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Exhibit 10.19    
    

QUOTESMITH.COM, INC.

2004 LIFE QUOTES NON-QUALIFIED STOCK OPTION PLAN  

1.     Purpose  

        The purpose of the Quotesmith.com, Inc. 2004 Life Quotes Non-Qualified Stock Option Plan (the "Plan") is to foster and promote the
long-term financial success of Quotesmith.com, Inc., a Delaware corporation, and its subsidiaries (the "Company"). The Plan provides for the award of stock options to certain former
employees of Life Quotes who are now employees of a subsidiary of the Company. 

2.     Definitions  

        For purposes of this Plan, the following terms used herein shall have the following meanings, unless a different meaning is clearly required by the context. 

        2.1   "Board"
means the Board of Directors of the Company. 

        2.2   "Change
in Control" means a change in control of the Company of a nature that would be required to be reported in response to Item l(a) of the Current Report on
Form 8-K, as in effect
as of the Effective Date, promulgated pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the Company is then subject to the
reporting requirements of the Exchange Act, provided that, without limitation, such a change in control shall be deemed to have occurred if: 

        (a)   there
shall be consummated any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the
Company's assets; 

        (b)   the
stockholders of the Company approve any plan or proposal of liquidation or dissolution of the Company; 

        (c)   there
shall be consummated any consolidation or merger of the Company in which the Company is not the surviving or continuing corporation, or pursuant to which shares of
the Company's Common Stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the Company's Common Stock immediately prior to the
merger have, directly or indirectly, at least a 67% ownership interest in the outstanding Common Stock of the surviving corporation immediately after the merger; 

        (d)   any
"person" or "group" (as such terms are used in Section 13(d) and 14(d) of the Exchange Act) shall become, after the Effective Date, the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 51% or more of the combined voting power of the Company's
then-outstanding voting securities ordinarily having the right to vote for the election of directors; 

        (e)   individuals
who, as of the Effective Date, constitute the Board of Directors of the Company (the "Board" generally, and as of the Effective Date, the "Incumbent Board")
shall cease for any reason to constitute a majority of the Board, provided that any person becoming a director subsequent to the date of this Agreement whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election contest relating to the directors of the Company) shall be, for purposes of this Plan, considered as though such person were
a member of the Incumbent Board; 

        (f)    a
proceeding is instituted in a court of competent jurisdiction seeking 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, or for the appointment 

 

of
a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Company or for any substantial part of its property, or for the winding-up or liquidation
of its affairs, and such proceeding remains undismissed or unstayed and in effect for a period of 60 consecutive days or such court enters a decree or court granting the relief sought in such
proceeding; or 

        (g)   the
Company commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereinafter in effect, consents to the entry of an order
for relief in an involuntary case under any such law, or consents to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) of or for any substantial part of its property, or makes a general assignment for the benefit of creditors, or fails generally to pay its debts as they become due, or take any corporate
action in furtherance of any of the foregoing. 

        2.3   "Code"
means the Internal Revenue Code of 1986, as amended. 

        2.4   "Committee"
shall have the meaning provided in Section 3 of the Plan. 

        2.5   "Common
Stock" means the common stock, $0.003 par value per share, of the Company. 

        2.6   "Continuous
Service" means that the Participant's service with the Company or any Subsidiary as an employee is not interrupted or terminated. The Participant's
Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the Company or any Subsidiary as an employee or a
change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant's Continuous Service. For example, a change in status from
an employee of the Company to an employee of a Subsidiary will not constitute an interruption of Continuous Service. The Committee, in its sole discretion, may determine whether Continuous Service
shall be considered interrupted in the case of any approved leave of absence by that party, including sick leave, military leave or any other personal leave. 

        2.7   "Disability"
means a mental or physical condition which, in the opinion of the Committee, renders a Participant unable or incompetent to carry out the job
responsibilities which such Participant held or the tasks to which such Participant was assigned at the time the disability was incurred, and which is expected to persist for an indefinite duration
exceeding one year. 

        2.8   "Effective
Date" shall have the meaning provided in Section 19 of the Plan. 

        2.9   "Exchange
Act" means the Securities Exchange Act of 1934, as amended. 

        2.10 "Fair
Market Value" means, as determined by the Committee, the closing price as quoted on the Nasdaq National Market on the trading day immediately preceding the date
for which the determination is being made; or, in the event that no such closing price exists due to no sale having taken place on such day, the average of the reported closing bid and asked prices on
such day; or, if the Common Stock of the Company is listed on a national securities exchange, the closing price on the principal national securities exchange on which the Common Stock is listed or
admitted to trading on the trading day immediately preceding the date for which the determination is being made; or, if no such closing price exists due to no sale having taken place on such day, the
average of the closing bid and asked prices on such day on the principal national securities exchange on which the Common Stock is listed or admitted to trading; or if the Common Stock is not quoted
on such Nasdaq national Market nor listed or admitted to trading on a national securities exchange, then the average of the closing bid and asked prices on the day immediately preceding the date for
which the determination is being made in the over-the-counter market as reported by Nasdaq; or, if bid and asked prices for the Common Stock on such day shall not have been
reported through Nasdaq, the average of the bid and asked prices for such day as furnished 

2

 

by
any New York Stock Exchange member firm regularly making a market in the Common Stock selected for such purpose by the Board or a committee thereof; or, if none of the foregoing is applicable, then
the fair market value of the Common Stock as determined in good faith by the Committee in its sole discretion. 

        2.11 "Participant"
shall mean any employee of the Company or any Subsidiary to whom an award is granted under the Plan. 

        2.12 "Sale
Event" means any (a) sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the
Company's assets, (b) sale, exchange or other transfer of all of the Company's outstanding capital stock to a third party or group of third parties acting in concert or (c) consolidation
or merger of the Company in which the Company is not the surviving or continuing corporation, or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or
other property, other than a merger of the Company in which the holders of the Company's Common Stock immediately prior to the merger have, directly or indirectly, at least a 67% ownership interest in
the outstanding Common Stock of the surviving corporation immediately after the merger. 

        2.13 "Stock
Option" means any option to purchase Common Stock granted pursuant to Section 6. 

        2.14 "Subsidiary"
means a company, domestic or foreign, of which not less than 50 percent of the voting shares are held by the Company or by a Subsidiary, whether or
not such company now exists or is hereafter organized or acquired by the Company or by a Subsidiary. 

        2.15 "Term
of the Plan" means the period beginning on the Effective Date and ending on the earlier to occur of (i) the date the Plan is terminated by the Board in
accordance with Section 16 and (ii) the day before the tenth anniversary of the Effective Date. 

3.     Administration  

        The Plan shall be administered by a committee of the Board (the "Committee") consisting solely of two or more members of the Board, each of whom shall qualify as
a "Non-employee Director" within the meaning of Rule 16b-3 of the Exchange Act and also qualify as an "outside director" within the meaning of Section 162(m) of
the Code and regulations pursuant thereto. The Committee shall have the power and authority to grant Stock Option awards to eligible persons pursuant to the terms of the Plan. 

        The
Committee shall have authority in its discretion to interpret the provisions of the Plan and to decide all questions of fact arising in its application. Except as otherwise expressly
provided in the Plan, the Committee shall have authority to select the persons to whom Stock Option awards shall be awarded under the Plan; to determine the size of each such Stock Option award; to
determine the time when the Stock Option awards shall be granted; to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall from time to time deem
advisable; and to make all other determinations necessary or advisable for the administration of the Plan. Notwithstanding anything in the Plan to the contrary, in the event that the Committee
determines that it is advisable to grant awards which shall not qualify for the exception for performance-based compensation from the tax deductibility limitations of Section 162(m) of the
Code, the Committee may make such grants or awards, or may amend the Plan to provide for such grants or awards, without satisfying the requirements of Section 162(m) of the Code. 

        The
Committee also shall have authority, in its discretion, to vary the terms of the Plan to the extent necessary to comply with federal, state or local law. 

3

 

        All
decisions made by the Committee pursuant to the provisions of the Plan shall be final and binding on all persons who participate in the Plan. 

        All
expenses and liabilities incurred by the Committee in the administration of the Plan shall be borne by the Company. The Committee may employ attorneys, consultants, accountants or
other persons in connection with the administration of the Plan. The Company, and its officers and directors, shall be entitled to rely upon the advice, opinions or valuations of any such persons. 

4.     Common Stock Subject to the Plan  

        4.1   Share
Reserve. There shall be reserved and available for issuance under the Plan 300,000 shares of Common Stock, subject to such adjustment as may be made pursuant to
Section 14. 

        4.2   Source
of Shares/Reversion of Shares. Such shares may consist in whole or in part of authorized and unissued shares or treasury shares or any combination thereof as the
Committee may determine. Except as otherwise provided herein, any shares subject to an option which for any reason expires or is terminated unexercised, becomes unexercisable or is forfeited or
otherwise terminated, or surrendered or canceled shall thereafter be available for further Stock Option awards under the Plan. No Stock Option awards may be granted following the end of the Term of
the Plan. 

        4.3   Code
Section 162(m) Limitation. The total number of shares of Common Stock for which Stock Options that are subject to the attainment of performance criteria to
protect against the loss of deductibility under Section 162(m) of the Code may be granted to any Participant during any twelve-month period shall not exceed 200,000 in the aggregate, subject to
adjustment pursuant to Section 14. 

5.     Eligibility to Receive Stock Option  

        Stock Option awards may be granted to any employee of the Company or any Subsidiary. The Committee shall have the sole authority to select the persons to whom an
award of Stock Options is to be granted hereunder and to determine the award to be granted to each such person. 

6.     Stock Options  

        A Stock Option shall be subject to the following terms and conditions not inconsistent with the terms of the Plan, as the Committee shall deem desirable: 

        6.1   Option
Price. The Stock Option exercise price shall be fixed by the Committee and shall be equal to 100 percent of the Fair Market Value of the shares of Common
Stock subject to the Stock Option at the time the option is granted. No Stock Option exercise price shall be re-priced or adjusted upward or downward other than as provided for in
Section 14. 

        6.2   Vesting
Period. No Stock Option may be exercised during the first year after its date of grant. After the first anniversary of the date of grant, Stock Options may be
exercised as to one-third of the shares of Common Stock available for purchase under the Stock Options, after the second anniversary of the date of grant, it may be exercised as to an
additional one-third of such shares and all Stock Options shall be fully vested and exercisable after the third anniversary of the date of grant. 

        6.3   Exercise
Term. Subject to Section 6.2, each Stock Option may be exercised in whole or in part, and from time to time, provided that no Stock Option shall be
exercisable after ten years from the date of grant thereof. 

        6.4   Payment
for Shares. A Stock Option shall be deemed to be exercised when notice of such exercise has been given to the Company by the Participant entitled to exercise the
Stock Option 

4

 

and
full payment for the shares of Common Stock with respect to which the Stock Option is exercised has been received by the Company or its designated agent. Payment shall be by any of the following
or a combination thereof, at the election of the Participant: 

        (a)   cash; 

        (b)   check;

        (c)   consideration
received by the Company under a cashless exercise program implemented by the Company in connection with the Plan; or 

        (d)   Surrender
of other shares of Common Stock which (i) in the case of shares of Common Stock acquired upon exercise of a Stock Option, have been owned by the
Participant for more than six (6) months on the date of surrender, and (ii) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the exercise shares
of Common Stock. 

        No
shares of Common Stock shall be issued to any Participant upon exercise of a Stock Option until the Company or its designated agent receives full payment therefor as described above.
Upon the receipt of notice of exercise and full payment for the shares of Common Stock, the shares of Common Stock shall be deemed to have been issued and the Participant shall be entitled to receive
such shares of Common Stock and shall be a stockholder with respect to such shares, and the shares of Common Stock shall be considered fully paid and nonassessable. No adjustment will be made for a
dividend or other right for which the record date is prior to the date on which the stock is issued, except as provided in Section 14 of the Plan. Each exercise of a Stock Option shall reduce,
by an equal number, the total number of shares of Common Stock that may thereafter be purchased under such Stock Option. 

        6.5   Rights
upon Termination of Continuous Service. In the event that a Participant's Continuous Service terminates for any reason, other than death or Disability, the
Participant (or any successor or legal representative) shall have the right to exercise the Stock Option to the extent that the Stock Option was exercisable at the time of termination, until the
earlier of (i) the date 90 days after the effective date of such termination of Continuous Service, or such other date as otherwise determined by the Committee in its sole discretion, or
(ii) the expiration of the term of the Stock Option. To the extent the Participant was not entitled to exercise the Stock Option at the time of termination of Continuous Service, or if the
Participant does not exercise the Stock Option within the time specified herein, such Stock Option shall terminate. 

        Notwithstanding
the foregoing, the Participant (or any successor or legal representative) shall not have any rights under the Stock Option, and the Company shall not be obligated to sell
or deliver shares of Common Stock (or have any other obligation or liability) under the Plan upon exercise of the Stock Option if the Committee shall determine in its sole discretion that the
Participant's Continuous Service shall have been terminated for cause, including, but not limited to, the Participant having engaged or may engage in employment or activities competitive with the
Company or any Subsidiary or contrary, in the opinion of the Committee, to the best interests of the Company or any Subsidiary. In the event of such determination, the Participant (or any successor or
legal representative) shall have no right under such Stock Option to purchase any shares of Common Stock regardless of whether the Participant (or any successor or legal representative) shall have
delivered a notice of exercise prior to the making of such determination. Any Stock Option may be terminated entirely by the Committee at the time or at any time subsequent to a determination by the
Committee under this Section 6.5, which has the effect of eliminating the Company's obligation to sell or deliver shares of Common Stock under such Stock Option. 

5

 

        In
the event that a Participant's Continuous Service terminates because such Participant either dies or is determined by the Committee to have a Disability prior to the expiration of the
Stock Option and without the Participant's having fully exercised the Stock Option, the Participant or his successor or legal representative shall be fully vested in the Stock Option and shall have
the right to exercise the Stock Option until the earlier of (i) the date twelve months following such event, or such other date as determined by the Committee in its sole discretion, or
(ii) the expiration of the term of the Stock Option. If the Participant does not exercise the Stock Option within the time specified herein, such Stock Option shall terminate. 

7.     No Stock Option Re-Pricing  

        Neither the Board nor the Committee shall re-price or adjust upward or downward the exercise price of any Stock Option, other than as provided for in
Section 14. 

8.     Rights of a Stockholder  

        The recipient of any Stock Option award under the Plan shall have no rights as a stockholder with respect thereto unless and until shares of Common Stock are
issued to the recipient. 

9.     No Right to Continue Employment or Service  

        Nothing in the Plan or any Stock Option award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or any
Subsidiary in the capacity in effect at the time the award was granted or shall affect the right of the Company or any Subsidiary to terminate the employment of an employee with or without notice and
with or without cause. 

10.   Withholding  

        The Company's obligation to deliver shares of Common Stock upon the exercise of any Stock Option shall be subject to applicable foreign, federal, state and local
withholding tax requirements. Foreign, federal, state and local withholding tax due under the terms of the Plan shall be paid by the Participant. 

11.   Indemnification  

        No member of the Board or the Committee, nor any officer or employee of the Company or a Subsidiary acting on behalf of the Board or the Committee, shall be
personally liable for any action, determination or interpretation taken or made in good faith with respect to the Plan, and all members of the Board or the Committee and each and any officer or
employee of the Company or any Subsidiary acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination
or interpretation. 

12.   Non-Assignability  

        No Stock Option award under the Plan shall be assignable or transferable by the recipient thereof except by will, by the laws of descent and distribution and by
such other means as the Committee may approve from time to time. No right or benefit hereunder shall in any manner be subject to the debts, contracts, liabilities or torts of the person entitled to
such right or benefit. 

13.   Nonuniform Determinations  

        The Committee's determinations under the Plan (including without limitation determinations of the persons to receive awards, the form, amount and timing of such
awards, and the terms and provisions of such awards) need not be uniform and may be made by it selectively among persons who 

6

 

receive,
or are eligible to receive, Stock Option awards under the Plan, whether or not such persons are similarly situated. 

14.   Adjustments  

        In the event of any change in the outstanding shares of Common Stock by reason of a stock dividend, stock split, reverse stock split or distribution,
recapitalization, merger, reorganization, reclassification, consolidation, split-up, spin-off, combination of shares, exchange of shares or other change in corporate structure
affecting the Common Stock and not involving the
receipt of consideration by the Company, the Committee shall make appropriate adjustments in (A) the aggregate number of shares of Common Stock (i) reserved for issuance under the Plan,
(ii) for which grants may be made to any Participant, and (iii) covered by outstanding unexercised grants denominated in shares or units of Common Stock; (B) the exercise price
applicable to outstanding Stock Option awards or grants; and (C) shall make such other adjustments as may be appropriate under the circumstances; provided that the number of shares subject to
any award or grant always shall be a whole number. 

15.   Provisions Relating to Sale Events.  

        (a)   The
Company, at its option, may give each Participant at least ten business days written notice (or, if such notice period is not practicable, such shorter notice period
as the Company determines in good faith is practicable) prior to the anticipated date of the consummation of a Sale Event. Upon receipt of such notice, and for a period of five business days
thereafter (or such other period as may be specified in the Company's notice with respect to the Sale Event), each Participant will be permitted to exercise, in whole or in part, the unexercised
portion of each Stock Option held by such Participant in accordance with the terms and conditions of the Plan and the award agreement relating such Option. 

        (b)   Upon
the consummation of the Sale Event, all Options will be canceled and forfeited to the extent they have not been exercised in accordance with the provisions of
Section 15(a). 

        (c)   If
the Sale Event is not consummated, all Options exercised pursuant to the Company's notice of the Sale Event will be deemed not to have been exercised and will
thereafter be exercisable to the same extent and on the same terms and conditions as if notice of the Sale Event had not been given by the Company. 

        (d)   In
lieu of delivering notice of a Sale Event pursuant to the provisions of Section 15(a), the Company, at its option, may cause the successor or acquiring
corporation in connection with any Sale Event or, if applicable, the corporate parent of any such corporation (the "Successor Corporation"), to assume in writing the obligations of the Company under
the Plan and the outstanding Stock Options awarded pursuant to the Plan. In such event, the number and kind of shares acquirable upon the exercise of the Stock Options and the exercise price
applicable thereto will be adjusted appropriately and the Stock Options as so adjusted will be deemed solely to represent rights to acquire shares of the Successor Corporation in the manner provided
in the agreements between the Company and the Successor Corporation. 

16.   Termination and Amendment  

        The Board may terminate or amend the Plan or any portion thereof at any time and the Committee may amend the Plan to the extent provided in Section 3,
without approval of the stockholders of the Company. No amendment, termination or modification of the Plan shall affect any Stock Option award theretofore granted in any material adverse way without
the consent of the recipient. 

7

 

17.   Severability  

        If any of the terms or provisions of this Plan, or awards made under this Plan, conflict with the requirements of Section 162(m) of the Code with respect
to awards subject to, or governed by, Section 162(m) of the Code, then such terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of
Section 162(m) of the Code. If this Plan does not contain any provision required to be included herein under Section 162(m) of the Code (as the same shall be amended from time to time),
such provision shall be deemed to be incorporated herein with the same force and effect as if such provision had been set out herein. 

18.   Effect on Other Plans  

        Participation in this Plan shall not affect a Participant's eligibility to participate in any other benefit or incentive plan of the Company or any Subsidiary and
any Stock Option awards made pursuant to this Plan shall not be used in determining the benefits provided under any other plan of the Company or any Subsidiary. 

19.   Effective Date of the Plan  

        The Plan shall become effective on April 1, 2004, but no Stock Option shall be exercised unless and until the Plan has been approved by the stockholders of
the Company at the next annual meeting to be held in 2004, or any adjournment thereof. If the Plan is not approved by the affirmative vote of the holders of a majority of the shares of Common Stock
present, or represented at the meeting and
entitled to vote thereon, the Plan shall not be, or become, effective and any Stock Options granted under the Plan prior thereto shall terminate and shall become null and void. 

20.   Governing Law  

        This Plan and all agreements executed in connection with the Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware,
without regard to its conflicts of law doctrine. 

21.   Gender and Number  

        Words denoting the masculine gender shall include the feminine gender, and words denoting the feminine gender shall include the masculine gender. Words in the
plural shall include the singular, and the singular shall include the plural. 

22.   No Strict Construction  

        No rule of strict construction shall be applied against the Company, the Committee, or any other person in the interpretation of any of the terms of the Plan, any
agreement executed in connection with the Plan, any award granted under the Plan, or any rule, regulation or procedure established by the Committee. 

23.   Plan Provisions Control  

        The terms of the Plan govern all awards granted under the Plan, and in no event will the Committee have the power to grant any award under the Plan which is
contrary to any of the provisions of the Plan. In the event any provision of any award granted under the Plan shall conflict with any term in the Plan, the term in the Plan shall control. 

8

 

24.   Headings  

        The headings used in the Plan are for convenience only, do not constitute a part of the Plan, and shall not be deemed to limit, characterize, or affect in any way
any provisions of the Plan, and all provisions of the Plan shall be construed as if no captions had been used in the Plan. 

9

QuickLinks

Exhibit 10.19Exhibit 10.1

 

 

 

WAREHOUSING CREDIT AND SECURITY

AGREEMENT

 

 

BETWEEN

 

MORTGAGEIT, INC.,

a New York corporation

AND

RESIDENTIAL FUNDING CORPORATION,

a Delaware corporation

Dated as of August 1, 2003

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  THE
  CREDIT

  	
  1-1

  
	
   

  	
  1.1.

  	
  The
  Warehousing Commitment

  	
  1-1

  
	
   

  	
  1.2.

  	
  Expiration of Warehousing
  Commitment

  	
  1-1

  
	
   

  	
  1.3.

  	
  Warehousing Note

  	
  1-1

  
	
  2.

  	
  PROCEDURES
  FOR OBTAINING ADVANCES

  	
  2-1

  
	
   

  	
  2.1.

  	
  Warehousing
  Advances

  	
  2-1

  
	
  3.

  	
  INTEREST,
  PRINCIPAL AND FEES

  	
  3-1

  
	
   

  	
  3.1.

  	
  Interest

  	
  3-1

  
	
   

  	
  3.2.

  	
  Interest
  Limitation

  	
  3-2

  
	
   

  	
  3.3.

  	
  Principal Payments

  	
  3-2

  
	
   

  	
  3.4.

  	
  Buydowns

  	
  3-4

  
	
   

  	
  3.5.

  	
  Warehousing
  Commitment Fees

  	
  3-5

  
	
   

  	
  3.6.

  	
  Loan Package Fees, Wire
  Fees, Warehousing Fees

  	
  3-5

  
	
   

  	
  3.7.

  	
  Miscellaneous Fees and
  Charges

  	
  3-5

  
	
   

  	
  3.8.

  	
  Overdraft Advances

  	
  3-5

  
	
   

  	
  3.9.

  	
  Method of Making Payments

  	
  3-5

  
	
  4.

  	
  COLLATERAL

  	
  4-1

  
	
   

  	
  4.1.

  	
  Grant
  of Security Interest

  	
  4-1

  
	
   

  	
  4.2.

  	
  Maintenance of
  Collateral Records

  	
  4-2

  
	
   

  	
  4.3.

  	
  Release
  of Security Interest in Pledged Loans and Pledged Securities

  	
  4-2

  
	
   

  	
  4.4.

  	
  Collection
  and Servicing Rights

  	
  4-3

  
	
   

  	
  4.5.

  	
  Return of Collateral at End
  of Warehousing Commitment

  	
  4-4

  
	
   

  	
  4.6.

  	
  Delivery
  of Collateral Documents

  	
  4-4

  
	
  5.

  	
  CONDITIONS
  PRECEDENT

  	
  5-1

  
	
   

  	
  5.1.

  	
  Initial Advance

  	
  5-1

  
	
   

  	
  5.2.

  	
  Each Advance

  	
  5-2

  
	
   

  	
  5.3.

  	
  Force Majeure

  	
  5-3

  
	
  6.

  	
  GENERAL REPRESENTATIONS AND
  WARRANTIES

  	
  6-1

  
	
   

  	
  6.1.

  	
  Place of
  Business

  	
  6-1

  
	
   

  	
  6.2.

  	
  Organization; Good
  Standing; Subsidiaries

  	
  6-1

  
	
   

  	
  6.3.

  	
  Authorization and
  Enforceability

  	
  6-1

  
	
   

  	
  6.4.

  	
  Approvals

  	
  6-1

  
	
   

  	
  6.5.

  	
  Financial Condition

  	
  6-2

  
	
   

  	
  6.6.

  	
  Litigation

  	
  6-2

  
	
   

  	
  6.7.

  	
  Compliance with Laws

  	
  6-2

  
	
   

  	
  6.8.

  	
  Regulation U

  	
  6-2

  
	
   

  	
  6.9.

  	
  Investment Company Act

  	
  6-2

  
	
   

  	
  6.10.

  	
  Payment of Taxes

  	
  6-3

  
	
   

  	
  6.11.

  	
  Agreements

  	
  6-3

  
	
   

  	
  6.12.

  	
  Title to Properties

  	
  6-3

  
	
   

  	
  6.13.

  	
  ERISA

  	
  6-3

  
	
   

  	
  6.14.

  	
  No
  Retiree Benefits

  	
  6-4

  
	
   

  	
  6.15.

  	
  Assumed Names

  	
  6-4

  
	
   

  	
  6.16.

  	
  Servicing

  	
  6-4

  
	
  7.

  	
  AFFIRMATIVE COVENANTS

  	
  7-1

  

 

 

	
   

  	
  7.1.

  	
  Payment
  of Obligations

  	
  7-1

  
	
   

  	
  7.2.

  	
  Financial
  Statements

  	
  7-1

  
	
   

  	
  7.3.

  	
  Other Borrower
  Reports

  	
  7-1

  
	
   

  	
  7.4.

  	
  Maintenance of Existence;
  Conduct of Business

  	
  7-2

  
	
   

  	
  7.5.

  	
  Compliance with
  Applicable Laws

  	
  7-2

  
	
   

  	
  7.6.

  	
  Inspection
  of Properties and Books; Operational Reviews

  	
  7-2

  
	
   

  	
  7.7.

  	
  Notice

  	
  7-3

  
	
   

  	
  7.8.

  	
  Payment of Debt,
  Taxes and Other Obligations

  	
  7-3

  
	
   

  	
  7.9.

  	
  Insurance

  	
  7-3

  
	
   

  	
  7.10.

  	
  Closing Instructions

  	
  7-4

  
	
   

  	
  7.11.

  	
  Subordination of Certain
  Indebtedness

  	
  7-4

  
	
   

  	
  7.12.

  	
  Other
  Loan Obligations

  	
  7-4

  
	
   

  	
  7.13.

  	
  ERISA

  	
  7-4

  
	
   

  	
  7.14.

  	
  Use of
  Proceeds of Warehousing Advances

  	
  7-5

  
	
  8.

  	
  NEGATIVE
  COVENANTS

  	
  8-1

  
	
   

  	
  8.1.

  	
  Contingent
  Liabilities

  	
  8-1

  
	
   

  	
  8.2.

  	
  Pledge
  of Servicing Contracts

  	
  8-1

  
	
   

  	
  8.3.

  	
  Restrictions on
  Fundamental Changes

  	
  8-1

  
	
   

  	
  8.4.

  	
  Subsidiaries

  	
  8-1

  
	
   

  	
  8.5.

  	
  Deferral of
  Subordinated Debt

  	
  8-1

  
	
   

  	
  8.6.

  	
  Loss of
  Eligibility

  	
  8-2

  
	
   

  	
  8.7.

  	
  Accounting Changes

  	
  8-2

  
	
   

  	
  8.8.

  	
  Leverage Ratio

  	
  8-2

  
	
   

  	
  8.9.

  	
  Minimum
  Tangible Net Worth

  	
  8-2

  
	
   

  	
  8.10.

  	
  Minimum
  Liquid Assets

  	
  8-2

  
	
   

  	
  8.11.

  	
  Operating
  Losses

  	
  8-2

  
	
   

  	
  8.12.

  	
  Distributions
  to Shareholders

  	
  8-2

  
	
   

  	
  8.13.

  	
  Transactions with
  Affiliates

  	
  8-2

  
	
   

  	
  8.14.

  	
  Recourse
  Servicing Contracts

  	
  8-2

  
	
  9.

  	
  SPECIAL REPRESENTATIONS, WARRANTIES AND
  COVENANTS CONCERNING COLLATERAL

  	
  9-1

  
	
   

  	
  9.1.

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

  	
  9-1

  
	
   

  	
  9.2.

  	
  Special Representations and
  Warranties Concerning Warehousing Collateral

  	
  9-1

  
	
   

  	
  9.3.

  	
  Special
  Affirmative Covenants Concerning Warehousing Collateral

  	
  9-3

  
	
   

  	
  9.4.

  	
  Special Negative Covenants
  Concerning Warehousing Collateral

  	
  9-4

  
	
  10.

  	
  DEFAULTS;
  REMEDIES

  	
  10-1

  
	
   

  	
  10.1.

  	
  Events of Default

  	
  10-1

  
	
   

  	
  10.2.

  	
  Remedies

  	
  10-2

  
	
   

  	
  10.3.

  	
  Application
  of Proceeds

  	
  10-5

  
	
   

  	
  10.4.

  	
  Lender
  Appointed Attorney-in-Fact

  	
  10-5

  
	
   

  	
  10.5.

  	
  Right of
  Set-Off

  	
  10-5

  
	
  11.

  	
  MISCELLANEOUS

  	
  11-1

  
	
   

  	
  11.1.

  	
  Notices

  	
  11-1

  
	
   

  	
  11.2.

  	
  Reimbursement Of Expenses;
  Indemnity

  	
  11-1

  
	
   

  	
  11.3.

  	
  Financial
  Information

  	
  11-2

  
	
   

  	
  11.4.

  	
  Terms
  Binding Upon Successors; Survival of Representations

  	
  11-2

  
	
   

  	
  11.5.

  	
  Assignment

  	
  11-2

  
	
   

  	
  11.6.

  	
  Amendments

  	
  11-2

  
	
   

  	
  11.7.

  	
  Governing Law

  	
  11-3

  
	
   

  	
  11.8.

  	
  Participations

  	
  11-3

  
	
   

  	
  11.9.

  	
  Relationship
  of the Parties

  	
  11-3

  
	
   

  	
  11.10.

  	
  Severability

  	
  11-3

  

 

 

	
   

  	
  11.11.

  	
  Consent to Credit
  References

  	
  11-3

  
	
   

  	
  11.12.

  	
  Counterparts

  	
  11-4

  
	
   

  	
  11.13.

  	
  Headings/Captions

  	
  11-4

  
	
   

  	
  11.14.

  	
  Entire Agreement

  	
  11-4

  
	
   

  	
  11.15.

  	
  Consent to
  Jurisdiction

  	
  11-4

  
	
   

  	
  11.16.

  	
  Waiver of Jury Trial

  	
  11-4

  
	
   

  	
  11.17.

  	
  Waiver of
  Punitive, Consequential, Special or Indirect Damages

  	
  11-5

  
	
  12.

  	
  DEFINITIONS

  	
  12-1

  
	
   

  	
  12.1.

  	
  Defined Terms

  	
  12-1

  
	
   

  	
  12.2.

  	
  Other
  Definitional Provisions; Terms of Construction

  	
  12-11

  

 

 

EXHIBITS

 

	
  Exhibit
  A

  	
   

  	
  Request
  for Advance Against Eligible Loans

  
	
   

  	
   

  	
   

  
	
  Exhibit
  B

  	
   

  	
  Procedures
  and Documentation for Warehousing Mortgage Loans

  
	
   

  	
   

  	
   

  
	
  Exhibit
  C

  	
   

  	
  Schedule of
  Servicing Portfolio

  
	
   

  	
   

  	
   

  
	
  Exhibit
  D

  	
   

  	
  Subsidiaries

  
	
   

  	
   

  	
   

  
	
  Exhibit
  E

  	
   

  	
  Compliance
  Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit
  F

  	
   

  	
  Schedule of
  Lines of Credit

  
	
   

  	
   

  	
   

  
	
  Exhibit
  G

  	
   

  	
  Assumed
  Names

  
	
   

  	
   

  	
   

  
	
  Exhibit
  H

  	
   

  	
  Eligible
  Loans and Other Assets

  
	
   

  	
   

  	
   

  
	
  Exhibit
  I

  	
   

  	
  Collateral
  Operations Fee Schedule

  
	
   

  	
   

  	
   

  
	
  Exhibit
  J

  	
   

  	
  Commitment
  Summary Report

  

 

 

WAREHOUSING CREDIT AND SECURITY AGREEMENT

 

WAREHOUSING
CREDIT AND SECURITY AGREEMENT, dated as of August 1, 2003 between MORTGAGEIT, INC., a New York
corporation (“Borrower”), and RESIDENTIAL FUNDING CORPORATION, a
Delaware corporation (“Lender”).

 

A.                                   Borrower has requested certain financing from
Lender.

 

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

 

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

 

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

 

1.                                      THE
CREDIT

 

1.1.                            The Warehousing Commitment

 

On the terms and subject to
the conditions and limitations of this Agreement, including Exhibit H,
Lender agrees to make Warehousing Advances to Borrower from the Closing Date to
the Business Day immediately preceding the Warehousing Maturity Date, during
which period Borrower may borrow, repay and reborrow in accordance with the
provisions of this Agreement. Lender has no obligation to make Warehousing
Advances in excess of the Warehousing Commitment Amount.  While a Default or Event of Default exists,
Lender may refuse to make any additional Warehousing Advances to Borrower.  All Warehousing Advances under this
Agreement constitute a single indebtedness, and all of the Collateral is
security for the Warehousing Note and for the performance of all of the
Obligations.  If the initial Warehousing
Advance has not been made within 90 days after the Closing Date, the
Warehousing Commitment and Lender’s obligation to make Warehousing Advances to
Borrower under this Agreement will automatically terminate, and all Obligations
(including any Obligations arising under Section 11.2) will automatically
become due and payable, without presentment, demand or other Notice or
requirements of any kinds, all of which Borrower expressly waives.

 

1.2.                            Expiration of Warehousing Commitment

 

The Warehousing Commitment
expires on the earlier of (“Warehousing Maturity Date”): (a)
June 30, 2004, as such date may be extended in writing by Lender, in its
sole discretion, on which date the Warehousing Commitment will expire of its
own term and the Warehousing Advances will become due and payable without the
necessity of Notice or action by Lender; and (b) the date the Warehousing
Commitment is terminated and the Warehousing Advances become due and payable
under Section 10.2.

 

1.3.                            Warehousing
Note

 

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

 

Page
1-1

 

Warehousing Note and all
substitutions for it. All terms and provisions of the Warehousing Note are
incorporated into this Agreement.

 

 

End of Article 1

 

Page
1-2

 

2.                                      PROCEDURES
FOR OBTAINING ADVANCES 

 

2.1.                            Warehousing
Advances

 

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

 

 

End of Article 2

 

Page
2-1

 

3.                                      INTEREST, PRINCIPAL
AND FEES

 

3.1.                            Interest

 

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

 

3.1 (b)              As long as no Default or Event of Default
exists, Borrower is entitled to receive a benefit in the form of an “Earnings
Credit” on the portion of the Eligible Balances maintained in time deposit
accounts with a Designated Bank, and Borrower is entitled to receive a benefit
in the form of an “Earnings Allowance” on the portion of the Eligible
Balances maintained in demand deposit accounts with a Designated Bank. Any
Earnings Allowance will be used first and any Earnings Credit will be used
second as a credit against Miscellaneous Fees and Charges (including Designated
Bank Charges), Warehousing Fees, Wire Fees, Warehousing Commitment Fees, Loan
Package Fees, and any other fees payable under this Agreement, and may be used,
at Lender’s option, to reduce accrued interest. Any Earnings Allowance not used
during the month in which the benefit was received will be accumulated and must
be used within 6 months of the month in which the benefit was received. As long
as no Default or Event of Default exists, any Earnings Credit not used during
the month in which the benefit was received will be used to provide a cash
benefit to Borrower. Any Earnings Credit retained by Lender as a result of a
Default or Event of Default will be applied to the payment of Borrower’s
Obligations in the order Lender determines in its sole discretion. The Earnings
Credit and the Earnings Allowance for any month will be determined by Lender in
its sole discretion and Lender’s determination of those amounts is conclusive
and binding absent manifest error. In no event will the benefit received by
Borrower exceed the Depository Benefit.

 

Either party to this
Agreement may terminate the benefits provided for in this
Section effective immediately upon Notice to the other party, if the
terminating party determines (which determination is conclusive and binding on
the other party, absent manifest error) at any time that any applicable law,
rule, regulation, order or decree or any interpretation or administration of
such law, rule, regulation, order or decree by any governmental authority
charged with its interpretation or administration, or compliance by such party
with any request or directive (whether or not having the force of law) of any
such authority, makes it unlawful or impossible for the party sending the
Notice to continue to offer or receive the benefits provided for in this
Section. No Notice is required for a termination of benefits as a result of a
Default or Event of Default.

 

3.1 (c)               Lender computes interest on the basis of the
actual number of days in each month and a year of 360 days (“Accrual Basis”).  Borrower must pay interest monthly in
arrears, not later than 9 days after the date of Lender’s invoice or, if
applicable, 2 days after the date of Lender’s account analysis statement,
commencing with the first month following the Closing Date and on the
Warehousing Maturity Date.

 

3.1 (d)              If, for any reason Borrower repays a
Warehousing Advance on the same day that it was made by Lender, Borrower agrees
to pay to Lender an administrative fee equal to 1 day of interest on that
Warehousing Advance at the Interest Rate that would otherwise be applicable
under Exhibit H.  Borrower must
pay all administrative fees within 9 days after the date of Lender’s invoice
or, if applicable, within 2 days after the date of Lender’s account analysis
statement.

 

Page
3-1

 

3.1 (e)               After an Event of Default occurs and upon
Notice to Borrower by Lender, the unpaid amount of each Warehousing Advance
will bear interest at the Default Rate until paid in full.

 

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

 

3.2.                            Interest Limitation

 

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

 

3.3.                            Principal Payments

 

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

 

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

 

3.3 (c)               Borrower must pay to Lender, without the
necessity of prior demand or Notice from Lender, and Borrower authorizes Lender
to cause the Funding Bank to charge Borrower’s Operating Account for, the
amount of any outstanding Warehousing Advance against a specific Pledged Asset
upon the earliest occurrence of any of the following events:

 

(1)                                 One (1) Business Day elapses from the date a
Warehousing Advance was made if the Pledged Loan to be funded by that
Warehousing Advance is not closed and funded.

 

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

 

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

 

Page
3-2

 

(4)                                 On the date the Pledged Loan or a Lien prior
to the Mortgage securing repayment of the Pledged Loan is defaulted and remains
in default for a period of 60 days or more.

 

(5)                                 Upon the sale, other disposition or
prepayment of any Pledged Asset or, with respect to a Pledged Loan included in
an Eligible Mortgage Pool, upon the sale or other disposition of the related
Agency Security.

 

(6)                                 One (1) Business Day immediately preceding
the date scheduled for the foreclosure or trustee sale of the premises securing
a Pledged Loan.

 

(7)                                 If the outstanding Warehousing Advances
against Pledged Loans of a specific type of Eligible Loan exceed the aggregate
Purchase Commitments for that type of Eligible Loan.

 

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

 

(1)                                 For any Pledged Loan, other than an Aged
Mortgage Loan, the Standard Warehouse Period elapses and, for any Aged Mortgage
Loan, the Aged Warehouse Period elapses.

 

(2)                                 Forty-five (45) days elapse from the date a
Pledged Loan was delivered to an Investor or Approved Custodian for examination
and purchase or for inclusion in a Mortgage Pool, without the purchase being
made or an Eligible Mortgage Pool being initially certified, or upon rejection
of a Pledged Loan as unsatisfactory by an Investor or Approved Custodian.

 

(3)                                  Seven (7) Business Days elapse from the date
a Wet Settlement Advance was made against a Pledged Loan without receipt by
Lender of all Collateral Documents relating to the Pledged Loan.

 

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

 

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

 

3.3 (e)               In addition to the payments required by
Sections 3.3(a), 3.3(c) and 3.3(d), if the principal amount of any Pledged Loan
is prepaid in whole or in part while a Warehousing Advance is outstanding
against the Pledged Loan, Borrower must pay to Lender, without the necessity of
prior demand or Notice from Lender, and Borrower authorizes Lender to cause the
Funding Bank to charge Borrower’s Operating Account for, the amount of the
prepayment, to be applied against the Warehousing Advance.

 

3.3 (f)                 The proceeds of the sale or other disposition
of Pledged Assets must be paid directly by the Investor to the Cash Collateral
Account. Borrower must give Notice to Lender in

 

Page
3-3

 

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

 

3.3 (g)              Lender reserves the right to revalue any
Pledged Loan.  Borrower must pay to
Lender, without the necessity of prior demand or Notice from Lender, and
Borrower authorizes Lender to cause the Funding Bank to charge Borrower’s
Operating Account for, any amount required after any such revaluation to reduce
the principal amount of the Warehousing Advance outstanding against the revalued
Pledged Loan to an amount equal to the Advance Rate for the applicable type of
Eligible Loan multiplied by the Fair Market Value of the Mortgage Loan.

 

3.4.                            Buydowns

 

Borrower may prepay a
portion of the Warehousing Advances outstanding against Prime Mortgage Loans (a
“Buydown”) upon Notice to Lender not later than (a) 1:00 p.m. on the
Business Day immediately preceding the Business Day on which Borrower desires
to make a Buydown in the amount of $10,000,000 or more or (b) 1:00 p.m. on the
Business Day on which Borrower desires to make a Buydown in an amount less than
$10,000,000.  Each Buydown must be in an
amount not less than $5,000, and Buydowns may not exceed the aggregate
principal balance of the Warehousing Advances outstanding against Prime Mortgage
Loans.  A Buydown is a reduction in the
aggregate amount of the Warehousing Advances outstanding against Prime Mortgage
Loans, but does not represent the prepayment of any particular Warehousing
Advance, and does not entitle Borrower to the release of any Collateral.  Lender may apply Buydowns to reduce interest
payable by Borrower on outstanding Warehousing Advances in any order that
Lender determines in its sole discretion. 
Unless a Default or Event of Default exists, Borrower may reborrow all
or any portion of a Buydown upon Notice to Lender not later than (m) 1:00 p.m.
on the Business Day immediately preceding the Busines Day on which borrower
desires to reborrow $10,000,000 or more or (n) 1:00 p.m. on the Business Day
that Borrower desires to reborrow an amount less than $10,000,000.  If Lender receives Buydowns or a combination
of Buydowns and payments of Warehousing Advances that exceed the aggregate
principal balance of the Warehousing Advances outstanding against Prime
Mortgage Loans (an “Excess Buydown”), as long as no Default or Event of
Default exists, Borrower may reborrow all or any portion of an Excess Buydown
upon Notice to Lender not later than (y) 1:00 p.m. on the Business Day
immediately preceding the Business Day on which Borrower desires to reborrow
$10,000,000 or more or (z) 1:00 p.m. on the Business Day that Borrower desires
to reborrow an amount less than $10,000,000.  
Alternatively, Lender may, in its sole discretion, re-advance to Borrower
all or any portion of an Excess Buydown by causing the Funding Bank to credit
the Operating Account in that amount. 
Lender has no obligation to pay or otherwise provide to Borrower any
interest, dividends or other benefits on an Excess Buydown.

 

Page
3-4

 

3.5.                            Warehousing
Commitment
Fees

 

Borrower must pay Lender a
fee (“Warehousing Commitment Fee”) in the amount set forth in Exhibit
I.  The Warehousing Commitment Fee
is payable quarterly in advance. On the Closing Date, Borrower must pay the prorated
portion of the Warehousing Commitment Fee due from the Closing Date to the last
day of the current Calendar Quarter. After the Closing Date, Borrower must pay
the Warehousing Commitment Fee within 9 days after the date of Lender’s invoice
or, if applicable, within 2 days after the date of Lender’s account analysis
statement. If the date set forth in clause (a) of the definition of Warehousing
Maturity Date occurs on a day other than the last day of a Calendar Quarter,
Borrower must pay the prorated portion of the Warehousing Commitment Fee due
from the beginning of the then current Calendar Quarter to and including that
date. Borrower is not entitled to a reduction in the amount of the Warehousing
Commitment Fee if (a) the Warehousing Commitment Amount is reduced or (b) the
Warehousing Commitment is terminated at the request of Borrower or as a result
of an Event of Default. If the Warehousing Commitment terminates at the request
of Borrower or as a result of an Event of Default, Borrower must pay, on the
date of termination, a Warehousing Commitment Fee on the Warehousing Commitment
Amount in effect immediately prior to termination, for the period from the date
of termination to and including the date set forth in clause (a) of the
definition of Warehousing Maturity Date on the date of such termination.
Lender’s determination of the Warehousing Commitment Fee for any period is
conclusive and binding, absent manifest error.

 

3.6.                            Loan Package Fees,  Wire Fees, Warehousing Fees

 

At the time of each Warehousing
Advance against an Eligible Loan, Borrower will incur a loan package fee (“Loan
Package Fee”) and a wire fee (“Wire Fee”). Loan Package Fees and
Wire Fees may, at Lender’s discretion, be billed separately or combined into a
single warehousing fee (“Warehousing Fee”).  Borrower must pay all Loan Package Fees, Wire Fees or Warehousing
Fees in the amount set forth in Exhibit I within 9 days after the date
of Lender’s invoice or, if applicable, within 2 days after the date of Lender’s
account analysis statement.

 

3.7.                            Miscellaneous Fees and Charges

 

Borrower must reimburse
Lender for all Miscellaneous Fees and Charges. 
Borrower must pay all Miscellaneous Fees and Charges within 9 days after
the date of Lender’s invoice or, if applicable, within 2 days after the date of
Lender’s account analysis statement.

 

3.8.                            Overdraft
Advances

 

If, under the authorization
given by Borrower in the Funding Bank Agreement or pursuant to this Agreement,
Lender debits Borrower’s Operating Account or directs the Funding Bank to honor
an item presented against the Operating Account or against the Check
Disbursement Account, and that debit or direction results in an overdraft,
Lender may make an additional Warehousing Advance to fund that overdraft (“Overdraft
Advance”).  Borrower must pay (a)
the outstanding amount of any Overdraft Advance, within 1 Business Day after
the date of the Overdraft Advance, and (b) interest on the amount of the
Overdraft Advance, at a rate per annum equal to the Bank One Prime Rate plus
2%, within 9 days after the date of Lender’s invoice or, if applicable, within
2 days after the date of Lender’s account analysis statement.

 

3.9.                            Method
of Making
Payments

 

3.9 (a)               Unless otherwise specified in this Agreement,
Borrower must make all payments under this Agreement to Lender by the close of
business on the date when due unless the date

 

Page
3-5

 

is not a Business Day. If
the due date is not a Business Day, payment is due on, and interest will accrue
to, the next Business Day. Borrower must make all payments in United States
dollars in immediately available funds transferred by wire to accounts
designated by Lender.

 

3.9 (b)              Borrower authorizes Lender to cause the
Funding Bank to charge Borrower’s Operating Account for any interest or fees
due and payable to Lender on or after the 9th day after the date of Lender’s
invoice or, if applicable, on or after the 2nd day after the date of Lender’s
account analysis statement, without the necessity of prior demand or Notice
from Lender.

 

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

 

 

End of Article 3

 

Page
3-6

 

4.                                      COLLATERAL

 

4.1.                            Grant
of
Security Interest

 

As security for the payment
of the Warehousing Note and for the performance of all of Borrower’s
Obligations, Borrower grants a security interest to Lender in all of Borrower’s
right, title and interest in and to the following described property (“Collateral”):

 

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

 

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

 

4.1 (c)               All Mortgage-backed Securities that are
created in whole or in part on the basis of Pledged Loans or that are delivered
or caused to be delivered to Lender (including delivery to a third party on
behalf of Lender), or that otherwise come into the possession, custody or
control of Lender (including the possession, custody or control of a third
party on behalf of Lender) or that are registered by book-entry in the name of
Lender (including registration in the name of a third party on behalf of
Lender), in each case for the purpose of pledge, or in respect of which a
Warehousing Advance has been made by Lender under this Agreement (collectively,
“Pledged Securities”).

 

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

 

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

 

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

 

Page
4-1

 

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

 

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

 

4.2.                            Maintenance
of
Collateral Records

 

As long as the Warehousing
Commitment is outstanding or there remain any Obligations to be paid or
performed under this Agreement or under any other Loan Document, Borrower must
preserve and maintain, at its chief executive office and principal place of
business or in a regional office approved by Lender, or in the office of a
computer service bureau engaged by Borrower and approved by Lender and, upon
request, make available to Lender the originals, or copies in any case where
the originals have been delivered to Lender or to an Investor, of the Mortgage
Notes, Mortgages and Security Agreements included in Pledged Loans, Mortgage-backed
Securities delivered to Lender as Pledged Securities, Purchase Commitments, and
all related 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.

 

4.3.                            Release of Security Interest in Pledged Loans and Pledged Securities

 

4.3 (a)               Except as provided in Section 4.3(b),
Lender will release its security interest in the Pledged Loans only against
payment to Lender of the Release Amount in connection with those Pledged Loans.
If Pledged Loans are transferred to a pool custodian or an Investor for
inclusion in a Mortgage Pool and Lender’s security interest in the Pledged
Loans included in the Mortgage Pool is not released before the issuance of the
related Mortgage-backed Security, then that Mortgage-backed Security, when
issued, is a Pledged Security, Lender’s security interest continues in the
Pledged Loans backing that Pledged Security and Lender is entitled to
possession of the Pledged Security in the manner provided in this Agreement.

 

4.3 (b)              If Pledged Loans are transferred to an
Approved Custodian and included in an Eligible Mortgage Pool, Lender’s security
interest in the Pledged Loans included in the Eligible Mortgage Pool will be
released upon the delivery of the Agency Security to Lender (including delivery
to or registration in the name of a third party on behalf of Lender) and that
Agency Security is a Pledged Security. 
Lender’s security interest in that Pledged Security will be released
only against payment to Lender of the Release Amount in connection with the
Mortgage Loans backing that Pledged Security.

 

4.3 (c)               Lender has the exclusive right to possession
of all Pledged Securities or, if Pledged Securities are issued in book-entry
form or issued in certificated form and delivered to a clearing corporation (as
that term is defined in the Uniform Commercial Code of Minnesota) or its
nominee, Lender has the right to have the Pledged Securities registered in the
name of a securities intermediary (as that term is defined in the Uniform
Commercial Code of Minnesota) in an account containing only customer securities
and

 

Page
4-2

 

credited to an account of
Lender. Lender has no duty or obligation to deliver Pledged Securities to an
Investor or to credit Pledged Securities to the account of an Investor or an
Investor’s designee except against payment for those Pledged Securities.
Borrower acknowledges that Lender may enter into one or more standing
arrangements with securities intermediaries with respect to Pledged Securities
issued in book entry form or issued in certificated form and delivered to a
clearing corporation or its designee, under which the Pledged Securities are
registered in the name of the securities intermediary, and Borrower agrees,
upon request of Lender, to execute and deliver to those securities
intermediaries Borrower’s written concurrence in any such standing arrangements.

 

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

 

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

 

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

 

4.4.                            Collection and Servicing Rights

 

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

 

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

 

Page
4-3

 

4.5.                            Return of Collateral at End of Warehousing Commitment

 

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

 

4.6.                            Delivery of Collateral Documents

 

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

 

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

 

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

 

 

End of Article 4

 

Page
4-4

 

5.                                      CONDITIONS PRECEDENT

 

5.1.                            Initial
Advance

 

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

 

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

 

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

 

(2)                                 Borrower’s articles or certificate of
incorporation, together with all amendments, as certified by the Secretary of
State of New York, Borrower’s bylaws, together with all amendments, certified
by the corporate secretary or assistant secretary of Borrower, and certificates
of good standing dated within 60 days of the date of this Agreement, together
with a certification from the Franchise Tax Board or other state tax authority
stating that Borrower is in good standing with the Franchise Tax Board or such
state tax authority, if applicable.

 

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

 

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

 

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

 

(6)                                 Fiscal year-end financial statements of
Borrower (and, if applicable, Borrower’s Subsidiaries, on a consolidated basis)
containing a balance sheet as of December 31, 2002 and related statements
of income, changes in stockholders’ equity and cash flows for the period ended
on that date, all in reasonable detail and prepared in accordance with GAAP
applied on a basis consistent with prior periods and accompanied by (A) an
opinion as to those financial statements in form and substance satisfactory to
Lender and prepared by independent certified public accountants of recognized
standing acceptable to Lender and (B) any management letters, management
reports or other supplementary comments or reports delivered by those
accountants to Borrower or its board of directors.

 

(7)                                 Interim financial statements of Borrower
(and, if applicable, Borrower’s Subsidiaries, on a consolidated basis)
containing a balance sheet as of March 31, 2003, and a related statement
of income, for the period ended on that date prepared in accordance with GAAP
applied on a basis consistent with Borrower’s most recent audited financial
statements.

 

(8)                                 A favorable written opinion of counsel to Borrower,
addressed to Lender and dated as of the date of this Agreement, covering such
matters as Lender may reasonably request.

 

Page
5-1

 

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

 

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

 

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

 

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

 

(13)                           One or more agreements among Borrower, Lender
and Fannie Mae in which Fannie Mae agrees to send all cash proceeds of Mortgage
Loans sold by Borrower to Fannie Mae to the Cash Collateral Account, each in
form and substance satisfactory to Lender.

 

(14)                           Receipt by Lender of any fees due on the date
of this Agreement.

 

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

 

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

 

5.2.                            Each
Advance

 

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

 

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

 

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

 

Page
5-2

 

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

 

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

 

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

 

5.3.                            Force
Majeure

 

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

 

 

End of Article 5

 

Page
5-3

 

6.                                      GENERAL REPRESENTATIONS AND WARRANTIES

 

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

 

6.1.                            Place of Business

 

Borrower’s chief executive
office and principal place of business is 33 Maiden Lane, New York, NY, 10038.

 

6.2.                            Organization; Good Standing; Subsidiaries

 

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

 

6.3.                            Authorization and Enforceability

 

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

 

6.4.                            Approvals

 

The execution and delivery
of this Agreement, the Warehousing Note and the other Loan Documents and the
performance of Borrower’s obligations under this Agreement, the Warehousing
Note and the other Loan Documents and the validity and enforceability of this
Agreement, the Warehousing Note and the other Loan Documents do not require any
license,

 

Page
6-1

 

consent, approval or other
action of any state or federal agency or governmental or regulatory authority
other than those that have been obtained and remain in full force and effect.

 

6.5.                            Financial
Condition

 

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

 

6.6.                            Litigation

 

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

 

6.7.                            Compliance
with
Laws

 

Neither Borrower nor any
Subsidiary of Borrower is in violation of any provision of any law, or of any
judgment, award, rule, regulation, order, decree, writ or injunction of any
court or public regulatory body or authority that could result in a material
adverse change in Borrower’s business, operations, assets or financial
condition as a whole or that would affect the validity or enforceability of
this Agreement, the Warehousing Note or any other Loan Document.

 

6.8.                            Regulation
U

 

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

 

6.9.                            Investment
Company
Act

 

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

 

Page
6-2

 

6.10.                     Payment of Taxes

 

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

 

6.11.                     Agreements

 

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

 

6.12.                     Title to Properties

 

Borrower and each Subsidiary
of Borrower has good, valid, insurable and (in the case of real property) marketable
title to all of its properties and assets (whether real or personal, tangible
or intangible) reflected on the financial statements described in
Section 6.6, except for those properties and assets that Borrower has
disposed of since the date of those financial statements either in the ordinary
course of business or because they were no longer used or useful in the conduct
of Borrower’s or the Subsidiary’s business. All of Borrower’s properties and
assets are free and clear of all Liens except as disclosed in Borrower’s
financial statements.

 

6.13.                     ERISA

 

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

 

Page
6-3

 

6.14.                     No Retiree Benefits

 

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

 

6.15.                     Assumed
Names

 

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

 

6.16.                     Servicing

 

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

 

 

End of Article 6

 

Page
6-4

 

7.                                      AFFIRMATIVE COVENANTS

 

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

 

7.1.                            Payment of Obligations

 

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

 

7.2.                            Financial Statements

 

Deliver to Lender:

 

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

 

7.2 (b)              As soon as available and in any event within
90 days after the end of each fiscal year of Borrower, fiscal year-end
statements of income, changes in stockholders’ equity and cash flow of Borrower
(and, if applicable, Borrower’s Subsidiaries, on a consolidated basis) for that
year, and the related balance sheet as of the end of that year (setting forth
in comparative form the corresponding figures for the preceding fiscal year),
all in reasonable detail and accompanied by (1) an opinion as to those
financial statements in form and substance satisfactory to Lender and prepared
by independent certified public accountants of recognized standing acceptable
to Lender and (2) any management letters, management reports or other
supplementary comments or reports delivered by those accountants to Borrower or
its board of directors.

 

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

 

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

 

7.3.                            Other
Borrower Reports

 

Deliver to Lender:

 

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

 

Page
7-1

 

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

 

7.3 (c)               As soon as available and in any event within
30 days after the end of each month, a commitment summary and pipeline report,
substantially in the form of Exhibit J, as of the end of that month.

 

7.3 (d)              Unless the Funding Bank has previously
provided Lender with a copy of the Funding Bank’s monthly statement for the
Check Disbursement Account, as soon as available and in any event within 30 days
after the end of each month, a copy of that monthly statement.

 

7.3 (e)               Within 30 days after the end of each month, a
report as of the end of that month detailing all requests that Borrower
repurchase Mortgage Loans from an Investor or out of an Eligible Mortgage Pool
for which Borrower has determined it is legally obligated to honor pursuant to
the applicable written agreements between Borrower and the requesting party,
including the status of each such request and any indemnification or similar
agreement to which Borrower is a party in connection with any such request.

 

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

 

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

 

7.4.                            Maintenance of Existence; Conduct of
Business

 

Preserve and maintain its
corporate existence in good standing and all of its rights, privileges,
licenses and franchises necessary or desirable in the normal conduct of its
business, including its eligibility as lender, seller/servicer and issuer
described under Section 9.1; conduct its business in an orderly and
efficient manner; maintain a net worth of acceptable assets as required for maintaining
Borrower’s eligibility as lender, seller/servicer and issuer described under
Section 9.1; and make no material change in the nature or character of its
business or engage in any business in which it was not engaged on the date of
this Agreement.

 

7.5.                            Compliance
with
Applicable Laws

 

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

 

7.6.                            Inspection of Properties and Books; Operational Reviews

 

Permit Lender or any
Participant (and their authorized representatives) to discuss the business,
operations, assets and financial condition of Borrower and its Subsidiaries
with Borrower’s officers, agents and employees, and to examine and make copies
or extracts of Borrower’s and its Subsidiaries’ books of account, all at such
reasonable times as Lender or any Participant may

 

Page
7-2

 

request. Provide its
accountants with a copy of this Agreement promptly after its execution and
authorize and instruct them to answer candidly all questions that the officers
of Lender or any Participant or any authorized representatives of Lender or any
Participant may address to them in reference to the financial condition or
affairs of Borrower and its Subsidiaries. Borrower may have its representatives
in attendance at any meetings held between the officers or other
representatives of Lender or any Participant and Borrower’s accountants under
this authorization. Permit Lender or any Participant (and their authorized
representatives) access to Borrower’s premises and records for the purpose of
conducting a review of Borrower’s general mortgage business methods, policies
and procedures, auditing its loan files and reviewing the financial and
operational aspects of Borrower’s business.

 

7.7.                            Notice

 

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

 

7.8.                            Payment
of Debt, Taxes and Other Obligations

 

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

 

7.9.                            Insurance

 

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

 

Page
7-3

 

7.10.                     Closing
Instructions

 

Indemnify and hold Lender
harmless from and against any loss, including reasonable attorneys’ fees and
costs, attributable to the failure of any title insurance company, agent or
attorney to comply with Borrower’s disbursement or instruction letter relating
to any Mortgage Loan. Lender has the right to pre-approve Borrower’s choice of
title insurance company, agent or attorney and Borrower’s disbursement or
instruction letter to them in any case in which Borrower intends to obtain a
Warehousing Advance against the Mortgage Loan to be created at settlement or to
pledge that Mortgage Loan as Collateral under this Agreement. In any event,
Borrower’s disbursement or instruction letter must include the following
language:

 

A warehouse lender has a
security interest in any amounts advanced by it to fund this mortgage loan and
in the mortgage loan funded with those amounts.  You must promptly return any amounts advanced by the warehouse
lender and not used to fund this mortgage loan.  If the mortgage loan does not close and disburse within 24 hours
of receipt of funds, the closing agent must contact MIT Lending and return the
wire to the warehouse lender from whom funds were delivered.  All funds wired are to be held in trust
until such time as the corresponding mortgage loan is recorded and funds are
disbursed.

 

7.11.                     Subordination of Certain
Indebtedness

 

Cause any indebtedness of
Borrower for borrowed money to any shareholder, director, officer or Affiliate
of Borrower, which indebtedness has a term of more than 1 year or is in excess
of $25,000, to be subordinated to the Obligations by the execution and delivery
to Lender of a Subordination of Debt Agreement, on the form prescribed by
Lender, certified by the corporate secretary of Borrower to be true and
complete and in full force and effect.

 

7.12.                     Other Loan Obligations

 

Perform all material
obligations under the terms of each loan agreement, note, mortgage, security
agreement or debt instrument by which Borrower is bound or to which any of its
property is subject which involves obligations, in the aggregate, in excess of
$250,000, and promptly notify Lender in writing of a declared default under or
the termination, cancellation, reduction or nonrenewal of any of its other
lines of credit or agreements with any other lender. Exhibit F is a true
and complete list of all such lines of credit or agreements as of the date of
this Agreement. Borrower must give Lender at least 30 days Notice before
entering into any additional lines of credit or agreements with a commitment of
$1,000,000 or more.

 

7.13.                     ERISA

 

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

 

Page
7-4

 

7.14.                     Use of Proceeds of Warehousing Advances

 

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

 

 

End of Article 7

 

Page
7-5

 

8.                                      NEGATIVE
COVENANTS

 

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

 

8.1.                            Contingent
Liabilities

 

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

 

8.2.                            Pledge of Servicing Contracts

 

Pledge or grant a security
interest in any existing or future Servicing Contracts of Borrower other than
to Lender, or omit to take any action required to keep all of Borrower’s
Servicing Contracts in full force and effect.

 

8.3.                            Restrictions on Fundamental Changes

 

8.3 (a)               Consolidate, merge or enter into any
analogous reorganization or transaction with any Person.

 

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

 

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

 

8.3 (d)              Cease actively to engage in the business of
originating or acquiring Mortgage Loans or make any other material change in
the nature or scope of the business in which Borrower engages as of the date of
this Agreement.

 

8.3 (e)               Sell, assign, lease, convey, transfer or
otherwise dispose of (whether in one transaction or a series of transactions)
all or any substantial part of Borrower’s business or assets, whether now owned
or acquired after the Closing Date, other than, in the ordinary course of
business and to the extent not otherwise prohibited by this Agreement, sales of
(1) Mortgage Loans, (2) Mortgage-backed Securities and (3) Servicing Contracts.

 

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

 

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

 

8.4.                            Subsidiaries

 

Form or acquire, or permit
any Subsidiary of Borrower to form or acquire, any Person that would thereby
become a Subsidiary.

 

8.5.                            Deferral
of Subordinated
Debt

 

Pay any Subordinated Debt of
Borrower in advance of its stated maturity or, after a Default or Event of
Default under this Agreement has occurred, make any payment of any kind on any

 

Page
8-1

 

Subordinated Debt of
Borrower until all of the Obligations have been paid and performed in full and
any applicable preference period has expired.

 

8.6.                            Loss of Eligibility

 

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

 

8.7.                            Accounting Changes

 

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

 

8.8.                            Leverage
Ratio

 

Permit Borrower’s Leverage
Ratio at any time to exceed 20 to 1.

 

8.9.                            Minimum Tangible Net Worth

 

Permit Borrower’s Tangible
Net Worth at any time to be less than $17,500,000.

 

8.10.                     Minimum Liquid Assets

 

Permit Borrower’s Liquid
Assets at any time to be less than $2,000,000.

 

8.11.                     Operating Losses

 

Permit Borrower (and its
Subsidiaries, on a consolidated basis) to have any calendar quarter of net
operating losses.

 

8.12.                     Distributions to Shareholders

 

Declare or pay any dividends
or otherwise declare or make any distribution to Borrower’s shareholders
(including any purchase or redemption of stock) if a Default or Event of
Default exists or would occur as a result of the dividend or distribution.

 

8.13.                     Transactions with Affiliates

 

Directly or indirectly (a)
make any loan, advance, extension of credit or capital contribution to any of
Borrower’s Affiliates, (b) sell, transfer, pledge or assign any of its assets
to or on behalf of those Affiliates, (c) merge or consolidate with or purchase
or acquire assets from those Affiliates, or (d) pay management fees to or on
behalf of those Affiliates.

 

8.14.                     Recourse
Servicing Contracts

 

Acquire or enter into
Servicing Contracts under which Borrower must repurchase or indemnify the
holder of the Mortgage Loans as a result of defaults on the Mortgage Loans at
any time during the term of those Mortgage Loans.

 

 

End of Article 8

 

Page
8-2

 

9.                                      SPECIAL
REPRESENTATIONS, WARRANTIES AND COVENANTS CONCERNING COLLATERAL

 

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

 

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

 

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

 

9.1 (b)              A Fannie Mae-approved seller/servicer of
Mortgage Loans, eligible to originate, purchase, hold, sell and service
Mortgage Loans to be sold to Fannie Mae.

 

9.1 (c)               A Freddie Mac-approved seller of Mortgage
Loans, eligible to originate, purchase, hold and sell Mortgage Loans to be sold
to Freddie Mac.

 

9.1 (d)              A VA-approved mortgagee and a lender in
good-standing under the VA loan guarantee program, eligible to originate,
purchase, hold, sell and service VA-guaranteed Mortgage Loans.

 

9.1 (e)               A Lender-approved seller/servicer of Mortgage
Loans, eligible to originate, purchase, hold, sell and service Mortgage Loans
to be sold to Lender.

 

9.2.                            Special Representations and Warranties Concerning Warehousing Collateral

 

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

 

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

 

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

 

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

 

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

 

Page
9-1

 

modified, amended or any requirements
of which waived, except in writing that is part of the Collateral Documents.

 

9.2 (e)               Each Pledged Loan is secured by a Mortgage on
real property and improvements located in one of the states of the United
States or the District of Columbia.

 

9.2 (f)                 Unless Third Party Originated Loans are
permitted, each Pledged Loan has been closed or will be closed and funded with
the Warehousing Advance made against it.

 

9.2 (g)              Except for open-ended Second Mortgage Loans,
each Mortgage Loan has been fully advanced in the face amount of its Mortgage
Note.

 

9.2 (h)              Each First Mortgage Loan is secured by a
First Mortgage on the real property and improvements described in or covered by
that Mortgage.

 

9.2 (i)                  Each First Mortgage Loan has or will have a
title insurance policy, in ALTA form or equivalent, from a recognized title
insurance company, insuring the priority of the Lien of the Mortgage and
meeting the usual requirements of Investors purchasing those Mortgage Loans.

 

9.2 (j)                  Each Second Mortgage Loan is secured by a
Second Mortgage on the real property and improvements described in or covered
by that Mortgage.

 

9.2 (k)               To the extent required by the related
Purchase Commitment or by Investors generally for similar Mortgage Loans, each
Second Mortgage Loan has or will have a title insurance policy, in ALTA form or
equivalent, from a recognized title insurance company, insuring the priority of
the Lien of the Mortgage and meeting the usual requirements of Investors
purchasing those Mortgage Loans.

 

9.2 (l)                  Each Mortgage Loan has been evaluated or
appraised in accordance with Title XI of FIRREA.

 

9.2 (m)            The Mortgage Note for each Pledged Loan is
(1) payable or endorsed to the order of Borrower, (2) an “instrument” within
the meaning of Article 9 of the Uniform Commercial Code of all applicable
jurisdictions and (3) is denominated and payable in United States dollars.

 

9.2 (n)              No default has existed for 60 days or more
under any Mortgage Loan included in the Pledged Loans.

 

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

 

9.2 (p)              All fire and casualty policies covering the
real property and improvements encumbered by each Mortgage included in the
Pledged Loans (1) name and will continue to name Borrower and its successors
and assigns as the insured under a standard mortgagee clause, (2) are and will
continue to be in full force and effect and (3) afford and will continue to
afford insurance against fire and such other risks as are usually insured
against in the broad form of extended coverage insurance generally available.

 

9.2 (q)              Pledged Loans secured by real property and
improvements located in a special flood hazard area designated as such by the
Director of the Federal Emergency Management

 

Page
9-2

 

Agency are and will continue
to be covered by special flood insurance under the National Flood Insurance
Program.

 

9.2 (r)                 Each Pledged Loan against which a Warehousing
Advance is made on the basis of a Purchase Commitment meets all of the
requirements of that Purchase Commitment, and each Pledged Security against
which a Warehousing Advance is outstanding meets all of the requirements of the
related Purchase Commitment.

 

9.2 (s)               Pledged Loans that are intended to be
exchanged for Agency Securities comply or, prior to the issuance of the Agency
Securities will comply, with the requirements of any governmental
instrumentality, department or agency issuing or guaranteeing the Agency
Securities.

 

9.2 (t)                 Pledged Loans that are intended to be used in
the formation of Mortgage-backed Securities (other than Agency Securities)
comply with the requirements of the issuer of the Mortgage-backed Securities
(or its sponsor) and of the Rating Agencies.

 

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

 

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

 

9.2 (w)            No Pledged Loan delivered to Lender is a
Discontinued Loan.

 

9.2 (x)                Each Pledged Loan secured by real property to
which a Manufactured Home is affixed will create a valid Lien on that
Manufactured Home that will have priority over any other Lien on the
Manufactured Home, whether or not arising under applicable real property law.

 

9.3.                            Special Affirmative Covenants Concerning Warehousing Collateral

 

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

 

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

 

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

 

9.3 (c)               Execute and deliver to Lender with respect to
the Collateral those further instruments of sale, pledge, assignment or
transfer, and those powers of attorney, as required by Lender, and do and
perform all matters and things necessary or desirable to be done or

 

Page
9-3

 

observed, for the purpose of
effectively creating, maintaining and preserving the security and benefits
intended to be afforded Lender under this Agreement.

 

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

 

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

 

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

 

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

 

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

 

9.4.                            Special Negative Covenants Concerning Warehousing
Collateral

 

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

 

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

 

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

 

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

 

 

End of Article 9

 

Page
9-4

 

10.                               DEFAULTS; REMEDIES

 

10.1.                     Events of Default

 

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

 

10.1 (a)         Borrower fails to pay the principal of any
Warehousing Advance when due, whether at stated maturity, by acceleration, or
otherwise; or fails to pay any installment of interest on any Warehousing
Advance within 9 days after the date of Lender’s invoice or, if applicable,
within 2 days after the date of Lender’s account analysis statement; or fails
to pay, within any applicable grace period, any other amount due under this
Agreement or any other Obligation of Borrower to Lender.

 

10.1 (b)        Borrower or any of its Subsidiaries fails to
pay, or defaults in the payment of any principal or interest on, any other
indebtedness or any contingent obligation within any applicable grace period;
breaches or defaults with respect to any other material term of any other
indebtedness or of any loan agreement, mortgage, indenture or other agreement
relating to that indebtedness, if the effect of that breach or default is to
cause, or to permit the holder or holders of that indebtedness (or a trustee on
behalf of such holder or holders) to cause, indebtedness of Borrower or its
Subsidiaries in the aggregate amount of $50,000 or more to become or be
declared due before its stated maturity (upon the giving or receiving of
notice, lapse of time, both, or otherwise).

 

10.1 (c)         Borrower fails to perform or comply with any
term or condition applicable to it contained in Sections 7.4 or 7.14 or in any
Section of Article 8.

 

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

 

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

 

10.1 (f)           An “event of default” (however defined) occurs
under any agreement between Borrower and Lender other than this Agreement and
the other Loan Documents.

 

10.1 (g)        A case (whether voluntary or involuntary) is
filed by or against Borrower or any Subsidiary of Borrower under any applicable
bankruptcy, insolvency or other similar federal or state law; or a court of
competent jurisdiction appoints a receiver (interim or permanent), liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
Borrower or any Subsidiary of Borrower, or over all or a substantial part of
their respective properties or assets; or Borrower or any Subsidiary of
Borrower (1) consents to the appointment of or possession by a receiver
(interim or permanent), liquidator, sequestrator, trustee, custodian or other
officer having similar powers over Borrower or any Subsidiary of Borrower, or
over all or a substantial part of their respective properties or assets, (2)
makes an assignment for the benefit of creditors, or (3) fails, or admits in
writing its inability, to pay its debts as those debts become due.

 

Page
10-1

 

10.1 (h)        Borrower fails to repurchase Mortgage Loans
for which Borrower has determined it is legally obligated to repurchase
pursuant to the applicable written agreements with respect to any such Mortgage
Loans, if such obligations in the aggregate exceed $500,000.

 

10.1 (i)            Any money judgment, writ or warrant of
attachment or similar process involving an amount in excess of $250,000 is
entered or filed against Borrower or any of its Subsidiaries or any of their
respective assets and remains undischarged, unvacated, unbonded or unstayed for
a period of 30 days or 5 days before the date of any proposed sale under that
money judgment, writ or warrant of attachment or similar process.

 

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

 

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

 

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

 

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

 

10.1 (n)        Any Lien for any taxes, assessments or other
governmental charges (1) is filed against Borrower or any of its property, or
is otherwise enforced against Borrower or any of its property, or (2) obtains
priority that is equal to or greater than the priority of Lender’s security
interest in any of the Collateral.

 

10.1 (o)        Larry Lewis ceases to be the Chief Operating
Officer of Borrower, unless a successor acceptable to Lender in its sole
discretion has been appointed Chief Operating Officer of Borrower within 60
days of the date on which Larry Lewis ceases to be the Chief Operating Officer
of Borrower.

 

10.2.                     Remedies

 

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

 

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

 

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

 

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

 

(2)                                 Notify all obligors under any of the
Collateral that the Collateral has been assigned to Lender (or to another
Person designated by Lender) and that all payments on that Collateral are to be
made directly to Lender (or such other Person); settle, compromise or release,
in whole or in part, any amounts any

 

Page
10-2

 

obligor or Investor owes on
any of the Collateral on terms acceptable to Lender; enforce payment and
prosecute any action or proceeding involving any of the Collateral; and where
any Collateral is in default, foreclose on and enforce any Liens securing that
Collateral in any manner permitted by law and sell any property acquired as a
result of those enforcement actions.

 

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

 

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

 

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

 

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

 

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

 

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

 

(9)                                 Instead of or in conjunction with exercising
the power of sale authorized by Section 10.2(c)(8), Lender may proceed by
suit at law or in equity to collect all amounts due on the Collateral, or to
foreclose Lender’s Lien on and sell all or any portion of the Collateral
pursuant to a judgment or decree of a court of competent jurisdiction.

 

(10)                           Proceed against Borrower on the Warehousing
Note.

 

Page
10-3

 

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

 

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

 

10.2 (e)         Borrower acknowledges that Mortgage Loans are
collateral of a type that is the subject of widely distributed standard price
quotations and that Mortgage-backed Securities are collateral of a type that is
customarily sold on a recognized market. Borrower waives any right it may have
to prior notice of the sale of Pledged Securities, and agrees that Lender may
purchase Pledged Loans and Pledged Securities at a private sale of such
Collateral.

 

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

 

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

 

10.2 (h)        No failure or delay on the part of Lender to
exercise any right, power or remedy provided in this Agreement or under any
other Loan Document, at law or in equity, will operate as a waiver of that
right, power or remedy. No single or partial exercise by Lender of any right,
power or remedy provided under this Agreement or any other Loan Document, at
law or in equity, precludes any other or further exercise of that right, power,
or remedy by Lender, or Lender’s exercise of any other right, power or remedy.
Without limiting the foregoing, Borrower waives all defenses based on the
statute of limitations to the extent permitted by law. The remedies provided in
this Agreement and the other Loan Documents are cumulative and are not
exclusive of any remedies provided at law or in equity.

 

10.2 (i)            Borrower grants Lender a license or other
right to use, without charge, Borrower’s computer programs, other programs,
labels, patents, copyrights, rights of use of any

 

Page
10-4

 

name, trade secrets, trade
names, trademarks, service marks and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in advertising for sale and
selling any of the Collateral and Borrower’s rights under all licenses and all
other agreements related to the foregoing inure to Lender’s benefit until the
Obligations are paid in full.

 

10.3.                     Application of Proceeds

 

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

 

10.4.                     Lender Appointed Attorney-in-Fact

 

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

 

10.5.                     Right
of Set-Off

 

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

 

 

End of Article 10

 

Page
10-5

 

11.                               MISCELLANEOUS

 

11.1.                     Notices

 

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

 

	
  If
  to Borrower:

  	
   

  	
  MORTGAGEIT,
  INC.

  
	
   

  	
   

  	
  33
  Maiden Lane

  
	
   

  	
   

  	
  New
  York, NY 10038

  
	
   

  	
   

  	
  Attention:
  Larry Lewis, Chief Operating Officer

  
	
   

  	
   

  	
  Facsimile:
  (212) 651-4691

  
	
   

  	
   

  	
   

  
	
  If
  to Lender:

  	
   

  	
  Residential
  Funding Corporation

  
	
   

  	
   

  	
  7501
  Wisconsin Avenue

  
	
   

  	
   

  	
  Bethesda,
  MD 20814

  
	
   

  	
   

  	
  Attention:
  Jason Mitchell, Director

  
	
   

  	
   

  	
  Facsimile:
  (301) 215-6288

  

 

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

 

11.2.                     Reimbursement Of Expenses; Indemnity

 

Borrower must: (a) pay
Lender a document production fee in connection with the preparation and
negotiation of this Agreement in an aggregate amount not to exceed $25,000 at
any time; (b) pay such additional documentation production fees as Lender may
require and all out-of-pocket costs and expenses of Lender, including
reasonable fees, service charges and disbursements of counsel to Lender
(including allocated costs of internal counsel), in connection with the amendment,
enforcement and administration of this Agreement, the Warehousing Note, and
other Loan Documents, the making, repayment and payment of interest on the
Warehousing Advances and the payment of all other Obligations under Loan
Documents; (c) indemnify, pay, and hold harmless Lender and any other holder of
the Warehousing Note from and against, all present and future stamp,
documentary and other similar taxes with respect to the foregoing matters and
save Lender and any other holder of the Warehousing Note harmless from and
against all liabilities with respect to or resulting from any delay or omission
to pay such taxes; and (d) indemnify, pay and hold harmless Lender and all of
its Affiliates, officers, directors, employees or agents and any subsequent holder
of the Warehousing Note (collectively called the “Indemnitees”) from and
against all liabilities, obligations, losses, damages, penalties, judgments,
suits, costs, expenses and disbursements of every kind or nature (including the
reasonable fees and disbursements of counsel to the Indemnitees (including
allocated costs of internal counsel) in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnitees have been
designated as parties to such proceeding) that may be imposed upon, incurred by
or asserted against such Indemnitees in any manner relating to or arising out
of this

 

Page
11-1

 

Agreement, the Warehousing
Note, or any other Loan Document or any of the transactions contemplated by
this Agreement, the Warehousing Note and the other Loan Documents, including
against all liabilities, obligations, losses, damages, penalties, judgments,
suits, costs, expenses and disbursements of every kind or nature (including the
reasonable fees and disbursements of counsel to the Indemnitees (including
allocated costs of internal counsel) in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnitees have been
designated as parties to such proceeding) arising from any breach of Sections
9.2(v) or 9.3(f) or the making of any Mortgage Loan in which any mortgagor,
guarantor or other obligor is a Person named in any Restriction List and to
whom the provision of financial services is prohibited or otherwise restricted
by applicable law (“Indemnified Liabilities”), except that Borrower has
no obligation under this Agreement with respect to Indemnified Liabilities
arising from the gross negligence or willful misconduct of any such Indemnitees.
To the extent that the undertaking to indemnify, pay and hold harmless as set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, Borrower must contribute the maximum portion that it
is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them. The agreement of Borrower contained in this Article survives the
expiration or termination of this Agreement and the payment in full of the
Warehousing Note. Attorneys’ fees and disbursements incurred in enforcing, or
on appeal from, a judgment under this Agreement are recoverable separately from
and in addition to any other amount included in such judgment, and this clause
is intended to be severable from the other provisions of this Agreement and to
survive and not be merged into such judgment.

 

11.3.                     Financial
Information

 

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

 

11.4.                     Terms Binding Upon Successors; Survival of Representations

 

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

 

11.5.                     Assignment

 

Borrower cannot assign this
Agreement. Lender may at any time, without Notice to or the consent of
Borrower, transfer or assign, in whole or in part, its interest in this
Agreement and the Warehousing Note along with Lender’s security interest in any
of the Collateral, and any assignee of Lender may enforce this Agreement, the
Warehousing Note and its security interest in the Collateral assigned.

 

11.6.                     Amendments

 

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

 

Page
11-2

 

11.7.                     Governing Law

 

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

 

11.8.                     Participations

 

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

 

11.9.                     Relationship of the Parties

 

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

 

11.10.              Severability

 

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

 

11.11.              Consent
to Credit References

 

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

 

Page
11-3

 

11.12.              Counterparts

 

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

 

11.13.              Headings/Captions

 

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

 

11.14.              Entire
Agreement

 

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

 

11.15.              Consent to Jurisdiction

 

AT THE OPTION OF LENDER,
THIS AGREEMENT, THE WAREHOUSING NOTE AND THE OTHER LOAN DOCUMENTS MAY BE
ENFORCED IN ANY STATE OR FEDERAL COURT WITHIN THE STATE OF MINNESOTA. BORROWER
CONSENTS TO THE JURISDICTION AND VENUE OF THOSE COURTS, AND WAIVES ANY
OBJECTION TO THE JURISDICTION OR VENUE OF THOSE COURTS, INCLUDING THE OBJECTION
THAT VENUE IN THOSE COURTS IS NOT CONVENIENT. ANY SUCH SUIT, ACTION OR
PROCEEDING MAY BE COMMENCED AND INSTITUTED BY SERVICE OF PROCESS UPON BORROWER
BY FIRST CLASS REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
ADDRESSED TO BORROWER AT ITS ADDRESS LAST KNOWN TO LENDER. BORROWER’S CONSENT
AND AGREEMENT UNDER THIS SECTION DOES NOT AFFECT LENDER’S RIGHT TO
ACCOMPLISH SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER
JURISDICTION OR COURT. IN THE EVENT BORROWER COMMENCES ANY ACTION IN ANOTHER
JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR
INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, LENDER AT ITS OPTION MAY HAVE THE CASE TRANSFERRED TO A STATE OR
FEDERAL COURT WITHIN THE STATE OF MINNESOTA OR, IF A TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, MAY HAVE BORROWER’S ACTION DISMISSED WITHOUT
PREJUDICE.

 

11.16.              Waiver
of Jury Trial

 

BORROWER AND LENDER EACH
PROMISES AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT
BY A JURY, AND FULLY WAIVES ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY
SUCH RIGHT NOW EXISTS OR ARISES AFTER THE DATE OF THIS AGREEMENT. THIS WAIVER
OF THE RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY,
BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS EACH INSTANCE AND EACH
ISSUE FOR WHICH THE RIGHT TO TRIAL BY JURY WOULD OTHERWISE APPLY. LENDER AND
BORROWER ARE EACH AUTHORIZED AND DIRECTED TO SUBMIT THIS AGREEMENT TO ANY COURT
HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES TO THIS AGREEMENT
AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF THE RIGHT TO TRIAL BY JURY. FURTHER,
BORROWER AND LENDER EACH CERTIFIES THAT NO

 

Page
11-4

 

REPRESENTATIVE OR AGENT OF
THE OTHER PARTY, INCLUDING THE OTHER PARTY’S COUNSEL, HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, TO ANY OF ITS REPRESENTATIVES OR AGENTS THAT THE OTHER
PARTY WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL BY JURY.

 

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

 

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

 

 

End of Article 11

 

Page
11-5

 

12.                               DEFINITIONS

 

12.1.                     Defined
Terms

 

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

 

“Accrual Basis” has
the meaning set forth in Section 3.1(c).

 

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

 

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

 

“Aged Mortgage Loans”
means Mortgage Loans against which a Warehousing Advance has been outstanding
for longer than the Standard Warehouse Period, provided that Aged Mortgage Loans
are permitted for such type of Mortgage Loan.

 

“Aged Warehouse Period”
means the maximum number of days a Warehouse Advance against Aged Mortgage
Loans of a particular type may remain outstanding as set forth in Exhibit H.

 

“Agency Security”
means a Mortgage-backed Security issued or guaranteed by Fannie Mae, Freddie
Mac or Ginnie Mae.

 

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

 

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

 

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

 

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

 

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

 

“Bank One Prime Rate”
means, as of any date of determination, the highest prime rate quoted by Bank
One and most recently published by Bloomberg L.P. If the prime rate for Bank
One is not quoted or published for any period, then during that period the term
“Bank One Prime Rate”

 

Page
12-1

 

means the highest prime rate
published in the most recent edition of The Wall Street Journal in its regular
column entitled “Money Rates.”

 

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

 

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

 

“Buydown” has the
meaning set forth in Section 3.4.

 

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

 

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

 

“Check Disbursement
Account” means a demand deposit account maintained at the Funding Bank in
Borrower’s name and under the control of Lender for clearing checks written by
Borrower to fund Mortgage Loans funded by Warehousing Advances.

 

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

 

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

 

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

 

“Committed Purchase Price”
means for an Eligible Loan (a) the dollar price as set forth in the Purchase
Commitment or, if the price is not expressed in dollars, the product of the
Mortgage Note Amount multiplied by the price (expressed as a percentage) as set
forth in the Purchase Commitment for the Eligible Loan, or (b) if the Eligible
Loan is to be used to back an Agency Security, an amount equal to the product
of the Mortgage Note Amount multiplied by the price (expressed as a percentage)
as set forth in the Purchase Commitment for the Agency Security.

 

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

 

“Credit Score” means
a mortgagor’s overall consumer credit rating, represented by a single numeric
credit score using the Fair, Isaac consumer credit scoring system, provided by
a credit repository acceptable to Lender and the Investor that issued the
Purchase Commitment covering the related Mortgage Loan (if a Purchase
Commitment is required by Exhibit H).

 

“Debt” means (a) all
indebtedness or other obligations of a Person (and, if applicable, that
Person’s Subsidiaries, on a consolidated basis) that, in accordance with GAAP,
would be included in determining total liabilities as shown on the liabilities
side of a balance sheet of that

 

Page
12-2

 

Person on the date of
determination, plus (b) all indebtedness or other obligations of that Person
(and, if applicable, that Person’s Subsidiaries, on a consolidated basis) for
borrowed money or for the deferred purchase price of property or services. For
purposes of calculating a Person’s Debt, Subordinated Debt due more than 6
months after the Warehousing Maturity Date may be excluded from that Person’s
indebtedness.

 

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

 

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

 

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

 

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

 

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

 

“Discontinued Loan”
has the meaning set forth in the GMAC-RFC Client Guide.

 

“Earnings Allowance”
has the meaning set forth in Section 3.1(b).

 

“Earnings Credit” has
the meaning set forth in Section 3.1(b).

 

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

 

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

 

“Eligible Balances”
means all funds of or maintained by Borrower (and, if applicable, Borrower’s
Subsidiaries) in demand deposit or time deposit accounts at a Designated Bank,
minus balances to support float, reserve requirements and any other reductions
that may be imposed by governmental authorities from time to time.

 

“Eligible Loan” means
a Single Family Mortgage Loan that satisfies the conditions and requirements
set forth in Exhibit H.

 

“Eligible Mortgage Pool”
means a Mortgage Pool for which (a) an Approved Custodian has issued its
initial certification, (b) there exists a Purchase Commitment covering the
Agency Security to be issued on the basis of that certification and (c) the
Agency Security will be delivered to Lender.

 

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

 

Page
12-3

 

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

 

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

 

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

 

“Excess Buydown” has
the meaning set forth in Section 3.4.

 

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

 

“Exhibit B” means Exhibit
B, as applicable to the type of Eligible Loan against which a Warehousing
Advance is to be made.

 

“Fair Market Value”
means, at any time for an Eligible Loan or a related Agency Security (if the
Eligible Loan is to be used to back an Agency Security) as of any date of
determination, (a) the Committed Purchase Price if the Eligible Loan is covered
by a Purchase Commitment from Fannie Mae or Freddie Mac or the Eligible Loan is
to be exchanged for an Agency Security and that Agency Security is covered by a
Purchase Commitment from an Investor, or (b) otherwise, the market price for
such Eligible Loan or Agency Security, determined by Lender based on market
data for similar Mortgage Loans or Agency Securities and such other criteria as
Lender deems appropriate in its sole discretion.

 

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

 

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

 

“FHA Mortgage Loan”
means an FHA-insured Mortgage Loan included in the Pledged Loans.

 

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

 

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

 

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

 

“First Mortgage Loan”
means a Mortgage Loan secured by a First Mortgage.

 

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

 

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

 

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

 

Page
12-4

 

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

 

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

 

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

 

“Government Mortgage Loan”
means a closed-end First Mortgage Loan that is either HUD/FHA insured (other
than a HUD 203(K) Mortgage Loan or a Title I Mortgage Loan) or VA guaranteed.

 

“Hedging Arrangements”
means, with respect to any Person, any agreements or other arrangements
(including interest rate swap agreements, interest rate cap agreements and
forward sale agreements) entered into to protect that Person against changes in
interest rates or the market value of assets.

 

“High LTV Mortgage Loan”
has the meaning set forth in Exhibit H.

 

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

 

“HUD 203(K) Mortgage Loan”
means an FHA -insured closed-end First Mortgage Loan to an individual obligor
the proceeds of which will be used for the purpose of rehabilitating and
repairing the related single family property, and which satisfies the
definition of “rehabilitation loan” in 24 C.F.R. 203.50(a).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Page
12-5

 

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

 

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

 

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

 

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

 

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

 

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

 

“Loan Package Fee”
has the meaning set forth in Section 3.6.

 

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

 

“Manufactured Home”
means a structure that is built on a permanent chassis (steel frame) with the
wheel assembly necessary for transportation in one or more sections to a
permanent site or semi-permanent site.

 

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

 

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

 

“Miscellaneous Fees and
Charges” means the Collateral Operations Fees set forth on Lender’s fee
schedule attached as Exhibit I and all miscellaneous disbursements,
charges and expenses incurred by or on behalf of Lender for the handling and
administration of Warehousing Advances and Collateral, including costs for
Uniform Commercial Code, tax lien and judgment searches conducted by Lender,
filing fees, charges for wire transfers and check processing charges, charges
for security delivery fees, charges for overnight delivery of Collateral to
Investors, recording fees, Funding Bank service fees and overdraft charges and
Designated Bank Charges.

 

Page
12-6

 

Upon not less than 3
Business Days’ prior Notice to Borrower, Lender may modify the Collateral
Operations Fees set forth in Exhibit I to conform to current Lender
practices and, as so modified, the revised Exhibit I will become part of
this Agreement.

 

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

 

“Mortgage-backed
Securities” means securities that are secured or otherwise backed by
Mortgage Loans.

 

“Mortgage Loan” means
any loan evidenced by a Mortgage Note and secured by a Mortgage and, if
applicable, a Security Agreement.

 

“Mortgage Note” means
a promissory note secured by one or more Mortgages and, if applicable, one or
more Security Agreements.

 

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

 

“Mortgage Pool” means
a pool of one or more Pledged Loans on the basis of which a Mortgage-backed
Security is to be issued.

 

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

 

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

 

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

 

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

 

“Overdraft Advance”
has the meaning set forth in Section 3.8.

 

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

 

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

 

Page
12-7

 

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

 

“Pledged Assets”
means, collectively, Pledged Loans and Pledged Securities. 

 

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

 

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

 

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

 

“Pledged Securities”
has the meaning set forth in Section 4.1(c).

 

“Prime Mortgage Loan”
has the meaning set forth in Exhibit H.

 

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

 

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

 

“Rating Agency” means
any nationally recognized statistical rating organization that in the ordinary
course of its business rates Mortgage-backed Securities.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Second Mortgage Loan”
means a Mortgage Loan secured by a Second Mortgage.

 

Page
12-8

 

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

 

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

 

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

 

“Servicing Portfolio
Report” has the meaning set forth in Section 7.3(a).

 

“Single Family Mortgage
Loan” means a Mortgage Loan secured by a Mortgage on improved real property
on which is located a 1-to-4 family residence.

 

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

 

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

 

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

 

“Subordinated Debt”
means (a) all indebtedness of Borrower for borrowed money that is effectively
subordinated in right of payment to all present and future Obligations either
(1) under a Subordination of Debt Agreement on the form prescribed by Lender or
(2) otherwise on terms acceptable to Lender, and (b) solely for purposes of
Section 8.5, all indebtedness of Borrower that is required to be
subordinated by Sections 5.1(b) and 7.11.

 

“Subprime Mortgage Loan”
has the meaning set forth in Exhibit H.

 

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

 

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

 

Page
12-9

 

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

 

“Title I Mortgage Loan”
means an FHA co-insured closed-end First Mortgage Loan or Second Mortgage Loan
that is underwritten in accordance with HUD underwriting standards for the
Title I Property Improvement Program set forth in, and that is reported for
insurance under, the Mortgage Insurance Program authorized and administered
under Title I of the National Housing Act of 1934, as amended, and the regulations
related to that statute.

 

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

 

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

 

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

 

“Warehousing Collateral
Value” means, as of any date of determination, (a) with respect to any
Eligible Loan, the lesser of (1) the amount of any Warehousing Advance made, or
that could be made, against such Eligible Loan under Exhibit H or (2) an
amount equal to the Advance Rate for the applicable type of Eligible Loan
multiplied by the Fair Market Value of such Eligible Loan; (b) if Eligible
Loans have been exchanged for Agency Securities, the lesser of (1) the amount
of any Warehousing Advances outstanding against the Eligible Loans backing the
Agency Securities or (2) an amount equal to the Advance Rates for the
applicable types of Eligible Loans backing the Agency Securities multiplied by
the Fair Market Value of the Agency Securities; and (c) with respect to cash,
the amount of the cash.

 

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

 

“Warehousing Commitment
Amount” means $100,000,000

 

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

 

“Warehousing Fee” has
the meaning set forth in Section 3.6.

 

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

 

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

 

“Weighted Average
Committed Purchase Price” means the weighted average of the Committed
Purchase Prices of the unfilled Purchase Commitments (expressed as a
percentage) for Mortgage Loans or Mortgage-backed Securities of the same type,
interest rate and term.

 

“Wet Settlement Advance”
means with respect to any Warehousing Advance, the time from the date the
Warehousing Advance is made until the date of Lender’s receipt of the
Collateral Documents required by Article 2 and the Exhibits and documents
referenced in that Article.

 

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

 

“Wire Fee” has the
meaning set forth in Section 3.6.

 

Page
12-10

 

12.2.                     Other Definitional Provisions; Terms of Construction

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

End of Article 12

 

Page
12-11

 

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

 

	
   

  	
   

  	
   

  	
  MORTGAGEIT,
  INC.,

  
	
  Closing
  Date:

  	
  August 21,
  2003

  	
   

  	
  a
  New York corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Larry P. Lewis

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
  Chief Operating Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  RESIDENTIAL
  FUNDING CORPORATION,

  
	
   

  	
   

  	
   

  	
  a
  Delaware Corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Jason Mitchell

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
  Director

  

 

Page 12-12

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