Exhibit 10.1

 

Execution Copy

 

MASTER REPURCHASE AGREEMENT

 

Dated as of October 30, 2009

 

Between:

 

HOME LOAN CENTER, INC., as Seller

 

and

 

JPMORGAN CHASE BANK, N.A., as Buyer

 

1.                                      APPLICABILITY

 

Subject to the terms of the Side Letter and satisfaction of the conditions
precedent set forth in Paragraph 3 and in Paragraph 7, prior to the Termination
Date, the parties hereto may enter into transactions in which Home Loan
Center, Inc. (“Seller”) may transfer to JPMorgan Chase Bank, N.A. (together with
its successors and assigns, “Buyer”) certain Mortgage Loans (including the
Servicing Rights, as defined below, thereto) and Buyer shall be obligated to
accept such Mortgage Loans (on a servicing released basis against the transfer
of funds by Buyer), with a simultaneous agreement by Buyer to transfer to Seller
those Mortgage Loans (including the Servicing Rights thereto) on a servicing
released basis at a date certain or on demand, against the transfer of funds by
Seller.  Each such transaction shall be referred to in this Agreement as a
“Transaction” and shall be governed by this Agreement.  Buyer shall have no
obligation to enter into any Transaction on or after the Termination Date.

 

2.                                      DEFINITIONS

 

“Accounts” means, collectively, the Cash Pledge Account, the Funding Account and
the Operating Account, any interest, additions and proceeds due or to become due
on such Accounts, which Accounts are held at Financial Institution and include
all of the above described deposits, deposit accounts, payment intangibles,
financial assets and other obligations of Financial Institution, whether they
are deposit accounts, negotiable or non-negotiable or book entry certificates of
deposit, book entry investment time deposits, savings accounts, money market
accounts, transaction accounts, time deposits, negotiable order of withdrawal
accounts, share draft accounts, demand deposit accounts, instruments, general
intangibles, chattel paper or otherwise, and all funds held in or represented by
any of the foregoing, and any successor Accounts howsoever numbered and all
Accounts issued in renewal, extension or increase or decrease of or replacement
or substitution for any of the foregoing; and all promissory notes, checks,
cash, certificates of deposit, passbooks, deposit receipts, instruments,
certificates and other records from time to time representing or evidencing the
Accounts described above and any supporting obligations relating to any of the
foregoing property.

 

“Act of Insolvency” means with respect to any Person (a) the commencement by
that Person as debtor of any case or proceeding under any bankruptcy,
insolvency, reorganization,

 

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liquidation, dissolution or similar law, or a request by that Person for the
appointment of a receiver, trustee, custodian or similar official for that
Person or any substantial part of its property; (b) the commencement of any such
case or proceeding against that Person, or another’s seeking such appointment,
or the filing against that Person of an application for a protective decree
which (i) is consented to or not timely contested by that Person, or
(ii) results in the entry of an order for relief, such an appointment, the
issuance of such a protective decree or the entry of an order having similar
effect, or (iii) is not dismissed within fifteen (15) days; (c) the making by
that Person of a general assignment for the benefit of creditors; (d) the
admission in writing by that Person (or, if a non-natural Person, by any of the
President, the Chief Financial Officer or the board of directors or managers of
that Person) that it is unable to pay its debts as they become due, or the
nonpayment of its debts generally as they become due; or (e) the board of
directors, managers, members or partners, as the case may be, of that Person
taking any action in furtherance of any of the foregoing.

 

“Additional Purchased Mortgage Loans” means Mortgage Loans provided by Seller to
Buyer pursuant to Paragraph 4(a).

 

“Adjusted LIBOR Rate” has the meaning set forth in the Side Letter.

 

“Adjusted Tangible Net Worth” means, with respect to Seller and its Subsidiaries
on a consolidated basis at any date, an amount equal to (i) the Tangible Net
Worth of Seller and its Subsidiaries on a consolidated basis at such date, plus
(ii) the lesser of (A) one percent (1%) of the unpaid principal balances of all
Mortgage Loans at such date for which Seller and its Subsidiaries owns the
Servicing Rights and (B) the capitalized value of Seller’s and its Subsidiaries’
Servicing Rights, plus (iii) the unpaid principal amount of all Qualified
Subordinated Debt of Seller and its Subsidiaries at such date, minus (iv) an
amount equal to 50% of the net book value of Mortgage Loans held by Seller for
investment purposes at such date, minus (v)  an amount equal to 50% of the net
book value of net REO Property held by Seller at such date, minus (vi) an amount
equal to 50% of the net book value of other illiquid investments held by Seller
at such date.

 

“Affiliate” means, as to a specified Person, any other Person (a) that directly
or indirectly through one or more intermediaries controls, is controlled by or
is under common control with the specified Person; (b) that is a director,
manager, trustee, general partner or executive officer of the specified Person
or serves in a similar capacity in respect of the specified Person; (c) that,
directly or indirectly through one or more intermediaries, is the beneficial
owner of ten percent (10%) or more of any class of equity securities of the
specified Person; or (d) of which the specified Person is directly or indirectly
the owner of ten percent (10%) or more of any class of equity securities (or
equivalent equity interests).

 

“Agency” (and, with respect to two or more of the following, “Agencies”) means
FHA, Fannie Mae, Ginnie Mae, Freddie Mac or VA.

 

“Agency Guidelines” means those requirements, standards and procedures which may
be adopted by the Agencies from time to time with respect to their purchase or
guaranty of residential mortgage loans, which requirements govern the Agencies’
willingness to purchase or guaranty such loans.

 

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“Aggregate Purchase Price” means, at any time, the sum of the Purchase Prices
paid by Buyer for all Purchased Mortgage Loans that are subject to Transactions
outstanding at that time.

 

“Agreement” means this Master Repurchase Agreement dated as of the date hereof,
between Seller and Buyer (including any supplemental terms or conditions
contained in the Exhibits hereto and the Side Letter), as the same shall be
amended, restated, supplemented or otherwise modified from time to time.

 

“Approved Takeout Investor” means any of (i) Fannie Mae, Freddie Mac and any of
the other entities listed on Schedule I, as such schedule is updated from time
to time by Buyer, in its sole discretion, with written notice to Seller;
(ii) CL, or (iii) an entity which is acceptable to Buyer, as notified to Seller
in writing by Buyer; provided, however, that, notwithstanding the foregoing, any
entity described in the foregoing clauses (i) through (iii) that fails to
perform any of its material obligations under its Takeout Agreement shall cease
to be an Approved Takeout Investor upon such failure.

 

“Available Warehouse Facilities” means, at any time, the aggregate amount of
used and unused available warehouse lines of credit, purchase facilities,
repurchase facilities and off-balance sheet funding facilities (whether
committed or uncommitted) available to Seller at such time.

 

“Bailee Letter” means a bailee letter in the form attached hereto as Exhibit J
or such other form as is satisfactory to Buyer in its sole discretion.

 

“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C.
Paragraph 101 et seq.), as amended by the Bankruptcy Reform Act and as further
amended from time to time, or any successor statute.

 

“Bankruptcy Reform Act” means the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005, effective as of October 17, 2005.

 

“Business Day” means a day other than a Saturday or Sunday when (i) banks in
Dallas, Texas, Houston, Texas and New York, New York are generally open for
commercial banking business and (ii) federal funds wire transfers can be made.

 

“Cash Equivalents” means any of the following: (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within three (3) months or less after the
date of the applicable financial statement reporting such amounts; and
(b) certificates of deposit, time deposits or Eurodollar time deposits having
maturities of three (3) months or less after the date of the applicable
financial statement reporting such amounts, or overnight bank deposits, issued
by any commercial bank organized under the laws of the United States or any
state thereof having combined capital and surplus of not less than $500,000,000
and rated at least A- by S&P or A3 by Moody’s.

 

“Cash Pledge Account”  means the internal demand deposit account held at JPM
Chase for the benefit of Buyer, and styled as follows:

 

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JPMorgan Chase Bank, N.A. Secured Party

Cash Pledge Account for Home Loan Center, Inc.

 

“Change in Control” means either of the following events (a) 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, as amended) of outstanding shares of
voting stock (or equivalent equity interests) of Seller or any Guarantor at any
time if after giving effect to such acquisition such Person or Persons owns
fifty percent (50%) or more of such outstanding voting stock (or equivalent
equity interests) or (b) the Parent shall for any reason cease to own and
control, directly or indirectly, all of the outstanding equity interests of
Seller.

 

“Change in Requirement of Law” means (a) the adoption of a Requirement of Law
after the date of this Agreement, (b) any change in a Requirement of Law or
(c) compliance by Buyer (or by any applicable lending office of Buyer) with any
Requirement of Law made or issued after the date of this Agreement.

 

“CL” means JPM Chase, operating through its unincorporated division commonly
known as its Correspondent Lending group.

 

“CL Loan” means an Eligible Mortgage Loan for which CL is the Approved Takeout
Investor.

 

“CMWF Web” means the website maintained by Buyer and used by Seller and Buyer to
administer the Transactions, the notices and reporting requirements contemplated
by the Transaction Documents and other related arrangements.

 

“Completed Repurchase Advice” means with respect to any Purchased Mortgage Loan,
receipt by Buyer of:

 

(i) funds into the Funding Account in an amount equal to or greater than (x) the
Repurchase Price of such Purchased Mortgage Loan minus (y) any unpaid Price
Differential to be paid by Seller on the next Remittance Date;

 

(ii) in the event that the funds described in clause (i) above are less than an
amount equal to (x) the Repurchase Price of such Purchased Mortgage Loan minus
(y) any unpaid Price Differential to be paid by Seller on the next Remittance
Date, confirmation that funds in an amount equal to such deficiency are on
deposit in the Operating Account and available for payment to Buyer after taking
into account all other payments required to be made by Seller out of funds on
deposit in the Operating Account;

 

(iii) confirmation from the related Approved Takeout Investor that the funds
received in the Funding Account are for the purchase of that Purchased Mortgage
Loan; and

 

(iv) an updated Loan Purchase Detail from Seller showing the removal of that
Purchased Mortgage Loan from the list of Purchased Mortgage Loans subject to the
outstanding Transactions under this Agreement.

 

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“Compliance Certificate” means a compliance certificate substantially in the
form of Exhibit C, completed, executed and submitted by the chief financial
officer of Seller.

 

“Confirmation” means a confirmation substantially in the form attached hereto as
Exhibit A and delivered pursuant to Paragraph 3.

 

“Conventional Conforming Loan” means a Mortgage Loan which conforms to Agency
Guidelines.  The term Conventional Conforming Loan shall not include a Mortgage
Loan which is a Government Loan.

 

“Cooperative Corporation” means with respect to any Cooperative Loan, the
cooperative apartment corporation that holds legal title to the related
Cooperative Project and grants occupancy rights to units therein to stockholders
through Proprietary Leases or similar arrangements.

 

“Cooperative Loan” means a mortgage loan that is secured by a Lien on and
perfected security interest in Cooperative Shares and the related Proprietary
Lease granting exclusive rights to occupy the related Cooperative Unit in the
building owned by the related Cooperative Corporation.

 

“Cooperative Project” means, with respect to any Cooperative Loan, all real
property and improvements thereto and rights therein and thereto owned by a
Cooperative Corporation including without limitation the land, separate dwelling
units and all common elements, all of which shall be located in any state of the
United States or the District of Columbia.

 

“Cooperative Shares” means, with respect to any Cooperative Loan, the shares of
stock issued by a Cooperative Corporation and allocated to a Cooperative Unit
and represented by a stock certificate.

 

“Cooperative Unit” means, with respect to a Cooperative Loan, a specific unit in
a Cooperative Project.

 

“Credit File” means, with respect to a Mortgage Loan, all of the paper and
documents required to be maintained pursuant to the related Takeout Commitment
or the related Hedging Arrangement, as applicable, and all other papers and
records of whatever kind or description, whether developed or created by Seller
or others, required to Originate, document or service the Mortgage Loan.

 

“Current Assets” means, with respect to any Person at any date, those assets set
forth in the consolidated balance sheet of the Person, prepared in accordance
with GAAP, as current assets, defined as those assets that are now cash or will
be by their terms or disposition converted to cash within one year from the date
of calculation.

 

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

 

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

 

“Debt” means, with respect to any Person, at any date (a) all indebtedness or
other obligations of such Person (and, if applicable, that Person’s
Subsidiaries, on a consolidated basis) which, in accordance with GAAP, would be
included in determining total liabilities as shown on the liabilities side of a
balance sheet of such Person at such date; and (b) all indebtedness or other
obligations of such Person (and, if applicable, that Person’s Subsidiaries, on a
consolidated basis) for borrowed money or for the deferred purchase price of
property or services; provided, however, that, for purposes of this Agreement,
there shall be excluded from Debt at any date loan loss reserves, deferred taxes
arising from capitalized excess service fees, operating leases and Qualified
Subordinated Debt.

 

“Default” means any condition or event that, with the giving of notice or lapse
of time or both, would constitute an Event of Default.

 

“Defaulted Loan” means a Mortgage Loan (i) as to which any payment, escrow
payment, or part thereof, remains unpaid for 30 days or more from the original
due date for such payment (whether or not Seller has allowed any grace period or
extended the due date thereof by any means), (ii) as to which another material
default has occurred and is continuing, including the commencement of
foreclosure proceedings; (iii) as to which an Act of Insolvency has occurred
with respect to the Mortgagor thereof or any cosigner, guarantor, endorser,
surety, assumptor or grantor with respect thereto, or (iv) which, consistent
with Seller’s collection policies, has been or should be written off as
uncollectible in whole or in part.

 

“Defective Mortgage Loan” means a Mortgage Loan that is not an Eligible Mortgage
Loan.

 

“Early Repurchase Date” has the meaning set forth in Paragraph 3(h)(ii).

 

“Electronic Tracking Agreement” means the Electronic Tracking Agreement
substantially dated the date hereof by and among, Buyer, Seller, MERS and
MERSCORP, Inc. (the “Electronic Agent”); as the same shall be amended,
supplemented or otherwise modified from time to time.

 

“Eligible Mortgage Loan” means, on any date of determination, a Mortgage Loan:

 

(I)            FOR WHICH EACH OF THE REPRESENTATIONS AND WARRANTIES SET FORTH ON
EXHIBIT B ARE TRUE AND CORRECT AS OF SUCH DATE OF DETERMINATION;

 

(II)           WHICH IS EITHER A CONVENTIONAL CONFORMING LOAN OR A GOVERNMENT
LOAN;

 

(III)          WHICH HAS AN ORIGINATION DATE NO MORE THAN THIRTY (30) DAYS PRIOR
TO THE PURCHASE DATE FOR THE INITIAL TRANSACTION TO WHICH THAT MORTGAGE LOAN WAS
SUBJECT;

 

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(IV)          WHICH IS ELIGIBLE FOR SALE TO AN APPROVED TAKEOUT INVESTOR UNDER
ITS TAKEOUT GUIDELINES;

 

(V)           WHICH HAS A SCHEDULED REPURCHASE DATE NOT LATER THAN THIRTY (30)
DAYS AFTER THE PURCHASE DATE FOR THE INITIAL TRANSACTION TO WHICH THAT MORTGAGE
LOAN WAS SUBJECT;

 

(VI)          WHICH DOES NOT HAVE A LOAN-TO-VALUE RATIO IN EXCESS OF 103%, IN
THE CASE OF A GOVERNMENT LOAN, OR 95%, IN THE CASE OF A CONVENTIONAL CONFORMING
LOAN (OR, IN EACH CASE, SUCH OTHER PERCENTAGE DETERMINED BY BUYER IN ITS SOLE
DISCRETION AND SPECIFIED IN A WRITTEN NOTICE FROM BUYER TO SELLER FROM TIME TO
TIME) AND, IF ITS LOAN-TO-VALUE RATIO IS IN EXCESS OF 80% (OR SUCH OTHER
PERCENTAGE AS MAY BE DETERMINED BY BUYER IN ITS SOLE DISCRETION AND SPECIFIED IN
A WRITTEN NOTICE FROM BUYER TO SELLER FROM TIME TO TIME), IT HAS PRIVATE
MORTGAGE INSURANCE IN AN AMOUNT REQUIRED BY THE APPLICABLE AGENCY GUIDELINES,
UNLESS PURSUANT TO AGENCY GUIDELINES IN EXISTENCE AT THE TIME SUCH MORTGAGE LOAN
WAS ORIGINATED, PRIVATE MORTGAGE INSURANCE IS NOT REQUIRED FOR SUCH MORTGAGE
LOAN;

 

(VII)         WHICH, IF A GOVERNMENT LOAN, THE RELATED MORTGAGOR HAS A FICO
SCORE OF AT LEAST 620 (OR SUCH OTHER MINIMUM FICO SCORE AS MAY BE DETERMINED BY
BUYER IN ITS SOLE DISCRETION AND SPECIFIED IN A WRITTEN NOTICE FROM BUYER TO
SELLER FROM TIME TO TIME);

 

(VIII)        WHICH, IF A CONVENTIONAL CONFORMING LOAN, THE RELATED MORTGAGOR
HAS A FICO SCORE OF AT LEAST 620 (OR SUCH OTHER MINIMUM FICO SCORE AS MAY BE
DETERMINED BY BUYER IN ITS SOLE DISCRETION AND SPECIFIED IN A WRITTEN NOTICE
FROM BUYER TO SELLER FROM TIME TO TIME);

 

(IX)           FOR WHICH A COMPLETE LOAN FILE HAS BEEN DELIVERED TO BUYER, OR,
IN THE CASE OF A WET LOAN, FOR WHICH THE ITEMS LISTED IN ITEMS (I) THROUGH
(IV) OF THE DEFINITION OF LOAN FILE HAVE BEEN DELIVERED TO BUYER;

 

(X)            FOR WHICH, IF A WET LOAN ON THE APPLICABLE PURCHASE DATE, ALL
APPLICABLE ITEMS LISTED IN ITEMS (V) THROUGH (XII) OF THE DEFINITION OF LOAN
FILE HAVE BEEN DELIVERED TO BUYER AT OR PRIOR TO ITS WET FUNDING DEADLINE;

 

(XI)           WHICH, IF A WET LOAN, ITS PURCHASE PRICE, WHEN ADDED TO THE SUM
OF THE PURCHASE PRICES OF ALL OTHER WET LOANS THAT ARE THEN SUBJECT TO
TRANSACTIONS, IS LESS THAN OR EQUAL TO (I) 50% (OR SUCH OTHER PERCENTAGE AS MAY
BE DETERMINED BY BUYER IN ITS SOLE DISCRETION AND SPECIFIED IN A WRITTEN NOTICE
FROM BUYER TO SELLER FROM TIME TO TIME) OF THE FACILITY AMOUNT ON ANY DAY THAT
IS ONE OF THE FIRST FIVE (5) OR THE LAST FIVE (5) BUSINESS DAYS OF ANY CALENDAR
MONTH OR (II) 30% (OR SUCH OTHER PERCENTAGE AS MAY BE DETERMINED BY BUYER IN ITS
SOLE DISCRETION AND SPECIFIED IN A WRITTEN NOTICE FROM BUYER TO SELLER FROM TIME
TO TIME) OF THE FACILITY AMOUNT ON ANY OTHER DAY;

 

(XII)          WHICH, IF A GOVERNMENT LOAN, ITS PURCHASE PRICE, WHEN ADDED TO
THE SUM OF THE PURCHASE PRICES OF ALL OTHER GOVERNMENT LOANS THAT ARE THEN
SUBJECT TO TRANSACTIONS, IS LESS THAN OR EQUAL TO 50% (OR SUCH OTHER PERCENTAGE
AS MAY BE DETERMINED BY BUYER IN ITS SOLE DISCRETION AND SPECIFIED IN A WRITTEN
NOTICE FROM BUYER TO SELLER FROM TIME TO TIME) OF THE FACILITY AMOUNT;

 

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(XIII)         FOR WHICH, IF NOT A CL LOAN, BUYER HAS APPROVED THE UNDERWRITING,
THE TAKEOUT COMMITMENT OR HEDGING ARRANGEMENT, AS APPLICABLE, THE APPRAISAL AND
OTHER RELATED INFORMATION;

 

(XIV)        WHICH, IF SUBJECT TO A TAKEOUT COMMITMENT, IS NOT (A) SUBJECT TO A
TAKEOUT AGREEMENT WITH RESPECT TO WHICH SELLER IS IN DEFAULT, OR (B) REJECTED OR
EXCLUDED FOR ANY REASON (OTHER THAN DEFAULT BY BUYER) FROM THE RELATED TAKEOUT
COMMITMENT BY THE APPROVED TAKEOUT INVESTOR;

 

(XV)         WHICH, IF SUBJECT TO A HEDGING ARRANGEMENT, IS NOT (A) SUBJECT TO A
HEDGING ARRANGEMENT WITH RESPECT TO WHICH SELLER IS IN DEFAULT, OR (B) REJECTED
OR EXCLUDED FOR ANY REASON (OTHER THAN DEFAULT BY BUYER) FROM THE RELATED
HEDGING ARRANGEMENT BY THE PERSON WITH WHOM SUCH HEDGING ARRANGEMENT IS
MAINTAINED;

 

(XVI)        WHICH IS NOT A MORTGAGE LOAN THAT SELLER HAS FAILED TO REPURCHASE
WHEN REQUIRED BY THE TERMS OF THIS AGREEMENT;

 

(XVII)       FOR WHICH, IF SUBJECT TO A TAKEOUT COMMITMENT, THE RELATED TAKEOUT
COMMITMENT HAS NOT EXPIRED OR BEEN TERMINATED OR CANCELLED BY THE APPROVED
TAKEOUT INVESTOR;

 

(XVIII)      FOR WHICH, IF SUBJECT TO A HEDGING ARRANGEMENT, THE RELATED HEDGING
ARRANGEMENT HAS NOT EXPIRED OR BEEN TERMINATED OR CANCELLED BY THE PERSON WITH
WHOM SUCH HEDGING ARRANGEMENT IS MAINTAINED;

 

(XIX)         FOR WHICH THE RELATED MORTGAGE NOTE HAS NOT BEEN OUT OF THE
POSSESSION OF BUYER PURSUANT TO A TRUST RELEASE LETTER FOR MORE THAN FIVE
(5) BUSINESS DAYS AFTER THE DATE OF THAT TRUST RELEASE LETTER;

 

(XX)          FOR WHICH NEITHER THE RELATED MORTGAGE NOTE NOR THE MORTGAGE HAS
BEEN OUT OF THE POSSESSION OF BUYER PURSUANT TO A BAILEE LETTER FOR MORE THAN
THE NUMBER OF DAYS SPECIFIED IN SUCH BAILEE LETTER; AND

 

(XXI)         WHICH IS NOT A DEFAULTED LOAN.

 

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

 

“Event of Default” has the meaning set forth in Paragraph 12.

 

“Facility Amount” has the meaning set forth in the Side Letter.

 

“Fannie Mae” means the Federal National Mortgage Association or any successor.

 

“FDIC” means the Federal Deposit Insurance Corporation or any successor.

 

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“FHA” means the Federal Housing Administration, which is a sub-division of HUD,
or any successor.  The term “FHA” is used interchangeably in this Agreement with
the term “HUD”.

 

“FICO Score” means, with respect to any Mortgagor, the statistical credit score
prepared by Fair Isaac Corporation, Experian Information Solutions, Inc.,
TransUnion LLC or such other Person as may be approved in writing by Buyer in
its sole discretion.

 

“Financial Institution” means JPM Chase in its capacity of the bank at which the
Accounts are held.

 

“Freddie Mac” means the Federal Home Loan Mortgage Corporation or any successor.

 

“Funding Account” means the internal demand deposit account held at JPM Chase
for the benefit of Buyer, and styled as follows:

 

JPMorgan Chase Bank, N.A. Secured Party

Funding Account for Home Loan Center, Inc.

 

“GAAP” means generally accepted accounting principles consistently applied in
the United States.

 

“Ginnie Mae” means the Government National Mortgage Association or any
successor.

 

“GLB Act” means the Gramm-Leach Bliley Act of 1999 (Public Law 106-102, 113 Stat
1338), as it may be amended from time to time.

 

“Government Loan” means a Mortgage Loan which is insured by the FHA or
guaranteed by the Department of Veterans Affairs.  The term Government Loan
shall not include any Mortgage Loan which is a Conventional Conforming Loan.

 

“Governmental Authority” means and includes the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, central
bank or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government,
any governmental or quasi-governmental department, commission, board, bureau or
instrumentality, any court, tribunal or arbitration panel, and, with respect to
any Person, any private body having regulatory jurisdiction over any Person or
its business or assets (including any insurance company or underwriter through
whom that Person has obtained insurance coverage).

 

“Guarantors” means each of Tree.com, Inc., Lending Tree Holdings Corp. and
Lending Tree, LLC, and any Person who hereafter executes a guaranty to support
the obligations of Seller under this Agreement and the other Transaction
Documents.

 

“Guaranty” means each guaranty dated the date hereof, executed by each Guarantor
in favor of Buyer or any other guaranty executed and delivered to Buyer by a
Guarantor, in each

 

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case, as the same may be amended, restated, supplemented or otherwise modified
from time to time.

 

“Hedging Arrangement” means any forward sales contract, forward trade contract,
interest rate swap agreement, interest rate cap agreement, or other contract
pursuant to which Seller has protected itself from the consequences of a loss in
the value of a Mortgage Loan or its portfolio of Mortgage Loans because of
changes in interest rates or in the market value of mortgage loan assets.

 

“HLC Escrow” means HLC Escrow and Settlement Services, Inc., a California
corporation.

 

“HUD” means the U.S. Department of Housing and Urban Development or any
successor department or agency.

 

“Income” means, with respect to any Purchased Mortgage Loan, (i) all payments of
principal, payments of interest, proceeds of Takeout Commitments, proceeds of
Hedging Arrangements, cash collections, dividends, sale or insurance proceeds
and other cash proceeds received relating to the Purchased Mortgage Loan and
other Mortgage Assets, (ii) any other payments or proceeds received in relation
to the Purchased Mortgage Loan and other Mortgage Assets (including, without
limitation, any liquidation or foreclosure proceeds with respect to the
Purchased Mortgage Loan and payments under any guarantees relating to the
Purchased Mortgage Loan), (iii) all escrow withholds and escrow payments for
Property Charges and (iv) all other “proceeds” as defined in Section 9-102(64)
of the UCC.

 

“Indemnified Party” has the meaning set forth in Paragraph 16(b).

 

“Insured Closing Letter” means a letter of indemnification from a title insurer
addressed to Seller and/or Buyer, with coverage that is customarily acceptable
to Persons engaged in the Origination of mortgage loans, identifying the
Settlement Agent covered thereby and indemnifying Seller and/or Buyer against
losses incurred due to malfeasance or fraud by the Settlement Agent or the
failure of the Settlement Agent to follow the specific closing instructions
specified by Buyer in the escrow letter with respect to the closing of the
Mortgage Loan.  The Insured Closing Letter shall be either with respect to the
individual Mortgage Loan being purchased pursuant hereto or a blanket Insured
Closing Letter which covers closings conducted by the Settlement Agent in the
jurisdiction in which the closing of such Mortgage Loan takes place.

 

“Interim Servicing Term” has the meaning set forth in Paragraph 13(a).

 

“IRC” means the Internal Revenue Code of 1986, as amended from time to time and
any successor statute.

 

“JPM Chase” means JPMorgan Chase Bank, N.A., a national banking association, in
its individual capacity, and its successors and assigns.

 

“Last Endorsee” means with respect to each Mortgage Loan, the last Person to
whom such Mortgage Loan was assigned or the related Mortgage Note was endorsed,
as applicable.

 

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“Leverage Ratio” means that ratio of a Person’s Debt (including off balance
sheet financings) to its Adjusted Tangible Net Worth.

 

“Lien” means any security interest, mortgage, deed of trust, charge, pledge,
hypothecation, assignment, deposit arrangement, equity, encumbrance, lien
(statutory or other), preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing.

 

“Liquidity” means, at any time, Seller’s unencumbered and unrestricted cash and
Cash Equivalents (including the balance on deposit in the Cash Pledge Account,
but excluding any restricted cash or cash pledged to third parties) at such time
plus, with respect to any Purchased Mortgage Loans subject to this Agreement or
other Mortgage Loans subject to similar agreements with other third parties, the
excess, if any, of the maximum Purchase Price (or equivalent term under a
similar agreement) available to Seller pursuant to the terms hereof (or thereof)
for such Purchased Mortgage Loans (or such other Mortgage Loans) over the
aggregate outstanding Purchase Price (or equivalent term) for such Purchased
Mortgage Loans (or such other Mortgage Loans) at such time.

 

“Litigation” means, as to any Person, any action, lawsuit, investigation, claim,
proceeding, judgment, order, decree or resolution pending against such Person or
the business, operations, properties or assets of such Person before, or by, any
Governmental Authority.

 

“Loan File” means, with respect to each Mortgage Loan, the following documents:

 

(I)            IF A WET LOAN, A FULLY EXECUTED INSURED CLOSING LETTER FROM THE
RELATED SETTLEMENT AGENT INVOLVED IN THE WET FUNDING OF THAT MORTGAGE LOAN;

 

(II)           IF A GOVERNMENT LOAN, A VALID ELIGIBILITY CERTIFICATION FROM VA
OR FHA, AS APPLICABLE, OR SUCH OTHER DOCUMENTATION AS MAY BE REQUIRED BY BUYER
IN ITS SOLE DISCRETION AND SPECIFIED IN A WRITTEN NOTICE FROM BUYER TO SELLER
FROM TIME TO TIME, WITH RESPECT TO SUCH PURCHASED MORTGAGE LOAN;

 

(III)          IF A CONVENTIONAL CONFORMING LOAN, A VALID ELIGIBILITY
CERTIFICATION FROM FANNIE MAE OR FREDDIE MAC, AS APPLICABLE, OR SUCH OTHER
DOCUMENTATION AS MAY BE REQUIRED BY BUYER IN ITS SOLE DISCRETION AND SPECIFIED
IN A WRITTEN NOTICE FROM BUYER TO SELLER FROM TIME TO TIME, WITH RESPECT TO SUCH
MORTGAGE LOAN;

 

(IV)          SUCH OTHER DOCUMENTS REQUIRED BY BUYER IN ITS SOLE DISCRETION;

 

(V)           THE ORIGINAL MORTGAGE NOTE, ENDORSED IN BLANK WITHOUT RECOURSE BY
THE LAST ENDORSEE THEREOF, TOGETHER WITH ALL INTERVENING ENDORSEMENTS SHOWING AN
UNBROKEN CHAIN OF ENDORSEMENT FROM THE ORIGINATOR OF SUCH MORTGAGE LOAN TO THE
LAST ENDORSEE, OR, IF THE ORIGINAL HAS BEEN LOST, A LOST NOTE AFFIDAVIT IN FORM
AND SUBSTANCE ACCEPTABLE TO BUYER AND EXECUTED BY THE LAST ENDORSEE;

 

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(VI)          THE ORIGINAL RECORDED MORTGAGE, OR, IF THE ORIGINAL HAS BEEN LOST
OR IF SUCH MORTGAGE IS IN THE PROCESS OF BEING RECORDED, A COPY OF THE ORIGINAL
MORTGAGE TOGETHER WITH AN OFFICER’S CERTIFICATE (WHICH MAY BE INCLUDED ON THE
FACE OF SUCH COPY) CERTIFYING (X) THAT SUCH COPY IS A TRUE, CORRECT AND COMPLETE
COPY AND (Y) THAT SUCH MORTGAGE HAS BEEN TRANSMITTED TO THE APPROPRIATE
RECORDING OFFICE FOR RECORDATION;

 

(VII)         THE ORIGINALS OF ALL ASSUMPTION, MODIFICATION, CONSOLIDATION,
SUBSTITUTION AND EXTENSION AGREEMENTS, IF ANY, WITH EVIDENCE OF RECORDATION
THEREON, OR COPIES OF SUCH ORIGINAL AGREEMENTS TOGETHER WITH AN OFFICER’S
CERTIFICATE CERTIFYING (X) THAT SUCH COPY IS A TRUE, CORRECT AND COMPLETE COPY
AND (Y) THAT SUCH AGREEMENTS HAVE BEEN TRANSMITTED TO THE APPROPRIATE RECORDING
OFFICE FOR RECORDATION;

 

(VIII)        ALL GUARANTEES, SUPPORTING OBLIGATIONS AND COLLATERAL, IF ANY,
RECEIVED WITH RESPECT TO, OR SUPPORTING REPAYMENT OF, SUCH PURCHASED MORTGAGE
LOAN;

 

(IX)           EVIDENCE SATISFACTORY TO BUYER THAT EACH MORTGAGE LOAN SUBJECT TO
SUCH TRANSACTION IS A MERS DESIGNATED MORTGAGE LOAN AND BUYER IS DESIGNATED AS
“INTERIM FUNDER” ON THE MERS SYSTEM WITH RESPECT TO EACH SUCH MORTGAGE LOAN;

 

(X)            IF, AT ANY POINT IN THE FUTURE, BUYER SO DESIGNATES, BY GIVING AT
LEAST TEN (10) BUSINESS DAYS’ WRITTEN NOTICE TO A SELLER, THAT SELLERS WILL, ON
A GOING FORWARD BASIS, BE RESPONSIBLE FOR GIVING THE SAME (IT BEING UNDERSTOOD
AND AGREED THAT UNLESS AND UNTIL BUYER GIVES SUCH NOTICE TO A SELLER, BUYER WILL
BE RESPONSIBLE FOR GIVING SUCH NOTICES TO MORTGAGORS AND THIS ITEM WILL NOT BE
INCLUDED IN THE LOAN FILES), A NOTICE LETTER IN FORM AND SUBSTANCE ACCEPTABLE TO
BUYER IN ITS SOLE DISCRETION, DELIVERED BY SELLER ON BEHALF OF BUYER TO
MORTGAGOR SETTING FORTH THE INFORMATION REGARDING BUYER AS THE “NEW CREDITOR”
AND SUCH OTHER INFORMATION REQUIRED BY SECTION 404 OF THE HELPING FAMILIES SAVE
THEIR HOMES ACT OF 2009 (AMENDING THE TRUTH IN LENDING ACT OF 1968 (AS
AMENDED)), AND ACKNOWLEDGED IN WRITING BY MORTGAGOR UNLESS BUYER HAS NOTIFIED
SELLER IN WRITING THAT SUCH NOTICE IS NO LONGER REQUIRED;

 

(XI)           IF A COOPERATIVE LOAN:

 

(A)  THE ORIGINAL COOPERATIVE SHARES WITH ORIGINAL STOCK POWER WITH A SIGNATURE
GUARANTEE IN FORM AND SUBSTANCE SATISFACTORY TO BUYER;

 

(B)  THE ORIGINAL PROPRIETARY LEASE;

 

(C)  THE ORIGINAL RECOGNITION AGREEMENT; AND

 

(D) AN ACKNOWLEDGEMENT COPY OF THE UCC-1 FINANCING STATEMENT FILED IN CONNECTION
WITH THE MORTGAGE RELATED THERETO; AND

 

(XII)          SUCH ADDITIONAL DOCUMENTS REQUIRED BY BUYER IN ITS SOLE
DISCRETION FROM TIME TO TIME BY WRITTEN NOTICE TO SELLER.

 

“Loan Purchase Detail” means a data tape or schedule of information prepared and
transmitted electronically by Seller to Buyer in the format and with such fields
of information set

 

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forth in Exhibit I regarding the Purchased Mortgage Loans, as such required
format or information fields may be changed from time to time by Buyer with
prior written notice to Seller.

 

“Loan-to-Value Ratio” means, for each Mortgage Loan as of the related Purchase
Date, a fraction (expressed as a percentage) having as its numerator the
original principal amount of the Mortgage Note and as its denominator the
appraised value of the related Mortgaged Property of such Mortgage Loan
indicated in the appraisal obtained in connection with the Origination of such
Mortgage Loan.

 

“MANUFACTURED HOME” MEANS A SINGLE-FAMILY HOME CONSTRUCTED AT A FACTORY AND
SHIPPED IN ONE OR MORE SECTIONS TO A HOUSING SITE.

 

“Margin Amount” means at any time with respect to any Purchased Mortgage Loan,
the amount equal to (a) the applicable Margin Percentage for that Purchased
Mortgage Loan at that time multiplied by (b) the Market Value for that Purchased
Mortgage Loan at that time.

 

“Margin Deficit” has the meaning specified in Paragraph 4(a).

 

“Margin Percentage” has the meaning set forth in the Side Letter.

 

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

 

“Market Value” means, at any time with respect to any Purchased Mortgage Loan,
the fair market value of such Purchased Mortgage Loan at such time as determined
by Buyer in its sole good faith discretion.

 

“Material Adverse Effect” means any (i) material adverse effect upon the
validity, performance or enforceability of any Transaction Document,
(ii) material adverse effect upon the assets, business or condition, financial
or otherwise, of Seller (and its Subsidiaries, on a consolidated basis) or any
Guarantor, (iii) material adverse effect upon the ability of Seller to fulfill
its obligations under this Agreement or the ability of any Guarantor to fulfill
its obligations under its Guaranty, or (iv) material adverse effect on the value
or salability of the Purchased Mortgage Loans subject to this Agreement, taken
as a whole.

 

“Maximum Warehouse Capacity Ratio” means, at any time with respect to any
Person, the ratio of (a) Available Warehouse Facilities at such time, to
(b) that Person’s Adjusted Tangible Net Worth at such time.

 

“MERS” means Mortgage Electronic Registration Systems, Inc. and its successors
and assigns.

 

“MERS Designated Mortgage Loan” means a Mortgage Loan that satisfies the
definition of the term “MERS Designated Mortgage Loan” contained in the
Electronic Tracking Agreement.

 

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“MERS® System” has the meaning given that term in the Electronic Tracking
Agreement.

 

“MIN” means the eighteen digit MERS Identification Number permanently assigned
to each MERS Designated Mortgage Loan.

 

“MOM Loan” means a MERS Designated Mortgage Loan that was registered on the
MERS® System at the time of its Origination and for which MERS appears as the
record mortgagee or beneficiary on the related Mortgage.

 

“Moody’s” means Moody’s Investors Service and any successor.

 

“Mortgage” means a mortgage, deed of trust or other security instrument creating
a Lien on the Mortgaged Property.

 

“Mortgage Assets” has the meaning specified in Paragraph 6.

 

“Mortgage Loan” means a whole mortgage loan or Cooperative Loan which is secured
by a Mortgage on residential real estate, and shall include all Servicing Rights
with respect thereto.

 

“Mortgage Loan Documents” means the Mortgage Note, the Mortgage and all other
documents evidencing, securing, guaranteeing or otherwise related to a Mortgage
Loan.

 

“Mortgage Note” means the original, executed promissory note or other primary
evidence of indebtedness of a Mortgagor on a Mortgage Loan.

 

“Mortgaged Property” means the residential real estate securing the Mortgage
Note, which shall be either (i) in the case of a Mortgage Loan that is not a
Cooperative Loan, a fee simple estate in the real property located in any state
of the United States (including, without limitation, all buildings, improvements
and fixtures thereon and all additions, alterations and replacements made at any
time with respect to the foregoing) purchased with the proceeds of the Mortgage
Loan or (ii) in the case of a Cooperative Loan, the Proprietary Lease and
related Cooperative Shares.

 

“Mortgagor” means the obligor on a Mortgage Note or the grantor or mortgagor on
a Mortgage, as the context requires.

 

“Officer’s Certificate” means a certificate signed by a Responsible Officer of
Seller and delivered to Buyer.

 

“Operating Account” means the internal demand deposit account held at JPM Chase
for the benefit of Buyer, and styled as follows:

 

JPMorgan Chase Bank, N.A. Secured Party

Operating Account for Home Loan Center, Inc.

 

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“Originate” or “Origination” means a Person’s actions in taking applications
for, underwriting and closing Mortgage Loans.

 

“Origination Date” means the date of the Mortgage Note and the related Mortgage.

 

“Outstanding Principal Balance” of a Mortgage Loan means, at any time, the then
unpaid outstanding principal balance of such Mortgage Loan.

 

“Parent” means Tree.com, Inc.

 

“Party” means each of Buyer and Seller.

 

“Permitted Dividend” means (a) as to any taxable period of Seller during
which Seller makes an S corporation election with the Internal Revenue Service,
an annual or quarterly distribution necessary to enable each shareholder
of Seller to pay federal or state income taxes attributable to such shareholder
resulting solely from the allocated share of income of Seller for such period
(“Permitted Tax Distributions”) and (b) a regular cash dividend declared by
Seller and paid to its shareholders, provided that such regular cash dividends
do not exceed, in the aggregate, during any fiscal year one hundred percent
(100%) of Seller’s net income for such fiscal year after payment of the
Permitted Tax Distributions (as calculated on its annual statement of income).

 

“Person” means an individual, partnership, corporation (including a business
trust), joint-stock company, limited liability company, trust, unincorporated
association, joint venture, any Governmental Authority or other entity.

 

“Post-Origination Period” means the period of time between a Mortgage Loan’s
Origination Date and its subsequent sale to an Approved Takeout Investor.

 

“Price Differential” means with respect to any Transaction hereunder, for each
month (or portion thereof) during which that Transaction is outstanding, the sum
of the following amount for each day during that month (or portion thereof): 
the weighted average of the applicable Pricing Rates for such day multiplied by
the aggregate outstanding Purchase Price on such day divided by 360.  The Price
Differential for each Transaction shall accrue during the period commencing on
(and including) the day on which the Purchase Price is transferred into the
Funding Account (or otherwise paid to Seller) for such Transaction and ending on
(but excluding) the date on which the Repurchase Price is paid.

 

“Pricing Rate” means the per annum percentage rate (or rates) to be applied to
determine the Price Differential, which rate (or rates) shall be determined in
accordance with the Side Letter.

 

“Prime Rate” means the rate of interest per annum announced from time to time by
Buyer as its prime rate.  The Prime Rate is a variable rate and each change in
the Prime Rate is effective from and including the date the change is announced
as being effective.  THE PRIME RATE IS A REFERENCE RATE AND MAY NOT BE BUYER’S
LOWEST RATE.

 

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“Privacy Requirements” means (a) Title V of the GLB Act, (b) federal regulations
implementing such act codified at 12 CFR Parts 40, 216, 332 and 573, (c) the
Interagency Guidelines Establishing Standards For Safeguarding Customer
Information and codified at 12 CFR Parts 30, 208, 211, 225, 263, 308, 364, 568
and 570 and (d) any other applicable federal, state and local laws, rules,
regulations and orders relating to the privacy and security of Seller’s Customer
Information, as such statutes, regulations, guidelines, laws, rules and orders
may be amended from time to time.

 

“Property Charges” means all taxes, fees, assessments, water, sewer and
municipal charges (general or special) and all insurance premiums, leasehold
payments or ground rents.

 

“Proprietary Lease” means the lease on a Cooperative Unit evidencing the
possessory interest of the owner of the Cooperative Shares in such Cooperative
Unit.

 

“Purchase Date” means the date with respect to each Transaction on which the
Mortgage Loans subject to such Transaction are transferred by Seller to Buyer
hereunder; provided, however, that in any case, the Purchase Date shall occur no
later than 30 days after the Origination Date of each related Mortgage Loan.

 

“Purchase Price”  has the meaning set forth in the Side Letter.

 

“Purchased Mortgage Loans” means, with respect to any Transaction, the Mortgage
Loans sold by Seller to Buyer in such Transaction hereunder (each of which sales
shall be on a servicing released basis), including any Additional Purchased
Mortgage Loans delivered pursuant to Paragraph 4(a) and excluding any Purchased
Mortgage Loans repurchased by Seller or transferred to Seller.  Unless the
context shall otherwise require, the term “Purchased Mortgage Loans” shall refer
to all Purchased Mortgage Loans under all Transactions.

 

“Qualified Subordinated Debt” means, with respect to any Person, all unsecured
Debt of such Person, for borrowed money, which is, by its terms or by the terms
of a subordination agreement (which terms shall have been approved by Buyer), in
form and substance satisfactory to Buyer, effectively subordinated in right of
payment to all other present and future obligations and all indebtedness of such
Person, of every kind and character, owed to Buyer and which terms or
subordination agreement, as applicable, include, among other things, standstill
and blockage provisions approved by Buyer, restrictions on amendments without
the consent of Buyer, non-petition provisions and maturity date or dates for any
principal thereof at least 395 days after the date hereof.

 

“Recognition Agreement” means, with respect to a Cooperative Loan, an agreement
among a Cooperative Corporation, a lender and a Mortgagor whereby such parties
(i) acknowledge that such lender may make, or intends to make, such Cooperative
Loan and (ii) make certain agreements with respect to such Cooperative Loan.

 

“Remittance Date” means the 15th day of each month, or if such day is not a
Business Day, the next succeeding Business Day.

 

“REO Property” means a Mortgaged Property acquired by Seller through foreclosure
or deed in lieu of foreclosure.

 

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“Repurchase Date” means, with respect to each Transaction, the date on which
Seller is required to repurchase from Buyer the Purchased Mortgage Loans which
are subject to that Transaction.  The Repurchase Date shall occur (i) for
Transactions terminable on a date certain, on the date that is 30 days after the
related Purchase Date, or such later date as permitted by Buyer in its sole
discretion, (ii) for Transactions to be terminable on demand (as permissible
under this Agreement), the earlier to occur of (a) the date specified in Buyer’s
demand or (b) the date that is 30 days after the related Purchase Date, if no
demand is sooner made, or such later date as permitted by Buyer in its sole
discretion and (iii) for repurchases of Defective Mortgage Loans under Paragraph
3(h), the Early Repurchase Date; provided, however, that in any case, the
Repurchase Date with respect to each Transaction shall occur no later than the
earlier of (1) the date declared by Buyer pursuant to Paragraph 12(b)(i) and
(2) the Termination Date.

 

“Repurchase Price” means, with respect to each Transaction, the price at which
Purchased Mortgage Loans subject to such Transaction are to be resold by Buyer
to Seller upon termination of such Transaction, which will be determined in each
case (including Transactions terminable upon demand) as the sum of the Purchase
Price and the accrued and unpaid Price Differential as of the date of such
termination; provided that such Price Differential may be paid on a day other
than the Repurchase Date in accordance with the terms of this Agreement.

 

“Required Amount” has the meaning set forth in Paragraph 5(b).

 

“Requirement(s) of Law” means any law, treaty, ordinance, decree, requirement,
order, judgment, rule, regulation (or interpretation of any of the foregoing) of
any Governmental Authority having jurisdiction over Buyer, Seller, any
Guarantor, any Approved Takeout Investor or any person with whom any Hedging
Arrangement is maintained, any of their respective Subsidiaries or their
respective properties or any agreement by which any of them is bound.

 

“Rescission” means the Mortgagor’s exercise of any right to rescind the related
Mortgage Note and related documents pursuant to applicable law.

 

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

 

“S&P” means Standard and Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor.

 

“Seller’s Accounts” means each of the Funding Account and the Operating Account.

 

“Seller’s Customer” means any natural person who has applied to Seller for a
financial product or service, has obtained any financial product or service from
Seller or has a Mortgage Loan that is serviced or subserviced by Seller.

 

“Seller’s Customer Information” means any information or records in any form
(written, electronic or otherwise) containing a Seller’s Customer’s personal
information or

 

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identity, including such Seller’s Customer’s name, address, telephone number,
loan number, loan payment history, delinquency status, insurance carrier or
payment information, tax amount or payment information and the fact that such
Seller’s Customer has a relationship with Seller.

 

“Servicing File” means with respect to each Mortgage Loan, all documents
relating to the servicing thereof, which may consist of (i) copies of the
documents contained in the related Credit File and Loan File, as applicable,
(ii) the credit documentation relating to the underwriting and closing of such
Mortgage Loan(s), (iii) copies of all related documents, correspondence, notes
and all other materials of any kind, (iv) copies of computer tapes, proof of
insurance coverage, insurance policies, appraisals, other closing documentation,
payment history records, (v) all other information or materials necessary or
required to board such Mortgage Loan onto the applicable servicing system and
(vi) all other related documents required to be delivered pursuant to any of the
Transaction Documents.

 

“Servicing Records” means all servicing records created and/or maintained by
Seller in its capacity as interim servicer for Buyer with respect to a Purchased
Mortgage Loan, including but not limited to any and all servicing agreements,
files, documents, records, databases, 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 thereof.

 

“Servicing Rights” means all rights and interests of Seller or any other Person,
whether contractual, possessory or otherwise to service, administer and collect
Income with respect to Mortgage Loans, and all rights incidental thereto.

 

“Settlement Agent” means a title company, escrow company or attorney that is
acceptable to Buyer in its sole discretion and that is (i) a division,
subsidiary or licensed agent of a title insurance company reasonably acceptable
to Buyer and (ii) insured against errors and omissions in such amounts and
covering such risks as are at all times customary for its business and with
industry standards, to which the proceeds of any purchase of a Mortgage Loan are
to be wired in accordance with local law and practice in the jurisdiction where
such Mortgage Loan is being Originated.

 

“Shipping Instructions” means the advice in the form of Exhibit D, sent by
Seller to Buyer electronically through the CMWF Web, which instructs Buyer to
send one or more Mortgage Notes and the related Mortgages to an Approved Takeout
Investor.

 

“Side Letter” means the letter agreement, dated as of the date hereof, between
Buyer and Seller, as the same may be amended, restated, supplemented or
otherwise modified from time to time.

 

“Stock Power” means, with respect to a Cooperative Loan, an assignment of the
stock certificate or an assignment of the Cooperative Shares issued by the
Cooperative Corporation.

 

“Subservicer” has the meaning set forth in Paragraph 13(a)(ii).

 

“Subservicer Instruction Letter” means a letter agreement between Seller and
each Subservicer substantially in the form of Exhibit H.

 

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“Subservicing Agreement” has the meaning set forth in Paragraph 13(a)(ii).

 

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

 

“Successor Servicer” has the meaning set forth in Paragraph 13(e).

 

“Takeout Agreement” means an agreement, in form and substance acceptable to
Buyer, between an Approved Takeout Investor and Seller, pursuant to which such
Approved Takeout Investor has committed to purchase from Seller certain of the
Purchased Mortgage Loans, as such agreement may be amended, restated,
supplemented or otherwise modified from time to time with the prior written
consent of Buyer.

 

“Takeout Commitment” means, with respect to each Approved Takeout Investor, the
commitment to purchase a Purchased Mortgage Loan from Seller pursuant to a
Takeout Agreement, and that specifies (a) the type of Purchased Mortgage Loan to
be purchased, (b) a purchase date or purchase deadline date and (c) a purchase
price or the criteria by which the purchase price will be determined.

 

“Takeout Guidelines” means (i) the eligibility requirements established by the
Approved Takeout Investor that must be satisfied by a Mortgage Loan originator
to sell Mortgage Loans to the Approved Takeout Investor and (ii) the
specifications that a Mortgage Loan must meet, and the requirements that it must
satisfy, to qualify for the Approved Takeout Investor’s program of Mortgage Loan
purchases, as such requirements and specifications may be revised, supplemented
or replaced from time to time.

 

“Takeout Value” means, with respect to any Purchased Mortgage Loan subject to a
Takeout Commitment, the price that an Approved Takeout Investor has agreed to
pay Seller for such Purchased Mortgage Loan and, with respect to any Purchased
Mortgage Loan subject to a Hedging Arrangement, the weighted average price of
portfolio hedges or forward trades for such Purchased Mortgage Loan.

 

“Tangible Net Worth” means, without respect to any Person at any date, the sum
of total shareholders’ equity in such Person (including capital stock,
additional paid-in capital and retained earnings, but excluding treasury stock,
if any), on a consolidated basis; provided, however, that, for purposes of this
definition, there shall be excluded from assets the following: the aggregate
book value of all intangible assets of such Person (as determined in accordance
with GAAP), including, without limitation, goodwill, trademarks, trade names,
service marks, copyrights, patents, licenses, franchises, capitalized servicing
rights, excess capitalized servicing rights, each to be determined in accordance
with GAAP consistent with those applied in the preparation of such Person’s
financial statements; advances of loans to shareholders or Affiliates, advances
of loans to employees (unless such advances are against future commissions),
investments in Affiliates, deferred tax assets, assets pledged to secure any
liabilities not included

 

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in the Debt of such Person and any other assets which would be deemed by Buyer,
CL or the Agencies to be unacceptable in calculating tangible net worth.

 

“Tax and Insurance Amount” means, at any time, the amount determined by Buyer
from time to time in its sole discretion with written notice to Seller, as the
amount approximately equal to the escrowed tax and insurance payments made by
the Mortgagors with respect to the Purchased Mortgage Loans, at that time.

 

“Termination Date” means the earliest of (i) that Business Day which Seller
designates as the Termination Date by written notice to Buyer at least thirty
(30) days prior to such date, (ii) the date of declaration of the Termination
Date pursuant to Paragraph 12(c), (iii) the Business Day which Buyer designates
as the Termination Date pursuant to Paragraph 11(aa), and (iv) 364 days after
the date hereof.

 

“Third Party Originator” means any Person, other than a permanent employee of
Seller, who engages in the solicitation, procurement, packaging, processing or
performing of any other Origination function with regard to a Mortgage Loan.

 

“TPO Loan” means a Mortgage Loan which has been solicited, procured, packaged,
processed or otherwise Originated by a Third Party Originator.

 

“Transaction” has the meaning set forth in Paragraph 1 of this Agreement.

 

“Transaction Documents” means this Agreement, each Confirmation, each Bailee
Letter, each Trust Release Letter, the Side Letter, the Electronic Tracking
Agreement, each Takeout Agreement, each Takeout Commitment, each Insured Closing
Letter, each Guaranty and each other agreement, document or instrument executed
or delivered in connection therewith, in each case as amended, restated,
supplemented or otherwise modified from time to time.

 

“Trust Release Letter” means a letter in substantially the form of Exhibit L,
appropriately completed and authenticated by Seller, or such other form as may
be approved by Buyer in writing in its sole discretion.

 

“UCC” means the Uniform Commercial Code, as amended from time to time, as in
effect in the relevant jurisdiction.

 

“VA” means the U.S. Department of Veterans Affairs or any successor department
or agency.

 

“Wet Funding” means the purchase of a Mortgage Loan that is Originated by Seller
on the Purchase Date under escrow arrangements satisfactory to Buyer pursuant to
which Seller is permitted to use the Purchase Price proceeds to close the
Mortgage Loan prior to Buyer’s receipt of the complete Loan File.

 

“Wet Funding Deadline” means, with respect to any Wet Loan, the fifth (5th)
Business Day after the Origination Date for such Wet Loan, or such later
Business Day as Buyer, in its sole discretion, may specify from time to time.

 

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“Wet Loan” means a Mortgage Loan for which the completed Loan File was not
delivered to Buyer prior to funding.

 

3.                                      INITIATION; CONFIRMATIONS; TERMINATION

 

(A)                                 INITIATION.  ANY AGREEMENT TO ENTER INTO A
TRANSACTION SHALL BE MADE IN WRITING AT THE INITIATION OF SELLER THROUGH THE
CMWF WEB PRIOR TO THE TERMINATION DATE.  IN THE EVENT THAT SELLER DESIRES TO
ENTER INTO A TRANSACTION HEREUNDER, SELLER SHALL DELIVER TO BUYER NO EARLIER
THAN THREE (3) BUSINESS DAYS PRIOR TO, AND NO LATER THAN (X) IF NO FRAUD
DETECTION REPORT IS SUBMITTED WITH A REQUEST, 2:30 P.M., HOUSTON, TEXAS TIME, OR
(Y) IF A FRAUD DETECTION REPORT FROM A THIRD-PARTY MORTGAGE FRAUD DETECTION
SERVICE ACCEPTABLE TO BUYER IS SUBMITTED WITH A REQUEST, 3:00 P.M., HOUSTON,
TEXAS TIME, ON, THE DATE OF THE PROPOSED PURCHASE DATE, A REQUEST FOR BUYER TO
PURCHASE AN AMOUNT OF ELIGIBLE MORTGAGE LOANS ON SUCH PURCHASE DATE; PROVIDED
THAT BUYER MAY OBTAIN ADDITIONAL FRAUD DETECTION REPORTS WITH RESPECT TO
MORTGAGE LOANS IN RESPECT OF WHICH SELLER SUBMITS FRAUD DETECTION REPORTS.  ALL
SUCH PURCHASES SHALL BE ON A SERVICING RELEASED BASIS AND SHALL INCLUDE THE
SERVICING RIGHTS WITH RESPECT TO SUCH ELIGIBLE MORTGAGE LOAN.  SUCH REQUEST
SHALL STATE THE PURCHASE PRICE AND SHALL INCLUDE THE CONFIRMATION RELATED TO THE
PROPOSED TRANSACTION.

 

(B)                                 PURCHASE BY BUYER.  SUBJECT TO THE TERMS OF
THE SIDE LETTER AND SATISFACTION OF THE CONDITIONS PRECEDENT SET FORTH IN THIS
PARAGRAPH 3 AND IN PARAGRAPH 7, ON THE REQUESTED PURCHASE DATE FOR EACH
TRANSACTION, BUYER SHALL TRANSFER TO SELLER AN AMOUNT EQUAL TO THE PURCHASE
PRICE FOR PURCHASE OF THE ELIGIBLE MORTGAGE LOANS THAT IS THE SUBJECT OF SUCH
TRANSACTION ON THAT PURCHASE DATE, LESS ANY AMOUNTS TO BE NETTED AGAINST SUCH
PURCHASE PRICE.  THE TRANSFER OF FUNDS TO THE SETTLEMENT AGENT TO BE USED TO
FUND THE MORTGAGE LOAN, AND IF APPLICABLE, THE NETTING OF AMOUNTS FOR VALUE, ON
THE PURCHASE DATE FOR ANY TRANSACTION WILL CONSTITUTE FULL PAYMENT BY BUYER OF
THE PURCHASE PRICE FOR SUCH TRANSACTION. WITHIN FIVE (5) DAYS FOLLOWING THE
PURCHASE DATE, SELLER SHALL (I) TAKE SUCH STEPS AS ARE NECESSARY AND APPROPRIATE
TO EFFECT THE TRANSFER OF THE PURCHASED MORTGAGE LOAN TO BUYER ON THE
MERS® SYSTEM AND (II) IN THE CASE OF A WET FUNDING, DELIVER ALL REMAINING ITEMS
OF THE RELATED LOAN FILE TO BUYER.  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, BUYER SHALL HAVE NO OBLIGATION
TO ENTER INTO ANY TRANSACTION ON OR AFTER THE TERMINATION DATE.

 

(C)                                  CONFIRMATIONS.  THE CONFIRMATION FOR EACH
TRANSACTION SHALL (I) INCLUDE THE LOAN PURCHASE DETAIL WITH RESPECT TO THE
MORTGAGE LOANS SUBJECT TO SUCH TRANSACTION, (II) IDENTIFY BUYER AND SELLER AND
(III) SET FORTH (A) THE PURCHASE DATE, (B) THE PURCHASE PRICE, (C) THE
REPURCHASE DATE, (D) THE PRICING RATE APPLICABLE TO THE TRANSACTION AND (E) ANY
ADDITIONAL TERMS OR CONDITIONS OF THE TRANSACTION MUTUALLY AGREEABLE TO BUYER
AND SELLER.  IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF A CONFIRMATION
AND THIS AGREEMENT, SUCH CONFIRMATION SHALL PREVAIL.

 

(D)                                 FAILED FUNDINGS.  SELLER AGREES TO REPORT TO
BUYER BY FACSIMILE TRANSMISSION OR ELECTRONIC MAIL AS SOON AS PRACTICABLE, BUT
IN NO EVENT LATER THAN ONE (1) BUSINESS DAY AFTER EACH PURCHASE DATE ANY
MORTGAGE LOANS WHICH FAILED TO BE FUNDED TO THE RELATED MORTGAGOR, OTHERWISE
FAILED TO CLOSE FOR ANY REASON OR FAILED TO BE PURCHASED HEREUNDER.  SELLER
FURTHER AGREES TO (I) RETURN, OR CAUSE THE SETTLEMENT AGENT TO RETURN, TO BUYER
THE PORTION OF THE PURCHASE PRICE ALLOCABLE TO SUCH MORTGAGE LOANS AS SOON AS
PRACTICABLE, BUT IN NO EVENT LATER THAN ONE (1) BUSINESS DAY AFTER THE RELATED
PURCHASE DATE, AND (II) INDEMNIFY BUYER FOR ANY LOSS, COST OR

 

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EXPENSE INCURRED BY BUYER AS A RESULT OF THE FAILURE OF SUCH MORTGAGE LOANS TO
CLOSE; PROVIDED THAT SELLER SHALL NOT BE REQUIRED TO INDEMNIFY BUYER FOR ANY
LOSS, COST OR EXPENSE ARISING AS A RESULT OF BUYER’S FAILURE TO FUND THE
PURCHASE PRICE FOR AN ELIGIBLE MORTGAGE LOAN BY THE END OF THE DAY ON THE
RELATED PURCHASE DATE IN ACCORDANCE WITH PARAGRAPH 3(B) IF BUYER IS OBLIGATED TO
SO FUND PURSUANT TO PARAGRAPH 3(B).

 

(E)                                  REPURCHASE REQUIRED.  SELLER SHALL
REPURCHASE PURCHASED MORTGAGE LOANS FROM BUYER ON OR PRIOR TO EACH RELATED
SCHEDULED REPURCHASE DATE.  EACH OBLIGATION TO REPURCHASE EXISTS WITHOUT REGARD
TO ANY PRIOR OR INTERVENING LIQUIDATION OR FORECLOSURE WITH RESPECT TO ANY
PURCHASED MORTGAGE LOAN.  SELLER IS OBLIGATED TO OBTAIN THE PURCHASED MORTGAGE
LOANS FROM BUYER OR ITS DESIGNEE AT SELLER’S EXPENSE ON THE RELATED REPURCHASE
DATE. ON THE REPURCHASE DATE, TERMINATION OF THE TRANSACTION WILL BE EFFECTED BY
RESALE BY BUYER TO SELLER OR ITS DESIGNEE OF THE PURCHASED MORTGAGE LOANS ON A
SERVICING RELEASED BASIS AGAINST SELLER’S SUBMISSION TO BUYER OF A COMPLETED
REPURCHASE ADVICE, ALL IN FORM AND SUBSTANCE SATISFACTORY TO BUYER.  AFTER
RECEIPT OF THE PAYMENT OF THE REPURCHASE PRICE FROM SELLER, BUYER SHALL DELIVER,
OR CAUSE TO BE DELIVERED, TO SELLER ALL MORTGAGE LOAN DOCUMENTS PREVIOUSLY
DELIVERED TO BUYER AND TAKE SUCH STEPS AS ARE NECESSARY AND APPROPRIATE TO
EFFECT THE TRANSFER OF THE PURCHASED MORTGAGE LOAN TO SELLER ON THE
MERS® SYSTEM.

 

(F)                                   REPURCHASE ADVICE.  IF BUYER RECEIVES THE
COMPLETED REPURCHASE ADVICE WITH RESPECT TO A PURCHASED MORTGAGE LOAN AT OR
PRIOR TO 3:00 P.M. HOUSTON, TEXAS TIME, ON ANY BUSINESS DAY, THEN THE REPURCHASE
DATE WILL OCCUR WITH RESPECT TO SUCH PURCHASED MORTGAGE LOAN ON SUCH DAY.  IF
BUYER RECEIVES THE COMPLETED REPURCHASE ADVICE WITH RESPECT TO ANY PURCHASED
MORTGAGE LOAN AFTER 3:00 P.M. HOUSTON, TEXAS TIME, ON ANY BUSINESS DAY, THEN THE
REPURCHASE DATE WILL OCCUR WITH RESPECT TO SUCH PURCHASED MORTGAGE LOAN ON THE
NEXT BUSINESS DAY.  IN CONNECTION WITH ANY REPURCHASE PURSUANT TO A COMPLETED
REPURCHASE ADVICE, BUYER WILL DEBIT THE FUNDING ACCOUNT AND THE OPERATING
ACCOUNT, IF APPLICABLE, FOR THE AMOUNT OF THE REPURCHASE PRICE (LESS ANY AMOUNT
OF PRICE DIFFERENTIAL TO BE PAID ON THE NEXT REMITTANCE DATE).  WITHOUT LIMITING
SELLER’S OBLIGATIONS HEREUNDER, AT ANY TIME AFTER THE OCCURRENCE AND DURING THE
CONTINUANCE OF A DEFAULT OR AN EVENT OF DEFAULT, SELLER SHALL NOT BE PERMITTED
TO REPURCHASE LESS THAN ALL OF THE PURCHASED MORTGAGE LOANS WITHOUT THE PRIOR
WRITTEN CONSENT OF BUYER.

 

(G)                                  RELIANCE.  WITH RESPECT TO ANY TRANSACTION,
BUYER MAY CONCLUSIVELY RELY UPON, AND SHALL INCUR NO LIABILITY TO SELLER IN
ACTING UPON, ANY REQUEST OR OTHER COMMUNICATION THAT BUYER REASONABLY BELIEVES
TO HAVE BEEN GIVEN OR MADE BY A PERSON AUTHORIZED TO ENTER INTO A TRANSACTION ON
SELLER’S BEHALF.

 

(H)                                 DEFECTIVE MORTGAGE LOANS.  (I)  IF, AFTER
BUYER PURCHASES A MORTGAGE LOAN, BUYER DETERMINES OR RECEIVES NOTICE (WHETHER
FROM SELLER OR OTHERWISE) THAT A PURCHASED MORTGAGE LOAN IS (OR HAS BECOME) A
DEFECTIVE MORTGAGE LOAN, BUYER SHALL PROMPTLY NOTIFY SELLER, AND SELLER SHALL
REPURCHASE SUCH PURCHASED MORTGAGE LOAN AT THE REPURCHASE PRICE ON THE EARLY
REPURCHASE DATE (AS SUCH TERM IS DEFINED BELOW).

 

(II)  IF SELLER BECOMES OBLIGATED TO REPURCHASE A MORTGAGE LOAN PURSUANT TO
SUBPARAGRAPH (H)(I) ABOVE, BUYER SHALL PROMPTLY GIVE SELLER NOTICE OF SUCH
REPURCHASE OBLIGATION AND A CALCULATION OF THE REPURCHASE PRICE THEREFOR.  ON
THE SAME DAY SELLER RECEIVES SUCH NOTICE (THE “EARLY REPURCHASE DATE”), SELLER
SHALL REPURCHASE THE DEFECTIVE MORTGAGE LOAN BY MAKING

 

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A PAYMENT TO BUYER OF AN AMOUNT EQUAL TO THE REPURCHASE PRICE, AND SHALL SUBMIT
A COMPLETED REPURCHASE ADVICE.  BUYER IS AUTHORIZED TO CHARGE ANY OF SELLER’S
ACCOUNTS FOR SUCH AMOUNT UNLESS THE PARTIES HAVE AGREED IN WRITING TO A
DIFFERENT METHOD OF PAYMENT AND SELLER HAS PAID SUCH AMOUNT BY SUCH AGREED
METHOD.  IF SELLER’S ACCOUNTS DO NOT CONTAIN SUFFICIENT FUNDS TO PAY IN FULL THE
AMOUNT DUE BUYER UNDER THIS SUBPARAGRAPH, OR IF THE AMOUNT DUE IS NOT PAID BY
ANY APPLICABLE ALTERNATIVE METHOD OF PAYMENT PREVIOUSLY AGREED TO BY THE
PARTIES, SELLER SHALL PROMPTLY DEPOSIT FUNDS IN THE OPERATING ACCOUNT SUFFICIENT
TO PAY SUCH AMOUNT DUE BUYER AND NOTIFY BUYER OF SUCH DEPOSIT.  AFTER RECEIPT OF
THE PAYMENT OF THE REPURCHASE PRICE FROM SELLER, BUYER SHALL DELIVER, OR CAUSE
TO BE DELIVERED, TO SELLER ALL DOCUMENTS FOR THE MORTGAGE LOAN PREVIOUSLY
DELIVERED TO BUYER AND TAKE SUCH STEPS AS ARE NECESSARY AND APPROPRIATE TO
EFFECT THE TRANSFER OF THE MORTGAGE LOAN TO SELLER ON THE MERS® SYSTEM.

 

4.                                      MARGIN MAINTENANCE

 

(A)                                 MARGIN DEFICIT.  IF AT ANY TIME THE SUM OF
THE MARGIN AMOUNTS OF ALL PURCHASED MORTGAGE LOANS IS LESS THAN THE AGGREGATE
PURCHASE PRICE (A “MARGIN DEFICIT”), THEN BUYER, BY NOTICE TO SELLER (A “MARGIN
CALL”), MAY REQUIRE SELLER TO TRANSFER TO BUYER, AT BUYER’S OPTION, EITHER
(X) CASH TO BE APPLIED BY BUYER TO THE PAYMENT OF THE REPURCHASE PRICES OF THE
PURCHASED MORTGAGE LOANS THAT ARE SUBJECT TO THE RELATED TRANSACTIONS,
(Y) ADDITIONAL ELIGIBLE MORTGAGE LOANS REASONABLY ACCEPTABLE TO BUYER
(“ADDITIONAL PURCHASED MORTGAGE LOANS”) OR (Z) A COMBINATION, AS DETERMINED BY
BUYER, OF CASH AND ADDITIONAL PURCHASED MORTGAGE LOANS, SO THAT, IMMEDIATELY
AFTER SUCH TRANSFER(S), THE SUM OF (I) SUCH CASH, IF ANY, SO TRANSFERRED TO
BUYER PLUS (II) THE AGGREGATE OF THE MARGIN AMOUNTS OF ALL PURCHASED MORTGAGE
LOANS FOR ALL TRANSACTIONS OUTSTANDING AT THAT TIME, INCLUDING ANY SUCH
ADDITIONAL PURCHASED MORTGAGE LOANS, WILL BE AT LEAST EQUAL TO THE AGGREGATE
PURCHASE PRICE AT THAT TIME.

 

(b)           Margin Maintenance.  If the notice to be given by Buyer to Seller
under Paragraph (a) above is given at or prior to 10:00 a.m. Houston, Texas time
on a Business Day, Seller shall transfer cash or Additional Purchased Mortgage
Loans to Buyer prior to 5:00 p.m. Houston, Texas time on the date of such
notice, and if such notice is given after 10:00 a.m. Houston, Texas time, Seller
shall transfer cash or Additional Purchased Mortgage Loans prior to 9:30 a.m.
Houston, Texas time on the Business Day following the date of such notice.  All
cash required to be delivered to Buyer pursuant to this Paragraph shall be
deposited by Seller into the Funding Account. Buyer’s election, in its sole and
absolute discretion, not to make a Margin Call at any time there is a Margin
Deficit shall not in any way limit or impair its right to make a Margin Call at
any other time a Margin Deficit exists.

 

(C)                                  MARGIN EXCESS.  IF ON ANY DAY AFTER SELLER
HAS TRANSFERRED CASH OR ADDITIONAL PURCHASED MORTGAGE LOANS TO BUYER PURSUANT TO
PARAGRAPH (B) ABOVE, THE SUM OF (I) THE CASH PAID TO BUYER AND (II) THE
AGGREGATE OF THE MARGIN AMOUNTS OF ALL PURCHASED MORTGAGE LOANS FOR ALL
TRANSACTIONS AT THAT TIME, INCLUDING ANY SUCH ADDITIONAL PURCHASED MORTGAGE
LOANS, EXCEEDS THE SUM OF THE OUTSTANDING PURCHASE PRICES FOR ALL OUTSTANDING
TRANSACTIONS AT THAT TIME, THEN AT THE REQUEST OF SELLER, BUYER SHALL RETURN A
PORTION OF THE CASH OR ADDITIONAL PURCHASED MORTGAGE LOANS TO SELLER SO THAT THE
REMAINING SUM OF (I) AND (II) DOES NOT EXCEED THE SUM OF THE OUTSTANDING
PURCHASE PRICES FOR ALL OUTSTANDING TRANSACTIONS AT THAT TIME; PROVIDED THAT THE
SUM OF THE CASH PLUS THE VALUE OF ADDITIONAL PURCHASED MORTGAGE LOANS RETURNED
SHALL BE STRICTLY LIMITED TO AN AMOUNT, AFTER THE RETURN OF WHICH, NO MARGIN
DEFICIT WILL EXIST.

 

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(D)                                 MARKET VALUE DETERMINATIONS.  BUYER MAY
DETERMINE THE MARKET VALUE OF ANY PURCHASED MORTGAGE LOANS FROM TIME TO TIME AND
WITH SUCH FREQUENCY AND TAKING INTO CONSIDERATION SUCH FACTORS, AS IT MAY ELECT,
IN ITS SOLE GOOD FAITH DISCRETION, INCLUDING, BUT NOT LIMITED TO, CURRENT MARKET
CONDITIONS AND THE FACT THAT THE PURCHASED MORTGAGE LOANS MAY BE SOLD OR
OTHERWISE DISPOSED OF UNDER CIRCUMSTANCES WHERE SELLER IS IN DEFAULT UNDER THIS
AGREEMENT; PROVIDED, HOWEVER, THAT A MARKET VALUE OF ZERO SHALL BE ASSIGNED TO
ANY PURCHASED MORTGAGE LOAN THAT, AT THE TIME OF DETERMINATION, IS NOT AN
ELIGIBLE MORTGAGE LOAN.  BUYER’S DETERMINATION OF MARKET VALUE SHALL BE
CONCLUSIVE UPON THE PARTIES.

 

5.                                      ACCOUNTS; INCOME PAYMENTS

 

(A)                                 ACCOUNTS.  PRIOR TO THE DATE HEREOF, SELLER
SHALL ESTABLISH OR CAUSE TO BE ESTABLISHED EACH OF THE ACCOUNTS AT FINANCIAL
INSTITUTION.  SELLER’S TAXPAYER IDENTIFICATION NUMBER WILL BE DESIGNATED AS THE
TAXPAYER IDENTIFICATION NUMBER FOR EACH ACCOUNT AND SELLER SHALL BE RESPONSIBLE
FOR REPORTING AND PAYING TAXES ON ANY INCOME EARNED WITH RESPECT TO THE
ACCOUNTS.  EACH ACCOUNT SHALL BE UNDER THE SOLE DOMINION AND CONTROL OF BUYER,
AND SELLER AGREES THAT (I) SELLER SHALL HAVE NO RIGHT OR AUTHORITY TO WITHDRAW
OR OTHERWISE GIVE ANY DIRECTIONS WITH RESPECT TO THE ACCOUNTS OR THE DISPOSITION
OF ANY FUNDS HELD IN THE ACCOUNTS; PROVIDED THAT SELLER MAY CAUSE AMOUNTS TO BE
DEPOSITED INTO ANY ACCOUNT AT ANY TIME, AND (II) FINANCIAL INSTITUTION MAY
COMPLY WITH INSTRUCTIONS ORIGINATED BY BUYER DIRECTING DISPOSITION OF THE FUNDS
IN THE ACCOUNTS WITHOUT FURTHER CONSENT OF SELLER.  ONLY EMPLOYEES OF BUYER
SHALL BE SIGNERS WITH RESPECT TO THE ACCOUNTS.   PURSUANT TO PARAGRAPH 6, SELLER
HAS PLEDGED, ASSIGNED, TRANSFERRED AND GRANTED A SECURITY INTEREST TO BUYER IN
ALL ACCOUNTS IN WHICH SELLER HAS RIGHTS OR POWER TO TRANSFER RIGHTS AND ALL
ACCOUNTS IN WHICH SELLER LATER ACQUIRES OWNERSHIP, OTHER RIGHTS OR THE POWER TO
TRANSFER RIGHTS.  SELLER AND BUYER HEREBY AGREE THAT BUYER HAS “CONTROL” OF THE
ACCOUNTS WITHIN THE MEANING OF SECTION 9-104 OF THE UCC.

 

(B)                                 CASH PLEDGE ACCOUNT.  ON OR PRIOR TO THE
DATE HEREOF, SELLER SHALL DEPOSIT AN AMOUNT EQUAL TO 1.00% OF THE FACILITY
AMOUNT (THE “REQUIRED AMOUNT”) INTO THE CASH PLEDGE ACCOUNT.  SELLER SHALL CAUSE
AN AMOUNT NOT LESS THAN THE REQUIRED AMOUNT TO BE ON DEPOSIT IN THE CASH PLEDGE
ACCOUNT AT ALL TIMES.  IF ON ANY REMITTANCE DATE, THE AMOUNT ON DEPOSIT IN THE
CASH PLEDGE ACCOUNT IS GREATER THAN THE REQUIRED AMOUNT, PROVIDED THAT NO
DEFAULT OR EVENT OF DEFAULT HAS OCCURRED, UPON SELLER’S REQUEST SUCH EXCESS WILL
BE DISBURSED TO SELLER ON SUCH REMITTANCE DATE AFTER APPLICATION BY BUYER TO THE
PAYMENT OF ANY AMOUNTS OWING BY SELLER TO BUYER ON SUCH DATE.  AT ANY TIME UPON
OR AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT, BUYER, IN ITS SOLE DISCRETION,
MAY APPLY THE AMOUNTS ON DEPOSIT IN THE CASH PLEDGE ACCOUNT IN ACCORDANCE WITH
THE PROVISIONS OF PARAGRAPH 5(F).

 

(C)                                  FUNDING ACCOUNT.  THE FUNDING ACCOUNT SHALL
BE USED FOR FUNDINGS OF THE PURCHASE PRICE AND THE REPURCHASE PRICE WITH RESPECT
TO EACH PURCHASED MORTGAGE LOAN IN ACCORDANCE WITH PARAGRAPH 3.  SELLER SHALL
CAUSE ALL AMOUNTS TO BE PAID IN RESPECT OF THE TAKEOUT COMMITMENTS TO BE
REMITTED BY THE APPROVED TAKEOUT INVESTORS DIRECTLY TO THE FUNDING ACCOUNT
WITHOUT ANY NOTICE TO OR CONSENT OF SELLER.  ON EACH REPURCHASE DATE WHICH
OCCURS PURSUANT TO PARAGRAPH 3(E) WITH RESPECT TO ANY PURCHASED MORTGAGE LOAN,
BUYER WILL APPLY THE APPLICABLE AMOUNTS ON DEPOSIT IN THE FUNDING ACCOUNT TO THE
UNPAID REPURCHASE PRICE DUE TO BUYER FOR SUCH PURCHASED MORTGAGE LOAN.  AT ANY
TIME UPON OR AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT,

 

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BUYER, IN ITS SOLE DISCRETION, MAY APPLY THE AMOUNTS ON DEPOSIT IN THE FUNDING
ACCOUNT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 5(F).

 

(D)                                 [RESERVED]

 

(E)                                  OPERATING ACCOUNT.  THE OPERATING ACCOUNT
SHALL BE USED FOR THE PURPOSES OF (I) SELLER’S PAYMENT OF PRICE DIFFERENTIAL AND
ANY OTHER AMOUNTS OWING TO BUYER UNDER THIS AGREEMENT, THE SIDE LETTER OR ANY
OTHER TRANSACTION DOCUMENT, (II) SELLER’S FUNDING OF THE SHORTFALL BETWEEN THE
ORIGINAL OUTSTANDING BALANCE OF A MORTGAGE LOAN AND THE PURCHASE PRICE PAID BY
BUYER FOR THAT MORTGAGE LOAN AND (III) SELLER’S PAYMENT OF ANY DIFFERENCE
BETWEEN THE REPURCHASE PRICE AND THE AMOUNT RECEIVED BY BUYER FROM THE
APPLICABLE APPROVED TAKEOUT INVESTOR IN CONNECTION WITH THE REPURCHASE OF A
PURCHASED MORTGAGE LOAN PURSUANT TO PARAGRAPH 3(F).   ON OR PRIOR TO THE FOURTH
(4TH) BUSINESS DAY PRIOR TO EACH REMITTANCE DATE, BUYER WILL NOTIFY SELLER IN
WRITING OF THE PRICE DIFFERENTIAL AND OTHER AMOUNTS DUE TO BUYER ON THAT
REMITTANCE DATE.  ON OR PRIOR TO THE BUSINESS DAY PRECEDING EACH REMITTANCE
DATE, SELLER SHALL DEPOSIT INTO THE OPERATING ACCOUNT AN AMOUNT SUFFICIENT TO
PAY SUCH AMOUNTS DUE TO BUYER ON THAT REMITTANCE DATE.  ON EACH REMITTANCE DATE,
BUYER SHALL WITHDRAW FUNDS FROM AMOUNTS ON DEPOSIT IN THE OPERATING ACCOUNT TO
EFFECT SUCH PAYMENT TO THE EXTENT OF FUNDS AVAILABLE.  IN THE EVENT THAT THE
FUNDS ON DEPOSIT IN THE OPERATING ACCOUNT ARE INSUFFICIENT TO PAY THE AMOUNTS
DUE TO BUYER IN FULL, SELLER SHALL PAY THE AMOUNT OF THE SHORTFALL ON THE DATE
SUCH PAYMENT IS DUE BY WIRE TRANSFER OF SUCH AMOUNT TO THE OPERATING ACCOUNT. 
AT ANY TIME UPON OR AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT, BUYER, IN ITS
SOLE DISCRETION, MAY APPLY THE AMOUNTS ON DEPOSIT IN THE OPERATING ACCOUNT IN
ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 5(F).

 

(F)                                   APPLICATION OF FUNDS.  AFTER THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, AT SUCH TIMES AS
BUYER MAY DIRECT IN ITS SOLE DISCRETION, BUYER SHALL APPLY ALL INCOME AND SUCH
OTHER AMOUNTS ON DEPOSIT IN ALL OR ANY OF THE ACCOUNTS OTHER THAN ESCROW AMOUNTS
HELD IN ANY ACCOUNT AND REQUIRED TO BE USED FOR THE PAYMENT OF TAXES AND
INSURANCE ON ANY PURCHASED MORTGAGE LOAN (I) FIRST, TO PAY ALL ACTUAL AND
REASONABLE COSTS AND EXPENSES INCURRED BY BUYER IN CONNECTION WITH OR AS A
RESULT OF A DEFAULT OR AN EVENT OF DEFAULT (INCLUDING, WITHOUT LIMITATION, LEGAL
FEES, CONSULTING FEES, ACCOUNTING FEES, FILE TRANSFER AND INVENTORY FEES, COSTS
AND EXPENSES INCURRED IN RESPECT OF A TRANSFER OF THE SERVICING OF THE PURCHASED
MORTGAGE LOANS AND COSTS AND EXPENSES INCURRED IN CONNECTION WITH A DISPOSITION
OF THE PURCHASED MORTGAGE LOANS), (II) SECOND, TO BUYER FOR THE PAYMENT OF ALL
ACCRUED AND UNPAID PRICE DIFFERENTIAL FOR ALL TRANSACTIONS, (III) THIRD, TO
BUYER FOR THE PAYMENT OF THE AGGREGATE REMAINING UNPAID REPURCHASE PRICE THEN
DUE AND PAYABLE, (IV) FOURTH, TO BUYER TO BE APPLIED BY BUYER TO THE PAYMENT OF
ALL OTHER ACCRUED AND UNPAID OBLIGATIONS OF SELLER HEREUNDER AND UNDER THE OTHER
TRANSACTION DOCUMENTS AND (V) FIFTH, ANY REMAINING PROCEEDS TO SELLER OR OTHER
PERSON LEGALLY ENTITLED THERETO.

 

(G)                                  INCOME.  WHERE A PARTICULAR TRANSACTION’S
TERM EXTENDS OVER THE DATE ON WHICH INCOME IS PAID BY THE MORTGAGOR ON ANY
PURCHASED MORTGAGE LOAN SUBJECT TO THAT TRANSACTION, THAT INCOME WILL BE THE
PROPERTY OF BUYER UNTIL SELLER HAS PAID BUYER THE FULL REPURCHASE PRICE IN
RESPECT OF SUCH TRANSACTION.  NOTWITHSTANDING THE FOREGOING, AND PROVIDED NO
DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING AND NO MARGIN DEFICIT
THEN EXISTS, BUYER AGREES THAT SELLER OR ITS DESIGNEE SHALL BE ENTITLED TO
RECEIVE AND RETAIN THAT INCOME TO THE FULL EXTENT IT WOULD BE SO ENTITLED IF THE
PURCHASED MORTGAGE LOANS HAD NOT BEEN SOLD TO BUYER; PROVIDED THAT ANY

 

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INCOME RECEIVED BY SELLER WHILE THE RELATED TRANSACTION IS OUTSTANDING SHALL BE
DEEMED TO BE HELD BY SELLER SOLELY IN TRUST FOR BUYER PENDING THE PAYMENT OF THE
REPURCHASE PRICE IN RESPECT OF SUCH TRANSACTION AND THE REPURCHASE OF THE
RELATED PURCHASED MORTGAGE LOANS.  IF A DEFAULT OR AN EVENT OF DEFAULT HAS
OCCURRED AND IS CONTINUING, OR A MARGIN DEFICIT EXISTS, AS OF THE DATE INCOME IS
PAID ON A PURCHASED MORTGAGE LOAN SUBJECT TO A TRANSACTION HEREUNDER, IF
DIRECTED BY BUYER, SELLER SHALL CAUSE SUCH INCOME TO BE DEPOSITED DIRECTLY INTO
AN ACCOUNT DESIGNATED BY BUYER.

 

(H)                                 SELLER’S OBLIGATIONS.  THE PROVISIONS OF
THIS PARAGRAPH 5 SHALL NOT RELIEVE SELLER FROM ITS OBLIGATIONS TO PAY THE
REPURCHASE PRICE ON THE APPLICABLE REPURCHASE DATE AND TO SATISFY ANY OTHER
PAYMENT OBLIGATION OF SELLER HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT.

 

6.                                      SECURITY INTEREST; ASSIGNMENT OF TAKEOUT
COMMITMENTS

 

(A)                                 SECURITY INTEREST.  ALTHOUGH THE PARTIES
INTEND THAT ALL TRANSACTIONS HEREUNDER BE ABSOLUTE SALES AND PURCHASES AND NOT
LOANS, TO SECURE THE PAYMENT AND PERFORMANCE BY SELLER OF ITS OBLIGATIONS,
LIABILITIES AND INDEBTEDNESS UNDER EACH SUCH TRANSACTION AND SELLER’S
OBLIGATIONS, LIABILITIES AND INDEBTEDNESS HEREUNDER AND UNDER THE OTHER
TRANSACTION DOCUMENTS, SELLER HEREBY PLEDGES, ASSIGNS, TRANSFERS AND GRANTS TO
BUYER A SECURITY INTEREST IN THE MORTGAGE ASSETS IN WHICH SELLER HAS RIGHTS OR
POWER TO TRANSFER RIGHTS AND ALL OF THE MORTGAGE ASSETS IN WHICH SELLER LATER
ACQUIRES OWNERSHIP, OTHER RIGHTS OR THE POWER TO TRANSFER RIGHTS.  “MORTGAGE
ASSETS” MEANS (I) THE PURCHASED MORTGAGE LOANS WITH RESPECT TO ALL TRANSACTIONS
HEREUNDER (INCLUDING, WITHOUT LIMITATION, ALL SERVICING RIGHTS WITH RESPECT
THERETO), (II) ALL SERVICING RECORDS, LOAN FILES, MORTGAGE LOAN DOCUMENTS,
INCLUDING, WITHOUT LIMITATION, THE MORTGAGE NOTE AND MORTGAGE, AND ALL OF
SELLER’S CLAIMS, LIENS, RIGHTS, TITLE AND INTERESTS IN AND TO THE MORTGAGED
PROPERTY RELATED TO SUCH PURCHASED MORTGAGE LOANS, (III) ALL LIENS SECURING
REPAYMENT OF SUCH PURCHASED MORTGAGE LOANS, (IV) ALL INCOME WITH RESPECT TO SUCH
PURCHASED MORTGAGE LOANS, (V) THE ACCOUNTS, (VI) THE TAKEOUT COMMITMENTS AND
TAKEOUT AGREEMENTS TO THE EXTENT SELLER’S RIGHTS THEREUNDER RELATE TO THE
PURCHASED MORTGAGE LOANS, (VII) ALL HEDGING ARRANGEMENTS RELATING TO THE
PURCHASED MORTGAGE LOANS AND (VIII) ALL PROCEEDS OF THE FOREGOING.  SELLER
HEREBY AUTHORIZES BUYER TO FILE SUCH FINANCING STATEMENTS RELATING TO THE
MORTGAGE ASSETS AS BUYER MAY DEEM APPROPRIATE, AND IRREVOCABLY APPOINTS BUYER AS
SELLER’S ATTORNEY-IN-FACT TO TAKE SUCH OTHER ACTIONS AS BUYER DEEMS NECESSARY OR
APPROPRIATE TO PERFECT AND CONTINUE THE LIEN GRANTED HEREBY AND TO PROTECT,
PRESERVE AND REALIZE UPON THE MORTGAGE ASSETS.  SELLER SHALL PAY ALL FEES AND
EXPENSES ASSOCIATED WITH PERFECTING SUCH LIENS INCLUDING, WITHOUT LIMITATION,
THE COST OF FILING FINANCING STATEMENTS AND AMENDMENTS UNDER THE UCC,
REGISTERING EACH PURCHASED MORTGAGE LOAN WITH MERS AND RECORDING ASSIGNMENTS OF
THE MORTGAGES AS AND WHEN REQUIRED BY BUYER IN ITS SOLE DISCRETION.

 

(b)                                 Assignment of Takeout Commitment.The sale of
each Mortgage Loan to Buyer shall include Seller’s rights (but none of the
obligations) under the applicable Takeout Commitment and Takeout Agreement to
deliver the Mortgage Loan to the Approved Takeout Investor and to receive the
net sum therefor specified in the Takeout Commitment from the Approved Takeout
Investor.  Effective on and  after the Purchase Date for each Mortgage Loan
purchased by Buyer hereunder, Seller assigns to Buyer, free and clear of any
Lien, all of Seller’s right, title and interest in any applicable Takeout
Commitment and Takeout Agreement for such Mortgage Loan; provided that Buyer
shall not assume or be deemed to have assumed any of the obligations of Seller
under any Takeout Agreement or Takeout Commitment.

 

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7.                                      CONDITIONS PRECEDENT

 

(A)                                 CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF
THIS AGREEMENT.  THE EFFECTIVENESS OF THIS AGREEMENT SHALL BE SUBJECT TO THE
SATISFACTION OF EACH OF THE FOLLOWING CONDITIONS PRECEDENT:

 

(I)                                     ON OR BEFORE THE DATE HEREOF, SELLER
SHALL DELIVER OR CAUSE TO BE DELIVERED EACH OF THE DOCUMENTS LISTED ON EXHIBIT E
(OTHER THAN THOSE LISTED UNDER THE HEADING “POST-CLOSING ITEMS”) IN FORM AND
SUBSTANCE SATISFACTORY TO BUYER AND ITS COUNSEL;

 

(II)                                  AS OF THE DATE HEREOF, THERE HAS BEEN NO
MATERIAL ADVERSE CHANGE IN THE FINANCIAL CONDITION OF SELLER OR ANY GUARANTOR
SINCE THE MOST RECENT FINANCIAL STATEMENTS OF SUCH PERSON DELIVERED TO BUYER;

 

(III)                               AS OF THE DATE HEREOF, NO MATERIAL ACTION,
PROCEEDING OR INVESTIGATION SHALL HAVE BEEN INSTITUTED, NOR SHALL ANY MATERIAL
ORDER, JUDGMENT OR DECREE HAVE BEEN ISSUED OR PROPOSED TO BE ISSUED BY ANY
GOVERNMENTAL AUTHORITY WITH RESPECT TO SELLER OR ANY GUARANTOR;

 

(IV)                              SELLER SHALL HAVE DELIVERED TO BUYER SUCH
OTHER DOCUMENTS, OPINIONS OF COUNSEL AND CERTIFICATES AS BUYER MAY REASONABLY
REQUEST;

 

(V)                                 SELLER SHALL HAVE ESTABLISHED THE ACCOUNTS
AT FINANCIAL INSTITUTION AND SHALL HAVE DEPOSITED THE REQUIRED AMOUNT TO THE
CASH PLEDGE ACCOUNT; AND

 

(VI)                              ON OR BEFORE THE DATE HEREOF, SELLER SHALL
HAVE PAID TO THE EXTENT DUE ALL FEES AND OUT-OF-POCKET COSTS AND EXPENSES
(INCLUDING, WITHOUT LIMITATION, DUE DILIGENCE FEES AND EXPENSES AND REASONABLE
LEGAL FEES AND EXPENSES) REQUIRED TO BE PAID HEREUNDER AND UNDER THE OTHER
TRANSACTION DOCUMENTS.

 

(B)                                 CONDITIONS PRECEDENT TO EACH TRANSACTION. 
BUYER’S OBLIGATION TO PAY THE PURCHASE PRICE FOR EACH TRANSACTION SHALL BE
SUBJECT TO THE SATISFACTION OF EACH OF THE FOLLOWING CONDITIONS PRECEDENT:

 

(I)                                     WITH RESPECT TO EACH PURCHASE DATE,
SELLER SHALL HAVE DELIVERED TO BUYER A CONFIRMATION AND THE LOAN PURCHASE DETAIL
WITH RESPECT TO THE PURCHASED MORTGAGE LOANS SUBJECT TO SUCH TRANSACTION;

 

(II)                                  IN THE CASE OF A MORTGAGE LOAN SUBJECT TO
A WET FUNDING, BUYER SHALL HAVE RECEIVED THE DOCUMENTS DESCRIBED IN ITEMS
(I) THROUGH (IV) OF THE DEFINITION OF LOAN FILE, AND, IN THE CASE OF ANY OTHER
MORTGAGE LOAN SUBJECT TO SUCH TRANSACTION, BUYER SHALL HAVE RECEIVED THE
COMPLETE LOAN FILE FOR SUCH MORTGAGE LOAN, IN EACH CASE IN FORM AND SUBSTANCE
SATISFACTORY TO BUYER;

 

(III)                               NO DEFAULT OR EVENT OF DEFAULT SHALL HAVE
OCCURRED AND BE CONTINUING;

 

(IV)                              NO MARGIN DEFICIT SHALL EXIST EITHER BEFORE OR
AFTER GIVING EFFECT TO SUCH TRANSACTION;

 

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(V)                                 THIS AGREEMENT AND EACH OF THE OTHER
TRANSACTION DOCUMENTS SHALL REMAIN IN FULL FORCE AND EFFECT, AND THE TERMINATION
DATE SHALL NOT HAVE OCCURRED;

 

(VI)                              EACH MORTGAGE LOAN SUBJECT TO SUCH TRANSACTION
IS AN ELIGIBLE MORTGAGE LOAN;

 

(VII)                           SELLER SHALL HAVE DELIVERED EVIDENCE
SATISFACTORY TO BUYER, IN ITS SOLE DISCRETION, THAT EACH MORTGAGE LOAN SUBJECT
TO SUCH TRANSACTION IS SUBJECT TO A VALID AND BINDING TAKEOUT COMMITMENT OR
HEDGING ARRANGEMENT, WHICH MAY INCLUDE A COPY OF THE RELATED TAKEOUT AGREEMENT
OR HEDGING ARRANGEMENT;

 

(VIII)                        EACH OF SELLER’S AND EACH GUARANTOR’S
REPRESENTATIONS AND WARRANTIES IN THIS AGREEMENT AND EACH OF THE OTHER
TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY AND IN ANY OFFICER’S CERTIFICATE
DELIVERED TO BUYER IN CONNECTION THEREWITH SHALL BE TRUE AND CORRECT ON AND AS
OF THE DATE HEREOF AND SUCH PURCHASE DATE, WITH THE SAME EFFECT AS THOUGH SUCH
REPRESENTATIONS AND WARRANTIES HAD BEEN MADE ON AND AS OF SUCH DATE (EXCEPT FOR
THOSE REPRESENTATIONS AND WARRANTIES AND OFFICER’S CERTIFICATES WHICH ARE
SPECIFICALLY MADE ONLY AS OF A DIFFERENT DATE, WHICH REPRESENTATIONS AND
WARRANTIES AND OFFICER’S CERTIFICATES SHALL BE CORRECT ON AND AS OF THE DATE
MADE), AND SELLER AND EACH GUARANTOR SHALL HAVE COMPLIED WITH ALL THE AGREEMENTS
AND SATISFIED ALL THE CONDITIONS UNDER THIS AGREEMENT, EACH OF THE OTHER
TRANSACTION DOCUMENTS AND THE MORTGAGE LOAN DOCUMENTS TO WHICH IT IS A PARTY ON
ITS PART TO BE PERFORMED OR SATISFIED AT OR PRIOR TO THE RELATED PURCHASE DATE;

 

(IX)                              NO REQUIREMENT OF LAW WOULD PROHIBIT THE
CONSUMMATION OF ANY TRANSACTION CONTEMPLATED HEREBY, OR WOULD IMPOSE LIMITS ON
THE AMOUNTS THAT BUYER MAY LEGALLY RECEIVE OR WOULD IMPOSE A MATERIAL TAX OR
LEVY ON SUCH TRANSACTION OR THE PURCHASE PRICE, REPURCHASE PRICE OR ANY PAYMENTS
RECEIVED IN RESPECT THEREOF;

 

(X)                                 NO ACTION, PROCEEDING OR INVESTIGATION SHALL
HAVE BEEN INSTITUTED, NOR SHALL ANY ORDER, JUDGMENT OR DECREE HAVE BEEN ISSUED
OR PROPOSED TO BE ISSUED BY ANY GOVERNMENTAL AUTHORITY TO SET ASIDE, RESTRAIN,
ENJOIN OR PREVENT THE CONSUMMATION OF ANY TRANSACTION CONTEMPLATED HEREBY OR
SEEKING MATERIAL DAMAGES AGAINST BUYER IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THE TRANSACTION DOCUMENTS;

 

(XI)                              AFTER GIVING EFFECT TO SUCH TRANSACTION, AS OF
THE RELATED PURCHASE DATE FOR SUCH TRANSACTION, NO PURCHASED MORTGAGE LOAN
SUBJECT TO A TRANSACTION HAS AN ORIGINATION DATE MORE THAN THIRTY (30) DAYS
PRIOR TO SUCH PURCHASE DATE;

 

(XII)                           BUYER SHALL HAVE DETERMINED THAT THE AMOUNTS ON
DEPOSIT IN THE OPERATING ACCOUNT ARE SUFFICIENT TO FUND THE DIFFERENCE BETWEEN
THE OUTSTANDING PRINCIPAL BALANCE OF THE RELATED MORTGAGE LOAN AND THE PURCHASE
PRICE TO BE PAID BY BUYER FOR THE RELATED MORTGAGE LOAN, AFTER TAKING INTO
ACCOUNT THE OTHER OBLIGATIONS OF SELLER TO BE SATISFIED WITH THE AMOUNTS ON
DEPOSIT IN THE OPERATING ACCOUNT ON SUCH PURCHASE DATE;

 

(XIII)                        AFTER GIVING EFFECT TO SUCH TRANSACTION, THE
AGGREGATE PURCHASE PRICE FOR ALL OUTSTANDING TRANSACTIONS SHALL NOT EXCEED THE
FACILITY AMOUNT;

 

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(XIV)                       BUYER SHALL HAVE RECEIVED SUCH OTHER DOCUMENTS,
INFORMATION, REPORTS AND CERTIFICATES AS IT SHALL HAVE REASONABLY REQUESTED;

 

(XV)                          SELLER SHALL HAVE DEPOSITED THE AMOUNTS REQUIRED
BY PARAGRAPH 5 INTO THE CASH PLEDGE ACCOUNT; AND

 

(XVI)                       LENDING TREE HOLDINGS CORP. SHALL HAVE DELIVERED ITS
SIGNATURE PAGE TO THE GUARANTY AND A CERTIFICATE OF ITS SECRETARY AS DESCRIBED
ON EXHIBIT E.

 

The acceptance by Seller of any Purchase Price proceeds shall be deemed to
constitute a representation and warranty by Seller that the foregoing conditions
have been satisfied.

 

8.                                      CHANGE IN REQUIREMENT OF LAW

 

(A)                                 IF ANY CHANGE IN REQUIREMENT OF LAW SHALL:

 

(I)                                     IMPOSE, MODIFY OR DEEM APPLICABLE ANY
RESERVE, SPECIAL DEPOSIT OR SIMILAR REQUIREMENT AGAINST ASSETS OF, DEPOSITS WITH
OR FOR THE ACCOUNT OF, OR CREDIT EXTENDED BY, BUYER (EXCEPT ANY SUCH RESERVE
REQUIREMENT REFLECTED IN THE ADJUSTED LIBOR RATE); OR

 

(II)                                  IMPOSE ON BUYER OR THE LONDON INTERBANK
MARKET ANY OTHER CONDITION AFFECTING THIS AGREEMENT OR TRANSACTIONS ENTERED INTO
BY BUYER;

 

and the result of any of the foregoing shall be to increase the cost to Buyer of
making or maintaining any purchase hereunder (or of maintaining its obligation
to enter into any Transaction) or to increase the cost or to reduce the amount
of any sum received or receivable by Buyer (whether of Repurchase Price, Price
Differential or otherwise), then Seller will pay to Buyer such additional amount
or amounts as will compensate Buyer for such additional costs incurred or
reduction suffered.

 

(B)                                 IF BUYER DETERMINES THAT ANY CHANGE IN
REQUIREMENT OF LAW REGARDING CAPITAL REQUIREMENTS HAS OR WOULD HAVE THE EFFECT
OF REDUCING THE RATE OF RETURN ON BUYER’S CAPITAL OR ON THE CAPITAL OF BUYER’S
HOLDING COMPANY AS A CONSEQUENCE OF THIS AGREEMENT OR THE PURCHASES MADE BY
BUYER TO A LEVEL BELOW THAT WHICH BUYER OR BUYER’S HOLDING COMPANY COULD HAVE
ACHIEVED BUT FOR SUCH CHANGE IN REQUIREMENT OF LAW (TAKING INTO CONSIDERATION
BUYER’S POLICIES WITH RESPECT TO CAPITAL ADEQUACY), THEN FROM TIME TO TIME
SELLER WILL PAY TO BUYER SUCH ADDITIONAL AMOUNT OR AMOUNTS AS WILL COMPENSATE
BUYER OR BUYER’S HOLDING COMPANY FOR ANY SUCH REDUCTION SUFFERED.

 

(C)                                  A CERTIFICATE OF BUYER SETTING FORTH THE
AMOUNT OR AMOUNTS NECESSARY TO COMPENSATE BUYER OR ITS HOLDING COMPANY, AS THE
CASE MAY BE, AS SPECIFIED IN SUBPARAGRAPH (A) OR (B) OF THIS PARAGRAPH SHALL BE
DELIVERED TO SELLER AND SHALL BE CONCLUSIVE ABSENT MANIFEST ERROR.  SELLER SHALL
PAY BUYER, THE AMOUNT SHOWN AS DUE ON ANY SUCH CERTIFICATE WITHIN 10 DAYS AFTER
RECEIPT THEREOF.

 

(D)                                 FAILURE OR DELAY ON THE PART OF BUYER TO
DEMAND COMPENSATION PURSUANT TO THIS PARAGRAPH SHALL NOT CONSTITUTE A WAIVER OF
BUYER’S RIGHT TO DEMAND SUCH COMPENSATION; PROVIDED THAT SELLER SHALL NOT BE
REQUIRED TO COMPENSATE BUYER PURSUANT TO THIS PARAGRAPH FOR ANY INCREASED

 

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COSTS OR REDUCTIONS INCURRED MORE THAN 270 DAYS PRIOR TO THE DATE THAT BUYER
NOTIFIES SELLER OF THE CHANGE IN REQUIREMENT OF LAW GIVING RISE TO SUCH
INCREASED COSTS OR REDUCTIONS AND OF BUYER’S INTENTION TO CLAIM COMPENSATION
THEREFOR; PROVIDED FURTHER THAT, IF THE CHANGE IN REQUIREMENT OF LAW GIVING RISE
TO SUCH INCREASED COSTS OR REDUCTIONS IS RETROACTIVE, THEN THE 270-DAY PERIOD
REFERRED TO ABOVE SHALL BE EXTENDED TO INCLUDE THE PERIOD OF RETROACTIVE EFFECT
THEREOF.

 

(E)                                  IF, WITHIN 10 DAYS AFTER RECEIPT OF NOTICE
FROM BUYER DEMANDING COMPENSATION PURSUANT TO THIS PARAGRAPH (IT BEING
UNDERSTOOD THAT A CERTIFICATE DESCRIBED IN CLAUSE (C) ABOVE SHALL CONSTITUTE
SUCH NOTICE FOR PURPOSES HEREOF), SELLER NOTIFIES BUYER THAT IT DECLARES THE
TERMINATION DATE IN ACCORDANCE WITH CLAUSE (I) OF THE DEFINITION OF “TERMINATION
DATE” (WHICH TERMINATION DATE SHALL OCCUR NOT LESS THAN 30 DAYS FOLLOWING SUCH
NOTICE FROM SELLER TO BUYER), SELLER SHALL BE ENTITLED TO RECEIVE A PRO-RATED
REFUND OF THE “COMMITMENT FEE” (AS DEFINED IN THE SIDE LETTER) IN THE AMOUNT
EQUAL TO THE PORTION OF THE TOTAL COMMITMENT FEE ALLOCATED TO THE PERIOD OF TIME
FOLLOWING THE TERMINATION DATE DECLARED PURSUANT TO THIS CLAUSE (E) UNTIL
OCTOBER 29, 2010, CALCULATED ON A 364 DAY PER YEAR BASIS.  SUCH REFUND SHALL BE
PAID TO SELLER ON THE TERMINATION DATE NET OF ANY AMOUNTS OWED BY SELLER TO
BUYER OR ANY OTHER INDEMNIFIED PARTY AS OF THE TERMINATION DATE.

 

9.                                      SEGREGATION OF DOCUMENTS RELATING TO
PURCHASED MORTGAGE LOANS

 

All documents relating to Purchased Mortgage Loans in the possession of Seller
shall be segregated from other documents and securities in its possession and
shall be identified as being subject to this Agreement.  Segregation may be
accomplished by appropriate identification on the books and records of the
holder, including a financial or securities intermediary or a clearing
corporation.  All of Seller’s interest in the Purchased Mortgage Loans
(including, without limitation, the Servicing Rights) shall pass to Buyer on the
Purchase Date and nothing in this Agreement shall preclude Buyer from engaging
in repurchase transactions with the Purchased Mortgage Loans or otherwise
selling, transferring, pledging or hypothecating the Purchased Mortgage Loans,
but no such transaction shall relieve Buyer of its obligations to transfer the
Purchased Mortgage Loans or other Mortgage Loans with substantially identical
terms to Seller pursuant to Paragraph 3 or 4.

 

10.                               REPRESENTATIONS AND WARRANTIES.

 

(A)                                 TO INDUCE BUYER TO ENTER INTO THIS AGREEMENT
AND THE TRANSACTIONS HEREUNDER, SELLER REPRESENTS AND WARRANTS AS OF THE DATE OF
THIS AGREEMENT AND AS OF EACH PURCHASE DATE THAT EACH OF THE FOLLOWING
STATEMENTS IS AND SHALL REMAIN TRUE AND CORRECT THROUGHOUT THE TERM OF THIS
AGREEMENT AND UNTIL ALL OBLIGATIONS, LIABILITIES AND INDEBTEDNESS OF SELLER
UNDER THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS ARE PAID IN FULL.

 

(I)                                     REPRESENTATIONS AND WARRANTIES
CONCERNING PURCHASED MORTGAGE LOANS.  BY EACH DELIVERY OF A CONFIRMATION, SELLER
SHALL BE DEEMED, AS OF THE PURCHASE DATE OF THE DESCRIBED SALE OF EACH PURCHASED
MORTGAGE LOAN (OR, IF ANOTHER DATE IS EXPRESSLY PROVIDED IN SUCH REPRESENTATION
OR WARRANTY, AS OF SUCH OTHER DATE), AND AS OF EACH DATE THEREAFTER THAT SUCH
PURCHASED MORTGAGE LOAN REMAINS SUBJECT TO THIS AGREEMENT, TO REPRESENT AND
WARRANT THAT EACH PURCHASED MORTGAGE LOAN THEN SOLD TO BUYER IS AN ELIGIBLE
MORTGAGE LOAN.

 

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(II)                                  ORGANIZATION AND GOOD STANDING.  EACH OF
SELLER AND ITS SUBSIDIARIES IS A CORPORATION OR OTHER LEGAL ENTITY DULY
ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE
JURISDICTION UNDER WHICH IT WAS ORGANIZED, HAS FULL LEGAL POWER AND AUTHORITY TO
OWN ITS PROPERTY AND TO CARRY ON ITS BUSINESS AS CURRENTLY CONDUCTED, AND IS
DULY QUALIFIED AS A FOREIGN CORPORATION OR ENTITY TO DO BUSINESS AND IS IN GOOD
STANDING IN EACH JURISDICTION IN WHICH THE TRANSACTION OF ITS BUSINESS MAKES
SUCH QUALIFICATION NECESSARY, EXCEPT IN JURISDICTIONS, IF ANY, WHERE A FAILURE
TO BE IN GOOD STANDING HAS NO MATERIAL ADVERSE EFFECT ON THE BUSINESS,
OPERATIONS, ASSETS OR FINANCIAL CONDITION OF SELLER OR ANY SUCH SUBSIDIARY.  FOR
THE PURPOSES HEREOF, GOOD STANDING SHALL INCLUDE QUALIFICATION FOR ANY AND ALL
LICENSES AND PAYMENT OF ANY AND ALL TAXES REQUIRED IN THE JURISDICTION OF ITS
ORGANIZATION AND IN EACH JURISDICTION IN WHICH SELLER OR A SUBSIDIARY TRANSACTS
BUSINESS.  SELLER HAS NO SUBSIDIARIES EXCEPT THOSE IDENTIFIED BY SELLER TO BUYER
IN EXHIBIT G.  WITH RESPECT TO SELLER AND EACH SUCH SUBSIDIARY, EXHIBIT G
CORRECTLY STATES ITS NAME AS IT APPEARS IN ITS ARTICLES OF FORMATION FILED IN
THE JURISDICTION OF ITS ORGANIZATION, ADDRESS, PLACE OF ORGANIZATION, EACH STATE
IN WHICH IT IS QUALIFIED AS A FOREIGN CORPORATION OR ENTITY, AND IN THE CASE OF
THE SUBSIDIARIES, THE PERCENTAGE OWNERSHIP (DIRECT OR INDIRECT) OF SELLER IN
SUCH SUBSIDIARY.

 

(III)                               AUTHORITY AND CAPACITY.  SELLER HAS ALL
REQUISITE POWER, AUTHORITY AND CAPACITY TO ENTER INTO THIS AGREEMENT AND EACH
OTHER TRANSACTION DOCUMENT AND TO PERFORM THE OBLIGATIONS REQUIRED OF IT
HEREUNDER AND THEREUNDER.  THIS AGREEMENT CONSTITUTES A VALID AND LEGALLY
BINDING AGREEMENT OF SELLER ENFORCEABLE IN ACCORDANCE WITH ITS TERMS, EXCEPT AS
ENFORCEABILITY MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY, MORATORIUM,
REORGANIZATION, CONSERVATORSHIP AND SIMILAR LAWS, AND BY EQUITABLE PRINCIPLES. 
NO CONSENT, APPROVAL, AUTHORIZATION, LICENSE OR ORDER OF OR REGISTRATION OR
FILING WITH, OR NOTICE TO, ANY GOVERNMENTAL AUTHORITY IS REQUIRED UNDER ANY
REQUIREMENT OF LAW PRIOR TO THE EXECUTION, DELIVERY AND PERFORMANCE OF OR
COMPLIANCE BY SELLER WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR
THE CONSUMMATION BY SELLER OF ANY TRANSACTION CONTEMPLATED THEREBY, EXCEPT FOR
THOSE WHICH HAVE ALREADY BEEN OBTAINED BY SELLER, AND THE FILINGS AND RECORDINGS
IN RESPECT OF THE LIENS CREATED PURSUANT TO THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS.  IF SELLER IS A DEPOSITORY INSTITUTION, THIS AGREEMENT
SHALL BE MAINTAINED IN SELLER’S OFFICIAL RECORDS.

 

(IV)                              NO CONFLICT.  NEITHER THE EXECUTION AND
DELIVERY OF THIS AGREEMENT, NOR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, NOR COMPLIANCE WITH ITS TERMS AND CONDITIONS,
SHALL CONFLICT WITH OR RESULT IN THE BREACH OF, OR CONSTITUTE A DEFAULT UNDER,
OR RESULT IN THE CREATION OR IMPOSITION OF ANY LIEN OF ANY NATURE UPON THE
PROPERTIES OR ASSETS OF SELLER, ANY OF THE TERMS, CONDITIONS OR PROVISIONS OF
SELLER’S ORGANIZATIONAL DOCUMENTS, OR ANY MORTGAGE, INDENTURE, DEED OF TRUST,
LOAN OR CREDIT AGREEMENT OR OTHER AGREEMENT OR INSTRUMENT TO WHICH SELLER IS NOW
A PARTY OR BY WHICH IT IS BOUND (OTHER THAN THIS AGREEMENT).

 

(V)                                 PERFORMANCE.  SELLER DOES NOT BELIEVE, NOR
DOES IT HAVE ANY REASON OR CAUSE TO BELIEVE, THAT IT CANNOT PERFORM, AND SELLER
INTENDS TO PERFORM, EACH AND EVERY COVENANT WHICH IT IS REQUIRED TO PERFORM
UNDER THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS.

 

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(VI)                              ORDINARY COURSE TRANSACTION.  THE CONSUMMATION
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT ARE IN THE ORDINARY COURSE OF
BUSINESS OF SELLER, AND NEITHER THE SALE, TRANSFER, ASSIGNMENT AND CONVEYANCE OF
MORTGAGE LOANS TO BUYER NOR THE PLEDGE, ASSIGNMENT, TRANSFER AND GRANTING OF A
SECURITY INTEREST TO BUYER IN THE MORTGAGE ASSETS, BY SELLER PURSUANT TO THIS
AGREEMENT ARE SUBJECT TO THE BULK TRANSFER OR ANY SIMILAR REQUIREMENT OF LAW IN
EFFECT IN ANY APPLICABLE JURISDICTION.

 

(VII)                           LITIGATION; COMPLIANCE WITH LAWS.  THERE IS NO
LITIGATION PENDING THAT COULD REASONABLY BE EXPECTED TO CAUSE A MATERIAL ADVERSE
EFFECT OR THAT MIGHT MATERIALLY AND ADVERSELY AFFECT THE MORTGAGE LOANS SOLD OR
TO BE SOLD PURSUANT TO THIS AGREEMENT.  SELLER HAS NOT VIOLATED ANY REQUIREMENT
OF LAW APPLICABLE TO SELLER WHICH, IF VIOLATED, WOULD MATERIALLY AND ADVERSELY
AFFECT THE MORTGAGE LOANS TO BE SOLD PURSUANT TO THIS AGREEMENT OR COULD
REASONABLY BE EXPECTED TO CAUSE A MATERIAL ADVERSE EFFECT.

 

(VIII)                        STATEMENTS MADE.  THE INFORMATION, REPORTS,
FINANCIAL STATEMENTS, EXHIBITS AND SCHEDULES FURNISHED IN WRITING BY OR ON
BEHALF OF SELLER TO BUYER IN CONNECTION WITH THE NEGOTIATION, PREPARATION OR
DELIVERY OF THIS AGREEMENT AND THE OTHER TRANSACTION 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 OR ON BEHALF OF SELLER TO BUYER
IN CONNECTION WITH THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY WILL BE TRUE, COMPLETE AND ACCURATE
IN EVERY MATERIAL RESPECT, 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, AFTER DUE INQUIRY, COULD
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT THAT HAS NOT BEEN
DISCLOSED HEREIN, IN THE OTHER TRANSACTION DOCUMENTS OR IN A REPORT, FINANCIAL
STATEMENT, EXHIBIT, SCHEDULE, DISCLOSURE LETTER OR OTHER WRITING FURNISHED TO
BUYER FOR USE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.

 

(IX)                                APPROVED COMPANY.  SELLER CURRENTLY HOLDS
ALL APPROVALS, AUTHORIZATIONS AND OTHER LICENSES FROM THE APPROVED TAKEOUT
INVESTORS AND THE AGENCIES REQUIRED UNDER THE TAKEOUT GUIDELINES (OR OTHERWISE)
TO ORIGINATE, PURCHASE, HOLD, SERVICE AND SELL MORTGAGE LOANS OF THE TYPES TO BE
OFFERED FOR SALE TO BUYER HEREUNDER.

 

(X)                                   FIDELITY BONDS.  SELLER HAS PURCHASED
FIDELITY BONDS AND POLICIES OF INSURANCE, ALL OF WHICH ARE IN FULL FORCE AND
EFFECT, INSURING SELLER, BUYER AND THE SUCCESSORS AND ASSIGNS OF BUYER IN THE
GREATER OF (A) $500,000, (B) THE AMOUNT REQUIRED BY THE APPROVED TAKEOUT
INVESTOR AND (C) THE AMOUNT REQUIRED BY ANY OTHER TAKEOUT GUIDELINES, AGAINST
LOSS OR DAMAGE FROM ANY BREACH OF FIDELITY BY SELLER OR ANY OFFICER, DIRECTOR,
EMPLOYEE OR AGENT OF SELLER, AND AGAINST ANY LOSS OR DAMAGE FROM LOSS OR
DESTRUCTION OF DOCUMENTS, FRAUD, THEFT, MISAPPROPRIATION, OR ERRORS OR
OMISSIONS.

 

(XI)                                SOLVENCY.  AS OF THE DATE HEREOF AND
IMMEDIATELY AFTER GIVING EFFECT TO EACH TRANSACTION HEREUNDER, THE FAIR VALUE OF
THE ASSETS OF SELLER IS GREATER THAN THE FAIR VALUE OF THE LIABILITIES
(INCLUDING, WITHOUT LIMITATION, CONTINGENT LIABILITIES IF AND TO THE

 

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EXTENT REQUIRED TO BE RECORDED AS A LIABILITY ON THE FINANCIAL STATEMENTS OF
SELLER IN ACCORDANCE WITH GAAP) OF SELLER, AND SELLER IS AND, TO THE BEST OF ITS
KNOWLEDGE, WILL BE SOLVENT, IS, WILL BE ABLE AND INTENDS, 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. SELLER
DOES NOT INTEND TO INCUR, OR BELIEVE THAT IT HAS INCURRED, DEBTS BEYOND ITS
ABILITY TO PAY SUCH DEBTS AS THEY MATURE. SELLER IS NOT TRANSFERRING ANY LOANS
WITH ANY INTENT TO HINDER, DELAY OR DEFRAUD ANY PERSON.

 

(XII)                             REPORTING.  IN ITS FINANCIAL STATEMENTS,
SELLER INTENDS TO REPORT EACH SALE OF A MORTGAGE LOAN HEREUNDER AS A FINANCING
IN ACCORDANCE WITH GAAP.  SELLER HAS BEEN ADVISED BY OR CONFIRMED WITH ITS
INDEPENDENT PUBLIC ACCOUNTANTS THAT SUCH SALES CAN BE SO REPORTED UNDER GAAP ON
ITS FINANCIAL STATEMENTS.

 

(XIII)                          FINANCIAL CONDITION.  THE BALANCE SHEETS OF
SELLER PROVIDED TO BUYER PURSUANT TO PARAGRAPH 11(G) (AND, IF APPLICABLE, ITS
SUBSIDIARIES, ON A CONSOLIDATED AND CONSOLIDATING BASIS) AS AT THE DATES OF SUCH
BALANCE SHEETS, AND THE RELATED STATEMENTS OF INCOME, CHANGES IN STOCKHOLDERS’
EQUITY AND CASH FLOWS FOR THE PERIODS ENDED ON THE DATES OF SUCH BALANCE SHEETS
HERETOFORE FURNISHED TO BUYER, FAIRLY PRESENT THE FINANCIAL CONDITION OF SELLER
AND ITS SUBSIDIARIES AS OF SUCH DATES AND THE RESULTS OF ITS AND THEIR
OPERATIONS FOR THE PERIODS ENDED ON SUCH DATES.  ON THE DATES OF SUCH BALANCE
SHEETS, SELLER HAD NO KNOWN MATERIAL LIABILITIES, DIRECT OR INDIRECT, FIXED OR
CONTINGENT, MATURED OR UNMATURED, OR LIABILITIES FOR TAXES, LONG-TERM LEASES OR
UNUSUAL FORWARD OR LONG-TERM COMMITMENTS NOT DISCLOSED BY, OR RESERVED AGAINST
ON, SAID BALANCE SHEETS AND RELATED STATEMENTS, AND AT THE PRESENT TIME THERE
ARE NO MATERIAL UNREALIZED OR ANTICIPATED LOSSES FROM ANY LOANS, ADVANCES OR
OTHER COMMITMENTS OF SELLER EXCEPT AS HERETOFORE DISCLOSED TO BUYER IN WRITING. 
SAID FINANCIAL STATEMENTS WERE PREPARED IN ACCORDANCE WITH GAAP APPLIED ON A
CONSISTENT BASIS THROUGHOUT THE PERIODS INVOLVED.  SINCE THE DATE OF SUCH
BALANCE SHEET, THERE HAS BEEN NO MATERIAL ADVERSE EFFECT, NOR IS SELLER AWARE OF
ANY STATE OF FACTS PARTICULAR TO SELLER WHICH (WITH OR WITHOUT NOTICE OR LAPSE
OF TIME OR BOTH) COULD REASONABLY BE EXPECTED TO RESULT IN ANY SUCH MATERIAL
ADVERSE EFFECT.

 

(XIV)                         REGULATION U.  SELLER IS NOT ENGAGED PRINCIPALLY,
OR AS ONE OF ITS IMPORTANT ACTIVITIES, IN THE BUSINESS OF EXTENDING CREDIT FOR
THE PURPOSE OF PURCHASING OR CARRYING MARGIN STOCK, AND NO PART OF THE PROCEEDS
OF ANY SALES MADE HEREUNDER WILL BE USED TO PURCHASE OR CARRY ANY MARGIN STOCK
OR TO EXTEND CREDIT TO OTHERS FOR THE PURPOSE OF PURCHASING OR CARRYING ANY
MARGIN STOCK.

 

(XV)                            INVESTMENT COMPANY ACT.  NEITHER SELLER NOR ANY
OF ITS SUBSIDIARIES IS AN “INVESTMENT COMPANY” OR CONTROLLED BY AN “INVESTMENT
COMPANY” WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.

 

(XVI)                         AGREEMENTS.  NEITHER SELLER NOR ANY OF ITS
SUBSIDIARIES IS A PARTY TO ANY AGREEMENT, INSTRUMENT OR INDENTURE, OR SUBJECT TO
ANY RESTRICTION, MATERIALLY OR ADVERSELY AFFECTING ITS BUSINESS, OPERATIONS,
ASSETS OR FINANCIAL CONDITION, EXCEPT AS DISCLOSED IN THE FINANCIAL STATEMENTS
DESCRIBED IN PARAGRAPH 11(G).  NONE OF SELLER’S SUBSIDIARIES IS SUBJECT TO ANY
DIVIDEND RESTRICTION IMPOSED BY A GOVERNMENTAL AUTHORITY OTHER THAN THOSE UNDER
APPLICABLE STATUTORY LAW.  NEITHER SELLER NOR ANY OF ITS SUBSIDIARIES IS IN
DEFAULT IN

 

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THE PERFORMANCE, OBSERVANCE OR FULFILLMENT OF ANY OF THE OBLIGATIONS, COVENANTS
OR CONDITIONS CONTAINED IN ANY AGREEMENT, INSTRUMENT OR INDENTURE WHICH DEFAULT
COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.  NO HOLDER
OF ANY DEBT OF SELLER OR OF ANY OF ITS SUBSIDIARIES HAS GIVEN NOTICE OF ANY
ALLEGED DEFAULT THEREUNDER, OR, IF GIVEN, THE SAME HAS BEEN CURED OR WILL BE
CURED BY SELLER OR THE RELEVANT SUBSIDIARY WITHIN THE CURE PERIOD PROVIDED
THEREIN.  NO ACT OF INSOLVENCY WITH RESPECT TO SELLER OR ANY OF ITS SUBSIDIARIES
OR ANY OF THEIR RESPECTIVE PROPERTIES IS PENDING, CONTEMPLATED OR, TO THE
KNOWLEDGE OF SELLER, THREATENED.

 

(XVII)                      TITLE TO PROPERTIES.  SELLER AND EACH SUBSIDIARY OF
SELLER HAS GOOD, VALID, INSURABLE (IN THE CASE OF REAL PROPERTY) AND MARKETABLE
TITLE TO ALL OF ITS PROPERTIES AND ASSETS (WHETHER REAL OR PERSONAL, TANGIBLE OR
INTANGIBLE) REFLECTED ON THE FINANCIAL STATEMENTS DESCRIBED IN PARAGRAPH 11(G),
AND ALL SUCH PROPERTIES AND ASSETS ARE FREE AND CLEAR OF ALL LIENS EXCEPT
(I) THE LIEN OF CURRENT (NONDELINQUENT) REAL AND PERSONAL PROPERTY TAXES AND
ASSESSMENTS, (II) COVENANTS, CONDITIONS AND RESTRICTIONS, RIGHTS OF WAY,
EASEMENTS AND OTHER SIMILAR MATTERS TO WHICH LIKE PROPERTIES AND ASSETS ARE
COMMONLY SUBJECT THAT DO NOT MATERIALLY INTERFERE WITH THE USE OF THE PROPERTY
OR ASSET AS IT IS CURRENTLY BEING USED AND (III) SUCH OTHER LIENS AS ARE
DISCLOSED IN SUCH FINANCIAL STATEMENTS AND NOT PROHIBITED UNDER THIS AGREEMENT.

 

(XVIII)                   ERISA.  IF APPLICABLE, ALL PLANS (“PLANS”) OF A TYPE
DESCRIBED IN PARAGRAPH 3(3) OF ERISA IN RESPECT OF WHICH SELLER OR ANY
SUBSIDIARY OF SELLER IS AN “EMPLOYER,” AS DEFINED IN PARAGRAPH 3(5) OF ERISA,
ARE IN SUBSTANTIAL COMPLIANCE WITH ERISA, AND NONE OF SUCH PLANS IS INSOLVENT OR
IN REORGANIZATION, HAS AN ACCUMULATED OR WAIVED FUNDING DEFICIENCY WITHIN THE
MEANING OF PARAGRAPH 412 OF THE IRC, AND NEITHER SELLER NOR ANY SUBSIDIARY OF
SELLER HAS INCURRED ANY MATERIAL LIABILITY (INCLUDING ANY MATERIAL CONTINGENT
LIABILITY) TO OR ON ACCOUNT OF ANY SUCH PLAN PURSUANT TO PARAGRAPHS 4062, 4063,
4064, 4201 OR 4204 OF ERISA.  NO PROCEEDINGS HAVE BEEN INSTITUTED TO TERMINATE
ANY SUCH PLAN, AND NO CONDITION EXISTS WHICH PRESENTS A MATERIAL RISK TO SELLER
OR A SUBSIDIARY OF SELLER OF INCURRING A LIABILITY TO OR ON ACCOUNT OF ANY SUCH
PLAN PURSUANT TO ANY OF THE FOREGOING PARAGRAPHS OF ERISA.  NO PLAN OR TRUST
FORMING A PART THEREOF HAS BEEN TERMINATED SINCE DECEMBER 1, 1974.

 

(XIX)                           PROPER NAMES.  SELLER DOES NOT OPERATE IN ANY
JURISDICTION UNDER A TRADE NAME, DIVISION, DIVISION NAME OR NAME OTHER THAN
THOSE NAMES PREVIOUSLY DISCLOSED IN WRITING BY SELLER TO BUYER, AND ALL SUCH
NAMES ARE UTILIZED BY SELLER ONLY IN THE JURISDICTION(S) IDENTIFIED IN SUCH
WRITING.  THE ONLY NAMES USED BY SELLER IN ITS TAX RETURNS FOR THE LAST TEN
YEARS ARE SET FORTH IN EXHIBIT K.

 

(XX)                              NO UNDISCLOSED LIABILITIES.  OTHER THAN AS
DISCLOSED IN THE FINANCIAL STATEMENTS DELIVERED PURSUANT TO PARAGRAPH 11(G),
SELLER DOES NOT HAVE ANY LIABILITIES OR DEBT, DIRECT OR CONTINGENT.

 

(XXI)                           TAX RETURNS AND PAYMENTS.  ALL FEDERAL, STATE
AND LOCAL INCOME, EXCISE, PROPERTY AND OTHER TAX RETURNS REQUIRED TO BE FILED
WITH RESPECT TO SELLER’S OPERATIONS AND THOSE OF ITS SUBSIDIARIES IN ANY
JURISDICTION HAVE BEEN FILED ON OR BEFORE THE DUE DATE THEREOF (PLUS ANY
APPLICABLE EXTENSIONS); ALL SUCH RETURNS ARE TRUE AND CORRECT; ALL TAXES,

 

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ASSESSMENTS, FEES AND OTHER GOVERNMENTAL CHARGES UPON SELLER, AND SELLER’S
SUBSIDIARIES AND UPON THEIR RESPECTIVE PROPERTIES, INCOME OR FRANCHISES, WHICH
ARE, OR SHOULD BE, SHOWN TO BE DUE AND PAYABLE ON SUCH TAX RETURNS HAVE BEEN
PAID, INCLUDING, WITHOUT LIMITATION, ALL FEDERAL INSURANCE CONTRIBUTIONS ACT
(FICA) PAYMENTS AND WITHHOLDING TAXES, IF APPROPRIATE, OTHER THAN THOSE WHICH
ARE BEING CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS, DILIGENTLY PURSUED
AND AS TO WHICH SELLER HAS ESTABLISHED ADEQUATE RESERVES DETERMINED IN
ACCORDANCE WITH GAAP, CONSISTENTLY APPLIED.  THE AMOUNTS RESERVED, AS A
LIABILITY FOR INCOME AND OTHER TAXES PAYABLE, IN THE FINANCIAL STATEMENTS
DESCRIBED IN PARAGRAPH 11(G) ARE SUFFICIENT FOR PAYMENT OF ALL UNPAID FEDERAL,
STATE AND LOCAL INCOME, EXCISE, PROPERTY AND OTHER TAXES, WHETHER OR NOT
DISPUTED, OF SELLER AND ITS SUBSIDIARIES, ACCRUED FOR OR APPLICABLE TO THE
PERIOD AND ON THE DATES OF SUCH FINANCIAL STATEMENTS AND ALL YEARS AND PERIODS
PRIOR THERETO AND FOR WHICH SELLER AND SELLER’S SUBSIDIARIES MAY BE LIABLE IN
THEIR OWN RIGHT OR AS TRANSFEREE OF THE ASSETS OF, OR AS SUCCESSOR TO, ANY OTHER
PERSON.

 

(XXII)                        NO WARRANTS; SHARES VALID, PAID AND
NON-ASSESSABLE.  SELLER HAS NOT ISSUED, AND DOES NOT HAVE OUTSTANDING, ANY
WARRANTS, OPTIONS, RIGHTS OR OTHER OBLIGATIONS TO ISSUE OR PURCHASE ANY SHARES
OF ITS CAPITAL STOCK OR OTHER SECURITIES (OR OTHER EQUITY EQUIVALENT).  THE
OUTSTANDING SHARES OF CAPITAL STOCK (OR OTHER EQUITY EQUIVALENT) OF SELLER HAVE
BEEN DULY AUTHORIZED AND VALIDLY ISSUED AND ARE FULLY PAID AND NON-ASSESSABLE.

 

(XXIII)                     CREDIT INFORMATION.  SELLER HAS FULL RIGHT AND
AUTHORITY AND IS NOT PRECLUDED BY LAW OR CONTRACT FROM FURNISHING TO BUYER THE
APPLICABLE CONSUMER REPORT (AS DEFINED IN THE FAIR CREDIT REPORTING ACT, PUBLIC
LAW 91-508) AND ALL OTHER CREDIT INFORMATION RELATING TO EACH PURCHASED MORTGAGE
LOAN SOLD HEREUNDER, AND BUYER WILL NOT BE PRECLUDED FROM FURNISHING SUCH
MATERIALS TO THE RELATED APPROVED TAKEOUT INVESTOR BY SUCH LAWS.  NEITHER THE
FOREGOING NOR ANY OTHER PROVISION OF THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT SHALL BE CONSTRUED TO IMPOSE ANY OBLIGATION ON BUYER TO KEEP THE ABOVE
DESCRIBED MATERIALS CONFIDENTIAL OR TO OTHERWISE COMPLY WITH THE FAIR CREDIT
REPORTING ACT OR ANY SIMILAR LAWS.

 

(XXIV)                    NO DISCRIMINATION.  SELLER MAKES CREDIT ACCESSIBLE TO
ALL QUALIFIED APPLICANTS IN ACCORDANCE WITH ALL REQUIREMENTS OF LAW.  SELLER HAS
NOT DISCRIMINATED, AND WILL NOT DISCRIMINATE, AGAINST CREDIT APPLICANTS ON THE
BASIS OF ANY PROHIBITED CHARACTERISTIC, INCLUDING RACE, COLOR, RELIGION,
NATIONAL ORIGIN, SEX, MARITAL OR FAMILIAL STATUS, AGE (PROVIDED THAT THE
APPLICANT HAS THE ABILITY TO ENTER INTO A BINDING CONTRACT), HANDICAP, SEXUAL
ORIENTATION OR BECAUSE ALL OR PART OF THE APPLICANT’S INCOME IS DERIVED FROM A
PUBLIC ASSISTANCE PROGRAM OR BECAUSE OF THE APPLICANT’S GOOD FAITH EXERCISE OF
RIGHTS UNDER THE FEDERAL CONSUMER PROTECTION ACT.  FURTHERMORE, SELLER HAS NOT
DISCOURAGED, AND WILL NOT DISCOURAGE, THE COMPLETION OF ANY CREDIT APPLICATION
BASED ON ANY OF THE FOREGOING PROHIBITED BASES.  IN ADDITION, SELLER HAS
COMPLIED WITH ALL ANTI-REDLINING PROVISIONS AND EQUAL CREDIT OPPORTUNITY LAWS
APPLICABLE UNDER ALL REQUIREMENTS OF LAW.

 

(XXV)                       HOME OWNERSHIP AND EQUITY PROTECTION ACT.  THERE IS
NO LITIGATION, PROCEEDING OR GOVERNMENTAL INVESTIGATION EXISTING OR PENDING, OR
ANY ORDER, INJUNCTION OR DECREE OUTSTANDING AGAINST OR RELATING TO SELLER,
RELATING TO ANY VIOLATION OF THE HOME

 

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OWNERSHIP AND EQUITY PROTECTION ACT OR ANY STATE, CITY OR DISTRICT HIGH COST
HOME MORTGAGE OR PREDATORY LENDING LAW.

 

(XXVI)                    PLACE OF BUSINESS AND FORMATION.  THE PRINCIPAL PLACE
OF BUSINESS OF SELLER IS LOCATED AT THE ADDRESS SET FORTH FOR SELLER IN
PARAGRAPH 15.  AS OF THE DATE HEREOF, AND DURING THE FOUR (4) MONTHS IMMEDIATELY
PRECEDING THAT DATE, THE CHIEF EXECUTIVE OFFICE OF SELLER AND THE OFFICE WHERE
IT KEEPS ITS FINANCIAL BOOKS AND RECORDS RELATING TO ITS PROPERTY AND ALL
CONTRACTS RELATING THERETO AND ALL ACCOUNTS ARISING THEREFROM IS AND HAS BEEN
LOCATED AT THE ADDRESS SET FORTH FOR SELLER IN PARAGRAPH 15.  AS OF THE DATE
HEREOF, SELLER’S JURISDICTION OF ORGANIZATION IS THE STATE SPECIFIED IN
PARAGRAPH 15.

 

(XXVII)                 NO ADVERSE SELECTION.  SELLER USED NO SELECTION
PROCEDURES THAT IDENTIFIED THE PURCHASED MORTGAGE LOANS OFFERED TO BUYER FOR
PURCHASE HEREUNDER AS BEING LESS DESIRABLE OR VALUABLE THAN OTHER COMPARABLE
MORTGAGE LOANS OWNED BY SELLER.

 

(XXVIII)              MERS.  SELLER AND EACH APPROVED TAKEOUT INVESTOR IS A
MEMBER OF MERS IN GOOD STANDING.

 

(XXIX)                      PRINCIPAL.  SELLER IS ENGAGING IN THE TRANSACTIONS
AS A PRINCIPAL.

 

(XXX)                         NO DEFAULT.  NO DEFAULT OR EVENT OF DEFAULT HAS
OCCURRED.

 

(XXXI)                      NATIONAL CITY BANK.  NO MORTGAGE ASSETS OR PROCEEDS
THEREOF ARE MAINTAINED AT OR DEPOSITED INTO ANY ACCOUNT MAINTAINED AT NATIONAL
CITY BANK.

 

(B)                                 MORTGAGE LOAN REPRESENTATIONS.  SELLER
REPRESENTS AND WARRANTS TO BUYER THAT (I) EACH PURCHASED MORTGAGE LOAN IS AN
ELIGIBLE MORTGAGE LOAN ON AND AS OF THE PURCHASE DATE THEREFOR, (II) EACH
MORTGAGE LOAN TO BE TRANSFERRED FROM SELLER TO BUYER AS AN ADDITIONAL PURCHASED
MORTGAGE LOAN IS AN ELIGIBLE MORTGAGE LOAN ON AND AS OF THE DATE OF TRANSFER
THEREOF AND (III) EACH PURCHASED MORTGAGE LOAN IDENTIFIED AS AN ELIGIBLE
MORTGAGE LOAN BY SELLER IN ANY REPORT OR OTHER INFORMATION DELIVERED TO BUYER IS
AN ELIGIBLE MORTGAGE LOAN.  SELLER FURTHER MAKES THE REPRESENTATIONS AND
WARRANTIES REGARDING EACH PURCHASED MORTGAGE LOAN (INCLUDING EACH ADDITIONAL
PURCHASED MORTGAGE LOAN) AS ARE SET FORTH IN EXHIBIT B.

 

(C)                                  SURVIVAL OF REPRESENTATIONS.  ALL THE
REPRESENTATIONS AND WARRANTIES MADE BY SELLER TO BUYER IN THIS AGREEMENT ARE
BINDING ON SELLER REGARDLESS OF WHETHER THE SUBJECT MATTER THEREOF WAS UNDER THE
CONTROL OF SELLER OR A THIRD PARTY.  SELLER ACKNOWLEDGES THAT BUYER WILL RELY
UPON ALL SUCH REPRESENTATIONS AND WARRANTIES WITH RESPECT TO EACH PURCHASED
MORTGAGE LOAN PURCHASED BY BUYER HEREUNDER, AND SELLER MAKES SUCH
REPRESENTATIONS AND WARRANTIES IN ORDER TO INDUCE BUYER TO PURCHASE THE MORTGAGE
LOANS.  THE REPRESENTATIONS AND WARRANTIES BY SELLER IN THIS AGREEMENT WITH
RESPECT TO A PURCHASED MORTGAGE LOAN SHALL BE UNAFFECTED BY, AND SHALL SUPERSEDE
AND CONTROL OVER, ANY PROVISION IN ANY EXISTING OR FUTURE ENDORSEMENT OF ANY
PURCHASED MORTGAGE LOAN OR IN ANY ASSIGNMENT WITH RESPECT TO SUCH PURCHASED
MORTGAGE LOAN TO THE EFFECT THAT SUCH ENDORSEMENT OR ASSIGNMENT IS WITHOUT
RECOURSE OR WITHOUT REPRESENTATION OR WARRANTY.  ALL SELLER REPRESENTATIONS AND
WARRANTIES SHALL SURVIVE DELIVERY OF THE LOAN FILES AND THE CONFIRMATIONS,
PURCHASE BY BUYER OF PURCHASED MORTGAGE LOANS, TRANSFER OF THE SERVICING FOR THE
PURCHASED MORTGAGE LOANS TO A SUCCESSOR SERVICER, DELIVERY OF PURCHASED MORTGAGE
LOANS TO AN APPROVED TAKEOUT INVESTOR, REPURCHASES OF THE PURCHASED MORTGAGE
LOANS BY SELLER AND

 

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TERMINATION OF THIS AGREEMENT. THE REPRESENTATIONS AND WARRANTIES OF SELLER IN
THIS AGREEMENT SHALL INURE TO THE BENEFIT OF BUYER AND ITS SUCCESSORS AND
ASSIGNS, NOTWITHSTANDING ANY EXAMINATION BY BUYER OF ANY MORTGAGE LOAN
DOCUMENTS, RELATED FILES OR OTHER DOCUMENTS DELIVERED TO BUYER.

 

11.                               SELLER’S COVENANTS.

 

Seller shall perform, and shall cause each of its Subsidiaries to perform, the
following duties at all times during the term of this Agreement:

 

(A)                                  MAINTENANCE OF EXISTENCE; CONDUCT OF
BUSINESS.  SELLER AND EACH OF ITS SUBSIDIARIES SHALL PRESERVE AND MAINTAIN ITS
EXISTENCE IN GOOD STANDING AND ALL OF ITS RIGHTS, PRIVILEGES, LICENSES AND
FRANCHISES NECESSARY IN THE NORMAL CONDUCT OF ITS BUSINESS, INCLUDING WITHOUT
LIMITATION ITS ELIGIBILITY AS LENDER, SELLER/SERVICER AND ISSUER DESCRIBED UNDER
PARAGRAPH 10(A)(IX); AND EACH OF SELLER AND ITS SUBSIDIARIES SHALL CONDUCT ITS
BUSINESS IN AN ORDERLY AND EFFICIENT MANNER AND SHALL KEEP ADEQUATE BOOKS AND
RECORDS OF ITS BUSINESS ACTIVITIES, AND MAKE NO MATERIAL CHANGE IN THE NATURE OR
CHARACTER OF ITS BUSINESS OR ENGAGE IN ANY BUSINESS IN WHICH IT WAS NOT ENGAGED
ON THE DATE OF THIS AGREEMENT, EXCEPT THAT SELLER AND HLC ESCROW SHALL BE
PERMITTED TO ENTER INTO THE MORTGAGE LOAN CLOSING, ESCROW, TITLE INSURANCE AND
SETTLEMENT BUSINESS.  SELLER WILL NOT MAKE ANY MATERIAL CHANGE IN ITS ACCOUNTING
TREATMENT AND REPORTING PRACTICES EXCEPT AS REQUIRED BY GAAP.  SELLER SHALL
REMAIN A MEMBER OF MERS IN GOOD STANDING.

 

(B)                                 COMPLIANCE WITH APPLICABLE LAWS.  SELLER AND
EACH OF ITS SUBSIDIARIES SHALL COMPLY WITH ALL REQUIREMENTS OF LAW, A BREACH OF
WHICH COULD AFFECT THE MORTGAGE LOANS TO BE SOLD PURSUANT TO THIS AGREEMENT OR
THAT COULD REASONABLY EXPECT TO RESULT IN A MATERIAL ADVERSE EFFECT, EXCEPT
WHERE CONTESTED IN GOOD FAITH AND BY APPROPRIATE PROCEEDINGS, AND WITH
SUFFICIENT RESERVES ESTABLISHED THEREFOR.  SELLER AND EACH OF ITS SUBSIDIARIES
SHALL COMPLY WITH ALL REQUIREMENTS OF LAW APPLICABLE TO IT AND THE PURCHASED
MORTGAGE LOANS OR ANY PART THEREOF (INCLUDING, WITHOUT LIMITATION, ANY AGENCY
GUIDELINES, ALL ANTI-MONEY LAUNDERING LAWS AND REGULATIONS, INCLUDING, WITHOUT
LIMITATION, THE USA PATRIOT ACT OF 2001, AS AMENDED, THE GLB ACT AND ALL
CONSUMER PROTECTION LAWS AND REGULATIONS).

 

(C)                                  INSPECTION OF PROPERTIES AND BOOKS.  SELLER
SHALL PERMIT AUTHORIZED REPRESENTATIVES OF BUYER TO (I) DISCUSS THE BUSINESS,
OPERATIONS, ASSETS AND FINANCIAL CONDITION OF SELLER AND SELLER’S SUBSIDIARIES
WITH THEIR OFFICERS AND EMPLOYEES AND TO EXAMINE THEIR BOOKS OF ACCOUNT,
RECORDS, REPORTS AND OTHER PAPERS AND MAKE COPIES OR EXTRACTS THEREOF,
(II) INSPECT ALL OF SELLER’S PROPERTY AND ALL RELATED INFORMATION AND REPORTS,
AND (III) AUDIT SELLER’S OPERATIONS TO ENSURE COMPLIANCE WITH THE TERMS OF THE
TRANSACTION DOCUMENTS, THE GLB ACT AND OTHER PRIVACY LAWS AND REGULATIONS, ALL
AT SELLER’S EXPENSE AND AT SUCH REASONABLE TIMES AS BUYER MAY REQUEST.  SELLER
WILL PROVIDE ITS ACCOUNTANTS WITH A PHOTOCOPY OF THIS AGREEMENT PROMPTLY AFTER
THE EXECUTION HEREOF AND WILL INSTRUCT ITS ACCOUNTANTS TO ANSWER CANDIDLY ANY
AND ALL QUESTIONS THAT THE OFFICERS OF BUYER OR ANY AUTHORIZED REPRESENTATIVES
OF BUYER MAY ADDRESS TO THEM IN REFERENCE TO THE FINANCIAL CONDITION OR AFFAIRS
OF SELLER AND SELLER’S SUBSIDIARIES.  SELLER MAY HAVE ITS REPRESENTATIVES IN
ATTENDANCE AT ANY MEETINGS BETWEEN THE OFFICERS OR OTHER REPRESENTATIVES OF
BUYER AND SELLER’S ACCOUNTANTS HELD IN ACCORDANCE WITH THIS AUTHORIZATION.

 

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(D)                                 NOTICES.  SELLER WILL PROMPTLY NOTIFY BUYER
OF THE OCCURRENCE OF ANY OF THE FOLLOWING AND SHALL PROVIDE SUCH ADDITIONAL
DOCUMENTATION AND COOPERATION AS BUYER MAY REQUEST WITH RESPECT TO ANY OF THE
FOLLOWING:

 

(I)                                     ANY CHANGE IN SELLER’S, ANY OF ITS
SUBSIDIARY’S OR ANY GUARANTOR’S BUSINESS ADDRESS AND/OR TELEPHONE NUMBER;

 

(II)                                  ANY MERGER, CONSOLIDATION OR
REORGANIZATION OF SELLER, ANY OF ITS SUBSIDIARIES OR ANY GUARANTOR, OR ANY
CHANGES IN THE OWNERSHIP OF SELLER, ANY OF ITS SUBSIDIARIES OR ANY GUARANTOR BY
DIRECT OR INDIRECT MEANS.  “INDIRECT” MEANS ANY CHANGE IN OWNERSHIP OF A
CONTROLLING INTEREST OF THE RELEVANT PERSON’S DIRECT OR INDIRECT PARENT;

 

(III)                               ANY CHANGE OF THE NAME OR JURISDICTION OF
ORGANIZATION OF SELLER, ANY OF ITS SUBSIDIARIES OR ANY GUARANTOR;

 

(IV)                              ANY SIGNIFICANT ADVERSE CHANGE IN THE
FINANCIAL POSITION OF SELLER, ANY OF ITS SUBSIDIARIES OR ANY GUARANTOR;

 

(V)                                 ENTRY OF ANY COURT JUDGMENT OR REGULATORY
ORDER IN WHICH SELLER, ANY SUBSIDIARY OF SELLER OR ANY GUARANTOR IS OR MAY BE
REQUIRED TO PAY A CLAIM OR CLAIMS WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON
THE FINANCIAL CONDITION OF SELLER, ANY OF SELLER’S SUBSIDIARIES OR ANY
GUARANTOR, ON SELLER’S OR ANY GUARANTOR’S ABILITY TO PERFORM ITS OBLIGATIONS
UNDER ANY TRANSACTION DOCUMENT, OR ON THE ABILITY OF SELLER, ANY SUBSIDIARY OF
SELLER OR ANY GUARANTOR TO CONTINUE ITS OPERATIONS IN A MANNER SIMILAR TO ITS
CURRENT OPERATIONS;

 

(VI)                              THE FILING OF ANY PETITION, CLAIM OR LAWSUIT
AGAINST SELLER, ANY OF SELLER’S SUBSIDIARIES OR ANY GUARANTOR WHICH COULD HAVE A
MATERIAL ADVERSE EFFECT ON THE FINANCIAL CONDITION OF SELLER, ANY SUBSIDIARY OF
SELLER OR ANY GUARANTOR, ON SELLER’S OR ANY GUARANTOR’S ABILITY TO PERFORM ITS
OBLIGATIONS UNDER ANY TRANSACTION DOCUMENT, OR ON THE ABILITY OF SELLER, ANY
SUBSIDIARY OF SELLER OR ANY GUARANTOR TO CONTINUE ITS OPERATIONS IN A MANNER
SIMILAR TO ITS CURRENT OPERATIONS;

 

(VII)                           SELLER, ANY SUBSIDIARY OF SELLER OR ANY
GUARANTOR ADMITS TO COMMITTING, OR IS FOUND BY A COURT OR SIMILAR BODY WITH THE
APPROPRIATE JURISDICTION TO HAVE COMMITTED, A MATERIAL VIOLATION OF ANY
REQUIREMENT OF LAW RELATING TO ITS BUSINESS OPERATIONS, INCLUDING BUT NOT
LIMITED TO, ITS LOAN GENERATION, SALE OR SERVICING OPERATIONS;

 

(VIII)                        THE INITIATION OF ANY INVESTIGATIONS, AUDITS,
EXAMINATIONS OR REVIEWS OF SELLER, ANY SUBSIDIARY OF SELLER OR ANY GUARANTOR BY
ANY AGENCY, GOVERNMENTAL AUTHORITY, TRADE ASSOCIATION OR CONSUMER ADVOCACY GROUP
RELATING TO THE ORIGINATION, SALE OR SERVICING OF MORTGAGE LOANS BY SELLER, ANY
SUBSIDIARY OF SELLER OR ANY GUARANTOR OR THE BUSINESS OPERATIONS OF SELLER, ANY
SUBSIDIARY OF SELLER OR ANY GUARANTOR, WITH THE EXCEPTION OF NORMALLY SCHEDULED
AUDITS OR EXAMINATIONS BY THE REGULATORS OF SELLER, ANY SUBSIDIARY OF SELLER OR
ANY GUARANTOR;

 

(IX)                                ANY DISQUALIFICATION OR SUSPENSION OF
SELLER, ANY SUBSIDIARY OF SELLER OR ANY GUARANTOR BY AN AGENCY, INCLUDING ANY
NOTIFICATION OR KNOWLEDGE, FROM ANY SOURCE,

 

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OF ANY DISQUALIFICATION OR SUSPENSION, OR ANY WARNING OF ANY SUCH
DISQUALIFICATION OR SUSPENSION OR IMPENDING DISQUALIFICATION OR SUSPENSION;

 

(X)                                   THE OCCURRENCE OF ANY ACTIONS, INACTIONS
OR EVENTS UPON WHICH AN AGENCY MAY, IN ACCORDANCE WITH AGENCY GUIDELINES,
DISQUALIFY OR SUSPEND SELLER, ANY SUBSIDIARY OF SELLER OR ANY GUARANTOR AS A
SELLER OR SERVICER, INCLUDING, BUT NOT LIMITED TO, THOSE EVENTS OR REASONS FOR
DISQUALIFICATION OR SUSPENSION ENUMERATED IN CHAPTER 5 OF THE FREDDIE MAC SINGLE
FAMILY SELLER/SERVICER GUIDE;

 

(XI)                                THE FILING, RECORDING OR ASSESSMENT OF ANY
VALID FEDERAL, STATE OR LOCAL TAX LIEN AGAINST IT, ANY SUBSIDIARY OF SELLER OR
ANY GUARANTOR, OR ANY OF ITS, ANY SUCH SUBSIDIARY’S OR ANY GUARANTOR’S ASSETS;

 

(XII)                             THE OCCURRENCE OF ANY EVENT OF DEFAULT
HEREUNDER OR THE OCCURRENCE OF ANY DEFAULT,

 

(XIII)                          THE SUSPENSION, REVOCATION OR TERMINATION OF ANY
LICENSES OR ELIGIBILITY AS DESCRIBED UNDER PARAGRAPH 10(A)(IX) OF SELLER, ANY
SUBSIDIARY OF SELLER OR ANY GUARANTOR,

 

(XIV)                         ANY OTHER ACTION, EVENT OR CONDITION OF ANY NATURE
WHICH COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT OR
WHICH, WITH OR WITHOUT NOTICE OR LAPSE OF TIME OR BOTH, WILL CONSTITUTE A
DEFAULT UNDER ANY OTHER AGREEMENT, INSTRUMENT OR INDENTURE TO WHICH SELLER, ANY
SUBSIDIARY OF SELLER OR ANY GUARANTOR IS A PARTY OR TO WHICH ITS PROPERTIES OR
ASSETS MAY BE SUBJECT; OR

 

(XV)                            ANY ALLEGED BREACH BY BUYER OF ANY PROVISION OF
THIS AGREEMENT OR OF ANY OF THE OTHER TRANSACTION DOCUMENTS.

 

(E)                                  PAYMENT OF DEBT, TAXES, ETC.

 

(I)                                     SELLER SHALL PAY AND PERFORM ALL
OBLIGATIONS AND DEBT OF SELLER, AND CAUSE TO BE PAID AND PERFORMED ALL
OBLIGATIONS AND DEBT OF ITS SUBSIDIARIES IN ACCORDANCE WITH THE TERMS THEREOF,
AND PAY AND DISCHARGE OR CAUSE TO BE PAID AND DISCHARGED ALL TAXES, ASSESSMENTS
AND GOVERNMENTAL CHARGES OR LEVIES IMPOSED UPON SELLER, ITS SUBSIDIARIES, OR
UPON THEIR RESPECTIVE INCOME, RECEIPTS OR PROPERTIES, BEFORE THE SAME SHALL
BECOME PAST DUE, AS WELL AS ALL LAWFUL CLAIMS FOR LABOR, MATERIALS OR SUPPLIES
OR OTHERWISE WHICH, IF UNPAID, MIGHT BECOME A LIEN UPON SUCH PROPERTIES OR ANY
PART THEREOF; PROVIDED, HOWEVER, THAT SELLER AND ITS SUBSIDIARIES SHALL NOT BE
REQUIRED TO PAY OBLIGATIONS, DEBT, TAXES, ASSESSMENTS OR GOVERNMENTAL CHARGES OR
LEVIES OR CLAIMS FOR LABOR, MATERIALS OR SUPPLIES FOR WHICH SELLER OR ITS
SUBSIDIARIES SHALL HAVE OBTAINED AN ADEQUATE BOND OR ADEQUATE INSURANCE OR WHICH
ARE BEING CONTESTED IN GOOD FAITH AND BY PROPER PROCEEDINGS THAT ARE BEING
REASONABLY AND DILIGENTLY PURSUED, IF SUCH PROCEEDINGS DO NOT INVOLVE ANY
LIKELIHOOD OF THE SALE, FORFEITURE OR LOSS OF ANY SUCH PROPERTY OR ANY INTEREST
THEREIN WHILE SUCH PROCEEDINGS ARE PENDING; AND PROVIDED FURTHER THAT BOOK
RESERVES ADEQUATE UNDER GAAP SHALL HAVE BEEN ESTABLISHED WITH RESPECT THERETO.

 

(II)                                  (A)                              ALL
PAYMENTS MADE BY SELLER UNDER THIS AGREEMENT SHALL BE MADE FREE AND CLEAR OF,
AND WITHOUT DEDUCTION OR WITHHOLDING FOR OR ON ACCOUNT OF, ANY PRESENT

 

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OR FUTURE TAXES, LEVIES, IMPOSTS, DEDUCTIONS, CHARGES OR WITHHOLDINGS, AND ALL
LIABILITIES (INCLUDING PENALTIES, INTEREST AND ADDITIONS TO TAX) WITH RESPECT
THERETO IMPOSED BY ANY GOVERNMENTAL AUTHORITY, EXCLUDING TAXES IMPOSED ON (OR
MEASURED BY) ITS NET INCOME (HOWEVER DENOMINATED) OR CAPITAL, BRANCH PROFITS
TAXES, FRANCHISE TAXES OR ANY OTHER TAX IMPOSED ON THE NET INCOME BY THE UNITED
STATES, A STATE OR A FOREIGN JURISDICTION UNDER THE LAWS OF WHICH BUYER IS
ORGANIZED OR OF ITS APPLICABLE LENDING OFFICE, OR ANY POLITICAL SUBDIVISION
THEREOF (COLLECTIVELY, “TAXES”), ALL OF WHICH SHALL BE PAID BY SELLER FOR ITS
OWN ACCOUNT NOT LATER THAN THE DATE WHEN DUE.  IF SELLER IS REQUIRED BY
REQUIREMENT OF LAW TO DEDUCT OR WITHHOLD ANY TAXES FROM OR IN RESPECT OF ANY
AMOUNT PAYABLE HEREUNDER, IT SHALL: (A) MAKE SUCH DEDUCTION OR WITHHOLDING;
(B) PAY THE AMOUNT SO DEDUCTED OR WITHHELD TO THE APPROPRIATE GOVERNMENTAL
AUTHORITY NOT LATER THAN THE DATE WHEN DUE; (C) DELIVER TO BUYER, PROMPTLY,
ORIGINAL TAX RECEIPTS AND OTHER EVIDENCE SATISFACTORY TO BUYER OF THE PAYMENT
WHEN DUE OF THE FULL AMOUNT OF SUCH TAXES; AND (D) PAY TO BUYER SUCH ADDITIONAL
AMOUNTS AS MAY BE NECESSARY SO THAT SUCH BUYER RECEIVES, FREE AND CLEAR OF ALL
TAXES, A NET AMOUNT EQUAL TO THE AMOUNT IT WOULD HAVE RECEIVED UNDER THIS
AGREEMENT, AS IF NO SUCH DEDUCTION OR WITHHOLDING HAD BEEN MADE.

 

(B)                                In addition, Seller agrees to pay to the
relevant Governmental Authority in accordance with all applicable Requirements
of Law any current or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies (including, without limitation,
mortgage recording taxes, transfer taxes and similar fees) imposed by the United
States or any taxing authority thereof or therein that arise from any payment
made hereunder or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement (“Other Taxes”).

 

(C)                                Seller agrees to indemnify Buyer for the full
amount of Taxes (including additional amounts with respect thereto) and Other
Taxes, and the full amount of Taxes of any kind imposed by any jurisdiction on
amounts payable under this subparagraph, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, provided that
Buyer shall have provided Seller with evidence, reasonably satisfactory to
Seller, of payment of Taxes or Other Taxes, as the case may be.

 

(D)                               Any assignee of Buyer that is not incorporated
or otherwise created under the laws of the United States, any State thereof, or
the District of Columbia (a “Foreign Buyer”) shall provide Seller with properly
completed United States Internal Revenue Service (“IRS”) Form W-8BEN or W-8ECI
or any successor form prescribed by the IRS, certifying that such Foreign Buyer
is entitled to benefits under an income tax treaty to which the United States is
a party which reduces the rate of withholding tax on payments of interest or
certifying that the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States on or
prior to the date upon which each such Foreign Buyer becomes a purchaser of
Mortgage Loans hereunder.  Each Foreign Buyer will resubmit the appropriate form
on the earliest of (x) the third anniversary of the prior submission or (y) on
or before the expiration of thirty (30) days after there is a “change in
circumstances” with respect to such Foreign Buyer as defined in Treas. Reg.
Section 1.1441(e)(4)(ii)(D).  For any period with respect to which a Foreign
Buyer has failed to provide Seller with the appropriate form or other

 

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relevant document pursuant to this subparagraph (unless such failure is due to a
change in any Requirement of Law occurring subsequent to the date on which a
form originally was required to be provided), such Foreign Buyer shall not be
entitled to any “gross-up” of Taxes or indemnification under this Paragraph
11(e) with respect to Taxes imposed by the United States; provided, however,
that should a Foreign Buyer, which is otherwise exempt from a withholding tax,
become subject to Taxes because of its failure to deliver a form required
hereunder, Seller shall take such steps as such Foreign Buyer shall reasonably
request to assist such Foreign Buyer to recover such Taxes.

 

(E)                                 Without prejudice to the survival or any
other agreement of Seller hereunder, the agreements and obligations of Seller
contained in this Paragraph 11(e) shall survive the termination of this
Agreement.  Nothing contained in this Paragraph 11(e) shall require Buyer to
make available any of its tax returns or other information that it deems to be
confidential or proprietary.

 

(F)                                 Each Party acknowledges that it is its
intent, for purposes of U.S. federal, state and local income and franchise taxes
only, to treat each purchase transaction hereunder as indebtedness of Seller
that is secured by the Mortgage Loans and that the Mortgage Loans are owned by
Seller in the absence of an Event of Default by Seller.  All parties to this
Agreement agree to such treatment and agree to take no action inconsistent with
this treatment, unless required by law.

 

(F)                                    INSURANCE.  SELLER SHALL, AND SHALL CAUSE
ITS SUBSIDIARIES TO, MAINTAIN (A) ERRORS AND OMISSIONS INSURANCE OR MORTGAGE
IMPAIRMENT INSURANCE AND BLANKET BOND COVERAGE, WITH SUCH COMPANIES AND IN SUCH
AMOUNTS AS TO SATISFY PREVAILING AGENCY GUIDELINES REQUIREMENTS APPLICABLE TO A
QUALIFIED MORTGAGE ORIGINATING INSTITUTION; (B) LIABILITY INSURANCE AND FIRE AND
OTHER HAZARD INSURANCE ON ITS PROPERTIES, WITH RESPONSIBLE INSURANCE COMPANIES
APPROVED BY BUYER, IN SUCH AMOUNTS AND AGAINST SUCH RISKS AS IS CUSTOMARILY
CARRIED BY SIMILAR BUSINESSES OPERATING IN THE SAME VICINITY; AND (C) WITHIN
THIRTY (30) DAYS AFTER NOTICE FROM BUYER, OBTAIN SUCH ADDITIONAL INSURANCE AS
BUYER SHALL REASONABLY REQUIRE, ALL AT THE SOLE EXPENSE OF SELLER.  PHOTOCOPIES
OF SUCH POLICIES SHALL BE FURNISHED TO BUYER WITHOUT CHARGE UPON OBTAINING SUCH
COVERAGE OR ANY RENEWAL OF OR MODIFICATION TO SUCH COVERAGE.

 

(G)                                 FINANCIAL STATEMENTS AND OTHER REPORTS. 
SELLER SHALL DELIVER OR CAUSE TO BE DELIVERED TO BUYER:

 

(I)                                     AS SOON AS AVAILABLE AND IN ANY EVENT
NOT LATER THAN 30 DAYS AFTER THE END OF EACH CALENDAR MONTH, STATEMENTS OF
INCOME AND CHANGES IN STOCKHOLDERS’ EQUITY AND CASH FLOW OF SELLER, AND, IF
APPLICABLE, SELLER’S SUBSIDIARIES, ON A CONSOLIDATED AND CONSOLIDATING BASIS FOR
THE IMMEDIATELY PRECEDING MONTH, AND RELATED BALANCE SHEET AS AT THE END OF THE
IMMEDIATELY PRECEDING MONTH, ALL IN REASONABLE DETAIL, PREPARED IN ACCORDANCE
WITH GAAP APPLIED ON A CONSISTENT BASIS, AND CERTIFIED AS TO THE FAIRNESS OF
PRESENTATION BY THE CHIEF FINANCIAL OFFICER OF SELLER, SUBJECT, HOWEVER, TO
NORMAL YEAR-END AUDIT ADJUSTMENTS;

 

(II)                                  AS SOON AS AVAILABLE AND IN ANY EVENT NOT
LATER THAN 90 DAYS AFTER SELLER’S AND PARENT’S FISCAL YEAR END, STATEMENTS OF
INCOME, CHANGES IN STOCKHOLDERS’ EQUITY AND

 

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CASH FLOWS OF SELLER, PARENT AND, IF APPLICABLE, THEIR RESPECTIVE SUBSIDIARIES,
ON A CONSOLIDATED BASIS FOR THE PRECEDING FISCAL YEAR, THE RELATED BALANCE SHEET
AS AT THE END OF SUCH YEAR (SETTING FORTH IN COMPARATIVE FORM THE CORRESPONDING
FIGURES FOR THE PRECEDING FISCAL YEAR), ALL IN REASONABLE DETAIL, PREPARED IN
ACCORDANCE WITH GAAP APPLIED ON A CONSISTENT BASIS THROUGHOUT THE PERIODS
INVOLVED, AND ACCOMPANIED BY AN OPINION IN FORM AND SUBSTANCE SATISFACTORY TO
BUYER AND PREPARED BY AN ACCOUNTING FIRM REASONABLY SATISFACTORY TO BUYER, OR
OTHER INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF RECOGNIZED STANDING SELECTED
BY SELLER OR PARENT, AS APPLICABLE, AND, IN EACH CASE, ACCEPTABLE TO BUYER, AS
TO SAID FINANCIAL STATEMENTS AND A CERTIFICATE SIGNED BY THE CHIEF FINANCIAL
OFFICER OF SELLER OR PARENT, AS APPLICABLE, STATING THAT SAID FINANCIAL
STATEMENTS FAIRLY PRESENT THE FINANCIAL CONDITION, RESULTS AND CASH FLOWS OF
OPERATIONS OF SELLER OR PARENT, AS APPLICABLE (AND, IF APPLICABLE, SELLER’S OR
PARENT’S SUBSIDIARIES ON A CONSOLIDATED BASIS) AS AT THE END OF, AND FOR, SUCH
YEAR;

 

(III)                               TOGETHER WITH EACH DELIVERY OF FINANCIAL
STATEMENTS REQUIRED IN THIS PARAGRAPH, COMPLIANCE CERTIFICATES EXECUTED BY EACH
CHIEF FINANCIAL OFFICER OF SELLER AND PARENT;

 

(IV)                              PHOTOCOPIES OF ALL REGULAR OR PERIODIC
FINANCIAL AND OTHER REPORTS, IF ANY, WHICH SELLER, ANY GUARANTOR OR ANY
SUBSIDIARY OF SELLER OR ANY GUARANTOR SHALL FILE WITH THE SEC OR ANY OTHER
GOVERNMENTAL AUTHORITY, NOT LATER THAN FIVE (5) DAYS AFTER FILING,

 

(V)                                 PHOTOCOPIES OF ANY AUDITS COMPLETED BY ANY
AGENCY OF SELLER, ANY GUARANTOR OR ANY OF THEIR SUBSIDIARIES, NOT LATER THAN
FIVE (5) DAYS AFTER RECEIVING SUCH AUDIT;

 

(VI)                              NOT LESS FREQUENTLY THAN ONCE EVERY WEEK (AND
MORE OFTEN IF REQUESTED BY BUYER), A REPORT IN FORM AND SUBSTANCE SATISFACTORY
TO BUYER SUMMARIZING THE HEDGING ARRANGEMENTS THEN IN EFFECT WITH RESPECT TO ALL
MORTGAGE LOANS THEN OWNED BY BUYER AND INTERIM SERVICED BY SELLER (OR A
SUCCESSOR SERVICER);

 

(VII)                           ON EACH BUSINESS DAY, A DATA TAPE FOR PURCHASED
MORTGAGE LOANS INCLUDING THE INFORMATION DESCRIBED ON EXHIBIT I AND SUCH OTHER
INFORMATION REQUESTED BY BUYER FROM TIME TO TIME; AND

 

(VIII)                        FROM TIME TO TIME, WITH REASONABLE PROMPTNESS,
SUCH FURTHER INFORMATION REGARDING THE MORTGAGE ASSETS, OR THE BUSINESS,
OPERATIONS, PROPERTIES OR FINANCIAL CONDITION OF SELLER AND ANY GUARANTOR AS
BUYER MAY REASONABLY REQUEST.

 

(H)                                 LIMITS ON DISTRIBUTIONS.  SELLER SHALL NOT,
AND SHALL NOT PERMIT ANY OF ITS SUBSIDIARIES TO, PAY, MAKE OR DECLARE OR INCUR
ANY LIABILITY TO PAY, MAKE OR DECLARE ANY DIVIDEND (EXCLUDING STOCK DIVIDENDS)
OR OTHER DISTRIBUTION, DIRECT OR INDIRECT, ON OR ON ACCOUNT OF ANY SHARES OF ITS
STOCK (OR EQUIVALENT EQUITY INTEREST) OR ANY REDEMPTION OR OTHER ACQUISITION,
DIRECT OR INDIRECT, OF ANY SHARES OF ITS STOCK (OR EQUIVALENT EQUITY INTEREST)
OR OF ANY WARRANTS, RIGHTS OR OTHER OPTIONS TO PURCHASE ANY SHARES OF ITS STOCK
(OR EQUIVALENT EQUITY INTEREST), NOR PURCHASE, ACQUIRE, REDEEM OR RETIRE ANY
STOCK (OR EQUIVALENT EQUITY INTEREST) IN ITSELF WHETHER NOW OR HEREAFTER

 

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OUTSTANDING, EXCEPT THAT, SO LONG AS NO DEFAULT OR EVENT OF DEFAULT EXISTS AT
SUCH TIME OR WILL OCCUR AS A RESULT OF SUCH PAYMENT, SELLER AND ITS SUBSIDIARIES
MAY PAY PERMITTED DIVIDENDS.

 

(I)                                     USE OF CHASE’S NAME.  SELLER SHALL AND
SHALL CAUSE ITS SUBSIDIARIES TO, CONFINE ITS USE OF BUYER’S LOGO AND THE
“JPMORGAN” AND “CHASE” NAMES TO THOSE USES SPECIFICALLY AUTHORIZED BY BUYER IN
WRITING.   EXCEPT WHERE REQUIRED BY THE FEDERAL REAL ESTATE SETTLEMENT
PROCEDURES ACT OR HUD’S REGULATION X THEREUNDER, OR THE HELPING FAMILIES SAVE
THEIR HOMES ACT OF 2009, AS AMENDED FROM TIME TO TIME, IN NO INSTANCE MAY SELLER
OR ANY OF ITS SUBSIDIARIES DISCLOSE TO ANY PROSPECTIVE MORTGAGOR, OR THE AGENTS
OF THE MORTGAGOR, THAT SUCH MORTGAGOR’S MORTGAGE LOAN WILL BE OFFERED FOR SALE
TO BUYER.  NONE OF SELLER OR ITS SUBSIDIARIES MAY USE BUYER’S NAME OR LOGO TO
OBTAIN ANY MORTGAGE-RELATED SERVICES WITHOUT THE PRIOR WRITTEN CONSENT OF BUYER.

 

(J)                                     REPORTING.  IN ITS FINANCIAL STATEMENTS,
SELLER WILL REPORT EACH SALE OF A MORTGAGE LOAN HEREUNDER AS A FINANCING IN
ACCORDANCE WITH GAAP.

 

(K)                                  TRANSACTIONS WITH AFFILIATES.  SELLER WILL
NOT AND WILL NOT PERMIT ANY OF ITS SUBSIDIARIES TO (I) 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 AGREEMENT, (B) IN THE
ORDINARY COURSE OF SELLER’S OR SUCH SUBSIDIARY’S BUSINESS AND (C) UPON FAIR AND
REASONABLE TERMS NO LESS FAVORABLE TO SELLER OR SUCH SUBSIDIARY THAN IT WOULD
OBTAIN IN A COMPARABLE ARM’S-LENGTH TRANSACTION WITH A PERSON WHICH IS NOT AN
AFFILIATE, OR (II) MAKE A PAYMENT THAT IS NOT OTHERWISE PERMITTED BY THIS
PARAGRAPH 11 TO ANY AFFILIATE.

 

(L)                                     DEFENSE OF TITLE; PRESERVATION OF
MORTGAGE ASSETS.  SELLER WARRANTS AND WILL DEFEND THE RIGHT, TITLE AND INTEREST
OF BUYER IN AND TO ALL MORTGAGE ASSETS AGAINST ALL ADVERSE CLAIMS AND DEMANDS OF
ALL PERSONS WHOMSOEVER.  SELLER SHALL DO ALL THINGS NECESSARY TO PRESERVE THE
MORTGAGE ASSETS SO THAT SUCH MORTGAGE ASSETS REMAIN SUBJECT TO A FIRST PRIORITY
PERFECTED LIEN HEREUNDER. WITHOUT LIMITING THE FOREGOING, SELLER WILL COMPLY
WITH ALL REQUIREMENTS OF LAW APPLICABLE TO SELLER OR RELATING TO THE MORTGAGE
ASSETS AND CAUSE THE MORTGAGE ASSETS TO COMPLY WITH ALL APPLICABLE REQUIREMENTS
OF LAW.  SELLER WILL NOT ALLOW ANY DEFAULT TO OCCUR FOR WHICH SELLER IS
RESPONSIBLE UNDER ANY MORTGAGE ASSETS OR ANY TRANSACTION DOCUMENTS AND SELLER
SHALL FULLY PERFORM OR CAUSE TO BE PERFORMED WHEN DUE ALL OF ITS OBLIGATIONS
UNDER ANY MORTGAGE ASSETS AND THE TRANSACTION DOCUMENTS.

 

(M)                               LIMITATION ON SALE OF ASSETS. SELLER 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 OF ITS SUBSIDIARIES TO TRANSFER ALL OR
SUBSTANTIALLY ALL OF ITS ASSETS TO ANY PERSON; PROVIDED, THAT SELLER MAY, AFTER
AT LEAST TEN (10) DAYS’ PRIOR WRITTEN NOTICE TO BUYER, ALLOW SUCH ACTION WITH
RESPECT TO ANY SUBSIDIARY WHICH IS NOT A MATERIAL PART OF SELLER’S OVERALL
BUSINESS OPERATIONS.

 

(N)                                 NO AMENDMENT OR COMPROMISE.  WITHOUT BUYER’S
PRIOR WRITTEN CONSENT, NONE OF SELLER OR THOSE ACTING ON SELLER’S BEHALF SHALL
AMEND OR MODIFY, OR WAIVE ANY TERM OR CONDITION OF, OR SETTLE OR COMPROMISE ANY
CLAIM IN RESPECT OF, ANY ITEM OF THE PURCHASED MORTGAGE LOANS, ANY RELATED
RIGHTS OR ANY OF THE TRANSACTION DOCUMENTS.

 

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(O)                                 LOAN DETERMINED TO BE DEFAULTED OR
DEFECTIVE.  UPON DISCOVERY BY SELLER THAT ANY PURCHASED MORTGAGE LOAN IS A
DEFAULTED LOAN OR A DEFECTIVE MORTGAGE LOAN, SELLER SHALL PROMPTLY GIVE NOTICE
OF SUCH DISCOVERY TO BUYER.

 

(P)                                 FURTHER ASSURANCES.  SELLER AGREES TO DO
SUCH FURTHER ACTS AND THINGS AND TO EXECUTE AND DELIVER TO BUYER SUCH ADDITIONAL
ASSIGNMENTS, ACKNOWLEDGMENTS, AGREEMENTS, POWERS AND INSTRUMENTS AS ARE
REASONABLY REQUIRED BY BUYER TO CARRY INTO EFFECT THE INTENT AND PURPOSES OF
THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, TO PERFECT THE INTERESTS OF
BUYER IN THE MORTGAGE ASSETS OR TO BETTER ASSURE AND CONFIRM UNTO BUYER ITS
RIGHTS, POWERS AND REMEDIES HEREUNDER AND THEREUNDER.

 

(Q)                                 HEDGING ARRANGEMENTS.  SELLER SHALL MAINTAIN
HEDGING ARRANGEMENTS WITH RESPECT TO ALL MORTGAGE LOANS NOT THE SUBJECT OF
TAKEOUT COMMITMENTS REASONABLY SATISFACTORY TO BUYER, WITH PERSONS REASONABLY
SATISFACTORY TO BUYER, IN ORDER TO MITIGATE THE RISK THAT THE MARKET VALUE OF
ANY SUCH MORTGAGE LOAN WILL CHANGE AS A RESULT OF A CHANGE IN INTEREST RATES OR
THE MARKET FOR MORTGAGE LOAN ASSETS BEFORE THE MORTGAGE LOAN IS PURCHASED BY AN
APPROVED TAKEOUT INVESTOR OR REPURCHASED BY SELLER.

 

(R)                                    NO LOANS OR INVESTMENTS EXCEPT APPROVED
INVESTMENTS.  SELLERS SHALL NOT AND SHALL NOT PERMIT ANY OF ITS SUBSIDIARIES TO,
MAKE OR PERMIT TO REMAIN OUTSTANDING ANY LOANS OR ADVANCES TO, OR INVESTMENTS
IN, ANY PERSON, EXCEPT THAT THE FOREGOING RESTRICTION SHALL NOT APPLY TO:

 

(I)                                     INVESTMENTS IN CASH EQUIVALENTS; AND

 

(II)                                  INVESTMENTS NOT TO EXCEED $1,000,000 IN
THE AGGREGATE WITHOUT BUYER’S PRIOR WRITTEN CONSENT.

 

(S)                                  NO GUARANTIES.  WITHOUT THE PRIOR WRITTEN
CONSENT OF BUYER, SELLER SHALL NOT, AND SHALL NOT PERMIT ANY OF ITS SUBSIDIARIES
TO, GUARANTY ANY DEBT OTHER THAN DEBT INCURRED BY A SUBSIDIARY FOR A WAREHOUSE
OR REPURCHASE FACILITY FOR MORTGAGE LOANS.

 

(T)                                    MORTGAGE LOANS.  SELLER WILL UNDERWRITE
ELIGIBLE MORTGAGE LOANS IN COMPLIANCE WITH ITS UNDERWRITING GUIDELINES IN EFFECT
ON THE DATE HEREOF.  SELLER WILL NOT CHANGE ITS UNDERWRITING GUIDELINES IN ANY
MATERIAL RESPECT WITHOUT THE PRIOR WRITTEN CONSENT OF BUYER.

 

(U)                                 NO MERGERS, ACQUISITIONS, SUBSIDIARIES. 
SELLER WILL NOT, AND WILL NOT PERMIT ANY OF ITS SUBSIDIARIES TO, CONSOLIDATE OR
MERGE WITH OR INTO ANY ENTITY (UNLESS SELLER IS THE SURVIVING ENTITY AND ANY OF
SELLER’S SUBSIDIARIES MAY MERGE WITH OR INTO SELLER), CONSOLIDATE, ACQUIRE ANY
INTEREST IN ANY PERSON OR CREATE, FORM OR ACQUIRE ANY SUBSIDIARY NOT LISTED IN
EXHIBIT G.

 

(V)                                 UCC.  SELLER WILL NOT CHANGE ITS NAME,
IDENTITY, CORPORATE STRUCTURE OR LOCATION (WITHIN THE MEANING OF PARAGRAPH 9-307
OF THE UCC) UNLESS IT SHALL HAVE (I) GIVEN BUYER AT LEAST FORTY-FIVE (45) DAYS’
PRIOR WRITTEN NOTICE THEREOF AND (II) DELIVERED TO BUYER ALL FINANCING
STATEMENTS, AMENDMENTS, INSTRUMENTS, LEGAL OPINIONS AND OTHER DOCUMENTS
REQUESTED BY BUYER IN CONNECTION WITH SUCH CHANGE.  SELLER WILL KEEP ITS
PRINCIPAL PLACE OF BUSINESS AND CHIEF EXECUTIVE OFFICE AT 163 TECHNOLOGY DRIVE,
IRVINE, CA 92618, AND THE OFFICE WHERE IT MAINTAINS ANY PHYSICAL RECORDS OF THE
PURCHASED MORTGAGE LOANS AT A CORPORATE FACILITY OF SELLER, OR, IN ANY SUCH
CASE, UPON THIRTY (30) DAYS’ PRIOR WRITTEN NOTICE TO BUYER, AT ANOTHER LOCATION
WITHIN THE UNITED STATES.

 

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(W)                               TAKEOUT COMMITMENTS.  EXCEPT TO THE EXTENT
SUPERSEDED BY THIS AGREEMENT, SELLER COVENANTS THAT IT SHALL CONTINUE TO PERFORM
ALL OF ITS DUTIES AND OBLIGATIONS TO THE APPROVED TAKEOUT INVESTOR, UNDER ANY
APPLICABLE TAKEOUT COMMITMENT AND TAKEOUT AGREEMENT AND OTHERWISE, WITH RESPECT
TO A PURCHASED MORTGAGE LOAN AS IF SUCH MORTGAGE LOAN WERE STILL OWNED BY SELLER
AND TO BE SOLD DIRECTLY BY SELLER TO THE APPROVED TAKEOUT INVESTOR PURSUANT TO
SUCH TAKEOUT COMMITMENT ON THE DATE PROVIDED THEREIN WITHOUT THE INTERVENING
OWNERSHIP OF BUYER PURSUANT TO THIS AGREEMENT.  WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, SELLER SHALL TIMELY ASSEMBLE ALL RECORDS AND DOCUMENTS
CONCERNING THE MORTGAGE LOAN REQUIRED UNDER ANY APPLICABLE TAKEOUT COMMITMENT
(EXCEPT THAT PHOTOCOPIES INSTEAD OF ORIGINALS SHALL BE USED FOR THOSE DOCUMENTS
ALREADY PROVIDED TO BUYER IN THE LOAN FILE) AND ALL OTHER DOCUMENTS AND
INFORMATION THAT MAY HAVE BEEN REQUIRED OR REQUESTED BY THE APPROVED TAKEOUT
INVESTOR, AND SELLER SHALL MAKE ALL REPRESENTATIONS AND WARRANTIES REQUIRED TO
BE MADE TO THE APPROVED TAKEOUT INVESTOR UNDER THE APPLICABLE TAKEOUT COMMITMENT
AND TAKEOUT AGREEMENT.

 

(X)                                   FINANCIAL COVENANTS.

 

(I)                                     LEVERAGE RATIO.  SELLER SHALL NOT PERMIT
THE LEVERAGE RATIO OF SELLER (AND, IF APPLICABLE, ITS SUBSIDIARIES, ON A
CONSOLIDATED BASIS) TO EXCEED 10 TO 1 COMPUTED AS OF THE END OF EACH CALENDAR
MONTH.

 

(II)                                  MINIMUM ADJUSTED TANGIBLE NET WORTH. 
SELLER SHALL NOT PERMIT THE ADJUSTED TANGIBLE NET WORTH OF SELLER (AND, IF
APPLICABLE, ITS SUBSIDIARIES, ON A CONSOLIDATED BASIS), COMPUTED AS OF THE END
OF EACH CALENDAR MONTH, TO BE LESS THAN $44,000,000.

 

(III)                               MINIMUM CURRENT RATIO.  SELLER SHALL NOT
PERMIT THE CURRENT RATIO OF SELLER (AND, IF APPLICABLE, ITS SUBSIDIARIES, ON A
CONSOLIDATED BASIS), COMPUTED AS OF THE END OF EACH CALENDAR MONTH, TO BE LESS
THAN 1.05 TO 1.

 

(IV)                              MAINTENANCE OF LIQUIDITY.  SELLER SHALL:

 

(A)                              MAINTAIN AT ALL TIMES UNENCUMBERED LIQUIDITY IN
AN AMOUNT GREATER THAN OR EQUAL TO 3% OF ACTUAL TOTAL ASSETS; AND

 

(B)                                MAINTAIN AT ALL TIMES AVAILABLE WAREHOUSE
FACILITIES FROM BUYERS AND LENDERS OTHER THAN BUYER SUCH THAT THE AVAILABLE
WAREHOUSE FACILITY UNDER THIS AGREEMENT CONSTITUTES NO MORE THAN 50% OF SELLER’S
AGGREGATE AVAILABLE WAREHOUSE FACILITIES.

 

(V)                                 NET INCOME.  AS OF THE END OF EACH CALENDAR
MONTH, SELLER SHALL NOT PERMIT ITS NET INCOME BEFORE TAXES, FOR THE PERIOD
INCLUDING SUCH CALENDAR MONTH AND THE EIGHT CALENDAR MONTHS ENDING IMMEDIATELY
PRIOR TO SUCH CALENDAR MONTH, TO BE LESS THAN $1.00.

 

(VI)                              MAXIMUM WAREHOUSE CAPACITY RATIO.  SELLER
SHALL NOT PERMIT THE MAXIMUM WAREHOUSE CAPACITY RATIO OF SELLER (AND, IF
APPLICABLE, ITS SUBSIDIARIES, ON A CONSOLIDATED BASIS) TO EXCEED 30 TO 1
COMPUTED AS OF THE END OF EACH CALENDAR MONTH.

 

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(VII)                           WHOLESALE ORIGINATIONS.  SELLER SHALL ORIGINATE
NO MORE THAN 20% OF ITS TOTAL MORTGAGE LOAN ORIGINATIONS IN ANY CALENDAR MONTH
THROUGH WHOLESALE OR BROKER ORIGINATIONS.

 

(VIII)                        NET LOSSES.  SELLER SHALL NOT PERMIT:

 

(A)                              ITS NET LOSS BEFORE TAXES, FOR ANY CALENDAR
QUARTER, TO BE GREATER THAN $2,500,000; OR

 

(B)                                ANY NET LOSS BEFORE TAXES TO OCCUR FOR ANY
TWO CONSECUTIVE CALENDAR QUARTERS.

 

(Y)                                 GOVERNMENT REGULATION.  SELLER SHALL NOT
(1) BE OR BECOME SUBJECT AT ANY TIME TO ANY REQUIREMENT OF LAW (INCLUDING,
WITHOUT LIMITATION, THE U.S. OFFICE OF FOREIGN ASSET CONTROL LIST) THAT
PROHIBITS OR LIMITS BUYER FROM MAKING ANY ADVANCE OR EXTENSION OF CREDIT TO
SELLER OR FROM OTHERWISE CONDUCTING BUSINESS WITH SELLER, OR (2) FAIL TO PROVIDE
DOCUMENTARY AND OTHER EVIDENCE OF SELLER’S IDENTITY AS MAY BE REQUESTED BY BUYER
AT ANY TIME TO ENABLE BUYER TO VERIFY SELLER’S IDENTITY OR TO COMPLY WITH ANY
APPLICABLE REQUIREMENT OF LAW, INCLUDING, WITHOUT LIMITATION, SECTION 326 OF THE
USA PATRIOT ACT OF 2001, 31 U.S.C. SECTION 5318.

 

(Z)                                   NATIONAL CITY BANK.  AT NO TIME SHALL
SELLER PERMIT ANY MORTGAGE ASSETS OR PROCEEDS THEREOF TO BE MAINTAINED AT OR
DEPOSITED INTO ANY ACCOUNT MAINTAINED AT NATIONAL CITY BANK.

 

(AA)                            MANAGEMENT CHANGE.  SELLER WILL NOTIFY BUYER IN
WRITING WITHIN THIRTY (30) DAYS AFTER ANY OF DOUGLAS LEBDA, MATTHEW PACKEY OR
DAVID NORRIS SHALL CEASE FOR ANY REASON WHATSOEVER, INCLUDING DEATH OR
DISABILITY, TO BE, AND TO CONTINUOUSLY PERFORM THE DUTIES OF, CHAIRMAN AND CHIEF
EXECUTIVE OFFICER OF THE PARENT, CHIEF FINANCIAL OFFICER OF THE PARENT OR
PRESIDENT OF THE SELLER, RESPECTIVELY (SUCH AN OCCURRENCE BEING REFERRED TO
HEREIN AS A “CHANGE IN MANAGEMENT”).  IF BUYER REASONABLY DISAPPROVES OF ANY
CHANGE IN MANAGEMENT, BUYER SHALL GIVE WRITTEN NOTICE OF ITS DISAPPROVAL WITHIN
THIRTY (30) DAYS AFTER ITS RECEIPT OF SELLER’S NOTICE TOGETHER WITH BUYER’S
RECOMMENDATIONS FOR RESOLVING SUCH MANAGEMENT CHANGE TO BUYER’S SATISFACTION. 
IF SELLER DOES NOT RESOLVE SUCH CHANGE IN MANAGEMENT TO BUYER’S SATISFACTION
WITHIN THIRTY (30) DAYS AFTER BUYER’S NOTICE OF DISAPPROVAL, BUYER MAY
ACCELERATE THE TERMINATION DATE BY GIVING WRITTEN NOTICE OF THE ACCELERATED
TERMINATION DATE TO SELLER.  IF ANY SUCCESSOR SATISFACTORY TO BUYER SHALL HAVE
BEEN ELECTED OR APPOINTED IN CONNECTION WITH A CHANGE IN MANAGEMENT, THEN THE
NAME OF SUCH SUCCESSOR OR SUCCESSORS SHALL BE DEEMED TO HAVE BEEN INSERTED IN
PLACE OF DOUGLAS LEBDA, MATTHEW PACKEY, OR DAVID NORRIS, AS APPLICABLE, IN THIS
PARAGRAPH.

 

12.                               EVENTS OF DEFAULT; REMEDIES.

 

(A)                                  EACH OF THE FOLLOWING EVENTS SHALL, UPON
THE OCCURRENCE AND CONTINUANCE THEREOF, BE AN “EVENT OF DEFAULT”:

 

(I)                                     SELLER FAILS TO REMIT ANY PRICE
DIFFERENTIAL, INCOME, FEES, REPURCHASE PRICE, ESCROW PAYMENT OR ANY OTHER AMOUNT
DUE TO BUYER PURSUANT TO THE TERMS HEREOF OR ANY OTHER TRANSACTION DOCUMENT OR
FAILS TO CURE ANY MARGIN DEFICIT AS PROVIDED IN PARAGRAPH 4; OR

 

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(II)                                  SELLER FAILS TO REPURCHASE ANY PURCHASED
MORTGAGE LOAN AT THE TIME AND FOR THE AMOUNT REQUIRED HEREUNDER; OR

 

(III)                               (A) ANY REPRESENTATION OR WARRANTY MADE BY
SELLER OR ANY GUARANTOR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT OR CONTAINED HEREIN OR THEREIN IS INACCURATE OR INCOMPLETE
ON OR AS OF THE DATE MADE OR HEREAFTER BECOMES UNTRUE OR (B) ANY INFORMATION
CONTAINED IN ANY WRITTEN STATEMENT, REPORT, FINANCIAL STATEMENT OR CERTIFICATE
MADE OR DELIVERED BY SELLER OR ANY GUARANTOR (EITHER BEFORE OR AFTER THE DATE
HEREOF) TO BUYER PURSUANT TO THE TERMS OF ANY TRANSACTION DOCUMENT IS UNTRUE OR
INCORRECT AS OF THE DATE WHEN MADE OR DEEMED MADE; OR

 

(IV)                              SELLER SHALL FAIL IN THE OBSERVANCE OR
PERFORMANCE OF ANY DUTY, RESPONSIBILITY OR OBLIGATION IMPOSED BY OR SET FORTH IN
PARAGRAPH:

 

(A)                              11(C) (INSPECTION OF PROPERTIES AND BOOKS);

 

(B)                                11(H) (LIMITS ON DISTRIBUTIONS);

 

(C)                                11(O) (LOAN DETERMINED TO BE DEFAULTED OR
DEFECTIVE);

 

(D)                               11(X) (FINANCIAL COVENANTS); OR

 

(V)                                 ANY GUARANTOR SHALL FAIL IN THE OBSERVANCE
OR PERFORMANCE OF ANY DUTY, RESPONSIBILITY OR OBLIGATION IMPOSED BY OR SET FORTH
IN PARAGRAPH 4(C) (INSPECTION OF PROPERTIES AND BOOKS) OF THE GUARANTY; OR

 

(VI)                              SELLER OR ANY GUARANTOR, AS APPLICABLE, SHALL
FAIL IN THE OBSERVANCE OR PERFORMANCE OF ANY OTHER DUTY, RESPONSIBILITY OR
OBLIGATION CONTAINED IN THE TRANSACTION DOCUMENTS (OTHER THAN THE OTHER “EVENTS
OF DEFAULT” IDENTIFIED IN THIS PARAGRAPH 12), AND SUCH FAILURE CONTINUES
UNREMEDIED FOR A PERIOD OF FIVE (5) DAYS; OR

 

(VII)                           ANY ACT OF INSOLVENCY OCCURS WITH RESPECT TO
SELLER, ANY GUARANTOR, OR ANY SUBSIDIARY OF SELLER OR ANY GUARANTOR (OTHER THAN
HLC ESCROW); OR

 

(VIII)                        ONE OR MORE JUDGMENTS OR DECREES ARE ENTERED
AGAINST SELLER, ANY GUARANTOR OR ANY SUBSIDIARY OF SELLER OR ANY GUARANTOR
(OTHER THAN HLC ESCROW) INVOLVING CLAIMS NOT PAID OR NOT FULLY COVERED BY
INSURANCE AND ALL SUCH JUDGMENTS OR DECREES ARE NOT VACATED, DISCHARGED, OR
STAYED OR BONDED PENDING APPEAL WITHIN THIRTY (30) DAYS FROM ENTRY THEREOF; OR

 

(IX)                                ANY AGENCY, OR PRIVATE INVESTOR, OR ANY
OTHER PERSON SEIZES OR TAKES CONTROL OF THE SERVICING PORTFOLIO OF SELLER, ANY
OF ITS SUBSIDIARIES, ANY SUBSERVICER, ANY GUARANTOR OR ANY SUBSIDIARY OF ANY
GUARANTOR, FOR BREACH OF ANY SERVICING AGREEMENT APPLICABLE TO SUCH SERVICING
PORTFOLIO OR FOR ANY OTHER REASON WHATSOEVER; OR

 

(X)                                   ANY AGENCY OR GOVERNMENTAL AUTHORITY
REVOKES OR MATERIALLY RESTRICTS THE AUTHORITY OF SELLER, ANY OF SELLER’S
SUBSIDIARIES, ANY SUBSERVICER, ANY GUARANTOR OR ANY SUBSIDIARY OF ANY GUARANTOR
TO ORIGINATE, PURCHASE, SELL OR SERVICE MORTGAGE LOANS, OR

 

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SELLER, ANY OF SELLER’S SUBSIDIARIES, ANY SUBSERVICER, ANY GUARANTOR OR ANY
SUBSIDIARY OF ANY GUARANTOR SHALL FAIL TO MEET ALL REQUISITE SERVICER
ELIGIBILITY QUALIFICATIONS PROMULGATED BY ANY AGENCY; OR

 

(XI)                                THERE IS A DEFAULT (WHICH HAS NOT BEEN CURED
WITHIN THE APPLICABLE CURE PERIOD, IF ANY) UNDER ANY AGREEMENT, IF ANY, THAT
SELLER OR ANY GUARANTOR, OR ANY OF THEIR RESPECTIVE AFFILIATES OR SUBSIDIARIES,
HAS ENTERED INTO WITH BUYER, OR ANY OF ITS AFFILIATES OR SUBSIDIARIES; OR

 

(XII)                             SELLER, ANY GUARANTOR OR ANY OF THEIR
RESPECTIVE SUBSIDIARIES (OTHER THAN HLC ESCROW) FAILS TO PAY WHEN DUE ANY OTHER
DEBT IN EXCESS OF $1,000,000 INDIVIDUALLY OR IN THE AGGREGATE BEYOND ANY PERIOD
OF GRACE PROVIDED, OR THERE OCCURS ANY BREACH OR DEFAULT (WHICH HAS NOT BEEN
CURED WITHIN THE APPLICABLE CURE PERIOD, IF ANY), WITH RESPECT TO ANY MATERIAL
TERM OF ANY SUCH DEBT, IF THE EFFECT OF SUCH FAILURE, BREACH OR DEFAULT IS TO
CAUSE, OR TO PERMIT THE HOLDER OR HOLDERS THEREOF (OR A TRUSTEE ON BEHALF OF
SUCH HOLDER OR HOLDERS) TO CAUSE, SUCH DEBT OF SUCH PERSON TO BECOME OR BE
DECLARED DUE PRIOR TO ITS STATED MATURITY (UPON THE GIVING OR RECEIVING OF
NOTICE, LAPSE OF TIME, BOTH, OR OTHERWISE); OR

 

(XIII)                          THERE IS A MATERIAL ADVERSE EFFECT; OR

 

(XIV)                         SELLER, ANY GUARANTOR OR ANY OF THEIR RESPECTIVE
SUBSIDIARIES DEFAULTS UNDER ANY MORTGAGE LOAN REPURCHASE ARRANGEMENT SIMILAR TO
THIS AGREEMENT, INCLUDING OFF BALANCE SHEET REPURCHASE ARRANGEMENTS, OR UNDER
ANY WAREHOUSE LENDING ARRANGEMENT, INCLUDING OFF BALANCE SHEET WAREHOUSE LENDING
ARRANGEMENTS, WHICH IT MAY HAVE WITH ANY OTHER PERSON, BEYOND ANY APPLICABLE
NOTICE AND GRACE PERIODS; OR

 

(XV)                            (A)  SELLER OR ANY GUARANTOR SHALL ASSERT THAT
ANY TRANSACTION DOCUMENT IS NOT IN FULL FORCE AND EFFECT OR SHALL OTHERWISE SEEK
TO TERMINATE OR DISAFFIRM ITS OBLIGATIONS UNDER ANY SUCH TRANSACTION DOCUMENT AT
ANY TIME FOLLOWING THE EXECUTION THEREOF OR (B) ANY TRANSACTION DOCUMENT CEASES
TO BE IN FULL FORCE AND EFFECT, OR ANY OF SELLER’S OR ANY GUARANTOR’S MATERIAL
OBLIGATIONS UNDER ANY TRANSACTION DOCUMENT SHALL CEASE TO BE IN FULL FORCE AND
EFFECT, OR THE ENFORCEABILITY THEREOF SHALL BE CONTESTED BY SELLER OR ANY
GUARANTOR; OR

 

(XVI)                         ANY GOVERNMENTAL AUTHORITY OR ANY PERSON ACTING OR
PURPORTING TO ACT UNDER GOVERNMENTAL AUTHORITY SHALL HAVE TAKEN ANY ACTION TO
CONDEMN, SEIZE OR APPROPRIATE, OR TO ASSUME CUSTODY OR CONTROL OF, ALL OR ANY
SUBSTANTIAL PART OF THE ASSETS OF SELLER, ANY OF ITS SUBSIDIARIES, ANY
SUBSERVICER, ANY GUARANTOR OR ANY SUBSIDIARY OF ANY GUARANTOR, OR SHALL HAVE
TAKEN ANY ACTION TO DISPLACE THE MANAGEMENT OF SELLER, ANY OF ITS SUBSIDIARIES,
ANY GUARANTOR OR ANY SUBSIDIARY OF ANY GUARANTOR OR TO CURTAIL ITS AUTHORITY IN
THE CONDUCT OF THE BUSINESS OF SELLER, ANY OF ITS SUBSIDIARIES (OTHER THAN HLC
ESCROW), ANY GUARANTOR OR ANY SUBSIDIARY OF ANY GUARANTOR (OTHER THAN HLC
ESCROW), OR TO RESTRICT THE PAYMENT OF DIVIDENDS TO SELLER BY ANY SUBSIDIARY OF
SELLER (OTHER THAN HLC ESCROW), AND SUCH ACTION SHALL NOT HAVE BEEN DISCONTINUED
OR STAYED WITHIN THIRTY (30) DAYS; OR

 

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(XVII)                      ANY GUARANTOR DEFAULTS UNDER ITS GUARANTY, OR A
DEFAULT OR AN EVENT OF DEFAULT SHALL HAVE OCCURRED UNDER ANY OTHER TRANSACTION
DOCUMENT; OR

 

(XVIII)                   ANY CHANGE IN CONTROL OF SELLER, ANY OF ITS
SUBSIDIARIES OR ANY GUARANTOR SHALL HAVE OCCURRED WITHOUT BUYER’S PRIOR WRITTEN
CONSENT OR A MATERIAL CHANGE IN THE MANAGEMENT OF SELLER, ANY OF ITS
SUBSIDIARIES OR ANY GUARANTOR SHALL HAVE OCCURRED WHICH HAS NOT BEEN APPROVED BY
BUYER IN WRITING; OR

 

(XIX)                           WITHOUT THE BUYER’S PRIOR WRITTEN CONSENT, ANY
OF DOUGLAS LEBDA, MATTHEW PACKEY OR DAVID NORRIS SHALL CEASE FOR ANY REASON
WHATSOEVER, INCLUDING DEATH OR DISABILITY, TO BE, AND TO CONTINUOUSLY PERFORM
THE DUTIES OF, CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF THE PARENT, CHIEF
FINANCIAL OFFICER OF THE PARENT OR PRESIDENT OF THE SELLER, RESPECTIVELY, OR, IF
SUCH CESSATION SHALL OCCUR AS A RESULT OF DEATH OR DISABILITY, NO SUCCESSOR
SATISFACTORY TO BUYER, IN ITS REASONABLE JUDGMENT, SHALL HAVE BECOME, AND SHALL
HAVE COMMENCED TO PERFORM THE DUTIES OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF
THE PARENT, CHIEF FINANCIAL OFFICER OF THE PARENT OR PRESIDENT OF THE SELLER,
RESPECTIVELY, WITHIN NINETY (90) DAYS AFTER SUCH CESSATION; PROVIDED THAT IF ANY
SUCH SATISFACTORY SUCCESSOR SHALL HAVE BEEN SO ELECTED AND SHALL HAVE COMMENCED
PERFORMANCE OF SUCH DUTIES WITHIN SUCH PERIOD, THEN THE NAME OF SUCH SUCCESSOR
OR SUCCESSORS SHALL BE DEEMED TO HAVE BEEN INSERTED IN PLACE OF DOUGLAS LEBDA,
MATTHEW PACKEY, OR DAVID NORRIS, AS APPLICABLE, IN THIS PARAGRAPH; OR

 

(XX)                              ANY FAILURE BY SELLER TO DELIVER ASSIGNMENTS
EXECUTED IN BLANK TO BUYER OR ITS DESIGNEE FOR ANY PURCHASED MORTGAGE LOAN
WITHIN FIVE (5) BUSINESS DAYS FOLLOWING ANY TERMINATION OF SELLER’S MERS
MEMBERSHIP; OR

 

(XXI)                           THE INITIATION OF ANY INVESTIGATION OR
PROCEEDING OF SELLER OR ANY GUARANTOR BY ANY GOVERNMENTAL AUTHORITY RELATED TO
ALLEGATIONS OF MISCONDUCT OR WRONGDOING, WHICH IS REASONABLY LIKELY TO HAVE A
MATERIAL EFFECT ON SELLER’S OR ANY GUARANTOR’S ABILITY TO PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS;  PROVIDED,
THAT SELLER IS NOT OTHERWISE PROHIBITED FROM DISCLOSING THE FACT OF THE
INVESTIGATION; OR

 

(XXII)                        THE PENSION BENEFIT GUARANTY CORP. SHALL, OR SHALL
INDICATE ITS INTENTION TO, FILE NOTICE OF A LIEN PURSUANT TO SECTION 4068 OF
ERISA WITH REGARD TO ANY OF THE ASSETS OF SELLER, ANY GUARANTOR OR ANY OF THEIR
RESPECTIVE SUBSIDIARIES; OR

 

(XXIII)                     SELLER SHALL BECOME SUBJECT TO REGISTRATION AS AN
“INVESTMENT COMPANY” AS DEFINED IN, OR SUBJECT TO REGULATION UNDER, THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED;

 

(XXIV)                    BUYER SHALL FAIL TO HAVE A VALID AND PERFECTED FIRST
PRIORITY SECURITY INTEREST IN ANY OF THE PURCHASED MORTGAGE LOANS, INCLUDING THE
SERVICING RIGHTS THERETO, AND OTHER MORTGAGE ASSETS, IN EACH CASE FREE AND CLEAR
OF ANY OTHER LIEN;

 

(XXV)                       SELLER SHALL HAVE FAILED TO DELIVER TO BUYER
OPINIONS OF COUNSEL SUBSTANTIALLY IN THE FORM OF EXHIBIT F AND IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO BUYER AND ITS COUNSEL BY NOVEMBER 29, 2009;
OR

 

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(B)                                 IF AN EVENT OF DEFAULT OCCURS AND IS
CONTINUING, THEN, BUYER MAY, AT ITS OPTION BY WRITTEN NOTICE TO SELLER
(I) DECLARE THE REPURCHASE DATE FOR EACH OUTSTANDING TRANSACTION HEREUNDER, IF
IT HAS NOT ALREADY OCCURRED, TO BE DEEMED IMMEDIATELY TO OCCUR (EXCEPT THAT, IN
THE EVENT THAT THE PURCHASE DATE FOR ANY TRANSACTION HAS NOT YET OCCURRED AS OF
THE DATE OF SUCH EXERCISE, SUCH TRANSACTION SHALL BE DEEMED IMMEDIATELY
CANCELED), (II) TERMINATE AND REPLACE SELLER AS INTERIM SERVICER WITH RESPECT TO
ANY MORTGAGE ASSETS AT THE COST AND EXPENSE OF SELLER, (III) DIRECT SELLER TO
CAUSE ALL INCOME TO BE TRANSFERRED INTO AN ACCOUNT SPECIFIED BY THE BUYER WITHIN
ONE (1) BUSINESS DAY AFTER RECEIPT BY SELLER OR ANY SUBSERVICER, (IV) DIRECT OR
CAUSE SELLER TO DIRECT, ALL MORTGAGORS TO REMIT ALL INCOME DIRECTLY TO AN
ACCOUNT SPECIFIED BY BUYER AND (V) TERMINATE ANY COMMITMENT OF BUYER TO PURCHASE
MORTGAGE LOANS UNDER THIS AGREEMENT.

 

(C)                                  IF BUYER HAS EXERCISED THE OPTION REFERRED
TO IN PARAGRAPH 12(B)(I), THEN (I) SELLER’S OBLIGATIONS HEREUNDER TO REPURCHASE
ALL PURCHASED MORTGAGE LOANS IN SUCH TRANSACTIONS ON THE REPURCHASE DATE
DETERMINED IN ACCORDANCE WITH PARAGRAPH 12(B)(I) SHALL THEREUPON BECOME
IMMEDIATELY DUE AND PAYABLE, (II) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
REPURCHASE PRICE WITH RESPECT TO EACH SUCH TRANSACTION SHALL BE INCREASED BY THE
AGGREGATE AMOUNT OBTAINED BY DAILY APPLICATION OF (X) THE GREATER OF (I) THE
PRICING RATE FOR SUCH TRANSACTION AND (II) 2.0% PLUS THE PRIME RATE TO (Y) THE
REPURCHASE PRICE FOR SUCH TRANSACTION AS OF THE REPURCHASE DATE AS DETERMINED
PURSUANT TO PARAGRAPH 12(B)(I) (DECREASED AS OF ANY DAY BY (A) ANY AMOUNTS
RETAINED BY BUYER WITH RESPECT TO SUCH REPURCHASE PRICE PURSUANT TO
CLAUSE (III) OR CLAUSE (IV) OF THIS PARAGRAPH AND (B) ANY PROCEEDS FROM THE SALE
OF PURCHASED MORTGAGE LOANS PURSUANT TO PARAGRAPH 12(D), ON A 360 DAY PER YEAR
BASIS FOR THE ACTUAL NUMBER OF DAYS DURING THE PERIOD FROM AND INCLUDING THE
DATE OF THE EVENT OF DEFAULT GIVING RISE TO SUCH OPTION TO BUT EXCLUDING THE
DATE OF PAYMENT OF THE REPURCHASE PRICE AS SO INCREASED, (III) ALL INCOME PAID
AFTER SUCH EXERCISE OR DEEMED EXERCISE SHALL BE PAYABLE TO AND RETAINED BY BUYER
AND SHALL BE APPLIED TO THE AGGREGATE UNPAID REPURCHASE PRICES AND ALL OTHER
AMOUNTS OWED BY SELLER TO BUYER OR ANY OTHER INDEMNIFIED PARTY UNDER THE
TRANSACTION DOCUMENTS, (IV) IN ACCORDANCE WITH PARAGRAPHS 4 AND 5, ALL AMOUNTS
ON DEPOSIT IN THE ACCOUNTS, SHALL BE APPLIED BY BUYER TO THE AGGREGATE UNPAID
REPURCHASE PRICES AND ALL OTHER AMOUNTS OWED BY SELLER TO BUYER OR ANY OTHER
INDEMNIFIED PARTY UNDER THE TRANSACTION DOCUMENTS, (V) SELLER SHALL, IF DIRECTED
BY BUYER IN WRITING, IMMEDIATELY DELIVER TO BUYER ANY DOCUMENTS THEN IN SELLER’S
POSSESSION RELATING TO ANY PURCHASED MORTGAGE LOANS SUBJECT TO SUCH
TRANSACTIONS, (IV) BUYER MAY, BY NOTICE TO SELLER, DECLARE THE TERMINATION DATE
TO HAVE OCCURRED.

 

(D)                                 UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT,
WITHOUT PRIOR NOTICE TO SELLER, BUYER MAY (A) IMMEDIATELY SELL, ON A SERVICING
RELEASED OR SERVICING RETAINED BASIS AS BUYER DEEMS DESIRABLE, IN A RECOGNIZED
MARKET AT SUCH PRICE OR PRICES AS BUYER MAY IN ITS SOLE DISCRETION DEEM
SATISFACTORY, ANY OR ALL PURCHASED MORTGAGE LOANS SUBJECT TO SUCH TRANSACTIONS
AND APPLY THE PROCEEDS THEREOF TO THE AGGREGATE UNPAID REPURCHASE PRICES AND ANY
OTHER AMOUNTS OWING BY SELLER TO BUYER OR ANY OTHER INDEMNIFIED PARTY UNDER THE
TRANSACTION DOCUMENTS OR (B) IN ITS SOLE DISCRETION ELECT, IN LIEU OF SELLING
ALL OR A PORTION OF SUCH PURCHASED MORTGAGE LOANS, TO GIVE SELLER CREDIT FOR
SUCH PURCHASED MORTGAGE LOANS IN AN AMOUNT EQUAL TO THE MARKET VALUE THEREFOR ON
SUCH DATE AGAINST THE AGGREGATE UNPAID REPURCHASE PRICES AND ANY OTHER AMOUNTS
OWING BY SELLER TO BUYER OR ANY OTHER INDEMNIFIED PARTY UNDER THE TRANSACTION
DOCUMENTS.

 

The proceeds of any disposition described above shall be applied first, to the
reasonable costs and expenses incurred by Buyer in connection with or as a
result of an Event of

 

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Default (including, without limitation, legal fees, consulting fees, accounting
fees, file transfer and inventory fees, costs and expenses incurred in respect
of a transfer of the servicing of the Purchased Mortgage Loans and costs and
expenses incurred in connection with a disposition of the Purchased Mortgage
Loans); second, to costs of cover and/or related hedging transactions; third, to
the aggregate and accrued Price Differential owed hereunder, fourth, to the
remaining aggregate Repurchase Prices owed hereunder; fifth, to any other
accrued and unpaid obligations of Seller hereunder and under the other
Transaction Documents, and sixth, any remaining proceeds shall be paid to Seller
or other Person legally entitled thereto.

 

The parties acknowledge and agree that (1) the Purchased Mortgage Loans subject
to any Transaction hereunder are instruments traded in a recognized market,
(2) in the absence of a generally recognized source for prices or bid or offer
quotations for any Purchased Mortgage Loans, Buyer may establish the source
therefor in its sole discretion, (3) all prices, bids and offers shall be
determined together with accrued Income (except to the extent contrary to market
practice with respect to the relevant Purchased Mortgage Loans) and (4) in
soliciting price, bid and offer quotations for any Purchased Mortgage Loan, it
is reasonable for Buyer to use only the information provided by Seller on the
daily data tape pursuant to Paragraph 11(g)(vii).  The parties further recognize
that it may not be possible to purchase or sell all of the Purchased Mortgage
Loans on a particular Business Day, or in a transaction with the same purchaser,
or in the same manner because the market for such Purchased Mortgage Loans may
not be liquid at such time.  In view of the nature of the Purchased Mortgage
Loans, the parties agree that liquidation of a Transaction or the underlying
Purchased Mortgage Loans 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, Buyer may elect the time and
manner of liquidating any Purchased Mortgage Loan and nothing contained herein
shall obligate Buyer to liquidate any Purchased Mortgage Loan on the occurrence
of an Event of Default or to liquidate all Purchased Mortgage Loans in the same
manner or on the same Business Day and no such exercise of any right or remedy
shall constitute a waiver of any other right or remedy of Buyer.

 

(E)           SELLER SHALL BE LIABLE TO BUYER FOR (I) THE AMOUNT OF ALL
REASONABLE LEGAL OR OTHER EXPENSES INCURRED BY BUYER IN CONNECTION WITH OR AS A
RESULT OF AN EVENT OF DEFAULT, (II) DAMAGES IN AN AMOUNT EQUAL TO THE COST
(INCLUDING ALL FEES, EXPENSES AND COMMISSIONS DETERMINED IN GOOD FAITH) OF
ENTERING INTO REPLACEMENT TRANSACTIONS AND ENTERING INTO OR TERMINATING HEDGE
TRANSACTIONS IN CONNECTION WITH OR AS A RESULT OF AN EVENT OF DEFAULT AND
(III) ANY OTHER LOSS, DAMAGE, COST OR EXPENSE DIRECTLY ARISING OR RESULTING FROM
THE OCCURRENCE OF AN EVENT OF DEFAULT.

 

(F)            TO THE EXTENT PERMITTED BY APPLICABLE LAW, SELLER SHALL BE LIABLE
TO BUYER FOR INTEREST ON ANY AMOUNTS OWING BY SELLER HEREUNDER, FROM THE DATE
SELLER BECOMES LIABLE FOR SUCH AMOUNTS HEREUNDER UNTIL SUCH AMOUNTS ARE (I) PAID
IN FULL BY OR ON BEHALF OF SELLER OR (II) SATISFIED IN FULL BY THE EXERCISE OF
BUYER’S RIGHTS HEREUNDER.  INTEREST ON ANY SUM PAYABLE BY SELLER TO BUYER UNDER
THIS PARAGRAPH 12(F) SHALL BE AT A RATE EQUAL TO THE GREATER OF THE PRICING RATE
FOR THE RELEVANT TRANSACTION AND THE PRIME RATE.

 

(G)           IF AN EVENT OF DEFAULT OCCURS, BUYER SHALL HAVE, IN ADDITION TO
ITS RIGHTS HEREUNDER, ANY RIGHTS OTHERWISE AVAILABLE TO IT UNDER ANY OTHER
AGREEMENT ENTERED INTO IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, UNDER APPLICABLE LAW OR IN EQUITY.

 

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(H)           SELLER HEREBY ACKNOWLEDGES, ADMITS AND AGREES THAT SELLER’S
OBLIGATIONS UNDER THIS AGREEMENT ARE RECOURSE OBLIGATIONS OF SELLER.

 

13.                               INTERIM SERVICING OF THE PURCHASED MORTGAGE
LOANS

 

(A)                                 AS A CONDITION OF PURCHASING AN ELIGIBLE
MORTGAGE LOAN, BUYER HEREBY ENGAGES SELLER TO INTERIM SERVICE SUCH PURCHASED
MORTGAGE LOAN AS AGENT FOR BUYER FOR A TERM OF THIRTY (30) DAYS DURING THE POST
ORIGINATION PERIOD (THE “INTERIM SERVICING TERM”), WHICH IS RENEWABLE AS
PROVIDED IN CLAUSE (VI) BELOW, ON THE FOLLOWING TERMS AND CONDITIONS:

 

(I)            SELLER SHALL INTERIM SERVICE AND TEMPORARILY ADMINISTER THE
PURCHASED MORTGAGE LOAN ON BEHALF OF BUYER IN ACCORDANCE WITH PRUDENT MORTGAGE
LOAN SERVICING STANDARDS AND PROCEDURES GENERALLY ACCEPTED IN THE MORTGAGE
BANKING INDUSTRY AND IN ACCORDANCE WITH ALL APPLICABLE REQUIREMENTS OF THE
AGENCIES, REQUIREMENTS OF LAW, THE PROVISIONS OF ANY APPLICABLE SERVICING
AGREEMENT, AND THE REQUIREMENTS OF ANY APPLICABLE TAKEOUT AGREEMENT AND THE
APPROVED TAKEOUT INVESTOR, SO THAT THE ELIGIBILITY OF THE PURCHASED MORTGAGE
LOAN FOR PURCHASE UNDER SUCH TAKEOUT AGREEMENT IS NOT VOIDED OR REDUCED BY SUCH
INTERIM SERVICING AND TEMPORARY ADMINISTRATION;

 

(II)           IF ANY ELIGIBLE MORTGAGE LOAN THAT IS PROPOSED TO BE SOLD ON A
PURCHASE DATE IS SERVICED BY A SERVICER OTHER THAN SELLER OR ANY OF ITS
AFFILIATES (A “SUBSERVICER”), OR IF THE INTERIM SERVICING OF ANY PURCHASED
MORTGAGE LOAN IS TO BE TRANSFERRED TO A SUBSERVICER, SELLER SHALL PROVIDE A COPY
OF THE RELATED SUBSERVICING AGREEMENT AND A SUBSERVICER INSTRUCTION LETTER
EXECUTED BY SUCH SUBSERVICER (COLLECTIVELY, THE “SUBSERVICING AGREEMENT”) TO
BUYER PRIOR TO SUCH PURCHASE DATE OR INTERIM SERVICING TRANSFER DATE, AS
APPLICABLE.  EACH SUCH SUBSERVICING AGREEMENT SHALL BE IN FORM AND SUBSTANCE
ACCEPTABLE TO BUYER.  IN ADDITION, SELLER SHALL HAVE OBTAINED THE PRIOR WRITTEN
CONSENT OF BUYER FOR SUCH SUBSERVICER TO SUBSERVICE THE PURCHASED MORTGAGE
LOANS, WHICH CONSENT MAY BE WITHHELD IN BUYER’S SOLE DISCRETION.  IN NO EVENT
SHALL SELLER’S USE OF A SUBSERVICER RELIEVE SELLER OF ITS OBLIGATIONS HEREUNDER,
AND SELLER SHALL REMAIN LIABLE UNDER THIS AGREEMENT AS IF SELLER WERE INTERIM
SERVICING SUCH PURCHASED MORTGAGE LOANS DIRECTLY.  ANY TERMINATION OF SELLER AS
INTERIM SERVICER SHALL AUTOMATICALLY TERMINATE EACH SUBSERVICER.  IN THE EVENT
THAT ANY AGENCY OR GOVERNMENTAL AUTHORITY REVOKES OR MATERIALLY RESTRICTS ANY
SUBSERVICER’S AUTHORITY TO ORIGINATE, SELL OR SERVICE MORTGAGE LOANS, OR ANY
SUBSERVICER SHALL FAIL TO MEET ALL REQUISITE ORIGINATOR, SELLER AND SERVICER
ELIGIBILITY QUALIFICATIONS PROMULGATED BY ANY AGENCY, BUYER MAY DIRECT SELLER TO
IMMEDIATELY TERMINATE SUCH SUBSERVICER AS A SUBSERVICER OF ANY OR ALL OF THE
PURCHASED MORTGAGE LOANS AND SELLER SHALL PROMPTLY CAUSE THE TERMINATION OF SUCH
SUBSERVICER AS DIRECTED BY BUYER.

 

(III)          SELLER ACKNOWLEDGES THAT IT HAS NO RIGHT, TITLE OR INTEREST IN
THE SERVICING RIGHTS FOR ANY PURCHASED MORTGAGE LOAN, AND AGREES THAT SELLER MAY
NOT TRANSFER OR ASSIGN ANY RIGHTS TO MASTER SERVICE, SERVICE, INTERIM SERVICE,
SUBSERVICE OR ADMINISTER ANY PURCHASED MORTGAGE LOAN PRIOR TO SELLER’S
REPURCHASE THEREOF FROM BUYER (BY PAYMENT TO BUYER OF THE REPURCHASE PRICE ON
THE APPLICABLE REPURCHASE DATE) OTHER THAN AN INTERIM SERVICING TRANSFER TO A
SUBSERVICER APPROVED BY BUYER PURSUANT TO A SUBSERVICING AGREEMENT APPROVED BY
BUYER AS DESCRIBED ABOVE IN THIS PARAGRAPH.

 

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(IV)          SELLER SHALL DELIVER ALL PHYSICAL AND CONTRACTUAL SERVICING
MATERIALS, FILES AND RECORDS FOR THE SERVICING OF EACH PURCHASED MORTGAGE LOAN,
TOGETHER WITH ALL OF THE RELATED SERVICING RECORDS THAT ARE NOT ALREADY IN
BUYER’S POSSESSION, TO BUYER’S DESIGNEE UPON THE EARLIEST OF (W) THE OCCURRENCE
OF A DEFAULT OR EVENT OF DEFAULT HEREUNDER, (X) THE TERMINATION OF SELLER AS
INTERIM SERVICER BY BUYER PURSUANT TO PARAGRAPH 13(A)(V), (Y) THE EXPIRATION
(AND NON-RENEWAL) OF THE INTERIM SERVICING TERM, OR (Z) THE TRANSFER OF
SERVICING TO ANY ENTITY APPROVED BY BUYER AND THE ASSUMPTION THEREOF BY SUCH
ENTITY.  SELLER’S TRANSFER OF THE SERVICING RECORDS AND THE PHYSICAL AND SUCH
CONTRACTUAL SERVICING MATERIALS, FILES AND RECORDS UNDER THIS PARAGRAPH SHALL BE
IN ACCORDANCE WITH CUSTOMARY STANDARDS IN THE INDUSTRY AND SUCH TRANSFER SHALL
INCLUDE THE TRANSFER OF THE GROSS AMOUNT OF ALL ESCROWS HELD FOR THE RELATED
MORTGAGORS (WITHOUT REDUCTION FOR UNREIMBURSED ADVANCES OR “NEGATIVE ESCROWS”).

 

(V)           BUYER SHALL HAVE THE RIGHT TO TERMINATE SELLER AS INTERIM SERVICER
OF ANY OF THE PURCHASED MORTGAGE LOANS, WHICH RIGHT SHALL BE EXERCISABLE AT ANY
TIME IN BUYER’S SOLE DISCRETION, UPON WRITTEN NOTICE.

 

(VI)          THE INTERIM SERVICING TERM WILL BE DEEMED RENEWED ON EACH
REMITTANCE DATE SUCCEEDING THE RELATED PURCHASE DATE UNLESS (I) SELLER HAS
PREVIOUSLY BEEN TERMINATED AS INTERIM SERVICER OF ALL OF THE PURCHASED MORTGAGED
LOANS OR (II) AN EVENT OF DEFAULT HAS OCCURRED ON OR BEFORE SUCH REMITTANCE
DATE, IN WHICH LATTER EVENT THE INTERIM SERVICING TERM WILL EXPIRE ON SUCH
REMITTANCE DATE UNLESS BUYER GIVES WRITTEN NOTICE TO SELLER THAT THE INTERIM
SERVICING TERM IS RENEWED AND SPECIFYING THE RENEWAL TERM.

 

(VII)         THE INTERIM SERVICING TERM WILL AUTOMATICALLY TERMINATE AND SELLER
SHALL HAVE NO FURTHER OBLIGATION TO INTERIM SERVICE SUCH PURCHASED MORTGAGE LOAN
AS AGENT FOR BUYER OR TO MAKE THE DELIVERY OF DOCUMENTS REQUIRED UNDER THIS
PARAGRAPH, UPON RECEIPT BY BUYER OF THE REPURCHASE PRICE THEREFOR.

 

(VIII)        BUYER HAS NO OBLIGATION TO PAY SELLER A FEE FOR THE INTERIM
SERVICING OBLIGATIONS SELLER AGREES TO ASSUME HEREUNDER, NO FEE OR OTHER
COMPENSATION WILL EVER ACCRUE OR BE OR BECOME OWING, DUE OR PAYABLE FOR OR ON
ACCOUNT OF SUCH INTERIM SERVICING, AND SUCH INTERIM SERVICING RIGHTS HAVE NO
MONETARY VALUE.

 

(B)                                DURING THE PERIOD SELLER IS INTERIM SERVICING
THE PURCHASED MORTGAGE LOANS AS AGENT FOR BUYER, SELLER AGREES THAT BUYER IS THE
OWNER OF THE RELATED SERVICING RIGHTS, CREDIT FILES AND SERVICING RECORDS AND
SELLER SHALL AT ALL TIMES MAINTAIN AND SAFEGUARD, AND CAUSE ANY SUBSERVICER TO
MAINTAIN AND SAFEGUARD, THE CREDIT FILE FOR THE PURCHASED MORTGAGE LOAN
(INCLUDING PHOTOCOPIES OR IMAGES OF THE DOCUMENTS DELIVERED TO BUYER), AND
ACCURATE AND COMPLETE RECORDS OF ITS INTERIM SERVICING OF THE PURCHASED MORTGAGE
LOAN; SELLER’S POSSESSION OF THE CREDIT FILES AND SERVICING RECORDS BEING FOR
THE SOLE PURPOSE OF INTERIM SERVICING SUCH PURCHASED MORTGAGE LOANS AND SUCH
RETENTION AND POSSESSION BY SELLER BEING IN A TEMPORARY CUSTODIAL CAPACITY ONLY.

 

(C)                                 SELLER FURTHER COVENANTS AS FOLLOWS:

 

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(I)            BUYER MAY, AT ANY TIME DURING SELLER’S BUSINESS HOURS ON
REASONABLE NOTICE (PROVIDED THAT UPON OR DURING THE OCCURRENCE OF A DEFAULT OR
EVENT OF DEFAULT, NO SUCH NOTICE SHALL BE REQUIRED), EXAMINE AND MAKE COPIES OF
ALL SUCH DOCUMENTS AND RECORDS RELATING TO INTERIM SERVICING AND ADMINISTRATION
OF THE PURCHASED MORTGAGE LOANS;

 

(II)           AT BUYER’S REQUEST, SELLER SHALL PROMPTLY DELIVER TO BUYER
REPORTS REGARDING THE STATUS OF ANY PURCHASED MORTGAGE LOAN BEING INTERIM
SERVICED BY SELLER, WHICH REPORTS SHALL INCLUDE, BUT SHALL NOT BE LIMITED TO, A
DESCRIPTION OF ANY EVENT THAT WOULD CAUSE THE PURCHASED MORTGAGE LOAN TO BECOME
A DEFAULTED LOAN OR A DEFECTIVE MORTGAGE LOAN OR ANY OTHER CIRCUMSTANCES THAT
COULD CAUSE A MATERIAL ADVERSE EFFECT ON SUCH PURCHASED MORTGAGE LOAN, BUYER’S
TITLE TO SUCH PURCHASED MORTGAGE LOAN OR THE COLLATERAL SECURING SUCH PURCHASED
MORTGAGE LOAN; SELLER MAY BE REQUIRED TO DELIVER SUCH REPORTS UNTIL THE
REPURCHASE OF THE PURCHASED MORTGAGE LOAN BY SELLER;

 

(III)          SELLER SHALL IMMEDIATELY NOTIFY BUYER IF IT BECOMES AWARE OF ANY
PAYMENT DEFAULT THAT OCCURS UNDER THE PURCHASED MORTGAGE LOAN OR ANY DEFAULT
UNDER ANY SUBSERVICING AGREEMENT THAT WOULD MATERIALLY AND ADVERSELY AFFECT ANY
PURCHASED MORTGAGE LOAN SUBJECT THERETO; AND

 

(IV)          IF, DURING THE POST-ORIGINATION PERIOD, ANY MORTGAGOR CONTACTS
SELLER REQUESTING A PAYOFF QUOTE ON THE RELATED PURCHASED MORTGAGE LOAN, SELLER
SHALL ENSURE THAT ANY PAYOFF QUOTE PROVIDED REQUIRES MORTGAGOR TO WIRE PAYOFF
FUNDS DIRECTLY TO THE FUNDING ACCOUNT AND INCLUDES WIRING INSTRUCTIONS THEREFOR.

 

(D)                                SELLER SHALL RELEASE ITS CUSTODY OF THE
CONTENTS OF ANY CREDIT FILE AND ANY LOAN FILE ONLY (I) IN ACCORDANCE WITH THE
WRITTEN INSTRUCTIONS OF BUYER, (II) UPON THE CONSENT OF BUYER WHEN SUCH RELEASE
IS REQUIRED AS INCIDENTAL TO SELLER’S SERVICING OF THE PURCHASED MORTGAGE LOAN,
OR IS REQUIRED TO COMPLETE THE TAKEOUT FUNDING OR COMPLY WITH THE TAKEOUT
GUIDELINES, OR (III) AS REQUIRED BY ANY REQUIREMENTS OF LAW.

 

(E)                                 BUYER RESERVES THE RIGHT TO APPOINT A
SUCCESSOR INTERIM SERVICER, OR A REGULAR SERVICER, AT ANY TIME TO SERVICE ANY
PURCHASED MORTGAGE LOAN (EACH A “SUCCESSOR SERVICER”) IN ITS SOLE DISCRETION. 
IF BUYER ELECTS TO MAKE SUCH AN APPOINTMENT AFTER THE OCCURRENCE OF A DEFAULT OR
AN EVENT OF DEFAULT, SELLER SHALL BE ASSESSED ALL COSTS AND EXPENSES INCURRED BY
BUYER ASSOCIATED WITH TRANSFERRING THE PHYSICAL AND CONTRACTUAL SERVICING
MATERIALS, FILES AND RECORDS FOR THE SERVICING OF EACH PURCHASED MORTGAGE LOAN,
TOGETHER WITH ALL RELATED SERVICING RECORDS, TO THE SUCCESSOR SERVICER.  IN THE
EVENT OF SUCH AN APPOINTMENT, SELLER SHALL PERFORM ALL ACTS AND TAKE ALL ACTION
SO THAT ANY PART OF THE CREDIT FILE AND RELATED SERVICING RECORDS HELD BY
SELLER, TOGETHER WITH ALL FUNDS AND OTHER RECEIPTS RELATING TO SUCH PURCHASED
MORTGAGE LOAN, ARE PROMPTLY DELIVERED TO THE SUCCESSOR SERVICER, AND SHALL
OTHERWISE FULLY COOPERATE WITH BUYER IN EFFECTUATING SUCH TRANSFER.  SELLER
SHALL HAVE NO CLAIM FOR LOST INTERIM SERVICING INCOME, ANY TERMINATION FEE, LOST
PROFITS OR OTHER DAMAGES IF BUYER APPOINTS A SUCCESSOR SERVICER HEREUNDER. 
BUYER MAY, IN ITS SOLE DISCRETION IF AN EVENT OF DEFAULT SHALL HAVE OCCURRED AND
BE CONTINUING, WITHOUT PAYMENT OF ANY TERMINATION FEE OR ANY OTHER AMOUNT TO
SELLER, SELL ANY OR ALL OF THE PURCHASED MORTGAGE LOANS ON A SERVICING RELEASED
BASIS, AT THE SOLE COST AND EXPENSE OF SELLER.

 

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(F)            IN THE EVENT SELLER IS TERMINATED AS INTERIM SERVICER OF ANY
PURCHASED MORTGAGE LOAN, WHETHER BY EXPIRY OF THE INTERIM SERVICING TERM OR BY
ANY OTHER MEANS, SELLER SHALL COOPERATE WITH BUYER IN EFFECTING SUCH TERMINATION
AND TRANSFERRING ALL AUTHORITY TO INTERIM SERVICE SUCH PURCHASED MORTGAGE LOAN
TO THE SUCCESSOR SERVICER.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
SELLER SHALL, IN THE MANNER AND AT SUCH TIMES AS THE SUCCESSOR SERVICER OR BUYER
SHALL REASONABLY REQUEST (I) PROMPTLY TRANSFER ALL DATA IN ITS POSSESSION
RELATING TO THE APPLICABLE PURCHASED MORTGAGE LOANS AND OTHER MORTGAGE ASSETS TO
THE SUCCESSOR SERVICER IN SUCH ELECTRONIC FORMAT AS THE SUCCESSOR SERVICER MAY
REASONABLY REQUEST, (II) PROMPTLY TRANSFER TO THE SUCCESSOR SERVICER, BUYER OR
BUYER’S DESIGNEE ALL OTHER FILES, RECORDS, CORRESPONDENCE AND DOCUMENTS RELATING
TO THE APPLICABLE PURCHASED MORTGAGE LOANS AND OTHER MORTGAGE ASSETS AND
(III) FULLY COOPERATE AND COORDINATE WITH THE SUCCESSOR SERVICER AND/OR BUYER TO
COMPLY WITH ANY APPLICABLE SO-CALLED “GOODBYE” LETTER REQUIREMENTS, NOTICES OR
OTHER APPLICABLE REQUIREMENTS OF THE REAL ESTATE SETTLEMENT PROCEDURES ACT OR
OTHER APPLICABLE REQUIREMENTS OF LAW APPLICABLE TO THE TRANSFER OF THE SERVICING
OF THE APPLICABLE PURCHASED MORTGAGE LOANS.  SELLER AGREES THAT IF SELLER FAILS
TO COOPERATE WITH BUYER OR ANY SUCCESSOR SERVICER IN EFFECTING THE TERMINATION
OF SELLER AS SERVICER OF ANY PURCHASED MORTGAGE LOAN OR THE TRANSFER OF ALL
AUTHORITY TO SERVICE SUCH PURCHASED MORTGAGE LOAN TO SUCH SUCCESSOR SERVICER IN
ACCORDANCE WITH THE TERMS HEREOF, BUYER WILL BE IRREPARABLY HARMED AND ENTITLED
TO INJUNCTIVE RELIEF AND SHALL NOT BE REQUIRED TO POST BOND.

 

(G)           NOTWITHSTANDING ANYTHING TO THE CONTRARY IN ANY TRANSACTION
DOCUMENT, SELLER AND BUYER AGREE THAT ALL SERVICING RIGHTS WITH RESPECT TO THE
PURCHASED MORTGAGE LOANS ARE BEING TRANSFERRED HEREUNDER TO BUYER ON THE
APPLICABLE PURCHASE DATE, THE PURCHASE PRICE FOR THE PURCHASED MORTGAGE LOANS
INCLUDES FULL AND FAIR CONSIDERATION FOR SUCH SERVICING RIGHTS AND SUCH
SERVICING RIGHTS SHALL BE TRANSFERRED BY BUYER TO SELLER UPON SELLER’S PAYMENT
OF THE REPURCHASE PRICE FOR SUCH PURCHASED MORTGAGE LOANS.

 

14.                               SINGLE AGREEMENT

 

Buyer and Seller acknowledge that, and have entered into this Agreement and will
enter into each Transaction hereunder in consideration of and in reliance upon
the fact that, all Transactions hereunder, together with the provisions of the
Side Letter, constitute a single business and contractual relationship and have
been made in consideration of each other.  Accordingly, each of Buyer and Seller
agrees (i) to perform all of its obligations in respect of each Transaction
hereunder and its obligations under the Side Letter, and that a default in the
performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, (ii) that each of them shall be entitled to set
off claims and apply property held by them in respect of any Transaction against
obligations owing to them in respect of any other Transactions hereunder or any
obligations under the Side Letter and (iii) that payments, deliveries and other
transfers made by either of them in respect of any Transaction or any agreement
under the Side Letter shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any other Transactions
hereunder or any agreement under the Side Letter, and the obligations to make
any such payments, deliveries and other transfers may be applied against each
other and netted.

 

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15.                               NOTICES AND OTHER COMMUNICATIONS

 

Except as otherwise expressly provided herein, all such notices, statements,
demands or other communications shall be in writing and shall be deemed to have
been duly given and received (i) if sent by facsimile, upon the sender’s receipt
of confirmation of transmission of such facsimile from the sending facsimile
machine, (ii) by email, upon confirmation of receipt by the recipient, (ii) if
hand delivered, when delivery to the address below is made, as evidenced by a
confirmation from the applicable courier service of delivery to such address,
but without any need of evidence of receipt by the named individual required and
(iii) if mailed by overnight courier, on the following Business Day, in each
case addressed as follows:

 

if to Seller:

 

Home Loan Center, Inc.
163 Technology Drive

Irvine, California  92618

Attn: Rian Furey

Telecopier: (949) 579-8462

Telephone: (949) 579-8362
Email: Rian.Furey@lendingtree.com

 

if to Buyer:

 

JPMorgan Chase Bank, N.A.
712 Main Street, 7th Floor
Houston, Texas 77002
Attention:  Jack Camiolo
Telephone:  (713) 216-3019
Facsimile:  (713) 216-3024
Email:  jack.j.camiolo@chase.com

 

with copies to:

 

Veronica J. Chapple

Senior Operations Manager

Chase Mortgage Warehouse Finance

14800 Frye Road, Mailstop TX1 - 0022

Fort Worth, TX 76155

Telephone:  817-399-5122

Facsimile:  817-399-5117

Email:  vickie.j.chapple@jpmchase.com

 

and

 

Marjorie A. Hirsch

Vice President and Assistant General Counsel

Legal and Compliance Department

JPMorgan Chase Bank, N.A.

1111 Fannin, 10th Floor (Mail Code TX2-F069)

 

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Houston, TX 77002

Telephone: 713-750-2305

Facsimile: 713-750-2346

Email: Midge.Hirsch@jpmorgan.com

 

Either Party may revise any information relating to it by notice in writing to
the other Party, in accordance with the provisions in this paragraph.

 

16.                               FEES AND EXPENSES; INDEMNITY

 

(A)           SELLER WILL PROMPTLY PAY ALL OUT-OF-POCKET COSTS AND EXPENSES
INCURRED BY BUYER, INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES, IN
CONNECTION WITH (I) PREPARATION, NEGOTIATION, AND DOCUMENTATION OF THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, (II) ADMINISTRATION OF THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS AND ANY AMENDMENT OR WAIVER
THERETO AND PURCHASE AND RESALE OF MORTGAGE LOANS BY BUYER HEREUNDER,
(III) PROTECTION OF THE PURCHASED MORTGAGE LOANS (INCLUDING, WITHOUT LIMITATION,
ALL COSTS OF FILING OR RECORDING ANY ASSIGNMENTS, FINANCING STATEMENTS,
AMENDMENTS AND OTHER DOCUMENTS), (IV) PERFORMANCE OF DUE DILIGENCE, COLLATERAL
AUDITS AND SERVICING APPRAISALS BY BUYER OR ANY AGENT OF BUYER CONDUCTED PRIOR
TO AND AFTER THE DATE HEREOF, AND (V) ENFORCEMENT OF BUYER’S RIGHTS HEREUNDER
AND UNDER ANY OTHER TRANSACTION DOCUMENT (INCLUDING, WITHOUT LIMITATION, COSTS
AND EXPENSES SUFFERED OR INCURRED BY BUYER IN CONNECTION WITH ANY ACT OF
INSOLVENCY RELATED TO SELLER OR ANY GUARANTOR, APPEALS AND ANY ANTICIPATED
POST-JUDGMENT COLLECTION SERVICES).

 

(B)           IN ADDITION TO ITS OTHER RIGHTS HEREUNDER, SELLER SHALL INDEMNIFY
BUYER AND BUYER’S AFFILIATES AND SUBSIDIARIES AND THEIR RESPECTIVE DIRECTORS,
OFFICERS, AGENTS, ADVISORS AND EMPLOYEES (COLLECTIVELY THE “INDEMNIFIED
PARTIES”) AGAINST, AND HOLD BUYER AND EACH OF THEM HARMLESS FROM, ANY LOSSES,
LIABILITIES, DAMAGES, CLAIMS, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS’ FEES AND DISBURSEMENTS) SUFFERED OR INCURRED BY ANY INDEMNIFIED PARTY
(“LOSSES”) RELATING TO OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR ANY OTHER RELATED DOCUMENT, OR ANY TRANSACTION CONTEMPLATED HEREBY
OR THEREBY OR ANY USE OR PROPOSED USE OF PROCEEDS THEREOF AND AMENDMENT OR
WAIVER THEREOF, OR ANY BREACH OF ANY COVENANT, REPRESENTATION OR WARRANTY
CONTAINED IN ANY OF SUCH DOCUMENTS, OR ARISING OUT OF, RESULTING FROM, OR IN ANY
MANNER CONNECTED WITH, THE PURCHASE BY BUYER OF ANY MORTGAGE LOAN OR THE
SERVICING OF ANY PURCHASED MORTGAGE LOANS BY SELLER OR ANY SUBSERVICER; PROVIDED
THAT SELLER SHALL NOT BE REQUIRED TO INDEMNIFY ANY INDEMNIFIED PARTY TO THE
EXTENT SUCH LOSSES RESULT FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUCH INDEMNIFIED PARTY.  THE PROVISIONS OF PARAGRAPH 16 SHALL SURVIVE THE
TERMINATION OF THIS AGREEMENT.

 

17.                               SHIPMENT TO APPROVED TAKEOUT INVESTOR; TRUST
RELEASE LETTERS

 

(A)           SHIPPING INSTRUCTIONS.  IF SELLER DESIRES THAT BUYER SEND A
MORTGAGE NOTE AND THE RELATED MORTGAGE TO AN APPROVED TAKEOUT INVESTOR, RATHER
THAN TO SELLER DIRECTLY, IN CONNECTION WITH SELLER’S REPURCHASE OF THE RELATED
PURCHASED MORTGAGE LOAN, THEN SELLER SHALL PREPARE AND SEND TO BUYER SHIPPING
INSTRUCTIONS TO INSTRUCT BUYER WHEN AND HOW TO SEND SUCH MORTGAGE NOTE AND
RELATED MORTGAGE TO SUCH APPROVED TAKEOUT INVESTOR.  BUYER SHALL USE ITS BEST
EFFORTS TO SEND EACH MORTGAGE NOTE AND RELATED MORTGAGE ON OR BEFORE THE DATE
SPECIFIED FOR SHIPMENT IN THE SHIPPING INSTRUCTIONS IN ACCORDANCE WITH THE
CUTOFF TIMES SPECIFIED IN THE “CHASE MORTGAGE

 

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WAREHOUSE FINANCE CUSTOMER REFERENCE GUIDE” PROVIDED BY BUYER TO SELLER, OR
OTHERWISE SPECIFIED BY BUYER TO SELLER IN WRITING FROM TIME TO TIME.  IF SELLER
INSTRUCTS BUYER TO SEND A MORTGAGE NOTE AND RELATED MORTGAGE BEFORE THE
REPURCHASE DATE, BUYER WILL SEND THE MORTGAGE NOTE AND RELATED MORTGAGE UNDER A
BAILEE LETTER.  IF SELLER DOES NOT PROVIDE BUYER WITH SHIPPING INSTRUCTIONS WITH
RESPECT TO A MORTGAGE LOAN, BUYER SHALL SEND THE MORTGAGE NOTE AND RELATED
MORTGAGE TO SELLER AT SUCH TIME AS BUYER RECEIVES THE REPURCHASE PRICE.

 

(B)           TRUST RELEASE LETTERS.  IF SELLER BELIEVES THAT A MORTGAGE NOTE
CONTAINS ONE OR MORE ASPECTS THAT ARE CORRECTABLE AND NECESSARY TO FACILITATE
THE PURCHASE OR ENFORCEABILITY OF THAT MORTGAGE NOTE, THEN SELLER MAY DELIVER A
TRUST RELEASE LETTER TO BUYER TO REQUEST THE RELEASE OF THE MORTGAGE NOTE TO
SELLER FOR THE PURPOSE OF MAKING THAT CORRECTION.  IF BUYER, IN ITS SOLE
DISCRETION, DEEMS THE REASON STATED BY SELLER IN THE TRUST RELEASE LETTER TO BE
SUFFICIENT TO CAUSE THE MORTGAGE NOTE TO BE RETURNED TO SELLER FOR CORRECTION,
THEN BUYER WILL DELIVER THE MORTGAGE NOTE TO SELLER AT ITS EARLIEST
CONVENIENCE.  SELLER SHALL RETURN THE CORRECTED MORTGAGE NOTE TO BUYER NO LATER
THAN THE FIFTH (5TH) BUSINESS DAY AFTER THE DATE OF THE RELATED TRUST RELEASE
LETTER.  AT ALL TIMES ANY MORTGAGE NOTE IS IN THE POSSESSION SELLER PURSUANT TO
A TRUST RELEASE LETTER, SELLER SHALL HOLD SUCH MORTGAGE NOTE IN TRUST FOR THE
BENEFIT OF BUYER.  AT NO TIME SHALL THE AGGREGATE ORIGINAL OUTSTANDING PRINCIPAL
BALANCE OF ALL MORTGAGE NOTES RELEASED TO SELLER PURSUANT TO THIS PARAGRAPH
EXCEED $10,000,000.

 

18.                               FURTHER ASSURANCES.

 

SELLER SHALL (I) PROMPTLY PROVIDE SUCH FURTHER ASSURANCES OR AGREEMENTS AS BUYER
MAY REQUEST IN GOOD FAITH IN ORDER TO EFFECT THE PURPOSES OF THIS AGREEMENT AND
(II) ON OR PRIOR TO THE DATE HEREOF, MARK ITS SYSTEMS AND/OR OTHER DATA
PROCESSING RECORDS EVIDENCING THE PURCHASED MORTGAGE LOANS WITH A LEGEND OR
OTHER IDENTIFIER, ACCEPTABLE TO BUYER, EVIDENCING THAT BUYER HAS ACQUIRED AN
INTEREST THEREIN AS PROVIDED IN THIS AGREEMENT.

 

19.                               BUYER AS ATTORNEY-IN-FACT

 

Buyer is hereby appointed the attorney-in-fact of Seller for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing any instruments that Buyer may, in good faith, deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest.  Without limiting
the generality of the foregoing, Buyer shall have the right and power to
receive, endorse and collect all checks made payable to the order of Seller
representing any Income on any of the Purchased Mortgage Loans and to give full
discharge for the same.

 

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20.                               WIRE INSTRUCTIONS

 

(A)                                 UNLESS OTHERWISE SPECIFIED IN THIS
AGREEMENT, ANY AMOUNTS TO BE TRANSFERRED BY BUYER TO SELLER HEREUNDER SHALL BE
SENT BY WIRE TRANSFER IN IMMEDIATELY AVAILABLE FUNDS TO THE ACCOUNT OF SELLER
AT:

 

Bank:  JPMorgan Chase Bank, N.A.
Account Name:  Home Loan Center, Inc. Clearing Account
Acct.  No.: 
ABA No. 
Reference:

 

(B)                                ANY AMOUNTS TO BE TRANSFERRED BY SELLER TO
BUYER HEREUNDER SHALL BE SENT BY WIRE TRANSFER IN IMMEDIATELY AVAILABLE FUNDS TO
THE ACCOUNT OF BUYER AT:

 

Bank:

 

JPMorgan Chase Bank, N.A.

ABA:

 

 

Acct Name:

 

Chase Mortgage Warehouse Finance - Clearing Account

Account #:

 

 

Attn:

 

Veronica J. Chapple, 817-399-5122

 

Amounts received after 4:00 p.m., Houston, Texas time, on any Business Day shall
be deemed to have been paid and received on the next succeeding Business Day.

 

21.                               ENTIRE AGREEMENT; SEVERABILITY

 

This Agreement, as supplemented by the Side Letter, shall supersede any existing
agreements between the parties containing general terms and conditions for
repurchase transactions.  Each provision and agreement herein shall be treated
as separate and independent from any other provision or agreement herein and
shall be enforceable notwithstanding the unenforceability of any such other
provision or agreement.

 

22.                               ASSIGNMENTS; TERMINATION

 

(A)                                  THE RIGHTS AND OBLIGATIONS OF SELLER UNDER
THIS AGREEMENT AND UNDER ANY TRANSACTION SHALL NOT BE ASSIGNED BY SELLER WITHOUT
THE PRIOR WRITTEN CONSENT OF BUYER AND ANY SUCH ASSIGNMENT WITHOUT THE PRIOR
WRITTEN CONSENT OF BUYER SHALL BE NULL AND VOID.

 

(B)                                 BUYER MAY ASSIGN ALL OR ANY PORTION OF ITS
RIGHTS, OBLIGATIONS AND INTEREST UNDER THIS AGREEMENT AND IN THE MORTGAGE ASSETS
AT ANY TIME WITHOUT THE CONSENT OF ANY PERSON, PROVIDED THAT ANY SUCH
ASSIGNMENT, OTHER THAN AN ASSIGNMENT TO AN AFFILIATE OF BUYER, IS SUBJECT TO THE
PRIOR WRITTEN CONSENT OF SELLER SO LONG AS AN EVENT OF DEFAULT OR DEFAULT HAS
NOT OCCURRED AND IS NOT CONTINUING.  ANY SUCH ASSIGNMENT SHALL BE IN A MINIMUM
AMOUNT OF AT LEAST $5,000,000 UNLESS OTHERWISE CONSENTED TO BY SELLER; PROVIDED
THAT SELLER’S CONSENT SHALL NOT BE REQUIRED IF AN EVENT OF DEFAULT OR DEFAULT
HAS OCCURRED AND IS CONTINUING.  RESALES OF PURCHASED MORTGAGE LOANS BY BUYER
(SUBJECT TO SELLER’S PRIOR RIGHT TO REPURCHASE THE PURCHASED MORTGAGE LOANS OR
MORTGAGE LOANS SUBSTANTIALLY SIMILAR TO THE PURCHASED MORTGAGE LOANS PRIOR TO
THE TERMINATION OF

 

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THIS AGREEMENT OR BUYER’S LIQUIDATION OF THE PURCHASED MORTGAGE LOANS PURSUANT
TO PARAGRAPH 12) IN ACCORDANCE WITH APPLICABLE LAW, SHALL BE PERMITTED WITHOUT
RESTRICTION.  BUYER MAY SELL PARTICIPATION INTERESTS IN ALL OR ANY PORTION OF
ITS RIGHTS, OBLIGATIONS AND INTEREST UNDER THIS AGREEMENT AND IN THE MORTGAGE
ASSETS TO ANY PERSON AT ANY TIME WITHOUT THE CONSENT OF ANY PERSON.  IN ADDITION
TO, AND NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN, THE FOREGOING, BUYER
MAY ASSIGN ITS RIGHTS TO ENFORCE THIS AGREEMENT AS TO ANY MORTGAGE LOAN TO ANY
PERSON THAT SUBSEQUENTLY PURCHASES SUCH MORTGAGE LOAN FROM BUYER OR PROVIDES
FINANCING TO BUYER WITH RESPECT TO SUCH MORTGAGE LOAN.

 

(C)           IN ADDITION TO THE FOREGOING, BUYER MAY, AT ANY TIME, PLEDGE OR
GRANT A LIEN IN ALL OR ANY PORTION OF ITS RIGHTS UNDER THIS AGREEMENT
(INCLUDING, WITHOUT LIMITATION, ANY RIGHTS TO MORTGAGE ASSETS AND ANY RIGHTS TO
PAYMENT OF THE REPURCHASE PRICE) TO SECURE OBLIGATIONS TO A FEDERAL RESERVE
BANK, WITHOUT NOTICE TO OR CONSENT OF SELLER; PROVIDED THAT NO SUCH PLEDGE OR
GRANT OF A SECURITY INTEREST WOULD RELEASE BUYER FROM ANY OF ITS OBLIGATIONS
UNDER THIS AGREEMENT, OR SUBSTITUTE ANY SUCH PLEDGEE OR GRANTEE FOR BUYER AS A
PARTY TO THIS AGREEMENT.

 

(D)           SUBJECT TO THE FOREGOING, THIS AGREEMENT AND ANY TRANSACTIONS
SHALL BE BINDING UPON AND SHALL INURE TO THE BENEFIT OF THE PARTIES AND THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS.

 

(E)           NOTWITHSTANDING ANY OF THE FOREGOING PROVISIONS OF THIS PARAGRAPH,
BUYER SHALL NOT BE PRECLUDED FROM ASSIGNING, CHARGING OR OTHERWISE DEALING WITH
ALL OR ANY PART OF ITS INTEREST IN ANY SUM PAYABLE TO IT UNDER PARAGRAPH 12.

 

(F)            THIS AGREEMENT AND ALL TRANSACTIONS OUTSTANDING HEREUNDER SHALL
TERMINATE AUTOMATICALLY WITHOUT ANY REQUIREMENT FOR NOTICE ON THE DATE OCCURRING
ON OR AFTER THE TERMINATION DATE ON WHICH ALL REPURCHASE PRICES AND ALL OTHER
OBLIGATIONS OF SELLER UNDER THE TRANSACTION DOCUMENTS HAVE BEEN PAID IN FULL.

 

23.                               COUNTERPARTS

 

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

 

24.                               GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF JURY TRIAL

 

(A)           THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK , WITHOUT GIVING EFFECT TO THE CONFLICT
OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTIONS 5-1401 AND 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW).

 

(B)           SELLER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY
NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS

 

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CONTEMPLATED HEREBY.  SELLER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT
MAY EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM
THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.  NOTHING IN THIS PARAGRAPH 24 SHALL AFFECT THE RIGHT OF
BUYER TO BRING ANY ACTION OR PROCEEDING AGAINST SELLER OR ITS PROPERTY IN THE
COURTS OF OTHER JURISDICTIONS.  EACH PARTY CONSENTS TO THE SERVICE OF ANY AND
ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH
PROCESS TO IT AT ITS ADDRESS FOR NOTICES HEREUNDER SPECIFIED IN PARAGRAPH 15.

 

(C)           EACH OF SELLER AND BUYER (BY ITS ACCEPTANCE HEREOF) HEREBY
VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON CONTRACT, TORT, OR
OTHERWISE) BETWEEN SELLER AND BUYER ARISING OUT OF OR IN ANY WAY RELATED TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT. THIS PROVISION IS A MATERIAL
INDUCEMENT TO BUYER TO PROVIDE THE FACILITY EVIDENCED BY THIS AGREEMENT.

 

25.                               NO WAIVERS, ETC.

 

No express or implied waiver of any Event of Default by Buyer shall constitute a
waiver of any other Event of Default and no exercise of any remedy hereunder by
Buyer shall constitute a waiver of its right to exercise any other remedy
hereunder.  No modification or waiver of any provision of this Agreement and no
consent by any Party to a departure herefrom shall be effective unless and until
such shall be in writing and duly executed by both of the parties hereto. 
Without limitation on any of the foregoing, the failure to give a notice
pursuant to Paragraph 4(a) hereof will not constitute a waiver of any right to
do so at a later date.

 

26.                               USE OF EMPLOYEE PLAN ASSETS

 

(A)           IF ASSETS OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ANY PROVISION OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 (“ERISA”) ARE INTENDED TO BE
USED BY SELLER IN A TRANSACTION, SELLER SHALL SO NOTIFY BUYER PRIOR TO THE
TRANSACTION.  SELLER SHALL REPRESENT IN WRITING TO BUYER THAT THE TRANSACTION
DOES NOT CONSTITUTE A PROHIBITED TRANSACTION UNDER ERISA OR IS OTHERWISE EXEMPT
THEREFROM, AND BUYER MAY PROCEED IN RELIANCE THEREON BUT SHALL NOT BE REQUIRED
SO TO PROCEED.

 

(B)           SUBJECT TO THE LAST SENTENCE OF PARAGRAPH (A) OF THIS PARAGRAPH,
ANY SUCH TRANSACTION SHALL PROCEED ONLY IF SELLER FURNISHES OR HAS FURNISHED TO
BUYER ITS MOST RECENT AVAILABLE AUDITED STATEMENT OF ITS FINANCIAL CONDITION AND
ITS MOST RECENT SUBSEQUENT UNAUDITED STATEMENT OF ITS FINANCIAL CONDITION.

 

(C)           BY ENTERING INTO A TRANSACTION PURSUANT TO THIS PARAGRAPH, SELLER
SHALL BE DEEMED (I) TO REPRESENT TO BUYER THAT SINCE THE DATE OF SELLER’S LATEST
SUCH FINANCIAL STATEMENTS, THERE HAS

 

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BEEN NO MATERIAL ADVERSE CHANGE IN SELLER’S FINANCIAL CONDITION WHICH SELLER HAS
NOT DISCLOSED TO BUYER, AND (II) TO AGREE TO PROVIDE BUYER WITH FUTURE AUDITED
AND UNAUDITED STATEMENTS OF ITS FINANCIAL CONDITION AS THEY ARE ISSUED, SO LONG
ANY SUCH TRANSACTION IS OUTSTANDING.

 

27.                               INTENT

 

(A)           THE PARTIES INTEND AND ACKNOWLEDGE THAT EACH TRANSACTION IS A
“REPURCHASE AGREEMENT” AS THAT TERM IS DEFINED IN PARAGRAPH 101 OF THE
BANKRUPTCY CODE, AND A “SECURITIES CONTRACT” AS THAT TERM IS DEFINED IN
PARAGRAPH 741 OF THE BANKRUPTCY CODE.  SELLER HEREBY AGREES THAT IT SHALL NOT
CHALLENGE THE CHARACTERIZATION OF THIS AGREEMENT AS A “REPURCHASE AGREEMENT” AS
THAT TERM IS DEFINED IN PARAGRAPH 101 OF THE BANKRUPTCY CODE, OR AS A
“SECURITIES CONTRACT” AS THAT TERM IS DEFINED IN PARAGRAPH 741 OF THE BANKRUPTCY
CODE IN ANY DISPUTE OR PROCEEDING.

 

(B)           IT IS UNDERSTOOD THAT EITHER PARTY’S RIGHT TO ACCELERATE OR
TERMINATE THIS AGREEMENT OR TO LIQUIDATE MORTGAGE LOANS DELIVERED TO IT IN
CONNECTION WITH TRANSACTIONS HEREUNDER OR TO EXERCISE ANY OTHER REMEDIES
PURSUANT TO PARAGRAPH 12 HEREOF, IS A CONTRACTUAL RIGHT TO ACCELERATE, TERMINATE
OR LIQUIDATE THIS AGREEMENT OR SUCH TRANSACTION AS DESCRIBED IN PARAGRAPHS 555
AND 559 OF THE BANKRUPTCY CODE.

 

(C)           THE PARTIES AGREE AND ACKNOWLEDGE THAT IF A PARTY HERETO IS AN
“INSURED DEPOSITORY INSTITUTION,” AS SUCH TERM IS DEFINED IN THE FEDERAL DEPOSIT
INSURANCE ACT, AS AMENDED (“FDIA”), THEN EACH TRANSACTION HEREUNDER IS A
“QUALIFIED FINANCIAL CONTRACT,” AS THAT TERM IS DEFINED IN FDIA AND ANY RULES,
ORDERS OR POLICY STATEMENTS THEREUNDER (EXCEPT INSOFAR AS THE TYPE OF ASSETS
SUBJECT TO SUCH TRANSACTION WOULD RENDER SUCH DEFINITION INAPPLICABLE).

 

(D)           IT IS UNDERSTOOD THAT THIS AGREEMENT CONSTITUTES A “NETTING
CONTRACT” AS DEFINED IN AND SUBJECT TO TITLE IV OF THE FEDERAL DEPOSIT INSURANCE
CORPORATION IMPROVEMENT ACT OF 1991 (“FDICIA”) AND EACH PAYMENT ENTITLEMENT AND
PAYMENT OBLIGATION UNDER ANY TRANSACTION HEREUNDER SHALL CONSTITUTE A “COVERED
CONTRACTUAL PAYMENT ENTITLEMENT” OR “COVERED CONTRACTUAL PAYMENT OBLIGATION”,
RESPECTIVELY, AS DEFINED IN AND SUBJECT TO FDICIA (EXCEPT INSOFAR AS ONE OR BOTH
OF THE PARTIES IS NOT A “FINANCIAL INSTITUTION” AS THAT TERM IS DEFINED IN
FDICIA).

 

(E)           IT IS UNDERSTOOD AND AGREED THAT THIS AGREEMENT CONSTITUTES A
“MASTER NETTING AGREEMENT” AS THAT TERM IS DEFINED IN PARAGRAPH 101 OF THE
BANKRUPTCY CODE, AND THAT EITHER PARTY’S RIGHT TO CAUSE THE TERMINATION,
LIQUIDATION, OR ACCELERATION OF, OR TO OFFSET NET TERMINATION VALUES, PAYMENT
AMOUNTS OR OTHER TRANSFER OBLIGATIONS ARISING UNDER OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY TRANSACTION IS A CONTRACTUAL RIGHT TO CAUSE THE TERMINATION,
LIQUIDATION, OR ACCELERATION OF, OR TO OFFSET NET TERMINATION VALUES, PAYMENT
AMOUNTS OR OTHER TRANSFER OBLIGATIONS ARISING UNDER OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY TRANSACTION AS DESCRIBED IN PARAGRAPH 561 OF THE BANKRUPTCY
CODE.

 

28.                               DISCLOSURE RELATING TO CERTAIN FEDERAL
PROTECTIONS

 

The parties acknowledge that they have been advised that:

 

(A)           IN THE CASE OF TRANSACTIONS IN WHICH ONE OF THE PARTIES IS A
BROKER OR DEALER REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”)
UNDER PARAGRAPH 15 OF THE SECURITIES EXCHANGE ACT OF 1934 (“1934 ACT”), THE
SECURITIES INVESTOR PROTECTION CORPORATION HAS

 

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TAKEN THE POSITION THAT THE PROVISIONS OF THE SECURITIES INVESTOR PROTECTION ACT
OF 1970 (“SIPA”) DO NOT PROTECT THE OTHER PARTY WITH RESPECT TO ANY TRANSACTION
HEREUNDER;

 

(B)           IN THE CASE OF TRANSACTIONS IN WHICH ONE OF THE PARTIES IS A
GOVERNMENT SECURITIES BROKER OR A GOVERNMENT SECURITIES DEALER REGISTERED WITH
THE SEC UNDER PARAGRAPH 15C OF THE 1934 ACT, SIPA WILL NOT PROVIDE PROTECTION TO
THE OTHER PARTY WITH RESPECT TO ANY TRANSACTION HEREUNDER; AND

 

(C)           IN THE CASE OF TRANSACTIONS IN WHICH ONE OF THE PARTIES IS A
FINANCIAL INSTITUTION, FUNDS HELD BY THE FINANCIAL INSTITUTION PURSUANT TO A
TRANSACTION HEREUNDER ARE NOT A DEPOSIT AND THEREFORE ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL SAVINGS AND LOAN INSURANCE
CORPORATION OR THE NATIONAL CREDIT UNION SHARE INSURANCE FUND, AS APPLICABLE.

 

29.                               CONFIDENTIALITY

 

(A)           CONFIDENTIAL TERMS.  THE PARTIES HEREBY ACKNOWLEDGE AND AGREE THAT
ALL WRITTEN OR COMPUTER-READABLE INFORMATION PROVIDED BY ONE PARTY TO ANY OTHER
REGARDING THE TERMS SET FORTH IN ANY OF THE TRANSACTION DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREBY (THE “CONFIDENTIAL TERMS”) SHALL BE KEPT
CONFIDENTIAL AND SHALL NOT BE DIVULGED TO ANY PERSON WITHOUT THE PRIOR WRITTEN
CONSENT OF SUCH OTHER PARTY EXCEPT TO THE EXTENT THAT (I) SUCH PERSON IS AN
AFFILIATE, DIVISION, OR PARENT HOLDING COMPANY OF A PARTY OR A DIRECTOR,
OFFICER, EMPLOYEE OR AGENT (INCLUDING AN ACCOUNTANT, LEGAL COUNSEL AND OTHER
ADVISOR) OF A PARTY OR SUCH AFFILIATE, DIVISION OR PARENT HOLDING COMPANY ,
(II) IN SUCH PARTY’S OPINION IT IS NECESSARY TO DO SO IN WORKING WITH LEGAL
COUNSEL, AUDITORS, TAXING AUTHORITIES OR OTHER GOVERNMENTAL AGENCIES OR
REGULATORY BODIES OR IN ORDER TO COMPLY WITH ANY APPLICABLE FEDERAL OR STATE
LAWS OR REGULATIONS, (III) ANY OF THE CONFIDENTIAL TERMS ARE IN THE PUBLIC
DOMAIN OTHER THAN DUE TO A BREACH OF THIS COVENANT, (IV) IN THE EVENT OF A
DEFAULT OR AND EVENT OF DEFAULT BUYER REASONABLY DETERMINES SUCH INFORMATION TO
BE NECESSARY OR DESIRABLE TO DISCLOSE IN CONNECTION WITH THE MARKETING AND SALES
OF THE PURCHASED MORTGAGE LOANS OR OTHERWISE TO ENFORCE OR EXERCISE BUYER’S
RIGHTS HEREUNDER, OR (V) TO THE EXTENT BUYER DEEMS NECESSARY OR APPROPRIATE, IN
CONNECTION WITH AN ASSIGNMENT OR PARTICIPATION UNDER PARAGRAPH 22 OF THIS
AGREEMENT OR IN CONNECTION WITH ANY HEDGING TRANSACTION RELATED TO PURCHASED
MORTGAGE LOANS.  NOTWITHSTANDING THE FOREGOING OR ANYTHING TO THE CONTRARY
CONTAINED HEREIN OR IN ANY OTHER TRANSACTION DOCUMENT, THE PARTIES MAY DISCLOSE
TO ANY AND ALL PERSONS, WITHOUT LIMITATION OF ANY KIND, THE U.S. FEDERAL, STATE
AND LOCAL TAX TREATMENT OF THE TRANSACTIONS, ANY FACT THAT MAY BE RELEVANT TO
UNDERSTANDING THE U.S. FEDERAL, STATE AND LOCAL TAX TREATMENT OF THE
TRANSACTIONS, AND ALL MATERIALS OF ANY KIND (INCLUDING OPINIONS OR OTHER TAX
ANALYSES) RELATING TO SUCH U.S. FEDERAL, STATE AND LOCAL TAX TREATMENT AND THAT
MAY BE RELEVANT TO UNDERSTANDING SUCH TAX TREATMENT; PROVIDED THAT SELLER MAY
NOT DISCLOSE (EXCEPT AS PROVIDED IN CLAUSES (I) THROUGH (IV) OF THIS SECTION)
THE NAME OF OR IDENTIFYING INFORMATION WITH RESPECT TO BUYER OR ANY PRICING
TERMS (INCLUDING THE PRICING RATE, FACILITY FEE, PURCHASE PRICE PERCENTAGE AND
PURCHASE PRICE) OR OTHER NONPUBLIC BUSINESS OR FINANCIAL INFORMATION (INCLUDING
ANY SUBLIMITS AND FINANCIAL COVENANTS) THAT IS UNRELATED TO THE U.S. FEDERAL,
STATE AND LOCAL TAX TREATMENT OF THE TRANSACTIONS AND IS NOT RELEVANT TO
UNDERSTANDING THE U.S. FEDERAL, STATE AND LOCAL TAX TREATMENT OF THE
TRANSACTIONS, WITHOUT THE PRIOR WRITTEN CONSENT OF BUYER. THE PROVISIONS SET
FORTH IN THIS PARAGRAPH 29 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT FOR A
PERIOD OF ONE (1) YEAR FOLLOWING SUCH TERMINATION.

 

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(B)           PRIVACY OF CUSTOMER INFORMATION.  THE SELLER’S CUSTOMER
INFORMATION IN THE POSSESSION OF BUYER, OTHER THAN INFORMATION INDEPENDENTLY
OBTAINED BY BUYER AND NOT DERIVED IN ANY MANNER FROM OR USING INFORMATION
OBTAINED UNDER OR IN CONNECTION WITH THIS AGREEMENT, IS AND SHALL REMAIN
CONFIDENTIAL AND PROPRIETARY INFORMATION OF SELLER.  EXCEPT IN ACCORDANCE WITH
THIS PARAGRAPH 29(B), BUYER SHALL NOT USE ANY SELLER’S CUSTOMER INFORMATION FOR
ANY PURPOSE, INCLUDING THE MARKETING OF PRODUCTS OR SERVICES TO, OR THE
SOLICITATION OF BUSINESS FROM, CUSTOMERS, OR DISCLOSE ANY SELLER’S CUSTOMER
INFORMATION TO ANY PERSON, INCLUDING ANY OF BUYER’S EMPLOYEES, AGENTS OR
CONTRACTORS OR ANY THIRD PARTY NOT AFFILIATED WITH BUYER.  BUYER MAY USE OR
DISCLOSE SELLER’S CUSTOMER INFORMATION ONLY TO THE EXTENT NECESSARY (I) FOR
EXAMINATION AND AUDIT OF BUYER’S ACTIVITIES, BOOKS AND RECORDS BY BUYER’S
REGULATORY AUTHORITIES, (II) TO PROTECT OR EXERCISE BUYER’S RIGHTS AND
PRIVILEGES OR (III) TO CARRY OUT BUYER’S EXPRESS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS (INCLUDING PROVIDING SELLER’S
CUSTOMER INFORMATION TO APPROVED TAKEOUT INVESTORS), AND FOR NO OTHER PURPOSE;
PROVIDED THAT BUYER MAY ALSO USE AND DISCLOSE THE SELLER’S CUSTOMER INFORMATION
AS EXPRESSLY PERMITTED BY SELLER IN WRITING, TO THE EXTENT THAT SUCH EXPRESS
PERMISSION IS IN ACCORDANCE WITH THE PRIVACY REQUIREMENTS.  BUYER SHALL TAKE
COMMERCIALLY REASONABLE STEPS TO ENSURE THAT EACH PERSON TO WHICH BUYER INTENDS
TO DISCLOSE SELLER’S CUSTOMER INFORMATION, BEFORE ANY SUCH DISCLOSURE OF
INFORMATION, AGREES TO KEEP CONFIDENTIAL ANY SUCH SELLER’S CUSTOMER INFORMATION
AND TO USE OR DISCLOSE SUCH SELLER’S CUSTOMER INFORMATION ONLY TO THE EXTENT
NECESSARY TO PROTECT OR EXERCISE BUYER’S RIGHTS AND PRIVILEGES, OR TO CARRY OUT
BUYER’S EXPRESS OBLIGATIONS, UNDER THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS (INCLUDING PROVIDING SELLER’S CUSTOMER INFORMATION TO APPROVED
INVESTORS).  BUYER AGREES TO MAINTAIN AN INFORMATION SECURITY PROGRAM AND TO
ASSESS, MANAGE AND CONTROL RISKS RELATING TO THE SECURITY AND CONFIDENTIALITY OF
SELLER’S CUSTOMER INFORMATION PURSUANT TO SUCH PROGRAM IN THE SAME MANNER AS
BUYER DOES IN RESPECT OF ITS OWN CUSTOMERS’ INFORMATION, AND SHALL IMPLEMENT THE
STANDARDS RELATING TO SUCH RISKS IN THE MANNER SET FORTH IN THE INTERAGENCY
GUIDELINES ESTABLISHING STANDARDS FOR SAFEGUARDING COMPANY CUSTOMER INFORMATION
SET FORTH IN 12 CFR PARTS 30, 208, 211, 225, 263, 308, 364, 568 AND 570. 
WITHOUT LIMITING THE SCOPE OF THE FOREGOING SENTENCE, BUYER SHALL USE AT LEAST
THE SAME PHYSICAL AND OTHER SECURITY MEASURES TO PROTECT ALL OF THE SELLER’S
CUSTOMER INFORMATION IN ITS POSSESSION OR CONTROL AS BUYER USES FOR ITS OWN
CUSTOMERS’ CONFIDENTIAL AND PROPRIETARY INFORMATION.

 

30.                               SETOFF

 

EXCEPT TO THE EXTENT SPECIFICALLY PERMITTED HEREIN, SELLER HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES ALL RIGHT TO SETOFF THAT IT MAY HAVE UNDER CONTRACT
(INCLUDING THIS AGREEMENT), APPLICABLE LAW, IN EQUITY OR OTHERWISE WITH RESPECT
TO ANY FUNDS OR MONIES OF BUYER (OR ANY DISCLOSED PRINCIPAL FOR WHICH BUYER IS
ACTING AS AGENT) AT ANY TIME HELD BY OR IN THE POSSESSION OF SELLER.

 

SELLER AGREES THAT BUYER MAY SETOFF ANY FUNDS OR MONIES OF SELLER AT ANY TIME
HELD BY OR IN THE POSSESSION OF BUYER, WHETHER IN CONNECTION WITH THIS AGREEMENT
OR OTHERWISE, AGAINST ANY AMOUNTS SELLER OWES TO BUYER PURSUANT TO THE TERMS OF
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.

 

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31.                               WAIVER OF SPECIAL DAMAGES.

 

SELLER WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT SELLER
MAY HAVE TO CLAIM OR RECOVER FROM BUYER IN ANY LEGAL ACTION OR PROCEEDING ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.

 

32.                               USA PATRIOT ACT NOTIFICATION.

 

THE FOLLOWING NOTIFICATION IS PROVIDED TO BORROWER PURSUANT TO SECTION 326 OF
THE USA PATRIOT ACT OF 2001, 31 U.S.C. SECTION 5318:

 

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT.  TO HELP THE
GOVERNMENT FIGHT THE FUNDING OF TERRORISM AND MONEY LAUNDERING ACTIVITIES,
FEDERAL LAW REQUIRES ALL FINANCIAL INSTITUTIONS TO OBTAIN, VERIFY, AND RECORD
INFORMATION THAT IDENTIFIES EACH PERSON OR ENTITY THAT OPENS AN ACCOUNT,
INCLUDING ANY DEPOSIT ACCOUNT, TREASURY MANAGEMENT ACCOUNT, LOAN, OTHER
EXTENSION OF CREDIT, OR OTHER FINANCIAL SERVICES PRODUCT. WHAT THIS MEANS FOR
SELLER:  WHEN SELLER OPENS AN ACCOUNT, IF SELLER IS AN INDIVIDUAL, BUYER WILL
ASK FOR SELLER’S NAME, TAXPAYER IDENTIFICATION NUMBER, RESIDENTIAL ADDRESS, DATE
OF BIRTH, AND OTHER INFORMATION THAT WILL ALLOW BUYER TO IDENTIFY SELLER, AND IF
SELLER IS NOT AN INDIVIDUAL, BUYER WILL ASK FOR SELLER’S NAME, TAXPAYER
IDENTIFICATION NUMBER, BUSINESS ADDRESS, AND OTHER INFORMATION THAT WILL ALLOW
BUYER TO IDENTIFY SELLER.  BUYER MAY ALSO ASK, IF SELLER IS AN INDIVIDUAL, TO
SEE SELLER’S DRIVER’S LICENSE OR OTHER IDENTIFYING DOCUMENTS, AND IF SELLER IS
NOT AN INDIVIDUAL TO SEE SELLER’S LEGAL ORGANIZATIONAL DOCUMENTS OR OTHER
IDENTIFYING DOCUMENTS.

 

[Remainder of page intentionally blank.]

 

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

 

 

JPMORGAN CHASE BANK, N.A.

 

 

 

 

 

By:

/s/ Ken Brock

 

 

 

 

 

 

 

Name:

Ken Brock

 

 

 

 

Title:

Senior Vice President

 

 

 

 

 

 

 

HOME LOAN CENTER, INC.

 

 

 

 

 

 

By:

/s/ Rian Furey

 

 

 

 

Name:

Rian Furey

 

 

 

 

Title:

Senior Vice President

 

 

 

Signature Page to

Master Repurchase Agreement

 

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