Document:

Exhibit
10.1

FOURTH AMENDED AND RESTATED 

WAREHOUSING CREDIT AND SECURITY AGREEMENT 

(SINGLE-FAMILY MORTGAGE LOANS)

BETWEEN

SIRVA
MORTGAGE, INC., an Ohio corporation
  

AND

WASHINGTON
MUTUAL BANK,

a federal association

 

Dated as of June 1, 2006

 

                                                                                                                         

TABLE OF CONTENTS

	
  

  	
   

  	
  Page

   

  
	
  1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
  1.1

  	
   

  	
  Defined Terms

  	
  1

  
	
   

  	
  1.2

  	
   

  	
  Other Definitional Provisions

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  THE CREDIT

  	
  13

  
	
   

  	
  2.1

  	
   

  	
  The Commitment

  	
  13

  
	
   

  	
  2.2

  	
   

  	
  Procedures for Obtaining Advances

  	
  15

  
	
   

  	
  2.3

  	
   

  	
  Note

  	
  16

  
	
   

  	
  2.4

  	
   

  	
  Interest

  	
  16

  
	
   

  	
  2.5

  	
   

  	
  Principal Payments

  	
  17

  
	
   

  	
  2.6

  	
   

  	
  Expiration of Commitment

  	
  18

  
	
   

  	
  2.7

  	
   

  	
  Method of Making Payments

  	
  19

  
	
   

  	
  2.8

  	
   

  	
  Miscellaneous Charges

  	
  19

  
	
   

  	
  2.9

  	
   

  	
  Bailee

  	
  19

  
	
   

  	
  2.10

  	
   

  	
  Restatement

  	
  19

  
	
   

  	
   

  	
   

  
	
  3.

  	
  COLLATERAL

  	
  20

  
	
   

  	
  3.1

  	
   

  	
  Grant of Security Interest

  	
  20

  
	
   

  	
  3.2

  	
   

  	
  Security Interest in Mortgage-backed Securities

  	
  21

  
	
   

  	
  3.3

  	
   

  	
  Delivery of Collateral Documents

  	
  22

  
	
   

  	
  3.4

  	
   

  	
  Mandatory Prepayment

  	
  22

  
	
   

  	
  3.5

  	
   

  	
  Right of Redemption from Pledge

  	
  22

  
	
   

  	
  3.6

  	
   

  	
  Collection and Servicing Rights

  	
  23

  
	
   

  	
  3.7

  	
   

  	
  Return or Release of Collateral at End of Commitment

  	
  23

  
	
   

  	
   

  	
   

  
	
  4.

  	
  CONDITIONS PRECEDENT

  	
  23

  
	
   

  	
  4.1

  	
   

  	
  Initial Advance

  	
  23

  
	
   

  	
  4.2

  	
   

  	
  Each Advance

  	
  24

  
	
   

  	
   

  	
   

  
	
  5.

  	
  REPRESENTATIONS AND WARRANTIES

  	
  25

  
	
   

  	
  5.1

  	
   

  	
  Organization; Good Standing; Subsidiaries

  	
  25

  
	
   

  	
  5.2

  	
   

  	
  Authorization and Enforceability

  	
  25

  
	
   

  	
  5.3

  	
   

  	
  Financial Condition

  	
  25

  
	
   

  	
  5.4

  	
   

  	
  Litigation

  	
  26

  
	
   

  	
  5.5

  	
   

  	
  Compliance with Laws

  	
  26

  
	
   

  	
  5.6

  	
   

  	
  Regulation U

  	
  26

  
	
   

  	
  5.7

  	
   

  	
  Investment Company Act

  	
  26

  
	
   

  	
  5.8

  	
   

  	
  Agreements

  	
  26

  
	
   

  	
  5.9

  	
   

  	
  Title to Properties

  	
  27

  
	
   

  	
  5.10

  	
   

  	
  ERISA

  	
  27

  
	
   

  	
  5.11

  	
   

  	
  Eligibility

  	
  27

  
	
   

  	
  5.12

  	
   

  	
  Special Representations Concerning Collateral

  	
  28

  

 

 i
 

                                                                                                                         

 

	
  

  	
  5.13

  	
   

  	
  RICO

  	
   

  	
  30

  
	
   

  	
  5.14

  	
   

  	
  Proper Names

  	
   

  	
  30

  
	
   

  	
  5.15

  	
   

  	
  Direct Benefit From Loans

  	
   

  	
  30

  
	
   

  	
  5.16

  	
   

  	
  Loan Documents Do Not Violate Other Documents

  	
   

  	
  30

  
	
   

  	
  5.17

  	
   

  	
  Consents Not Required

  	
   

  	
  30

  
	
   

  	
  5.18

  	
   

  	
  Material Fact Representations

  	
   

  	
  30

  
	
   

  	
  5.19

  	
   

  	
  Place of Business

  	
   

  	
  31

  
	
   

  	
  5.20

  	
   

  	
  Use of Proceeds; Business Loans

  	
   

  	
  31

  
	
   

  	
  5.21

  	
   

  	
  No Undisclosed Liabilities

  	
   

  	
  31

  
	
   

  	
  5.22

  	
   

  	
  Tax Returns and Payments

  	
   

  	
  31

  
	
   

  	
  5.23

  	
   

  	
  Subsidiaries

  	
   

  	
  31

  
	
   

  	
  5.24

  	
   

  	
  Holding Company

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  32

  
	
   

  	
  6.1

  	
   

  	
  Payment of Note

  	
   

  	
  32

  
	
   

  	
  6.2

  	
   

  	
  Financial Statements and Other Reports

  	
   

  	
  32

  
	
   

  	
  6.3

  	
   

  	
  Maintenance of Existence; Conduct of Business

  	
   

  	
  33

  
	
   

  	
  6.4

  	
   

  	
  Compliance with Applicable Laws

  	
   

  	
  33

  
	
   

  	
  6.5

  	
   

  	
  Inspection of Properties and Books

  	
   

  	
  33

  
	
   

  	
  6.6

  	
   

  	
  Notice

  	
   

  	
  34

  
	
   

  	
  6.7

  	
   

  	
  Payment of Debt, Taxes, etc

  	
   

  	
  34

  
	
   

  	
  6.8

  	
   

  	
  Insurance

  	
   

  	
  34

  
	
   

  	
  6.9

  	
   

  	
  Closing Instructions

  	
   

  	
  35

  
	
   

  	
  6.10

  	
   

  	
  Other Loan Obligations

  	
   

  	
  35

  
	
   

  	
  6.11

  	
   

  	
  Use of Proceeds of Advances

  	
   

  	
  35

  
	
   

  	
  6.12

  	
   

  	
  Special Affirmative Covenants Concerning Collateral

  	
   

  	
  35

  
	
   

  	
  6.13

  	
   

  	
  Cure of Defects in Loan Documents

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  NEGATIVE COVENANTS

  	
   

  	
  36

  
	
   

  	
  7.1

  	
   

  	
  Contingent Liabilities

  	
   

  	
  37

  
	
   

  	
  7.2

  	
   

  	
  Pledge of Servicing Contracts/Mortgage Loans

  	
   

  	
  37

  
	
   

  	
  7.3

  	
   

  	
  Merger; Acquisitions

  	
   

  	
  37

  
	
   

  	
  7.4

  	
   

  	
  Loss of Eligibility

  	
   

  	
  37

  
	
   

  	
  7.5

  	
   

  	
  Adjusted Tangible Net Worth

  	
   

  	
  37

  
	
   

  	
  7.6

  	
   

  	
  Debt to Adjusted Tangible Worth Ratio

  	
   

  	
  37

  
	
   

  	
  7.7

  	
   

  	
  Minimum Current Ratio

  	
   

  	
  37

  
	
   

  	
  7.8

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  37

  
	
   

  	
  7.9

  	
   

  	
  Limits on Corporate Distributions

  	
   

  	
  38

  
	
   

  	
  7.10

  	
   

  	
  RICO

  	
   

  	
  38

  
	
   

  	
  7.11

  	
   

  	
  No Loans or Investments Except Approved Investments

  	
   

  	
  38

  
	
   

  	
  7.12

  	
   

  	
  Charter Documents and Business Termination

  	
   

  	
  39

  
	
   

  	
  7.13

  	
   

  	
  Changes in Accounting Methods

  	
   

  	
  39

  
	
   

  	
  7.14

  	
   

  	
  No Sales, Leases or Dispositions of Property

  	
   

  	
  39

  
	
   

  	
  7.15

  	
   

  	
  Changes in Business or Assets

  	
   

  	
  39

  
	
   

  	
  7.16

  	
   

  	
  Changes in Office or Inventory Location

  	
   

  	
  40

  
	
   

  	
  7.17

  	
   

  	
  Special Negative Covenants Concerning Collateral

  	
   

  	
  40

  
	
   

  	
  7.18

  	
   

  	
  No Indebtedness

  	
   

  	
  40

  

 ii
 

                                                                                                                         

 

	
  

  	
  7.19

  	
   

  	
  Ownership of the Company

  	
   

  	
  41

  
	
   

  	
  7.20

  	
   

  	
  Payments of Subordinated Debt

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  DEFAULTS; REMEDIES

  	
   

  	
  41

  
	
   

  	
  8.1

  	
   

  	
  Events of Default

  	
   

  	
  41

  
	
   

  	
  8.2

  	
   

  	
  Remedies

  	
   

  	
  44

  
	
   

  	
  8.3

  	
   

  	
  Application of Proceeds

  	
   

  	
  47

  
	
   

  	
  8.4

  	
   

  	
  Lender Appointed Attorney-in-Fact

  	
   

  	
  47

  
	
   

  	
  8.5

  	
   

  	
  Right of Set-Off

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  NOTICES

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  REIMBURSEMENT OF EXPENSES; INDEMNITY

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  FINANCIAL INFORMATION

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  MISCELLANEOUS

  	
   

  	
  50

  
	
   

  	
  12.1

  	
   

  	
  Terms Binding Upon Successors; Survival of Representations

  	
   

  	
  50

  
	
   

  	
  12.2

  	
   

  	
  Assignment

  	
   

  	
  50

  
	
   

  	
  12.3

  	
   

  	
  Amendments

  	
   

  	
  50

  
	
   

  	
  12.4

  	
   

  	
  Governing Law

  	
   

  	
  50

  
	
   

  	
  12.5

  	
   

  	
  Participations

  	
   

  	
  50

  
	
   

  	
  12.6

  	
   

  	
  Relationship of the Parties

  	
   

  	
  51

  
	
   

  	
  12.7

  	
   

  	
  Severability

  	
   

  	
  51

  
	
   

  	
  12.8

  	
   

  	
  Usury

  	
   

  	
  51

  
	
   

  	
  12.9

  	
   

  	
  Consent to Jurisdiction

  	
   

  	
  52

  
	
   

  	
  12.10

  	
   

  	
  Arbitration

  	
   

  	
  52

  
	
   

  	
  12.11

  	
   

  	
  ADDITIONAL INDEMNITY

  	
   

  	
  53

  
	
   

  	
  12.12

  	
   

  	
  No Waivers Except in Writing

  	
   

  	
  54

  
	
   

  	
  12.13

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  54

  
	
   

  	
  12.14

  	
   

  	
  Multiple Counterparts

  	
   

  	
  55

  
	
   

  	
  12.15

  	
   

  	
  No Third Party Beneficiaries

  	
   

  	
  55

  
	
   

  	
  12.16

  	
   

  	
  RELEASE OF LENDER LIABILITY

  	
   

  	
  55

  
	
   

  	
  12.17

  	
   

  	
  Entire Agreement; Amendment

  	
   

  	
  55

  
	
   

  	
  12.18

  	
   

  	
  NO ORAL AGREEMENTS

  	
   

  	
  56

  

 

 iii

                                                                                                                         

FOURTH AMENDED AND
RESTATED

WAREHOUSING CREDIT AND SECURITY AGREEMENT

THIS FOURTH AMENDED AND RESTATED WAREHOUSING CREDIT
AND SECURITY AGREEMENT (this “Agreement”), is dated as of June 1, 2006, by and
between SIRVA MORTGAGE, INC., an Ohio corporation (the “Company”), having its
principal office at 6070 Parkland Boulevard, Mayfield Heights, Ohio 44124, and
WASHINGTON MUTUAL BANK, a federal association (the “Lender”), having its
principal office at 555 Dividend Drive, Coppell, Texas 75019.

WHEREAS, the Company, the Lender, and certain other
lenders, including National City Bank of Kentucky and Colonial Bank, N.A., are
parties to that certain Third Amended and Restated Warehousing Credit and
Security Agreement (as amended, the “Existing Agreement”) dated effective as of
September 30, 2002;

WHEREAS, the Company and the Lender desire to make
certain amendments to the Existing Agreement, including, without limitation,
removing as of the date hereof National City Bank of Kentucky and Colonial
Bank, N.A. as lenders thereunder;

NOW, THEREFORE, for good and valuable consideration,
the amount and sufficiency of which are hereby acknowledged by the parties
hereto, the parties hereto hereby agree that the Existing Agreement is amended
and restated in its entirety as follows:

1.             DEFINITIONS.

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

“Adjusted Tangible Net Worth” means with
respect to Company at any date, the Tangible Net Worth of Company at such date
plus one percent (1%) of the unpaid principal balances of Mortgage Loans at
such date for which the Company owns the Servicing Rights and that are serviced
by Company for Persons other than Company plus the unpaid principal amount of
all Subordinated Debt of the Company at such date, if any.

“Advance” means a disbursement by the Lender
under the Commitment pursuant to Article 2 of this Agreement.

“Advance Date” means, for any Advance, the date
it is disbursed.

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

“Affiliate” means and includes, with respect to
a specified Person, any other Person:

(a)           that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with the specified Person;

 1
 

                                                                                                                         

(b)           that
is a director, trustee, general partner or executive officer of the specified
Person or serves in a similar capacity in respect of the specified Person;

(c)           that,
directly or indirectly through one or more intermediaries, is the beneficial
owner of ten percent (10%) or more of any class of equity securities of the
specified Person; or

(d)           of
which the specified Person is directly or indirectly the owner of ten percent
(10%) or more of any class of equity securities.

Without limiting the generality of the foregoing, for
the purposes of this Agreement, SIRVA shall be deemed an Affiliate of the
Company.

“Aged Mortgage Loan” means a Mortgage Loan that
satisfies all of the requirements of an Eligible Mortgage Loan except it has
been included in Collateral for a period of more than ninety (90) days.

“Agreement” means this Fourth Amended and
Restated Warehousing Credit and Security Agreement (Single Family Mortgage
Loans), either as originally executed or as it may from time to time be
supplemented, modified or amended.

“Applicable Law” means the laws of the State of
Texas and the United States of America in effect from time to time and
applicable to the transactions between the Lender and the Company pursuant to
this Agreement and the other Loan Documents whichever permits the charging and
collection of the highest nonusurious rate of interest on such
transactions.  For purposes of
determining Texas law with respect to the highest nonusurious rate of interest,
the weekly ceiling permitted under Chapter 303 of the Texas Finance Code, as
amended, shall be controlling.

“Approved Custodian” means a Person acceptable
to the Lender from time to time in its sole discretion, who possesses Mortgage
Loans that secure Mortgaged-backed Securities.

“Bailee Letter” has the meaning set forth in
Section 3.3 hereof.

“Basic Rate” has the meaning set forth in
Section 2.4(a)(3) hereof.

“Business Day” means any day excluding
Saturday, Sunday and any day on which Lender is closed for business.

“Capitalized Lease” means any lease under which
rental payments are required to be capitalized on a balance sheet of the lessee
in accordance with GAAP.

“Capitalized Rentals” means the amount of
aggregate rentals due and to become due under all Capitalized Leases under
which the Company is a lessee that would be reflected as a liability on a
balance sheet of the Company.

 2
 

                                                                                                                         

“Change of Control” means

(a)           a
sale of substantially all of the Company’s assets to any Person or related
group of Persons; or

(b)           any
merger or consolidation of the Company with or into another Person with the
effect that SIRVA holds (directly or indirectly) less than one hundred percent
(100%) of the total voting power entitled to vote in election of directors,
managers, or trustees of the survivor of such merger or consolidation; or

(c)           the
occurrence of any event after which SIRVA no longer owns (directly or
indirectly) voting stock having one hundred percent (100%) of the total voting
power entitled to vote in the election of directors of the Company.

“Collateral” has the meaning set forth in
Section 3.1 hereof.

“Collateral Documents” means all of the
documents and other items described on Exhibit “C” hereto and required
to be delivered to the Lender in connection with an Advance.

“Collateral Value” means, at the time of any
determination,

(a)             with respect to
any Eligible Mortgage Loan, an amount equal to the least of (i) the actual
out-of-pocket cost of such Mortgage Loan to the Company, i.e., the net
amount actually funded against such Mortgage Loan or the net purchase price of
such Mortgage Loan, (ii) the Par Value thereof, (iii) the amount which the
Investor has committed to pay for such Mortgage Loan pursuant to a Purchase
Commitment, or (iv) the Fair Market Value of such Mortgage Loan;

(b)             with respect to
Mortgage-backed Securities, an amount equal to the least of (i) the sum of the
principal balances of the Mortgage Loans from which such Mortgage-backed
Securities were created, (ii) the amount which the Investor has committed to
pay for such Mortgage-backed Securities pursuant to a Purchase Commitment, or
(iii) the Fair Market Value of such Mortgage-backed Securities;

(c)             with respect to
any Aged Mortgage Loan, an amount equal to the least of (i) the Par Value
thereof or (ii) the market value of such Mortgage Loan as determined by Lender
in its sole discretion;

(d)             with respect to
Collateral that is not described in (a), (b), or (c) the Collateral Value shall
be equal to $0.00;

(e)             notwithstanding
the foregoing, with respect to Mortgage Loans that are not or cease to be
Eligible Mortgage Loans, the Collateral Value thereof shall equal $0.00.

“Combined Loan-to-Value Ratio” means, with
respect to any Mortgage Loan, the ratio expressed as a percentage that (x) the
sum of the unpaid principal balance of such

 3
 

                                                                                                                         

Mortgage Loan and if such
Mortgage Loan is a Second Mortgage Loan, the then current principal balance of
any related first priority mortgage, bears to (y) the value of the related
mortgaged property securing such Mortgage Loan at the time it was originated.

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

“Commitment Amount”
means, on any day, FORTY MILLION AND NO/100 DOLLARS ($40,000,000.00)

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

“Conventional Mortgage Loan” means a
Single-family Mortgage Loan, other than an FHA Loan or VA Loan, that complies
with all applicable requirements for purchase under the FNMA or FHLMC standard
form of conventional mortgage purchase contract.

“Credit A Mortgage Loan” means a FHA Loan, VA
Loan, Conventional Mortgage Loan, a Jumbo Loan, or a Super Jumbo Loan.

“Current Assets” means, with respect to any
Person, those assets set forth in the consolidated balance sheet of a Person
prepared in accordance with GAAP, as current assets, defined as those assets
that are now cash or will be by their terms or disposition be converted to cash
within one year of the date of calculation; provided, however
there shall be excluded from the assets of the Comany, any and all advances or
loans to Affiliates of the Company, accounts from Affiliates of the Company,
and investments in Affilates of the Company.

“Current Liabilities” means, with respect to
any Person, those liabilities set forth in the consolidated balance sheet of a
Person prepared in accordance with GAAP, as current liabilities, defined as
those liabilities due upon demand or within one year from the date of
calculation.

“Current Ratio” means, with respect to any
Person, the sum of the amounts set forth in the consolidated balance sheet of
the Person, prepared in accordance with GAAP, on the date of calculation as
Current Assets divided by the sum of the amounts set forth in such consolidated
balance sheet as Current Liabilities.

“Debt” means, with respect to any Person, at
any date (a) all indebtedness or other obligations of such Person which, in
accordance with GAAP, would be included in determining total liabilities as
shown on the liabilities side of a balance sheet of such Person at such date;
and (b) all indebtedness or other obligations of such Person for borrowed money
or for the deferred purchase price of property or services; provided that for
purposes of this Agreement, there shall be excluded from Debt at any date loan
loss reserves, deferred taxes arising from capitalized excess service fees, and
operating leases.  With respect to the
Company, the term “Debt” shall include all off balance sheet warehouse loan
obligations owed to any Person, including, without limitation, indebtedness or
other obligations of the Company under all repurchase arrangements.  For the purposes of calculating the Debt of
the Company, Subordinated Debt of the Company shall be excluded from Debt.

 4
 

                                                                                                                         

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

“Default Rate” has the meaning set forth in
Section 2.4(c) hereof.

“Electronic Request” has the meaning set forth
in Section 2.2(a) hereof.

“Eligible Mortgage Loan” means a Mortgage Loan,
that, at all times during the term of this Agreement, (a) is a Credit “A”
Mortgage Loan or a Relocation Mortgage Loan, or a HELOC Mortgage Loan; (b) is
evidenced by loan documents that are the standard forms approved by FNMA or
FHLMC or forms previously approved, in writing, by the Lender in its sole
discretion; (c) is made to a natural person or persons; (d) is validly pledged
to the Lender, subject to no other Liens; (e) is not in default in the payment
of principal and interest or in the performance of any obligation under the
Mortgage Note or the Mortgage evidencing or securing such Eligible Mortgage
Loan for a period of sixty (60) days or more; (f) has closed less than
twenty-five (25) days prior to the date of the Advance made in connection with
such Eligible Mortgage Loan; (g) has a Combined Loan-to-Value Ratio not greater
than one hundred percent (100%); and (h) is covered by a Purchase Commitment.

“Eligible Mortgage Pool” means a pool of
Mortgage Loans that will secure a “mortgage related security,” as defined in
Section 3(a)(41) of the Exchange Act administered or to be administered by a
trustee acceptable to Lender in its sole discretion where the Mortgage,
Mortgage Note and other documents relating to such Mortgage Loans are held or
to be held by an Approved Custodian.

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

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

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

“Fair Market Value” means, at any date, with
respect to:

(a)             any
Mortgage-backed Security, the bid price rate reflected on the Telerate screen
for a Mortgage-backed Security with the closest coupon rate that does not
exceed that of the Mortgage-backed Security in question multiplied by the
original face amount of such Mortgage-backed Security, and multiplied by the
current pool factor for such Mortgage-backed Security.

(b)             any Mortgage Loan,
the market price rate reflected on the Telerate screen for thirty (30) day
mandatory future delivery of such Mortgage Loan multiplied by the outstanding
principal balance thereof.

 5
 

                                                                                                                         

In the event Telerate does not publish or ceases to publish either the
market or bid price rate for any Mortgage Loan or Mortgage-backed Security
referenced in (a) and (b) above, the average bid price rate quoted in writing
to the Lender as of the date of determination by any two nationally recognized
dealers selected by Lender that are making a market in similar Mortgage Loans
or Mortgaged-backed Securities shall be utilized in lieu of the market or bid
price rate, as the case may be.

“FHA” means the Federal Housing Administration
and any successor thereto.

“FHA Loan” means a Single-family Mortgage Loan,
payment of which is partially or completely insured by the FHA under the
National Housing Act or Title V of the Housing Act of 1949 or with respect to
which there is a current, binding and enforceable commitment for such insurance
issued by the FHA.

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

“FHLMC Guide” means the Freddie Mac Sellers’
and Servicers’ Guide, dated September 17, 1984, applicable bulletins, the
applicable MIDANET Users Guide (or the MIDAPHONE User’s Guide) and any
particular purchase documents as defined in the Sellers’ and Servicers’ Guide,
as revised prior to the date hereof.

“FICA” means the Federal Insurance
Contributions Act or any successor statute.

“First Mortgage” means a mortgage or deed of
trust which constitutes a first Lien on improved property containing
one-to-four family residences.

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

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

“FNMA Guide” means the FNMA Servicing Guide
dated June 30, 1990, as revised prior to the date hereof.

“Funding Account” means the non-interest
bearing demand checking account established with, maintained by, and pledged to
the Lender into which shall be deposited the proceeds of Advances, the proceeds
from any sale of Collateral, and from which funds shall be disbursed for the
funding or acquisition of Mortgage Loans.

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

 6
 

                                                                                                                         

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

“GNMA Guide” means the GNMA I Mortgage-Backed
Securities Guide, Handbook GNMA 5500.1 REV. 
6, as revised prior to the date hereof, and as may be revised from time
to time, and GNMA II Mortgage-Backed Securities Guide Handbook GNMA 5500.2, as
revised prior to the date hereof.

“Hedging Arrangements” means, with respect to
the Company, any agreements or other arrangement (including, without
limitation, interest rate swap agreements, interest rate cap agreements and
forward sale agreements) entered into by the Company to protect itself against
changes in the value of any of the Collateral or changes in the interest rate
applicable to the Advances.

“HELOC Mortgage Loan” means a Single-family
Mortgage Loan that evidences an open-ended revolving line of credit.

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

“Indebtedness” means and includes, without
duplication, (1) all items which in accordance with GAAP, consistently applied,
would be included on the liability side of a balance sheet on the date as of
which Indebtedness is to be determined (excluding shareholders’ equity), (2)
Capitalized Rentals under any Capitalized Lease, (3) guaranties, endorsements
and other contingent obligations in respect of, or any obligations to purchase
or otherwise acquire, Indebtedness of others, and (4) indebtedness secured by
any mortgage, pledge, security interest or other Lien existing on any property
owned by the Person with respect to which indebtedness is being determined,
whether or not the indebtedness secured thereby shall have been assumed.

“Indemnified Liabilities” has the meaning set
forth in Article 10 hereof.

“Interim Date” has the meaning set forth in
Section 4.1(a)(3) hereof.

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

“Investor” means FNMA, FHLMC, GNMA, any of the
Persons or a financially responsible institution which is acceptable to Lender,
in its sole discretion; provided that at any time by written notice to Company
Lender may disapprove any Investor in its sole discretion, whether or not that
Person has been previously approved as an Investor by Lender.  Upon receipt of such notice, the Persons
named in Lender’s notice shall no longer be Investors from and after the date
of the receipt of such notice.

“Jumbo Loan” means a Single-family Mortgage
Loan whose original principal amount is more than $650,000.00 but not more than
$1,500,000.00.

 

 7

                                                                                                                         

“Loan” means the loan under this Agreement —
the sum of all Advances made pursuant to Article 2 of this Agreement — all of
which shall be treated and considered as one loan.

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

“LIBOR Rate” means a rate of interest equal to
the London Interbank Offered Rate for U. S. dollar deposits for an interest
period of one month as quoted or published by Telerate, Bloomberg or any other
rate quoting service, selected by Lender in its sole discretion for any day
during a given month.  In the event such
rate ceases to be published or quoted, LIBOR Rate shall mean a comparable rate
of interest reasonably selected by Lender. 
Lender’s determination of the LIBOR Rate shall be conclusive and binding
on the Company, absent manifest error.

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

“Loan Documents” means this Agreement, the
Note, and each other document, instrument or agreement executed by the Company
or any other Person in connection herewith or therewith, as any of the same may
be amended, restated, renewed or replaced from time to time.

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

“Market Value” means, with respect to any
Mortgage Loan, at any time, an amount determined by Lender, in its sole
discretion, to be the market value of such Mortgage Loan based upon (a)
information then available to Lender regarding quotes to dealers for the
purchase of mortgage loans similar to such Mortgage Loan or (b) sales prices
actually received by Company for Mortgage Loans sold by Company during the
immediately preceding thirty (30) day period similar to such Mortgage Loan.

“Maximum Rate” means the maximum lawful
non-usurious rate of interest (if any) that, under Applicable Law, Lender may
charge the Company on the Advances from time to time.  To the extent that the interest rate laws of
the State of Texas are applicable and unless changed in accordance with law,
the applicable rate ceiling shall be the weekly 
ceiling determined in accordance with Chapter 303 of the Texas Finance
Code, as amended.

“Monthly Average LIBOR Rate” means, with
respect to any calendar month, the average of all LIBOR Rates quoted during
that month.  In the event (i) the Note is
paid in full and the Commitment is terminated prior to a month end; or (ii) the
initial Advance hereunder occurs on a date other than the first day of that
month on which LIBOR Rates are quoted, the Monthly Average LIBOR Rate shall
mean, in the case of clause (i), the average of all LIBOR Rates quoted that
month up to and including the last Business Day

 8
 

                                                                                                                         

prior to such payment in
full; or, in the case of clause (ii), the average of all LIBOR Rates quoted on
the date of the initial Advance through the end of that month.

“Mortgage” means a First Mortgage or Second
Mortgage on improved real property containing one-to-four family residences.

“Mortgage-backed Securities” means FHLMC, GNMA
or FNMA securities that are backed by Mortgage Loans.

“Mortgage Loan” means any loan evidenced by a
Mortgage Note.  A Mortgage Loan, unless
otherwise expressly stated herein, means a Single-family Mortgage Loan.

“Mortgage Note” means a note secured by a
Mortgage.

“Mortgage Note Amount” means, as of the date of
determination, the then outstanding unpaid principal amount of a Mortgage Note.

“Mortgage Pool” means a pool of Mortgage Loans
that were warehoused with the Lender, on the basis of which there is to be
issued a Mortgage-backed Security.

“Mortgaged Property” means the property, real,
personal, tangible or intangible, securing a Mortgage Note.

“Multiemployer Plan” means a “multiemployer
plan” as defined in Section 4001(a)(3) of ERISA  that is maintained for employees of the
Company or a Subsidiary of the Company.

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

“Notices” has the meaning set forth in Article
9 hereof.

“Obligations” means any and all indebtedness,
obligations, and liabilities of the Company to the Lender (whether now existing
or hereafter arising, voluntary or involuntary, whether or not jointly owed
with others, direct or indirect, absolute or contingent, liquidated or
unliquidated, and whether or not from time to time decreased or extinguished
and later increased, created or incurred), arising out of or related to the
Loan Documents, or any of them, and any renewals, extensions, modifications,
enlargements, reinstatements or rearrangements thereof.

“Obligor” means the Company and any guarantor
or other person liable for payment or performance of the Obligations.

“Officer’s Certificate” means a certificate
executed on behalf of the Company by its chief financial officer or its
treasurer or by such other officer as may be designated herein, in
substantially the form of Exhibit “F”
hereto.

“Par Value” means, with respect to any Mortgage
Loan at the time of any determination, the unpaid principal balance of such
Mortgage Loan on such date.

 9
 

                                                                                                                         

“Participant” has the meaning set forth in
Section 12.5 hereof.

“Person” means and includes natural persons,
corporations, 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 federal and state governments and agencies or regulatory
authorities and political subdivisions thereof.

“Plans” has the meaning set forth in Section
5.10 hereof.

“Pledged Mortgages” has the meaning set forth
in Section 3.1(a) hereof.

“Pledged Securities” has the meaning set forth in
Section 3.1(b) hereof.

“PMI” means any private mortgage insurance
company which is acceptable to Lender, in its sole discretion; provided that at
any time by written notice to Company, Lender may disapprove any PMI because it
has determined in its sole discretion and for any reason that it is no longer
comfortable with that Person being a PMI, whether or not that Person has been
previously approved as a PMI by Lender. 
Upon receipt of such notice, the Persons named in Lender’s notice shall
no longer be PMIs from and after the date of receipt of such notice.

“Purchase Agreement”
means that certain Mortgage Loan Purchase and Sale Agreement dated as of May
27, 2005by and between the Company and the Lender, as the same may be amended,
restated, renewed, extended, or replaced from time to time.

“Purchase Commitment” means (a) a written
commitment, in form and substance satisfactory to the Lender, issued in favor
of the Company by an Investor pursuant to which that Investor commits to
purchase Mortgage Loans or Mortgage-backed Securities of a particular type and
yield owned by Company at a committed price, which commitment shall at all
times be subject to approval by Lender as to the terms and conditions or (b) a
written master commitment or any other written commitment on general terms and
conditions approved by the Lender, issued in favor of the Company by an
Investor pursuant to which Investor commits to purchase from Company from time
to time up to a specified dollar amount of Mortgage Loans without specification
of the yield or purchase price of each such Mortgage Loan.

“Redemption Amount” has the meaning set forth
in Section 3.5 hereof.

“Relocation Mortgage Loan” means a
Single-family Mortgage Loan owned by the Company that (a) is originated by
Sirva Relocation, Inc. under its home equity lending program; (b) secured by a
First Mortgage; and (c) is underwritten in accordance with standards approved
by Lender so that such Mortgage Loan is readily salable to an Investor.

“RICO” means the Racketeer Influenced and
Corrupt Organizations Act of 1970, as amended.

 10
 

                                                                                                                         

“Second Mortgage” means a mortgage or deed of
trust which constitutes a second Lien on improved property containing
one-to-four family residences.

“Second Mortgage Loan” means a Single-family
Mortgage Loan that is secured by a Second Mortgage that (a) has a Combined
Loan-to-Value Ratio not greater than one hundred percent (100%) (ratio to be
based upon all loans, including such Second Mortgage Loan, secured by the
Mortgaged Property securing such Second Mortgage Loan); (b) is underwritten in
accordance with standards approved by Lender so that such Mortgage Loan is
readily salable to an Investor; and (c) is covered by a Purchase Commitment.

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

“Servicing Rights” means (a) the rights,
obligations, remedies, powers, and responsibilities of a Person to  service Mortgage Loans owned by that Person,
including without limitation the right to collect principal and interest
payments, administer escrow accounts, and the right to own and possess loan
files and all records, documents, and data relating to such Mortgage Loans, and
(b) the obligations, rights, remedies, powers, privileges, benefits and
responsibilities of a Person to service Mortgage Notes for GNMA, FNMA or FHLMC
under and in accordance with the GNMA Guide, the FNMA Guide and the FHLMC
Guide, respectively or for any Investor under any Servicing Contract,
including, without limitation, (i) the right to receive servicing fees,
termination fees, net sales proceeds, late charges, insufficient fund fees, and
other ancillary income relating to the Mortgage Notes (ii) the right to hold
and administer the  escrow accounts, and
(iii) the right to all loan files, insurance files, tax records, collection
records, documents, ledgers, computer printouts, computer tapes and other
records, data or information relating to the Mortgage Notes, the escrow
accounts or the servicing or otherwise necessary or proper to perform the
obligations of servicer.

“Shipped Mortgage Loans” means a Mortgage Loan
for which Lender has shipped the related Collateral Documents to an Investor
for purchase by such Investor pursuant to a Purchase Commitment.  A Mortgage Loan shall be classified as a
Shipped Mortgage Loan for the period beginning on the date the Lender ships the
related Collateral Documents to an Investor and ending on the earliest to occur
of (a) the date the Lender receives the proceeds of such Mortgage Loan from the
Investor, (b) the date the Lender receives the related Collateral Documents
from the Investor and (c) thirty (30) days from the date Lender shipped the
related Collateral Documents to the Investor.

“Single-family Mortgage Loan” means a Mortgage
Loan secured by a Mortgage covering improved real property containing one to
four family residences.

“SIRVA” means SIRVA, Inc., a Delaware
corporation.

“Statement Date” has the meaning set forth in
Section 4.1(a)(3) hereof.

“Subordinated Debt” means, with respect to any
Person, all Indebtedness of such Person, for borrowed money, which is, by its
terms (which terms shall have been

 11
 

                                                                                                                         

approved by the Lender)
or by the terms of a subordination agreement, in form and substance
satisfactory to the Lender, effectively subordinated in right of payment to all
other present and future obligations and all indebtedness of such Person, of
every kind and character, owed to the Lender.

“Super Jumbo Loan” means a Single-family
Mortgage Loan whose original principal amount is more than $1,500,000.00;
provided, however, if such Mortgage Loan will be included in Collateral if and only if Lender has approved
such Mortgage Loan prior to its pledge.

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

“Tangible Net Worth” means, with respect to any
Person at any date, the sum of the total shareholders’ equity in such Person
(including capital stock, additional paid-in capital, and retained earnings,
but excluding treasury stock, if any), on a consolidated basis; less the
aggregate book value of all intangible assets of such Person (as determined in
accordance with GAAP), including without limitation, goodwill, trademarks,
trade names, service marks, copyrights, patents, licenses, franchises, and
Servicing Rights, each to be determined in accordance with GAAP consistent with
those applied in the preparation of the financial statements referred to in
Section 5.3 hereof; provided that, for purposes of this Agreement, there shall
be excluded from total assets, advances or loans to shareholders, officers or
Affiliates, investments in Affiliates, assets pledged to secure any liabilities
not included in the Debt of such Person and those other assets which would be
deemed by HUD to be non-acceptable in calculating adjusted net worth in
accordance with its requirements in the Audit Guide for Audit of Approved
Non-Supervised Mortgagees”, as in effect as of such date.  For the purposes of calculating the Tangible
Net Worth of such Person, Subordinated Debt of such Person shall be excluded
from the liabilities of such Person.

“Termination Date” means June 1, 2007, or such
earlier date upon which Lender’ obligation to fund shall be terminated pursuant
to the terms of this Agreement.

“Texas Finance Code” is defined in the
definition of “Applicable Law.”

“Tribunal” means any court or governmental
department, commission, board, bureau, agency, or instrumentality of any state,
commonwealth, nation, territory, possession, county, parish, or municipality,
whether now or hereafter constituted and/or existing.

“Unit Collateral Value” means, at the time of
any determination, (a) with respect to any Eligible Mortgage Loan that is
not a  Relocation Mortgage Loan, HELOC
Mortgage Loan, or an Aged Mortgage Loan, an amount equal to ninety-eight
percent (98%) of the Collateral Value of such Mortgage Loan as of such date;
(b) with respect to any Eligible Mortgage Loan that is a HELOC Mortgage
Loan but not an Aged Mortgage Loan, an amount equal to ninety-six percent (96%)
of the Collateral Value of such Mortgage Loan as of such date; (c) with respect
to

 12
 

                                                                                                                         

any
Eligible Mortgage Loan that is a Relocation Mortgage Loan but not an Aged
Mortgage Loan, an amount equal to ninety percent (90%) of the Collateral Value
of such Mortgage Loan as of such date; (d)  with respect to each Aged
Mortgage Loan included in the Collateral (calculated from the date such
Mortgage Loan was originally pledged to Lender) for more than 91 days but not
in excess of 120 days, an amount equal to ninety percent (90%) of the
Collateral Value of such Mortgage Loan as of such date; (e) with respect
to each Aged Mortgage Loan included in the Collateral (calculated from the date
such Mortgage Loan was originally pledged to Lender) for more than 121 days but
not in excess of 150 days, an amount equal to eighty percent (80%) of the
Collateral Value of such Mortgage Loan as of such date; (f) with respect
to each Aged Mortgage Loan included in the Collateral (calculated from the date
such Mortgage Loan was originally pledged to Lender) for more than 151 days but
not in excess of 180 days, an amount equal to seventy percent (70%) of the
Collateral Value of such Mortgage Loan as of such date; (g) with respect
to each Aged Mortgage Loan included in the Collateral (calculated from the date
such Mortgage Loan was originally pledged to Lender) for more than 180 days,
the Unit Collateral Value of such Mortgage Loan shall be equal to zero, and
(i) with respect to any Mortgage Loan that is not an Eligible Mortgage
Loan, its Unit Collateral Value shall be zero.

“VA” means the Veterans Administration and any
successor thereto.

“VA Loan” means a Single-family Mortgage Loan,
payment of which is partially or completely guaranteed by the VA under the
Servicemen’s Readjustment Act of 1944 or Chapter 37 of Title 38 of the United
States Code or with respect to which there is a current binding and enforceable
commitment for such a guaranty issued by the VA or its delegated underwriter.

“Wet Settlement Advance” means a disbursement
by a Lender under the Commitment and pursuant to Section 2.2(a) of this
Agreement, in respect of the closing or settlement of a Single-family Mortgage
Loan, prior to delivery and examination of all Collateral Documents for such
Mortgage Loan.

1.2           Other
Definitional Provisions.

(a)           Accounting terms not otherwise
defined herein shall have the meanings given the terms under GAAP.

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

(c)           All references to time of day shall
mean the then applicable time in Houston, Texas, unless expressly provided to
the contrary.

2.             THE CREDIT.

2.1           The Commitment.

 

 13

                                                                                                                         

(a)           Subject to the terms and conditions
of this Agreement and provided no Default or Event of Default has occurred and
is continuing, the Lender agrees, from time to time during the period from the
date hereof to and including the Termination Date, to make Advances to the
Company, provided, however, the sum of the total aggregate principal amount
outstanding at any one time of all such Advances shall not exceed the
Commitment Amount. The obligation of the Lender to make Advances hereunder up
to but not exceeding the Commitment Amount is hereinafter referred to as the “Commitment”.  Within the Commitment, the Company may
borrow, repay and reborrow.  All Advances
under this Agreement shall constitute a single indebtedness, and all of the
Collateral shall be security for the Note and for the performance of all the
Obligations of the Company.

(b)           Advances shall be used by the Company
solely for the purpose of funding the acquisition or origination of Eligible
Mortgage Loans, as specified in the Advance Request, and none other, and shall
be made at the request of the Company in the manner hereinafter provided in
Section 2.2, against the pledge of such Mortgage Loans, and such other
collateral as is set forth in Section 3.1 hereof as Collateral therefor.  Advances shall also be subject to the
following restrictions:

(1)           No Advance shall be made against
Mortgage Loans which are not Eligible Mortgage Loans.

(2)           The aggregate amount of Wet
Settlement Advances outstanding at any one time shall not exceed an amount
equal to forty percent (40%) of the Commitment Amount at any time during the
first and last five business days of any calendar month or thirty percent (30%)
of the Commitment Amount at any other time during such calendar month..

(3)           The aggregate amount of Advances
against Aged Mortgage Loans outstanding at any one time shall not exceed TWO
MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00).

(4)           The aggregate amount of Advances
against HELOC Mortgage Loans outstanding at any one time shall not exceed TWO
MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00).

(5)           The aggregate amount of Advances
against all Jumbo Loans and Super Jumbo Loans outstanding at any one time shall
not exceed SEVEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($7,500,000.00);
provided, further however, that in no event shall the aggregate amount of
Advances against Super Jumbo Loans outstanding at any one time exceed FIVE
MILLION AND NO/100 DOLLARS ($5,000,000.00)..

(c)           No Advance against an Eligible
Mortgage Loan shall exceed the following amounts:  (i) with respect to a Credit ”A”
Mortgage Loan, an amount equal to ninety-eight percent (98%) of the
Collateral Value of such Mortgage Loan determined as of the date is pledged to
the Lender; (ii) with respect to a Relocation Mortgage Loan, an

 14
 

                                                                                                                         

amount equal
to ninety percent (90%) of the Collateral Value of such Mortgage Loan
determined as of the date is pledged to the Lender; and (iii)  with
respect to a HELOC Mortgage Loan, an amount equal to ninety-six percent (96%)
of the Collateral Value of such Mortgage Loan determined as of the date it is
pledged to the Lender.

2.2           Procedures for
Obtaining Advances.  The Company may
obtain an Advance hereunder subject to the following:

(a)           The Company may obtain an Advance
hereunder, subject to the satisfaction of the conditions set forth in
Sections 4.1 and 4.2 hereof, upon compliance with the procedures set forth
in this Section 2.2 and in Exhibit ”C”
attached hereto and made a part hereof. 
Requests for Advances shall be initiated by the Company by using the
electronic data transmission service provided by the Lender to transmit to the
Lender a request for Advance (“Electronic Request”), which shall include all
information required by Exhibit ”A”
through the Warehouse Management System software provided by the Lender and its
licensor, MBMS Incorporated. The Lender shall have the right, on not less than
three (3) Business Days’ prior notice to the Company, to modify the Advance
Request, Electronic Request, or any exhibits hereto to conform to current legal
requirements or Lender practices, and, as so modified, said Advance Request,
Electronic Request or exhibits shall be deemed a part hereof.  In consideration of the Lender permitting the
Company to make Electronic Requests for Advances utilizing the Warehouse
Management System software or Advance Requests by telecopy, the Company
covenants and agrees to assume liability for and to protect, indemnify and save
the Lender harmless from, any and all liabilities, obligations, damages, penalties,
claims, causes of action, costs, charges and expenses, including attorneys’
fees and expenses of employees, which may be imposed, incurred by or asserted
against the Lender by reason of any loss, damage or claim howsoever arising or
incurred because of, out of or in connection with (i) any action of the
Lender pursuant to Electronic Requests or Advance Requests by telecopy,
(ii) the breach of any provisions of this Agreement by the Company,
(iii) the transfer of funds pursuant to such Electronic Requests or
Advance Requests by telecopy, or (iv) the Lender’s honoring or failing to
honor any Electronic Request or Advance Request by telecopy for any reason or
no reason whatsoever. The Lender is entitled to rely upon and act upon
Electronic Requests or Advance Requests by telecopy, and the Company shall be
unconditionally and absolutely estopped from denying (x) the authenticity
and validity of any such transaction so acted upon by the Lender once the
Lender has advanced funds and has deposited or transferred such funds as
requested in any such Electronic Request or Advance Request by telecopy, and
(y) the Company’s liability and responsibility therefor.

(1)           In the case of any Wet Settlement
Advances, the Company shall follow the procedures and, at or prior to the
Lender’s making of such Wet Settlement Advance, shall deliver to the Lender or
its designee the documents set forth in Section II of Exhibit ”C” hereto.  In case of Collateral financed through a Wet
Settlement Advance, the Company shall cause all Collateral Documents to be
delivered to the Lender or its designee within seven (7) Business Days after
the date of the Wet Settlement Advance relating thereto.

 15
 

                                                                                                                         

(2)           Before funding, the Lender and its
designee shall have a reasonable time to examine such Advance Request and the
Collateral Documents to be delivered prior to such requested Advance, as set
forth in the applicable Exhibit hereto, and may reject such of them as do not
meet the requirements of this Agreement or of the related Purchase Commitment.  The Advance Request and the Collateral
Documents must be received by Lender no later than 2:00 p.m. Houston, Texas
time in order for funding to occur the same day provided that all conditions to
such Advance have been satisfied.

(b)           To make an Advance, the Lender shall
credit the Funding Account upon compliance by the Company with the terms of
this Agreement.

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

2.4           Interest.

(a)           (1)           Except
as provided in Section 2.4(c) below, the unpaid amount of each Advance
against Mortgage Loans that are not Relocation Mortgaged Loans or Aged Mortgage
Loans shall bear interest, from the date of such Advance until paid in full, at
a rate of interest equal to the lesser of (i) the Maximum Rate, or
(ii) a floating rate of interest which is equal to 125 basis points
(1.25%) per annum over the Monthly Average LIBOR Rate.

(2)           Except as provided in
Section 2.4(c) below, the unpaid amount of each Advance outstanding
against Relocation Mortgage Loans shall bear interest, from the date of such
Advance until paid in full, at a rate of interest equal to the lesser of
(i) the Maximum Rate or (ii) a floating rate of interest (“Basic Rate”)
which is equal to 250 basis points (2.50%) per annum over the Monthly Average
LIBOR Rate.

(3)           Except as provided in
Section 2.4(c) below, the unpaid amount of each Advance outstanding
against Aged Mortgage Loans shall bear interest, from the date such Mortgage
Loans become Aged Mortgage Loans until such Advance is paid in full, at a rate
of interest equal to the lesser of (i) the Maximum Rate or (ii) a
floating rate of interest (“Basic Rate”) which is equal to 250 basis points
(2.50%) per annum over the Monthly Average LIBOR Rate.

(b)           Interest shall be computed on the
basis of a 360-day year and applied to the actual number of days elapsed in
each interest calculation period and shall be payable monthly in arrears, on
the first day of each month, commencing with the first month following the date
of this Agreement, and continuing on the 1st day of each calendar month
thereafter until the Termination Date when all outstanding and unpaid Advances
plus all accrued and unpaid interest shall be due and payable.

 16
 

                                                                                                                         

 

(c)           Obligations not paid when due
(whether at stated maturity, upon acceleration following the occurrence of an
Event of Default or otherwise) shall bear interest, from the date due until
paid in full, at a rate of interest (“Default Rate”) at all times equal to the
lesser of (i) four percent (4%) per annum over the Basic Rate; or
(ii) the Maximum Rate, said interest to be payable on demand by Lender.

2.5           Principal
Payments.

(a)           The outstanding unpaid principal
amount of all Advances shall be payable in full upon Termination Date.

(b)           The Company shall have the right to
prepay the outstanding Advances in whole or in part, from time to time, without
premium or penalty.

(c)           The Company shall be obligated to pay
to the Lender, without the necessity of prior demand or notice from the Lender,
and the Company authorizes the Lender to charge the Funding Account or any
other accounts of the Company (excluding any monies held by Company in trust
for third parties) in Lender’s possession for the amount of any outstanding
Advance against a specific Mortgage Loan upon the earliest occurrence of any of
the following events:

(1)           The expiration of ninety (90) days
from the date of any Advance for any Mortgage Loan (excluding Aged Mortgage
Loans);

(2)           The expiration of thirty (30) days
from the date the Mortgage Loan was delivered to an Investor for examination
and purchase, without the purchase being made, or upon rejection of the
Mortgage Loan as unsatisfactory by an Investor and without such Mortgage Loan
being redelivered by such Investor to the Lender and continuing thereafter to
qualify as an Eligible Mortgage Loan hereunder;

(3)           The expiration of forty-five (45)
days from the date Mortgage Loan is delivered to the certificating custodian
acceptable to the Lender for the issuance of a Mortgage-backed Security;

(4)           The expiration of five (5) Business
Days from the date a Wet Settlement Advance was made without receipt of all
Collateral Documents relating to such Mortgage Loan, or such Collateral
Documents, upon examination by the Lender, are found not to be in compliance
with the requirements of this Agreement or the related Purchase Commitment;

(5)           The expiration of ten (10) calendar
days from the date a Collateral Document in connection with such Mortgage Loan
was delivered to the Company for correction or completion, without being
returned to the Lender, corrected or completed;

(6)           The Mortgage Loan is not or ceases to
be an Eligible Mortgage Loan;

 17
 

                                                                                                                         

 

(7)           The expiration of three (3) Business
Days after the date on which the related Purchase Commitment, if any, expires,
is terminated or otherwise canceled or no longer in full force and effect and
the specific Mortgage Loan was not delivered under the Purchase Commitment prior
to such termination, expiration or cancellation; and

(8)           Upon sale of the Mortgage Loan.

Upon receipt of such payment by the Lender, such
Mortgage Loans or Mortgage-backed Securities shall be considered to have been
redeemed from pledge, and the Collateral Documents relating thereto which have
not been delivered to the Investor or the pool custodian or pool trustee shall
be released by the Lender to the Company.

(d)           With respect to Aged Mortgage Loans,
the Company shall be obligated to pay to the Lender (and the Company authorizes
the Lender to charge the operating account or any other accounts of the Company
[excluding monies held by the Company in trust for third parties] in Lender’s
possession for the payment thereof) the principal payments in the amounts and
on the dates specified below:

(1)           On the date a Pledged Mortgage
becomes an Aged Mortgage Loan, a principal payment in an amount necessary to
reduce the outstanding unpaid Advances against such Aged Mortgage Loan to an
amount equal to ninety percent (90%) of the Collateral Value of such Aged
Mortgage Loan as of such date;

(2)           Thirty (30) days following the date a
Pledge Mortgage becomes an Aged Mortgage Loan, a principal payment in an amount
necessary to reduce the outstanding unpaid Advances against such Aged Mortgage
Loan to an amount equal to eighty percent (80%) of the Collateral Value of such
Aged Mortgage Loan as of such date;

(3)           Sixty (60) days following the date a
Pledge Mortgage becomes an Aged Mortgage Loan, a principal payment in an amount
necessary to reduce the outstanding unpaid Advances against such Aged Mortgage
Loan to an amount equal to seventy percent (70%) of the Collateral Value of
such Aged Mortgage Loan as of such date;

(4)           Ninety (90) days following the date a
Pledge Mortgage becomes an Aged Mortgage Loan, an amount equal to the balance
of the aggregate outstanding unpaid Advances against such Aged Mortgage Loan.

2.6           Expiration of
Commitment.  Unless extended or
terminated earlier as permitted hereunder, the Commitment shall each expire of
its own term, and without the necessity of action by the Lender, at the close
of business on  the Termination
Date.  However, the remainder of this
Agreement shall remain in full force and effect until all amounts due on the
Obligations have been paid in full.  The
Lender has not made, and do not hereby make, any commitment to renew, extend,
rearrange or otherwise refinance the outstanding and unpaid principal of the
Note or accrued interest thereon.  In the
event, however, the Lenders from time to time renew, extend, rearrange,
increase and/or otherwise refinance any portion or all of any Obligation and
any

 18
 

                                                                                                                         

accrued
interest thereon at any time, such refinancing shall be evidenced by
appropriate promissory notes in form and substance satisfactory to the Lender
and, unless otherwise noted or modified at such time or times by the terms of
such promissory note or any agreements executed in connection therewith, any
such promissory notes and refinancing evidenced thereby shall be governed in
all respects by the terms of this Agreement.

2.7           Method of Making
Payments.  Except as otherwise
specifically provided herein, all payments hereunder shall be made to the
Lender not later than the close of business (Houston time) on the date when due
unless such date is a non-Business Day, in which case, such payment shall be
due on the first Business Day thereafter, and shall be made in lawful money of
the United States of America in immediately available funds.

2.8           Miscellaneous
Charges.  At the end of each month
during the term of this Agreement, the Company shall pay to the Lender in
arrears on or before five (5) days after the later of (a) the end of each
calendar month or (b) the Company’s receipt of the Lender’s bill for such
monthly period, a transaction fee equal to TWENTY AND NO/100 DOLLARS ($20.00)
for each Pledged Mortgage that held by Lender during such month and for which
Lender has not previously received a transaction fee, for the handling and
administration of Advances and Collateral. 
For the purposes hereof, Company shall, at its sole cost and expense,
pay all miscellaneous charges and expenses incurred by the Lender in connection
with the handling and administration of Advances and Collateral, including,
without limitation, all charges for security delivery fees, Lender’s standard
wiring fees, and charges for overnight delivery of Collateral to Investors.
Miscellaneous charges are due when incurred, but shall not be delinquent if
paid within ten (10) days after receipt of an invoice or an account analysis
statement from the Lender.

2.9           Bailee.  Lender appoints Company — and Company shall
act — as its bailee to (i) hold in trust for Lender (A) the original
recorded copy of the mortgage, deed of trust, or trust deed securing each
Pledged Mortgage, (B) a mortgagee policy of title insurance (or binding
unexpired and unconditional commitment to issue such insurance if the policy
has not yet been delivered to Company) insuring the Company’s perfected, first
priority Lien (or second priority with respect to Second Mortgage Loans)
created by that mortgage, deed of trust, or trust deed, (C) the original
insurance policies for each Pledged Mortgage, and (D) all other original
documents relating to each Pledged Mortgage, including any promissory notes,
any other loan documents, and supporting documentation, surveys, settlement
statements, closing instructions, and Mortgage-backed Securities, and
(ii) deliver to Lender any of the foregoing items as soon as reasonably
practicable upon Lender’s request.

2.10         Restatement.  This Agreement amends and restates the
Existing Agreement in its entirety.  All
outstanding and unpaid advances under the Existing Agreement and all other sums
owing under the Existing Agreement shall continue and be deemed Advances due
and owing hereunder and evidenced by the Note. 
The Note is given in renewal and extension, but not extinguishment of
the outstanding unpaid balances of those certain promissory notes (“Prior Notes”)
executed by the Company and delivered to lenders as more particularly described
in the Note.  All liens, security
interests, and assignments securing the obligations of the Company under the
Prior Notes and the Existing Agreement are hereby ratified, confirmed, and
brought forward as security for the Obligations, in addition to and cumulative
of all other security.

 

 19

3.             COLLATERAL.

3.1           Grant of Security
Interest.  As security for the
payment of the Note and for the payment and performance of all of the Company’s
Obligations hereunder, the Company hereby assigns and transfers all of its
rights, titles and interests in and to and grants a security interest to the
Lender in the following described property, whether now owned or hereafter
acquired (the “Collateral”):

(a)           All Mortgage Loans which from time to
time are delivered or caused to be delivered to the Lender or its designee,
come into the possession, custody or control of the Lender for the purpose of
assignment or pledge or in respect of which an Advance has been made by the
Lender hereunder, including all Mortgage Notes and Mortgages evidencing such
Mortgage Loans and all Mortgage Loans in respect of which Wet Settlement
Advances have been made by the Lender (the “Pledged Mortgages”).

(b)           All Mortgage-backed Securities which
are from time to time delivered or caused to be delivered to, or are otherwise
in the possession of the Lender, or its designee, its agent, bailee or
custodian as assignee or pledged to the Lender, or for such purpose are
registered by book-entry in the name of the Lender (the “Pledged Securities”).

(c)           All private mortgage insurance and
all commitments issued by the FHA or VA to insure or guarantee any Mortgage
Loans included in the Pledged Mortgages; all guaranties related to Pledged
Securities; all Purchase Commitments held by the Company covering the Pledged
Mortgages or the Pledged Securities and all proceeds resulting from the sale
thereof to Investors pursuant thereto; all personal property, contract rights,
servicing and servicing fees and income or other proceeds, amounts and payments
payable to the Company as compensation or reimbursement, accounts and general
intangibles of whatsoever kind relating to the Pledged Mortgages, the Pledged
Securities, and all other documents or instruments relating to the Pledged
Mortgages, including, without limitation, any interest of the Company 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 the Pledged
Mortgages.

(d)           All right, title and interest of the
Company in and to 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 foregoing Collateral) and other information and data of the
Company relating to the foregoing Collateral.

(e)           All now existing or hereafter
acquired cash delivered to or otherwise in the possession of the Lender or any
Lender or its agent, bailee or custodian or designated on the books and records
of the Company as assigned and pledged to the Lender.

 20
 

(f)            All money, property, deposit
accounts, accounts, securities, documents, chattel paper, claims, demands,
instruments, items or deposits of the Company now held or hereafter coming
within Lender’s custody or control, including, without limitation, the Funding
Account.

(g)           All Accounts, Chattel Paper,
Instruments, General Intangibles, Certificated Securities, Uncertificated
Securities, and Investment Property, as those terms are defined in the Texas
Uniform Commercial Code, arising from or relating to any of the foregoing
Collateral.

(h)           All cash and non-cash proceeds of the
foregoing Collateral, including all dividends, distributions and other rights
in connection with, and all additions to, modifications of and replacements
for, the foregoing Collateral, and all products and proceeds of the foregoing
Collateral, together with whatever is receivable or received when the foregoing
Collateral or proceeds thereof are sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, including,
without limitation, all rights to payment with respect to any cause of action
affecting or relating to the foregoing Collateral or proceeds thereof.

3.2           Security Interest
in Mortgage-backed Securities.  The
Company’s ability to convert Mortgage Loans that are within the Collateral to
Mortgage-backed Securities  are subject
to the following conditions:

(a)           Pledged Mortgages that are to be
transferred to a pool custodian in connection with the issuance of
Mortgage-backed Securities, shall be released from the security interest
granted hereunder only against payment to the Lender of the amount due in
connection with such Pledged Mortgages as determined in accordance with Section
3.5 of this Agreement or against the issuance of such Mortgage-backed
Securities and the continuation of the Lender’s first priority, perfected
security interest in such Mortgage-backed Securities and the proceeds thereof
until payment due the Lender, in respect of said Pledged Mortgages is made to
the Lender.

(b)           In the case of Mortgage-backed
Securities created from Pledged Mortgages, the Lender shall have the exclusive
right to the possession of the Mortgage-backed Securities or, if the
Mortgage-backed Securities are not to be issued in certificated form, shall
have the right to have the book entries for the Mortgage-backed Securities
issued in the Lender’s name or the name or names of its designees.  Lender shall cause delivery of the
Mortgage-backed Securities to be made to the Investor or the book entries
registered in the name of the Investor or the Investor’s designee only against
payment therefor.  The Company
acknowledges that the Lender may enter into one or more standing arrangements
with other financial institutions for the issuance of Mortgage-backed
Securities in book entry form in the name of such other financial institutions,
as agent for the Lender, and the Company agrees upon request of the Lender, to
execute and deliver to such other financial institutions the Company’s written
concurrence in any such standing arrangements.

 21
 

3.3           Delivery of
Collateral Documents.  The Lender or
its designee exclusively shall deliver Pledged Mortgages or Pledged Securities
to (a) an Investor that has issued a Purchase Commitment with respect thereto
for its examination and purchase, or (b) an Approved Custodian for purposes of examination
or delivery in connection with the issuance of Mortgage-backed Securities.  In such cases where the Lender must deliver
documents to an Investor or Approved Custodian, the Lender must receive signed
shipping instructions (in the form of Exhibit ”D”
attached hereto), no later than 2:00 p.m. Houston, Texas time one (1) Business
Day prior to the expiration of the appended Purchase Commitment, in addition to
any other documents listed in Section III of Exhibit “C” in respect of the issuance of Mortgage-backed
Securities.  If shipping instructions are
received by Lender before 2:00 p.m. Houston, Texas time of any Business Day,
Lender will ship the documents together with the Bailee Letter (in form of Exhibit “K”) to the Investor or
Approved Custodian on the same Business Day, otherwise Lender will ship the
documents the next Business Day following receipt of shipping
instructions.  In any case in which an
Advance has been made hereunder against Pledged Mortgages, based on the
existence of a Purchase Commitment covering such Pledged Mortgages, the Company
agrees that such Pledged Mortgages will not be placed in any mortgage pool
other than an Eligible Mortgage Pool, unless such Pledged Mortgages have been
redeemed from pledge as permitted hereunder or other arrangements, satisfactory
to the Lender in its sole discretion, have been made for the redemption of such
Pledged Mortgages from pledge hereunder. 
The Lender may deliver any document relating to the Collateral to the
Company for correction or completion against a trust receipt in the form of Exhibit “E” attached hereto executed by
the Company.  The Company hereby
represents and warrants to and agrees with the Lender that any request by the
Company for release of the Collateral consisting of or relating to Mortgage
Loans to the Company shall be solely for the purposes of correcting clerical or
non-substantial  documentation problems
in preparation for returning such Collateral to the Lender for ultimate sale or
exchange and the aggregate Collateral Value of the Collateral released to the
Company pursuant to this Section 3.3 will not exceed FIVE  HUNDRED THOUSAND AND NO/100 DOLLARS
($500,000.00); the Company shall request such release in compliance with all of
the terms and conditions of such release set forth herein; and the Company will
return to the Lender such documentation released to the Company pursuant to
this Section 3.3 within ten (10) calendar days after such delivery.

3.4           Mandatory
Prepayment.  At any time that the
aggregate sum of the Unit Collateral Values of all Pledged Mortgages is less
than the aggregate amount of the Advances then outstanding hereunder, the
Lender shall request and the Company shall immediately after Notice by the
Lender repay the Advances in an amount sufficient to reduce the aggregate
balance thereof outstanding to an amount equal to or below the aggregate Unit
Collateral Values of all Pledged Mortgages. 
If at any time or from time to time any of the limitations of Section
2.1(b) hereof are exceeded, the Company shall immediately pay to the Lender the
amount of such excess for application to the principal balance of the Note.

3.5           Right of
Redemption from Pledge.  So long as
no Event of Default has occurred, the Company may redeem a Mortgage Loan or
Mortgage-backed Security, by notifying the Lender of its intention to redeem
such Mortgage Loan or Mortgage-backed Security, from pledge and by paying, or
causing an Investor to pay, to the Lender, for application to prepayment of the
principal balance of the Note as determined by the Lender in its reasonable
discretion, an amount 

 22
 

(the “Redemption
Amount”) equal to the aggregate amount of the outstanding, unpaid Advances made
with respect to or relating to such Mortgage Loan or Mortgage-backed Security.

3.6           Collection and
Servicing Rights.  So long as no
Event of Default shall have occurred, the Company shall have a revocable and
nontransferable license to service and receive and collect directly all sums
payable to the Company in respect of the Collateral other than proceeds of any
Purchase Commitment or proceeds of the sale of any Collateral.  Following the occurrence of any Event of
Default, the Lender or its designee may revoke such license by notice to the
Company (or its successor, trustee, or receiver) whereupon the Company’s rights
to so service the Collateral shall terminate. 
Lender or its designee shall thereafter be entitled to service and
receive and collect all sums payable to the Company in respect of the
Collateral, and in such case (a) the Lender or its designee in its
discretion may, in its own name or in the name of the Company or otherwise,
demand, sue for, collect or receive any money or property at any time payable
or receivable on account of or in exchange for any of the Collateral, but shall
be under no obligation to do so and (b) the Company shall, if the Lender
so requests, forthwith deliver the credit files and the servicing files for the
Collateral to the Lender or its designee and pay to the Lender, at its
principal office all amounts thereafter received by the Company upon or in
respect of any of the Collateral, advising the Lender as to the source of such
funds.

3.7           Return or Release
of Collateral at End of Commitment. 
If (a) the Commitment shall have expired or been terminated, and (b) no
Advances, interest or other Obligations evidenced by the Loan Documents or due
under this Agreement shall be outstanding and unpaid, the Lender shall deliver
or release all Collateral in its possession to the Company.  The receipt of the Company for any Collateral
released or delivered to the Company pursuant to any provision of this
Agreement shall be a complete and full acquittance for the Collateral so
returned, and the Lender shall thereafter be discharged from any liability or
responsibility therefor.

4.             CONDITIONS PRECEDENT.

4.1           Initial Advance.  The obligation of the Lender to make any
Advance under this Agreement is subject to the satisfaction, in the sole
discretion of the Lender, on or before the date thereof, of the following
conditions precedent:

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

(1)           The Loan Documents dated as of the
date hereof duly executed by the Company;

(2)           A certificate of corporate
resolutions by the corporate secretary of the Company in the form of Exhibit “J” attached hereto certifying
the resolutions authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents, and all other instruments or documents
to be delivered by the Company pursuant to this Agreement;

(3)           Financial statements of the Company
(and its Subsidiaries, on a consolidated basis) containing a balance sheet as
of December 31, 2005 (the “Statement Date”) and related statements of income,
changes in stockholders’ 

 23
 

equity and cash flows for the period ended on
the Statement Date and a balance sheet as of March 31, 2006 (“Interim Date”)
and related statement of income for the period ended on the Interim Date, all
prepared in accordance with GAAP applied on a basis consistent with prior
periods and in the case of the statements as of the Statement Date, audited by
independent certified public accountants of recognized standing acceptable to
the Lender, together with an Officer Certificate prepared as of the Interim
Date and executed by the president or chief financial officer of the Company;
and

(4)           A favorable written opinion of
counsel to the Company, dated as of June 1, 2006 in form and substance
satisfactory to the Lender, addressed to the Lender.

4.2           Each Advance.  The obligation of the Lender to make any
Advance under this Agreement is subject to the satisfaction, in the sole
discretion of the Lender, as of the date of each such Advance, of the following
additional conditions precedent:

(a)           In connection with an Advance, the
Company shall have delivered to the Lender the Advance Request or the
Electronic Request, Collateral Documents, and documents required under and
shall have satisfied the procedures set forth in Section 2.2 and Exhibit “C”.  All items delivered to the Lender or its
designee shall be satisfactory to the Lender in form and content, and the
Lender may reject such of them as do not meet the requirements of this
Agreement or of the related Purchase Commitment.

(b)           The representations and warranties of
the Company contained in Article 5 hereof shall be accurate and complete in all
material respects as if made on and as of the date of each Advance.

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

(d)           The Company shall not have incurred
any material liabilities, direct or contingent, except as approved by Lender in
writing or permitted by Section 7.18, since the dates of the Company’s
most recent financial statements theretofore delivered to the Lender.

(e)           Such additional documents,
instruments, and information as Lender or its legal counsel may reasonably
require, including, without limitation, all documents, instruments and
information required pursuant to Section 4.1 of this Agreement.

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

 24
 

5.             REPRESENTATIONS AND
WARRANTIES.

The Company hereby represents and warrants to the
Lender, as of the date of this Agreement and (unless otherwise notified in
writing by the Company and Lender, in its sole discretion, approves in writing)
as of the date of each Advance Request and the making of each Advance, that:

5.1           Organization;
Good Standing; Subsidiaries.  The
Company and each Subsidiary of the Company is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, has the full legal power and authority to own its property and
to carry on its business as currently conducted and is duly qualified as a
foreign corporation to do business and is in good standing in each jurisdiction
in which the transaction of its business makes such qualification necessary,
except in jurisdictions, if any, where a failure to be in good standing has no
material adverse effect on the business, operations, assets or financial
condition of the Company or any such Subsidiary.  For the purposes hereof, good standing shall
include qualification for any and all licenses and payment of any and all taxes
required in the jurisdiction of its incorporation and in each jurisdiction in
which the Company transacts business. 
The Company has no Subsidiaries except as set forth on Exhibit “G” hereto.  Exhibit ”G”
sets forth with respect to each such Subsidiary, its name, address, place of
incorporation, each state in which it is qualified as a foreign corporation,
and the percentage ownership of the Company in such Subsidiary.

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

5.3           Financial
Condition.  The balance sheet of the
Company provided to Lender pursuant to Section 4.1(a)(3) hereof (and if
applicable, its Subsidiaries, on a consolidating and consolidated basis) as at
the Statement Date, and the related statements of income, changes in
stockholders’ equity, and cash flows for the fiscal year ended on the Statement
Date, heretofore furnished to the Lender, fairly present the financial
condition of the Company and its Subsidiaries as at the Statement Date and the
Interim Date and the results of its and their 

 25
 

operations for the fiscal
period ended on the Statement Date and the Interim Date.  The Company had, on the Statement Date and
the Interim 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, said balance sheet and related statements, and at the present time there
are no material unrealized or anticipated losses from any loans, advances or
other commitments of the Company except as heretofore disclosed to the Lender
in writing.  Said financial statements
were prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved.  Since the Interim
Date, there has been no material adverse change in the business, operations,
assets or financial condition of the Company or its Subsidiaries, nor is the
Company aware of any state of facts particular to the Company which (with or
without notice or lapse of time or both) would or could result in any such
material adverse change.

5.4           Litigation.  Except as disclosed on Exhibit “H”,
there are no actions, claims, suits or proceedings pending, or to the knowledge
of the Company, threatened or reasonably anticipated against or affecting the
Company  or any Subsidiary of the Company
in any court or before any arbitrator or before any government commission,
board, bureau or other administrative agency which, if adversely determined, may
reasonably be expected to result in any material and adverse change in the
business, operations, assets or financial condition of the Company or any of
Company’s Subsidiaries, as a whole.

5.5           Compliance
with Laws.  To the knowledge of
Company, neither the Company  nor any
Subsidiary of the Company 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 which might have a material adverse
effect on the business, operations, assets or financial condition of the
Company  or any of Company’s
Subsidiaries, as a whole.

5.6           Regulation
U.  The Company 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 Advances made hereunder will be used to purchase or carry
any Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock.

5.7           Investment
Company Act.  Neither the Company nor
any of its Subsidiaries is  an “investment
company” or controlled by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

5.8           Agreements.  Neither the Company nor any Subsidiary of the
Company 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 5.3 hereof.  The
Company and each Subsidiary of the Company are not in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement, instrument, or indenture which default
could have a material adverse effect on the business, operations, properties or
financial condition of the Company as a whole. 
No holder of any Indebtedness of the Company or of any of its Subsidiaries
has given notice of any alleged default thereunder or, if given, the same has 

 26
 

been cured or will be
cured by Company within the cure period provided therein, and no liquidation or
dissolution of the Company or any of its Subsidiaries  and no receivership, insolvency, bankruptcy,
reorganization or other similar proceedings relative to the Company or any of
its Subsidiaries or any of their respective properties is pending, or to the
knowledge of the Company, threatened.

5.9           Title to
Properties.  The Company and each
Subsidiary of the Company has good, valid, insurable (in the case of real
property) and marketable title to all of its properties and assets (whether
real or personal, tangible or intangible) reflected on the financial statements
described in Section 5.3 hereof, and all such properties and assets are free
and clear of all Liens except as disclosed in such financial statements (other
than Collateral which shall be free and clear of all Liens other than those
held by Lender), as approved by Lender in writing, or permitted pursuant to this
Agreement.

5.10         ERISA.  All plans (“Plans”) of a type described in
Section 3(3) of ERISA in respect of which the Company  or any Subsidiary of the Company is an “Employer,”
as defined in Section 3(5) of ERISA, are in substantial compliance with ERISA,
and none of such Plans is insolvent or in reorganization, has an accumulated or
waived funding deficiency within the meaning of Section 412 of the Internal
Revenue Code, and neither the Company nor any Subsidiary of the Company has
incurred any material liability (including any material contingent liability)
to or on account of any such Plan pursuant to Sections 4062, 4063, 4064, 4201
or 4204 of ERISA; and no proceedings have been instituted to terminate any such
Plan, and no condition exists which presents a material risk to the Company or
a Subsidiary of the Company of incurring a liability to or on account of any
such Plan pursuant to any of the foregoing Sections of ERISA.  No Plan or trust forming a part thereof has
been terminated since December 1, 1974.

5.11         Eligibility.  The Company has all requisite corporate power
and authority and all necessary licenses, permits, franchises and other
authorizations to own and operate its property and to carry on its business as
now conducted.  If approved now or hereafter
as a lender or seller/servicer for any one or more of the governmental agencies
as set forth below, the Company will remain at all times approved and qualified
and in good standing and meet all requirements applicable to such status:

(a)           FNMA approved seller/servicer of
Mortgage Loans, eligible to originate, purchase, hold, sell, and service
Mortgage Loans to be sold to FNMA.

(b)           FHLMC approved seller/servicer of
Mortgage Loans, eligible to originate, purchase, hold, sell, and service
Mortgage Loans to be sold to FHLMC.

(c)           GNMA approved seller/servicer of
Mortgage Loans, eligible to originate, purchase, hold, sell, and service
Mortgage Loans to be sold to GNMA.

(d)           HUD approved lender, eligible to
originate, purchase, hold, sell and service FHA-insured Mortgage Loans.

(e)           VA lender in good standing under the
VA loan guarantee program eligible to originate, purchase, hold, sell, and
service VA-guaranteed Mortgage Loans.

 27

                                                                                                                         

(f)            A lender in good standing with any
Investor.

5.12         Special
Representations Concerning Collateral. 
The Company hereby represents and warrants to the Lender, as of the date
of this Agreement and as of the date of each Advance, that:

(a)           The Company is the legal and
equitable owner and holder, free and clear of all Liens (other than Liens
granted hereunder), of the Pledged Mortgages and the Pledged Securities.  All Pledged Mortgages, Pledged Securities,
and Purchase Commitments have been duly authorized and validly granted or
issued to the Company, and all of the foregoing items of Collateral comply with
all of the requirements of this Agreement, and have been validly pledged or
assigned to the Lender, subject to no other Liens.

(b)           The Company has, and will continue to
have, the full right, power and authority to pledge the Collateral pledged and
to be pledged by it hereunder.

(c)           Any Mortgage Loan and related
documents included in the Pledged Mortgages (1) has been duly executed and
delivered by the parties thereto at a closing held not more than twenty-five
(25) days prior to such date; (2) has been made in compliance with all
requirements of the Real Estate Settlement Procedures Act, Equal Credit
Opportunity Act, the federal Truth-In-Lending Act, the Financial Institutions
Reform, Recovery and Enforcement Act, and all other applicable laws and
regulations; (3) is valid and enforceable in accordance with its terms, without
defense or offset; (4) has not been modified or amended except in writing,
which writing is part of the Collateral Documents, nor any requirements thereof
waived; and (5) complies with the terms of this Agreement and, if applicable,
with the related Purchase Commitment held by the Company.  Each Mortgage Loan has been fully advanced in
the face amount thereof and each First Mortgage creates a Lien on the premises
described therein; each Second Mortgage is a second Lien on the premises
described therein, and each Mortgage Loan has or will have a title insurance
policy, in American Land Title Association form or equivalent thereof, from a
recognized title insurance company, insuring the priority of the Lien of the
Mortgage and meeting the usual requirements of Investor purchasing such
Mortgage Loans.

(d)           No monetary default, nor, to the
knowledge of the Company, any event which, with notice or lapse of time or
both, would become a default, has occurred and is continuing under any Mortgage
Loan included in the Pledged Mortgages; provided, however, that, with respect
to Pledged Mortgages which have already been pledged as Collateral hereunder,
if any such default or event has occurred, the Company will promptly notify the
Lender and the same shall not have continued for more than sixty (60) days.

(e)           The Company has complied with all
laws, rules and regulations in respect of the FHA insurance or VA guarantee of
each Mortgage Loan included in the Pledged Mortgages designated by the Company
as an FHA insured or VA guaranteed Mortgage Loans, and such insurance or
guarantee is in full force and effect. 
All such FHA insured

 28
 

                                                                                                                         

and VA
guaranteed Mortgage Loans comply in all respects with all applicable
requirements for purchase under the FNMA standard form of selling contract for
FHA insured and VA guaranteed loans and any supplement thereto then in effect.

(f)            All fire and casualty policies
covering Mortgaged Property encumbered by a Pledged Mortgage (1) name the
Company 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 from time to time available, as well as insurance against flood
hazards if the same is required by FHA or VA.

(g)           Pledged Mortgages encumbering
Mortgaged Property located in a special flood hazard area designated as such by
the Secretary of HUD are and shall continue to be covered by special flood
insurance under the National Flood Insurance Program.

(h)           Each FHA insured Mortgage Loan
pledged hereunder meets all applicable governmental requirements for such
insurance.  Each Mortgage Loan, against
which an Advance is made on the basis of a Purchase Commitment meets all
requirements of such Purchase Commitment. 
The Company shall assure that Mortgage Loans pledged pursuant to this
Agreement and intended to be used in the formation of Mortgage-backed
Securities shall comply, or prior to the formation of any such Mortgage-backed
Security, shall comply with the requirements of the governmental
instrumentality, department or agency guaranteeing such Mortgage-backed
Security.

(i)            For Pledged Mortgages which will be
used to secure GNMA Mortgage-backed Securities, the Company has received from
GNMA a Confirmation Notice or Confirmation Notices for Request Additional
Commitment Authority and for Request Pool Numbers, and there remains available
thereunder a commitment on the part of GNMA sufficient to permit the issuance
of GNMA Mortgage-backed Securities in an amount at least equal to the amount of
such Pledged Mortgages designated by the Company as the Mortgage Loans to be
used to  secure such GNMA Mortgage-backed
Securities; each such Confirmation Notice is in full force and effect; each of
such Pledged Mortgages has been assigned by the Company to one of such Pool
Numbers and a portion of the available GNMA Commitment has been allocated
thereto by the Company, in an amount at least equal to the principal amount of
each Mortgage Note  secured by such Pledged
Mortgages; and each such assignment and allocation has been reflected in the
books and records of the Company.

(j)            Each Pledged Mortgage in excess of
TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($250,000.00) is supported by an
appraisal that meets the appraisal requirements of FNMA or FHLMC (in the case
of residential Mortgaged Property), or the Office of Thrift Supervision for the
type of Mortgaged Property securing that Pledged Mortgage; or, alternatively,
such Pledged Mortgage is eligible for purchase or is guaranteed or insured by a
U.S. Government agency or a U.S. Government sponsored enterprise.

 29
 

                                                                                                                         

5.13         RICO.  The Company is not in violation of any laws,
statutes or regulations, including, without limitation, RICO, which contain
provisions which could potentially override Lender’s security interest in the
Collateral.

5.14         Proper Names.  The Company does not operate in any
jurisdiction under a trade name, division, division name or name other than
those names set forth on Exhibit “I”
attached hereto and all such names included on Exhibit “I” are utilized by the Company only in the
jurisdictions listed therein.

5.15         Direct Benefit
From Loans.  The Company has
received, or, upon the execution and funding thereof, will receive (a) direct
and indirect benefit from the making and execution of this Agreement and the
other Loan Documents to which it is a party, and (b) fair and independent
consideration for the entry into, and performance of, this Agreement and the
other Loan Documents to which it is a party. 
Contemporaneously with the disbursements of each Advance by the Lender
to the Company, all such proceeds will be used to finance the origination or
purchase of Eligible Mortgage Loans.

5.16         Loan Documents Do
Not Violate Other Documents.  Neither
the execution and delivery by the Company of this Agreement or any other Loan
Document to which it is a party nor the consummation of the transactions herein
and therein contemplated, nor the performance of, or compliance with, the terms
and provisions hereof and thereof, does or will contravene, breach or conflict
with any provision of either of its articles of incorporation or by-laws, or
any applicable law, statute, rule or regulation or any judgment, decree, writ,
injunction, franchise, order or permit applicable to the Company or its assets
or properties, or does or will conflict or be inconsistent with, or does or
will result in any breach or default of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the creation
or imposition of any Lien upon any of the property or assets of the Company
pursuant to the terms of any indenture, mortgage, deed of trust, loan
agreement, or other instrument to which the Company is a party or by which the
Company or any of its property may be bound, the contravention, conflict,
inconsistency, breach or default of which will have a materially adverse effect
on the Company’s condition, financial or otherwise, or affect its ability to
perform, promptly and fully, its obligations hereunder or under any of the
other Loan Documents.

5.17         Consents Not
Required.  Except for those
consents  that have already been obtained
and delivered to Lender or required as a condition to any Advance hereunder, no
consent of any Person and no consent, license, permit, approval, or
authorization of, exemption by, or registration or declaration with, any
Tribunal is required in connection with the execution, delivery, performance,
validity, or enforceability of this Agreement or any of the Loan Documents by
the Company.

5.18         Material Fact
Representations.  Neither the Loan
Documents nor any other agreement, document, certificate, or written statement
furnished to the Lender by or on behalf of the Company in connection with the
transactions contemplated in any of the Loan Documents contains any untrue
statement of a material adverse fact. 
There are no material adverse facts or conditions relating to the making
of the Commitment, any of the Collateral, and/or the financial condition and
business of the Company known to the Company which have not been fully
disclosed, in writing, to the Lender, it being understood that this
representation is made as of, and

 30
 

                                                                                                                         

shall be limited to the date of this Agreement.  All writings heretofore or hereafter
exhibited or delivered to the Lender by or on behalf of the Company are and
will be genuine and what they purport to be.

 

5.19         Place of Business.  The principal place of business of the
Company is 6070 Parkland Boulevard, Mayfield Heights, Ohio 44124 and the
chief executive office of the Company and the office where it keeps its
financial books and records relating to its property and all contracts relating
thereto and all accounts arising therefrom is located at the address set forth
for the Company in Section 9 hereof.

5.20         Use of Proceeds;
Business Loans.  The Company will use
the proceeds of the Advances made pursuant to the Commitment solely as follows,
and for no other purpose:  finance the
origination and purchase of Eligible Mortgage Loans.  All loans evidenced by the Note are and shall
be “business loans”, as such term is used in the Depository Institutions
Deregulation and Monetary Control Act of 1980, as amended, and such loans are
for business or commercial purposes and not primarily for personal, family,
household or agricultural use, as such terms are used or defined in Texas
Revised Civil Statutes, Texas Finance Code, Regulation Z promulgated by the
Board of Governors of the Federal Reserve System, and Titles I and V of the
Consumer Credit Protection Act.  Section
346 of the Texas Finance Code which regulates revolving loans and revolving
triparty accounts shall not apply to this Agreement.

5.21         No Undisclosed
Liabilities.  Other than as approved
by Lender, in writing or permitted in Section 7.18 hereof, the Company does not
have any liabilities or Indebtedness, direct or contingent, except for
liabilities or Indebtedness which, in the aggregate, do not exceed TWENTY-FIVE
THOUSAND AND NO/100 DOLLARS ($25,000.00).

5.22         Tax Returns and
Payments.  All federal, state and
local income, excise, property and other tax returns required to be filed with
respect to Company’s operations and those of its Subsidiaries in any
jurisdiction have been filed on or before the due date thereof (plus any
applicable extensions); all such returns are true and correct; all taxes,
assessments, fees and other governmental charges upon the Company, and Company’s
Subsidiaries and upon its property, income or franchises, which are due and
payable have been paid, including, without limitation, all FICA payments and
withholding taxes, if appropriate, other than those which are being contested
in good faith by appropriate proceedings, diligently pursued and as to which
the Company has established adequate reserves determined in accordance with GAAP,
consistently applied.  The amounts
reserved, as a liability for income and other taxes payable, in the financial
statements described in Section 5.3 hereof are sufficient for payment of all
unpaid federal, state and local income, excise, property and other taxes,
whether or not disputed, of the Company and its Subsidiaries,  accrued for or applicable to the period and
on the dates of such financial statements and all years and periods prior
thereto and for which the Company,  and
Company’s Subsidiaries may be liable in their own right or as transferee of the
assets of, or as successor to, any other Person.

5.23         Subsidiaries.  The Company has not issued, and does not have
outstanding, any warrants, options, rights or other obligations to issue or
purchase any shares of its capital stock or other securities.  The outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable.

 31
 

                                                                                                                         

5.24         Holding Company.  The Company is not a “holding company” or a “subsidiary
company” of a “holding company” within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

6.             AFFIRMATIVE COVENANTS.

The Company hereby covenants and agrees with the
Lender that, so long as the Commitment is outstanding or there remain any
Obligations of the Company to be paid or performed under this Agreement or
under any other Loan Document, the Company shall:

6.1           Payment of Note.  Punctually pay or cause to be paid the
principal of, interest on and all other amounts payable hereunder and under the
Note in accordance with the terms thereof.

6.2           Financial
Statements and Other Reports. 
Deliver or cause to be delivered to the Lender:

(a)           As soon as available and in any event
within thirty (30) days after the end of each calendar month, statements of
income and changes in stockholders’ equity and cash flow of the Company and, if
applicable, Company’s Subsidiaries, on a consolidated and consolidating basis
for the immediately preceding month, and related balance sheet as at the end of
the immediately preceding month, all in reasonable detail, prepared in
accordance with GAAP applied on a consistent basis, and certified as to the
fairness of presentation by the president and chief financial officer of the
Company, subject, however, to year-end audit adjustments.

(b)           As soon as available and in any event
within ninety (90) days after the close of each fiscal year: statements of
income, changes in stockholders’ equity and cash flows of the Company, and, if
applicable, Company’s Subsidiaries, on a consolidated and consolidating basis
for such year, the related balance sheet as at the end of such year (setting
forth in comparative form the corresponding figures for the preceding fiscal
year), all in reasonable detail, prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved, and accompanied by an opinion
in form and substance satisfactory to the Lender and prepared by an accounting
firm reasonably satisfactory to the Lender, or other independent certified
public accountants of recognized standing selected by the Company and
acceptable to the Lender, as to said financial statements and a certificate
signed by the president and chief financial officer of the Company stating that
said financial statements fairly present the financial condition and results of
operations of the Company and, if applicable, Company’s Subsidiaries as at the
end of, and for, such year.

(c)           Together with each delivery of
financial statements required in this Section 6.2, an Officer’s Certificate by
the president, chief financial officer, or other officer of the Company
acceptable to the Lender.

(d)           With respect to Aged Mortgage Loans,
copies of the complete credit and collateral file relating each Aged Mortgage
Loan, an updated title opinion covering the Mortgaged Property securing each
Aged Mortgage Loan issued inform and substance

 32
 

                                                                                                                         

acceptable to
Lender and issued by a title company acceptable to Lender, a current appraisal
or brokers price opinion certifying the current market value of the Mortgaged
Property securing each Aged Mortgage Loan in form and substance acceptable to
Lender and such other information or documentation relating to the borrowers or
Mortgaged Property of each Aged Mortgage Loan, all of the foregoing to be
provided as the Lender in its discretion may request at any time or from time
to time and at the sole cost and expense of the Company.

(e)           Reports in respect of the Pledged
Mortgages and Pledged Securities, in such detail and at such times as the
Lender in its discretion may request at any time or from time to time,
including, without limitation, a monthly pipeline report in form satisfactory
to Lender, to be delivered with the monthly financial statements required in
Section 6.2(a).

(f)            Copies of all regular or periodic
financial and other reports, if any, which the Company shall file with the
Securities and Exchange Commission or any governmental agency successor thereto
and copies of any audits completed by GNMA, FHLMC, or FNMA.  Copies of the Mortgage Bankers’ Financial
Reporting Forms (FNMA Form 1002) which the Company shall have filed with FNMA.

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

6.3           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 in the normal
conduct of its business, including, without limitation, its eligibility as
lender, seller/servicer and issuer described under Section 5.11 hereof; conduct
its business in an orderly and efficient manner; maintain a net worth of
acceptable assets as required by HUD at any and all times for maintaining the
Company’s status as a FHA approved mortgagee; 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.

6.4           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 materially adversely affect its business,
operations, assets, or financial condition, except where contested in good
faith and by appropriate proceedings, and with sufficient reserves established
therefor.

6.5           Inspection of
Properties and Books.  Permit
authorized representatives of the Lender to (a) discuss the business,
operations, assets and financial condition of the Company and Company’s
Subsidiaries with their officers and employees and to examine their books of
account, records, reports and other papers and make copies or extracts thereof,
and (b) inspect all of the Company’s property and all related information and
reports at the expense of such Lender or Lender, as applicable, all at such
reasonable times as the Lender may request. 
The Company will provide its accountants with a copy of this Agreement
promptly after the execution hereof and will instruct its accountants to answer
candidly any and all questions that the officers of the

 33
 

                                                                                                                         

Lender or any
authorized representatives of the Lender may address to them in reference to
the financial condition or affairs of the Company and Company’s Subsidiaries.  The Company may have its representatives in
attendance at any meetings between the officers or other representatives of the
Lender and the Company accountants held in accordance with this authorization.

6.6           Notice.  Give prompt written notice to the Lender of
(a) any action, suit or proceeding instituted by or against the Company 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 ONE HUNDRED THOUSAND AND
NO/100 DOLLARS ($100,000.00) (except for normal collection and foreclosure
proceedings initiated by the Company in connection with a Mortgage Loan or any
other Mortgage loan), or any such proceedings threatened against the Company,
or any of Company’s Subsidiaries in writing containing the details thereof, (b)
the filing, recording or assessment of any federal, state or local tax Lien
against it, or any of its assets or any of its Subsidiaries, (c) the occurrence
of any Event of Default hereunder or the occurrence of any Default and
continuation thereof for five (5) days, (d) the suspension, revocation or
termination of the Company’s eligibility, in any respect, as approved lender,
seller/servicer or issuer as described under Section 5.11 hereof, (e) the
transfer, loss or termination of any Servicing Contract to which the Company is
a party, or which is held for the benefit of the Company, and the reason for
such transfer, loss or termination, if known to the Company, and (f) any other
action, event or condition of any nature which may lead to or result in a
material adverse effect upon the business, operations, assets, or financial
condition of the Company or Company’s Subsidiaries or which, with or without
notice or lapse of time or both, would constitute a default under any other
agreement instrument or indenture to which the Company is a party or to which
the Company its properties or assets may be subject.

6.7           Payment of Debt,
Taxes, etc.  Pay and perform all
obligations and Indebtedness of the Company, and cause to be paid and performed
all obligations and Indebtedness of its Subsidiaries  in accordance with the terms thereof and pay
and discharge or cause to be paid and discharged all taxes, assessments and
governmental charges or levies imposed upon the Company  or its Subsidiaries,  or upon their respective income, receipts or
properties before the same shall become past due, as well as all lawful claims
for labor, materials and supplies or otherwise which, if unpaid, might become a
Lien or charge upon such properties or any part thereof; provided, however,
that the  Company and its Subsidiaries
shall not be required to pay obligation, Indebtedness, taxes, assessments or
governmental charges or levies or claims for labor, materials or supplies for
which the Company or its Subsidiaries shall have obtained an adequate bond or
adequate insurance or which are being contested in good faith and by proper
proceedings which are being reasonably and diligently pursued if such
proceedings do not involve any likelihood of the sale, forfeiture or loss of
any such property or any interest therein while such proceedings are pending,
and provided further that book reserves adequate under generally accepted accounting
principles shall have been established with respect thereto and provided
further that the owing Person’s title to, and its right to use, its property is
not materially adversely affected thereby.

6.8           Insurance.  Maintain (a) errors and omissions insurance
or Mortgage impairment insurance and blanket bond coverage, with such companies
and in such amounts as satisfy

 34
 

                                                                                                                         

prevailing
FNMA and FHLMC requirements applicable to a qualified Mortgage originating
institution, and (b) liability insurance and fire and other hazard insurance on
its properties, with responsible insurance companies approved by the Lender, in
such amounts and against such risks as is customarily carried by similar
businesses operating in the same vicinity; and (c) within thirty (30) days
after notice from the Lender, obtain such additional insurance as the Lender
shall reasonably require, all at the sole expense of the Company.  Copies of such policies shall be furnished to
the Lender without charge upon obtaining such coverage or any renewal of or
modification to such coverage.

6.9           Closing
Instructions.  Indemnify and hold the
Lender harmless from and against any loss, including reasonable attorneys’ fees
and costs, attributable to the failure of a title insurance company, agent or
attorney to comply with the disbursement or instruction letter or letters of
the Company or of the Lender relating to any Mortgage Loan.  The Lender shall have the right to
pre-approve the closing instructions of the Company to the title insurance
company, agent or attorney in any case where the Mortgage Loan to be created at
settlement is intended to be warehoused by the Company pursuant hereto.

6.10         Other Loan
Obligations.  Perform all obligations
under the terms of each loan agreement, note, mortgage, security agreement or
debt instrument by which the Company is bound or to which any of its property
is subject, and promptly notify the Lender in writing of a declared default
under or the termination, cancellation, reduction or non-renewal of any of its
other lines of credit or financing agreements with any other lender.  Exhibit “B”
hereto is a true and complete list of all such lines of credit or financing
agreements as of the date hereof.

6.11         Use of Proceeds of
Advances.  Use the proceeds of each
Advance solely for the purpose of financing or purchasing Eligible Mortgage
Loans.

6.12         Special
Affirmative Covenants Concerning Collateral.

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

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

(c)           Execute and deliver to the Lender
such Uniform Commercial Code financing statements with respect to the
Collateral as the Lender may request. 
The Company shall also execute and deliver to the Lender such further
instruments of sale, pledge or assignment or transfer, and such powers of
attorney, as required by the Lender

 35
 

                                                                                                                         

to secure the
Collateral, and shall do and perform all matters and things necessary or
desirable to be done or observed, for the purpose of effectively creating,
maintaining and preserving the security and benefits intended to be afforded
the Lender under this Agreement.  The
Lender shall have all the rights and remedies of a secured party under the
Uniform Commercial Code of Texas, or any other applicable law, in addition to
all rights provided for herein.

(d)           Notify the Lender within two (2)
Business Days after receipt of notice from an Investor of any default under, or
of the termination of, any Purchase Commitment relating to any Pledged
Mortgage, Eligible Mortgage Pool or Pledged Security.

(e)           Promptly comply in all respects with
the terms and conditions of all Purchase Commitments, and all extensions,
renewals and modifications or substitutions thereof or thereto.  The Company will cause to be delivered to the
Investor the Pledged Mortgages and Pledged Securities to be sold under each
Purchase Commitment not later than the expiration thereof.

(f)            Maintain, at its principal office or
in a regional office approved by the Lender, or in the office of a computer
service bureau engaged by the Company and approved by the Lender, and, upon
request, shall make available to the Lender the originals, or copies in any
case where the originals have been delivered to the Lender or to an Investor,
of its Mortgage Notes and Mortgages included in Collateral, Mortgage-backed
Securities delivered to the 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.

6.13         Cure of Defects in
Loan Documents.  Promptly cure and
cause to be promptly cured any defects in the creation, issuance, execution and
delivery of this Agreement and the other Loan Documents; and upon request of
the Lender and at the Company’s expense, the Company will promptly execute and
deliver, and cause to be executed and delivered, to the Lender or its designee,
all such additional documents, agreements and/or instruments in compliance with
or in accomplishment of the covenants and agreements of this Agreement and the
other Loan Documents, and/or to create, perfect, preserve, extend and/or
maintain any and all Liens created pursuant hereto or pursuant to any other
Loan Document as valid and perfected Liens (of a priority as set forth in this
Agreement) in favor of the Lender to secure the Obligations, all as reasonably
requested from time to time by the Lender.

7.             NEGATIVE COVENANTS.

The Company hereby covenants and agrees with the
Lender that, so long as the Commitment is outstanding or there remain any
Obligations of the Company to be paid or performed under this Agreement or any
other Loan Document, the Company shall not, either directly or indirectly,
without the prior written consent of the Lender:

 36

7.1           Contingent
Liabilities.  Assume, incur, create,
guarantee, endorse, or otherwise become or be liable for the obligation of any
Person other than the Company except by endorsement of negotiable instruments
for deposit or collection in the ordinary course of business and excluding the
sale of Mortgage Loans with recourse in the ordinary course of the company’s
business.

7.2           Pledge of
Servicing Contracts/Mortgage Loans. 
Except for Mortgage Loans pledged to lenders described on Exhibit “B hereto, pledge or grant a
security interest in any existing or future Mortgage Loans or Servicing Rights
acquired by the Company other than to the Lender, except as otherwise expressly
permitted in this Agreement; provided, however, that if no Default or Event of
Default has occurred and is continuing, servicing on individual Mortgage Loans
may be sold concurrently with and incidental to the sale of such Mortgage Loans
(with servicing released) in the ordinary course of the Company’s business.

7.3           Merger;
Acquisitions.  Liquidate, dissolve,
consolidate or merge, or acquire any substantial part of the assets of another,
except for transactions involving not more than FIFTY THOUSAND AND NO/100
DOLLARS ($50,000.00) each.

7.4           Loss of
Eligibility.  Take any action that
would cause the Company to lose all or any part of its status as an eligible
lender, seller/servicer and issuer as described under Section 5.11 hereof.

7.5           Adjusted Tangible
Net Worth.  Permit the sum of the
Adjusted Tangible Net Worth of Company (and its Subsidiaries, on a consolidated
basis) to be less than an amount equal to the sum of ELEVEN MILLION AND NO/100
DOLLARS ($11,000,000.00), computed as of the end of each calendar month.

7.6           Debt to Adjusted
Tangible Worth Ratio.  Permit the
ratio of Debt to Adjusted Tangible Worth of the Company (and its Subsidiaries,
on a consolidated basis) to exceed (a) 17:1 for the period commencing June 1,
2006 through and including September 30, 2006 and (b) 15:1 for any time
thereafter, such ratio to be computed as of the end of each calendar month

7.7           Minimum Current
Ratio.  Permit the Current Ratio of
the Company to be less than 1.05 to 1.0 computed as of the end of each calendar
month.

7.8           Transactions with
Affiliates.  Directly or indirectly
(a) make any loan, advance, extension of credit or capital contribution to any
of its Affiliates except as permitted by Section 7.11 hereof, (b) transfer,
sell, pledge, assign or otherwise dispose of any of its assets to or on behalf
of such Affiliates, (c) merge or consolidate with or purchase or acquire assets
from such Affiliates, or (d) transfer, pledge, or assign or otherwise pay to or
on behalf of such Affiliates management fees; provided, however,
Company may pay to its Affiliates management fees not to exceed FIVE MILLION
AND NO/100 DOLLARS ($5,000,000.00) per annum in the aggregate; provided that,
no Default, Event of Default or violation of Sections 7.5, 7.6, or 7.7 hereof
exists at the time of any payment of such management fees or would result after
the payment of such management fees and provided further that the payment of
such management fees would not result in a net loss for the Company for any
calendar quarter or fiscal year.

 37
 

7.9           Limits on
Corporate Distributions.  Pay, make
or declare or incur any liability to pay, make or declare any dividend
(excluding stock dividends) or other distribution, direct or indirect, on or on
account of any shares of its stock or any redemption or other acquisition,
direct or indirect, of any shares of its stock or of any warrants, rights or other
options to purchase any shares of its stock nor purchase, acquire, redeem or
retire any stock or ownership interest in itself whether now or hereafter
outstanding except that so long as no Default, Event of Default or violation of
Sections 7.5, 7.6, and 7.7 hereof exists at such time, or would exist
immediately thereafter, the Company may declare and pay cash dividends to its
shareholders; provided, that (a) such cash dividends must be declared and paid
within twenty (20) days after delivery to Lender of the financial statements
described in Section 6.2(a) hereof; and (b) provided further that such
dividends shall not exceed, in the aggregate during any fiscal year, fifty
percent (50%) of the Company’s net income for such fiscal year.

7.10         RICO.  Violate any laws, statutes or regulations,
whether federal or state, for which forfeiture of its properties is a potential
penalty, including, without limitations, RICO.

7.11         No Loans or
Investments Except Approved Investments. 
Without the prior written consent of Lender, make or permit to remain
outstanding any loans or advances to, or investments in, any Person, except
that the foregoing restriction shall not apply to:

(a)           investments in marketable obligations
maturing no later than one hundred eighty (180) days from the date of
acquisition thereof by the Company and issued and fully guaranteed, directly,
by the full faith and credit of the Government of the United States of America
or any agency thereof; and

(b)           investments in certificates of
deposit maturing no later than one hundred eighty (180) days from the date of
issuance thereof and issued by commercial banks in the United States and such
banks rated by Moody’s Investor Service, Inc. 
and receiving a rating of Prime-2 or higher on Moody’s short term debt rating
or rated by Standard & Poor’s Corporation and receiving a rating of AA-/A1+
or higher on S&P’s short term debt rating, it being acknowledged and agreed
that the foregoing requirements shall pertain to certificates of deposit issued
and/or received on a date on or after the date of this Agreement);

(c)           investments not to exceed FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) in the aggregate;

(d)           investments in the acquisition or
origination of Mortgage Loans in the ordinary course of business;

(e)           marketable direct obligations issued
by any state of the United States of America or any political subdivision of
any such state or any public instrumentality thereof maturing within one year
from the date of acquisition thereof and, at the time of acquisition, having a
rating of AA-/A1 + or higher from Standard & Poor’s Rating Group, a
Division of McGraw, Hill, Inc., or rated P-1 or higher by Moody’s Investors
Service, Inc.;

 38
 

(f)            commercial paper maturing no more
than one year from the date of creation thereof and, at the time of
acquisition, having a rating of AA-/A1+ or higher from Standard & Poor’s
Rating Group, a Division of McGraw, Hill, Inc., or rated P-1 by Moody’s
Investors Service, Inc.;

(g)           investments in mutual funds that
invest substantially all of their assets in Investments of the types described
in subsections (a), (b), (c) and (e) of this Section 7.11;

(h)           Investments consisting of loans,
advances or extensions of credit to Affiliates made in the ordinary course of
business; and

(i)            Investments made pursuant to Hedging
Arrangements.

7.12         Charter Documents
and Business Termination.

(a)           Issue, sell or commit to issue or
sell any shares of its capital stock of any class, or other equity or
investment security,

(b)           Amend or otherwise modify its
corporate charter or otherwise change its corporate structure in any manner
which will have a materially adverse effect on the Company’s condition,
financial or otherwise, or which will have a material adverse effect upon the
Company’s ability to perform, promptly and fully, its obligations hereunder or
under any of the other Loan Documents, or

(c)           Take any action with a view toward
its dissolution, liquidation or termination, or, in fact, dissolve, liquidate
or terminate its existence.

7.13         Changes in Accounting
Methods.  Make any change in its
accounting method as in effect on the date of this Agreement or change its
fiscal year ending date from December 31, unless such changes (a) are required
for conformity with generally accepted accounting principles and, in such
event, the Company will give prior written notice of each such change to the
Lender or (b) or if not so required, are in conformity with generally accepted
accounting principles and have the prior written approval of the Lender which
approval shall not be unreasonably withheld.

7.14         No Sales, Leases
or Dispositions of Property.  Except
in the ordinary course of its business, sell, lease, transfer or otherwise
dispose of all or any material portion or portions or integral part of its
properties or assets, whether now owned or hereafter acquired (whether in a
single transaction or in a series of transactions), or enter into any
arrangement, directly or indirectly, with any person, whereby it shall sell or
transfer any of its properties or assets, whether now owned or hereafter
acquired, and thereafter rent or lease as lessee such property or any part
thereof which it intends to use for substantially the same purpose or purposes
as the property sold or transferred.

7.15         Changes in
Business or Assets.  Make any
substantial change (a) in the nature of its business as now conducted, or (b)
in the use of its property as now used and proposed to be used.

 39
 

7.16         Changes in Office
or Inventory Location.  Change the
address and/or location of its chief executive office or principal place of
business or the place where it keeps its books and records or its inventory to
a location outside the State of Ohio unless, prior to any such change, the
Company shall execute and cause to be executed such additional agreements
and/or lien instruments as the Lender may reasonably request to conform with
the provisions hereof and the transactions and perfected Liens in the
Collateral contemplated under this Agreement and the other Loan Documents.

7.17         Special Negative
Covenants Concerning Collateral.

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

(b)           Sell, assign, transfer or otherwise
dispose of, or grant any option with respect to, or pledge or otherwise
encumber any of the Collateral or any interest therein.

(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.

7.18         No Indebtedness.  Except for the Indebtedness described in Exhibit “B” hereto, incur, create,
assume or guarantee or in any manner become or be liable or permit to be
outstanding any Indebtedness (including obligations for the payment of rentals
other than provided for herein) nor guarantee any contract or other obligation,
and will not in any way become or be responsible for obligations of any Person,
whether by agreement to purchase the Indebtedness of any other Person or
agreement for the furnishing of funds to any other Person through the purchase
of goods, supplies or services (or by way of stock purchase, capital
contribution, advance or loan) for the purpose of paying or discharging the
Indebtedness of any other Person or otherwise, except that the foregoing
restrictions shall not apply to:

(a)           the Obligations.

(b)           liabilities for taxes, assessments,
governmental charges or levies which are not yet due and payable or which are
being contested in good faith by appropriate proceedings diligently conducted
if reserves adequate under generally accepted accounting principles have been
established therefor.

(c)           endorsements of negotiable
instruments for collection in the ordinary course of business.

(d)           indebtedness incurred in the ordinary
course of business in connection with normal trade or business obligations
which are payable within ninety (90) days of the occurrence thereof, provided,
however, that no such Indebtedness shall be incurred by the Company to
any Affiliate unless it is subordinated in all respects to the Obligations in a
form and substance acceptable to the Lender, and is incurred in the ordinary
course of business and upon substantially the same or better terms as it could
obtain in an arm’s length transaction with a Person who is not an Affiliate.

 40
 

(e)           Indebtedness of less than TWO HUNDRED
FIFTY THOUSAND AND NO/100 DOLLARS ($250,000.00), in the aggregate, incurred in
the ordinary course of business.

(f)            Indebtedness incurred in the
ordinary course of business for the purpose of leasing office space or
equipment to be used in the conduct of the business of the Company.

7.19         Ownership of the
Company.  Permit any change in the
legal or beneficial ownership of any capital stock, instruments convertible to
same, or other equity instruments, of the Company that results or would result
in a Change of Control.

7.20         Payments of
Subordinated Debt.  Make any payment
of any kind on any  Subordinated Debt
until the Commitments have terminated, all Obligations have been paid and
performed in full, and any applicable preference period has expired.

8.             DEFAULTS; REMEDIES.

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

(a)           Failure to pay the principal of any
Advance when due, whether at stated maturity, by acceleration, or otherwise; or
failure to pay any installment of interest on any Advance or any other amount
due under this Agreement within ten (10) days after the due date (other than
any amounts due under Section 3.4 hereof which shall be due and payable on its
due date); or failure to pay, beyond any applicable grace period, the principal
or interest on any other indebtedness due Lender; or

(b)           Failure of the Company or any of its
Subsidiaries to pay, or any default in the payment of any principal or interest
on, any other Indebtedness or in the payment of any contingent obligation
beyond any period of grace provided; or breach or default with respect to any
other material term of any other Indebtedness of any loan agreement, mortgage,
indenture or other agreement relating thereto, if the effect of such failure,
default or breach is to cause, or to permit the holder or holders thereof (or a
trustee on behalf of such holder or holders) to cause, Indebtedness of the Company
or its Subsidiaries in the aggregate amount of TWO HUNDRED FIFTY THOUSAND AND
NO/100 DOLLARS ($250,000.00) or more to become or be declared due prior to its
stated maturity (upon the giving or receiving of notice, lapse of time, both,
or otherwise) or failure of the Company to perform or comply with any term or
condition applicable to it contained in Sections 6.3, 6.11, and any
Section in Article 7 hereof; or

(c)           Any of the Company’s representations
or warranties made or deemed made herein or in any other Loan Document, or in
any statement or certificate at any time given by the Company in writing
pursuant hereto or thereto shall be inaccurate or incomplete in any materially
adverse respect on the date as of which made or deemed made; or

 41
 

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

(e)           (1) A court having jurisdiction shall
enter a decree or order for relief in respect of the Company or any of Company’s
Subsidiaries in an involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect in respect of the Company or
any of Company’s Subsidiaries, which decree or order is not stayed; or a filing
of an involuntary case under any applicable bankruptcy, insolvency or other similar
law in respect of the Company or any of Company’s Subsidiaries has occurred; or
(2) any other similar relief shall be granted under any applicable federal or
state law; or a decree or order of a court having jurisdiction for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over the Company or any of Company’s
Subsidiaries, or over all or a substantial part of their respective property,
shall have been entered; or the involuntary appointment of an interim receiver,
trustee or other custodian of the Company or any of Company’s Subsidiaries, for
all or a substantial part of their respective property; or the issuance of a
warrant of attachment, execution or similar process against any substantial
part of the property of the Company or any of Company’s Subsidiaries, and the
continuance of any such events in Subsections (1) and (2) above for sixty (60)
days unless dismissed or discharged; or

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

(g)           Any money judgment, writ or warrant
of attachment, or similar process involving in any case an amount in excess of
TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($250,000.00) shall be entered or
filed against the Company or any of its Subsidiaries or any of their respective
assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of thirty (30) days or in any event no later than five (5) days prior to
the date of any proposed sale thereunder; or

(h)           Any order, judgment or decree shall
be entered against the Company decreeing the dissolution or split up of the
Company and such order shall remain undischarged or unstayed for a period in
excess of twenty (20) days; or

 42
 

(i)            Any Plan maintained by the Company
or any of Company’s Subsidiaries shall be terminated within the meaning of
Title IV of ERISA or a trustee shall be appointed by an appropriate United
States district court to administer any Plan, or the Pension Benefit Guaranty
Corporation (or any successor thereto) shall institute proceedings to terminate
any Plan or to appoint a trustee to administer any Plan if as of the date
thereof the Company’s or any Subsidiary’s liability (after giving effect to the
tax consequences thereof) to the Pension Benefit Guaranty Corporation (or any
successor thereto) for unfunded guaranteed vested benefits under the Plan
exceeds the then current value of assets accumulated in such Plan by more than
FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00) (or in the case of a termination
involving the Company or any of Company’s Subsidiaries as a “substantial
employer” (as defined in Section 4001(a)(2) of ERISA) the withdrawing employer’s
proportionate share of such excess shall exceed such amount); or

(j)            The Company or any of Company’s
Subsidiaries as employer under a Multiemployer Plan shall have made a complete
or partial withdrawal from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that such
employer has incurred a withdrawal liability in an annual amount exceeding FIFTY
THOUSAND AND NO/100 DOLLARS ($50,000.00); or

(k)           The Company shall purport to disavow,
in writing, its obligations hereunder or shall contest, in writing, the
validity or enforceability hereof, or the Lender’s security interest on any
portion of the Collateral shall become unperfected, of less than a first
priority, unenforceable or otherwise impaired; or

(l)            The Company dissolves or terminates
its existence, or discontinues its usual business; or

(m)          Any court shall find or rule, or the
Company shall assert or claim, in writing, (i) that the Lender does not have a
valid, first priority perfected, enforceable Lien and security interest in the
Collateral as represented in this Agreement or in any other Loan Document, or
(ii) that this Agreement or any of the Loan Documents does not or will not
constitute the legal, valid, binding and enforceable obligations of the party
or parties (as applicable) thereto, or (iii) that any Person has a conflicting
or adverse Lien, claim or right in, or with respect to, the Collateral and the
Company is unable within ten (10) days to have such finding or ruling reversed
or to have such adverse Lien, claim or right removed; or

(n)           The Company shall have concealed,
removed, or permitted to be concealed or removed, any part of its property,
with intent to hinder, delay or defraud its creditors or any of them, or made
or suffered a transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or shall have made any
transfer of its property to or for the benefit of a creditor at a time when
other creditors similarly situated have not been paid; or shall have suffered
or permitted, while insolvent, any creditor to obtain a Lien upon any of its
property through legal

 43
 

proceedings or
other process which is not vacated within sixty (60) days from the date
thereof; or

(o)           There shall be a material adverse
change in the financial condition, business or operations of the Company;

(p)           A Change of Control occurs; or

(q)           A default or event of default occurs
under the Purchase Agreement.

8.2           Remedies.

(a)           Upon the occurrence of any Event of
Default described in Sections 8.1(e), 8.1(f), 8.1(h) or 8.1(k), the Commitment
shall automatically terminate and all unpaid and accrued Obligations of the
Company shall automatically become due and payable, without presentment for
payment, demand, notice of non-payment, protest, notice of protest, notice of
intent to accelerate, notice of acceleration, maturity, or any other notices or
requirements of any kind to the Company or any other Person liable thereon or
with respect thereto, all of which are hereby expressly waived by the Company.

(b)           Upon the occurrence of any Event of
Default, other than those described in Sections 8.1(e), 8.1(f), 8.1(h) or 8.1(k),
the Lender may, by written notice to the Company, terminate the Commitment
and/or declare all unpaid and accrued Obligations of the Company to be
immediately due and payable, whereupon the same shall forthwith become due and
payable, together with all accrued and unpaid interest thereon, and the
obligation of the Lender to make any Advances shall thereupon terminate.

(c)           Upon the occurrence of any Event of
Default, the Lender may also do any of the following:

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

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

(3)           Act, or contract with a third Person
to act, as servicer or subservicer of each item of Collateral requiring
servicing and perform all

 44
 

obligations required in
connection with Purchase Commitments, such third party’s fees to be paid by the
Company.

(4)           Require the Company to assemble the
Collateral and/or books and records relating thereto and make such available to
the Lender at a place to be designated by the Lender.

(5)           Enter onto property where any
Collateral or books and records relating thereto are located and take
possession thereof with or without judicial process.

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

(7)           Exercise all rights and remedies of a
secured creditor under the Uniform Commercial Code of Texas or other applicable
law, including, but not limited to, selling or otherwise disposing of the
Collateral, or any part thereof, at one or more public or private sales,
whether or not such Collateral is present at the place of sale, for cash or
credit or future delivery, on such terms and in such manner as the Lender may
determine, including, without limitation, sale pursuant to any applicable
Purchase Commitment.  If notice is
required under such applicable law, the Lender will give the Company not less
than ten (10) days’ notice of any such public sale or of the date after which
private sale may be held.  The Company
agrees that ten (10) days’ notice shall be reasonable notice.  The Lender may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be
so adjourned.  The Lender is authorized
at any such sale, if the Lender deems it advisable so to do, to restrict the
prospective bidders or purchasers to Persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or resale of any of the Collateral.  The Company specifically agrees that any such
sale, whether public or private, of any Collateral pursuant to the commitment
of any investor to purchase such Collateral that was obtained by (or with the
approval of) the Company will be commercially reasonable, and if such sale is
for the price provided for in such commitment, then such sale shall be held to
be for value reasonably equivalent to the value of the Collateral so sold.  Upon any such sale, the Lender shall have the
right to deliver, assign and transfer to the purchaser thereof the Collateral
so sold.  Each purchaser at any such sale
shall hold the property sold absolutely free from any claim or right of
whatsoever kind, including any equity or right of redemption, stay or appraisal
which the Company has or may have under any rule of law or statute now existing
or hereafter adopted.  In any case of any
sale of all or any part of the Collateral on credit or for future delivery, the
Collateral so sold may be retained by the Lender until the selling price is
paid by the purchaser, but the Lender shall not incur any liability in case of
such purchaser’s failure to take up and pay for the Collateral so sold and, in
case of any such failure, such Collateral may again be sold upon like

 45
 

notice.  In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Lender until the selling price is paid by the purchaser
thereof, but the Lender shall not incur any liability in case of the failure of
such purchaser to take up and pay for the Collateral so sold and, in case of
any such failure, such Collateral may again be sold upon like notice.  The Lender may, however, instead of
exercising the power of sale herein conferred upon it, proceed by a suit or
suits at law or in equity to collect all amounts due upon the Collateral or to
foreclose the pledge and sell the Collateral or any portion thereof under a
judgment or decree of a court or courts of competent jurisdiction, or both.

(8)           Proceed against the Company on the
Note.

(9)           Exercise any or all of its rights,
remedies or recourses under any other Loan Documents, at law, in equity, or
otherwise.

(d)           Lender shall not incur any liability
as a result of the sale or other disposition of the Collateral, or any part
thereof, at any public or private sale or disposition.  The Company hereby waives (to the extent
permitted by law) any claims it may have against the Lender arising by reason
of the fact that the price at which the Collateral may have been sold at such
private sale was less than the price which might have been obtained at a public
sale or was less than the aggregate amount of the outstanding Advances and the
unpaid interest accrued thereon, even if the Lender accepts the first offer received
and does not offer the Collateral to more than one offeree and none of the
actions described herein shall render Lender’s disposition of the Collateral in
such a manner as commercially unreasonable. 
Any sale of Collateral pursuant to the terms of a Purchase Commitment,
or any other disposition of collateral arranged by the Company, whether before
or after the occurrence of an Event of Default, shall be deemed to have been
made in a commercially reasonable manner.

(e)           The Company specifically waives (to
the extent permitted by law) any equity or right of redemption, all rights of
redemption, stay or appraisal which the Company has or may have under any rule
of law or statute now existing or hereafter adopted, and any right to require
the Lender to (1) proceed against any Person, (2) proceed against or exhaust
any of the Collateral or pursue its rights and remedies as against the
Collateral in any particular order, or (3) pursue any other remedy in its
power.  The Lender shall not be required
to take any steps necessary to preserve any rights of the Company against
holders of mortgages prior in lien to the Lien of any Mortgage included in the
Collateral or to preserve rights against prior parties.

(f)            Lender may, but shall not be
obligated to, advance any sums or do any act or thing necessary to uphold and
enforce the Lien and priority of, or the security intended to be afforded by,
any Mortgage included in the Collateral, including, without limitation, payment
of delinquent taxes or assessments and insurance premiums.  All advances, charges, costs and expenses,
including reasonable attorneys’ fees and disbursements, incurred or paid by the
Lender in exercising any right, power or remedy conferred by this Agreement, or
in the enforcement hereof, together with interest thereon, at the Default

 46
 

Rate, from the
time of payment until repaid, shall become a part of the principal balance
outstanding hereunder and under the Note.

(g)           No failure on the part of the Lender
to exercise, and no delay in exercising, any right, power or remedy provided
hereunder, at law or in equity shall operate as a waiver thereof; nor shall any
single or partial exercise by the Lender of any right, power or remedy provided
hereunder, at law or in equity preclude any other or further exercise thereof
or the exercise of any other right, power or remedy.  Without intending to limit the foregoing, all
defenses based on the statute of limitations are hereby waived by the Company
to the extent permitted by law.  The
remedies herein provided are cumulative and are not exclusive of any remedies
provided at law or in equity.

8.3           Application of
Proceeds.  The proceeds of any sale,
disposition or other enforcement of the Lender’s security interest in all or
any part of the Collateral shall be applied by the Lender:

First,
to the payment of the costs and expenses of such sale or enforcement, including
reasonable compensation to the Lender’s agents and counsel, and all expenses,
liabilities and advances made or incurred by or on behalf of the Lender in connection
therewith;

Second,
to the payment of any other amounts due (other than principal and interest)
under the Note or this Agreement;

Third,
to the payment of interest accrued and unpaid on the Note;

Fourth,
to the payment of the outstanding principal balance of the Note; and

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

If the proceeds of any such sale, disposition or other
enforcement are insufficient to cover the costs and expenses of such sale, as
aforesaid, and the payment in full of all Obligations of the Company, the
Company shall remain liable for any deficiency.

8.4           Lender Appointed
Attorney-in-Fact.  The Lender is hereby
appointed the attorney-in-fact of the Company, with full power of substitution,
for the purpose of carrying out the provisions hereof and taking any action and
executing any instruments which the Lender may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest and shall remain in full force and
effect until the full and final payment and performance of all
Obligations.  Without limiting the
generality of the foregoing, the Lender shall have the right and power to give
notices of its security interest in the Collateral to any Person, either in the
name of the Company or in its own name, to endorse all Pledged Mortgages or
Pledged Securities payable to the order of the Company, to change or cause to
be changed the book-entry registration or name of subscriber or Investor on any
Pledged Security, or to receive, endorse and collect all checks made payable to
the order of the Company

 47
 

representing
any payment on account of the principal of or interest on, or the proceeds of
sale of, any of the Pledged Mortgages or Pledged Securities and to give full
discharge for the same.

8.5           Right of Set-Off.  If the Company shall default in the payment
of the Note, any interest accrued thereon, or any other sums which may become
payable hereunder when due, or in the performance of any of its other
Obligations under this Agreement, the Lender, shall have the right, at any time
and from time to time, without notice, to set-off and to appropriate or apply
any and all property or indebtedness of any kind at any time held or owing by
the Lender to or for the credit of the account of the Company (excluding any
monies held by the Company in trust for third parties) against and on account
of the Obligations, irrespective of whether or not the Lender shall have made
any demand hereunder and whether or not said Obligations shall have matured;
provided, however, that the Lender shall not be allowed to set-off against
funds in accounts with respect to which (i) the Company is a trustee or an
escrow agent in respect of bona fide third parties other than Affiliates, and
(ii) such trust or escrow arrangement was so denominated at the time of
the creation of such account.

9.             NOTICES.  

All notices, demands, consents, requests and other
communications required or permitted to be given or made hereunder
(collectively, “Notices”) shall, except as otherwise expressly provided
hereunder, be in writing addressed to the respective parties hereto at their
respective addresses hereinafter set forth and shall be either (a) delivered in
person, or (b) mailed, by certified, registered, or express mail, postage
prepaid, or (c) delivered by overnight courier, or (d) telecopied to their
respective telecopy numbers (with a paper copy mailed the same day as
aforesaid) as hereinafter set forth; provided any party may change its address
for notice by designating such party’s new address in a Notice to the sending
party given at least five (5) Business Days before it shall become
effective.  All Notices shall be
conclusively deemed to have been properly given or served when duly received,
in person regardless of how sent. 
Regardless of when received, all Notices shall be conclusively deemed
given or served if addressed in accordance with this Section and (1) if by
overnight courier, on the next Business Day or (2) if mailed, on the third
Business Day after being deposited in the mails, or (3) if telecopied, when
telecopied to the telecopy number set forth below (provided a paper copy is
mailed the same day):

	
  If to the Company:

  	
   

  	
  SIRVA MORTGAGE, INC.

  
	
   

  	
   

  	
  Attn: Paul Klemme, President

  
	
   

  	
   

  	
  6070 Parkland Boulevard

  
	
   

  	
   

  	
  Mayfield Heights, Ohio 44124

  
	
   

  	
   

  	
  Fax No.: (440) 646-1835

  

 

 48
 

 

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If to the Lender:

  	
   

  	
  Washington
  Mutual Bank

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Attn: Michael D. McAuley

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Mortgage Banker Finance

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  3200 Southwest Freeway, Suite 1922

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Houston, Texas 77027

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Fax No.: (713) 543-4292

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  	
   

  	
  Washington Mutual Bank

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Attn: Eva L. Torres

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Mortgage Banker Finance

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  555 Dividend Drive

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Coppell, Texas 75019

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Fax No.: (469) 549-5632

  	
   

  	
   

  	
   

  	
   

  

 

10.           REIMBURSEMENT OF EXPENSES; INDEMNITY.

Reimbursement of Expenses
and Indemnification by Company.  The Company shall: (a) pay all
out-of-pocket costs and expenses of the Lender, including, without limitation,
reasonable attorneys’ fees, in connection with the preparation, negotiation,
documentation, enforcement and administration of this Agreement, the Note, and
other Loan Documents and the making and repayment of the Advances and the
payment of interest thereon; (b) pay, and hold the Lender and any holder
of the Note harmless from and against, any and all present and future stamp,
documentary and other similar taxes with respect to the foregoing matters and
save the Lender and the holder or holders of the Note harmless from and against
any and all liabilities with respect to or resulting from any delay or omission
to pay such taxes; (c) INDEMNIFY, PAY
AND HOLD HARMLESS THE LENDER AND ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR
AGENTS AND ANY SUBSEQUENT HOLDER OF THE NOTE FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, JUDGMENTS, SUITS, COSTS,
EXPENSES AND DISBURSEMENTS OF ANY KIND WHATSOEVER (THE “INDEMNIFIED LIABILITIES”)
(INCLUDING, WITHOUT LIMITATION, INDEMNIFIED LIABILITIES RESULTING, IN WHOLE OR
IN PART, FROM ANY INDEMNIFIED PARTY’S OWN NEGLIGENCE OR STRICT LIABILITY) WHICH
MAY BE IMPOSED UPON, INCURRED BY OR ASSERTED AGAINST THE LENDER OR SUCH HOLDER
IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT, THE NOTE, OR ANY OTHER
LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY TO THE
EXTENT THAT ANY SUCH INDEMNIFIED LIABILITIES RESULT (DIRECTLY OR INDIRECTLY)
FROM ANY CLAIMS MADE, OR ANY ACTIONS, SUITS OR PROCEEDINGS COMMENCED OR
THREATENED, BY OR ON BEHALF OF ANY CREDITOR (EXCLUDING THE LENDER AND THE
HOLDER OR HOLDERS OF THE NOTE), SECURITY HOLDER, SHAREHOLDER, CUSTOMER
(INCLUDING, WITHOUT LIMITATION, ANY PERSON HAVING ANY DEALINGS OF ANY KIND WITH
THE COMPANY), TRUSTEE, DIRECTOR, OFFICER, EMPLOYEE AND/OR AGENT OF THE COMPANY
ACTING IN SUCH CAPACITY, THE COMPANY OR ANY GOVERNMENTAL REGULATORY BODY OR
AUTHORITY. THE FOREGOING INDEMNITY SHALL NOT APPLY TO THE EXTENT THE
INDEMNIFIED

 

 49

                                                                                                                         

LIABILITIES
RESULT FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE LENDER OR LENDER’S
OWN VIOLATIONS OF REGULATIONS APPLICABLE TO IT OR ITS OFFICERS, DIRECTORS,
EMPLOYEES OR AGENETS AND ANY SUBSEQUENT HOLDER OF THE NOTE.  THE AGREEMENT OF THE COMPANY CONTAINED IN
THIS SUBSECTION (c) SHALL SURVIVE THE EXPIRATION OR TERMINATION OF THIS
AGREEMENT AND THE PAYMENT IN FULL OF THE NOTE. 
ATTORNEYS’ FEES AND DISBURSEMENTS INCURRED IN ENFORCING, OR ON APPEAL
FROM, A JUDGMENT PURSUANT HERETO SHALL BE 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.           FINANCIAL INFORMATION.

All financial statements and reports furnished to the
Lender hereunder shall be prepared in accordance with GAAP, applied on a basis
consistent with that applied in preparing the financial statements as at, and
for the period ended, the Statement Date (except to the extent otherwise
required to conform to good accounting practice).

12.           MISCELLANEOUS.

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

12.2         Assignment.  This Agreement may not be assigned by the
Company.  The Lender may assign, at any
time, in whole or in part, its rights and delegate its obligations under this
Agreement and the other Loan Documents, along with the Lender’s security
interest in any or all of the Collateral, and any assignee thereof may enforce
this Agreement and the other Loan Documents, and such security interest.

12.3         Amendments.  Except as otherwise provided in this
Agreement, this Agreement may not be amended, modified or supplemented unless
such amendment, modification or supplement is set forth in a writing signed by
the parties hereto.

12.4         Governing Law.  This Agreement and the other Loan Documents
shall be governed by the laws of the State of Texas, without reference to its
principles of conflicts of laws.

12.5         Participations.  The Lender may at any time sell, assign or
grant participations in, or otherwise transfer to any other Person (a “Participant”),
all or part of the Obligations of the Company under this Agreement.  Without limitation of the exclusive right of
the Lender to 

 50
 

                                                                                                                         

collect and
enforce such Obligations, the Company agrees that each disposition will give
rise to a debtor-creditor relationship of the Company to the Participant, and
the Company 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 the Company which may be in the hands of such
Participant.  The Company authorizes the
Lender to disclose to any prospective Participant and any Participant any and
all information in the Lender’s possession concerning the Company, this
Agreement and the Collateral.

12.6         Relationship of
the Parties.  This Agreement provides
for the making of Advances by the Lender, in its capacity as a lender, to the
Company, in its capacity as a borrower, and for the payment of interest,
repayment of principal by the Company to the Lender, and for the payment of
certain fees by the Company to the Lender. 
The relationship between the Lender and the Company is limited to that
of creditor/secured party, on the one hand, and debtor, on the other hand.  The provisions herein for compliance with
financial covenants and delivery of financial statements are intended solely
for the benefit of the Lender to protect its interests as lender in assuring
payments of interest and repayment of principal and payment of certain fees,
and nothing contained in this Agreement shall be construed as permitting or
obligating the Lender to act as a financial or business advisor or consultant
to the Company, as permitting or obligating the Lender to control the Company
or to conduct the Company’s operations, as creating any fiduciary obligation on
the part of the Lender to the Company, or as creating any joint venture,
agency, or other relationship between the parties hereto other than as
explicitly and specifically stated in this Agreement.  The Company acknowledges that it has had the
opportunity to obtain the advice of experienced counsel of its own choosing in
connection with the negotiation and execution of this Agreement and to obtain
the advice of such counsel with respect to all matters contained herein,
including, without limitation, the provision for waiver of trial by jury.  The Company further acknowledges that it is
experienced with respect to financial and credit matters and has made its own
independent decisions to apply to the Lender for credit and to execute and
deliver this Agreement.

12.7         Severability.  If any provision of this Agreement shall be
declared to be illegal or unenforceable in any respect, such illegal or
unenforceable provision shall be and become absolutely null and void and of no
force and effect as though such provision were not in fact set forth herein,
but all other covenants, terms, conditions and provisions hereof shall
nevertheless continue to be valid and enforceable.

12.8         Usury.  It is the intent of Lender and the Company in
the execution and performance of this Agreement and the Note or any Loan
Document to remain in strict compliance with Applicable Law from time to time
in effect.  In furtherance thereof,
Lender and the Company stipulate and agree that none of the terms and
provisions contained in the Note, this Agreement or any Loan Document shall
ever be construed to create a contract to pay for the use, forbearance or
detention of money with interest at a rate or in an amount in excess of the
Maximum Rate or amount of interest permitted to be charged under Applicable
Law.  For purposes of this Agreement, the
Note and any other Loan Document, “interest” shall include the aggregate of all
charges which constitute interest under Applicable Law that are contracted for,
taken, charged, reserved, or received under this Agreement, the Note or any
other Loan Document.  The Company shall
never be required to pay unearned interest or interest at a rate or in an
amount in excess of the Maximum Rate or amount of interest that may be lawfully
charged

 51
 

                                                                                                                         

under
Applicable Law, and the provisions of this paragraph shall control over all
other provisions of this Agreement and the Note or any Loan Document, which may
be in actual or apparent conflict herewith. 
If the Note is prepaid, or if the maturity of the Note is accelerated
for any reason, or if under any other contingency the effective rate or amount
of interest which would otherwise be payable under the Note would exceed the Maximum
Rate or amount of interest Lender or any other holder of the Note is allowed by
Applicable Law to charge, contract for, take, reserve or receive, or in the
event Lender or any holder of the Note shall charge, contract for, take,
reserve or receive monies that are deemed to constitute interest which would,
in the absence of this provision, increase the effective rate or amount of
interest payable under the Note to a rate or amount in excess of that permitted
to be charged, contracted for, taken, reserved or received under Applicable Law
then in effect, then the principal amount of the Note or the amount of interest
which would otherwise be payable under the Note or both shall be reduced to the
amount allowed under Applicable Law as now or hereinafter construed by the
courts having jurisdiction, and all such moneys so charged, contracted for,
taken, reserved or received that are deemed to constitute interest in excess of
the Maximum Rate or amount of interest permitted by Applicable Law shall
immediately be returned to or credited to the account of the Company upon such
determination.  Lender and the Company
further stipulate and agree that, without limitation of the foregoing, all
calculations of the rate or amount of interest contracted for, charged, taken,
reserved or received under the Note which are made for the purpose of
determining whether such rate or amount exceeds the Maximum Rate, shall be made
to the extent not prohibited by Applicable Law, by amortizing, prorating,
allocating and spreading during the period of the full stated term of the Note,
all interest at any time contracted for, charged, taken, reserved or received
from the Company or otherwise by Lender or any other holder of the Note.

12.9         Consent to
Jurisdiction.  Subject to the provisions
of Section 12.10 of this Agreement, the Company hereby agrees that any
action or proceeding under this Agreement, the Note or any document delivered
pursuant hereto may be commenced against it in any court of competent
jurisdiction within the State of Texas, by service of process upon the Company
by first class registered or certified mail, return receipt requested,
addressed to the Company at its address last known to the Lender.  The Company agrees that any such suit, action
or proceeding arising out of or relating to this Agreement or any other such
document may be instituted in Harris County, State District Court or in the
United States District Court for the District of Texas at the option of the
Lender; and the Company hereby waives any objection to the venue, or any claim
as to inconvenient forum, of any such suit, action or proceeding.  Nothing herein shall affect the right of the
Lender to accomplish service of process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the Company in any
other jurisdiction or court.

12.10       Arbitration.  To the maximum extent not prohibited by law,
any controversy, dispute or claim arising out of, in connection with, or
relating to the Commitment or the Loan Documents or any transaction provided
for therein, including but not limited to any claim based on or arising from an
alleged tort or an alleged breach of any agreement contained in any of the Loan
Documents, shall, at the request of any party to the Loan Documents (either
before or after the commencement of judicial proceedings), be settled by
arbitration pursuant to Title 9 of the United States Code, which the parties
hereto acknowledge and agree applies to the transaction involved herein, and in
accordance with the Commercial Arbitration Rules of the American 

 52
 

                                                                                                                         

Arbitration
Association (the “AAA”).  If Title 9 of
the United States Code is inapplicable to any such claim, dispute or
controversy for any reason, such arbitration shall be conducted pursuant to the
Texas General Arbitration Act and in accordance with the Commercial Arbitration
Rules of the AAA.  In any such
arbitration proceeding:  (i) all
statutes of limitations which would otherwise be applicable shall apply; and
(ii) the proceeding shall be conducted in Houston, Texas, by a single
arbitrator, if the amount in controversy is ONE MILLION AND NO/100 DOLLARS
($1,000,000.00) or less, or by a panel of three arbitrators if the amount in
controversy is over ONE MILLION AND NO/100 DOLLARS ($1,000,000.00).  All arbitrators shall be selected by the
process of appointment from a panel pursuant to Section 13 of the AAA
Commercial Arbitration Rules and each arbitrator shall be either an active
attorney, a mortgage banker or retired judge with an AAA acknowledged expertise
in the subject matter of the controversy, dispute or claim.  Any award rendered in any such arbitration
proceeding shall be final and binding, and judgment upon any such award may be
entered in any court having jurisdiction.

If any party to any Loan Document files a proceeding
in any court to resolve any such controversy, dispute or claim, such action
shall not constitute a waiver of the right of such party or a bar to the right
of any other party to seek arbitration under the provisions of this Section of
that or any other claim, dispute or controversy, and the court shall, upon
motion of any party to the proceeding, direct that such controversy, dispute or
claim be arbitrated in accordance with this Section.

Notwithstanding any of the foregoing, the parties
hereto agree that no arbitrator or panel of arbitrators shall possess or have
the power to (i) assess punitive damages, (ii) dissolve, rescind or
reform (except that the arbitrator may construe ambiguous terms) any Loan
Document, (iii) enter judgment on the debt, (iv) exercise equitable
powers or issue or enter any equitable remedies with respect to matters
submitted to arbitration, or (v) allow discovery of attorney/client
privileged information.  The Commercial
Arbitration Rules of the AAA are hereby modified to this extent for the purpose
of arbitration of any dispute, controversy or claim arising out of, in
connection with, or relating to the Loan or any Loan Document.  The parties hereby further agree to waive,
each to the other, any claims for punitive damages and agree neither an
arbitrator nor any court shall have the power to assess such damages.

No provision of, or the exercise of any rights under,
this Section shall limit or impair the right of any party to any Loan
Document before, during or after any arbitration proceeding to:
(i) exercise self-help remedies such as setoff or repossession;
(ii) foreclose (judicially or otherwise) any Lien on or security interest
in any real or personal Collateral; or (iii) obtain emergency relief from
a court of competent jurisdiction to prevent the dissipation, damage,
destruction, transfer, hypothecation, pledging or concealment of assets or of
Collateral securing any Indebtedness, obligation or guaranty referenced in any
Loan Document.  Such emergency relief may
be in the nature of, but is not limited to: pre judgment attachments,
garnishments, sequestrations, appointments of receivers, or other emergency
injunctive relief to preserve the status quo.

12.11       ADDITIONAL INDEMNITY.  IN ADDITION TO THE INDEMNITY PROVIDED IN
SECTION 10, THE COMPANY SHALL INDEMNIFY AND HOLD THE LENDER, ITS SUCCESSORS,
ASSIGNS, AGENTS, AND EMPLOYEES, HARMLESS 

 53
 

                                                                                                                         

FROM
AND AGAINST ANY AND ALL CLAIMS, ACTIONS, SUITS, PROCEEDINGS, COSTS, EXPENSES,
DAMAGES, FINES, PENALTIES, AND LIABILITIES, INCLUDING, WITHOUT LIMITATION,
ATTORNEYS’ FEES AND COSTS, ARISING OUT OF, CONNECTED WITH, OR RESULTING FROM
(A) THE OPERATION OF THE COMPANY’S BUSINESSES, (B) THE LENDER’S
PRESERVATION OR ATTEMPTED PRESERVATION OF COLLATERAL, AND (C) ANY FAILURE
OF THE SECURITY INTERESTS AND LIENS IN THE COLLATERAL GRANTED TO THE LENDER
PURSUANT TO THIS AGREEMENT TO BE OR TO REMAIN PERFECTED OR TO HAVE THE PRIORITY
AS CONTEMPLATED THEREIN REGARDLESS OF WHETHER THE CLAIM IS CAUSED BY OR ARISES
OUT OF, IN WHOLE OR IN PART, THE NEGLIGENCE OF THE ANY INDEMNIFIED PARTY OR MAY
BE BASED ON THE STRICT LIABILITY OF ANY INDEMNIFIED PARTY.  THIS INDEMNITY SHALL NOT APPLY TO THE EXTENT
THE SUBJECT OF THE INDEMNIFICATION IS CAUSED BY OR ARISES OUT OF THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE LENDER. 
AT THE LENDER’S REQUEST, THE COMPANY SHALL, AT ITS OWN COST AND EXPENSE,
DEFEND OR CAUSE TO BE DEFENDED ANY AND ALL SUCH ACTIONS OR SUITS THAT MAY BE
BROUGHT AGAINST THE LENDER AND, IN ANY EVENT, SHALL SATISFY, PAY, AND DISCHARGE
ANY AND ALL JUDGMENTS, AWARDS, PENALTIES, COSTS, AND FINES THAT MAY BE
RECOVERED AGAINST THE LENDER IN ANY SUCH ACTION, PLUS ALL ATTORNEYS’ FEES AND
COSTS RELATED THERETO TO THE EXTENT PERMITTED BY APPLICABLE LAW; PROVIDED,
HOWEVER, THAT THE LENDER SHALL GIVE THE COMPANY (TO THE EXTENT THE LENDER SEEKS
INDEMNIFICATION THEREFOR FROM THE COMPANY UNDER THIS SECTION 12.11) WRITTEN
NOTICE OF ANY SUCH CLAIM, DEMAND, OR SUIT AFTER THE LENDER HAS RECEIVED WRITTEN
NOTICE THEREOF, AND THE LENDER SHALL NOT SETTLE ANY SUCH CLAIM, DEMAND, OR
SUIT, IF THE LENDER SEEKS INDEMNIFICATION THEREFOR FROM THE COMPANY, WITHOUT
FIRST GIVING NOTICE TO THE COMPANY OF THE LENDER’S DESIRE TO SETTLE AND
OBTAINING THE CONSENT OF THE COMPANY TO THE SAME, WHICH CONSENT THE COMPANY
HEREBY AGREES NOT TO UNREASONABLY WITHHOLD. ALL OBLIGATIONS OF THE COMPANY
UNDER THIS SECTION 12.11 SHALL SURVIVE THE PAYMENT OF THE NOTE AND THE
OBLIGATIONS.

12.12       No Waivers Except
in Writing.  No failure or delay on
the part of the Lender in exercising any power or right hereunder or under any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  No notice to or demand on the Company or any
other Person in any case shall entitle the Company or such other Person to any
other or further notice or demand in similar or other circumstances.

12.13       WAIVER OF JURY TRIAL.  AS TO THIS AGREEMENT EACH OF THE COMPANY AND
LENDER HEREBY (a) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY A JURY, AND (b) WAIVES ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY 

 54
 

                                                                                                                         

SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY THE COMPANY AND THE LENDER, AND
THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE
AS TO WHICH THE RIGHT OF A JURY TRIAL WOULD OTHERWISE ACCRUE. THE LENDER AND
THE COMPANY ARE HEREBY AUTHORIZED AND REQUESTED TO SUBMIT THIS AGREEMENT TO ANY
COURT HAVING JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES HERETO, SO AS
TO SERVE AS CONCLUSIVE EVIDENCE OF THE FOREGOING WAIVER OF THE RIGHT TO JURY
TRIAL.  FURTHER THE COMPANY AND THE
LENDER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF ANY OF THEM,
RESPECTIVELY, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO ANY OF THE
UNDERSIGNED THAT EITHER OF THE LENDER OR THE COMPANY WILL NOT SEEK TO ENFORCE
THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.

12.14       Multiple
Counterparts.  Multiple
Counterparts.  This Agreement may be
executed in any number of counterparts, all of which, taken together, shall
constitute one and the same instrument.

12.15       No Third Party
Beneficiaries.  This Agreement is for
the sole and exclusive benefit of the Company and Lender.  This Agreement does not create, and is not
intended to create, any rights in favor of or enforceable by any other
Person.  This Agreement may be amended or
modified by the agreement of the Company and Lender, without any requirement or
necessity for notice to, or the consent of or approval of any other Person.

12.16       RELEASE OF LENDER LIABILITY.  TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW
FROM TIME TO TIME IN EFFECT, THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY (AND AFTER IT HAS CONSULTED WITH ITS OWN ATTORNEY) IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT NO CLAIM MAYBE MADE BY THE COMPANY AGAINST THE
LENDER OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS, ACCOUNTANTS,
AGENTS OR INSURERS, OR ANY OF ITS OR THEIR SUCCESSORS AND ASSIGNS, FOR ANY
SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY BREACH
OR WRONGFUL CONDUCT (WHETHER THE CLAIM IS BASED ON CONTRACT OR TORT OR DUTY
IMPOSED BY LAW) ARISING OUT OF, OR RELATED TO, THE TRANSACTIONS CONTEMPLATED BY
ANY OF THIS AGREEMENT, THE NOTE, OR ANY OTHER LOAN DOCUMENTS, OR ANY ACT,
OMISSION, OR EVENT OCCURRING IN CONNECTION HEREWITH OR THEREWITH. IN
FURTHERANCE OF THE FOREGOING, THE COMPANY HEREBY WAIVES, RELEASES AND AGREES
NOT TO SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND
WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

12.17       Entire Agreement;
Amendment.  This Agreement, the Note,
and the other Loan Documents referred to herein embody the final, entire
Agreement among the parties hereto and supersede any and all prior commitments,
agreements, representations, and understandings, 

 55
 

                                                                                                                         

whether written
or oral, relating to the subject matter hereof. 
The provisions of this Agreement and the other Loan Documents to which
the Company is a party maybe amended or waived only by an instrument in writing
signed by the parties hereto.

12.18       NO ORAL AGREEMENTS.  THE WRITTEN LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.

[Signature Pages Follow]

 56

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

	
  

  	
   

  	
  COMPANY:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SIRVA MORTGAGE, INC.,

  an Ohio corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
          /s/
  Paul Klemme

  
	
   

  	
   

  	
   

  	
          PAUL
  KLEMME, President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
  LENDER:

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WASHINGTON MUTUAL BANK,

  a federal association

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
      /s/ Ben Culver

  
	
   

  	
   

  	
  Name:

  	
      Ben Culver

  
	
   

  	
   

  	
  Title:

  	
      Vice President

  
											

 

 

	
  EXHIBITS:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  —

  	
   

  	
  Advance Request (Single Family Mortgage Loans)

  
	
  B

  	
   

  	
  —

  	
   

  	
  Existing Company Indebtedness

  
	
  C

  	
   

  	
  —

  	
   

  	
  Collateral Procedures and Documentation

  
	
  D

  	
   

  	
  —

  	
   

  	
  Shipping Instructions

  
	
  E

  	
   

  	
  —

  	
   

  	
  Trust Receipt

  
	
  F

  	
   

  	
  —

  	
   

  	
  Officer’s Certificate

  
	
  G

  	
   

  	
  —

  	
   

  	
  Subsidiaries

  
	
  H

  	
   

  	
  —

  	
   

  	
  Litigation

  
	
  I

  	
   

  	
  —

  	
   

  	
  Trade Names

  
	
  J

  	
   

  	
  —

  	
   

  	
  Certificate of Corporate Resolutions

  
	
  K

  	
   

  	
  —

  	
   

  	
  Bailee Letter

  
	
  L

  	
   

  	
  —

  	
   

  	
  Investors

  
	
  M

  	
   

  	
  —

  	
   

  	
  Legal Opinion

  
	
  N

  	
   

  	
  —

  	
   

  	
  Promissory Note

  
	
  O

  	
   

  	
  —

  	
   

  	
  Lenders, Aggregate Commitment Amount, and Commitment
  Amount

  
	
  P

  	
   

  	
  —

  	
   

  	
  Intentionally deleted

  
	
  Q

  	
   

  	
  —

  	
   

  	
  Form of Assignment and AcceptanceExhibit 10.31

	
  

  	
   

  	
  REVOLVING
  NOTE

  (LIBOR and/or Prime)

  
	
  $10,000,000.00

  	
   

  	
  655787/00003

  
	
   

  	
   

  	
  Irvine, California

  
	
   

  	
   

  	
  April 27, 2007

  

 

On May 1, 2008 (“Termination Date”), SM&A, a Delaware corporation (“Borrower”), promises to
pay to the order of City National Bank,
a national banking association (“CNB”), at its office in this city, in United
States Dollars and in immediately available funds, the principal sum of Ten Million Dollars ($10,000,000.00) (“Revolving Credit
Commitment”) or so much thereof as may be advanced and then outstanding, plus
interest on the unpaid balance, until fully repaid, at a rate computed on the
basis of a 360-day year, actual days elapsed, at the rates, times and in
accordance with the terms set forth below.

As provided herein, the principal of this Note may be
borrowed, repaid and reborrowed from time to time prior to the Termination
Date, provided at the time of any borrowing no Event of Default (as hereinafter
defined) exists, and provided further that the total borrowings outstanding at
any one time shall not exceed the lesser of (i) the Revolving Credit
Commitment or (ii) the Revolving Credit Commitment, less Letters of Credit
issued and outstanding under that certain Agreement for Issuance of Letters of
Credit of even date herewith between Borrower and CNB. Each borrowing and
repayment hereunder shall be noted in the books and records of CNB. The excess
of borrowings over repayments shall evidence the principal balance due hereon
from time to time and at any time. Borrowings hereunder shall be presumed to
have been made to or for the benefit of Borrower when made as noted in such
books and records.

For purposes of this Note, the following definitions
shall apply:

“Business Day” means a day that
CNB’s Head Office is open and conducts a substantial portion of its business.

“Eurocurrency Reserve Requirement”
means the aggregate (without duplication) of the rates (expressed as a decimal)
of reserves (including, without limitation, any basic, marginal, supplemental,
or emergency reserves) that are required to be maintained by banks during the
Interest Period under any regulations of the Board of Governors of the Federal
Reserve System, or any other governmental authority having jurisdiction with
respect thereto, applicable to funding based on so-called “Eurocurrency
Liabilities”, including Regulation D (12 CFR 204).

“Interest Period” means the
period commencing on the date a LIBOR Loan is made (including the date a Prime
Loan is converted to a LIBOR Loan, or a LIBOR Loan is renewed as a LIBOR Loan,
which, in the latter case, shall be the last day of the expiring Interest
Period) and ending on the first day of the month occurring prior to or on the
date which is one (1), three (3), six (6), nine (9) or twelve (12) months thereafter,
as selected by the Borrower; provided, however, no Interest Period may extend
beyond the Termination Date.

“LIBOR Base Rate” means the
British Banker’s Association definition of the London InterBank Offered Rates
as made available by Bloomberg LP, or such other information service available
to CNB, for the applicable monthly period upon which the Interest Period is
based for the LIBOR Loan selected by Borrower and as quoted by CNB on the
Business Day Borrower requests a LIBOR Loan or on the last Business Day of an
expiring Interest Period.

“LIBOR Interest Rate” means the
rate per year (rounded upward to the next one-sixteenth (1/16th) of one percent
(0.0625%), if necessary) determined by CNB to be the quotient of (a) the
LIBOR Base Rate divided by (b) one minus the Eurocurrency Reserve
Requirement for the Interest Period; which is expressed by the following
formula:

	
  LIBOR Base Rate

  
	
  1 -
  Eurocurrency Reserve Requirement

  

 

“LIBOR Loan” means any Loan tied to the LIBOR Interest Rate.

“Loan(s)” means a borrowing under this Note.

“Prime Loan” means any Loan tied
to the Prime Rate. A Loan hereunder shall be a Prime Loan any time it is not a
LIBOR Loan.

“Prime Rate” means the rate most
recently announced by CNB at its principal office in Beverly Hills, California,
as its “Prime Rate.” Any change in the interest rate resulting from a change in
the Prime Rate shall be effective on the day on which each change in the Prime
Rate is announced by CNB.

1.             Interest on Loans.   Each
Loan shall bear interest from disbursement until due (whether at stated
maturity, by acceleration or otherwise) at a rate equal to, at Borrower’s
option, either (a) for a LIBOR Loan, the LIBOR Interest Rate plus two and
one quarter of one percent (2.25%) per annum, or (b) for a Prime Loan, the
fluctuating Prime Rate minus one half of one percent (-0.50%) per annum.
Interest on the Loans shall accrue daily and be payable (a) monthly, in
arrears, on the first day of the next month, commencing on the first such date
following disbursement; and (b) if a LIBOR Loan, upon any prepayment of
any LIBOR Loan (to the extent accrued on the amount prepaid.) Anything herein
to the contrary notwithstanding, all principal and interest remaining unpaid on
the Termination Date shall be immediately due and payable.

2.             Procedure
for LIBOR Loans.   Borrower may request that a Loan be a
LIBOR Loan, if herein allowed (including conversion of a Prime Loan to a LIBOR
Loan, or continuation of a LIBOR Loan as a LIBOR Loan upon the expiration of
the Interest Period). Borrower’s request shall be irrevocable, shall be made to
CNB, orally or in writing or using the form “Notice of Borrowing/Interest
Selection” form attached hereto as Exhibit “A”, no earlier than two (2)
Business Days before and no later than 1:00 p.m. Pacific Time on the date
the LIBOR Loan is to be made, and shall specify the Interest Period, the amount
of the LIBOR Loan, and such other information as CNB requests. If Borrower
fails to select a LIBOR Loan in accordance herewith, the Loan shall be a Prime
Loan, and any LIBOR Loan shall be deemed a Prime Loan upon expiration of the
Interest Period.

3.             Availability of LIBOR
Loans.   Notwithstanding anything herein to the contrary, each
LIBOR Loan must be in the minimum amount of $500,000.00 and increments of
$100,000.00. Borrower may not have more than five (5) LIBOR Loans outstanding
at any one time under the Revolving Credit Commitment. Borrower may have Prime
Loans and LIBOR Loans outstanding simultaneously.

4.             Prepayment of Principal.   Borrower
may prepay the principal amount outstanding on a Prime Loan at any time and in
any amount without a prepayment fee. Borrower may not make a partial principal
prepayment on a LIBOR Loan. Borrower may prepay the full outstanding principal
balance on a LIBOR Loan prior to the end of the Interest Period, provided,
however, that such prepayment is accompanied by a fee (“LIBOR Prepayment Fee”)
equal to the amount, if any, by which (a) the additional interest which
would have been earned by CNB had the LIBOR Loan not been prepaid exceeds
(b) the interest which would have been recoverable by CNB by placing the
amount of the LIBOR Loan on deposit in the LIBOR market for a period starting
on the date on which it was prepaid and ending on the last day of the
applicable Interest Period. CNB’s calculation of the LIBOR Prepayment Fee shall
be conclusive absent manifest error.

5.             Suspension of LIBOR Loans.   In
the event CNB, on any Business Day, is unable to determine the LIBOR Base Rate
applicable for a new, continued, or converted LIBOR Loan for any reason, or any
law, regulation, or governmental order, rule or determination, makes it
unlawful for CNB to make a LIBOR Loan, Borrower’s right to select LIBOR Loans
shall be suspended until CNB is again able to determine the LIBOR Base Rate or
make LIBOR Loans, as the case may be. During such suspension, new Loans,
outstanding Prime Loans and LIBOR Loans whose Interest Periods terminate may
only be Prime Loans.

6.             Late Charge.   Borrower
shall pay to CNB a late charge of 5% or $10.00, whichever is greater, of any
payment not received by CNB on or before the 10th day after the payment is due.

The occurrence of any of the
following with respect to any Borrower or guarantor of this Note or any general
partner of such Borrower or guarantor shall constitute an “Event of Default”
hereunder:

1.                                       Failure
to make any payment of principal or interest when due under this Note.

2.                                       Filing
of a petition by or against any of such parties under any provision of the Bankruptcy Code;

3.                                       Appointment
of a receiver or an assignee for the benefit of creditors;

4.                                       Commencement
of dissolution or liquidation proceedings or the disqualification (under any
applicable law or regulation) of any of such parties which is a corporation,
partnership, joint venture or any other type of entity;

5.                                       Death
or incapacity of any of such parties which is an individual;

6.                                       Revocation
of any guaranty of this Note, or any guaranty of this Note becomes
unenforceable as to any future advances under this Note;

 2
 

7.                                       Any
financial statement provided by any of such parties to CNB is false or
materially misleading;

8.                                       Any
material default in the payment or performance of any obligation, or any
default under any provision of any contract or instrument pursuant to which any
of such parties has incurred any obligation for borrowed money, any purchase
obligation or any other liability of any kind to any person or entity,
including CNB;

9.                                       Any
sale or transfer of all or a substantial part of the assets of any of such
parties other than in the ordinary course of business;

10.                                 Any
violation, breach or default under this Note, any letter agreement, guaranty,
security agreement, deed of trust, subordination agreement or any other
contract or instrument executed in connection with this Note or securing this
Note;

11.                                 Borrower
creates, incurs, assumes or permits to exist any indebtedness in excess of
$1,000,000.00, except indebtedness to CNB and trade debt incurred in the
ordinary course of business, without CNB’s prior written consent;

12.                                 Borrower
makes or commits to make expenditures for capital assets (including capitalized
lease expenditures and acquisitions) of more than $3,000,000.00 in the
aggregate for Borrower and all Subsidiaries in any fiscal year, without CNB’s
prior written consent;

13.                                 Borrower
mortgages, pledges, hypothecates, grants or contracts to grant any security
interest of any kind in any of its property or assets to anyone, except
purchase money security interest, except CNB, without CNB’s prior written
consent.

14.                                 Failure
of Borrower to furnish CNB, within the times specified, the following
statements:

14.1                           Within
forty-five (45) days after the end of each of the first three quarterly
accounting period of each fiscal year, a financial statement consisting of not
less than a balance sheet and income statement, reconciliation of net worth and
statement of cash flows, prepared in accordance with generally accepted
accounting principles consistently applied, which financial statement may be
internally prepared;

14.2                           Within
one hundred twenty (120) days after the close of each fiscal year, a copy of
the annual audit report for such year for Borrower and the Subsidiaries
including therein a balance sheet, income statement, reconciliation of net
worth and statement of cash flows, with notes thereto, the balance sheet,
income statement and statement of cash flows to be audited by a certified
public accountant acceptable to CNB, and certified by such accountants to have
been prepared in accordance with generally accepted accounting principles
consistently applied; and

14.3                           Such
additional information, reports and/or statements as CNB may, from time to
time, reasonably request.

15.                                 Failure
of Borrower to maintain the following:

15.1                           Tangible
Net Worth of not less than $29,000.00;

15.2                           A
ratio of Total Senior Liabilities to Tangible Net Worth of not more than 1.00
to 1.00; and

15.3                           A
ratio of Current Assets to Current Liabilities of not less than 2.00 to 1.00.

For purposes of this Note, the following terms have
the following meanings:

“Current Assets” shall be
determined on a consolidated basis for Borrower and the Subsidiaries in
accordance with generally accepted accounting principles, consistently applied,
excluding, however, from the determination of Current Assets, loans to
shareholders, management or employees, amounts due from Subsidiaries or
affiliates, deferred costs, and other intangible assets.

 3
 

“Current Liabilities” shall be
determined on a consolidated basis for Borrower and the Subsidiaries in
accordance with generally accepted accounting principles, consistently applied,
and shall include without limitation (a) all payments on Subordinated Debt
required to be made within one (1) year after the date on which the
determination is made; and (b) all indebtedness payable to stockholders,
affiliates, Subsidiaries or officers regardless of maturity, unless such
indebtedness shall have been subordinated to CNB, on terms satisfactory to CNB.

“Subsidiary” shall mean any
corporation, the majority of whose voting shares are at any time owned,
directly or indirectly by Borrower and/or by one or more Subsidiaries.

“Tangible Net Worth” shall mean
the total of all assets appearing on a balance sheet prepared in accordance
with generally accepted accounting principles consistently applied for Borrower
and the Subsidiaries on a consolidated basis, minus (a) all intangible
assets including, without limitation, unamortized debt discount, affiliate,
employee and officer receivables or advances, goodwill, research and
development costs, patents, trademarks, the excess of purchase price over
underlying values of acquired companies, any covenants not to compete, deferred
charges, copyrights, franchises and appraisal surplus; minus (b) all
obligations which are required by generally accepted accounting principles
consistently applied to be reflected as a liability on the consolidated balance
sheet of Borrower and the Subsidiaries; minus (c) the amount, if any, at
which shares of stock of a non-wholly owned Subsidiary appear on the asset side
of Borrower’s consolidated balance sheet, as determined in accordance with
generally accepted accounting principles consistently applied; minus
(d) minority interests; and minus (e) deferred income and reserves not
otherwise reflected as a liability on the consolidated balance sheet of
Borrower and the Subsidiaries.

“Total Senior Liabilities” shall
mean, as of any date of determination, the amount of all obligations that
should be reflected as a liability on a consolidated balance sheet of Borrower
and the Subsidiaries prepared in accordance with generally accepted accounting
principles, consistently applied, less subordinated debt.

Upon the occurrence of any Event of Default, CNB, at
its option, may declare all sums of principal and interest outstanding
hereunder to be immediately due and payable without presentment, demand,
protest or notice of dishonor, all of which are expressly waived by Borrower,
and CNB shall have no obligation to make any further advances hereunder. Borrower
agrees to pay all costs and expenses, including reasonable attorneys’ fees,
expended or incurred by CNB (or allocable to CNB’s in-house counsel) in
connection with the enforcement of this Note or the collection of any sums due
hereunder and irrespective of whether suit is filed.

Upon the occurrence of any Event of Default (and
without constituting a waiver of the Event of Default), and until the Event of
Default has been cured, the outstanding principal (and interest, to the extent
permitted by law) shall bear additional interest at a fluctuating rate equal to
five percent (5%) per annum higher than the interest rate as determined above;
provided, however, for purposes hereof, a LIBOR Loan shall be treated as a
Prime Loan upon the termination of the Interest Period.

This Note and all matters related hereto shall be
governed by the laws of the State of Delaware. If this Note is executed by more
than one Borrower, all obligations are joint and several.

SM&A, a Delaware corporation

	
  By:

  	
   

  	
  /s/ Cynthia Davis

  	
   

  	
   

  
	
   

  	
   

  	
  Cynthia Davis, CEO

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Steve D. Handy

  	
   

  	
   

  
	
   

  	
   

  	
  Steve D. Handy, SVP/CFO/Secretary

  	
   

  	
   

  

 

	
  BANK USE ONLY

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
				

 

 4
 

EXHIBIT A

NOTICE OF
BORROWING/INTEREST SELECTION

This Notice of Borrowing/Interest Selection (“Notice”)
is executed and delivered by SM&A, a
Delaware corporation (“Borrower”), to City National Bank,
a national banking association (“CNB”), pursuant to that Revolving Note
(“Note”) in the principal sum of $10,000,000.00, dated April 27, 2007,
executed by Borrower in favor of CNB. Any terms not defined herein shall have
the meanings defined in the Note or the Interest Rate Provision.

1.   Request for a
Loan.   Borrower requests a Loan under the Note as
follows:

1.1                                 Interest
Selection - State “LIBOR” or “Prime”:                                     

1.2                               Principal
Amount of Loan: $                               
[If LIBOR Loan, minimum of $500,000.00]

1.3                                 LIBOR
Loan - Effective Date of Interest Period:                                 ,
20     

1.4                                 LIBOR
Loan - Interest Period:             
month(s) [1, 3, 6, 9 or 12 months only]

2.   Conversion to
LIBOR Loan.   Borrower requests conversion of the
outstanding Prime Loan to a LIBOR Loan.

2.1                                 Effective
Date of Conversion:                        ,
20   

2.2                                 Principal
Amount of Conversion: $                          
[minimum of $500,000.00]

2.3                                 Interest
Period:                  
month(s) [1, 3, 6, 9 or 12 months only]

3.   Renewal of LIBOR
Loan.   Borrower requests renewing an outstanding
LIBOR Loan as follows:

3.1                                 Principal
Amount of Renewal of LIBOR Loan: $                        
[minimum of $500,000.00] (Amount of LIBOR Loan not renewed as a LIBOR Loan will
be a Prime Loan)

3.2                                 Date
of Renewal:                                  ,
20      [last date of current
Interest Period]

3.3                                 Interest
Period:                          
month(s) [1,3, 6, 9 or 12 months only]

4.   Conversion to
Prime Loan.   LIBOR Loans shall automatically convert
to a Prime Loan at the end of an Interest Period if CNB fails to timely receive
a Notice for an outstanding LIBOR Loan.

5.   Warranty.   In connection with the action requested herein,
Borrower hereby represents and warrants to CNB that, as of the date of such
request, no Event of Default has occurred and is continuing.

This Notice is executed on                                             ,
20     .

	
  “Borrower”

  	
   

  	
  SM&A, a Delaware
  corporation

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Cynthia Davis, CEO

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Steven D. Handy, SVP/CFO/Secretary

  

 

 5

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