Subordination
Agreement, and shall cause to be conspicuously inserted in each  and
every promissory note or other instrument, on the face thereof, which
now or at any time hereafter evidences any of the Subordinate Liabilities,
immediately prior to the issuance or delivery thereof, the following statement:


 


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


 


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


 


3





















 


6.                                      Modifications to Senior Loan Documents and
Subordinate 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 releasing
the covenants and agreements of Shareholder-Creditor hereunder (a) change
the amount of credit extended under, change the manner, place or terms of payment
of, or change or extend the time of payment of, or renew or alter the Senior
Loan Documents, (b) extend, modify or amend the Senior Loan Documents, (c) sell,
exchange, release or otherwise deal with any of the property pledged to the
Agent for the pro rata benefit of the Senior Banks as collateral under the
Senior Loan Documents (the “Senior Collateral”), whether now existing or
hereafter created, (d) release anyone liable in any manner for the payment
or collection of any of the Senior Liabilities, (e) exercise or refrain
from exercising any rights against the Company, the Senior Collateral or any
other person, or (f) take or refrain from taking any other action
whatsoever, except as otherwise provided herein.  The Shareholder-Creditor may, but only with
the prior written consent of the Agent and the Senior Banks, (a) change
the amount of credit extended under, change the manner, place or terms of
payment of, or change or extend the time of payment of, or renew or alter the
Subordinate Loan Documents, (b) extend, modify or amend the Subordinate
Loan Documents, (c) sell, exchange, release or otherwise deal with any of
the property pledged to the Shareholder-Creditor as collateral under the
Subordinate Loan Documents (the “Subordinate Collateral”), whether now existing
or hereafter created, (d) release anyone liable in any manner for the
payment or collection of any of the indebtedness owed by the Company to the
Shareholder-Creditor, (e) exercise or refrain from exercising any rights
against the Company, the Subordinate Collateral or any other person, or (f) take
or refrain from taking any other action whatsoever, except as otherwise
provided herein.


 


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


 


8.                                      Waivers by Shareholder-Creditor.  Shareholder-Creditor hereby waives: (a) notice
of acceptance by Agent of this Subordination Agreement; (b) all diligence
by Agent in collection or protection of or realization upon the Senior
Liabilities or any collateral or other security therefore; (c) marshalling
of assets of the Company, (d) any rights to force Agent to seek remedies
against any guarantor of the Senior Liabilities or any other collateral
therefor prior to seeking enforcement of its rights under the Senior Loan
Documents, (e) all defenses, offsets, credits to or against the Senior
Loan Documents, and (f) all claims and counterclaims against Agent and
Senior Banks.


 


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


 


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10.                               Continuing
Agreement.  This Subordination
Agreement shall in all respects be a continuing agreement and shall remain in
full force and effect so long as any portion of the Senior Notes and any and
all extensions, renewals, replacements, modifications, consolidations and the
like thereto, or any other Senior Liabilities and any and all expenses paid or
incurred by the Agent or the Senior Banks in endeavoring to collect or to
realize upon any of the foregoing or any security therefor, shall remain
unpaid; and all of the agreements and obligations of the Company and the
Shareholder-Creditor under this Subordination Agreement shall, notwithstanding
any notice of discontinuance from the Shareholder-Creditor, remain in full
force and effect and be fully binding until all Senior Liabilities shall have
been paid in full to the Agent in collected funds that are not subject to
recovery or disgorgement by any trustee in bankruptcy or any other Person.


 


11.                               The
Agent’s Remedies.  The Agent may,
from time to time and at any time, without notice to or consent of any of the
Company and without impairing or affecting the rights of the Agent hereunder or
any agreements or obligations of the Company hereunder, under the Warehousing
Credit Agreement, or under any other Senior
Loan Document, take all or any of the following actions:  (a) retain or obtain a security interest
in any property to secure any of the Senior Liabilities; (b) retain or
obtain, and release and/or terminate, the primary or secondary liability of any
party or parties with respect to any of the Senior Liabilities; (c) extend
or renew for any period (whether or not longer than the original period),
alter, replace or exchange any of the Senior Liabilities or release or
compromise 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 Senior
Liabilities, or compromise or extend or renew for any period (whether or not
longer than the initial period) any or all the Senior Liabilities.


 


12.                               The
Shareholder-Creditor’s Remedies.  The
Shareholder-Creditor shall give the Agent, at the address listed in the
Warehousing Credit Agreement, notice of (i) any default by the Company
under the Subordinate Loan Documents at the time notice of such default is
given to the Company, (ii) copies of each further notice to the Company
relating to such default, and (iii) copies of each pleading and other
document filed in connection with any foreclosure action by or on behalf of, or
against, the Shareholder-Creditor and involving the Company, any obligor, or
any of the Subordinate Collateral.  So
long as the Senior Liabilities shall remain unpaid, the Shareholder-Creditor
will not exercise any remedies under the Subordinate Loan Documents, including
without limitation, commencing or maintaining, or joining with any creditor in
commencing or maintaining, any suit, action, or proceeding against the Company,
unless consented to in writing by the Agent and the Senior Banks.


 


13.                               Right
of Bank To File Proof Of Claim For Shareholder-Creditor. In order to
enable the Agent to enforce any claims by the Shareholder-Creditor against any
obligor in any liquidation or dissolution of such obligor, or any execution
sale, receivership, insolvency, bankruptcy, liquidation, readjustment,
reorganization, or other similar proceeding relating to any obligor or its
property or any Collateral, the Agent is hereby irrevocably authorized and
empowered in its discretion to make and present, for and on behalf of the
Shareholder-Creditor, such proofs of claims against any obligor on account of
the Subordinate Loan, or pursuant to the Subordinate Loan Documents, as the
Agent may deem expedient or proper, and to vote such proofs of claims in any
such proceeding and to receive and collect any and all dividends or other
payments or disbursements made on such proofs of claims in whatever form such
payments or disbursements may be paid or issued.  The Shareholder-Creditor further agrees to
execute and deliver to the Agent such assignments or other instruments as may
be required by the Agent in order to enable the Agent to enforce any and all
such claims and to collect any and all such payments or disbursements.


 


14.                               Transferability
of 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


 


5





















 


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


 


15.                               No
Waiver.  The Agent and the Senior
Banks shall not be prejudiced in their rights under this Subordination
Agreement by any act or failure to act of the Agent or the Senior Banks, the
Company or the Shareholder-Creditor, or any noncompliance by the Agent or the Senior
Banks, the Company or the Shareholder-Creditor with any agreement or
obligation, regardless of any knowledge thereof which the Agent or the Senior
Banks may have or with which the Agent or the Senior Banks may be charged.  No delay on the part of the Agent or the
Senior Banks in the exercise of any right, privilege or remedy shall operate as
a waiver thereof or of any other right; and no single or partial exercise by
the Agent or the Senior Banks of any right, privilege or remedy shall preclude
other or further exercise thereof or the exercise of any other right, privilege
or remedy, all from time to time, and no delay on the part of the Agent or the
Senior Banks in enforcing its rights under any instruments securing or
pertaining to the Senior Liabilities or otherwise shall impair or otherwise
affect or release the rights of the Agent or the Senior Banks hereunder or the
obligations and agreements of the Company and/or the Shareholder-Creditor
hereunder; and no amendments to or modifications of this Subordination
Agreement shall be valid, nor shall any waiver by the Agent of any of their
rights hereunder be deemed to be made, unless the same shall be in writing duly
signed on behalf of the Agent and the Senior Banks.


 


16.                               Interpretation.  THIS SUBORDINATION
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
COMMONWEALTH OF KENTUCKY.    Wherever possible each provision of this
Subordination Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, and the invalidity of any provision hereof or
under any particular circumstance shall not invalidate the remainder of this
Subordination Agreement or the application of such provision under other
circumstances, and this Subordination Agreement shall remain valid and
enforceable to the greatest extent permitted by applicable law.


 


17.                               Subordination
of Guarantees and Collateral. 
The Shareholder-Creditor hereby expressly subordinates the
Shareholder-Creditor’s interest, if any, in all guarantees and collateral
whatsoever now or hereafter held by or pledged or assigned to it or in which
the Shareholder-Creditor has been or hereafter is granted a security interest
as security for the Subordinate Liabilities, to the guarantee(s), security
interests therein or liens thereon that have been granted or that hereafter are
granted by any of the Company and/or its guarantors or other parties, to the
Agent and the Senior Banks, to secure the Senior Liabilities even if not duly
or properly perfected.  The Shareholder-Creditor
represents to the Agent and the Senior Banks that, except for the subordinated
security interest in servicing rights expressly provided for in the Subordinate
Loan Documents, the Shareholder-Creditor does not have any such security as of
the date hereof and agrees not to accept any such security while this
Subordination Agreement remains in effect.


 


18.                               Notices.
 All notices, elections, requests,
demands and other communications (“Communications”) required or permitted to be
given hereunder shall be given in writing and shall be personally delivered or
sent by telecopier, by express courier service or by registered or certified
United 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 the
other 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 hereunder
shall be deemed given upon the earliest of (a) actual delivery in person
or by telecopier, (b) one (1) Business Day after delivery to an
express courier service, or (c) three (3) Business Days after having
been deposited in the United States mails, in accordance with the
foregoing.  Any notice of an Event of
Default to the Company shall be sent by personal delivery, express courier
service or by registered or certified mail in accordance with this Section 18.


 


19.                               Binding
Agreement.  This Subordination
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto, and their respective heirs, representatives, successors and assigns, except
as otherwise provided herein.  The
Company and the Shareholder-Creditor shall comply with all the terms and
provisions of this Subordination Agreement. 
All obligations hereunder or in connection herewith of the Company and
the Shareholder-Creditor shall be joint and several.


 


20.                               Counterparts.  This Subordination Agreement may be
executed in several counterparts, any of which shall be treated for all
purposes as an original, and all of which shall be treated as one and the same
agreement.


 


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21.                               Entire
Agreement.  This Subordination
Agreement constitutes the entire agreement of the parties pertaining to the
subject matter and supersedes all prior or contemporaneous agreements,
undertakings, and understandings of the parties in connection with the subject
matter hereof, other than the Warehousing Credit Agreement, the other Senior
Loan Documents, the Senior Notes and other instruments pertaining thereto or
securing same.


 


22.                               Time
of Essence.  Time shall be of the
essence in the performance of all obligations and agreement of the Company and
the Shareholder-Creditor hereunder.


 


23.                               Waiver
of Jury Trial.  THE COMPANY, THE
SHAREHOLDER-CREDITOR AND THE AGENT HEREBY AGREE TO WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS SUBORDINATION AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS.  THE
COMPANY, THE SHAREHOLDER-CREDITOR AND THE AGENT ACKNOWLEDGE THAT THIS WAIVER IS
A MATERIAL INDUCEMENT FOR EACH SUCH PARTY TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT THE COMPANY, THE SHAREHOLDER-CREDITOR AND THE AGENT HAVE
ALREADY RELIED ON THE WAIVER IN ITS RELATED FUTURE DEALINGS WITH THE
OTHER.  THE COMPANY, THE SHAREHOLDER-CREDITOR
AND THE AGENT FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT
BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
SUBORDINATION AGREEMENT.   IN THE EVENT
OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.


 


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IN
WITNESS WHEREOF, the parties hereto have executed this
Subordination 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 of
Indebtedness to Shareholder-Creditor; Form of Subordinate Promissory Note


 


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


 


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EXHIBIT B


 


Permitted Payments
on Subordinate Liabilities


 


The Company shall be
permitted to make scheduled payments on the Subordinate Liabilities so long as
the Company shall be in full compliance with each of the conditions set forth
in this Exhibit B and
each of the other terms of this Subordination Agreement.  Payments on the Subordinate Liabilities shall
only be made by the Company from the proceeds of the sale of servicing by the
Company, such sale to be approved by the Agent and the Senior Banks as provided
in the Warehousing Credit Agreement, and only after the occurrence of each of
the following events: (i) all of the Servicing Advances under the
Warehousing Credit Agreement have been repaid in full by the Company, (ii) the
2004 tax refund which is due to the Company has been received by the Company
and immediately deposited by the Company into the Collateral Proceeds Account
under the Warehousing Credit Agreement, and (iii) all pending interest
payments due and payable under the Senior Loan Documents and other Senior
Liabilities have been fully paid by the Company through such date.


 


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