Amendment to Credit Agreement



 EXHIBIT 10.1 
  
 

 
  
 12/05 AMENDMENT TO CREDIT
AGREEMENT 
 effective as of December 22, 2005 
  
 amending the 
 8/05 AMENDED AND RESTATED SENIOR SECURED 
 CREDIT AGREEMENT 
 dated as of August 1, 2005 
 by and among 
  
 HOMEBANC CORP. 
 and 
 HOMEBANC MORTGAGE CORPORATION 
  
 and 
  
 JPMORGAN CHASE BANK, N.A. 
 as Administrative Agent, Collateral Agent and a Lender, 
  
 and 
  
 the other Lender(s) parties
hereto 
  
 KEYBANK NATIONAL ASSOCIATION 
 as Syndication Agent 
  
 COMMERZBANK, A.G., NEW YORK BRANCH and GRAND CAYMAN BRANCH, 
 U.S. BANK
NATIONAL ASSOCIATION, 
 BNP PARIBAS 
 and 
 UNITED OVERSEAS BANK LIMITED, NEW YORK AGENCY 
 as Documentation Agents 
  
 J.P. MORGAN SECURITIES INC. 
 Sole
Bookrunner 
 and Lead Arranger 
  
 $500,000,000 Senior Secured Revolving Credit 
  
 

 







 Index of Defined Terms 
  

			
	 	  	Page


	 12/05 Amendment
	  	1
	 12/05 Amendment Effective Date
	  	1
	 2006 Capital Program
	  	2
	 8/05 Credit Agreement
	  	1
	 Adjusted Tangible Net Worth
	  	2
	 Agent
	  	1
	 Amendment
	  	1
	 Capital Trust Entity
	  	2
	 Companies
	  	1
	 Company
	  	1
	 Current Credit Agreement
	  	1
	 HC
	  	1
	 HMC
	  	1
	 JPMorgan
	  	1
	 Lenders
	  	1
	 Qualified Subordinated Debt
	  	4
	 Qualified Trust Preferred Securities
	  	2








 Table of Contents 
  

					
	 	 	 	  	Page


	 1
	 	DEFINITIONS	  	2
	 7
	 	COLLATERAL	  	4
	 8
	 	CONDITIONS PRECEDENT	  	5
	 9
	 	REPRESENTATIONS	  	5
	 11
	 	NEGATIVE COVENANTS	  	5
	 12
	 	DEFAULTS AND REMEDIES	  	6
	 16
	 	MISCELLANEOUS	  	7

  

 i 








 12/05 AMENDMENT TO CREDIT AGREEMENT 
  
 Preamble 
  
 This 12/05 Amendment to Credit Agreement (the “12/05 Amendment“ or, within itself only, this “Amendment“)
effective as of December 22, 2005 (the “12/05 Amendment Effective Date“) amending (for the second time) the 8/05 Amended and Restated Senior Secured Credit Agreement (the “8/05 Credit Agreement“
and as it may be supplemented, amended or restated, the “Current Credit Agreement“), executed as of August 1, 2005, among: 
  
 (i) HOMEBANC CORP., a Georgia corporation (“HC“), its wholly-owned subsidiary, HOMEBANC MORTGAGE CORPORATION, a Delaware
corporation (“HMC“; HC and HMC being sometimes referred to individually as a “Company“ and together as the “Companies“), each having its principal office at 2002 Summit
Boulevard, Suite 100, Atlanta, Georgia 30319; 
  
 (ii) JPMORGAN
CHASE BANK, N.A. (“JPMorgan“), a national banking association, acting herein as a Lender and agent and representative of the other Lenders (in that capacity JPMorgan is called the “Agent“); and

  
 (iii) such other Lenders as may from time to time be party to
this Agreement (together with JPMorgan as a lender, the “Lenders“). 
  
 Each of the parties hereto recites and provides as follows: 
  
 Recitals 
  
 The Companies
have asked the Lenders and the Agent to (i) allow HC or HMC to issue Qualified Trust Preferred Securities in an amount not to exceed $150,000,000, (ii) amend the Total Recourse Liabilities to Adjusted Tangible Net Worth Ratio to 8:1, and
(iii) clarify that proposed 2006 Capital Program does not trigger the change in the Total Liabilities to Adjusted Tangible Net Worth ratio until the increase in capital exceeds $50,000,000 in the aggregate prior to May 31, 2006, and the
Lenders and the Agent have agreed to do so on the terms and subject to the conditions of this Amendment. 
  
 All capitalized terms used in the 8/05 Credit Agreement and used but not defined differently in this Amendment have the same meanings here as there.

  
 The Sections of this Amendment are numbered to correspond with
the numbers of the Sections of the 8/05 Credit Agreement amended hereby and are accordingly often nonsequential. 
  
 If there is any conflict or inconsistency between (i) these recitals and the following agreements; (ii) any of the terms or provisions of any of
the other Facilities Papers and this Amendment; or (iii) any provision of this Amendment and any later supplement, amendment, restatement or replacement of it then in each case the latter shall govern and control. 







 Agreements 
  

In consideration of the premises, the mutual agreements stated below and other good and valuable consideration paid by each party to each other party
to this Amendment, the receipt and sufficiency of which each hereby acknowledges, the parties hereby agree as follows. 
  
 1 DEFINITIONS 
  
 1.1. Defined Terms. Effective from and after the 12/05 Amendment Effective Date: 
  
 A. The following new definitions are added to Section 1.2 of the Current Credit Agreement, in
alphabetical order (except where otherwise specified). 
  
 “12/05 Amendment” means the 12/05 Amendment to Credit Agreement effective as of December 22, 2005, amending this Agreement. 
  
 “12/05 Amendment Effective Date” means December 22, 2005, the effective date of
the 12/05 Amendment. 
  
 “2006 Capital
Program” means HC’s efforts to increase capital through the public sale or sales of additional equity during the 2006 calendar year. 
  
 “Capital Trust Entity” means HMB Capital Trust I and any other unconsolidated subsidiary of HC or HMC created
solely for the purpose of the issuance of trust preferred securities and whose common equity interests are solely held by HC or HMC, as applicable. 
  
 “Qualified Trust Preferred Securities” means trust preferred securities, including all junior subordinated
debentures and guaranties related to the issuance of such trust preferred securities, issued by a Capital Trust Entity, provided such issued securities, debentures and guaranties qualify as Qualified Subordinated Debt. 
  
 B. The following definition is amended to read as follows: 
  
 “Adjusted Tangible Net Worth“ means,
on any day: 
  
 A. for HC: 
  
 (a) the excess of the total assets over Total Liabilities of
HC on that day — including assets and liabilities of its wholly-owned subsidiaries — each being determined in accordance with GAAP consistent with the accounting principles applied in the preparation of the Financial Statements referred to
in Section 9.4; 
  
 less         (b) the value, if any, in excess of the lesser of (i) sixty-seven and one half percent (67.5%) of the Appraised Value of such capitalized 
  

 2 








 mortgage loan servicing rights or (ii) one percent (1%) of the aggregate principal balances of
the portfolio of Serviced Loans in respect of such capitalized mortgage loan servicing rights included in the Financial Statements referred to in Section 9.4 for capitalized mortgage loan servicing rights; 
  
 less        
(c) aggregate investments in nonconsolidated Subsidiaries and Affiliates included in the Financial Statements referred to in Section 9.4, other than any common equity interests issued by a Capital Trust Entity and held by
HC or HMC; 
  
 less         (d) net total advances to nonconsolidated Subsidiaries and Affiliates outstanding; 
  
 less         (e) goodwill and all other assets not supported by or representative of a
tangible asset, which intangible assets would be deemed by HUD to be unacceptable for the purpose of calculating adjusted net worth in accordance with HUD requirements in effect as of such day; 
  
 less        
(f) all accumulated other comprehensive income; 
  
 plus         (g) the amount of (negative) accumulated other comprehensive income that exceeds (negative) Ten Million Dollars ($10,000,000); 
  
 plus        
(h) Qualified Subordinated Debt; and 
  
 B. for HMC: 
  
 (i) the excess of
HMC’s total assets over Total Liabilities on that day — including assets and liabilities of its wholly-owned subsidiaries — each being determined in accordance with GAAP consistent with the accounting principles applied in the
preparation of the Financial Statements referred to in Section 9.4; 
  
 less         (ii) the value included in the Financial Statements referred to in
Section 9.4 for capitalized mortgage loan servicing rights; 
  
 less         (iii) aggregate investments in nonconsolidated Subsidiaries and
Affiliates included in the Financial Statements referred to in Section 9.4; 
  
 less         (iv) net total advances to nonconsolidated Subsidiaries and Affiliates
outstanding; 
  
 less         (v) goodwill and all other assets not supported by or representative of a tangible asset, which intangible assets would be deemed by HUD to be unacceptable for the purpose of
calculating adjusted net worth in accordance with HUD requirements in effect as of such day; 
  

 3 








 less         (vi) all accumulated
other comprehensive income; 
  
 plus         (vii) a value for the capitalized mortgage loan servicing rights excluded in clause (ii) above that is an amount equal to the lesser of (i) sixty-seven
and one-half percent (67.5%) of the value of such capitalized mortgage loan servicing rights as determined by the most recent appraisal thereof approved by the Agent and (ii) one percent (1%) of the unpaid principal balance of the
portfolio of Serviced Loans in respect of such capitalized mortgage loan servicing rights; and 
  
 plus         (viii) the amount of (negative) accumulated other comprehensive income
that exceeds (negative) Five Million Dollars ($5,000,000). 
  
 “Qualified Subordinated Debt“ means Debt (including all junior subordinated debentures and guaranties related to the issuance of trust preferred securities by any Capital Trust Entity) of the
Companies to any Person (i) the papers evidencing, securing, governing or otherwise related to which Debt impose covenants and conditions on the debtor under them that are no more restrictive or onerous than the covenants and conditions imposed
on the Companies by this Agreement, (ii) that is subordinated to the Obligations pursuant to a currently effective and irrevocable Subordination Agreement approved by the Agent and (iii) the principal of which is not due and payable until
ninety (90) days or more after the Maturity Date; provided, that inter-company Debt incurred pursuant to Section 11.4(f)(v) hereof shall be deemed not to be Qualified Subordinated Debt for all purposes hereunder. 

 
 C. Exhibit 12/05-E attached to this Amendment is hereby
substituted for Exhibit E to the 8/05 Credit Agreement. 
  
 7 COLLATERAL 
  
 The provisions of
Section 7.1 of the 8/05 Credit Agreement are not otherwise amended hereby. Cumulative of such existing provisions, as security for the payment of the Loan and for the payment and performance of all of the Obligations, each Company
hereby GRANTS to the Agent (as agent and representative of the Lenders) a first priority security interest in all of such Company’s present and future estate, right, title and interest in and to the Collateral, in addition to and cumulative of
the security interest in the Collateral granted to the Agent in the 8/05 Credit Agreement, and the parties hereby declare and confirm that all such security interests were and are granted to and held by the Agent (as agent and representative of the
Lenders.) 
  

 4 








 8 CONDITIONS PRECEDENT 
  
 Section 8 of the 8/05 Credit Agreement is further amended by adding the following new
Section 8.4 to the end of Section 8, viz.: 
  
 8.4 Borrowings After the 12/05 Amendment Effective Date. In addition to the conditions precedent stated in Sections 8.1,
8.2 and 8.3 above, the obligations of the Lenders to fund and the Agent to disburse any Advances under this Agreement after the 12/05 Amendment Effective Date are subject to the condition precedent that the Agent shall have
received: 
  
 (a) the 12/05 Amendment, duly
executed by each Company, the Agent and the Required Lenders; 
  
 (b) a certificate of each Company’s corporate secretary (i) as to the incumbency of the officers of such Company executing the 12/05 Amendment and all other Facilities Papers executed or to be executed by or
on behalf of such Company in connection with the 12/05 Amendment, (ii) as to the authenticity of their signatures (specimens of their signatures shall be included in such certificate or set forth on an exhibit attached to it, and the Agent and
the Lenders shall be entitled to rely on that certificate until such Company has furnished a new certificate to the Agent) and (iii) that there have been no amendments to the Company’s certificate of incorporation or bylaws since
September 30, 2005; and 
  
 (c) such other
documents, if any, as shall be specified by the Agent. 
  
 9
REPRESENTATIONS 
  
 Each Company hereby republishes its
warranties and representations made in the 8/05 Credit Agreement effective (except as to those specified to relate only to a specific date) as of the 12/05 Amendment Effective Date. 
  
 11 NEGATIVE COVENANTS 
  
 Sections 11.4(b), (c) and (f) are amended to henceforth read as follows: 
  
 11.4(b) HC’s Total Recourse Liabilities to Adjusted
Tangible Net Worth Ratio. Permit the ratio of: 
  
 (x) the Total Recourse Liabilities of HC and its Subsidiaries, on a consolidated basis; 
  
 to (y) the Adjusted Tangible Net Worth of HC and its Subsidiaries, on a consolidated basis; 
  
 to exceed 8.00:1.00 as of the end of any calendar month or any of HC’s
fiscal quarters or fiscal years. 
  

 5 








 11.4(c) HC’s Total Liabilities to Adjusted Tangible Net Worth Ratio. Permit
the ratio of: 
  
 (x) the Total Liabilities of HC
and its Subsidiaries minus Qualified Subordinated Debt, on a consolidated basis; 
  
 to (y) the Adjusted Tangible Net Worth of HC and its Subsidiaries, on a consolidated basis; 
  
 as of the end of any calendar month or any of HC’s fiscal quarters or
fiscal years to exceed as follows: 
  

			
	 On and after this Date

	  	the maximum
ratio is


	Effective Date	  	20.00:1.00
	November 30, 2005	  	25.00:1.00
	 The earlier of (i) the time the 2006 Capital Program exceeds $50,000,000 in the aggregate or (ii) May 31, 2006
	  	20.00:1.00

  
 11.4(f) Debt Limitation. Incur any Debt for borrowed money or for the deferred purchase price of property or services other than (i) Debt to the Lenders under this Agreement, (ii) Debt under warehousing, repurchase or other
mortgage-related asset agreements to finance the Companies’ inventory of Mortgage Loans and other mortgage-related assets, (iii) accounts payable incurred in the ordinary course of business with standard payment terms, (iv) Debt of up
to Twenty Million Dollars ($20,000,000) incurred in the ordinary course of business (for purposes of this provision, junior subordinated debt to support trust common securities issued by HC or HMC concurrently and in connection with the issuance of
junior subordinate debentures issued by HC or HMC shall be deemed debt incurred in the ordinary course of business); (v) Debt of one Company owed to the other Company, so long as such inter-company Debt is subordinated, in form acceptable to
the Agent, to the Debt under this Facility and (vi) Debt of up to One Hundred Fifty Million Dollars ($150,000,000) issued by HC or HMC to support the issuance of Qualified Trust Preferred Securities and related common securities by any and all
Capital Trust Entities. 
  
 12 DEFAULTS AND REMEDIES

  
 Section 12.1(b) is
amended to henceforth read as follows: 
  
 (b)
Failure of the Companies or any of their Subsidiaries to pay any other Debt when due, or any default in the payment when due of any principal or interest on any other Debt or in the payment when due of any contingent 
  

 6 








 obligation; or breach or default with respect to any other material term of any other debt or of any
promissory note, bond, loan agreement, reimbursement agreement, mortgage, indenture or other agreement relating thereto, if the effect of any such failure, default or breach referred to in this Section 12.1(b), is to cause, or to
permit the holder or holders of such obligation (or a trustee on behalf of such holder or holders) with or without notice, the passage of time or both, to cause debt of the Companies or any of their Subsidiaries in the aggregate amount of One
Million Dollars ($1,000,000) or more to become or be declared due before its stated maturity. 
  
 16 MISCELLANEOUS 
  
 Section 16.11 is amended to read as follows: 
  
 16.11 Notice Pursuant to Tex. Bus. & Comm. Code §26.02. THE 8/05 CREDIT AGREEMENT, AS AMENDED BY THE 9/05
AMENDMENT, THE 12/05 AMENDMENT AND THE OTHER FACILITIES PAPERS TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 
  
 (The remainder of this page is intentionally blank; signature pages follow.) 
  

 7 








 EXECUTED as of the 12/05 Amendment Effective Date. 
  

			
	 HOMEBANC CORP.

		
	 By:
	 	 /s/ James L. Krakau


	 Name:
	 	 James L. Krakau

	 Title:
	 	 Senior Vice President

	
	 HOMEBANC MORTGAGE CORPORATION

		
	 By:
	 	 /s/ James L. Krakau


	 Name:
	 	 James L. Krakau

	 Title:
	 	 Senior Vice President



  
 Unnumbered
counterpart signature page to 12/05 Amendment to 8/05 Amended and Restated 
 Senior Secured Credit Agreement among HomeBanc Corp.,
HomeBanc Mortgage Corporation, 
 JPMorgan Chase Bank, et al. 








			
	JPMORGAN CHASE BANK, N.A.
	as the Agent and as a Lender
		
	By:	 	 /s/ Michael W. Nicholson


	Name:	 	Michael W. Nicholson
	Title:	 	Senior Vice President


  
  
 Unnumbered counterpart signature page to 12/05 Amendment to 8/05 Amended and Restated 
 Senior Secured Credit Agreement among HomeBanc Corp., HomeBanc Mortgage Corporation, 
 JPMorgan Chase Bank, et al. 








			
	 COMMERZBANK AKTIENGESELLSCHAFT

	 NEW YORK AND GRAND CAYMAN BRANCHES
 as a Lender

		
	 By:
	 	 /s/ Gerard A. Araw


	 Name:
	 	 Gerard A. Araw

	 Title:
	 	 Assistant Treasurer

		
	 By:
	 	 /s/ Michael P. McCarthy


	 Name:
	 	 Michael P. McCarthy

	 Title:
	 	 Vice President



  
 Unnumbered
counterpart signature page to 12/05 Amendment to 8/05 Amended and Restated 
 Senior Secured Credit Agreement among HomeBanc Corp.,
HomeBanc Mortgage Corporation, 
 JPMorgan Chase Bank, et al. 
  
  








			
	KEYBANK NATIONAL ASSOCIATION,
	as a Lender
		
	By:	 	 /s/ Paul E. Henson


	Name:	 	Paul E. Henson
	Title:	 	Executive Vice President


  
 Unnumbered
counterpart signature page to 12/05 Amendment to 8/05 Amended and Restated 
 Senior Secured Credit Agreement among HomeBanc Corp.,
HomeBanc Mortgage Corporation, 
 JPMorgan Chase Bank, et al. 








			
	U.S. BANK NATIONAL ASSOCIATION,
	as a Lender
		
	By:	 	 /s/ William J. Umscheid


	Name:	 	William J. Umscheid
	Title:	 	Vice President


  
 Unnumbered
counterpart signature page to 12/05 Amendment to 8/05 Amended and Restated 
 Senior Secured Credit Agreement among HomeBanc Corp.,
HomeBanc Mortgage Corporation, 
 JPMorgan Chase Bank, et al. 








			
	BNP PARIBAS,
	as a Lender
		
	By:	 	 /s/ Barry K. Chung


	Name:	 	Barry K. Chung
	Title:	 	Vice President


  
 Unnumbered
counterpart signature page to 12/05 Amendment to 8/05 Amended and Restated 
 Senior Secured Credit Agreement among HomeBanc Corp.,
HomeBanc Mortgage Corporation, 
 JPMorgan Chase Bank, et al. 








			
	UNITED OVERSEAS BANK LIMITED
	 NEW YORK AGENCY,
 as a
Lender

		
	By:	 	 /s/ Wong, Kwong Yew


	Name:	 	Wong, Kwong Yew
	Title:	 	FVP & General Manager
		
	By:	 	 /s/ Philip Cheong


	Name:	 	Philip Cheong
	Title:	 	VP & Deputy General Manager


  
 Unnumbered
counterpart signature page to 12/05 Amendment to 8/05 Amended and Restated 
 Senior Secured Credit Agreement among HomeBanc Corp.,
HomeBanc Mortgage Corporation, 
 JPMorgan Chase Bank, et al. 








			
	FIRST COMMERCIAL BANK,
	 NEW YORK AGENCY,
 as a
Lender

		
	By:	 	 /s/ Bruce M.J.Ju


	Name:	 	Bruce M.J.Ju
	Title:	 	VP & GM


  
 Unnumbered
counterpart signature page to 12/05 Amendment to 8/05 Amended and Restated 
 Senior Secured Credit Agreement among HomeBanc Corp.,
HomeBanc Mortgage Corporation, 
 JPMorgan Chase Bank, et al. 








			
	 BANK HAPOALIM B.M.,

	 as a Lender

		
	 By:
	 	 /s/ James P. Surless


	 Name:
	 	 James P. Surless

	 Title:
	 	 Vice President

		
	 By:
	 	 /s/ Charles McLaughlin


	 Name:
	 	 Charles McLaughlin

	 Title:
	 	 Senior Vice President



  
 Exhibits 
  

			
	Exhibit 12/05-E	 	 -             Form of Officer’s Certificate


  
 Unnumbered
counterpart signature page to 12/05 Amendment to 8/05 Amended and Restated 
 Senior Secured Credit Agreement among HomeBanc Corp.,
HomeBanc Mortgage Corporation, 
 JPMorgan Chase Bank, et al. 







 EXHIBIT 12/05-E 
 TO 8/05 CREDIT AGREEMENT 
  
 Form of Officer’s Certificate with computations 
 to show compliance or non-compliance with 
 certain financial covenants 
  
 OFFICER’S CERTIFICATE 
  

			
	 AGENT:
	 	JPMORGAN CHASE BANK, N.A.
		
	 COMPANY:
	 	HOMEBANC CORPORATION (“HC”)
	
	 SUBJECT PERIOD:                        ended
            , 200    

		
	 DATE:
	 	                       ,
200    

  
 This certificate is
delivered to the Agent under the 8/05 Amended and Restated Senior Secured Credit Agreement dated as of August 1, 2005 (as supplemented, amended or restated from time to time, the “Current Credit Agreement”), among HC,
its Subsidiary, HomeBanc Mortgage Corporation, the Agent and the financial institutions now or hereafter parties thereto (the “Lenders”). Unless they are otherwise defined in this request, terms defined in the Current Credit
Agreement have the same meanings here as there. 
  
 The
undersigned officer of HC certifies to the Agent and the Lenders that on the date of this certificate that: 
  
 1. The undersigned is an incumbent officer of HC, holding the title stated below the undersigned’s signature below. 
  
 2. HC’s financial statements that are attached to this certificate were
prepared in accordance with GAAP (except that interim — i.e., other than annual — financial statements exclude notes to financial statements and statements of changes to stockholders’ equity and are subject to year-end
adjustments) and (subject to the aforesaid proviso as to interim financial statements) present fairly the financial position and results of operations of HC and its Subsidiaries, on a consolidated basis, as of
                         and for the (check, as applicable)  ̈ month  ̈ one,  ̈ two or  ̈ three quarter(s) of HC’s fiscal year, as the case may be,
ending on the last day of that period (the “Subject Period”). 
  
 3. The undersigned officer of HC supervised a review of the activities of HC and its Subsidiaries during the Subject Period in respect of the following matters and has determined the following: (a) to undersigned
officer’s best knowledge, except to the extent that (i) a 







 representation or warranty speaks to a specific date or (ii) the facts on which a representation or warranty is
based have changed by transactions or conditions contemplated or expressly permitted by the Facilities Papers, the representations and warranties of the Companies in Section 9 of the Current Credit Agreement are true and correct
in all material respects, other than for the changes, if any, described on the attached Annex A; (b) the Companies have complied with all of their obligations under the Facilities Papers, other than for the
deviations, if any, described on the attached Annex A; (c) no Event of Default has occurred that has not been declared by the Agent in writing to have been cured or waived, and no Default has occurred that has not been cured
before it became an Event of Default, other than those Events of Default and/or Defaults, if any, described on the attached Annex A (d) compliance by HC with certain financial covenants in Section 11 of
the Current Credit Agreement is accurately calculated on the attached Annex A. 
  

			
	 HOMEBANC CORP.

		
	 By:
	 	  


	 Name:
	 	  


	 Title:
	 	  











 ANNEX A TO OFFICER’S CERTIFICATE 
  
 1. Describe deviations from compliance with obligations, if any — clause 3(b) of attached Officer’s
Certificate — if none, so state: 
  
 2. Describe Defaults or
Events of Default, if any — clause 3(c) of attached Officer’s Certificate — if none, so state: 
  
 3. Calculate compliance with covenants in Section 11 — clause 3(d) of attached Officer’s Certificate:

  
 (a) Section 11.4(a). HC’s Adjusted
Tangible Net Worth as of              is $                     (the minimum
under Section 11.4(a) is $225,000,000 plus 85% of the net proceeds realized by HC from equity offerings after its initial public offering.) 
  

(b) Section 11.4(b). HC’s Total Recourse Liabilities to Adjusted Tangible Net Worth ratio as of
                 is             :1.00 (the limit under Section 11.4(b) is
8.0:1:00.) 
  
 (c) Section 11.4(c). HC’s
Total Liabilities minus Qualified Subordinated Debt to Adjusted Tangible Net Worth ratio as of                      is
            :1.00 (the limit under Section 11.4(c) is as follows:) 
  

			
	 On and after this Date

	  	 the maximum
 ratio is


	 Effective Date
	  	20.00:1.00
	 November 30, 2005
	  	25.00:1.00
	 The earlier of (i) the time the 2006 Capital Program exceeds $50,000,000 in the aggregate or (ii) May 31, 2006
	  	20.00:1.00








 (d) Section 11.4(d). HC’s Liquidity is
$                    . (The minimum under Section 11.4(d) is $35,000,000.) 
  
 (e) Section 11.4(e). HMC’s Adjusted Tangible Net
Worth as of                  is $                    
(the minimum under Section 11.4(e) is $10,000,000.) 
  
 (f) Section 11.4(f). HC and its Subsidiaries have not incurred any Debt other than (i) Debt to the Lenders under the Current Credit Agreement, (ii) Debt under warehousing, repurchase or other mortgage-related
asset agreements to finance the Companies’ inventory of Mortgage Loans and other mortgage-related assets, (iii) accounts payable incurred in the ordinary course of business with standard payment terms, (iv) Debt of up to Twenty
Million Dollars ($20,000,000) incurred in the ordinary course of business (for purposes of this provision, junior subordinated debt to support trust common securities issued by HC or HMC concurrently and in connection with the issuance of junior
subordinate debentures issued by HC or HMC shall be deemed debt incurred in the ordinary course of business), (v) Debt of one Company owed to the other Company, so long as such inter-company Debt is subordinated, in form acceptable to the
Agent, to the Debt under this Facility and (vi) Debt of up to One Hundred Fifty Million Dollars ($150,000,000) issued by HC or HMC to support the issuance of Qualified Trust Preferred Securities by any and all Capital Trust Entities.

  
 (g) Section 11.4(g). HC has not declared or
paid any dividend or made any distribution directly or indirectly to its shareholders when, or after the payment of which, (i) any Default or Event of Default described in Sections 12.1(a), 12.1(b), or non-payment of any fee
described in 12.1(c) exists or (ii) when any Default or Event of Default other than those described in Sections 12.1(a), 12.1(b), or non-payment of any fee described in 12.1(c) exists, except to the
extent necessary to avoid the loss of HC’s federal tax status as a real estate investment trust. 
  
 (h) Section 11.4(h). The Companies have not directly or indirectly made any advance to (or declined or deferred any payment due from)
any stockholder where at the time of or immediately after such action (x) the Companies’ Adjusted Tangible Net Worth was or would be less than the minimum specified in clause (d) above or (y) any Default or Event of
Default existed or would exist[, except for the aggregate sum of $                     advanced by HMC to HC which was necessary to enable HC
to fund payment of a dividend the nonpayment of which would result in the loss of HC’s federal tax status as a real estate investment trust]. 
  
 (a) Section 11.4(i). The percentage of the aggregate principal balances of all of the Companies’ Serviced Loans that are In
Default as of                  is                 % (the maximum permitted
under Section 11.4(i) is 5%.)