Document:

Exhibit
10.3

 

EXECUTION VERSION

 

 

 

 

MASTER LOAN AND SECURITY AGREEMENT

 

 

Dated as of December 30, 2003

 

 

 

HOMEONE FUNDING I

as Borrower

 

 

and

 

 

GREENWICH CAPITAL FINANCIAL PRODUCTS,
INC.

as Lender

 

 

 

 

TABLE OF CONTENTS

 

	
  Section 1.

  	
  Definitions and Accounting Matters

  	
   

  
	
   

  	
  1.01

  	
  Certain
  Defined Terms

  	
   

  
	
   

  	
  1.02

  	
  Accounting
  Terms and Determinations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Advances, Note and Prepayments

  	
   

  
	
   

  	
  2.01

  	
  Advances

  	
   

  
	
   

  	
  2.02

  	
  Notes

  	
   

  
	
   

  	
  2.03

  	
  Procedure
  for Borrowing

  	
   

  
	
   

  	
  2.04

  	
  Limitation on Types of
  Advances; Illegality

  	
   

  
	
   

  	
  2.05

  	
  Repayment of Advances;
  Interest

  	
   

  
	
   

  	
  2.06

  	
  Mandatory Prepayments
  or Pledge

  	
   

  
	
   

  	
  2.07

  	
  Optional
  Prepayments

  	
   

  
	
   

  	
  2.08

  	
  Requirements
  of Law.

  	
   

  
	
   

  	
  2.09

  	
  Purpose
  of Advances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Payments; Computations; Taxes; Commitment
  Fee

  	
   

  
	
   

  	
  3.01

  	
  Payments

  	
   

  
	
   

  	
  3.02

  	
  Computations

  	
   

  
	
   

  	
  3.03

  	
  U.S. Taxes

  	
   

  
	
   

  	
  3.04

  	
  Commitment Fee

  	
   

  
	
   

  	
  3.05

  	
  Non-Utilization
  Fee.

  	
   

  
	
   

  	
  3.06

  	
  Termination Fee.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Collateral Security

  	
   

  
	
   

  	
  4.01

  	
  Collateral; Security
  Interest

  	
   

  
	
   

  	
  4.02

  	
  Further
  Documentation

  	
   

  
	
   

  	
  4.03

  	
  Changes
  in Locations, Name, etc

  	
   

  
	
   

  	
  4.04

  	
  Lender’s
  Appointment as Attorney-in-Fact.

  	
   

  
	
   

  	
  4.05

  	
  Performance
  by Lender of Borrower’s Obligations

  	
   

  
	
   

  	
  4.06

  	
  Proceeds

  	
   

  
	
   

  	
  4.07

  	
  Remedies

  	
   

  
	
   

  	
  4.08

  	
  Limitation
  on Duties Regarding Preservation of Collateral

  	
   

  
	
   

  	
  4.09

  	
  Powers
  Coupled with an Interest

  	
   

  
	
   

  	
  4.10

  	
  Release of Security
  Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Conditions Precedent

  	
   

  
	
   

  	
  5.01

  	
  Initial Advance

  	
   

  
	
   

  	
  5.02

  	
  Initial and Subsequent
  Advances

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
  Representations and Warranties

  	
   

  
	
   

  	
  6.01

  	
  Existence

  	
   

  
	
   

  	
  6.02

  	
  Financial
  Condition

  	
   

  
	
   

  	
  6.03

  	
  Litigation

  	
   

  
	
   

  	
  6.04

  	
  No Breach

  	
   

  

 

 

	
   

  	
  6.05

  	
  Action

  	
   

  
	
   

  	
  6.06

  	
  Approvals

  	
   

  
	
   

  	
  6.07

  	
  Margin
  Regulations

  	
   

  
	
   

  	
  6.08

  	
  Taxes

  	
   

  
	
   

  	
  6.09

  	
  Investment
  Company Act

  	
   

  
	
   

  	
  6.10

  	
  No Legal Bar

  	
   

  
	
   

  	
  6.11

  	
  No Default

  	
   

  
	
   

  	
  6.12

  	
  Collateral;
  Collateral Security

  	
   

  
	
   

  	
  6.13

  	
  Chief
  Executive Office

  	
   

  
	
   

  	
  6.14

  	
  Location of Books and
  Records

  	
   

  
	
   

  	
  6.15

  	
  True and Complete
  Disclosure

  	
   

  
	
   

  	
  6.16

  	
  Guarantors’
  Compliance with the Guaranties

  	
   

  
	
   

  	
  6.17

  	
  ERISA

  	
   

  
	
   

  	
  6.19

  	
  Relevant
  States

  	
   

  
	
   

  	
  6.20

  	
  True Sales

  	
   

  
	
   

  	
  6.21

  	
  No Burdensome Restrictions

  	
   

  
	
   

  	
  6.22

  	
  Subsidiaries

  	
   

  
	
   

  	
  6.23

  	
  Origination
  and Acquisition of Mortgage Loans

  	
   

  
	
   

  	
  6.24

  	
  No
  Adverse Selection

  	
   

  
	
   

  	
  6.25

  	
  Borrower Solvent;
  Fraudulent Conveyance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Covenants of the Borrower

  	
   

  
	
   

  	
  7.01

  	
  Financial
  Statements

  	
   

  
	
   

  	
  7.02

  	
  Litigation

  	
   

  
	
   

  	
  7.03

  	
  Existence, Etc

  	
   

  
	
   

  	
  7.04

  	
  Prohibition of
  Fundamental Changes

  	
   

  
	
   

  	
  7.05

  	
  Borrowing Base Deficiency

  	
   

  
	
   

  	
  7.06

  	
  Notices

  	
   

  
	
   

  	
  7.07

  	
  Servicing

  	
   

  
	
   

  	
  7.08

  	
  MERS

  	
   

  
	
   

  	
  7.09

  	
  Underwriting
  Guidelines

  	
   

  
	
   

  	
  7.10

  	
  Lines of
  Business

  	
   

  
	
   

  	
  7.11

  	
  Transactions with
  Affiliates

  	
   

  
	
   

  	
  7.12

  	
  Use of Proceeds

  	
   

  
	
   

  	
  7.13

  	
  Limitation
  on Liens

  	
   

  
	
   

  	
  7.14

  	
  Limitation on Sale of
  Assets

  	
   

  
	
   

  	
  7.15

  	
  Limitation on Distributions

  	
   

  
	
   

  	
  7.16

  	
  Maintenance of Liquidity.

  	
   

  
	
   

  	
  7.17

  	
  Maintenance of Tangible Net Worth

  	
   

  
	
   

  	
  7.18

  	
  Maintenance of Ratio of Total Indebtedness
  to Tangible Net Worth

  	
   

  
	
   

  	
  7.19

  	
  Restricted
  Payments

  	
   

  
	
   

  	
  7.20

  	
  Servicing
  Transmission

  	
   

  
	
   

  	
  7.21

  	
  No
  Amendment or Waiver

  	
   

  
	
   

  	
  7.22

  	
  Maintenance of
  Property; Insurance

  	
   

  
	
   

  	
  7.23

  	
  Further
  Identification of Collateral

  	
   

  
	
   

  	
  7.24

  	
  Contract
  or Mortgage Loan Determined to be Defective

  	
   

  
	
   

  	
  7.25

  	
  Interest Rate
  Protection Agreements

  	
   

  
	
   

  	
  7.26

  	
  Certificate
  of a Responsible Officer of the Borrower

  	
   

  
	
   

  	
  7.27

  	
  Reserved

  	
   

  
	
   

  	
  7.28

  	
  Alternative
  Collateral

  	
   

  
	
   

  	
  7.29

  	
  Maintenance of Separateness

  	
   

  
	
   

  	
  7.30

  	
  Securitization Exclusivity

  	
   

  

 

 

	
  Section 8.

  	
  Events of Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Remedies Upon Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.

  	
  No Duty on Lender’s Part

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.

  	
  Miscellaneous

  	
   

  
	
   

  	
  11.01

  	
  Waiver

  	
   

  
	
   

  	
  11.02

  	
  Notices

  	
   

  
	
   

  	
  11.03

  	
  Indemnification and
  Expenses

  	
   

  
	
   

  	
  11.04

  	
  Amendments

  	
   

  
	
   

  	
  11.05

  	
  Successors
  and Assigns

  	
   

  
	
   

  	
  11.06

  	
  Survival

  	
   

  
	
   

  	
  11.07

  	
  Captions

  	
   

  
	
   

  	
  11.08

  	
  Counterparts

  	
   

  
	
   

  	
  11.09

  	
  Loan
  Agreement Constitutes Security Agreement; Governing Law

  	
   

  
	
   

  	
  11.10

  	
  SUBMISSION TO JURISDICTION; WAIVERS

  	
   

  
	
   

  	
  11.11

  	
  WAIVER OF JURY TRIAL

  	
   

  
	
   

  	
  11.12

  	
  Acknowledgments

  	
   

  
	
   

  	
  11.13

  	
  Hypothecation
  or Pledge of Collateral

  	
   

  
	
   

  	
  11.14

  	
  Assignments;
  Participations

  	
   

  
	
   

  	
  11.15

  	
  Servicing

  	
   

  
	
   

  	
  11.16

  	
  Periodic Due Diligence
  Review

  	
   

  
	
   

  	
  11.17

  	
  Set-Off

  	
   

  
	
   

  	
  11.18

  	
  Intent

  	
   

  
	
   

  	
  11.19

  	
  Entire Agreement

  	
   

  
	
   

  	
  11.20

  	
  Public
  Announcements

  	
   

  
	
   

  	
  11.21

  	
  Limitation
  on Liability

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  SCHEDULES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SCHEDULE 1

  	
  Representations and Warranties re:
  Mortgage Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SCHEDULE 2

  	
  Filing Jurisdictions
  and Offices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SCHEDULE 3

  	
  Relevant States

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SCHEDULE 4

  	
  Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXHIBITS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT A

  	
  Form of Promissory Note

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT B

  	
  Form of Custodial Agreement

  	
   

  
					

 

 

	
   

  	
  EXHIBIT C

  	
  Reserved

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT D

  	
  Form of Notice of Borrowing and Pledge

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT E

  	
  Underwriting Guidelines

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT F

  	
  Required Fields for Servicing Transmission

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT G

  	
  Required Fields for Asset Data Transmission

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT H

  	
  Form of Borrowing Base Certificate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT I

  	
  Form of Confidentiality Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT J

  	
  Form of Instruction Letter

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT K

  	
  Applicable Collateral
  Percentage

  	
   

  

 

 

MASTER LOAN AND SECURITY AGREEMENT

 

MASTER LOAN AND SECURITY
AGREEMENT, dated as of December 30, 2003, between HOMEONE FUNDING I , a
Delaware statutory trust (the “Borrower”) and GREENWICH CAPITAL
FINANCIAL PRODUCTS, INC., a Delaware corporation (the “Lender”).

 

RECITALS

 

The Borrower wishes to
obtain financing from time to time to provide interim funding for the
origination or acquisition of certain first lien manufactured or modular
housing retail installment sales contracts and installment loan agreements,
including any Streamlined Land-and Home Contracts (as defined herein) or
promissory notes, mortgages, deeds of trust or other security instruments
creating a first lien on the real estate to which a manufactured home is deemed
permanently affixed, which Contracts (as defined herein) and Mortgage Loans (as
defined herein) shall secure Advances (as defined herein) to be made by the
Lender hereunder.

 

The Lender has agreed,
subject to the terms and conditions of this Loan Agreement  (as defined herein), to provide such
financing to the Borrower, with a portion of the proceeds of the sale of all
mortgage-backed securities issued by any such trust or other entity, together
with a portion of the proceeds of any permitted whole loan sales, together with
other funds of the Borrower, if necessary, being used to repay any Advances
made hereunder as more particularly described herein.

 

Accordingly, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

 

Section 1.              Definitions
and Accounting Matters.

 

1.01         Certain Defined Terms. As used herein, the
following terms shall have the following meanings (all terms defined in this
Section 1.01 or in other provisions of this Loan Agreement in the singular
to have the same meanings when used in the plural and vice versa):

 

“Accepted Servicing
Practices” shall mean, with respect to any Contract or Mortgage Loan,
accepted and prudent mortgage servicing practices of prudent mortgage lending
institutions which service assets of the same type as such Contracts or
Mortgage Loans in the jurisdiction where the related Secured Property or
Mortgaged Property is located in a manner at least equal in quality to the
servicing the Borrower or Borrower’s designee provides to assets which it owns
in its own portfolio.

 

“Advance” shall
have the meaning specified in Section 2.01(a) hereof.

 

“Affiliate” means,
with respect to any Person, any other Person which, directly or indirectly,
controls, is controlled by, or is under common control with, such Person.  For purposes of this definition, “control”
(together with the correlative meanings of “controlled by” and “under common
control with”) means possession, directly or indirectly, of the power (a) to
vote 10% or more of the securities (on a fully diluted basis) having ordinary
voting power for the directors or managing general partners (or their equivalent)
of such Person, or (b) to direct or

 

 

cause the direction of
the management or policies of such Person, whether through the ownership of
voting securities, by contract, or otherwise.

 

“ALTA” means the
American Land Title Association.

 

“Applicable Collateral
Percentage” shall mean with respect to each Advance for any calendar month
(or partial calendar month),

 

(i) the percentage
specified on Exhibit K hereto, corresponding to the characteristics of
the Mortgage Loans and Contracts securing such Advances and the Applicable
Margin selected by the Borrower for such calendar month (or partial calendar
month); less

 

(ii) on the date on which
such Contract or Mortgage Loan becomes subject to the terms of this Agreement,
200 basis points (2.00%) for each 0.25% by which the weighted average coupon of
the Eligible Assets is less than the fixed side of a five year swap against 3
month LIBOR plus 600 basis points as of such date.  The Borrower shall not be permitted to elect to increase the
Applicable Collateral Percentage for any Mortgage Loan or Contract following
the related Funding Date.

 

“Applicable Margin”
shall mean with respect to any Advance, the percentage per annum selected by
the Borrower, not more frequently than monthly with respect to the next succeeding
calendar month, which shall not be less than 2.00% per annum or greater than
2.50% per annum, in accordance with the characteristics specified on Exhibit
K hereto.

 

“Appraised Value”
shall mean the value set forth in an appraisal made in connection with the
origination of the related Contract or Mortgage Loan as the value of the
related Secured Property or Mortgaged Property.

 

“Asset Data
Transmission” shall mean a computer-readable transmission in a standardized
text format, delivered by the Borrower to the Lender and the Custodian and
incorporating the fields identified on Exhibit G or as otherwise
mutually agreed by the Lender, the Borrower and the Custodian.

 

“Asset List” shall
mean the hard copy report provided by the Borrower which shall include with
respect to each Contract or Mortgage Loan to be included as Collateral: (i) the
Mortgage Loan or Contract number, (ii) the Obligor’s name, (iii) the original
principal amount of the Contract or Mortgage Loan and (iv) the current
principal balance of the Contract or Mortgage Loan.

 

“Assignment of
Mortgage” shall mean, with respect to any Mortgage, an assignment of the
Mortgage, notice of transfer or equivalent instrument in recordable form
(excluding the name of the assignee), sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
assignment and pledge of the Mortgage.

 

“Bank of America
Facility” shall mean the Credit Agreement dated as of July 27, 2001,
among the lenders party thereto, Bank of America, N.A. as administrative agent,
FEI as guarantor and Fleetwood Holdings, Inc., Fleetwood Retail Corp. and
certain of their respective

 

 

subsidiaries as the
borrowers (as amended through the Eighth Amendment thereto and without regard
for whether such facility has expired or been terminated.)

 

“Bankruptcy Code”
shall mean the United States Bankruptcy Code of 1978, as amended from time to
time.

 

“Best’s” means
Best’s Key Rating Guide, as the same shall be amended from time to time.

 

“Blocked Account
Agreement” shall mean the Blocked Account Agreement, dated as of the date
hereof, executed among the Borrower, the Lender and the Servicer.

 

“Borrower” shall
have the meaning provided in the heading hereof.

 

“Borrowing Base”
shall mean the aggregate Collateral Value of all Eligible Assets that have
been, and remain pledged to the Lender hereunder.

 

“Borrowing Base
Certificate” shall mean the certificate prepared by the Borrower and
approved by the Lender in its reasonable discretion substantially in the form
of Exhibit H, attached hereto.

 

“Borrowing Base
Deficiency” shall have the meaning provided in Section 2.06 hereof.

 

“Business Day”
shall mean any day other than (i) a Saturday or Sunday, (ii) a day on which the
New York Stock Exchange, the Federal Reserve Bank of New York, the Custodian or
banking and savings and loan institutions in the State of New York, Connecticut
or Texas or the City of New York or the city or state in which the Custodian’s
offices are located are closed, or (iii) a day on which trading in securities
on the New York Stock Exchange or any other major securities exchange in the
United States is not conducted.

 

“Buy-For Contract”
shall mean a Contract under which the related Obligor is not a resident of the
related Manufactured Home and such Manufactured Home was purchased primarily
for use by some party other than the Obligor.

 

“Capital Lease
Obligations” shall mean, for any Person, all obligations of such Person to
pay rent or other amounts under a lease of (or other agreement conveying the
right to use) Property to the extent such obligations are required to be
classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Loan Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.

 

“Cash Equivalents”
shall mean (a) securities with maturities of 90 days or less from the date of
acquisition issued or fully guaranteed or insured by the United States
Government or any agency thereof, (b) certificates of deposit and eurodollar
time deposits with maturities of 90 days or less from the date of acquisition
and overnight bank deposits of any commercial bank having capital and surplus
in excess of $500,000,000, (c) repurchase obligations of any commercial bank
satisfying the requirements of clause (b) of this definition,

 

 

having a term of not more
than seven days with respect to securities issued or fully guaranteed or
insured by the United States Government, (d) commercial paper of a domestic
issuer rated at least A-1 or the equivalent thereof by Standard and Poor’s
Ratings Group (“S&P”) or P-1 or the equivalent thereof by Moody’s
Investors Service, Inc. (“Moody’s”) and in either case maturing within
90 days after the day of acquisition, (e) securities with maturities of 90 days
or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody’s, (f) securities with maturities of
90 days or less from the date of acquisition backed by standby letters of
credit issued by any commercial bank satisfying the requirements of clause (b)
of this definition, (g) shares of money market mutual or similar funds which
invest exclusively in assets satisfying the requirements of clauses (a) through
(f) of this definition or (h) Bank of America’s Nation Cash Reserve Fund or
UBS’s Select Money Market Fund, provided that the rating of the sponsor of such
fund provided by S&P and Moody’s is not lower than the rating of such
entity on the date hereof.

 

“Change of Control”
means (a) with respect to any entity, the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of outstanding shares of voting stock of such entity at
any time if after giving effect to such acquisition (i) such Person or Persons
owns twenty percent (20%) or more of such outstanding voting stock or (ii) the
owners of such entity as of the Effective Date do not own more than fifty
percent (50%) of such outstanding shares of voting stock, or (b) with respect
to HCC, either Boyd Plowman or Joe Corona leaves the employ of HCC and a
replacement reasonably acceptable to Lender is not hired within 90 days.

 

“Code” shall mean
the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral” shall
have the meaning assigned to such term in Section 4.01(b) hereof.

 

“Collateral Documents”
shall mean, with respect to a Contract or Mortgage Loan, the documents
comprising the Collateral File for such Contract or Mortgage Loan.

 

“Collateral File”
shall have the meaning assigned thereto in the Custodial Agreement.

 

“Collateral Value”
shall mean with respect to each Contract or Mortgage Loan,  the lesser of (a) the product of (x) the
Applicable Collateral Percentage and (y) the outstanding principal balance of
such Contract or Mortgage Loan, and (b) 95% the Market Value thereof; provided,
that, the Collateral Value shall be deemed to be zero with respect to
each Contract or Mortgage Loan:

 

(1)           in respect of which
there is a material breach of a representation and warranty set forth on
Schedule 1 (assuming each representation and

 

 

warranty is made as of
the date Collateral Value is determined) or there is an Exception which was not
otherwise waived by Lender;

 

(2)           which has been released
from the possession of the Custodian under Section 5(a) of the Custodial
Agreement to the Borrower or its bailee for a period in excess of ten (10)
calendar days (or if such tenth day is not a Business Day, the next succeeding
Business Day);

 

(3)           which has been released
from the possession of the Custodian (i) under Section 5(b) of the Custodial
Agreement under any Transmittal Letter in excess of the time period stated in
such Transmittal Letter for release, or (ii) under Section 5(c) of the
Custodial Agreement under an Attorney Bailee Letter, from and after the date
such Attorney’s Bailee Letter is terminated or ceases to be in full force and
effect;

 

(4)           in respect of which (a)
the related Secured Property or Mortgaged Property is the subject of a
foreclosure proceeding or (b) the related Mortgage Note or Contract has been
extinguished under relevant state law in connection with a judgment of
foreclosure or foreclosure sale or otherwise;

 

(5)           if (a) the related
Mortgage Note or Contract or the related Mortgage is not genuine or is not the
legal, valid, binding and enforceable obligation of the maker thereof, subject
to no right of rescission, set-off, counterclaim or defense, or (b) such
Mortgage, is not a valid, subsisting, enforceable and perfected first lien on
the Secured Property or Mortgaged Property;

 

(6)           in respect of which the
related Obligor is the subject of a bankruptcy proceeding other than if (a) in
the case of a Chapter 7 bankruptcy proceeding, 
the Bankruptcy Court has reaffirmed the related Contract or Mortgage
Loan or in the case of a Chapter 12 or Chapter 13 bankruptcy proceeding, such
proceeding has been completed, and (b) the Obligor has made not less than six
consecutive Monthly Payments thereunder after such reaffirmation, in the case
of a Contract or Mortgage Loan subject to a Chapter 7 bankruptcy proceeding, or
after completion of the bankruptcy proceeding, in the case of a Contract or
Mortgage Loan subject to a Chapter 12 or Chapter 13 bankruptcy proceeding;

 

(7)           if the Obligor has not
made its first payment on the related Contract or Mortgage Loan prior to the
last day of the month following the month in which such payment was due at the
time of the funding of the related Advance;

 

(8)           if the related
Mortgaged Property or Secured Property is subject to any lien other than (1)
that created in connection with the related Mortgage Note or Contract; (2) the
lien of current real property taxes and assessments not yet due and payable;
(3) covenants, conditions and restrictions, rights of way, easements and other
matters of the public

 

 

record as of the date of
recording acceptable to prudent mortgage lending institutions generally and
specifically referred to in the lender’s title insurance policy delivered to
the originator of the Mortgage Loan and (a) referred to or otherwise considered
in the appraisal made for the originator of the Mortgage Loan or (b) which do
not adversely affect the Appraised Value of the related Mortgaged Property set
forth in such appraisal; and (4) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or Contract or the use,
enjoyment, value or marketability of the related Mortgaged Property or Secured
Property;

 

(9)           if the inclusion of
such Contract or Mortgage Loan would cause the weighted average LTV of the
Mortgage Loans and Contracts that are subject to this Loan Agreement to exceed
90%;

 

(10)         if the inclusion of such
Contract or Mortgage Loan would cause the weighted average FICO Scores of the
Obligors to be less than 675;

 

(11)         which is a Sublimit
Excess Loan;

 

(12)         which when combined with
all other Eligible Assets is not an Eligible Asset;

 

(13)         if the inclusion of such
Contract or Mortgage Loan would cause the weighted average down payment of the
Mortgage Loans and Contracts to be less than 10%; or

 

(14)         if the inclusion of such
Contract or Mortgage Loan would cause the weighted average original term of the
Mortgage Loans and Contracts to be greater than 270 months.

 

“Commitment
Fee” shall have the meaning assigned to such term in Section 3.04
hereof.

 

“Contracts” shall
mean the manufactured or modular housing retail installment sales contracts and
installment loan agreements, including any Streamlined Land-and-Home Contract
delivered under this Loan Agreement and includes, without limitation, all
related security interests and any and all rights to receive payments
thereunder and the security interest in the related Secured Property that the
Custodian has been instructed to hold for the Lender pursuant to the Custodial
Agreement.

 

“Contractual
Obligation” shall mean as to any Person, any material provision of any
material agreement, instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound or any material provision
of any security issued by such Person.

 

“Custodial Agreement”
shall mean the Custodial Agreement, dated as of the date hereof, among the
Borrower, the Custodian and the Lender, substantially in the form of Exhibit
B hereto, as the same shall be modified and supplemented and in effect from
time to time.

 

 

“Custodian” shall
mean U.S. Bank, National Association, its successors and permitted assigns.

 

“Custodian Loan
Transmission” shall have the meaning assigned thereto in the Custodial
Agreement.

 

“Default” shall
mean an Event of Default or an event that with notice or lapse of time or both
would become an Event of Default.

 

“Dollars” and “$”
shall mean lawful money of the United States of America.

 

“Due Date” means
the day of the month on which the Monthly Payment is due on a Contract or
Mortgage Loan, exclusive of any days of grace.

 

“Due Diligence Review”
shall mean the performance by the Lender of any or all of the reviews permitted
under Section 11.16 hereof with respect to any or all of the Contracts or
Mortgage Loans or the Borrower or related parties, as desired by the Lender
from time to time.

 

“Effective Date”
shall mean the date upon which the conditions precedent set forth in
Section 5.01 shall have been satisfied.

 

“Eligible Asset”
shall mean a fixed rate Mortgage Loan or Contract secured by a first priority
lien on a single family manufactured or modular home that was originated or
acquired by the Borrower in accordance with the Underwriting Guidelines or
other Lender approved underwriting guidelines and as to which (i) the
representations and warranties in Section 6.12 and 6.23 and
Schedule 1 hereof are correct, (ii) the Mortgage Loan or Contract has a
maximum term of 360 months, (iii) the maximum amount of such Mortgage Loan or
Contract is $250,000, (iv)  such other
customary criteria for eligibility determined by the Lender shall have been
satisfied, (v) the Mortgage Loan or Contract is not more than 30 days past due
at the month end of any reporting period, (vi) the Mortgage Loan or Contract
has a maximum of 4 buy-down points, (vii) with respect to Mortgage Loans and
Contracts that were originated prior to the Effective Date, such Mortgage Loan
or Contract has a maximum of 1% in origination fees as a percentage of the
purchase price of the related Manufactured Home, and with respect to
Land-and-Home Contracts that are originated prior to, on or after the Effective
Date, such Land-and-Home Contract has a maximum of 1% in origination fees as a
percentage of the purchase price of the related Manufactured Home,  (viii) the Mortgage Loan or Contract has a
maximum of 2.5% in construction period interest as a percentage of the purchase
price of the related Manufactured Home, and (ix) the Mortgage Loan or Contract
has an LTV less than or equal to 100%.

 

“ERISA” shall mean
the Employee Retirement Income Security Act of 1974, as amended from time to
time.

 

“ERISA Affiliate”
shall mean any corporation or trade or business that is a member of any group
of organizations (i) described in Section 414(b) or (c) of the Code of
which Borrower is a member and (ii) solely for purposes of potential liability
under Section 302(c)(11) of ERISA and 

 

 

Section 412(c)(11)
of the Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of the
Code of which Borrower is a member.

 

“Event of Default”
shall have the meaning provided in Section 8 hereof.

 

“Exception” shall
have the meaning assigned thereto in the Custodial Agreement.

 

“Exception Report”
shall mean the exception report prepared by the Custodian pursuant to the
Custodial Agreement.

 

“Fannie Mae” shall
mean Fannie Mae, or any successor thereto.

 

“Federal Funds Rate”
shall mean, for any day, the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for the day of such
transactions received by the Lender from three primary dealers (other than an
affiliate of the Lender).

 

“FEI” shall mean
Fleetwood Enterprises, Inc., a Delaware corporation.

 

“FICO Score” means
a statistical credit score published by Equifax (Beacon), Transunion (Emperica)
or Experian (FICO), based on the primary bureau designated by HCC’s priority
list (zip code matrix) for the primary applicant (or any comparable company
that is acceptable to Lender and Borrower), that is obtained in connection with
a loan application to help assess an applicant’s creditworthiness as of the
time the score is obtained.

 

“Freddie Mac”
shall mean Freddie Mac, or any successor thereto.

 

“Funding Date”
shall mean the date on which an Advance is made hereunder.

 

“GAAP” shall mean
generally accepted accounting principles as in effect from time to time in the
United States of America.

 

“Governmental
Authority” shall mean any nation or government, any state or other
political subdivision, agency or instrumentality thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction over
any Person, any of its Subsidiaries or any of its properties.

 

“Guarantee” shall
mean, as to any Person, any obligation of such Person directly or indirectly
guaranteeing any Indebtedness of any other Person or in any manner providing
for the payment of any Indebtedness of any other Person or otherwise protecting
the holder of such Indebtedness against loss (whether by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, or to take-or-pay or otherwise), provided that the term
“Guarantee” shall not include (i) endorsements for collection or deposit in the
ordinary course of business, or (ii) obligations to make servicing advances or
other obligations in

 

 

respect of a Mortgaged
Property. The amount of any Guarantee of a Person shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by
such Person in good faith. The terms “Guarantee” and “Guaranteed”
used as verbs shall have correlative meanings.

 

“Guaranties” shall
mean the guaranties, dated December 30, 2003, executed by each of the
Guarantors in favor of the Lender which evidences the guarantee by the related
Guarantor of the obligations of the Borrower under this Loan Agreement pursuant
to the respective terms set forth therein.

 

“Guarantor” shall
mean each of FEI and HCC.

 

“HCC” shall mean
HomeOne Credit Corp., a Delaware corporation.

 

“Indebtedness” shall
mean, for any Person: (a) obligations created, issued or incurred by such
Person for borrowed money (whether by loan, the issuance and sale of debt
securities or the sale of Property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such
Property from such Person); (b) obligations of such Person to pay the deferred
purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (d) obligations of
such Person in respect of letters of credit or similar instruments issued or
accepted by banks and other financial institutions for account of such Person
(other than any such obligations which are undrawn); (e) Capital Lease
Obligations of such Person; (f) obligations of such Person under repurchase
agreements or like arrangements (other than flooring repurchase obligations);
(g) indebtedness of others Guaranteed by such Person; (h) all obligations of
such Person incurred in connection with the acquisition or carrying of fixed
assets by such Person; (i) indebtedness of general partnerships of which such
Person is a general partner; and (j) any other indebtedness of such Person by a
note, bond, debenture or similar instrument.

 

“Instruction Letter”
shall mean a letter agreement between the Borrower and each Subservicer
substantially in the form of Exhibit J attached hereto, in which such
Persons acknowledge the Lender’s security interest in the Contracts or Mortgage
Loans, and agree to remit any collections with respect to the Contracts or
Mortgage Loans as the Lender may so direct from time to time, which Instruction
Letter may be delivered by Lender to such Subservicer in its sole discretion.

 

“Insurance Proceeds”
means with respect to each Contract and Mortgage Loan, proceeds of insurance
policies insuring the Contract or Mortgage Loan or the related Secured Property
or Mortgaged Property, as the case may be.

 

“Interest Period”
shall mean, with respect to any Advance, (i) initially, the period commencing
on the Funding Date with respect to such Advance and ending on the calendar day
prior to the next succeeding Payment Date, and (ii) thereafter, each period
commencing on the

 

 

Payment Date of a month
and ending on the calendar day prior to the Payment Date of the next succeeding
month.  Notwithstanding the foregoing,
no Interest Period may end after the Termination Date.

 

“Interest Rate
Protection Agreement” shall mean with respect to any or all of the Mortgage
Loans and/or Advances, any interest rate swap, cap or collar agreement or any
other applicable hedging arrangements providing for protection against
fluctuations in interest rates or the exchange of nominal interest obligations,
either generally or under specific contingencies entered into by Borrower and
reasonably acceptable to the Lender.

 

“Land-and-Home
Contract” shall mean a Contract or Mortgage Loan that is secured by a
Mortgage on real estate on which the related Manufactured Home is situated, and
which Manufactured Home is considered or classified as part of the real estate
under the laws of the jurisdiction in which it is located.

 

“Lender” shall
have the meaning assigned thereto in the heading hereto.

 

“LIBO Base Rate”
shall mean with respect to each day an Advance is outstanding (or if such day
is not a Business Day, the next succeeding Business Day), the rate per annum
equal to the rate published by Bloomberg or if such rate is not available, the
rate appearing at page 3750 of the Telerate Screen, as one-month LIBOR on such
date, and if such rate shall not be so quoted, the rate per annum at which the
Lender is offered Dollar deposits at or about 11:00 A.M., eastern time, on such
date by prime banks in the interbank eurodollar market where the eurodollar and
foreign currency and exchange operations in respect of its Advances are then
being conducted for delivery on such day for a period of one month and in an amount
comparable to the amount of the Advances to be outstanding on such day.

 

“LIBO Rate” shall
mean with respect to each Interest Period pertaining to an Advance, a rate per
annum determined by the Lender in its sole discretion in accordance with the
following formula (rounded upwards to the nearest l/100th of one percent),
which rate as determined by the Lender shall be conclusive absent manifest
error by the Lender:

 

	
  LIBO Base Rate

  
	
  1.00 - LIBO
  Reserve Requirements

  

 

The LIBO Rate shall be
calculated each Funding Date and Payment Date commencing with the first Funding
Date.

 

“LIBO Reserve
Requirements” shall mean for any Interest Period for any Advance, the
aggregate (without duplication) of the rates (expressed as a decimal fraction)
of reserve requirements applicable to the Lender in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect
thereto), dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of such
Board) maintained by a member bank of such Governmental Authority. As of the
Effective Date, the LIBO Reserve Requirements shall be deemed to be zero.

 

 

“Lien” shall mean
any mortgage, lien, pledge, charge, security interest or similar encumbrance.

 

“Loan Agreement”
shall mean this Master Loan and Security Agreement, as may be amended,
supplemented or otherwise modified from time to time as mutually agreed by the
parties in writing.

 

“Loan Documents”
shall mean collectively, this Loan Agreement, the Note, the Custodial
Agreement, the Servicing Agreement, the Blocked Account Agreement, the Guaranty
of HCC and the Guaranty of FEI.

 

“Loan-to-Value Ratio”
or “LTV” means with respect to any Contract or Mortgage Loan, the ratio
of the original outstanding principal amount of the Contract or Mortgage Loan
to (i) with respect to a Land-and-Home Contract, the sum of the Appraised Value
of the Secured Property or Mortgaged Property, as the case may be, at
origination, plus the sum of the related (a) sales tax and (b) insurance, (ii)
with respect to any Contract that does not arise in connection with a
Land-and-Home Contract, the cash selling price of the related Manufactured Home
(or Appraised Value in the case of used Manufactured Homes and Manufactured
Homes sold in the State of California) plus the sum of the related (a) sales
tax, and (b) insurance, or (iii) with respect to any Streamlined Land-and-Home
Contract, the cash selling price of the related Manufactured Home plus the sum
of the related (a) sales tax, (b) land value, (c)  land improvements and (d) insurance.

 

“Manufactured Home”
shall mean a unit of manufactured or modular housing, including all accessions
thereto, securing the indebtedness of the Obligor under the related Contract or
Mortgage Loan.

 

“Market Value”
shall mean the value, determined by the Lender in its good faith reasonable
discretion, of the Contracts or Mortgage Loans.   The Lender’s determination of Market Value shall be conclusive
upon the parties, absent manifest error on the part of the Lender.  The Lender shall have the right to mark to
market the Contracts or Mortgage Loans on a daily basis which Market Value with
respect to one or more of the Contracts or Mortgage Loans may be determined to
be zero.  The Borrower acknowledges that
the Lender’s determination of Market Value is for the limited purpose of determining
Collateral Value for lending purposes hereunder without the ability to perform
customary purchaser’s due diligence and is not necessarily equivalent to a
determination of the fair market value of the Contracts or Mortgage Loans
achieved by obtaining competing bids in an orderly market.

 

“Material Adverse
Effect” shall mean a material adverse effect on (a) the property, business,
operations, financial condition or prospects of the Borrower or either
Guarantor, (b) the ability of the Borrower or either Guarantor to perform in
all material respects its obligations under any of the Loan Documents to which
it is a party, (c) the validity or enforceability in all material respects of
any of the Loan Documents, (d) the rights and remedies of the Lender under any
of the Loan Documents, (e) the timely payment of the principal of or interest
on the Advances or other amounts payable in connection therewith or (f) the
Collateral.

 

“Maximum Credit”
shall mean $75,000,000.

 

 

“MERS” shall mean
Mortgage Electronic Registration Systems, Inc., a Delaware corporation, or any
successor in interest thereto.

 

“MERS Mortgage Loan”
shall mean any Mortgage Loan as to which the related Mortgage or Assignment of
Mortgage, has been recorded in the name of MERS, as agent for the holder from
time to time of the Mortgage Note and which is identified as a MERS Mortgage
Loan on the related Mortgage Loan Schedule.

 

“MERS System”
shall mean the system of recording transfers of Mortgages electronically
maintained by MERS.

 

“Monthly Payment”
means the scheduled monthly payment of principal and interest on a Contract or
Mortgage Loan.

 

“Mortgage” shall
mean with respect to any Mortgage Loan, the mortgage, deed of trust or other
instrument, which creates a first lien on the fee simple or a leasehold estate
in such real property which secures the Mortgage Note.

 

“Mortgage Interest
Rate” means the annual rate of interest borne on a Contract or Mortgage
Note.

 

“Mortgage Loan”
shall mean a mortgage loan which the Custodian has been instructed to hold for
the Lender pursuant to the Custodial Agreement, and which Mortgage Loan
includes, without limitation, (i) a Mortgage Note, the related Mortgage and all
other Mortgage Loan Documents and (ii) all right, title and interest of the
Borrower in and to the Mortgaged Property covered by such Mortgage.

 

“Mortgage Note”
shall mean the original executed promissory note or other evidence of the
indebtedness of an Obligor with respect to a Mortgage Loan.

 

“Mortgaged Property”
means the real property (including all improvements, buildings, fixtures,
building equipment and personal property thereon and all additions, alterations
and replacements made at any time with respect to the foregoing) and all other
collateral securing repayment of the debt evidenced by a Mortgage Note.

 

“Multiemployer Plan”
shall mean a multiemployer plan defined as such in Section 3(37) of ERISA
to which contributions have been or are required to be made by Borrower or any
ERISA Affiliate and that is covered by Title IV of ERISA.

 

“Net Income” shall
mean, for any period, the net income of the Borrower for such period as
determined in accordance with GAAP.

 

“Net Worth” shall
mean, with respect to any Person, the excess of total assets of such Person,
over total liabilities of such Person, determined in accordance with GAAP.

 

“Note” shall mean
the promissory note provided for by Section 2.02(a) hereof for Advances
and any promissory note delivered in substitution or exchange therefor, in each
case as the same shall be modified and supplemented and in effect from time to
time.

 

 

“Notice of Borrowing
and Pledge” shall have the meaning assigned to such term in
Section 2.03(a).

 

“Obligee” means
either Borrower or any subsequent holder of a Mortgage Loan.

 

“Obligor” means
the obligor on a Contract or Mortgage Note.

 

“Owner Trustee”
means Wilmington Trust Company, a Delaware banking corporation, not in its
individual capacity but solely as Owner Trustee under this Loan Agreement, and
any successor trustee under the Trust Agreement.

 

“Payment Date”
shall mean the tenth day of each calendar month, or if such day is not a
Business Day, the next succeeding Business Day.

 

“PBGC” shall mean
the Pension Benefit Guaranty Corporation or any entity succeeding to any or all
of its functions under ERISA.

 

“Permitted Exceptions”
shall mean the exceptions to lien priority including but not limited to: (i)
the lien of current real property taxes and assessments not yet due and
payable; (ii) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording acceptable
to mortgage lending institutions generally and specifically referred to in the
lender’s title insurance policy delivered to the originator of the Contract or
Mortgage Loan and (A) referred to or otherwise considered in the appraisal (if
any) made for the originator of the Contract or Mortgage Loan or (B) which do
not adversely affect the appraised value of the Mortgaged Property or Secured
Property set forth in such appraisal; and (iii) other matters to which like
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Mortgage or the use,
enjoyment, value or marketability of the related Mortgaged Property.

 

“Person” shall
mean any individual, corporation, company, voluntary association, partnership,
joint venture, limited liability company, trust, unincorporated association or
government (or any agency, instrumentality or political subdivision thereof).

 

“Plan” shall mean
an employee benefit or other plan established or maintained by either Borrower
or any ERISA Affiliate and that is covered by Title IV of ERISA, other than a
Multiemployer Plan.

 

“Post-Default Rate”
shall mean, in respect of any principal of any Advance or any other amount
under this Loan Agreement, the Note or any other Loan Document that is not paid
when 

 

 

due to the Lender
(whether at stated maturity, by acceleration or mandatory prepayment or
otherwise), a rate per annum during the period from and including the due date
to but excluding the date on which such amount is paid in full equal to 2% per
annum, plus (a) the interest rate otherwise applicable to such Advance or other
amount, or (b) if no interest rate is otherwise applicable, (i) the LIBO Rate
plus (ii) the Applicable Margin.

 

“Property” shall
mean any right or interest in or to property of any kind whatsoever, whether
real, personal or mixed and whether tangible or intangible.

 

“Qualified Insurer”
means an insurance company duly qualified as such under the laws of the states
in which the Mortgaged Property is located, duly authorized and licensed in
such states to transact the applicable insurance business and to write the
insurance provided, and approved as an insurer by Fannie Mae and Freddie Mac
and whose claims paying ability is rated in the two highest rating categories
by any of the rating agencies with respect to primary mortgage insurance and in
the two highest rating categories by Best’s with respect to hazard and flood
insurance.

 

“Qualified Originator”
shall mean (a) HCC and (b) any other originator of Mortgage Loans or Contracts
as may be approved by the Lender in writing from time to time.

 

“Regulations T, U and
X” shall mean Regulations T, U and X of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be modified and
supplemented and in effect from time to time.

 

“Requirement of Law”
shall mean as to any Person, the certificate of incorporation and by-laws or
other organizational or governing documents of such Person, and any law,
treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.

 

“Required Documents”
shall mean those documents identified in Section 2(I) of the Custodial
Agreement.

 

“Responsible Officer”
shall mean, as to any Person, the chief executive officer or any executive vice
president or, with respect to financial matters, the chief financial officer or
any executive vice president of such Person; provided, that in the event
any such officer is unavailable at any time he or she is required to take any
action hereunder, Responsible Officer shall mean any officer authorized to act
on such officer’s behalf as demonstrated by a certificate of corporate
resolution.

 

“Restricted Payments”
shall mean with respect to any Person, collectively, all dividends or other
distributions of any nature (cash, securities, assets or otherwise), and all
payments, by virtue of redemption or otherwise, on any class of equity
securities (including, without limitation, warrants, options or rights
therefor) issued by such Person, whether such securities are now or may hereafter
be authorized or outstanding and any distribution in respect of any of the
foregoing, whether directly or indirectly.

 

 

“Secured Obligations”
shall have the meaning assigned thereto in Section 4.01(c) hereof.

 

“Secured Property”
shall mean the property securing a Contract which consists of a Manufactured
Home, not considered real property under applicable state law, and any
additional personal property or real property identified in the Contract as
collateral securing payment of the Contract.

 

“Servicer” shall
mean HCC in its capacity as servicer or master servicer of the Contracts and
Mortgage Loans.

 

“Servicing Agreement”
shall have the meaning provided in Section 11.15(c) hereof.

 

“Servicing File”
means with respect to each Contract or Mortgage Loan, the file retained by the
Borrower consisting of originals of all material documents in the Collateral
File which are not delivered to a Custodian and copies of the Collateral
Documents set forth in Section 2 of the Custodial Agreement.

 

“Servicing Records”
shall mean any and all servicing agreements, files, documents, records, data
bases, computer tapes, copies of computer tapes, proof of insurance coverage,
insurance policies, appraisals, other closing documentation, payment history
records and any other records relating to or evidencing the servicing of the
Mortgage Loans or Contracts.

 

“Servicing
Transmission” shall mean a computer-readable magnetic or other electronic
format acceptable to the parties containing the information identified on Exhibit
F.

 

“Streamlined
Land-and-Home Contract” shall mean any Contract originated pursuant to the
Underwriting Guidelines providing for streamlined documentation.

 

“Sublimit Excess Asset”
shall mean, as of any date of determination, a Contract or Mortgage Loan contained
in any one or more of the categories set forth below for which the related
Collateral Value, when added to the Collateral Value with respect to all other
Eligible Assets which are pledged to the Lender under this Loan Agreement and
which are contained in such category, exceed the percentages (each expressed as
a percentage of outstanding Advances with respect to all other Eligible Assets
pledged to the Lender) or dollar amounts indicated below and as may be
identified as such by the Lender (which selection may be determined by the
Lender in its discretion based on the Lender’s reasonable determination of the
value of each Eligible Asset).

 

	
  Category

  	
   

  	
  Maximum

  Sublimit Percentage

  	
   

  
	
  Single
  state concentration

  	
   

  	
  25

  	
  %

  
	
  Top
  3 states concentration

  	
   

  	
  60

  	
  %

  
	
  Zip
  code concentration

  	
   

  	
  1

  	
  %

  
	
  California
  Obligors with FICO scores less than 700

  	
   

  	
  15

  	
  %

  
	
  Manufactured
  Home was occupied prior to acquisition by the Obligor

  	
   

  	
  25

  	
  %

  
	
  Manufactured
  Home was repossessed and the Mortgage Loan or Contract is a refinanced loan

  	
   

  	
  5

  	
  %

  
	
  Manufactured
  Home was (i) occupied prior to acquisition by the Obligor or (ii) Repossessed
  prior to the sale to the Obligor and the Mortgage Loan or Contract is a
  refinanced loan

  	
   

  	
  25

  	
  %

  
	
  Weighted
  average maximum loan amount to Invoice Exceeds 160%

  	
   

  	
  0

  	
  %

  
	
  Asset
  is a chattel mortgage and weighted average maximum loan amount to invoice
  exceeds 150%

  	
   

  	
  0

  	
  %

  
	
  Asset
  is a Streamlined Land-and-Home Contract and weighted average maximum loan
  amount to invoice exceeds 170%

  	
   

  	
  0

  	
  %

  
	
  FICO
  Score is less than 600 (including Mortgage Loans and Contracts with no FICO
  Score)

  	
   

  	
  5

  	
  %

  
	
  FICO
  Score is less than 600 (including Mortgage Loans and Contracts with no FICO
  score); provided that, with respect to such Mortgage Loan or Contract (i) the
  Obligor’s down payment was at least 30% and (ii) the Obligor’s debt to income
  ratio is less than 35% (which shall be in addition to the 5% provided
  immediately above)

  	
   

  	
  2.5

  	
  %

  
	
  Manufactured
  Home is a single-wide Unit

  	
   

  	
  40

  	
  %

  
	
  Contract
  is not a Land-Home Contract

  	
   

  	
  85

  	
  %

  
	
  Manufactured
  Home Unit is located in a mobile home park

  	
   

  	
  50

  	
  %

  
	
  Mortgage
  Loan or Contract had origination fees in excess of 1% of loan amount
  (excluding construction period interest capitalized into the Contract or
  Mortgage Loan)

  	
   

  	
  50

  	
  %

  
	
  Weighted
  Average Buy-down points exceed 3% of the original principal balance of all
  Mortgage Loans and Contracts then pledged

  	
   

  	
  0

  	
  %

  
	
  Mortgage
  Loan or Contract is a Buy-For Contract

  	
   

  	
  5

  	
  %

  
	
  Mortgage
  Loan or Contract that has been subject to a maturity date extension

  	
   

  	
  2

  	
  %

  
	
  Mortgage
  Loan or Contract is 30-59 days delinquent

  	
   

  	
  3

  	
  %

  
	
  Mortgage
  Loan or Contract is 60-89 days delinquent

  	
   

  	
  2

  	
  %

  
	
  Mortgage
  Loan or Contract is 90+ days delinquent

  	
   

  	
  0

  	
  %

  
	
  Mortgage
  Loan or Contract has been reaffirmed in a Chapter 7 bankruptcy proceeding or
  is subject to a Chapter 12 or Chapter 13 bankruptcy proceeding

  	
   

  	
  1

  	
  %

  

 

 

“Subsidiary” shall
mean, with respect to any Person, any corporation, partnership or other entity
of which at least a majority of the securities or other ownership interests
having by the terms thereof ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at the
time securities or other ownership interests of any other class or classes of such
corporation, partnership or other entity shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.

 

“Tangible Net Worth”
shall mean, with respect to any Person, as of any date of determination, the
consolidated Net Worth of such Person and its Subsidiaries, less the
consolidated net book value of all assets of such Person and its Subsidiaries
(to the extent reflected as an asset in the balance sheet of such Person or any
Subsidiary at such date) which will be treated as intangibles under GAAP,
including, without limitation, such items as deferred taxes,  goodwill, trademarks, trade names, service
marks, copyrights, patents, licenses and unamortized debt discount and expense;
provided, that residual securities issued by such Person or its Subsidiaries
shall not be treated as intangibles for purposes of this definition.

 

“Termination Date”
shall mean December 29, 2004, or such earlier date on which this Loan
Agreement shall terminate in accordance with the provisions hereof or by
operation of law.

 

“Total Indebtedness”
shall mean with respect to any Person, for any period, the aggregate
Indebtedness of such Person and its Subsidiaries during such period, less the
amount of any nonspecific consolidated balance sheet reserves maintained in
accordance with GAAP.  provided that,
with respect to FEI, Total Indebtedness shall not include Indebtedness related
to the Trust Securities, the Subordinated Debentures and the New Subordinated
Debentures (in each case as defined in the Bank of America Facility), excluding
current accruals on the Trust Securities.

 

“Trust Agreement”
shall mean the Amended and Restated Trust Agreement dated as of
December 30, 2003 between HCC and the Owner Trustee.

 

“Trust Receipt”
shall have the meaning provided in the Custodial Agreement.

 

“Underwriting
Guidelines” shall mean the underwriting guidelines of HCC attached as Exhibit
E hereto as amended from time to time in accordance with Section 7.09.

 

“Uniform Commercial
Code” shall mean the Uniform Commercial Code as in effect on the date
hereof in the State of New York; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than New York, “Uniform
Commercial Code” shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.

 

 

1.02         Accounting Terms and Determinations.
Except as otherwise expressly provided herein, all accounting terms used herein
shall be interpreted, and all financial statements and certificates and reports
as to financial matters required to be delivered to the Lender hereunder shall
be prepared, in accordance with GAAP.

 

Section 2.              Advances,
Note and Prepayments.

 

2.01         Advances.

 

(a)           Subject to fulfillment
of the conditions precedent set forth in Sections 5.01 and 5.02 hereof, and
provided that no Default or Event or Default shall have occurred and be
continuing hereunder, the Lender agrees from time to time, on the terms and
conditions of this Loan Agreement, to make loans (individually, an “Advance”;
collectively, the “Advances”) to the Borrower in Dollars, on any
Business Day from and including the Effective Date to but excluding the
Termination Date in an aggregate principal amount at any one time outstanding
up to but not exceeding the lesser of (i) the Maximum Credit (which shall be
further subject to the limitations in the definition of Collateral Value) and (ii)
the Borrowing Base as in effect from time to time.

 

(b)           Subject to the terms
and conditions of this Loan Agreement, during such period the Borrower may
borrow, repay and reborrow hereunder.

 

(c)           In no event shall an
Advance be made when any Default or Event of Default has occurred and is
continuing.

 

(d)           The Lender may, but
shall not be required to make more than one Advance in any calendar week or to
make any Advance of less than $500,000.

 

2.02         Notes.

 

(a)           The Advances made by
the Lender shall be evidenced by a single promissory note of the Borrower
substantially in the form of Exhibit A hereto (the “Note”), dated
the date hereof, payable to the Lender in a principal amount equal to the
amount of the Maximum Credit as originally in effect and otherwise duly
completed. The Lender shall have the right to have its Note subdivided, by
exchange for promissory notes of lesser denominations or otherwise.

 

(b)           The date, amount and
interest rate of each Advance made by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books and, prior to any transfer of the Note, noted by the Lender
on the grid attached to the Note or any continuation thereof; provided,
that the failure of the Lender to make any such recordation or notation shall
not affect the obligations of the Borrower to make a payment when due of any
amount owing hereunder or under the Note in respect of the Advances.

 

2.03         Procedure for Borrowing.

 

(a)           Borrowing Procedure
for Requesting an Advance. The Borrower may request a borrowing to be
secured by any Contracts or Mortgage Loans hereunder, on any Business Day
during the period from and including the Effective Date to the Termination
Date, by delivering to the Lender, with a copy to the Custodian, an Asset Data
Transmission and an

 

 

irrevocable Notice of
Borrowing and Pledge substantially in the form of Exhibit D hereto (a “Notice
of Borrowing and Pledge”), appropriately completed, which must be received
no later than 5:00 p.m (eastern time) two Business Days prior to the requested
Funding Date.   Such Notice of Borrowing
and Pledge shall include an Asset List in respect of the Eligible Assets that
the Borrower proposes to pledge to the Lender and to be included in the
Borrowing Base in connection with such borrowing.

 

(b)           The Custodian shall
review any Required Documents in accordance with the terms of the Custodial
Agreement.  Not later than 3:00 p.m.
(eastern time) on the Business Day set forth in the Custodial Agreement, the
Custodian shall deliver to the Lender, via electronic transmission acceptable
to the Lender, the Custodian Loan Transmission and an Exception Report showing
the status of all Contracts and Mortgage Loans then held by the Custodian,
including but not limited to the Mortgage Loans which are subject to document
exceptions, and the time the related Collateral Documents have been released
pursuant to Section 5(a) or 5(b) of the Custodial Agreement. Not less than
monthly, and in any case on each Business Day that the Borrower requests an
Advance hereunder, the Borrower shall calculate the Borrowing Base of all
Mortgage Loans that are held by the Custodian and forward to the Lender by
facsimile transmission a copy of the Borrowing Base Certificate in the form of
Exhibit H, which calculation shall be subject to the consent of the
Lender.   In addition, the Custodian
shall deliver to the Lender no later than 4:00 p.m. (eastern time) by facsimile
transmission on each Funding Date, one or more Trust Receipts (as defined in
the Custodial Agreement) relating to the Mortgage Loans. The original copies of
such Trust Receipts shall be delivered to JPMorgan Chase Bank at Four New York
Plaza, Ground Floor, Outsourcing Department, New York, New York  10004, Attention: Jennifer John for the
account of Greenwich Capital Financial Products, Inc. (telephone number (212)
623-5953), as agent for the Lender by overnight delivery using a nationally
recognized insured overnight delivery service.

 

(c)           Upon the Borrower’s
request for a borrowing pursuant to Section 2.03(a) above, the Lender
shall, assuming all conditions precedent set forth in this Section 2.03
and in Sections 5.01 and 5.02 have been met, and provided no Default shall have
occurred and be continuing (in accordance with Section 2.01), not later
than 5:00 p.m. (eastern time) on the requested Funding Date make an Advance
(determined by the Lender) in an amount which would not cause the aggregate
amount of Advances then outstanding to exceed the lesser of (i) the Maximum
Credit or (ii) the Borrowing Base shown on the latest Borrowing Base
Certificate.  Subject to the foregoing,
such borrowing will be made available to the Borrower by the Lender
transferring, via wire transfer (pursuant to wire transfer instructions
provided by the Borrower on or prior to such Funding Date), in the aggregate
amount of such borrowing in funds immediately available to the Borrower.

 

2.04         Limitation on Types of Advances;
Illegality.  Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any LIBO Base
Rate:

 

(a)           the Lender determines,
which determination shall be conclusive, that quotations of interest rates for
the relevant deposits referred to in the definition of “LIBO Base Rate” in
Section 1.01 hereof are not being provided in the relevant amounts or for
the relevant maturities for purposes of determining rates of interest for
Advances as provided herein; or

 

 

(b)           the Lender determines,
which determination shall be conclusive, that the Applicable Margin plus the
relevant rate of interest referred to in the definition of “LIBO Base Rate” in
Section 1.01 hereof upon the basis of which the rate of interest for
Advances is to be determined is not likely adequate to cover the cost to the
Lender of making or maintaining Advances; or

 

(c)           it becomes unlawful for
the Lender to honor its obligation to make or maintain Advances hereunder using
a LIBO Rate;

 

then the Lender shall
give the Borrower prompt notice thereof and, so long as such condition remains
in effect, the Lender shall be under no obligation to make additional Advances,
and the Borrower shall, at its option, either prepay such Advances or pay
interest on such Advances at a rate per annum reasonably determined by the
Lender taking into account the increased cost to the Lender of making and
maintaining the Advances.

 

2.05         Repayment of Advances; Interest.

 

(a)           The Borrower shall
repay in full on the Termination Date the then aggregate outstanding principal
amount of the Advances (as evidenced by the Note).

 

(b)           Interest on the
Advances shall be payable in arrears monthly on the Payment Date in respect of
the previous calendar month and on the Termination Date. No later than the
Business Day prior to each Payment Date, the Lender shall provide to the
Borrower a report which shall state the interest amount due for the current
interest period on the Advance.  The
calculation on such report shall be based upon information provided in the
Servicing Transmission and the report provided pursuant to Section 7.20.

 

(c)           The Borrower shall pay
to the Lender interest on the unpaid principal amount of each Advance for the
period from and including the date of such Advance to but excluding the date
such Advance shall be paid in full, at a rate per annum equal to the LIBO Rate plus
the Applicable Margin.  Notwithstanding
the foregoing, the Borrower shall pay to the Lender interest at the applicable
Post-Default Rate on any principal of any Advance and on any other amount
payable by the Borrower hereunder or under the Note, that shall not be paid in
full when due (whether at stated maturity, by acceleration or by mandatory
prepayment or otherwise), for the period from and including the due date
thereof to but excluding the date the same is paid in full. Accrued interest on
each Advance as calculated in Section 2.05(b) above shall be payable
monthly on each Payment Date and on the Termination Date, except that interest
payable at the Post-Default Rate shall accrue daily and shall be payable
promptly upon receipt of invoice. Promptly after the determination of any
interest rate provided for herein or any change therein, the Lender shall give
written notice thereof to the Borrower.

 

2.06         Mandatory Prepayments or Pledge.

 

On each Funding Date or
other date on which there is a change in the Contracts or Mortgage Loans held
by the Custodian, the Custodian shall deliver to the Lender and the Borrower
the Custodian Loan Transmission.  At
least three (3) Business Days prior to each Payment Date, the Borrower shall
deliver to the Lender a Borrowing Base Certificate in the form attached hereto
as Exhibit H, the calculation in such certificate to be based on the
delinquency

 

 

status and principal
balance of the Eligible Assets as of the last calendar day of the prior
month.  Such information shall be ascertained
from the Servicing Transmission, a copy of which shall be delivered or caused
to be delivered by the Borrower in accordance with Section 7.20 and shall
include all Contracts and Mortgage Loans which were funded on or prior to the
last calendar day of the previous month. 
The Lender shall promptly notify the Borrower of any material
disagreement in the calculation of the Borrowing Base.  In the event that such Borrowing Base
Certificate indicates or if at any time the aggregate outstanding principal
amount of Advances exceeds the Borrowing Base (a “Borrowing Base Deficiency”),
as determined by the Lender and notified to the Borrower on any Business Day,
the Borrower shall no later than one Business Day after receipt of such notice,
either prepay the Advances in part or in whole or pledge additional Eligible
Assets (which Collateral shall be in all respects acceptable to the Lender) to
the Lender, such that after giving effect to such prepayment or pledge the
aggregate outstanding principal amount of the Advances does not exceed the
Borrowing Base.

 

2.07         Optional Prepayments.

 

The Advances are
prepayable without premium or penalty, in whole or in part on each Payment
Date.  The Advances are prepayable at
any other time, in whole or in part, in accordance herewith.  Any amounts prepaid shall be applied to
repay the outstanding principal amount of any Advances (together with interest
thereon) until paid in full.  Amounts
repaid may be reborrowed in accordance with the terms of this Loan
Agreement.  If the Borrower intends to
prepay an Advance in whole or in part from any source on any date other than
the Payment Date, the Borrower shall give two (2) Business Days’ prior written
notice thereof to the Lender.  If such
notice is given, the amount specified in such notice shall be due and payable
on the date specified therein, together with accrued interest to such date on
the amount prepaid.  Partial prepayments
shall be in an aggregate principal amount of at least $100,000.  Upon Lender’s receipt of a prepayment in
accordance with this Section 2.07, Lender shall release its security
interest in the Collateral securing the Advance prepaid, provided that no
Default or Event of Default exists or Borrowing Base Deficiency exists.

 

2.08         Requirements of Law.

 

(a)           If any Requirement of
Law (other than with respect to any amendment made to the Lender’s certificate
of incorporation and by-laws or other organizational or governing documents) or
any change in the interpretation or application thereof or compliance by the
Lender with any request or directive (whether or not having the force of law)
from any central bank or other Governmental Authority made subsequent to the
date hereof:

 

(i)            shall subject the
Lender to any tax of any kind whatsoever with respect to this Loan Agreement,
the Note or any Advance made by it (excluding net income taxes) or change the
basis of taxation of payments to the Lender in respect thereof;

 

(ii)           shall impose, modify or
hold applicable any reserve, special deposit, compulsory advance or similar
requirement against assets held by deposits or other liabilities in or for the
account of Advances or other extensions of credit by, or any other acquisition
of funds by any office of the Lender which is not otherwise included in the
determination of the LIBO Base Rate hereunder; or

 

 

(iii)          shall impose on the
Lender any other condition;

 

and the result of any of
the foregoing is to increase the cost to the Lender, by an amount which the
Lender deems to be material, of making, continuing or maintaining any Advance
or to reduce any amount receivable hereunder in respect thereof, then, in any
such case, the Borrower shall promptly pay the Lender such additional amount or
amounts as will compensate the Lender for such increased cost or reduced amount
receivable thereafter incurred.

 

(b)           If the Lender shall
have determined that the adoption of or any change in any Requirement of Law
(other than with respect to any amendment made to the Lender’s certificate of
incorporation and by-laws or other organizational or governing documents)
regarding capital adequacy or in the interpretation or application thereof or
compliance by the Lender or any corporation controlling the Lender with any
request or directive regarding capital adequacy (whether or not having the
force of law) from any Governmental Authority made subsequent to the date
hereof shall have the effect of reducing the rate of return on the Lender’s or
such corporation’s capital as a consequence of its obligations hereunder to a
level below that which the Lender or such corporation (taking into
consideration the Lender’s or such corporation’s policies with respect to
capital adequacy) by an amount deemed by the Lender to be material, then from
time to time, the Borrower shall promptly pay to the Lender such additional
amount or amounts as will thereafter compensate the Lender for such reduction.

 

(c)           If the Lender becomes
entitled to claim any additional amounts pursuant to this subsection, it shall
promptly notify the Borrower of the event by reason of which it has become so
entitled.

 

2.09         Purpose of Advances.

 

Each Advance shall be
used to finance the origination or purchase of Eligible Assets identified to
the Lender in writing on each Asset Data Transmission as such Asset Data
Transmission may be amended from time to time.

 

Section 3.              Payments;
Computations; Taxes; Commitment Fee.

 

3.01         Payments.

 

Except to the extent
otherwise provided herein, all payments of principal, interest and other
amounts to be made by the Borrower under this Loan Agreement and the Note,
shall be made in Dollars, in immediately available funds, without deduction,
set-off or counterclaim, to the Lender at the following account maintained by
the Lender at JPMorgan Chase Bank: Account Number 140095961, For the A/C of
Greenwich Capital Financial Products, Inc., ABA# 021000021, Attn: Michael
Harris, not later than 1:00 p.m., eastern time, on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding Business Day). The
Borrower acknowledges that it has no rights of withdrawal from the foregoing
account.

 

 

3.02         Computations.
Interest on the Advances shall be computed on the basis of a 360-day year
for the actual days elapsed (including the first day but excluding the last
day) occurring in the period for which payable.

 

3.03         U.S.
Taxes.

 

(a)           The Borrower agrees to
pay to the Lender such additional amounts as are necessary in order that the
net payment of any amount due to the Lender hereunder after deduction for or
withholding in respect of any U.S. Tax (as defined below) imposed with respect
to such payment (or in lieu thereof, payment of such U.S. Tax by the Lender),
will not be less than the amount stated herein to be then due and payable; provided,
that the foregoing obligation to pay such additional amounts shall not apply:

 

(i)            to any payment to the
Lender hereunder unless the Lender is entitled to submit a Form 1001 (relating
to the Lender and entitling it to a complete exemption from withholding on all
interest to be received by it hereunder in respect of the Advances) or Form
4224 (relating to all interest to be received by the Lender hereunder in
respect of the Advances), or

 

(ii)           to any U.S. Tax imposed
solely by reason of the failure by the Lender to comply with applicable
certification, information, documentation or other reporting requirements
concerning the nationality, residence, identity or connections with the United
States of America of the Lender if such compliance is required by statute or
regulation of the United States of America as a precondition to relief or
exemption from such U.S. Tax.

 

For the purposes of this
Section 3.03(a), (w) “Form 1001” shall mean Form 1001 (Ownership,
Exemption, or Reduced Rate Certificate) of the Department of the Treasury of
the United States of America, (x) “Form 4224” shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America (or in relation to either such Form
such successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a claim
to which such Form relates), and (y) “U.S. Taxes” shall mean any present
or future tax, assessment or other charge or levy imposed by or on behalf of
the United States of America or any taxing authority thereof or therein
(excluding franchise taxes or taxes on the net income of Lender and its
Affiliates).

 

(b)           Within 30 days after
paying any such amount to the Lender, and within 30 days after it is required
by law to remit such deduction or withholding to any relevant taxing or other
authority, the Borrower shall deliver to the Lender evidence satisfactory to
the Lender of such deduction, withholding or payment (as the case may be).

 

(c)           The Lender represents
and warrants to the Borrower that on the date hereof the Lender is either
incorporated under the laws of the United States or a State thereof or is
entitled to submit a Form 1001 (relating to the Lender and entitling it to a
complete exemption from withholding on all interest to be received by it
hereunder in respect of the Advances) or Form 4224 (relating to all interest to
be received by the Lender hereunder in respect of the Advances).

 

 

3.04         Commitment
Fee. The Borrower agrees to pay to the Lender a commitment fee equal to
(a) 100 basis points (1%) multiplied by (b) the Maximum Credit (the “Commitment
Fee”), such payment to be made in Dollars, in immediately available funds,
without deduction, set-off or counterclaim, to the Lender not later than
January 12, 2004.  Such Commitment
Fee shall be deemed to be fully earned as of the Effective Date. The Lender
may, in its sole discretion, net such Commitment Fee from the proceeds of any
Advance made to the Borrower.   Lender
shall refund to Borrower a pro rata share of the Commitment Fee for any period
of time that Lender is unable to fund Advances due to the application of
Section 5.02(i)(i).

 

3.05         Non-Utilization Fee. On each Payment
Date and on the Termination Date, the Lender shall determine the average daily
utilization during the preceding calendar month period (or with respect to but
not including the Termination Date, during the period from the day immediately
following the date through which the last non-utilization fee calculation has
been made to the Termination Date) (the “Utilization Percentage”) by the
Borrower by (a) dividing the sum of the Advances outstanding on each day during
such period by the number of days in such period and (b) dividing the result of
(a) by the Maximum Credit.  The Borrower
shall pay to the Lender on such Payment Date or Termination Date,  a non-utilization fee equal to (a) during
the first six-month period following the Effective Date, the product of (i)
0.25% per annum, times (ii) the Maximum Credit, times (iii) 1 minus the
Utilization Percentage, (b) during the second six-month period following the
Effective Date, the product of (i) 0.375% per annum, times  (ii) the Maximum Credit, times (iii) 1 minus
the Utilization Percentage and (c) thereafter, the product of (i) 0.50% per
annum, times (ii) the Maximum Credit, times (iii) 1 minus the Utilization
Percentage (the “Non-Utilization Fee”). 
All payments shall be made to the Lender in Dollars, in immediately
available funds, without deduction, setoff or counterclaim.  The Lender may, in its sole discretion, net such
Non-Utilization Fee from the proceeds of any Advance made to the Borrower hereunder
if not previously paid by the Borrower. 
Borrower shall not be responsible for any Non-Utilization Fee for any
period of time that the Lender is unable to fund Advances due to the
application of Section 5.02(i)(i).

 

3.06         Termination
Fee. In the event that the Borrower terminates this Loan Agreement at
any time prior to the Termination Date, 
the Borrower shall pay the Lender a fee equal to 1% of the Maximum
Credit.  Notwithstanding the foregoing,
such Termination Fee shall not be payable if (a) the Borrower terminates this
Loan Agreement as a result of the failure of the Lender and the Borrower to
agree in good faith on a securitization at competitive “market terms” or (b) as
a result of the election of the Lender or its designated Affiliate not to act
as lead underwriter with respect to HCC’s securitization of manufactured
housing loans during the term of this Loan Agreement or (c) the Borrower
terminates this Loan Agreement as a result of a material default by the Lender
hereunder or (d) if Borrower terminates this Agreement as a result of a claim
for increased costs by Lender pursuant to Section 2.08 or as a result of a
refusal by Lender to fund Advances for a period of more than ten (10) Business
Days as a result of the provisions of Section 5.02(i)(i).

 

Section 4.              Collateral
Security.

 

4.01         Collateral; Security Interest.

 

(a)           Pursuant to the
Custodial Agreement, the Custodian shall hold the Collateral Documents as
exclusive bailee and agent for the Lender pursuant to the terms of the

 

 

Custodial Agreement and
shall deliver to the Lender Trust Receipts with Exception Reports (as such
terms are defined in the Custodial Agreement) to the effect that it has
reviewed such Collateral Documents in the manner required by the Custodial
Agreement and identifying any deficiencies in such Collateral Documents as so
reviewed.

 

(b)           Each of the following
items or types of property, whether now owned or hereafter acquired, now
existing or hereafter created and wherever located, is hereinafter referred to
as the “Collateral”:

 

(i)            all Mortgage Loans and
Contracts identified on a Notice of Borrowing and Pledge delivered by the
Borrower to the Lender and the Custodian from time to time;

 

(ii)           all Collateral
Documents, including without limitation all promissory notes, and all Servicing
Records, and any other collateral pledged or otherwise relating to such
Mortgage Loans and Contracts, together with all files, material documents,
instruments, surveys (if available), certificates, correspondence, appraisals,
computer records, computer storage media, Mortgage Loan and Contract accounting
records and other books and records relating thereto;

 

(iii)          all mortgage guaranties
and insurance (issued by governmental agencies or otherwise) and any mortgage
insurance certificate or other document evidencing such mortgage guaranties or
insurance relating to any Mortgage Loans and all claims and payments
thereunder;

 

(iv)          all other insurance
policies and insurance proceeds relating to any Mortgage Loans and Contracts or
the related Mortgaged Property or Secured Property, as the case may be;

 

(v)           all Interest Rate
Protection Agreements relating to any or all of the foregoing;

 

(vi)          any purchase agreements
or other agreements or contracts relating to or constituting any or all of the
foregoing;

 

(vii)         all purchase or take-out
commitments relating to or constituting any or all of the foregoing;

 

(viii)        all “accounts”, “chattel
paper”, “commercial tort claims”, “deposit accounts”, “documents”, “equipment”,
“general intangibles”, “goods”, “instruments”, “inventory”, “investment
property”, “letter-of-credit rights”, and “securities accounts”, as each of
those terms is defined in the Uniform Commercial Code and all cash and Cash
Equivalents and all products and proceeds, in each case relating to or
constituting any or all of the foregoing;

 

(ix)           all interests in real
property owned by the Borrower or collateralizing any  Contract or
Mortgage Loan; and

 

(x)            any and all
replacements, substitutions, distributions on or proceeds of any or all of the
foregoing.

 

 

(c)           The Borrower hereby
assigns, pledges and grants a security interest to the Lender in all of its
assets now owned and existing and hereafter acquired or arising, including,
without limitation, all of its right, title and interest in, to and under all
the Collateral, whether now owned or hereafter acquired, now existing or
hereafter created and wherever located, to secure the repayment of principal of
and interest on all Advances and all other amounts owing to the Lender
hereunder, under the Note and under the other Loan Documents (collectively, the
“Secured Obligations”). The Borrower agrees to mark its computer records
and tapes to evidence the security interests granted to the Lender hereunder.

 

4.02         Further Documentation. At any time and
from time to time, upon the written request of the Lender, and at the sole
expense of the Borrower, the Borrower will promptly and duly execute and
deliver, or will promptly cause to be executed and delivered, such further
instruments and documents and take such further action as the Lender may
reasonably request for the purpose of obtaining or preserving the full benefits
of this Loan Agreement and of the rights and powers herein granted, including,
without limitation, the filing of any financing or continuation statements
under the Uniform Commercial Code in effect in any jurisdiction with respect to
the Liens created hereby.  The Borrower
also hereby authorizes the Lender to file any such financing or continuation
statement without the signature of the Borrower to the extent permitted by
applicable law.

 

4.03         Changes in Locations, Name, etc.  The Borrower shall not (i) change the
location of its chief executive office/chief place of business from that
specified in Section 6 hereof, (ii) change its name, identity or corporate
structure (or the equivalent) or change the location where it maintains its
records with respect to the Collateral, or (iii) reincorporate or reorganize
under the laws of another jurisdiction unless it shall have given the Lender at
least 30 days prior written notice thereof and shall have delivered to the
Lender all Uniform Commercial Code financing statements and amendments thereto
as the Lender shall request and taken all other actions deemed reasonably
necessary by the Lender to continue its first priority perfected status in the
Collateral.

 

4.04         Lender’s Appointment as Attorney-in-Fact.

 

(a)           The Borrower hereby
irrevocably constitutes and appoints the Lender and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Borrower and in the name of the Borrower or in its own name, from
time to time if and only if an Event of Default shall have occurred and be
continuing, for the purpose of carrying out the terms of this Loan Agreement,
to take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Loan Agreement, and, without limiting the generality of the foregoing, the
Borrower hereby gives the Lender the power and right, on behalf of the
Borrower, without assent by, but with notice to, the Borrower to do the
following:

 

(i)            in the name of the
Borrower or its own name, or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any mortgage insurance or with respect to any other
Collateral and to file any claim or to take any other action or proceeding in
any court of law or equity or otherwise deemed appropriate by the Lender for
the purpose of collecting any

 

 

and all such moneys due
under any such mortgage insurance or with respect to any other Collateral
whenever payable;

 

(ii)           to pay or discharge
taxes and Liens levied or placed on or threatened against the Collateral; and

 

(iii)          (A) to direct any party
liable for any payment under any Collateral to make payment of any and all
moneys due or to become due thereunder directly to the Lender or as the Lender
shall direct; (B) to ask or demand for, collect, receive payment of and receipt
for, any and all moneys, claims and other amounts due or to become due at any
time in respect of or arising out of any Collateral; (C) to sign and endorse
any invoices, assignments, verifications, notices and other documents in
connection with any of the Collateral; (D) to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce any
other right in respect of any Collateral; (E) to defend any suit, action or
proceeding brought against the Borrower with respect to any Collateral; (F) to
settle, compromise or adjust any suit, action or proceeding described in clause
(E) above and, in connection therewith, to give such discharges or releases as
the Lender may deem appropriate; and (G) generally, to sell, transfer, pledge
and make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Lender were the absolute owner
thereof for all purposes, and to do, at the Lender’s option and the Borrower’s
expense, at any time, or from time to time, all acts and things which the
Lender deems necessary to protect, preserve or realize upon the Collateral and
the Lender’s Liens thereon and to effect the intent of this Loan Agreement, all
as fully and effectively as the Borrower might do.

 

The Borrower hereby
ratifies all that said attorneys shall lawfully do or cause to be done by
virtue hereof. This power of attorney is a power coupled with an interest and
shall be irrevocable.

 

(b)           The Borrower also
authorizes the Lender, at any time and from time to time, to execute, in
connection with the sale provided for in Section 4.07 hereof, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.

 

(c)           The powers conferred on
the Lender are solely to protect the Lender’s interests in the Collateral and shall
not impose any duty upon the Lender to exercise any such powers. The Lender
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither the Lender nor any of its officers,
directors, or employees shall be responsible to the Borrower for any act or
failure to act hereunder, except for its own gross negligence or willful
misconduct.

 

4.05         Performance by Lender of Borrower’s
Obligations. If the Borrower fails to perform or comply with any of its
material obligations contained in the Loan Documents and the Lender may itself
perform or comply, or otherwise cause performance or compliance, with such
agreement, the reasonable out-of-pocket expenses of the Lender incurred in
connection with such performance or compliance, together with interest thereon
at a rate per annum equal to the Post-Default Rate, shall be payable by the
Borrower to the Lender on demand and shall constitute Secured Obligations.

 

 

4.06         Proceeds.
If an Event of Default shall occur and be continuing, (a) all proceeds of
Collateral received by the Borrower consisting of cash, checks and other
near-cash items shall be held by the Borrower in trust for the Lender,
segregated from other funds of the Borrower, and shall forthwith upon receipt
by the Borrower be turned over to the Lender in the exact form received by the
Borrower (duly endorsed by the Borrower to the Lender, if required) and (b) any
and all such proceeds received by the Lender will be applied by the Lender
against, the Secured Obligations (whether matured or unmatured), such
application to be in such order as the Lender shall elect.  Any balance of such proceeds remaining after
the Secured Obligations shall have been paid in full and this Loan Agreement
shall have been terminated shall be promptly paid over to the Borrower or to
whomsoever may be lawfully entitled to receive the same. For purposes hereof,
proceeds shall include, but not be limited to, all principal and interest
payments, all prepayments and payoffs, insurance claims, condemnation awards,
sale proceeds, real estate owned rents and any other income and all other
amounts received with respect to the Collateral.

 

4.07         Reserved.

 

4.08         Limitation on Duties Regarding
Preservation of Collateral.  The
Lender’s duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of
the Uniform Commercial Code or otherwise, shall be to deal with it in the same
manner as the Lender deals with similar property for its own account. Neither
the Lender nor any of its directors, officers or employees shall be liable for
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Borrower or otherwise.

 

4.09         Powers Coupled with an Interest.  All authorizations and agencies herein
contained with respect to the Collateral are irrevocable and powers coupled
with an interest.

 

4.10         Release of Security Interest.  Upon termination of this Loan Agreement and
repayment to the Lender of all Secured Obligations and the performance of all
obligations under the Loan Documents the Lender shall release its security
interest in any remaining Collateral; provided that if any payment, or
any part thereof, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by the Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower, or upon
or as a result of the appointment of a receiver, intervenor or conservator of,
or a trustee or similar officer for the Borrower or any substantial part of its
Property, or otherwise, this Loan Agreement, all rights hereunder and the Liens
created hereby shall continue to be effective, or be reinstated, until such
payments have been made.

 

Section 5.              Conditions
Precedent.

 

5.01         Initial
Advance.  The obligation of the
Lender to make its initial Advance hereunder is subject to the satisfaction,
immediately prior to or concurrently with the making of such Advance, of the
following conditions precedent:

 

(a)           Loan Agreement.
The Lender shall have received this Loan Agreement, executed and delivered by a
duly authorized officer of the Borrower.

 

 

(b)           Loan Documents.  The Lender shall have received the following
documents, each of which shall be satisfactory to the Lender in form and
substance:

 

(i)            Note.  The Note, duly completed and executed;

 

(ii)           Custodial Agreement.  The Custodial Agreement, duly executed and
delivered by the Borrower and the Custodian;

 

(iii)          Guaranty.  A Guaranty, duly executed and delivered by
each Guarantor;

 

(iv)          Blocked Account
Agreement. A Blocked Account Agreement duly executed and delivered by the
Borrower and the Servicer;

 

(v)           Servicing Agreement.  A Servicing Agreement duly executed and
delivered by HCC and the Borrower; and

 

(vi)          UCC Filings.  The Borrower shall have delivered to Lender
all information necessary for the filing of all Uniform Commercial Code and
related filings and shall have performed under the Custodial Agreement and
taken such other action as the Lender shall have requested in order to perfect
the security interests created pursuant to this Loan Agreement.

 

(c)           Organizational
Documents.  A good standing
certificate and certified copies of the charter and by-laws (or equivalent
documents) of the Borrower and each of the Guarantors and of all corporate or
other authority for the Borrower and the Guarantors with respect to the
execution, delivery and performance of the related Loan Documents and each
other document to be delivered by the Borrower and the Guarantors from time to
time in connection herewith (and the Lender may conclusively rely on such
certificate until it receives notice in writing from the Borrower to the
contrary).

 

(d)           Legal Opinion.  A legal opinion of counsel to the Borrower
and the Guarantors, in a form reasonably acceptable to Lender.

 

(e)           Filings,
Registrations, Recordings. (i) Any documents (including, without
limitation, financing statements) required to be filed, registered or recorded
in order to create, in favor of the Lender, a perfected, first-priority
security interest in the Collateral, subject to no Liens other than those
created hereunder, shall have been properly prepared and executed for filing
(including the applicable county(ies) if the Lender determines such filings are
necessary in its reasonable discretion), registration or recording in each
office in each jurisdiction in which such filings, registrations and recordations
are required to perfect such first-priority security interest; and (ii) UCC
lien searches in such jurisdictions as shall be applicable to the Borrower and
the Collateral, the results of which shall be satisfactory to the Lender.

 

(f)            Fees and Expenses.
The Lender shall have received all fees and expenses required to be paid by the
Borrower on or prior to the initial Funding Date and such fees and expenses may
be netted out of any Advance made by the Lender hereunder.

 

 

(g)           Financial Statements.
The Lender shall have received the financial statements referenced in
Section 7.01(a).

 

(h)           Underwriting
Guidelines. The Lender and the Borrower shall have agreed upon HCC’s
current Underwriting Guidelines for Contracts and Mortgage Loans and the Lender
shall have received a copy thereof.

 

(i)            Consents, Licenses,
Approvals, etc. The Lender shall have received copies certified by the
Borrower of all consents, licenses and approvals, if any, required in
connection with the execution, delivery and performance by the Borrower of, and
the validity and enforceability of, the Loan Documents, which consents,
licenses and approvals shall be in full force and effect.

 

(j)            Insurance. The
Lender shall have received evidence in form and substance satisfactory to the
Lender showing compliance by the Borrower as of such initial Funding Date with
Section 7.22 hereof.

 

(k)           Instruction Letter.
The Lender shall have received an Instruction Letter in the form attached
hereto as Exhibit J executed by the Borrower.

 

(l)            Restrictions on
Cash Management Accounts and Procedures. 
The Lender shall have received an account control agreement acceptable
to the Lender in its reasonable discretion.

 

(m)          Other Documents.
The Lender shall have received such other documents as the Lender or its
counsel may reasonably request.

 

5.02         Initial and Subsequent Advances.  The making of each Advance to the Borrower
(including the initial Advance) on any Business Day is subject to the following
further conditions precedent, both immediately prior to the making of such
Advance and also after giving effect thereto and to the intended use thereof:

 

(a)           no Default or Event of
Default shall have occurred and be continuing;

 

(b)           both immediately prior
to the making of such Advance and also after giving effect thereto and to the
intended use thereof, the representations and warranties made by the Borrower
in Section 6 hereof, and in each of the other Loan Documents, shall be
true and complete on and as of the date of the making of such Advance in all
material respects (in the case of the representations and warranties in
Section 6.23 and Schedule 1, solely with respect to Contracts and
Mortgage Loans included in the Borrowing Base) with the same force and effect
as if made on and as of such date (or, if any such representation or warranty
is expressly stated to have been made as of a specific date, as of such
specific date). At the request of the Lender, the Lender shall have received an
officer’s certificate signed by a Responsible Officer of the Borrower certifying
as to the truth and accuracy of the above, which certificate shall specifically
include a statement that the Borrower is in compliance with all governmental
licenses and authorizations and is qualified to do business and in good
standing in all required jurisdictions;

 

 

(c)           the aggregate
outstanding principal amount of the Advances shall not exceed the Borrowing
Base or the Maximum Credit;

 

(d)           if any Mortgage Loans
are MERS Mortgage Loans, the Lender and the Originator shall have entered into
an Electronic Tracking Agreement with MERS in a form acceptable to the Lender.

 

(e)           the Lender shall have
received a Notice of Borrowing and Pledge, Loan List and Asset Data
Transmission and all other documents required under Section 2.03;

 

(f)            the Lender shall have
received from the Custodian a Custodian Loan Transmission and one or more Trust
Receipts in respect of the Contracts and Mortgage Loans to be pledged hereunder
on such Business Day and an Exception Report, in each case dated such Business
Day and duly completed;

 

(g)           in the event that the
Contracts and Mortgage Loans to be pledged would cause the aggregate
outstanding principal balance of the Contracts and Mortgage Loans pledged
secured by Mortgaged Property or Secured Property from any state to exceed 15%
of the aggregate outstanding principal balance of the Contracts and Mortgage
Loans pledged hereunder, then the Borrower shall, upon request by the Lender,
deliver an opinion of counsel acceptable to the Lender in such state,
substantially in the form of items number 12 and 13 of Exhibit C, and an
opinion of counsel as to the characterization of such Contract or Mortgage Loan
under the Uniform Commercial Code of the state in which the Collateral Files
are held by the Custodian and under the laws of the State of New York or the
laws of such other state or states as the parties reasonably determine are
applicable.

 

(h)           with respect to any
Contract or Mortgage Loan that was funded in the name of or acquired by a
Qualified Originator which is an Affiliate of the Borrower, the Lender may, in
its sole discretion, require the Borrower to provide evidence sufficient to
satisfy the Lender that such Contracts or Mortgage Loan was acquired in a legal
sale, including without limitation, an opinion, in form and substance and from
an attorney, in both cases, acceptable to the Lender in its sole discretion,
that such Contract or Mortgage Loan was acquired in a legal sale;

 

(i)            none of the following
shall have occurred and/or be continuing:

 

(i)            an event or events,
beyond the reasonable control of the Lender, resulting in the inability of the
Lender to finance any Advances with traditional counterparties at rates which
would have been reasonable prior to the occurrence of such catastrophic event
or events or a material adverse change in the financial condition of the Lender
which affects (or can reasonably be expected to affect) materially and
adversely the ability of the Lender to fund its obligations under or otherwise
comply with the terms of this Loan Agreement; or

 

(ii)           any other event beyond
the control of the Lender which the Lender reasonably determines may result in
the Lender’s inability to perform its obligations under this Loan Agreement
including, without limitation, acts of God, strikes, lockouts, riots, acts of
war or terrorism, epidemics, nationalization,

 

 

expropriation, currency
restrictions, fire, communication line failures, computer viruses, power
failures, earthquakes, or other disasters of a similar nature to the foregoing.

 

(j)            if any Contracts or Mortgage
Loans to be pledged hereunder were acquired by the Borrower, such Contracts or
Mortgage Loans shall conform to the Borrower’s Underwriting Guidelines or the
Lender shall have received Underwriting Guidelines for such Contracts or
Mortgage Loans acceptable to the Lender in its reasonable discretion;

 

(k)           the Lender shall have
received all information requested from the Borrower relating to Interest Rate
Protection Agreements pursuant to Section 7.25, and the Lender shall have
reasonably determined that such Interest Rate Protection Agreements adequately
protect the Borrower from interest rate fluctuations; and

 

(l)            the Lender shall have
received (to the extent not previously provided), no later than 1:00 p.m. three
(3) days prior to the requested Funding Date, an Instruction Letter, executed
by the Borrower, with the Servicing Agreement attached thereto, which such
Servicing Agreement shall be in form and substance acceptable to Lender.

 

Each request for a
borrowing by the Borrower hereunder shall constitute a certification by the
Borrower to the effect set forth in this Section (both as of the date of
such notice, request or confirmation and as of the date of such borrowing).

 

Section 6.              Representations
and Warranties.  The Borrower
represents and warrants to the Lender that throughout the term of this Loan
Agreement:

 

6.01         Existence.  The Borrower (a) is a statutory trust duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has all requisite corporate or other
power, and has all governmental licenses, authorizations, consents and
approvals, necessary to own its assets and carry on its business as now being
or as proposed to be conducted, except where the lack of such licenses,
authorizations, consents and approvals would not be reasonably likely to have a
Material Adverse Effect on its property, business or financial condition, or
prospects; and (c) is qualified to do business and is in good standing in all
other jurisdictions in which the nature of the business conducted by it makes
such qualification necessary, except where failure so to qualify would not be
reasonably likely (either individually or in the aggregate) to have a Material
Adverse Effect on its property, business or financial condition, or prospects
and (d) is in compliance in all material respects with all Requirements of Law.

 

6.02         Financial Condition.  The Borrower has heretofore furnished to the
Lender a copy of each Guarantor’s audited consolidated balance sheets and the
audited consolidated balance sheets of the consolidated Subsidiaries of each
Guarantor, each as at April 27, 2003 with the opinion thereon of Ernst
& Young LLP, a copy of which has been provided to Lender. The Borrower has
also heretofore furnished to the Lender the related consolidated statements of
income and retained earnings and of cash flows for the each Guarantor and the
consolidated Subsidiaries of each Guarantor for the one year period ending
April 27, 2003, setting forth comparative form the figures for the
previous year.  All such financial
statements are materially complete and correct and fairly present the
consolidated financial condition of the related

 

 

Guarantor and its
Subsidiaries and the consolidated results of their operations for the fiscal
year ended on said date, all in accordance with GAAP applied on a consistent
basis. Since April 27, 2003 there has been no development or event nor any
prospective development or event which has had or should reasonably be expected
to have a Material Adverse Effect. 
Except as otherwise required by law (including, without limitation
changes made in the reasonable judgment of FEI to comply with the
Sarbanes-Oxley Act) or by changes in GAAP, there has been no material change in
accounting policies, procedures or methods of the Borrower or either Guarantor
if such change would have material adverse effect on the calculation of the
financial covenants or on the value of the Collateral.

 

6.03         Litigation.  There are no actions, suits, arbitrations,
investigations or proceedings pending or, to its knowledge, threatened against
the Borrower, either Guarantor or any of their Subsidiaries or affecting any of
their respective properties before any Governmental Authority, (i) as to which
individually or in the aggregate there is a reasonable likelihood of an adverse
decision which would be reasonably likely to have a Material Adverse Effect on
the property, business or financial condition, or prospects of the Borrower or
either Guarantor or (ii) which questions the validity or enforceability of any
of the Loan Documents or any action to be taken in connection with the
transactions contemplated hereby and there is a reasonable likelihood of a
Material Adverse Effect or adverse decision.

 

6.04         No
Breach.  Neither (a) the execution
and delivery of the Loan Documents or (b) the consummation of the transactions
therein contemplated in compliance with the terms and provisions thereof will
conflict with or result in a breach of the charter or by-laws of the Borrower
or either Guarantor, or any applicable law, rule or regulation, or any order,
writ, injunction or decree of any Governmental Authority, or other material
agreement or instrument to which the Borrower or either Guarantor, or any of
its Subsidiaries, is a party or by which any of them or any of their property
is bound or to which any of them is subject, or constitute a default under any
such material agreement or instrument, or (except for the Liens created
pursuant to this Loan Agreement) result in the creation or imposition of any
Lien upon any property of the Borrower or either Guarantor or any of its
Subsidiaries, pursuant to the terms of any such agreement or instrument.

 

6.05         Action.  The Borrower and each Guarantor has all
necessary corporate or other power, authority and legal right to execute,
deliver and perform its obligations under each of the Loan Documents to which
it is a party; the execution, delivery and performance by such entity of each
of the Loan Documents to which it is a party has been duly authorized by all
necessary corporate or other action on its part; and each Loan Document has
been duly and validly executed and delivered by the such entity and constitutes
a legal, valid and binding obligation of such entity, enforceable against it in
accordance with its terms, subject to bankruptcy laws and other similar laws of
general application affecting rights of creditors and to general principles of
equity.

 

6.06         Approvals.  No authorizations, approvals or consents of,
and no filings or registrations with, any Governmental Authority, or any other
Person, are necessary for the execution, delivery or performance by the
Borrower or either Guarantor of the Loan Documents to which it is a party or
for the legality, validity or enforceability thereof, except for filings and
recordings in respect of the Liens created pursuant to this Loan Agreement and
other filings, recordings and consents that have been obtained and copies
thereof provided to Lender prior to the Effective Date.

 

 

 

6.07         Margin
Regulations.  Neither the
making of any Advance hereunder, nor the use of the proceeds thereof, will
violate or be inconsistent with the provisions of Regulation T, U or X.

 

6.08         Taxes.  The Borrower and its Subsidiaries have filed
all Federal income tax returns and all other material tax returns that are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by any of them, except for any
such taxes, if any, that are being appropriately contested in good faith by
appropriate proceedings diligently conducted and with respect to which adequate
reserves have been provided. The charges, accruals and reserves on the books of
the Borrower and its Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of the Borrower, adequate.

 

6.09         Investment Company Act.  Neither the Borrower nor any of its
Subsidiaries is an “investment company”, or a company “controlled” by an
“investment company”, within the meaning of the Investment Company Act of 1940,
as amended. The Borrower is not subject to any Federal or state statute or
regulation which limits its ability to incur indebtedness.

 

6.10         No
Legal Bar.  The execution,
delivery and performance of this Loan Agreement and the Note, the borrowings
hereunder and the use of the proceeds thereof will not violate any Requirement
of Law or Contractual Obligation of the Borrower or of any of its Subsidiaries
and will not result in, or require, the creation or imposition of any Lien
(other than the Liens created hereunder) on any of its or their respective
properties or revenues pursuant to any such Requirement of Law or Contractual
Obligation.

 

6.11         No
Default.  Neither the Borrower
nor any of its Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect that would reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.

 

6.12         Collateral; Collateral Security.

 

(a)           The Borrower has not
assigned, pledged, or otherwise conveyed or encumbered any Contract or Mortgage
Loan to any other Person, and immediately prior to the pledge of any such
Contract or Mortgage Loan as security under this Loan Agreement, the Borrower
was the sole owner of such Contract or Mortgage Loan and had good and
marketable title thereto, free and clear of all Liens, in each case except for
Liens to be released simultaneously with the Liens granted in favor of the
Lender hereunder and no Person other than the Borrower has any Lien on any Contract
or Mortgage Loan.

 

(b)           The provisions of this
Loan Agreement are effective to create in favor of the Lender a valid security
interest in all right, title and interest of the Borrower in, to and under the
Collateral.

 

(c)           Upon receipt by the
Custodian of each Contract or Mortgage Note, endorsed in blank by a duly
authorized officer of the payee or last endorsee, the Lender shall have a fully
perfected first priority security interest therein, in the Contract or Mortgage
Loan

 

 

evidenced thereby and in
the Borrower’s interest in the related Mortgaged Property or Secured Property,
as the case may be.

 

(d)           Upon the filing of
financing statements on Form UCC1 naming the Lender as “Secured Party” and the
Borrower as “Debtor”, and describing the Collateral, in the jurisdictions and
recording offices listed on Schedule 2 attached hereto, the security
interests granted hereunder in the Collateral will constitute fully perfected
first priority security interests under the Uniform Commercial Code in all
right, title and interest of the Borrower in, to and under such Collateral,
which can be perfected by filing under the Uniform Commercial Code.

 

6.13         Chief Executive Office; Chief
Operating Office.  The
Borrower’s chief executive office on the Effective Date is located at 2150 West
18th Street, Suite 300A, Houston, TX 
77008 and  the Borrower’s chief
operating office is located at 2150 West 18th Street, Suite 300, Houston, TX  77008.

 

6.14         Location of Books and Records.  The location where the Borrower keeps its
books and records including all computer tapes and records relating to the
Collateral is its chief executive office or chief operating office or the
offices of the Custodian.

 

6.15         True and Complete Disclosure.  The information, reports, financial statements,
exhibits and schedules furnished in writing by, on behalf of or at the
direction of the Borrower but in any case provided by the Borrower or a
Guarantor, to the Lender in connection with the negotiation, preparation or
delivery of this Loan Agreement and the other Loan Documents or included herein
or therein or delivered pursuant hereto or thereto, when taken as a whole, do
not contain any untrue statement of material fact or omit to state any material
fact necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by, on behalf of or at the
direction the Borrower, but in any case provided by the Borrower or a Guarantor
to the Lender in connection with this Loan Agreement and the other Loan
Documents and the transactions contemplated hereby and thereby will be true,
complete and accurate in all  material
respects, or (in the case of projections) based on reasonable estimates, on the
date as of which such information is stated or certified. There is no fact
known to a Responsible Officer that would reasonably be expected to have a
Material Adverse Effect that has not been disclosed herein, in the other Loan
Documents or in a report, financial statement, exhibit, schedule, disclosure
letter or other writing furnished to the Lender for use in connection with the
transactions contemplated hereby or thereby.

 

6.16         Guarantors’ Compliance with the
Guaranties. Each Guarantor is in compliance in all material respects
with all of the terms of such Guarantor’s Guaranty and no Event of Default (as
defined in the related Guaranty) has occurred thereunder.

 

6.17         ERISA.  Each Plan to which the Borrower or its
Subsidiaries make direct contributions, and, to the knowledge of the Borrower,
each other Plan and each Multiemployer Plan, is in compliance in all material
respects with, and has been administered in all material respects in compliance
with, the applicable provisions of ERISA, the Code and any other Federal or
State law. No event or condition has occurred and is continuing as to which the
Borrower would be under an obligation to furnish a report to the Lender under
Section 7.01(d) hereof.

 

6.18         Reserved.

 

 

6.19         Relevant
States.  Schedule 3
sets forth all of the states or other jurisdictions (the “Relevant States”)
in which HCC originates Contracts and Mortgage Loans in its own name or through
brokers on the date of this Loan Agreement.

 

6.20         True
Sales.  Any and all interest of
a Qualified Originator in, to and under any Contract or Mortgage Loan funded in
the name of or acquired by such Qualified Originator or seller which is an
Affiliate of the Borrower has been sold, transferred, conveyed and assigned to
the Borrower pursuant to a legal sale and such Qualified Originator retains no
interest in such Contract or Mortgage Loan, and if so requested by the Lender,
is covered by an opinion of counsel to that effect in form and substance
acceptable to the Lender.

 

6.21         No Burdensome Restrictions.  No Requirement of Law or Contractual
Obligation of the Borrower or either Guarantor or any of its Subsidiaries has a
Material Adverse Effect.

 

6.23         Origination and Acquisition of
Contracts or Mortgage Loans.  The Contracts and Mortgage Loans were originated or acquired by a
Qualified Originator, and the origination and collection practices used by the
Qualified Originator, with respect to the Contracts and Mortgage Loans have
been, in all material respects legal, proper, prudent and customary in the
residential mortgage loan servicing business, and in accordance with the
Underwriting Guidelines. Each of the Contracts and Mortgage Loans complies with
the representations and warranties listed in Schedule I hereto.

 

6.24         No Adverse Selection.  The Borrower used no selection procedures
that identified the Contracts or Mortgage Loans as being less desirable or
valuable than other comparable contracts and mortgage loans owned by the
Borrower.

 

6.25         Borrower Solvent; Fraudulent
Conveyance. As of the date hereof and immediately after giving effect
to each Advance, the fair value of the assets of the Borrower is greater than
the fair value of the liabilities (including, without limitation, contingent
liabilities if and to the extent required to be recorded as a liability on the
financial statements of the Borrower in accordance with GAAP) of the Borrower
and the Borrower is and will be solvent, is and will be able to pay its debts
as they mature and does not and will not have an unreasonably small capital to
engage in the business in which it is engaged and proposes to engage. Borrower
does not intend to incur, or believe that it has incurred, debts beyond its
ability to pay such debts as they mature. Borrower is not contemplating the
commencement of insolvency, bankruptcy, liquidation or consolidation
proceedings or the appointment of a receiver, liquidator, conservator, trustee
or similar official in respect of Borrower or any of its assets. Borrower is
not transferring any Mortgage Loans with any intent to hinder, delay or defraud
any of its creditors.

 

Section 7.              Covenants
of the Borrower.  The Borrower
covenants and agrees with the Lender that, so long as any Advance is
outstanding and until payment in full of all Secured Obligations:

 

 

7.01         Financial Statements.  The Borrower shall deliver to the Lender:

 

(a)(i)        as soon as available and
in any event within 30 days after the end of each month, the consolidated
balance sheets of FEI and its consolidated Subsidiaries as at the end of such
month and the related unaudited consolidated statements of income and retained
earnings and of cash flows for FEI and its consolidated Subsidiaries for such
month and the portion of the fiscal year through the end of such month, setting
forth in each case in comparative form the figures for the previous year,
accompanied by a certificate of a Responsible Officer of the Borrower, which
certificate shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of FEI and
its Subsidiaries in accordance with GAAP, consistently applied, as at the end
of, and for, such month (subject to normal year-end audit adjustments);

 

(ii)           as
soon as available and in any event within 45 days after the end of each of the
first three quarterly fiscal periods of each fiscal year of the Borrower, the
consolidated balance sheets of the Guarantors, the Borrower and their
consolidated Subsidiaries as at the end of such period and the related
unaudited consolidated statements of income and retained earnings and of cash
flows for the Guarantors, the Borrower and their consolidated Subsidiaries for
such period and the portion of the fiscal year through the end of such period,
setting forth in each case in comparative form the figures for the previous
year, accompanied by a certificate of a Responsible Officer of the Borrower,
which certificate shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of operations
of the Guarantors, the Borrower and their Subsidiaries in accordance with GAAP,
consistently applied, as at the end of, and for, such period (subject to normal
year-end audit adjustments);

 

(b)           as soon as available
and in any event within 90 days after the end of each fiscal year of the
Borrower, the consolidated balance sheets of the Guarantors, the Borrower and
their consolidated Subsidiaries as at the end of such fiscal year and the
related consolidated statements of income and retained earnings and of cash
flows for the Guarantors, the Borrower and their consolidated Subsidiaries for
such year, setting forth in each case in comparative form the figures for the
previous year, accompanied by an opinion thereon of independent certified
public accountants of recognized national standing, which opinion shall not be
qualified as to scope of audit or going concern and shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of the Guarantors, the Borrower and their
consolidated Subsidiaries  at the end
of, and for, such fiscal year in accordance with GAAP, and a certificate of
such accountants stating that, in making the examination necessary for their
opinion, they obtained no knowledge, except as specifically stated, of any
Default or Event of Default;

 

(c)           from time to time such
other information regarding the financial condition, operations, or business of
the Borrower or the Guarantors as the Lender may reasonably request; and

 

(d)           as soon as reasonably
possible, and in any event within thirty (30) days after a Responsible Officer
knows, or with respect to any Plan or Multiemployer Plan to which the Borrower
or either Guarantor or any of its Subsidiaries makes direct contributions, has
reason to believe, that any of the events or conditions specified below 

 

 

 

with respect to any Plan
or Multiemployer Plan has occurred or exists, a statement signed by a senior
financial officer of the Borrower setting forth details respecting such event
or condition and the action, if any, that the Borrower or its ERISA Affiliate
proposes to take with respect thereto (and a copy of any report or notice
required to be filed with or given to PBGC by the Borrower or an ERISA
Affiliate with respect to such event or condition):

 

(i)            any reportable event,
as defined in Section 4043(b) of ERISA and the regulations issued
thereunder, with respect to a Plan, as to which PBGC has not by regulation or
otherwise waived the requirement of Section 4043(a) of ERISA that it be
notified within thirty (30) days of the occurrence of such event (provided
that a failure to meet the minimum funding standard of Section 412 of the
Code or Section 302 of ERISA, including, without limitation, the failure
to make on or before its due date a required installment under
Section 412(m) of the Code or Section 302(e) of ERISA, shall be a
reportable event regardless of the issuance of any waivers in accordance with
Section 412(d) of the Code); and any request for a waiver under
Section 412(d) of the Code for any Plan;

 

(ii)           the distribution under
Section 4041(c) of ERISA of a notice of intent to terminate any Plan or
any action taken by the Borrower or an ERISA Affiliate to terminate any Plan;

 

(iii)          the institution by PBGC
of proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the receipt by the
Borrower or any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by PBGC with respect to such Multiemployer Plan;

 

(iv)          the complete or partial
withdrawal from a Multiemployer Plan by the Borrower or any ERISA Affiliate
that results in liability under Section 4201 or 4204 of ERISA (including
the obligation to satisfy secondary liability as a result of a purchaser default)
or the receipt by the Borrower or any ERISA Affiliate of notice from a
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;

 

(v)           the institution of a
proceeding by a fiduciary of any Multiemployer Plan against the Borrower or any
ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not
dismissed within 30 days; and

 

(vi)          the adoption of an
amendment to any Plan that, pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA, would result in the loss of tax-exempt status of the
trust of which such Plan is a part if the Borrower or an ERISA Affiliate fails
to timely provide security to such Plan in accordance with the provisions of
said Sections.

 

The Borrower will furnish
to the Lender, at the time it furnishes each set of financial statements
pursuant to paragraphs (a) and (b) above, a certificate of a Responsible
Officer of the Borrower to the effect that, to the best of such Responsible
Officer’s knowledge, the Borrower during such 

 

 

fiscal period or year has
observed or performed all of its covenants and other agreements, and satisfied
every material condition, contained in this Loan Agreement and the other Loan
Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate (and, if any Default or Event
of Default has occurred and is continuing, describing the same in reasonable
detail and describing the action the Borrower has taken or proposes to take
with respect thereto).

 

7.02         Litigation.
 The Borrower will promptly, and in
any event within one (1) Business Day (with respect to the Borrower) and seven
(7) Business Days (with respect to each of the Guarantors) after receipt of
notice of  any of the following, give to
the Lender notice of all legal or arbitrable proceedings affecting the
Borrower, a Guarantor or any of their respective Subsidiaries that questions or
challenges the validity or enforceability of any of the Loan Documents or as to
which there is a reasonable likelihood of adverse determination which would
result in a Material Adverse Effect.

 

7.03         Existence,
Etc.  The Borrower will and shall
assure that each Guarantor will:

 

(a)           preserve and maintain
its legal existence and all of its material rights, privileges, licenses and
franchises;

 

(b)           comply with the
requirements of all applicable laws, rules, regulations and orders of
Governmental Authorities (including, without limitation, truth in lending, real
estate settlement procedures and all environmental laws) if failure to comply
with such requirements would be reasonably likely (either individually or in
the aggregate) to have a Material Adverse Effect;

 

(c)           keep adequate records
and books of account, in which complete entries will be made in accordance with
GAAP consistently applied;

 

(d)           as to the Borrower
only, not move its chief executive office or chief operating office from the
addresses referred to in Section 6.13 unless it shall have provided the
Lender 30 days prior written notice of such change;

 

(e)           pay and discharge all
taxes, assessments and governmental charges or levies imposed on it or on its
income or profits or on any of its Property prior to the date on which
penalties attach thereto, except for any such tax, assessment, charge or levy
the payment of which is being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained; and

 

(f)            permit representatives
of the Lender, during normal business hours upon three (3) Business Days prior
written notice at a mutually desirable time (or at any time and from time to
time during the continuance of a Default or an Event of Default), to examine,
copy and make extracts from its books and records, to inspect any of its
Properties, and to discuss its business and affairs with its officers, all to
the extent reasonably requested by the Lender.

 

 

7.04         Prohibition of Fundamental Changes.  The Borrower shall not enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up
or dissolve itself (or suffer any liquidation, winding up or dissolution) or
sell all or substantially all of its assets; provided, that the Borrower
may merge or consolidate with (a) any wholly owned subsidiary of the Borrower,
or (b) any other Person if the Borrower is the surviving corporation; and provided
further, that if after giving effect thereto, no Default would exist
hereunder.

 

7.05         Borrowing Base Deficiency.  If at any time there exists a Borrowing Base
Deficiency the Borrower shall cure same in accordance with Section 2.06
hereof.

 

7.06         Notices.
The Borrower shall give notice to the Lender promptly:

 

(a)           upon the Borrower
becoming aware of, and in any event within one (1) Business Day after, the
occurrence of any Default or Event of Default or any event of default or
default under any other material agreement of the Borrower or either Guarantor;

 

(b)           upon, and in any event
within one (1) Business Day after receipt of notice by Borrower and within
seven (7) Business Days after receipt of notice by either Guarantor or any
agent thereof in respect of any legal or arbitrable proceedings affecting the
Borrower or either Guarantor or any of their Subsidiaries (i) that questions or
challenges the validity or enforceability of any of the Loan Documents or (ii)
in which the amount in controversy exceeds $250,000 (as to the Borrower),
$1,000,000 (as to HCC), and $5,000,000 (as to FEI);

 

(c)           upon the Borrower
becoming aware of  any Material Adverse
Effect and any event or change in circumstances which should reasonably be
expected to have a Material Adverse Effect;

 

(d)           upon the Borrower
becoming aware during the normal course of its business that the Mortgaged
Property in respect of any Mortgage Loan or Mortgage Loans with an aggregate
unpaid principal balance of at least $1,000,000 has been damaged by waste,
fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty, or otherwise damaged so as to materially and adversely affect the
Collateral Value of such Mortgage Loan;

 

(e)           upon the entry of an
uninsured judgment or decree (i) against the Borrower, (ii) against HCC in an
amount in excess of $1,000,000 or (iii) against FEI in an amount in excess of
$5,000,000.

 

Each notice pursuant to
this Section 7.06 (other than 7.06(e)) shall be accompanied by a statement
of a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower has taken
or proposes to take with respect thereto.

 

7.07         Servicing.  The Borrower shall not permit any Person
other than HCC to service the Contracts and Mortgage Loans without the prior
written consent of the Lender.

 

7.08         MERS.  The Originator is a member of MERS in good
standing (or will be prior to utilizing the MERS System) and current in the
payment of all fees and assessments 

 

 

imposed by MERS, and has
complied in all material respects with all rules and procedures of MERS.  In connection with the assignment of any
Mortgage Loan registered on the MERS System, the Borrower agrees that at the
request of the Lender it will, at the Borrower’s own cost and expense, cause
the MERS System to indicate that such Mortgage Loan has been transferred to the
Lender in accordance with the terms of this Agreement by including in MERS’
computer files (a) the code in the field which identifies the specific owner of
the Mortgage Loans and (b) the code in the field “Pool Field” which identifies
the series in which such Mortgage Loans were sold.  The Borrower further agrees that it will not alter codes
referenced in this paragraph with respect to any Mortgage Loan at any time that
such Mortgage Loan is subject to this Agreement.

 

7.09         Underwriting Guidelines.  The Borrower shall notify the Lender in
writing of any material modifications to the Underwriting Guidelines prior to
requesting any Advance against Contracts or Mortgage Loans underwritten in
accordance with such modified Underwriting Guidelines.  If the Lender determines, in its reasonable
discretion (which determination shall be made and communicated in writing to
Borrower within 5 Business Days after Lender’s receipt of such notice), that
any such modification is not acceptable, the Lender will have no obligation to
finance any loans that are originated pursuant to such modified underwriting
guidelines.

 

7.10         Lines
of Business.  The Borrower will
not engage to any substantial extent in any line or lines of business activity
other than the businesses generally carried on by it as of the Effective Date.

 

7.11         Transactions with Affiliates.  The Borrower will not enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Loan Agreement, (b) in
the ordinary course of the Borrower’s business and (c) upon fair and reasonable
terms no less favorable to the Borrower than it would obtain in a comparable
arm’s length transaction with a Person which is not an Affiliate, or make a
payment that is not otherwise permitted by this Section 7.11 to any
Affiliate.

 

7.12         Use
of Proceeds.  The Borrower will
use the proceeds of the Advances solely to originate, purchase, fund, manage
and service Eligible Assets.

 

7.13         Limitation on Liens. The Borrower will not,
nor will it permit or allow others to, create, incur or permit to exist any
Lien, security interest or claim on or to any of its Property, except for (i)
Liens (not otherwise permitted hereunder) which are created in connection with
the purchase of fixed assets and equipment necessary in the ordinary course of
the Borrower’s business or to finance residual certificates issued in
connection with securitizations of mortgage loans completed by the Borrower
which are financed solely based on a pledge of such residual certificates; and
(ii) Liens on the Collateral created pursuant to this Loan Agreement.  The Borrower will defend the Collateral
against, and will take such other action as is necessary to remove, any Lien,
security interest or claim on or to the Collateral, other than the security
interests created under this Loan Agreement, and the Borrower will defend the right,
title and interest of the Lender in and to any of the Collateral against the
claims and demands of all persons whomsoever.

 

 

7.14         Limitation on Sale of Assets.  The Borrower shall not convey, sell, lease,
assign, transfer or otherwise dispose of (collectively, “Transfer”), all or
substantially all of its Property, business or assets (including, without
limitation, receivables and leasehold interests) whether now owned or hereafter
acquired or allow any Subsidiary to Transfer substantially all of its assets to
any Person; provided, that the Borrower may after prior written notice to the
Lender allow such action with respect to any Subsidiary which is not a material
part of the Borrower’s overall business operations.

 

7.15         Limitation on Distributions. Without
the Lender’s consent, the Borrower shall not make any payment on account of, or
set apart assets for a sinking or other analogous fund for the purchase,
redemption, defeasance, retirement or other acquisition of, any stock or senior
or subordinate debt of the Borrower, whether now or hereafter outstanding, or
make any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Borrower.

 

7.16         Reserved.

 

7.17         Reserved.

 

7.18         Reserved.

 

7.19         Restricted Payments.  The Borrower shall not make any Restricted
Payments following an Event of Default.

 

7.20         Servicing Transmission.  The Borrower shall cause the Servicer to
provide to the Lender on a weekly and monthly basis no later than 11:00 a.m.
eastern time on the first Business Day of each calendar week and two (2)
Business Days prior to each Payment Date (or such other day requested by
Lender) (i) the Servicing Transmission, on a loan-by-loan basis and in the
aggregate, with respect to the Contracts and Mortgage Loans serviced hereunder
by the Servicer on behalf of the Borrower which were funded prior to the first
day of such week or month, summarizing the Borrower’s delinquency and loss
experience with respect to Contracts and Mortgage Loans serviced by the
Servicer on behalf of the Borrower (including, in the case of the Mortgage
Loans, the following categories: current, 30-59, 60-89, and 90+) and (ii) any
other information reasonably requested by the Lender with respect to the
Mortgage Loans.

 

7.21         No Amendment or Waiver.  The Borrower will not, nor will it permit or
allow others to amend, modify, terminate or waive any provision of any Contract
or Mortgage Loan to which the Borrower is a party in any manner which would
reasonably be expected to materially and adversely affect the value of the
Collateral taken as a whole.

 

7.22         Maintenance of Property; Insurance.  The Borrower shall keep all property used
and necessary in its business in good working order and condition.  The Borrower shall cause the Servicer to
maintain errors and omissions insurance and/or mortgage impairment insurance
and blanket bond coverage in such amounts as are in effect on the Effective
Date (as disclosed to Lender in writing) and shall not reduce such coverage
without the written consent of the Lender, and shall also maintain such other
insurance with financially sound and reputable insurance companies, and with
respect to property and risks of a character usually maintained by 

 

 

entities engaged in the
same or similar business similarly situated, against loss, damage and liability
of the kinds and in the amounts customarily maintained by such entities.

 

7.23         Further Identification of
Collateral.  The Borrower will
furnish to the Lender from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Lender or any Lender may reasonably request, all in
reasonable detail.

 

7.24         Contract or Mortgage Loan Determined
to be Defective.  Upon discovery
by the Borrower or the Lender of any breach of any representation or warranty
listed on Schedule 1 hereto applicable to any Contract or Mortgage Loan,
the party discovering such breach shall promptly give notice of such discovery
to the other.

 

7.25         Interest Rate Protection Agreements.  Upon the Lender’s request, the Borrower
shall deliver to the Lender any and all information relating to Interest Rate
Protection Agreements.  The Borrower
shall maintain Interest Rate Protection Agreements relating to the Collateral
at all times for the benefit of Lender in an amount reasonably acceptable to
Lender.

 

7.26         Certificate of a Responsible Officer
of the Borrower.  At the time
that the Borrower delivers financial statements to the Lender in accordance
with Section 7.01 hereof, the Borrower shall forward to the Lender a
certificate of a Responsible Officer of the Borrower which demonstrates that
the Borrower is in compliance with the covenants set forth in Sections 7.16,
7.17 and 7.18 above.

 

7.27         Reserved.

 

7.28         Alternative Collateral.  Borrower agrees that in the event that it
sells, pledges or otherwise transfers Mortgage Loans or Contracts with an
outstanding principal balance in excess of $20 million in the aggregate to any
third party in transactions not involving Lender or an affiliate of Lender
(excluding Title I mortgage loans that have been transferred to Fannie Mae,
Freddie Mac or Ginnie Mae and Mortgage Loans and Contracts repurchased as a
result of breaches by HCC of representations and warranties in connection with
the purchase of the loans by Borrower) (a “Third Party Sale”), Borrower shall
pay to Lender (a) in connection with the first Third Party Sale that causes the
$20 million threshold to be exceeded, an amount equal to the amount of the
excess over $20 million times 0.25% and (b) in connection with all Third Party
Sales thereafter, an amount equal to 0.25% times the outstanding principal
balance of the Mortgage Loans and Contracts sold.

 

7.29         Maintenance of Separateness.  The Borrower acknowledges that the Lender is
relying upon and will continue to rely on the separate legal identity and the
separate assets of the Borrower as distinguished from any other Person.  The Borrower agrees that its business shall
be operated and its affairs shall be conducted in such a manner that its assets
and liabilities can be readily determined and shall not be substantively
consolidated with those of any other Person in the event of the bankruptcy or
insolvency of the Borrower or such other Person.  Without limiting the foregoing, the Borrower shall conduct its
business in its own name, maintain its books and records separate from those of
any other Person, maintain its bank accounts separate from those of any other
Person, maintain separate financial statements, showing its assets and
liabilities separate and apart from those of any other Person, pay its own
liabilities and expenses only out of

 

 

its own funds, enter into
a transaction with an Affiliate only if such transaction is intrinsically fair,
commercially reasonable and on the same terms as would be available in an arm’s
length transaction with a Person or entity that is not an Affiliate, allocate
fairly and reasonably any overhead expenses that are shared with an Affiliate,
hold itself out as a separate entity, maintain adequate capital in light of its
contemplated business operations and observe all other appropriate entity and
other organizational formalities.

 

7.30         Securitization Exclusivity.  The Borrower hereby grants Lender, Greenwich
Capital Markets, Inc. (“GCM”), and such of their Affiliates as Lender may
subsequently designate in writing to Borrower (collectively, “Greenwich”), the
right, but not the obligation, to act, with respect to any securitization
transaction, as initial purchaser and/or lead manager or placement agent or
underwriter  with respect to the
Mortgage Loans and Contracts, so long as the securitization transaction is on
market terms.

 

Section 8.              Events
of Default.  Each of the following
events shall constitute an event of default (an “Event of Default”)
hereunder:

 

(a)           the Borrower shall
default in the payment of any principal of or interest on any Advance when due
(whether at stated maturity, upon acceleration or at mandatory prepayment) or a
Guarantor shall default in the payment of any amount required to be paid by it
under the related Guaranty; or

 

(b)           the Borrower shall
default in the payment of any other amount payable by it hereunder or under any
other Loan Document or a Guarantor shall default under any  obligation (other than a payment obligation)
under the related Guaranty, in either case, after notification by the Lender of
such default, and such default shall have continued unremedied for three
Business Days; or

 

(c)           any representation,
warranty or certification made or deemed made herein or in any other Loan
Document by the Borrower or a Guarantor or any certificate furnished to the
Lender pursuant to the provisions thereof, shall prove to have been false or
misleading in any material respect as of the time made or furnished (other than
the representations and warranties set forth in Schedule 1 which shall be
considered solely for the purpose of determining the Collateral Value of the
Mortgage Loans; unless (i) the Borrower or a Guarantor shall have made any such
representations and warranties with actual knowledge that they were materially
false or misleading at the time made or (ii) any such representations and
warranties have been materially false or misleading on a regular basis); or

 

(d)           the Borrower or any
Guarantor shall otherwise fail to observe or perform any other agreement
contained in this Loan Agreement or any other Loan Document and such failure to
observe or perform shall continue unremedied for a period of fifteen (15)
calendar  days following written notice
from Lender; or

 

(e)           a final judgment or
judgments for the payment of money in excess of $100,000 (as to Borrower),
$1,000,000 (as to HCC) or $5,000,000 (as to FEI) in the aggregate (to the
extent that it is, in the reasonable determination of the Lender, uninsured and
provided that any insurance or other credit posted in connection with an appeal
shall 

 

 

not be deemed insurance
for these purposes) shall be rendered against the Borrower or either Guarantor
or any of their Subsidiaries by one or more courts, administrative tribunals or
other bodies having jurisdiction over them and the same shall not be discharged
(or provision shall not be made for such discharge) or bonded, or a stay of
execution thereof shall not be procured, within 60 days from the date of entry
thereof and the Borrower or any such Subsidiary shall not, within said period
of 60 days, or such longer period during which execution of the same shall have
been stayed or bonded, appeal therefrom and cause the execution thereof to be
stayed during such appeal; or

 

(f)            the Borrower or either
Guarantor shall admit in writing its inability to pay its debts as such debts
become due; or

 

(g)           the Borrower or either
Guarantor or any of their Subsidiaries shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
examiner or liquidator of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under the Bankruptcy Code, (iv) file a petition
seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding-up, or
composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it
in an involuntary case under the Bankruptcy Code or (vi) take any corporate or
other action for the purpose of effecting any of the foregoing; or

 

(h)           a proceeding or case
shall be commenced, without the application or consent of the Borrower or
either Guarantor or any of their Subsidiaries, in any court of competent
jurisdiction, seeking (i) its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its debts,
(ii) the appointment of, or taking of possession by, a receiver, custodian,
trustee, examiner, liquidator or the like of the Borrower or either Guarantor
or any such Subsidiary or of all or any substantial part of its property, or
(iii) similar relief in respect of the Borrower or either Guarantor or any such
Subsidiary under any law relating to bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement or 
winding-up, or composition or adjustment of debts, and such proceeding
or case shall continue undismissed, or an order, judgment or decree approving
or ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 60 or more days; or an order for relief against the
Borrower or either Guarantor or any such Subsidiary shall be entered in an
involuntary case under the Bankruptcy Code; or

 

(i)            the Custodial
Agreement or any Loan Document shall for whatever reason (including an event of
default thereunder) be terminated or the lien on the Collateral created by this
Loan Agreement or Borrower’s or either Guarantor’s material obligations
hereunder or under the Guaranty shall cease to be in full force and effect, or
the enforceability thereof shall be contested by the Borrower or either
Guarantor; or

 

(j)            any material adverse
change in the Properties, business or financial condition, or prospects of the
Borrower or either Guarantor or any of their Subsidiaries, in each case as
determined by the Lender in its reasonable discretion, or the existence of any
other condition which, in the Lender’s reasonable discretion, constitutes a
material 

 

 

impairment of the
Borrower’s ability to perform its obligations under this Loan Agreement, the
Note or any other Loan Document or such Guarantor’s ability to perform under
the Guaranty; or

 

(k)           (i) any Person shall
engage in any “prohibited transaction” (as defined in Section 406 of ERISA
or Section 4975 of the Code) involving any Plan, (ii) any material
“accumulated funding deficiency” (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in
favor of the PBGC or a Plan shall arise on the assets of the Borrower, either
Guarantor or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which reportable event (as described in Section 7.01(d)
hereof) or commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Lenders, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, (iv) any single employer plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower, either Guarantor
or any commonly controlled entity (for purposes of ERISA) shall, or in the
reasonable opinion of the Lenders is likely to, incur any liability in
connection with a withdrawal from, or the insolvency or reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or exist
with respect to a Plan; and in each case in clauses (i) through (vi) above,
such event or condition, together with all other such events or conditions, if
any, could reasonably be expected to have a Material Adverse Effect; or

 

(l)            any Change of Control
of the Borrower or either Guarantor shall have occurred without the prior
consent of the Lender; or

 

(m)          the Borrower shall
grant, or suffer to exist, any Lien on any Collateral except the Liens
contemplated hereby; or the Liens contemplated hereby shall cease to be first
priority perfected Liens on the Collateral in favor of the Lender or shall be
Liens in favor of any Person other than the Lender; or

 

(n)           the Lender shall
reasonably request, specifying the reasons for such request, information,
and/or written responses to such requests, regarding the financial well-being
of the Borrower or the Guarantors and such information and/or responses shall
not have been provided within five Business Days of such request; or

 

(o)           the Borrower or either
Guarantor or any Subsidiary of the Borrower or either Guarantor shall default
under, or fail to perform as required under, or shall otherwise materially
breach the terms of any instrument, agreement or contract between the Borrower
or such Guarantor or such other entity, on the one hand, and the Lender or any
of the Lender’s Affiliates on the other; or the Borrower or such Guarantor or
any Subsidiary of the Borrower shall materially default under, or fail to
perform as requested under, the terms of any, material repurchase agreement,
loan and security agreement or similar credit facility or agreement for
borrowed funds entered into by the Borrower, the Guarantor or such other entity
and any third party, which default or failure entitles any party to require
acceleration or prepayment of any indebtedness thereunder; or

 

 

(p)           the Servicer breaches
in any material respect any terms of the Servicing Agreement.

 

Section 9.              Remedies Upon
Default.

 

(a)           Upon the occurrence of
one or more Events of Default (subject to the expiration of the applicable cure
period contained therein) other than those referred to in Section 8(g) or
(h), the Lender may immediately declare the principal amount of the Advances
then outstanding under the Note to be immediately due and payable, together
with all interest thereon and other amounts payable hereunder (including, but
not limited to, amounts payable pursuant to Sections 2.05, 3.04, 3.05 and 3.06
hereof) and reasonable fees and out-of-pocket expenses accruing under this Loan
Agreement; provided that upon the occurrence of an Event of Default
referred to in Sections 8(g) or (h), such amounts shall immediately and
automatically become due and payable without any further action by any Person.
Upon such declaration or such automatic acceleration, the balance then
outstanding on the Note shall become immediately due and payable, without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower and may thereupon exercise any remedies
available to it at law and pursuant to the Loan Documents, including, but not
limited to, the transfer of servicing or the liquidation of the Collateral on a
servicing released basis.

 

(b)           Upon the occurrence of
one or more Events of Default, the Lender shall have the right to obtain
physical possession of the Servicing Records and all other files of the
Borrower relating to the Collateral and all documents relating to the
Collateral which are then or may thereafter come in to the possession of the
Borrower or any third party acting for the Borrower and the Borrower shall
deliver to the Lender such assignments as the Lender shall request. The Lender
shall be entitled to specific performance of all agreements of the Borrower
contained in this Loan Agreement.

 

(c)           If an Event of Default
shall occur and be continuing, the Lender may exercise, in addition to all
other rights and remedies granted to it in this Loan Agreement and in any other
instrument or agreement securing, evidencing or relating to the Secured
Obligations, all rights and remedies of a secured party under the Uniform
Commercial Code, at law and in equity. Without limiting the generality of the
foregoing, the Lender without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Borrower or any other Person
(all and each of which demands, defenses, presentments, protests,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels or as
an entirety at public or private sale or sales, at any exchange, broker’s board
or office of the Lender or elsewhere upon such terms and conditions and at
prices that are consistent with a recognized market for similar collateral as
it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk.  The Lender shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of 

 

 

redemption in the
Borrower, which right or equity is hereby waived or released. The Borrower
further agrees, at the Lender’s request, to assemble the Collateral and make it
available to the Lender at places which the Lender shall reasonably select,
whether at the Borrower’s premises or elsewhere. The Lender shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Lender
hereunder, including, without limitation, reasonable attorneys’ fees and
disbursements, to the payment in whole or in part of the Secured Obligations,
in such order as the Lender may elect, and only after such application and
after the payment by the Lender of any other amount required or permitted by
any provision of law, including, without limitation, Section 9-504(1)(c)
of the Uniform Commercial Code, need the Lender account for the surplus, if
any, to the Borrower. Except as set forth in the first sentence of
Section 4.08, to the extent permitted by applicable law, the Borrower
waives all claims, damages and demands it may acquire against the Lender
arising out of the exercise by the Lender of any of its rights hereunder, other
than those claims, damages and demands arising from the gross negligence or
willful misconduct of the Lender. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition. The Borrower shall remain liable for any deficiency (plus accrued
interest thereon as contemplated pursuant to Section 2.05(b) hereof) if
the proceeds of any sale or other disposition of the Collateral are
insufficient to pay the Secured Obligations and the reasonable fees and
disbursements incurred by the Lender to collect such deficiency.  Because the Borrower recognizes that it may
not be possible to purchase or sell all of the Collateral on a particular
Business Day, or in a transaction with the same purchaser, or in the same
manner because the market for such Collateral may not be liquid, the Borrower
agrees that liquidation of the Collateral does not require a public purchase or
sale and that a good faith private purchase or sale shall be deemed to have
been made in a commercially reasonable manner. 
Accordingly, the Lender may elect, in its sole discretion, the time and
manner of liquidating any Collateral and nothing contained herein shall (A)
obligate the Lender to liquidate any Collateral on the occurrence of an Event
of Default or to liquidate all Collateral in the same manner or on the same
Business Day or (B) constitute a waiver of any of the Lender’s rights or
remedies.

 

(d)           If a Default (as to a
failure by the Borrower to comply with the provisions of Section 7.25
hereof) or an Event of Default (as to other matters) shall occur and be
continuing, the Lender may, at its option, enter into one or more Interest Rate
Protection Agreements covering all or a portion of the Mortgage Loans pledged
to the Lender hereunder, and the Borrower shall be responsible for all damages,
judgments, costs and expenses of any kind which may be imposed on, incurred by
or asserted against the Lender relating to or arising out of such Interest Rate
Protection Agreements; including without limitation any losses resulting from
such Interest Rate Protection Agreements.

 

Section 10.            No
Duty on Lender’s Part.  The powers
conferred on the Lender hereunder are solely to protect the Lender’s interests
in the Collateral and shall not impose any duty upon it to exercise any such
powers. The Lender shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers, and neither it nor any of
its officers, directors, employees or agents shall be responsible to the
Borrower for any act or failure to act hereunder, except for its or their own
gross negligence or willful misconduct.

 

 

Section 11.            Miscellaneous.

 

11.01       Waiver.  No failure on the part of the Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under any Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under any Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
provided herein are cumulative and not exclusive of any remedies provided by
law.

 

11.02       Notices.
 Except as otherwise expressly
permitted by this Loan Agreement, all notices, requests and other
communications provided for herein and under the Custodial Agreement
(including, without limitation, any modifications of, or waivers, requests or
consents under, this Loan Agreement) shall be given or made in writing
(including, without limitation, by telex or telecopy) delivered to the intended
recipient at the “Address for Notices” specified below its name on the
signature pages hereof); or, as to any party, at such other address as shall be
designated by such party in a written notice to each other party. Except as
otherwise provided in this Loan Agreement and except for notices given under
Section 2 (which shall be effective only on receipt), all such
communications shall be deemed to have been duly given when transmitted by
telex or telecopier or personally delivered or, in the case of a mailed notice,
upon receipt, in each case given or addressed as aforesaid.

 

11.03       Indemnification and Expenses.

 

(a)           The Borrower agrees to
hold the Lender, and the Lender’s Affiliates and their respective officers,
directors, employees, agents and advisors (each an “Indemnified Party”)
harmless from and indemnify any Indemnified Party against all third-party
liabilities, losses (but in no case including lost profits), damages,
judgments, costs and expenses of any kind which may be imposed on, incurred by
or asserted against such Indemnified Party (collectively, the “Costs”) relating
to or arising out of this Loan Agreement, the Note, any other Loan Document or
any transaction contemplated hereby or thereby, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this Loan
Agreement, the Note, any other Loan Document or any transaction contemplated
hereby or thereby, that, in each case, results from anything other than any
Indemnified Party’s gross negligence or willful misconduct.  Without limiting the generality of the
foregoing, the Borrower agrees to hold any Indemnified Party harmless from and
indemnify such Indemnified Party against all Costs with respect to all Mortgage
Loans relating to or arising out of any violation or alleged violation of any
environmental law, rule or regulation or any consumer credit laws, including
without limitation laws with respect to unfair or deceptive lending practices
and predatory lending practices, the Truth in Lending Act and/or the Real Estate
Settlement Procedures Act, that, in each case, results from anything other than
such Indemnified Party’s gross negligence or willful misconduct.  In any suit, proceeding or action brought by
an Indemnified Party in connection with any Contract or Mortgage Loan for any
sum owing thereunder, or to enforce any provisions of any Contract or Mortgage
Loan, the Borrower will save, indemnify and hold such Indemnified Party
harmless from and against all expense, loss or damage suffered by reason of any
defense, set-off, counterclaim, recoupment or reduction or liability whatsoever
of the account debtor or obligor thereunder, arising out of a breach by the
Borrower or any Affiliate of any obligation thereunder or arising out of any
other agreement, indebtedness or liability at any time owing to or in favor of
such account debtor or obligor or its successors from the Borrower or any
Affiliate.  The 

 

 

Borrower also agrees to
reimburse an Indemnified Party as and when billed by such Indemnified Party for
all such Indemnified Party’s reasonable and documented costs and expenses
incurred in connection with the enforcement or the preservation of such
Indemnified Party’s rights under this Loan Agreement, the Note, any other Loan
Document or any transaction contemplated hereby or thereby, including without
limitation the reasonable fees and disbursements of its counsel.  The Borrower hereby acknowledges that,
notwithstanding the fact that the Note is secured by the Collateral, the obligation
of the Borrower under the Note is a recourse obligation of the Borrower.

 

(b)           The Borrower agrees to
pay as and when billed by the Lender all of the reasonable and documented
out-of pocket costs and expenses incurred by the Lender in connection with the
development, preparation and execution of, and any amendment, supplement or
modification to, this Loan Agreement, the Note, any other Loan Document or any
other documents prepared in connection herewith or therewith.  The Borrower agrees to pay as and when
billed by the Lender all of the reasonable and documented out-of-pocket costs
and expenses incurred in connection with the consummation and administration of
the transactions contemplated hereby and thereby including, without limitation,
(i) all the reasonable fees, disbursements and expenses of counsel to the
Lender and (ii) all the due diligence, inspection, testing and review costs and
expenses incurred by the Lender with respect to Collateral under this Loan
Agreement, including, but not limited to, those costs and expenses incurred by
the Lender pursuant to Sections 11.03(a), 11.14 and 11.16 hereof.

 

11.04       Amendments.  Except as otherwise expressly provided in
this Loan Agreement, any provision of this Loan Agreement may be modified or
supplemented only by an instrument in writing signed by the Borrower and the
Lender and any provision of this Loan Agreement may be waived by the Lender.

 

11.05       Successors and Assigns.  This Loan Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.

 

11.06       Survival.
 The obligations of the Borrower
under Sections 3.03 and 11.03 hereof shall survive the repayment of the
Advances and the termination of this Loan Agreement. In addition, each
representation and warranty made, or deemed to be made by a request for a
borrowing, herein or pursuant hereto shall survive the making of such
representation and warranty, and the Lender shall not be deemed to have waived,
by reason of making any Advance, any Default that may arise by reason of such
representation or warranty proving to have been false or misleading,
notwithstanding that the Lender may have had notice or knowledge or reason to
believe that such representation or warranty was false or misleading at the
time such Advance was made.

 

11.07       Captions.
 The table of contents and captions
and section headings appearing herein are included solely for convenience
of reference and are not intended to affect the interpretation of any provision
of this Loan Agreement.

 

11.08       Counterparts.  This Loan Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Loan
Agreement by signing any such counterpart.

 

 

11.09       Loan Agreement Constitutes
Security Agreement; Governing Law.  This Loan Agreement shall be governed by New York law without
reference to choice of law doctrine (but with reference to Section 5-1401
of the New York General Obligations Law, which by its terms applies to this
Loan Agreement), and shall constitute a security agreement within the meaning
of the Uniform Commercial Code.

 

11.10      SUBMISSION TO JURISDICTION; WAIVERS.  EACH OF BORROWER AND LENDER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:

 

(A)          SUBMITS
FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NONEXCLUSIVE PERSONAL
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
COURTS FROM ANY THEREOF;

 

(B)          CONSENTS
THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE
EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH
ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO
PLEAD OR CLAIM THE SAME;

 

(C)          AGREES
THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY
MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY
SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS
SIGNATURE BELOW OR AT SUCH OTHER ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN
NOTIFIED; AND

 

(D)          AGREES
THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER
JURISDICTION.

 

11.11      WAIVER OF JURY TRIAL.  EACH OF THE BORROWER AND THE LENDER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

 

 

11.12       Acknowledgments.
 The Borrower hereby acknowledges
that:

 

(a)           it has been advised by
counsel in the negotiation, execution and delivery of this Loan Agreement, the
Note and the other Loan Documents to which it is a party;

 

(b)           the Lender has no
fiduciary relationship to the Borrower, and the relationship between the
Borrower and the Lender is solely that of debtor and creditor; and

 

(c)           no joint venture exists
among or between the Lender and the Borrower.

 

11.13       Hypothecation or Pledge of
Collateral.  The Lender shall
have free and unrestricted use of all Collateral and nothing in this Loan
Agreement shall preclude the Lender from engaging in repurchase transactions
with the Collateral or otherwise pledging, repledging, transferring,
hypothecating, or rehypothecating the Collateral.  Nothing contained in this Loan Agreement shall obligate the
Lender to segregate any Collateral delivered to the Lender by the Borrower.

 

11.14       Assignments; Participations.

 

(a)           The Borrower may assign
any of its rights or obligations hereunder or under the Note only with the
prior written consent of the Lender. 
The Lender may assign or transfer to any bank or other financial
institution that makes or invests in loans or any Affiliate of the Lender all
or any of its rights or obligations under this Loan Agreement and the other
Loan Documents; provided that the Lender shall not assign its rights or
obligations hereunder or under any of the other Loan Documents to any third
party which is not an Affiliate of the Lender without the prior written consent
of the Borrower, which consent shall not be unreasonably withheld.

 

(b)           The Lender may, in
accordance with applicable law, at any time sell to one or more lenders or
other entities (each a “Participant”) participating interests in any
Advance, the Note, its commitment to make Advances, or any other interest of
the Lender hereunder and under the other Loan Documents.  In the event of any such sale by the Lender
of participating interests to a Participant, the Lender’s obligations under
this Loan Agreement to the Borrower shall remain unchanged, the Lender shall
remain solely responsible for the performance thereof, the Lender shall remain
the holder of the Note for all purposes under this Loan Agreement and the other
Loan Documents, and the Borrower shall continue to deal solely and directly
with the Lender in connection with the Lender’s rights and obligations under
this Loan Agreement and the other Loan Documents. The Borrower agrees that if
amounts outstanding under this Loan Agreement and the Note are due or unpaid,
or shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing
under this Loan Agreement and the Note to the same extent as if the amount of
its participating interest were owing directly to it as a Lender under this
Loan Agreement or the Note; provided, that such Participant shall only
be entitled to such right of set-off if it shall have agreed in the agreement
pursuant to which it shall have acquired its participating interest to share
with the Lender the proceeds thereof. 
The Lender also agrees that each Participant shall be entitled to the
benefits of Sections 2.07 and 11.03 with respect to its participation in the
Advances outstanding from time to time; provided, that the Lender and
all Participants shall be entitled to receive no greater amount in the
aggregate pursuant to such Sections than the Lender would have been entitled to
receive had no such transfer occurred.

 

 

(c)           The Lender may furnish
any information concerning the Borrower or any of its Subsidiaries in the
possession of such Lender from time to time to assignees and Participants
(including prospective assignees and Participants) only after notifying the
Borrower in writing and securing signed confidentiality statements (a form of
which is attached hereto as Exhibit I) and only for the sole purpose of
evaluating participations and for no other purpose.

 

(d)           The Borrower agrees to
cooperate with the Lender in connection with any such assignment and/or
participation, to execute and deliver such replacement notes, and to enter into
such restatements of, and amendments, supplements and other modifications to,
this Loan Agreement and the other Loan Documents in order to give effect to
such assignment and/or participation. The Borrower further agrees to furnish to
any Participant identified by the Lender to the Borrower copies of all reports
and certificates to be delivered by the Borrower to the Lender hereunder, as
and when delivered to the Lender.  The
Lender shall reimburse the Borrower for any reasonable and documented
out-of-pocket costs incurred by the Borrower pursuant to this
Section 11.14(d).

 

11.15       Servicing.

 

(a)           The Borrower covenants
to maintain or cause the Mortgage Loans and the Contracts to be serviced
pursuant to the Servicing Agreement.

 

(b)           The Borrower covenants
to safeguard the Servicing Records and to deliver them promptly to the Lender
or its designee (including the Custodian) at the Lender’s request.

 

(c)           The Borrower agrees
that upon the occurrence of an Event of Default, the Lender may terminate the
Servicer and terminate any Servicing Agreement.  In addition, the Borrower shall provide to the Lender an
Instruction Letter from the Borrower to the effect that upon the occurrence of
an Event of Default, the Lender may terminate any Servicing Agreement and
direct that collections with respect to the Mortgage Loans and Contracts be
remitted in accordance with the Lender’s instructions.  The Borrower agrees to cooperate with the
Lender in connection with the transfer of servicing.

 

(d)           After the Funding Date,
until the pledge of any Mortgage Loan or Contract is relinquished by the
Custodian, the Borrower will have no right to modify or alter the terms of the
Mortgage Loan or Contract or consent to the modification or alteration of the
terms of any Mortgage Loan or Contract, and the Borrower will have no
obligation or right to repossess any Mortgage Loan or Contract or substitute
another Mortgage Loan or Contract, except as provided in any Custodial
Agreement.

 

11.16       Periodic Due Diligence Review.  The Borrower acknowledges that the Lender
has the right to perform continuing due diligence reviews with respect to the
Contracts and Mortgage Loans, for purposes of verifying compliance with the
representations, warranties and specifications made hereunder, or otherwise, and
the Borrower agrees that upon reasonable (but no less than three (3) Business
Days) prior notice to the Borrower, the Lender or its authorized
representatives will be permitted during normal business hours to examine,
inspect, make copies of, and make extracts of, the Collateral Files and any and
all documents, records, agreements, instruments or information relating to such
Contracts and Mortgage Loans in the possession, or under the control, of the
Borrower and/or the Custodian. The Borrower also shall 

 

 

make available to the
Lender a knowledgeable financial or accounting officer for the purpose of
answering questions respecting the Collateral Files and the Contracts and
Mortgage Loans. Without limiting the generality of the foregoing, the Borrower
acknowledges that the Lender shall make Advances to the Borrower based solely
upon the information provided by the Borrower to the Lender in the Asset Data
Transmission and the representations, warranties and covenants contained
herein, and that the Lender, at its option, has the right, at any time to
conduct a partial or complete due diligence review on some or all of the
Contracts and Mortgage Loans securing such Advance, including, without
limitation, ordering new credit reports, new appraisals on the related
Mortgaged Properties or Secured Property as the case may be, and otherwise
re-generating the information used to originate such Contract or Mortgage Loan.
The Lender may underwrite such Contracts and Mortgage Loans itself or engage a
mutually agreed upon third party underwriter to perform such underwriting. The
Borrower agrees to cooperate with the Lender and any third party underwriter in
connection with such underwriting, including, but not limited to, providing the
Lender and any third party underwriter with access to any and all documents,
records, agreements, instruments or information relating to such Contracts and
Mortgage Loans in the possession, or under the control, of the Borrower. So
long as no Default or Event of Default exists or a prior review does not
demonstrate material non-compliance with the Underwriting Guidelines, the
Borrower and Lender agree that the Borrower’s costs associated with such loan
level due diligence will be limited to four (4) visits per year at a maximum
cost of $17,500 each.  The Lender shall
have the right to conduct additional reviews at its expense with at least 3
Business Days advance notification to Borrower, including the right to perform
continuing Due Diligence Reviews of the Borrower and its directors, officers,
employees and significant shareholders.

 

11.17       Set-Off.  In addition to any rights and remedies of
the Lender provided by this Loan Agreement and by law, the Lender shall have
the right, without prior notice to the Borrower, any such notice being expressly
waived by the Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by the Borrower hereunder (whether at the
stated maturity, by acceleration or otherwise) to set-off and appropriate and
apply against such amount any and all Property and deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct
or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Lender or any Affiliate thereof to or for the credit or the
account of the Borrower.  The Lender may
set-off cash, the proceeds of the liquidation of any Collateral and all other
sums or obligations owed by the Lender or its Affiliates to Borrower against
all of Borrower’s obligations to the Lender or its Affiliates, whether under
this Loan Agreement or under any other agreement between the parties or between
Borrower and any affiliate of the Lender, or otherwise, whether or not such
obligations are then due, without prejudice to the Lender’s or its Affiliate’s
right to recover any deficiency.  The
Lender agrees promptly to notify the Borrower after any such set-off and
application made by the Lender; provided that the failure to give such
notice shall not affect the validity of such set-off and application.

 

11.18       Intent.  The parties recognize that each Advance is a
“securities contract” as that term is defined in Section 741 of Title 11
of the United States Code, as amended.

 

11.19       Entire
Agreement.  This Loan Agreement
embodies the entire agreement and understanding of the parties hereto and
supersedes any and all prior agreements, arrangements and understandings
relating to the matters provided for herein. No alteration, waiver,

 

 

amendments, or change or
supplement hereto shall be binding or effective unless the same is set forth in
writing by a duly authorized representative of each party hereto.

 

11.20       Public Announcements.  The Lender shall have approval rights with
respect to all press releases and other public announcements related to or
concerning this Loan Agreement and the other Loan Documents.

 

11.21       Limitation on Liability.  It is expressly understood and agreed by the
parties hereto that (a) this Agreement is executed and delivered by Wilmington
Trust Company, not individually or personally, but solely as Owner Trustee of
HomeOne Funding I, in the exercise of the powers and authority conferred and
vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of the Issuer is made and intended not as personal
representations, undertakings and agreements by Wilmington Trust Company but is
made and intended for the purpose for binding only the Issuer, (c) nothing
herein contained shall be construed as creating any liability on Wilmington
Trust Company, individually or personally, to perform any covenant either
expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties hereto and by any Person claiming by, through
or under the parties hereto and (d) under no circumstances shall Wilmington
Trust Company be personally liable for the payment of any indebtedness or
expenses of the Borrower or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by the
Borrower under this Agreement or any other related documents.

 

[SIGNATURE PAGES
FOLLOW]

 

 

IN WITNESS WHEREOF, the
parties hereto have caused this Loan Agreement to be duly executed and
delivered as of the day and year first above written.

 

	
   

  	
  BORROWER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  HOMEONE FUNDING I

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: Wilmington Trust
  Company not in its individual capacity but solely as owner trustee.

  
	
   

  	
  By:

  	
   

  	
  /s/ Heather L. Maier

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Heather L. Maier

  
	
   

  	
  Title:

  	
   

  	
  Authorized Signer

  
	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2150 West 18th Street

  
	
   

  	
  Houston, Texas 77008

  
	
   

  	
  Attention: Gary V.
  Busch

  
	
   

  	
  Telecopier No.:(713)
  331-2210

  
	
   

  	
  Telephone No.:(713)
  331-2200

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention: General
  Counsel

  
	
   

  	
  Telecopier No.: (713)
  331-2205

  
	
   

  	
  Telephone No.: (713)
  331-2200

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GREENWICH CAPITAL FINANCIAL

  PRODUCTS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jonathan Stapleton

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
  600 Steamboat Road

  
	
   

  	
  Greenwich, Connecticut  06830

  
	
   

  	
  Attention: Anthony
  Palmisano

  
	
   

  	
  Telecopier No.: (203)
  618-2164

  
	
   

  	
  Telephone No.: (203)
  618-2341

  
	
   

  	
  With a copy to:

  
	
   

  	
  Attention:  General Counsel

  
	
   

  	
  Telecopier No.: (203)
  629-5718

  
	
   

  	
  Telephone No.: (203)
  625-2700

  
							

 

 

Schedule 1

 

REPRESENTATIONS AND WARRANTIES RE:
MORTGAGE LOANS

 

 

Schedule 3

 

 

Schedule 4

 

 

EXHIBIT A

 

[FORM OF PROMISSORY NOTE]

 

	
  $75,000,000

  	
   

  	
   

  
	
  December 30, 2003

  	
   

  	
  New York, New York

  

 

FOR VALUE RECEIVED,
HomeOne Funding I, a Delaware statutory trust (the “Borrower”), hereby
promises to pay to the order of GREENWICH CAPITAL FINANCIAL PRODUCTS, INC. (the
“Lender”), at the principal office of the Lender at 600 Steamboat Road,
Greenwich, Connecticut 06830, in lawful money of the United States, and in
immediately available funds, the principal sum of SEVENTY FIVE MILLION DOLLARS
AND NO CENTS ($75,000,000) (or such lesser amount as shall equal the aggregate
unpaid principal amount of the Advances made by the Lender to the Borrower
under the Loan Agreement (as defined below)), on the dates and in the principal
amounts provided in the Loan Agreement, and to pay interest on the unpaid
principal amount of each such Advance, at such office, in like money and funds,
for the period commencing on the date of such Advance until such Advance shall
be paid in full, at the rates per annum and on the dates provided in the Loan
Agreement.

 

The date, amount and
interest rate of each Advance made by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books and, prior to any transfer of this Note, endorsed by the
Lender on the schedule attached hereto or any continuation thereof; provided,
that the failure of the Lender to make any such recordation or endorsement
shall not affect the obligations of the Borrower to make a payment when due of
any amount owing under the Loan Agreement or hereunder in respect of the
Advances made by the Lender.

 

This Note is the Note
referred to in the Master Loan and Security Agreement dated as of December 30,
2003 (as amended, supplemented or otherwise modified and in effect from time to
time, the “Loan Agreement”) between the Borrower, and the Lender, and
evidences Advances made by the Lender thereunder.  Terms used but not defined in this Note have the respective
meanings assigned to them in the Loan Agreement.

 

The Borrower agrees to
pay all the Lender’s costs of collection and enforcement (including reasonable
attorneys’ fees and disbursements of Lender’s counsel) in respect of this Note
when incurred, including, without limitation, reasonable attorneys’ fees
through appellate proceedings.

 

Notwithstanding the
pledge of the Collateral, the Borrower hereby acknowledges, admits and agrees
that the Borrower’s obligations under this Note are recourse obligations of the
Borrower to which the Borrower pledges its full faith and credit.

 

The Borrower, and any
indorsers or guarantors hereof, (a) severally waive diligence, presentment,
protest and demand and also notice of protest, demand, dishonor and nonpayments
of this Note, (b) expressly agree that this Note, or any payment hereunder, may
be extended from time to time, and consent to the acceptance of further
Collateral, the release of any Collateral for this Note, the release of any
party primarily or secondarily liable hereon, and (c) expressly agree

 

 

that it will not be
necessary for the Lender, in order to enforce payment of this Note, to first
institute or exhaust the Lender’s remedies against the Borrower or any other
party liable hereon or against any Collateral for this Note.  No extension of time for the payment of this
Note, or any installment hereof, made by agreement by the Lender with any
person now or hereafter liable for the payment of this Note, shall affect the
liability under this Note of the Borrower, even if the Borrower is not a party
to such agreement; provided, however, that the Lender and the
Borrower, by written agreement between them, may affect the liability of the
Borrower.

 

Any reference herein to
the Lender shall be deemed to include and apply to every subsequent holder of
this Note.  Reference is made to the
Loan Agreement for provisions concerning optional and mandatory prepayments,
Collateral, acceleration and other material terms affecting this Note.

 

Any enforcement action relating
to this Note may be brought by motion for summary judgment in lieu of a
complaint pursuant to Section 3213 of the New York Civil Practice Law and
Rules.  The Borrower hereby submits to
New York jurisdiction with respect to any action brought with respect to this
Note and waives any right with respect to the doctrine of forum non conveniens
with respect to such transactions.

 

This Note shall be governed by and
construed under the laws of the State of New York (without reference to choice
of law doctrine but with reference to Section 5-1401 of the New York
General Obligations Law, which by its terms applies to this Note) whose laws
the Borrower expressly elects to apply to this Note.  The Borrower agrees that any action or proceeding brought to
enforce or arising out of this Note may be commenced in the Supreme Court of
the State of New York, Borough of Manhattan, or in the District Court of the
United States for the Southern District of New York.

 

The protections of
Section 11.21 of the Loan Agreement are incorporated herein by reference.

 

	
   

  	
  HOMEONE FUNDING I

  
	
   

  	
   

  
	
   

  	
  By: Wilmington Trust
  Company not in its individual capacity but solely as owner trustee.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

SCHEDULE OF
LOANS

 

This Note evidences
Advances made under the within-described Loan Agreement to the Borrower, on the
dates, in the principal amounts and bearing interest at the rates set forth
below, and subject to the payments and prepayments of principal set forth
below:

 

	
  Date Made

  	
   

  	
  Principal
  Amount

  of Loan

  	
   

  	
  Amount
  Paid

  or Prepaid

  	
   

  	
  Unpaid
  Principal

  Amount

  	
   

  	
  Notation

  Made by

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT B 

 

FORM OF CUSTODIAL AGREEMENT

 

 

EXHIBIT C

 

RESERVED

 

 

EXHIBIT D

 

FORM OF NOTICE OF BORROWING AND
PLEDGE

 

[insert date]

 

Greenwich Capital
Financial Products, Inc.

600 Steamboat Road

Greenwich, Connecticut
06830

Attention:  

 

Notice of Borrowing and
Pledge No.:

 

Ladies/Gentlemen:

 

Reference is made to the
Master Loan and Security Agreement, dated as of December 30, 2003 (the “Loan
Agreement”; capitalized terms used but not otherwise defined herein shall
have the meaning given them in the Loan Agreement), between HomeOne Funding I
(the “Borrower”) and Greenwich Capital Financial Products, Inc. (the “Lender”).

 

In accordance with
Section 2.03(a) of the Loan Agreement, the undersigned Borrower hereby
requests that you, the Lender, make Advances to us in connection with our
delivery of Mortgage Loans on
                        [insert
requested Funding Date, which must be at least two (2) Business Days following
the date of the request], in connection with which we shall pledge
to you as Collateral the Eligible Assets (along with all previous pledges
defined as Eligible Assets for such date) set forth on the Asset
Schedule attached hereto.

 

The Borrower hereby
certifies, as of such Funding Date, that:

 

(a)         no Default or Event of
Default has occurred and is continuing on the date hereof nor will occur after
giving effect to such Advance as a result of such Advance;

 

(b)         each of the
representations and warranties made by the Borrower in or pursuant to the Loan
Documents is true and correct in all material respects on and as of such date
(in the case of the representations and warranties in respect of Contracts
or  Mortgage Loans, solely with respect
to Contracts or Mortgage Loans being included the Borrowing Base on the Funding
Date) as if made on and as of the date hereof (or, if any such representation
or warranty is expressly stated to have been made as of a specific date, as of
such specific date);

 

(c)         the Borrower is in
compliance with all governmental licenses and authorizations and is qualified
to do business and is in good standing in all required jurisdictions; and

 

 

(d)           the Borrower has
satisfied all conditions precedent in Section 5.02 of the Loan Agreement
and all other requirements of the Loan Agreement, in each case to the extent
required to be satisfied by the Lender.

 

The undersigned duly
authorized officer of Borrower further represents and warrants that (1) the
documents constituting the Custodial File (as defined in the Custodial
Agreement) with respect to the Contracts or Mortgage Loans that are the subject
of the Advance requested herein and more specifically identified on the Asset
Schedule or computer readable magnetic transmission delivered to both the
Lender and the Custodian in connection herewith (the “Receipted Contracts or
Mortgage Loans”) have been or are hereby submitted to Custodian and such
Required Documents are to be held by the Custodian subject to Lender’s first
priority security interest thereon, (2) all other documents related to such
Receipted Mortgage Loans (including, but not limited to, mortgages, insurance policies,
loan applications and appraisals) have been or will be created and held by
Borrower in trust for Lender, (3) all documents related to such Receipted
Contracts or Mortgage Loans withdrawn from Custodian shall be held in trust by
Borrower for Lender, and Borrower will not attempt to pledge, hypothecate or
otherwise transfer such Receipted Contracts or Mortgage Loans to any other
party until the Advance to which such Receipted Contracts or Mortgage Loans are
related has been paid in full by Borrower and (4) Borrower has granted a first
priority perfected security interest in and lien on the Receipted Contracts or
Mortgage Loans.

 

Borrower hereby
represents and warrants that (x) the Receipted Contracts or Mortgage Loans have
an unpaid principal balance as of the date hereof of
$                    
and (y) the number of Receipted Contracts or Mortgage Loans is
              .

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  HOMEONE FUNDING I

  
	
   

  	
   

  
	
   

  	
  By: Wilmington Trust
  Company not in its individual capacity but solely as owner trustee.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

Schedule I

to Notice of Borrowing and Pledge

 

[MORTGAGE LOANS
PROPOSED TO BE PLEDGED

TO LENDER ON
FUNDING DATE]

 

[attach Mortgage
Loan Schedule]

 

 

EXHIBIT E

 

UNDERWRITING GUIDELINES

 

[TO BE PROVIDED BY
BORROWER]

 

 

EXHIBIT F

 

REQUIRED FIELDS FOR SERVICING
TRANSMISSION

 

 

[TO BE PROVIDED BY
LENDER]

 

 

EXHIBIT G

 

REQUIRED FIELDS FOR ASSET DATA
TRANSMISSION

 

[TO BE PROVIDED BY
LENDER]

 

 

EXHIBIT H

 

FORM OF BORROWING BASE CERTIFICATE

 

[TO BE PROVIDED BY
LENDER ]

 

 

EXHIBIT
I

 

FORM OF CONFIDENTIALITY

AGREEMENT

 

In connection with your
consideration of a possible or actual acquisition of a participating interest
(the “Transaction”) in an advance, note or commitment of Greenwich Capital
Financial Products, Inc. (“Greenwich”) pursuant to a Master Loan and Security
Agreement between Greenwich and HomeOne Funding I (the “Borrower”) dated
December 30, 2003, you have requested the right to review certain
non-public information regarding the Borrower that is in the possession of
Greenwich. In consideration of, and as a condition to, furnishing you with such
information and any other information (whether communicated in writing or
communicated orally) delivered to you by Greenwich or its affiliates,
directors, officers, employees, advisors, agents or “controlling persons”
(within the meaning of the Securities Exchange Act of 1934, as amended (the
“1934 Act”)) (such affiliates and other persons being herein referred to
collectively as Greenwich “Representatives”) in connection with the
consideration of a Transaction (such information being  herein referred to as “Evaluation
Material”), Greenwich hereby requests your agreement as follows:

 

1.             The Evaluation
Material will be used solely for the purpose of evaluating a possible
Transaction with Greenwich involving you or your affiliates, such Evaluation
Material will be kept strictly confidential by you and your affiliates,
directors, officers, employees, advisors, agents or controlling persons (such
affiliates and other persons being herein referred to collectively as “your
Representatives”), except that the Evaluation Material or portions thereof may
be disclosed to those of your Representatives who need to know such information
for the purpose of evaluating a possible Transaction with Greenwich (it being
understood that prior to such disclosure your Representatives will be informed
of the confidential nature of the Evaluation Material and shall agree to be
bound by this Agreement). You agree to be responsible for any breach of this
Agreement by your Representatives.

 

2.             The term “Evaluation
Material” does not include any information which (i) at the time of disclosure
or thereafter is generally known by the public (other than as a result of its
disclosure by you or your Representatives) or (ii) was or becomes available to
you on a nonconfidential basis from a person not otherwise bound by a
confidential agreement with Greenwich or its Representatives or is not
otherwise prohibited from transmitting the information to you. As used in this
Agreement, the term “person” shall be broadly interpreted to include, without
limitation, any corporation, company, joint venture, partnership or individual.

 

3.             In the event that you
receive a request to disclose all or any part of the information contained in
the Evaluation Material under the terms of a valid and effective subpoena or
order issued by a court of competent jurisdiction, you agree to (i) immediately
notify Greenwich and the Borrower of the existence, terms and circumstances surrounding
such a request, (ii) consult with the Borrower on the advisability of taking
legally available steps to resist or narrow such request, and (iii) if
disclosure of such information is 

 

 

required, exercise your
best efforts to obtain an order or other reliable assurance that confidential
treatment will be accorded to such information.

 

4.             Unless otherwise
required by law in the opinion of your counsel, neither you nor your
Representative will, without our prior written consent, disclose to any person
the fact that the Evaluation Material has been made available to you.

 

5.             You agree not to
initiate or maintain contact (except for those contacts made in the ordinary
course of business) with any officer, director or employee of the Borrower
regarding the business, operations, prospects or finances of the Borrower or
the employment of such officer, director or employee, except with the express
written permission of the Borrower.

 

6.             You understand and
acknowledge that the Borrower is not making any representation or warranty,
express or implied, as to the accuracy or completeness of the Evaluation
Material or any other information provided to you by Greenwich. The Borrower,
its respective affiliates or Representatives, nor any of its respective
officers, directors, employees, agents or controlling persons (within the
meaning of the 1934 Act) shall have any liability to you or any other person
(including, without limitation, any of your Representatives) resulting from
your use of the Evaluation Material.

 

7.             You agree that
neither Greenwich or the Borrower has not granted you any license, copyright,
or similar right with respect to any of the Evaluation Material or any other
information provided to you by Greenwich.

 

8.             If you determine that
you do not wish to proceed with the Transaction, you will promptly deliver to
Greenwich all of the Evaluation Material, including all copies, reproductions
and summaries thereof in your possession or in the possession of any of your
Representatives.

 

9.             Without prejudice to
the rights and remedies otherwise available to the Borrower, the Borrower shall
be entitled to equitable relief by way of injunction if you or any of your
Representatives breach or threaten to breach any of the provisions of this
Agreement. You agree to waive, and to cause your Representatives to waive, any
requirement for the securing or posting of any bond in connection with such
remedy.

 

10.           The validity and
interpretation of this Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York applicable to
agreements made and to be fully performed therein (excluding the conflicts of
law rules). You submit to the jurisdiction of any court of the State of New
York or the United States District Court for the Southern District of the State
of New York for the purpose of any suit, action, or other proceeding arising
out of this Agreement.

 

11.           The benefits of this
Agreement shall inure to the respective successors and assigns of the parties
hereto, and the obligations and liabilities assumed in this Agreement by the
parties hereto shall be binding upon the respective successors and assigns.

 

12.           If it is found in a
final judgment by a court of competent jurisdiction (not subject to further
appeal) that any term or provision hereof is invalid or unenforceable, (i) the 

 

 

remaining terms and
provisions hereof shall be unimpaired and shall remain in full force and effect
and (ii) the invalid or unenforceable provision or term shall be replaced by a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of such invalid or unenforceable term or provision.

 

13.           This Agreement embodies
the entire agreement and understanding of the parties hereto and supersedes any
and all prior agreements, arrangements and understandings relating to the
matters provided for herein. No alteration, waiver, amendments, or change or
supplement hereto shall be binding or effective unless the same is set forth in
writing by a duly authorized representative of each party and may be modified
or waived only by a separate letter executed by the Borrower and you expressly
so modifying or waiving such Agreement.

 

14.           For the convenience of
the parties, any number of counterparts of this Agreement may be executed by
the parties hereto. Each such counterpart shall be, and shall be deemed to be,
an original instrument, but all such counterparts taken together shall
constitute one and the same Agreement.

 

 

 

Kindly execute and return
one copy of this letter which will constitute our Agreement with respect to the
subject matter of this letter.

 

 

	
   

  	
  By:

  	
   

  	
   

  
	
  Greenwich Capital
  Financial Products, Inc.

  
	
   

  
	
  Confirmed and agreed to
  this          day of
                      ,
  200   .

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
								

 

 

EXHIBIT J

 

FORM OF
INSTRUCTION LETTER

 

                       
     , 2003

 

                                   ,
as  [Subservicer]

 

 

 

Attention: 

 

Re:          Loan and Security
Agreement, dated as of December 30, 2003, by and between Greenwich Capital
Financial Products, Inc., (“Lender”), and HomeOne Funding I (“Borrower”)

 

Ladies and Gentlemen:

 

Pursuant to the Master
Loan and Security Agreement, dated as of December 30, 2003 (the “Loan
and Security Agreement”), between the Lender and the Borrower, you are hereby
notified that: (i) the undersigned Borrower has pledged to the Lender the
assets described on Schedule 1 hereto (the “Eligible Assets”),
(ii) each of the Eligible Assets is subject to a security interest in favor of
the Lender, and (iii) effective as of the delivery of this letter to the
Subservicer, unless otherwise notified by the Lender in writing, any payments
or distributions made with respect to such Eligible Assets shall be remitted
immediately by the [Subservicer] in accordance with the Lender’s wiring
instructions provided below:

 

	
  Account No.:

  	
  [

  	
  ]

  
	
  ABA No.:

  	
  [

  	
  ]

  
	
   

  	
  [

  	
  ]

  
	
  Reference:

  	
  [

  	
  ]

  

 

The Subservicer also
acknowledges its consent to terminate such Servicing Agreement upon
notification by the Lender of an occurrence of an Event of Default.

 

This instruction letter
is executed and delivered by Wilmington Trust Company, not individually or
personally, but solely as Owner Trustee of HomeOne Funding I, in the exercise
of the powers and authority conferred and vested in it, each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Issuer, nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being 

 

 

 

expressly waived by the
parties hereto and by any Person claiming by, through or under the parties
hereto, and under no circumstances shall Wilmington Trust Company be personally
liable for the payment of any indebtedness or expenses of the Borrower or be
liable for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Borrower under this Agreement or any other
related documents.

 

Please acknowledge
receipt of this instruction letter by signing in the signature block below and
forwarding an executed copy to the Lender promptly upon receipt.  Any notices to the Lender should be
delivered to the following address: 600 Steamboat Road, Greenwich, Connecticut
06830, Attention: Joe Bartolotta, Telephone: (203) 625-6675, Facsimile: (203)
625-4751.

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOMEONE
  FUNDING I

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  Wilmington Trust Company not in its individual capacity but solely as owner
  trustee.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  

 

 

	
  ACKNOWLEDGED:

  
	
   

  
	
   

  
	
   

  	
  , as [Subservicer]

  
	
   

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  
	
   

  
	
   

  
	
  Title:

  
	
   

  
	
   

  
	
  Telephone:

  
	
   

  
	
   

  
	
  Facsimile:Exhibit
10.4

 

 

FORM OF NINTH AMENDMENT TO

CREDIT AGREEMENT

AND CONSENT OF GUARANTORS

This NINTH AMENDMENT TO CREDIT AGREEMENT AND CONSENT OF
GUARANTORS (this “Amendment”) is dated as of
February       , 2004, and entered into by
and among FLEETWOOD ENTERPRISES INC.  (“Fleetwood”),
FLEETWOOD
HOLDINGS INC. and its Subsidiaries listed on the signature pages
hereof (collectively, “FMC”), FLEETWOOD RETAIL, CORP. and its
Subsidiaries listed on the signature pages hereof (collectively, “FRC”),
the banks and other financial institutions signatory hereto that are parties as
Lenders to the Credit Agreement referred to below (the “Lenders”), and BANK OF
AMERICA, N.A., as administrative agent and collateral agent (in such
capacity, the “Agent”) for the Lenders.

 

Recitals

 

Whereas, Fleetwood, the Borrowers, the
Lenders, and the Agent have entered into that certain Credit Agreement dated as
of July 27, 2001, as amended by that certain First Amendment to Credit
Agreement and Consent of Guarantors dated as of December 4, 2001,
that certain Second Amendment to Credit Agreement and Security Agreement and
Consent of Guarantors dated as of December 4, 2001, that certain Third
Amendment to Credit Agreement and Consent of Guarantors dated as of
December 7, 2001, that certain Fourth Amendment to Credit Agreement
and Consent of Guarantors dated as of July 12, 2002, that certain
Fifth Amendment to Credit Agreement and Consent of Guarantors dated as of
January 24, 2003, that certain Sixth Amendment to Credit Agreement
and Consent of Guarantors dated as of March 25, 2003, that certain
Seventh Amendment and Consent of Guarantors dated as of July 21, 2003 and
that certain Eighth Amendment and Consent of Guarantors dated as of
December 15, 2003 (the “Credit Agreement”; capitalized terms used
in this Amendment without definition shall have the meanings given such terms
in the Credit Agreement); and,

 

Whereas,
Fleetwood (on behalf of itself and each of its subsidiaries), Textron Financial
Corporation (“Textron Financial”) and the Agent (for itself and in its
capacity as administrative agent for the Lenders) have entered into that
certain Intercreditor Agreement dated as of August 21, 2002 (the “Textron
Intercreditor Agreement”); and

 

Whereas, the Borrowers have requested
certain amendments to the Credit Agreement; and

 

Whereas,
the Borrowers have requested of the Agent and the Lenders
certain consents and approvals under the Textron Intercreditor Agreement; and

 

Whereas, the Borrowers have requested of
the Agent and the Lenders certain waivers under the Credit Agreement; and

 

1

 

Whereas, the Lenders and the Agent are
willing to agree to the amendments and to give the consents and approvals
requested by the Loan Parties, on the terms and conditions set forth in this
Amendment;

 

Now Therefore, in consideration of the
premises and the mutual agreements set forth herein, Fleetwood, the Borrowers,
the Lenders, and the Agent agree as follows:

 

1.               AMENDMENTS TO CREDIT AGREEMENT. 
Subject to the conditions and upon the terms set forth in this Amendment
and in reliance on the representations and

 

warranties
of Fleetwood and the Borrowers set forth in this Amendment, the Credit
Agreement is hereby amended as follows:

 

1.1         Amendment to
Section 7.10.  Section 7.10(a)
shall be amended by deleting clause (x) and replacing it with the following
clause (x):

 

“(x) so long as no
Default or Event of Default has occurred and is continuing on the date of the
payment thereof, both before and after giving effect to such payment, Fleetwood
may, on or prior to the date which is six (6) months after the date of the
issuance of the 2003 Subordinated Debentures, either (I) prepay or repurchase
and cancel all or a portion of the Subordinated Debentures or New Subordinated
Debentures, or (II) pay a solicitation, conversion, or other inducement fee to
induce the holders of the Subordinated Debentures or the New Subordinated
Debentures to convert the Subordinated Debentures or the New Subordinated
Debentures, as applicable, pursuant to the terms thereof; provided that
the aggregate amount of such prepayment or repurchase and such fees does not
exceed the amount of the net 2003 Subordinated Debentures Cash Proceeds
received upon the issuance of the 2003 Subordinated Debentures; and provided
further that contemporaneously therewith Fleetwood Trust either (A) uses such
proceeds to prepay or repurchase and cancel those Trust Securities having the
same liquidation amount as the principal amount of such Subordinated Debentures
or the New Subordinated Debentures underlying such Trust Securities or (B) in
the case of the use of proceeds from the 2003 Subordinated Debentures as
described in clause (II) above, otherwise complies with the requirements upon
conversion set forth in the Subordinated Debentures, the New Subordinated
Debentures and the Trust Securities as applicable;”

 

1.2         Amendment to
Section 7.24.  Section 7.24
shall be amended by replacing the table therein with the following table:

 

	
  Period
  Ending

  	
   

  	
  EBITDA

  	
   

  
	
  On
  the last Sunday in April 2003

  	
   

  	
  $

  	
  (7,500,000

  	
  )

  
	
  On
  the last Sunday in July 2003

  	
   

  	
  $

  	
  (7,500,000

  	
  )

  
	
  On
  the last Sunday in October 2003

  	
   

  	
  $

  	
  (8,500,000

  	
  )

  
	
  On
  the last Sunday in January 2004

  	
   

  	
  $

  	
  16,500,000

  	
   

  
	
  On
  the last Sunday in April 2004

  	
   

  	
  $

  	
  60,000,000

  	
   

  

 

2

 

1.3         Amendment to
Section 7.29.  Section 7.29(a)
shall be amended by deleting the proviso at the end of clause (a) and replaced
with the following:

 

“; provided that,
in respect of clause (i) above only, so long as no Default or Event of Default
has occurred and is continuing on the date of the payment thereof, both before
and after giving effect to such payment, Fleetwood may, on or prior to the date
which is six (6) months after the date of the issuance of the 2003 Subordinated
Debentures, either (I) prepay or repurchase and cancel all or a portion of the
Subordinated Debentures or New Subordinated Debentures, or (II) pay a
solicitation, conversion, or other inducement fee to induce the holders of the
Subordinated Debentures or the New Subordinated Debentures to convert the
Subordinated Debentures or the New Subordinated Debentures, as applicable,
pursuant to the terms thereof; provided that the aggregate amount of
such prepayment or repurchase and such fees does not exceed the amount of the
net 2003 Subordinated Debentures Cash Proceeds received upon the issuance of
the 2003 Subordinated Debentures; and provided further that
contemporaneously therewith Fleetwood Trust either (A) uses such proceeds to
prepay or repurchase and cancel those Trust Securities having the same
liquidation amount as the principal amount of such Subordinated Debentures or
the New Subordinated Debentures underlying such Trust Securities or (B) in the
case of the use of proceeds from the 2003 Subordinated Debentures as described
in clause (II) above, otherwise complies with the requirements upon conversion
set forth in the Subordinated Debentures, the New Subordinated Debentures and
the Trust Securities as applicable.”

 

2.               CONSENTS, APPROVALS AND WAIVERS.

 

2.1         Minimum
EBITDA.  By the execution of this Amendment, the
Agent and the Lenders hereby waive any right, as a result solely of Fleetwood
failing to maintain EBITDA for the period ending on the last Sunday in
January 2004 at the level required by Section 7.24 of the
Credit Agreement (as modified by the Seventh Amendment but prior to the
effectiveness of this Amendment), to exercise any remedies pursuant to the
Credit Agreement.

 

2.2         Wholesale Security Agreement
Amendment.  By the
execution of this Amendment, the Agent and the Lenders hereby consent to the
execution and delivery by any of the Loan Parties of  the amendment to that certain Wholesale Security Agreement, dated
as of August 21, 2002, as amended, by and among Textron Financial, the
Loan Parties and the other parties thereto (the “Wholesale Security Agreement”)
in the form of Exhibit A attached hereto, pursuant to which Schedule 9(l)
of the Wholesale Security Agreement shall be replaced with a revised Schedule 9(l)
that reflects the amendments to Section 7.24 of the Credit  Agreement made pursuant hereto.

 

3.               REPRESENTATIONS AND WARRANTIES OF FLEETWOOD AND THE
BORROWERS.  In order to induce the Lenders and
the Agent to enter into this Amendment, each of Fleetwood and each Borrower
represents and warrants to each Lender, the Issuing Bank and the Agent that the
following statements are true, correct and complete:

 

3.1         Power
and Authority.  Each of the Loan Parties has all corporate
power and authority to enter into this Amendment and, as applicable, the
Consent of Guarantors

 

3

 

attached
hereto (the “Consent”), and to carry out the transactions contemplated
by, and to perform its obligations under or in respect of, the Credit
Agreement.

 

3.2         Corporate
Action.  The execution and delivery of this Amendment
and the Consent and the performance of the obligations of each Loan Party under
or in respect of the Credit Agreement as amended hereby have been duly
authorized by all necessary corporate action on the part of each of the Loan
Parties.

 

3.3         No
Conflict or Violation or Required Consent or Approval. 
The execution and delivery of this Amendment and the Consent and the
performance of the obligations of each Credit Party under or in respect of the
Credit Agreement as amended hereby do not and will not conflict with or violate
(a) any provision of the governing documents of any Loan Party or any of its
Subsidiaries, (b) any Requirement of Law, (c) any order, judgment or
decree of any court or other governmental agency binding on any Loan Party or
any of its Subsidiaries, or (d) any indenture, agreement or instrument to which
any Loan Party or any of its Subsidiaries is a party or by which any Loan Party
or any of its Subsidiaries, or any property of any of them, is bound, and do
not and will not require any consent or approval of any Person.

 

3.4         Execution, Delivery and Enforceability.  This Amendment and the Consent have been
duly executed and delivered by each Loan Party which is a party thereto and are
the legal, valid and binding obligations of such Loan Party, enforceable in
accordance with their terms, except as enforceability may be affected by
applicable bankruptcy, insolvency, and similar proceedings affecting the rights
of creditors generally, and general principles of equity.  The Agent’s Liens in the Collateral continue
to be valid, binding and enforceable first priority Liens which secure the
Obligations.

 

3.5         No
Default or Event of Default. No event has occurred and is continuing or will
result from the execution and delivery of this Amendment or the Consent that
would constitute a Default or an Event of Default.

 

3.6         No
Material Adverse Effect.  No event has
occurred that has resulted, or could reasonably be expected to result, in a
Material Adverse Effect.

 

3.7         Representations
and Warranties.  Each of the representations and warranties
contained in the Loan Documents is and will be true and correct in all material
respects on and as of the date hereof and as of the effective date of this
Amendment, except to the extent that such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects as of such earlier date.

 

4.               CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT.  This Amendment, and the consents and approvals
contained herein, shall be effective only if and when signed by, and when
counterparts hereof shall have been delivered to the Agent (by hand delivery,
mail or telecopy) by, Fleetwood, the Borrowers and each Lender and only if and
when each of the following conditions is satisfied:

 

4.1         Consent
of Guarantors.  Each of the Guarantors shall have
executed and delivered to the Agent the Consent.

 

4

 

4.2
Consents.  The Borrowers shall have
received original copies of executed consents delivered by Textron Financial,
in a form reasonably satisfactory to the Agent giving their consent, effective
on or prior to the Ninth Amendment Effective Date, to the Loan Parties entering
into the Ninth Amendment.

 

4.3         No
Default or Event of Default; Accuracy of Representations and Warranties. 
No Default or Event of Default shall exist and each of the
representations and warranties made by the Loan Parties herein and in or
pursuant to the Loan Documents shall be true and correct in all material
respects as if made on and as of the date on which this Amendment becomes
effective (except that any such representation or warranty that is expressly
stated as being made only as of a specified earlier date shall be true and
correct as of such earlier date), and the Borrowers shall have delivered to the
Agent a certificate confirming such matters.

 

4.4         Fees. 
The Borrowers shall have paid to the Agent for the pro rata account of
all Lenders an amendment fee equal to one-eighth of one percent (0.125%) times
the aggregate Commitments of all Lenders as of the Ninth Amendment Effective
Date; provided that such fee shall be applied to any extension or
closing fee paid or payable by the Borrower in consideration for the agreement
by the Agent and the Lenders to extend the Stated Termination Date for a period
equal to or greater than two (2) years, on or prior to July 31, 2004.

 

4.5         Other
Documents.  The Agent shall have received such documents
as the Agent may reasonably request in connection with this Amendment.

 

5.               EFFECTIVE
DATE.  This Amendment shall
become effective on the date of the satisfaction of the conditions set forth in
Section 4, and each of the Lenders signatory hereto hereby
waives any Default or Event of Default that may have arisen prior to the date
of the Amendment, but that would not be a Default or Event of Default after
giving effect to this Amendment (the “Ninth Amendment Effective Date”).

 

6.               EFFECT OF AMENDMENT; RATIFICATION. 
This Amendment is a Loan Document. 
From and after the date on which this Amendment becomes effective, all
references in the Loan Documents to the Credit Agreement shall mean the Credit
Agreement as amended hereby.  Except as
expressly amended hereby or waived herein, the Credit Agreement and the other
Loan Documents, including the Liens granted thereunder, shall remain in full
force and effect, and all terms and provisions thereof are hereby ratified and
confirmed.  Each of Fleetwood and the
Borrowers confirms that as amended hereby, each of the Loan Documents is in
full force and effect, and that none of the Credit Parties has any defenses,
setoffs or counterclaims to its Obligations.

 

7.               APPLICABLE LAW.  THE VALIDITY, INTERPRETATIONS AND
ENFORCEMENT OF THIS AMENDMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION
WITH THIS AMENDMENT, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE,
SHALL BE GOVERNED BY THE INTERNAL LAWS AND DECISIONS OF THE STATE OF
CALIFORNIA; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.

 

5

 

8.               COMPLETE AGREEMENT.  This Amendment sets forth the
complete agreement of the parties in respect of any amendment to any of the
provisions of any Loan Document or any waiver thereof.  The execution, delivery and effectiveness of
this Amendment do not constitute a waiver of any Default or Event of Default,
amend or modify any provision of any Loan Document except as expressly set
forth herein or constitute a course of dealing or any other basis for altering
the Obligations of any Loan Party.

 

9.               CAPTIONS; COUNTERPARTS. 
The
catchlines and captions herein are intended solely for convenience of reference
and shall not be used to interpret or construe the provisions hereof.  This Amendment may be executed by one or
more of the parties to this Amendment on any number of separate counterparts
(including by telecopy), all of which taken together shall constitute but one
and the same instrument.

 

[signatures follow; remainder of page intentionally
left blank]

 

6

 

IN
WITNESS WHEREOF, each of the undersigned has duly executed
this Ninth Amendment to Credit Agreement and Security Agreement as of the date
set forth above.

 

	
  FMC BORROWERS

  	
  FLEETWOOD HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES OF ARIZONA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES OF CALIFORNIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES OF FLORIDA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES OF GEORGIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES OF IDAHO, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES OF INDIANA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES OF KENTUCKY, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES OF NORTH CAROLINA,
  INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES OF OREGON, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES OF PENNSYLVANIA,
  INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES OF TENNESSEE, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES OF TEXAS, L.P.

  
	
   

  	
  By:    FLEETWOOD
  GENERAL PARTNER

  OF TEXAS, INC., its General Partner

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES OF VIRGINIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES OF WASHINGTON, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD MOTOR HOMES OF
  CALIFORNIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD MOTOR HOMES OF INDIANA,
  INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD MOTOR HOMES OF
  PENNSYLVANIA, INC.

  

 

S-1

 

	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF
  CALIFORNIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF
  INDIANA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF
  KENTUCKY, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF
  MARYLAND, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF OHIO,
  INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF
  OREGON, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD TRAVEL TRAILERS OF TEXAS,
  INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD FOLDING TRAILERS, INC.

  
	
   

  	
   

  
	
   

  	
  GOLD SHIELD, INC.

  
	
   

  	
   

  
	
   

  	
  GOLD SHIELD OF INDIANA, INC.

  
	
   

  	
   

  
	
   

  	
  HAUSER LAKE LUMBER OPERATION, INC.

  
	
   

  	
   

  
	
   

  	
  CONTINENTAL LUMBER PRODUCTS, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD GENERAL PARTNER OF TEXAS,
  INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD HOMES INVESTMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Boyd. R. Plowman

  
	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  

 

S-2

 

	
  FRC BORROWERS

  	
  FLEETWOOD RETAIL CORP.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD RETAIL CORP. OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD RETAIL CORP. OF IDAHO

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD RETAIL CORP. OF KENTUCKY

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD RETAIL CORP. OF MISSISSIPPI

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD RETAIL CORP. OF NORTH CAROLINA

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD RETAIL CORP. OF OREGON

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD RETAIL CORP. OF VIRGINIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Boyd R. Plowman

  
	
   

  	
  Title:

  	
  Executive Vice
  President and Chief 

  
	
   

  	
   

  	
  Financial Officer

  
	
   

  	
   

  
	
  GUARANTOR

  	
  FLEETWOOD ENTERPRISES, INC., as the
  Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Boyd R. Plowman

  
	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  

 

S-3

 

	
   

  	
  BANK OF AMERICA, N.A., as the Agent and

  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

S-4

 

	
   

  	
  HELLER FINANCIAL, INC., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

S-5

 

	
   

  	
  WELLS FARGO FOOTHILL, INC., fka FOOTHILL CAPITAL CORPORATION,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

S-6

 

	
   

  	
  THE
  CIT GROUP/BUSINESS CREDIT, INC., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

S-7

 

CONSENT OF GUARANTORS

 

Each of the undersigned
is a Guarantor of the Obligations of the FMC Borrowers and/or FRC Borrowers
under the Credit Agreement and hereby (a) consents to the foregoing
Amendment, (b) acknowledges that notwithstanding the execution and
delivery of the foregoing Amendment, the obligations of each of the undersigned
Guarantors are not impaired or affected and the Guaranties continue in full
force and effect, and (c) ratifies its Guaranty and each of the Loan
Documents to which it is a party.

 

IN WITNESS WHEREOF, each
of the undersigned has executed and delivered this CONSENT OF GUARANTORS as of
the        day of February, 2004. 

 

	
  FMC
  BORROWERS

  	
  FLEETWOOD
  HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF ARIZONA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF CALIFORNIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF FLORIDA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF GEORGIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF IDAHO, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF INDIANA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF KENTUCKY, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF NORTH CAROLINA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF OREGON, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF PENNSYLVANIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF TENNESSEE, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF TEXAS, L.P.

  By:    FLEETWOOD
  GENERAL PARTNER

  OF TEXAS, INC., its General Partner

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  HOMES OF VIRGINIA, INC.

  

 

Exhibit A

 

 

	
   

  	
  FLEETWOOD
  HOMES OF WASHINGTON, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  MOTOR HOMES OF CALIFORNIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  MOTOR HOMES OF INDIANA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  MOTOR HOMES OF PENNSYLVANIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  TRAVEL TRAILERS OF CALIFORNIA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  TRAVEL TRAILERS OF INDIANA, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  TRAVEL TRAILERS OF KENTUCKY, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  TRAVEL TRAILERS OF MARYLAND, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  TRAVEL TRAILERS OF OHIO, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  TRAVEL TRAILERS OF OREGON, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  TRAVEL TRAILERS OF TEXAS, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  FOLDING TRAILERS, INC.

  
	
   

  	
   

  
	
   

  	
  GOLD
  SHIELD, INC.

  
	
   

  	
   

  
	
   

  	
  GOLD
  SHIELD OF INDIANA, INC.

  
	
   

  	
   

  
	
   

  	
  HAUSER
  LAKE LUMBER OPERATION, INC.

  
	
   

  	
   

  
	
   

  	
  CONTINENTAL
  LUMBER PRODUCTS, INC.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  GENERAL PARTNER OF TEXAS, INC.

  

 

S-9

 

	
   

  	
  FLEETWOOD
  HOMES INVESTMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Boyd. R. Plowman

  
	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  

 

S-10

 

	
  FRC
  BORROWERS

  	
  FLEETWOOD
  RETAIL CORP.

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  RETAIL CORP. OF CALIFORNIA

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  RETAIL CORP. OF IDAHO

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  RETAIL CORP. OF KENTUCKY

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  RETAIL CORP. OF MISSISSIPPI

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  RETAIL CORP. OF NORTH CAROLINA

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  RETAIL CORP. OF OREGON

  
	
   

  	
   

  
	
   

  	
  FLEETWOOD
  RETAIL CORP. OF VIRGINIA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Boyd R. Plowman

  
	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  OTHER
  GUARANTORS

  	
  FLEETWOOD
  ENTERPRISES, INC.

  
	
   

  	
  FLEETWOOD
  CANADA LTD.

  
	
   

  	
  BUCKINGHAM
  DEVELOPMENT CO.

  
	
   

  	
  FLEETWOOD
  INTERNATIONAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Boyd R. Plowman

  
	
   

  	
  Title:

  	
  Executive Vice
  President and Chief Financial Officer

  
					

 

S-11

 

EXHIBIT A

 

AMENDMENT TO
WHOLESALE SECURITY AGREEMENT

 

[Attached Hereto]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00061-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00061-of-00352.parquet"}]]