Document:

FLOW
      WAREHOUSING CREDIT AND SECURITY AGREEMENT

    

    

    between

    

    FRANKLIN
      CREDIT MANAGEMENT CORPORATION

    

    Borrower

    

    and

    

    

    SKY
      BANK

    

    Lender

    

    

    

    

    Dated
      as
      of August 11, 2006

    

     

     

    
 

    

    
      

      

      
        
           

        

        
           

          
          

        

        
           

        

      

    FLOW WAREHOUSING CREDIT AND SECURITY AGREEMENT

     

    THIS FLOW WAREHOUSING CREDIT AND 
SECURITY AGREEMENT
      (the
“Agreement”)
      is
      entered into as of August 10, 2006, between Franklin Credit Management
      Corporation, a New York corporation (the “Company”
or
      the
“Borrower”),
      having its principal office at 101 Hudson Street, Jersey City, NJ 07302, and
      Sky
      Bank, an Ohio banking corporation (the “Bank”),
      having an office at 110 East Main Street, Salineville, Ohio 43945.

     

    WHEREAS,
      the
      Company has requested the Bank, and the Bank is willing, to extend a revolving
      warehousing line of credit to the Company to finance the purchasing of
      residential mortgage loans in mortgage loan portfolio pools of less than
      $1,500,000, in the aggregate, at the time of purchase, and the parties desire
      to
      set forth herein the terms and conditions under which Advances under the
      revolving warehousing line of credit shall be made and security provided for
      the
      repayment thereof;

     

    NOW,
      THEREFORE,
      the
      parties hereto hereby agree as follows:

     

    ARTICLE I

     

    DEFINITIONS

     

    Section 1.1.Defined
      Terms.
      Capitalized terms defined below or elsewhere in this Agreement (including the
      Exhibits hereto) shall have the following meanings:

     

    “Advance”
      means a
      disbursement by the Bank under the Commitment, including readvances of funds
      previously advanced to the Company and repaid to the Bank.

     

    “Advance
      Request”
      has the
      meaning set forth in Section 2.2 hereof.

     

    “Affiliate”
      has the
      meaning set forth in Rule 12b-2 of the General Rules and Regulations under
      the Exchange Act.

     

    “Agreement”
      means
      this FLOW Warehousing Credit and Security Agreement, either as originally
      executed or as it may from time to time be supplemented, modified or
      amended.

     

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

     

    “Business
      Day”
      means
      any day excluding Saturday, Sunday and any day which is a legal holiday for
      banks under the laws of the State of Ohio.

     

    “Collateral”
      has the
      meaning set forth in Section 3 hereof.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    “Collateral
      Documents”
      means
      all Mortgage Loan Documents evidencing or securing or pertaining to any Pledged
      Mortgage Loan, whether now existing or hereafter arising, and being generally
      described on Exhibit
      C
      attached
      hereto. The term Collateral Documents shall also include any endorsements or
      assignments of such Mortgage Loan Documents to the Company. The Bank shall
      have
      the right, on not less than thirty (30) Business Days’ prior written notice to
      the Company to modify Exhibit
      C
      to
      conform to current legal requirements or Bank practices, and, as so modified,
      said Exhibits shall be deemed a part hereof.

     

    “Commitment”
      has the
      meaning set forth in Section 2.1 hereof.

     

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

     

    “Conventional
      Mortgage Loan”
      means a
      Mortgage Loan other than a FHA-insured or VA-guaranteed Mortgage
      Loan.

     

    “Custodian”
      means
      the organization, if any, which holds Mortgage Loan Documents under any
      custodial agreement relating to pooled Mortgage Loans on the Company and Bank’s
      behalf.

     

    Custodial
      Agreement” means
      any
      custodial agreement entered into by Bank, Company and the Custodian, if
      any.

     

    “Debt”
      means,
      with respect to any Person, at any date (a) all indebtedness or other
      obligations of such Person which, in accordance with GAAP, would be included
      in
      determining total liabilities as shown on the liabilities side of a balance
      sheet of such Person at such date; (b) all indebtedness or other
      obligations of such Person for borrowed money or for the deferred purchase
      price
      of property or services; (c) all indebtedness or other obligations of any
      other Person for borrowed money or for the deferred purchase price of property
      or services in respect of which such Person is liable, contingently or
      otherwise, to pay or advance money or property as guarantor, endorser, or
      otherwise (except as endorser of negotiable instruments for collection in the
      ordinary course of business), or which such Person has agreed to purchase or
      otherwise acquire; and (d) all indebtedness for borrowed money or for the
      deferred purchase price of property or services secured by a Lien on any
      property owned or being purchased by such Person (even though such Person has
      not assumed or otherwise become liable for the payment of such
      indebtedness).

     

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

     

    “Event
      of Default”
      means
      any of the conditions or events set forth in Section 8.1
      hereof.

     

    “Exchange
      Act”
      means
      the Securities Exchange Act of 1934, as amended from time to time, and any
      successor statute.

     

    “FHA”
      means
      The Federal Housing Administration of the United States Department of Housing
      and Urban Development and any successor thereto.

    
      
         

      

      
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    “FHLMC”
      means
      The Federal Home Loan Mortgage Corporation and any successor
      thereto.

     

    “Floating
      Rate”
      has the
      meaning set forth in Section 2.4 hereof.

     

    “FNMA”
      means
      The Federal National Mortgage Association and any successor
      thereto.

     

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

     

    “GNMA”
      means
      Government National Mortgage Association or any successor thereto.

     

    “HUD”
      means
      the United States Department of Housing and Urban Development or any successor
      thereto.

     

    “Indemnified
      Liabilities”
      has the
      meaning set forth in Section 9.3 hereof.

     

    “Index”
      has the
      meaning set forth in Section 2.4 hereof.

     

    “Insurer”
      means
      FHA, VA or a private mortgage insurer, as applicable.

     

     “Internal
      Revenue Code”
      means
      the Internal Revenue Code of 1986, or any subsequent federal income tax law
      or
      laws, as any of the foregoing have been or may from time to time be
      amended.

     

    “Investor”
      means a
      third party financially responsible institution purchasing Mortgage Loans from
      the Company pursuant to a Purchase Commitment.

     

    “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 thereof, and any agreement to give any
      security interest).

     

    “Lock-box
      Terms” has
      the
      meaning set forth in Section
      3.5
      hereof.

     

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

     

    “Mortgage”
      means
      either (1) a first-lien mortgage, deed of trust, security deed or similar
      instrument on improved real property; or (2) a second-lien mortgage, deed
      of trust, security deed or similar instrument on improved real
      property.

    
      
         

      

      
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    “Mortgage
      Loan”
      means
      any loan evidenced by a Mortgage Note, including any modifications thereof.
      A
      Mortgage Loan, unless otherwise expressly stated herein, means a Residential
      Mortgage Loan.

     

    “Mortgage
      Loan Documents”
      means
      the Mortgage, Mortgage Note, credit and closing packages, disclosures, and
      all
      other files, records and documents evidencing, securing, guaranteeing or
      otherwise arising in connection with or relating to any Pledged Mortgage Loan,
      and including, without limitation, (to the extent applicable) those documents
      listed on Exhibit
      C.

     

    “Mortgage
      Note”
      means a
      note secured by a Mortgage and evidencing a Mortgage Loan.

     

    “Net
      Worth”
      means,
      at any date of determination, (a) Consolidated total assets of the Company
      and
      its Subsidiaries at such date less (b) the sum of (i) Consolidated total
      liabilities of the Company and its Subsidiaries at such date and (ii) the
      liquidation value of any redeemable preferred stock of the Company and its
      Subsidiaries at such date, in each case as determined in accordance with
      GAAP.

     

    “Note”
      has the
      meaning set forth in Section 2.3 hereof.

     

    “Notices”
      has the
      meaning set forth in Section 11.3.

     

    “Officers’
      Certificate”
      means a
      certificate executed on behalf of the Company by its vice president, cashier
      or
      other appropriate officer.

     

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

     

    “Pledged
      Mortgage Loans”
      has the
      meaning set forth in Section 3.1 hereof.

     

    “Post-Default
      Rate”
means
      in respect of any day (a “Post-Default
      Day”)
      an
      Event of Default has occurred and is continuing hereunder, a rate per annum
      on a
      360 day per year basis equal to 2% per annum plus the applicable Floating Rate
      on such Post-Default Day.

     

    “Covered
      Loan” means (a) a“high
      cost mortgage” as defined in Section 152(a) of the Home Ownership and Equity
      Protection Act of 1994; (b) a “high cost home loan” or a “predatory loan” within
      the meaning of any corresponding state or local laws, including but not limited
      to, the Georgia Fair Lending Act, the New York State Anti-Predatory Lending
      Law,
      and the New Jersey Homeownership Security Act; (c) any loan which under any
      other state or local law or ordinance could result in such loan being deemed
      to
      be unenforceable or could result in the refund or recession of all principal
      and/or interest paid or to be paid under such loan; and (d) any loan which
      under
      a state or local law may otherwise subject the originator and/or holder of
      such
      loan to civil or criminal sanctions related to the origination, holding,
      servicing, and/or transfer of such loan. 

    
      
         

      

      
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    “Purchase
      Commitment”
      means a
      written commitment, in form and substance reasonably satisfactory to the Bank,
      issued in favor of the Company by an Investor pursuant to which that Investor
      commits to purchase one or more Mortgage Loans, along with the related
      correspondent or whole loan purchase agreement by and between the Company and
      the Investor, in form and substance reasonably satisfactory to the Bank,
      governing the terms and conditions of any such purchases.

     

    “Redemption
      Amount”
      has the
      meaning set forth in Section 3.3 hereof.

     

    “Residential
      Mortgage Loan”
      means a
      Mortgage Loan secured by a Mortgage covering improved real property containing
      one- to four-family residences, including, condominiums, and cooperative housing
      units.

     

    “Subsidiary”
      means
      any corporation, association or other business entity in which more than fifty
      percent (50%) of the total voting power or shares of stock entitled to vote
      in
      the election of directors, managers or trustees thereof is at the time owned
      or
      controlled, directly or indirectly, by any Person or one or more of the other
      Subsidiaries of that Person or a combination thereof.

     

    “VA”
      means
      the Department of Veterans Affairs and any successor thereto.

     

    Section 1.2.Other
      Definitional Provisions.
      (a) Accounting terms not otherwise defined herein shall have the meanings
      given them under GAAP.

     

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

     

    ARTICLE II

     

    THE CREDIT

     

    Section 2.1. The
      Commitment.
      (a) Subject to the terms and conditions of this Agreement, including the
      conditions precedent set forth in Section 4.1 below, and provided no Default
      has
      occurred and is continuing, the Bank agrees, from time to time during the period
      from the date hereof to the expiration date as provided in Section 2.6
      hereof, to make Advances to, or on behalf of, the Company solely for the
      purchase of Mortgage Loans in mortgage loan portfolio pools of less than
      $1,500,000, in the aggregate, at the time of purchase (and known between the
      parties individually as a “Flow Transaction” and collectively, as the “Flow
      Transactions”), provided
      the
      total aggregate principal amount which is outstanding at any one time of all
      such Advances shall not exceed Forty Million Dollars ($40,000,000.00) unless
      there is a written request by the Company and subsequent approval by an officer
      of the Bank to modify this amount. The obligation of the Bank to make Advances
      hereunder up to such limits or the amount to which such limit may be reduced
      pursuant to Section 2.7(b) hereof, is hereinafter referred to as the
“Commitment.”
      Within
      the Commitment, the Company may borrow, repay and re-borrow. 

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (b)
      Advances
      shall be used by the Company solely for the purpose of funding or financing
      the
      purchase of Flow Transaction Mortgage Loans and shall be made at the request
      of
      the Company, in the manner hereinafter provided in Section 2.2., secured by
      the assignment and pledge of such Mortgage Loans to Bank.

     

    (c)
      Unless
      otherwise agreed to by Bank at its sole discretion, no Advance for the purchase
      of a Mortgage Loan shall exceed (100%) of the purchase price, inclusive of
      the
      transaction fee payable to Bank and all out of pocket costs incurred by the
      Company for the acquisition of such Mortgage Loan.

     

    (d)
      Notwithstanding anything to the contrary herein, Advances may be obtained by
      the
      Company for the purpose of repurchasing Mortgage Loans that were sold by the
      Company to an Investor, provided, however, an Advance for such purpose shall
      be
      limited to 98% of the then unpaid principal balance of the to be repurchased
      Mortgage Loan, and such Advances shall be repaid not later than the later of
      (i)
      sixty (60) days from the date of such Advance, or (ii) at the time of and
      included with the next refinancing of Advances through a term loan issued under
      and pursuant to the Senior Debt Facility provided such repurchased Mortgage
      Loan
      qualifies for refinancing into the Senior Debt Facility.

     

    Section 2.2.Procedures
      for Obtaining Advances.
      (a) The Company may obtain an Advance hereunder, subject to the
      satisfaction of the conditions set forth in Sections 4.1 hereof, upon
      compliance with the procedures set forth in this Section 2.2. Requests for
      Advances shall be initiated by the Company by delivering to the Bank a completed
      and signed request for an Advance (an “Advance
      Request”)
      on the
      then current form therefor approved by the Bank and provided to the Company.
      The
      current form in use by the Bank is set forth in Exhibit B
      hereto.
      The Bank shall have the right to revise or supplement approved forms of Advance
      Request by giving prior written-notice thereof to the Company. Bank, in all
      events, reserves the right to reject any Loan Request to finance the acquisition
      of a Covered Loan.

     

    (b)
      The
      procedures to be followed by the Company in making an Advance Request for the
      purchase of Mortgage Loans, and the documents relating to the Collateral
      described in the Advance Request required to be delivered to the Bank, shall
      consist of those set forth in the following described Exhibit C
      attached
      hereto and hereby made part hereof entitled: Procedures and Documentation for
      Warehousing Residential Mortgage Loans. 

     

    The
      Bank
      shall have the right, on not less than thirty (30) days’ prior written notice to
      the Company, to modify said Exhibit(s) to conform to current legal requirements
      or requirements set forth by the regulators and independent certified auditors
      of the Bank, and, as so modified, said Exhibit shall be deemed part hereof
      for
      any Advance Requests thereafter delivered. 

     

    (c)
      Before
      funding any Advance, the Bank shall have three (3) Business Days to examine
      each
      Advance Request to be delivered prior to the Advance, as set forth in
Exhibit
      C
      hereto,
      and may reject such of them as do not meet the requirements of this Agreement.
      Bank, in all events, reserves the right to reject any Advance Request to finance
      the purchase of (i) any Mortgage Loan which in the Bank’s judgment does not
      comply or did not comply at the time of origination with any federal or state
      statute or regulation applicable to such Mortgage Loan, and/or (ii) any Covered
      Loan. 

    
      
         

      

      
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    (d)
      To
      make
      an Advance, the Bank shall debit this warehousing credit line account for the
      amount of the Advance and, unless otherwise agreed to by the Bank, the Bank
      shall wire the proceeds of such Advance to the Company’s operating account
      no. _____________
      with the Bank.

     

    (e)
      All
      Advances under this Agreement shall constitute a single indebtedness and all
      of
      the Collateral shall be security for the Note and for the performance of all
      obligations of the Company to the Bank.

     

    (f)
      This
      Agreement shall be separate from and shall not be subject to the Senior Credit
      Facility except as specifically otherwise provided in this
      Agreement. 

     

    Section 2.3.Note.
      The
      Company’s obligation to pay the principal of, and interest on, all Advances made
      by the Bank shall be evidenced by the promissory note (the “Note”)
      of the
      Company dated as of the date hereof substantially in the form of Exhibit A
      attached
      hereto. The term “Note”
      shall
      include all extensions, renewals and modifications of the Note and all
      substitutions therefor. All terms and provisions of the Note are incorporated
      herein.

     

    Section 2.4. Interest
      & Transaction Fees.
      (a)  The unpaid principal balance of Advances shall bear interest, payable
      monthly, on the fifth (5th)
      day of
      each month, from the date of such Advance until paid in full, at a floating
      per
      annum rate of interest (the “Floating
      Rate”)
      from
      time to time which is fifty (50) basis points less that the Index. The interest
      rate charged herein shall be adjusted monthly, effective on the first
      (1st)
      day of
      each month, based upon the Index in effect on the last Business Day of the
      then
      prior month. As used herein, the term “Index” shall mean the independent index,
      which is the Prime Rate as published from time to time in the Money Rates Column
      of The
      Wall Street Journal.
      If more
      than one such prime rate or a range of prime rates is published, the highest
      prime rate will be used when calculating the Index, and if The
      Wall Street Journal
      ceases
      to publish the Prime Rate, Lender and Company will mutually and reasonably
      agree
      upon an independent, replacement source for determining the Prime Rate when
      calculating the Index. Interest
      will be calculated on the basis of actual days elapsed over a 360 day year
      (365/360
      basis).
      Interest
      will be billed monthly and will be due within ten (10) days of the issuance
      of
      the relevant monthly billing statement. 

     

    (b)
      If an
      Event of Default has occurred and is continuing hereunder, the Company shall
      be
      obligated to pay to Bank interest on the outstanding principal balance of
      outstanding Advances at a rate per annum equal to the Post-Default Rate until
      paid in full or such Event of Default is cured or waived by the
      Bank.

     

    (c)
      The
      record of the dates and amounts of each Advance, the payments of principal
      and
      interest, and applicable interest rates and other information with respect
      thereto shall be maintained on the books and records of the holder of the Note
      and such records shall constitute prima facie evidence of the accuracy of the
      information so recorded.

    
      
         

      

      
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    Section 2.5.Principal
      Payments.
      (a) The outstanding principal amount of each Advance shall be payable in
      full upon the earliest to occur of (i) the occurrence of any event
      described in Section 2.5(c) hereof with respect to such Advance,
      (ii) the due date required for such principal amount upon the expiration or
      termination of the Commitment in accordance with and subject to the terms of
      Section 2.6 below; or (iii) the occurrence of an Event of Default.

     

    (b)
      The
      Company shall have the right to prepay the outstanding Advances in whole or
      in
      part, from time to time, without premium or penalty or advance notice, and
      in
      accordance with and subject to the terms of Section 3.4 herein-below, the
      corresponding Pledged Mortgage Loans shall be released from Bank’s security
      interest.

     

    (c)
      The
      Mortgage Loans will be reviewed on a monthly basis and the
      Company shall be obligated to pay to the Bank, without the necessity of prior
      demand or notice from the Bank, and the Company authorizes the Bank to charge
      its account for, the amount of any outstanding Advance against a specific
      Mortgage Loan upon the occurrence of any of the following events:

     

    
      	 	
              1.

            	
              One
                hundred twenty (120) calendar days elapse from the date of the
                Advance;

            

    

    

    
      	 	
              2.

            	
              Ten
                (10) Business Days elapse from the date the Collateral Documents
                relating
                to a Mortgage Loan against which the Advance was made, were required
                to be
                received by the Bank or the custodian without the actual receipt
                thereof;
                or

            

    

    

    
      	 	
              3.

            	
              Thirty
                (30) calendar days elapse from the date a Collateral Document relating
                to
                a Mortgage Loan against which the Advance was made was delivered to the
                Company for correction or completion, without being returned to the
                Bank,
                or such Collateral Documents, upon examination by the Bank, are found
                not
                to be in compliance with the requirements of this Agreement or the
                related
                Purchase Commitment; or 

            

    

    

    
      	 	
              4.

            	
              Upon
                sale of the Mortgage Loan; or

            

    

    

    
      	 	
              5.

            	
              Upon
                a determination by Bank within thirty (30) days of the date of the
                Advance
                that the Mortgage Loan with respect to which such Advance was made
                is (a)
                a fraudulent loan, or (b) does not comply, in a material manner,
                with the
                requirements of this Agreement, provided, however, in such event,
                Company
                shall have sixty (60) days from the date of notification to Company
                of
                such determination to either re-pay such Advance to Bank, or in the
                event
                of subpart (b), to cure such defect;
                or

            

    

    

    
      	 	
              6.

            	
              Upon
                a determination by the regulators or auditors of either the Bank
                or the
                Company, that the Mortgage Loan is a predatory loan, as defined in
                any
                applicable federal, state or local statute or
                regulation

            

    

     

    (d) 
      Notwithstanding the foregoing, any such Advance related to a Mortgage Loan
      meeting criteria 1 above may, at the option of Company, be refinanced through
      a
      term loan issued under and pursuant to the related Master
      Credit and Security Agreement
      dated
      October 13, 2004, between the Bank, certain now existing and hereafter arising
      subsidiaries of the Company (individually, a “Company
      Subsidiary”
and
      collectively and severally, the “Company
      Subsidiaries”),
      and
      the Company (the “Senior
      Credit Facility”)
      (subject to the terms, conditions, covenants and any amendments thereof and
      provided that term loan advances are then available under such Senior Credit
      Facility), provided, further however, in the event that such Advance relates
      to
      a Mortgage Loan that has been originated with the specific intent to sell such
      Mortgage Loan to a 3rd
      party,
      not more than ninety-eight percent (98%) of such advance may be refinanced
      with
      funds from said Senior Credit Facility. 

    

    
      
         

      

      
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    (e) 
      Upon
      making such payment to the Bank as outlined in 2.5(c) above, the Company shall
      be deemed to have redeemed such Mortgage Loan from pledge (other than in the
      event of a re-finance under the Senior Credit Facility), and the Collateral
      Documents relating thereto shall be promptly released by the Bank to the Company
      or to the applicable Investor. The Bank agrees to take such other steps
      reasonably requested by the Company in connection with such
      release.

     

    Section 2.6. Expiration
      and/or Termination of Commitment.
      (a) Unless terminated earlier as permitted hereunder, the Commitment shall
      expire of its own term, and without the necessity of action by the Bank,
on
      August 11, 2007.
      Notwithstanding anything to the foregoing, for any Advance made by the Bank
      prior to the termination date, the Company shall still have one hundred twenty
      (120) days from the date of the Advance to pay the Bank the amount of any
      outstanding Advance or the Company may, at its option, re-finance any such
      Outstanding Advance through a term loan issued under the Senior Credit
      Facility.

     

    (b)
      The
      Bank
      shall have the right, without cause, at any time to terminate the Agreement
      on
      not less than sixty (60) days’ prior written notice to the Company. During such
      sixty (60) day notice period, Company may continue to obtain Advances in
      accordance with the terms of this Agreement, and upon expiration of such sixty
      (60) day notice period, as set forth above, Company shall continue to have
      one
      hundred twenty (120) days from the date of each Advance to pay the Bank the
      amount of any then outstanding Advances or the Company may, at its option,
      re-finance any such Outstanding Advances through a term loan issued under the
      Senior Credit Facility.

     

    (c)
      The
      Bank
      shall also have the right to terminate this Agreement and the line of credit
      extended to the Company pursuant to the terms of this Agreement, upon any
      adverse material change in the Company’s financial condition as defined by the
      Bank in its reasonable discretion during the term of this Agreement upon written
      notice to the Company. For purposes of this Section
      2.6(c),
      the
      term “adverse material change” means Company’s failure to comply with and
      maintain during the term of this Agreement any of the Financial Requirements
      set
      forth under Section
      6.15.
      Notwithstanding the foregoing, the Company shall continue to have one hundred
      twenty (120) days from the date of each Advance to pay the Bank the amount
      of
      any then outstanding Advances or, at the discretion of the Bank, may re-finance
      any such Outstanding Advances through a term loan issued under the Senior Credit
      Facility.

     

    (d)
      The
      Bank
      shall have the right from time to time and in its sole discretion, to extend
      the
      term of this Agreement with prior written notice to the Company. The length
      of
      any such extension shall also be determined in the Bank’s sole discretion. Such
      extension may be made subject to the renegotiation of the terms hereunder and
      to
      any other such conditions as the Bank may deem necessary. Under no circumstances
      shall such an extension by the Bank be interpreted or construed as the Bank’s
      forfeiture of any of its rights, entitlements or interest created hereunder.
      The
      Company acknowledges and understands that the Bank is under no obligation
      whatsoever to extend the term of this Agreement beyond its expiration date
      as
      originally stated in this Agreement, or if extended, to further extend the
      expiration date beyond any such extension thereof.

    
      
         

      

      
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    Section 2.7.Method
      of Making Payments; Reductions in Commitment.
      (a) Except as otherwise specifically provided herein, all payments
      hereunder shall be received by the Bank on the date when due and shall be made
      in lawful money of the United States of America in immediately available funds
      at the office of the Bank, at East
      Liverpool, Ohio, P.O. Box 5399,
      zip
      code 43920,
      or at
      such other place as the Bank from time to time shall designate. Whenever any
      payment to be made hereunder or under the Note shall be stated to be due on
      a
      day which is not a Business Day, the due date thereof shall be extended to
      the
      next succeeding Business Day, and, with respect to payments of principal, the
      interest thereon shall be payable at the applicable rate during such extension.
      Funds received by the Bank after 4:00 p.m. (East Liverpool, Ohio, time) on
      a
      Business Day shall be deemed to have been paid by the Company on the next
      succeeding Business Day.

     

    (b)
      The
      Company shall have the right, at any time and from time to time, effective
      as of
      the first day of any calendar month, to terminate in whole or permanently reduce
      in part, without premium or penalty, the amount of the Commitment in excess
      of
      the then outstanding principal amount of all Advances hereunder. The Company
      shall give written notice to the Bank designating the date of such termination
      or reduction not less than five (5) Business Days’ prior to the date such
      termination or reduction is to take effect, and the amount of any partial
      reduction of the Commitment shall be in an aggregate minimum amount of One
      Hundred Thousand Dollars ($100,000.00) or integral multiples of One Hundred
      Thousand Dollars ($100,000.00) in excess of that amount.

     

    Section 2.8.Late
      Payment Fees.
      In the
      event the Company fails to make any payment (whether of principal or interest)
      on the date such payment is due and payable hereunder or under the Note, and
      such failure continues for more than fifteen (15) days after notice from the
      Bank, the Company shall pay to the Bank, upon demand therefor, a late payment
      fee equal to five
      percent (5%)
      of the
      amount of such payment or One
      Thousand Dollars ($1,000.00),
      whichever is greater.

     

    Section 2.9.Net
      Payments.
      All
      payments with respect to any Advance shall be made without offset or
      counterclaim and free from any present or future taxes, levies, imports, duties
      or other similar charges of whatsoever nature imposed by any government or
      any
      political subdivision or taxing authority hereof, other than any taxes on or
      measured by the net income of the Bank.

     

    Section 2.10.Commitment
      & Transaction Fees. The
      Company shall pay the Bank the transaction fee equal to Fifty
      Dollars ($50.00)
      for each
      Advance obtained under
      the
      terms of this Agreement which fee shall be billed monthly and will be due within
      ten (10) days of the issuance of the relevant monthly billing statement. In
      addition, so long as this Agreement is in effect, the Company shall annually
      pay
      the Bank a commitment fee computed as follows: Ten
      Thousand Dollars ($10,000.00)
      multiplied by a fraction, the numerator of which is equal to the average monthly
      un-borrowed amount of the Commitment during the previous year, and the
      denominator of which is equal to the Commitment. The commitment fee shall be
      payable by the Company to the Bank within thirty (30) days of the anniversary
      date of this Agreement. The Bank shall provide the Company with an annual
      statement showing its computation of the average daily un-borrowed amount of
      the
      Commitment for the previous year. Unless the Company contests the accuracy
      of
      the Bank’s statement within ten (10) days of receipt, the Bank may debit this
      credit line account for the amount of the commitment fee. 

     

    
      
         

      

      
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    ARTICLE III

     

    COLLATERAL

     

    Section 3.1.Assignments
      and Grant of Security Interest.
      In
      consideration of the Commitment, and as security for (i) the payment of the
      Note
      and (ii) payment and performance of all of the Company’s obligations hereunder,
      the Company hereby grants to the Bank a security interest in all rights and
      interest of the Company in and to the following described property
      (collectively, the “Collateral”):

    

    (a) All
      Mortgage Loans, including all Mortgage Notes and Mortgages evidencing or
      securing such Mortgage Loans and all other related Mortgage Loan Documents
      which
      from time to time are delivered, or caused to be delivered, or which heretofore
      have been delivered to the Bank (including delivery to a third party on behalf
      of the Bank) pursuant hereto or in respect of which an Advance has been made
      by
      the Bank or which is hereafter made by the Bank hereunder (the “Pledged
      Mortgage Loans”);
      the
      Company shall deliver a schedule, in form and detail acceptable to Bank, of
      the
      Mortgage Loan(s) being purchased from the proceeds of such Advance.

    

    (b) All
      mortgage insurance and all commitments issued by Insurers to insure or guarantee
      any Pledged Mortgage Loan; all Purchase Commitments held by the Company covering
      the Pledged Mortgage Loans and all proceeds resulting from the sale thereof
      to
      Investors pursuant thereto; and all personal property, contract rights,
      collection and servicing rights and servicing fees and income, accounts and
      general intangibles of whatsoever kind relating to the Pledged Mortgage Loans;
      said Insurer commitments and the Purchase Commitments, and all other documents
      or instruments delivered to the Bank in respect of the Pledged Mortgage Loans,
      and including, without limitation, the right to receive all insurance proceeds
      and condemnation awards which may be payable in respect of the premises
      encumbered by any Pledged Mortgage Loan;

     

    
      
         

      

      
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    (c) All
      right, title and interest of the Company in and to all files, surveys,
      certificates, correspondence, appraisals, computer programs, tapes, discs,
      cards, accounting records, information and data of the Company relating to
      the
      Pledged Mortgage Loans;

     

    (d)
      All
      rights, but not any obligations or liabilities under all purchase agreements
      relating to the Company’s acquisition of Pledged Mortgage Loans.

     

    (e) All
      property of the Company, in any form or capacity now or at any time hereafter
      in
      the possession or direct or indirect control of the Bank relating to the Pledged
      Mortgage Loans (including possession by a parent company, affiliate or
      subsidiary of the Bank);

    

    (f) All
      rights (but not any obligations or liabilities) of the Company under the
      Custodial Agreements; and

    

    (g) All
      replacements, products and proceeds of any and all of the
      foregoing.

     

    In
      addition to the foregoing grant of a security interest to the Bank in the
      Collateral, the Company hereby assigns and delivers to the Bank and grants
      to
      Bank a security interest in all of the following: (i) the Company’s right
      (but not any liabilities of the Company) under all Purchase Commitments now
      held
      or hereafter acquired by the Company covering Pledged Mortgage Loans and all
      proceeds resulting from the sale of Pledged Mortgage Loans pursuant thereto;
      and
      (ii) all rights of the Company (but not any liabilities of the Company)
      with respect to Investors to the extent related to the Pledged Mortgage Loans.
      Upon the request of the Bank, the Company shall execute any further document
      or
      instrument reasonably requested by the Bank to further evidence or effectuate
      the assignments set forth in this subparagraph.

    

    Without
      limiting the foregoing, it is the express intention of the Company, that the
      security interest granted above is and shall be a continuing security interest
      covering all now present (or then present), and all future obligations of the
      Company to Bank hereunder or arising hereunder; and that the security interests
      granted herein by the Company shall remain in effect until all indebtedness
      secured hereby has been paid in full and the Commitment has expired or has
      been
      otherwise terminated.

    

    Upon
      the
      request of the Bank, the Company shall execute any further document or
      instrument reasonably requested by the Bank to further evidence or effectuate
      the assignments and security interests set forth in this Section. Furthermore,
      the Company (a) hereby authorizes Bank to sign (if required) and file financing
      statements at any time with respect to any of the Collateral, without such
      financing statements being executed by, or on behalf of, the Company, (b) shall,
      at any time on request of Bank, execute or cause to be executed financing
      statements in respect of any Collateral, and (c) shall reasonably cooperate
      to
      provide any information reasonably required by the Bank in connection with
      the
      filing of financing statements with respect to the Collateral. The Company
      agrees to pay all filing fees, including fees for filing continuation statements
      in connection with such financing statements, and to reimburse Bank for all
      costs incurred in connection therewith.

     

    Section 3.2.Reserved.

     

    Section 3.3.Right
      of Redemption from Pledge.
      Provided no Default or Event of Default has occurred and is continuing, the
      Company may redeem a Mortgage Loan from pledge, by either paying, or causing
      an
      Investor to pay, to the Bank, for application to prepayment of the principal
      balance of the Note, an amount (the “Redemption
      Amount”)
      equal
      to amount of the Advance made with respect to such Mortgage Loan, which is
      still
      outstanding. To determine the exact amount of an Advance for an individual
      Mortgage Loan under this Section 3.3, the Bank will be provided, prior to making
      an Advance, with loan level pricing detailing the percentage price to be paid,
      (rounded to the nearest tenth of one percent) and the proposed funding cost
      to
      the Bank (rounded to the nearest one dollar) for each Mortgage Loan proposed
      for
      purchase by the Company.

     

    
      
         

      

      
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    Section 3.4.Collection
      and Servicing Rights.
      (a) The
      Company agrees that the “Lock Box Terms” set forth on Exhibit
      F
      shall be
      utilized by Company for the receiving, collecting, and processing of all sums
      payable to the Company in respect of the Collateral (the “Lock-box
      Terms”).
      Under
      that Lock-box Terms the Bank shall be entitled to receive all sums payable
      to
      the Company in respect of the Collateral. All amounts payable to the Company
      for
      the purchase by any Investor of any Pledged Mortgage Loans shall also be paid
      directly to the Bank. The Company shall instruct each Pledged Mortgage Loan
      obligor to direct all payments due under the Pledged Mortgage Loans, and shall
      direct each Investor to pay the amounts payable for the purchase of such Pledged
      Mortgage Loans, directly to the Lockbox address at the Bank. Without limiting
      the foregoing, Following the occurrence of any Event of Default, the Bank may,
      at any time thereafter, upon written notice to the Company, be entitled to
      service, receive and collect all sums payable to the Company in respect of
      the
      Collateral, and in such case: (i) the Bank in its discretion may, in its
      own name or in the name of the Company 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 shall be under no obligation to
      do
      so; and (ii) all amounts so received and collected by the Bank shall be
      held by it as part of the Collateral.

     

    (b) The
      Bank
      shall have the right on not less than thirty (30) days prior notice to the
      Company to reasonably modify the Lock-box Terms to conform to then current
      Bank
      practices upon mutual agreement of Company, not to be unreasonably withheld,
      and/or banking regulations.

     

    Section 3.5.Return
      of Collateral at End of Commitment.
      If
      (i) the Commitment shall have expired or been terminated, and (ii) no
      Advances, interest or other amounts evidenced by the Note or due under this
      Agreement shall be outstanding and unpaid, the Bank shall promptly deliver
      or
      release all Collateral in its possession to the Company. The Bank shall also
      execute and deliver such assignments and other instruments and documents
      reasonably requested by the Company to vest title in the Collateral into the
      Company. The receipt of the Company for any Collateral released or delivered
      to
      the Company pursuant to any provision of this Agreement shall be a complete
      and
      full acquittance for the Collateral so returned. 

     

    ARTICLE IV

     

    CONDITIONS PRECEDENT

     

    Section 4.1.Advances.
      The
      obligation of the Bank to make Advances under this Agreement are subject to
      the
      following conditions precedent:

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    
      (a)
        The
        Bank shall have received the following, all of which must be satisfactory
        in
        form and content to the Bank, in its reasonable discretion:

       

      (1)
        On or
        before the date hereof, the Note duly executed by the Company;

       

      (2)
        On or
        before the date hereof of Certified copies of the Company’s articles of
        organization and by-laws, and certificate of good standing dated no less
        recently than one (1) month prior to the date of the initial
        Advance;

       

      (3)
        On or
        before the date hereof of an original resolution of the board of directors
        of
        the Company, certified as of the date of this Agreement by its secretary,
        authorizing the execution, delivery and performance of this Agreement and
        the
        Note, and all other instruments or documents to be delivered by the Company
        pursuant to this Agreement;

       

      (4)
        On or
        before the date hereof of a true and complete copy of the audited
        financial statements of the Company for the most recent fiscal year-end
        containing a balance sheet and related statements of income and retained
        earnings (the “Statement
        Date”)
        and
        changes in financial position for the period ended on the Statement Date,
        all
        prepared in accordance with GAAP;

       

      (5)
        On or
        before the date hereof of copies of the certificates, documents or other
        written
        instruments which evidence the Company’s eligibility described in Section 5.13
        hereof,
        all in form and substance satisfactory to the Bank;

       

      (6)
        On or
        before the date hereof of Copies of the Company’s errors and omissions insurance
        policy or mortgage impairment insurance policy and blanket bond coverage
        policy,
        or certificates in lieu of policies, all in form and content satisfactory
        to the
        Bank, showing compliance by the Company; and

       

      (7)
        On or
        before the date hereof of a Power of Attorney to indorse negotiable instruments
        in the form of Exhibit E.

       

      (8)
        On or
        before the date hereof of The Bank shall have received evidence satisfactory
        to
        it as to the due filing and recording in all appropriate offices of all
        financing statements and other instruments as may be necessary to perfect
        the
        security interest of the Bank in the Collateral under the Uniform Commercial
        Code of the State of New York or other applicable law.

       

      (9)
        Prior
        to each Advance, (a) the Bank shall
        have received a true and complete copy of each of the following: (i) the
        purchase agreement relating to the acquisition of the Mortgage Loan(s) being
        acquired with the Advance, and the assignment documents assigning such Mortgage
        Loan(s) to the Company or, where applicable, the Mortgage Identification
        Number
        (“MIN”) for each Mortgage Loan registered on the MERS® System to track the
        transfer of ownership and/or servicing rights to the Company; and evidence
        that
        such assignment to Borrower has been appropriately registered on the MERS®
System; and (ii) a schedule, in form and detail acceptable to Bank of the
        Mortgage Loan(s) being purchased; and (b) the
        Company shall have delivered to the Bank an Advance Request, and shall have
        delivered to the Bank or the Custodian the Collateral Documents called for
        under
        this Agreement, and shall have satisfied the procedures set forth in, Sections
        2
        and the applicable Exhibits related thereto. All items delivered to the Bank
        must be reasonably satisfactory to the Bank in form and content, and the
        Bank
        may reject such of them as do not meet the requirements of this
        Agreement.

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

       

      (10)
        The
        representations and warranties of the Company contained in Article V hereof
        shall be true and correct in all material respects as if made on and as of
        the
        date of each Advance unless the same by its terms relates to an earlier
        date.

       

      (11)
        The
        Company shall have performed all agreements to be performed by it hereunder
        and
        under the Note, and after giving effect to the requested Advance, there shall
        exist no Default or Event of Default hereunder or under the Note.

       

      (12)
        As
        of the date of such Advance, the Company shall not have (i) incurred any
        material liabilities, direct or contingent, other than in the ordinary course
        of
        its business that would render it to be noncompliant with the financial
        requirements set forth in Article 6 herein, since the dates of the Company’s
        most recent financial statements theretofore delivered to the Bank, or
        (ii) experienced any other material adverse change in its business or
        operations.

       

      Acceptance
        of the proceeds of the requested Advance by the Company shall be deemed a
        representation by the Company that all conditions set forth in this
        Section 4 shall have been satisfied as of the date of such
        Advance.

      ARTICLE V

       

      REPRESENTATIONS AND WARRANTIES

       

      In
        order
        to induce the Bank to enter into this Agreement and make each Advance, the
        Company hereby represents and warrants to the Bank, as of the date of this
        Agreement and as of the date of each Advance Request and of each Advance,
        that:

       

      Section 5.1.Organization;
        Good Standing.
        The
        Company is a corporation duly organized, validly existing and in good standing
        under the laws of the State of Delaware, has the full legal power and authority
        to own its property and to carry on its business as currently conducted and
        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 such
        qualification necessary, except in jurisdictions, if any, where a failure
        to be
        in good standing has no material adverse effect on the business, operations,
        assets or financial condition of the Company. 

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

       

      Section 5.2.Authorization
        and Enforceability.
        The
        Company has the power and authority to execute, deliver and perform this
        Agreement, the Note and all other documents contemplated hereby or thereby.
        The
        execution, delivery and performance by the Company of this Agreement, the
        Note
        and all other documents contemplated hereby or thereby and the making of
        the
        borrowing hereunder and thereunder, have been duly and validly authorized
        by all
        necessary corporate action on the part of the Company (none of which actions
        have 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 or
        of the articles of organization or bylaws of the Company, conflict with or
        result in a breach of or constitute a default or require any consent under,
        or
        result in the creation of any Lien upon any property or assets of the Company
        (other than pursuant to this Agreement), or result in or require the
        acceleration of any indebtedness of the Company pursuant to any agreement,
        instrument or indenture to which the Company is a party or by which the Company
        or its property may be bound or affected. This Agreement, the Note and all
        other
        documents contemplated hereby or thereby constitute legal, valid, and binding
        obligations of the Company enforceable in accordance with their respective
        terms, except as limited by bankruptcy, insolvency or other similar laws
        affecting the enforcement of creditors’ rights and by general principles of
        equity.

       

      Section 5.3.Approvals.
        The
        execution and delivery of this Agreement, the Note and all other documents
        contemplated hereby or thereby and the performance of the Company’s obligations
        hereunder and thereunder do not require any license, consent, approval or
        other
        action of any state or federal agency or governmental or regulatory
        authority.

       

      Section 5.4.Financial
        Condition.
        The
        balance sheet of the Company as at the Statement Date, and the related
        statements of income and cash flows for the fiscal year ended on the Statement
        Date, heretofore furnished to the Bank, fairly present the financial condition
        of the Company as at the Statement Date and the results of its operations
        for
        the fiscal period ended on the Statement Date. The Company had, on the Statement
        Date, no known 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, said balance
        sheet and related statements, except as heretofore disclosed to the Bank
        in
        writing or otherwise reflected on the Company’s balance sheet, and except for
        the Bank’s extension(s) of credit to the Company Except for financial statements
        prepared for interim periods between the fiscal year-end, all financial
        statements were prepared in accordance with GAAP applied on a consistent
        basis
        throughout the periods involved. Since the Statement Date, there has been
        no
        material adverse change in the business, operations, assets or financial
        condition of the Company, nor is the Company aware of any state of facts
        which
        (with or without notice or lapse of time or both) would or could result in
        any
        such material adverse change.

      Section 5.5.Litigation.
        There
        are no actions, claims, suits or proceedings pending, or to the knowledge
        of the
        Company, threatened against or affecting the Company in any court or before
        any
        arbitrator or before any government commission, board, bureau or other
        administrative agency which, if adversely determined, may reasonably be expected
        to result in any material and adverse change in the business, operations,
        assets, licenses, qualifications or financial condition of the
        Company.

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

       

      Section 5.6.Licenses;
        Compliance with Laws.
        The
        Company has all material permits, licenses, authorizations and approvals
        with
        all governmental authorities or agencies that are required in order to permit
        it
        to conduct its business as presently conducted, and all such material permits,
        licenses, authorizations and approvals that are required to conduct its business
        as presently conducted are in full force and effect. The Company, to the
        best of
        its knowledge, is not 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 which might have a material
        adverse
        effect on the business, operations, assets or financial condition of the
        Company.

       

      Section 5.7.Regulation U.
        No part
        of the proceeds of any Advances made hereunder 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.

       

      Section 5.8.Investment
        Company Act.
        The
        Company is not an “investment company,” or a company controlled by an
“investment company,” within the meaning of the Investment Company Act of 1940,
        as amended.

       

      Section 5.9.Payment
        of Taxes.
        The
        Company has filed or caused to be filed all federal, state, and local income,
        excise, property and other tax returns with respect to the operations of
        the
        Company, which to the knowledge of the Company are required to be filed,
        all
        such returns are true and correct in all material respects, and the Company
        has
        paid or caused to be paid all taxes as shown on such returns or on any
        assessment to the extent that such taxes have become due, except in cases
        where
        the Company has disputed in good faith the amount of said taxes. 

       

      Section 5.10.Agreements.
        The
        Company is not 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 this Agreement. The Company is not 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
        have a
        material adverse effect on the business, operations, properties or financial
        condition of the Company. No holder of any indebtedness of the Company has
        given
        notice of any asserted default thereunder, and no liquidation or dissolution
        of
        the Company and no receivership, insolvency, bankruptcy, reorganization or
        other
        similar proceedings relative to the Company or any of its properties is pending,
        or to the knowledge of the Company, threatened.

       

      Section 5.11.Title
        to Properties.
        The
        Company has good, valid, insurable (in the case of real property) and marketable
        title to all material portions of its properties and assets (whether real
        or
        personal, tangible or intangible) reflected on the financial statements
        described in this Agreement, except for such properties and assets as have
        been
        disposed of since the date of such financial statements as no longer used
        or
        useful in the conduct of its business or as have been disposed of in the
        ordinary course of business, and all such properties and assets are free
        and
        clear of all Liens except as disclosed in such financial statements, and
        liens
        created in favor of Bank (the “Bank Liens”) 

       

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

       

      Section 5.12.Reserved.

       

      Section 5.13.Eligibility.
        The
        Company has and shall maintain in good standing all state and local permits,
        licenses, approvals, registrations and qualifications which are required
        in
        order to permit the Company to conduct its business, in all material manners,
        as
        presently conducted, and which if not maintained in good standing could
        materially and adversely affect the Companies business, operations, assets,
        or
        financial condition or which could materially and adversely impair the ability
        of Company to perform its obligation hereunder. 

       

      Section 5.14.Special
        Representations Concerning Collateral.
        The
        Company hereby represents and warrants to the Bank, as of the date of this
        Agreement and as of the date of each Advance Request and of each Advance,
        that:

       

      (a)
        The
        Company owns the Collateral free and clear of any Lien, except for the security
        interest created by this Agreement, and any rights of Investors and Insurers
        of
        the Pledged Mortgage Loans. No financing statement or other instrument similar
        in effect covering all or any part of the Collateral is on file in any recording
        office, except such as may have been filed in favor of Bank relating to this
        Agreement. The Company has no trade name.

       

      (b)
        This
        Agreement, together with the Bank’s possession of the Mortgage Notes and a duly
        filed financing statement, creates a valid and perfected first priority security
        interest in the Mortgage Notes in favor of the Bank, securing the payment
        of the
        Note, and all filings and other actions necessary or desirable to perfect
        and
        protect such security interest have been duly taken or shall be taken at
        the
        time of the initial Advance hereunder.

       

      (c)
        No
        authorization, approval or other action by, and no notice to or filing with,
        any
        governmental authority or regulatory body is required (and has not been
        obtained, delivered or filed, as applicable) either (i) for the grant by
        the Company of the security interest granted hereby or for the execution,
        delivery or performance of this Agreement by the Company, or (ii) for the
        perfection of or the exercise by the Bank of its rights and remedies hereunder,
        other than the filing of a financing statement which has been duly executed
        by
        the Company and delivered to the Bank for filing.

       

      (d)
        The
        Mortgage Loan Documents have been duly executed by the mortgagor and create
        valid and legally binding obligations of the mortgagor, enforceable in
        accordance with their terms, except as may be limited by bankruptcy or other
        similar laws affecting the enforcement of creditors’ rights generally, and
        general principles of equity, and to the knowledge of the Company there are
        no
        rights of rescission, set-offs, counterclaims or other defenses with respect
        thereto. The full original principal amount of each Mortgage Loan (net of
        any
        discounts) has been fully advanced or disbursed to the mortgagor named therein.
        There is no requirement for future advances and except for Mortgage Loans
        insured under Section 203(k) of the National Housing Act, any and all
        requirements as to completion of any on-site or off-site improvements and
        as to
        disbursements of any escrow funds therefor have been satisfied. To Company’s
        knowledge and except as disclosed to Bank, there is no material default,
        breach,
        violation or event of acceleration existing under the Mortgage or the related
        Mortgage Note, and no event has occurred which, with the passage of time
        or with
        notice and the expiration of any grace or cure period, would constitute a
        material default, breach, violation or event of acceleration, other than
        waivers
        in the ordinary course of servicing the Mortgage Loan which do not have a
        material adverse effect of the Collateral; the Company has not waived any
        material default, breach, violation or event of acceleration; and the terms
        of
        the Mortgage Loan have in no way been waived, impaired, changed or modified.
        To
        Company’s knowledge and except as disclosed to Bank, all tax identifications and
        property descriptions are legally sufficient; tax segregation, where required,
        has been completed and all taxes, governmental assessments, insurance premiums,
        water, sewer and municipal charges, leasehold payments or ground rents which
        previously became due and owing have been paid, or an escrow of funds has
        been
        established in an amount sufficient to pay for every such item which remains
        unpaid.

       

      
        
           

        

        
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      (e)
        Except as disclosed to Bank in writing, to the best of the Company’s knowledge
        based upon due diligence conducted by the Company, each of the Mortgage Loans
        has been originated, made and serviced in material compliance with all industry
        standards, and all applicable federal, state and local statutes, regulations
        and
        rules, including, without limitation, the Federal Truth-in-Lending Act of
        1968,
        as amended, and Regulation Z thereunder, the Federal Fair Credit Reporting
        Act,
        the Federal Equal Credit Opportunity Act, the Federal Real Estate Settlement
        Procedures Act of 1974, as amended, and Regulation X thereunder, the Home
        Ownership and Equity Protection Act of 1994, Section 32 of regulation Z
        thereunder, and all applicable usury, licensing, real property, consumer
        protection and other laws.

       

      (f)
        Except as disclosed to Bank in writing, to the best of the Company’s knowledge
        based upon due diligence conducted by the Company, each of the Mortgage Loans
        presently is covered by a policy of hazard insurance, unless the Mortgage
        is not
        a first lien mortgage, (and flood insurance and insurance against other
        insurable risks and hazards as required), in amounts not less than outstanding
        principal balance of the Mortgage Loans or such maximum lesser amount as
        permitted by applicable law, all in a form usual and customary in the industry
        and which is in full force and effect, and all amounts required to have been
        paid under any such policy have been paid;. 

       

      (g)
        Except as is disclosed to Bank in writing, to the best of the Company based
        upon
        due diligence conducted by the Company, no Mortgage Loan is a Covered Loan.
        

       

      (h)
        A
        title commitment or a valid and enforceable title policy currently in full
        force
        and effect has been issued for each Mortgage Loan which is a first mortgage
        lien, and in the case of title insurance, in an amount not less than the
        original principal amount of such Mortgage Loan, and which title opinion
        opines
        or which title policy insures that the Mortgage relating thereto is a valid
        first lien on the property therein described and that the mortgaged property
        is
        free and clear of all encumbrances and liens having priority over the first
        lien
        of the Mortgage except for taxes not yet due and payable and minor title
        irregularities that do not have a material adverse effect on the use or
        marketability of the mortgaged property. 

       

      
        
           

        

        
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      (i)
        All
        escrow/custodial accounts have been established in accordance with applicable
        laws and by the terms of the related Mortgages.

       

      (j)
        Except
        as
        disclosed to Bank in writing, any and all payments made with respect to the
        individual Pledged Mortgage Loans have been and will be applied to such Mortgage
        Loan in accordance with the terms of the Mortgage Note and Mortgage and any
        modifications thereof evidencing and securing that Mortgage Loan. 

       

      ARTICLE VI

       

      AFFIRMATIVE COVENANTS

       

      The
        Company agrees that so long as the Commitment is outstanding or there remain
        any
        obligations of the Company to be paid or performed under this Agreement or
        under
        the Note, the Company agrees as follows:

       

      Section 6.1.Payment
        of Note.
        The
        Company will punctually pay or cause to be paid the principal and interest
        on
        and all other amounts due and payable hereunder and under the Note in accordance
        with the terms hereof and thereof.

       

      Section 6.2.Financial
        Statements and Other Reports.
        The
        Company will deliver or cause to be delivered to the Bank, or make available
        to
        the Bank, as applicable:

       

      (a)
        Upon
        request by the Bank, as soon as available and in any event within forty-five
        (45) days after each calendar quarter, statements of income and cash flows
        of
        the Company for the immediately preceding quarter, and related balance sheet
        as
        of the end of the immediately preceding quarter, all in reasonable detail
        and
        certified by the chief financial officer or other appropriate officer of
        the
        Company, subject, however, to year-end audit adjustments.

       

      (b)
        As
        soon as available and in any event within one hundred twenty (120) days
        after the close of each fiscal year: a true and complete copy of the Company’s
        independently audited financial statements of the Company for the then most
        recent fiscal year-end (the “Statement
        Date”),
        containing a balance sheet and related statements of income and retained
        earnings and changes in financial position for the period ended on the Statement
        Date, all prepared in accordance with GAAP and accompanied by an opinion
        of an
        accounting firm reasonably satisfactory to the Bank, or other independent
        public
        accountants of recognized standing selected by the Company and acceptable
        to the
        Bank, as to said financial statements and a certificate signed by the chief
        financial officer or other appropriate officer of the Company stating that
        said
        financial statements fairly present the financial condition and results of
        operations of the Company as at the end of, and for, such year.

       

      
        
           

        

        
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      (c)
        Such
        other reports in respect of the Mortgage Loans pledged as collateral, in
        such
        detail and at such times as the Bank in its reasonable discretion may request
        at
        any time or from time to time.

       

      (d)
        Upon
        request, copies of all audits, examinations and reports concerning the
        operations of the Company from any licensing authority, to the extent not
        subject to restrictions on disclosure,

       

      (e)
        From
        time to time, with reasonable promptness, such further information regarding
        the
        business, operations, properties or financial condition of the Company as
        the
        Bank may reasonably request.

       

      Except
        for financial statements prepared for interim periods between the fiscal
        year
        end, all financial statements and reports furnished to the Bank hereunder
        shall
        be prepared in accordance with GAAP, applied on a basis consistent with that
        applied in preparing the financial statements as at, and for the period ended,
        the Statement Date (except to the extent otherwise required to conform to
        good
        accounting practice).

       

      Section 6.3.Maintenance
        of Existence; Conduct of Business.
        The
        Company will preserve and maintain its corporate existence in good standing
        and
        all of its material rights, privileges, licenses, qualifications and franchises
        necessary or desirable in the normal conduct of its business, including,
        without
        limitation, its eligibility as an approved servicer of mortgage loans, where
        required, as described under Article 5 hereof; and make no material change
        in the nature or character of its business, if such material change would
        result
        in Company being unable to fulfill or complete its duties and obligations
        under
        this Agreement.

       

      Section 6.4.Compliance
        with Applicable Laws.
        The
        Company will comply with the requirements of all applicable laws, rules,
        regulations (including laws, rules and regulations relating to predatory
        lending) and orders of any governmental authority and prudent industry
        standards, a breach of which could materially adversely affect its business,
        operations, assets, or financial condition or which could materially adversely
        impair the ability of Company to perform its obligation hereunder, except
        where
        contested in good faith and by appropriate proceedings.

       

      Section 6.5.Inspection
        of Properties and Books.
        The
        Company will permit authorized representatives of the Bank, its parent company
        or affiliates (i), to discuss the business, operations, assets and financial
        condition of the Company and its Subsidiaries with their officers and employees,
        (ii) to examine their books, records, information and service systems and
        properties, and make copies or extracts thereof subject to applicable laws
        with
        respect to confidentiality of customer records, (iii) to examine and audit
        the
        Company’s Loan accounts, individual Pledged Mortgage Loans, and related
        documentation and Collateral, and (iv) for those purposes, to visit the
        Company’s, all at such reasonable times as the Bank may request. Upon the
        request of its accountants, the Company will provide its accountants with
        a copy
        of this Agreement promptly after the execution hereof and will instruct its
        accountants to answer candidly and fully any and all questions that the officers
        of the Bank or any authorized representatives of the Bank may address to
        them in
        reference to the financial condition or affairs of the Company. In addition
        to
        the foregoing, the Company shall provide, or cause to be provided, live,
“real
        time” read/view only access to the data system(s) for all records maintained by
        the Company related to the Pledged Mortgage Loans. The purposes or uses for
        which the Bank may use the right of access to such data system records, and
        the
        rights of inspection, examination, and audit set forth in this Section shall
        include, without limitation, the following: (i) to ensure that the
        administration, and their payment processing remain in compliance with the
        terms
        of this Agreement; (ii) to enable the Bank to periodically sample or test
        the
        flow of payments received from the Pledged Mortgage Loan obligors; and (iii)
        to
        enable the Bank to periodically determine the value of the Bank’s Collateral
        from time to time and to ensure that the Collateral continues to meet the
        Bank’s
        underwriting standards throughout the life of those Mortgage Loans.

       

      
        
           

        

        
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      Section 6.6.Notice.
        The
        Company will
        give
        prompt written notice to the Bank of (a) any action, suit or proceeding
        instituted against the Company in any federal or state
        court or before any commission or other regulatory body (federal, state or
        local, domestic or foreign) which may reasonably be expected to result in
        damages of Five Hundred Thousand Dollars ($500,000.00) or more, or of any
        written notification that the filing of any such action, suit or proceeding
        against the Company is imminent, and containing the details thereof,
        (b) the filing, recording or assessment of any federal, state or local tax
        lien of more than $100,000.00, individually or in the aggregate, against
        the
        Company, or any of its assets, which lien is not released or satisfied within
        sixty (60) days and the Company has not commenced and is not then diligently
        pursing appropriate actions to stay enforcement of the lien or assessment
        or to
        contest the validity of such filing, (c) the occurrence of any Default or
        Event of Default hereunder, (d) the actual or written threat of the
        imminent suspension, revocation or termination of the Company’s eligibility, in
        any respect, as an approved servicer of mortgage loans, where required, as
        described under Section 5.13 hereof which will have a material and adverse
        effect on the Company’s business operations, , and (e) any other action,
        event or condition of any nature which may lead to or result in a material
        adverse effect upon the business, operations, assets, or financial condition
        of
        the Company or which, with or without notice or lapse of time or both, would
        constitute a default under any other material agreement, instrument or indenture
        to which the Company is a party or to which the Company, its properties or
        assets may be subject.

       

      Section 6.7.Payment
        of Debt, Taxes, etc.
        The
        Company will pay and perform all obligations of the Company promptly and
        in
        accordance with the terms thereof and pay and discharge or cause to be paid
        and
        discharged promptly all taxes, assessments and governmental charges or levies
        imposed upon the Company or upon its income, receipts or properties before
        the
        same shall become past due, as well as all lawful claims for labor, materials
        and supplies or otherwise which, if unpaid, might become a Lien or charge
        upon
        such properties or any part thereof; provided,
        however, that
        the
        Company shall not be required to pay taxes, assessments or governmental charges
        or levies or claims for labor, materials or supplies for which the Company
        shall
        have obtained an adequate bond or adequate insurance or which are being
        contested in good faith and by proper proceedings which are being reasonably
        and
        diligently pursued.

       

      
        
           

        

        
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      Section 6.8.Insurance.
        The
        Company will maintain (a) errors and omissions insurance or mortgage
        impairment insurance and blanket bond coverage, with responsible companies
        and
        in such amounts as is customary and usual for a prudent mortgage servicing
        institution, and (b) liability insurance and fire and other hazard
        insurance on its properties, with responsible insurance companies, in such
        amounts and against such risks as is customarily carried by similar businesses
        operating in the same vicinity, and (c) within thirty (30) days after
        written notice from the Bank, will obtain such additional insurance as the
        Bank
        shall reasonably require, all at the sole expense of the Company. Copies
        of all
        such policies shall be furnished to the Bank without charge upon request
        of the
        Bank.

       

      Section 6.9Reserved.

       

      Section 6.10.Purchased
        Loans.
        The
        Company will indemnify and hold the Bank harmless from and against any loss,
        including reasonable attorneys’ fees and costs, attributable to the failure of
        any correspondent of the Company to comply with the disbursement or instruction
        letter or letters of the Company or of the Bank relating to Mortgage Loans
        purchased by the Company with Advances hereunder.

       

      Section
        6.11 Loan Purchase Agreement. The
        Company will
        use its
        best commercially reasonable efforts, reasonably and in good faith, to include
        covenants, representations, and warranties covering the following items in
        its
        Mortgage Loan purchase agreements with respect to the acquisition of the
        Pledged
        Mortgage Loans, and cause such purchase agreements to include, except as
        disclosed to Bank in writing: (i) standard representations and warranties
        as to
        the due organization of the seller and the seller’s authorization to sell the
        loans; (ii) representations and warranties regarding the mortgage loans being
        purchased, and the documentation for the same consistent with general commercial
        standards, but in any event, having representations and warranties consistent
        with the requirements for Mortgage Loans set forth in this Agreement; (iii)
        standard remedies for breach of contract; (iv) covenant that the seller will
        buy
        back from the Company (or any assignee) any mortgage loan which does not
        comply
        with representations and warranties regarding it; and (vi) covenant that
        the
        seller will indemnify and hold the Company, and any assignee, harmless against
        any and all damages which the indemnified party may suffer on account of
        any
        mortgage loan which does not meet representations and warranties.

       

      Section 6.12.Other
        Loan Obligations.
        The
        Company will perform in all material respects all obligations under the terms
        of
        each loan agreement, note, mortgage, security agreement or debt instrument
        by
        which the Company is bound or to which any of its property is subject, and
        will
        promptly notify the Bank in writing of the cancellation or reduction of any
        of
        its other mortgage warehousing lines of credit or agreements with any other
        lender.

       

      Section 6.13.Use
        of Proceeds of Advances.
        The
        Company will use the proceeds of each Advance solely for the purpose of
        financing the purchase of Mortgage Loans in accordance with the terms,
        conditions, requirements and representations and warranties set forth in
        this
        Agreement. 

       

      
        
           

        

        
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      Section 6.14.The
        Company will assist the Bank in the performance of the Bank’s due diligence in
        response to Advance Requests in order for the Bank to gain assurance that
        the
        terms and conditions of this Agreement will be met; and The Company will
        perform
        reasonable due diligence when agreeing to purchase Mortgage Loans to be financed
        by Advances from Bank hereunder in order to ensure that the Mortgage Loans
        comply with the terms and conditions of this Agreement.

       

      Section
        6.15. Financial Requirements.
        (a)
Net
        Worth.
        The
        Company will maintain at all times a Net Worth equal to or greater than
$10,000,000.00.

       

      Section
        6.16. Custodial Agreement.
        The
        Company will maintain in effect the Custodial Agreement, or another custodial
        agreement with another custodian with substantially the same terms as the
        Custodial Agreement.

       

      Section 6.17.Special
        Affirmative Covenants Concerning Collateral.
        (a) The Company warrants and will defend the right, title and interest of
        the Bank in and to the Pledged Mortgage Loans against the claims and demands
        of
        all persons whomsoever.

       

      (b)
        The
        Company shall service or cause to be serviced in all material respects all
        Pledged Mortgage Loans in accordance with all applicable governmental
        requirements, including without limitation taking all actions necessary to
        enforce the obligations of the obligors under such Pledged Mortgage Loans.
        The
        Company shall hold all escrow funds collected in respect of Pledged Mortgage
        Loans in trust, without commingling the same with non-custodial funds, and
        apply
        the same for the purposes for which such funds were collected.

       

      (c)
        The
        Company shall execute and deliver to the Bank such Uniform Commercial Code
        financing statements with respect to the Collateral as the Bank may reasonably
        request. The Company shall also execute and deliver to the Bank such further
        instruments of sale, pledge or assignment or transfer, and such powers of
        attorney, as reasonably required by the Bank, and shall 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 the Bank under this Agreement. The Bank
        shall
        have all the rights and remedies of a secured party under the Uniform Commercial
        Code of the State of Ohio, or any other applicable law, in addition to all
        rights provided for herein. 

       

      (d)
        The
        Company shall maintain, at its principal office or in a regional office approved
        by the Bank, or in the office of the custodian under the Custodial Agreement,
        and, upon request, shall make available to the Bank the originals, or copies
        in
        any case where the original has been delivered to the Bank, or to an Investor,
        of its Mortgage Notes and Mortgages included in Mortgage Loans, Purchase
        Commitments, and all related Pledged Mortgage 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.

       

      
        
           

        

        
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      (e)
        Any
        and all payments made with respect to the individual Pledged Mortgage Loans
        will
        be applied to such Pledged Mortgage Loan in accordance with the terms of
        the
        Mortgage Note and Mortgage and any modifications thereof evidencing and securing
        that Pledged Mortgage Loan, and the books, records, accounts and reports
        of the
Company
        with
        respect to the Pledged Mortgage Loans and servicing contracts have will be
        prepared and maintained in accordance with all applicable Investor and Insurer
        requirements.

       

      ARTICLE VII

       

      NEGATIVE COVENANTS

       

      The
        Company agrees that so long as the Commitment is outstanding or there remain
        any
        obligation of the Company to be paid or performed hereunder or under the
        Note,
        the Company shall not, either directly or indirectly, without the prior written
        consent of the Bank:

       

      Section 7.1.Contingent
        Liabilities.
        Assume,
        guarantee, endorse, or otherwise become liable for the obligation of any
        Person,
        other than a subsidiary or affiliate of the Company, except by endorsement
        of
        negotiable instruments for deposit or collection in the ordinary course of
        business.

       

      Section 7.2.Merger;
        Sale of Assets; Acquisitions; Change in Control; Change of Senior
        Management.
        Except
        for the securitization, sale or purchase of loans in the ordinary course
        of the
        business, liquidate, dissolve, consolidate or merge or sell, transfer or
        otherwise dispose of, any substantial part of its assets, which would cause
        the
        Company to not be in compliance with the financial covenants of Section 6.14,
        or
        which would otherwise cause a material adverse change in the Company’s financial
        condition, or which would result in a material adverse change in the Company’s
        business operations, or permit ownership beneficially or of record of the
        voting stock of Company which results in Thomas J. Axon having a non-controlling
        ownership interest of the voting stock of the Company. For purposes of this
        section, “control” shall have the meaning set forth in Rule 12b-2 under the
        Exchange Act.

       

      Section 7.3.Loss
        of Eligibility.
        Take,
        or fail to take, any action that would cause the Company to lose all or any
        part
        of its status as an eligible servicer of mortgage loans, where required,
        which
        if not maintained in good standing could materially and adversely affect
        the
        Company’s business, operations, assets, or financial condition or which could
        materially and adversely impair the ability of Company to perform its obligation
        hereunder, as described under Section 5.13 hereof.

       

      Section 7.4.Special
        Negative Covenants Concerning Collateral.
        Except
        in the ordinary course of business of servicing the Pledged Mortgage Loans
        in
        accordance with reasonable and customary servicing practices in the industry
        for
        the same type of mortgage loans as the Pledged Mortgage Loans, Company shall
        not
        do or permit any of the following:

       

      (i)
        cancel or terminate any of the Collateral Documents (in any capacity), or
        consent to or accept any cancellation or termination of any of such agreements,
        or materially amend or otherwise modify any term or condition of any of the
        Collateral Documents; settle or compromise any claim in respect of any Pledged
        Mortgage Loan or any other Collateral; or give any consent, waiver or approval
        under any such agreement, or waive any default under or breach of any of
        the
        Collateral Documents or take any other action under any such agreement not
        required by the terms thereof, unless (in each case) Bank shall have consented
        thereto.

       

      
        
           

        

        
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      (ii)
        Except as permitted in this Agreement, sell, assign, transfer or otherwise
        dispose of, or grant any option with respect to the Collateral or any interest
        therein; or

       

      (iii)
        pledge or otherwise encumber any of the Collateral, or accept consideration
        other than cash in payment or liquidation of the Collateral.

       

      ARTICLE VIII

       

      DEFAULTS;
        REMEDIES

       

      Section 8.1.Events
        of Default.
        The
        occurrence of any of the following conditions or events shall be in event
        of
        default (“Event
        of Default”):

       

      (a)
        Failure to pay the principal of any Advance when due or required under the
        Note
        or this Agreement, whether at stated due date or stated maturity date, or
        by
        acceleration, or otherwise; or failure to pay any installment of interest
        on any
        Advance or any other amount due under this Agreement when due and any such
        failure shall continue unremedied for fifteen days; or

       

      (b)
        Failure of the Company to pay, or any default in the payment of any principal
        or
        interest on, any other indebtedness or in the payment of any contingent
        obligation which are in the aggregate amount of One Hundred Thousand Dollars
        ($100,000.00); or breach or default with respect to any other material term
        of
        any other indebtedness or of any loan agreement, note, mortgage, security
        agreement, indenture or other agreement relating thereto, if the effect of
        such
        failure, default or breach is to cause, or to permit the holder or holders
        thereof (or a trustee on behalf of such holder or holders) to cause,
        indebtedness of the Company or its Subsidiaries in the aggregate amount of
        One
        Hundred Thousand Dollars ($100,000.00) or more to become or be declared due
        prior to its stated maturity; or

       

      (c)
        Failure of the Company to perform or comply with any term or condition
        applicable to it contained in Sections 6.1 through 6.16 inclusive, or 7.1
        through 7.5, inclusive, of this Agreement; or

       

      (d)
        If
        any of the Company’s representations or warranties made herein or in any
        statement or certificate at any time given by the Company in writing pursuant
        hereto or in connection herewith shall be false in any material respect on
        the
        date as of which made; or

       

      
        
           

        

        
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      (e)
        If,
        the Company shall default in the observance or performance of, or compliance
        with, any term contained in this Agreement other than those referred to above
        in
        subsections 8.1(a), (b), (c) or (d), and such default shall not have been
        remedied or waived within thirty (30) days after receipt of notice from the
        Bank
        of such default; or

       

      (f)
        (i) A court having jurisdiction shall enter a decree or order for relief in
        respect of the Company in an involuntary case under any applicable bankruptcy,
        insolvency or other similar law now or hereafter in effect, which decree
        or
        order is not stayed; or (ii) any other similar relief shall be granted
        under any applicable federal or state law; or a decree or order of a court
        having jurisdiction for the appointment of a receiver, liquidator, sequestrator,
        trustee, custodian or other officer having similar powers over the Company,
        or
        over all or a substantial part of their respective properties, shall have
        been
        entered; or the involuntary appointment of an interim receiver, trustee or
        other
        custodian of the Company for all or a substantial part of its respective
        property; or the issuance of a warrant of attachment, execution or similar
        process against any substantial part of the property of the Company, and
        the
        continuance of any such events in this clause (ii) for sixty (60) days
        unless dismissed, bonded off or discharged; or

       

      (g)
        If
        the Company shall have an order for relief entered with respect to it or
        commence a voluntary case under any applicable bankruptcy, insolvency or
        other
        similar law now or hereafter in effect, or shall consent to the entry of
        an
        order for relief in an involuntary case, or to the conversion to an involuntary
        case, under any such law, or shall consent to the appointment of or taking
        possession by a receiver, trustee or other custodian for all or a substantial
        part of its property; the making by the Company of any assignment for the
        benefit of creditors; or the inability or failure of the Company, or the
        admission by the Company in writing of its inability to pay its debts as
        such
        debts become due; or

       

      (h)
        If
        any money judgment, writ or warrant of attachment, or similar process involving
        in any case an amount in excess of One Hundred Thousand Dollars ($100,000.00)
        shall be entered or filed against the Company or any of its assets and shall
        remain undischarged, unvacated, unbonded or unstayed for a period of sixty
        (60)
        days or in any event later than five (5) days prior to the date of any proposed
        sale thereunder; or

       

      (i)
        If
        any order, judgment or decree shall be entered against the Company decreeing
        the
        dissolution, liquidation or split up of the Company and such order shall
        remain
        undischarged or unstayed for a period in excess of sixty (60) days;
        or

       

      (j)
        If
        the Company, other than in good faith, shall purport to disavow its obligations
        hereunder or shall contest the validity or enforceability hereof; or the
        Bank’s
        security interest in any material portion of the Collateral shall become
        unenforceable or otherwise impaired; or

       

      (k)
        If
        the Company shall have been subject to an enforcement action by any federal
        regulatory agency which may reasonably be expected to result in any material
        and
        adverse change in the business, operations, assets, licenses, qualifications
        or
        financial condition of the Company; 

       

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

       

      Section 8.2.
        Remedies.
        (a) Upon the occurrence of any Event of Default described in
        Section 8.1(f) or (g) the unpaid principal amount of and accrued interest
        on the Note shall automatically become due and payable, without presentment,
        demand or other requirements of any kind, all of which are hereby expressly
        waived by the Company, and the obligation of the Bank to make Advances shall
        thereupon terminate.

       

      (b)
        Upon
        the occurrence of any Event of Default (other than those described in
        Section 8.1(f) or (g)), the Bank may, by written notice to the Company
        declare all or any portion of the Advances to be due and payable whereupon
        the
        same shall forthwith become due and payable, together with all accrued interest
        thereon, and the obligation of the Bank to make Advances shall thereupon
        terminate.

       

      (c)
        Upon
        the occurrence of any Event of Default, the Bank may also do any one or more
        or
        all of the following:

       

      (1)
        Foreclose upon or otherwise enforce its security interest in and Lien on
        all of
        the Collateral or on any portion thereof to secure all payments and performance
        of obligations owed by the Company under this Agreement.

       

      (2)
        Notify all obligors of Collateral or on any portion thereof that the Collateral
        has been assigned to the Bank and that all payments thereon are to be made
        directly to the Bank or such other party as may be designated by the Bank;
        settle, compromise, or release, in whole or in part, any amounts owing on
        the
        Collateral, any such obligor or Investor or any portion of the Collateral,
        on
        terms acceptable to the Bank; enforce payment and prosecute any action or
        proceeding with respect to any and all Collateral; and where any such Collateral
        is in default, foreclose on and enforce security interests in, such Collateral
        by any available judicial procedure or, if permitted by applicable law, without
        judicial process and sell property acquired as a result of any such
        foreclosure.

       

      (3)
        Act,
        or contract with a qualified third party to act, as servicer of all or any
        item
        of Collateral requiring servicing and perform all obligations required in
        connection with Purchase Commitments, such third party’s fees to be paid by the
        Company.

       

      (4)
        Exercise all rights and remedies of a secured creditor under the Uniform
        Commercial Code of the State of New York or the state in which the Collateral
        is
        located, including but not limited to selling the collateral at public or
        private sale. The Bank shall give the Company not less than sixty (60) days’
written notice of any such public sale or of the date after which private
        sale
        may be held. The Company agrees that sixty (60) days’ notice shall be reasonable
        notice. At any such sale the Collateral may be sold as an entirety or in
        separate parts, as the Bank may determine, but any such sale shall be conducted
        in a commercially reasonable manner. The Bank may, without notice or
        publication, adjourn any public or private sale or cause the same to be
        adjourned from time to time by announcement at the time and place fixed for
        the
        sale, and such sale may be made at any time or place to which the same may
        be so
        adjourned. In case of any sale of all or any part of the Collateral on credit
        or
        for future delivery, the Collateral so sold may be retained by the Bank until
        the selling price is paid by the purchaser thereof, but the Bank shall not
        incur
        any liability in case of the failure of such purchaser to take up and pay
        for
        the Collateral so sold and, in case of any such failure, such Collateral
        may
        again be sold upon like notice. The Bank may, however, instead of exercising
        the
        power of sale herein conferred upon it, proceed by a suit or suits at law
        or in
        equity to collect all amounts due upon all or any portion of the Collateral
        or
        to foreclose the pledge and sell all or any portion of the Collateral under
        a
        judgment or decree of a court or courts of competent jurisdiction, or
        both.

       

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

       

      (5)
        Proceed against the Company on the Note.

       

      (6)
        Pursue any rights and/or remedies available at law or in equity against the
        Company.

       

      (d)
        The
        Bank shall not be required to take any steps necessary to preserve any rights
        of
        the Company against holders of mortgages prior in lien to the Lien of any
        Mortgage included in the Collateral or to preserve rights against prior
        parties.

       

      (e)
        The
        Bank may, but shall not be obligated to, advance any sums or do any act or
        thing
        necessary to uphold and enforce the Lien and priority of, or the security
        intended to be afforded by, any Mortgage included in the Collateral, including,
        without limitation, 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 the Bank in exercising
        any right, power or remedy conferred by this Agreement, or in the enforcement
        hereof, shall be paid by the Company, shall be secured by the Collateral,
        and
        until paid, shall bear interest from the date of expenditure at the rate
        of
        interest specified herein and/or in the Note.

       

      (f)
        No
        failure on the part of the Bank to exercise, and no delay in exercising,
        any
        right, power or remedy provided hereunder, at law or in equity shall operate
        as
        a waiver thereof; nor shall any single or partial exercise by the Bank of
        any
        right, power or remedy provided hereunder, at law or in equity preclude any
        other or further exercise thereof or the exercise of any other right, power
        or
        remedy. The remedies herein provided are cumulative and are not exclusive
        of any
        remedies provided at law or in equity.

       

      Section 8.3.
        Application
        of Proceeds.
        Unless
        otherwise required by applicable law, the proceeds of any sale or other
        enforcement of the Bank’s security interest in all or any part of the Collateral
        may be applied by the Bank in such order of priority as the Bank may determine
        at its sole discretion, including, without limitation, the following:

       

      (a)
        To
        the payment of the costs and expenses of such sale or enforcement, including
        reasonable compensation to the Bank’s agents and counsel, and all customary and
        usual expenses, liabilities and advances made or incurred by or on behalf
        of the
        Bank in connection therewith;

       

      
        
           

        

        
          29

          
            

          

        

        
           

        

      

       

      (b)
        To
        the payment of any other amounts due under the Note or this Agreement (whether
        for principal or interest or otherwise), in such order and manner as the
        Bank
        elects; and

       

      (c)
        To
        the payment to the Company, or to its successors or assigns, or as a court
        of
        competent jurisdiction may direct, of any surplus then remaining from such
        proceeds. 

       

      If
        the
        Proceeds of any such sale are insufficient to cover the costs and expenses
        of
        such sale, as aforesaid, and the payment in full of the Note and all other
        amounts due hereunder, the Company shall remain liable for any
        deficiency.

       

      All
        references to costs and expenses of Bank (including attorney fees) to be
        reimbursed to Bank by Borrower shall mean Bank’s reasonable costs, and expenses
        (including reasonable attorney fees).

       

      Section 8.4.
        Bank
        Appointed Attorney-in-Fact.
        The
        Bank
        is hereby appointed the attorney-in-fact of the Company, after the occurrence
        and during the continuance of an Event of Default hereunder, with full power
        of
        substitution, for the purpose of carrying out the provisions hereof, and
        taking
        any action and executing any instruments which the Bank may deem necessary
        or
        advisable to accomplish the purposes hereof or thereof, after the occurrence
        and
        during the continuance of an Event of Default hereunder, which appointment
        as
        attorney-in-fact is irrevocable and coupled with an interest. Without limiting
        the generality of the foregoing, the Bank shall have the right and power
        to give
        notices of its security interest in the Collateral to any Person, either
        in the
        name of the Company, or in its own name, after the occurrence and during
        the
        continuance of an Event of Default hereunder to endorse all Pledged Mortgage
        Loans payable to the order of the Company or, after the occurrence and during
        the continuance of an Event of Default hereunder, to receive, endorse and
        collect all checks made payable to the order of the Company, representing
        any
        payment on account of the principal of or interest on, or the proceeds of
        sale
        of, any of the Pledged Mortgage Loans and to give full discharge for the
        same
        and execute any and all instruments in writing whatever kind and nature,
        if they
        be necessary, and be necessary and deemed proper by Bank to effectively assure
        its appropriate lien position in the Collateral and in the Pledged Mortgage
        Loans.

       

      Section 8.5.
        Right
        of Set-off.
        If the
        Company shall default in the payment of the Note, any interest accrued thereon,
        or any other sums which may become payable hereunder when due, or in the
        performance of any of its other obligations or liabilities under this Agreement,
        the Bank, shall have the right, at any time and from time to time, without
        notice, to set-off and to appropriate or apply any and all deposits of money
        or
        property or any other indebtedness at any time held or owing by the Bank
        or a
        parent company, affiliate, or subsidiary to or for the credit of the account
        of
        the Company against and on account of the obligations and liabilities of
        the
        Company under the Note and this Agreement, irrespective of whether or not
        the
        Bank shall have made any demand hereunder and whether or not said obligations
        and liabilities shall have matured, provided,
        however, that
        the
        aforesaid right of set-off shall not apply to any deposits of escrow monies
        or
        other funds being held on behalf of the mortgagors under Mortgage Loans or
        other
        third parties, and Bank shall promptly notify Company subsequent to Bank
        exercising any such set-off.

       

      
        
           

        

        
          30

          
            

          

        

        
           

        

      

       

      ARTICLE IX

       

      REIMBURSEMENT OF EXPENSES;
        INDEMNITY

       

      The
        Company shall:

       

      Section 9.1.Cost
        of Enforcement.
        Pay all
        reasonable costs and expenses of the Bank, including reasonable attorney’s fees,
        in connection with the enforcement of this Agreement, the Note, and other
        documents and instruments related hereto.

       

      Section 9.2.Payments
        of Taxes.
        Pay,
        and hold the Bank and any holder of the Note harmless from and against, any,
        and
        all, present and future stamp, documentary and other similar taxes with respect
        to the foregoing matters and save the Bank and the holder or holders of the
        Note
        harmless from and against any and all liabilities with respect to or resulting
        from any delay or omission to pay such taxes.

       

      Section 9.3.Indemnification.
        Indemnify, pay and hold harmless the Bank and any of its officers, directors,
        employees or agents and any subsequent holder of the Note from and against
        any
        and all liabilities, obligations, losses, damages, penalties, judgments,
        suits,
        costs, expenses and disbursements of any kind whatsoever (the “Indemnified
        Liabilities”)
        (excluding any such Indemnified Liabilities resulting from failure by the
        Bank
        to perform any of its obligations under this Agreement, the Note, or any
        other
        document referred to herein as established in a suit between the Company
        and the
        Bank which may be the same suit in which indemnification is being sought
        hereunder by the Bank and any liabilities arising from the Bank’s gross
        negligence or willful misconduct) which may be imposed upon, incurred by
        or
        asserted against the Bank or such holder in any way relating to or arising
        out
        of this Agreement, the Note, or any other document referred to herein or
        any of
        the transactions contemplated hereby or thereby to the extent that any such
        Indemnified Liabilities result (directly or indirectly) from (i) the
        inaccuracy or incompleteness of any representation or warranty made by the
        Company in this Agreement or any schedule, statement, Exhibit or certificate
        furnished by the company pursuant to this Agreement or (ii) the failure by
        the Company to observe or perform any term or provision of this Agreement
        or of
        any agreement executed in connection herewith, including without limitation
        any
        claims made, or any actions, suits or proceedings commenced or threatened,
        by or
        on behalf of any creditor (excluding the Bank and the holder or holders of
        the
        Note), security holder, shareholder, mortgagor, customer (including, without
        limitation, any person or entity having any dealings of any kind with the
        Company), trustee, director, officer, employee and/or agent of the Company
        acting in such capacity, the Company or any governmental regulatory body
        or
        authority.

       

      
        
           

        

        
          31

          
            

          

        

        
           

        

      

       

      ARTICLE X

       

      DELIVERIES OF COLLATERAL DOCUMENTS

       

      Section
        10. 1. Delivery of Collateral Documents. The
        Bank
        reserves the right to exclusively deliver Pledged Mortgage Loans to an Investor
        under a Purchase Commitment with respect thereto for its examination and
        purchase, against a bailee letter substantially in the form attached hereto
        as
Exhibit D.
        In
        addition, the Bank may deliver any document relating to the Collateral to
        the
        Company for correction or completion against a properly executed trust receipt
        in the form approved by the Bank with instructions to the Company to either
        return the corrected document to the Bank within ten (10) calendar days after
        such delivery or redeem the Mortgage Loan from pledge. In the case of deliveries
        of Pledged Mortgage Loans by the Bank, the Company shall deliver to the Bank
        a
        letter, to accompany the delivery, confirming the security interest of the
        Bank
        and designating the Bank as payee under any Purchase Commitment.

       

      Section
        10.2. Reserved.

       

      ARTICLE XI

       

      MISCELLANEOUS

       

      Section 11.1.Relationship
        of Parties.
        The
        relationship between Bank and the Company is limited to that of creditor/secured
        party, on the one hand, and borrower, on the other hand. The provisions herein
        for compliance with financial covenants and delivery of financial statements,
        are intended solely for the benefit of Bank to protect its interests as lender
        in assuring performance of the obligations hereunder, and nothing contained
        in
        this Agreement shall be construed as permitting or obligating Bank to act
        as a
        financial or business advisor or consultant to the Company, as permitting
        or
        obligating the Bank to control the Company or to conduct the Company’s
        operations, as creating any joint venture, agency, fiduciary, trustee, or
        other
        relationship between the parties other than as explicitly and specifically
        stated in this Agreement. The Company acknowledges that it has had the
        opportunity to obtain the advice of experienced counsel of its own choosing
        in
        connection with the negotiation and execution of this Agreement and to obtain
        the advice of such counsel with respect to all matters contained herein.
        The
        Company further acknowledges that it is experienced with respect to financial
        and credit matters and has made its own independent decision to execute and
        deliver this Agreement.

       

      Section 11.2.Recourse.
        The
        Company acknowledges and agrees that it is fully liable for repayment of
        all
        Advances and all sums due hereunder or under the Note and for performance
        of all
        obligations contained in this Agreement.

       

      Section 11.3.Notices.
        All
        notices, demands, consents, requests and other communications required or,
        permitted to be given or made hereunder (collectively, “Notices”)
        shall,
        except as otherwise expressly provided hereunder, be in writing and shall
        be
        delivered in person, or mailed, first class, return
        receipt requested, postage prepaid, or by overnight delivery service or by
        facsimile or other telecommunications device addressed to the respective
        parties
        hereto at their respective addresses hereinafter set forth or, as to any
        such
        party, at such other address as may be designated by it in a Notice to the
        other. All Notices shall be conclusively deemed to have been properly given
        or
        made when duly delivered, in person or by facsimile or other telecommunications
        device, on the next business day if sent by overnight delivery service, or,
        if
        mailed, on the third Business Day after being deposited in the mails or when
        delivered to the telegraph company, addressed as follows:

       

      
        
           

        

        
          32

          
            

          

        

        
           

        

      

       

      

      
        	 	
                if
                  to the Company:

              	
                Franklin
                  Credit Management Corporation

              
	 	 	
                101
                  Hudson Street

              
	 	 	
                Jersey
                  City, NJ 07302

              
	 	 	
                Attention:
                  Mr. Gordon Jardin

              
	 	 	
                C.E.O

              
	 	 	
                Facsimile
                  No. 212.625.9830

              
	 	 	 
	 	
                with
                  a copy to:

              	
                Franklin
                  Credit Management Corporation

              
	 	 	
                101
                  Hudson Street

              
	 	 	
                Jersey
                  City, NJ 07302

              
	 	 	
                Attention:
                  Kevin Gildea

              
	 	 	
                General
                  Counsel

              
	 	 	
                Facsimile
                  No. 212.625.9830

              
	 	 	 
	 	
                if
                  to the Bank:

              	
                Sky
                  Bank

              
	 	 	
                110
                  East Main Street

              
	 	 	
                Salineville,
                  Ohio 43945

              
	 	 	
                Attention:
                  Mr. Jerry S. Sutherin

              
	 	 	
                Senior
                  Vice President

              
	 	 	
                Facsimile
                  No. 330.679.2377

              
	 	 	 
	 	
                with
                  a copy to:

              	
                Sky
                  Financial Group, Inc.

              
	 	 	
                221
                  South Church Street

              
	 	 	
                Bowling
                  Green, OH 43402

              
	 	 	
                Attention:
                  General Counsel

              
	 	 	
                Facsimile
                  No. 419.254.6345

              

      

       

      Section 11.4.Terms
        Binding Upon Successors; Survival.
        The
        terms and provisions of this Agreement shall be binding upon and inure to
        the
        benefit of the parties hereto and their respective successors and assigns.
        All
        representations, warranties, covenants and agreements herein contained on
        the
        part of the Company shall survive the making of any Advance and the execution
        of
        the Note, and shall be effective so long as the Commitment is outstanding
        or
        there remains any obligation of the Company hereunder or under the Note to
        be
        paid or performed.

       

      Section 11.5.Assignment.
        This
        Agreement may not be assigned by the Company without the written consent
        of
        Bank. This Agreement and the Note, along with the Bank’s security interest in
        any or all of the Collateral, may, at any time, be transferred or assigned,
        in
        whole or in part, by the Bank, and any such transferee or assignee thereof
        may
        enforce this Agreement, the Note and such security interest.

       

      
        
           

        

        
          33

          
            

          

        

        
           

        

      

       

      Section 11.6.Amendments.
        This
        Agreement may not be modified or amended or waived unless such modification,
        waiver or amendment is in writing signed by the parties.

       

      Section 11.7.No
        Waiver; Remedies Cumulative.
        No
        failure or delay on the part of the Company or the Bank or any holder of
        the
        Note in exercising any right, power or privilege hereunder and no course
        of
        dealing between the Company and the Bank or the holder of the Note shall
        operate
        as a waiver thereof; nor shall any single or partial exercise of any right,
        power or privilege hereunder or under the Note preclude any other or further
        exercise thereof or the exercise of any other right, power or privilege
        hereunder. The rights and remedies herein expressly provided are cumulative
        and
        not exclusive of any rights or remedies which the Company or the Bank or
        the
        holder of the Note would otherwise have. No notice to or demand on the Company
        in any case shall entitle the Company to any other or further notice or demand
        in similar or other circumstances or constitute a waiver of the rights of
        the
        Bank or the holder of the Note to any other or further action in any
        circumstances without notice or demand.

       

      Section 11.8.Invalidity.
        In case
        any one or more of the provisions contained in this Agreement shall for any
        reason be held to be invalid, illegal, or unenforceable in any respect, such
        invalidity, illegality or unenforceability shall not affect any other provisions
        hereof, and this Agreement shall be construed as if such invalid, illegal
        or
        unenforceable provision had not been included.

       

      Section 11.9.Participations.
        The
        Bank may from time to time sell or otherwise grant participations in the
        Note,
        and the holder of any such participation, if the participation agreement
        so
        provides, (i) shall, with respect to its participation, be entitled to all
        of the rights of the Bank and (ii) may exercise any and all rights of
        setoff or banker’s lien with respect thereto, in each case as fully as though
        the Company were directly indebted to the holder of such participation in
        the
        amount of such participation; provided,
        however, that
        the
        Company shall not be required to send or deliver to any of the participants
        other than the Bank any of the materials or notices required to be sent or
        delivered by it under the terms of this Agreement, nor shall it have to act
        except in compliance with the instructions of the Bank.

       

      Section 11.10.Integration.
        This
        Agreement, together with the Note, and other documents executed pursuant
        to the
        terms hereof, constitute the entire agreement between the parties hereto,
        with
        respect to the subject matter hereof.

       

      Section 11.11.Additional
        Instruments, etc.
        The
        Company shall execute and deliver such further instruments and shall do and
        perform all matters and things necessary or expedient to be done or observed
        for
        the purpose of effectively creating, maintaining and preserving the security
        and
        benefits intended to be afforded by this Agreement.

       

      Section 11.12.Governing
        Law.
        This
        Agreement and the rights and obligations of the parties hereunder and under
        the
        Note shall be construed in accordance with and governed by the laws of the
        State
        of Ohio.

       

      
        
           

        

        
          34

          
            

          

        

        
           

        

      

       

      Section 11.13.Company
        Information.
        The
        Company hereby authorizes the Bank to provide any Affiliate of the Bank with
        information regarding the Company, including copies of documents, financial
        statements, corporate records and reports, obtained by the Bank from the
        Company
        or any other entity during the course of the negotiation or administration
        of
        this Agreement.

       

      Section 11.14.Counterparts.
        This
        Agreement may be executed in any number of counterparts and by the different
        parties hereto on separate counterpart signature pages, each of which when
        so
        executed and delivered shall be an original, but all of which together
        constitute one and the same instrument.

       

      Section
        11.15.Privacy
        and Security.
        Bank
        acknowledges that the Company and its affiliates are required to safeguard
        nonpublic personal information of their respective customers. This duty to
        safeguard personal information requires the Company and its affiliates to
        ensure
        that third parties who may observe or obtain nonpublic personal information
        also
        safeguard this information to the same extent. Accordingly, Bank agrees and
        represents and warrants the Bank shall, at all times, comply with the
        requirements of the Gramm-Leach-Bliley Act, Pub. L. 106-102, as amended,
        and its
        implementing regulations, with respect to maintaining the confidentiality
        and
        security of nonpublic personal information of the Company’s customers in
        connection with the Bank’s rights under this Agreement. Bank acknowledges that
        all documents and information furnished to or obtained by Bank, whether in
        written or verbal form, relating to the personal, non-public information
        of the
        Company’s customers (collectively, the “Confidential Information”), constitute
        valuable assets of, and are proprietary to, the Company and its affiliates.
        Accordingly, Bank agrees not to disclose (whether directly or indirectly)
        or use
        any Confidential Information except as required to carry out its duties under
        the Agreement or as required by law. Third party disclosures made in the
        ordinary course of Bank’s business are permitted, provided they are solely in
        furtherance of Bank’s duties under this Agreement and are made to a party bound
        by privacy and security provisions consistent herewith. Bank agrees to establish
        and maintain procedures reasonably designed to assure the security of all
        Confidential Information. This Privacy and Security Section 11.15 shall survive
        termination of the Agreement.

       

      [This
        space has been left blank intentionally.]

       

      
        
           

        

        
          35

          
            

          

        

        
           

        

      

       

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

       

      

      
        	 	
                COMPANY:
                  FRANKLIN
                  CREDIT MANAGEMENT CORPORATION

              
	 	 	 
	 	 	 
	 	
                By

              	 
	 	 	
                Printed
                  Name:

              
	 	 	
                Title:

              
	 	 	 
	 	 	 
	 	 	 
	 	
                BANK:
                  SKY BANK

              
	 	 	 
	 	 	 
	 	
                By

              	 
	 	 	
                Printed
                  Name: JERRY SUTHERIN

              
	 	 	
                Title:
                  SENIOR VICE PRESIDENT

              

      

      

      

      
        
           

        

        
          36

          
            

          

        

        
           

        

      

      EXHIBIT A

       

      PROMISSORY NOTE

      

      
        	
                $40,000,000.00

              	
                Date:
                  August 11, 2006        

              

      

      

      

      FOR
        VALUE
        RECEIVED the undersigned (herein called the "Company”), hereby promises to pay
        to the order of Sky Bank (the "Bank" or, together with its successors and
        assigns, the "Holder”) at Sky Bank, P.O. Box 5399 East Liverpool, Ohio 43920, or
        at such other place as the Holder may designate from time to time, the principal
        sum of Forty Million Dollars ($40,000,000.00) or so much thereof as may be
        outstanding from time to time at such times and in such amounts as set forth
        in
        the Flow Warehousing
        Credit and Security Agreement of
        even
        date herewith, as the same may be amended from time to time, between the
        Company
        and the Bank (the "Agreement”). The unpaid principal balance of Advances shall
        bear interest, payable monthly, on the fifth (5th)
        day of
        each month, from the date of such Advance until paid in full, at a floating
        per
        annum rate of interest (the “Floating
        Rate”)
        from
        time to time which is fifty (50) basis points less that the Index. The interest
        rate charged herein shall be adjusted monthly, effective on the first
        (1st)
        day of
        each month, based upon the Index in effect on the last Business Day of the
        then
        prior month. As used herein, the term “Index” shall mean the independent index,
        which is the Prime Rate as published from time to time in the Money Rates
        Column
        of The
        Wall Street Journal.
        If more
        than one such prime rate or a range of prime rates is published, the highest
        prime rate will be used when calculating the Index, and if The
        Wall Street Journal
        ceases
        to publish the Prime Rate, Lender and Company will mutually and reasonably
        agree
        upon an independent, replacement source for determining the Prime Rate when
        calculating the Index. All interest and transaction fees will be deducted
        from
        the proceeds remitted from an Investor, if any, to the Bank on each individual
        Advance. In the event the total sum of the Advance plus such fees and interest
        exceeds the remittance amount received from the Investor, the deficit amount
        shall be deemed in arrears and will be payable to the Bank on the fifth day
        of
        each month. All payments hereunder shall be made in lawful money of the United
        States and in immediately available funds.

      

      Interest
        will be billed monthly and will be due within ten (10) days of the issuance
        of
        the relevant monthly billing statement.

      

      Interest
        shall be computed on the basis of a 360-day year and applied to the actual
        number of days in each interest calculation period.

      

      If
        any
        payment required to be made by the Company hereunder becomes due and payable
        on
        a Saturday, Sunday or holiday, the due date thereof shall be extended to
        the
        next succeeding business day and interest hereon shall be payable at the
        then
        applicable rate during such extension. The holder of this Note is hereby
        authorized to record the date and amount of each payment of principal and
        interest, and applicable interest rates and other information with respect
        thereto, on the schedules annexed to and constituting a part of this Note
        and
        any such recordation shall constitute prima facie evidence of the accuracy
        of
        the information so recorded; provided however, that the failure to make a
        notation or the inaccuracy of any notation shall not limit or otherwise affect
        the obligations of the Company hereunder.

      

      Unless
        otherwise required by law, payments may be applied by Bank to the interest
        due
        hereunder at the applicable rate set forth above, the principal of this Note,
        and to any other amounts which may be due pursuant to any of the terms,
        provisions, conditions, or covenants of this Note or of the Agreement in
        such
        order as Bank may determine from time to time at its sole
        discretion.

      

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      This
        Note
        is the note referred to in the Agreement and has been issued under, is subject
        to the terms, conditions and covenants thereof, including without limitation
        the
        requirement for monthly interest payments and mandatory payments of principal
        as
        described in the Agreement, and is entitled to the benefits thereof, provided,
        however, reference to the Agreement does not affect or impair the absolute
        and
        unconditional obligation of the Company to pay the principal and interest
        of
        this Note when due. Capitalized terms used herein without definition shall
        have
        the meanings given them in said Agreement. 

      

      Upon
        failure of the Company to pay any payment due hereunder in full when due
        or upon
        the occurrence of any Event of Default specified in the Agreement, the entire
        unpaid principal balance hereof plus accrued and unpaid interest thereon
        shall,
        at the option of the Bank, mature and become immediately due and payable
        all in
        accordance with the terms of the Agreement.

      

      This
        Note
        may be prepaid in whole or in part at any time without premium or
        penalty.

      

      The
        Company hereby agrees to pay, in addition to all of the sums of money due
        hereunder, all costs of collection and reasonable attorneys' fees; whether
        suit
        be brought or not, and all other amounts due under the Agreement, if this
        Note
        is not paid in full when due, whether at the stated maturity or by acceleration.
        No provision hereof may be waived or modified orally, but all such waivers,
        or
        modifications shall be in writing.

      

      The
        Company hereby waives presentment-for payment, demand, protest, notice of
        protest and notice of dishonor.

      

      This
        Note
        shall be construed and enforced in accordance with the laws of the State
        of
        Ohio, without reference to its principles of conflicts of law. For any action
        or
        dispute arising under this Note or in connection herewith, the Company hereby
        irrevocably submits to, consents to, and waives any objection to, the
        jurisdiction of the courts of the State of Ohio or the United States Courts
        for
        the Northern District of Ohio. 

      

      In
        the
        event that any one or more of the provisions of this Note shall for any reason
        be held to be invalid, illegal or unenforceable, in whole or in part, or
        in any
        respect, or in the event that any one or more of the provisions of this Note
        shall operate, or would prospectively operate, to invalidate this Note, then,
        and in any such event, such provision or provisions only shall be deemed
        to be
        null and void and of no force or effect and shall not affect any other provision
        of this Note, and the remaining provisions of this Note shall remain operative
        and in full force and effect and shall in no way be affected, prejudiced
        or
        disturbed thereby.

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      
 

      IN
        WITNESS WHEREOF, the Company has executed this Note to be effective as of
        the
        day and year first above written.

      

      

      
        	 	
                FRANKLIN
                  CREDIT MANAGEMENT CORPORATION

              
	 	 
	 	 
	 	
                By:
                  _______________________________ 

              
	 	
                      
                  Printed Name: 

              
	 	
                      
                  Title:

              

      

      

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      EXHIBIT B

       

      ADVANCE REQUEST FORM

       

      See
        attached form.

       

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      EXHIBIT C

       

      PROCEDURES FOR RECIEPT AND REVIEW OF DOCUMENTS FOR WAREHOUSE RESIDENTIAL MORTGAGE LOANS

       

      As
        the
        portfolios of loans are submitted to Franklin Credit Management Corporation
        for
        preliminary due diligence and indicative pricing, the following steps must
        occur:

       

      
        
          	 	
                  1)

                	
                  A
                    monthly pipeline or projections report must be submitted to Sky
                    Bank by
                    the 25th
                    of
                    each month detailing the anticipated fundings for the following
                    month.
                    Inclusive of this report shall be the number of anticipated proposals,
                    seller, loan files within each proposal, expected funding date,
                    conditional bid price and loan
                    characteristics.

                

        

         

        
          	 	
                  2)

                	
                  At
                    least three (3) Business days prior to anticipated funding, Franklin
                    must
                    provide to Sky, a due diligence review package consisting of
                    a loan
                    proposal, loan level detail, loan level detail and pricing updated
                    FICO
                    scores, independent BPO reviews as dictated by Franklin Policies
                    and
                    Procedures, loan-level due diligence sheets and other supplemental
                    information as deemed necessary by Sky
                    bank.

                

        

         

        
          	 	
                  3)

                	
                  Once
                    all information is compiled and submitted, Sky Bank shall be
                    responsible
                    for review according to internal policy guidelines. Funding approval
                    shall
                    be in the sole discretion of Sky Bank. Assuming approval, funding
                    will
                    take place within three (3) Business days of receipt of the entire
                    due
                    diligence package as described above.

                

        

      

       

      Upon
        the
        request of the Bank, for any Mortgage Loan for which the Bank has a reasonable
        concern regarding the underwriting thereof, the Company will provide, and
        Sky
        Bank or Custodian shall receive, the following pre-closing documents in a
        time
        deemed satisfactory by both the Bank and Company: 

      

      Approved
        Loan Proposal

      
        	
                ·

              	
                Certified
                  copy of the Mortgage

              

      

      
        	
                ·

              	
                Faxed
                  copy of the executed note

              

      

      
        	
                ·

              	
                Preliminary
                  title commitment, where applicable

              

      

      
        	
                ·

              	
                Application
                  - 1003

              

      

      
        	
                ·

              	
                Loan
                  Summary - 1008

              

      

      
        	
                ·

              	
                Credit
                  Report along with three corresponding FICO
                  scores

              

      

      
        	
                ·

              	
                Verified
                  collateral insurance

              

      

      
        	
                ·

              	
                Appraisal
                  

              

      

      
         

        
           

        

        
          
          

          
            

          

        

        
           

        

      

      
        	
                ·

              	
                Flood
                  Determination

              

      

      
        	
                ·

              	
                Flood
                  insurance (if necessary)

              

      

      
        	
                ·

              	
                VOE,
                  where applicable

              

      

      
        	
                ·

              	
                VOM,
                  where applicable

              

      

      
        	
                ·

              	
                VOD,
                  where applicable

              

      

      
        	
                ·

              	
                Assignment
                  of Mortgage to Company and all intervening assignments, where
                  applicable

              

      

      

       

      With
        respect to each Pledged Mortgage Loan, the Collateral Documents shall include
        each of the following items, which shall be available for inspection by the
        Bank
        and which shall be delivered to the Bank or the Custodian within three (3)
        business days of funding:

       

      (a)
        a
        lost note affidavit in a form acceptable to the Bank; or the original Mortgage
        Note bearing all intervening endorsements evidencing a complete chain of
        assignment from the originator to the last endorsee, endorsed “Pay to the order
        of _________, without recourse” and signed in the name of the last endorsee by
        an authorized officer. To the extent that there is no room on the face of
        the
        Mortgage Notes for endorsements, the endorsement may be contained on an allonge,
        if state law so allows and the Custodian is so advised by the Company that
        state
        law so allows;

       

      (b)
        the
        original of any guarantee executed in connection with the Mortgage
        Note;

       

      (c)
        the
        original Mortgage with evidence of recording thereon. If in connection with
        any
        Mortgage Loan, the Company cannot deliver or cause to be delivered the original
        Mortgage with evidence of recording thereon on or prior to the Closing Date
        because of a delay caused by the public recording office where such Mortgage
        has
        been delivered for recordation or because such Mortgage has been lost or
        because
        such public recording office retains the original recorded Mortgage, the
        Company
        shall deliver or cause to be delivered to the Custodian, a photocopy of such
        Mortgage, together with (i) in the case of a Mortgage where a public recording
        office retains the original recorded Mortgage or in the case where a Mortgage
        is
        lost after recordation in a public recording office, a copy of such Mortgage
        certified by such public recording office to be a true and complete copy
        of the
        original recorded Mortgage;

       

      (d)
        the
        originals or certified copy of all assumption, modification, consolidation
        or
        extension agreements, if any, with evidence of recording thereon;

       

      (e)
        the
        original assignment of Mortgage for each Mortgage Loan, in form and substance
        acceptable for recording. The assignment of Mortgage shall be delivered in
        blank;

       

      (f)
        the
        originals of all intervening assignments of mortgage, evidencing a complete
        chain of assignment from the originator to the last endorsee, with evidence
        of
        recording thereon, or if any such intervening assignment has not been returned
        from the applicable recording office or has been lost or if such public
        recording office retains the original recorded assignments of mortgage, the
        Company shall deliver or cause to be delivered to the Custodian, a photocopy
        of
        such intervening assignment. In the case of an intervening assignment where
        a
        public recording office retains the original recorded intervening assignment
        or
        in the case where an intervening assignment is lost after recordation in
        a
        public recording office, a copy of such intervening assignment certified
        by such
        public recording office to be a true and complete copy of the original recorded
        intervening assignment shall be included;

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      (g)
        (i)
        for first mortgage financing, the original mortgagee policy of title insurance
        or, for up to a reasonable period of time following the recordation of the
        mortgage, a marked up title commitment for a mortgagee title insurance policy,
        and (ii) for second mortgage financing, one of the following: (w) an
        original mortgagee title insurance policy or marked up commitment, as described
        in clause (i) above, (x) a mortgagee title insurance policy insuring the
        first
        mortgage but not the second mortgage, but showing the second mortgage of
        record,
        (y) a title commitment showing no matters not satisfactory to the Bank, or
        (z)
        other evidence of the title satisfactory to the Bank in its discretion.  In
        a situation where a mortgagee title insurance policy is required but
        unavailable, a copy of the policy certified as true and complete by the title
        insurance company shall suffice. 

       

      (h)
        security agreement, chattel mortgage or equivalent document executed in
        connection with the Mortgage, if any; and

       

      (i)
        where
        applicable, the Mortgage Identification Number (“MIN”) for each Mortgage Loan
        registered on the MERS® System to track the transfer of ownership and/or
        servicing rights to the Company

       

      From
        time
        to time, the Company shall cause to be forwarded to the Custodian additional
        original documents, additional documents evidencing an assumption, modification,
        consolidation or extension of a Mortgage Loan. All such mortgage documents
        held
        by the Custodian as to each Mortgage Loan shall constitute the “Collateral
        Documents”

       

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      

      EXHIBIT D

       

      BAILEE LETTER

      

      __________________,
        2006

      

      NOTICE
        OF
        BAILMENT

       

       

      __________________

      __________________

      __________________

      __________________

      

      Re:
        Franklin Credit Management Corporation Flow Transaction Loans-

       

      Ladies
        and Gentlemen:

      

      You
        are
        hereby notified that the enclosed original promissory notes with respect
        to the
        referenced loan together with certain other documents comprising the related
        file with respect to that loan (the “Mortgage Documents”) being hereby delivered
        to you herewith are to be held by you as agent of Custodian and subject to
        the
        terms of the Bailee Letter, as defined herein.

      

      Any
        funds
        wired by Takeout Investor in accordance with the Bailee Letter shall be
        transmitted in immediately available funds to:

      

      Sky
        Bank

      ABA:
        041201936

      Account
        #: 3000 1015040

      Account
        Name: Wire Clearing-Specialty Lending Group- Attn Elaine Ramsey

      

      Any
        Mortgage Documents (or portion thereof) being returned in accordance with
        the
        Bailee Letter shall be sent to the Custodian by overnight courier to: Sky
        Bank;
        110 East Main Street, Salineville, Ohio 43945-0110, no later than thirty
        (30)
        calendar days after the date hereof.

       

      

      If
        you
        have any further questions, please feel free to call Elaine Ramsey at
        330-679-3862 .

      

      Sincerely,

      

      

      Jerry
        S.
        Sutherin

      Vice
        President, Specialty Lending Group

      Sky
        Bank

       

      
        
           

        

        
          A-1

          
            

          

        

        
           

        

      

      
 

      EXHIBIT E

       

      POWER OF ATTORNEY

      

      Franklin
        Credit Management Corporation ("Company") hereby appoints Sky Bank ("Bank")
        as
        its true and lawful attorney-in-fact to act in the name, place and stead
        of
        Company for the purposes set forth below. This Power of Attorney is given
        pursuant to a certain Warehouse Credit and Security Agreement (Amended and
        Restated) by and between the Company and Bank dated August 11, 2006, (the
        "Agreement") to which reference is made for the definition of all capitalized
        terms herein.

      

      Now,
        therefore, Company does hereby constitute and appoint Bank the true and lawful
        attorney-in-fact of Company in Company's name, place and stead with respect
        to
        each Mortgage Loan purchased pursuant to the Agreement for the following,
        and
        only the following, purposes:

      

      
        	
                1.

              	
                To
                  execute, acknowledge, seal and deliver deed of trust/mortgage note
                  endorsements, assignments of deed of trust/mortgage and other recorded
                  documents, satisfactions/releases/reconveyances of deeds of
                  trust/mortgages, tax authority notifications and declaration, deeds,
                  bills
                  of sale, and other instruments of sale, conveyance and transfer,
                  appropriately completed, with all ordinary or necessary endorsements,
                  acknowledgments, affidavits, and supporting documents as may be
                  necessary
                  and proper to effect its execution, delivery, conveyance, and recordation
                  of filing.

              

      

      

      
        	
                2.

              	
                To
                  execute and deliver affidavits of debt, substitutions of trustee,
                  substitutions of counsel, non-military affidavits, notices of recession,
                  foreclosure deeds, transfer tax affidavit, affidavits of merit,
                  verifications of complaint, notices to quit, bankruptcy declarations
                  for
                  the purpose of filing motions to lift stays and other documents
                  or notice
                  filings on behalf of Company in connection with foreclosure, bankruptcy
                  and eviction actions.

              

      

      

      
        	
                3.

              	
                To
                  endorse and/or assign any borrower or mortgagor's check or negotiable
                  instrument received by Bank as a payment under a Mortgage
                  Loan.

              

      

      

      Company
        intends that this Power of Attorney be coupled with an interest and is not
        revocable.

      

      Company
        further grants to its attorney-in-fact full authority to act in any manner
        both
        proper and necessary to exercise the foregoing powers, and ratifies every
        act
        that Bank may lawfully perform in exercising those powers by virtue
        hereof.

      

      Company
        further grants to its attorney-in-fact the power of substitution and revocation
        of another party for the purpose and only the purpose of endorsing or assigning
        notes or security instruments in Company’s name, and Company hereby ratifies and
        confirms all that the attorney-in-fact, or substitute or substitutes, shall
        lawfully do or cause to be done by virtue of this power of attorney and its
        rights and powers.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      Bank
        shall indemnify, defend and hold harmless Company, its successors and assigns,
        from and against any and all losses, costs, expenses (including, without
        limitation, reasonable attorneys' fees), damages, liabilities, demand or
        claims
        of any kind whatsoever ("Claims") arising out of, related to, or in connection
        with (i) any act taken by Bank pursuant to this Limited Power of Attorney,
        which
        act results in a claim solely by virtue of the unlawful use of this Limited
        Power of Attorney (and not as a result of a claim related to the underlying
        instrument with respect to which this Limited Power of Attorney has been
        used),
        or (ii) any use or misuse of this Limited Power of Attorney in any manner
        or by
        any person not expressly authorized hereby.

      

      IN
        WITNESS WHEREOF, Company has executed this Power of Attorney this 11th
        day of
August
        2006.

      

      Company:
        Franklin Credit Management Corporation

      

      ______________________________

      

      By:
        ___________________________ 

      

      Title:__________________________

      

      

      
        	
                STATE
                  OF

              	
                )

              
	 	
                ):ss.

              
	
                COUNTY
                  OF

              	
                )

              

      

      

      On
        this_____ day of _________, ____, before me, a notary public, the undersigned
        officer, personally appeared ______________________________ who acknowledged
        himself/herself to be the ________________________________ of
        ___________________________, a __________________ corporation, and that he/she
        as such officer, being authorized to do so, executed the foregoing instrument
        for the purposes therein contained by signing the name of the corporation
        by
        himself/herself as such officer.

      

      IN
        WITNESS WHEREOF, I have hereunto set my hand and official seal.

      

      ________________________________________
        

      Notary
        Public 

      

      My
        commission expires on ___________________________.

       

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      EXHIBIT
        F

       

      LOCK
        BOX
        TERMS

       

      

      A. Lockbox
        Service.
        The
        lockbox service (the “Service”) will operate through a U.S. Postal Service box
        in the Company’s name (the “Lockbox”) and Company’s demand deposit accounts at
        Bank (the “Accounts”) which are designated herein below, and which Accounts are
        subject to Bank’s standard deposit account agreements. Company authorizes Bank
        and its employees, representatives or authorized agents to (i) pick up and
        transport from the Post Office mail addressed to the Lockbox, and (ii) open
        such
        mail and process its contents according to the Lockbox processing procedures
        which will be agreed to by Bank and the Company. 

      

      B. Company’s
        Obligations.
        Company
        agrees to provide Bank, its employees, representatives or authorized agents
        with
        unrestricted and exclusive access to the Lockbox. Company agrees to follow
        the
        recommendations and specifications outlined in the Processing Procedures
        relating, without limitation, to document specifications for the remittance
        documents to be submitted to the Lockbox. Insofar as the performance of Services
        under this Agreement by Bank requires data, documents, information or materials
        of any nature to be furnished by Company, or for Bank personnel, Company
        hereby
        agrees to furnish all data, documents, information, and materials and to
        perform
        all such acts and to make appropriate personnel, records and facilities
        available to Bank, within such time and in such form or manner as may reasonably
        be necessary in order to enable Bank to perform the required Services promptly
        and in a workmanlike manner.

      

      C Deposits.
        Bank
        will deposit all items which comply with the processing procedures agreed
        to by
        Bank and Customer for credit to Company’s Account with Bank. Company authorizes
        Bank to endorse checks and other payment instruments received (the
“Remittances”) and to deposit such instruments in the Accounts. If any payee is
        a legal entity other than Company, Company represents and warrants to Bank
        that
        Company has the proper authorization from such payee to have such check endorsed
        for deposit, and deposited into the Account, and Company agrees to indemnify
        Bank against any losses, liabilities, damages, claims, demands, obligations,
        actions, suits, judgments, penalties, costs or expenses, including, but not
        limited to, attorneys’ fees (collectively “Losses and Liabilities”), suffered or
        incurred by Bank as a result of, or in connection with, Company’s failure to
        have such authorization. Further, the Bank may accept checks and other
        instruments for deposit to the Account without endorsement. Company represents
        and warrants to Bank that the endorsements of all items received through
        this
        Service are proper and valid and that Company has a right to receive such
        items
        for deposit to the Account. Company agrees to notify Bank no later than ten
        (10)
        calendar days after Company receives an advice of deposit, if there is any
        error
        in such advice, and no later than thirty (30) calendar days after Company
        receives a bank statement on the Account, if such statement contains an error
        or
        fails to show a deposit that should have been made during the time period
        covered by such statement.

      

      D. Account
        Documentation.
        Company
        understands that this Agreement covers Lockbox
        Services as described herein and does not cover the handling of the Accounts
        and
        the processing of checks drawn on the Account or the availability of the
        deposits made to the Accounts. The Accounts will be subject to, and Bank’s
        operation of the Accounts will be in accordance with, the terms and provisions
        of Bank’s deposit account agreements and the account rules and regulations
        governing the Accounts (collectively the “Account Agreements”), copies of which
        Company acknowledges having received, and shall be subject to the Master
        Credit
        Agreement to which this Lock Box Terms agreement is attached.

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      E. Reasonable
        Care. As to property of Company in Bank’s possession Bank shall be liable only
        for the exercise of reasonable care in safekeeping the same and restricting
        access to authorized persons of information relating to Company’s business or
        the business of any of Company’s customers which may be received in the course
        of rendering the Service hereunder.

      

      F. Mail
        Collection.
        Bank
        shall collect the mail from the Lockbox in accordance with Bank’s post office
        schedule, as such schedule may change from time to time.

      

      G.
        Limitation
        of Liability,
        Indemnity.
        The
        Bank will only be liable for damages arising
        from the Bank’s intentional misconduct or negligence in the performance of this
        Service. The Bank will not be responsible for any loss, delay, costs or
        liability which arise, directly or indirectly, in whole or part, from, Company’s
        actions or omissions, negligence or breach of any agreement with Bank; any
        ambiguity, inaccuracy or omission in any instruction or information provided
        to
        Bank; accidents, strikes, labor disputes, civil unrest, fire, flood, water
        damage (e.g., from fire suppression systems), or acts of God; or the actions
        of
        others or causes that are beyond Bank’s reasonable control. The Bank will not be
        responsible under any circumstances for special, indirect, or consequential
        damages, which the Company incurs as a result of the Bank’s actions or
        omissions, even if the Bank is aware of the possibility for such damage.
        Any
        claim, action or proceeding by the Company to enforce the terms of this
        Agreement or to recover for any Service-related loss or for any losses or
        liabilities, must be commenced within one year from the date that the event
        giving rise to the claim, action, or proceeding first occurs. The Company
        agrees
        to cooperate with the Bank in any loss recovery effort the Bank undertakes
        to
        reduce any loss or liability that arises in connection with the Bank’s Services.
        Company agrees to indemnify, defend, hold Bank harmless from and against
        any
        claim, damage, loss, liability and cost (including, without limitation,
        reasonable attorneys’ fees) of any kind whatsoever which results directly or
        indirectly, in whole or in part from: (a) Bank’s actions or omissions, if they
        are in accordance with the Company’s instructions or the terms of this
        Agreement; or (b) the actions or omissions of the Company, its agents or
        employees. This clause shall survive the termination of this
        Agreement.

      

      Account
        Information:

      

      Depository
        Account Number: 0401740085

      Other:
        

      

      Any
        correspondence between the Company and the Bank concerning normal operations
        of
        the Payments Processing and Control service shall be addressed as
        follows:

      

      Account
        Name: FCMC General Depository Account

      

      
        	
                Address:

              	
                PMT
                  Processing and Control Service, C/O Elaine Ramsey or Barb
                  Webb

              
	 	
                110
                  E Main Street

              
	 	
                Salineville,
                  OH 43945RATE
      CAP TRANSACTION AGREEMENT

    

    This
      Agreement is made as of August 29, 2006 (the "Trade Date"), by and among
LASALLE
      BANK NATIONAL ASSOCIATION (the
      "Floating Rate Payer") and FRANKLIN
      CREDIT MANAGEMENT CORPORATION (the
      "Fixed Rate Payer").

    

    WHEREAS,
      the Fixed Rate Payer desires to enter into an arrangement for the purpose of
      limiting its interest expense on certain existing floating rate liabilities;
      and

    

    WHEREAS,
      the Floating Rate Payer desires to enter into such an arrangement with the
      Fixed
      Rate Payer;

    

    NOW,
      THEREFORE, the parties hereto agree as follows:

    

    1. Payment
      of Fixed Amount.
      The
      Fixed Rate Payer agrees to pay to the Floating Rate Payer a Fixed Amount USD
      101,000.00 on or before August 31, 2006 (the "Fixed Rate Payer Payment Date"),
      in consideration of the Floating Rate Payer agreeing to make a payment to the
      Fixed Rate Payer for each Calculation Period (as defined below) during which
      the
      Floating Rate (as defined below) exceeds the Cap Rate (as defined
      below).

    

    2. Payment
      of Floating Amounts.
      The
      Floating Rate Payer agrees to make a payment of the Floating Amount (as defined
      below) on each Floating Rate Payer Payment Date (as defined below) in
      immediately available funds at such location as the Fixed Rate Payer shall
      direct. For each Floating Rate Payer Payment Date, the Floating Rate Payer
      shall
      deliver to the Fixed Rate Payer a notice containing a computation of the
      Floating Amount payable.

    

    3. Definitions.
      The
      definitions and provisions contained in the 2000 ISDA Definitions (as published
      by the International Swap Dealers Association, Inc.) are incorporated by
      reference into this Agreement. In the event of any inconsistency between those
      definitions and provisions and the provisions of this Agreement, the provisions
      of this Agreement shall govern.

    

    (a) "Business
      Day" shall mean a day on which banks are open in New York for the transaction
      of
      general commercial banking business and
      on
      which dealings may be carried on in the London interbank eurodollar
      market.

     

    (b) "Calculation
      Agent" shall mean the Floating Rate Payer.

    

    (c) "Calculation
      Period" shall mean each period from, and including, one Floating Rate Payer
      Payment Date to, but excluding, the next following Floating Rate Payer Payment
      Date, except that (i) the initial Calculation Period will commence on, and
      include, the Effective Date, and (ii) the final Calculation Period will end
      on,
      but exclude, the Termination Date.

    

    (d) "Cap
      Rate" shall mean 5.75%.

    

    
      
        (e)
          "Designated
          Maturity" shall mean 1 Month

      

    

    

    (f) "USD"
      and
      the sign "$" mean lawful currency of the United States of America.

    

    (g) "Effective
      Date" shall mean August 31, 2006.

    

    (h) "Floating
      Amount" with respect to any Calculation Period shall mean an amount equal to
      (i)
      the amount by which the interest earned on the Notional Amount for the
      Calculation Period at the Floating Rate would exceed (ii) the amount of interest
      which would have been earned on the Notional Amount for the Calculation Period
      at the Cap Rate, all said calculations being based on a Floating Rate Day Count
      Fraction of Actual/360. (If the amount calculated in clause (i) shall be less
      than the amount calculated under clause (ii), the Floating Amount for said
      Calculation Period shall be zero).

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    (i) "Floating
      Rate" means (i) with respect to the initial Calculation Period, the rate
      determined for the Floating Rate Option two (2) London Banking Days prior to
      the
      Effective Date for value on the Effective Date; and (ii) with respect to any
      subsequent Calculation Period, the rate determined with respect to such period
      for the Floating Rate Option.

    

    (j)
       "Floating
      Rate Option" shall mean USD-LIBOR-BBA

    

    (k) "Floating
      Rate Payer Payment Date" shall mean the last day of each month, commencing
      on
      September 30, 2006 and ending on the Termination Date, subject to adjustment
      in
      accordance with the Modified Following Business Day Convention.

    

    
      
        (l)
          "Notional
          Amount" shall mean USD 300,000,000.00.

      

    

     

    (m) "Reset
      Date" shall mean each Floating Rate Payer Payment Date to, but not including,
      the Termination Date.

    

    (n) "Termination
      Date" shall mean August 31, 2007.

    

    4. Representations
      and Warranties - The Fixed Rate Payer.
      The
      Fixed Rate Payer hereby represents and warrants to the Floating Rate Payer
      that:

    

    (a) The
      Fixed
      Rate Payer is a corporation validly existing and in good standing under the
      laws
      of the jurisdiction of its organization and such jurisdiction is a State of
      the
      United States of America.

    

    (b) The
      Fixed
      Rate Payer has the corporate power and authority to own its property and assets
      and to carry on its business as currently conducted.

    

    (c) The
      Fixed
      Rate Payer has the corporate power to execute, deliver and perform this
      Agreement.

    

    (d) The
      execution, delivery and performance of this Agreement (i) have been duly
      authorized by all requisite corporate or organizational action on the part
      of
      the Fixed Rate Payer and (ii) will not (A) violate (1) any provision of law,
      (2)
      the constitutional documents of the Fixed Rate Payer, (3) any applicable order
      of any court or agency of government or (4) any indenture, agreement or
      other instrument to which the Fixed Rate Payer is a party or by which the Fixed
      Rate Payer or any of its property or assets is bound, (B) be in conflict with,
      result in a breach of or constitute (with due notice or lapse of time or both)
      a
      default under any indenture, agreement or other instrument to which the Fixed
      Rate Payer is a party or by which the Fixed Rate Payer or any of its property
      or
      assets is bound or (C) result in the creation or imposition of any lien, charge
      or encumbrance of any nature whatsoever upon any property or assets of the
      Fixed
      Rate Payer.

    

    (e) This
      Agreement has been duly executed and delivered by the Fixed Rate Payer and
      constitutes a legal, valid and binding obligation of the Fixed Rate Payer,
      enforceable in accordance with its terms (subject, as to enforcement of
      remedies, to applicable bankruptcy, reorganization, insolvency or similar laws
      from time to time in effect).

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (f) No
      action, consent or approval of, or registration or filing with, or any other
      action by any governmental agency, bureau, commission or court has been required
      in connection with the execution, delivery and performance by the Fixed Rate
      Payer of this Agreement, or if so required, such registration or filing has
      been
      made, such consent or approval has been given or such other appropriate action
      has been taken.

    

    5. Representations
      and Warranties - The Floating Rate Payer.
      The
      Floating Rate Payer hereby represents and warrants to the Fixed Rate Payer
      that:

    

    (a) The
      Floating Rate Payer is a bank organized or formed under the laws of the United
      States of America.

    

    (b) The
      Floating Rate Payer has the corporate or organizational power and authority
      to
      own its property and assets and to carry on its business as currently
      conducted.

    

    (c) The
      Floating Rate Payer has the corporate or organizational power to execute,
      deliver and perform this Agreement.

    

    (d) The
      execution, delivery and performance of this Agreement (i) have been duly
      authorized by all requisite corporate or organizational action on the part
      of
      the Floating Rate Payer and (ii) will not (A) violate (1) any provision of
      law,
      (2) the constitutional documents of the Floating Rate Payer, (3) any applicable
      order of any court or agency of government or (4) any indenture, agreement
      or
      other instrument to which the Floating Rate Payer is a party or by which the
      Floating Rate Payer or any of its property or assets is bound, (B) be in
      conflict with, result in a breach of or constitute (with due notice or lapse
      of
      time or both) a default under any indenture, agreement or other instrument
      to
      which the Floating Rate Payer is a party or by which the Floating Rate Payer
      or
      any of its property or assets is bound or (C) result in the creation or
      imposition of any lien, charge or encumbrance of any nature whatsoever upon
      any
      property or assets of the Floating Rate Payer.

    

    (e) This
      Agreement has been duly executed and delivered by the Floating Rate Payer and
      constitutes a legal, valid and binding obligation of the Floating Rate Payer,
      enforceable in accordance with its terms (subject, as to enforcement of
      remedies, to applicable bankruptcy, reorganization, insolvency or similar laws
      from time to time in effect).

    

    (f) No
      action, consent or approval of, or registration or filing with, or any other
      action by any governmental agency, bureau, commission or court has been required
      in connection with the execution, delivery and performance by the Floating
      Rate
      Payer of this Agreement, or if so required, such registration or filing has
      been
      made, such consent or approval has been given or such other appropriate action
      has been taken.

    

    6. Assignment
      and Transfer.
      Neither
      party may assign or transfer its rights or obligations under this Agreement
      without the prior written consent of the other party and any purported
      assignment in violation of this Section shall be void; provided,
      however,
      that
      the consent to transfer shall not be unreasonably withheld.

    

    7. Other
      Provisions Relating to the Fixed Amount.
      In no
      event shall the Fixed Amount (or any portion thereof) paid to the Floating
      Rate
      Payer pursuant to Section 1 hereof be refundable, provided that nothing
      contained herein shall be deemed to constitute a waiver by the Fixed Rate Payer
      of any of its rights to collect damages from, or to enforce other remedies
      against, the Floating Rate Payer in the event that the Floating Rate Payer
      fails
      to perform its obligations hereunder.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    8. Amendments
      and Waivers.
      No
      amendment, modification or waiver with respect to this Agreement will be
      effective unless in writing and executed by each of the parties
      hereto.

    

    9. Notices.
      All
      notices, requests and other communications to either party hereunder shall
      be in
      writing and shall be given to such party at its address, telex or telecopier
      number set forth on the signature page hereof
      or
      such other address, telex or telecopier number as such party may hereafter
      specify for the purpose of notice to the other party.

    

    10. Termination.
      This
      Agreement shall terminate on the Termination Date, subject to any applicable
      requirement for payment as set forth in Section 2 hereof.

    

    11. Governing
      Law.
      THIS
      AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND SHALL BE GOVERNED BY THE
      LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
      LAW.

     

    12. Authorization
      Documents.
      Upon
      the
      execution of this Agreement, the Fixed Rate Payer shall promptly deliver to
      the
      Floating Rate Payer, certified evidence of the authority, incumbency and
      specimen signature of each authorized person executing this Agreement on its
      behalf.

    

    13. Account
      Details:

    

    Payments
      to the Floating Rate Payer:

    LaSalle
      Bank National Association, ABA #0710-0050-5, A/C 2090102-9030, Attn: Derivative
      Operations

    

    Payments
      to the Fixed Rate
      Payer:                   
Please Advise

    

    14. Set-off.
      Upon
      the occurrence of any default by the Fixed Rate Payer with respect to any
      indebtedness or other amounts payable by the Fixed Rate Payer to the Floating
      Rate Payer (irrespective of the currency, place of payment or booking office
      of
      the obligation) under any other agreements between the Fixed Rate Payer and
      the
      Floating Rate Payer or instrument(s) or undertaking(s) issued or executed by
      one
      party to, or in favor of, the other party, the Floating Rate Payer may at its
      option (but shall not be obligated to) reduce such amounts by its setoff of
      such
      amounts against any amount(s) payable (whether at such time or in the future
      or
      upon the occurrence of a contingency) by the Floating Rate Payer to the Fixed
      Rate Payer hereunder. For purposes hereof, if a payment obligation is
      unascertained, the Floating Rate Payer may in good faith estimate that
      obligation and setoff in respect of the estimate, subject to an accounting
      when
      the obligation is ascertained.

    

    15.
       Relationship
      Between the Parties.
      Each
      party represents to the other party that:

    

    (a) Non-Reliance.
      It is
      acting for its own account, and it has made its own independent decisions to
      enter into this Transaction and as to whether this Transaction is appropriate
      or
      proper for it based upon its own judgment and upon advice from such advisors
      as
      it has deemed necessary. It is not relying on any communication (written or
      oral) of the other party as investment advice or as a recommendation to enter
      into this Transaction; it being understood that information and explanation
      related to the terms and conditions of this Transaction shall not be considered
      investment advice or a recommendation to enter into this Transaction. No
      communication (written or oral) received from the other party shall be deemed
      to
      be an assurance or guarantee as to the expected results of this
      Transaction.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (b) Assessment
      and Understanding.
      It is
      capable of assessing the merits of and understanding (on its own behalf or
      through independent professional advice), and understands and accepts the terms,
      conditions and risks of this Transaction. It is also capable of assuming, and
      assumes, the risks of this Transaction.

    

    (c) Status
      of Parties. The
      other
      party is not acting as a fiduciary or an advisor to it in respect of this
      Transaction.

    

    16.
       Waiver
      of Jury Trial.
      Each
      party irrevocably waives any and all right to trial by jury in any legal
      proceeding instituted in connection with this Agreement or this Transaction
      to
      the fullest extent permitted by law. As to any matter for which a jury trial
      cannot be waived, each party agrees not to assert any such matter as a cross
      claim or counterclaim in, nor move to consolidate the same with, any legal
      proceeding in which a jury trial is waived."

    

    17. IMPORTANT
      INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

    

    To
      help
      the government fight the funding of terrorism and money laundering activities,
      Federal law requires all financial institutions to obtain, verify, and record
      information that identifies each entity or person that opens an
      account.

    

    When
      you
      open an account, we will ask for the business’ full legal name, street address,
      and tax identification number and other information that will assist us in
      identifying the business. We may also ask for other identifying information
      such
      as your date of birth and a copy of your driver’s license.

     

     

    
 

    

    

    [Signature
      Following Page]

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed by their respective authorized officers as of the day and year first
      above written.

    

    LASALLE
      BANK NATIONAL ASSOCIATION

    

    

    
      	
              By:

            	
              ________________________________

            	
              By:

            	
              ________________________________

            
	 	
              Name:

            	 	
              Name:

            
	 	
              Title:

            	 	
              Title:

            

    

    

    
      	
              Address:
                

            	
              540
                West Madison Avenue

            
	 	
              Suite
                2132

            
	 	
              Chicago,
                IL 60661

            
	 	 
	
              Attention:

            	
              Treasury
                Documentation

            
	
              Facsimile:

            	
              312-992-5847

            
	
              Phone:

            	
              312-992-5842

            

    

    

    FRANKLIN
      CREDIT MANAGEMENT CORPORATION

    

    

    
      	
              By:

            	
              ________________________________

            
	 	
              Name:

            
	 	
              Title:

            

    

    

    
      	 	 
	
              Address:

            	
              101
                Hudson Street

            
	 	
              Jersey
                City, NJ 07302

            
	 	 
	
              Attention:

            	
              Paul
                Colasono

            
	
              Facsimile:

            	
              201-604-4400

            
	
              Telephone:

            	
              201-604-4402

            

    

    

    

    
      
         

      

      
        6

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