Document:

Prepared by MERRILL CORPORATION

 

SEPARATION AND GENERAL RELEASE AGREEMENT

 

 

This Separation and General Release Agreement (the “Agreement”)

is entered into by and among Avocent Corporation (“Avocent”), Apex Inc. (“Apex”),

and Barry L. Harmon (“Mr. Harmon”) to set forth the terms

and conditions of the termination of Mr. Harmon’s employment with Avocent

and Apex.  Avocent and Apex are

collectively referred to as “Employer” in this Agreement.

 

1.             Termination of Employment.  Effective at the close of

business on Friday, September 28, 2001, Employer and Mr. Harmon

hereby agree that Mr. Harmon will resign as an employee and officer of

Employer and its affiliates.

 

2.             Benefits.  In consideration for (i) the complete

release from Mr. Harmon described in Section 8 of this Agreement and (ii)

the extension of Mr. Harmon’s noncompetition obligation described in Section 11

of this Agreement, Employer and Mr. Harmon agree that, subject to compliance by

Mr. Harmon with the terms and conditions of this Agreement and in exchange for

Mr. Harmon’s signature on this Agreement and on Attachments A, B

and C, Mr. Harmon will:

 

(a)           through

September 28, 2002, receive a biweekly payment of $9,809.60 (less required

withholding and deductions);

 

(b)           on September 28, 2001, vest in

options to purchase 115,866 shares of common stock of Avocent Corporation (all

exercisable at $15.894849 per share) under the terms and conditions of the Apex

Employee Stock Plan (it being acknowledged by the parties that, immediately

prior to September 28, 2001, Mr. Harmon will also be vested in unexercised

options to purchase a total of 265,808 shares pursuant to the Apex Employee

Stock Plan, pursuant to options granted on December 8, 1998 and March 12,

1999);

 

(c)           on September 28, 2001, vest in

options to purchase 110,000 shares of common stock of Avocent Corporation

(70,000 exercisable at $52.4375 per share and 40,000 exercisable at $22.36 per

share) under the terms and conditions of the Avocent Corporation 2000 Stock

Option Plan (it being acknowledged by the parties that, immediately prior to

September 28, 2001, Mr. Harmon will also be vested in unexercised options

to purchase a total of 30,000 shares pursuant to the Avocent Corporation 2000

Stock Option Plan, pursuant to options granted on September 18, 2000 and May

25, 2001);

 

(d)           on

January 2, 2002, receive a payment of $130,496.39 (less required withholding

and deductions), representing $104,447.00 as his average annual bonus for the

preceding two years and $26,049.39 for accrued but unused vacation;

 

(e)           through

September 28, 2002, be eligible for benefits, including life insurance, Section

401(k) Plan and cafeteria plans, and employee and dependent coverage under

Employer’s medical and dental plans to the same extent as available to other

Employer employees; and

 

(f)            through

December 28, 2002, be able to exercise vested options (including by means of

cashless exercise with a trade for taxes) under the Apex Employee Stock Plan

and the Avocent Corporation 2000 Stock Option Plan (including any options that

become vested as a result of any acceleration provisions described in the

Restated Employment Agreement defined below or in this Section 2).

 

                Other than as expressly set forth herein,

Mr. Harmon hereby waives his right to receive a lump sum severance payment

pursuant to Section 4.2 of that certain Amended and Restated Employment and

Noncompetition Agreement among Avocent, Apex, and Mr. Harmon dated as of

October 31, 2000 (the “Restated Employment Agreement”).  Mr. Harmon acknowledges and agrees that the

benefits in this Section 2 include payment for all his wages and all his

accrued but unused vacation, personal, and sick time through September 28,

2001, and Mr. Harmon further acknowledges that he will not accrue any

additional vacation or be eligible for any additional incentive or bonus payments

from Avocent or Apex for 2001 or thereafter (except amounts previously paid to

him and any matching 401(k) contribution that Employer makes on behalf of all

eligible employees for compensation in 2001).

 

3.             Performance

of Duties; Pay.  Mr.

Harmon agrees that, through the close of business on September 28, 2001, he

will help Employer transition the duties he formerly performed as Senior Vice

President of West Coast Operations. 

Effective on September 7, 2001, Mr. Harmon will be relieved of

his regular, day-to-day responsibilities with Employer, and he agrees that,

through September 28, 2002, he will be reasonably available upon reasonable

advance notice to confer and consult with Employer on matters with which he is

familiar.  Mr. Harmon’s obligations

pursuant to this Section 3 shall, from and after September 7, 2001,

amend and supersede Mr. Harmon’s obligations pursuant to Section 1 of

the Restated Employment Agreement. 

Mr. Harmon acknowledges that he will be entitled to receive the

consideration specified in Section 2 of this Agreement only if he is not in

material breach of this Agreement (including the obligation to provide the

services described in this Section 3 and the confidentiality and noncompetition

obligations described in Section 11 of this Agreement), and only if he signs

and returns Attachment A confirming that he does not revoke the

Agreement, and provided that Attachment A is signed not fewer than eight

(8) calendar days after Mr. Harmon signs this Agreement.  Mr. Harmon also understands and agrees

that, as an additional condition to receiving or retaining the consideration

(including any Avocent shares received on the exercise of stock options)

provided for in Section 2 of this Agreement, Mr. Harmon must execute and

return to Employer the Confirmation of Separation and General Release Agreement

attached as Attachment B, which may not be signed any earlier than

September 28, 2002.  In the event that

Avocent determines that Mr. Harmon is in material breach of his

obligations pursuant to this Section 3, Avocent will, not less than five

(5) business days prior to withholding any consideration specified in Section 2

of this Agreement, provide Mr. Harmon with written notice of such material

breach.

 

4.             Medical

Insurance.  Pursuant

to his rights under the federal COBRA statute and regulations and subject to

the conditions of COBRA, Mr. Harmon and his eligible dependents have the

opportunity to continue group medical insurance after September 28, 2002,

through Employer for a period of 18 months at his expense.

 

5.             Mutual

Nondisparagement. 

Mr. Harmon agrees that he will not make any disparaging or

derogatory remarks about Avocent or Apex, their affiliates, or any of their

officers, directors, employees, or products. 

Avocent, Apex, and their officers, directors, and employees agree not to

make any disparaging or derogatory remarks about Mr. Harmon or his

performance at Employer.

 

6.             Return of

Property.  Mr. Harmon agrees

to return all of Employer’s property in his possession or under his control, including,

but not limited to, laptop computer, files, documents of any kind, credit

cards, access codes to software and the telephone system, and keys; provided,

however, that Mr. Harmon shall be entitled to retain possession and use of

his cell phone through September 28, 2002. 

Such property shall be returned no later than September 7, 2001.

 

7.             Covenant Not

to Sue.  Mr. Harmon

represents that he has not filed any complaints, charges, or lawsuits against

Avocent or Apex or any of their affiliates, and Mr. Harmon agrees that he

will not do so at any time hereafter other than to enforce the terms of this

Agreement.  Employer represents that it

has not filed any complaints, charges, or lawsuits against Mr. Harmon and that,

on the date of this Agreement, its executive officers have no actual knowledge

of any basis for doing so.

 

8.             Complete

Release.  In consideration of

the payments and other benefits (including the extension of the period during

which his stock options may be exercised) described in Section 2, some of which

Mr. Harmon is not otherwise entitled to receive and which are given to him

specifically in exchange for this release (and for the extension of the

noncompetition provision as described in Section 11) as a result of

negotiations between himself and Employer, Mr. Harmon, on behalf of himself and

his heirs, successors, and assigns, releases and discharges Avocent, Apex, and

their affiliated and predecessor organizations, their employee benefit plans,

their current and former directors, officers, agents, employees, and attorneys,

and each of their respective successors and assigns (the “Released Parties”), from any

and all claims, charges, causes of action, and damages (including attorneys’

fees and costs actually incurred), known and unknown (“Claims”), including those

Claims related in any way to Mr. Harmon’s employment with Employer or the

termination of his employment relationship with Employer arising prior to the

effective date of this Agreement.  Mr.

Harmon specifically acknowledges and agrees that the payments and other

benefits described in this Agreement are a full and complete satisfaction of

all obligations owed by Employer to him under the terms and conditions of the

Restated Employment Agreement, and Mr. Harmon hereby waives and release any

rights under such Restated Employment Agreement.

 

For the purposes of implementing a full and complete

release and discharge of Employer and the other Released Parties, and each of

them, Mr. Harmon expressly acknowledges that this Separation and General

Release Agreement is intended to include in its effect, without limitation, all

Claims which he does not know or suspect to exist in his favor at the time he

signs this Agreement, and that this Agreement is intended to fully and finally

resolve any such Claim or Claims.

 

This Release specifically includes but is not limited

to rights and claims under the local, state or federal laws prohibiting

discrimination in employment, including the Civil Rights Acts, The Americans

with Disabilities Act, the Washington Law Against Discrimination (or any other

state or local law against discrimination), The Age Discrimination in

Employment Act, the Family and Medical Leave Act, the Employee Retirement

Income Security Act, as well as any other state or federal laws or common law

theories relating to discrimination in employment, the termination of

employment, or personal injury, including without limitation all claims for

breach of contract, fraud, defamation, loss of consortium, infliction of

emotional distress, additional compensation, back pay or benefits (other than

as provided for in this Agreement).

 

                9.             Voluntary Agreement; Full Understanding;

Advice of Counsel. 

Mr. Harmon understands and acknowledges the significance of this

Agreement and acknowledges that this Agreement is voluntary and has not been

given as a result of any coercion. 

Mr. Harmon acknowledges that he has been given at least twenty-one

(21) days after receipt of this document during which to consider whether he

wanted to sign it (but that he need not wait 21 days if he so desires).  Mr. Harmon also acknowledges that he has

been given full opportunity to review and negotiate this Agreement, that he has

consulted with his legal counsel, and that he executes this Agreement only

after full reflection and analysis.

 

                10.          Nonadmission.  This Separation and General Release Agreement shall not be

construed as an admission of wrongdoing by Employer or by Mr. Harmon.

 

                11.          Confidentiality and Noncompetition.

(a)           The parties agree to keep the terms

of this Agreement confidential, and not to disclose them to anyone other than

their respective accountants, attorneys, tax authorities and other agents with

a need to know and, in the case of Mr. Harmon, his immediate family.  Notwithstanding the foregoing, Avocent may

disclose the terms of this Agreement to the extent necessary to comply with

applicable laws, rules and regulations, in particular those of the Securities

and Exchange Commission.  After any

disclosure of information deemed confidential pursuant to this Agreement by a

party hereto, the terms so disclosed shall no longer be subject to the

confidentiality obligations of this Section 11.  Mr. Harmon also agrees to keep confidential any proprietary or

confidential information he has regarding Avocent and Apex and their affiliates

which he has obtained during his employment with Employer, and not to disclose

any such information without the prior written approval of Employer.  Notwithstanding the foregoing, Mr. Harmon and

Employer agree and acknowledge that Employer will issue a press release (the “Press

Release”), and may engage in communications with shareholders and

analysts, relating to Mr. Harmon’s resignation.  Mr. Harmon and Employer agree to cooperate in the preparation of

the Press Release and in communications with shareholders and analysts.  Mr. Harmon and Employer agree that any

conversations with shareholders and analysts will not be inconsistent with the

Press Release.  Mr. Harmon agrees that

he will not convey to shareholders or analysts any proprietary or confidential

information of Avocent, Apex or their affiliates.

                                (b)           In consideration of the payments and

other benefits (including the extension of the exercise period for his stock

options) described in Section 2, some of which Mr. Harmon is not otherwise

entitled to receive and which are given to him specifically in exchange for

this extension of the noncompetition provision (and for the complete release as

described in Section 8) as a result of negotiations between himself and

Employer, Mr. Harmon acknowledges and agrees as follows:

                                                (i)            through September 28, 2002, Mr.

Harmon shall not, directly or indirectly, alone or as a partner, joint

venturer, officer, director, employee, consultant, agent, independent

contractor, or stockholder of any company or business, engage in any business

activity in the United States, Canada or Europe which is substantially similar

to or in direct competition with any of the business activities of or services

provided by Avocent, Apex, or any subsidiaries of Avocent or Apex.  Mr. Harmon acknowledges that Employer’s

current business consists of designing, manufacturing and selling console (KVM)

switching systems, digital connectivity solutions, serial connectivity devices,

extension and remote access products, and display products.

                                                (ii)           through September 28, 2003, Mr.

Harmon shall not, directly or indirectly, become an officer, partner, director,

employee, consultant, agent, independent contractor, or stockholder of Raritan

Computer Inc., Rose Electronics, CCC Network Systems, Inc., Belkin Components

(each, a “Competitor”)

or any corporation or partnership that controls, is controlled by or is under

common control with a Competitor.

 

12.          Applicable

Law.  This Agreement

shall be interpreted in accordance with the laws of the State of Washington,

without giving effect to any conflicts of law principles.

 

13.          Notice.  All notices and other

communications required or permitted hereunder shall be in writing, shall be

effective when given, and shall in any event be deemed to be given upon receipt

or, if earlier, (a) one business day after the business day of deposit with

Federal Express or similar overnight courier, freight prepaid or (b) one

business day after the business day of facsimile transmission, if delivered by facsimile

transmission with copy by first class mail, postage prepaid, and shall be

addressed (i) if to Mr. Harmon, at his address as set forth beneath his

signature to this Agreement, and (ii) if to Avocent, at the address of its

principal corporate offices at 4991 Corporate Drive, Huntsville, Alabama 35805

(attention:  Mr. Doyle Weeks) with

a copy to Avocent (attention:  General

Counsel), 9911 Willows Road N.E., Redmond, Washington 98052, or at such other

address as a party may designate by ten days' advance written notice to the

other party pursuant to the provisions above.

                14.          Arbitration.  Any and all disputes arising out of or relating to the

interpretation or application of this Agreement or the breach thereof shall be

resolved by arbitration in King County, Washington using a single arbitrator,

administered by the American Arbitration Association under its National Rules

for the Resolution of Employment Disputes. 

The award shall be in writing. 

Judgment on the award rendered by the arbitrator may be entered in any

court having jurisdiction thereof.  In

the event it is necessary for either party to commence arbitration in

connection with this Agreement or its breach, the prevailing party in such

arbitration shall be entitled to reimbursement for its reasonable costs and

attorneys’ fees incurred.

 

 

PLEASE READ CAREFULLY. 

THIS AGREEMENT INCLUDES

A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

 

	

  Avocent Corporation

  	

   

  	

  Barry L. Harmon

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  By:  /s/

  Doyle C. Weeks

  	

   

  	

  /s/ Barry L. Harmon

  	

   

  
	

  Its: 

  Executive Vice President

  	

   

  	

  Date:  August

  28, 2001

  	

   

  
	

  Date:  August

  28, 2001

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Address:

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Apex Inc.

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  By:  /s/

  Doyle C. Weeks

  	

   

  	

   

  	

   

  
	

  Its: 

  Executive Vice President

  	

   

  	

   

  	

   

  
	

  Date: August 28, 2001

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  

ATTACHMENT

A

 

STATEMENT OF NON-REVOCATION

AS OF THE DATE SHOWN ON THIS FORM

 

 

                By signing below,

I hereby verify that I have chosen not to revoke my agreement to and execute of

the Separation and General Release Agreement. 

My signature confirms my renewed agreement to the terms of that Agreement,

including the release and waiver of any and all claims relating to my

employment with Apex Inc./Avocent Corporation and/or the termination of that

employment.

 

 

 

	

  _______________________________

  	

   

  	

  _______________________________

  
	

  Name (Please Print)

  	

   

  	

  Social Security Number

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  _______________________________

  	

   

  	

  _______________________________

  
	

  Signature*

  	

   

  	

  Date*

  

 

 

 

*DO NOT

SIGN, DATE OR RETURN THIS DOCUMENT UNTIL EIGHT (8) DAYS AFTER YOU SIGN THIS

SEPARATION AND GENERAL RELEASE AGREEMENT.

ATTACHMENT B

 

CONFIRMATION OF SEPARATION AND GENERAL RELEASE

 

 

By signing below, I hereby acknowledge and confirm my

agreement to all the terms of the Separation and General Release Agreement (“Agreement”).  I also agree that, as of the date I sign

this document, I release and waive any and all additional employment claims (e.g.,

statutory employment claims, wrongful discharge types of claims or related

claims, breach of employment contract types of claims, but not claims for

breach of the Agreement itself) I may have relating to my employment with

Avocent Corporation and Apex Inc. and/or the termination of that relationship

which I would not have but for my being an employee of Avocent Corporation and

Apex Inc. since the time I signed the Agreement, as well as releasing and

waiving any and all other claims referenced in Paragraph 8 of the Agreement to

the extent permitted by law.

 

 

 

	

  _______________________________

  	

   

  	

  _______________________________

  
	

  Barry L. Harmon

  	

   

  	

  Date*

  

 

 

 

*DO NOT SIGN, DATE OR RETURN THIS DOCUMENT

BEFORE SEPTEMBER 28, 2002

 

 

ATTACHMENT C

 

RESIGNATION

 

 

Secretary

Avocent Corporation

4991 Corporate Drive

Huntsville, Alabama 35805

 

 

 

                I hereby resign as an employee and officer of Avocent

Corporation and its affiliates effective as of September 28, 2001.

 

 

	

   

  	

   

  
	

   

  	

  Barry L. HarmonPrepared by MERRILL CORPORATION

EXHIBIT

10.20

 

[Pursuant

to Rule 24b-2, certain information has been deleted and filed separately with

the Commission.]

 

AGREEMENT

OF LIMITED LIABILITY COMPANY OF

COMMUNITY

FIRST MORTGAGE, LLC

 

This

Agreement of Limited Liability Company (the "Agreement"), is entered

into June 15, 2001 by and between Wells Fargo Ventures, LLC, with its principal

place of business at 1 Home Campus, Des Moines, Iowa 50328-0001, ("Wells

Fargo Member") and Community First Home Mortgage, Inc. with its principal

place of business at 520 Main, Fargo, ND 58124-0001, (“Community Member”) who

do hereby form the limited liability company agreement of Community First

Mortgage, LLC (the "Company"), pursuant to the Delaware Limited

Liability Company Act, upon the following terms and conditions:

 

ARTICLE I

Definitions and Glossary

of Terms

 

Section 1.1 Definitions. The following terms used in the

Agreement shall have (unless otherwise expressly provided herein or unless the

context otherwise requires) the following respective meanings:

 

"Accountants" means KPMG Peat Marwick, or such other

certified public accountants as the Operating Committee may select.

 

"Act" shall mean the Delaware Limited Liability

Company Act, 6 Del, C. §18-101 through §18-1107, as amended from time to

time.

 

"Affiliate" means any person or entity that directly

or indirectly, through one or more intermediaries, controls, or is controlled

by, or is under common control with, the person or entity specified.

 

“Agreement” shall mean this Agreement of Limited Liability Company

of Community First Mortgage, LLC.

 

"Budget" means the budget established annually

pursuant to Section 8.3.

 

“Capital Account” means, with respect to any Unit Holder, the

account maintained for such Unit Holder in accordance with the provisions of

Section 4.1 hereof.

 

“Capital Contribution" shall mean any contribution to the

capital of the Company in cash or property by a Member whenever made.

 

“Certificate” means the Certificate of Formation of the Company

and any and all amendments thereto and restatements thereof filed on behalf of

the Company with the office of the Secretary of State of the State of Delaware

pursuant to the Delaware Act.

 

“Closing Date” shall mean the date of execution of this

Agreement.

 

"Code" shall mean the Internal Revenue Code of 1986,

as amended.  Any reference to any

specific provision of the Code or any regulations thereunder shall be deemed to

refer also to any successor provisions thereto.

 

"Company" shall mean Community First Mortgage, LLC,

the Delaware limited liability company governed by this Agreement.

 

"Company Distributions" shall mean cash or property

which is distributed pursuant to Section 5.4 or Section 11.7 of this Agreement.

 

"Company Expenses" shall mean all expenditures and

costs paid out by the Company in the course of the conduct of its business.

 

"Company Revenues" shall mean all receipts from

operations and use of assets received by the Company and all other income,

receipts, or gain received by the Company in the course of the conduct of its

business.

 

“Fiscal Year” means (i) the period commencing upon the formation

of the Company and ending on December 31, of the year of formation, (ii) any

subsequent twelve (12) month period commencing on January 1 and ending on

December 31, or (iii) any portion of the period described in Clause (ii) of

this sentence for which the Company is required to allocate Profits, Losses and

other items of company income, gain, loss or deduction pursuant to Article V

hereof.

 

"Intercompany Net Cash Balance" means the net of the

Company's funds on deposit with Wells Fargo and any amounts owed by the Company

to Wells Fargo excluding advances by Wells Fargo pursuant to Section 8.8.

 

"Interest" shall mean the personal property ownership

right of a Member in the Company and shall entitle such Member to an allocation

of Company Revenues and Company Expenses pursuant to Article V of the Agreement

and to a share of the Company Distributions pursuant to Article V of the

Agreement.  Each Member's Interest is

evidenced by and composed of the Units owned by that Member, and such

allocation and share of Company Revenues, Company Expenses, and Company

Distributions shall be determined based upon the number of Units owned by such

Member.

 

"Loan Policies" shall mean those

policies, standards and procedures of Wells Fargo, as amended from time to

time, relating to residential mortgage loan origination by Retail Offices

including the All-Office Memos, Loan Production Memos, Product Catalogs,

Conventional Loan Standards Manual, VA Handbook, FHA Underwriting Manual,

Compliance Manual, Disclosure Manual, Code of Ethics, Ncyclopedia and other

communications with their terminology adjusted to apply to the Company rather

than to Retail Offices.

 

"Losses" shall mean the taxable loss of the Company as

determined for federal income tax purposes under Code section 703(a) including

items separately stated pursuant to section 703(a)(1).

 

“Managing Officer” means the individual

responsible for the day to day operation of the Company.

 

"Member" shall mean a person who has been admitted to

the Company as a member as provided in the Agreement and section 18-301 of the

Act.

 

"Net Cash Available" means cash on

deposit or cash equivalents which includes the Intercompany Net Cash Balance

less amounts required to maintain minimum regulatory net worth requirements (in

excess of other Company assets if otherwise insufficient, or if cash is

required) and less such other amounts the Operating Committee may determine are

required to be set aside in reserve to fund future operating and capital

expenditures.

 

“Wells Fargo” shall mean Wells Fargo Home

Mortgage, Inc., a California corporation.

 

“Operating Committee” means the Operating

Committee of the Company, constituted as provided in Section 6.1.

 

“Person” includes any individual, association,

partnership (general or limited), joint venture, trust, estate, limited

liability company, corporation or partnership, or other legal entity or

organization.

 

"Profits" shall mean the taxable income of the Company

as determined for federal income tax purposes under Code section 703(a)

including items separately stated pursuant to section 703(a)(1).

 

"Retail Offices" means Wells Fargo's

wholly-owned loan production offices in operation from time to time.

 

"Units" with respect to any Member, shall mean the

ownership interests of the particular Member which quantify the share of that

particular Member in the right, privilege, or interest being addressed.

 

“Unit Holder” means any person who holds one (1) or more Units,

regardless of whether such Person is a Member and regardless of whether such

Units were initially acquired by such Person from the Company or by assignment

from another Unit Holder.

 

ARTICLE II

Formation, Name and

Registered Agent

 

Section 2.1  Formation.  Wells Fargo Member and Community Member, by

execution of this Agreement and the filing of the Certificate with the Delaware

Secretary of State, hereby enter into and form the Company as a limited

liability company under and pursuant to the Delaware Act.  The name and mailing address of each Member

or Unit Holder shall be listed on the Schedule of Capital Contributions

attached hereto.  The Company shall be

required to update the names and addresses on the Schedule of Capital

Contributions from time to time as necessary to accurately reflect the

information therein.  Any amendment or

revision to the names and addresses on the Schedule of Capital Contributions

made in accordance with this Agreement shall not be deemed an amendment to this

Agreement.  Any reference in this

Agreement to the Schedule of Capital Contributions shall be deemed to be a

reference to the Schedule of Capital Contributions as amended and in effect

from time to time.  The Members agree

that the rights, powers, duties and liabilities of the Members and Managing

Officer shall be as provided in the Delaware Act, except as otherwise provided

in this Agreement.

 

Section 2.2  Name and

Registered Agent.  The name of the

Company is Community First Mortgage, LLC. 

Its registered agent is Corporation Service Company or such other agent

as the Members may hereafter determine.

 

ARTICLE III

Business Purpose

 

Section 3.1  Character of the

Business.  The purpose of the

Company shall be to carry on the business of residential mortgage lending.

 

Section 3.2  Other

Qualifications.  The Members agree

that the Company shall file or record such documents and take such other

actions under the laws of any jurisdiction as are necessary or desirable to

permit the Company to do business in any such jurisdiction as is selected by

the Company and to promote the limitation of liability for the Members in any

such jurisdiction.

 

Section 3.3  Prohibited

Activities.  The Company shall not

participate in any activity that violates the Real Estate Settlement Procedures

Act of 1974 or any other law or regulation. 

The Company shall not engage in any prohibited activities for a national

bank or its subsidiaries and shall obtain any required regulatory approvals for

a national bank subsidiary before commencing any activity.

 

Section 3.4  Limitations

on Other Activities.

 

(a)  Except as provided in this section, [Confidential

Treatment Requested]

 

(b)  While it is a Member, subject to the

exceptions stated below[Confidential Treatment Requested]

 

(c) [Confidential Treatment Requested]

 

(d)  Neither Member shall be accountable to

Company or to the other Member for any activity or business permitted under

this Article 3 except for the business of Company.  Neither Member shall have any right by virtue of this Agreement

or by their status as a Member to be apprised of the independent business or

activities of the other Member, nor to be allowed to participate therein or to

the income or profits derived therefrom. 

Neither Member shall be required to devote full time to Company, but

only so much time as may be necessary to accomplish the purposes of Company and

the duties specifically set forth in any agreements related to Company.

 

Section 3.5  Transactions

Involving the Members.

 

(a) Community Member

shall cooperate with and promote Company and its loan products to customers of

Community Member or its Affiliates consistent with all applicable legal

requirements. [Confidential Treatment Requested]

 

(b)  Except as may be expressly provided for in

this Agreement or in any agreements executed between Company and any Member or

as approved by the Operating Committee, no payment will be made by Company to

any Member for the services of such Member or the employees of such Member.

 

(c) [Confidential Treatment Requested]

 

ARTICLE IV

Capital Accounts

 

Section 4.1  Capital Accounts.  A separate capital account shall be

maintained for each Member of the Company. 

Each Member’s Capital Contributions and its share of all Company

Revenues shall be credited to its capital account and each Member’s share of

all costs, expenses, losses and Distributions (including return of capital) of

the Company shall be debited to its account, all as allocated under this

Agreement. Each Member's initial Capital

Contribution, as reflected on Exhibit A, is due and payable upon execution of

this Agreement.  Any subsequent Capital

Contribution pursuant to Section 8.8 shall be due and payable within 15 days of

receipt of notice of the need for the additional Capital Contribution.

 

Section 4.2  Units.  A Unit Holder’s limited liability company

interest in the Company shall be represented by the “Unit” or “Units” held by

such Unit Holder.  Each Unit Holder’s

respective Units shall be set forth on the Schedule of Capital Contributions

attached hereto.  Each Unit Holder

hereby agrees that its limited liability company interest in the Company and

its Units shall for all purposes be personal property.  A Unit Holder has no interest in specific

Company property.

 

Section 4.3  Status of

Capital Contributions.

 

(a) 

Except as otherwise provided in this Agreement, the amount of a Unit

Holder’s Capital Contributions may be returned to it, in whole or in part, at

any time, but only with the consent of all Members.  Any such returns of Capital Contributions shall be made to all

Unit Holders in proportion to the number of Units then held by each Unit

Holder.  Notwithstanding the foregoing,

no return of a Unit Holder’s Capital Contributions shall be made hereunder if

such distribution would violate applicable state law.  Under circumstances requiring a return of any Capital Contribution,

no Unit Holder shall have the right to demand or receive property other than

cash, except as may be specifically provided in this Agreement.

 

(b)  Except as

provided in Section 8.8 and by applicable state law, the Members shall be

liable only to make their capital contributions pursuant to Section 4.1 hereof,

and no Member or Assignee shall be required to lend any funds to the Company

or, after a Member’s Capital Contributions have been fully paid pursuant to

Section 4.1 hereof, to make any additional capital contributions to the

Company.  No Unit Holder shall have any

personal liability for the repayment of any Capital Contribution of any other

Member or Assignee.

 

ARTICLE V

Allocation of Revenues,

Expenses, Profits and Losses

 

Section 5.1  Allocation of

Revenues and Expenses.  All Company

Revenues and Company Expenses shall be allocated among the Members in

proportion to their respective Units.

 

Section 5.2  Allocation of

Profits and Losses.  All Profits and

Losses shall be allocated among the Members in proportion to their respective

Units.

 

Section 5.3  Allocation of

Items for Federal Income Tax Purposes. 

To the extent permitted by law, all items of Company taxable income,

gain, loss, credit, and deduction recognized or allowable for Federal income

tax purposes shall be allocated and credited or charged to the Members in the

same manner as the revenues, income, receipts, costs, or expenses giving rise

to such items of taxable income, gain, loss, credit, or deduction are allocated

and credited or charged.  Any Member

allocated and charged a particular cost or expense shall be entitled to such

deductions or credits as are attributable to such cost or expense in computing

such Member's taxable income or tax liability to the exclusion of any other Member.  Upon the sale or other transfer of any asset

of the Company, any recapture of depreciation deductions or other deductions

previously taken shall be allocated to the Member to whom such deductions were

originally allocated, and any recapture of investment tax credit shall be

allocated to the Member to whom such credit was originally allocated.

 

Section 5.4. Distribution of Cash.  All Company Distributions shall be made among the Members in

proportion to their respective Units. 

Cash of the Company which is not required, in the judgment of the

Members, to meet obligations of the Company nor reasonably necessary for future

Company operations shall be distributed not less frequently than

quarter-annually to the Members in proportion to their respective Units, not

later than ninety (90) days after the end of each quarter-annual period with

respect to which such distribution is being made.

 

Section 5.5 [Confidential Treatment Requested]

 

ARTICLE VI

Management of the Company

 

Section 6.1  General.  The overall management and control of the

business and affairs of the Company shall be vested in the Operating Committee

consisting of four individuals, with each Member appointing individuals to the

Operating Committee in proportion to their respective Units.  The Company may have a Managing Officer

appointed by the Operating Committee. 

The Managing Officer of the Company shall not be appointed to the

Operating Committee.  The number of

individuals on the Operating Committee may be reset by the Operating Committee

from time to time, provided that each Member shall appoint individuals to the

Operating Committee in proportion to its respective Units.  Each Member may remove and replace the

individuals appointed by it at any time and for any reason.  Any vacancy on the Operating Committee shall

be filled by the Member that had appointed the individual to the position that

has become vacant.

 

Section 6.2  Operating

Committee Procedures.  Except where

herein expressly provided to the contrary, all decisions with respect to the

management and control of the Company shall be made and agreed to by the

Operating Committee and shall be binding on the Company.  [Confidential Treatment Requested]  Action may be taken by the Operating

Committee by telephone conference, by meeting in person, by written action in

lieu of a meeting or in such other manner approved by all Members.

 

Section 6.3  Loan

Policies.  The Company expressly

adopts the Loan Policies effective on the Closing Date as provided to the

Company by Wells Fargo.  Any updates to

the Loan Policies issued by Wells Fargo shall automatically be adopted by the

Company unless the Operating Committee expressly decides not to adopt a

particular policy.  Any employee who

violates the Loan Policies shall be subject to termination unless the Operating

Committee expressly decides not to terminate the employee.

 

Section 6.4  Major

Decisions.  No act shall be taken or

funds expended or obligation incurred by the Company, any individual on the

Operating Committee, or the Managing Officer with respect to a matter within

the scope of any of the major decisions ("Major Decisions") affecting

the Company, as defined below, unless such Major Decision has been approved by

the Operating Committee.  A decision

shall be a Major Decision if it satisfies one of the following:

 

(a)  Decisions relating to the selection,

evaluation, retention and compensation of the Managing Officer or any other

executive officers of the Company as may be appointed by the Operating

Committee;

 

(b)  Decisions regarding new business ventures

and material deviations by the Company from the Loan Policies in effect from

time to time;

 

(c)  Decisions relating to the hiring policy,

compensation, terms of employment or termination of non–clerical or non–support

staff employees of the Company;

 

(d)  Decisions relating to matters involving

transactions, expenditures, commitments or other contractual obligations (or

groups of similar transactions or such other events) in an amount in excess of [Confidential

Treatment Requested] except transactions to originate, fund and sell

residential real estate mortgage loans that are in the day–to–day

course of the Company's business;

 

(e)  Decisions relating to obtaining any

financing for the Company pursuant to Section 8.8;

 

(f)  Decisions relating to the terms, conditions,

limits and deductibles of any risk financing program in addition to the program

provided by Wells Fargo or its Affiliate pursuant to the Service Agreement

referenced under Section 6.9;

 

(g)  Decisions related to establishing or

maintaining cash, cash equivalents or reserves for the Company;

 

(h)  Decisions relating to amendment or

termination of the Service Agreement referenced under Section 6.9 and obtaining

a substitute service provider upon termination of such Service Agreements; and

 

(i)  Any other decision or action referred to the

Operating Committee by an individual on the Operating Committee which by any

provision of this Agreement or by law is required to be approved by the

Operating Committee.

 

Section 6.5  Managing

Officer. The Managing Officer shall be responsible for the implementation

of the decisions of the Operating Committee and for conducting the ordinary and

usual day–to–day business and affairs of the Company, as limited by

this Agreement.  The Managing Officer of

the Company, shall in good faith use his or her best efforts to implement or

cause to be implemented all Major Decisions approved by the Operating Committee

and to conduct or cause to be conducted the ordinary and usual business of the

Company in accordance with and subject to the direction of the Operating

Committee and the Loan Policies and in accordance with the business plan and

current Budget approved by the Members. 

The Managing Officer may, except as otherwise determined by the

Operating Committee, delegate in writing to other officers, employees or agents

of the Company matters for which the Managing Officer may be responsible in

accordance with this section, but the Managing Officer shall continue to be

responsible for such matters. The initial and successor managing officers are

listed on the Schedule of Initial and Successor Managing Officers.

 

Section 6.6  FHA

Matters.  Section 6.6 shall be

limited in application solely to any and all matters involving the Federal

Housing Administration ("FHA") of the United States Department of

Housing and Urban Development and FHA–insured loans.  In the event of any conflict between the

provisions set forth in this Section and any other provision of this Agreement,

the provisions set forth in this Section will take precedence over all other

provisions of this Agreement with respect to all FHA matters.  The Managing Officer is designated to deal

exclusively with FHA in all aspects of the FHA mortgage insurance program,

including, without limitation, the making of applications for mortgage

insurance claims and collecting the benefits of mortgage insurance for the

Company.  The Managing Officer is hereby

appointed as the managing agent (the "Managing Agent") of the Company

with respect to FHA matters.  The Operating

Committee may choose a person other than the Managing Officer as Managing Agent

on the condition that there will at any time be one and only one Managing Agent

with which FHA deals exclusively.  Any

such substitute person shall have the rights and responsibilities of the

Managing Officer as Managing Agent under this Section.  If (a) the Managing Agent resigns or (b)

another Managing Agent is appointed, FHA will be immediately advised of such

event and, if applicable, the name of the new Managing Agent.  The Company shall inform FHA of any

amendment to this Agreement it intends to make that could affect the Company's

dealings with FHA and FHA–insured mortgages.  Upon dissolution of the Company, any FHA–insured mortgages

owned or serviced by the Company may only be transferred to another FHA–approved

mortgage lender.

 

Section 6.7  Office

Space.  The Members shall lease to

the Company in each of their offices as determined by the Operating Committee,

space from which the Company will conduct the business of the Company.  Such space shall be separately identified

and segregated in a manner required by all applicable laws and

regulations.  Rental rates charged to

the Company by a Member shall be set at rates that reflect actual market rates

for comparable space in the area in which each office used by the Company is

located.  The foregoing lease

arrangements, which shall terminate automatically upon the dissolution of the

Company subject to an additional period as necessary to wind down the business

of the Company, shall be set forth in separate written lease agreements to be

agreed upon and executed between the lessor Member and the Company.

 

Section 6.8  Computer

Network.  If the Company will

process its own loans or otherwise needs access to a loan origination system,

Wells Fargo, or one of its Affiliates, shall lease to the Company (and the

Company shall be required to utilize), the computer software and computer

network used by Retail Offices to conduct a residential mortgage business.  The terms and conditions of these lease

arrangements, which shall terminate automatically upon any dissolution of the

Company subject to an additional period as necessary to wind down the business

of the Company, shall be set forth in a separate written lease agreement to be

agreed upon and executed by the Wells Fargo or its Affiliate and the Company

(attached as Exhibit 1).  Terms of the

lease agreement shall be set at rates that reflect actual rates charged Retail

Offices for Wells Fargo's internal reporting purposes for similar software and

network access as adjusted from time to time.

 

Section 6.9  Service

Agreement.  Wells Fargo, or its

Affiliate, shall provide to the Company, certain services required by the

Company in conducting a residential mortgage lending business, as set forth in

the Service Agreement (attached as Exhibit 2) to be executed between Wells

Fargo and the Company.

 

Section 6.10  Loan

Sales.  The Company shall provide

residential mortgage loan financing to its customers.  Wells Fargo, or one of its Affiliates, shall purchase mortgage

loans if offered by the Company in accordance with the terms of a separate

written Loan Purchase Agreement (attached as Exhibit 3) to be executed by Wells

Fargo or one of its Affiliates, and the Company.  The Company shall sell at least [Confidential Treatment Requested]

of its annual loan production to investors other than Wells Fargo.

 

Section 6.11  Credit

Agreement.  The Company shall fund

its loans through a warehouse line of credit provided by Wells Fargo (attached

as Exhibit 4) or such other source as determined by the Operating Committee.

 

ARTICLE VII

Other Rights, Liabilities

and Obligations of Members

 

Section 7.1  Liability of

Members.  No Member shall be

personally liable for the expenses, liabilities, debts, or obligations of the

Company except as specifically set forth in this Agreement or as provided in

the Act.

 

Section 7.2  Other Provisions

Applicable to Members.  Except as

otherwise specifically provided in this Agreement, no Member shall have the

right to withdraw or retire from, or reduce its contribution to the capital of,

the Company.  No Member shall have the

right to demand or receive property other than cash in return for its Capital

Contribution.  No Member shall have

priority over any other Member either as to the return of its Capital

Contribution or as to profits or distributions except as specifically set forth

in this Agreement.

 

ARTICLE VIII

Accounting and Fiscal

Matters

 

Section 8.1  Maintenance of

and Access to Records.  Wells Fargo

or its Affiliate on behalf of the Company shall keep complete and accurate

books of account and records relative to the Company's business based on

information submitted to it by the Company. 

The accrual method of accounting shall be used by the Company for

financial and income tax purposes.  The

Company's books and records shall at all times be maintained at the principal

business office of Wells Fargo, or the Accountants, or such other place agreed

upon by the Members, and shall be available for inspection by each of the

Members or their duly authorized representatives during reasonable business

hours.  The fiscal year of the Company

shall end on December 31 of each year or such other date as determined by the

Operating Committee and allowed by the Code. Wells Fargo shall cause to be

prepared financial statements in accordance with the Service Agreement attached

as Exhibit 2.

 

Section 8.2  Bank

Accounts.  Wells Fargo shall deposit

all of the funds of the Company into one or more bank accounts for the

Company.  Unless otherwise required by

regulatory authority, each such account shall be established with an Affiliate

of Wells Fargo that holds deposits insured by the Federal Deposit Insurance

Corporation.  Wells Fargo shall separately

account for all funds of the Company. 

The Company may withdraw its funds only to pay the Company's debts, pay

expenses or to be distributed to the Members or as directed by the Operating

Committee pursuant to this Agreement.

 

Section 8.3  Budget.  The Company shall prepare a preliminary annual

Budget for the first partial fiscal year of the Company.  At least thirty (30) days prior to the end

of each fiscal year of the Company, the Managing Officer will develop and

deliver to the Operating Committee for its review and approval a Budget for the

Company for the next fiscal year.  As

set forth in Section 6.4(d), approval of the Budget shall be a Major Decision.

 

Section 8.4  Company Tax

Returns.  Wells Fargo, its

Affiliate, or such other person agreed upon by the Members, shall, for each

fiscal year, cause to be prepared and filed on behalf of the Company such

federal, state and city tax returns as may be required by law, and in

connection therewith, shall make any elections deemed advisable; provided,

however, the Company shall be given prior written notice thereof.  Copies of such tax returns shall be

delivered to each Member within 10 days after each such filing.  The Company's federal and state income tax

returns shall be approved by the Operating Committee in advance of filing.

 

Section 8.5  Tax

Audits.  Wells Fargo or its

Affiliate is hereby designated to manage administrative tax proceedings

conducted by the Internal Revenue Service or state tax authorities with respect

to the Company.  The taking of any

action or the failure to take any action in connection with any such

proceeding, except to the extent required by law, is a matter for Wells Fargo,

subject to the direction of the Operating Committee.  Wells Fargo shall give prompt written notice to the Members of

any such administrative proceeding.  Any

Member has the right to participate in such administrative proceedings relating

to the determination of tax items at the Company level.  Expenses of such administrative proceedings

undertaken by Wells Fargo will be paid for out of the assets of the

Company.  If any Member elects to

participate in such proceedings, the Member will be responsible for its

expenses incurred in connection with such participation.  Further, the cost of any adjustments to a

Member and the cost of any resulting audits or adjustments of a Member’s tax

return, will be borne solely by the affected Member.

 

Section 8.6  Internal

Audit.  The ongoing activities of

the Company shall be subject to regulatory audit by Wells Fargo Audit Services,

Inc. at no direct cost to the Company. 

Wells Fargo Audit Services, Inc. shall have no liability with respect to

the Company.  A copy of any regulatory

audit report prepared by Wells Fargo Audit Services, Inc. related to the

Company shall be provided to the Operating Committee.

 

Section 8.7  The

Accountants.  Any services provided

by the Accountants under this Agreement shall be an expense of the

Company.  The Accountants shall prepare

annual audited financial statements as set forth in Exhibit 2.

 

Section 8.8 [Confidential Treatment Requested]

 

ARTICLE IX

Limitations on

Dispositions of Members' Interests

 

Section 9.1  Basic

Restrictions.  Except as otherwise

provided in this Article IX, no Member may sell, assign, give, hypothecate,

pledge, transfer, bequeath, or otherwise dispose of any or all of its Interest,

in whole or in part, voluntarily, involuntarily, by operation of law, or

otherwise, to any other person or entity.

 

Section 9.2  Representations

and Warranties.  Each Member hereby

represents and warrants to the Company and to the other Members that its

acquisition of its Interest is made as principal for its account for investment

purposes only and not with a view to the resale or distribution of such

Interest.  Each Member agrees that it

will not sell, assign, give, hypothecate, pledge, transfer, bequeath, or

otherwise dispose of any or all of its Interest to any person or entity who or

which does not similarly represent and warrant and agree as provided in this

Section 9.2.

 

Section 9.3  Disposition of

Interests.  The sale, assignment,

gift, hypothecation, pledge, transfer, or other disposition

("Transfer") of Interests by or in respect of a Member shall be

subject to the following conditions and restrictions in addition to any others

which are provided for in this Agreement:

 

(a)  No Member

may Transfer any or all of its Interest without the consent of all of the

Members.

 

(b)  No Member

may Transfer any or all of its Interest if such Transfer would cause the

termination of the Company for Federal income tax purposes.  Any purported Transfer which would cause the

termination of the Company for Federal income tax purposes shall be void ab

initio.  Counsel for the Company

shall give to the Company its opinion, at the expense of the Member seeking to

effect such Transfer, as to whether such Transfer would cause the termination

of the Company for Federal income tax purposes.

 

(c)  No

Transfer of, or offer to Transfer, any Interest may be made unless the Company

shall have received, at the expense of the Member seeking to effect such Transfer

an opinion of counsel satisfactory to the Members that such proposed Transfer

(i) may be effected without registration of the Interest under the Securities

Act of 1933, as amended, and (ii) would not be in violation of any applicable

state securities or "Blue Sky" law (including investment suitability

standards).

 

Section 9.4  Admission of

Transferee as Additional or Substitute Member.  Any person to whom any Interest or portion thereof is Transferred

("Transferee") shall be entitled to be admitted as a Member hereunder

and to have all of the rights herein conferred upon a Member only if

 

(a)  such

transferee's admission as a Member will not violate, nor cause the Company to

violate, any applicable laws, rules, or regulations, including federal and

state securities laws, and either such transferee shall have delivered an

opinion of counsel satisfactory to the Members, or counsel for the Company

shall have delivered an opinion, to such effect;

 

(b)  the

consent of all of the Members shall have been given, which consent may be

evidenced by the execution by all of the Members of a Certificate evidencing

the admission of such transferee as a Member;

 

(c)  the

transferee shall have accepted and agreed to be bound by the terms and

provisions of this Agreement by executing a counterpart thereof and such other

documents or instruments as the Members may require in order to effect the

admission of such transferee as a Member;

 

(d)  such

transferee qualifies and becomes a Member within the meaning of the Act by the

procedures set forth in the Act;

 

(e)  such

transferee shall have delivered to the Members a letter containing a

representation and an agreement in the form set forth in Section 9.2 of this

Agreement;

 

(f)  if the

transferee is not an individual, the transferee shall have provided the Members

with evidence satisfactory to counsel for the Company of its authority to

become a Member under the terms and provisions of this Agreement;

 

(g)  such

transferee pays to the Company a sum which is sufficient to cover all expenses

(including legal fees) connected with the admission of the transferee as a

Member pursuant to this Agreement and the Act, including without limitation the

cost of any opinion of counsel referred to above.

 

Section 9.5  Execution of

Documents, Etc.  Each Member hereby

consents to the execution and recordation on its behalf by the Company of any

amendment hereto required for the purpose of admitting as a Member the

transferee of any or all of the Interest of a Member in the Company in this

Article IX and to the execution and recordation on its behalf of any other

instruments required in connection therewith, and the Company is hereby granted

the right to admit any such transferee upon all of the terms set forth above.  In addition, each Member agrees to execute

at the request of the Company any and all documents required to be executed by

such Member to effect the admission as a Member of the transferee of any or all

of the Interest of a Member in the Company pursuant to this Article IX.

 

Section 9.6  Filings By

Company.  The Company shall

cooperate with any transferee seeking to become a Member by preparing the

documentation required by this Article IX and making all official filings and

publications.

 

Section 9.7  Pledges.  No Member shall mortgage, pledge, or

otherwise encumber all or any part of such Member's Interest in the Company at

any time.

 

Section 9.8  No Withdrawal

Rights Prior to Dissolution.  Prior

to the dissolution of the Company, no Member may withdraw from the Company or

receive any return of capital or other distribution of Company assets in

respect of any withdrawal or attempted withdrawal.

 

ARTICLE X

Amendment of Agreement

 

Section 10.1  Amendment.  Any amendment or supplement to this

Agreement shall only be effective if in writing and if the same shall be

consented to by all of the Members.

 

Section 10.2  Procedure for

Amendment.  Any Member may propose

an amendment or supplement to this Agreement, and any such amendment or

supplement may be proposed by mailing to all of the Members a written request

for consent to such amendment or supplement, accompanied by the text of the

proposed amendment or supplement, and a written statement of the reasons for

such proposal.  A Member shall be deemed

to have voted its Interest in consent to any amendment or supplement hereto if

such Member does not respond in writing, sent to all Members, to such written

request for consent within thirty days from the date of mailing of the same to

such Member.

 

ARTICLE XI

Dissolution

 

Section 11.1  No

Dissolution.  The Company shall not

be dissolved by the admission of additional or substitute Members in accordance

with the terms of this Agreement or by the death, retirement, resignation,

expulsion, bankruptcy or dissolution of a Member or the occurrence of any other

event under the Act that terminates the continued membership of a Member in the

Company except as expressly provided in the Agreement.

 

Section 11.2  Term.  The Company shall be in effect for a term

beginning on the date the Certificate of Formation of the Company is filed with

the Delaware Secretary of State in accordance with the provisions of the Act

and shall continue for a minimum of ten (10) years unless sooner dissolved and

liquidated in accordance with the provisions of this Article.

 

Section 11.3  [Confidential

Treatment Requested]

 

Section 11.4  Bankruptcy.  If:

 

(a)  any Member shall file a voluntary petition

in bankruptcy, or shall be adjudicated a bankrupt or insolvent, or shall file

any petition or answer seeking any reorganization, arrangement, composition,

readjustment, liquidation, dissolution or similar relief for itself under the

present or any future Federal Bankruptcy Act, or any other present or future

applicable Federal, state or other statute or law relative to bankruptcy, insolvency,

or other relief for debtors, or shall seek or consent to or acquiesce in the

appointment of any trustee, receiver, conservator or liquidator of said Member

or of all or any substantial part of its properties or its interest in the

Company (the term "acquiesce" includes, but is not limited to, the

failure to file a petition or motion to vacate or discharge any order, judgment

or decree providing for such appointment within ten (10) days after the

appointment); or

 

(b)  a court of competent jurisdiction shall

enter an order, judgment or decree approving a petition filed against any

Member seeking any reorganization, arrangement, composition, readjustment,

liquidation, dissolution or similar relief under the present or any future

Federal Bankruptcy Act, or any other present or future applicable Federal,

state or other statute or law relative to bankruptcy, insolvency, or other

relief for debtors, and said Member shall acquiesce in the entry of such order

judgment or decree (the term "acquiesce" includes, but is not limited

to, the failure to file a petition or motion to vacate or discharge any order,

judgment or decree within ten (10) days after the entry of the order, judgment

or decree), or such order, judgment or decree shall remain unvacated and unstayed

for an aggregate of ninety (90) days (whether or not consecutive from the date

of entry thereof), or any trustee, receiver, conservator or liquidator of said

Member or of all or any substantial part of its property or its interest in the

Company shall be appointed without the consent or acquiescence of said Member

and such appointment shall remain unvacated and unstayed for an aggregate of

sixty (60) days (whether or not consecutive); or

 

(c)  any Member shall give notice to any

governmental body of insolvency or pending insolvency, or suspension or pending

suspension of operations.

 

then, and in any such event such Member shall be

deemed, as of the date of occurrence of the respective event, to be the

"Electing Member" for purposes of Section 11.8.  The filing date of the  bankruptcy petition shall be the

"Section 11.4 Termination Date" and the Company shall be liquidated

in accordance with Section 11.7.

 

Section

11.5  Automatic Termination.

 

(a) 

In the event:

 

(1)  any

Member, or its Affiliate, is prohibited by a change of law or regulation or an

administrative action or judicial decree subsequent to this Agreement

(including the application or interpretation of the change of law or regulation

or the subsequent administrative action or judicial decree by opinion of

counsel) from participating in the Company substantially upon the material

terms and conditions of this Agreement and the prohibition cannot be corrected

by amendment of the Agreement to put the Members in substantially the same

financial position as prior to the prohibition; or

 

(2) [Confidential Treatment Requested]

 

(b) [Confidential Treatment Requested]  In order for Community Member to elect to

withdraw pursuant to this Section 11.5(b), Community Member must [Confidential

Treatment Requested].  In the

event that Community Member elects to withdraw pursuant to this Section

11.5(b), no Member shall be deemed an “Electing Member”, [Confidential Treatment Requested].

 

(c) [Confidential Treatment Requested]  In order to withdraw pursuant to this

Section 11.5(c), the Member not subject [Confidential Treatment Requested].  In the event the Member not subject [Confidential

Treatment Requested], no Member shall be deemed an “Electing

Member”, the expiration of the thirty day notice period shall be the

termination date (“Section 11.5(c) Termination Date”), and the Company shall be

liquidated pursuant to Section 11.7.

 

Section 11.6  Default.

 

(a)  If any Member fails to perform any of its

obligations set forth in this Agreement, any other Member ("Non–defaulting

Member") shall have the right within 30 days of the date of the default to

give the defaulting party ("Defaulting Member") a written notice of

the default ("Notice of Default"). 

The Notice of Default shall set forth in detail the obligation(s) that

the Defaulting Member has not performed.

 

(b)  If, within a 15–day period following

receipt of the Notice of Default, the Defaulting Member cures such default, it

shall be deemed that the Notice of Default was not given and the Defaulting

Member shall lose no rights hereunder. 

If, within such 15–day period, the Defaulting Member does not cure

such default, the Non–Defaulting Member hereunder shall have the right

within 30 days of the expiration of the 15 day cure period to terminate this

Company by giving the Defaulting Member written notice thereof “Termination

Notice”).  The Company shall terminate

on the date of the Termination Notice ("Section 11.6(b) Termination

Date").  The remedy of the

Non-Defaulting Member shall be limited to the damages provisions provided for

under Section 11.8.

 

(c)  If a Defaulting Member disputes the basis

set forth in the Notice of Default, the Defaulting Member must file for

arbitration pursuant to Section 13.9 below within thirty (30) days of the

Section 11.6 (b) Termination Date.  If

it is ultimately determined by the arbitrator that the Defaulting Member was

not in default as specified in the Notice of Default, then the Non–Defaulting

Member shall be deemed an "Electing Member" under Section 11.8.  The Company shall be deemed to have

terminated on the date of the Termination Notice ("Section 11.6(c)

Termination Date").  The Company

shall be liquidated pursuant to Section 11.7. 

The remedy of the Non-Electing Member shall be limited to the damages

provisions provided for under Section 11.8.

 

Section 11.7 Liquidation.

 

(a)  In the event the Company is terminated, the

Company shall be liquidated as described below.  Upon the earlier of a Section 11.3 Termination Date, a Section

11.4 Termination Date, a Section 11.5(a) Termination Date, a Section 11.5(b)

Termination Date, a Section 11.5(c) Termination Date, a Section 11.6(b)

Termination Date, or a Section 11.6(c) Termination Date:

 

(1)  the Company shall not take any additional

loan applications;

 

(2 [Confidential

Treatment Requested];

 

(3) [Confidential

Treatment Requested];

 

(4)  any restrictions on the activities of the

Members contained in this Agreement shall cease unless the restriction

specifically provides that it shall continue after termination; and

 

(5) 

the Accountants or other third party mutually agreed to between the

Members shall be retained to handle the liquidation consistent with the

provisions of this Agreement.

 

(b)  The assets of the Company shall be paid or

distributed in the following order of priority, unless otherwise required by

applicable law:

 

(1)  To pay (or make provision for the payment

of) all creditors of the Company, including the Members, in the order of

priority provided by law; and

 

(2)  To distribute to the Members in accordance

with (or in direct proportion to if less than) their respective Units, as

adjusted for item (1) above and all Company operations up to and including such

liquidation.

 

[Confidential

Treatment Requested]

 

Section 11.8  Liquidated

Damages.

 

(a)  It is understood that in the course of

operation of the Company, the Members will contribute to the Company

significant funds, resources and knowledge, including information, techniques,

processes and business clientele, the value of which cannot be calculated.  As a material inducement to enter into this

Agreement and to develop and disclose such information, the Members agree to

the liquidated damages provisions set forth in this Section 11.8. [Confidential

Treatment Requested]

 

(1) [Confidential

Treatment Requested]

 

(2) [Confidential

Treatment Requested].

 

(b) [Confidential Treatment Requested]

 

ARTICLE XII

Representations and Warranties; Closing

Requirements

 

Section 12.1  Member

Representations and Warranties. Community Member represents and warrants as

of the Closing Date that:

 

(a)  Community Member is a corporation duly

organized, validly existing and in good standing under the laws of the State of

North Dakota and has all requisite power and authority and licenses to own or

lease its property and to carry on its business as it is now being

conducted.  The execution, delivery and

performance of this Agreement by Community Member have been duly authorized by

all proper action on the part of Community Member, and are within its powers

and will not conflict with or be in violation of Community Member's

organizational documents.  This

Agreement constitutes the legal, valid and binding obligation of Community

Member, enforceable against Community Member in accordance with its terms.

 

(b)  The performance of this Agreement by Community

Member will not violate or result in a breach of, constitute a default under,

give rise to any right of acceleration or termination under any law or any

contract, agreement, note, bond, license, indenture, mortgage, lease agreement

or other instrument or obligation to which Community Member is a party or by

which it is bound or affected or violate any rule or regulation of any

administrative agency, or order, writ, injunction, judgment or decree of any

court, administrative agency or governmental body applicable to it.

 

(c) Community Member has

obtained and kept in force all material governmental licenses and permits

necessary to conduct its business as it is now being conducted.

 

(d)  The balance sheet of Community Member or its

affiliate group provided to Wells Fargo Member and the related statements of

earnings, stockholders' equity and changes in financial position for the year

provided, with notes thereto, reported upon or reviewed by independent

certified public accountants, present fairly the financial position of

Community Member or its affiliate group as of the date thereof and the results

of operations, stockholders' equity and changes in financial position thereof

for the year then ended, in accordance with GAAP applied on a consistent basis

throughout such period.

 

(e)  Except as has been disclosed in writing to

Wells Fargo Member, Community Member is not a party to any pending or, to the

best knowledge of Community Member, threatened, claim, action suit,

investigation or proceeding, nor is subject to any order, judgment or decree

which may have a materially adverse effect on the Community Member's assets or

business as currently conducted.

 

(f)  There are

no claims for brokerage or other commissions or finder's or other similar fees

in connection with the transactions covered by this Agreement insofar as such

claims shall be based on arrangements or agreements made by or on behalf of

Community Member, and Community Member hereby agrees to indemnify and hold

harmless Wells Fargo Member from and against all liabilities, costs, damages

and expenses from any such claim.

 

Section 12.2  Wells Fargo

Member Representations and Warranties. 

Wells Fargo Member represents and warrants as of the Closing Date that:

 

(a)  Wells Fargo Member is a limited liability

company, duly organized, validly existing and in good standing under the laws

of the State of Delaware and has all requisite corporate power and authority

and licenses to own or lease its property and to carry on its business as it is

now being conducted.  The execution,

delivery and performance of this Agreement by Wells Fargo Member have been duly

authorized by all proper action on the part of Wells Fargo Member, and are

within its powers and will not conflict with, result in the breach or violation

of, constitute a default under, give rise to any right of acceleration or

termination under Wells Fargo Member's organizational documents or any

indenture, mortgage, lease agreement, contract, order, injunction, judgment,

decree or other instrument, rule or regulation to which Wells Fargo Member is a

party or by which Wells Fargo Member is bound. 

This Agreement constitutes the legal, valid and binding obligation of

Wells Fargo Member, enforceable against Wells Fargo Member in accordance with

its terms.

 

(b)  The performance of this Agreement by Wells

Fargo Member will not violate or result in a breach of any law or any contract,

agreement, note, bond, license or other instrument or obligation to which Wells

Fargo Member is a party or by which it is bound or affected or violate any rule

or regulation of any administrative agency, or order, writ, injunction or

decree of any court, administrative agency or governmental body applicable to

it.

 

(c)  Wells Fargo Member has obtained and kept in

force all material governmental licenses and permits necessary to conduct its

business as it is now being conducted.

 

(d)  The balance sheet of Wells Fargo Member or

its affiliate group provided to Community Member and the related statements of

earnings, stockholders' equity and changes in financial position for the year

provided, with notes thereto, reported upon or reviewed by independent

certified public accountants, present fairly the financial position of Wells

Fargo Member or its affiliate group as of the date thereof and the results of

operations, stockholders' equity and changes in financial position thereof for

the year then ended, in accordance with GAAP applied on a consistent basis

throughout such period.

 

(e)  Except as has been disclosed in writing to

Community Member, Wells Fargo Member is not a party to any pending or, to the

best knowledge of Wells Fargo Member, threatened, claim, action suit,

investigation or proceeding, nor is subject to any order, judgment or decree

which may have a materially adverse effect on the Wells Fargo Member's assets

or business as currently conducted.

 

(f)  There are

no claims for brokerage or other commissions or finder's or other similar fees

in connection with the transactions covered by this Agreement insofar as such

claims shall be based on arrangements or agreements made by or on behalf of

Wells Fargo Member, and Wells Fargo Member hereby agrees to indemnify and hold

harmless Community Member from and against all liabilities, costs, damages and

expenses from any such claim.

 

Section 12.3  Closing

Requirements.  On the Closing Date,

the Members shall each deliver to the other the following:

 

(a)  a certified copy of an authorization to

enter into this Agreement by the appropriate authority of the other party.

 

(b)  a certificate, dated as of the Closing Date,

signed by the president or any vice president 

and by the Secretary of the other party as to the matters set forth in

Section 12.1 or 12.2 respectively.

 

(c)  an opinion of counsel, dated as of the

Closing Date, in form and substance satisfactory to counsel for such party, to

the effect that:

 

(1)                The other party is a corporation

or limited liability company, duly organized, validly existing and in good

standing under the laws of its state of incorporation or organization and has

the power and authority to own and operate its properties and to carry on its

business as now being conducted.

 

(2)The other party has the requisite power and

authority to execute, deliver and perform this Agreement and to consummate the

transactions contemplated by this Agreement; all necessary action required to

be taken under the other Member’s organizational documents has been taken to

authorize and approve this Agreement and the transactions contemplated hereby;

and this Agreement has been duly executed and delivered.

 

(3)The execution, delivery and performance of this

Agreement by the other party and consummation by the other party of the

transactions contemplated by this Agreement will not result in a breach or

violation of, or constitute a default under, the organizational documents of

the other party or any judgment, decree, order, governmental permit or license,

agreement, trust agreement, indenture or instrument actually known to such

counsel to which the other is a party or by which it is bound, the breach or

violation of which would have a material adverse effect on the other party;

 

(4)To the best of such counsel's knowledge without

independent investigation, there is no legal action or governmental proceeding

or investigation pending or threatened against or affecting the other party or

which prevents the other party from entering into or being bound by this

Agreement or prevents the other party from consummating the transactions

contemplated by this Agreement or which questions the validity of this

Agreement or the transactions contemplated by this Agreement and there is no

bankruptcy or other insolvency proceeding pending against or affecting the

other party.

 

ARTICLE XIII

Miscellaneous Provisions

 

Section 13.1  Notices.  Notices, requests, reports, payments, calls

or other communications required to be given or made to any Member hereunder

shall be in writing and shall be deemed to be given or made when properly

addressed and delivered.  Delivery may

be by registered or certified mail, postage prepaid, or by overnight courier to

such Member at such Member's last known address.  Addresses shown on the Schedule of Capital Contributions for each

Member shall be considered the last known address of such Member unless and

until the Company is otherwise notified by such Member in the manner set forth

in this Section 13.1.

 

Section 13.2  Nature of

Interest of Members.  The Interest

of each Member in the Company is personal property.

 

Section 13.3  Applicable Law.  Notwithstanding the place where this

Agreement may be executed by any of the parties hereto, this Agreement, the

rights and obligations of the parties hereto, and any claims and disputes

relating thereto, shall be subject to and governed by the Act and the other

laws of the State of Delaware as applied to agreements among Delaware residents

to be entered into and performed entirely within the State of Delaware, and

such laws shall govern the limited liability company aspects of this Agreement.

 

Section 13.4  Execution in

Counterparts.  This Agreement may be

executed in one or more counterparts with the effect as if the parties

executing the several counterparts had all executed one counterpart, but in

such event each such counterpart shall constitute an original and all of such

counterparts shall constitute one and the same agreement.

 

Section 13.5  Successors in

Interest.  Each and all of the

covenants, agreements, terms, and provisions of this Agreement shall be binding

upon and inure to the benefit of each of the Members and, to the extent

permitted by this Agreement, their respective heirs, executors, administrators,

personal representatives, successors and assigns.

 

Section 13.6  Severability.  Any provision of this Agreement which is

invalid, illegal, or unenforceable in any respect in any jurisdiction shall, as

to such jurisdiction, be ineffective to the extent of such invalidity,

illegality, or unenforceability without in any way affecting the validity,

legality, or enforceability of the remaining provisions hereof, and any such invalidity,

illegality, or unenforceability in any jurisdiction shall not invalidate or in

any way affect the validity, legality, or enforceability of such provisions in

any other jurisdiction.

 

Section 13.7  Headings.  The headings in this Agreement are inserted

for convenience and identification only and are in no way intended to describe,

interpret, define or limit the scope, extent or intent of this Agreement or any

provision hereof.

 

Section 13.8  Waiver of Right

to Partition.  Each of the Members

irrevocably waives during the term of the Company any right that such Member

may have to maintain any action for partition with respect to the property and

assets of the Company.

 

Section 13.9  Arbitration.

 

(a)  The Members agree to take all reasonable

steps to resolve disputes between them without resorting to arbitration.  The Members agree to submit to binding

arbitration any and all claims, disputes and controversies between or among

them which cannot be resolved without arbitration, whether in tort, contract or

otherwise (and their respective employees, officers, directors, attorneys, and

other agents) arising out of or relating in any way to this Agreement, any

related ancillary documents and their negotiation, execution, administration,

modification, extension, substitution, formation, inducement, enforcement,

default or termination.  However,

"Core proceedings" under the United States Bankruptcy Code shall be

exempted from arbitration.  Should the

need arise for such arbitration, the Members agree that the determination of

the arbitrator shall be final and shall not be capable of being appealed to any

other court or form of resolution. 

Notwithstanding this prohibition, the Members do agree that the decision

of any arbitrator shall be capable of being enforced through an action filed in

the appropriate court having jurisdiction.

 

(b) 

Arbitration under this Agreement shall be governed by the Federal

Arbitration Act (Title 9 of the U.S. Code), and shall be conducted in

accordance with the Commercial Arbitration Rules of the American Arbitration

Association ("AAA").  When the

need for selection of an arbitrator shall arise, the Members shall request AAA

to supply them with a list of no less than seven (7) arbitrators having no less

than five (5) years experience in arbitrating complex business

arrangements.  Upon receipt of that list

of potential arbitrators, each Member shall communicate within 7 days to AAA

four (4) arbitrators from the list they would agree to use or their right to

participate in the selection of the arbitrator shall be forfeited.  As soon as AAA receives the selections from

both Members, AAA shall review the selected arbitrators and appoint one of

those arbitrators whose name appears on both Members’ lists of acceptable

arbitrators.  AAA shall have the

discretion to select the arbitrator from those arbitrators approved by both

Members based upon availability and experience and AAA’s selection shall be

final.  The arbitrator shall give effect

to statutes of limitation in determining any claim.  Any controversy concerning whether an issue is arbitrable shall

be determined by the arbitrator. Each Member shall each pay its own costs and

expenses of the arbitration proceeding and the cost of the arbitrator shall be

divided equally between the Members.

 

Section 13.10 Confidentiality.

 

(a)  The parties agree that the terms of this

Agreement shall be maintained in confidence, and shall not be disclosed to any

third party, except (i) as is required by law, (ii) pursuant to court order

during the course of litigation after notice to the other Member, (iii) for

internal communications purposes, (iv) as necessary for tax, accounting, and

other regulatory purposes and, (v) as necessary or desirable to facilitate

procurement of insurance protection. 

This clause shall not restrict the release of financial statements of

the Company by either party to any third party for regulatory requirements.

 

(b)  Community Member will hold in confidence all

documents and information concerning Wells Fargo Member and its Affiliates

furnished to it and its representatives in connection with this Agreement.  Community Member will not release or

disclose such information to any other person, except as required by law or in

connection with any proceedings to enforce or construe this Agreement and

except its advisers in connection with this Agreement, with the same

undertaking from such advisers.  If the

Company shall not commence operation, such confidence shall be maintained and

such information shall not be used in competition with Wells Fargo Member,

unless Community Member can show that that such information was previously

known to Community Member, in the public domain, or later acquired from other

legitimate sources.  Upon request, all

such documents and any copies thereof and extracts therefrom shall immediately

thereafter be returned to Wells Fargo Member. 

Upon termination of this Agreement, all confidential documents and

information shall be returned upon completion of the liquidation of the

Company.

 

(c)  Wells Fargo Member will hold in confidence

all documents and information concerning Community Member and its Affiliates

furnished to it and its representatives in connection with this Agreement.  Wells Fargo Member will not release or

disclose such information to any other person, except as required by law or in

connection with any proceedings to enforce or construe this Agreement and

except its advisers in connection with this Agreement, with the same

undertaking from such advisers.  If the

Company shall not commence operation, such confidence shall be maintained and

such information shall not be used in competition with Community Member, unless

Wells Fargo Member can show that that such information was previously known to

Wells Fargo Member, in the public domain, or later acquired from other

legitimate sources.  Upon request, all

such documents and any copies thereof and extracts therefrom shall immediately

thereafter be returned to Community Member. 

Upon termination of this Agreement, all confidential documents and information

shall be returned upon completion of the liquidation of the Company.

 

Section 13.11  Publicity.  The Members shall consult with each other as

to the form and substance of any proposed press release or other proposed

public disclosure of matters related to this Agreement or any of the

transactions contemplated hereby.

 

Section 13.12 Survival. 

The provisions of Sections 13.9 and 13.10 shall continue to bind the

Members should either withdraw from or otherwise leave the Company and shall

survive any termination of this Agreement.

 

IN WITNESS WHEREOF, the Members hereto have executed and delivered this

Agreement of Limited Liability Company the day and year first above written.

 

	

  WELLS FARGO VENTURES, LLC

  	

  COMMUNITY FIRST HOME MORTGAGE, INC.

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Printed Name:

  	

   

  	

   

  	

  Printed Name:

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

   

  	

   

  	

  Title:

  	

   

  
											

 

SCHEDULE OF CAPITAL

CONTRIBUTIONS

 

	

  Name & Address

  	

   

  	

  Amount of Capital

  Contribution

  	

   

  	

  Units

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Wells Fargo Ventures, LLC

  	

   

  	

  [Confidential Treatment Requested]

  	

   

  	

  50

  
	

  1 Home Campus, X2406-011

  	

   

  	

   

  	

   

  	

   

  
	

  Des Moines, IA 50328-0001

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Community First Home Mortgage, Inc.

  	

   

  	

  [Confidential Treatment Requested]

  	

   

  	

  50

  
	

  520 Main Avenue

  	

   

  	

   

  	

   

  	

   

  
	

  Fargo, ND 58124-0001

  	

   

  	

   

  	

   

  	

   

  

 

SCHEDULE OF INITIAL AND

SUCESSOR MANAGING OFFICERS

 

Exhibit 1

 

COMPUTER

ACCESS AGREEMENT

 

This Computer Access Agreement ("Agreement") is entered into

effective November 1, 2001 (the "Effective Date") by and between

Community First Mortgage, LLC 

("Company") and Wells Fargo Home Mortgage, Inc.

("WFHM").

 

RECITALS

 

WHEREAS, WFHM is willing to offer and provide Company with access to

its residential mortgage origination computer system in operation from time to

time, including the programs necessary for its operation (the

"System") subject to the terms and limitations of this Agreement.

 

NOW, therefore, in consideration of the covenants contained herein,

WFHM and Company agree as follows:

 

1.             WFHM

Responsibilities. WFHM shall provide Company access to the System under the

same terms and conditions which WFHM gives its loan production offices

("Retail Franchisees") access. 

The System will be available to Company during the same hours as it is

available to Retail Franchisees in the Company's market area.  In the event of any System outage, the

Company's access shall be restored on the same basis as the Retail Franchisees

in the Company's marketplace.  Access

shall consist of allowing the Company to:

 

(a)                

prequalify applicants;

(b)               

register residential mortgage loan

applications ("Applications") under WFHM's various loan programs in

effect from time to time;

(c)                

price protect interest rates on

registered Applications according to WFHM's price protection guidelines;

(d)               

process registered Applications;

(e)                

prepare documents required to close

Applications which have been approved by WFHM's underwriting department; and

(f)                 

approve funding of closed Applications

for which WFHM has provided price protection.

 

2.                Ownership.  The System is proprietary to WFHM.  Company shall not sell, transfer, publish,

disclose, display, or otherwise make access to the System or information regarding

the System available to any third parties without the express written consent

of WFHM other than disclosure or display through the normal course of the

mortgage origination business.  Company

agrees to secure and protect the System in a manner consistent with WFHM's

rights therein and to take appropriate action by instruction or agreement with

its employees or consultants who are permitted access to the System to satisfy

its obligations hereunder.  Upon termination

of this Agreement, all information regarding the System, including all manuals,

shall be returned to WFHM.  Violation of

any provision of this section shall be basis for immediate termination of this

Agreement.

 

3.             Fees And Taxes.

 

3.1                Fees.  For each Company office location provided

with access to the System pursuant to this Agreement, the Company shall pay

WFHM a fee of [Confidential Treatment Requested] per month.  The fee due under this Agreement shall be

adjusted by the amount of any adjustment by WFHM applicable for Retail

Franchisees for internal accounting purposes. 

All fees due under this Agreement shall be paid on the last day of the

month during which the fees accrue. 

This monthly fee includes all costs of maintaining the System.

 

3.2                Taxes.  Where applicable, Company shall be

responsible for payment of any applicable taxes, however designated, exclusive

of taxes based on the net income.

 

4.             Term.  Except as otherwise provided herein, this

Agreement shall commence on the Effective Date and remain in effect until the

agreement which established Company (“Joint Company Agreement”) is terminated

including any period necessary to wind down the affairs of the Company.

 

5.                Confidentiality.

WFHM acknowledges that during the term of this Agreement, WFHM will be required

to access certain information relating to the Company's customers prior to

purchase of the customers' closed loans ("Information"). WFHM

recognizes that such Information is of a confidential and proprietary nature to

the Company until 30 days after WFHM purchases the closed loans except WFHM may

use the Information with respect to its own business in regard to the

Loans.  Both parties agree to:  (1) use at least the  same degree of care to maintain the

confidentiality of the Information as it uses in maintaining the confidentiality

of its own confidential and proprietary information; (2) use the Information

only for the origination of residential mortgage loans through the Company; and

(3) upon termination of this Agreement, immediately cease using the

Information, erase the Information from storage in each computer system in

which it has been installed except where retention is required for regulatory

purposes, maintain in confidence all knowledge of the Information gained

pursuant to the contract and, either return or destroy all physical embodiments

of the Information.

 

6.             Liability.  Each party shall be liable to the other

party for any loss or damage proximately caused by the gross negligence or

willful misconduct of its officers, employees or agents.  WFHM shall be

granted the same level of discretion in operating the System as it exercises in

regard to providing similar services to its Retail Franchisees.

 

7.                Inspection.  All documents and records produced by or

stored on the System under this Agreement shall be made available from time to

time to and at the reasonable request of (i) regulatory authorities having

jurisdiction over either of the parties, (ii) officers, employees and agents of

either party and (iii) WFHM & Company’s auditors.

 

8.             Notices.  All notices and other communications in

connection with this Agreement to a party hereto shall be in writing and shall

be deemed to have been duly given when delivered by hand or when deposited in

the United States mail with first class postage prepaid or when delivered to

any nationally recognized overnight courier with delivery charges paid to such

party at its address set forth below, or to such other person or address as

such other party may specify by similar notice to the other party hereto:

 

	

  If to WFHM:

  	

   

  	

  If to Company (Both

  Companies):

  	

   

  	

   

  
	

  Wells Fargo Home

  Mortgage, Inc.

  	

   

  	

  Wells Fargo Home

  Mortgage, Inc.

  	

   

  	

  Community First Home

  Mortgage, Inc.

  
	

  1 Home Campus,

  X2401-06T

  	

   

  	

  1 Home Campus,

  X2401-06T

  	

   

  	

  520 Main Avenue

  
	

  Des Moines, IA

  50328-0001

  	

   

  	

  Des Moines, IA

  50328-0001

  	

   

  	

  Fargo, ND 58124-0001

  
	

  Attn:  General Counsel

  	

   

  	

  Attn:  General Counsel

  	

   

  	

  Attn:

  

 

9.             General

 

9.1                Applicable

Law.  This Agreement and performance

hereunder shall be governed by the laws of the State of Delaware.

 

9.2                Amendment,

Modification, or Waiver.  No amendment,

modification, or waiver of any condition, provision, or term of this Agreement

shall be valid or of any effect unless made in writing, signed by the party or

parties to be bound or its duly authorized representative and specifying with

particularity the extent and nature of such amendment, modification, or

waiver.  No waiver of any term of

condition set forth in this Agreement shall constitute a waiver of any other

term or condition; nor shall it affect or impair any right arising from any

subsequent default.

 

9.3                Assignment

and Delegation.  No rights or

interest in this Agreement may be assigned. 

Nor, unless otherwise provided in this Agreement, may any obligations be

delegated without the prior written consent of the other party, such consent

not to be unreasonably withheld.

 

9.4                Severability.  Any invalidity, in whole or in part, of any

provision of this Agreement, shall not affect the validity of any other

provision of this Agreement.

 

9.5                Paragraph

Heading.  Paragraph headings are

provided for convenience of reference and do not constitute a part of this

Agreement.

 

9.6                Force

Majeure.  The parties shall be

excused for delays in performing and failures to perform the obligations of

this Agreement to the extent that any such delay or failure results from any

cause beyond their reasonable control, including, solely by way of example and

without limitation, delays caused by the other party, acts of God, strikes, and

other labor disputes, civil disorder, catastrophes of nature, fire, explosion,

natural or man–made floods or any severe weather, war, failure of a

communications or computer system, nuclear attack, embargoes, actions or

inactions of governmental authorities. 

Each party agrees to make reasonable efforts to prevent such occurrences

from affecting the performance of this Agreement.

 

9.7                The

parties agree to submit to binding arbitration any and all claims, disputes and

controversies between or among them which cannot be resolved without

arbitration, whether in tort, contract or otherwise (and their respective

employees, officers, directors, attorneys, and other agents) arising out of or

relating in any way to this Agreement, and its negotiation, execution,

administration, modification, extension, substitution, formation, inducement,

enforcement, default or termination. 

Arbitration under this Agreement shall be governed by the provisions

regarding arbitration set forth in the Agreement of Limited Liability Company

of Community First Mortgage, LLC as amended from time to time.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be

executed and do each hereby warrant and represent that their respective

signatory, whose signature appears below, has been and is on the date of this

Agreement duly authorized by all necessary and appropriate corporate action to

execute this Agreement.

 

	

  AGREED TO AND ACCEPTED BY:

  	

  AGREED TO AND ACCEPTED BY:

  
	

   

  	

   

  	

   

  	

   

  
	

  WELLS

  FARGO HOME MORTGAGE, INC.

  	

  COMMUNITY

  FIRST MORTGAGE, LLC

  
	

  (WFHM)

  	

  (Company)

  
	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

  Printed Name:

  	

   

  	

   

  	

  Printed Name:

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Its:

  	

   

  	

   

  	

  Its:

  	

   

  
									

 

Exhibit 2

 

SERVICE

AGREEMENT

 

This

Service Agreement ("Agreement") entered into effective November 1,

2001 (the "Effective Date") by and between Community First Mortgage,

LLC ("Venture") and Wells Fargo Home Mortgage, Inc. ("WFHM

").

 

RECITALS

 

WHEREAS, WFHM is willing to offer and provide certain

support services to Venture; and

 

WHEREAS, Venture desires to retain WFHM to provide

certain support services.

 

NOW, therefore, WFHM and Venture agree as follows:

 

1.  RESPONSIBILITIES.

 

1.1     Scope of Services. WFHM shall

perform the services for Venture as set forth in this Agreement and any

amendments or addenda that may from time to time be made a part of this

Agreement (the "Services"), by mutual agreement.

 

1.2          Performance of Services. WFHM

shall perform the Services for Venture under this Agreement in accordance with

reasonable commercial standards; generally accepted accounting principles

(GAAP) except as otherwise contemplated by the Joint Venture Agreement which

established Venture ("Joint Venture Agreement"); in conformity with

regulations or laws governing their activities; and in accordance with Standard

Operating Procedures established from time to time pursuant to Section 1.3

below.

 

1.3     Standard Operating Procedures. WFHM

has established (or may from time to time establish) internal policies, rules

and procedures ("Standard Operating Procedures"), which will govern

how the Services are provided and which do not directly and materially affect

the daily operation of the Venture as determined by the Operating Committee.  Any change in Standard Operating Procedures

which directly and materially affects the daily operation of the Venture is

subject to approval by the Operating Committee.  For example, the elimination of regional underwriting could

directly and materially affect the daily operation of the Venture.  If the Operating Committee decides not to

adopt such a change, the Venture shall bear the added incremental cost of

providing the Services without the change. 

Any other changes by WFHM in the Standard Operating Procedures are not

subject to review by the Venture.

 

1.4          Designate Contact Person.  Each party shall designate a person or

persons to respond to other party's inquiries regarding activities related to

the Services.

 

1.5          Confidentiality.  The parties acknowledge that during the term

of this Agreement, the parties will be required to access certain information

relating to the other party's customers ("Information").  The parties recognize that such Information

is of a confidential and proprietary nature to the other party.  Both parties agree to: (1) use at least the

same degree of care to maintain the confidentiality of the Information as it

uses in maintaining the confidentiality of its own confidential and proprietary

information; (2) use the Information only for the purpose of performing the

Services agreed to in this Agreement; and (3) upon termination of this

Agreement, immediately cease using the Information, erase same from storage in

each computer system in which same has been installed except where retention is

required for regulatory purposes, maintain in confidence all knowledge of same

gained pursuant to the contract and, either return or destroy all physical

embodiments of such Information.

 

1.6          Compliance with State and Federal

Laws.  Both parties shall take

reasonable steps to ensure that the Services performed under this Agreement are

performed in compliance with applicable Federal and State laws.  Such steps may include, by way of example

and not by way of limitation, ensuring that its employees are properly licensed

to perform any Services that require such licensing.

 

2.  SERVICES.

 

2.1     Legal. WFHM will provide legal

services required by Venture including litigation management, regulatory

compliance and general corporate legal advice. The Venture shall be responsible

for the expense of outside counsel and adverse judgments.

 

2.2          Accounting. WFHM will provide

all accounting services required by Venture consistent with the Joint Venture

Agreement including preparation of complete and accurate books of accounts and

records, tax return preparation, regulatory reporting and preparation of income

statements, balance sheets and commission reports.  In providing the accounting services required by this paragraph,

WFHM may contract with a certified public accountant acceptable to the Venture

for the performance of services.  The

expense of the certified public accountant for performing any of WFHM’s

responsibilities under this Agreement shall be paid by WFHM except that the

Venture shall be responsible for the cost of preparing annual audited financial

statements.

 

The books shall be

prepared in accordance with generally accepted accounting principles (except as

otherwise contemplated in the Joint Venture Agreement), consistently applied,

utilizing the accrual method of accounting. 

The accrual method of accounting shall also be used by the Venture for

income tax purposes.  The Venture's

books and records shall at all times be maintained at the principal business

office of WFHM, or the Accountants, or such other place agreed upon by the

Venturers, and shall be available for inspection by each of the Venturers or

their duly authorized representatives during reasonable business hours. WFHM

shall use its reasonable best efforts to preserve the books and records for the

same period of time that WFHM preserves its own records, and each Venturer

shall have the right to copy any and all such books and records at its own

expense prior to the destruction thereof. WFHM shall not be liable for the

destruction of the books and records resulting from any cause beyond its

reasonable control, including, solely by way of example and without limitation,

delays caused by the other party, acts of God, strikes, and other labor

disputes, civil disorder, catastrophes of nature, fire, explosion, natural or

man–made floods or any severe weather, war, failure of a communications

or computer system, nuclear attack, embargoes, actions or inactions of

governmental authorities.

 

Within

ninety (90) days after the end of each fiscal year, WFHM shall cause to be

prepared and furnished to the Venturers at the expense of the Venture, a

balance sheet of the Venture (dated as of the end of the fiscal year then

ended), a related statement of earnings for the Venture for the same year, a statement

of cash flows for the Venture for such year, related footnotes to the financial

statements and all other financial information reasonably requested by either

Venturer.  Such financial information

shall reflect the beginning balance in each Venturer's Capital Account as of

the first day of such year, increases due to Capital Contributions or

allocations of Profits, decreases due to allocations of Losses or distributions

of profit made to each Venturer during the year, and the ending balance in each

Venturer's Capital Account as of the last day of such year. WFHM shall also on

a monthly basis distribute to the Venturers (i) profit and loss statement

showing revenue and expenses of the Venture for the previous calendar month,

(ii) report showing the number and loan amount of loan applications and loans

closed during the previous calendar month, (iii) a balance sheet for the

Venture, and (iv) any other information with respect to the operations of the

Venture for the previous calendar month which either Venturer may reasonably

request.

 

2.3     Human Resources. WFHM or a third

party vendor will provide employee relations services required by the employees

of the Venture including representation at administrative hearings, assistance

in handling personnel matters, and administration of the benefits program and

payroll for employees of the Venture. 

The Venture shall be responsible for the expense of the third party

vendor’s services in providing the benefits program and payroll for employees

of the Venture and any third party representation at any administration

hearings.

 

2.4     Data Processing and Management

Information. WFHM will provide data processing and management information

services as agreed between Venture and WFHM. 

Such services shall consist of those data processing services currently

provided by WFHM to its 100% owned loan production offices ("Retail

Offices"), and such additions and modifications as are  provided by WFHM.

 

2.5          Assignment Processing. WFHM

will safeguard Venture's loan files until such time as the loans are purchased

by WFHM or other investors and will properly assign and endorse mortgages and

notes as directed by Venture.

 

2.6     Post Closing. WFHM will provide all

post closing services on Venture's files purchased by WFHM or other investors

as directed by Venture including loan file review, pooling and delivery.

 

2.7          Underwriting. WFHM will

underwrite loans that Venture elects to sell to WFHM. For loans approved by an

automated underwriting system without review by an underwriter, there will be

no separate charge to the Venture.  For

loans which must be reviewed by an underwriter, there shall be a charge to the

Venture of [Confidential Treatment Requested] per file (“Underwriting

Fee”).  In the event WFHM adjusts the

amount of or how the Underwriting Fee is calculated for its Retail Offices, the

Underwriting Fee amount or calculation for the Venture shall be similarly

adjusted.

 

2.8     Facilities Management.  To the extent requested by the Operating

Committee, WFHM will provide facilities management services for the office

locations used by the Venture including supplying office equipment, and

arranging long distance service.

 

2.9     Quality Control. WFHM will provide

quality control services for loans that Venture elects to sell to WFHM as part

of its normal quality control review. 

Any additional quality control services required in order for the

Venture to maintain its approval as a HUD Loan Correspondent shall be

separately provided and billed.

 

2.10     Management

Consulting. WFHM will provide the part time consulting services of its in

market Regional and/or Divisional Manager and Regional Operations Specialist.

 

2.11  Risk Management. WFHM will establish

a risk management program for the Venture with terms, conditions, limits and

deductibles as WFHM and the Venture determine to be appropriate from time to

time. WFHM shall provide the Venture with a schedule of coverage for the risk

management program in effect from time to time.  The Venture shall pay the premiums and deductibles, if any, on any

insurance policies obtained by WFHM for the Venture as part of the risk

management program.

 

2.12.  Promotions, Public Relations and

Advertising. WFHM shall make available to the Venture all promotional

materials, promotions and public relations services which are provided to

Retail Offices.  The Venture shall pay

any incremental cost of modifying or using the material in excess to the base

cost charged to Retail Offices.  Programs

involving WFHM trademarks may only be used if the Venture executes a written

agreement with WFHM governing use of the trademarks.  The Venture shall be responsible for the cost of any employee of

the Venture who qualifies to attend the WFHM sales conference, the WFHM service

conference or any similar promotional event held by WFHM.

 

2.13.  Compliance with Credit Agreements.

WFHM shall take all steps within its responsibilities under this Agreement

which are necessary to ensure that the Venture complies with all terms of any

credit or financing agreements to which it is a party.

 

2.14.  Loan Processing. WFHM shall process

all mortgage loan applications taken by Venture in accordance with the

standards set forth in Paragraph 2.15 below and shall comply with the covenants

set forth in Paragraph 2.16 below.

 

2.15     Service

Standards. WFHM shall conduct mortgage loan processing activities in

accordance with the Standard Operating Procedures in a manner that is no less

favorable to Venture customers than those applied by WFHM to customers of

WFHM’s Retail Offices. WFHM shall meet the following service standards:

 

(a)          Establishing non-discriminatory

practices consistent with federal, state and local equal opportunity and fair

lending laws and regulations pertaining to such practices;

 

(b)          Periodically assessing and measuring

customer satisfaction with the Venture through the use of customer satisfaction

surveys and reporting the results to the Operating Committee;

 

(c)          Applying the same standards and

efforts WFHM applies with respect to its own customers.

 

2.16     Covenants.  In conducting mortgage loan processing

activities for Venture, WFHM shall:

 

(a)     comply in all material respects with all

laws, statutes, regulations, orders and/or ordinances, whether federal, state

or local or of any governmental agency, applicable to the activities contemplated,

the Service Agreement, the Partnership Agreement and any agreements referred to

herein or therein, including but not limited to, assuring that all credit

practices and all preprinted forms and/or computer generated forms used by the

Venture will be in compliance in all material respects with such laws,

statutes, regulations, orders and/or ordinances;

 

(b)          periodically perform the normal and

customary audits which WFHM performs for WFHM’s Retail Offices, the results of

which shall be reported to the Operating Committee.

 

2.17  Processing Fee.  The Venture shall pay WFHM a processing fee

for each mortgage loan processed by WFHM equal to the processing fee paid by

WFHM's Retail Offices which use the same processing center (the “Processing

Fee”).  In the event the Processing Fee

for WFHM's Retail Offices is adjusted, the Processing Fee for the Venture shall

be similarly adjusted.  There shall be

added to the Processing Fee any applicable taxes payable by WFHM for providing

the processing services, however designated, exclusive of taxes based on net

income, required by law to be added to the Processing Fee.  Except as otherwise expressly provided

herein or agreed in writing by the Venture, WFHM shall be responsible for all

fees, costs, and expenses associated or in connection with the processing of

the mortgage loans.  All Processing Fees

shall be payable in arrears within 15 days following the end of the calendar

month during which such Processing Fees accrue.

 

3.  TERM.

This

Agreement shall commence on the Effective Date and remain in effect until the

Joint Venture Agreement is terminated subject to such period as required to

wind down the affairs of the Venture.

 

4.  RELATIONSHIP

OF THE PARTIES.

 

4.1     Agency.  Venture does hereby designate WFHM as its agent solely for the

purpose of performing the Services.

 

4.2     Officer of Party.

 

4.2.1                Designating Officers.  Either party may, with the consent of the

other, from time to time designate certain employees or officers of the other

party as officers of the designating party with such authority and to perform

such duties as set forth in this Agreement or as the designating party shall

from time to time designate in writing.

 

4.2.2                Performance Of Duties As

Officer.  When an employee or

officer of the other party is performing duties as an officer of the

designating party, such employee or officer shall be responsible and

accountable directly to the designating party.

 

5.  FEES AND

TAXES.

 

5.1          Management Fees.  Venture agrees to pay WFHM for its services

rendered pursuant to this Agreement a Management Fee pursuant to the same

formula used for WFHM’s Retail Offices, except as otherwise agreed in writing

between WFHM and the Venture.  In the

event WFHM adjusts the Management Fee formula for its Retail Offices, the Management

Fee formula for the Venture shall be similarly adjusted, subject to any

separate written agreements between WFHM and the Venture.

 

5.2     Taxes.  Where applicable, there shall be added to the Management Fee

amounts equal to any applicable taxes, however designated, exclusive of taxes

based on the net income of the Venture.

 

5.3          Payment.  All Management Fees shall be paid on the

last day of the month during which the fees accrue.

 

5.4     Annual Fee.  The Venture shall pay an annual joint

venture administration fee in addition to its Management Fee.  During the first year of operation, the

joint venture administration fee shall be [Confidential Treatment Requested].  Subsequent to the first year, WFHM may not

increase the amount of the joint venture administration fee by more than [Confidential

Treatment Requested].

 

6.  LIABILITY.

Each

party shall be liable to the other party for any loss or damage proximately

caused by the gross negligence or willful misconduct of its officers, employees

or agents. WFHM shall be granted the same level of discretion in providing the

Services to the Venture as it exercises in regard to its Retail Offices.

 

7.  INSPECTION.

The

documents and records relating to Services performed under this Agreement shall

be made available from time to time to and at the reasonable request of (i)

regulatory authorities having jurisdiction over either of the parties and (ii)

officers, employees and agents of either party and (iii) WFHM & Company’s

Auditors.

 

8.  NOTICES.

All notices and other communications in connection

with this Agreement to a party hereto shall be in writing and shall be deemed

to have been duly given when delivered by hand or when deposited in the United

States mail with first class postage prepaid or when delivered to any nationally

recognized overnight courier with delivery charges paid to such party at its

address set forth below, or to such other person or address as such other party

may specify by similar notice to the other party hereto:

 

If

to WFHM:

Wells Fargo Home Mortgage, Inc.

1 Home Campus, X2401-06T

Des Moines, IA 50328-0001

Attn:  General

Counsel

 

If

to Venture: (Both Venturers)

Wells Fargo Home Mortgage, Inc.,        Community First Home Mortgage, Inc.

1 Home Campus, X2401-06T             520 Main Avenue

Des Moines, IA 50328-0001                        Fargo,

ND 58124-0001

Attn:  General

Counsel                 Attn: ______________

 

9.   GENERAL.

 

9.1  Applicable Law.  This Agreement and performance hereunder

shall be governed by the laws of the State of Delaware.

 

9.2 Amendment,

Modification, or Waiver.  No amendment,

modification, or waiver of any condition, provision, or term of this Agreement

shall be valid or of any effect unless made in writing, signed by the party or

parties to be bound or its duly authorized representative and specifying with

particularity the extent and nature of such amendment, modification, or

waiver.  No waiver of any term or

condition set forth in this Agreement shall constitute a waiver of any other

term or condition; nor shall it affect or impair any right arising from any

subsequent default.

 

9.3    Assignment and Delegation.  No rights or interest in this Agreement may

be assigned.  Nor, unless otherwise

provided in this Agreement, may any obligations be delegated without the prior

written consent of the other party, such consent not to be unreasonably

withheld.

 

9.4    Severability.  Any invalidity, in whole or in part, of any

provision of this Agreement, shall not affect the validity of any other

provision of this Agreement.

 

9.5    Paragraph Heading.  Paragraph headings are provided for convenience

of reference and do not constitute a part of this Agreement.

 

9.6    Force Majeure.  The parties shall be excused for delays in

performing and failures to perform their obligations under this Agreement to

the extent that any such delay or failure results from any cause beyond their

reasonable control, including, solely by way of example and without limitation,

delays caused by the other party, acts of God, strikes, and other labor

disputes, civil disorder, catastrophes of nature, fire, explosion, natural or

man–made floods or any severe weather, war, failure of a communications

or computer system, nuclear attack, embargoes, actions or inactions of

governmental authorities.  Each party

agrees to make reasonable efforts to prevent such occurrences from affecting

the performance of this Agreement.

 

9.7    Arbitration.  The parties agree to submit to binding

arbitration any and all claims, disputes and controversies between or among

them which cannot be resolved without arbitration, whether in tort, contract or

otherwise (and their respective employees, officers, directors, attorneys, and

other agents) arising out of or relating in any way to this Agreement, and its

negotiation, execution, administration, modification, extension, substitution,

formation, inducement, enforcement, default or termination.  Arbitration under this Agreement shall be

governed by the provisions regarding arbitration set forth in the Agreement of

Limited Liability Company of Community First Mortgage, LLC as amended from time

to time.

 

IN WITNESS WHEREOF, the parties have caused this

Agreement to be executed and do each hereby warrant and represent that their

respective signatory, whose signature appears below, has been and is on the

date of this Agreement duly authorized by all necessary and appropriate

corporate action to execute this Agreement.

 

	

  AGREED TO AND ACCEPTED BY

  	

   

  	

  AGREED TO AND ACCEPTED BY

  
	

   

  	

   

  	

   

  
	

  WELLS FARGO HOME MORTGAGE, INC.

  	

   

  	

  COMMUNITY FIRST MORTGAGE, LLC

  
	

  (WFHM)

  	

   

  	

  (Venture)

  
	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

  Printed Name:

  	

   

  	

   

  	

  Printed Name:

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Its:

  	

   

  	

   

  	

  Its:

  	

   

  
										

 

Exhibit 3

 

LOAN PURCHASE

AGREEMENT

 

 

THIS AGREEMENT, entered into effective November 1,

2001 between Wells Fargo Home Mortgage, Inc. (hereinafter called

"WFHM") and Community First Mortgage, LLC (hereinafter called the

"Venture").

 

1.   Procedures

 

a)     The Venture will be provided with the same price blast that

WFHM's wholly owned retail branches ("Retail Offices") receive,

containing information with respect to the types and prices of mortgage loans

WFHM will commit to buy and the Venture may register a loan for delivery to

WFHM by following WFHM's procedures as set forth below.  Any loan type information provided to the

Venture shall be subject to change at any time prior to registration by the Venture.  Notwithstanding anything herein to the

contrary, WFHM shall be under no obligation or commitment to approve or buy any

Mortgage Loan which does not meet its underwriting criteria.

 

b)    Interest rates and prices currently offered by WFHM will be made

available to the Venture by distribution of the price blast on a daily

basis.  Interest rate and prices are

subject to change at any time prior to "lock-in" ("lock-in"

means to obtain a guaranteed rate and price for a specified period of

time).  The Venture may

"lock-in" a previously registered loan for an agreed length of time

(the "lock-in period") by following the procedure set forth in the

WFHM procedures and guidelines for its Retail Offices as amended from time to

time by WFHM ("Guidelines"). 

The terms of the Guidelines are incorporated herein by reference.

 

c)     If a lock-in expires, the Venture may relock at a renegotiated

price and rate as set forth in the Guidelines.

 

d)    WFHM may, in its sole discretion, reduce or waive any of the fees

provided for herein under extraordinary circumstances.

 

e)     WFHM shall purchase loans at par and the Venture shall receive

an interest income credit for the per diem interest which accrues between the

date of loan closing and purchase by WFHM.

 

f)    WFHM will pay the Venture the same service

release premiums for delivered loans as WFHM pays its Retail Offices as

adjusted from time to time.

 

2.   General

 

a)     All loan applications submitted to WFHM will be prepared in

accordance with the Guidelines and the Venture will use its best efforts to

insure that any loan application registered with WFHM will be sold to WFHM as

provided below.

 

b)    The Venture shall obtain all data necessary to insure the proper

and accurate completion of the loan application including signed authorizations

for written verification of employment, income, assets and other material

information requiring verification. 

Appraisals, credit reports and mortgage insurance must be done by WFHM

approved vendors.

 

c)     The Venture shall control closing and funding of each approved

loan. WFHM will be paid at funding its required fees and discount as agreed

when Venture locked in the loan with WFHM. 

Any sums collected in excess of WFHM’s required fees and discount shall

be retained by the Venture as income. 

The Venture shall not be required to broker loans to WFHM which have not

been "locked-in" with WFHM.

 

d)    WFHM portfolio products which are not deemed high risk products

by WFHM may be made available to the Venture, but at different pricing from

WFHM’s Retail Offices. WFHM portfolio products which are deemed high risk

products by WFHM may be made available to the Venture if WFHM’s partner in the

Venture agrees to share equally in any losses incurred by WFHM from high risk

products originated by the Venture.

 

3.   Representations and Indemnities

 

a)     The Venture, WFHM and their respective officers, agents,

employees and representatives will comply with all federal, state and local

laws with regard to this Agreement and the duties and obligations imposed and

the conduct and activities permitted, authorized or contemplated hereby and use

their best efforts to obtain and retain all approvals and licenses required by

the Venture, or WFHM by this Agreement.

 

b)    The Venture will indemnify and hold WFHM, and its affiliates,

their officers, agents, representatives and employees harmless from any and all

costs, claims, charges, actions, causes of action, losses or liability,

including attorney's fees, arising either directly or indirectly by reason of a

breach of the terms of this Agreement by the Venture, its officers, agents,

employees or representatives or in any way as a result of an inaccurate or

incomplete loan application or other documentation prepared by or at the

direction of the Venture and submitted to WFHM.  The provisions of this paragraph shall remain effective and inure

to the benefit of WFHM, and its affiliates, their officers, agents, employees,

affiliates or representatives notwithstanding the expiration, cancellation,

termination or completion of this Agreement.

 

c)     WFHM will indemnify and hold the Venture, its officers, agents,

employees and representatives harmless from any and all costs, claims, charges,

actions, causes of action, losses or liability including attorneys fees,

arising either directly or indirectly by reason of a breach of the terms of

this Agreement by WFHM, its affiliates, officers, agents, employees or

representatives.  The provisions of this

paragraph shall remain effective and inure to the benefit of the Venture, its

officers, agents, employees or representatives notwithstanding the expiration,

cancellation, termination or completion of this Agreement.

 

d)    The Venture agrees that it will not participate in or receive any

form of compensation from any other lender (including itself) closing a loan

that has been "locked-in" with WFHM unless the loan was denied by

WFHM or WFHM approved the sale to the other lender.

 

4.   Transfer and Termination

 

a)     No sale, transfer or assignment of this Agreement or of any

interest herein shall be valid without the prior written consent of WFHM.

 

b)    This agreement will automatically terminate upon termination or

expiration of any approval or license of the Venture or WFHM required by law to

perform the services required of the Venture or WFHM by this Agreement.  Any such termination shall not affect

applications, if any, which have been registered with WFHM prior to termination

except to the extent required by termination or expiration of the approval or

license.

 

c)     This Agreement shall be terminated upon termination of the Joint

Venture Agreement.  Any such termination

will not affect applications, if any, that have been locked-in with WFHM prior

to termination.

 

5.   Governing Law

This

Agreement will be governed by and construed in accordance with the laws of the

State of Delaware.

 

6.   Arbitration

The parties agree to submit to binding

arbitration any and all claims, disputes and controversies between or among

them which cannot be resolved without arbitration, whether in tort, contract or

otherwise (and their respective employees, officers, directors, attorneys, and

other agents) arising out of or relating in any way to this Agreement, and its

negotiation, execution, administration, modification, extension, substitution,

formation, inducement, enforcement, default or termination.  Arbitration under this Agreement shall be

governed by the provisions regarding arbitration set forth in the Agreement of

Limited Liability Company of Community First Mortgage, LLC, as amended from

time to time.

 

IN WITNESS WHEREOF, the parties hereto have executed

this Agreement on the date first above written.

 

	

   

  	

   

  	

   

  
	

  WELLS

  FARGO HOME MORTGAGE, INC.

  	

   

  	

  COMMUNITY

  FIRST MORTGAGE, LLC

  
	

  (WFHM)

  	

   

  	

  (Venture)

  
	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

  Printed Name:

  	

   

  	

   

  	

  Printed Name:

  	

   

  
	

   

  	

   

  	

   

  
	

  Its:

  	

   

  	

   

  	

  Its:

  	

   

  
							

 

Exhibit 4

 

CREDIT AGREEMENT

 

THIS

AGREEMENT, entered into effective November 1, 2001 by and between Community

First Mortgage, LLC (the "Borrower"), and Wells Fargo Home Mortgage,

Inc., a California Corporation ("WFHM"), provides as follows:

 

ARTICLE I

Definitions

 

Section 1.1                Definitions.  For all purposes of this Agreement, except

as otherwise expressly provided or unless the context otherwise requires:

 

"Advance" means an advance by WFHM to the Borrower

pursuant to Article II.

 

"Agreement" means this Credit Agreement, as the same

may from time to time be supplemented or amended.

 

"Business Day" means a day on which banks are

generally open for business in the State of Delaware.

 

"Collateral" has the meaning given to that term in the

Pledge and Security Agreement.

 

"Collateral Account" means the account of the Borrower

with Wells Fargo Bank Minnesota, N.A.

 

"Collateral Account Agreement" means that certain

Collateral Account Agreement of even date herewith pursuant to which the

Borrower and WFHM establish the Collateral Account with Wells Fargo Bank

Minnesota, N.A. attached hereto as Exhibit A.

 

"Commitment" means WFHM's commitment to make advances

under Article II.

 

"Commitment Amount" means [Confidential Treatment Requested]

unless said amount is reduced pursuant to Section 2.5, in which event it means

the amount to which said amount is reduced.

 

"Commitment Termination Date" means the date of

termination in whole of the Commitment pursuant to Section 2.5 or 5.2.

 

"Default" means an event that, with the giving of

notice, the passage of time or both, would constitute an Event of Default.

 

"Eligible Mortgage Loan" has the meaning specified in

Section 2.10.

 

"Event of Default" has the meaning specified in

Section 5.1.

 

"FHA" means the Federal Housing Administration and any

successor thereto.

 

"GAAP" means generally accepted accounting principles.

 

"GNMA" means the Government National Mortgage

Association and any successor thereto.

 

"Interest Rate" means the interest rate specified in

the Mortgage Note.

 

"Investor" means Wells Fargo Home Mortgage, Inc. and

any other investor approved in writing from time to time by WFHM.  Approval of any investor can be withdrawn at

any time by WFHM with 10 days written notice.

 

"Loan Documents" means this Agreement, the Note, the

Pledge and Security Agreement and all other agreements, instruments,

certificates and other documents executed and delivered pursuant to or in

connection therewith, as the same may from time to time be supplemented or

amended.

 

"Mortgage" means a mortgage or deed of trust on real

property which has been improved by a completed single family (one to four

family units) dwelling unit (i.e., a detached house, townhouse or condominium).

 

"Mortgage Loan" means a Mortgage Note and the related

Mortgage.

 

"Mortgage Note" means a promissory note which has a

term not exceeding 30 years evidencing a loan or advance which is secured by a

Mortgage.

 

"Note" has the meaning specified in Section 2.2.

 

"Person" means any individual, corporation,

partnership, joint venture, association, joint–stock company, trust,

unincorporated organization or government or any agency or political

subdivision thereof.

 

"Pledge and Security Agreement" means the pledge and

security agreement of the Borrower in the form of Exhibit B.

 

"System" means WFHM residential mortgage loan

origination computer system used by Borrower.

 

"VA" means the Department of Veterans Affairs and any

successor thereto.

 

ARTICLE II

Amount and Terms of the

Loans

 

Section 2.1  Revolving

Advances. WFHM agrees, upon the terms and subject to the conditions

hereinafter set forth, to make Advances to the Borrower from time to time

during the period from the date hereof to and including the Commitment

Termination Date in an aggregate outstanding amount not to exceed at any time

outstanding the Commitment Amount. 

Within the limits of the Commitment Amount, the Borrower may borrow,

prepay pursuant to Section 2.6 and reborrow under this Section 2.1.

 

Section 2.2  The Note.  The Advances made by WFHM shall be evidenced

by and repayable with interest in accordance with a single demand note of the

Borrower (the "Note") payable to the order of WFHM, substantially in

the form of Exhibit C hereto, dated the date hereof.  The Note shall bear interest on the unpaid principal amount

thereof from the date thereof until paid as set forth in Section 2.4.

 

Section 2.3  Making the

Revolving Advances.  In order to

obtain an Advance, Borrower shall electronically provide WFHM through the

System with the following:

 

(a)                verified

personal and credit information regarding the borrower(s);

 

(b)                loan

registration information;

 

(c)                property

and appraisal information;

 

(d)                underwriting

approval information; and

 

(e)                a

request for funding.

 

Upon fulfillment of the applicable conditions set forth in Article III

hereof, WFHM shall disburse the amount of the requested Advance by crediting

the same to the Collateral Account or in such other manner as WFHM and the

Borrower may from time to time agree. 

The Borrower shall be obligated to repay all Advances made based on

Borrower's submission of the above–referenced information.  Any request for an Advance, whether written

or telephonic, shall be deemed to be a representation that the statements set

forth in Section 3.2 are correct to the best of Borrower’s knowledge.

 

Section 2.4  Interest.  The Borrower shall pay interest on the

unpaid principal balance of the Advances from time to time outstanding at the

Interest Rate.  Interest accruing on the

unpaid principal balance of the Advances during a month shall be payable on the

fifteenth day of the month following the date of the Advance.

 

Section 2.5  Termination or

Reduction of the Commitment. WFHM shall have the right at any time upon

written notice to the Borrower to permanently terminate the Commitment for new

registrations upon ten days written notice and demand payment in full of the

outstanding principal balance of the Note and all accrued and unpaid interest

thereon, for any reason or for no reason whatsoever, whether or not a Default

or Event of Default has occurred. 

Nothing contained in this Section 2.5 shall preclude or limit WFHM from

terminating the Commitment and demanding payment of the Note upon the

occurrence of an Event of Default as provided in Article V.

 

Section 2.6  Voluntary and

Mandatory Prepayments.

 

(a)                The Borrower may prepay the

principal balance of the Note then outstanding in whole or in part, without

penalty or premium, at any time and from time to time; provided that any

prepayment of the full amount of the Note shall include accrued interest

thereon.

 

(b)                If the outstanding Advances

shall on any date exceed the Commitment Amount, the Borrower shall immediately

make a principal prepayment of the Note in an amount equal to the amount of

such excess.

 

(c)                Any outstanding Advance must be

repaid on the date the sale proceeds for the related Mortgage Loan are received

from the Investor.

 

Section 2.7  Computation of

Interest and Fees.  Interest under

the Note and the fees hereunder shall be computed on the basis of actual number

of days elapsed in a year of 360 days.

 

Section 2.8  Payment.  All payment of principal and interest under

the Note and of the fees hereunder shall be made to WFHM in immediately

available funds.  The Borrower agrees

that the amount shown on the books and records of WFHM as being the aggregate

amount of Advances outstanding shall be prima facie evidence of the principal

amount of the Note then outstanding. 

Borrower agrees that the Investor will transmit the sale proceeds for

each Eligible Mortgage Loan directly to WFHM.

 

Section 2.9  Payment on

Nonbusiness Days.  Whenever any payment

to be made hereunder or under the Note shall be stated to be due on a day which

is not a Business Day, such payment may be made on the next succeeding Business

Day, and such extension of time shall in each case be included in the

computation of payment of interest on the Note or the fees hereunder, as the

case may be.

 

Section 2.10  Use of Proceeds.  The proceeds of each Advance shall be used

by the Borrower only to make, originate or acquire Mortgage Loans which have

been registered for sale to any Investor ("Eligible Mortgage Loans").

 

ARTICLE III

Conditions of Lending

 

Section 3.1  Initial

Conditions Precedent.  The

obligation of WFHM to make any Advance is subject to the condition precedent

that WFHM shall have received on or before the day of the first Advance all of

the following, each dated (unless otherwise indicated) as of the date hereof,

in form and substance satisfactory to WFHM:

 

(a)                The Note, properly executed on

behalf of the Borrower.

 

(b)                The Pledge and Security

Agreement, properly executed on behalf of the Borrower.

 

(c)                The Collateral Account

Agreement, properly executed on behalf of the Borrower.

 

(d)                A Certificate of a member of the

Borrower, certifying as to (i) the resolutions of the Operating Committee of

the Borrower authorizing the execution, delivery and performance of the Loan

Documents, (ii) true and correct copies of the Borrower's limited liability

company or partnership agreement, and (iii) the signatures of the officers of

the Borrowers authorized to execute and deliver such documents and other

documents or certificates to be delivered pursuant to this Agreement on behalf

of the Borrower, including requests for Advances. WFHM may conclusively rely on

any such certificate until it shall receive a further certificate of the Secretary

or member of the Borrower canceling or amending the prior certificate and

submitting the signature of the officers named in such further certificate.

 

Section 3.2  Conditions

Precedent to All Advances.  The

obligation of WFHM to make any advance (including the initial Advance) shall be

the subject to the further conditions precedent that on the date of such

Advance:

 

(a)                the representations and

warranties contained in Article IV hereof are correct on and as of the date of

such Advance as though made on and as of such date, except to the extent that

such representations and warranties relate solely to an earlier date;

 

(b)                no event has occurred and is

continuing, or would result from such Advance, which constitutes a Default or

an Event of Default; and

 

(c)                the aggregate outstanding

Advances after such Advance is made would not exceed the Commitment Amount as

of the date of such Advance.

 

ARTICLE IV

Representations and

Warranties

 

The Borrower represents and warrants to WFHM as follows:

 

Section 4.1  Existence and

Power.  The Borrower is a limited

liability company validly organized, existing and in good standing under the

laws of the State of Delaware and is duly licensed or qualified to transact

business in all jurisdictions where the character of the property owned or

leased or the nature of the business transacted by it makes such licensing or

qualification necessary. The Borrower has all requisite power and authority,

corporate or otherwise, to conduct its business, to own its properties and to

execute and deliver, and to perform all of its obligations under, the Loan

Documents.

 

Section 4.2  Authorization of

Borrowing; No Conflict as to Law or Agreements.  The execution, delivery and performance by the Borrower of the

Loan Documents and the borrowings from time to time hereunder have been duly

authorized by all necessary company action and do and will not (i) require any

consent or approval of the Borrower's members or any authorization, consent or

approval by any governmental authority or regulatory body, (ii) violate any

provision of any law, rule or regulation (including, without limitation,

Regulation X of the Board of Governors of the Federal Reserve System) or of any

order, writ, injunction or decree presently in effect having applicability to the

Borrower, (iii) result in a breach of or constitute a default under any

contract binding on or affecting the Borrower, or (iv) result in, or require,

the creation, lien, security interest or other charge or encumbrance of any

nature (other than the Pledge and Security Agreement) upon or with respect to

any of the properties now owned or hereafter acquired by the Borrower.

 

Section 4.3  Legal Agreements.  This Agreement constitutes, and the other

Loan Documents, when executed and delivered by the Borrower hereunder, will

constitute, the legal, valid and binding obligations of the Borrower

enforceable against the Borrower in accordance with their respective terms,

except to the extent that enforcement thereof may be limited by any applicable

bankruptcy, insolvency or similar laws now or hereafter in effect affecting

creditor's rights generally (other than fraudulent conveyance laws and

preference laws) and by general principles of equity.

 

Section 4.4  Financial

Condition.  The Borrower has

heretofore furnished to WFHM its current financial statements. Those financial

statements fairly present the financial condition of the Borrower on the dates

thereof and the results of its operations for the periods then ended, and were

prepared in accordance with GAAP except as otherwise contemplated by Borrower’s

operating agreement.

 

Section 4.5  Adverse Change.  There has been no material adverse change in

the business, properties or condition (financial or otherwise) of the Borrower

since the date of the latest financial statement referred to in Section 4.4.

 

Section 4.6  Litigation.  There are no actions, suits or proceedings

pending or, to the knowledge of the Borrower, threatened against or affecting

the Borrower or the properties of the Borrower before any court, governmental

agency or regulatory body or arbitrator, which may materially adversely affect

the financial condition or operations of the Borrower.

 

Section 4.7  Licenses and

Permits.  The Borrower has all

federal, state and local licenses and permits required to be maintained in

connection with the operation of its businesses, and all such licenses and

permits are valid and fully effective. The Borrower is fully approved to

originate FHA, VA and conventional 

Mortgage Loans.

 

ARTICLE V

Events of Default, Rights

and Remedies

 

 

Section 5.1  Events of

Default.  "Event of

Default", wherever used herein, means any one of the following events:

 

(a)                Default in the payment of any

principal or interest on the Note when it becomes due and payable.

 

(b)                Default in the payment of any

fees required under this Agreement, when the same become due and payable.

 

(c)                Default in the performance, or

breach, of the covenant of the Borrower contained in Section 2.6(b) or (c).

 

(d)                Default in the performance, or

breach, of any material covenant or agreement of the Borrower in this Agreement

or in any other Loan Document (other than a covenant or agreement a default in

whose performance or whose breach is elsewhere in this Section specifically

dealt with), and the continuance of such default or breach for a period of 30

days after WFHM has given notice to the Borrower specifying such default or

breach and requiring it to be remedied.

 

(e)                Any representation or warranty

made by the Borrower in any Loan Document or by the Borrower (or any of its

officers) in any certificate, instrument, or statement contemplated by or made

or delivered pursuant to or in connection with any Loan Document, shall prove

to have been incorrect in any material respect when made.

 

(f)                A default under any bond, debenture,

note or other evidence of Debt of the Borrower (other than to WFHM) or under

any indenture or other instrument under which any such evidence of debt has

been issued or by which it is governed and the acceleration of payment of such

Debt.

 

(g)                Default in the payment of any

amount owed by the Borrower to WFHM other than hereunder or under the Note.

 

(h)                The Borrower shall be insolvent,

or admit in writing its inability to pay its debts as they mature, or make an

assignment for the benefit of creditors; or the Borrower shall apply for or

consent to the appointment of any receiver, trustee, or similar officer for it

or for all or any substantial part of its property; or such receiver, trustee

or similar officer shall be appointed without the application or consent of the

Borrower and such appointment shall continue undischarged for a period of 30

days; or the Borrower shall institute (by petition, application, answer,

consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement,

readjustment of debt, dissolution, liquidation or similar proceeding relating

to it under the laws of any jurisdiction; or any such proceeding shall be

instituted (by petition, application or otherwise) against the Borrower; or any

judgment, writ, warrant of attachment or execution or similar process shall be

issued or levied against a substantial part of the property of the Borrower and

such judgment, writ, or similar process shall not be released, vacated or fully

bonded within 30 days after its issue or levy.

 

(i)A petition shall be filed by or against the

Borrower under the United States Bankruptcy Code naming the Borrower as debtor.

 

(j)                The rendering against the

Borrower of a final judgment, decree or order for the payment of money in

excess of [Confidential

Treatment Requested] and such judgment, decree or order shall remain

unsatisfied and in effect for any period of 30 consecutive days without a stay

of execution.

 

(k)                A writ of attachment,

garnishment, levy or similar process shall be issued against or served upon

WFHM with respect to (i) any property of the Borrower in the possession of

WFHM, or (ii) any indebtedness of WFHM to the Borrower.

 

Section 5.2  Rights and

Remedies.  Upon the occurrence of an

Event of Default or at any time thereafter until such Event of Default is cured

to the written satisfaction of WFHM, WFHM may exercise any or all of the

following rights and remedies:

 

(a)                WFHM may declare the Commitment

to be terminated, whereupon the same shall forthwith terminate.

 

(b)                WFHM may, by notice to the

Borrower, declare the entire unpaid principal amount of the Note then

outstanding, all interest accrued and unpaid thereon, and all other amounts

payable under this Agreement to be forthwith due and payable, whereupon such

Note, all such accrued interest and all such amounts shall become and be

forthwith due and payable, without presentment, demand, protest or further

notice of any kind, all of which are hereby expressly waived by the Borrower.

 

(c)                WFHM may exercise and enforce

its rights and remedies under the Loan Documents.

 

Notwithstanding the foregoing, upon the occurrence of an Event of

Default described in Section 5.1(i) or 5.1(k) hereof, the entire unpaid

principal amount of the Note then outstanding, all interest accrued and unpaid

thereon, and all other amounts payable under this Agreement shall be

immediately due and payable without presentment, demand, protest or notice of

any kind. NOTHING CONTAINED IN THIS ARTICLE V OR IN ANY OTHER PROVISION OF THIS

AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL PRECLUDE OR LIMIT WFHM FROM

TERMINATING ITS COMMITMENT FOR NEW REGISTRATIONS UPON TEN DAYS WRITTEN NOTICE

AND DEMANDING PAYMENT OF THE NOTE AT ANY TIME AND FOR ANY REASON OR FOR NO

REASON AS PROVIDED IN SECTION 2.5.

 

ARTICLE VI

Miscellaneous

 

Section 6.1  No Waiver;

Cumulative Remedies.  No failure or

delay on the part of WFHM in exercising any right, power or remedy under the

Loan Documents shall operate as a waiver thereof; nor shall any single or

partial exercise of any such right, power or remedy preclude any other or

further exercise thereof or the exercise of any other right, power or remedy

under the Loan Documents.  The remedies

provided in the Loan Documents are cumulative and not exclusive of any remedies

provided by law.

 

Section 6.2  Amendments, Etc.  No amendment, modification, termination or

waiver of any provision of any Loan Document or consent to any departure by the

Borrower therefrom shall be effective unless the same shall be in writing and

signed by WFHM and then such waiver or consent shall be effective only in the

specific instance and for the specific purpose for which given. No notice to or

demand on the Borrower in any case shall entitle the Borrower to any other or

further notice or demand in similar or other circumstances.

 

Section 6.3  Notice.  Except as otherwise expressly provided

herein, all notices and other communications hereunder shall be in writing and

shall be (i) personally delivered, (ii) sent by certified mail, postage

prepaid, (iii) delivery by overnight courier, or (iv) transmitted by telecopy

if followed with a hard copy by regular mail, in each case addressed to the

party to whom notice is being given at its address as set forth below and, if

telecopied, transmitted to that party at its telecopier number set forth below:

 

If

to WFHM:

Wells Fargo Home Mortgage, Inc.

1 Home Campus, X2401-06T

Des Moines, IA 50328-0001

Attn:  General

Counsel

 

If to the Borrower (Both Members):

Wells Fargo Home Mortgage, Inc.,        Community First Home Mortgage, Inc.

1 Home Campus, X2401-06T             520 Main Avenue

Des Moines, IA 50328-0001                        Fargo,

ND 58124-0001

Attn:  General

Counsel                 Attn: ______________

 

or, as to each party, at such other address or telecopier number as may

hereafter be designated in a notice by that party to the other party complying

with the terms of this Section.  All

such notices or other communications shall be deemed to have been given on (i)

the date received if delivered personally, (ii) two Business Days after the

date of posting if delivered by mail, (iii) one Business Day after deposit with

an overnight courier for next Business Day Delivery, or (iv) the date of

transmission if delivered by telecopy, except that notice or requests to WFHM

pursuant to any of the provisions of Article II shall not be effective until

received by WFHM.

 

Section 6.4  Costs and

Expenses.  Each party agrees to pay

to the other party all costs and expenses incurred (including the reasonable

fees and out–of–pocket expenses of counsel) in connection with the

enforcement during the term hereof or thereafter of any of the rights or

remedies under any of the foregoing documents, instruments or agreements or

under applicable law, whether or not arbitration is filed with respect,

thereto.  All costs and expenses shall

be payable on demand.

 

Section 6.5  Execution in

Counterparts.  This Agreement and

the Pledge and Security Agreement may be executed in any number of

counterparts, each of which when so executed and delivered shall be deemed to

be an original and all of which counterparts of this Agreement or the Pledge

and Security Agreement, as the case may be, taken together, shall constitute

but one and the same instrument.

 

Section 6.6  Binding Effect,

Assignment.  This Agreement shall be

binding upon and inure to the benefit of the Borrower and WFHM and their

respective successors and assigns, except that the Borrower shall not have the

right to assign its rights hereunder or any interest herein without the prior

written consent of WFHM.

 

Section 6.7  Governing Law.  The Loan Documents shall be governed by, and

construed in accordance with, the substantive laws (other than conflict laws)

of the State of Delaware.

 

Section 6.8  Arbitration.

The parties agree to submit to binding arbitration any and all claims, disputes

and controversies between or among them which cannot be resolved without

arbitration, whether in tort, contract or otherwise (and their respective

employees, officers, directors, attorneys, and other agents) arising out of or

relating in any way to this Agreement or any exhibits hereto, and their

negotiation, execution, administration, modification, extension, substitution,

formation, inducement, enforcement, default or termination.  Arbitration under this Agreement and its

exhibits shall be governed by the provisions regarding arbitration set forth in

the Agreement of Limited Liability Company of Community First Mortgage, LLC, as

amended from time to time.

 

Section 6.9  Severability of

Provisions.  Any provision of this

Agreement which is prohibited or unenforceable shall be ineffective to the

extent of such prohibition or unenforceability without invalidating the

remaining provisions hereof.

 

Section 6.10  Entire

Agreement.  This Agreement and the

other Loan Documents and related documents described herein embody the entire

agreement and understanding between the Borrower and WFHM and supersede all

prior agreements and understandings, oral or written, between WFHM and the

Borrower.

 

Section 6.11  Acceptable to

WFHM.  As used in this Agreement,

the phrases "to the satisfaction of WFHM," "acceptable to

WFHM," "acceptable to WFHM in WFHM's sole discretion" or any

similar phrase shall mean acceptable to WFHM in WFHM's reasonable discretion.

 

Section 6.12  Headings.  Article and Section headings in this

Agreement are included herein for convenience of reference only and shall not

constitute a part of this Agreement for any other purpose.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be

executed by their respective officers thereunto duly authorized as of the date

first above written.

 

 

	

  WELLS

  FARGO HOME MORTGAGE, INC.

  	

   

  	

  COMMUNITY

  FIRST MORTGAGE, LLC

  
	

  (WFHM)

  	

   

  	

  (Borrower)

  
	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

  Printed Name:

  	

   

  	

   

  	

  Printed Name:

  	

   

  
	

   

  	

   

  	

   

  
	

  Its:

  	

   

  	

   

  	

  Its:

  	

   

  
								

 

Exhibit A

 

COLLATERAL ACCOUNT AGREEMENT

 

This

Collateral Account Agreement, entered into effective November 1, 2001 is by and

between Community First Mortgage, LLC (the "Borrower"), and Wells

Fargo Bank Minnesota, National Association (the "Bank") and Wells

Fargo Home Mortgage, Inc. ("WFHM").

 

WFHM and the Borrower have entered into a Credit Agreement dated

contemporaneously herewith pursuant to which WFHM has agreed to make revolving

advances to the Borrower in an aggregate principal amount not to exceed [Confidential

Treatment Requested] (as the same may from time to time be amended,

modified or supplemented, the "Credit Agreement").  All terms used herein have the same meanings

ascribed to such terms in the Credit Agreement.

 

The parties desire to establish the Collateral Account into which

Advances will be deposited and payments and other proceeds of Collateral (as

that term is defined in the Credit Agreement) will be received and held by the

Bank.

 

Accordingly, the parties hereto agree as follows:

 

1.             There shall be opened and maintained with the Bank a

collateral bank account designated " Community First Mortgage, LLC -

Collateral Account" or similarly designated to WFHM's and the Bank's

satisfaction (the "Collateral Account").

 

2.             The Collateral Account and all funds at any time on

deposit therein shall constitute collateral security for any and all

indebtedness now or hereafter at any time owing by the Borrower to WFHM under

the Credit Agreement, whether or not then due. WFHM, through its agent the

Bank, shall have full and exclusive dominion of and control over the Collateral

Account and all funds at any time on deposit therein.

 

3.             WFHM shall deposit all Advances made under the Credit

Agreement into the Collateral Account, which Advances shall be used solely for

the origination of Eligible Mortgage Loans by the Borrower.  The Borrower shall deposit into the

Collateral Account, or shall direct the Bank to debit its operating account

for, any additional funds necessary for the origination or acquisition of the

Eligible Mortgage Loans to be funded with the deposited Advances.  Provided the Borrower is in compliance with

the applicable conditions set forth in Article III of the Credit Agreement, the

Bank shall payout all such Advances and other funds deposited into the

Collateral Account pursuant to this paragraph according to the terms of the

Credit Agreement.

 

4.             The Borrower shall direct the Investor to make all

payments with respect to Eligible Mortgage Loans, and shall promptly deposit

all other proceeds of Collateral, by wire or other acceptable transfer, to the

Bank for deposit in the Collateral Account. 

To the extent the Borrower is in possession of any proceeds of

Collateral, the Borrower will hold such proceeds separately in trust for WFHM

until deposited in the Collateral Account.

 

5.             WFHM may, from time to time, in its sole discretion,

instruct the Bank to do any of the following or any combination thereof with

respect to funds on deposit in the Collateral Account: (a) charge the

Collateral Account and credit WFHM’s account to be applied as a payment of the

unpaid principal amount of the outstanding Advances and accrued interest

thereon; (b) retain the funds on deposit in the Collateral Account; or (c)

release and transfer the funds to the Borrower's operating account with the

Bank for the Borrower's general use.

 

6.             The Borrower shall have no right to withdraw any funds

from the Collateral Account at any time and shall have no dominion or control

over the funds at any time on deposit in the Collateral Account.

 

7.             WFHM hereby acknowledges that it is responsible for the

payment of all charges relating to the Collateral Account, including but not

limited to account maintenance charges, fees for incoming and outgoing wire

transfers and for any other credits or debits in accordance with Bank's

standard fee schedule.

 

 

	

  WELLS

  FARGO HOME MORTGAGE, INC.

  	

   

  	

  COMMUNITY

  FIRST MORTGAGE, LLC

  
	

   

  	

   

  	

  (Borrower)

  
	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

  Printed Name:

  	

   

  	

   

  	

  Printed Name:

  	

   

  	 

	

   

  	

   

  	

   

  
	

  Its:

  	

   

  	

   

  	

  Its:

  	

   

  
										

 

	

  WELLS FARGO BANK MINNESOTA,

  
	

  NATIONAL

  ASSOCIATION

  
	

   

  
	

  By:

  	

   

  	

   

  
	

  Printed Name:

  	

   

  	

   

  
	

   

  
	

  Its:

  	

   

  	

   

  
				

 

Exhibit B

 

PLEDGE AND SECURITY AGREEMENT

 

This Pledge and Security Agreement (the "Agreement") entered

into effective November 1, 2001 by and between Community First Mortgage, LLC, a

limited liability company with its principal place of business in Fargo, North

Dakota (the "Pledgor"), and Wells Fargo Home Mortgage, Inc.

("WFHM").

 

RECITALS

 

The Pledgor and WFHM have entered into a Credit Agreement dated

contemporaneously herewith (as amended or modified from time to time, the

"Credit Agreement"), pursuant to which WFHM has agreed to extend a

revolving credit facility to the Pledgor, on the condition, among others, that

the Pledgor execute and deliver this Agreement to WFHM; and

 

The Pledgor finds it advantageous, desirable and in its best interest

to comply with the condition that it execute and deliver this Agreement.

 

ACCORDINGLY, in consideration of the premises and of the mutual

covenants herein contained and in order to induce WFHM to become a party to,

and to extend credit under, the Credit Agreement, the parties hereto agree as

follows:

 

Section 1. DEFINITIONS

Each capitalized term used herein which is not otherwise defined herein

shall have the meaning ascribed to such term in the Credit Agreement.  In addition, the following terms shall have

the following respective meanings:

 

"Collateral" has the meaning specified in Section 2

hereof.

 

"Investor" means Wells Fargo Home Mortgage, Inc. and

any other investor approved in writing from time to time by WFHM.  Approval of any investor can be withdrawn at

any time by WFHM with 10 days written notice.

 

"Obligations" means all obligations of the Pledgor to

WFHM now or hereafter existing under any Loan Document.

 

"Obligor" means a person or other entity who now or

hereafter is or becomes liable to the Pledgor with respect to any of the

Collateral.

 

"Pledged Mortgage Loans" means Mortgage Loans deemed

to have been delivered to WFHM as provided in Section 4.

 

Section 2.  PLEDGE

As collateral security for the due and punctual payment of the

Obligations, and to secure performance of each obligation and the observance of

each term and condition by the Pledgor to be performed or observed under the

Credit Agreement, this Agreement and the other Loan Documents, the Pledgor does

hereby pledge, hypothecate, assign, transfer and convey to WFHM, and assigns

and grants to WFHM a security interest in and to the following described

property now owned or hereafter acquired by the Pledgor (the

"Collateral"):

 

(a)           all right, title and interest of the

Pledgor in and to the Pledged Mortgage Loans and all promissory notes, or other

instruments or agreements which evidence the Pledged Mortgage Loans;

 

(b)           all right, title and interest of the

Pledgor in and to all notes, real estate mortgages, deeds of trust, security

agreements, chattel mortgages, assignments of rent and other security

instruments whether now or hereafter owned, acquired or held by the Pledgor

which secure (or constitute collateral for any note, instrument or agreement

securing) any of the Pledged Mortgage Loans;

 

(c)           all right, title and interest of the

Pledgor in and to all financing statements perfecting the security interest of

any of the Pledged Mortgage Loans or property securing any Pledged Mortgage

Loans;

 

(d)           all right, title and interest of the

Pledgor in and to all guaranties and other instruments by which the persons or

entities executing the same guarantee, among other things, the payment or

performance of the Pledged Mortgage Loans;

 

(e)           all right, title and interest of the

Pledgor in and to all title insurance policies, title insurance binders, commitments

or reports insuring or relating to any Pledged Mortgage Loan or property

securing any Pledged Mortgage Loan;

 

(f)            all right, title and interest of the

Pledgor in and to all surveys, bonds, hazard and liability insurance, policies,

and any other agreement, instrument or document pertaining to, affecting,

obtained by the Pledgor in connection with, or arising out of, the Pledged

Mortgage Loans;

 

(g)           all right, title and interest of the

Pledgor in and to all agreements to purchase any Pledged Mortgage Loans;

 

(h)           all right, title and interest of the

Pledgor in and to all collections on, and proceeds of or from, any and all of

the foregoing (hereinafter collectively called "Collections");

 

(i)            all right, title and interest of the

Pledgor in and to any other asset of the Pledgor which has been or hereafter at

any time is delivered to WFHM hereunder;

 

(j)            all files, surveys, certificates,

correspondence, appraisals, tapes, discs, cards, accounting records, and other

records, information, and data of the Pledgor relating to the Pledged Mortgage

Loans (including all information, data, tapes, discs and cards necessary to

administer and service such Pledged Mortgage Loans);

 

(k)           all balances, credits and deposits of

the Pledgor maintained in the Collateral Account; and

 

(l)            any and all balances, credits,

deposits, accounts or moneys of, or in the name of, the Pledgor representing or

evidencing the foregoing.

 

Section 3.  REPORTS

CONCERNING EXISTING COLLATERAL AND HEREAFTER ACQUIRED COLLATERAL

From time to time hereafter as reasonably requested by WFHM, the

Pledgor will promptly give a written report to WFHM describing and listing each

document, instrument or other paper which evidences, secures, guarantees,

insures or pertains to any item of the Collateral whether now or hereafter

owned, acquired or held by the Pledgor that the Pledgor has not theretofore

delivered to an Investor.  Such written

report shall contain sufficient information to enable WFHM to identify each such

document, instrument or other paper.  The

Pledgor (a) upon the request of WFHM, shall promptly provide additional

information concerning, or a more complete description of, each such document,

instrument or other paper and (b) at the request of WFHM, shall promptly

deliver the same to WFHM.

 

Section 4.  DELIVERY OF

COLLATERAL DOCUMENTS

(a)           A Mortgage Loan closed and funded

with the proceeds of an Advance shall be deemed to have been delivered under

this Agreement when there shall have been electronically delivered to WFHM the

information required by the Credit Agreement. 

The Pledgor shall also comply with its obligation under this Pledge and

Security Agreement to deliver to WFHM the instruments and documents described

in the Transmittal Form.  The documents

to be delivered pursuant to this Section 4(a) shall be delivered (including

delivery by telecopy, as provided for above) to WFHM no later than 9:00 a.m.

(Minneapolis time) on the Business Day on which the Advance is to be made for

the purpose of funding such Mortgage Loan.

 

(b)           Within five Business Days after

receiving a written request from WFHM to deliver the same, the Pledgor shall

deliver to WFHM the following:

 

(i)                if any such exist, original

guaranties, assignments of rents and other instruments and documents relating

to security for and payment of such Mortgage Loan, together with duly executed

assignments thereof;

 

(ii)                a mortgagee's title insurance

policy (or commitment therefor) in the form of an American Land Title

Association standard policy (revised coverage, most recent form) from a

substantial and reputable title insurance company acceptable to FNMA and FHLMC

in favor of the Pledgor insuring the lien of the mortgage securing such

Mortgage Loan (subject only to such liens and encumbrances as are generally

acceptable to reputable lending institutions, mortgage investors and securities

dealers) or, if such a mortgagee's title policy (or commitment therefor) is

generally not available in the state in which the real property subject to such

mortgage is located, an opinion of an attorney reasonably acceptable to WFHM to

the effect that the mortgage securing such Mortgage Loan is a valid first lien

free and clear of all other liens, encumbrances and restrictions, except such

as are generally acceptable to reputable lending institutions, mortgage

investors and securities dealers;

 

(iii)                evidence satisfactory to WFHM

that the premises covered by the Mortgage securing such Mortgage Loan is

insured against fire and perils of extended coverage for an amount at least

equal to the lesser of the full insurable value of such premises and the

Collateral Value of such Mortgage Loan;

 

(iv)                with respect to each Mortgage

Loan secured by a Mortgage which is insured by FHA, insured by a private

mortgage insurer or guaranteed by the VA, a certificate signed by an officer of

the Pledgor that, as of the date of delivery thereof, the Pledgor either has

possession of the applicable FHA insurance certificate, private mortgage

insurance certificate or VA guarantee covering such Mortgage Loan, or has

complied with all requirements and conditions for obtaining possession of such

applicable FHA insurance certificate, private mortgage insurance certificate or

VA guarantee;

 

(v)                originals or photocopies, as

WFHM may reasonably request, of surveys (or plat maps, if surveys are not

available) and all other instruments, documents and other papers pertaining to

each such Pledged Mortgage Loan; and

 

(vi)                the original of each Mortgage

referred to in Section 2(b) hereof, together with satisfactory evidence of its

recordation.

 

(c)           All assignments executed and

delivered by the Pledgor shall be in form and substance acceptable to and

approved by WFHM.

 

(d)           Any Transmittal Form delivered to

WFHM hereunder, together with the documents accompanying any such Transmittal

Form, shall conclusively be presumed to have been delivered to WFHM on behalf

of the Pledgor notwithstanding that any such Transmittal Form shall not be

signed or submitted by a person who has been authorized in writing to do so by

the Pledgor through its Operating Committee or otherwise.

 

(e)           The Pledgor will from time to time

whenever an Event of Default exists, upon the request of WFHM, endorse and

deliver to WFHM any draft, check, note, assignment or other writing which

evidences a right to the payment of money which constitutes Collateral for

deposit to the Collateral Account.

 

Section 5.  REPRESENTATIONS AND WARRANTIES

The Pledgor hereby

represents and warrants that:

 

(a)           All of the representations and

warranties set forth in the Credit Agreement are true and correct;

 

(b)           The Pledgor is the legal and

equitable owner of the Collateral and its interests therein are free and clear

of all liens, security interests, charges and encumbrances of every kind and

nature (other than as created hereunder or under commitments to purchase by the

Investor);

 

(c)           No financing statement or other

evidence of lien covering any of the Collateral is on file in any public

office;

 

(d)           The Pledgor has good right, power and

lawful authority to pledge, assign and deliver the Collateral in the manner

hereby done or contemplated;

 

(e)           No consent or approval (other than

any consents which may be incidental to any filing which may be necessary to

perfect the security interests in the Collateral) of any governmental body,

regulatory authority, person, trust, or entity is or will be (i) necessary to

the validity of the rights created hereunder or (ii) required prior to the

assignment, transfer and delivery of any of the Collateral to the Investor.

 

(f)            To the Pledgor's knowledge, no

material dispute, right of setoff, counterclaim or defense exists with respect

to all or any part of the Collateral;

 

(g)           This Agreement constitutes the legal,

valid and binding obligation of the Pledgor enforceable against the Pledgor and

the Collateral in accordance with its terms (subject to limitations as to

enforceability which might result from bankruptcy, reorganization, arrangement,

insolvency or other similar laws affecting creditors' rights generally) and by

general principles of equity;

 

(h)           In making and closing each Pledged

Mortgage Loan, the Pledgor has fully complied with, and all collateral

documents delivered with respect to such Pledged Mortgage Loans comply with,

all applicable federal, state and local laws, regulations and rules, including,

but not limited to, (i) usury laws, (ii) the Real Estate Settlement procedures

Act of 1974, (iii) the Equal Credit Opportunity Act, (iv) the Federal Truth in

Lending Act, (v) Regulation Z of the Board of Governors of the Federal Reserve

System; and (vi) all other consumer protection and truth-in-lending laws which

may apply, and in each case with the regulations promulgated in connection

therewith, as the same may be amended from time to time; and the Pledgor shall

maintain sufficient documentary evidence in its files with respect to such

Pledged Mortgage Loans to substantiate such compliance; and

 

(i)                Immediately upon (A) the

execution and delivery of the Credit Agreement, the Note and the other Loan

Documents, (B) the delivery of the Collateral to the Investor as contemplated

herein and (C) the filing of an appropriate financing statement in the

appropriate filing office or offices, WFHM shall have a valid, first priority

security interest and lien in the Collateral.

 

Section 6.  EVENTS OF DEFAULT; REMEDIES

If one or more Events of Default shall exist, then WFHM, in addition to

any and all other rights and remedies which it may then have hereunder, under

the Credit Agreement or any other Loan Document, under the Uniform Commercial

Code of the State of Minnesota or of any other pertinent jurisdiction (the

"Code"), or under any other instrument, or which WFHM may have at

law, in equity or otherwise, may, at its option (a) in the name of the Pledgor,

or otherwise, demand, collect, receive and receipt for, compound, compromise,

settle and give acquittance for, and prosecute and discontinue any suits or

proceedings in respect of any or all of the Collateral; (b) take any action

which WFHM may deem necessary or desirable in order to realize on the

Collateral, including without limitation, the power to perform any contract,

endorse in the name of the Pledgor without recourse to the Pledgor any checks,

drafts, notes or other instruments or documents received in payment of or on

account of the Collateral; (c) enter upon the premises where any of the

Collateral not in the possession of WFHM is located and take possession thereof

and remove the same, with or without judicial process; (d) reduce the claims of

WFHM to judgment or foreclosure or otherwise enforce the security interests herein

granted and assigned, in whole or in part, by any available judicial procedure;

(e) after notification, if any, provided for herein, sell, lease, or otherwise

dispose of, at the office of WFHM, on the premises of the Pledgor, or

elsewhere, all or any part of the Collateral, in its then condition or

following any commercially reasonable preparation or processing, and any such

sale or other disposition may be as a unit or in parcels, by public or private

proceedings, and by way of one of more contracts (it being agreed that the sale

of any part of the Collateral shall not exhaust the power of sale granted

hereby, but sales may be made from time to time, and at any time, until all the

Collateral has been sold or until all Obligations have been fully paid and

performed), and at any such sale it shall not be necessary to exhibit any of

the Collateral; (f) at its discretion, retain the Collateral in satisfaction of

the Obligations whenever the circumstances are such that WFHM is entitled to do

so under the Code or otherwise; and (g) exercise any and all other rights,

remedies and privileges which WFHM may have under this Agreement, or any of the

other promissory notes, assignments, transfers of lien, and any other

instruments, documents, and agreements executed and delivered pursuant to the

terms hereof or pursuant to the terms of the Credit Agreement.  The Pledgor acknowledges and agrees that a

sale of the Collateral to the Investor in accordance with its standard program

shall be deemed commercially reasonable and preferable, and the Collateral is

intended to be sold and that none of the Collateral is a type or kind intended

by the Pledgor to be held for investment or any purpose other than for sale.

 

Section 7.  NOTICES

Reasonable notification of the time and place of any public sale of any

Collateral, or reasonable notification of the time after which any private sale

or other intended disposition of any of the Collateral is to be made shall be

sent to the Pledgor and to any other person entitled under the Code to notice;

provided, that if any of the Collateral threatens to decline speedily in value,

or is of a type customarily sold on a recognized market, WFHM may sell or

otherwise dispose of the Collateral without notification, advertisement, or

other notice of any kind.  It is agreed

that notice sent or given not less than fifteen (15) calendar days prior to the

taking of the action to which the notice relates is reasonable notification and

notice of the purposes of this Section 7 and that such notice is sufficient if

it states only the number of Pledged Mortgage Loans to be sold and their

aggregate outstanding principal balance, average interest rate, and average

balance together with the time and place of sale.  All notices and other communications provided for in this

Agreement shall be given to the parties at their respective addresses set forth

in the Credit Agreement or, as to each such party, at such other address as

shall be designated by such party in a written notice to the other parties.  All such notices and other communications

shall be given by one or more of the means specified in Section 6.3 of the

Credit Agreement, and upon being so given, shall be deemed to have been given

as of the earliest time specified in said Section 6.3 for the means so used.

 

Section 8.  APPLICATION OF

PROCEEDS

Until all Obligations owed to WFHM have been paid in full, any and all

proceeds ever received by WFHM from any sale or other disposition of the

Collateral, or any part thereof, or the exercise of any other remedy pursuant

to Section 6 hereof, shall be applied by WFHM as follows:

 

First,

to the payment of the out-of-pocket expenses of WFHM and the reasonable fees

and out-of-pocket expenses of counsel employed in connection therewith, and to

the payment of all costs and expenses reasonably incurred by WFHM in connection

with the administration and enforcement of this Agreement (including, without

limitation, the sale or other disposition of the Collateral) and to the payment

of all advances made by WFHM for the account of the Pledgor hereunder to the

extent that such costs and expense have not been reimbursed to WFHM, as the

case may be;

 

Second,

to the payment in full of the other Obligations; and

 

Third,

the balance (if any) of such proceeds shall be paid to the Pledgor, its

successors or assigns, or as a court of competent jurisdiction may direct,

provided, that if such proceeds are not sufficient to satisfy the Obligations

in full, the Pledgor shall remain liable to WFHM for any deficiency.

 

Section 9.  INDEMNIFICATION AND COSTS AND EXPENSES

The Pledgor will (a) pay all reasonable out-of-pocket expenses,

including, without limitation, any recording or filing fees, fees of title

insurance companies in connection with records or filings, costs of mortgage

insurance policies and endorsements thereof and mortgage registration taxes (or

any similar fees or taxes), incurred by WFHM in connection with the enforcement

and administration of this Agreement (whether or not the transactions hereby

contemplated shall be consummated), the Credit agreement and the other Loan

Documents, and including, without limitation, the reasonable fees and

disbursements of outside counsel for WFHM, (b) pay, and hold WFHM harmless from

and against, any and all present and future stamp and other similar taxes with

respect to the foregoing matters and save WFHM harmless from and against any

and all liabilities with respect to or resulting from any delay or omission to

pay by Borrower such taxes; and (c) indemnify, pay and hold harmless WFHM from

and against any and all liabilities, obligations, losses, damages, penalties,

judgments, suits, costs, expenses and disbursements of any kind whatsoever (the

"Indemnified Liabilities") which may be imposed on, incurred by or

asserted against it in any way relating to or arising out of this Agreement,

the Credit Agreement, the Loan Documents or any of the transactions

contemplated hereby or thereby, unless the same are caused by the gross

negligence or willful misconduct of WFHM. 

The undertakings of the Pledgor set forth in this Section 9 shall

survive the payment in full of the Note and the termination of this Agreement,

the Credit Agreement and the other Loan Documents.

 

Section 10.  TERMINATION

This Agreement shall terminate when all the Obligations have been fully

paid and performed and WFHM has no further Commitment under the Credit

Agreement, at which time WFHM shall reassign and redeliver, without recourse

upon, or representation or warranty by, WFHM and at the expense of the Pledgor,

to the Pledgor, or to such other person or persons as the Pledgor shall

designate, against receipt, such of the Collateral (if any) as shall not have

been sold or otherwise disposed of by WFHM pursuant to the terms hereof, of the

Credit Agreement or of the other Loan Documents, and shall still be held by

WFHM, together with the appropriate instruments of reassignment and release;

provided, however, that this Agreement shall continue to be effective or be

reinstated, as the case may be, if at any time payment of any of the Obligations

is rescinded or must otherwise be returned by WFHM or any other Person upon the

insolvency, bankruptcy or reorganization of the Pledgor or otherwise, all as

though such payment had not been made.

 

Section 11.  NON-ASSUMPTION

OF LIABILITY; NO FIDUCIARY RESPONSIBILITY

Nothing herein contained shall relieve the Pledgor from performing any

covenant, agreement or obligation on the part of the Pledgor to be performed

under or in respect of any of the Collateral or from any liability to any party

or parties having an interest therein or impose any liability on WFHM for the

acts or omissions of the Pledgor in connection with any of the Collateral. WFHM

shall not assume or become liable for, nor shall it be deemed or construed to

have assumed or become liable for, any obligation of the Pledgor with respect

to any of the Collateral, or otherwise, by reason of the grant to WFHM of a

security interest in the Collateral. 

While WFHM shall use reasonable care in the custody and preservation of

the Collateral, WFHM shall not have any fiduciary responsibility to the Pledgor

with respect to the holding, maintenance or transmittal of the Collateral

delivered hereunder.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be

executed as of the day and year first above written.

 

 

	

  WELLS

  FARGO HOME MORTGAGE, INC.

  	

   

  	

  COMMUNITY

  FIRST MORTGAGE, LLC

  
	

  (WFHM)

  	

   

  	

  (Venture)

  
	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  By:

  	

   

  
	

  Printed Name:

  	

   

  	

   

  	

  Printed Name:

  	

   

  
	

   

  	

   

  	

   

  
	

  Its:

  	

   

  	

   

  	

  Its:

  	

   

  
									

 

Exhibit C

 

DEMAND NOTE

 

Bloomington, Minnesota

November 1, 2001

 

For value received the undersigned, Community First Mortgage, LLC, a

limited liability company with its principal place of business in Fargo, North

Dakota hereby promises to pay ON DEMAND to the order of Wells Fargo Home

Mortgage, Inc. ("Lender"), at its office in Bloomington, Minnesota or

at any other place designated at any time by the holder hereof, in lawful money

of the United States of America and in immediately available funds, the

principal sum of [Confidential Treatment Requested] or, if less, the aggregate

unpaid principal amount of all advances made by Lender to the undersigned

hereunder, together with interest on the principal amount of all Advances

hereunder remaining unpaid from time to time computed on the basis of the

actual number of days elapsed and a 360-day year, from the date hereof until

this Note is fully paid at the rate or rates set forth in Section 2.4 of the

Credit Agreement referred to below. 

Interest accruing each month shall be payable on the first Business Day

of the next succeeding month and at maturity or earlier if prepaid in

full.  Interest accruing under this Note

is subject to any restrictions contained in the Service Agreement between

Lender and the undersigned.

 

This Note may be prepaid in whole at any time or from time to time in

part, without penalty or premium, provided that any prepayment of the full

amount of the Note shall include accrued interest thereon.

 

This Note is issued pursuant to, and is subject to, a Credit Agreement

of even date herewith, by and between the undersigned and Lender, which, among

other things, provides for acceleration of the maturity hereof upon the

occurrence of an Event of Default (as defined in that Credit Agreement) and for

mandatory prepayment hereof upon the occurrence of certain events.

 

All outstanding Advances under this Note are secured by a Pledge and

Security Agreement of even date herewith from the undersigned to Lender, and

may now or hereafter be secured by one or more other security agreements,

mortgages, deeds of trust, assignments, or other instruments or agreements.

 

This Note shall be immediately due and payable (including unpaid

interest accrued hereon) without demand or notice thereof upon filing of a

petition by or against the undersigned under the United States Bankruptcy Code.

 

The undersigned hereby agrees to pay all costs of collection, including

reasonable attorneys' fees and legal expenses, in the event this Note is not

paid when due, whether or not legal proceedings are commenced.

 

Presentment or other demand for payment, notice of dishonor and protest

are expressly waived.

 

 

	

  COMMUNITY FIRST MORTGAGE, LLC

  
	

  By:

  	

   

  	

   

  
	

  Printed Name:

  	

   

  	

   

  
	

   

  
	

  Its:

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