Exhibit 10.1


 


 


WAREHOUSING CREDIT AND SECURITY

AGREEMENT

(MANUFACTURED HOUSING)


 


 


BETWEEN


 


 


HOMEONE
CREDIT CORP.,


a
Delaware corporation


 


 


AND


 


 


RESIDENTIAL
FUNDING CORPORATION,

a Delaware corporation


 


Dated
as of September 3, 2004


 


 


© 2004
Residential Funding Corporation


 

















 


TABLE OF CONTENTS


 


	
  1.

  	
  THE
  CREDIT

  	
   

  
	
   

  	
  1.1.

  	
  The Warehousing Commitment

  	
   

  
	
   

  	
  1.2.

  	
  Expiration of Warehousing Commitment

  	
   

  
	
   

  	
  1.3.

  	
  Warehousing Note

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  PROCEDURES FOR OBTAINING ADVANCES

  	
   

  
	
   

  	
  2.1.

  	
  Warehousing Advances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  INTEREST, PRINCIPAL AND FEES

  	
   

  
	
   

  	
  3.1.

  	
  Interest

  	
   

  
	
   

  	
  3.2.

  	
  Interest Limitation

  	
   

  
	
   

  	
  3.3.

  	
  Principal Payments

  	
   

  
	
   

  	
  3.4.

  	
  Warehousing Commitment Fees

  	
   

  
	
   

  	
  3.5.

  	
  Warehousing Fees

  	
   

  
	
   

  	
  3.6.

  	
  Miscellaneous Fees and Charges

  	
   

  
	
   

  	
  3.7.

  	
  Overdraft Advances

  	
   

  
	
   

  	
  3.8.

  	
  Method of Making Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  COLLATERAL

  	
   

  
	
   

  	
  4.1.

  	
  Grant of Security Interest

  	
   

  
	
   

  	
  4.2.

  	
  Maintenance of Collateral Records

  	
   

  
	
   

  	
  4.3.

  	
  Release of Security Interest in Pledged
  Loans

  	
   

  
	
   

  	
  4.4.

  	
  Collection and Servicing Rights

  	
   

  
	
   

  	
  4.5.

  	
  Return of Collateral at End of Warehousing
  Commitment

  	
   

  
	
   

  	
  4.6.

  	
  Delivery of Collateral Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
  5.1.

  	
  Initial Advance

  	
   

  
	
   

  	
  5.2.

  	
  Each Advance

  	
   

  
	
   

  	
  5.3.

  	
  Force Majeure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  GENERAL REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
  6.1.

  	
  Place of Business

  	
   

  
	
   

  	
  6.2.

  	
  Organization; Good Standing; Subsidiaries

  	
   

  
	
   

  	
  6.3.

  	
  Authorization and Enforceability

  	
   

  
	
   

  	
  6.4.

  	
  Authorization and Enforceability of
  Guaranty

  	
   

  
	
   

  	
  6.5.

  	
  Approvals

  	
   

  
	
   

  	
  6.6.

  	
  Financial Condition

  	
   

  
	
   

  	
  6.7.

  	
  Litigation

  	
   

  
	
   

  	
  6.8.

  	
  Compliance with Laws

  	
   

  
	
   

  	
  6.9.

  	
  Regulation U

  	
   

  
	
   

  	
  6.10.

  	
  Investment Company Act

  	
   

  
	
   

  	
  6.11.

  	
  Payment of Taxes

  	
   

  
	
   

  	
  6.12.

  	
  Agreements

  	
   

  
	
   

  	
  6.13.

  	
  Title to Properties

  	
   

  
	
   

  	
  6.14.

  	
  ERISA

  	
   

  
	
   

  	
  6.15.

  	
  No Retiree Benefits

  	
   

  
	
   

  	
  6.16.

  	
  Assumed Names

  	
   

  
	
   

  	
  6.17.

  	
  Servicing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
  7.1.

  	
  Payment of Obligations

  	
   

  



 

















 


	
   

  	
  7.2.

  	
  Financial Statements

  	
   

  
	
   

  	
  7.3.

  	
  Other Borrower Reports

  	
   

  
	
   

  	
  7.4.

  	
  Maintenance of Existence; Conduct of
  Business

  	
   

  
	
   

  	
  7.5.

  	
  Compliance with Applicable Laws

  	
   

  
	
   

  	
  7.6.

  	
  Inspection of Properties and Books;
  Operational Reviews

  	
   

  
	
   

  	
  7.7.

  	
  Notice

  	
   

  
	
   

  	
  7.8.

  	
  Payment of Debt, Taxes and Other
  Obligations

  	
   

  
	
   

  	
  7.9.

  	
  Insurance

  	
   

  
	
   

  	
  7.10.

  	
  Subordination of Certain Indebtedness

  	
   

  
	
   

  	
  7.11.

  	
  Other Loan Obligations

  	
   

  
	
   

  	
  7.12.

  	
  ERISA

  	
   

  
	
   

  	
  7.13.

  	
  Use of Proceeds of Warehousing Advances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
  8.1.

  	
  Contingent Liabilities

  	
   

  
	
   

  	
  8.2.

  	
  Pledge of Servicing Contracts

  	
   

  
	
   

  	
  8.3.

  	
  Restrictions on Fundamental Changes

  	
   

  
	
   

  	
  8.4.

  	
  Subsidiaries

  	
   

  
	
   

  	
  8.5.

  	
  Deferral of Subordinated Debt

  	
   

  
	
   

  	
  8.6.

  	
  Loss of Eligibility

  	
   

  
	
   

  	
  8.7.

  	
  Accounting Changes

  	
   

  
	
   

  	
  8.8.

  	
  Leverage Ratio

  	
   

  
	
   

  	
  8.9.

  	
  Minimum Tangible Net Worth

  	
   

  
	
   

  	
  8.10.

  	
  Delinquent Loans

  	
   

  
	
   

  	
  8.11.

  	
  Minimum Liquid Assets

  	
   

  
	
   

  	
  8.12.

  	
  Distributions to Shareholders

  	
   

  
	
   

  	
  8.13.

  	
  Transactions with Affiliates

  	
   

  
	
   

  	
  8.14.

  	
  Recourse Servicing Contracts

  	
   

  
	
   

  	
  8.15.

  	
  Home Center Loan Servicing Incentive Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  SPECIAL REPRESENTATIONS, WARRANTIES AND
  COVENANTS CONCERNING COLLATERAL

  	
   

  
	
   

  	
  9.1.

  	
  Special Representations and Warranties
  Concerning Eligibility as Seller/Servicer of Loans

  	
   

  
	
   

  	
  9.2.

  	
  Special Representations and Warranties Concerning
  Warehousing Collateral

  	
   

  
	
   

  	
  9.3.

  	
  Special Representations and Warranties
  Concerning RICs

  	
   

  
	
   

  	
  9.4.

  	
  Special Representations and Warranties
  Concerning Home-Only Loans

  	
   

  
	
   

  	
  9.5.

  	
  Special Representations and Warranties
  Concerning Land/Home Loans

  	
   

  
	
   

  	
  9.6.

  	
  Special Affirmative Covenants Concerning
  Warehousing Collateral

  	
   

  
	
   

  	
  9.7.

  	
  Special Negative Covenants Concerning
  Warehousing Collateral

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  DEFAULTS; REMEDIES

  	
   

  
	
   

  	
  10.1.

  	
  Events
  of Default

  	
   

  
	
   

  	
  10.2.

  	
  Remedies

  	
   

  
	
   

  	
  10.3.

  	
  Application of Proceeds

  	
   

  
	
   

  	
  10.4.

  	
  Lender Appointed Attorney-in-Fact

  	
   

  
	
   

  	
  10.5.

  	
  Right of Set-Off

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
  11.1.

  	
  Notices

  	
   

  
	
   

  	
  11.2.

  	
  Reimbursement Of Expenses; Indemnity

  	
   

  
	
   

  	
  11.3.

  	
  Financial Information

  	
   

  



 

















 


	
   

  	
  11.4.

  	
  Terms Binding Upon Successors; Survival of
  Representations

  	
   

  
	
   

  	
  11.5.

  	
  Assignment

  	
   

  
	
   

  	
  11.6.

  	
  Amendments

  	
   

  
	
   

  	
  11.7.

  	
  Governing Law

  	
   

  
	
   

  	
  11.8.

  	
  Participations

  	
   

  
	
   

  	
  11.9.

  	
  Relationship of the Parties

  	
   

  
	
   

  	
  11.10.

  	
  Severability

  	
   

  
	
   

  	
  11.11.

  	
  Consent to Credit References

  	
   

  
	
   

  	
  11.12.

  	
  Counterparts

  	
   

  
	
   

  	
  11.13.

  	
  Headings/Captions

  	
   

  
	
   

  	
  11.14.

  	
  Entire Agreement

  	
   

  
	
   

  	
  11.15.

  	
  Consent to Jurisdiction

  	
   

  
	
   

  	
  11.16.

  	
  Waiver of Jury Trial

  	
   

  
	
   

  	
  11.17.

  	
  Waiver of Punitive, Consequential, Special or Indirect Damages

  	
   

  
	
   

  	
  11.18.

  	
  Termination Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  DEFINITIONS

  	
   

  
	
   

  	
  12.1.

  	
  Defined Terms

  	
   

  
	
   

  	
  12.2.

  	
  Other Definitional Provisions; Terms of
  Construction

  	
   

  



 

















 


EXHIBITS


 


	
  Exhibit A

  	
  Request for Advance

  
	
   

  	
   

  
	
  Exhibit B

  	
  Procedures and Documentation for Warehousing Loans

  
	
   

  	
   

  
	
  Exhibit C

  	
  Schedule of Servicing Portfolio

  
	
   

  	
   

  
	
  Exhibit D

  	
  Subsidiaries

  
	
   

  	
   

  
	
  Exhibit E

  	
  Compliance Certificate

  
	
   

  	
   

  
	
  Exhibit F

  	
  Lines of Credit

  
	
   

  	
   

  
	
  Exhibit G

  	
  Assumed Names

  
	
   

  	
   

  
	
  Exhibit H

  	
  Eligible Loans, Exception Loans and Other Assets

  
	
   

  	
   

  
	
  Exhibit I

  	
  Schedule of Miscellaneous Fees

  
	
   

  	
   

  
	
  Exhibit J

  	
  Form of Confidentiality Agreement

  



 

















 


WAREHOUSING CREDIT AND

SECURITY AGREEMENT

(MANUFACTURED HOUSING)


 


WAREHOUSING
CREDIT AND SECURITY AGREEMENT (MANUFACTURED HOUSING),
dated as of September 3, 2004 between HOMEONE CREDIT CORP., a Delaware
corporation (“Borrower”), and RESIDENTIAL FUNDING CORPORATION, a
Delaware corporation (“Lender”).


 


A.           Borrower has requested
certain financing from Lender.


 


B.             Lender has agreed to
provide that financing to Borrower, subject to the terms and conditions of this
Agreement.


 


C.             Subject to Borrower’s
satisfaction of the conditions set forth in Article 5, the “Closing Date”
for the transactions contemplated by this Agreement is the date set forth as
the Closing Date on the signature page to this Agreement.


 


NOW, THEREFORE, the parties to this Agreement agree as follows:


 


1.                                      THE
CREDIT


 


1.1.                            The
Warehousing Commitment


 


On the terms and subject to the conditions and limitations of this
Agreement, including Exhibit H, Lender agrees to make Warehousing
Advances to Borrower from the Closing Date to the Business Day immediately
preceding the Warehousing Maturity Date, during which period Borrower may
borrow, repay and reborrow in accordance with the provisions of this
Agreement.  Lender has no obligation to
make Warehousing Advances in excess of the Warehousing Commitment Amount.  While a Default or Event of Default exists,
Lender may refuse to make any additional Warehousing Advances to Borrower.  All Warehousing Advances under this
Agreement constitute a single indebtedness, and all of the Collateral is
security for the Warehousing Note and for the performance of all of the
Obligations.


 


1.2.                            Expiration of Warehousing Commitment


 


The Warehousing Commitment expires on the earlier of (“Warehousing
Maturity Date”):  (a) the earliest
of (i) 365 days from the Closing Date, (ii) the first Business Day that is 90
Business Days after either Borrower or Lender gives Notice to the other that it
does not intend to enter into a Shared Execution Manufactured Housing Loan
Purchase Agreement, or (iii) the Early Termination Date, in the case of (a)(i)
or (ii), as such date may be extended by Lender in its sole discretion, on
which date the Warehousing Commitment will expire without the necessity of
Notice or action by Lender, and (b) the date the Warehousing Commitment is
terminated and the Warehousing Advances become due and payable under
Section 10.2.


 


Notwithstanding the foregoing, in the event that Borrower and Lender
enter into a Shared Execution Manufactured Housing Loan Purchase Agreement
during the term of this Agreement, the Warehousing Maturity Date will be the
earlier of (x) the earlier of (i) 3 years from the Closing Date, or (ii) the
Early Termination Date, in the case of (x)(i), as such date may be extended by
Lender in its sole discretion, on which date the Warehousing Commitment will
expire without the


 


1

















 


necessity of Notice or action by Lender and (y) the date the Warehousing
Commitment is terminated and the Warehousing Advances become due and payable
under Section 10.2.


 


1.3.                            Warehousing Note


 


Warehousing Advances are evidenced by Borrower’s promissory note,
payable to Lender on the form prescribed by Lender (“Warehousing Note”).  The term “Warehousing Note” as used
in this Agreement includes all amendments, restatements, renewals or
replacements of the original Warehousing Note and all substitutions for
it.  All terms and provisions of the
Warehousing Note are incorporated into this Agreement.


 


 


End of Article 1


 


2

















 


2.                                      PROCEDURES FOR OBTAINING ADVANCES


 


2.1.                            Warehousing
Advances


 


To obtain a Warehousing Advance under this Agreement, Borrower must
deliver to Lender either a completed and signed request for a Warehousing
Advance on the then current form approved by Lender or an Electronic Advance
Request, together with a list of the Loans for which the request is being made
and a signed RFConnects Pledge Agreement sent by facsimile (“Warehousing
Advance Request”), not later than (a) in the case of Electronic Advance
Requests, 2:30 p.m. on the Business Day, and (b) in all other cases, 1 Business
Day before the Business Day, on which Borrower desires the Warehousing
Advance.  Subject to the delivery of a
Warehousing Advance Request and the satisfaction of the conditions set forth in
Sections 5.1 and 5.2, Borrower may obtain a Warehousing Advance under this
Agreement upon compliance with the procedures set forth in this Section and in
the applicable Exhibit B, including delivery to Lender of all
required Collateral Documents.  Lender’s
current form of Warehousing Advance Request is set forth in Exhibit A.  Lender may modify its form of Warehousing
Advance Request, RFConnects Pledge Agreement, Exhibit A and Exhibit B
to conform to current legal requirements upon not less than 3 Business Days’
prior Notice to Borrower, or Lender practices upon not less than 10 Business
Days’ prior Notice to Borrower, and, as so modified, those Exhibits and
documents will become part of this Agreement.


 


 


End of Article 2


 


3

















 


3.                                      INTEREST, PRINCIPAL AND FEES


 


3.1.                            Interest


 


3.1 (a)                Except as otherwise provided in this
Section, Borrower must pay interest on the unpaid amount of each Warehousing
Advance from the date the Warehousing Advance is made until it is paid in full
at the Interest Rate specified in Exhibit H.


 


3.1 (b)               Lender computes interest on the basis of
the actual number of days in each month and a year of 360 days.  Borrower must pay interest monthly (if any
interest has accrued), in arrears, not later than 9 days after receipt by
Borrower of Lender’s invoice, commencing with the first month following the Closing
Date and on the Warehousing Maturity Date.


 


3.1 (c)                If, for any reason, Borrower repays a
Warehousing Advance on the same day that it was made by Lender, Borrower agrees
to pay to Lender an administrative fee equal to 1 day of interest on that
Warehousing Advance at the Interest Rate that would otherwise be applicable
under Exhibit H.  Borrower must
pay all administrative fees not later than 9 days after receipt by Borrower of
Lender’s invoice.


 


3.1 (d)               So long as an Event of Default exists
under 10.1 (a)  and upon Notice to
Borrower by Lender, the unpaid amount of each Warehousing Advance will bear
interest at the Default Rate until paid in full.


 


3.1 (e)                Lender will adjust the rates of
interest provided for in this Agreement as of the effective date of each change
in the applicable index.  Lender’s
determination of such rates of interest as of any date of determination are
conclusive and binding, absent manifest error. 
The applicable indexes are LIBOR and the Bank One Rate.


 


3.2.                            Interest Limitation


 


Lender does not intend, by reason of this Agreement, the Warehousing
Note or any other Loan Document, to receive interest in excess of the amount
permitted by applicable law.  If Lender
receives any interest in excess of the amount permitted by applicable law,
whether by reason of acceleration of the maturity of this Agreement, the
Warehousing Note or otherwise, Lender will apply the excess to the unpaid
principal balance of the Warehousing Advances and not to the payment of
interest.  If all Warehousing Advances
have been paid in full and the Warehousing Commitment has expired or has been
terminated, Lender will remit any excess to Borrower.  This Section controls every other provision of all agreements
between Borrower and Lender and is binding upon and available to any subsequent
holder of the Warehousing Note.


 


3.3.                            Principal Payments


 


3.3 (a)                Borrower must pay Lender the
outstanding principal amount of all Warehousing Advances on the Warehousing
Maturity Date.


 


3.3 (b)               Except as otherwise provided in Section
3.1, Borrower may prepay any portion of the Warehousing Advances without
premium or penalty at any time.


 


3.3 (c)                Borrower must pay to Lender, without
the necessity of prior demand or Notice from Lender, and Borrower authorizes
Lender to cause the Funding Bank to charge Borrower’s Operating Account for,
the amount of any outstanding Warehousing Advance


 


4

















 


against a specific Pledged Loan upon the earliest occurrence of any of
the following events:


 


(1)                                  Ten (10) Business
Days elapse without the return of a Collateral Document delivered by Lender to
Borrower under a Trust Receipt for correction or completion.


 


(2)                                  Not more than one (1)
Business Day after (A) the date on which a Pledged Loan is determined to have
been originated based on untrue, incomplete or inaccurate information or
otherwise to be subject to fraud, whether or not Borrower had knowledge of the
misrepresentation, incomplete or incorrect information or fraud, or (B) the
date on which Borrower knows, or receives Notice from Lender, that (i) one or
more of the representations and warranties set forth in Article 9 were
inaccurate or incomplete in any material respect on any date when made or
deemed made or (ii) Borrower has failed to perform or comply with any covenant,
term or condition set forth in Article 9.


 


(3)                                  Not more than two (2)
Business Days after the date on which any scheduled payment on a Pledged Loan
is 60 days past due on the last Business Day of the month, regardless of
whether any applicable grace period has expired.


 


(4)                                  If the outstanding
Warehousing Advances against Pledged Loans of a specific type of Eligible Loan
exceed the aggregate Purchase Commitments for that type of Eligible Loan
(applies only if Purchase Commitment is required).


 


(5)                                  Upon the sale, other
disposition or prepayment (except for prepayments allowed under Section 3.3
(e)) of any Pledged Asset.


 


(6)                                  Five (5) Business
Days immediately preceding the date scheduled for the foreclosure or trustee
sale of the Manufactured Home or the premises securing a Pledged Loan.


 


(7)                                  Five (5) Business
Days after the commencement of any litigation or governmental proceeding that
alleges a violation of local, state or federal law governing the origination or
servicing of a Pledged Loan.


 


3.3 (d)               Upon e-mail, facsimile or written Notice
to Borrower by Lender, Borrower must pay to Lender, and Borrower authorizes
Lender to cause the Funding Bank to charge Borrower’s Operating Account for,
the amount of any outstanding Warehousing Advance against a specific Pledged
Loan upon the earliest occurrence of any of the following events:


 


(1)                                  For any Pledged Loan,
the Warehouse Period elapses.


 


(2)                                  (A) Forty-five (45)
days elapse from the date a Pledged Loan was delivered to an Investor or
Approved Custodian for examination and purchase, without the purchase being
made or such Pledged Loan being returned (if that Pledged Loan otherwise
continues to be an Eligible Loan and the original Warehouse Period has not
elapsed), or (B) upon rejection of a Pledged Loan as unsatisfactory by an Investor
or Approved Custodian, unless, in the case of a rejection of the Pledged Loan
under (B), Borrower pays to Lender an amount that will reduce the principal
amount of the Warehousing Advance outstanding against the Pledged Loan to an
amount equal to no more than 50% of the Fair Market Value of the Pledged Loan.


 


5

















 


(3)                                  With respect to any
Pledged Loan, any of the Collateral Documents, upon examination by Lender, are
found not to be in compliance with the requirements of this Agreement or the
related Purchase Commitment.


 


(4)                                  Three (3) Business
Days after the mandatory delivery date of the related Purchase Commitment if
the specific Pledged Loan has not been delivered under the Purchase Commitment
prior to such mandatory delivery date, or on the date the related Purchase
Commitment expires or is terminated, unless, in each case, the Pledged Loan is
eligible for delivery to another Investor under a comparable Purchase
Commitment.


 


(5)                                  Any of the following
occur: (A) the Manufactured Home (or, with respect to Land/Home Loans, the real
property) securing the Loan is materially damaged; (B) there is a
proceeding pending for the partial or total condemnation of the Manufactured
Home (or with respect to Land/Home Loans, the underlying real property); (C)
the Manufactured Home or any improvements to the real property violate any
applicable zoning law or regulation; (D) any inspection, license or certificate
required to be made or issued with respect to the real property, the
Manufactured Home or its use and occupancy, including certificates of occupancy
and fire underwriting certificates, have not been made or obtained, as
applicable, from the appropriate authorities; or (E) the Manufactured Home is
not lawfully occupied under applicable law.


 


(6)                                  One (1) Business Day
after receipt of email, facsimile or written Notice that after giving effect to
a Warehousing Advance, or after the application of a principal payment, any of
the limitations set forth in Exhibit H have been exceeded.


 


3.3 (e)                In addition to the payments required by
Sections 3.3 (a), 3.3 (c) and 3.3 (d), if the principal amount of any Pledged
Loan is prepaid in whole or in part (except for (A) regularly scheduled monthly
payments and (B) principal prepayments that in aggregate do not exceed $2,500)
while a Warehousing Advance is outstanding against the Pledged Loan, Borrower
must pay to Lender, without the necessity of prior demand or Notice from
Lender, and Borrower authorizes Lender to cause the Funding Bank to charge
Borrower’s Operating Account for, the amount of the prepayment, to be applied
against the Warehousing Advance.


 


3.3 (f)                  The proceeds of the sale or other
disposition of Pledged Loans must be paid directly by the Investor to the Cash
Collateral Account.  Borrower must give
Notice to Lender in writing, or by telephone or by RFConnects Delivery to
Lender (and if by telephone, followed promptly by written Notice) of the
Pledged Loans for which proceeds have been received.  Upon receipt of Borrower’s Notice, Lender will apply any proceeds
deposited into the Cash Collateral Account to the payment of the Warehousing
Advances related to the Pledged Loans identified by Borrower in its Notice, and
those Pledged Loans will be considered to have been redeemed from pledge.  Lender is entitled to rely upon Borrower’s
affirmation that deposits in the Cash Collateral Account represent payments
from Investors for the purchase of the Pledged Loans specified by Borrower in
its Notice.  If the payment from an Investor
for the purchase of Pledged Loans is less than the outstanding Warehousing
Advances against the Pledged Loans identified by Borrower in its Notice,
Borrower must pay to Lender an amount equal to the deficiency.  If Borrower fails to pay the deficiency
within one (1) Business Day, Borrower authorizes Lender to cause the Funding
Bank to charge Borrower’s Operating Account in an amount equal to that
deficiency.  As long as no Default or
Event of Default exists, Lender will return to Borrower any excess payment from
an Investor for Pledged Loans.


 


3.3 (g)               Lender reserves the right to revalue any
Pledged Loan, and intends to, but is not required to, revalue all Pledged Loans
on a regular basis.  Borrower must pay
to Lender, within 3


 


6

















 


Business Days after receipt of Lender’s e-mail, facsimile or written or
telephonic notice to Borrower, and Borrower authorizes Lender to cause the
Funding Bank to charge Borrower’s Operating Account for, any amount required
after any such revaluation to reduce the principal amount of the Warehousing
Advance outstanding against any revalued Pledged Loan to an amount equal to (i)
in the case of Eligible Loans, 90% of the Fair Market Value of the Loan and
(ii) in the case of Exception Loans, 50% of the Fair Market Value of the Loan.


 


3.3 (h)               Lender reserves the right to review each
Seasoned Loan.  If Lender chooses to
review a Seasoned Loan, Lender’s review will generally take place within 60
days from the date of the Warehousing Advance against the Seasoned Loan.  If Lender, at any time and in its sole
discretion, determines that the Seasoned Loan is not an Eligible Loan, but is
an Exception Loan, then Borrower must pay to Lender, within 3 Business Day
after receipt of Lender’s e-mail, facsimile or written or telephonic notice to
Borrower, and Borrower authorizes Lender to cause the Funding Bank to charge
Borrower’s Operating Account for, any amount required to reduce the principal
amount of the Warehousing Advance outstanding against the Seasoned Loan to an
amount equal to the applicable Warehousing Advance Rate for Exception Loans set
out on Exhibit H.  If Lender, at
any time and in its sole discretion, determines that a Seasoned Loan is neither
an Eligible Loan nor an Exception Loan, then Borrower must pay to Lender,
within 3 Business Day after receipt of Lender’s e-mail, facsimile or written or
telephonic notice to Borrower, and Borrower authorizes Lender to cause the
Funding Bank to charge Borrower’s Operating Account for, the amount of any
outstanding Warehousing Advance against that Seasoned Loan.


 


3.4.                            Warehousing
Commitment Fees


 


Borrower must pay Lender the warehousing commitment fees (each a “Warehousing
Commitment Fee”) described in Exhibit I.  Except as otherwise set forth in Exhibit
I, each Warehousing Commitment Fee is payable annually in advance.  Borrower is not entitled to a reduction in
the amount of the Warehousing Commitment Fee if (a) the Warehousing
Commitment Amount is reduced or (b) the Warehousing Commitment is terminated,
in each case at the request of Borrower (including a request under paragraph
11.5) or as a result of an Event of Default. 
Lender’s determination of the Warehousing Commitment Fee for any period
is conclusive and binding, absent manifest error.  If this Agreement is terminated by either party for any reason,
Borrower is not obligated to pay Lender any Warehousing Commitment Fee after
the termination date.


 


3.5.                            Warehousing Fees


 


At the time of each Warehousing Advance against a Loan, Borrower must
pay a warehousing fee (“Warehousing Fee”), in each case, in the amount
set forth in Exhibit I.  Such
Warehousing Fees must be paid not later than 9 days after receipt by Borrower
of the related invoice from Lender.


 


3.6.                            Miscellaneous
Fees and Charges


 


Borrower must reimburse Lender for all Miscellaneous Fees and
Charges.  Borrower must pay all
Miscellaneous Fees and Charges not later than 9 days after receipt by Borrower
of the related invoice from Lender.


 


7

















 


3.7.                            Overdraft Advances


 


If, under the authorization given by Borrower in the Funding Bank
Agreement or pursuant to this Agreement, Lender debits Borrower’s Operating
Account or directs the Funding Bank to honor an item presented against the
Operating Account, and that debit or direction results in an overdraft, Lender
may make an additional Warehousing Advance to fund that overdraft (“Overdraft
Advance”).  Borrower must pay (a)
the outstanding amount of any Overdraft Advance within 1 Business Day after the
date of the Overdraft Advance and (b) interest on the amount of the Overdraft
Advance, at a rate per annum equal to the Bank One Prime Rate plus 2%,
not later than 9 days after receipt by Borrower of the related invoice from
Lender.


 


3.8.                            Method
of Making Payments


 


3.8 (a)                Unless otherwise specified in this
Agreement, Borrower must make all payments under this Agreement to Lender by
the close of business on the date when due unless the date is not a Business
Day.  If the due date is not a Business
Day, payment is due on, and interest will accrue to, the next Business
Day.  Borrower must make all payments in
United States dollars in immediately available funds transferred by wire
transfer to accounts designated by Lender.


 


3.8 (b)               Borrower authorizes Lender to cause the
Funding Bank to charge Borrower’s Operating Account for any interest or fees
due and payable to Lender within 9 days after receipt by Borrower of the
related invoice from Lender without the necessity of prior demand or Notice
from Lender.


 


3.8 (c)                While a Default or Event of Default
exists, Borrower authorizes Lender to cause the Funding Bank to charge
Borrower’s Operating Account for any Obligations due and payable to Lender,
without the necessity of prior demand or Notice from Lender.


 


 


End of Article 3


 


8

















 


4.                                      COLLATERAL


 


4.1.                            Grant
of Security Interest


 


As security for the payment of the Warehousing Note and for the
performance of all of Borrower’s Obligations, Borrower grants a security interest
to Lender in all of Borrower’s right, title and interest in and to the
following described property whether now owned or whether acquired or arising
after the date of this Agreement (“Collateral”):


 


4.1 (a)                All amounts advanced by Lender to or
for the account of Borrower under this Agreement to fund a Loan until that Loan
is closed and those funds disbursed.


 


4.1 (b)               All Loans, including all Notes,
Mortgages and Security Agreements evidencing or securing those Loans, and all
related titles, title applications, UCC-1s, UCC-1Ads and title surrender
certificates, that are delivered or caused to be delivered to Lender (including
delivery to a third party on behalf of Lender), or that otherwise come into the
possession, custody or control of Lender (including the possession, custody or
control of a third party on behalf of Lender) for the purpose of pledge or in
respect of which Lender has made Warehousing Advances under this Agreement  (collectively,
“Pledged Loans”).


 


4.1 (c)                All private mortgage insurance and all
commitments issued by the VA or FHA to insure or guarantee any Loans included
in the Pledged Loans; all Purchase Commitments held by Borrower to the extent
they cover Pledged Loans, and all proceeds from the sale of Pledged Loans to
Investors pursuant to those Purchase Commitments; and all personal property,
contract rights, servicing rights or contracts and servicing fees and income or
other proceeds, amounts and payments payable to Borrower as compensation or
reimbursement, accounts, payments, intangibles and general intangibles of every
kind relating to Pledged Loans, Purchase Commitments, VA commitments or
guaranties, FHA commitments and private mortgage insurance and commitments, and
all other documents or instruments relating to Pledged Loans, including any
interest of Borrower in any fire, casualty or hazard insurance policies and any
awards made by any public body or decreed by any court of competent
jurisdiction for a taking or for degradation of value in any eminent domain
proceeding as the same relate to Pledged Loans.


 


4.1 (d)               The Aggregate Payment Obligation and all
rights of Borrower (including rights to payment) arising under any Shared
Execution Manufactured Housing Loan Purchase Agreement, or otherwise relating
to the Aggregate Payment Obligation or any other Loans sold by Borrower to
Lender or any Affiliate of Lender.


 


4.1 (e)                All escrow accounts, documents,
instruments, files, surveys, certificates, correspondence, appraisals, computer
programs, tapes, discs, cards, accounting records (including all information,
records, tapes, data, programs, discs and cards necessary or helpful in the
administration or servicing of the Collateral) and other information and data
of Borrower relating to the Collateral.


 


4.1 (f)                  All cash, whether now existing or
acquired after the date of this Agreement, delivered to or otherwise in the
possession of Lender, the Funding Bank or Lender’s agent, bailee or custodian
or designated on the books and records of Borrower as assigned and pledged to
Lender, including all cash deposited in the Cash Collateral Account and the
Wire Disbursement Account.


 


9

















 


4.1 (g)               All Hedging Arrangements related to the
Pledged Loans (“Pledged Hedging Arrangements”) and Borrower’s accounts
in which those Hedging Arrangements are held (“Pledged Hedging Accounts”),
including all rights to payment arising under the Pledged Hedging Arrangements
and the Pledged Hedging Accounts, except that Lender’s security interest in the
Pledged Hedging Arrangements and Pledged Hedging Accounts applies only to
benefits, including rights to payment, related to the Pledged Loans.


 


4.1 (h)               All cash and non-cash proceeds of the
Collateral, including all dividends, distributions and other rights in
connection with, and all additions to, modifications of and replacements for,
the Collateral, and all products and proceeds of the Collateral, together with
whatever is receivable or received when the Collateral or proceeds of
Collateral are sold, collected, exchanged or otherwise disposed of, whether
such disposition is voluntary or involuntary, including all rights to payment
with respect to any cause of action affecting or relating to the Collateral or
proceeds of Collateral.


 


4.1 (i)                   All rights under any Retailer
Agreement with respect to the Pledged Loans.


 


4.2.                            Maintenance
of Collateral Records


 


As long as the Warehousing Commitment is outstanding or there remain
any Obligations to be paid or performed under this Agreement or under any other
Loan Document, Borrower must use commercially reasonable efforts to preserve
and maintain, at its chief executive office and principal place of business or
in a regional office approved by Lender, or in the office of a computer service
bureau engaged by Borrower and approved by Lender and, upon request, make
available to Lender the originals, or copies in any case where the originals
have been delivered to Lender or to an Investor, of the Notes, Mortgages and
Security Agreements included in Pledged Loans, and all related titles, title
applications, UCC-1s, UCC-1Ads and title surrender certificates, Purchase
Commitments, and all related Loan documents and instruments, and all files,
surveys, certificates, correspondence, appraisals, computer programs, tapes,
discs, cards, accounting records and other information and data relating to the
Collateral.


 


4.3.                            Release of Security Interest in Pledged Loans


 


4.3 (a)                Lender will promptly release its
security interest in the Pledged Loans only against payment to Lender of the
Release Amount in connection with those Pledged Loans.


 


4.3 (b)               If no Default or Event of Default
occurs, Borrower may redeem a Pledged Loan from Lender’s security interest by
notifying Lender of its intention to redeem the Pledged Loan from pledge and
either (1) paying, or causing an Investor to pay, to Lender, for
application as a prepayment on the principal balance of the Warehousing Note,
the Release Amount in connection with the Pledged Loan, or (2) delivering
substitute Collateral that, in addition to being acceptable to Lender in its
sole discretion, will, when included with the remaining Collateral result in a
Warehousing Collateral Value of all Collateral held by Lender that is at least
equal to the aggregate outstanding Warehousing Advances.


 


4.3 (c)                After a Default or Event of Default
occurs, Lender may, with no liability to Borrower or any Person, continue to
release its security interest in any Pledged Loan against payment of the
Release Amount for that Pledged Loan.


 


10

















 


4.3 (d)               The amount to be paid by Borrower to
obtain the release of Lender’s security interest in a Pledged Loan (“Release
Amount”) will be (1) in connection with the sale of a Pledged Loan by
Borrower, the payment required in any bailee letter pursuant to which Lender
ships that Pledged Loan to an Investor, Approved Custodian or other party, (2)
in connection with the sale of a Pledged Loan by Lender while an Event of
Default exists, the amount paid to Lender in a commercially reasonable disposition
of that Pledged Loan and (3) otherwise, until an Event of Default occurs, the
principal amount of the Warehousing Advance outstanding against the Pledged
Loan.


 


4.4.                            Collection
and Servicing Rights


 


4.4 (a)                If no Event of Default exists, Borrower
may service and receive and collect directly all sums payable to Borrower in
respect of the Collateral other than proceeds of any Purchase Commitment or
proceeds of the sale of any Collateral. 
All proceeds of any Purchase Commitment or any other sale of Collateral
must be paid directly to the Cash Collateral Account for application as
provided in this Agreement.


 


4.4 (b)               If an Event of Default exists, Lender or
its designee is entitled to service and receive and collect all sums payable to
Borrower in respect of the Collateral, and in such case (1) Lender or its
designee in its discretion may, in its own name, in the name of Borrower or
otherwise, demand, sue for, collect or receive any money or property at any
time payable or receivable on account of or in exchange for any of the
Collateral, but Lender has no obligation to do so, (2) Borrower must, if
Lender requests it to do so, hold in trust for the benefit of Lender and
immediately pay to Lender at its office designated by Notice, all amounts
received by Borrower upon or in respect of any of the Collateral, advising
Lender as to the source of those funds and (3) all amounts so received and
collected by Lender will be held by it as part of the Collateral.


 


4.5.                            Return of Collateral at End of Warehousing Commitment


 


If (a) the Warehousing Commitment has expired or been terminated,
and (b) no Warehousing Advances, interest or other Obligations are
outstanding and unpaid, Lender will release its security interest and will
deliver all Collateral in its possession to Borrower at Borrower’s
expense.  Borrower’s acknowledgement or
receipt for any Collateral released or delivered to Borrower under any
provision of this Agreement is a complete and full acquittance for the Collateral
so returned, and Lender is discharged from any liability or responsibility for
that Collateral.


 


4.6.                            Delivery
of Collateral Documents


 


4.6 (a)                Lender may deliver documents relating
to the Collateral to Borrower for correction or completion under a Trust
Receipt.


 


4.6 (b)               If no Event of Default exists, upon
delivery by Borrower to Lender of shipping instructions pursuant to the
applicable Exhibit B, Lender will deliver the Notes evidencing
Pledged Loans together with all related loan documents and pool documents
previously received by Lender under the requirements of the applicable Exhibit
B, to the designated Investor or Approved Custodian or to another party
designated by Borrower and acceptable to Lender in its sole discretion.


 


11

















 


4.6 (c)                If an Event of Default exists, Lender
may, without liability to Borrower or any other Person, continue to deliver
Pledged Loans, together with all related loan documents and pool documents in
Lender’s possession, to the applicable Investor or Approved Custodian or to
another party acceptable to Lender in its sole discretion.


 


 


End of Article 4


 


12

















 


5.                                      CONDITIONS PRECEDENT


 


5.1.                            Initial Advance


 


Lender’s obligation to make the initial Warehousing Advance is subject
to the satisfaction, in the sole discretion of Lender, of the following
conditions precedent:


 


5.1 (a)                Lender must receive the following, all
of which must be satisfactory in form and content to Lender, in its sole
discretion:


 


(1)                                  The Warehousing Note
and this Agreement duly executed by Borrower.


 


(2)                                  Borrower’s articles
or certificate of incorporation, together with all amendments, as certified by
the Secretary of State of Delaware, Borrower’s bylaws, together with all
amendments, certified by the corporate secretary or assistant secretary of
Borrower, and certificates of good standing dated within 30 days of the date of
this Agreement, together with a certification from the Franchise Tax Board or
other state tax authority stating that Borrower is in good standing with the
Franchise Tax Board or such state tax authority, if applicable.


 


(3)                                  A resolution of the
board of directors of Borrower authorizing the execution, delivery and
performance of this Agreement and the other Loan Documents, each Warehousing
Advance Request and all other agreements, instruments or documents to be
delivered by Borrower under this Agreement.


 


(4)                                  A certificate as to
the incumbency and authenticity of the signatures of the officers of Borrower
executing this Agreement and the other Loan Documents.


 


(5)                                  Assumed Name
Certificates dated within 30 days of the date of this Agreement for any assumed
name used by Borrower in the conduct of its business.


 


(6)                                  Fiscal year-end
financial statements of Borrower (and, if applicable, Borrower’s Subsidiaries,
on a consolidated basis) containing a balance sheet as of March 31, 2003
and related statements of income, cash flows and changes in stockholders’
equity for the period ended on that date, all prepared in accordance with GAAP
applied on a basis consistent with prior periods and accompanied by (A) an
opinion as to those financial statements prepared by independent certified
public accountants of recognized national standing, which opinion shall not be
qualified as to scope of audit or going concern and shall state that said
financial statements fairly present the financial condition and results of
operations of the Borrower (and, if applicable, Borrower’s Subsidiaries) at the
end of, and for, such fiscal year in accordance with GAAP, and a certificate of
such accountants stating that, in making the examination necessary for their
opinion, they obtained no knowledge, except as specifically stated, of any
Default or Event of Default, and (B) any management letters, management reports
or other supplementary comments or reports delivered by those accountants to
Borrower or its board of directors.


 


(7)                                  Interim financial
statements of Borrower (and, if applicable, Borrower’s Subsidiaries, on a
consolidated basis) containing a balance sheet as of March 31, 2004 and a
related statement of income for the period ended on that date


 


13

















 


prepared in accordance with GAAP applied on a basis consistent with
Borrower’s most recent audited financial statements.


 


(8)                                  The Guaranty, on the
form prescribed by Lender, duly executed by the Guarantor.


 


(9)                                  The Guarantor’s
articles or certificate of incorporation, together with all amendments, as
certified by the Secretary of State of Delaware, bylaws certified by the corporate
secretary of the Guarantor and certificates of good standing dated within 30
days of the date of this Agreement.


 


(10)                            A resolution of the board
of directors of the Guarantor, certified as of the date of the Agreement by its
corporate secretary, authorizing the execution, delivery and performance of the
Guaranty, and all other agreements, instruments or documents to be delivered by
the Guarantor under this Agreement.


 


(11)                            A certificate as to the
incumbency and authenticity of the signatures of the officers of the Guarantor
executing the Guaranty and all other agreements, instruments or documents to be
delivered under this Agreement (Lender being entitled to rely on that
certificate until a new incumbency certificate has been furnished to Lender).


 


(12)                            Financial statements of the
Guarantor (and, if applicable, the Guarantor’s Subsidiaries, on a consolidated
basis) containing a balance sheet as of March 31, 2004 and related statements
of income, cash flows changes in stockholders’ equity for the period ended on
that date, all prepared in accordance with GAAP applied on a basis consistent
with prior periods and audited by independent certified public accountants of
recognized standing acceptable to Lender.


 


(13)                            A favorable written opinion
of counsel to Borrower and the Guarantor (or of separate counsel at the option
of Borrower and the Guarantor), addressed to Lender and dated as of the date of
this Agreement, covering such matters as Lender may reasonably request.


 


(14)                            Uniform Commercial Code,
tax lien and judgment searches of the appropriate public records for Borrower
that do not disclose the existence of any prior Lien on the Collateral other
than in favor of Lender or as permitted under this Agreement.


 


(15)                            Copies of the certificates,
documents or other written instruments that evidence Borrower’s eligibility
described in Section 9.1, all in form and substance satisfactory to
Lender.


 


(16)                            Copies of Borrower’s errors
and omissions insurance policy or mortgage impairment insurance policy, and
blanket bond coverage policy, or certificates in lieu of policies, showing
compliance by Borrower as of the date of this Agreement with the provisions of
Section 7.9.


 


(17)                            Receipt by Lender of any
fees and expenses (including “Transaction Costs and Expenses” as defined in the
letter agreement between Borrower and Lender dated September 12, 2003) due on
the date of this Agreement.


 


(18)                            A fully-executed Funding
Bank Agreement and evidence that all accounts into which Warehousing Advances
will be funded have been established at the Funding Bank.


 


14

















 


(19)                            A UCC-1 financing statement or amendments
thereto in recordable form covering the Collateral, and evidence that the UCC-1
has been filed in all jurisdictions required by Lender.


 


(20)                            A power of attorney in form
and substance satisfactory to Lender in Lender’s sole discretion.


 


(21)         A
side letter from Guarantor describing those of Guarantor’s present and future
businesses for which Borrower intends to provide financing.


 


(22)         An
intercreditor agreement executed by Guarantor.


 


5.1 (b)               If, as of the date of this Agreement,
Borrower has any indebtedness for borrowed money to any of its directors,
officers, shareholders or Affiliates (other than Guarantor Debt), which indebtedness
has a term of more than 1 year or is in excess of $25,000, the Person to whom
Borrower is indebted must have executed a Subordination of Debt Agreement, on
the form prescribed by Lender; and Lender must have received an executed copy
of that Subordination of Debt Agreement, certified by the corporate secretary
of Borrower to be true and complete and in full force and effect as of the date
of the Warehousing Advance.


 


5.1 (c)                Borrower must not have incurred any
material liabilities, direct or contingent, other than in the ordinary course
of its business, since the Audited Statement Date.


 


5.2.                            Each Advance


 


Lender’s obligation to make the initial and each subsequent Warehousing
Advance, is subject to the satisfaction, in the sole discretion of Lender, as
of the date of each Warehousing Advance, of the following additional conditions
precedent:


 


5.2 (a)                Borrower must have delivered to Lender
the Warehousing Advance Request and Collateral Documents required by, and must
have satisfied the procedures set forth in, Article 2 and the Exhibits
described in that Article.  All items
delivered to Lender must be satisfactory to Lender in form and content, and
Lender may reject any item that does not satisfy the requirements of this
Agreement or of the related Purchase Commitment.


 


5.2 (b)               Lender must have received evidence
satisfactory to it as to the making or continuation of any book entry or the
due filing and recording in all appropriate offices of all financing statements
and other instruments necessary to perfect the security interest of Lender in
the Collateral under the Uniform Commercial Code or other applicable law.


 


5.2 (c)                The representations and warranties of
Borrower contained in Article 6 and Article 9 must be accurate and complete in
all material respects as if made on and as of the date of each Warehousing
Advance.


 


5.2 (d)               Borrower must have performed all
agreements to be performed by it under this Agreement, and after giving effect
to the requested Warehousing Advance, no Default or Event of Default will exist
under this Agreement.


 


5.2 (e)                The Guarantor must have performed all
agreements to be performed by the Guarantor under the Guaranty.


 


Delivery of a Warehousing Advance Request by Borrower will be deemed a
representation by Borrower that all conditions set forth in this Section have
been satisfied as of the date of the Warehousing Advance.


 


15

















 


5.3.                            Force Majeure


 


Notwithstanding Borrower’s satisfaction of the conditions set forth in
this Agreement, Lender has no obligation to make a Warehousing Advance if
Lender is prevented from obtaining the funds necessary to make a Warehousing
Advance or is otherwise prevented from making a Warehousing Advance as a result
of any fire or other casualty, failure of power, strike, lockout or other labor
trouble, banking moratorium, embargo, sabotage, confiscation, condemnation,
riot, civil disturbance, insurrection, act of terrorism, war or other activity
of armed forces, act of God or other similar reason beyond the reasonable
control of Lender.  Lender will make the
requested Warehousing Advance as soon as reasonably possible following the
occurrence of such an event.


 


 


End of Article 5


 


16

















 


6.                                      GENERAL REPRESENTATIONS AND WARRANTIES


 


Borrower represents and warrants to Lender, as of the date of this
Agreement and as of the date of each Warehousing Advance Request and the making
of each Warehousing Advance, that:


 


6.1.                            Place of Business


 


Borrower’s chief executive office and principal place of business is
2150 W. 18th Street, Suite 300, Houston, Texas 77008.


 


6.2.                            Organization; Good Standing; Subsidiaries


 


Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has the full legal power
and authority to own its property and to carry on its business as currently
conducted.  Borrower is duly qualified
as a foreign corporation to do business and is in good standing in each
jurisdiction in which the transaction of its business makes qualification
necessary, except in jurisdictions, if any, where a failure to be in good
standing has no material adverse effect on Borrower’s business, operations,
assets or financial condition as a whole. 
For the purposes of this Agreement, good standing includes qualification
for all licenses and payment of all taxes required in the jurisdiction of its
incorporation and in each jurisdiction in which Borrower transacts
business.  Borrower has no Subsidiaries
except as set forth on Exhibit D, which sets forth with respect to
each Subsidiary, its name, address, jurisdiction of organization, each state in
which it is qualified to do business, and the percentage ownership of its
capital stock, membership interests or partnership interests by Borrower.  Each of Borrower’s Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and has the full legal power and authority to
own its property and to carry on its business as currently conducted.


 


6.3.                            Authorization
and Enforceability


 


Borrower has the power and authority to execute, deliver and perform
this Agreement, the Warehousing Note and the other Loan Documents to which
Borrower is a party and to make the borrowings under this Agreement.  The execution, delivery and
performance by Borrower of this Agreement, the Warehousing Note and the other
Loan Documents to which Borrower is party and the making of the borrowings
under this Agreement and the Warehousing Note, have been duly and validly
authorized by all necessary corporate action on the part of Borrower (none of
which actions has been modified or rescinded, and all of which actions are in
full force and effect) and do not and will not conflict with or violate any
provision of law, of any judgments binding upon Borrower, or of the articles of
incorporation or by-laws of Borrower, conflict with or result in a breach of,
constitute a default or require any consent under or result in or require the
acceleration of any indebtedness of Borrower under any agreement, instrument or
indenture to which Borrower is a party or by which Borrower or its property may
be bound or affected, or result in the creation of any Lien upon any property
or assets of Borrower (other than the Lien on the Collateral granted under this
Agreement).  This Agreement, the
Warehousing Note and the other Loan Documents to which Borrower is a party
constitute the legal, valid and binding obligations of Borrower,  enforceable
in accordance with their respective terms, except that enforceability may be
limited by bankruptcy, insolvency or other such laws affecting creditors’
rights and general principles of equity.


 


17

















 


6.4.                            Authorization and Enforceability of Guaranty


 


Each non-individual Guarantor has the power and authority, and each
individual Guarantor has the legal capacity, to execute, deliver and perform
the Guaranty.  The Guaranty constitutes
the legal, valid and binding obligation of each Guarantor, enforceable in
accordance with its terms, except that enforceability may be limited by
bankruptcy, insolvency or other such laws affecting creditors’ rights and
general principles of equity.


 


6.5.                            Approvals


 


The execution and delivery of this Agreement, the Warehousing Note and
the other Loan Documents and the performance of Borrower’s obligations under
this Agreement, the Warehousing Note and the other Loan Documents and the
validity and enforceability of this Agreement, the Warehousing Note and the other
Loan Documents do not require any license, consent, approval or other action of
any state or federal agency or governmental or regulatory authority other than
those that have been obtained and remain in full force and effect.


 


6.6.                            Financial Condition


 


The balance sheet of Borrower (and, if applicable, Borrower’s
Subsidiaries, on a consolidated basis) as of each Statement Date, and the
related statements of income, cash flows and changes in stockholders’ equity
for the fiscal period ended on each Statement Date, furnished to Lender, fairly
present the financial condition of Borrower (and, if applicable, Borrower’s
Subsidiaries) as at that Statement Date and the results of its operations for
the fiscal period ended on that Statement Date.  Borrower had, on each Statement Date, no known material
liabilities, direct or indirect, fixed or contingent, matured or unmatured, or
liabilities for taxes, long-term leases or unusual forward or long-term
commitments not disclosed by, or reserved against in, those financial
statements, and at the present time there are no material unrealized or
anticipated losses from any loans, advances or other commitments of Borrower
except as previously disclosed to Lender in writing.  Those financial statements were prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved.  Since the Audited Statement Date, there has
been no material adverse change in the business, operations, assets or
financial condition of Borrower (and, if applicable, Borrower’s Subsidiaries),
nor is Borrower aware of any state of facts that (with or without notice or
lapse of time or both) would or could result in any such material adverse
change.


 


6.7.                            Litigation


 


There are no actions, claims, suits or proceedings pending or, to
Borrower’s knowledge, threatened or reasonably anticipated against or affecting
Borrower or any Subsidiary of Borrower in any court or before any arbitrator or
before any government commission, board, bureau or other administrative agency
that, if adversely determined, may reasonably be expected to result in a
material adverse change in Borrower’s business, operations, assets or financial
condition as a whole, or that would affect the validity or enforceability of
this Agreement, the Warehousing Note or any other Loan Document.


 


6.8.                            Compliance with Laws


 


Neither Borrower nor any Subsidiary of Borrower is in violation of any
provision of any law, or of any judgment, award, rule, regulation, order,
decree, writ or injunction of any court or public regulatory body or authority
that could result in a material adverse change in Borrower’s


 


18

















 


business, operations, assets or financial condition as a whole or that
would affect the validity or enforceability of this Agreement, the Warehousing
Note or any other Loan Document.


 


6.9.                            Regulation U


 


Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying Margin Stock, and no part of the proceeds of any Warehousing
Advances made under this Agreement will be used to purchase or carry any Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
any Margin Stock.


 


6.10.                     Investment Company Act


 


Borrower is not an “investment company” or controlled by an “investment
company” within the meaning of the Investment Company Act.


 


6.11.                     Payment of Taxes


 


Borrower and each of its Subsidiaries has filed or caused to be filed
all federal, state and local income, excise, property and other tax returns
that are required to be filed with respect to the operations of Borrower and
its Subsidiaries, all such returns are true and correct and Borrower and each
of its Subsidiaries has paid or caused to be paid all taxes shown on those
returns or on any assessment, to the extent that those taxes have become due,
including all FICA payments and withholding taxes, if appropriate.  The amounts reserved as a liability for
income and other taxes payable in the financial statements described in
Section 6.6 are sufficient for payment of all unpaid federal, state and
local income, excise, property and other taxes, whether or not disputed, of
Borrower and its Subsidiaries accrued for or applicable to the period and on
the dates of those financial statements and all years and periods prior to
those financial statements and for which Borrower and its Subsidiaries may be
liable in their own right or as transferee of the assets of, or as successor
to, any other Person.  No tax Liens have
been filed and no material claims are being asserted against Borrower, any
Subsidiary of Borrower or any property of Borrower or any Subsidiary of
Borrower with respect to any taxes, fees or charges.


 


6.12.                     Agreements


 


Neither Borrower nor any Subsidiary of Borrower is a party to any
agreement, instrument or indenture or subject to any restriction materially and
adversely affecting its business, operations, assets or financial condition,
except as disclosed in the financial statements described in Section 6.6.  Neither Borrower nor any Subsidiary of
Borrower is in default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement, instrument
or indenture which default could result in a material adverse change in
Borrower’s business, operations, properties or financial condition as a
whole.  No holder of any indebtedness of
Borrower or of any of its Subsidiaries has given notice of any asserted default
under that indebtedness, and no liquidation or dissolution of Borrower or of
any of its Subsidiaries and no receivership, insolvency, bankruptcy,
reorganization or other similar proceedings relative to Borrower or of any of
its Subsidiaries or any of its or their properties is pending or, to the knowledge
of Borrower, threatened.


 


6.13.                     Title to Properties


 


Borrower and each Subsidiary of Borrower has good, valid, insurable and
(in the case of real property) marketable title to all of its properties and
assets (whether real or personal, tangible or


 


19

















 


intangible) reflected on the financial statements described in
Section 6.6, except for those properties and assets that Borrower has
disposed of since the date of those financial statements either in the ordinary
course of business or because they were no longer used or useful in the conduct
of Borrower’s or the Subsidiary’s business. 
All of Borrower’s properties and assets are free and clear of all Liens
except as disclosed in Borrower’s financial statements.


 


6.14.                     ERISA


 


Each Plan is in compliance with all applicable requirements of ERISA
and the Internal Revenue Code and with all material applicable rulings and
regulations issued under the provisions of ERISA and the Internal Revenue Code
setting forth those requirements, except where any failure to comply would not
result in a material loss to Borrower or any ERISA Affiliate.  All of the minimum funding standards or
other contribution obligations applicable to each Plan have been
satisfied.  No Plan is a defined-benefit
pension plan subject to Title IV of ERISA, and there is no Multiemployer
Plan.


 


6.15.                     No Retiree Benefits


 


Except as required under Section 4980B of the Internal Revenue
Code, Section 601 of ERISA or applicable state law, neither Borrower nor,
if applicable, any Subsidiary is obligated to provide post-retirement medical
or insurance benefits with respect to employees or former employees.


 


6.16.                     Assumed Names


 


Borrower does not originate Loans or otherwise conduct business under
any names other than its legal name and the assumed names set forth on Exhibit G.  Borrower has made all filings and taken all
other action as may be required under the laws of any jurisdiction in which it
originates Loans or otherwise conducts business under any assumed name.  Borrower’s use of the assumed names set
forth on Exhibit G does not conflict with any other Person’s legal
rights to any such name, nor otherwise give rise to any liability by Borrower
to any other Person.  Borrower may amend
Exhibit G to add or delete any assumed names used by Borrower to conduct
business.  An amendment to Exhibit G
to add an assumed name is not effective until Borrower has delivered to Lender
an assumed name certificate in the jurisdictions in which the assumed name is
to be used, which must be satisfactory in form and content to Lender in its
sole discretion.  In connection with any
amendment to delete a name from Exhibit G, Borrower represents and
warrants that it has ceased using that assumed name in all jurisdictions.


 


6.17.                     Servicing


 


Exhibit C is a
true and complete list of Borrower’s Servicing Portfolio.  All of Borrower’s Servicing Contracts are in
full force and effect, and are unencumbered by Liens other than Liens disclosed
in Exhibit C.  No default or
event that, with notice or lapse of time or both, would become a default,
exists under any of Borrower’s Servicing Contracts.


 


 


End of Article 6


 


20

















 


7.                                      AFFIRMATIVE COVENANTS


 


As long as the Warehousing Commitment is outstanding or there remain
any Obligations to be paid or performed under this Agreement or under any other
Loan Document, Borrower must:


 


7.1.                            Payment
of Obligations


 


Punctually pay or cause to be paid all Obligations, including the
Obligations payable under this Agreement and under the Warehousing Note, in
accordance with their terms.


 


7.2.                            Financial
Statements


 


Deliver or make electronically available to Lender:


 


7.2 (a)                As soon as available and in any event
within 45 days after the end of each month, including the last month of
Borrower’s fiscal year, an interim statement of income of Borrower (and, if
applicable, Borrower’s Subsidiaries, on a consolidated basis) for the
immediately preceding month and for the period from the beginning of the fiscal
year to the end of that month, and the related balance sheet as at the end of
the immediately preceding month, all in reasonable detail, subject, however, to
year-end audit adjustments.


 


7.2 (b)               As soon as available and in any event
within 90 days after the end of each fiscal year of Borrower, fiscal year-end
statements of income, cash flows and changes in stockholders’ equity of
Borrower (and, if applicable, Borrower’s Subsidiaries, on a consolidated basis)
for that year, and the related balance sheet as of the end of that year
(setting forth in comparative form the corresponding figures for the preceding
fiscal year), all in reasonable detail and accompanied by (1) an opinion as to
those financial statements prepared by independent certified public accountants
of recognized national standing, which opinion shall not be qualified as to
scope of audit or going concern and shall state that said financial statements
fairly present the financial condition and results of operations of the
Borrower (and, if applicable, Borrower’s Subsidiaries) at the end of, and for,
such fiscal year in accordance with GAAP, and a certificate of such accountants
stating that, in making the examination necessary for their opinion, they
obtained no knowledge, except as specifically stated, of any Default or Event
of Default, and (2) any management letters, management reports or other
supplementary comments or reports delivered by those accountants to Borrower or
its board of directors.


 


7.2 (c)                Together with each delivery of
financial statements required by this Section, a Compliance Certificate
substantially in the form of Exhibit E.


 


7.2 (d)               As soon as available and in any event
within 45 days after the end of each Calendar Quarter, excluding the last
Calendar Quarter of Guarantor’s fiscal year, an interim statement of income of
Guarantor (and, if applicable, Guarantor’s Subsidiaries, on a consolidated
basis) for the immediately preceding Calendar Quarter and for the period from
the beginning of the fiscal year to the end of that Calendar Quarter, and the
related balance sheet as at the end of the immediately preceding Calendar
Quarter, all in reasonable detail, subject, however, to year-end audit
adjustments.


 


7.2 (e)                As soon as available and in any event
within 90 days after the end of each fiscal year of Guarantor, fiscal year-end
statements of income, cash flows and changes in


 


21

















 


stockholders’ equity of Guarantor (and, if applicable, Guarantor’s
Subsidiaries, on a consolidated basis) for that year, and the related balance
sheet as of the end of that year (setting forth in comparative form the
corresponding figures for the preceding fiscal year), all in reasonable detail
and accompanied by (1) an opinion as to those financial statements prepared by
independent certified public accountants of recognized national standing, which
opinion shall not be qualified as to scope of audit or going concern and shall
state that said financial statements fairly present the financial condition and
results of operations of the Borrower (and, if applicable, Borrower’s
Subsidiaries) at the end of, and for, such fiscal year in accordance with GAAP,
and a certificate of such accountants stating that, in making the examination
necessary for their opinion, they obtained no knowledge, except as specifically
stated, of any Default or Event of Default, and (2) any management letters,
management reports or other supplementary comments or reports delivered by
those accountants to Guarantor or its board of directors.


 


7.2 (f)                  Copies of all regular or periodic
financial and other reports that Borrower or Guarantor files with the
Securities and Exchange Commission or any successor governmental agency or
other entity.


 


7.3.                            Other
Borrower Reports


 


Deliver to Lender:


 


7.3 (a)     If
Borrower has a Servicing Portfolio, then as soon as available and in any event
within 30 days after the end of each month, a consolidated report (“Servicing
Portfolio Report”) as of the end of the month, as to all Loans the
servicing rights to which are owned by Borrower (specified by investor type,
recourse and non-recourse) regardless of whether the Loans are Pledged
Loans.  The Servicing Portfolio Report
must indicate the total outstanding principal balance of all Loans serviced by
Borrower, and the following information stated as a total dollar amount and as
a percentage of the outstanding principal balance of all Loans serviced:  Loans that (1) are current and in good
standing, (2) are more than 30, 60 or 90 days past due, (3) are the
subject of pending bankruptcy or repossession or foreclosure proceedings or
(4) have been converted (through repossession, foreclosure or other
proceedings in lieu of foreclosure) into real or personal property owned by
Borrower.


 


7.3 (b)               As soon as available and in any event
within 30 days after the end of each month, a consolidated loan production
report as of the end of that month, presenting the total dollar volume and the
number of Loans originated and closed or purchased during that month and for
the fiscal year-to-date, specified by property type and loan type.


 


7.3 (c)                Other reports in respect of Pledged
Loans, including copies of purchase confirmations issued by Investors
purchasing Pledged Loans from Borrower, in such detail and at such times as
Lender in its discretion may reasonably request.


 


7.3 (d)               With reasonable promptness, all further
information regarding the business, operations, properties or financial
condition of Borrower as Lender may reasonably request, including copies of any
audits completed by HUD, Ginnie Mae, Fannie Mae or Freddie Mac.


 


7.4.                            Maintenance of Existence; Conduct of Business


 


Preserve and maintain its corporate existence in good standing and all
of its rights, privileges, licenses and franchises necessary or desirable in
the normal conduct of its business, including its eligibility as lender,
seller/servicer and issuer described under Section 9.1; conduct its
business in an orderly and efficient manner; maintain a net worth of acceptable
assets as required for


 


22

















 


maintaining Borrower’s eligibility as lender, seller/servicer and
issuer described under Section 9.1; and make no material change in the
nature or character of its business or engage to any substantial extent in any
business in which it was not engaged on the date of this Agreement except for
providing financing for those of Guarantor’s present and future businesses that
Borrower disclosed in writing to Lender as of the Closing Date.


 


7.5.                            Compliance
with Applicable Laws


 


Comply with the requirements of all applicable laws, rules, regulations
and orders of any governmental authority, a breach of which could result in a
material adverse change in Borrower’s business, operations, assets, or
financial condition as a whole or on the enforceability of this Agreement, the
Warehousing Note, any other Loan Document or any Collateral, except where
contested in good faith and by appropriate proceedings.


 


7.6.                            Inspection of Properties and Books; Operational Reviews


 


Permit Lender or any Participant (and their authorized representatives)
to discuss the business, operations, assets and financial condition of Borrower
and its Subsidiaries with Borrower’s officers, agents and employees, and to
examine and make copies or extracts of Borrower’s and its Subsidiaries’ books
of account, all at such reasonable times as Lender or any Participant may
request after telephonic, facsimile or e-mail notice from Lender to
Borrower.  Provide its accountants with
a copy of this Agreement promptly after its execution and authorize and
instruct them to answer candidly all questions that the officers of Lender or
any Participant or any authorized representatives of Lender or any Participant
may address to them in reference to the financial condition or affairs of Borrower
and its Subsidiaries.  Borrower may have
its representatives in attendance at any meetings held between the officers or
other representatives of Lender or any Participant and Borrower’s accountants
under this authorization.  Permit Lender
or any Participant (and their authorized representatives) access to Borrower’s
premises and records for the purpose of conducting a review of Borrower’s
general mortgage business methods, policies and procedures, auditing its loan
files and reviewing the financial and operational aspects of Borrower’s
business.  Unless an Event of Default
exist, all such audits, reviews and inspections will be at Lender’s expense.


 


7.7.                            Notice


 


Give prompt Notice to Lender of (a) any action, suit or proceeding
instituted by or against Borrower or any of its Subsidiaries in any federal or
state court or before any commission or other regulatory body (federal, state
or local, domestic or foreign), which action, suit or proceeding has at issue
in excess of $250,000, or any such proceedings threatened against Borrower or
any of its Subsidiaries in a writing containing the details of that action,
suit or proceeding; (b) the filing, recording or assessment of any
federal, state or local tax Lien against Borrower, or any of its assets or any
of its Subsidiaries; (c) an Event of Default (unless Lender has provided
Borrower with Notice thereof); (d) a Default that continues for more than
4 days (unless Lender has provided Borrower with Notice thereof); (e) the
suspension, revocation or termination of Borrower’s eligibility, in any
respect, as lender, seller/servicer or issuer as described under
Section 9.1 or the suspension, revocation or termination of any license
required in order for Borrower to engage in the businesses of originating, acquiring
and, if applicable, servicing Loans; (f) the transfer, loss, nonrenewal or
termination of any Servicing Contracts to which Borrower is a party, or which
is held for the benefit of Borrower, and the reason for that transfer, loss,
nonrenewal or termination; (g) any Prohibited Transaction with respect to
any Plan, specifying the nature of the Prohibited Transaction and what action
Borrower proposes to take with respect to it; and (h) any other action,
event or condition of any nature that could reasonably lead to or result in


 


23

















 


a material adverse change in the business, operations, assets or
financial condition of Borrower or any of its Subsidiaries.


 


7.8.                            Payment of Debt, Taxes and Other Obligations


 


Pay, perform and discharge, or cause to be paid, performed and
discharged, all of the obligations and indebtedness of Borrower and its
Subsidiaries, all taxes, assessments and governmental charges or levies imposed
upon Borrower or its Subsidiaries or upon their respective income, receipts or
properties before those taxes, assessments and governmental charges or levies
become past due, and all lawful claims for labor, materials and supplies or
otherwise that, if unpaid, could become a Lien or charge upon any of their
respective properties or assets. 
Borrower and its Subsidiaries are not required to pay, however, any
taxes, assessments and governmental charges or levies or claims for labor,
materials or supplies for which Borrower or its Subsidiaries have obtained an
adequate bond or insurance or that are being contested in good faith and by
proper proceedings that are being reasonably and diligently pursued and for
which proper reserves have been created.


 


7.9.                            Insurance


 


Maintain blanket bond coverage and errors and omissions insurance or
mortgage impairment insurance with such companies and in such amounts as
satisfy prevailing requirements applicable to a lender, seller/servicer and
issuer described under Section 9.1, and liability insurance and fire and other
hazard insurance on its properties, in each case with responsible insurance
companies having a rating of at least A+ or better in the current Best’s Key
Rating Guide, in such amounts and against such risks as is customarily carried
by similar businesses operating in the same location.  Within 30 days after Notice from Lender, obtain such additional
insurance as Lender may reasonably require, all at the sole expense of
Borrower.  Copies of such policies must
be furnished to Lender without charge upon request of Lender.


 


7.10.                     Subordination of Certain Indebtedness


 


Cause any indebtedness of Borrower for borrowed money to any
shareholder, director, officer or Affiliate of Borrower (other than Guarantor
Debt), which indebtedness has a term of more than 1 year or is in excess of
$150,000, to be subordinated to the Obligations by the execution and delivery
to Lender of a Subordination of Debt Agreement, on the form prescribed by
Lender, certified by the corporate secretary of Borrower to be true and
complete and in full force and effect. 
Lender agrees that inter-company payables owed by Borrower to its
Affiliates relating to shared services provided to Borrower are not
indebtedness of Borrower subject to this Section 7.10 so long as those
inter-company payables are reconciled at least quarterly.


 


7.11.                     Other Loan Obligations


 


Perform all material obligations under the terms of each loan
agreement, note, mortgage, security agreement or debt instrument by which
Borrower is bound or to which any of its property is subject, and promptly
notify Lender in writing of a declared default under or the termination,
cancellation, reduction or nonrenewal of any of its other lines of credit or
agreements with any other lender.  Exhibit F
is a true and complete list of all such lines of credit or agreements as of the
date of this Agreement.  Borrower must
give Lender at least 30 days Notice before entering into any additional lines
of credit or agreements.


 


24

















 


7.12.                     ERISA


 


Maintain (and, if applicable, cause each ERISA Affiliate to maintain)
each Plan in compliance with all material applicable requirements of ERISA and
of the Internal Revenue Code and with all applicable rulings and regulations
issued under the provisions of ERISA and of the Internal Revenue Code, and not
(and, if applicable, not permit any ERISA Affiliate to) (a) engage in any
transaction in connection with which Borrower or any ERISA Affiliate would be
subject to either a civil penalty assessed pursuant to Section 502(i) of
ERISA or a tax imposed by Section 4975 of the Internal Revenue Code, in
either case in an amount exceeding $25,000 or (b) fail to make full
payment when due of all amounts that, under the provisions of any Plan,
Borrower or any ERISA Affiliate is required to pay as contributions to that
Plan, or permit to exist any accumulated funding deficiency (as such term is
defined in Section 302 of ERISA and Section 412 of the Internal
Revenue Code), whether or not waived, with respect to any Plan in an aggregate
amount exceeding $25,000.


 


7.13.                     Use of Proceeds of Warehousing Advances


 


Use the proceeds of each Warehousing Advance solely for the purpose of
funding Eligible Loans, Exception Loans, and Seasoned Loans and against the
pledge of those Eligible Loans, Exception Loans, and Seasoned Loans as
Collateral.


 


 


End of Article 7


 


25

















 


8.                                      NEGATIVE COVENANTS


 


As long as the Warehousing Commitment is outstanding or there remain
any Obligations to be paid or performed, Borrower must not, either directly or
indirectly, without the prior written consent of Lender:


 


8.1.                            Contingent
Liabilities


 


Assume, guarantee, endorse or otherwise become contingently liable for
the obligation of any Person except by endorsement of negotiable instruments
for deposit or collection in the ordinary course of business, and except for
obligations arising in connection with the sale of Loans with recourse in the
ordinary course of Borrower’s business.


 


8.2.                            Pledge
of Servicing Contracts


 


Pledge or grant a security interest in any existing or future Servicing
Contracts of Borrower if such Servicing Contracts include Pledged Loans other
than to Lender, or omit to take any action (other than allowing a Servicing
Contract to expire at the end of its term) required to keep all of Borrower’s
Servicing Contracts in full force and effect. 
Notwithstanding the foregoing, Borrower may terminate a Servicing
Contract if Borrower is not in default under that Servicing Contract and the
Servicing Contract by its terms gives Borrower the right to an early
termination.


 


8.3.                            Restrictions
on Fundamental Changes


 


8.3 (a)                Consolidate, merge or enter into any
analogous reorganization or transaction with any Person without Lender’s prior
written consent.


 


8.3 (b)               Amend or otherwise modify Borrower’s
articles of incorporation or by-laws.


 


8.3 (c)                Liquidate, wind up or dissolve (or
suffer any liquidation or dissolution).


 


8.3 (d)               Cease actively to engage in the business
of originating or acquiring Loans or make any other material change in the
nature or scope of its business, or engage to any substantial extent in any
line or lines of business activity other than the businesses in which Borrower
engages as of the date of this Agreement and supporting Guarantor’s present and
future businesses as disclosed in writing to Lender as of the Closing Date.


 


8.3 (e)                Sell, assign, lease, convey, transfer
or otherwise dispose of (whether in one transaction or a series of
transactions) all or any substantial part of Borrower’s business or assets,
whether now owned or acquired after the Closing Date, other than, in the
ordinary course of business and to the extent not otherwise prohibited by this
Agreement, sales of (1) Loans and (2) Servicing Contracts.


 


8.3 (f)                  Acquire by purchase or in any other
transaction all or substantially all of the business or property of, or stock
or other ownership interests of, any Person, other than as permitted by Section
8.4.


 


8.3 (g)               Permit any Subsidiary of Borrower to do
or take any of the foregoing actions.


 


26

















 


8.4.                            Subsidiaries


 


Form or acquire, or permit any Subsidiary of Borrower to form or
acquire, any Person that would thereby become a Subsidiary, other than
Subsidiaries that are special purpose entities created in connection with
financing arrangements.


 


8.5.                            Deferral
of Subordinated Debt


 


Pay any Subordinated Debt of Borrower or Guarantor Debt if such payment
would create a Default or Event of Default or, after a Default or Event of
Default under this Agreement has occurred, make any payment of any kind on any
Subordinated Debt of Borrower or Guarantor Debt until all of the Obligations
have been paid and performed in full and any applicable preference period has
expired.


 


8.6.                            Loss of Eligibility


 


Take any action that would cause Borrower to lose all or any part of
its status as an eligible lender, seller/servicer or issuer as described under
Section 9.1.


 


8.7.                            Accounting Changes


 


Make, or permit any Subsidiary of Borrower to make, any significant change
in accounting treatment or reporting practices, except as required by GAAP or
as otherwise required by law, or change its fiscal year or the fiscal year of
any Subsidiary of Borrower.


 


8.8.                            Leverage Ratio


 


Permit Borrower’s Leverage Ratio at any time to exceed 12 to 1.


 


8.9.                            Minimum
Tangible Net Worth


 


Permit Borrower’s Tangible Net Worth at any time to be less than
$7,500,000.


 


8.10.                     Delinquent Loans


 


Permit Loans on which any scheduled payment is 60 days past due at the
end of any month, regardless of whether any applicable grace period has
expired, to exceed 15% of the aggregate unpaid principal balance of Borrower’s
Servicing Portfolio.


 


8.11.                     Minimum Liquid Assets


 


Permit Borrower’s Liquid Assets at any time to be less than $1,000,000.


 


8.12.                     Distributions
to Shareholders


 


Declare or pay any dividends or otherwise declare or make any
distribution if such payment or distribution creates a Default or Event of
Default or, after an Event of Default, declare or pay any dividends or
otherwise declare or make any distribution to Borrower’s shareholders
(including any purchase or redemption of stock).


 


27

















 


8.13.                     Transactions
with Affiliates


 


Directly or indirectly (a) make any loan, advance, extension of
credit or capital contribution to any of Borrower’s Affiliates other than in
connection with (i) shared services arrangements among Borrower and its
Affiliates so long as related inter-company payables are reconciled at least
quarterly, (ii) dealer incentive plans entered into by Borrower and its
Affiliates, (iii) inter-company indebtedness not to exceed $150,000 in the
aggregate, and (iv) in the case of capital contributions, capital contributions
deemed made upon transfer of Loans to a special purpose Subsidiary of Borrower
in connection with financing arrangements, (b) sell, transfer, pledge or
assign any of its assets to or on behalf of those Affiliates other than in
connection with (i) transferring Loans that are not Pledged Loans to Borrower’s
subsidiary, HomeOne Funding I, in connection with that certain Master Loan and
Security Agreement between HomeOne Funding I and Greenwich Capital Financial
Products, Inc. dated as of December 30, 2003, as from time to time amended, and
(ii) transferring Loans to a special purpose Subsidiary of Borrower in
connection with financing arrangements, (c) merge or consolidate with or
purchase or acquire assets from those Affiliates, or (d) pay management
fees to or on behalf of those Affiliates (except for continuing to pay the
management fees that Borrower pays to Guarantor as of the Closing Date).


 


8.14.                     Recourse
Servicing Contracts


 


Acquire or enter into Servicing Contracts (other than that certain
Master Loan and Servicing Agreement between HomeOne Funding I and Greenwich Capital
Financial Products, Inc. dated as of December 30, 2003, as from time to time
amended) under which Borrower must repurchase or indemnify the holder of Loans
originated by a Person other than Borrower or its Affiliates as a result of
defaults on those Loans at any time during the term of those Loans.


 


8.15.                     Home Center Loan Servicing Incentive Plan


 


Modify the Home Center Loan Servicing Incentive Plan in any material
respect.


 


 


End of Article 8


 


28






















 


9.             SPECIAL REPRESENTATIONS, WARRANTIES AND COVENANTS
CONCERNING COLLATERAL


 


9.1.         Special Representations and
Warranties Concerning Eligibility as Seller/Servicer of Loans


 


Borrower
represents and warrants to Lender, as of the date of this Agreement and as of
the date of each Warehousing Advance Request and the making of each Warehousing
Advance, that Borrower is approved and qualified and in good standing as a
lender, seller/servicer or issuer, as set forth below, and meets all
requirements applicable to its status as:


 


9.1 (a)     A
HUD-approved mortgagee, eligible to originate, purchase, hold, sell and service
FHA fully insured Loans.


 


9.2.         Special Representations and
Warranties Concerning Warehousing Collateral


 


Borrower
represents and warrants to Lender, as of the date of this Agreement and as of
the date of each Warehousing Advance Request and the making of each Warehousing
Advance, that:


 


9.2 (a)     Borrower
has not selected the Collateral in a manner so as to affect adversely Lender’s
interests.


 


9.2 (b)     Borrower
is the legal and equitable owner and holder, free and clear of all Liens (other
than Liens granted under this Agreement), of the Pledged Loans.  All Pledged Loans and related Purchase
Commitments have been duly authorized and validly issued to Borrower, and all
of the foregoing items of Collateral comply with all of the requirements of
this Agreement, and have been and will continue to be validly pledged or
assigned to Lender, subject to no other Liens.


 


9.2 (c)     Borrower
has, and will continue to have, the full right, power and authority to pledge
the Collateral pledged and to be pledged by it under this Agreement.


 


9.2 (d)     Each
Pledged Loan and each related document included in the Pledged Loans
(1) has been duly executed and delivered by the parties to that Loan and
that related document, (2) has been made in compliance with all applicable
laws, rules and regulations (including all laws, rules and regulations relating
to usury), (3) is and will continue to be a legal, valid and binding obligation,
enforceable in accordance with its terms, without setoff, counterclaim or
defense in favor of the obligor under that Loan or any other obligor on the
Note and (4) has not been modified, amended or any requirements of which
waived, except in a writing that is part of the Collateral Documents.


 


9.2 (e)     The
Manufactured Home (and for Land/Home Loans, the real property) securing each
Pledged Loan is located in one of the states of the United States or the
District of Columbia.


 


9.2 (f)      The
Note for each Pledged Loan is (1) payable or endorsed to the order of Borrower,
(2) an “instrument” (with respect to Land/Home Loans) or “chattel paper”
(with respect to RICs and Home-Only Loans) within the meaning of Article 9
of the Uniform Commercial Code of all applicable jurisdictions and (3) is
denominated and payable in United States dollars.


 


29

















 


9.2 (g)     No
scheduled payment on a Pledged Loan is 60 days past due at the end of any
month, regardless of whether any applicable grace period has expired, and no
other default has existed for 60 days or more under any Loan included in the
Pledged Loans.


 


9.2 (h)     No
party to a Pledged Loan or any related document is in violation of any
applicable law, rule or regulation that would impair the collectibility of the
Pledged Loan or the performance by the borrower or any other obligor of its
obligations under the Note or any related document.


 


9.2 (i)      The
Manufactured Home, and, with respect to Land/Home Loans, the real property and
improvements securing repayment of each Pledged Loan, are covered by fire and
casualty policies, and (1) name and will continue to name Borrower and its
successors and assigns as the insured under a standard mortgagee clause,
(2) are and will continue to be in full force and effect and
(3) afford and will continue to afford insurance against fire and such
other risks as are usually insured against in the broad form of extended
coverage insurance generally available.


 


9.2 (j)      The
Manufactured Home, and, with respect to Land/Home Loans, the real property and
improvements securing each Pledged Loan are and will continue to be covered by
special flood insurance under the National Flood Insurance Program if located
in a special flood hazard area designated as such by the Director of the
Federal Emergency Management Agency.


 


9.2 (k)     Each
Pledged Loan against which a Warehousing Advance is made on the basis of a
Purchase Commitment meets all of the requirements of that Purchase Commitment.


 


9.2 (l)      The
original assignments of Mortgage delivered to Lender for each Land/Home Loan
are in recordable form and comply with all applicable laws and regulations
governing the filing and recording of such documents.


 


9.2 (m)    No
Pledged Loan is a High Cost Loan.


 


9.2 (n)     None
of the obligors, guarantors or other obligors of any Pledged Loan is a Person
named in any Restriction List and to whom the provision of financial services
is prohibited or otherwise restricted by applicable law.


 


9.2 (o)     The
full payment has been advanced to the obligor in the face amount of the Note,
by payment directly to the obligor or by payment made on request or approval of
the obligor, or, in the case of a RIC, in the form of goods and services
described in the RIC, and the Loan is fully closed.


 


9.2 (p)     Each
Pledged Loan meets the applicable requirements set out in this Agreement,
including Exhibit H.


 


9.2 (q)     Each
Pledged Loan has only one original Note.


 


9.2 (r)      The
Manufactured Home, and, with respect to Land/Home Loans, the real property
securing each Pledged Loan is free of damage and waste, and is good
condition.  There is no proceeding
pending for the partial or total condemnation of the Manufactured Home or, with
respect to Land/Home Loans, the underlying real property.  Neither the Manufactured Home nor any
improvements violate any applicable zoning law or regulation.


 


9.2 (s)     All
inspections, licenses and certificates required to be made or issued with
respect to the real property or Manufactured Home and its use and occupancy,
including certificates of


 


30

















 


occupancy and
fire underwriting certificates, have been made or obtained, as applicable, from
the appropriate authorities and the Manufactured Home is lawfully occupied
under applicable law.


 


9.2 (t)      No
Pledged Loan is subject to any litigation or governmental proceeding that
alleges any violation of local, state or federal law in connection with the
origination or servicing of that Pledged Loan and no third party claims have
been asserted with respect to the Pledged Loan that, if true, would be a breach
of any representation or warranty in this Agreement.


 


9.2 (u)     Each
Pledged Loan has been serviced in accordance with the terms of the Note and
Mortgage in all material respects, including the application of the obligors’
payments.


 


9.2 (v)     No
Note bears a stamp or endorsement indicating that the Note has been pledged or
assigned to another party.


 


9.2 (w)    Each
Seasoned Loan for which a Warehousing Advance request is made after 30 days
from the Closing Date is an Eligible Loan.


 


9.2 (x)      There
has been no amendment, modification, extension, waiver, or forbearance of any
of the payment terms or payment dates on any Pledged Loan that has not been
disclosed to and approved by Lender.


 


9.2 (y)     No
Pledged Loan is a Land-in-Lieu Loan.


 


9.2 (z)      Each
Manufactured Home securing a Pledged Loan was sold to the Obligor by a
Guarantor-Owned Retailer or by a Pinnacle Retailer.


 


9.3.         Special Representations and
Warranties Concerning RICs


 


Borrower
represents and warrants to Lender, as of the date of this Agreement and as of
the date of each Warehousing Advance Request and the making of each Warehousing
Advance, that with respect to Pledged Loans:


 


9.3 (a)     Each
RIC was originated by a Guarantor-Owned Retailer or by a Pinnacle Retailer and
was subsequently assigned to Borrower.


 


9.3 (b)     Each
RIC creates a properly perfected and valid first Lien on the related
Manufactured Home that will have priority over any other Lien on the
Manufactured Home.


 


9.3 (c)     Except
for RICs originated by a Guarantor-Owned Retailer, each RIC was originated in
compliance with a Retailer Agreement.


 


9.3 (d)     The
representations and warranties of the Retailer in the Retailer Agreement are
true and correct.


 


9.3 (e)     Each
RIC was originated in the regular course of the Retailer’s business.


 


9.3 (f)      If
the Manufactured Home is located in a state in which notation of a security
interest on the title document is required or permitted to perfect a security
interest in a Manufactured Home, the title document shows, or if a new or
replacement title document with respect to such Manufactured Home is being
applied for, such title document when issued will show, Borrower as the holder
of a first priority perfected security interest in such Manufactured Home.  Borrower’s application for title and lien
notation has been or will be received in the appropriate state filing office
prior to the expiration of the automatic


 


31

















 


perfection
period under applicable law, and the contents of Borrower’s application for
title and lien notations comply with all applicable requirements.  If the Manufactured Home is located in a
state in which the filing of a financing statement under the Uniform Commercial
Code is required to perfect a security interest in a Manufactured Home, such
filings or recordings have been duly made and show Borrower as the secured
party.


 


9.3 (g)     The
Manufactured Home has been delivered and set up according to the manufacturer’s
instructions and all applicable state and local codes.


 


9.3 (h)     The
Manufactured Home is not considered or classified as part of the real property
on which it is located under the laws of the jurisdiction in which it is
located.


 


9.3 (i)      No
RIC is secured in whole or in part by real estate, and no Manufactured Home
securing any RIC is considered real estate or a fixture under applicable law.


 


9.4.         Special
Representations and Warranties Concerning Home-Only Loans


 


Borrower
represents and warrants to Lender, as of the date of this Agreement and as of
the date of each Warehousing Advance Request and the making of each Warehousing
Advance, that:


 


9.4 (a)     No
Pledged Loan is a Home-Only Loan.


 


9.5.         Special
Representations and Warranties Concerning Land/Home Loans


 


Borrower
represents and warrants to Lender, as of the date of this Agreement and as of
the date of each Warehousing Advance Request and the making of each Warehousing
Advance, that with respect to Pledged Loans:


 


9.5 (a)     Each
Land/Home Loan was originated by Borrower.


 


9.5 (b)     Each
Land/Home Loan will create a properly perfected and valid first Lien on that
Manufactured Home that will have priority over any other Lien on the
Manufactured Home, whether or not arising under applicable real property law.


 


9.5 (c)     Each
Land/Home Loan is secured by a First Mortgage on the real property and other
improvements (including the Manufactured Home) described in or covered by that
Mortgage.


 


9.5 (d)     Each
Mortgage describes the Manufactured Home by make, model and serial number.


 


9.5 (e)     If
the Manufactured Home is located in a state in which notation of a security
interest on the title document is required or permitted to perfect such
security interest, the title document shows, or if a new or replacement title
document with respect to such Manufactured Home is being applied for such title
document when issued will show, Borrower as the holder of a first priority
security interest in such Manufactured Home. 
Borrower’s application for title and lien notation has been or will be
received in the appropriate state filing office prior to the expiration of the
automatic perfection period under applicable law, and the contents of
Borrower’s application for title and lien notations comply with all applicable
requirements. Alternatively, if the Manufactured Home is located in a state
that is a Title Surrender State, the title to each Manufactured Home securing a
Land/Home Loan has been surrendered and the Manufactured Home is legally
classified as real property under that statute.


 


32

















 


9.5 (f)      If
the Manufactured Home is located in a state in which the filing of a financing
statement under the Uniform Commercial Code is required to perfect a security
interest in manufactured housing, such filings or recordings have been duly
made and show Borrower as the secured party.


 


9.5 (g)     Each
Land/Home Loan has or will have a title insurance policy, in ALTA form or
equivalent, together with an ALTA 7 endorsement, from a recognized title
insurance company, insuring the priority of the Lien of the Mortgage and
meeting the usual requirements of Investors purchasing those Loans.


 


9.5 (h)     Each
Land/Home Loan has been evaluated or appraised in accordance with Title XI
of FIRREA.


 


9.5 (i)      Each
Manufactured Home has been delivered and set up on and Permanently Affixed to
the underlying real property in accordance with the manufacturer’s instructions
and all applicable state and local codes.


 


9.5 (j)      For
each Land/Home Loan, the obligor’s promise to pay is contained in a promissory note
and not a RIC.


 


9.6.         Special Affirmative Covenants
Concerning Warehousing Collateral


 


As long as the
Warehousing Commitment is outstanding or there remain any Obligations to be
paid or performed under this Agreement or under any other Loan Document, Borrower
must:


 


9.6 (a)     Warrant
and defend the right, title and interest of Lender in and to the Collateral
against the claims and demands of all Persons.


 


9.6 (b)     Service
or cause to be serviced all Pledged Loans in accordance with the standard
requirements of the issuers of Purchase Commitments covering them and all
applicable HUD, Fannie Mae and Freddie Mac requirements, including taking all
actions necessary to enforce the obligations of the obligors under such Loans.
Hold all escrow funds collected in respect of Pledged Loans in trust, without
commingling the same with non-custodial funds, and apply them for the purposes
for which those funds were collected.


 


9.6 (c)     Execute
and deliver to Lender, with respect to the Collateral, those further
instruments of sale, pledge, assignment or transfer, and those powers of
attorney, as required by Lender, in form and substance satisfactory to Lender,
and do and perform all matters and things necessary or desirable to be done or
observed, for the purpose of effectively creating, maintaining and preserving
the security and benefits intended to be afforded Lender under this Agreement.


 


9.6 (d)     Notify
Lender within 2 Business Days of any default under, or of the termination of,
any Purchase Commitment relating to any Pledged Loan.


 


9.6 (e)     Promptly
comply in all material respects with the terms and conditions of all Purchase
Commitments, and all extensions, renewals and modifications or substitutions of
or to all Purchase Commitments.  Deliver
or cause to be delivered to the Investor the Pledged Loans to be sold under
each Purchase Commitment not later than 3 Business Days prior to the mandatory
delivery date of the Pledged Loans under the Purchase Commitment.


 


9.6 (f)      Prior
to the origination by Borrower of any Pledged Loans for sale to Fannie Mae,
enter into an agreement among Borrower, Lender and Fannie Mae, pursuant to
which Fannie Mae agrees to send all cash proceeds of Pledged Loans sold by
Borrower to Fannie Mae to the Cash Collateral Account.


 


33

















 


9.6 (g)     Prior
to the origination by Borrower of any Loan to be registered on the MERS system,
obtain the approval of Lender and enter into an Electronic Tracking Agreement.


 


9.6 (h)     Compare
the names of every obligor, guarantor and other obligor of every Pledged Loan,
together with appropriate identifying information concerning those Persons
obtained by Borrower, against every Restriction List, and make certain that
none of the obligors, guarantors or other obligors of any Pledged Loan is a
Person named in any Restriction List and to whom the provision of financial
services is prohibited or otherwise restricted by applicable law.


 


9.7.         Special Negative Covenants Concerning
Warehousing Collateral


 


As long as the
Warehousing Commitment is outstanding or there remain any Obligations to be
paid or performed, Borrower must not, either directly or indirectly, without
the prior written consent of Lender:


 


9.7 (a)     Amend
or modify, or waive any of the terms and conditions of, or settle or compromise
any claim in respect of, any Pledged Loans.


 


9.7 (b)     Sell,
transfer or assign, or grant any option with respect to, or pledge (except
under this Agreement and, with respect to each Pledged Loan, the related
Purchase Commitment) any of the Collateral or any interest in any of the
Collateral.


 


9.7 (c)     Make
any compromise, adjustment or settlement in respect of any of the Collateral or
accept other than cash in payment or liquidation of the Collateral.


 


 


End of Article 9


 


34

















 


10.          DEFAULTS; REMEDIES


 


10.1.       Events of Default


 


The occurrence
of any of the following is an event of default (“Event of Default”):


 


10.1 (a)  Borrower fails to pay the principal of any
Warehousing Advance when due, whether at stated maturity, by acceleration, or
otherwise; or fails to pay any installment of interest on any Warehousing
Advance not later than 9 days after receipt by Borrower of the related invoice
from Lender; or fails to pay, within any applicable grace period, any other
amount due under this Agreement or any other Obligation of Borrower to Lender.


 


10.1 (b)  Borrower or any of its
Subsidiaries or any Guarantor fails to pay, or defaults in the payment of any
principal or interest on, any other indebtedness or any contingent obligation
(in the case of Borrower or any Subsidiary, which indebtedness or contingent
obligation is in excess of $500,000 and in the case of Guarantor, which
indebtedness or contingent obligation is in excess of $2,000,000) within any
applicable grace period; breaches or defaults with respect to any other
material term of any other indebtedness or of any loan agreement, mortgage,
indenture or other agreement relating to that indebtedness, if the effect of
that breach or default is to cause, or to permit the holder or holders of that
indebtedness (or a trustee on behalf of such holder or holders) to cause,
indebtedness in the aggregate amount of $500,000 or more (in the case of
Borrower or its Subsidiaries) or $2,000,000 or more (in the case of Guarantor)
to become or be declared due before its stated maturity (upon the giving or
receiving of notice, lapse of time, both, or otherwise).


 


10.1 (c)  Borrower fails to perform or comply with any term
or condition applicable to it contained in Sections 7.4 or 7.13, or in any
Section of Article 8.


 


10.1 (d)  Any representation or warranty made or deemed made
by Borrower under this Agreement, in any other Loan Document or in any written
statement or certificate at any time given by Borrower, other than the
representations and warranties set forth in Article 9 with respect to
specific Pledged Loans, is inaccurate or incomplete in any material respect on
the date as of which it is made or deemed made.


 


10.1 (e)  Borrower defaults in the performance of or compliance
with any term contained in this Agreement or any other Loan Document other than
those referred to in Sections 10.1 (a), 10.1 (c) or 10.1 (d) and such default
has not been remedied or waived within 30 days after the earliest of
(1) receipt by Borrower of Notice from Lender of that default,
(2) receipt by Lender of Notice from Borrower of that default or
(3) the date Borrower should have notified Lender of that default under
Section 7.7(c) or 7.7(d).


 


10.1 (f)  An “event of default” (however defined) occurs
under any agreement between Borrower and Lender or an Affiliate of Lender other
than this Agreement and the other Loan Documents, Lender has notified Borrower
thereof, and the cure period or appeal period, if any, for the event of default
has expired.


 


10.1 (g)  A case (whether voluntary or involuntary) is filed
by or against Borrower or any Subsidiary of Borrower or any Guarantor under any
applicable bankruptcy, insolvency or other similar federal or state law; or a
court of competent jurisdiction appoints a receiver (interim or permanent),
liquidator, sequestrator, trustee, custodian or other officer having similar
powers over Borrower or any Subsidiary of Borrower or any Guarantor, or over
all


 


35

















 


or a
substantial part of their respective properties or assets; or Borrower or any
Subsidiary of Borrower or any Guarantor (1) consents to the appointment of or
possession by a receiver (interim or permanent), liquidator, sequestrator,
trustee, custodian or other officer having similar powers over Borrower or any
Subsidiary of Borrower or any Guarantor, or over all or a substantial part of
their respective properties or assets, (2) makes an assignment for the
benefit of creditors, or (3) fails, or admits in writing its inability, to
pay its debts as those debts become due.


 


10.1 (h)  Borrower fails to perform any contractual
obligation to repurchase Loans, if such obligations that Borrower has failed to
perform in the aggregate exceed $500,000.


 


10.1 (i)  Any money judgment, writ or warrant of attachment
or similar process involving an amount in excess of $200,000 is entered or
filed against Borrower or any of its Subsidiaries or any of their respective
assets and remains undischarged, unvacated, unbonded or unstayed for a period
of 30 days or 5 days before the date of any proposed sale under that money
judgment, writ or warrant of attachment or similar process.


 


10.1 (j)  Any order, judgment or decree  decreeing the dissolution of
Borrower is entered and remains undischarged or unstayed for a period of 20
days.


 


10.1 (k)  Borrower purports to disavow the Obligations or
contests the validity or enforceability of any Loan Document.


 


10.1 (l)  Any Guarantor purports to disavow its obligations
under its Guaranty or contests the validity or enforceability of the Guaranty.


 


10.1 (m)  Any individual Guarantor dies or becomes
incapacitated.


 


10.1 (n)  Lender’s security interest on any portion of the
Collateral becomes unenforceable or otherwise impaired.


 


10.1 (o)  A material adverse change occurs in Borrower’s
financial condition, business, properties, or operations, or in Borrower’s
ability to repay the Obligations.


 


10.1 (p)  Any Lien for any taxes, assessments or other
governmental charges (1) in the amount of $10,000 or more is filed against
Borrower or any of its property and remains unpaid for 45 days or more, (2)
obtains priority that is equal to or greater than the priority of Lender’s
security interest in any of the Collateral, or (3) is enforced against Borrower
or any of its property.


 


10.1 (q)  Guarantor ceases to own, directly or indirectly,
all of the capital stock of Borrower.


 


10.2.       Remedies


 


10.2 (a)  If an Event of Default described in
Section 10.1 (g) occurs with respect to Borrower or any Guarantor, the
Warehousing Commitment will automatically terminate and the unpaid principal
amount of and accrued interest on the Warehousing Note and all other
Obligations will automatically become due and payable, without presentment,
demand or other Notice or requirements of any kind, all of which Borrower
expressly waives.


 


10.2 (b)  If any other Event of Default occurs, Lender may,
by Notice to Borrower, terminate the Warehousing Commitment and declare the
Obligations to be immediately due and payable.


 


10.2 (c)  If any Event of Default occurs, Lender may also
take any of the following actions:


 


36

















 


(1)           Foreclose
upon or otherwise enforce its security interest in and Lien on the Collateral
to secure all payments and performance of the Obligations in any manner
permitted by law or provided for in the Loan Documents.


 


(2)           Notify
all obligors under any of the Collateral that the Collateral has been assigned
to Lender (or to another Person designated by Lender) and that all payments on
that Collateral are to be made directly to Lender (or such other Person);
settle, compromise or release, in whole or in part, any amounts any obligor or
Investor owes on any of the Collateral on terms acceptable to Lender; enforce
payment and prosecute any action or proceeding involving any of the Collateral;
and where any Collateral is in default, foreclose on and enforce any Liens
securing that Collateral in any manner permitted by law and sell any property
acquired as a result of those enforcement actions.


 


(3)           Prepare
and submit for filing Uniform Commercial Code amendment statements evidencing
the assignment to Lender or its designee of any Uniform Commercial Code
financing statement filed in connection with any item of Collateral.


 


(4)           Transfer
Borrower’s Lien on any title related to any item of Collateral to Lender.  This may involve re-titling the item of
Collateral.


 


(5)           Act,
or contract with a third party to act at Borrower’s expense, as servicer or
subservicer of Collateral requiring servicing and perform all obligations
required under any Collateral, including Servicing Contracts and Purchase
Commitments.


 


(6)           Require
Borrower to assemble and make available to Lender the Collateral and all
related books and records at a place designated by Lender.


 


(7)           Enter
onto property where any Collateral or related books and records are located and
take possession of those items with or without judicial process; and obtain
access to Borrower’s data processing equipment, computer hardware and software
relating to the Collateral and use all of the foregoing and the information
contained in the foregoing in any manner Lender deems necessary for the purpose
of effectuating its rights under this Agreement and any other Loan Document.


 


(8)           Before
the disposition of the Collateral, prepare it for disposition in any manner and
to the extent Lender deems appropriate.


 


(9)           Exercise
all rights and remedies of a secured creditor under the Uniform Commercial Code
of Minnesota or other applicable law, including selling or otherwise disposing
of all or any portion of the Collateral at one or more public or private sales,
whether or not the Collateral is present at the place of sale, for cash or
credit or future delivery, on terms and conditions and in the manner as Lender
may determine, including sale under any applicable Purchase Commitment.  Borrower waives any right it may have to
prior notice of the sale of all or any portion of the Collateral to the extent
allowed by applicable law.  If notice is
required under applicable law, Lender will give Borrower not less than 10 days’
notice of any public sale or of the date after which any private sale may be
held.  Borrower agrees that 10 days’
notice is reasonable notice.  Lender
may, without notice or publication, adjourn any public or private sale one or
more times by announcement at the time and place fixed for the sale, and the
sale may be held at any time or place announced at the adjournment.  In the case of a sale of all or any portion
of the Collateral on credit or for future delivery, the Collateral sold on
those terms may be may be retained by Lender until the purchaser pays the
selling price or takes possession of the Collateral.  Lender has no liability to


 


37

















 


Borrower if a
purchaser fails to pay for or take possession of Collateral sold on those
terms, and in the case of any such failure, Lender may sell the Collateral
again upon notice complying with this Section.


 


(10)         Instead
of or in conjunction with exercising the power of sale authorized by
Section 10.2 (c)(9), Lender may proceed by suit at law or in equity to
collect all amounts due on the Collateral, or to foreclose Lender’s Lien on and
sell all or any portion of the Collateral pursuant to a judgment or decree of a
court of competent jurisdiction.


 


(11)         Proceed
against Borrower on the Warehousing Note or against any Guarantor under the
Guaranty.


 


(12)         Retain
all excess proceeds from the sale or other disposition of the Collateral, and
apply them to the payment of the Obligations under Section 10.3.


 


10.2 (d)  Lender will incur no liability as a result of the
commercially reasonable sale or other disposition of all or any portion of the
Collateral at any public or private sale or other disposition.  Borrower waives (to the extent permitted by
law) any claims it may have against Lender arising by reason of the fact that
the price at which the Collateral may have been sold at a private sale was less
than the price that Lender might have obtained at a public sale, or was less
than the aggregate amount of the outstanding Warehousing Advances, accrued and
unpaid interest on those Warehousing Advances and unpaid fees, even if Lender
accepts the first offer received and does not offer the Collateral to more than
one offeree.  Borrower agrees that any
sale of Collateral under the terms of a Purchase Commitment, or any other
disposition of Collateral arranged by Borrower, whether before or after the
occurrence of an Event of Default, will be deemed to have been made in a
commercially reasonable manner.


 


10.2 (e)  Borrower waives any rights it may have to prior
notice of the sale of Pledged Loans, and Borrower agrees that Lender may
purchase Pledged Loans at a private sale of such Collateral.


 


10.2 (f)  Borrower specifically waives and releases (to the
extent permitted by law) any equity or right of redemption, stay or appraisal
that Borrower has or may have under any rule of law or statute now existing or
adopted after the date of this Agreement, and any right to require Lender to
(1) proceed against any Person, (2) proceed against or exhaust any of
the Collateral or pursue its rights and remedies against the Collateral in any
particular order or (3) pursue any other remedy within its power.  Lender is not required to take any action to
preserve any rights of Borrower against holders of mortgages having priority to
the Lien of any Mortgage or Security Agreement included in the Collateral or to
preserve Borrower’s rights against other prior parties.


 


10.2 (g)  Lender may, but is not obligated to, advance any
sums or do any act or thing necessary to uphold or enforce the Lien and
priority of, or the security intended to be afforded by, any Mortgage or
Security Agreement included in the Collateral, including payment of delinquent
taxes or assessments and insurance premiums. 
All advances, charges, costs and expenses, including reasonable
attorneys’ fees and disbursements, incurred or paid by Lender in exercising any
right, power or remedy conferred by this Agreement, or in the enforcement of
this Agreement, together with interest on those amounts at the Default Rate,
from the time paid by Lender until repaid by Borrower, are deemed to be
principal outstanding under this Agreement and the Warehousing Note.


 


10.2 (h)  No failure or delay on the part of Lender to
exercise any right, power or remedy provided in this Agreement or under any
other Loan Document, at law or in equity, will operate as a waiver of that
right, power or remedy.  No single or
partial exercise by Lender of any


 


38

















 


right, power
or remedy provided under this Agreement or any other Loan Document, at law or
in equity, precludes any other or further exercise of that right, power, or
remedy by Lender, or Lender’s exercise of any other right, power or
remedy.  Without limiting the foregoing,
Borrower waives all defenses based on the statute of limitations to the extent
permitted by law.  The remedies provided
in this Agreement and the other Loan Documents are cumulative and are not
exclusive of any remedies provided at law or in equity.


 


10.2 (i)  Borrower grants Lender a license or other right to
use, without charge, Borrower’s computer programs, other programs, labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in advertising for sale and selling
any of the Collateral, and Borrower’s rights under all licenses and all other
agreements related to the foregoing inure to Lender’s benefit until the
Obligations are paid in full.


 


10.3.       Application of Proceeds


 


Lender may
apply the proceeds of any sale, disposition or other enforcement of Lender’s
Lien on all or any portion of the Collateral to the payment of the Obligations
in the order Lender determines in its sole discretion.  From and after the indefeasible payment to
Lender of all of the Obligations, any remaining proceeds of the Collateral will
be paid to Borrower, or to its successors or assigns, or as a court of
competent jurisdiction may direct.  If
the proceeds of any sale, disposition or other enforcement of the Collateral
are insufficient to cover the costs and expenses of that sale, disposition or
other enforcement and payment in full of all Obligations, Borrower is liable
for the deficiency.


 


10.4.       Lender Appointed Attorney-in-Fact


 


Borrower
appoints Lender its attorney-in-fact, with full power of substitution, for the
purpose of carrying out the provisions of this Agreement, the Warehousing Note
and the other Loan Documents and taking any action and executing any
instruments that Lender deems necessary or advisable to accomplish that
purpose.  Borrower’s appointment of
Lender as attorney-in-fact is irrevocable and coupled with an interest.  Without limiting the generality of the
foregoing, Lender may give notice of its Lien on the Collateral to any Person,
either in Borrower’s name or in its own name, endorse all Pledged Loans payable
to the order of Borrower, prepare and submit for filing Uniform Commercial Code
amendment statements with respect to any Uniform Commercial Code financing
statements filed in connection with any item of Collateral, assign to itself
Borrower’s Lien noted on any certificate of title for any item of Collateral,
take any action to perfect or maintain a security interest in the Collateral or
to maintain or collect insurance on the Collateral, or receive, endorse and
collect all checks made payable to the order of Borrower representing payment
on account of the principal of or interest on, or the proceeds of sale of, any
of the Pledged Loans and give full discharge for those transactions, and,
enforce the Retailer Agreement with respect to any of the Pledged Loans.


 


10.5.       Right of Set-Off


 


If Borrower
defaults in the payment of any Obligation or in the performance of any of its
duties under the Loan Documents, Lender may, without Notice to or demand on
Borrower (which Notice or demand Borrower expressly waives), set-off,
appropriate or apply any property of Borrower held at any time by Lender, or
any indebtedness at any time owed by Lender to or for the account of Borrower,
against the Obligations, whether or not those Obligations have matured.  Lender will


 


39

















 


provide
Borrower with notice by telephonic, facsimile or e-mail within a reasonable
time after any set-off under this Section.


 


 


End of Article 10


 


40

















 


11.          MISCELLANEOUS


 


11.1.       Notices


 


Except where telephonic, facsimile or e-mail notice is expressly
authorized by this Agreement, all communications required or permitted to be
given or made under this Agreement (“Notices”) must be in writing and
must be sent by manual delivery, overnight courier or United States mail
(postage prepaid), addressed as follows (or at such other address as may be
designated by it in a Notice to the other):


 


	
  If to
  Borrower:

  	
  HomeOne
  Credit Corp.

  
	
   

  	
  2150 W. 18th
  Street, Suite 300

  
	
   

  	
  Houston,
  Texas 77008

  
	
   

  	
  Attention:

  	
  Gary Busch,
  SVP Finance

  
	
   

  	
   

  	
  and Capital
  Markets

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  With a copy
  to the General Counsel at the same address

  
	
   

  	
   

  
	
  If to
  Lender:

  	
  Residential
  Funding Corporation

  
	
   

  	
  7501
  Wisconsin Avenue, Suite 900

  
	
   

  	
  Bethesda,
  Maryland 20814-6528

  
	
   

  	
  Attention:
  Jim Clapp, Director

  
	
   

  	
  Facsimile:  (301) 215-6201

  



 


All periods of
Notice will be measured from the date of delivery if delivered manually or by
facsimile, from the first Business Day after the date of sending if sent by
overnight courier or from 4 days after the date of mailing if sent by United
States mail, except that Notices to Lender under Article 2 and
Section 3.3 (f) shall be deemed to have been given only when actually
received by Lender.  Borrower authorizes
Lender to accept Borrower’s bailee pledge agreements, Warehousing Advance
Requests, shipping requests, wire transfer instructions and security delivery
instructions transmitted to Lender by facsimile or by RFConnects Delivery, and
those documents, when transmitted to Lender by facsimile or RFConnects
Delivery, have the same force and effect as the originals.


 


11.2.       Reimbursement Of Expenses; Indemnity


 


Borrower
must:  (a) pay Lender a document
production fee in connection with the preparation and negotiation of this
Agreement; (b) pay such additional documentation production fees as Lender
may require and all out-of-pocket costs and expenses of Lender, including
reasonable fees, service charges and disbursements of counsel to Lender, in
connection with the amendment, enforcement and administration of this
Agreement, the Warehousing Note, and other Loan Documents, the making,
repayment and payment of interest on the Warehousing Advances and the payment
of all other Obligations under Loan Documents, and pay Lender the allocated
costs of internal counsel in connection with the amendment of this Agreement;
(c) indemnify, pay and hold harmless Lender and any other holder of the
Warehousing Note from and against all present and future stamp, documentary and
other similar taxes with respect to the foregoing matters and save Lender and
any other holder of the Warehousing Note harmless from and against all
liabilities with respect to or resulting from any delay or omission to pay such
taxes; and (d) indemnify, pay and hold harmless Lender and all of its
Affiliates, officers, directors, employees or agents and any subsequent holder
of the Warehousing Note (collectively called the “Indemnitees”) from and
against all liabilities, obligations, losses, damages, penalties, judgments,


 


41

















 


suits, costs,
expenses and disbursements of every kind or nature (including the reasonable
fees and disbursements of counsel to the Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not the
Indemnitees have been designated as parties to such proceeding) that may be
imposed upon, incurred by or asserted against such Indemnitees in any manner
relating to or arising out of this Agreement, the Warehousing Note, or any
other Loan Document or any of the transactions contemplated by this Agreement,
the Warehousing Note and the other Loan Documents, including against all
liabilities, obligations, losses, damages, penalties, judgments, suits, costs,
expenses and disbursements of every kind or nature (including the reasonable
fees and disbursements of counsel to the Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not the
Indemnitees have been designated as parties to such proceeding) arising from
any breach of Sections 9.2(n) or 9.6 (h) or the making of any Loan in which any
obligor, guarantor or other obligor is a Person named in any Restriction List
and to whom the provision of financial services is prohibited or otherwise
restricted by applicable law (“Indemnified Liabilities”), except that
Borrower has no obligation under this Agreement with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of any such
Indemnitees.  To the extent that the
undertaking to indemnify, pay and hold harmless as set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, Borrower must contribute the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnitees or any of them.  The agreement of Borrower contained in this
Article survives the expiration or termination of this Agreement and the
payment in full of the Warehousing Note. 
Attorneys’ fees and disbursements incurred in enforcing, or on appeal
from, a judgment under this Agreement are recoverable separately from and in
addition to any other amount included in such judgment, and this clause is
intended to be severable from the other provisions of this Agreement and to
survive and not be merged into such judgment.


 


11.3.       Financial Information


 


All financial
statements and reports furnished to Lender under this Agreement must be
prepared in accordance with GAAP, applied on a basis consistent with that
applied in preparing the financial statements as at the end of and for
Borrower’s most recent fiscal year (except to the extent otherwise required to
conform to good accounting practice).


 


11.4.       Terms Binding Upon Successors; Survival
of Representations


 


The terms and
provisions of this Agreement are binding upon and inure to the benefit of
Borrower, Lender and their respective successors and assigns.  All of Borrower’s representations,
warranties, covenants and agreements survive the making of any Warehousing
Advance and, except where a longer period is set forth in this Agreement,
remain effective for as long as the Warehousing Commitment is outstanding or
there remain any Obligations to be paid or performed.


 


11.5.       Assignment


 


Borrower
cannot assign this Agreement.  Lender
may at any time, without Notice to or the consent of Borrower, transfer or
assign, in whole or in part, its interest in this Agreement and the Warehousing
Note along with Lender’s security interest in any of the Collateral (a) in connection
with a participation agreement, (b) to an Affiliate, or (c) in connection with
any arrangement maintained by Lender to fund credit facilities provided by the
Lender, and any such assignee of Lender will be considered to be the Lender
under this Agreement and may enforce this Agreement, the Warehousing Note and
its security interest in the Collateral assigned.  If Lender intends to assign this Agreement other than (i) in
connection with a participation agreement, (ii) to


 


42

















 


an Affiliate,
or (iii) in connection with any arrangement maintained by Lender to fund credit
facilities provided by the Lender, then Lender will provide Notice to Borrower
no later than 30 days prior to the assignment, and Borrower may elect to
terminate this Agreement as set forth in Section 11.18.  Borrower’s election to terminate this
Agreement must be exercised within ten (10) Business Days of Lender’s Notice,
and failure of Borrower to provide Notice of termination to Lender within ten
(10) Business Days of Lender’s Notice will be deemed to be consent by Borrower
to an assignment described in the preceding sentence.


 


11.6.       Amendments


 


Except as
otherwise provided in this Agreement, this Agreement may not be amended,
modified or supplemented unless the amendment, modification or supplement is
set forth in a writing signed by both Borrower and Lender.


 


11.7.       Governing Law


 


This Agreement
and the other Loan Documents are governed by the laws of the State of
Minnesota, without reference to its principles of conflicts of laws.


 


11.8.       Participations


 


Lender may at
any time sell, assign or grant participations in, or otherwise transfer to any
other Person (“Participant”), all or part of the Obligations.  Without limiting Lender’s exclusive right to
collect and enforce the Obligations, Borrower agrees that each participation
will give rise to a debtor-creditor relationship between Borrower and the
Participant, and Borrower authorizes each Participant, upon the occurrence of
an Event of Default, to proceed directly by right of setoff, banker’s lien or
otherwise, against any assets of Borrower that may be held by that
Participant.  Borrower authorizes Lender
to disclose to prospective and actual Participants all information in Lender’s
possession concerning Borrower, this Agreement and the Collateral.  Lender agrees that it will only disclose
Borrower information to prospective and actual Participants, if those
Participants are subject to a confidentiality agreement substantially in the
form of Exhibit J to this Agreement.


 


11.9.       Relationship of the Parties


 


This Agreement
provides for the making and repayment of Warehousing Advances by Lender (in its
capacity as a lender) and Borrower (in its capacity as a borrower), for the
payment of interest on those Warehousing Advances and for the payment of
certain fees by Borrower to Lender.  The
relationship between Lender and Borrower is limited to that of creditor and
secured party on the part of Lender and of debtor on the part of Borrower.  The provisions of this Agreement and the
other Loan Documents for compliance with financial covenants and the delivery
of financial statements and other operating reports are intended solely for the
benefit of Lender to protect its interest as a creditor and secured party.  Nothing in this Agreement creates or may be
construed as permitting or obligating Lender to act as a financial or business
advisor or consultant to Borrower, as permitting or obligating Lender to control
Borrower or to conduct Borrower’s operations, as creating any fiduciary
obligation on the part of Lender to Borrower, or as creating any joint venture,
partnership, agency or other relationship between Lender and Borrower other
than as explicitly and specifically stated in the Loan Documents.  Borrower acknowledges that it has had the
opportunity to obtain the advice of experienced counsel of its own choice in
connection with the negotiation and execution of the Loan Documents and to
obtain the advice of that counsel with respect to all matters contained in the
Loan Documents, including the waivers of jury trial and of punitive,
consequential, special or indirect damages contained in Sections 11.16 and
11.17, respectively.  Borrower further
acknowledges that it is experienced with respect to


 


43

















 


financial and
credit matters and has made its own independent decisions to apply to Lender
for credit and to execute and deliver this Agreement.


 


11.10.     Severability


 


If any
provision of this Agreement is declared to be illegal or unenforceable in any
respect, that provision is null and void and of no force and effect to the
extent of the illegality or unenforceability, and does not affect the validity
or enforceability of any other provision of the Agreement.


 


11.11.     Consent to Credit References


 


Borrower
consents to the disclosure of information regarding Borrower and its
Subsidiaries and their relationships with Lender to Persons making credit
inquiries to Lender.  This consent is
revocable by Borrower at any time upon Notice to Lender as provided in
Section 11.1.


 


11.12.     Counterparts


 


This Agreement
may be executed in any number of counterparts, each of which will be deemed an
original, but all of which together constitute but one and the same instrument.


 


11.13.     Headings/Captions


 


The captions
or headings in this Agreement and the other Loan Documents are for convenience
only and in no way define, limit or describe the scope or intent of any
provision of this Agreement or any other Loan Document.


 


11.14.     Entire Agreement


 


This
Agreement, the Warehousing Note and the other Loan Documents represent the
final agreement among the parties with respect to their subject matter, and may
not be contradicted by evidence of prior or contemporaneous oral agreements among
the parties.  There are no oral
agreements among the parties with respect to the subject matter of this
Agreement, the Warehousing Note and the other Loan Documents.


 


11.15.     Consent to Jurisdiction


 


AT THE OPTION
OF LENDER, THIS AGREEMENT, THE WAREHOUSING NOTE AND THE OTHER LOAN DOCUMENTS
MAY BE ENFORCED IN ANY STATE OR FEDERAL COURT WITHIN THE STATE OF
MINNESOTA.  BORROWER CONSENTS TO THE
JURISDICTION AND VENUE OF THOSE COURTS, AND WAIVES ANY OBJECTION TO THE JURISDICTION
OR VENUE OF THOSE COURTS, INCLUDING THE OBJECTION THAT VENUE IN THOSE COURTS IS
NOT CONVENIENT.  ANY SUCH SUIT, ACTION
OR PROCEEDING MAY BE COMMENCED AND INSTITUTED BY SERVICE OF PROCESS UPON
BORROWER BY FIRST CLASS REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
ADDRESSED TO BORROWER AT ITS ADDRESS LAST KNOWN TO LENDER.  BORROWER’S CONSENT AND AGREEMENT UNDER THIS
SECTION DOES NOT AFFECT LENDER’S RIGHT TO ACCOMPLISH SERVICE OF PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION OR COURT.  IN THE EVENT BORROWER COMMENCES ANY ACTION
IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT


 


44

















 


THEORY ARISING
DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS, LENDER AT ITS OPTION MAY HAVE THE CASE TRANSFERRED TO A
STATE OR FEDERAL COURT WITHIN THE STATE OF MINNESOTA OR, IF A TRANSFER CANNOT
BE ACCOMPLISHED UNDER APPLICABLE LAW, MAY HAVE BORROWER’S ACTION DISMISSED
WITHOUT PREJUDICE.


 


11.16.     Waiver of Jury Trial


 


BORROWER AND
LENDER EACH PROMISES AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY A JURY, AND FULLY WAIVES ANY RIGHT TO TRIAL BY JURY TO THE
EXTENT THAT ANY SUCH RIGHT NOW EXISTS OR ARISES AFTER THE DATE OF THIS
AGREEMENT.  THIS WAIVER OF THE RIGHT TO
TRIAL BY JURY IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY BORROWER AND
LENDER, AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH ISSUE FOR WHICH THE
RIGHT TO TRIAL BY JURY WOULD OTHERWISE APPLY. 
LENDER AND BORROWER ARE EACH AUTHORIZED AND DIRECTED TO SUBMIT THIS
AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE
PARTIES TO THIS AGREEMENT AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO
TRIAL BY JURY.  FURTHER, BORROWER AND
LENDER EACH CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE OTHER PARTY,
INCLUDING THE OTHER PARTY’S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
TO ANY OF ITS REPRESENTATIVES OR AGENTS THAT THE OTHER PARTY WILL NOT SEEK TO
ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.


 


45

















 


11.17.     Waiver of Punitive, Consequential, Special or
Indirect Damages


 


BORROWER AND
LENDER EACH WAIVES ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL OR INDIRECT DAMAGES FROM THE OTHER PARTY OR ANY OF THE OTHER PARTY’S
AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS WITH RESPECT TO ANY AND
ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY
EITHER PARTY AGAINST THE OTHER PARTY OR ANY OF THE OTHER PARTY’S AFFILIATES,
OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS WITH RESPECT TO ANY MATTER ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.  THIS WAIVER OF THE RIGHT TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES IS KNOWINGLY AND VOLUNTARILY GIVEN
BY EACH OF BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND
EACH ISSUE FOR WHICH THE RIGHT TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR
INDIRECT DAMAGES WOULD OTHERWISE APPLY. 
EACH OF BORROWER AND LENDER IS AUTHORIZED AND DIRECTED TO SUBMIT THIS
AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE
PARTIES TO THIS AGREEMENT AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO
SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES.


 


11.18.     Termination Rights


 


Borrower may
terminate this Agreement at any time and for any reason upon Notice to Lender
and repayment in full of all outstanding Obligations within one (1) Business Day
of Borrower’s Notice of termination (the “Early Termination Date”).  Borrower is not entitled to any refund of
Warehousing Commitment Fees paid to Lender prior to an Early Termination Date,
and Borrower is not obligated to pay Lender any Warehousing Commitment Fee
after an Early Termination Date.


 


 


End of Article 11


 


46

















 


12.          DEFINITIONS


 


12.1.       Defined Terms


 


Capitalized
terms defined below or elsewhere in this Agreement have the following meanings
or, as applicable, the meanings given to those terms in Exhibits to this
Agreement:


 


“Advance
Rate” means, with respect to any Loan, the Advance Rate set forth in Exhibit H
for that type of Loan.


 


“Affiliate”
means, when used with reference to any Person, (a) each Person that, directly
or indirectly, controls, is controlled by or is under common control with, the
Person referred to, (b) each Person that beneficially owns or holds,
directly or indirectly, 5% or more of any class of voting Equity Interests of the
Person referred to, (c) each Person, 5% or more of the voting Equity Interests
of which is beneficially owned or held, directly or indirectly, by the Person
referred to, and (d) each of such Person’s officers, directors, joint venturers
and partners.  For these purposes, the
term “control” (including the terms “controlled by” and “under common control
with”) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of the Person in question.  Affiliate included HomeComings Financial
Network, Inc.


 


“Aggregate
Payment Obligation” means with respect to all Eligible Subject Loans
purchased by Lender under Shared Execution Manufactured Housing Loan Purchase
Agreements, all amounts other than the Purchase Price payable to Borrower by
Lender with respect to such Eligible Subject Loans, whether as an Excess Coupon
Cash Flow Distribution or otherwise.


 


“Agreement”
means this Warehousing Credit and Security Agreement, either as originally
executed or as it may be amended, restated, renewed or replaced.


 


“Appraised
Property Value” means with respect to an interest in real property, the
then current fair market value of the real property and any improvements on it
as of recent date determined in accordance with Title XI of FIRREA by a
qualified appraiser who is a member of the American Institute of Real Estate
Appraisers or other group of professional appraisers.


 


“Approved
Custodian” means a Person that Lender deems acceptable, in its sole
discretion, to hold Loans as agent for an Investor that has issued a Purchase
Commitment for those Loans.


 


“Audited
Statement Date” means the date of Borrower’s most recent audited financial
statements (and, if applicable, Borrower’s Subsidiaries, on a consolidated
basis) delivered to Lender under this Agreement.


 


“Bank One”
means Bank One, National Association, Chicago, Illinois, or any successor bank.


 


“Bank One
Prime Rate” means, as of any date of determination, the highest prime rate
quoted by Bank One and most recently published by Bloomberg L.P.  If the prime rate for Bank One is not quoted
or published for any period, then during that period the term “Bank One
Prime Rate” means the highest prime rate published in the most recent
edition of The
Wall Street Journal in its regular column entitled “Money Rates.”


 


“Borrower”
has the meaning set forth in the first paragraph of this Agreement.


 


47

















 


“Business
Day” means any day other than Saturday, Sunday or any other day on which national
banking associations are closed for business.


 


“Calendar
Quarter” means the 3 month period beginning on each January 1,
April 1, July 1 or October 1.


 


“Cash
Collateral Account” means a demand deposit account maintained at the
Funding Bank in Lender’s name and designated for receipt of the proceeds of the
sale or other disposition of Collateral.


 


“Chattel
Loan” means a RIC and also means a Home-Only Loan.


 


“Closing
Date” has the meaning set forth in the Recitals to this Agreement.


 


“Collateral”
has the meaning set forth in Section 4.1.


 


“Collateral
Documents” means, with respect to each Loan, (a) the Note, the
Mortgage and all other documents, including, if applicable, any Security
Agreement, executed in connection with or relating to the Loan, and all related
titles, title applications, UCC-1s, UCC-1Ads, and title surrender certificates,
(b) as applicable, the original lender’s ALTA Policy of Title Insurance or
its equivalent, documents evidencing the FHA Commitment to Insure, the VA
Guaranty or private mortgage insurance, the appraisal, the Regulation Z
statement, the environmental assessment, the engineering report, certificates
of casualty or hazard insurance, credit information on the maker of the Note,
the HUD-1 or corresponding purchase advice, (c) any other document listed
in Exhibit B, and (d) any other document that is customarily
desired for inspection or transfer incidental to the purchase of any Note by an
Investor or that is customarily executed by the seller of a Note to an
Investor.


 


“Committed
Purchase Price” means for an Eligible Loan the dollar price as set forth in
the Purchase Commitment or, if the price is not expressed in dollars, the
product of the Note Amount multiplied by the price (expressed as a percentage)
as set forth in the Purchase Commitment for the Eligible Loan.


 


“Compliance
Certificate” means a certificate executed on behalf of Borrower by its
chief financial officer or its treasurer or by another officer approved by
Lender, substantially in the form of Exhibit E.


 


“Debt”
means (a) all indebtedness or other obligations of a Person (and, if
applicable, that Person’s Subsidiaries, on a consolidated basis) that, in
accordance with GAAP, would be included in determining total liabilities as
shown on the liabilities side of a balance sheet of that Person on the date of
determination, plus (b) all indebtedness or other obligations of
that Person (and, if applicable, that Person’s Subsidiaries, on a consolidated
basis) for borrowed money or for the deferred purchase price of property or
services.  For purposes of calculating a
Person’s Debt, Subordinated Debt more than 6 months after the Warehousing
Maturity Date may be excluded from that Person’s indebtedness.


 


“Default”
means the occurrence of any event or existence of any condition that, but for
the giving of Notice or the lapse of time, would constitute an Event of
Default.


 


“Default
Rate” means, for any Warehousing Advance, the Interest Rate applicable to
that Warehousing Advance plus 4% per annum.  If no Interest Rate is applicable to a Warehousing Advance, “Default
Rate” means, for that Warehousing Advance, the highest Interest Rate then
applicable to any outstanding Warehousing Advance plus 4% per annum.


 


48

















 


“Depository
Benefit” means the compensation received by Lender, directly or indirectly,
as a result of Borrower’s maintenance of Eligible Balances with a Designated
Bank.


 


“Designated
Bank” means any bank designated by Lender as a Designated Bank, but only
for as long as Lender has an agreement under which Lender receives Depository
Benefits from that bank.


 


“Designated
Bank Charges” means any fees, interest or other charges that would
otherwise be payable to a Designated Bank in connection with Eligible Balances
maintained at the Designated Bank, including deposit insurance premiums,
service charges and any other charges that may be imposed by governmental
authorities from time to time.


 


“Early
Termination Date” has the meaning set forth in Section 11.18.


 


“Electronic
Advance Request” means an electronic transmission through RFConnects
Delivery containing the same information as Exhibit A to this Agreement.


 


“Electronic
Tracking Agreement” means an Electronic Tracking Agreement, on the form
prescribed by Lender, among Borrower, Lender, MERS, and MERSCORP, Inc.


 


“Eligible
Loan” means a RIC or Land/Home Loan that complies with the standards set
out in the Underwriting Guidelines, that was originated in the 30 days prior to
the Warehousing Advance Request for that Loan (unless the Eligible Loan is a
Seasoned Loan that has been re-characterized as an Eligible Loan by Lender),
and that satisfies the conditions and requirements set forth in Exhibit H.


 


“Eligible
Subject Loan” has the meaning set forth in the Loan Sale Commitment.


 


“Equity
Interests” means all shares, interests, participations or other
equivalents, however designated, of or in a Person (other than a natural
person), whether or not voting, including common stock, membership interests,
warrants, preferred stock, convertible debentures and all agreements,
instruments and documents convertible, in whole or in part, into any one or
more of the foregoing.


 


“ERISA”
means the Employee Retirement Income Security Act of 1974 and all rules and
regulations promulgated under that statute, as amended, and any successor
statute, rules, and regulations.


 


“ERISA
Affiliate” means any trade or business (whether or not incorporated) that
is a member of a group of which Borrower is a member and that is treated as a
single employer under Section 414 of the Internal Revenue Code.


 


“Event of
Default” means any of the conditions or events set forth in
Section 10.1.


 


“Exception
Loan” means a RIC or Land/Home Loan that is not an Eligible Loan, but which
has been approved as an Exception Loan by Lender, in its sole discretion, and
(unless the Exception Loan is a Seasoned Loan that has been re-characterized as
an Eligible Loan by Lender) was originated in the 30 days prior to the
Warehousing Advance Request for that Loan


 


“Excess
Coupon Cash Flow Distribution” has the meaning set forth in the applicable
Shared Execution Manufactured Housing Loan Purchase Agreement.


 


“Exchange
Act” means the Securities Exchange Act of 1934 and all rules and
regulations promulgated under that statute, as amended, and any successor
statute, rules, and regulations.


 


49

















 


“Fair
Market Value” means, at any time for a Loan, the present value of that Loan
based on assumptions concerning default frequency, severity of loss, prepayment
speeds and other relevant factors determined by Lender for Loans, in its good
faith sole discretion, in a manner consistent with Lender’s procedures and at a
price consistent with the price that Lender provides in competitive bid
transactions with third parties for similar Loans.


 


“Fannie Mae”
means Fannie Mae, a corporation created under the laws of the United States,
and any successor corporation or other entity.


 


“FHA”
means the Federal Housing Administration and any successor agency or other
entity.


 


“FICA”
means the Federal Insurance Contributions Act and all rules and regulations
promulgated under that statute, as amended, and any successor statute, rules
and regulations.


 


“FIRREA”
means the Financial Institutions Reform, Recovery and Enforcement Act of 1989
and all rules and regulations promulgated under that statute, as amended, and
any successor statute, rules, and regulations.


 


“First
Mortgage” means a Mortgage that constitutes a first Lien on the real
property and improvements described in or covered by that Mortgage.


 


“Freddie
Mac” means the Federal Home Loan Mortgage Corporation, a corporation
created under the laws of the United States, and any successor corporation or
other entity.


 


“Funding
Bank” means Bank One or any other bank designated by Lender as a Funding
Bank.


 


“Funding
Bank Agreement” means a letter agreement on the form prescribed by Lender
between the Funding Bank and Borrower authorizing Lender’s access to the
Operating Account.


 


“GAAP”
means generally accepted accounting principles set forth in opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and in statements and pronouncements of the
Financial Accounting Standards Board, or in opinions, statements or pronouncements
of any other entity approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.


 


“Ginnie Mae”
means the Government National Mortgage Association, an agency of the United
States government, and any successor agency or other entity.


 


“GMAC
Manufactured Housing Client Guide” means the applicable loan purchase guide
issued by Lender, as the same may be amended or replaced.


 


“Guarantor”
means, individually and collectively, FLEETWOOD ENTERPRISES, INC., and any
other Person that after the date of this Agreement guarantees all or any
portion of Borrower’s Obligations.


 


“Guarantor
Debt” means all present and future indebtedness of Borrower to Guarantor.


 


“Guaranty”
means a guaranty of all or any portion of Borrower’s Obligations.  If more than one Guaranty is executed and
delivered to Lender, the term “Guaranty” means each of the Guaranties
and all of them.


 


“Hedging
Arrangements” means, with respect to any Person, any agreements or other
arrangements (including interest rate swap agreements, interest rate cap
agreements and


 


50

















 


forward sale
agreements) entered into to protect that Person against changes in interest
rates or the market value of assets.


 


“High Cost
Loan” has the meaning set forth in the GMAC Manufactured Housing Client
Guide.


 


“Home
Center Loan Servicing Incentive Plan” means the asset protection
section of the HomeOne policies and procedures as of the Closing Date.


 


“Home-Only Loan” means a Loan for the purchase
or refinance of a Manufactured Home, evidenced by a Note and secured by a
Security Agreement.  The term “Home-Only
Loan” does not include a RIC.


 


“HUD”
means the Department of Housing and Urban Development, and any successor agency
or other entity.


 


“Indemnified
Liabilities” has the meaning set forth in Section 11.2.


 


“Indemnitees”
has the meaning set forth in Section 11.2.


 


“Interest
Rate” means, for any Warehousing Advance, the floating rate of interest
specified for that Warehousing Advance in Exhibit H.


 


“Interest
Rate Change Date” means the effective date of any Shared Execution
Manufactured Housing Loan Purchase Agreement.


 


“Interim
Statement Date” means the date of the most recent unaudited financial statements
of Borrower (and, if applicable, Borrower’s Subsidiaries, on a consolidated
basis) delivered to Lender under the Existing Agreement or this Agreement.


 


“Internal
Revenue Code” means the Internal Revenue Code of 1986, Title 26 of the
United States Code, and all rules, regulations and interpretations issued under
those statutory provisions, as amended, and any subsequent or successor federal
income tax law or laws, rules, regulations and interpretations.


 


“Investment
Company Act” means the Investment Company Act of 1940 and all rules and
regulations promulgated under that statute, as amended, and any successor
statute, rules, and regulations.


 


“Investor”
means Fannie Mae, Freddie Mac or a financially responsible private institution
that Lender deems acceptable, in its sole discretion, to issue Purchase
Commitments with respect to a particular category of Eligible Loans.


 


“Land/Home
Loan” means a Loan secured by both real property and a Manufactured Home.


 


“Land-in-Lieu” means a Loan where the obligor
granted a Mortgage on real property in lieu of making a cash down payment.


 


“Lender”
has the meaning set forth in the first paragraph of this Agreement.


 


“Leverage
Ratio” means the ratio of a Person’s Debt to Tangible Net Worth.  For purposes of calculating a Person’s
Leverage Ratio, Debt arising under Hedging Arrangements, to the extent of
assets arising under those Hedging Arrangements, may be excluded from that
Person’s Debt.


 


“LIBOR”
means, for each week, the rate of interest per annum that is equal to the
arithmetic mean of the U.S. Dollar London Interbank Offered Rates for 1 month
periods of certain U.S.


 


51

















 


banks as of
11:00 a.m. (London time) on the first Business Day of each week on which the
London Interbank market is open, as published by Bloomberg L.P.  If those interest rates are not offered or
published for any period, then during that period LIBOR means the London
Interbank Offered Rate for 1 month periods as published in The Wall Street Journal in
its regular column entitled “Money Rates” on the first Business Day of
each week on which the London Interbank market is open.


 


“Lien”
means any lien, mortgage, deed of trust, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature of such an agreement and any
agreement to give any security interest).


 


“Liquid
Assets” means the following unrestricted and unencumbered assets owned by a
Person (and, if applicable, that Person’s Subsidiaries, on a consolidated
basis) as of any date of determination: 
(a) cash, (b) funds on deposit in accounts with any bank located in
the United States (net of the aggregate amount payable under all outstanding
and unpaid checks, drafts and similar items drawn by a Person against those
accounts), (c) investment grade commercial paper, (d) money market funds
and (e) marketable securities.


 


“Loan”
means (a) a loan evidenced by a Note and secured by a Mortgage or, if
applicable, a Security Agreement, and includes a Home-Only Loan and a Land/Home
Loan, and (b) a RIC.


 


“Loan
Documents” means this Agreement, the Warehousing Note, the Guaranty, any
agreement of Borrower relating to Subordinated Debt or Guarantor Debt, and each
other document, instrument or agreement executed by Borrower in connection with
any of those documents, instruments and agreements, as originally executed or
as any of the same may be amended, restated, renewed or replaced.


 


“Loan Sale
Commitment” means the agreement of Borrower to sell Loans to Lender which
may be entered into after the date of this Agreement, as it may be amended,
restated, renewed or replaced.


 


“Loan-to-Value
Ratio” means, for any Loan, the ratio of (a) the maximum amount that
may be borrowed under the Loan (whether or not borrowed) at the time of
origination, plus the Note Amounts of all other Loans secured by senior
or pari passu Liens on the related Property, to (b) the Appraised Property
Value of the related Property.


 


“Manufactured
Home” means a structure that is built on a permanent chassis (steel frame)
with the wheel assembly necessary for transportation in one or more sections to
a permanent site or semi-permanent site, and that is built in compliance with
the requirements of the National Manufactured Housing Construction and Safety
Standards Act of 1974, as amended, and the regulations of the U.S. Department
of Housing and Urban Development.


 


“Margin
Stock” has the meaning assigned to that term in Regulation U of the Board
of Governors of the Federal Reserve System, as amended.


 


“MERS”
means Mortgage Electronic Registration Systems, Inc. and any successor entity.


 


“Miscellaneous
Fees and Charges” means the Collateral Operations Fees set forth on
Lender’s fee schedule attached as Exhibit I and all miscellaneous
disbursements, charges and expenses incurred by or on behalf of Lender for the
handling and administration of Warehousing Advances and Collateral, including
costs for Uniform Commercial Code, tax lien and judgment searches conducted by
Lender, filing fees, charges for wire transfers and check processing charges,
charges for security delivery fees, charges for overnight delivery of
Collateral to Investors, recording fees, Funding Bank service fees and
overdraft charges and Designated Bank Charges. 
Upon not less than 3 Business Days’ prior Notice to Borrower, Lender may
modify the Collateral


 


52

















 


Operations
Fees set forth in Exhibit I to conform to current Lender practices and,
as so modified, the revised Exhibit I will become part of this
Agreement.


 


“Mortgage”
means a mortgage or deed of trust on real property that is improved and
substantially completed (including real property to which a Manufactured Home
has been affixed in a manner such that the Lien of a mortgage or deed of trust
would attach to the Manufactured Home under applicable real property law).


 


“Multiemployer
Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA, to which either Borrower or any ERISA Affiliate of Borrower has any
obligation with respect to its employees.


 


“Note”
means (a) a promissory note secured by one or more Mortgages or, if applicable,
one or more Security Agreements, (b) a RIC, or (c) a Security Agreement that
contains the obligor’s promise to pay.


 


“Note
Amount” means, as of any date of determination, the then outstanding and
unpaid principal amount of a Note (whether or not an additional amount is
available to be drawn under that Note).


 


“Notices”
has the meaning set forth in Section 11.1.


 


“Obligations”
means all indebtedness, obligations and liabilities of Borrower to Lender and
Lender’s Subsidiaries (whether now existing or arising after the date of this
Agreement, voluntary or involuntary, joint or several, direct or indirect,
absolute or contingent, liquidated or unliquidated, or decreased or
extinguished and later increased and however created or incurred), including
Borrower’s obligations and liabilities to Lender under the Transaction
Documents and disbursements made in accordance with the terms of this Agreement
by Lender for Borrower’s account.


 


“Operating
Account” means a demand deposit account maintained at the Funding Bank in
Borrower’s name and designated for funding that portion of each Eligible Loan
not funded by a Warehousing Advance made against that Eligible Loan and for
returning any excess payment from an Investor for a Pledged Loan.


 


“Overdraft
Advance” has the meaning set forth in 3.7.


 


“Parent”
means Fleetwood Enterprises, Inc.


 


“Participant”
has the meaning set forth in Section 11.8.


 


“Permanently Affixed” means, with respect to a
Manufactured Home, that the Manufactured Home is anchored to real property by
attachment to a permanent foundation, constructed in accordance with applicable
state and local building codes and a manufacturer’s specifications in a manner
sufficient to validate any applicable manufacturer’s warranty, and is connected
to all appropriate residential utilities (e.g., water, gas, electricity or
sewer).


 


“Person”
means and includes natural persons, corporations, limited liability companies,
limited liability partnerships, limited liability limited partnerships, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions of those governments.


 


“Pinnacle
Retailer” means Retailer that (i) is not an Affiliate of Guarantor and (ii)
has been pre-approved by Lender in Lender’s sole discretion.


 


53

















 


“Plan”
means each employee benefit plan (whether in existence on the date of this
Agreement or established after that date), as that term is defined in
Section 3 of ERISA, maintained for the benefit of directors, officers or
employees of Borrower or any ERISA Affiliate.


 


“Pledged
Hedging Accounts” has the meaning set forth in Section 4.1 (g).


 


“Pledged
Hedging Arrangements” has the meaning set forth in Section 4.1 (g).


 


“Pledged
Loans” has the meaning set forth in Section 4.1 (b).


 


“Prohibited
Transaction” has the meanings set forth for such term in Section 4975
of the Internal Revenue Code and Section 406 of ERISA.


 


“Purchase
Commitment” means a written commitment, in form and substance satisfactory
to Lender, issued in favor of Borrower by an Investor under which that Investor
commits to purchase Loans.


 


“Purchase
Price” has
the meaning set forth in the applicable Shared Execution Manufactured Housing
Loan Purchase Agreement.


 


“Release
Amount” has the meaning set forth in Section 4.3 (d).


 


“Repossessed
Manufactured Home” means a Manufactured Home that has been previously
financed by Borrower and repossessed by Borrower or an Affiliate of Borrower.


 


“Restriction
List” and “Restriction Lists” means each and every list of Persons
to whom the Government of the United States prohibits or otherwise restricts
the provision of financial services. 
For the purposes of this Agreement, Restriction Lists include the list
of Specially Designated Nationals and Blocked Persons established pursuant to
Executive Order 13224 (September 23, 2001) and maintained by the Office of
Foreign Assets Control, U.S. Department of the Treasury, current as of the day
the Restriction List is used for purposes of comparison in accordance with the
requirements of this Agreement.


 


“Retailer”
means a Person who sells Manufactured Homes in the ordinary course of business.


 


“Retailer
Agreement” means an agreement between a Retailer and Borrower (or
Borrower’s predecessor-in-interest which has been assigned to Borrower)
governing the sale of RICS by Retailer and setting forth Retailer’s
representations, warranties and covenants, including Retailer’s repurchase
obligations with respect to such sales.


 


“RFC Loan”
means an Eligible Loan covered by a Purchase Commitment issued by Lender.


 


“RFConnects
Delivery” means Lender’s proprietary service to support the electronic
exchange of information between Lender and Borrower, including Warehousing Advance
Requests, shipping requests, payoff requests, wire transfer instructions,
security delivery instructions, activity reports and exception reports.


 


“RFConnects
Pledge Agreement” means an agreement (on the then current form prescribed
by Lender) granting Lender a security interest in Loans for which Borrower has
requested Warehousing Advances using RFConnects Delivery.


 


“RIC”
means a retail installment contract evidencing the sale of a Manufactured Home
by a Retailer to an obligor, which evidences the obligor’s promise to pay for
the Manufactured Home and the related fees, charges and interest and grants a
security interest on the Manufactured Home to secure repayment.  A RIC includes a Land-in-Lieu Loan.


 


54

















 


“Seasoned
Loan” means a RIC or Land/Home Loan that was originated more than 30 days
prior to the Warehousing Advance Request and that satisfies the conditions and
requirements set forth on Exhibit H, and that has not been
re-characterized by Lender as either an Eligible Loan or an Exception Loan
under the procedures set out in 3.3 (h).


 


“Security
Agreement” means a security agreement or other agreement that creates a
Lien on personal property, including the Manufactured Home, furniture, fixtures
and equipment, to secure repayment of a Loan.


 


“Servicing
Contract” means, with respect to any Person, the arrangement, whether or
not in writing, under which that Person has the right to service Loans.


 


“Servicing
Portfolio” means, as to any Person, the unpaid principal balance of Loans
serviced by that Person under Servicing Contracts, minus the principal
balance of all Loans that are serviced by that Person for others under
subservicing arrangements.


 


“Shared
Execution Manufactured Housing Loan Purchase Agreement” has the meaning set
forth in the Loan Sale Commitment.


 


“Stage
Funded Loan” means a Land/Home Loan that has multiple disbursements and
complies with Lender’s stage funded construction loan program.


 


“Statement
Date” means the Audited Statement Date or the Interim Statement Date, as
applicable.


 


“Sublimit”
means the aggregate amount of Warehousing Advances (expressed as a dollar
amount or as a percentage of the Warehousing Commitment Amount) that is
permitted to be outstanding at any one time against a specific type of Eligible
Loan.


 


“Subordinated
Debt” means (a) all indebtedness of Borrower for borrowed money that
is effectively subordinated in right of payment to all present and future
Obligations either (1) under a Subordination of Debt Agreement on the form
prescribed by Lender or (2) otherwise on terms acceptable to Lender, and
(b) solely for purposes of Section 8.5, all indebtedness of Borrower
that is required to be subordinated by Sections 5.1 (b) and 7.10.


 


“Subsidiary”
means any corporation, partnership, association or other business entity in
which more than 50% of the shares of stock or other ownership interests having
voting power for the election of directors, managers, trustees or other Persons
performing similar functions is at the time owned or controlled by any Person
either directly or indirectly through one or more Subsidiaries of that Person.


 


“Tangible
Net Worth” means the excess of a Person’s (and, if applicable, that
Person’s Subsidiaries, on a consolidated basis) total assets over total
liabilities as of the date of determination, each determined in accordance with
GAAP applied in a manner consistent with the financial statements referred to
in Section 5.1 (a)(6), plus that portion of Subordinated Debt due
more than 6 months after the Warehousing Maturity Date.  For purposes of calculating a Person’s
Tangible Net Worth, advances or loans to shareholders, directors, officers,
employees or Affiliates, investments in Affiliates, assets pledged to secure
any liabilities not included in the Debt of that Person, intangible assets,
those other assets that would be deemed by HUD to be non-acceptable in
calculating adjusted net worth in accordance with its requirements in effect as
of that date, as those requirements appear in the “Consolidated Audit Guide for
Audits of HUD Programs,” and other assets Lender deems unacceptable, in its
sole discretion, must be excluded from that Person’s total assets.


 


55

















 


“Third
Party Originated Loan” means a Loan originated and funded by a third party
(other than with funds provided by Borrower at closing to purchase the Loan)
and subsequently purchased by Borrower.


 


“Title
Surrender Statute” means a state statute that converts the legal status of
a Manufactured Home from personal property to real property.


 


“Transaction
Documents” means collectively, the Loan Documents, the Loan Sale
Commitment, the Shared Execution Manufactured Housing Loan Purchase Agreement,
any asset disposition agreement, and any other agreement referred to in, or
entered into pursuant to, any of the foregoing.


 


“Trust
Receipt” means a trust receipt in a form approved by and under which Lender
may deliver any document relating to the Collateral to Borrower for correction
or completion.


 


“Underwriting
Guidelines” means Lender’s policies and procedures for underwriting Loans
and Lender’s requirements for Lender’s Loan programs which are set out in the
GMAC Manufactured Housing Client Guide.


 


“Used
Manufactured Home” means a used Manufactured Home that is not a Repossessed
Manufactured Home.


 


“Warehouse
Period” means, for any Eligible Loan, the maximum number of days a
Warehousing Advance against that type of Eligible Loan may remain outstanding
as set forth in Exhibit H.


 


“Warehousing
Advance” means a disbursement by Lender under Section 1.1.


 


“Warehousing
Advance Request” has the meaning set forth in Section 2.1.


 


“Warehousing
Collateral Value” means, as of any date of determination, (a) with
respect to any Eligible Loan, the lesser of (1) the amount of any
Warehousing Advance made, or that could be made, against such Eligible Loan
under Exhibit H or (2) an amount equal to the Advance Rate for the
Fair Market Value of such Eligible Loan; and (b) with respect to cash, the
amount of the cash.


 


“Warehousing
Commitment” means the obligation of Lender to make Warehousing Advances to
Borrower under Section 1.1.


 


“Warehousing
Commitment Amount” means $25,000,000.


 


“Warehousing
Commitment Fee” has the meaning set forth in Section 3.4.


 


“Warehousing
Fee” has the meaning set forth in Section 3.5.


 


“Warehousing
Maturity Date” has the meaning set forth in Section 1.2.


 


“Warehousing
Note” has the meaning set forth in Section 1.3.


 


“Wire
Disbursement Account” means a demand deposit account maintained at the
Funding Bank in Lender’s name for clearing wire transfers requested by Borrower
to fund Warehousing Advances.


 


56

















 


12.2.       Other Definitional Provisions; Terms of
Construction


 


12.2 (a)   Accounting
terms not otherwise defined in this Agreement have the meanings given to those
terms under GAAP.


 


12.2 (b)   Defined
terms may be used in the singular or the plural, as the context requires.


 


12.2 (c)   All
references to time of day mean the then applicable time in Chicago, Illinois,
unless otherwise expressly provided.


 


12.2 (d)   References
to Sections, Exhibits, Schedules and like references are to Sections, Exhibits,
Schedules and the like of this Agreement unless otherwise expressly provided.


 


12.2 (e)   The
words “include,” “includes” and “including” are deemed to be followed by the
phrase “without limitation.”


 


12.2 (f)    Unless
the context in which it is used otherwise clearly requires, the word “or” has
the inclusive meaning represented by the phrase “and/or.”


 


12.2 (g)   All
incorporations by reference of provisions from other agreements are
incorporated as if such provisions were fully set forth into this Agreement,
and include all necessary definitions and related provisions from those other
agreements.  All provisions from other
agreements incorporated into this Agreement by reference survive any
termination of those other agreements until the Obligations of Borrower under
this Agreement and the Warehousing Note  are irrevocably paid in full and the
Warehousing Commitment is terminated.


 


12.2 (h)   All
references to the Uniform Commercial Code shall be deemed to be references to
the Uniform Commercial Code in effect on the date of this Agreement in the
applicable jurisdiction.


 


12.2 (i)    Unless
the context in which it is used otherwise clearly requires, all references to
days, weeks and months mean calendar days, weeks and months.


 


 


End of Article 12


 


57

















 


IN WITNESS WHEREOF, the parties
have caused this Agreement to be duly executed as of the date first above
written.


 


 


	
  Closing
  Date:

  	
  September 21, 2004

  	
   

  	
  RESIDENTIAL
  FUNDING CORPORATION,

  
	
   

  	
  (To be
  completed by Lender)

  	
  a Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HOMEONE
  CREDIT CORP.,

  
	
   

  	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  



 


58