EXHIBIT 10.1

EXECUTION VERSION

 

MASTER REPURCHASE AGREEMENT

Dated October 31, 2006

Between

JPMorgan Chase Bank, N.A.,

as the Administrative Agent for the Various Buyers from time to time

Various Buyers

and

HomeBanc Corp.,

as a Seller

 

and

 

HomeBanc Mortgage Corporation,

as a Seller

and

KeyBank National Association

as Syndication Agent

and

Commerzbank Aktiengesellschaft New York Branch and Grand Cayman Branch, BNP
Paribas and US Bank National Association

as Documentation Agents

and

J.P. Morgan Securities Inc.

as Sole Bookrunner and Sole Lead Arranger

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TABLE OF CONTENTS

 

 

Page

 

 

 

SECTION 1

APPLICABILITY

1

 

 

 

SECTION 2

DEFINITIONS

1

 

 

 

SECTION 3

INITIATION; TERMINATION

30

 

 

 

SECTION 4

MARGIN AMOUNT MAINTENANCE

35

 

 

 

SECTION 5

INCOME PAYMENTS

36

 

 

 

SECTION 6

REQUIREMENTS OF LAW

37

 

 

 

SECTION 7

TAXES

38

 

 

 

SECTION 8

SECURITY INTEREST

41

 

 

 

SECTION 9

PAYMENT, TRANSFER AND CUSTODY

42

 

 

 

SECTION 10

RESERVED

43

 

 

 

SECTION 11

REPRESENTATIONS

43

 

 

 

SECTION 12

COVENANTS

50

 

 

 

SECTION 13

EVENTS OF DEFAULT

61

 

 

 

SECTION 14

REMEDIES

64

 

 

 

SECTION 15

INDEMNIFICATION AND EXPENSES

66

 

 

 

SECTION 16

SERVICING

67

 

 

 

SECTION 17

RECORDING OF COMMUNICATIONS

68

 

 

 

SECTION 18

SINGLE AGREEMENT

68

 

 

 

SECTION 19

SET-OFF

68

 

 

 

SECTION 20

NOTICES AND OTHER COMMUNICATIONS

68

 

 

 

SECTION 21

ENTIRE AGREEMENT; SEVERABILITY

69

 

 

 

SECTION 22

NON-ASSIGNABILITY

69

 

 

 

SECTION 23

TAX TREATMENT

70

 

 

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SECTION 24

TERMINABILITY

70

 

 

 

SECTION 25

GOVERNING LAW

70

 

 

 

SECTION 26

SUBMISSION TO JURISDICTION; WAIVERS

70

 

 

 

SECTION 27

NO WAIVERS, ETC.

71

 

 

 

SECTION 28

NETTING

71

 

 

 

SECTION 29

PERIODIC DUE DILIGENCE REVIEW

72

 

 

 

SECTION 30

ADMINISTRATIVE AGENT’S APPOINTMENT AS
  ATTORNEY-IN-FACT

72

 

 

 

SECTION 31

MISCELLANEOUS

74

 

 

 

SECTION 32

CONFIDENTIALITY

74

 

 

 

SECTION 33

INTENT

75

 

 

 

SECTION 34

DISCLOSURE RELATING TO CERTAIN FEDERAL
  PROTECTIONS

76

 

 

 

SECTION 35

CONFLICTS

76

 

 

 

SECTION 36

AUTHORIZATIONS

76

 

 

 

SECTION 37

ACKNOWLEDGEMENT OF ANTI PREDATORY LENDING
  PRACTICES

76

 

 

 

SECTION 38

GENERAL INTERPRETIVE PRINCIPLES

76

 

 

 

SECTION 39

FEES

77

 

 

 

SECTION 40

AMENDMENTS

77

 

 

 

SECTION 41

JOINT AND SEVERAL

77

 

SCHEDULE I

REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS

 

 

 

 

SCHEDULE II

AUTHORIZED REPRESENTATIVES

 

 

 

 

SCHEDULE III

LIST OF BUYERS

 

 

 

 

SCHEDULE IV

QUALIFIED SUBORDINATED DEBT

 

 

 

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EXHIBIT A

FORM OF TRANSACTION REQUEST

EXHIBIT B

FORM OF OPINION OF COUNSEL

EXHIBIT C

SELLERS’ TAX IDENTIFICATION NUMBERS

EXHIBIT D

EXISTING INDEBTEDNESS

EXHIBIT E

UNDERWRITING GUIDELINES

EXHIBIT F

CERTIFICATE OF AN OFFICER OF THE SELLERS

EXHIBIT G

RESERVED

EXHIBIT H

FORM OF SECTION 7 CERTIFICATE

EXHIBIT I

FINANCIAL COMPLIANCE CERTIFICATE

EXHIBIT J

MORTGAGE LOAN SCHEDULE FIELDS

EXHIBIT K

PURCHASED MORTGAGE LOAN REPORT

EXHIBIT L

APPROVED TAKEOUT INVESTORS

EXHIBIT M

FORM OF REPURCHASE NOTICE

EXHIBIT N

FORM OF SERVICER NOTICE

EXHIBIT O

SUBORDINATION PROVISIONS

 

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MASTER REPURCHASE AGREEMENT

This is a MASTER REPURCHASE AGREEMENT, dated as of October 31, 2006, between
HOMEBANC CORP., a Georgia corporation (“HB Corp.” and a “Seller”), HOMEBANC
MORTGAGE CORPORATION, a Delaware corporation (“HMC” and a “Seller”, together
with HB Corp., the “Sellers”), JPMORGAN CHASE BANK, N.A., a banking association
organized under the laws of the United States (“JPMorgan”, the “Administrative
Agent” and a “Buyer”) and the Buyers party hereto from time to time.

Section 1.         Applicability. Subject to the terms and conditions of this
Agreement and provided that no Event of Default has occurred and is continuing
(that the Administrative Agent on behalf of the Buyers has not declared in
writing to have been cured or waived), the Buyers hereby agree to enter into
transactions with the Sellers in which the Sellers agree to transfer to
Administrative Agent, for the benefit of Buyers as more particularly set forth
in the Administration Agreement, Mortgage Loans against the transfer of funds by
Administrative Agent for the benefit of Buyers, with a simultaneous agreement by
Administrative Agent for the benefit of Buyers to transfer to the Sellers such
Mortgage Loans at a date certain not later than the Termination Date and a
simultaneous agreement by the Sellers to pay the applicable Repurchase Price on
such date. Each such transaction shall be referred to herein as a “Transaction”
and shall be governed by this Repurchase Agreement, unless otherwise agreed in
writing.

Section 2.          Definitions. As used herein, the following terms shall have
the following meanings (all terms defined in this Section 2 or in other
provisions of this Repurchase Agreement in the singular to have the same
meanings when used in the plural and vice versa).

“Accepted Servicing Practices” shall mean, with respect to any Mortgage Loan,
those mortgage servicing practices of prudent mortgage lending institutions
which service mortgage loans of a similar type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located.

“Additional Collateral” shall have the meaning set forth in Section 8 hereof.

“Additional Purchased Mortgage Loans” shall mean Mortgage Loans or cash provided
by the Sellers to Administrative Agent pursuant to Section 4 of this Repurchase
Agreement.

“Adjusted Tangible Net Worth” shall mean, on any day, with respect to either HB
Corp. or HMC:

(a)          the excess of the total assets over the Total Adjusted Liabilities
of such Seller on any date of determination, including assets and liabilities of
its wholly-owned subsidiaries, each being determined in accordance with GAAP,
less

(b)          the value included in the financial statements for capitalized
mortgage loan servicing rights, less

 

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(c)          aggregate investments in nonconsolidated Subsidiaries and
Affiliates included in the Financial Statements, other than any common equity
interests issued by a Capital Trust Entity and held by a Seller, less

(d)          net total advances to nonconsolidated Subsidiaries and Affiliates
outstanding, less

(e)          goodwill and all other assets not supported by or representative of
a tangible asset, which tangible asset would be deemed by HUD to be acceptable
for the purpose of calculating adjusted net worth in accordance with HUD
requirements in effect as of such day, less

 

(f)

all accumulated other comprehensive income, plus

(g)          the value of the lesser of (i) sixty-seven and one half percent
(67.5) of the appraised value of such capitalized mortgage loan servicing rights
or (ii) one percent (1%) of the aggregate principal balances of the portfolio of
Serviced Mortgage Loans in respect of such capitalized mortgage loan servicing
rights in financial statements for capitalized mortgage loan servicing rights,
plus

(h)          the amount of (negative) accumulated other comprehensive income
associated with hedges that have a maturity of one (1) year or less unless the
other comprehensive income exceeds (negative), for HB Corp., Ten Million Dollars
($10,000,000), or for HMC, Five Million Dollars ($5,000,000).

“Administration Agreement” shall mean that certain Administration Agreement,
dated as of the date hereof, among the Administrative Agent, the Buyers and the
Sellers, as amended from time to time.

“Administrative Agent” shall mean JPMorgan Chase Bank, N.A., its successors in
interest and assigns.

“Administrative Fee” shall have the meaning set forth in Section 39(b) hereof.

“Affiliate” shall mean with respect to any Person, any “affiliate” of such
Person, as such term is defined in the Bankruptcy Code.

“Aged Construction to Permanent Mortgage Loan” shall mean a Construction to
Permanent Mortgage Loan which has been subject to a Transaction hereunder for a
period of greater than 360 days but not greater than 540 days.

“Aged Mortgage Loan” shall mean a Mortgage Loan (other than a HELOC, a Prime
Second Lien Mortgage Loan, an Alt-A Second Lien Mortgage Loan, a Residential Lot
Loan or a Construction to Permanent Mortgage Loan) which has been subject to a
Transaction hereunder for a period of greater than 90 days but not more than 180
days.

“Agency” shall mean Freddie Mac, Fannie Mae or Ginnie Mae, as applicable.

 

 

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“Agency Approval” shall have the meaning specified in Section 12(y) hereof.

“Alt-A Mortgage Loan” shall mean a first or second lien Mortgage Loan that (a)
was originated in accordance with the Underwriting Guidelines and (b) has a FICO
score above which would qualify it as a Subprime Mortgage Loan.

“Alt-A Second Lien Mortgage Loan” shall mean an Alt-A Mortgage Loan that is
secured by a second lien on the related Mortgaged Property.

“ALTA” shall mean the American Land Title Association or any successor in
interest thereto.

“Anti-Money Laundering Laws” shall have the meaning set forth in Section 11(ee)
hereof.

“Appraisal” shall mean an appraisal of a Mortgaged Property by a licensed
appraiser that satisfies the Underwriting Guidelines who is experienced in
estimating the value of property of that same type in the community where it is
located, and who is not a director, officer or employee of any Seller or any of
their Affiliates, or related as a parent, sibling or child to any Seller or any
of their Affiliates’ respective directors, members, managers or officers or any
of their spouses, a signed copy of the written report of which Appraisal is in
the possession of any Seller or the Servicer.

“Appraised Value” shall mean the value set forth in an Appraisal or AVM,
provided the Administrative Agent has approved in writing the use of AVMs for
the type of Mortgage Loan product to which the AVM relates, as applicable, made
in connection with the origination of the related Mortgage Loan as the value of
the Mortgaged Property.

“Asset Value” shall mean, with respect to each Eligible Mortgage Loan:

(a)          (i)          other than with respect to an Underperforming Mortgage
Loan, Construction to Permanent Mortgage Loan, Residential Lot Loan and Subprime
Mortgage Loan, the applicable Purchase Price Percentage multiplied by the least
of (1) the outstanding principal balance, (2) the Market Value of such Mortgage
Loan; provided, that the Administrative Agent in its discretion will
mark-to-market all HELOCs and Second Lien Mortgage Loans which have been subject
to a Transaction for more than ninety (90) days at least once a calendar quarter
(3) the purchase price a Takeout Investor shall pay for such Mortgage Loan
pursuant to a Takeout Commitment and (4) the purchase price paid by a Seller for
such Mortgage Loan (without regard to any servicing release premium);

(ii)          with respect to an Underperforming Mortgage Loan, the applicable
Purchase Price Percentage multiplied by the least of (1) the outstanding
principal balance of such Mortgage Loan, (2) a Seller’s net investment in such
Mortgage Loan (excluding any amounts on account of servicing, principal and
interest or any other servicing related advances thereto and including all
out-of-pocket expenses made with respect thereto) and (3) the amount of an
Appraisal or BPO issued within ninety (90) days of such valuation or within 30
days of repurchase by Seller;

 

 

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(iii)        with respect to a Construction to Permanent Mortgage Loan or a
Residential Lot Loan, the applicable Purchase Price Percentage multiplied by the
least of (1) the outstanding principal balance of such Mortgage Loan, (2) the
original Mortgage Note amount of such Mortgage Loan and (3) the Appraised Value
(calculated within ninety (90) days of the date of determination); and

(iv)         with respect to a Subprime Loan, the applicable Purchase Price
Percentage multiplied by the least of (1) the outstanding principal balance of
such Mortgage Loan, (2) the purchase price a Takeout Investor shall pay for such
Mortgage Loan pursuant to a Takeout Commitment and (3) the purchase price paid
by a Seller for such Mortgage Loan and (B) 97% of the Market Value of such
Mortgage Loan (including any servicing release premium, if applicable);

(b)          Without limiting the generality of the foregoing, each Seller
acknowledges that the Asset Value of a Purchased Mortgage Loan may be reduced to
zero by Administrative Agent if:

 

(i)

such Purchased Mortgage Loan ceases to be an Eligible Mortgage Loan;

(ii)          the Purchased Mortgage Loan has been released from the possession
of the Custodian under the Custodial Agreement (other than to a Takeout Investor
pursuant to a bailee letter) for a period in excess of 12 Business Days;

(iii)        the Purchased Mortgage Loan has been released from the possession
of the Custodian under the Custodial Agreement to a Takeout Investor pursuant to
a bailee letter for a period in excess of 45 calendar days or 120 calendar days
for Purchased Mortgage Loans shipped for purchase under any U.S. state’s bond
program;

(iv)         the Purchased Mortgage Loan has been subject to a Transaction for a
period of greater than (A) 60 days with respect to Option ARMs; (B) 90 Days with
respect to Non-Owner Occupied Second Lien Mortgage Loans and other Mortgage
Loans other than Aged Mortgage Loans, Underperforming Mortgage Loans,
Construction to Permanent Mortgage Loans, HELOCs, Prime Second Lien Loans, Alt-A
Second Lien Mortgage Loans, or Option ARMs; (C) 180 Days with respect to Aged
Mortgage Loans or Underperforming Mortgage Loans; (D) 360 days with respect to
HELOCs, Prime Second Lien Mortgage Loans, Alt-A Second Lien Mortgage Loans,
Residential Lot Loans and Construction to Permanent Mortgage Loans other than
Aged Construction to Permanent Mortgage Loans; and (E) 540 days with respect to
Aged Construction to Permanent Mortgage Loans;

 

(v)

such Purchased Mortgage Loan is a Non-Performing Mortgage Loan;

(vi)         the Administrative Agent has determined that the Purchased Mortgage
Loan is not eligible for whole loan sale or securitization in a transaction
consistent with the prevailing sale and securitization industry;

(vii)       such Purchased Mortgage Loan (other than a Subprime Mortgage Loan, a
Construction to Permanent Mortgage Loan, or a Residential Lot Loan) fails to be
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(A) subject to a Takeout Commitment or (B) subject to an Interest Rate
Protection Agreement;

(viii)      the Purchased Mortgage Loan is a Wet-Ink Mortgage Loan for which the
related Mortgage File has not been received and certified by the Custodian by
the seventh (7th) Business Day following the related Purchase Date;

(ix)         when such Purchased Mortgage Loan is added to all other Purchased
Mortgage Loans, the weighted average FICO score of all first lien Alt-A Mortgage
Loans that are Purchased Mortgage Loans is less than 690;

(x)          when such Purchased Mortgage Loan is added to all other Purchased
Mortgage Loans, the weighted average FICO score of all Option ARMs that are
Purchased Mortgage Loans is less than 700;

(xi)         when such Purchased Mortgage Loan is added to all other Purchased
Mortgage Loans, the weighted average FICO score of all Construction to Permanent
Mortgage Loans that are Purchased Mortgage Loans is less than 700;

(xii)       when such Purchased Mortgage Loan is added to all other Purchased
Mortgage Loans, the weighted average LTV of all Option ARMs that are Purchased
Mortgage Loans is in excess of 80%;

(xiii)      such Purchased Mortgage Loan is an Underperforming Mortgage Loan for
which an Appraisal or BPO has not been obtained within ninety (90) days
following the respective Seller’s acquisition of such Underperforming Mortgage
Loan;

(xiv)      such Purchased Mortgage Loan is an Underperforming Mortgage Loan for
which the Mortgaged Property has been foreclosed upon or has been converted to
REO Property;

(xv)        such Purchased Mortgage Loan is an Alt-A Second Lien Mortgage Loan,
a Prime Second Lien Mortgage Loan or a HELOC with an original outstanding
principal balance in excess of $350,000.

(c)          The aggregate Asset Value of all Mortgage Loans that are Wet-Ink
Mortgage Loans during the first five (5) Business Days or the last five (5)
Business Days of each calendar month shall not exceed 50% of the Maximum
Purchase Price.

(d)          The aggregate Asset Value of all Mortgage Loans that are Wet-Ink
Mortgage Loans other than during the first five (5) Business Days or the last
five (5) Business Days of each calendar month shall not exceed 40% of the of the
Maximum Purchase Price.

(e)          The aggregate Asset Value of all Mortgage Loans that are first lien
Alt-A Mortgage Loans shall not exceed 15% of the Maximum Purchase Price.

 

 

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(f)           The aggregate Asset Value of all Mortgage Loans that are Jumbo
Mortgage Loans and Super Jumbo Mortgage Loans, combined, shall not exceed 20% of
the Maximum Purchase Price.

(g)          The aggregate Asset Value of all Mortgage Loans that are Super
Jumbo Mortgage Loans shall not exceed 10% of the Maximum Purchase Price.

(h)          The aggregate Asset Value of all Mortgage Loans that are Subprime
Mortgage Loans and Subprime Second Lien Mortgage Loans, combined, shall not
exceed 7% of the Maximum Purchase Price.

(i)           The aggregate Asset Value of all Mortgage Loans that are Subprime
Second Lien Mortgage Loans shall not exceed 2% of the Maximum Purchase Price.

(j)           The aggregate Asset Value of all Mortgage Loans that are Prime
Second Lien Mortgage Loans, Alt-A Second Lien Mortgage Loans or HELOCs,
combined, shall not exceed 37.5% of the Maximum Purchase Price.

(k)          The aggregate Asset Value of all Mortgage Loans that are Non-Owner
Occupied Mortgage Loans or Non-Owner Occupied Second Lien Mortgage Loans,
combined, shall not exceed 15% of the Maximum Purchase Price.

(l)           The aggregate Asset Value of all Mortgage Loans that are Non-Owner
Occupied Second Lien Mortgage Loans with an CLTV in excess of 80% shall not
exceed 3% of the Maximum Purchase Price.

(m)         The aggregate Asset Value of all Mortgage Loans that are
Underperforming Mortgage Loans shall not exceed 5% of the Maximum Purchase
Price.

(n)          The aggregate Asset Value of all Mortgage Loans that are
Residential Lot Loans shall not exceed 3% of the Maximum Purchase Price.

(o)          The aggregate Asset Value of all Mortgage Loans that are
Construction to Permanent Mortgage Loans shall not exceed 15% of the Maximum
Purchase Price (the “Construction Sublimit”).

(p)          The aggregate Asset Value of all Mortgage Loans that are Aged
Construction to Permanent Mortgage Loans shall not exceed 50% of the
Construction Sublimit.

(q)          The aggregate Asset Value of all Mortgage Loans that are
Construction to Permanent Mortgage Loans with an LTV in excess of 80% shall not
exceed 5% of the Construction Sublimit.

(r)           The aggregate Asset Value of all Mortgage Loans that are Option
ARMs shall not exceed 5% of the Maximum Purchase Price (the “Option ARM
Sublimit”).

(s)          The aggregate Asset Value of all Mortgage Loans that are Option
ARMS and Non-Owner Occupied Mortgage Loans shall not exceed 15% of the Option
ARM Sublimit.

 

 

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(t)           The aggregate Asset Value of all Mortgage Loans that are Aged
Mortgage Loans shall not exceed 10% of the Maximum Purchase Price.

(u)          The aggregate Asset Value of all Mortgage Loans that have been
released from the possession of the Custodian under the Custodial Agreement
(other than to a Takeout Investor pursuant to a bailee letter) shall not exceed
$8,000,000.

(v)          The aggregate Asset Value of all Mortgage Loans that are Seasoned
Mortgage Loans shall not exceed 2% of the Maximum Purchase Price.

“Assignment and Acceptance” shall have the meaning specified in Section 22
hereof.

“Authorized Representative” shall mean, for the purposes of this Repurchase
Agreement only, an agent of the applicable party, as listed on Schedule 2
hereto, as such Schedule 2 may be amended from time to time .

“Available Borrowing Capacity” shall mean available and unused borrowing
capacity which may be drawn upon by the Sellers on a next Business Day basis.
Borrowing capacity shall not be deemed part of the Available Borrowing Capacity
if any condition to drawing cannot be satisfied or the related lender has no
obligation to make funds available.

“Available Purchase Price” shall mean the excess if any of (a) the Maximum
Purchase Price less (b) the sum of (i) the Purchase Price outstanding hereunder
and (ii) the Loans outstanding under the Loan Agreement.

“AVM” shall mean an estimate of the current value of a tract or parcel
determined by using an automated valuation model, dated no earlier than six (6)
months before the determination date.

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

“BPO” shall mean an opinion of the fair market value of a Mortgaged Property
given by a licensed real estate agent or broker (who is not an employee or
Affiliate of any Seller) which generally includes three comparable sales and
three comparable listings.

“Breakage Costs” shall have the meaning set forth in Section 3(g) hereof.

“Business Day” shall mean a day other than (i) a Saturday or Sunday, or (ii) any
day on which banking institutions are authorized or required by law, executive
order or governmental decree to be closed in the States of New York or Texas.

“Buyers” shall mean JPMorgan Chase Bank, N.A. and those Buyers listed on
Schedule III, hereto, as amended from time to time, and their successors in
interest and assigns.

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

“Capital Trust Entity” shall mean any unconsolidated subsidiary of the Sellers
created solely for the purpose of the issuance of trust securities and whose
common equity interests are solely held by HB Corp. or HMC, as applicable,
including without limitation HMB Capital Trust I, HMB Capital Trust IV and HMB
Capital Trust V.

“Cash Equivalents” shall mean and include, on any day:

(a)          any evidence of debt issued by the United States government, or
guaranteed as to the timely payment of principal and interest by the United
States government, and maturing twelve (12) months or less after that day;

(b)          commercial paper issued by a corporation (other than an Affiliate
of either Seller) organized under the laws of any state of the United States of
America or of the District of Columbia, rated A-1 by S&P, P-1 by Moody’s or the
equivalent rating by another nationally-recognized ratings service acceptable to
the Administrative Agent and having a stated maturity date nine (9) months or
less after its issue date;

(c)          any certificate of deposit or banker’s acceptance that does not
mature more than twelve (12) months after its issue date and is issued by a
commercial bank that (A) is a member of the Federal Reserve System, (B) is rated
“A” by S&P or the equivalent rating by another nationally-recognized ratings
service acceptable to the Administrative Agent and (C) has a combined unimpaired
capital and surplus and unimpaired undivided profits of not less than Five
Hundred Million Dollars ($500,000,000), and

(d)          any repurchase agreement (i) entered into with any Federal Reserve
System member commercial bank of the size referred to in clause c above and (ii)
secured by any obligation of the type described in any of clauses (a)-(c) above
and (iii) having a market value on its date of at least one hundred percent
(100%) of the repurchase obligation of that commercial bank.

“Ceiling Rate” shall mean, on any day, the maximum nonusurious rate of interest
permitted for that day by whichever of applicable federal or New York law
permits the higher interest rate, stated as a rate per annum.

“Change in Control” shall mean:

 

(a)

With respect to HB Corp.:

(i)           the sale, transfer, or other disposition of all or substantially
all of HB Corp.’s assets (excluding any such action taken in connection with any
securitization transaction);

 

 

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(ii)          any Person shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934 except that for purposes of this definition, a
Person shall not be deemed to have acquired beneficial ownership of securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person until such tendered securities are accepted for purchase or exchange),
directly or indirectly, of either (i) voting stock of HB Corp. (or other
securities convertible into such voting stock) representing more than twenty
percent (20%), or thirty percent (30%) with respect to Fidelity Investments, of
the combined voting power of all voting stock of HB Corp. or (ii) more than
twenty percent (20%), or thirty percent (30%) with respect to Fidelity
Investments, of the outstanding shares of any class or series of capital stock
of HB Corp.; or

(iii)         any Person shall have succeeded in having so many of such Person’s
nominees elected to the board of directors of HB Corp. that such nominees, when
added to any existing directors remaining on the board of directors of HC after
such election who were previously nominated by or are Affiliates of such Person,
comprise a majority of the board of directors of HB Corp.; and

 

(b)

With respect to HMC:

(i)           a sale of substantially all of HMC’s assets to a Person or related
group of Persons other than HB Corp.; or

(ii)          the occurrence of any event after which HB Corp. no longer holds
(whether directly or through one or more intermediaries) one hundred percent
(100%) of the capital stock of HB Corp. and voting control in any election of
HMC’s directors.

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

“Collection Account” shall mean the account established by the Administrative
Agent, into which all Income shall be deposited upon an Event of Default.

“Combined Loan to Value Ratio or CLTV” shall mean, with respect to any Second
Lien Mortgage Loan, the sum of (a) the principal balance of such Mortgage Loan,
or with respect to HELOCs, the original Credit Limit and (b) the principal
balance of the related first lien mortgage loan, each as of the applicable date
of determination, divided by (a) in the case of a purchase, the lesser of the
sale price of the Mortgaged Property and its Appraised Value at the time of sale
or (b) in the case of a refinancing or modification, the Appraised Value of the
Mortgaged Property at the time of the refinancing or modification.

“Confidential Terms” shall have the meaning set forth in Section 32 hereof.

“Confirmation Agreement” shall mean a confirmation agreement substantially in
the form of Exhibit F of the Custodial Agreement.

“Conforming Mortgage Loan” shall mean a first lien Mortgage Loan that conforms
to the requirements of an Agency for securitization or cash purchase.

 

 

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“Construction to Permanent Mortgage Loan” shall mean a Mortgage Loan (a) made to
a Mortgagor that is a natural person for the purpose of constructing a
one-to-four family dwelling which Mortgage Loan is secured by a first lien on
the related real estate and includes a dwelling constructed for occupancy by the
related Mortgagor; (b) has a FICO score of at least 650; (c) has an LTV of no
greater than 95% and (c) was originated in accordance with the Underwriting
Guidelines.

“Costs” shall have the meaning specified in Section 15 hereof.

“Credit Limit” shall mean, with respect to each HELOC, the maximum amount
permitted under the terms of the related Credit Line Agreement.

“Credit Line Agreement” shall mean, with respect to each HELOC, the related home
equity line of credit agreement, account agreement and promissory note (if any)
executed by the related Mortgagor and any amendment or modification thereof.

“Custodial Agreement” shall mean that certain Custodial Agreement dated as of
the date hereof, among the Sellers, Administrative Agent and Custodian as the
same may be amended from time to time.

“Custodian” shall mean JPMorgan Chase Bank, N.A. and any successor under the
Custodial Agreement.

“Daily Reset LIBOR Rate” shall mean, for any day, the rate of interest per annum
that is equal to the rate per annum determined by Administrative Agent to be the
average of the interest rates available to it in accordance with the
then-existing practices in the interbank market in London, England at
approximately 11:00 a.m. London time, as set forth on Telerate Page 3750, for
that day for the offering to Administrative Agent by leading dealers in such
interbank market for delivery on that day for one month U.S. dollar deposits of
One Million Dollars ($1,000,000), where the term is used in respect of the LIBOR
Adjusted Rate; provided that if for any reason Administrative Agent cannot
determine such rate for any day, then LIBOR Rate for that day shall be the rate
of interest per annum that is equal to the arithmetic mean of the rates
appearing on the Bloomberg British Bankers Association LIBOR page as of 11:00
a.m., London time, on that date for the offering by such institutions as are
named therein to prime banks in the Eurodollar interbank market in London,
England, for delivery on that day of one month U.S. dollar deposits of One
Million Dollars ($1,000,000).

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

“Defaulting Party” shall have the meaning set forth in Section 28(b) hereof.

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

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

“Due Diligence Cap” shall mean $20,000.

 

 

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“Due Diligence Costs” shall have the meaning set forth in Section 29 hereof.

“Due Diligence Review” shall mean the performance by Administrative Agent or
Buyers of any or all of the reviews permitted under Section 29 hereof with
respect to any or all of the Mortgage Loans, as desired by the Administrative
Agent and Buyers from time to time.

“Effective Date” shall mean the date upon which the conditions precedent set
forth in Section 3(a) shall have been satisfied.

“Electronic Tracking Agreement” shall mean an Electronic Tracking Agreement
among Administrative Agent, Sellers, MERS and MERSCORP, Inc., to the extent
applicable as the same may be amended from time to time.

“Eligible Mortgage Loan” shall mean a Purchased Mortgage Loan which complies
with the representations and warranties set forth on Schedule 1 to this
Repurchase Agreement.

“ERISA” shall, with respect to any Person, mean the Employee Retirement Income
Security Act of 1974, as amended from time to time and any successor thereto,
and the regulations promulgated and rulings issued thereunder.

“ERISA Affiliate” shall, with respect to any Person, mean any Person which is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which such Person is a member, or (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which such Person
is a member.

“Escrow Payments” shall mean, with respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, mortgage insurance premiums, fire and hazard insurance
premiums, condominium charges, and any other payments required to be escrowed by
the Mortgagor with the mortgagee pursuant to the Mortgage or any other document.

“Event of Default” shall have the meaning specified in Section 13.01 hereof.

“Event of ERISA Termination” shall mean, with respect to any Seller, (i) with
respect to any Plan, a Reportable Event, as defined in Section 4043 of ERISA, as
to which the PBGC has not by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of
such event, or (ii) the withdrawal of such Seller or any ERISA Affiliate thereof
from a Plan during a plan year in which it is a substantial employer, as defined
in Section 4001(a)(2) of ERISA, or (iii) the failure by such Seller or any ERISA
Affiliate thereof to meet the minimum funding standard of Section 412 of the
Code or Section 302 of ERISA with respect to any Plan, including, without
limitation, the failure to make on or before its due date a required installment
under Section 412(m) of the Code or Section 302(e) of ERISA, or (iv) the
distribution under Section 4041 of ERISA of a notice of intent to terminate any
Plan or any action taken by such Seller or any ERISA Affiliate thereof to
terminate any Plan, or (v) the adoption of an amendment to any Plan that,
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Section 401(a)(29) of the Code or Section 307 of ERISA, would result in the loss
of tax-exempt status of the trust of which such Plan is a part if such Seller or
any ERISA Affiliate thereof fails to timely provide security to the Plan in
accordance with the provisions of said Sections, or (vi) the institution by the
PBGC of proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or (vii) the receipt by such
Seller or any ERISA Affiliate thereof of a notice from a Multiemployer Plan that
action of the type described in the previous clause (vi) has been taken by the
PBGC with respect to such Multiemployer Plan, or (viii) any event or
circumstance exists which may reasonably be expected to constitute grounds for
such Seller or any ERISA Affiliate thereof to incur liability under Title IV of
ERISA or under Sections 412(c)(11) or 412(n) of the Code with respect to any
Plan.

“Event of Insolvency” shall mean, for any Person:

(a)          that such Person or any Affiliate shall discontinue or abandon
operation of its business; or

(b)           that such Person or any Affiliate shall fail to, or admit in
writing its inability to, pay its debts as they become due; or

(c)          a proceeding shall have been instituted in a court having
jurisdiction in the premises seeking a decree or order for relief in respect of
such Person or any Affiliate in an involuntary case under any applicable
bankruptcy, insolvency, liquidation, reorganization or other similar law now or
hereafter in effect, or for the appointment of a receiver, liquidator, assignee,
trustee, custodian, sequestrator, conservator or other similar official of such
Person or any Affiliate, or for any substantial part of its property, or for the
winding-up or liquidation of its affairs and such proceeding shall not have been
dismissed within sixty (60) days of its filing; or

(d)           the commencement by such Person or any Affiliate of a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or such Person’s or any Affiliate’s consent to the entry of
an order for relief in an involuntary case under any such law, or consent to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator, conservator or other similar official of such
Person, or for any substantial part of its property, or any general assignment
for the benefit of creditors; or

 

(e)

that such Person or any Affiliate shall become insolvent; or

(f)           if such Person or any Affiliate is a corporation, such Person or
any Affiliate, or any of their subsidiaries, shall take any corporate action in
furtherance of, or the action of which would result in any of the actions set
forth in the preceding clause (a), (b), (c), (d) or (e).

“Exception Report” shall have the meaning set forth in the Custodial Agreement.

“Excluded Taxes” shall have the meaning specified in Section 7(e) hereof.

 

 

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“Expenses” shall mean all present and future expenses reasonably incurred by or
on behalf of the Administrative Agent or Buyers in connection with this
Repurchase Agreement or any of the other Repurchase Documents and any amendment,
supplement or other modification or waiver related hereto or thereto, whether
incurred heretofore or hereafter, which expenses shall include the cost of
title, lien, judgment and other record searches; reasonable attorneys’ fees; and
costs of preparing and recording any UCC financing statements or other filings
necessary to perfect the security interest created hereby.

“Facility Fee” shall mean an amount equal to the product of (x) 0.125% per annum
and (y) the Maximum Purchase Price, payable in accordance with Section
39(a) hereof.

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

“FDIA” shall have the meaning set forth in Section 33(c) hereof.

“FHA” shall mean the Federal Housing Administration, an agency within the United
States Department of Housing and Urban Development, or any successor thereto,
and including the Federal Housing Commissioner and the Secretary of Housing and
Urban Development where appropriate under the FHA Regulations.

“FHA Loan” shall mean a Mortgage Loan which is the subject of an FHA Mortgage
Insurance Contract.

“FHA Mortgage Insurance” shall mean, mortgage insurance authorized under the
National Housing Act, as amended from time to time, and provided by the FHA.

“FHA Mortgage Insurance Contract” shall mean the contractual obligation of the
FHA respecting the insurance of a Mortgage Loan.

“FHA Regulations” shall mean the regulations promulgated by the Department of
Housing and Urban Development under the National Housing Act, as amended from
time to time and codified in 24 Code of Federal Regulations, and other
Department of Housing and Urban Development issuances relating to FHA Loans,
including the related handbooks, circulars, notices and mortgagee letters.

“FICO” shall mean Fair Isaac & Co., or any successor thereto.

“Fidelity Insurance” shall mean insurance coverage with respect to employee
errors, omissions, dishonesty, forgery, theft, disappearance and destruction,
robbery and safe burglary, property (other than money and securities) and
computer fraud.

“Financial Statements” shall mean the consolidated financial statements of the
Sellers prepared in accordance with GAAP for the year or other period then
ended. Such financial statements will be audited, in the case of annual
statements, by Ernst & Young LLP (or any of PricewaterhouseCoopers, Deloitte &
Touche LLP or KPMG LLP as selected by the Sellers with respect to the Sellers)
or such other independent certified public accountants approved by the
Administrative Agent (which approval shall not be unreasonably withheld).

 

 

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“Fitch” shall mean Fitch Ratings, Inc., or any successor thereto.

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

“Free Adjusted Balances Equivalent” shall mean, for each day of each calendar
month (whether a whole or partial month), the lesser of:

(a)          the sum of (x) the daily average of the collected balances in all
demand deposit accounts and non-interest bearing money market accounts
maintained by Sellers (or maintained by an Affiliate of a Seller at such
Seller’s request) with JPMorgan as a Buyer during that month (although no Seller
nor any of its Affiliates shall have any obligation whatsoever to maintain any
deposits with JPMorgan as a Buyer) less all amounts required and applied (or to
be applied) (i) to satisfy reserve and deposit insurance requirements allocable
to that month and (ii) to compensate JPMorgan as a Buyer for (1) services
rendered to any Seller or any of its Affiliates for that month if and to the
extent, if any, that such services are not separately billed and paid for, or
(2) any agreed reductions for that month in interest, fees and other normal
banking charges other than interest and fees that are part of the obligations to
JPMorgan as a Buyer, with each element calculated in accordance with JPMorgan as
a Buyer’s system of allocating reserve and deposit insurance requirements,
charges for services and reductions in other normal banking charges, and as that
system may be changed from time to time without notice plus (y) unless the
subject calendar month is January (carryovers after a rolling three (3) month
period and from one calendar year to the next are not permitted), an amount
equal to such adjusted daily average collected balances for the immediately
preceding calendar month (including any similarly unapplied adjusted balances
carried over from a prior month or months) not applied to compensate JPMorgan as
a Buyer for such services or agreed reductions incurred in such prior month; and

(b)          the daily average outstanding Purchase Price owed to JPMorgan as a
Buyer of all Transactions outstanding during that month.

Administrative Agent’s determination of the Free Adjusted Balances Equivalent
for any month shall be conclusive, absent manifest error.

“GAAP” shall mean generally accepted accounting principles in the United States
of America, applied on a consistent basis and applied to both classification of
items and amounts, and shall include, without limitation, the official
interpretations thereof by the Financial Accounting Standards Board, its
predecessors and successors. The requirement that such principles be applied on
a consistent basis means that the accounting principles observed in a current
period shall be comparable in all material respects to those applied in an
earlier period, with the exception of changes in generally accepted accounting
principles and changes in application to which the Sellers’ independent
certified public accountants have agreed and which changes and their effects are
summarized in the subject Sellers’ financial statements following such changes.

“Ginnie Mae” shall mean the Government National Mortgage Association and any
successor thereto.

 

 

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“Governmental Authority” shall mean any nation or government, any state, county,
municipality or other political subdivision thereof or any governmental body,
agency, authority, department or commission (including, without limitation, any
taxing authority) or any instrumentality or officer of any of the foregoing
(including, without limitation, any court or tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any corporation, partnership or other entity directly or
indirectly owned by or controlled by the foregoing.

“Gross Margin” shall mean, with respect to each adjustable rate Mortgage Loan,
the fixed percentage amount set forth in each related Mortgage Note which is
added to the Index on each Interest Rate Adjustment Date in order to determine
the related Mortgage Interest Rate for such Mortgage Loan.

“Guarantee” shall mean, as to any Person, any obligation of such Person directly
or indirectly guaranteeing any Indebtedness of any other Person or in any manner
providing for the payment of any Indebtedness of any other Person or otherwise
protecting the holder of such Indebtedness against loss (whether by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, or to take-or-pay or otherwise); provided that the term
“Guarantee” shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Guarantee of a Person shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith. The terms “Guarantee” and “Guaranteed”
used as verbs shall have correlative meanings.

“HELOC” shall mean a home equity revolving line of credit secured by a mortgage,
deed of trust or other instrument creating a first or second lien on the related
Mortgaged Property, which lien secures the related Credit Line Agreement, and
which is underwritten in conformity with the Underwriting Guidelines.

“High Cost Mortgage Loan” shall mean a Mortgage Loan classified as (a) a “high
cost” loan under the Home Ownership and Equity Protection Act of 1994 (b) a
“high cost” or “covered” loan as defined in the then current S&P LEVELS Glossary
Appendix E; or (c) a “high cost,” “threshold,” “covered,” “predatory,” or
“unfair and deceptive” loan under any other applicable state, federal or local
law (or a similarly classified loan using different terminology under a law,
regulation or ordinance imposing heightened regulatory scrutiny or additional
legal liability for residential mortgage loans having high interest rates,
points and/or fees).

“HUD” shall mean the Department of Housing and Urban Development.

“Income” shall mean, with respect to any Mortgage Loan at any time, any
principal thereof then payable and all interest, dividends or other
distributions payable thereon.

“Indebtedness” shall mean, with respect to any Person, without duplication:
(a) obligations created, issued or incurred by such Person for borrowed money
(whether by loan, the issuance and sale of debt securities or the sale of
Property to another Person subject to an understanding or agreement, contingent
or otherwise, to repurchase such Property from such

 

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Person); (b) obligations of such Person to pay the deferred purchase or
acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable
within 90 days of the date the respective goods are delivered or the respective
services are rendered; (c) Indebtedness of others secured by a Lien on the
Property of such Person, whether or not the respective Indebtedness so secured
has been assumed by such Person; (d) obligations (contingent or otherwise) of
such Person in respect of letters of credit or similar instruments issued or
accepted by banks and other financial institutions for account of such Person;
(e) obligations of such Person under repurchase agreements, sale/buy-back
agreements or like arrangements; (f) Indebtedness of others Guaranteed by such
Person; (g) all obligations of such Person incurred in connection with the
acquisition or carrying of fixed assets by such Person; and (h) Indebtedness of
general partnerships of which such Person is a general partner; and (i) Capital
Lease Obligations of such Person.

“Indemnified Party” shall have the meaning specified in Section 15 hereof.

“Index” shall mean, with respect to each adjustable rate Mortgage Loan, the
index as provided in the related Mortgage Note.

“Interest Rate Adjustment Date” shall mean the date on which an adjustment to
the Mortgage Interest Rate with respect to each Mortgage Loan becomes effective.

“Interest Rate Protection Agreement” shall mean, with respect to any or all of
the Mortgage Loans, any short sale of US Treasury Securities, or futures
contract, or mortgage related security, or Eurodollar futures contract, or
options related contract, or interest rate swap, cap or collar agreement or
similar arrangements providing for protection against fluctuations in interest
rates or the exchange of nominal interest obligations, either generally or under
specific contingencies, entered into by a Seller in accordance with the Seller’s
hedging policies and procedures.

“Jumbo Mortgage Loan” shall mean a first lien Mortgage Loan (including
Construction to Permanent Mortgage Loans) which would satisfy the requirement
for a Conforming Mortgage Loan or an Alt-A Mortgage Loan except for a principal
balance greater than the maximum balance permitted by the Agencies but not more
than $1,000,000.

“Late Payment Fee” shall have the meaning specified in Section 5(a) hereof.

“LIBOR Adjusted Rate” shall mean, on any day, a rate per annum equal to the
lesser of:

(a)          the quotient of (x) the LIBOR Rate or the Daily Reset LIBOR Rate,
as selected by the Sellers in the LIBOR Period Selection Confirmation, for that
day divided by (y) 1.00 minus the LIBOR Reserve Requirement for one day loans;
and

 

(b)

the Ceiling Rate for that day.

“LIBOR Period” shall mean a period of one month, two months or three months, as
selected by the Sellers, commencing and including the immediately preceding
Reset Date (or,

 

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with respect to the first LIBOR Period for the Transaction, from and including
the Purchase Date) to but excluding the following Reset Date of the immediately
succeeding LIBOR Period, unless otherwise agreed to by the Buyers and the
Sellers in writing. For the avoidance of doubt, if the Daily Reset LIBOR Rate is
selected by the Sellers, then the LIBOR Period shall mean a period from one
Business Day until the next Business Day.

“LIBOR Period Selection Confirmation” shall mean a confirmation of the LIBOR
Period selected by the Sellers in the form of Exhibit P hereto.

“LIBOR Rate” shall mean, for any day during the applicable LIBOR Period, the
rate of interest per annum that is equal to the rate per annum determined by
Administrative Agent to be the average of the interest rates available to it in
accordance with the then-existing practices in the interbank market in London,
England at approximately 11:00 a.m. London time, as set forth on Telerate Page
3750, on the date that is two (2) Business Days prior to the first day of such
LIBOR Period for the offering to Administrative Agent by leading dealers in such
interbank market for delivery on that day of one (1) month, two (2) months or
three (3) months as applicable, U.S. dollar deposits of One Million Dollars
($1,000,000), where the term is used in respect of the LIBOR Adjusted Rate;
provided that if for any reason Administrative Agent cannot determine such rate
for any day, then LIBOR Rate for that day shall be the rate of interest per
annum that is equal to the arithmetic mean of the rates appearing on the
Bloomberg British Bankers Association LIBOR page as of 11:00 a.m., London time,
on the day prior to the date for the offering by such institutions as are named
therein to prime banks in the Eurodollar interbank market in London, England,
for delivery on that day of one (1) month, two (2) months or three (3) months as
applicable, U.S. dollar deposits of One Million Dollars ($1,000,000).

“LIBOR Reserve Requirement” shall mean, for any day, the stated maximum rate
(expressed as a decimal fraction) for all reserves required to be maintained for
that day or during that period (including basic, supplemental, marginal and
emergency reserves) against “eurocurrency liabilities”, as defined in
Regulation D, all as specified by any Governmental Authority, including those
imposed under Regulation D. Each determination of the LIBOR Reserve Requirements
by Administrative Agent may be computed using any reasonable method and, absent
manifest error, shall be conclusive and binding.

“Lien” shall mean any lien, claim, charge, restriction, pledge, security
interest, mortgage, deed of trust or other encumbrance.

“Loan” shall have the meaning set forth in the Loan Agreement.

“Loan Agreement” shall mean that certain Loan and Security Agreement, dated as
of a date certain, among the Administrative Agent, the Sellers and the various
Lenders (as defined therein) thereto, as amended from time to time.

“Loan Document Termination” shall have the meaning set forth in Section 8
hereof.

“Loan Documents” shall have the meaning set forth in the Loan Agreement.

“Loan Rights” shall have the meaning set forth in Section 8 hereof.

 

 

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“Loan to Value Ratio” or “LTV” shall mean, with respect to any Mortgage Loan,
the principal balance of such Mortgage Loan as of the applicable date of
determination divided by (a) in the case of a purchase, the lesser of the sale
price of the Mortgaged Property or its Appraised Value at the time of sale or
(b) in the case of a refinancing or modification, the Appraised Value of the
Mortgaged Property at the time of the refinancing or modification.

“Manufactured Home” shall mean a manufactured home, including all accessions
thereto, that is legally classified as real property under applicable state law.

“Manufactured Home Loan” shall mean a Mortgage Loan (a) secured by property upon
which the primary dwelling is a Manufactured Home, (b) underwritten in
accordance with the Underwriting Guidelines; and (c) eligible for purchase by an
Agency.

“Mark-to-Market” shall have the meaning specified in Section 4(a) hereof.

“Margin Deficit” shall have the meaning specified in Section 4(a).

“Margin Excess” shall have the meaning specified in Section 4(e).

“Market Value” shall mean, as of any date with respect to any Purchased Mortgage
Loan, the price at which such Mortgage Loan could readily be sold as determined
by the Administrative Agent in its sole discretion. The Market Value of any
Purchased Mortgage Loan will be determined by the Administrative Agent in its
sole good faith discretion, taking into account customary factors such as market
conditions, interest rates and other factors deemed appropriate by the
Administrative Agent.

Any such determination by the Administrative Agent of Market Value hereunder
shall be conclusive and binding upon the parties, absent manifest error on the
part of the Administrative Agent.

“Material Adverse Effect” shall mean a material adverse effect on (a) the
Property, business, operations, financial condition or prospects of any Seller
or any Affiliate thereof, (b) the ability of either Seller or any Affiliate
thereof to perform its obligations under any of the Repurchase Documents to
which it is a party, (c) the validity or enforceability of any of the Repurchase
Documents or (d) the rights and remedies of the Administrative Agent or Buyers
under any of the Repurchase Documents.

“Maximum Purchase Price” shall mean FIVE HUNDRED MILLION DOLLARS ($500,000,000).
Subject to the terms hereof, the Maximum Purchase Price may increase in
accordance with the terms of Section 3(e) hereof.

“MBS” shall mean collateralized mortgage obligations and other mortgage-backed
securities.

“MERS” shall mean Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware, or any successor
thereto.

 

 

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“MERS Mortgage Loan” shall mean any Purchased Mortgage Loan registered with MERS
on the MERS System.

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

“Monthly Payment” shall mean the scheduled monthly payment of principal and/or
interest on a Mortgage Loan.

“Moody’s” shall mean Moody’s Investors Service, Inc. or any successors thereto.

“Mortgage” shall mean each mortgage, assignment of rents, security agreement and
fixture filing, deed of trust, deed to secure debt, or similar instrument
creating and evidencing a lien on real property and other property and rights
incidental thereto.

“Mortgage File” shall have the meaning set forth in the Custodial Agreement.

“Mortgage Interest Rate” shall mean the rate of interest borne on a Mortgage
Loan from time to time in accordance with the terms of the related Mortgage
Note.

“Mortgage Interest Rate Cap” shall mean, with respect to each adjustable rate
Mortgage Loan, the maximum Mortgage Interest Rate which shall be as permitted in
accordance with the provisions of the related Mortgage Note.

“Mortgage Loan” shall mean any first or second lien, one-to-four-family
residential mortgage loan evidenced by a Mortgage Note and secured by a
Mortgage, which Mortgage Loan is subject to a Transaction hereunder, which in no
event shall include any mortgage loan which (a) is subject to Section 226.32 of
Regulation Z or any similar state or local law (relating to high interest rate
credit/lending transactions), (b) includes any single premium credit life or
accident and health insurance or disability insurance, or (c) is a High Cost
Mortgage Loan.

“Mortgage Loan Schedule” shall mean with respect to any Transaction as of any
date, a mortgage loan schedule in the form of a computer tape or other
electronic medium generated by a Seller and delivered to Administrative Agent
and the Custodian, which provides information (including, without limitation,
the information set forth on Exhibit J attached hereto) relating to the
Purchased Mortgage Loans in a format acceptable to the Administrative Agent.

“Mortgage Note” shall mean the promissory note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage.

“Mortgaged Property” shall mean the real property securing repayment of the debt
evidenced by a Mortgage Note.

“Mortgagor” shall mean the obligor or obligors on a Mortgage Note, including any
Person who has assumed or guaranteed the obligations of the obligor thereunder.

 

 

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“Multiemployer Plan” shall mean, with respect to any Person, a “multiemployer
plan” as defined in Section 4001(a)(3) of ERISA which is or was at any time
during the current year or the immediately preceding five years contributed to
by any Seller or any ERISA Affiliate thereof on behalf of its employees and
which is covered by Title IV of ERISA.

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

“Nondefaulting Party” shall have the meaning set forth in Section 28(b) hereof.

“Non-Excluded Taxes” shall have the meaning set forth in Section 7(a) hereof.

“Non-Exempt Buyer” shall have the meaning specified in Section 7(e) hereof.

“Non-Owner Occupied Mortgage Loan” shall mean a Mortgage Loan whereby the
Mortgagor does not occupy the related Mortgaged Property as its primary
residence and (other than Non-Owner Occupied Second Lien Mortgage Loans) has an
LTV of no greater than 90%.

“Non-Owner Occupied Second Lien Mortgage Loan” shall mean a Non-Owner Occupied
Mortgage Loan that is secured by a second lien on the related Mortgaged Property
and has a CLTV of no greater than 95%.

“Non-Performing Mortgage Loan” shall mean other than an Underperforming Mortgage
Loan (a) any Mortgage Loan as to which any Monthly Payment, or part thereof,
remains unpaid for 30 days or more from the original Due Date for such Monthly
Payment; (b) any Mortgage Loan with respect to which the related Mortgagor is in
bankruptcy or (c) any Mortgage Loan with respect to which the related Mortgaged
Property has been converted to REO Property or is in foreclosure.

“Non-Recourse Debt” shall mean Indebtedness under (a) a credit or repurchase
facility payable solely from the assets sold or pledged to secure such facility
and (b) an MBS payable solely from the assets evidenced by or pledged to secure
such MBS, under which facility or MBS no purchaser or creditor has recourse to
either Seller or any of their Subsidiaries if such assets are inadequate or
unavailable to pay off such credit or repurchase facility, and neither Seller
nor any of their Subsidiaries effectively has any obligation to directly or
indirectly pay any such deficiency.

“Obligations” shall mean (a) any amounts due and payable by the Sellers to
Administrative Agent and/or Buyers in connection with a Transaction hereunder,
together with interest thereon (including interest which would be payable as
post-petition interest in connection with any bankruptcy or similar proceeding)
and all other fees or expenses which are payable hereunder or under any of the
Repurchase Documents and (b) all other obligations or amounts due and payable by
the Sellers under the Loan Documents.

“OFAC” shall have the meaning set forth in Section 11(ff) hereof.

“Operating Account” shall mean the account referred to in section 9(b) hereof.

 

 

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“Option ARM” shall mean an adjustable rate first lien mortgage with flexible
payment options which combine several of the features described below in clauses
(a)(i) through (a)(iv) and permit the borrower to elect whether to make a
monthly payment sufficient to pay accrued interest and amortize the principal
balance, make an interest-only payment or make a minimum payment that may be
insufficient to pay accrued interest (with the unpaid interest added to the
principal balance of the loan) and which

(a)          is underwritten in accordance with the Underwriting Guidelines and
may include the following:

(i)           mortgage loans whose interest rate adjusts on the basis of a
variable index plus a margin, with the initial adjustment occurring after a
specified period of time from origination of the related mortgage loan and
adjustments occurring periodically at specified intervals thereafter; these
loans may or may not have a low introductory interest rate;

(ii)          mortgage loans whose interest rate is fixed for the initial period
specified in the related mortgage note, and thereafter adjusts periodically
based on the related index plus a margin;

(iii)        mortgage loans which provide for payment of interest at the related
mortgage interest rate, but no payment of principal, for the period specified in
the related mortgage note; thereafter, the monthly payment is increased to an
amount sufficient to amortize the principal balance of the mortgage loan over
the remaining term and to pay interest at the applicable mortgage interest rate;
and

(iv)         mortgage loans which may have a low introductory interest rate, and
thereafter have a mortgage interest rate which adjusts periodically based on the
related index plus a margin; however, the borrower is only required to make a
minimum monthly payment which may not be sufficient to pay the monthly interest
accrued, resulting in an increase to the principal balance of the mortgage loan
by the amount of unpaid interest;

 

(b)

has a FICO score of at least 660;

 

 

(c)

has an LTV of no greater than 95%; and

 

(d)

is subject to a Takeout Commitment.

 

“Other Taxes” shall have the meaning set forth in Section 7(b) hereof.

“Payment Account” shall mean each of the Seller’s non-interest bearing demand
checking account, for HB Corp. 730141280 and for HMC 730141298, to be maintained
with Administrative Agent and to be used for (a) the Administrative Agent’s
deposits of the Purchase Price to the Sellers and payments constituting the
proceeds of principal from any Purchased Mortgage Loan (other than regular
principal and interest payments on the Purchased Mortgage Loan); (b) the
Administrative Agent’s deposits of principal and interest payments for the
Repurchase Price received from a Seller or for a Seller’s account and (c) only
if and when (i) no Default has occurred unless it has been either cured by the
Sellers or waived in writing by the

 

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Administrative Agent and (ii) no Event of Default has occurred unless the
Administrative Agent has declared in writing that it has been cured or waived,
the Administrative Agent’s transfer to the Operating Account of (x) the Purchase
Price and (y) proceeds from a Takeout Investor in excess of the Purchase Price.
The Payment Account is (and shall continuously be) part of the Repurchase
Assets. The Payment Account shall be subject to setoff by the Administrative
Agent for the benefit of the Administrative Agent and any Buyer. The Payment
Account shall be a controlled account from which the Sellers shall have no right
to directly withdraw funds, but instead such funds may be withdrawn or paid out
only against the order of a designee of the Administrative Agent, although under
the circumstances described in clause (c) of the first sentence of this
definition and subject to the conditions specified in that clause, the
Administrative Agent shall use diligent and reasonable efforts to cause proceeds
from a Takeout Investor in excess of the Purchase Price that are received as
therein described and that are deposited to the Payment Account before 1:00 p.m.
(Central Time) on a Business Day to be transferred to the Operating Account on
that same Business Day, but in any event no later than the next Business Day.

“Payment Date” shall mean the fifteenth (15th) day of each month, or if such
date is not a Business Day, the next Business Day.

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

“Periodic Advance Repurchase Payment” shall have the meaning specified in
Section 5(a).

“Permitted Debt” shall have the meaning specified in Section 12(dd).

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

“Plan” shall mean, with respect to any Person, any employee benefit or similar
plan that is or was at any time during the current year or immediately preceding
five years established or maintained by such Person or any ERISA Affiliate
thereof and that is covered by Title IV of ERISA, other than a Multiemployer
Plan.

“PMI Policy” shall mean a policy of primary mortgage guaranty insurance issued
by a Qualified Insurer, as required by this Repurchase Agreement with respect to
certain Mortgage Loans.

“Post-Default Rate” shall mean a rate equal to the lesser of (a) the sum of
(i) the Pricing Rate and (ii) three percent (3.00%); and (b) the Ceiling Rate
for that day.

“Price Differential” shall mean, with respect to any Transaction hereunder as of
any date, the aggregate amount obtained by daily application of the Pricing Rate
(or, during the continuation of an Event of Default, by daily application of the
Post-Default Rate) for such Transaction to the Purchase Price for such
Transaction on a 360 day per year basis for the actual number of days during the
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Transaction and ending on (but excluding) the Repurchase Date (reduced by any
amount of such Price Differential previously paid by the Sellers to
Administrative Agent for the benefit of the Buyers with respect to such
Transaction).

“Pricing Rate” shall mean:

(a)          with respect to Transactions up to and including the Free Adjusted
Balances Equivalent, a rate per annum equal to the Pricing Spread; and

(b)          with respect to Transactions exceeding the Free Adjusted Balances
Equivalent, a rate per annum equal to:

 

(i)

the sum of the LIBOR Adjusted Rate plus

 

(ii)

the applicable Pricing Spread.

 

For purposes of this Repurchase Agreement, the Pricing Rate set forth in clause
(a) of this definition will be allocated first to the Purchase Price owed to
JPMorgan as Buyer up to and including the Free Adjusted Balances Equivalent
based on the date on which the related Transaction becomes subject to this
Repurchase Agreement, commencing from the earliest date to the most recent date.
To the extent that there is availability under the Available Purchase Price, but
the portion of the Purchase Price of Mortgage Loans proposed by the Sellers for
purchase by JPMorgan as Buyer would otherwise exceed the Free Adjusted Balances
Equivalent, then to the extent that such Free Adjusted Balances Equivalent would
be exceeded, the Pricing Rate set forth in clause (b) of this definition shall
be applied. For the avoidance of doubt, the Pricing Rate set forth in clause
(a) of this definition shall only apply to the portion of the Purchase Price the
Sellers owe to JPMorgan as Buyer from time to time, as determined by the
Administrative Agent and the priority of payments shall be allocated in
accordance with the provisions of the Administration Agreement and furthermore
in no event shall the Pricing Rate set forth in clause (a) of this definition
apply to any Purchase Price the Sellers owe to any other Buyers. Each
calculation by the Administrative Agent of the amount of the Pricing Rate shall
be conclusive absent manifest error.

“Pricing Spread” shall mean, so long as no Event of Default has occurred and is
then continuing with respect to Transactions:

(a)          the subject of which are Conforming Mortgage Loans, First lien
Alt-A Mortgage Loans, Jumbo Mortgage Loans or Super Jumbo Mortgage Loans, 1.00%;

(b)          the subject of which are Prime Second Lien Mortgage Loans, Alt-A
Second Lien Mortgage Loans, HELOCS or Option ARMs, 1.20%;

(c)          the subject of which are Construction to Permanent Mortgage Loans,
Residential Lot Loans or Underperforming Mortgage Loans, 1.40%;

 

(d)

the subject of which are Subprime Mortgage Loans, 1.50%; and

 

 

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(e)          the subject of which are Swing Line Transactions (as defined in the
Administration Agreement), 1.00%.

The Administrative Agent’s calculations with respect thereto shall be conclusive
absent manifest error.

“Prime Second Lien Mortgage Loan” shall mean a Mortgage Loan that is secured by
a second lien on the related Mortgaged Property which would otherwise satisfy
the criteria for a Conforming Mortgage Loan except for its lien position.

“Prohibited Person” shall have the meaning set forth in Section 11(ff) hereof.

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

“PUHC Act” shall mean the Public Utility Holding Company Act of 1935, as
amended.

“Purchase Date” shall mean the date on which Purchased Mortgage Loans are
transferred by a Seller to Administrative Agent for the benefit of the Buyers.

“Purchase Price” shall mean the aggregate Asset Value of the Purchased Mortgage
Loans on the Purchase Date, and thereafter, such Purchase Price shall be
decreased by the amount without duplication, of any cash (other than payments of
Price Differential), Income and any amounts paid in respect of a Margin Deficit
actually received by Administrative Agent for the benefit of the Buyers pursuant
to Section 5 or applied to reduce the Sellers’ obligations under
Section 4(a) hereof.

“Purchase Price Decrease” shall have the meaning specified in Section 3(d)(iii).

“Purchase Price Decrease Notice” shall have the meaning specified in
Section 3(d)(iii).

“Purchase Price Percentage” shall mean:

(a)          with respect to Mortgage Loans which are Conforming Mortgage Loans,
first lien Alt-A Mortgage Loans or Jumbo Mortgage Loans, 98%;

(b)          with respect to Mortgage Loans which are Super Jumbo Mortgage Loans
or Subprime Loans, 97%;

(c)          with respect to Mortgage Loans which are Prime Second Lien Mortgage
Loans, Alt-A Second Lien Mortgage Loans, Option ARMS or HELOCS, 95%;

(d)          with respect to Mortgage Loans which are Construction to Permanent
Mortgage Loans, 93%;

 

 

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(e)          with respect to Mortgage Loans which are Non-Owner Occupied Second
Lien Mortgage Loans with an LTV greater than 80%, 85%;

(f)           with respect to Mortgage Loans which are Underperforming Mortgage
Loans, 70%;

 

(g)

with respect to Mortgage Loans which are Residential Lot Loans, 65%.

Where a Mortgage Loan may qualify for two or more Purchase Price Percentages
hereunder, unless otherwise expressly agreed to by the Administrative Agent in
writing, such Mortgage Loan shall be assigned the lower Purchase Price
Percentage, as applicable.

“Purchased Mortgage Loans” shall mean the Mortgage Loans sold by a Seller to
Administrative Agent for the benefit of the Buyers in a Transaction, and any
Additional Purchased Mortgage Loans as evidenced by a Confirmation Agreement.

“Purchased Mortgage Loan Report” shall mean a report, delivered with each
Transaction Request or upon the request of the Administrative Agent, including a
Mortgage Loan Schedule, setting forth information with respect to the Purchased
Mortgage Loans (and Mortgage Loans proposed to be the subject of a Transaction
on the related Purchase Date, if applicable) in the form of Exhibit K.

“Qualified Insurer” shall mean a mortgage guaranty insurance company duly
authorized and licensed where required by law to transact mortgage guaranty
insurance business and acceptable under the Underwriting Guidelines.

“Qualified Subordinated Debt” shall mean Indebtedness (including all junior
subordinated debentures and guaranties related to the issuance of trust
preferred securities by any Capital Trust Entity) of any Seller to any Person
(i) the papers evidencing, securing, governing or otherwise related to which
Indebtedness impose covenants and conditions on the debtor under them that are
no more restrictive or onerous than the covenants and conditions imposed on any
Seller, as applicable, under this Repurchase Agreement, (ii) that is
subordinated to the Obligations pursuant to a currently effective indenture or
other agreement containing subordination language substantially in the form of
Exhibit O (except that Qualified Subordinated Debt listed on Schedule IV will
not contain provision 15.7 of Exhibit O) and (iii) the principal of which is not
due and payable until six (6) months or more after the Termination Date. For
purposes of this definition and the agreements that constitute Qualified
Subordinated Debt, this Agreement shall be deemed debt for borrowed money
notwithstanding its documentation as a repurchase agreement as further described
in Section 33 hereof.

“Qualified Trust Preferred Securities” means trust preferred securities,
including all junior subordinated debentures and guaranties related to the
issuance of such trust preferred securities, issued by a Capital Trust Entity,
provided such issued securities, debentures and guaranties qualify as Qualified
Subordinated Debt.

“Rating Agency” shall mean any of S&P, Moody’s or Fitch.

“Register” shall have the meaning specified in Section 22 hereof.

 

 

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“Regulation D” shall mean Regulation D promulgated by the Board of Governors of
the Federal Reserve System (or any successor), 12 C.F.R. Part 204, or any other
regulation when promulgated to replace the prior Regulation D and having
substantially the same function.

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

“Regulation Z” shall mean Regulation Z promulgated by the Board of Governors of
the Federal Reserve System (or any successor), 12 C.F.R. Part 226, as the same
may be modified and supplemented and in effect from time to time.

“REIT” shall mean a real estate investment trust, as defined in Section 856 of
the Code, as may be amended from time to time.

“REIT Asset” shall mean any asset as defined in Section 856 of the Code, as may
be amended from time to time.

“REIT Distribution Requirement” means distributions reasonably necessary for HB
Corp. to maintain its status as a REIT and not be subject to corporate level tax
based on income or to excise tax under Section 4981 of the Code.

“REO Property” shall mean real property acquired by either Seller, including a
Mortgaged Property acquired through foreclosure of a Mortgage Loan or by deed in
lieu of such foreclosure.

“Reportable Event” shall mean any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .21, .22, .24, .26, .27 or .28 of PBGC Reg. § 4043.

“Repurchase Agreement” shall mean this Master Repurchase Agreement between
Administrative Agent, Buyers and the Sellers, dated as of the date hereof as the
same may be further amended, supplemented or otherwise modified in accordance
with the terms hereof.

“Repurchase Assets” shall have the meaning provided in Section 8 hereof.

“Repurchase Date” shall mean the date on which the Sellers are to repurchase the
Purchased Mortgage Loans subject to a Transaction from Administrative Agent for
the benefit of the Buyers on the earlier of (i) a date requested pursuant to
Section 3(d) or (ii) the Termination Date, including any date determined by
application of the provisions of Sections 3 or 14.

“Repurchase Documents” shall mean this Repurchase Agreement, the Custodial
Agreement, the Servicer Notice, the Electronic Tracking Agreement, the
Administration Agreement and any subordination provisions substantially in the
form of Exhibit O hereto contained in any indenture or other agreement.

“Repurchase Price” shall mean the price at which Purchased Mortgage Loans are to
be transferred from the Administrative Agent on behalf of the Buyers to the
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termination of a Transaction, which will be determined in each case (including
Transactions terminable upon demand) as the sum of the outstanding Purchase
Price and the accrued and unpaid Price Differential as of the date of such
determination.

“Repurchase Request” shall mean a written request from a Seller to the
Administrative Agent, substantially in the form of Exhibit M hereto, to
repurchase a Purchased Mortgage Loan.

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

“Reset Date” shall mean for each LIBOR Period, the last Business Day of such
LIBOR Period.

“Residential Lot Loan” shall mean a Construction to Permanent Mortgage Loan (a)
to finance the residential lot upon which improvements are intended to be
constructed; (b) with an LTV of not more than 90%; (c) with a final stated
maturity of twelve months from origination and (d) whose Mortgagor is eligible
for a permanent Mortgage Loan from the relevant Seller, subject to receipt of an
acceptable sales contract, builder approval documentation, construction plans
and specifications, an “as-constructed” Appraisal and, if applicable, updated
Mortgagor credit documentation.

“S&P” shall mean Standard & Poor’s Ratings Services, or any successor thereto.

“Seasoned Mortgage Loan” shall mean a Mortgage Loan with an origination date
greater than sixty (60) days but no more than one hundred and twenty (120) days
prior to the related Purchase Date.

“SEC” shall mean the Securities and Exchange Commission.

“Second Lien Mortgage Loan” shall mean an Alt-A Second Lien Mortgage Loan, a
Prime Second Lien Mortgage Loan, HELOCs or a Subprime Second Lien Mortgage Loan.

“Section 7 Certificate” shall have the meaning specified in Section
7(e)(ii) hereof.

“Securities Exchange Act of 1934” or “1934 Act” shall have the meaning set forth
in Section 34(a) hereof.

“Securities Investor Protection Act of 1970” or “SIPA” shall have the meaning
set forth in Section 34(a) hereof.

“Seller” shall mean each of HomeBanc Corp. and HomeBanc Mortgage Corporation
and/or any successor in interest thereto.

 

 

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“Serviced Mortgage Loans” means all Mortgage Loans serviced or required to be
serviced by a Seller under any Servicing Agreement, irrespective of whether the
actual servicing is done by another Person (a subservicer) retained by the
Seller for that purpose.

“Servicer” shall mean the HMC, or any successor or permitted assigns or any
other Person approved by Administrative Agent in writing (which approval shall
not be unreasonably withheld).

“Servicer Notice” shall mean the notice acknowledged by the Servicer (when the
Servicer is not the Seller) substantially in the form of Exhibit N hereto.

“Servicing Agreement” shall mean a servicing agreement between one or both of
the Sellers and Servicer, as the same may be amended from time to time.

“Servicing Rights” shall mean all of the Sellers’ rights and interests under any
Servicing Agreement, including the rights to (i) service the Serviced Mortgage
Loans that are the subject matter of such Servicing Agreement and (ii) be
compensated, directly or indirectly, for doing so.

“Single-Employer Plan” shall mean a single-employer plan as defined in
Section 4001(a)(15) of ERISA which is subject to the provisions of Title IV of
ERISA.

“Statement Date” shall have the meaning set forth in Section 11(g) hereof.

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

“Subprime Mortgage Loan” shall mean a Mortgage Loan (a) originated in accordance
with the Underwriting Guidelines for subprime Mortgage Loans; and (b) with a
FICO score of at least 500 and no greater than 620.

“Subprime Second Lien Mortgage Loan” shall mean a Subprime Mortgage Loan
(a) secured by a second lien on the related Mortgaged Property and (b) with a
FICO score of at least 500 and no greater than 620.

“Super Jumbo Mortgage Loan” shall mean a Mortgage Loan that otherwise satisfies
the definition of Jumbo Mortgage Loan, but has an unpaid principal balance in
excess of $1,000,000 but not greater than $2,500,000.

 

 

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“Takeout Commitment” shall mean a commitment of a Seller to sell one or more
Mortgage Loans to a Takeout Investor, and the corresponding Takeout Investor’s
commitment back to such Seller to effectuate the foregoing.

“Takeout Investor” shall mean any institution listed on Exhibit L hereto which
has made a Takeout Commitment and has been approved by Administrative Agent.

“Taxes” shall have the meaning set forth in Section 7(a) hereof.

“Termination Date” shall mean the date which is 364 days from the date hereof
which shall be October 30, 2007.

“Termination Event” shall have the meaning set forth in Section 13.02.

“Total Adjusted Liabilities” shall mean all liabilities of either Seller and
their respective consolidated Subsidiaries including Non-Recourse Debt and all
contingent liabilities and obligations (including recourse servicing, recourse
sale and other recourse obligations, and guarantee, indemnity and mortgage loan
repurchase obligations); all as, in accordance with GAAP, are reflected on a
Seller’s consolidated balance sheet, as applicable; but in all cases excluding
Qualified Subordinated Debt.

“Total Recourse Liabilities” shall mean Total Adjusted Liabilities minus
Non-Recourse Debt.

“Transaction” has the meaning specified in Section 1.

“Transaction Request” shall mean a request from a Seller to Administrative
Agent, substantially in the form of Exhibit A hereto, to enter into a
Transaction.

“Underperforming Mortgage Loan” shall mean a Mortgage Loan (a) which (i) is
repurchased by the Sellers from a Takeout Investor as a result of (A) a breach
of representations and warranties under the agreed upon terms in which the
claimed breach is not a result of fraud or material misrepresentation of fact by
any party to the Mortgage Loan or consumer credit law violation, or (B) is an
early payment default repurchase obligation or (C) exceeding the applicable
aging limitations and (ii) where the claimed breach or early payment default is
expressly identified to the Administrative Agent in writing, (b) which was
rejected for purchase by a Takeout Investor or (c) which is more than 30 days
but less than 90 days delinquent. In addition to the foregoing, in no event will
a Underperforming Mortgage Loan be subject to a Transaction hereunder as a
“Underperforming Mortgage Loan” if there is a breach of representation and
warranty in respect of such Underperforming Mortgage Loan other than the breach
identified in writing to the Buyer pursuant to subclause (ii) of this
definition.

“Underwriting Guidelines” shall mean the underwriting guidelines of the Sellers,
attached hereto as Exhibit E, as such underwriting guidelines may be amended
from time to time in conformity with the terms of this Repurchase Agreement.

“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect
from time to time in the State of New York; provided that if by reason of
mandatory

 

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provisions of law, the perfection or the effect of perfection or non-perfection
of the security interest in any Repurchase Assets or the continuation, renewal
or enforcement thereof is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than New York, “Uniform Commercial Code” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or effect of perfection or
non-perfection.

“VA” shall mean the U.S. Department of Veterans Affairs, an agency of the United
States of America, or any successor thereto including the Secretary of Veterans
Affairs.

“VA Approved Lender” shall mean a lender which is approved by the VA to act as a
lender in connection with the origination of VA Loans.

“VA Loan” shall mean a Mortgage Loan which is subject of a VA Loan Guaranty
Agreement as evidenced by a loan guaranty certificate, or a Mortgage Loan which
is a vender loan sold by the VA.

“VA Loan Guaranty Agreement” shall mean the obligation of the United States to
pay a specific percentage of a Mortgage Loan (subject to a maximum amount) upon
default of the Mortgagor pursuant to the Servicemen’s Readjustment Act, as
amended.

“Wet-Ink Mortgage Loan” shall mean an Eligible Mortgage Loan (other than a
Construction to Permanent Mortgage Loan) (a) that has been closed and funded;
(b) for which the complete Mortgage File is in the possession of a Seller, the
Sellers’ Servicer, a title agent, or a closing attorney and (c)  for which the
complete Mortgage File shall be delivered to the Custodian on or prior to the
seventh (7th) Business Day after the related Purchase Date.

Section 3.        Initiation; Termination. (a)  Conditions Precedent to Initial
Transaction. Administrative Agent’s obligation to enter into the initial
Transaction hereunder, for the benefit of the Buyers, is subject to the
satisfaction, immediately prior to or concurrently with the making of such
Transaction, of the condition precedent that Administrative Agent shall have
received from the Sellers any fees and expenses payable hereunder, and all of
the following documents, each of which shall be satisfactory to Administrative
Agent, Buyers and their counsel in form and substance:

(i)    Documents. The Repurchase Documents shall be duly executed by the parties
thereto and delivered to the Administrative Agent;

(ii)   Opinions of Counsel. An opinion or opinions of outside counsel to the
Sellers, substantially in the form of Exhibit B or such other form reasonably
acceptable to the Administrative Agent;

(iii) Organizational Documents. A certificate of corporate existence of each
Seller delivered to Administrative Agent prior to the Effective Date (or if
unavailable, as soon as available thereafter) and an officer’s certificate
substantially in the form of Exhibit F or such other form reasonably acceptable
to the Administrative Agent including certified copies of the articles of
incorporation, by-laws, resolutions and incumbency (or equivalent documents) of
such Seller and of all corporate or other authority for such

 

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Seller with respect to the execution, delivery and performance of the Repurchase
Documents and each other document to be delivered by such Seller from time to
time in connection herewith;

(iv) Security Interest. Evidence that all other actions necessary or, in the
opinion of Administrative Agent, desirable to perfect and protect Administrative
Agent’s and Buyer’s interest in the Purchased Mortgage Loans and other
Repurchase Assets have been taken, including, without limitation, UCC searches
and duly authorized and filed Uniform Commercial Code financing statements on
Form UCC-1;

(v)   Underwriting Guidelines. A true and correct copy of the Underwriting
Guidelines to be attached as Exhibit E;

(vi) Insurance. Evidence that Sellers have added Administrative Agent as agent
for the Buyers as an additional loss payee under their Fidelity Insurance and
copies thereof;

(vii)  Tax Identification Number. Tax identification numbers for each Seller, to
be listed on Exhibit C; and

(viii)               Other Documents. Such other documents as Administrative
Agent may reasonably request, in form and substance reasonably acceptable to
Administrative Agent.

(b)          Conditions Precedent to all Transactions. Administrative Agent’s
obligation to enter into each Transaction, for the benefit of Buyers, (including
the initial Transaction) is subject to the satisfaction of the following further
conditions precedent, both immediately prior to entering into such Transaction
and also after giving effect thereto to the intended use thereof:

(i)    No Termination Event, Default or Event of Default shall have occurred and
be continuing under the Repurchase Documents;

(ii)  Both immediately prior to the Transaction and also after giving effect
thereto and to the intended use thereof, the representations and warranties made
by each Seller in Section 11 hereof, shall be true, correct and complete in all
material respects on and as of such Purchase Date with the same force and effect
as if made on and as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such specific
date);

(iii) The amount requested in the Transaction Request does not exceed the
Available Purchase Price;

(iv) After giving effect to the requested Transaction, the Asset Value of all
Purchased Mortgage Loans that have not been repurchased is not less than the
aggregate Repurchase Price for such Transactions;

 

 

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(v)   Subject to the Administrative Agent’s and each Buyer’s right to perform
one or more Due Diligence Reviews pursuant to Section 29 hereof, the
Administrative Agent and each Buyer shall have completed its due diligence
review of the Mortgage Loans for each Purchased Mortgage Loan, and such other
documents, records, agreements, instruments, mortgaged properties or information
relating to such Purchased Mortgage Loan as the Administrative Agent and each
Buyer in its sole discretion deems appropriate to review and such review shall
be satisfactory to the Administrative Agent and each Buyer in its sole
discretion;

(vi) On or prior to 10:00 a.m. (Central Time) on the related Purchase Date,
Sellers shall have delivered to the Administrative Agent (a) a Transaction
Request, (b) Mortgage Loan Schedule and (c) a Purchased Mortgage Loan Report.
With respect to Wet-Ink Mortgage Loans delivered electronically, the Sellers
shall deliver a Mortgage Loan Schedule by 11:00 a.m. (Central time);

(vii)  The Sellers shall have delivered to the Custodian (A) the Mortgage File
with respect to each Purchased Mortgage Loan (other than a Wet-Ink Mortgage
Loan) and (B) the Confirmation Agreement;

(viii)               With respect to each Wet-Ink Mortgage Loan, on the seventh
(7th) Business Day following the applicable Purchase Date and in accordance with
the terms of the Custodial Agreement, the Sellers shall deliver to the Custodian
the Mortgage File;

(ix) The Administrative Agent shall have received all fees and expenses of
counsel to the Administrative Agent as contemplated by Sections 15(b), 29 and 40
which amount, at the Administrative Agent’s option, may be withheld from any
Transaction hereunder;

(x)   To the extent Sellers are selling Mortgage Loans which are registered on
the MERS® System, the Sellers shall have delivered an Electronic Tracking
Agreement entered into, duly executed and delivered by the parties thereto
(including, the Administrative Agent) and being in full force and effect, free
of any modification, breach or waiver;

(xi) Each Transaction Request delivered by Sellers hereunder shall constitute a
certification by Sellers that all the conditions set forth in this
Section 3(b) have been satisfied (both as of the date of such notice or request
and as of the date of such purchase);

(xii)  Upon request, the Administrative Agent shall have received from outside
counsel to the Sellers an updated favorable opinion or opinions, in form and
substance satisfactory to the Administrative Agent, covering and updating such
matters that were originally addressed in the initial opinion issued and which
the Administrative Agent in good faith deems appropriate to update;

(xiii)               the Administrative Agent shall have accepted any material
changes to the Underwriting Guidelines which affect the eligibility of a
Mortgage Loan or a Purchased Mortgage Loan hereunder; and

 

 

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(xiv)               The Sellers shall have selected the LIBOR Period for any
portion of the Transactions that, in the absence of such a selection or in the
case of Swing Line Transactions (as defined in the Administration Agreement)
would bear interest at the Daily Reset LIBOR Rate, as follows; provided that the
Sellers may not have more than eight (8) LIBOR Periods with respect to
outstanding Transactions at any given time:

(A)         In order to select the LIBOR Period, the Sellers shall give
Administrative Agent telephonic notice not later than 10:00 AM on the effective
date for which such LIBOR Period is being selected, specifying:

 

(1)

the Business Day when the selection is to become effective; and

(2)          the Purchase Price of the Transactions for which the selection is
being made;

(B)         Sellers shall confirm the telephonic notice in writing by not later
than the close of business on the same day, by forwarding to Administrative
Agent a completed and signed LIBOR Period Selection Confirmation in the form of
Exhibit P. Confirmation shall be made by telecopy and an original signed by an
Authorized Representative shall be mailed the same day.

 

(c)

Initiation.

(i)    Each Seller shall deliver a Transaction Request to the Administrative
Agent on or prior to 10:00 a.m. (Central time) or 11:00 a.m. (Central Time) with
respect to Wet-Ink Mortgage Loans delivered electronically, in each case, on the
date Seller wishes to enter into a Transaction. Such Transaction Request shall
include a Purchased Mortgage Loan Report and a Mortgage Loan Schedule (which
shall also be delivered via facsimile to Administrative Agent’s Mortgage Banking
Warehouse Services Division).

(ii)  The Repurchase Date for each Transaction shall not be later than the date
which is 364 days after the related Purchase Date.

(iii) In no event shall a Transaction be entered into when the Repurchase Date
for such Transaction would be later than the Termination Date.

(iv) The Sellers shall deliver to the Custodian the Mortgage File pertaining to
each Eligible Mortgage Loan in accordance with the terms of the Custodial
Agreement.

(v)   Subject to the provisions of this Section 3, the Purchase Price will then
be made available to the Sellers by the Administrative Agent on behalf of the
Buyers, by transferring, via wire transfer, in the aggregate amount of such
Purchase Price in funds immediately available.

 

(d)

Repurchase; Purchase Price Decrease.

(i)    The Sellers may repurchase Purchased Mortgage Loans without penalty or
premium, subject to Section 3(g), on any date. The Repurchase Price payable for
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repurchase of any such Purchased Mortgage Loan shall be reduced as provided in
Section 5(d). If the Sellers intend to make such a repurchase, the Sellers shall
deliver to the Administrative Agent a Repurchase Request, substantially in the
form of Exhibit M hereto, at least one (1) Business Day prior to the requested
Repurchase Date. The amounts set forth on the Repurchase Request shall be
applied to the Repurchase Price for the designated Purchased Mortgage Loans.

(ii)   On the Repurchase Date, termination of the Transaction will be effected
by reassignment to a Seller or its designee of the Purchased Mortgage Loans
against the simultaneous transfer of the Repurchase Price to an account of
Administrative Agent for the benefit of the Buyers. The Sellers are obligated to
obtain the Mortgage Files from the Custodian at the Sellers’ expense on the
Repurchase Date.

(iii) Sellers may at any time, and from time to time, request a decrease in
Purchase Price (a “Purchase Price Decrease”) by sending a notice to the
Administrative Agent at least one (1) Business Day prior to the date that the
Sellers intend to effectuate such Purchase Price Decrease, specifying the date
of the Purchase Price Decrease (a “Purchase Price Decrease Date”). The Purchase
Price Decrease amount shall be due and payable in cash on the Purchase Price
Decrease Date specified therein. Notwithstanding the foregoing, any Purchase
Price Decrease must be in an amount not less than $1,000,000.

(e)          Increased Maximum Purchase Price. The Sellers may by written notice
to the Administrative Agent elect to request prior to the Termination Date an
increase to the existing Maximum Purchase Price to an amount not in excess of
$750,000,000. The Administrative Agent will use commercially reasonable efforts
to cause the approval of the requested increase to the Maximum Purchase Price
provided that, (i) it shall be in each Buyer’s sole discretion whether to
increase its Commitments (as defined in the Administration Agreement) and
(ii) No Default or Event of Default has occurred.

(f)           Delivery of Additional Mortgage Loans. From time to time the
Sellers may deliver to the Administrative Agent Mortgage Loans without entering
into a new Transaction. The Sellers and Administrative Agent agree that such
Mortgage Loans shall be treated as Purchased Mortgage Loans subject to the
existing Transactions hereunder.

(g)          Breakage Costs. If either Seller repurchases, in whole or in part,
Purchased Mortgage Loans or pays a Purchase Price Decrease or makes a partial
prepayment with respect to the outstanding Purchase Price of any Purchased
Mortgage Loan on any day which is not the last day of the applicable LIBOR
Period (as determined at the time LIBOR Rate was locked) for such Purchased
Mortgage Loans, the Sellers shall indemnify the Administrative Agent for the
benefit of the Buyers and hold the Administrative Agent and Buyers harmless from
any out-of-pocket losses, costs and/or expenses which the Administrative Agent
or any Buyer sustains or incurs arising from the reemployment of funds obtained
by the Administrative Agent or any Buyer hereunder or from fees payable to
terminate the deposits from which such funds were obtained, in each case for the
remainder of the applicable period (“Breakage Costs”). The Administrative Agent
shall deliver to such Seller a statement setting forth the amount and basis of
determination of any Breakage Costs in such detail as determined in good faith
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Administrative Agent to be adequate, it being agreed that such statement and the
method of its calculation shall be adequate and shall be conclusive and binding
upon each Seller, absent manifest error.

Section 4.          Margin Amount Maintenance. (a)  If at any time the aggregate
Asset Value of all related Purchased Mortgage Loans subject to all Transactions
is less than the aggregate Purchase Price for all such Transactions (a “Margin
Deficit”), then the Administrative Agent may by notice to the Sellers (as such
notice is more particularly set forth below, a “Mark-to-Market”), require the
Sellers to transfer to Administrative Agent for the benefit of Buyers or its
designee cash or Eligible Mortgage Loans approved by the Administrative Agent in
its sole discretion (“Additional Purchased Mortgage Loans”) so that the
aggregate Asset Value of the Purchased Mortgage Loans, including any such
Additional Purchased Mortgage Loans or cash, will thereupon equal or exceed the
aggregate Purchase Price for all Transactions. If Administrative Agent delivers
a Mark-to-Market to Sellers on or prior to 10:00 a.m. (Central time) on any
Business Day, then the Sellers shall transfer cash or Additional Purchased
Mortgage Loans to Administrative Agent for the benefit of Buyers no later than
1:00 p.m. (Central time) that day. In the event the Administrative Agent
delivers a Mark-to-Market to Sellers after 10:00 a.m. (Central time) on any
Business Day, the Sellers shall be required to transfer cash or Additional
Purchased Mortgage Loans no later than 1:00 p.m. (Central time) on the
subsequent Business Day.

(b)          Administrative Agent’s election, in its sole and absolute
discretion, not to make a Mark-to-Market at any time there is a Margin Deficit
shall not in any way limit or impair its right to make a Mark-to-Market at any
time a Margin Deficit exists.

(c)          Any cash transferred to the Administrative Agent pursuant to
Section 4(a) above shall be credited to the Repurchase Price of the related
Transactions.

(d)          On any day, the outstanding Purchase Price for all Transactions
under the Repurchase Agreement shall in no event exceed the Maximum Purchase
Price minus outstanding Loans under the Loan Agreement. The Sellers shall (a) if
notice is given on before 10:00 a.m. (Central time), by 1:00 p.m. on that same
Business Day or (b) if notice is given after 10:00 a.m. (Central time) by 11:00
a.m. on the next Business Day, in each case, repurchase Purchased Mortgage Loans
such that the Purchase Price equals or is less than the Maximum Purchase Price
minus the aggregate outstanding Loans under the Loan Agreement.

(e)          On any day on which the aggregate Asset Value of the Purchased
Mortgage Loans subject to Transactions exceeds the then outstanding aggregate
Purchase Price of all Transactions (a “Margin Excess”), so long as no Default or
Event of Default has occurred and is continuing or will result therefrom, the
Administrative Agent shall, upon receipt of written request from Sellers, remit
cash or release Purchased Mortgage Loans as requested by the Sellers, in either
case, in amount equal to the lesser of (i) the amount requested by the Sellers
and (ii) such Margin Excess to Seller. To the extent that the Administrative
Agent remits cash to the Sellers, such cash shall be additional Purchase Price
with respect to the Transactions, subject in all respects to each Buyer’s
Available Commitment Amount (as defined under the Administration Agreement). Any
request received by the Administrative Agent on or prior to 10:00 a.m. (Central
time) on any Business Day shall be remitted by the Buyer no later than 1:00

 

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p.m. (Central time) that day. Any request received by the Administrative Agent
after 10:00 a.m. (Central time) on any Business Day shall be remitted by the
Buyer no later than 1:00 p.m. (Central time) on the subsequent Business Day.

(f)           Administrative Agent shall not be obligated to remit an amount or
release Purchased Mortgage Loans requested pursuant to a request for Margin
Excess which (i) Administrative Agent determines is based on erroneous
information or would result in a Transaction other than in accordance with the
terms of this Repurchase Agreement, (ii) does not reflect the current
determination of Asset Value as provided in the definition thereof, (iii)
exceeds the Available Purchase Price or (iv) exceeds a Buyer’s Available
Commitment Amount (as defined under the Administration Agreement).

Section 5.           Income Payments. (a)  Notwithstanding that Administrative
Agent and the Sellers intend that the Transactions hereunder be sales to the
Administrative Agent for the benefit of the Buyers of the Purchased Mortgage
Loans, the Sellers shall pay to Administrative Agent for the benefit of the
Buyers on each Payment Date the portion of Price Differential accrued as of such
Payment Date plus the amount of any unpaid Margin Deficit (each such payment, a
“Periodic Advance Repurchase Payment”) on each Payment Date. Notwithstanding the
preceding sentence, if Sellers fail to make all or part of the Periodic Advance
Repurchase Payment by 4:00 p.m. (Central time) on any Payment Date or the date
which is two (2) Business Days after receipt of notice of such Periodic Advance
Repurchase Payment, whichever is earlier, the Pricing Rate shall be equal to the
Post-Default Rate until the Periodic Advance Repurchase Payment is received in
full by Administrative Agent (any such amounts in excess of the standard Price
Differential, the “Late Payment Fee”). Any payment received after 4:00 p.m.
(Central time) shall be deemed to have been received by Administrative Agent on
the next Business Day.

(b)          The Sellers shall hold for the benefit of, and in trust for,
Administrative Agent for the benefit of Buyers all Income, including without
limitation all Income received by or on behalf of the Sellers with respect to
such Purchased Mortgage Loans. All Income shall be held in trust for
Administrative Agent for the benefit of Buyers, shall constitute the property of
Administrative Agent for the benefit of Buyers and shall not be commingled with
other property of the Sellers or any Affiliate of the Sellers except as
expressly permitted above. With respect to each Payment Date, the Sellers shall
remit all Income as follows:

(i)    first, to the payment of all costs and fees payable by the Sellers
pursuant to this Repurchase Agreement;

(ii)   second, to the Administrative Agent for the benefit of Buyers in payment
of any accrued and unpaid Price Differential;

(iii) third, without limiting the rights of Administrative Agent under Section 4
of this Repurchase Agreement, to the Administrative Agent, in the amount of any
unpaid Margin Deficit; and

 

(iv)

fourth, any excess to the Sellers.

 

 

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(c)          If and to the extent any payment is not made when due under this
Repurchase Agreement or any of the other Repurchase Documents, the Sellers
authorize the Administrative Agent for the benefit of the Buyers to charge any
amounts so due and unpaid against any or all of the Sellers’ accounts with the
Administrative Agent; provided that such right to charge the Sellers’ accounts
shall not apply to any escrow, trust or other deposit accounts designated as
being held by the Sellers on behalf of third party owners of the escrowed funds
other than Affiliates of the Sellers. The Administrative Agent agrees to use
reasonable efforts to promptly advise the Sellers of any charge made pursuant to
this Section 5(c), but its failure to do so will not affect the validity or
collectibility of such charge.

(d)          Any funds from a Takeout Investor with respect to the purchase by
such Takeout Investor of a Purchased Mortgage Loan shall be sent to the Payment
Account and the Administrative Agent shall promptly apply any funds to the
applicable Repurchase Price and apply any funds in excess of the related
Repurchase Price for such Purchased Mortgage Loan to the Operating Account
provided that no Default or Event of Default shall have occurred.

(e)          After the occurrence of a Default or an Event of Default, the
Sellers shall deposit all such Income in the Collection Account with the
Administrative Agent. All such Income shall be held in trust for Administrative
Agent for the benefit of Buyers, shall constitute the property of Administrative
Agent for the benefit of Buyers and shall not be commingled with other property
of the Sellers or any Affiliate of the Sellers except as expressly permitted
above. Funds deposited in the Collection Account during any month shall be held
therein, in trust for the Administrative Agent for the benefit of the Buyers,
until the next Payment Date.

(f)           Administrative Agent shall offset against the Repurchase Price of
each such Transaction all Income actually received by Administrative Agent
pursuant to Section 5(a), excluding any Late Payment Fees paid pursuant to
Section 5(a).

Section 6.          Requirements of Law. (a)  If any Requirement of Law (other
than with respect to any amendment made to any Buyer’s certificate of
incorporation and by-laws or other organizational or governing documents) or any
change in the interpretation or application thereof or compliance by any Buyer
with any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority made subsequent to the date hereof:

(i)    shall subject any Buyer to any Tax or increased Tax of any kind
whatsoever with respect to this Repurchase Agreement or any Transaction or
change the basis of taxation of payments to such Buyer in respect thereof;

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

 

(iii)

shall impose on any Buyer any other condition;

 

 

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and the result of any of the foregoing is to increase the cost to such Buyer, by
an amount which such Buyer reasonably deems to be material, of entering,
continuing or maintaining any Transaction or to reduce any amount due or owing
hereunder in respect thereof, then, in any such case, the Sellers shall promptly
pay such Buyer such additional amount or amounts as calculated by such Buyer in
good faith as will compensate such Buyer for such increased cost or reduced
amount receivable equal to such increased costs or additional amounts reasonably
determined by such Buyer.

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

(c)          If any Buyer becomes entitled to claim any additional amounts
pursuant to this Section, Administrative Agent shall notify the Sellers of the
event by reason of which it has become so entitled, however, the Sellers shall
not be required to pay any such amounts accruing more than two (2) years prior
to the date of any request for payment. A certificate as to any additional
amounts payable pursuant to this Section submitted by such Buyer shall be
conclusive in the absence of manifest error.

Section 7.           Taxes. (a)  Any and all payments by any Seller under or in
respect of this Repurchase Agreement or any other Repurchase Documents to which
such Seller is a party shall be made free and clear of, and without deduction or
withholding for or on account of, any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities (including
penalties, interest and additions to tax) with respect thereto, whether now or
hereafter imposed, levied, collected, withheld or assessed by any taxation
authority or other Governmental Authority (collectively, “Taxes”), unless
required by law. If any Seller shall be required under any applicable
Requirement of Law to deduct or withhold any Taxes from or in respect of any sum
payable under or in respect of this Repurchase Agreement or any of the other
Repurchase Documents to any Buyer, (i) such Seller shall make all such
deductions and withholdings in respect of Taxes, (ii) such Seller shall pay the
full amount deducted or withheld in respect of Taxes to the relevant taxation
authority or other Governmental Authority in accordance with any applicable
Requirement of Law, and (iii) the sum payable by each Seller shall be increased
as may be necessary so that after such Seller has made all required deductions
and withholdings (including deductions and withholdings applicable to additional
amounts payable under this Section 7) such Buyer receives an amount equal to the
sum it would have received had no such deductions or withholdings been made in
respect of Non-Excluded Taxes. For purposes of this Repurchase Agreement the
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than, in the case of a Buyer, Taxes that are imposed on its overall net income
(and franchise taxes imposed in lieu thereof) by the jurisdiction under the laws
of which such Buyer is organized or of its applicable lending office, or any
political subdivision thereof, unless such Taxes are imposed as a result of such
Buyer having executed, delivered or performed its obligations or received
payments under, or enforced, this Repurchase Agreement or any of the other
Repurchase Documents (in which case such Taxes will be treated as Non-Excluded
Taxes).

(b)          In addition, each Seller hereby agrees to pay any present or future
stamp, recording, documentary, excise, property or value-added taxes, or similar
taxes, charges or levies that arise from any payment made under or in respect of
this Repurchase Agreement or any other Repurchase Document or from the
execution, delivery or registration of, any performance under, or otherwise with
respect to, this Repurchase Agreement or any other Repurchase Document
(collectively, “Other Taxes”).

(c)          The Sellers will indemnify such Buyer for, and to hold it harmless
against, the full amount of Non-Excluded Taxes and Other Taxes, and the full
amount of Taxes of any kind imposed by any jurisdiction on amounts payable under
this Section 7 imposed on or paid by such Buyer and any liability (including
penalties, additions to tax, interest and expenses) arising therefrom or with
respect thereto. The indemnity by the Sellers provided for in this Section
7(c) shall apply and be made whether or not the Non-Excluded Taxes or Other
Taxes for which indemnification hereunder is sought have been correctly or
legally asserted. Amounts payable by the Sellers under the indemnity set forth
in this Section 7(c) shall be paid within ten (10) days from the date on which
the Administrative Agent makes written demand therefor on behalf of such Buyer.

 

(d)

Reserved.

(e)          Each Buyer (including for avoidance of doubt any assignee,
successor or participant) that either (i) is not incorporated under the laws of
the United States, any State thereof, or the District of Columbia or (ii) whose
name does not include “Incorporated,” “Inc.,” “Corporation,” “Corp.,” “P.C.,”
“insurance company,” or “assurance company” (a “Non-Exempt Buyer”) shall deliver
or cause to be delivered to the Sellers the following properly completed and
duly executed documents:

(i)    in the case of a Non-Exempt Buyer that is not a United States person, a
complete and executed (x) U.S. Internal Revenue Form W-8BEN with Part II
completed in which such Buyer claims the benefits of a tax treaty with the
United States providing for a zero or reduced rate of withholding (or any
successor forms thereto), including all appropriate attachments or (y) a U.S.
Internal Revenue Service Form W-8ECI (or any successor forms thereto); or

(ii)  in the case of an individual, (x) a complete and executed U.S. Internal
Revenue Service Form W-8BEN (or any successor forms thereto) and a certificate
substantially in the form of Exhibit H (a “Section 7 Certificate”) or (y) a
complete and executed U.S. Internal Revenue Service Form W-9 (or any successor
forms thereto); or

 

 

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(iii) in the case of a Non-Exempt Buyer that is organized under the laws of the
United States, any State thereof, or the District of Columbia, a complete and
executed U.S. Internal Revenue Service Form W-9 (or any successor forms
thereto), including all appropriate attachments; or

(iv) in the case of a Non-Exempt Buyer that (x) is not organized under the laws
of the United States, any State thereof, or the District of Columbia and (y) is
treated as a corporation for U.S. federal income tax purposes, a complete and
executed U.S. Internal Revenue Service Form W-8BEN claiming a zero rate of
withholding (or any successor forms thereto) and a Section 7 Certificate; or

(v)   in the case of a Non-Exempt Buyer that (A) is treated as a partnership or
other non-corporate entity, and (B) is not organized under the laws of the
United States, any State thereof, or the District of Columbia, (x)(i) a complete
and executed U.S. Internal Revenue Service Form W-8IMY (or any successor forms
thereto) (including all required documents and attachments) and (ii) a Section 7
Certificate, and (y) without duplication, with respect to each of its beneficial
owners and the beneficial owners of such beneficial owners looking through
chains of owners to individuals or entities that are treated as corporations for
U.S. federal income tax purposes (all such owners, “beneficial owners”), the
documents that would be required by clause (i), (ii), (iii), (iv), (vi),
(vii) and/or this clause (v) with respect to each such beneficial owner if such
beneficial owner were such Buyer, provided, however, that no such documents will
be required with respect to a beneficial owner to the extent the actual Buyer is
determined to be in compliance with the requirements for certification on behalf
of its beneficial owner as may be provided in applicable U.S. Treasury
regulations, or the requirements of this clause (v) are otherwise determined to
be unnecessary, all such determinations under this clause (v) to be made in the
sole discretion of the Sellers, provided, however, that such Buyer shall be
provided an opportunity to establish such compliance as reasonable; or

(vi) in the case of a Non-Exempt Buyer that is disregarded for U.S. federal
income tax purposes, the document that would be required by clause (i), (ii),
(iii), (iv), (v), (vii) and/or this clause (vi) of this Section 7(e) with
respect to its beneficial owner if such beneficial owner were such Buyer; or

(vii)  in the case of a Non-Exempt Buyer that (A) is not a United States person
and (B) is acting in the capacity as an “intermediary” (as defined in U.S.
Treasury Regulations), (x)(i) a U.S. Internal Revenue Service Form W-8IMY (or
any successor form thereto) (including all required documents and attachments)
and (ii) a Section 7 Certificate, and (y) if the intermediary is a
“non-qualified intermediary” (as defined in U.S. Treasury Regulations), from
each person upon whose behalf the “non-qualified intermediary” is acting the
documents that would be required by clause (i), (ii), (iii), (iv), (v), (vi),
and/or this clause (vii) with respect to each such person if each such person
were such Buyer.

If the forms referred to above in this Section 7(e) that are provided by a Buyer
at the time such Buyer first becomes a party to this Repurchase Agreement or,
with respect to a grant of a participation, the effective date thereof, indicate
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tax rate in excess of zero, withholding tax at such rate shall be treated as
Taxes other than “Non-Excluded Taxes” (“Excluded Taxes”) and shall not qualify
as Non-Excluded Taxes unless and until such Buyer provides the appropriate form
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate shall be considered Excluded Taxes solely for the periods governed by such
form. If, however, on the date a Person becomes an assignee, successor or
participant to this Repurchase Agreement, Buyer transferor was entitled to
indemnification or additional amounts under this Section 7, then such Buyer
assignee, successor or participant shall be entitled to indemnification or
additional amounts to the extent (and only to the extent), that such Buyer
transferor was entitled to such indemnification or additional amounts for
Non-Excluded Taxes, and such Buyer assignee, successor or participant shall be
entitled to additional indemnification or additional amounts for any other or
additional Non-Excluded Taxes .

(f)           For any period with respect to which such Buyer has failed to
provide the Sellers with the appropriate form, certificate or other document
described in subsection (e) of this Section 7 (other than (i) if such failure is
due to a change in any applicable Requirement of Law, or in the interpretation
or application thereof, occurring after the date on which a form, certificate or
other document originally was required to be provided, (ii) if such form,
certificate or other document otherwise is not required under subsection (e) of
this Section 7, or (iii) if it is legally inadvisable or otherwise commercially
disadvantageous for such Buyer to deliver such form, certificate or other
document), such Buyer shall not be entitled to indemnification or additional
amounts under subsection (a) or (c) of this Section 7 with respect to
Non-Excluded Taxes imposed by the United States by reason of such failure;
provided, however, that should a Buyer become subject to Non-Excluded Taxes
because of its failure to deliver a form, certificate or other document required
hereunder, the Sellers shall take such steps as the Administrative Agent shall
reasonably request on behalf of such Buyer, to assist such Buyer in recovering
such Non-Excluded Taxes.

(g)          Without prejudice to the survival of any other agreement of the
Sellers hereunder, the agreements and obligations of the Sellers contained in
this Section 7 shall survive the termination of this Repurchase Agreement.
Nothing contained in this Section 7 shall require such Buyer to make available
any of its tax returns or any other information that it deems to be confidential
or proprietary.

Section 8.           Security Interest. Although the parties intend that all
Transactions hereunder be sales and purchases (other than for accounting and tax
purposes) and not loans, in the event any such Transactions are deemed to be
loans, each Seller hereby pledges to Administrative Agent for the benefit of
Buyers as security for the performance by the Sellers of their Obligations and
hereby grants, assigns and pledges to Administrative Agent for the benefit of
Buyers a fully perfected first priority security interest in the Purchased
Mortgage Loans, the records, and all servicing rights related to the Purchased
Mortgage Loans, the Repurchase Documents (to the extent such Repurchase
Documents and such Seller’s right thereunder relate to the Purchased Mortgage
Loans), any Property relating to any Purchased Mortgage Loan or the related
Mortgaged Property, any Takeout Commitments relating to any Purchased Mortgage
Loan, all insurance policies and insurance proceeds relating to any Purchased
Mortgage Loan or the related Mortgaged Property, including but not limited to
any payments or proceeds under any related primary insurance or hazard
insurance, any Income relating to any Purchased Mortgage

 

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Loan, the Collection Account, the Payment Account, any Interest Rate Protection
Agreements relating to any Purchased Mortgage Loan, and any other contract
rights, accounts (including any interest of such Seller in escrow accounts) and
any other payments, rights to payment (including payments of interest or finance
charges) and general intangibles to the extent that the foregoing relates to any
Purchased Mortgage Loan and any other assets relating to the Purchased Mortgage
Loans (including, without limitation, any other accounts) or any interest in the
Purchased Mortgage Loans, the servicing of the Purchased Mortgage Loans, all
collateral and distributions and any other property, rights, title or interests
as are specified on an Exception Report with respect to any of the foregoing, in
all instances, whether now owned or hereafter acquired, now existing or
hereafter created (collectively, the “Repurchase Assets”).

The Administrative Agent and the Sellers hereby agree that in order to further
secure a Seller’s Obligations hereunder, each Seller hereby grants to the
Administrative Agent, for the benefit of Buyers, a security interest in (i) as
of the date hereof, each Seller’s rights (but not its obligations) under the
Loan Documents including without limitation any rights to receive payments
thereunder or any rights to collateral other than collateral released in
accordance with the Loan Documents thereunder whether now owned or hereafter
acquired, now existing or hereafter created (collectively, the “Loan Rights”)
and (ii) as of the Loan Document Termination (as defined below), all collateral
other than collateral released in accordance with the Loan Documents however
defined or described under the Loan Documents to the extent not otherwise
included under the definitions of Repurchase Assets or Loan Rights whether now
owned or hereafter acquired, now existing or hereafter created (such collateral,
“Additional Collateral”). As of the Loan Document Termination, all Additional
Collateral shall be deemed to be part of Repurchase Assets. For the avoidance of
doubt, the Loan Rights shall be deemed to be part of the Repurchase Assets as of
the date hereof. The Sellers shall deliver an irrevocable instruction to the
administrative agent under the Loan Documents that upon receipt of notice of an
Event of Default under this Repurchase Agreement, the administrative agent
thereunder is authorized and instructed to remit to the Administrative Agent
hereunder directly any amounts otherwise payable to Sellers and to deliver to
the Administrative Agent all collateral otherwise deliverable to the Sellers. In
furtherance of the foregoing, such notice shall also require, upon repayment of
the Loans under the Loan Agreement or other termination of the Loan Documents
(each a “Loan Document Termination”), that the Loan Document administrative
agent deliver to the Administrative Agent hereunder any collateral then in its
possession or control. For the avoidance of doubt, any payments due to Sellers
as part of the Loan Rights shall only be remitted to the Administrative Agent
hereunder following receipt by the Loan Document administrative agent of notice
of an Event of Default. The foregoing paragraph is intended to constitute a
security agreement or other arrangement or other credit enhancement related to
the Repurchase Agreement and transactions hereunder as defined under Section
101(47)(v) of the Bankruptcy Code.

The Sellers hereby authorize the Administrative Agent to file such financing
statement or statements relating to the Repurchase Assets as the Administrative
Agent, at its option, may deem appropriate. The Sellers shall pay the filing
costs for any financing statement or statements prepared pursuant to this
Section 8.

Section 9.          Payment, Transfer And Custody. (a)  Unless otherwise
mutually agreed in writing, all transfers of funds to be made by the Sellers
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Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Administrative Agent at the following account maintained by
the Administrative Agent:

JPMorgan Chase Bank, N.A.

1111 Fannin, 12th Floor Mail Code TX2-F200

ABA: 021-000-021

Attention: Mortgage Banking Warehouse Services – Wanda Carr

Phone: 713-427-6391

Account Number: 730141280

For Credit To: HB Corp.

JPMorgan Chase Bank, N.A.

1111 Fannin, 12th Floor Mail Code TX2-F200

ABA: 021-000-021

Attention: Mortgage Banking Warehouse Services – Wanda Carr

Phone: 713-427-6391

Account Number: 730141298

For Credit To: HMC

not later than 4:00 p.m. (Central time), on the date on which such payment shall
become due (and each such payment made after such time shall be deemed to have
been made on the next succeeding Business Day). The Sellers acknowledge that
they have no rights of withdrawal from the foregoing account.

(b)          On the Purchase Date for each Transaction, ownership of the
Purchased Mortgage Loans shall be transferred to the Administrative Agent for
the benefit of the Buyers against the simultaneous transfer of the Purchase
Price to the following account of the Sellers: Account No. 00113398359, for the
account of HB Corp. and Subsidiaries and Account No. 00113207618 for HMC and
Subsidiaries, JPMorgan Chase Bank, N.A., ABA No. 021000021, Attn: Mortgage
Banking Warehouse Services – Wanda Carr, (the “Operating Account”)
simultaneously with the delivery to the Administrative Agent for the benefit of
the Buyers of the Purchased Mortgage Loans relating to each Transaction. With
respect to the Purchased Mortgage Loans being sold by a Seller on a Purchase
Date, each Seller hereby sells, transfers, conveys and assigns to Administrative
Agent for the benefit of the Buyers without recourse, but subject to the terms
of this Repurchase Agreement, all the right, title and interest of such Seller
in and to the Purchased Mortgage Loans together with all right, title and
interest in and to the proceeds of any related Repurchase Assets.

(c)          In connection with such sale, transfer, conveyance and assignment,
on or prior to each Purchase Date, such Seller shall deliver or cause to be
delivered and released to the Custodian the Mortgage File for the related
Purchased Mortgage Loans.

 

Section 10.

Reserved.

Section 11.      Representations. Each Seller represents and warrants to the
Administrative Agent and the Buyers that as of the date of this Repurchase
Agreement and any

 

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Transaction hereunder and at all times while the Repurchase Documents and any
Transaction hereunder is in full force and effect:

(a)          Acting as Principal. The Sellers will engage in such Transactions
as principal (or, if agreed in writing in advance of any Transaction by the
other party hereto, as agent for a disclosed principal).

(b)          Mortgage Loan Schedule. The information set forth in the related
Mortgage Loan Schedule and all other information or data furnished by, or on
behalf of, the Sellers to Administrative or Buyers is complete, true and correct
in all material respects, and the Sellers acknowledge that neither the
Administrative Agent nor the Buyer has verified the accuracy of such information
or data.

(c)          Solvency. Neither the Repurchase Documents nor any Transaction
thereunder are entered into in contemplation of insolvency or with intent to
hinder, delay or defraud any of each Seller’s creditors. The transfer of the
Mortgage Loans subject hereto is not undertaken with the intent to hinder, delay
or defraud any of such Seller’s creditors. The Seller is not insolvent within
the meaning of 11 U.S.C. Section 101(32) and the transfer and sale of the
Mortgage Loans pursuant hereto (i) will not cause such Seller to become
insolvent, (ii) will not result in any property remaining with such Seller to be
unreasonably small capital, and (iii) will not result in debts that would be
beyond such Seller’s ability to pay as same mature. The Sellers have received
reasonably equivalent value in exchange for the transfer and sale of the
Purchased Mortgage Loans subject hereto.

(d)          No Broker.  The Sellers have not dealt with any broker, investment
banker, agent, or other person, except for the Administrative Agent, who may be
entitled to any commission or compensation in connection with the sale of
Purchased Mortgage Loans pursuant to this Repurchase Agreement.

(e)          Ability to Perform. No Seller believes, nor does it have any reason
to cause it to believe, that it cannot perform in all material respects each and
every covenant contained in the Repurchase Documents to which it is a party on
their part to be performed.

(f)           Existence. HB Corp. is a corporation duly organized, validly
existing and in good standing under the laws of the state of Georgia. HMC is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware. Each Seller (i) has all requisite corporate or other
power, and has all governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being or as
proposed to be conducted, except where the lack of such licenses,
authorizations, consents and approvals would not have a Material Adverse Effect;
and (ii) is qualified to do business and is in good standing in all other
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary, except where failure so to qualify would not be
reasonably likely (either individually or in the aggregate) to have a Material
Adverse Effect. Each Seller is duly registered as mortgage lenders and
servicers, as applicable, in each state in which Mortgage Loans have been or are
from time to time originated, to the extent such registration is required by any
applicable Requirement of Law, except where the failure to register would not
result in a Material Adverse Effect.

 

 

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(g)          Financial Statements. Each Seller has heretofore furnished to the
Administrative Agent a copy of its (a) consolidated balance sheet for the fiscal
year ended December 31, 2005 and the related consolidated statements of income
and retained earnings and of cash flows for each Seller and its consolidated
Subsidiaries for such fiscal year, setting forth in each case in comparative
form the figures for the previous year, with the opinion thereon of Ernst &
Young, LLP and (b) consolidated balance sheet for the quarterly fiscal periods
of each Seller ended March 31, 2006 and June 30, 2006 and the related
consolidated statements of income and retained earnings and of cash flows for
each Seller and its consolidated Subsidiaries for such quarterly fiscal period,
setting forth in each case in comparative form the figures for the previous
year. All such financial statements are complete and correct and fairly present,
in all material respects, the consolidated financial condition of each Seller
and its Subsidiaries and the consolidated results of their operations as at such
dates and for such fiscal periods, all in accordance with GAAP applied on a
consistent basis. Since December 31, 2005, there has been no material adverse
change in the consolidated business, operations or financial condition of the
Seller and its consolidated Subsidiaries taken as a whole from that which
(without notice or the lapse of time) would or could result in any such material
adverse change. The Sellers do not have, on the date of the statements delivered
pursuant to this section (the “Statement Date”), any liabilities, direct or
indirect, fixed or contingent, matured or unmatured, known or unknown, or
liabilities for taxes, long-term leases or unusual forward or long-term
commitments not disclosed by, or reserved against in, said balance sheet and
related statements which were required to be disclosed in or reserved against in
said balance sheet and related statement under GAAP.

(h)          No Breach. Neither (a) the execution and delivery of the Repurchase
Documents nor (b) the consummation of the transactions therein contemplated to
be entered into by the Sellers, in compliance with the terms and provisions
thereof, will conflict with or result in a breach of (i) the charter or by-laws
of any Seller, or (ii) any applicable law, rule or regulation, or any order,
writ, injunction or decree of any Governmental Authority in any material
respect, or (iii) any other material agreement or instrument to which any Seller
or any of its Subsidiaries is a party or by which any of them or any of their
Property is bound or to which any of them is subject in any material respect, or
(iv) constitute a default under any such material agreement or instrument or
result in the creation or imposition of any Lien (except for the Liens created
pursuant to the Repurchase Documents) upon any Property of any Seller or any of
its Subsidiaries pursuant to the terms of any such agreement or instrument.

(i)           Action. Each Seller has all necessary corporate or other power,
authority and legal right to execute, deliver and perform its obligations under
each of the Repurchase Documents, as applicable; the execution, delivery and
performance by each Seller of each of the Repurchase Documents have been duly
authorized by all necessary corporate or other action on its part; and each
Repurchase Document has been duly and validly executed and delivered by each
Seller, as applicable.

(j)           Approvals. No material authorizations, approvals or consents of,
and no material filings or registrations with, any Governmental Authority or any
securities exchange are necessary for the execution, delivery or performance by
the Sellers of the Repurchase Documents or for the legality, validity or
enforceability thereof, except for filings and recordings in respect of the
Liens created pursuant to the Repurchase Documents.

 

 

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(k)          Enforceability. This Repurchase Agreement and all of the other
Repurchase Documents executed and delivered by the Sellers in connection
herewith are legal, valid and binding obligations of the Sellers and are
enforceable against the Sellers in accordance with their terms except as such
enforceability may be limited by (i) the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors
rights generally and (ii) general principles of equity.

(l)           Indebtedness. The Sellers do not have any Indebtedness, except as
disclosed on Exhibit D to this Repurchase Agreement.

(m)         Material Adverse Effect. Since December 31, 2005, there has been no
development or event nor, to any Seller’s knowledge, any prospective development
or event, which has had or would reasonably be expected to have a Material
Adverse Effect.

(n)          No Default. No Default or Event of Default has occurred and is
continuing.

(o)          Underwriting Guidelines. The Underwriting Guidelines provided to
Administrative Agent are the true and correct Underwriting Guidelines of the
Sellers.

(p)          Adverse Selection. The Sellers have not selected the Purchased
Mortgage Loans in a manner so as to adversely affect the Administrative Agent’s
or any Buyer’s interests.

(q)          Title to Properties. The Sellers and each of their Subsidiaries has
good, valid, insurable (in the case of real property) and marketable title to
(i) all of its material Properties and assets (whether real or personal,
tangible or intangible) that are reflected on or referred to in the Financial
Statements most recently furnished to the Administrative Agent or any Buyer,
except for such Properties and assets as have been disposed of since the date of
such current Financial Statements either in the ordinary course of business or
because they were no longer used or useful in the conduct of its business, and
all such Properties and assets are free and clear of all Liens except for
(i) the lien of current real property taxes and assessments, (ii) covenants,
conditions and restrictions, rights of way, easements and other matters to which
like properties are commonly subject that do not materially interfere with the
use of the property as it is currently being used and (iii) such other Liens, if
any, as are disclosed in such Financial Statements.

(r)           Litigation. There are no actions, suits, arbitrations,
investigations (including, without limitation, any of the foregoing which are
pending or to the best of any Seller’s knowledge threatened) or other legal or
arbitrable proceedings affecting any Seller or any of their Subsidiaries or
affecting any of the Property of any of them before any Governmental Authority
that (i) questions or challenges the validity or enforceability of any of the
Repurchase Documents or any action to be taken in connection with the
transactions contemplated hereby or (ii) which, individually or in the
aggregate, if adversely determined, would be reasonably likely to have a
Material Adverse Effect.

(s)           Margin Regulations. The use of all funds acquired by the Sellers
under this Repurchase Agreement will not conflict with or contravene any of
Regulations T, U or X

 

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promulgated by the Board of Governors of the Federal Reserve System as the same
may from time to time be amended, supplemented or otherwise modified.

(t)           Taxes. The Sellers and their Subsidiaries have timely filed all
tax returns that are required to be filed by them or filed an extension for
filing as permissible under law (with written notice of such extension to the
Administrative Agent) and have timely paid all Taxes, except for any such Taxes
as are being appropriately contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have been
provided.  There are no Liens for Taxes, except for statutory liens for Taxes
not yet due and payable.

(u)          Investment Company Act and Public Utility Holding Company Act. No
Seller is an “investment company”, or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as amended.
No Seller nor any of their Subsidiaries is an Affiliate or a Subsidiary of a
“public utility company”, or a “holding company”, or an “affiliate” or a
“subsidiary company” of a “holding company”, as such terms are defined in the
PUHC Act. Further, none of the transactions contemplated under this Repurchase
Agreement shall cause or constitute a violation of any of the provisions, rules,
regulations or orders, of or under the PUHC Act and the PUHC Act does not in any
manner impair the legality, validity or enforceability of the Repurchase
Documents.

 

(v)

Purchased Mortgage Loans.

(i)    The Sellers have not assigned, pledged, or otherwise conveyed or
encumbered any Mortgage Loan to any other Person, and immediately prior to the
sale of such Mortgage Loan to the Administrative Agent for the benefit of the
Buyers, the applicable Seller was the sole owner of such Mortgage Loan and had
good and marketable title thereto, free and clear of all Liens, in each case
except for Liens to be released simultaneously with the sale to the
Administrative Agent for the benefit of the Buyers hereunder.

(ii)  The provisions of this Repurchase Agreement are effective to either
constitute a sale of Repurchase Assets to the Administrative Agent for the
benefit of the Buyers or to create in favor of the Administrative Agent for the
benefit of the Buyers a valid security interest in all right, title and interest
of the Sellers in, to and under the Repurchase Assets.

(w)         Chief Executive Office/Jurisdiction of Organization. On the
Effective Date, HB Corp.’s chief executive office is, and has been for the
previous two years, located at 2002 Summit Blvd, Suite 100, Atlanta, GA, 30319.
HB Corp.’s jurisdiction of organization is Georgia. On the Effective Date, HMC’s
chief executive office is, and has been for the previous two years, located at
2002 Summit Blvd, Suite 100, Atlanta, GA, 30319. HMC’s jurisdiction of
organization is Delaware.

(x)          Location of Books and Records. The location where the Sellers keep
their books and records, including all computer tapes and records related to the
Repurchase Assets is its chief executive office.

 

 

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(y)          Hedging. The Sellers shall have entered into Interest Rate
Protection Agreements in accordance with their hedging policies.

(z)          True and Complete Disclosure. The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of any
Seller to the Administrative Agent or Buyers in connection with the negotiation,
preparation or delivery of this Repurchase Agreement and the other Repurchase
Documents or included herein or therein or delivered pursuant hereto or thereto
(other than with respect to the Mortgage Loans), 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 the
Administrative Agent or Buyer in connection with this Repurchase Agreement and
the other Repurchase Documents and the transactions contemplated hereby (other
than with respect to the Mortgage Loans) and thereby will be true, complete and
accurate in all material respects, or (in the case of projections) based on
estimates that in Sellers’ respective opinions are reasonable, on the date as of
which such information is stated or certified.

 

 

(aa)

ERISA.

(i)    No liability under Section 4062, 4063, 4064 or 4069 of ERISA has been or
is expected by the Sellers to be incurred by the Sellers or any ERISA Affiliate
thereof ith respect to any Plan which is a Single-Employer Plan in an amount
that could reasonably be expected to have a Material Adverse Effect.

(ii)   No Plan of the Sellers which is a Single-Employer Plan had an accumulated
funding deficiency, whether or not waived, as of the last day of the most recent
fiscal year of such Plan ended prior to the date hereof. No Seller nor any ERISA
Affiliate thereof is (i) required to give security to any Plan which is a
Single-Employer Plan pursuant to Section 401(a) (29) of the Code or Section 307
of ERISA, or (ii) subject to a Lien in favor of such a Plan under
Section 302(f) of ERISA.

(iii) Each Plan of the Sellers, each of their Subsidiaries and each of their
ERISA Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the Code, except where the failure to comply would not
result in any Material Adverse Effect.

(iv) No Seller nor any of its Subsidiaries has incurred a tax liability under
Section 4975 of the Code or a penalty under Section 502(i) of ERISA in respect
of any Plan which has not been paid in full, except where the incurrence of such
tax or penalty would not result in a Material Adverse Effect.

(v)   No Seller nor any of its Subsidiaries or any ERISA Affiliate thereof has
incurred or reasonably expects to incur any withdrawal liability under
Section 4201 of ERISA as a result of a complete or partial withdrawal from a
Multiemployer Plan which will result in withdrawal liability to the Sellers or
any of their Subsidiaries or any ERISA Affiliate thereof in an amount that could
reasonably be expected to have a Material Adverse Effect.

 

 

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(bb)        Agency Approvals. HMC is approved by Fannie Mae as an approved
lender and Freddie Mac as an approved seller/servicer, and, to the extent
necessary, approved by the Secretary of Housing and Urban Development pursuant
to Sections 203 and 211 of the National Housing Act. HMC is in good standing,
with no event having occurred nor the Sellers having any reason whatsoever to
believe or suspect will occur, including, without limitation, a change in
insurance coverage which would either make a Seller unable to comply with the
eligibility requirements for maintaining all such applicable approvals or
require notification to the relevant Agency. HMC has (or has access to) adequate
financial standing, servicing facilities, procedures and experienced personnel
necessary for the sound servicing of mortgage loans of the same types as may
from time to time constitute Mortgage Loans and in accordance with Accepted
Servicing Practices.

(cc)        No Reliance. The Sellers have made their own independent decision to
enter into the Repurchase Documents to which it is a party and Sellers have made
their own independent decision to enter into each Transaction and as to whether
such Transaction is appropriate and proper for it based upon its own judgment
and upon advice from such advisors (including without limitation, legal counsel
and accountants) as it has deemed necessary. Sellers are not relying upon any
advice from Administrative Agent or any Buyer as to any aspect of the
Transactions, including without limitation, the legal, accounting or tax
treatment of such Transactions.

(dd)        Plan Assets. No Seller is an employee benefit plan as defined in
Section 3 of Title I of ERISA, or a plan described in Section 4975(e)(1) of the
Code, and the Purchased Mortgage Loans are not “plan assets” within the meaning
of 29 CFR §2510.3-101 in the Sellers’ hands.

(ee)        Anti-Money Laundering Laws. The Sellers have complied with all
applicable anti-money laundering laws and regulations, including without
limitation the USA Patriot Act of 2001 (collectively, the “Anti-Money Laundering
Laws”); the Sellers have established an anti-money laundering compliance program
as required by the Anti-Money Laundering Laws, has conducted the requisite due
diligence in connection with the origination of each Mortgage Loan for purposes
of the Anti-Money Laundering Laws, including with respect to the legitimacy of
the applicable Mortgagor and the origin of the assets used by the said Mortgagor
to purchase the property in question, and maintains, and will maintain,
sufficient information to identify the applicable Mortgagor for purposes of the
Anti-Money Laundering Laws.

(ff)         No Prohibited Persons. No Seller nor any of its Affiliates,
officers, directors, partners or members, is an entity or person (or to each
Seller’s knowledge, owned or controlled by an entity or person): (i) that is
listed in the Annex to, or is otherwise subject to the provisions of Executive
Order 13224 issued on September 24, 2001 (“EO13224”); (ii) whose name appears on
the United States Treasury Department’s Office of Foreign Assets Control
(“OFAC”) most current list of “Specifically Designated National and Blocked
Persons” (which list may be published from time to time in various mediums
including, but not limited to, the OFAC website,
http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits, threatens to commit or
supports “terrorism”, as that term is defined in EO13224; or (iv) who is
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any entity or person listed above (any and all parties or persons described in
clauses (i) through (iv) above are herein referred to as a “Prohibited Person”).

(gg)        USA Patriot Act. Each Seller acknowledges that pursuant to the
requirements of the USA Patriot Act, the Administrative Agent is required to
obtain, verify and record information that identifies the Sellers, which
information includes the name and address of Sellers and other information that
will allow the Administrative Agent to identify the Sellers in accordance with
the USA Patriot Act.

(hh)        Real Estate Investment Trust. HB Corp. has not engaged in any
material “prohibited transactions” as defined in Section 857(b)(6)(B)(iii) and
(C) of the Code or the requirements in any successor or replacement provision in
the Code, if any. HB Corp. for its current “tax year” (as defined in the Code)
is entitled to a dividends paid deduction under the requirements of Section 857
of the Code with respect to any dividends paid by it with respect to each such
year for which it claims a deduction in its Form 1120-REIT filed with the United
States Internal Revenue Service for such year, or the requirements in any
successor or replacement provision in the Code, if any.

(ii)          HELOC Provisions. With respect to each HELOC, if a Mortgagor
requests an increase in the related Credit Limit, the Sellers shall, in their
sole discretion, either accept or reject the Mortgagor's request in accordance
with the Underwriting Guidelines and notify the Administrative Agent of such
decision in writing. If the request for a Credit Limit increase is accepted by
Sellers, the increase will be effected by Sellers through modification of the
Mortgage Loan with the Mortgagor. Sellers shall deliver to the Administrative
Agent an updated Mortgage Loan Schedule reflecting the modification to the
Mortgage Loan and shall deliver any modified documents contained in the Mortgage
Files to the Custodian.

Section 12.        Covenants. On and as of the date of this Repurchase Agreement
and each Purchase Date and each day until this Repurchase Agreement is no longer
in force, each Seller covenants as follows:

(a)          Preservation of Existence; Compliance with Law. Each Seller shall,
in all material respects:

(i)    Preserve and maintain its legal existence and all of its material rights,
privileges, licenses and franchises necessary for the operation of its business;

(ii)   Comply with the requirements of all applicable laws, rules, regulations
and orders in all material respects, whether now in effect or hereafter enacted
or promulgated by any applicable Governmental Authority (including, without
limitation, all environmental laws);

(iii) Maintain all licenses, permits or other approvals necessary for such
Seller to conduct its business in all material respects and to perform its
obligations under the Repurchase Documents, and shall conduct its business
strictly in accordance with applicable law;

 

 

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

(v)   Permit representatives of the Administrative Agent and Buyers, upon
reasonable notice (unless an Event of Default shall have occurred and is
continuing, in which case, no prior notice shall be required), during normal
business hours, to examine, copy and make extracts from its books and records,
to inspect any of its Properties, and to discuss its business and affairs with
its officers, all to the extent reasonably requested by the Administrative Agent
and at the expense of the Sellers subject to Section 29 hereof.

(b)          Taxes. The Sellers and their Subsidiaries shall timely file all tax
returns that are required to be filed by them or file extensions as permissible
under law (with written notice of such extensions to the Administrative Agent)
and shall timely pay all Taxes due, except for any such Taxes as are being
appropriately contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves in accordance with GAAP
have been established by the applicable Seller.

(c)          Notice of Proceedings or Adverse Change. The Sellers shall give
notice to the Administrative Agent:

(i)    immediately after a responsible officer of the Sellers has any knowledge
of the occurrence of any Default (other than an Event of Default) which
continues for two (2) Business Days or an Event of Default;

(ii)  immediately after a responsible officer of the Sellers has any knowledge
of any (a) default or event of default under any Indebtedness of any Seller in
an aggregate amount in excess of $5,000,000 or (b) litigation, investigation,
regulatory action or proceeding that is pending or threatened by or against any
Seller in any federal or state court or before any Governmental Authority (i)
which, if not cured or if adversely determined, would reasonably be expected to
have a Material Adverse Effect or constitute a Default or Event of Default, in
each case, with respect to the Sellers or any Repurchase Asset, (ii) in which
the amount involved exceeds $5,000,000 and is not covered by insurance or (iii)
in which injunctive or similar relief is sought, or (c) any Material Adverse
Effect with respect to the Seller;

 

(iii)

Reserved;

(iv) as soon as reasonably possible after a responsible officer of the Sellers
has any knowledge of:

(A)         a material change in the insurance coverage of any Seller with a
copy of evidence of same attached;

(B)         any material change in accounting policies or financial reporting
practices of any Seller;

 

 

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(C)         the termination or involuntary nonrenewal of any debt facilities of
any Seller by the respective creditor which have a maximum principal amount (or
equivalent) available of more than $25,000,000.

(D)         promptly upon receipt of notice or knowledge of any Lien or security
interest (other than security interests created hereby or under any other
Repurchase Document or with respect to any Interest Rate Protection Agreement)
on, or claim asserted against, any of the Repurchase Assets;

(E)         the filing, recording or assessment of any material federal, state
or local tax lien for $5,000,000 or more against any Seller or any of its
Subsidiaries or any assets of any of them;

(F)          the transfer or loss of any Servicing Agreement that relates to any
Purchased Mortgage Loan, and the reason for such transfer or loss, if known to
any Seller; provided that no such notice to the Administrative Agent shall be
required in respect of transfer of any Servicing Agreement resulting from any
Seller’s sale of Mortgage Loans on a servicing-released basis and in the
ordinary course of its business; and

(G)         any other event, circumstance or condition that has resulted, or
would likely result, in a Material Adverse Effect.

(d)          Financial Reporting. Each Seller shall maintain a system of
accounting established and administered in accordance with GAAP, and furnish to
the Administrative Agent for the benefit of Buyers, as applicable:

(i)    As soon as available and in any event within one hundred and twenty
 (120) days after the close of each fiscal year, (A) Financial Statements,
including a consolidated and consolidating statement of income and changes in
shareholders’ equity of the Sellers for such year, and the related balance sheet
as at the end of such year, all in reasonable detail and accompanied by an
opinion of an accounting firm as to said financial statements; and (B) if
otherwise prepared in the ordinary course of a Seller’s business, (1) a report
and opinion of a firm of independent certified public accountants of recognized
standing and acceptable to the Administrative Agent, stating that such firm has
examined selected documents and records relating to the servicing of Mortgage
Loans in accordance with the Mortgage Bankers Association of America’s Uniform
Single Audit Program for Mortgage Bankers, or any successor uniform program, and
that, on the basis of such examination, such servicing has been conducted in
compliance with the minimum servicing standards identified therein, except for
such significant exceptions or errors in records that, in the opinion of such
firm, generally accepted auditing standards requires it to report or (2) the
report on assessment of compliance with servicing criteria and the related
independent accountant's attestation, in each case, as required by Item 1122 of
Regulation AB of the Securities Act of 1933, as amended from time to time,
(Seller that acts as Servicer will use reasonable efforts to obtain such a
report and opinion or attestation, as the case may be, in respect of each
subservicer for Seller and will furnish those obtained to the Administrative
Agent) and (C) any final

 

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management letters, management reports or other supplementary comments or
reports delivered by such accountants to the Sellers.

(ii)   As soon as available and in any event within sixty (60) days after the
close of each of the Seller’s first three fiscal quarters in each fiscal year
unaudited balance sheets and income statements, for each fiscal quarter;

(iii) As soon as available and in any event within forty-five (45) days after
the end of each calendar month, the unaudited balance sheets of the Sellers as
at the end of such period and the related unaudited consolidated statements of
income and retained earnings and of cash flows for the Sellers for such period
and the portion of the fiscal year through the end of such period, subject,
however, to year end adjustments;

(iv) Simultaneously with the furnishing of each of the financial statements to
be delivered pursuant to subsection (ii) above, or monthly upon Administrative
Agent’s request, a certificate in the form of Exhibit I hereto and certified by
an executive officer of such Seller;

(v)   Promptly, such other information related to such annual reports as the
Administrative Agent may from time to time reasonably request.

All required financial statements, information and reports delivered by either
Seller to the Administrative Agent pursuant to this Repurchase Agreement shall
be prepared in accordance with GAAP, or if applicable, to SEC filings, the
appropriate SEC accounting requirements.

(e)          Other Reporting. Each Seller, as applicable, shall furnish to
Administrative Agent for the benefit of Buyers:

(i)    Upon request by the Administrative Agent, a report of Purchased Mortgage
Loans prepaid in full, on or before three (3) Business Days after prepayment of
any one or more Purchased Mortgage Loans is reported to Sellers internally or by
any Servicer (and the Sellers will require each such Servicer to promptly make
such reports to the Sellers).

(ii)   If Sellers at any time engage in hedging activity, then upon the request
of the Administrative Agent, (A) a hedging coverage report showing, in
reasonable detail and in form and substance reasonably acceptable to and
approved by the Sellers and the Administrative Agent, Sellers’ hedging coverage
of all Purchased Mortgage Loans and (B) within ten (10) Business Days after
receipt by Sellers of the Administrative Agent’s request, copies of all Interest
Rate Protection Agreements.

(iii) Monthly, a report listing all Underperforming Mortgage Loans detailing
repurchased Mortgage Loans, indemnifications, delinquent Mortgage Loans and
Mortgage Loans below Market Value.

 

 

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(iv) Quarterly, any copies of any changed pages to the Sellers’ Underwriting
Guidelines to update the Sellers’ Underwriting Guidelines furnished to the
Administrative Agent before, on or about the Closing Date.

(v)   Monthly, a report summarizing notices received by the Sellers requesting
the repurchase of (or pay indemnity or other compensation in respect of)
Mortgage Loans previously sold or otherwise disposed of by the Sellers to any
investor or other Person pursuant to any express or implied repurchase or
indemnity obligation (whether absolute or contingent and whether or not the
Sellers are contesting or intend to contest the request or demands).

(vi) Monthly, a written report from the Sellers to the Administrative Agent
reflecting principal payments and prepayments for each Purchased Mortgage Loan.

(vii)  Monthly, a servicing report on all Mortgage Loans serviced by the Sellers
and all Mortgage Loans subject to a securitization of transaction.

(viii)               Monthly, mortgage loan production report reflecting the
Sellers’ monthly mortgage loan production and acquisition volumes, as well as
its mortgage loan pipeline.

(ix) Monthly, a report of the Sellers’ contingent liabilities and obligations,
including recourse servicing, recourse sale and other recourse obligations, and
guarantee, indemnity and mortgage loan repurchase obligations.

(x)   As soon as available and in any event within ten (10) days after filing,
copies of (i) all press releases issued by the Sellers or any of their
Subsidiaries, (ii) all regular or periodic financial reports, and copies of all
extraordinary or non-routine filings, if any, that shall be filed with the SEC
or any successor agency by or on behalf of the Sellers or any of their
Subsidiaries (including single-purpose finance Subsidiaries) and (iii) all such
filings relating to any securities that are or are to be based on, backed by or
created from any Repurchase Assets and which filings are made by or in respect
of the Sellers or any of their Subsidiaries in each case, to the extent not
available for public review on the SEC’s EDGAR database.

(xi) If requested by Administrative Agent, a summary report of Seller’s then
outstanding Takeout Commitments to sell Mortgage Loans to Takeout Investors.

 

(xii)

Weekly, a report indicating the unpaid principal balances for HELOCs.

(xiii)               Promptly, from time to time, such other information
regarding the business affairs, operations and financial condition of Sellers as
the Administrative Agent may reasonably request.

 

(f)

Reserved.

(g)          Reimbursement of Expenses. On the date of execution of this
Repurchase Agreement, the Sellers shall reimburse the Administrative Agent for
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Administrative Agent in connection with the Repurchase Documents (unless
otherwise provided herein) on or prior to such date. From and after such date,
the Sellers shall promptly reimburse the Administrative Agent for all expenses
as the same are incurred by the Administrative Agent in connection with the
Repurchase Documents and within thirty (30) days of the receipt of invoices
therefor.

(h)          Further Assurances. The Sellers shall execute and deliver to the
Administrative Agent all further documents, financing statements, agreements and
instruments, and take all further action that may be required under applicable
law, or that the Administrative Agent may reasonably request, in order to
effectuate the transactions contemplated by this Repurchase Agreement and the
Repurchase Documents or, without limiting any of the foregoing, to grant,
preserve, protect and perfect the validity and first-priority of the security
interests created or intended to be created hereby. The Sellers shall do all
things necessary to preserve the Repurchase Assets so that they remain subject
to a first priority perfected security interest hereunder. Without limiting the
foregoing, the Sellers will comply with all rules, regulations, and other laws
of any Governmental Authority and cause the Repurchase Assets to comply with all
applicable rules, regulations and other laws. The Sellers will not allow any
default for which the Sellers are responsible to occur under any Repurchase
Assets or any Repurchase Document and the Sellers shall fully perform or cause
to be performed when due all of its obligations under any Repurchase Assets or
the Repurchase Documents. The Sellers will keep the Administrative Agent
informed of the current name, address and contact information concerning the
Sellers’ other mortgage warehouse credit and repurchase facilities and will
cooperate and assist the Administrative Agent in exchanging information with
such others (and their document custodians or trustees) to prevent and promptly
correct conflicting claims to and interests in Repurchase Assets between or
among lenders or repurchase facilities counterparties.

(i)           True and Correct Information. All information, reports, exhibits,
schedules, financial statements or certificates of either Seller or any of its
Affiliates thereof or any of their officers furnished to Administrative Agent or
Buyers in connection with this Repurchase Agreement or other Repurchase
Documents and the transactions contemplated hereby and during Administrative
Agent’s or a Buyer’s diligence of either Seller when taken as a whole, do not
contain any untrue statement of material fact and do not omit to disclose any
material fact necessary to make the statements therein or therein, in light of
the circumstances in which they are made, not misleading or (in the case of
projections) based on reasonable estimates, on the date as of which such
information is stated or certified.

 

(j)

ERISA Events.

(i)    Promptly upon becoming aware of the occurrence of any Event of ERISA
Termination which together with all other Events of Termination occurring within
the prior 12 months involve a payment of money by or a potential aggregate
liability of the Sellers or any ERISA Affiliate thereof or any combination of
such entities in excess of $5,000,000 the Sellers shall give the Administrative
Agent a written notice specifying the nature thereof, what action the Sellers or
any ERISA Affiliate thereof has taken and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or the PBGC
with respect thereto;

 

 

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(ii)   Promptly upon receipt thereof, the Sellers shall furnish to the
Administrative Agent copies of (i) all notices received by the Sellers or any
ERISA Affiliate thereof of the PBGC’s intent to terminate any Plan or to have a
trustee appointed to administer any Plan; (ii) all notices received by the
Sellers or any ERISA Affiliate thereof from the sponsor of a Multiemployer Plan
pursuant to Section 4202 of ERISA involving a withdrawal liability in excess of
$5,000,000; and (iii) all funding waiver requests filed by the Sellers or any
ERISA Affiliate thereof with the Internal Revenue Service with respect to any
Plan, the accrued benefits of which exceed the present value of the plan assets
as of the date the waiver request is filed by more than $5,000,000, and all
communications received by the Sellers or any ERISA Affiliate thereof from the
Internal Revenue Service with respect to any such funding waiver request.

 

(k)

Financial Covenants.

 

(i)

Reserved.

 

(ii)   Maintenance of Adjusted Tangible Net Worth.  HB Corp., on a consolidated
basis, shall at all times maintain an Adjusted Tangible Net Worth, of at least
$310,000,000 plus 85% of net proceeds from future equity and Qualified
Subordinated Debt offerings. HMC shall at all times maintain an Adjusted
Tangible Net Worth, of at least $10,000,000.

(iii) Liabilities to Adjusted Tangible Net Worth Ratios. HB Corp., on a
consolidated basis, shall maintain the ratio of Total Recourse Liabilities to
Adjusted Tangible Net Worth no greater than 11:1. HB Corp., on a consolidated
basis, shall maintain a ratio of Total Adjusted Liabilities to Adjusted Tangible
Net Worth no greater than 25:1.

(iv) Maintenance of Liquidity. HB Corp., on a consolidated basis, shall at all
times have (a) unencumbered cash and Cash Equivalents and (b) Available
Borrowing Capacity on unencumbered assets (taking into account required
haircuts) under committed warehouse and repurchase facilities equal to not less
than $35,000,000.

(v)   Servicing Portfolio Delinquencies. HB Corp., on a consolidated basis,
shall not permit more than 5% of the aggregate outstanding principal balance of
its servicing portfolio of Mortgage Loans owned by HB Corp. or its Affiliates
(including those directly owned and those in pools securitized by HB Corp. or
any of its Affiliates in transactions which HB Corp. or any of its Affiliates
retains or acquires any residual or other interest) to be in payment default or
other material default for thirty (30) days or more.

provided, in each case, that Sellers’ failure to comply with this Section 12(k)
shall not constitute a breach of its covenants hereunder or constitute an Event
of Default if the Administration Agent consents in writing (subject to the
Buyers’ approval as contemplated in the Administration Agreement).

 

 

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(l)           Hedging. Sellers will pledge to the Administrative Agent for the
benefit of the Buyers any investment securities acquired by the Sellers and held
from time to time to hedge such investments in Purchased Mortgage Loans.

(m)         No Adverse Selection. No Seller shall select Eligible Mortgage Loans
to be sold to Buyers as Purchased Mortgage Loans using any type of adverse
selection or other selection criteria which would adversely affect any Buyer.

 

(n)

Reserved.

(o)          Qualified Subordinated Debt. Following the occurrence and during
the continuation of an Event of Default or if an Event of Default would result
after giving effect thereto, no Seller shall pay in advance of its stated
maturity any Qualified Subordinated Debt of the Seller, pay in advance any
scheduled installment thereon (for any term loans) or, make any payment of any
kind or through any direct or indirect means or method on such Qualified
Subordinated Debt unless the Administrative Agent consents otherwise in writing
(subject to the Buyers’ approval as contemplated in the Administration
Agreement).

(p)          Insurance. The Sellers shall and shall cause the Servicer to
continue to maintain Fidelity Insurance in an aggregate amount at least equal to
$10,000,000. The Sellers shall maintain Fidelity Insurance in respect of its
officers, employees and agents, with respect to any claims made in connection
with all or any portion of the Repurchase Assets. The Sellers shall maintain
liability insurance protecting the Sellers and fire and other hazard insurance
on its respective properties from which it conducts its business, with
responsible insurance companies, in such amounts and against such risks as is
customarily carried by similar businesses operating in the same vicinity. Copies
of such policies shall be furnished to the Administrative Agent upon the
Administrative Agent’s request made from time to time and without cost to the
Administrative Agent. The Sellers shall notify the Administrative Agent of any
material change in the terms of any such Fidelity Insurance.

(q)          Books and Records. Each Seller shall, to the extent practicable,
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing the Repurchase
Assets in the event of the destruction of the originals thereof), and keep and
maintain or obtain, as and when required, all documents, books, records and
other information reasonably necessary or advisable for the collection of all
Repurchase Assets.

(r)           Illegal Activities. No Seller shall engage in any illegal conduct
or activity that could subject their respective assets to forfeiture or seizure.

(s)           Material Change in Business. No Seller shall make any material
change in the nature of its businesses as carried on at the date hereof unless
the Administrative Agent consents otherwise in writing (subject to the Buyers’
approval as contemplated in the Administration Agreement).

(t)           Limitation on Dividends and Distributions. If an Event of Default
has occurred and is continuing, neither Seller shall pay any dividends with
respect to any capital stock or other equity interests in such entity, whether
now or hereafter outstanding, or make any

 

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other distribution in respect thereof, either directly or indirectly, whether in
cash or property or in obligations of either Seller, except that, following the
occurrence and during the continuation of an Event of Default (other than those
specified in Sections 13(a) or (i)), HB Corp. may make distributions in cash or
other property but only to the extent reasonably necessary for HB Corp. to
satisfy its REIT Distribution Requirement with respect to such taxable year.

(u)          Disposition of Assets; Liens. The Sellers shall not cause any of
the Repurchase Assets to be sold, pledged, assigned or transferred except as
contemplated hereby; nor shall the Sellers create, incur, assume or suffer to
exist any mortgage, pledge, Lien, charge or other encumbrance of any nature
whatsoever on any of the Repurchase Assets, whether real, personal or mixed, now
or hereafter owned, other than Liens in favor of the Administrative Agent for
the benefit of the Buyers.

(v)          Transactions with Affiliates. No Seller shall enter into any
transaction, including, without limitation, the purchase, sale, lease or
exchange of property or assets or the rendering or accepting of any service with
any Affiliate, unless such transaction is (a) not otherwise prohibited in this
Repurchase Agreement and (b) upon fair and reasonable terms no less favorable to
Sellers, as the case may be, than it would obtain in a comparable arm’s length
transaction with a Person which is not an Affiliate.

 

(w)

ERISA Matters.

(i)    The Sellers shall not permit any event or condition which is described in
any of clauses (i) through (vii) of the definition of “Event of ERISA
Termination” to occur or exist with respect to any Plan or Multiemployer Plan if
such event or condition, together with all other events or conditions described
in the definition of Event of ERISA Termination occurring within the prior 12
months, involves the payment of money by or an incurrence of liability of the
Sellers or any ERISA Affiliate thereof, or any combination of such entities in
an amount in excess of $200,000.

(ii)   No Seller shall be an employee benefit plan as defined in Section 3 of
Title I of ERISA, or a plan described in Section 4975(e)(1) of the Code and the
Sellers shall not use “plan assets” within the meaning of 29 CFR §2510.3-101 to
engage in this Repurchase Agreement or the Transactions hereunder.

(x)          Consolidations, Mergers, Sales of Assets and Acquisitions. No
Seller shall consolidate or merge with or into any other Person, sell, lease or
otherwise transfer all or substantially all of its assets to any other Person or
make any material acquisition of all or substantially all assets of another
Person, unless:

(i)    in the case of a consolidation or merger, a Seller may merge or
consolidate with another Person if such Person is a mortgage company and if such
Seller is the corporation surviving such merger or otherwise has been approved
by the Administrative Agent in writing (subject to the Buyers’ approval as
contemplated in the Administration Agreement);

(ii)  in the case of an acquisition, it is of assets or securities to be used by
a Seller in its core mortgage company business, or otherwise has been approved
by the

 

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Administrative Agent in writing (subject to the Buyers’ approval as contemplated
in the Administration Agreement); and

(iii) in the case of an acquisition or sale of a Seller’s assets, such
acquisition or sale is in the ordinary course of a Seller’s business or
otherwise has been approved by the Administrative Agent in writing (subject to
the Buyers’ approval as contemplated in the Administration Agreement).

in any case, after giving effect to such a sale, consolidation, merger or
acquisition, no Default or Event of Default would exist under this Agreement or
any of the other Repurchase Documents or Loan Documents.

(y)          Chief Executive Office; Jurisdiction of Organization. No Seller
shall move its chief executive office from the address referred to in Section
11(w) or change its jurisdiction of organization from the jurisdiction referred
to in Section 11(w) unless it shall have provided Administrative Agent 30 days’
prior written notice of such change.

(z)          Agency Approvals; Servicing. HMC shall maintain its status with
Fannie Mae and Ginnie Mae as an approved lender, and Freddie Mac as an approved
seller/servicer, the VA as an approved lender and with the FHA as an approved
mortgagee, in each case in good standing (each such approval, an “Agency
Approval”). Should HMC, for any reason, cease to possess all such applicable
Agency Approvals to the extent necessary, or should notification to the relevant
Agency or to HUD, FHA or VA be required, HMC shall so notify Administrative
Agent immediately in writing. Notwithstanding the preceding sentence, HMC shall
take all necessary action to maintain all of its applicable Agency Approvals at
all times during the term of this Repurchase Agreement and each outstanding
Transaction.

(aa)        Guarantees. Without prior written consent of the Administrative
Agent, no Seller shall (i) create, incur, assume or suffer to exist any
Guarantees, except (A) with respect to Indebtedness permitted pursuant to
Section 12(dd) hereunder or (B) with respect to recourse servicing rights in an
amount not to exceed ten percent (10%) of the aggregate outstanding amount of
Mortgage Loans serviced by the Sellers or a subservicer or (ii) either directly
or indirectly, assume, guarantee, endorse, or otherwise become liable for the
Indebtedness or other obligation of any Person or entity except (A) by
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business, (B) guaranties by the Sellers of Indebtedness of its
Subsidiaries, or joint and several liabilities of the Sellers with one or more
of its Affiliates pursuant to warehouse or aggregation borrowing arrangements,
providing for no more than ten percent (10%) recourse liability by the Sellers
under such arrangements, (C) contingent liabilities arising out of the Sellers’
recourse sales to others of the rights to service mortgage loans the aggregate
principal amount of which (for which such recourse liability remains in effect)
on any day does not exceed an amount equal to ten percent (10%) of the aggregate
principal amount of Mortgage Loans serviced by the Sellers on that day and
(D) under the Seller’s existing contingent liabilities described on Exhibit D
hereto.

(bb)        Underwriting Guidelines. The Sellers shall notify the Administrative
Agent of all material changes to the Underwriting Guidelines, quarterly, and
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Administrative Agent all material and nonmaterial changed pages to the
Underwriting Guidelines quarterly.

 

(cc)

Reserved.

(dd)        Permitted Debt. The Sellers shall not incur, permit to exist or
commit to incur any Indebtedness that has not been approved by the
Administrative Agent in writing in advance, except the following (collectively,
the “Permitted Debt”):

 

(i)

the Obligations hereunder and under the Loan Agreement;

(ii)  liabilities for accounts payable, non-capitalized equipment or operating
leases and similar liabilities incurred in the ordinary course of business;

 

(iii)

the Indebtedness described on Exhibit D;

 

(iv)

Qualified Subordinated Debt;

 

(v)   other Indebtedness of any Seller approved in writing by the Administrative
Agent (Administrative Agent shall have no obligation to approve any such
Indebtedness, and Administrative Agent may approve or disapprove it in
Administrative Agent’s sole and absolute discretion);

(vi) Indebtedness under warehousing, repurchase or other mortgage-related asset
agreements to finance the Sellers’ inventory of Mortgage Loans;

 

(vii)

Indebtedness between Sellers that is unsecured;

(viii)               Indebtedness secured by MBSs rated by at least one Rating
Agency;

 

(ix)

Indebtedness secured by R rated portions of MBSs;

(x)   Indebtedness supporting trust preferred stock, provided that such
Indebtedness shall not exceed 75% of such Sellers Adjusted Tangible Net Worth;

 

(xi)

additional Indebtedness not to exceed $20,000,000 in the aggregate;

(xii)  debt securities issued by HB Corp. convertible into common stock, of up
to Two Hundred Million Dollars ($200,000,000), so long as such convertible debt
is unsecured and does not mature until ninety (90) days or more after the
Termination Date, and its indenture contains subordination provisions approved
by the Administrative Agent subordinating such convertible debt in right of
payment to the Transactions hereof and imposes covenants and conditions that are
no more restrictive or onerous than HB Corp.’s covenants and conditions under
this Repurchase Agreement; and

 

 

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(xiii)               Indebtedness of any Seller owed to an Affiliate, so long as
such inter-company Indebtedness is subordinated in form and substance acceptable
to the Administrative Agent.

including, in each case, Guarantees by either Seller of any Permitted Debt
provided such Guarantee otherwise qualified as Permitted Debt.

(ee)        Notice of Defaults under Indentures. The Sellers shall after receipt
of actual knowledge give written notice to the Agent promptly, and in no event
later than five (5) days, after the occurrence of (i) any Event of Default,
(ii) any principal payment default, (iii) any interest or premium payment
default or (iv) any performance default or breach of any covenant other than
default in the payment of principal, interest or premium, under the trust
indenture related to (x) the Qualified Trust Preferred Securities issued by any
Capital Trust Entity or (y) any issue of HB Corp. debt convertible into HB Corp.
common stock.

(ff)         Maintain REIT Status. HB Corp. shall at all times maintain its
status as a REIT, unless otherwise approved by the Administrative Agent (subject
to the Buyers’ approval as contemplated in the Administration Agreement).

(gg)        Maintain Listing. HB Corp. shall at all times maintain its listing
on the New York Stock Exchange or NASDAQ unless the Administrative Agent
consents otherwise in writing (subject to the Buyers’ approval as contemplated
in the Administration Agreement).

(hh)        Use of Purchase Price. The Sellers shall use the Purchase Price
solely for the general purpose of financing the Sellers’ one-to-four family
mortgage lending operations, one-to-four family mortgage servicing operations
(servicing Mortgage Loans pursuant to a Takeout Commitment) and related
businesses.

 

Section 13.

Events Of Default; Termination Event.

13.01     Events of Default. If any of the following events (each an “Event of
Default”) occur, the Administrative Agent, for the benefit of the Buyers, shall
have the rights set forth in Section 14, as applicable:

(a)          Payment Failure. Any Seller shall default under this Agreement in
the payment of (i) a Mark-to-Market; (ii) any Price Differential or Repurchase
Price or Facility Fee which has become due, on a Payment Date or a Repurchase
Date or otherwise, whether by acceleration or otherwise, under the terms hereof,
or (iii) Expenses, Obligations or any other sum, when the same shall become due
and payable, whether at the due date thereof, or by acceleration or otherwise;

(b)          Breach of Financial Representation or Covenant. The failure of any
Seller to perform, comply with or observe any term, covenant or agreement
applicable to such Seller contained in Sections 12(a), (i), (j), (k), (r), (s),
(t), (u), (v), (w), (x), (z), (aa) or (dd); or

(c)          Breach of Non-Financial Representation. Any representation,
warranty or certification made or deemed made herein or in any other Repurchase
Document by any Seller, or any certificate furnished to the Administrative Agent
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thereof or any information with respect to the Mortgage Loans furnished in
writing by on behalf of any Seller shall prove to have been untrue or misleading
in any material respect as of the time made or furnished (other than the
representations and warranties set forth in Schedule I, which shall be
considered solely for the purpose of determining the Asset Value of the
Purchased Mortgage Loans; unless (i) any Seller shall have made any such
representations and warranties with actual knowledge that they were materially
false or misleading at the time made; or (ii) any such representations and
warranties have been determined in good faith by the Administrative Agent in its
sole discretion to be materially false or misleading on a regular basis); or

(d)          Breach of Other Covenant. Any Seller shall fail to observe or
perform any other covenant or agreement contained in this Repurchase Agreement
(and not identified in clause (b) of Section 13.01) or any other Repurchase
Document, and if such default shall be capable of being remedied, such failure
to observe or perform shall continue unremedied for a period of 30 days; or

(e)          Judgment. Any money judgment, writ or warrant of attachment or
similar process involving (i) any Seller in excess of $5,000,000 in the
aggregate or (ii) any Seller in excess of $5,000,000 in the aggregate (to the
extent not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage), shall be entered or
filed against any Seller or any of their assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of sixty (60) days (or in any event
later than five (5) days prior to the date of any proposed sale thereunder); or

(f)           Insolvency. An Event of Insolvency shall have occurred with
respect to any Seller; or

(g)          Enforceability. (i) Any Repurchase Document shall for whatever
reason be terminated or cease to be in full force and effect in all material
respects or shall not be enforceable in all material respects in accordance with
its terms, or (ii) any Lien granted pursuant thereto shall fail to be perfected
and of first priority, or (iii) any Person (other than the Administrative Agent
for the benefit of the Buyers) shall contest the validity, enforceability,
perfection or priority of any Lien granted pursuant thereto which has not been
dismissed or otherwise addressed in a manner acceptable to the Administrative
Agent or otherwise waived as an Event of Default by the Administrative Agent
(subject to the Buyers’ approval as contemplated in the Administration
Agreement) within three (3) Business Days of the date such Lien was first
contested, or (iv) any party thereto (other than the Administrative Agent for
the benefit of the Buyers) shall seek to disaffirm, terminate, limit or reduce
its obligations hereunder; or

(h)          Security Interest. Any Seller shall grant, or suffer to exist, any
Lien on any Repurchase Asset (except any Lien (i) in favor of the Administrative
Agent for the benefit of the Buyers or (ii) on any Interest Rate Protection
Agreement); or (A) the Repurchase Assets shall not have been sold to the Buyers,
or (B) the Liens contemplated hereby shall cease or fail to be first priority
perfected Liens on any Repurchase Assets in favor of the Administrative Agent
for the benefit of the Buyers or shall be Liens in favor of any Person other
than the Administrative Agent for the benefit of the Buyers; or

 

 

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(i)           Cross-Default. Any Seller or any of their Affiliates shall be in
default under (i) any Indebtedness, in excess of $5,000,000 individually or in
the aggregate, of any Seller or of any of their Affiliates which default
(1) involves the failure to pay a matured obligation, or (2) permits the
acceleration of the maturity of obligations by any other party to or beneficiary
with respect to such Indebtedness, or (ii) any other contract, in excess of
$5,000,000 individually or in the aggregate, to which any Seller is a party
which default (1) involves the failure to pay a matured obligation, or
(2) permits the acceleration of the maturity of obligations by any other party
to or beneficiary of such contract; or

 

(j)

Reserved; or

(k)          Going Concern. Any Seller’s audited financial statements or notes
thereto or other opinions or conclusions stated therein shall be qualified or
limited by reference to the status of any Seller as a “going concern” or
reference of similar import; or

(l)           Change in Control. A Change in Control shall have occurred unless
the Administrative Agent consents in writing (subject to the Buyers’ approval as
contemplated in the Administration Agreement); or

 

(m)

Reserved

(n)          Inability to Perform. An officer of a Seller shall admit its
inability to, or its intention not to, perform any of such Seller’s Obligations
hereunder or under any other Repurchase Document;

(o)          REIT Status. The failure of HB Corp. to at any time continue to be
(i) qualified as and “publicly traded” as a real estate investment trust as
defined in Section 856 of the Code and (ii) entitled to a dividend paid
deduction under Section 857 of the Code with respect to dividends paid by it
with respect to each taxable year for which it claims a deduction on its Form
1120 – REIT filed with the United States Internal Revenue Service for such year,
or the entering into by HB Corp. of any material “prohibited transactions” as
defined in Sections 857(b)(6) of the Code unless approved in writing by the
Administrative Agent (subject to the Buyers’ approval as contemplated in the
Administration Agreement);

(p)          Servicing Portfolio. The cancellation for cause, as permitted under
the applicable Servicing Agreements, of 10% or more of any Seller’s portfolio of
servicing rights by one or more Takeout Investors.

13.02     Termination Event (a) If the following event (a “Termination Event”)
occurs, the Administrative Agent shall have the rights set forth in
Section 13.02(b):

(i)           any Material Adverse Effect shall occur, in each case as
determined by the Administrative Agent in its sole good faith determination, or
any other condition shall exist which, in the Administrative Agent’s sole good
faith determination, constitutes a material impairment of any Seller’s ability
to perform its obligations under this Repurchase Agreement or any other
Repurchase Document.

 

 

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(b)          Upon the occurrence of a Termination Event, the Administrative
Agent shall have the right, in its sole discretion, to immediately terminate the
Administrative Agent’s obligation to enter into any additional Transactions. The
Sellers shall repurchase any Mortgage Loans subject to Transactions outstanding
hereunder at the Repurchase Price within 30 days following receipt of a request
therefor from the Administrative Agent following the occurrence of a Termination
Event.

Section 14.        Remedies. (a) If an Event of Default occurs with respect to
either Seller, the following rights and remedies are available to the
Administrative Agent for the benefit of the Buyers; provided, that an Event of
Default shall be deemed to be continuing unless expressly waived by the
Administrative Agent in writing.

(i)    At the option of the Administrative Agent, exercised by written notice
(which may be electronic) to the Sellers (which option shall be deemed to have
been exercised, even if no notice is given, immediately upon the occurrence of
an Event of Insolvency of either Seller), the Repurchase Date for each
Transaction hereunder, if it has not already occurred, shall be deemed
immediately to occur. Except with respect to the occurrence of an Event of
Insolvency of a Seller, the Administrative Agent shall give notice to the
Sellers of the exercise of such option as promptly as practicable.

(ii)   If the Administrative Agent exercises or is deemed to have exercised the
option referred to in subsection (a)(i) of this Section:

(A)         the Sellers’ obligations in such Transactions to repurchase all
Purchased Mortgage Loans, at the Repurchase Price therefor on the Repurchase
Date determined in accordance with subsection (a)(i) of this Section, (1) shall
thereupon become immediately due and payable, (2) all Income paid after such
exercise or deemed exercise shall be retained by the Administrative Agent and
applied to the aggregate unpaid Repurchase Price and any other amounts owed by
the Sellers hereunder;

(B)         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, on a 360 day per year basis for the actual
number of days during the period from and including the date of the exercise or
deemed exercise of such option to but excluding the date of payment of the
Repurchase Price as so increased, the Post-Default Rate to the Repurchase Price
for such Transaction as of the Repurchase Date as determined pursuant to
subsection (a)(i) of this Section (decreased as of any day by (i) any amounts
actually in the possession of the Administrative Agent for the benefit of the
Buyers pursuant to clause (iii) of this subsection, and (ii) any proceeds from
the sale of Purchased Mortgage Loans applied to the Repurchase Price pursuant to
subsection (a)(iv) of this Section; and

(C)         all Income actually received by the Administrative Agent for the
benefit of the Buyers pursuant to Section 5 (excluding any Late Payment Fees

 

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paid pursuant to Section 5(a) ) shall be applied to the aggregate unpaid
Repurchase Price owed by the Sellers.

(iii) Upon the occurrence of one or more Events of Default, the Administrative
Agent shall have the right to obtain physical possession of all files of the
Sellers relating to the Purchased Mortgage Loans and the Repurchase Assets and
all documents relating to the Purchased Mortgage Loans which are then or may
thereafter come in to the possession of the Sellers or any third party acting
for the Sellers and the Sellers shall deliver to the Administrative Agent such
assignments as the Administrative Agent shall request. The Administrative Agent
shall be entitled to specific performance of all agreements of the Sellers
contained in the Repurchase Documents.

(iv) At any time on the Business Day following notice to the Sellers (which
notice may be the notice given under subsection (a)(i) of this Section), in the
event the Sellers have not repurchased all Purchased Mortgage Loans, the
Administrative Agent may immediately sell, without demand or further notice of
any kind, at a public or private sale and at such price or prices as the
Administrative Agent may deem satisfactory any or all Purchased Mortgage Loans
and the Repurchase Assets, on a servicing released basis, subject to such
Transactions hereunder and apply the proceeds thereof to the aggregate unpaid
Repurchase Prices and any other amounts owing by the Sellers hereunder.  Any
Buyer or the Administrative Agent may be a purchaser of any Purchased Mortgage
Loan at any public or private sale and such Buyer or Administrative Agent shall
be entitled, for the purpose of bidding or making settlement or payment of the
purchase price for all or portion of the Purchased Mortgage Loan sold at any
such sale. The proceeds of any disposition of Purchased Mortgage Loans and the
Repurchase Assets shall be applied first to the costs and expenses incurred by
the Administrative Agent in connection with a Seller’s default; second to costs
of cover and/or related hedging transactions; third to the Repurchase Price; and
fourth to any other outstanding Obligations of the Sellers.

(v)   The Sellers shall be liable to Administrative Agent and Buyers for (i) the
amount of all reasonable legal or other expenses (including, without limitation,
all costs and expenses of Administrative Agent and Buyers in connection with the
enforcement of this Repurchase Agreement or any other agreement evidencing a
Transaction, whether in action, suit or litigation or bankruptcy, insolvency or
other similar proceeding affecting creditors’ rights generally, further
including, without limitation, the reasonable fees and expenses of counsel
(including the costs of internal counsel of Administrative Agent and Buyers)
incurred 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) 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 in respect of a Transaction.

(vi) The Administrative Agent shall have, in addition to its rights hereunder,
any rights otherwise available to it under any other agreement or applicable
law.

 

 

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(b)          Administrative Agent may exercise one or more of the remedies
available to Administrative Agent immediately upon the occurrence of an Event of
Default and, except to the extent provided in subsections (a)(i) and (iv) of
this Section, at any time thereafter without notice to the Sellers. All rights
and remedies arising under this Repurchase Agreement as amended from time to
time hereunder are cumulative and not exclusive of any other rights or remedies
which Administrative Agent may have.

(c)          Administrative Agent may enforce its rights and remedies hereunder
without prior judicial process or hearing, and each Seller hereby expressly
waives any defenses such Seller might otherwise have to require Administrative
Agent to enforce its rights by judicial process. Each Seller also waives any
defense (other than a defense of payment or performance) such Seller might
otherwise have arising from the use of nonjudicial process, enforcement and sale
of all or any portion of the Repurchase Assets, or from any other election of
remedies. Each Seller recognizes that nonjudicial remedies are consistent with
the usages of the trade, are responsive to commercial necessity and are the
result of a bargain at arm’s length.

(d)          To the extent permitted by applicable law, each Seller shall be
liable to the Administrative Agent for interest on any amounts owing by such
Seller hereunder, from the date such Seller becomes liable for such amounts
hereunder until such amounts are (i) paid in full by such Seller or
(ii) satisfied in full by the exercise of the Administrative Agent’s rights
hereunder. Interest on any sum payable by the Sellers to the Administrative
Agent under this paragraph 14(d) shall be at a rate equal to the Post-Default
Rate.

Section 15.        Indemnification and Expenses.(a)         (a) Each Seller
agrees to hold the Administrative Agent and the Buyers, and their Affiliates and
their officers, directors, employees, agents and advisors and their respective
successors and assigns (each an “Indemnified Party”) harmless from and indemnify
any Indemnified Party against all liabilities, losses, damages, judgments, costs
and expenses of any kind which may be imposed on, incurred by or asserted
against such Indemnified Party (collectively, “Costs”), relating to or arising
out of this Repurchase Agreement, any other Repurchase Document or any
transaction contemplated hereby or thereby, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Repurchase Agreement, any other Repurchase Document to which it is a party or
any transaction contemplated hereby or thereby, that, in each case, results from
anything other than the Indemnified Party’s gross negligence or willful
misconduct. Without limiting the generality of the foregoing, each Seller agrees
to hold any Indemnified Party harmless from and indemnify such Indemnified Party
against all Costs with respect to all Mortgage Loans relating to or arising out
of any taxes incurred or assessed in connection with the ownership of the
Mortgage Loans, that, in each case, results from anything other than the
Indemnified Party’s gross negligence or willful misconduct. In any suit,
proceeding or action brought by an Indemnified Party in connection with any
Mortgage Loan for any sum owing thereunder, or to enforce any provisions of any
Mortgage Loan, each Seller will save, indemnify and hold such Indemnified Party
harmless from and against all expense, loss or damage suffered by reason of any
defense, set-off, counterclaim, recoupment or reduction or liability whatsoever
of the account debtor or obligor thereunder, arising out of a breach by any
Seller of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such account
debtor or obligor or its successors from the Sellers. Each Seller also agrees to
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Party for all the Indemnified Party’s costs and expenses incurred in connection
with the enforcement or the preservation of the Administrative Agent’s and the
Buyers’ rights under this Repurchase Agreement, any other Repurchase Document or
any transaction contemplated hereby or thereby, including without limitation the
reasonable fees and disbursements of its counsel.

(b)          Each Seller agrees to pay as and when billed by the Administrative
Agent all of the out-of-pocket costs and expenses incurred by the Administrative
Agent in connection with the development, preparation and execution of, and any
amendment, supplement or modification to, this Repurchase Agreement, any other
Repurchase Document or any other documents prepared in connection herewith or
therewith. Each Seller agrees to pay as and when billed by the Administrative
Agent all of the reasonable out-of-pocket costs and expenses incurred in
connection with the consummation and administration of the transactions
contemplated hereby and thereby including without limitation filing fees and all
the reasonable fees, disbursements and expenses of counsel to the Administrative
Agent and costs and expenses required to be paid pursuant to Sections 6 and 7
hereof. Subject to the limitations set forth in Section 29 hereof, the Sellers
agree to pay the Administrative Agent all the reasonable out of pocket due
diligence, inspection, testing and review costs and expenses incurred by the
Administrative Agent and the Buyers with respect to Mortgage Loans submitted by
the Sellers for purchase under this Repurchase Agreement, including, but not
limited to, those out of pocket costs and expenses incurred by the
Administrative Agent and the Buyers pursuant to Sections 15 and 29 hereof.

(c)          The obligations of the Sellers from time to time to pay the
Repurchase Price, the Periodic Advance Repurchase Payments, and all other
amounts due under this Repurchase Agreement shall be full recourse obligations
of the Sellers.

Section 16.       Servicing. (a)  The Servicer shall service the Mortgage Loans
consistent with the degree of skill and care that such Servicer customarily
requires with respect to similar Mortgage Loans owned or managed by it and in
accordance with all applicable industry standards. The Servicer shall (i) comply
with all applicable Federal, State and local laws and regulations, (ii) maintain
all state and federal licenses necessary for it to perform its servicing
responsibilities hereunder and (iii) not impair the rights of any Buyer in any
Mortgage Loans or any payment thereunder. Administrative Agent may terminate the
servicing of any Mortgage Loan with the then existing servicer in accordance
with Section 16(d) hereof.

(b)          The Servicer shall hold or cause to be held all escrow funds
collected by the Servicer with respect to any Purchased Mortgage Loans in trust
accounts and shall apply the same for the purposes for which such funds were
collected.

(c)          Upon the occurrence of an Event of Default, the Servicer shall
deposit all collections received by the Servicer and Sellers on account of the
Purchased Mortgage Loans in the Collection Account.

(d)          Upon the occurrence of an Event of Default hereunder,
Administrative Agent shall have the right to immediately terminate the
Servicer’s right to service the Purchased Mortgage Loans without payment of any
penalty or termination fee. The Sellers and the Servicer

 

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shall cooperate in transferring the servicing of the Purchased Mortgage Loans to
a successor servicer appointed by Administrative Agent in its sole discretion.

(e)          If the Sellers should discover that, for any reason whatsoever, any
entity responsible to the Sellers by contract for managing or servicing any such
Purchased Mortgage Loan has failed to perform fully the Sellers’ obligations
under the Repurchase Documents or any of the obligations of such entities with
respect to the Purchased Mortgage Loans, the Sellers shall promptly notify
Administrative Agent.

Section 17.       Recording Of Communications. The Administrative Agent, the
Buyers and the Sellers shall have the right (but not the obligation) from time
to time to make or cause to be made tape recordings of communications between
its employees and those of the other party with respect to Transactions upon
notice to the other party of such recording.

Section 18.       Single Agreement. The Administrative Agent, Buyers and the
Sellers acknowledge that, and have entered hereinto and will enter into each
Transaction hereunder in consideration of and in reliance upon the fact that,
all Transactions hereunder constitute a single business and contractual
relationship and that each has been entered into in consideration of the other
Transactions. Accordingly, each of the Administrative Agent, Buyers and the
Sellers agree (i) to perform all of its obligations in respect of each
Transaction hereunder, 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 Transaction hereunder; (iii) that payments,
deliveries, and other transfers made by either of them in respect of any
Transaction shall be deemed to have been made in consideration of payments,
deliveries, and other transfers in respect of any other Transactions hereunder,
and the obligations to make any such payments, deliveries, and other transfers
may be applied against each other and netted and (iv) to promptly provide notice
to the other after any such set off or application.

Section 19.      Set-Off. In addition to any rights and remedies of the
Administrative Agent and the Buyers hereunder and by law, the Administrative
Agent and the Buyers shall have the right, without prior notice to the Sellers,
any such notice being expressly waived by the Sellers to the extent permitted by
applicable law, upon any amount becoming due and payable by either Seller
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by the Administrative Agent and the Buyers or any Affiliate
thereof to or for the credit or the account of either Seller or any Affiliate
thereof. The Administrative Agent and the Buyers agree to promptly notify the
Sellers after any such set-off and application made by such Buyer or
Administrative Agent; provided that the failure to give such notice shall not
affect the validity of such set-off and application.

Section 20.       Notices And Other Communications. Except as otherwise
expressly permitted by this Repurchase Agreement, all notices, requests and
other communications provided for herein (including without limitation any
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waivers, requests or consents under, this Repurchase Agreement) shall be given
or made in writing (including without limitation by telecopy or electronic mail)
delivered to the intended recipient at the “Address for Notices” specified below
its name on the signature pages hereof or thereof); or, as to any party, at such
other address as shall be designated by such party in a written notice to each
other party. Except as otherwise provided in this Repurchase Agreement and
except for notices given under Section 3 (which shall be effective only on
receipt), all such communications shall be deemed to have been duly given when
transmitted by telecopy or electronic mail or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.

Section 21.       Entire Agreement; Severability. This Repurchase Agreement,
together with the Repurchase Documents, constitute the entire understanding
between Administrative Agent, the Buyers and the Sellers with respect to the
subject matter they cover and shall supersede any existing agreements,
understandings, inducements and conditions, express or implied, oral or written
between the parties containing general terms and conditions for repurchase
transactions involving Purchased Mortgage Loans. By acceptance of this
Repurchase Agreement, Administrative Agent, the Buyers and the Sellers
acknowledge that they have not made, and are not relying upon, any statements,
representations, promises or undertakings not contained in this Repurchase
Agreement. 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.

Section 22.        Non-Assignability. The rights and obligations of the parties
under this Repurchase Agreement and under any Transaction shall not be assigned
by the Sellers without the prior written consent of the Administrative Agent and
the Buyers in accordance with the terms of the Administration Agreement. Subject
to the foregoing, this Repurchase Agreement and any Transactions shall be
binding upon and shall inure to the benefit of the parties and their respective
successors and assigns. Nothing in this Repurchase Agreement express or implied,
shall give to any Person, other than the parties to this Repurchase Agreement
and their successors hereunder, any benefit of any legal or equitable right,
power, remedy or claim under this Repurchase Agreement.

Each Buyer may assign and participate its rights and obligations hereunder, in
accordance with the Administration Agreement and pursuant to an executed
assignment and acceptance by such Buyer and assignee (“Assignment and
Acceptance”) provided that no Seller shall be required to deal with any assignee
until it has received a copy of such executed Assignment and Acceptance.

The Administrative Agent shall maintain, as agent for the Buyers and the
Sellers, a register (the “Register”) on which it will record each Buyer’s rights
hereunder, and each Assignment and Acceptance and participation. The Register
shall include the names and addresses of the Buyer (including all assignees,
successors and participants) and the percentage or portion of such rights and
obligations assigned. Failure to make any such recordation, or any error in such
recordation shall not affect the Sellers’ obligations in respect of such rights.
If a Buyer sells a participation in its rights hereunder, it shall provide the
Administrative Agent (as agent for the Sellers), or maintain as agent of the
Sellers, the information described in this

 

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paragraph and permit the Administrative Agent (as agent for the Sellers) to
review such information as reasonably needed for the Administrative Agent (as
agent for the Sellers) to comply with its obligations under this Repurchase
Agreement or under any applicable Requirement of Law.

Each Buyer may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Section 22, disclose to the
assignee or participant or proposed assignee or participant, as the case may be,
any information relating to the Sellers or any of its Subsidiaries or to any
aspect of the Transactions that has been furnished to such Buyer by or on behalf
of the Sellers or any of its Subsidiaries; provided that such assignee or
participant agrees to hold such information subject to the confidentiality
provisions of this Repurchase Agreement.

Each Buyer may at any time create a security interest in all or any portion of
its rights under this Repurchase Agreement in favor of any Federal Reserve Bank
in accordance with regulations of the Board of Governors of the Federal Reserve
System and any operating circular issued by such Federal Reserve Bank. No such
assignment shall release the assigning buyer from its obligations hereunder.

Section 23.      Tax Treatment. Each party to this Repurchase Agreement
acknowledges that it is its intent for purposes of U.S. federal, state and local
income and franchise taxes, to treat each Transaction as indebtedness of the
Sellers that is secured by the Purchased Mortgage Loans and that the Purchased
Mortgage Loans are owned by the Sellers in the absence of a Default by the
Sellers. All parties to this Repurchase Agreement agree to such treatment and
agree to take no action inconsistent with this treatment, unless required by
law.

Section 24.        Terminability. Each representation and warranty made or
deemed to be made by entering into a Transaction, herein or pursuant hereto
shall survive the making of such representation and warranty, and the
Administrative Agent shall not be deemed to have waived any Default that may
arise because any such representation or warranty shall have proved to be false
or misleading, notwithstanding that the Administrative Agent may have had notice
or knowledge or reason to believe that such representation or warranty was false
or misleading at the time the Transaction was made. Notwithstanding any such
termination or the occurrence of an Event of Default, all of the representations
and warranties and covenants hereunder shall continue and survive. The
obligations of the Sellers under Section 15 hereof shall survive the termination
of this Repurchase Agreement.

Section 25.       GOVERNING LAW. THIS REPURCHASE AGREEMENT SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT
OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.

Section 26.       SUBMISSION TO JURISDICTION; WAIVERS. ADMINISTRATIVE AGENT,
BUYERS, AND EACH SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY:

 

 

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

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

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

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

(e)          THE, ADMINISTRATIVE AGENT, BUYERS, AND EACH SELLER HEREBY
IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS REPURCHASE AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.

Section 27.       No Waivers, etc. No failure on the part of the Administrative
Agent or any Buyer to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under any Repurchase
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under any Repurchase Document preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The remedies provided herein are cumulative and not exclusive of
any remedies provided by law. An Event of Default shall be deemed to have
occurred and be continuing unless expressly waived by the Administrative Agent
in writing or the Administrative Agent has agreed in writing that such Event of
Default has been cured (subject to the Buyers’ approval as contemplated in the
Administration Agreement).

 

 

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Section 28.        Netting. If the Administrative Agent and the Sellers are
“financial institutions” as now or hereinafter defined in Section 4402 of Title
12 of the United States Code (“Section 4402”) and any rules or regulations
promulgated thereunder,

(a)          All amounts to be paid or advanced by one party to or on behalf of
the other under this Repurchase Agreement or any Transaction hereunder shall be
deemed to be “payment obligations” and all amounts to be received by or on
behalf of one party from the other under this Repurchase Agreement or any
Transaction hereunder shall be deemed to be “payment entitlements” within the
meaning of Section 4402, and this Repurchase Agreement shall be deemed to be a
“netting contract” as defined in Section 4402.

(b)          The payment obligations and the payment entitlements of the parties
hereto pursuant to this Repurchase Agreement and any Transaction hereunder shall
be netted as follows. In the event that either party (the “Defaulting Party”)
shall fail to honor any payment obligation under this Repurchase Agreement or
any Transaction hereunder, the other party (the “Nondefaulting Party”) shall be
entitled to reduce the amount of any payment to be made by the Nondefaulting
Party to the Defaulting Party by the amount of the payment obligation that the
Defaulting Party failed to honor.

Section 29.        Periodic Due Diligence Review. Each Seller acknowledges that
the Administrative Agent and the Buyers have the right to perform continuing due
diligence reviews with respect to the Mortgage Loans, for purposes of verifying
compliance with the representations, warranties and specifications made
hereunder, or otherwise, and each Seller agrees that upon reasonable (but no
less than five (5) Business Days) prior notice unless an Event of Default shall
have occurred, in which case no notice is required, to the Sellers, the
Administrative Agent and the Buyers or their authorized representatives will be
permitted during normal business hours to examine, inspect, and make copies and
extracts of, the Mortgage Files and any and all documents, records, agreements,
instruments or information relating to such Mortgage Loans in the possession or
under the control of the Sellers. The Sellers also shall make available to the
Administrative Agent and the Buyers a knowledgeable financial or accounting
officer for the purpose of answering questions respecting the Mortgage Files and
the Mortgage Loans. Without limiting the generality of the foregoing, each
Seller acknowledges that the Administrative Agent and the Buyers may purchase
Mortgage Loans from the Sellers based solely upon the information provided by
the Sellers to the Administrative Agent and the Buyers in the Mortgage Loan
Schedule and the representations, warranties and covenants contained herein, and
that the Administrative Agent and the Buyers, at their option, have the right at
any time to conduct a partial or complete due diligence review on some or all of
the Mortgage Loans purchased in a Transaction, including, without limitation,
ordering broker’s price opinions, new credit reports and new Appraisals on the
related Mortgaged Properties and otherwise regenerating the information used to
originate such Mortgage Loan. The Administrative Agent and the Buyers may
underwrite such Mortgage Loans itself or engage a third party underwriter to
perform such underwriting. Each Seller agrees to cooperate with the
Administrative Agent and the Buyers and any third party underwriter in
connection with such underwriting, including, but not limited to, providing the
Administrative Agent and the Buyers and any third party underwriter with access
to any and all documents, records, agreements, instruments or information
relating to such Mortgage Loans in the possession, or under the control, of the
Sellers. Each Seller further agrees that such Seller shall pay all reasonable
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the Administrative Agent and the Buyers in connection with the Administrative
Agent’s and the Buyers’ activities pursuant to this Section 29 (“Due Diligence
Costs”); provided, that such Due Diligence Costs shall not exceed the Due
Diligence Cap per calendar year unless a Default or Event of Default shall have
occurred, in which event the Administrative Agent and the Buyers shall have the
right to perform due diligence, at the sole expense of Sellers without regard to
the dollar limitation set forth herein.

 

Section 30.

Administrative Agent’s Appointment As Attorney-In-Fact.

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

(i)    in the name of Sellers, or in its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due with respect to any other
Repurchase Assets and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by the
Administrative Agent for the purpose of collecting any and all such moneys due
with respect to any other Repurchase Assets whenever payable;

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

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

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

(c)          Each Seller also authorizes the Administrative Agent, if an Event
of Default shall have occurred, from time to time, to execute, in connection
with any sale provided for in Section 14 hereof, any endorsements, assignments
or other instruments of conveyance or transfer with respect to the Repurchase
Assets.

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

Section 31.       Miscellaneous. (a)  Counterparts. This Repurchase Agreement
may be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument, and any of the parties hereto may
execute this Repurchase Agreement by signing any such counterpart.

(b)          Captions. The captions and headings appearing herein are for
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Repurchase Agreement.

 

(c)

Acknowledgment. Each Seller hereby acknowledges that:

(i)    it has been advised by counsel in the negotiation, execution and delivery
of this Repurchase Agreement and the other Repurchase Documents;

(ii)  neither the Administrative Agent nor any Buyer has any fiduciary
relationship to the Sellers; and

(iii) no joint venture exists between the Administrative Agent or any Buyer on
the one hand and the Sellers on the other hand.

(d)          Documents Mutually Drafted. The Sellers, Administrative Agent and
Buyers agree that this Repurchase Agreement each other Repurchase Document
prepared in connection with the Transactions set forth herein have been mutually
drafted and negotiated by each party, and consequently such documents shall not
be construed against either party as the drafter thereof.

 

 

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Section 32.       Confidentiality. The Administrative Agent, Buyers and Sellers
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
Repurchase Documents or the Transactions contemplated thereby (the “Confidential
Terms”) shall be kept confidential and shall not be divulged to any party (other
than Affiliates and Subsidiaries thereof) without the prior written consent of
such other party except to the extent that (i) 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, (ii) any of the
Confidential Terms are in the public domain other than due to a breach of this
covenant, (iii) in the Event of a Default the Administrative Agent determines in
good faith 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 the Administrative Agent’s rights hereunder, or
(iv) to the extent a Buyer deems necessary or appropriate, in connection with an
assignment or participation under Section 22 of this Repurchase Agreement or
under the Administration 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 Repurchase Document, the
parties hereto 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 Sellers may not disclose (except as provided in clauses (i) through (iv) of
this Section) the name of or identifying information with respect to
Administrative Agent or any Buyer or any pricing terms (including, without
limitation, 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 the Administrative Agent or
applicable Buyer. The provisions set forth in this Section 32 shall survive the
termination of this Repurchase Agreement for a period of one year following such
termination.

Section 33.       Intent. (a)  The parties recognize that each Transaction is a
“repurchase agreement” as that term is defined in Section 101 of Title 11 of the
United States Code, as amended, and constitute “repurchase agreements” under
Sections 546(f), 559 and 362(b)(7) of the Bankruptcy Code (except insofar as the
type of Mortgage Loans subject to such Transaction or the term of such
Transaction would render such definition inapplicable), a “securities contract”
as that term is defined in Section 741 of Title 11 of the United States Code, as
amended (except insofar as the type of assets subject to such Transaction would
render such definition inapplicable) and that all payments hereunder are deemed
“margin payments” or “settlement payments” as defined in Title 11 of the United
States Code.

(b)          It is understood that either party’s right to liquidate Mortgage
Loans delivered to it in connection with Transactions hereunder or to exercise
any other remedies pursuant to Section 14 hereof is a contractual right to
liquidate such Transaction as described in Sections 555, 559 and 561 of Title 11
of the United States Code, as amended.

 

 

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(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 Repurchase 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)          This Repurchase Agreement is intended to be a "repurchase
agreement" and a "securities contract," within the meaning of Section 555 and
Section 559 under the Bankruptcy Code.

Section 34.       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
Section 15 of the Securities Exchange Act of 1934 (“1934 Act”), the Securities
Investor Protection Corporation has 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 Section 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 or the National Credit Union Share
Insurance Fund, as applicable.

Section 35.        Conflicts. In the event of any conflict between the terms of
this Repurchase Agreement and any other Repurchase Document, the documents shall
control in the following order of priority: first, the terms of this Repurchase
Agreement shall prevail and then the terms of the Repurchase Documents shall
prevail.

Section 36.       Authorizations. Any of the persons whose signatures and titles
appear on Schedule II are authorized, acting singly, to act for the Sellers or
Administrative Agent, as the case may be, under this Repurchase Agreement.

 

 

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Section 37.       Acknowledgement of Anti Predatory Lending Practices.
Administrative Agent has in place internal policies and procedures that
expressly prohibit its purchase of any High Cost Mortgage Loan.

Section 38.        General Interpretive Principles. For purposes of this
Repurchase Agreement, except as otherwise expressly provided or unless the
context otherwise requires:

(a)          the terms defined in this Repurchase Agreement have the meanings
assigned to them in this Repurchase Agreement and include the plural as well as
the singular, and the use of any gender herein shall be deemed to include the
other gender;

(b)          accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;

(c)          references herein to “Articles”, “Sections”, “Subsections”,
“Paragraphs”, and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Repurchase Agreement;

(d)          a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;

(e)          the words “herein”, “hereof”, “hereunder” and other words of
similar import refer to this Repurchase Agreement as a whole and not to any
particular provision;

(f)           the term “include” or “including” shall mean without limitation by
reason of enumeration;

(g)          all times specified herein or in any other Repurchase Document
(unless expressly specified otherwise) are Central times unless otherwise
stated; and

(h)          all references herein or in any Repurchase Document to "good faith"
means good faith as defined in Section 1-201(19) of the UCC as in effect in the
State of New York.

Section 39.        Fees. (a)  Facility Fee. Sellers shall pay to Administrative
Agent for the benefit of the Buyers in immediately available funds the Facility
Fee payable in arrears and based on a 360 day year no later than the Payment
Date following the end of each calendar quarter, provided that the portion of
the Facility Fee due for any calendar quarter shall be pro rated for the number
of days during such calendar quarter and provided further that all accrued and
unpaid Facility Fees shall be due and payable on the Termination Date.
Notwithstanding the foregoing, such Facility Fee shall be earned in full on the
Effective Date. Such payment shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to Administrative Agent at
such account designated by Administrative Agent.

(b)          Administrative Fee. Each Seller agrees to pay to the Administrative
Agent such administrative fee (the “Administrative Fee”) for the Administrative
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administering this Repurchase Agreement and the other Repurchase Documents as
may be provided for in a separate agreement between the Sellers and the
Administrative Agent.

Section 40.        Amendments. This Repurchase Agreement may not be amended or
modified, except by a writing signed by the parties hereto and subject to the
terms of the Administration Agreement.

Section 41.        Joint and Several. Each Seller shall be jointly and severally
liable for the full, complete and punctual performance and satisfaction of all
obligations of either Seller under this Repurchase Agreement. Accordingly, each
Seller waives any and all notice of creation, renewal, extension or accrual of
any of the Obligations and notice of or proof of reliance by Administrative
Agent upon such Seller’s joint and several liability. Each Seller waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon such Seller with respect to the Obligations. When pursuing
its rights and remedies hereunder against either Seller, Administrative Agent
may, but shall be under no obligation to, pursue such rights and remedies
hereunder against either Seller or any other Person or against any collateral
security for the Obligations or any right of offset with respect thereto, and
any failure by Administrative Agent to pursue such other rights or remedies or
to collect any payments from such Seller or any such other Person to realize
upon any such collateral security or to exercise any such right of offset, or
any release of such Seller or any such other Person or any such collateral
security, or right of offset, shall not relieve such Seller of any liability
hereunder, and shall not impair or affect the rights and remedies, whether
express, implied or available as a matter of law, of Administrative Agent
against such Seller.

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IN WITNESS WHEREOF, the parties have entered into this Repurchase Agreement as
of the date set forth above.

JPMORGAN CHASE BANK, N.A., as Administrative Agent and a Buyer

 

By:

/s/ MICHAEL W. NICHOLSON                    

Name:  Michael W. Nicholson

 

Title:  

Vice President

Address for Notices:

 

JPMorgan Chase Bank, N.A.

707 Travis

6th Floor North

Houston, Texas 77252

Attention: Michael Nicholson

Telecopier No.: (713) 216-1567

Telephone No.: (713) 216-5335

E-mail: Michael.Nicholson@chase.com

 

 

 

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BNP PARIBAS, as a Buyer

 

By:

/s/ LAURENT VANDERZYPPE                  

Name:  LAURENT VANDERZYPPE

 

Title:  

Managing Director

 

By:

/s/ BARRY S. FOIGENBAUM                      

Name:  Barry S. Foigenbaum

 

Title:  

Managing Director

Address for Notices:

787 Seventh Avenue, 28th Floor

New York, NY 10019

Attention: Kevin Ernst

Telecopier No.: (212) 841-2533

Telephone No.: (212) 471-7061

 

 

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COMMERZBANK AKTIENGESELLSCHAFT NEW YORK BRANCH and GRAND CAYMAN BRANCH, as a
Buyer

By: /s/ JOSEPH J. HAYES                                    

Name:  JOSEPH J. HAYES

 

Title:  

VICE PRESIDENT

By:  /s/ GERARD A. ARAW                                

Name: Gerard A. Araw

 

Title:  

Assistant Vice President

Address for Notices:

2 World Financial Center

New York, NY 10281

Attention: Joseph J. Hayes

Telecopier No.: (212) 266-7629

Telephone No.: (212) 266-7518

 

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US BANK NATIONAL ASSOCIATION, as a Buyer

By: /s/ WILLIAM J. UMSCHEID                        

Name: WILLIAM J. UMSCHEID

 

Title:  

Vice President

Address for Notices:

800 Nicollet Mall

Mail Station BC-MN-HO3B

Minneapolis, MN 55402

 

Attention:

Mr. William Umscheid

Telecopier No.: (612) 303-2253

 

Telephone No.: (612) 303-3575

 

 

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KEYBANK NATIONAL ASSOCIATION, as a Buyer

By: /s/ PAUL HENSON                                        

Name: Paul Henson

 

Title:  

Executive Vice President

Address for Notices:

127 Public Square, OH-01-27-0406

Cleveland, OH 44114

Attention: Craig Platt

Telecopier No.: 216-689-4233

Telephone No.: 216-689-5608

 

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DB STRUCTURED PRODUCTS, INC., as a Buyer

By: /s/ GLENN MINKOFF                                  

Name: GLENN MINKOFF

 

Title:  

DIRECTOR

By: /s/ JOHN MCCARTHY                                  

Name: John McCarthy

 

Title:  

Authorized Signatory

Address for Notices:

60 Wall Street

New York, New York 10005

Attention: Tina Gu

Telecopier No.: 212-797-5150

Telephone No.: 212-250-0357

 

 

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FORTIS CAPITAL CORP., as a Buyer

By: /s/ ALAN KROUK                                          

Name: Alan Krouk

 

Title:  

Managing Director

By: /s/ BARRY CHUNG                                      

Name: Barry Chung

 

Title:  

Senior Vice President

Address for Notices:

520 Madison Avenue, 3rd Floor

New York, NY 10022

Attention: Barry Chung

Telecopier No.: (212) 340-5479

Telephone No.: (212) 340-5320

 

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BANK HAPOALIM BM, as a Buyer

By: /s/ HELEN H. GATESON                              

Name: HELEN H. GATESON

 

Title:  

VICE PRESIDENT

By: /s/ LENROY HACKETT                                

Name: LENROY HACKETT

 

Title:  

FIRST VICE PRESIDENT

Address for Notices:

1177 Avenue of the Americas

New York, NY 10036

Attention: Ms. Helen H. Gateson

Telecopier No.: (212) 782-2382

Telephone No.: (212) 782-2161

 

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SELLER:

HOMEBANC CORP.

By: /s/ JAMES L. KRAKAU                                

Name: James L. Krakau

Title:  Senior Vice President and Treasurer

Address for Notices:

2002 Summit Blvd, Suite 100

Atlanta, Georgia 30319

Attention: Treasurer

Telecopier No.: 404-705-7915

Telephone No: 404-459-7720

E-mail: cmcguire@homebanc.com and

 

jkrakau@homebanc.com

SELLER:

HOMEBANC MORTGAGE CORPORATION

By: /s/ JAMES L. KRAKAU                                

Name: James L. Krakau

Title:  Senior Vice President and Treasurer

Address for Notices:

 

2002 Summit Blvd, Suite 100

Atlanta, Georgia 30319

Attention: Treasurer

Telecopier No.: 404-705-7915

Telephone No: 404-459-7720

E-mail: cmcguire@homebanc.com and

 

jkrakau@homebanc.com

 

 

 

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SCHEDULE I

REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS

Each Seller makes the following representations and warranties to the
Administrative Agent and Buyers with respect to each Mortgage Loan, that as of
the Purchase Date for the purchase of any Purchased Mortgage Loans by the
Administrative Agent for the benefit of the Buyers from the Sellers and as of
the date of this Repurchase Agreement and any Transaction hereunder and at all
times while the Repurchase Documents and any Transaction hereunder is in full
force and effect, except with respect to any Underperforming Mortgage Loan in
which the claimed breach of the representation or warranty is expressly
identified to Buyer in writing pursuant to clause (a) of the definition of
Underperforming Mortgage Loan. For purposes of this Schedule 1 and the
representations and warranties set forth herein, a breach of a representation or
warranty shall be deemed to have been cured with respect to a Mortgage Loan if
and when Sellers have taken or caused to be taken action such that the event,
circumstance or condition that gave rise to such breach no longer adversely
affects such Mortgage Loan. With respect to those representations and warranties
which are made to the best of a Seller’s knowledge, if it is discovered by
Sellers or the Administrative Agent that the substance of such representation
and warranty is inaccurate, notwithstanding a Seller’s lack of knowledge with
respect to the substance of such representation and warranty, such inaccuracy
shall be deemed a breach of the applicable representation and warranty.

(a)          Mortgage Loans as Described. The information set forth in the
related Mortgage Loan Schedule is complete, true and correct;

(b)          Payments Current. All payments required to be made up to the close
of business on the Purchase Date for such Mortgage Loan under the terms of the
Mortgage Note have been made and credited. Except with respect to
Underperforming Mortgage Loans, no payment required under the Mortgage Loan is
30 days or more delinquent nor has any payment under the Mortgage Loan been 30
days or more delinquent at any time since the origination of the Mortgage Loan.
The first Monthly Payment shall be made, or shall have been made, with respect
to the Mortgage Loan on its Due Date or within the grace period, all in
accordance with the terms of the related Mortgage Note;

(c)          No Outstanding Charges. There are no delinquent taxes, ground
rents, water charges, sewer rents, governmental assessments, municipal charges,
insurance premiums, leasehold payments, including assessments payable in future
installments or other outstanding charges affecting the related Mortgaged
Property. The Sellers have not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the Mortgagor,
directly or indirectly, for the payment of any amount required under the
Mortgage Loan, except for interest accruing from the date of the Mortgage Note
or date of disbursement of the Mortgage Loan proceeds, whichever is later, to
the day which precedes by one month the Due Date of the first installment of
principal and/or interest and advances for taxes and insurance in accordance
with RESPA;

 

 

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(d)          Original Terms Unmodified. The terms of the Mortgage Note and the
Mortgage have not been impaired, waived, altered or modified in any respect,
except by written instruments, recorded in the applicable public recording
office if necessary to maintain the lien priority of the Mortgage, and which
have been delivered to the related Custodian; the substance of any such waiver,
alteration or modification has been approved by the insurer under the PMI, if
any, and the title insurer, to the extent required by the related policy, and is
reflected on the related final Mortgage Loan Schedule. No instrument of waiver,
alteration or modification has been executed, and no Mortgagor has been
released, in whole or in part, except in connection with an assumption agreement
approved by the insurer under the PMI Policy, if any, the title insurer, to the
extent required by the policy, and which assumption agreement has been delivered
to the Custodian and the terms of which are reflected in the related Final
Mortgage Loan Schedule;

(e)          No Defenses. The Mortgage Note and the Mortgage are not subject to
any right of rescission, set-off, counterclaim or defense, including the defense
of usury, nor will the operation of any of the terms of the Mortgage Note and
the Mortgage, or the exercise of any right thereunder, render the Mortgage
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and no such
right of rescission, set-off, counterclaim or defense has been asserted with
respect thereto, and no Mortgagor was a debtor of any state or federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated;

(f)           Hazard Insurance. The Mortgaged Property is insured by a fire and
extended perils insurance policy, issued by a Qualified Insurer, and such other
hazards as are customary in the area where the Mortgaged Property is located,
and to the extent required by the Sellers as of the date of origination
consistent with the Underwriting Guidelines, against earthquake and other risks
insured against by Persons operating like properties in the locality of the
Mortgaged Property, in an amount not less than the greatest of (i) 100% of the
replacement cost of all improvements to the Mortgaged Property, (ii) the
outstanding principal balance of the Mortgage Loan, or (iii) the amount
necessary to avoid the operation of any co-insurance provisions with respect to
the Mortgaged Property, and consistent with the amount that would have been
required as of the date of origination in accordance with the Underwriting
Guidelines. If any portion of the Mortgaged Property is in an area identified by
any federal Governmental Authority as having special flood hazards, and flood
insurance is available, a flood insurance policy meeting the current guidelines
of the Federal Emergency Management Agency is in effect with a generally
acceptable insurance carrier, in an amount representing coverage not less than
the least of (1) the outstanding principal balance of the Mortgage Loan (2) the
full insurable value of the Mortgaged Property, and (3) the maximum amount of
insurance available under the National Flood Insurance Act of 1968, as amended
by the Flood Disaster Protection Act of 1974. All such insurance policies
(collectively, the “hazard insurance policy”) contain a standard mortgagee
clause naming Sellers, their successors and assigns (including, without
limitation, subsequent owners of the Mortgage Loan), as mortgagee, and may not
be reduced, terminated or canceled without 30 days’ prior written notice to the
mortgagee. No such notice has been received by Sellers. All premiums on such
insurance policy have been paid. The related Mortgage obligates the Mortgagor to
maintain all such insurance and, at such Mortgagor’s failure to do so,
authorizes the mortgagee to maintain such insurance at the Mortgagor’s cost and
expense and to seek reimbursement therefor from such Mortgagor. Where required
by state law

 

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or regulation, the Mortgagor has been given an opportunity to choose the carrier
of the required hazard insurance, provided the policy is not a “master” or
“blanket” hazard insurance policy covering a condominium, or any hazard
insurance policy covering the common facilities of a planned unit development.
The hazard insurance policy is the valid and binding obligation of the insurer
and is in full force and effect. No Seller has engaged in, nor has any knowledge
of the Mortgagor’s having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
herein, or the validity and binding effect of either including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other Person, and no such unlawful items have been received,
retained or realized the Sellers;

(g)          Compliance with Applicable Law. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit protection,
equal credit opportunity or disclosure laws applicable to the Mortgage Loan have
been complied with, the consummation of the transactions contemplated hereby
will not involve the violation of any such laws or regulations, and the Sellers
shall maintain or shall cause its agent to maintain in its possession, available
for the inspection of Administrative Agent and Buyers, and shall deliver to
Administrative Agent, upon demand, evidence of compliance with all such
requirements;

(h)          No Satisfaction of Mortgage. The Mortgage has not been satisfied,
cancelled, subordinated (other than to the related first lien in the case of a
Second Lien Mortgage Loan) or rescinded, in whole or in part, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole or in
part, nor has any instrument been executed that would effect any such
satisfaction, cancellation, subordination, rescission or release. Sellers have
not waived the performance by the Mortgagor of any action, if the Mortgagor’s
failure to perform such action would cause the Mortgage Loan to be in default,
nor have the Sellers waived any default resulting from any action or inaction by
the Mortgagor;

(i)           Valid First or Second Lien. The Mortgage is a valid, subsisting,
enforceable and perfected (a) with respect to each first lien Mortgage Loan,
first priority lien and first priority security interest or (b) with respect to
a Second Lien Mortgage Loan, second priority lien and second priority security
interest, in each case, on the real property included in the Mortgaged Property,
including all buildings on the Mortgaged Property and all installations and
mechanical, electrical, plumbing, heating and air conditioning systems located
in or annexed to such buildings, and all additions, alterations and replacements
made at any time with respect to the foregoing. The lien of the Mortgage is
subject only to:

(i)    the lien of current real property taxes and assessments not yet due and
payable;

(ii)   covenants, conditions and restrictions, rights of way, easements and
other matters of the public record as of the date of recording acceptable to
prudent mortgage lending institutions generally and specifically referred to in
the ALTA lender’s title policy delivered to the originator of the Mortgage Loan
and (a) referred to or otherwise considered in the Appraisal made for the
originator of

 

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the Mortgage Loan or (b) which do not adversely affect the Appraised Value of
the Mortgaged Property set forth in such Appraisal;

(iii) other matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be provided
by the Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property; and

(iv) with respect to each Mortgage Loan that is a Second Lien Mortgage Loan, a
first lien on the Mortgaged Property.

Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting and enforceable (a) with respect to each first lien Mortgage Loan,
first priority lien and first priority security interest and (b) with respect to
each Second Lien Mortgage Loan, second priority lien and second priority
security interest, in each case, on the property described therein and Sellers
have full right to pledge and assign the same to Administrative Agent for the
benefit of the Buyers. Except with respect to Second Lien Mortgage Loans and
HELOCs that are (a) originated simultaneously with the corresponding first lien
Mortgage Loan or (b) re-subordinated to the first lien at the time of
origination of the first lien, the Mortgaged Property was not, as of the date of
origination or re-subordination of the Mortgage Loan, subject to a mortgage,
deed of trust, deed to secure debt or other security instrument creating a lien
subordinate to the lien of the Mortgage;

(j)           Validity of Mortgage Documents. The Mortgage Note and the Mortgage
and any other agreement executed and delivered by a Mortgagor or guarantor, if
applicable, in connection with a Mortgage Loan are genuine, and each is the
legal, valid and binding obligation of the maker thereof enforceable in
accordance with its terms except as such enforceability may be limited by (i)
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors rights generally and (ii) general principles
of equity. All parties to the Mortgage Note, the Mortgage and any other such
related agreement had legal capacity to enter into the Mortgage Loan and to
execute and deliver the Mortgage Note, the Mortgage and any such agreement, and
the Mortgage Note, the Mortgage and any other such related agreement have been
duly and properly executed by such related parties. No fraud, error, omission,
misrepresentation, negligence or similar occurrence with respect to a Mortgage
Loan has taken place on the part of any Person, including, without limitation,
the Mortgagor, any appraiser, any builder or developer, or any other party
involved in the origination of the Mortgage Loan. The applicable Seller has
reviewed all of the documents constituting the Mortgage File and has made such
inquiries as it deems necessary to make and confirm the accuracy of the
representations set forth herein. To the best of either Seller’s knowledge,
except as disclosed to Administrative Agent in writing, all tax identifications
and property descriptions are legally sufficient; and tax segregation, where
required, has been completed;

(k)          Full Disbursement of Proceeds. The proceeds of the Mortgage Loan
have been fully disbursed to or for the account of the Mortgagor and there is no
obligation for the Mortgagee to advance additional funds thereunder and any and
all requirements as to completion of any on-site or off-site improvement and as
to disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing the Mortgage

 

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Loan and the recording of the Mortgage have been paid, and the Mortgagor is not
entitled to any refund of any amounts paid or due to the Mortgagee pursuant to
the Mortgage Note or Mortgage;

(l)           Ownership. The related Seller has full right to sell the Mortgage
Loan to Administrative Agent, for the benefit of the Buyers, free and clear of
any encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell each Mortgage Loan
pursuant to this Repurchase Agreement and following the sale of each Mortgage
Loan, Administrative Agent, for the benefit of the Buyers, will own such
Mortgage Loan free and clear of any encumbrance, equity, participation interest,
lien, pledge, charge, claim or security interest except any such security
interest created pursuant to the terms of this Repurchase Agreement;

(m)         Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (i) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (ii) either (A) organized
under the laws of such state, (B) qualified to do business in such state, (C) a
federal savings and loan association, a savings bank or a national bank having a
principal office in such state, or (D) not doing business in such state;

(n)          Title Insurance. The Mortgage Loan is covered by either (i) an
attorney’s opinion of title and abstract of title, the form and substance of
which is acceptable to prudent mortgage lending institutions making mortgage
loans in the area wherein the Mortgaged Property is located or (ii) an ALTA
lender’s title insurance policy or other generally acceptable form of policy or
insurance acceptable to Fannie Mae or Freddie Mac and each such title insurance
policy is issued by a title insurer acceptable to Fannie Mae or Freddie Mac and
qualified to do business in the jurisdiction where the Mortgaged Property is
located, insuring Sellers, its successors and assigns, as to the first priority
lien or second priority lien, as applicable, of the Mortgage, as applicable, in
the original principal amount of the Mortgage Loan, subject only to the
exceptions contained in clauses (1), (2) and (3) of paragraph (i) of this
Schedule 1, and in the case of adjustable rate Mortgage Loans, against any loss
by reason of the invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment to the Mortgage Interest
Rate and Monthly Payment. Where required by state law or regulation, the
Mortgagor has been given the opportunity to choose the carrier of the required
lender’s title policy. Additionally, such lender’s title insurance policy
affirmatively insures ingress and egress and against encroachments by or upon
the Mortgaged Property or any interest therein. The title policy does not
contain any special exceptions (other than the standard exclusions) for zoning
and uses and has been marked to delete the standard survey exception or to
replace the standard survey exception with a specific survey reading. Sellers,
its successors and assigns, are the sole insureds of such lender’s title
insurance policy, and such lender’s title insurance policy is valid and remains
in full force and effect and will be in force and effect upon the consummation
of the transactions contemplated by this Repurchase Agreement. No claims have
been made under such lender’s title insurance policy, and no prior holder or
servicer of the related Mortgage, including Sellers, has done, by act or
omission, anything which would impair the coverage of such lender’s title
insurance policy, including without limitation, no unlawful fee, commission,
kickback or other unlawful compensation or value of any kind has been or will

 

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be received, retained or realized by any attorney, firm or other Person, and no
such unlawful items have been received, retained or realized by Sellers;

(o)          No Defaults. There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration, and the Sellers have not waived any default, breach, violation or
event of acceleration;

(p)          No Mechanics’ Liens. There are no mechanics’ or similar liens or
claims which have been filed for work, labor or material (and no rights are
outstanding that under law could give rise to such lien) affecting the related
Mortgaged Property which are or may be liens prior to, or equal or coordinate
with, the lien of the related Mortgage;

(q)          Location of Improvements; No Encroachments. Unless otherwise
affirmatively insured by a lender’s title insurance policy, all improvements
which were considered in determining the Appraised Value of the related
Mortgaged Property lay wholly within the boundaries and building restriction
lines of the Mortgaged Property, and no improvements on adjoining properties
encroach upon the Mortgaged Property. No improvement located on or being part of
the Mortgage Property is in violation of any applicable zoning law or
regulation;

(r)           Origination. The Mortgage Loan was originated by or in conjunction
with a mortgagee approved by the Secretary of Housing and Urban Development
pursuant to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or similar banking institution which is supervised and examined by a federal or
state authority. The Mortgage Interest Rate is adjusted, with respect to
adjustable rate Mortgage Loans, on each Interest Rate Adjustment Date to equal
the Index plus the Gross Margin (rounded up or down to the nearest .125%),
subject to the Mortgage Interest Rate Cap. Other than with respect to an Option
ARM, the Mortgage Note is payable on the first day of each month in equal
monthly installments of principal and/or interest, which installments of
interest, with respect to adjustable rate Mortgage Loans, are subject to change
due to the adjustments to the Mortgage Interest Rate on each Interest Rate
Adjustment Date, with interest calculated and payable in arrears, sufficient to
amortize the Mortgage Loan fully by the stated maturity date, (i) (other than
Mortgage Loans underwritten to Agency guidelines) over an original term of not
more than 30 years from commencement of amortization and (ii) with respect to
Mortgage Loan underwritten to Agency guidelines, 40 years from the commencement
of amortization. No Second Lien Mortgage Loan has a balloon payment due prior to
the date which is 30 years following the origination date and, in the case of
interest only loans, have no principal amortization for a period of not more
than 10 years and then fully amortize over a term which ends not more than 30
years from the date of the Mortgage Note. Other than with respect to an Option
ARM, the Due Date of the first payment under the Mortgage Note is no more than
60 days from the date of the Mortgage Note;

(s)           Payment Provisions. Other than with respect to an Option ARM or
other interest only adjustable rate mortgage, principal payments on the Mortgage
Loan commenced no more than sixty days after the proceeds of the Mortgage Loan
were disbursed. The Mortgage

 

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Loan bears interest at the Mortgage Interest Rate. With respect to each Mortgage
Loan, the Mortgage Note is payable on the first day of each month in Monthly
Payments, which, in the case of a fixed rate Mortgage Loan, are sufficient to
fully amortize the original principal balance over the original term thereof and
to pay interest at the related Mortgage Interest Rate, and, in the case of an
adjustable rate Mortgage Loan, are changed on each Interest Rate Adjustment
Date, and in any case, are sufficient to fully amortize the original principal
balance over the original term thereof and to pay interest at the related
Mortgage Interest Rate. Other than with respect to an Option ARM or other
interest only adjustable rate mortgage, the Mortgage Note does not permit
negative amortization. With respect to HELOCs, the related Mortgagor may request
advances up to the Credit Limit within the first ten years following the date of
origination; each HELOC will amortize within thirty (30) years from the date of
origination;

(t)           Customary Provisions. The Mortgage Note has a stated maturity. The
Mortgage contains customary and enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for the realization against
the Mortgaged Property of the benefits of the security provided thereby,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee’s sale, and (ii) otherwise by judicial foreclosure. Upon default by a
Mortgagor on a Mortgage Loan and foreclosure on, or trustee’s sale of, the
Mortgaged Property pursuant to the proper procedures, the holder of the Mortgage
Loan will be able to deliver good and merchantable title to the Mortgaged
Property. There is no homestead or other exemption available to a Mortgagor
which would interfere with the right to sell the Mortgaged Property at a
trustee’s sale or the right to foreclose the Mortgage. The Mortgage Note and
Mortgage are on forms acceptable to Freddie Mac or Fannie Mae;

(u)          Collection Practices; Escrow Deposits; Interest Rate Adjustments.
The origination and collection practices used by the Sellers with respect to
each Mortgage Note and Mortgage have been in all respects legal, proper, prudent
and customary in the mortgage origination and servicing industry. The Mortgage
Loan has been serviced by the Sellers and any predecessor servicer in accordance
with the terms of the Mortgage Note. With respect to escrow deposits and Escrow
Payments, if any, all such payments are in the possession of, or under the
control of, the Sellers and there exist no deficiencies in connection therewith
for which customary arrangements for repayment thereof have not been made. No
escrow deposits or Escrow Payments or other charges or payments due the Sellers
have been capitalized under any Mortgage or the related Mortgage Note and no
such escrow deposits or Escrow Payments are being held by the Sellers for any
work on a Mortgaged Property which has not been completed. All Mortgage Interest
Rate adjustments have been made in strict compliance with state and federal law
and the terms of the related Mortgage Note. Any interest required to be paid
pursuant to state and local law has been properly paid and credited. The
Mortgage and related Mortgage Note contain customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security
provided thereby, including, (a) in the case of a Mortgage designated as a deed
of trust, by trustee’s sale, and (b) otherwise by judicial foreclosure.

(v)          Mortgaged Property Undamaged. The Mortgaged Property is free of
damage by fire, earthquake or earth movement, windstorm, flood, tornado or other
casualty and waste, and there is no proceeding pending for the total or partial
condemnation thereof;

 

 

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(w)         Customary Provisions. The Mortgaged Property has not been subject to
any bankruptcy proceeding or foreclosure proceeding and the Mortgagor has not
filed for protection under applicable bankruptcy laws. The Mortgagor has not
notified the Sellers and Sellers have no knowledge of any relief requested or
allowed to the Mortgagor under the Servicemembers Civil Relief Act of 2003;

(x)          Conformance with Underwriting Standards. The Mortgage Loan was
underwritten in accordance with the Underwriting Guidelines in effect at the
time the Mortgage Loan was originated;

(y)          No Additional Collateral. The Mortgage Note is not and has not been
secured by any collateral except the lien of the corresponding Mortgage on the
Mortgaged Property and the security interest of any applicable security
agreement or chattel mortgage referred to in (j) above;

(z)          Appraisal. The Appraisal (if required) of the related Mortgaged
Property satisfies the standards of Fannie Mae and Freddie Mac and was made and
signed, prior to the approval of the Mortgage Loan application, by a qualified
appraiser, duly appointed by the Sellers, who had no interest, direct or
indirect in the Mortgaged Property or in any loan made on the security thereof,
whose compensation is not affected by the approval or disapproval of the
Mortgage Loan and who met the minimum qualifications of Fannie Mae and Freddie
Mac. Each Appraisal of the Mortgage Loan was made in accordance with the
requirements of Title XI of the Federal Institutions Reform, Recovery, and
Enforcement Act of 1989 and the regulations promulgated thereunder, all as in
effect on the date the Mortgage Loan was originated. To the extent an AVM is
permitted pursuant to the Underwriting Guidelines, such AVM satisfies the
requirements set forth in such Underwriting Guidelines;

(aa)        Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves and is named in the Mortgage, and no
fees or expenses are or will become payable by the Administrative Agent to the
trustee under the deed of trust, except in connection with a trustee’s sale
after default by the Mortgagor;

(bb)        No Buydown Provisions; No Graduated Payments or Contingent
Interests. Other than as permitted pursuant to the Underwriting Guidelines, no
Mortgage Loan contains provisions pursuant to which Monthly Payments are
(a) paid or partially paid with funds deposited in any separate account
established by the Sellers, the Mortgagor, or anyone on behalf of the Mortgagor,
(b) paid by any source other than the Mortgagor or (c) contains any other
similar provisions which may constitute a “buydown” provision. The Mortgage Loan
is not a graduated payment mortgage loan and the Mortgage Loan does not have a
shared appreciation or other contingent interest feature;

(cc)        Mortgagor Acknowledgment. The Mortgagor has executed a statement to
the effect that the Mortgagor has received all disclosure materials required by
applicable law with respect to the making of fixed rate mortgage loans and
adjustable rate mortgage loans i and rescission materials with respect to
Refinanced Mortgage Loans, and such statement is and will remain in the Mortgage
File;

 

 

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(dd)        Construction Loans. Except for Construction to Permanent Loans, no
Mortgage Loan was made in connection with the construction or rehabilitation of
a Mortgaged Property. No Mortgage Loan was made in connection with facilitating
a trade-in or exchange of a Mortgaged Property;

(ee)        Acceptable Investment. No Seller has any knowledge of any
circumstances or condition with respect to the Mortgage, the Mortgaged Property,
the Mortgagor or the Mortgagor’s credit standing that can reasonably be expected
to cause the Mortgage Loan to be an unacceptable investment, cause the Mortgage
Loan to become delinquent, or adversely affect the value of the Mortgage Loan;

(ff)         LTV, PMI Policy. No Mortgage Loan has an LTV or CLTV in excess of
100% except for Conforming Mortgage Loans, FHA Loans or VA Loans. No Option ARM
has an LTV or CLTV of greater than 95%. No Non-Owner Occupied Mortgage Loan has
an LTV of greater than 90%. No Construction to Permanent Mortgage Loan has an
LTV of greater than 95%. Each Mortgage Loan (other than a Subprime Mortgage
Loan) with an LTV at origination in excess of 80% is and will be subject to a
PMI Policy, issued by a Qualified Insurer, which insures that portion of the
Mortgage Loan in excess of the portion of the Appraised Value of the Mortgaged
Property required by the Underwriting Guidelines. All provisions of such PMI
Policy have been and are being complied with, such policy is in full force and
effect, and all premiums due thereunder have been paid. Any Mortgage subject to
any borrower-paid PMI Policy obligates the Mortgagor thereunder to maintain such
insurance and to pay all premiums and charges in connection therewith. The
Mortgage Interest Rate for the Mortgage Loan does not include any such insurance
premium;

(gg)        Capitalization of Interest. Other than with respect to an Option
ARM, the Mortgage Note does not by its terms provide for the capitalization or
forbearance of interest;

(hh)        No Equity Participation. No document relating to the Mortgage Loan
provides for any contingent or additional interest in the form of participation
in the cash flow of the Mortgaged Property or a sharing in the appreciation of
the value of the Mortgaged Property. The indebtedness evidenced by the Mortgage
Note is not convertible to an ownership interest in the Mortgaged Property or
the Mortgagor and except with respect to Second Lien Mortgage Loans, neither
Seller has financed or owns directly or indirectly, any equity of any form in
the Mortgaged Property or the Mortgagor;

(ii)          Proceeds of Mortgage Loan. The proceeds of the Mortgage Loan have
not been and shall not be used to satisfy, in whole or in part, any debt owed or
owing by the Mortgagor to the Sellers or any Affiliate or correspondent of the
Sellers, except in connection with a refinanced Mortgage Loan;

(jj)          Origination Date. Other than with respect to Seasoned Mortgage
Loans, the origination date is no earlier than ninety (90) days prior to the
related Purchase Date;

(kk)        Manufactured Home. Each Manufactured Home (i) has been rendered
permanently immobile, (ii) ownership is not represented by or based on a
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similar device, (iii) has been permanently affixed to the earth and
(iv) constitutes real property under the applicable law of the jurisdiction in
which it is located;

(ll)          No Exception. The Custodian has not noted any material exceptions
on an Exception Report with respect to the Mortgage Loan which would materially
adversely affect the Mortgage Loan or a Buyer’s interest in the Mortgage Loan;

(mm)     Occupancy of Mortgaged Property. The Mortgaged Property is lawfully
occupied under applicable law; all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions of the
Mortgaged Property and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy, have been made or
obtained from the appropriate authorities;

(nn)        No Misrepresentation or Fraud. No error, omission,
misrepresentation, negligence, fraud or similar occurrence with respect to a
Mortgage Loan has taken place on the part of any person, including without
limitation the Mortgagor, any appraiser, any builder or developer, or any other
party involved in the origination of the Mortgage Loan or in the application of
any insurance in relation to such Mortgage Loan;

(oo)        Transfer of Mortgage Loans. Except with respect to Mortgage Loans
registered with MERS, the Assignment of Mortgage is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;

(pp)        Consolidated Future Advances. Any principal advances made to the
Mortgagor prior to the Purchase Date have been or, in the case of HELOCs, will
be, consolidated with the outstanding principal amount secured by the Mortgage,
and the secured principal amount, as consolidated, bears a single interest rate
and single repayment term. The lien of the Mortgage securing the consolidated
principal amount is expressly insured as having first lien or second lien, as
applicable, priority by a title insurance policy, an endorsement to the policy
insuring the mortgagee’s consolidated interest or by other title evidence
acceptable to Fannie Mae and Freddie Mac. The consolidated principal amount does
not exceed the original principal amount or, in the case of HELOCs, the Credit
Limit of the Mortgage Loan;

(qq)        No Balloon Payment. Other than with respect to a Second Lien
Mortgage Loan or an Option ARM, no Mortgage Loan has a balloon payment feature;

 

(rr)

No Cooperatives. The Mortgaged Property is not a cooperative unit;

 

(ss)

Reserved;

 

(tt)          Calculation of Interest. Interest on each Mortgage Loan is
calculated on the basis of a 360-day year consisting of twelve 30-day months
other than HELOCs, which are calculated on the basis of a 365-day year
consisting of twelve 30-day months;

(uu)        Environmental Matters. The Mortgaged Property is in material
compliance with all applicable local, state and federal environmental laws,
rules or regulations pertaining to environmental hazards including, without
limitation, asbestos, and Sellers nor, to any Seller’s knowledge, the related
Mortgagor, has not received any notice of any violation or

 

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potential violation of such law nor is there any pending action or proceeding
directly involving any Mortgaged Property of which the Sellers are aware in
which compliance with any environmental law, rule or regulation is an issue;

(vv)        Predatory Lending Regulations; High Cost Loans. No Mortgage Loan
(a) is subject to Section 226.32 of Regulation Z or any similar state law
(relating to high interest rate credit/lending transactions); (b) is a High Cost
Mortgage Loan; or (c) is secured by Mortgaged Property located in the State of
Georgia, which was originated on or after October 1, 2002 through March 6, 2003
and is subject to the Georgia Fair Lending Act.

(ww)     Location and Type of Mortgaged Property. The Mortgaged Property is a
fee simple property located in the state identified in the Mortgage Loan
Schedule and consists of a parcel of real property with a detached single family
residence erected thereon, or a two-to-four family dwelling and no residence or
dwelling is a mobile home or cooperative housing. No portion of the Mortgaged
Property is used for commercial purposes nor is the Mortgage Loan a commercial
Mortgage Loan;

(xx)        Due on Sale. The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage Loan
in the event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder;

(yy)        Servicemembers Civil Relief Act of 2003. The Mortgagor has not
notified the Sellers, and the Sellers have no knowledge of any relief requested
or allowed to the Mortgagor under the Servicemembers Civil Relief Act of 2003;

(zz)        No Denial of Insurance. No action, inaction, or event has occurred
and no state exists or has existed that has resulted or will result in the
exclusion from, denial of, or defense to coverage under any applicable pool
insurance policy, special hazard insurance policy, PMI Policy or bankruptcy
bond, irrespective of the cause of such failure of coverage. In connection with
the placement of any such insurance, no commission, fee, or other compensation
has been or will be received by the Sellers or any designee of the Sellers or
any corporation in which the Sellers or any officer, director, or employee had a
financial interest at the time of placement of such insurance. The Sellers have
caused or will cause to be performed any and all acts required to preserve the
rights and remedies of the Administrative Agent in any insurance policies
applicable to the Mortgage Loans including, without limitation, any necessary
notifications of insurers, assignments of policies or interests therein, and
establishments of coinsured, joint loss payee and mortgagee rights in favor of
the Administrative Agent;

 

(aaa)

Reserved;

(bbb)     Flood Certification Contract. The Sellers have obtained a life of
loan, transferable flood certification contract for each Mortgage Loan and such
contract is assignable without penalty, premium or cost to the Administrative
Agent;

(ccc)      Recordation. Each original Mortgage was or is in the process of being
recorded and all subsequent assignments of the original Mortgage (other than the
assignment to the Administrative Agent for the benefit of the Buyers) have been
or are in the process of being

 

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recorded in the appropriate jurisdictions wherein such recordation is necessary
to perfect the lien thereof as against creditors of the Sellers;

(ddd)     Simple Interest Mortgage Loans. Other than HELOCs, none of the
Mortgage Loans are simple interest Mortgage Loans;

(eee)      Documents Genuine. Such Purchased Mortgage Loan and all accompanying
collateral documents are complete and authentic and all signatures thereon are
genuine. Such Purchased Mortgage Loan is a “closed” loan fully funded by the
Sellers and held in Sellers’ name;

(fff)        Bona Fide Loan. Such Purchased Mortgage Loan arose from a bona fide
loan, complying with all applicable State and Federal laws and regulations, to
persons having legal capacity to contract and is not subject to any defense,
set-off or counterclaim;

(ggg)     Other Encumbrances. To the best of any Seller’s knowledge, any
property subject to any security interest given in connection with such
Purchased Mortgage Loan is not subject to any other encumbrances other than a
stated first mortgage, if applicable, and encumbrances which may be allowed
under the Underwriting Guidelines;

(hhh)     Description. Each Purchased Mortgage Loan conforms to the description
thereof as set forth on the related Mortgage Loan Schedule delivered to the
Custodian and Administrative Agent;

(iii)        Located in U.S. No collateral (including, without limitation, the
related real property and the dwellings thereon and otherwise) relating to a
Purchased Mortgage Loan is located in any jurisdiction other than in one of the
fifty (50) states of the United States of America or the District of Columbia;

(jjj)         Prepayment Penalty. With respect to each Mortgage Loan that has a
prepayment penalty feature, each such prepayment penalty is enforceable and will
be enforced by the Sellers, and each prepayment penalty is permitted pursuant to
federal, state and local law;

(kkk)     Servicing Practices. Each Mortgage Loan has been serviced in
compliance in all material respects with Accepted Servicing Practices; and

(lll)         Single-Premium Credit Life Insurance. None of the proceeds of the
Mortgage Loan were used to finance single-premium credit insurance policies.

(mmm)     Government Subsidy Program. No Mortgage Loan is subject to any
governmental subsidy program;

(nnn)     Regarding the Mortgagor. Any Mortgage Loan made to a corporation,
partnership, trust or any other entity that is not a natural person is
guaranteed by a natural person;

(ooo)     Warehousing. No Mortgage Loan (other than a Mortgage Loan that has
been modified in lieu of refinancing or for which such modification did not cure
an existing default or defect) was previously warehoused with any other Person,
whether under a lending

 

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arrangement or an arrangement involving a sale in contemplation of a subsequent
further sale to (or securitization by) a secondary mortgage market purchaser.

(ppp)     Repurchase. No Mortgage Loan was repurchased by Sellers because of any
fatal underwriting or documentary defect or deficiency unless agreed to in
writing by the Administrative Agent.

 

(qqq)

FICO. No Mortgage Loan has a FICO score below 500.

(rrr)        Outstanding Principal Balance. No Mortgage Loan has an outstanding
principal balance of greater than $2,500,000.

(sss)       Construction to Permanent Mortgage Loans. No Construction to
Permanent Mortgage Loan is a homebuilder loan or a Non-Owner Occupied Mortgage
Loan.

(ttt)        Takeout Commitments and Interest Rate Protection Agreements. Each
Mortgage Loan (other than a Subprime Mortgage Loan, a Construction to Permanent
Mortgage Loan or an Option ARM) is either (i) subject to a Takeout Commitment or
(ii) subject to an Interest Rate Protection Agreement.

 

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SCHEDULE II

AUTHORIZED REPRESENTATIVES

HOMEBANC CORP. NOTICES

Name:   James L. Krakau

Address:

2002 Summit Blvd., Suite 100

Atlanta, Georgia 30319

Telephone:   (404) 459-7720

Facsimile:     (404) 705-7915

With a copy to:

Name:   Charles W. McGuire

Address:

2002 Summit Blvd., Suite 100

Atlanta, Georgia 30319

Telephone:   (404) 459-7602

Facsimile:     (404) 705-2309

HOMEBANC CORP. AUTHORIZATIONS

Any of the persons whose signatures and titles appear below are authorized,
acting singly, to act for HB CORP. under this Repurchase Agreement:

Name

Title

Signature

Kevin D. Race

President, Chief Operating Officer and Chief Financial Officer

 

Nicolas V. Chater

Executive Vice President and Deputy CFO

 

Debra F. Watkins

Executive Vice President

 

 

John Kubiak

Senior Vice President and Chief Investment Officer

 

Charles W. McGuire

Executive Vice President, General Counsel and Secretary

 

James L. Krakau

Senior Vice President and Treasurer

 

 

Alana L. Griffin

Senior Vice President, Assistant General Counsel and Assistant Secretary

 

Pamela Detrow

Senior Vice President and Assistant Secretary

 

Gregory Herron

Senior Vice President and Assistant Treasurer

 

Yancy Lockie

Vice President

 

 

Justina Jenkins

Authorized Employee

 

 

 

 

 

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AUTHORIZED REPRESENTATIVES

HOMEBANC MORTGAGE CORPORATION NOTICES

Name:   James L. Krakau

Address:

2002 Summit Blvd., Suite 100

Atlanta, Georgia 30319

Telephone:   (404) 459-7720

Facsimile:     (404) 705-7915

With a copy to:

Name:   Charles W. McGuire

Address:

2002 Summit Blvd., Suite 100

Atlanta, Georgia 30319

Telephone:   (404) 459-7602

Facsimile:     (404) 705-2309

HOMEBANC MORTGAGE CORPORATION AUTHORIZATIONS

Any of the persons whose signatures and titles appear below are authorized,
acting singly, to act for HMC under this Repurchase Agreement:

Name

Title

Signature

Kevin D. Race

 

President and Chief Operating Officer

 

Nicolas V. Chater

Executive Vice President and Chief Financial Officer

 

Debra F. Watkins

 

Executive Vice President

 

John Kubiak

 

Senior Vice President

 

James L. Krakau

 

Senior Vice President and Treasurer

 

Alana L. Griffin

Senior Vice President and Assistant Secretary

 

Pamela Detrow

Senior Vice President and Assistant Secretary

 

Gregory Herron

Senior Vice President and Assistant Treasurer

 

Cameron Beane

 

Vice President

 

Yancy Lockie

 

Vice President

 

Kortney Rollinger

 

Authorized Employee

 

Marilyn Eberhardt

 

Vice President

 

 

 

 

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Heidi Buck

 

Limited Vice President

 

Janet Miller

 

Limited Vice President

 

Scott Mudge

 

Limited Vice President

 

Syreeta Butler

 

Limited Vice President

 

Teresa Crowell

 

Limited Vice President

 

Angeline McDonald

 

Limited Vice President

 

Dorothy Cooper

 

Limited Vice President

 

 

 

 

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ADMINISTRATIVE AGENT NOTICES

Name:   Michael Nicholson

Address:      JPMorgan Chase Bank, N.A.
707 Travis
6th Floor North
Houston, Texas 77252

Title:     Managing Director

Telephone:   (713) 216-5335

Facsimile:     (713) 216-1567

 

ADMINISTRATIVE AGENT AUTHORIZATIONS

Any of the persons whose signatures and titles appear below, including any other
authorized officers, are authorized, acting singly, to act for Administrative
Agent under this Repurchase Agreement:

Name

Title

Signature

Michael Nicholson

 

 

Ben Middleberg

 

 

 

 

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SCHEDULE III

BUYERS

JPMorgan Chase Bank, N.A.

DB Structured Products, Inc.

Fortis Capital Corp.

Bank Hapoalim B.M.

KeyBank National Association

Commerzbank Aktiengesellschaft New York and Grand Cayman Branch

BNP Paribas

US Bank National Association

SCHEDULE IV

QUALIFIED SUBORDINATED DEBT

 

Trust Preferred Securities: Junior Subordinated Debentures to HMB Capital Trust
I in the amount of $51,547,000

 

Trust Preferred Securities: Junior Subordinated Debentures to HMB Capital Trust
IV in the amount of $82,475,000

 

Trust Preferred Securities: Junior Subordinated Debentures to HMB Capital Trust
V in the amount of $41,238,000

 

 

 

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