Exhibit 10.17.1

REPURCHASE AGREEMENT

By and Among:

AMERICAN HOME MORTGAGE CORP.,

As a Seller,

AMERICAN HOME MORTGAGE SERVICING, INC.,

As a Seller and as the Servicer

AMERICAN HOME MORTGAGE ACCEPTANCE, INC.,

As a Seller,

AMERICAN HOME MORTGAGE INVESTMENT CORP.,

As a Seller,

LA FAYETTE ASSET SECURITIZATION LLC,

As an Issuer,

AMSTERDAM FUNDING CORPORATION,

As an Issuer,

BARTON CAPITAL LLC,

As an Issuer,

PARK AVENUE RECEIVABLES COMPANY, LLC

As an Issuer,

STARBIRD FUNDING CORPORATION,

As an Issuer,

CALYON NEW YORK BRANCH,

As a Bank, a Managing Agent and as the Administrative Agent,

LLOYDS TSB BANK PLC,

As a Bank,

ABN AMRO BANK N.V.,

As a Bank and as a Managing Agent,

SOCIETE GENERALE,

As a Bank and as a Managing Agent,

JPMORGAN CHASE BANK, N.A.

As a Bank and as a Managing Agent,

and

BNP PARIBAS,

As a Bank and as a Managing Agent

Dated as of November 21, 2006

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TABLE OF CONTENTS

 

         Page

ARTICLE I GENERAL TERMS

   3

            1.1.

  Certain Definitions.    3

            1.2.

  Other Definitional Provisions.    33

ARTICLE II TRANSACTIONS, REPURCHASES AND MARGIN MAINTENANCE

   34

            2.1.

  Maximum Facility Amount.    34

            2.2.

  [Reserved].    36

            2.3.

  Notice and Manner of Obtaining Purchases.    36

            2.4.

  Fees.    38

            2.5.

  Repurchases, Prepayments and Margin Maintenance.    38

            2.6.

  Business Days.    40

            2.7.

  Payment Procedures.    40

            2.8.

  The Reserve Account.    44

            2.9.

  Price Differential Allocations.    46

            2.10.

  Price Differential Rates.    46

            2.11.

  Quotation of Rates.    46

            2.12.

  Default Rate.    47

            2.13.

  Price Differential Recapture.    47

            2.14.

  Price Differential Calculations.    47

            2.15.

  Price Differential Calculation Period.    47

            2.16.

  Additional Costs.    49

            2.17.

  Additional Price Differential on Purchases Bearing a Eurodollar Rate.    50

            2.18.

  Consequential Loss.    51

            2.19.

  Taxes.    51

            2.20.

  Replacement Banks.    53

            2.21.

  LIBOR Determination Date.    53

            2.22.

  Repurchase or Substitution Procedures.    54

            2.23.

  Intent of the Sellers and the Purchasers.    55

            2.24.

  No Segregation of Assets.    55

            2.25.

  Substitution.    56

ARTICLE III MORTGAGE ASSETS

   57

            3.1.

  Mortgage Assets.    57

            3.2.

  Delivery of Mortgage Assets to Custodian.    57

            3.3.

  Transfer and Shipping of Mortgage Assets.    59

            3.4.

  Releases of Mortgage Notes for Servicing.    62

            3.5.

  Mortgage Asset Reporting.    62

            3.6.

  Hedge Reporting.    62

            3.7.

  Servicer Monthly Reporting.    62

            3.8.

  Approved Take-Out Investor Reporting.    63

ARTICLE IV CONDITIONS PRECEDENT

   63

            4.1.

  Initial Purchase under this Agreement.    63

 

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            4.2.

  All Purchases.    64

ARTICLE V REPRESENTATIONS AND WARRANTIES

   65

            5.1.

  Representations of the Sellers and the Servicer.    65

            5.2.

  Survival of Representations.    71

ARTICLE VI AFFIRMATIVE COVENANTS

   72

            6.1.

  Financial Statements and Reports.    72

            6.2.

  Taxes and Other Liens.    73

            6.3.

  Maintenance.    74

            6.4.

  Further Assurances.    74

            6.5.

  Compliance with Laws.    74

            6.6.

  Insurance.    74

            6.7.

  Accounts and Records.    75

            6.8.

  Periodic Visits.    75

            6.9.

  Notice of Certain Events.    76

            6.10.

  Performance of Certain Obligations.    76

            6.11.

  Use of Proceeds; Margin Stock.    77

            6.12.

  Notice of Default.    77

            6.13.

  [Reserved].    77

            6.14.

  Compliance with Material Agreements.    77

            6.15.

  Operations and Properties.    77

            6.16.

  Hedges.    77

            6.17.

  Full Disclosure.    77

            6.18.

  Environmental Compliance.    78

            6.19.

  Closing Instructions.    78

            6.20.

  Special Affirmative Covenants Concerning Mortgage Assets.    78

ARTICLE VII NEGATIVE COVENANTS

   79

            7.1.

  Limitations on Mergers and Acquisitions.    79

            7.2.

  Fiscal Year.    79

            7.3.

  [Reserved].    79

            7.4.

  Use of Proceeds.    79

            7.5.

  Actions with Respect to Mortgage Assets.    79

            7.6.

  Liens.    80

            7.7.

  Employee Benefit Plans.    80

            7.8.

  Change of Principal Office.    80

            7.9.

  No Commercial, A&D, Etc. Loans.    80

            7.10.

  [Reserved].    81

            7.11.

  [Reserved].    81

            7.12.

  Deposits to Collection Account.    81

            7.13.

  Transaction Documents.    81

            7.14.

  [Reserved].    81

            7.15.

  Delivery of Wet Loans.    81

            7.16.

  Minimum Tangible Net Worth.    81

            7.17.

  Positive Net Income of Performance Guarantor.    81

            7.18.

  Collateral Value to Adjusted Consolidated Funded Debt Ratio.    82

 

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            7.19.

  Approved Take-Out Investor Concentration Limits.    82

ARTICLE VIII EVENTS OF DEFAULT

   82

            8.1.

  Nature of Event.    82

            8.2.

  Default Remedies.    86

            8.3.

  [Reserved]    88

            8.4.

  Waivers of Notice, Etc.    88

ARTICLE IX THE ADMINISTRATIVE AGENT

   88

            9.1.

  Authorization.    88

            9.2.

  Reliance by Agent.    89

            9.3.

  Agent and Affiliates.    89

            9.4.

  Purchaser Decision.    89

            9.5.

  Rights of the Administrative Agent.    90

            9.6.

  Indemnification of Administrative Agent.    90

            9.7.

  UCC Filings.    90

            9.8.

  Notices and Payments to Managing Agents.    90

ARTICLE X INDEMNIFICATION

   91

            10.1.

  Indemnities by the Sellers.    91

ARTICLE XI ADMINISTRATION AND COLLECTION OF MORTGAGE LOANS

   91

            11.1.

  Designation of Servicer.    91

            11.2.

  Duties of Servicer.    92

            11.3.

  Certain Rights of the Administrative Agent.    92

            11.4.

  Rights and Remedies.    93

            11.5.

  Indemnities by the Servicer.    93

ARTICLE XII THE MANAGING AGENTS

   94

            12.1.

  Authorization.    94

            12.2.

  Reliance by Agent.    95

            12.3.

  Agent and Affiliates.    95

            12.4.

  Notices.    96

            12.5.

  Purchaser Decision.    96

            12.6.

  Indemnification of Managing Agents.    96

ARTICLE XIII MISCELLANEOUS

   96

            13.1.

  Notices.    96

            13.2.

  Amendments, Etc.    100

            13.3.

  Invalidity.    101

            13.4.

  Restrictions on Informal Amendments.    101

            13.5.

  Cumulative Rights.    101

            13.6.

  Construction; Governing Law.    101

            13.7.

  Price Differential.    101

            13.8.

  Right of Offset.    102

            13.9.

  Successors and Assigns.    103

            13.10.

  Survival of Termination.    104

 

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            13.11.

  Exhibits.    104

            13.12.

  Titles of Articles, Sections and Subsections.    105

            13.13.

  Counterparts.    105

            13.14.

  No Proceedings.    105

            13.15.

  Confidentiality.    105

            13.16.

  Recourse Against Directors, Officers, Etc.    106

            13.17.

  Waiver of Jury Trial.    106

            13.18.

  Consent to Jurisdiction; Waiver of Immunities.    106

            13.19.

  Costs, Expenses and Taxes.    107

            13.20.

  Entire Agreement.    107

            13.21.

  Excess Funds.    108

            13.22.

  Previous Agreements.    108

 

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SCHEDULES AND EXHIBITS

 

Schedule I   Bank Commitments and Percentages - §3.2(b) Schedule II   Approved
Take-Out Investors - §3.2(b) Schedule III   Litigation - §5.1(g)(i) Exhibit A  
Form of Assignment and Acceptance - §1.1 Exhibit B   Form of Subordination
Agreement - §4.1(f) Exhibit C   Form of Purchase Report - §2.3(a)(i) Exhibit D  
Custodial Agreement - §1.1 Exhibit D-1   Definitions - §1 Exhibit D-3   Form of
Collection Account Control Agreement - §3.1(b) Exhibit D-4   Form of Assignment
- §3.1(c) and §3.2(a) Exhibit D-5   Form of Transfer Request - § 3.3(a)
Exhibit D-5A   Form of Shipping Request - §3.3(b) Exhibit D-6(a)   Form of
Bailee and Security Agreement Letter for Approved Take-Out Investors - §
3.4(b)(i) Exhibit D-6(b)   Form of Bailee and Security Agreement Letter for Pool
Custodian - § 3.4(b)(i) Exhibit D-7   Form of Trust Receipt and Security
Agreement - §3.5 Exhibit D-8   Custodian Daily Report - §3.5 Exhibit D-9  
Purchase Report Exhibit D-10   UCC Financing Statements - §3.1(d) Exhibit D-11  
Collection Account Release Notice Exhibit D-12   Assignment of Trade Exhibit E  
[Reserved] Exhibit F   Form of Servicer Monthly Report - § 3.7 Exhibit G   Form
of Servicer Performance Guaranty

 

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Exhibit H-1   Servicer’s Quarterly Officer’s Certificate - § 6.1(e) Exhibit H-2
  Sellers’ Quarterly Officer’s Certificate - § 6.1(e) Exhibit I   Form of Bill
of Sale - § 4.2(f). Exhibit J   Form of Hedge Report - § 3.6 Exhibit K   Form of
Reserve Account Control Agreement Exhibit L   Each Seller’s Underwriting
Guidelines

 

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REPURCHASE AGREEMENT

Dated as of November 21, 2006

REPURCHASE AGREEMENT, among AMERICAN HOME MORTGAGE CORP., a New York corporation
(hereinafter, together with its successors and assigns, “AHMC”), AMERICAN HOME
MORTGAGE SERVICING, INC., a Maryland corporation, as the Servicer (hereinafter,
together with its successors and assigns, the “Servicer” or “AHMS”), AMERICAN
HOME MORTGAGE ACCEPTANCE, INC., a Maryland corporation (hereinafter, together
with its successors and assigns, “AHMA”), AMERICAN HOME MORTGAGE INVESTMENT
CORP., a Maryland corporation (hereinafter, together with its successors and
assigns, “AHMIC” and together with AHMC, AHMS and AHMA, collectively, the
“Sellers”), LA FAYETTE ASSET SECURITIZATION LLC, a Delaware limited liability
company (hereinafter, together with its successors and assigns, “La Fayette”),
AMSTERDAM FUNDING CORPORATION, a Delaware corporation (hereinafter, together
with its successors and assigns, “Amsterdam”), BARTON CAPITAL LLC, a Delaware
limited liability company (hereinafter, together with its successors and
assigns, “Barton”), PARK AVENUE RECEIVABLES COMPANY, LLC a Delaware limited
liability company (hereinafter, together with its successors and assigns, “Park
Avenue”), STARBIRD FUNDING CORPORATION, a Delaware corporation (hereinafter,
together with its successors and assigns, “Starbird”), CALYON NEW YORK BRANCH
(“Calyon”), as a Bank, as a Managing Agent and the Administrative Agent, LLOYDS
TSB BANK PLC (“Lloyds”), as a Bank, ABN AMRO BANK N.V. (“ABN AMRO”), as a Bank
and as a Managing Agent, SOCIETE GENERALE (“SG”), as a Bank and as a Managing
Agent, JPMORGAN CHASE BANK, N.A. (“JPMorgan”), as a Bank and as a Managing
Agent, and BNP PARIBAS, (hereinafter, together with its successors and assigns,
“BNP”).

RECITALS

1. Capitalized terms used in these Recitals and not defined in the preamble
above have the meanings set forth in Article I.

2. The Sellers are engaged in the business of originating, acquiring, investing
in, marketing and selling, for their own account, mortgage loans that are made
either to finance the purchase of one- to four-family owner-occupied homes or to
refinance loans secured by such properties.

3. AHM SPV I, LLC, AHMC and AHMS entered into that certain Master Repurchase
Agreement dated as of August 8, 2003, as amended by the Addendum to Master
Repurchase Agreement, dated as of August 8, 2003, which addendum was restated by
the Amended and Restated Addendum to Master Repurchase Agreement, dated as of
November 22, 2005 (collectively, the “Existing Repurchase Agreement”).

4. AHM SPV I, LLC, the Servicer, La Fayette, Amsterdam, Barton, Park Avenue,
Calyon New York, Lloyds, ABN AMRO, SG and JPMorgan entered that certain Loan
Agreement dated as of August 8, 2003 as amended by the Amended and Restated Loan
Agreement, dated as of November 22, 2005 (the “Existing Loan Agreement”).

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5. AHMS, La Fayette, Amsterdam, Barton, Park Avenue, Starbird, Calyon New York,
Lloyds, ABN AMRO, SG and JPMorgan entered into that First Omnibus Amendment,
dated as of March 1, 2006, in order to add Starbird and BNP as parties to the
Existing Loan Agreement.

6. For the convenience of the parties and to reduce administrative costs, the
parties hereto have agreed to terminate the Existing Loan Agreement and enter
into this Repurchase Agreement and to eliminate the Existing Repurchase
Agreement, as provided herein.

7. In furtherance of the foregoing, the Sellers have requested that the
Administrative Agent, on behalf of the Purchasers, from time to time enter into
transactions (“Transactions”), pursuant to which, on the applicable Purchase
Date, the applicable Seller shall sell and the Purchasers shall purchase certain
Eligible Mortgage Loans, with each Purchaser purchasing undivided ownership
interests in such Eligible Mortgage Loans, pursuant to such Transactions,
against payment by the Purchasers of an amount equal to the Purchase Price for
such Eligible Mortgage Loans with a simultaneous agreement by the Sellers,
jointly and severally, to repurchase Purchased Mortgage Loans on the applicable
Repurchase Date by payment to the Administrative Agent for the account of the
Purchasers of an amount equal to the related Repurchase Price.

8. Upon the request of the Sellers, the Issuers may, in their sole discretion
(except that Barton shall), and the Banks (other than the Banks in the SG Group)
shall, in each case subject to the terms and conditions contained in this
Agreement, purchase the Mortgage Loans and certain other Mortgage Assets.

9. The Purchasers have appointed the Administrative Agent as their agent to
perform certain administrative duties for the Purchasers including, among other
things, the administration of the funding of the Transactions hereunder and the
making of certain determinations hereunder and in connection herewith.

10. Each Seller is engaged in a business that is complementary to the business
of the other Sellers and each Seller will directly benefit from the Transactions
entered into hereunder with each other Seller and the Purchase Price paid in
connection with each Transaction will inure to the benefit of each Seller.

AGREEMENTS

In consideration of the recitals and the representations, warranties,
conditions, covenants and agreements made in this Agreement, the sufficiency of
which are acknowledged by all parties hereto, the Sellers, the Purchasers, the
Administrative Agent, the Managing Agents, the Banks and the Servicer covenant
and agree as follows:

 

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ARTICLE I

GENERAL TERMS

1.1. Certain Definitions.

As used in this Agreement, the following terms have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):

“ABN AMRO” has the meaning specified in the preamble of this Agreement.

“ABN AMRO Group” means Amsterdam and ABN AMRO.

“ABR Allocation” means all or any portion of Invested Amount if Price
Differential thereon is calculated by reference to the Eurodollar Rate or the
Alternate Base Rate.

“Accepted Servicing Standards” means the same manner in which the Servicer
services and administers similar mortgage loans for its own portfolio, giving
due consideration to customary and usual standards of practice of mortgage
lenders and loan servicers administering similar mortgage loans but without
regard to any relationship that the Servicer or any Affiliate of the Servicer
may have with the related Obligor, or the Servicer’s right to receive
compensation for its services hereunder.

“Act of Insolvency” means, with respect to any Seller, the Servicer or the
Performance Guarantor, any of the events described in Section 8.1(f), (g) or
(h).

“Adjusted Consolidated Funded Debt” means, on any date of determination, the sum
of (a) the Consolidated Funded Debt of AHMIC and any other Person which would be
reflected on the consolidated balance sheet of AHMIC prepared in accordance with
GAAP if such balance sheet were prepared as of such date of determination, less
(b) 50% of any Subordinated Debt, less (c) the mortgage debt associated with the
building and the land located at 538 Broadhollow Road, Melville, New York.

“Administrative Agent” means Calyon, in its capacity as administrative agent for
the Purchasers, or any successor administrative agent.

“Administrative Agent’s Account” means, the special account (account number
01-50576-0001-00-001, ABA No. 026008073) of Calyon maintained at the office of
Calyon New York Branch at 1301 Avenue of the Americas, New York, New York.

“Advanced Funds” means funds advanced to an escrow agent for purposes of funding
a Mortgage Loan to be pledged hereunder.

“Adverse Claim” means a lien, security interest, or other charge or encumbrance,
or any other type of preferential arrangement.

“Affected Party” means each Purchaser, the Administrative Agent, each Managing
Agent, any bank party to a Liquidity Agreement, any party providing credit
enhancement or liquidity to any issuer, and any permitted assignee or
participant of any such bank, and any holding company of an Affected Party.

 

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“Affiliate” of any Person means (a) any other Person that, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person, or (b) any other Person who is a director, officer or employee (i) of
such Person, or (ii) of any Person described in the preceding clause (a). For
purposes of this definition, the term “control” (and the terms “controlled by”
and “under common control with”), as used with respect to any Person, shall mean
the possession or ownership, directly or indirectly, of the power either (x) to
direct or cause the direction of the management and policies of such Person,
whether by contract or otherwise, or (y) vote 10% or more of the securities
having ordinary power in the election of directors of such Person.

“Aggregate Collateral Value” means an amount equal to the sum of the products of
the book values (as determined in accordance with GAAP) of the consolidated
assets of AHMIC and its Subsidiaries, such assets being categorized in the
classes set forth on the calculation schedule that is part of Exhibit E attached
to the Credit Agreement, times the percentage multiplier for each such class set
forth on such calculation schedule.

“Agreement” or the “Repurchase Agreement” means this Agreement, as amended,
restated, modified or supplemented from time to time.

“AHMIC” has the meaning set forth in the preamble of this Agreement and its
successors and assigns.

“Alt-A Loan” means a Mortgage Loan (other than a Conforming Loan or a Jumbo
Loan) that (1) does not conform to the conventional underwriting standards of
Fannie Mae, Freddie Mac or Ginnie Mae but that is underwritten in a manner
designed to be purchased by an Approved Take-Out Investor (other than Fannie
Mae, Freddie Mac or Ginnie Mae), within guidelines generally acceptable to
industry norms for “Alt-A” loans, (2) has a demonstrated secondary market and is
readily securitizable, and (3) matches all applicable requirements for purchase
under the requirements of a Take Out Commitment or Hedge specifically issued for
the purchase of such Mortgage Loan.

“Alternate Base Rate” means, with respect to any Group Bank, on any date, a
fluctuating rate of interest per annum equal to the higher of:

(a) the rate of interest most recently announced by such Group Bank as its base
rate, changing when and as said base rate changes; or

(b) the Federal Funds Rate (as defined below) most recently determined by the
Administrative Agent plus 1.0% per annum.

For purposes of this definition, “Federal Funds Rate” means, for any period, a
fluctuating interest rate per annum equal (for each day during such period) to
(i) the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York; or
(ii) if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by the
Administrative Agent from

 

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three federal funds brokers of recognized standing selected by it. The Alternate
Base Rate is not necessarily intended to be the lowest rate of interest
determined by any Group Bank in connection with extensions of credit.

“Amended and Restated Managing Agents Fee Letter” means that certain letter
among the Managing Agents, the Sellers and the Servicer, dated as of the date
hereof, regarding fees payable to the Managing Agents.

“Amsterdam” has the meaning specified in the preamble of this Agreement.

“Annual Extension Date” shall mean (i) November 20, 2007, and (ii) thereafter,
if consented to by the Purchasers, the Managing Agents and the Administrative
Agent pursuant to Section 2.1(a), the date that is specified by the Purchasers,
the Managing Agents and the Administrative Agent in the applicable consent,
which date shall not be more than 364 days following the then effective Annual
Extension Date.

“Applicable Purchase Rate” means (i) with respect to a Conforming Loan,
ninety-eight percent (98%) or, if a Conforming FICO Score Trigger Event or
Conforming Loan-to-Value Ratio Trigger Event has occurred and is continuing, as
reported to the Custodian by the Administrative Agent, then zero, (ii) with
respect to a Jumbo Loan (other than a Super Jumbo Loan), ninety-eight percent
(98%) or, if a Non-Conforming FICO Score Trigger Event or Non-Conforming
Loan-to-Value Ratio Trigger Event has occurred and is continuing, as reported to
the Custodian by the Administrative Agent, then zero, (iii) with respect to a
Super Jumbo Loan, ninety-five percent (95%) or, if a Non-Conforming FICO Score
Trigger Event or Non-Conforming Loan-to-Value Ratio Trigger Event has occurred
and is continuing, as reported to the Custodian by the Administrative Agent,
then zero, (iv) with respect to an Alt-A Loan, ninety seven percent (97%) or, if
a Non-Conforming FICO Score Trigger Event or Non-Conforming Loan-to-Value Ratio
Trigger Event has occurred and is continuing, as reported to the Custodian by
the Administrative Agent, then zero, (v) with respect to Second-Lien Loans,
ninety-five percent (95%) or, if a Non-Conforming FICO Score Trigger Event or
Non-Conforming Loan-to-Value Ratio Trigger Event has occurred and is continuing,
as reported to the Custodian by the Administrative Agent, then zero and
(vi) with respect to Uncovered Mortgage Loans, ninety-five percent (95%) or, if
a Non-Conforming FICO Score Trigger Event or Non-Conforming Loan-to-Value Ratio
Trigger Event has occurred and is continuing, as reported to the Custodian by
the Administrative Agent, then zero.

“Approved Hedge Counterparty” means:

(a) Fannie Mae, Freddie Mac or Ginnie Mae, or

(b) any Person with short-term ratings of at least P-1 from Moody’s and either
at least A-1 from S&P or at least F1 from Fitch, or long-term unsecured debt
ratings (or in the case of a bank without such ratings that is the principal
subsidiary of a bank holding company, the rating of the bank holding company) of
at least Aa2 by Moody’s, and either at least AA from S&P or at least AA from
Fitch, or

(c) any Person with short-term ratings of at least P-1 from Moody’s, and either
at least A-1 from S&P or at least F1 from Fitch, or long-term unsecured debt
ratings (or in the case of a bank without such ratings that is the principal
subsidiary of a bank holding

 

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company, the rating of the bank holding company) of at least A2 from Moody’s,
and either at least A from S&P or at least A from Fitch, limited to a
concentration limit of 50% of the concentration percentage for such Person as
shown on Schedule II, or such other concentration percentage approved by the
Majority Banks, or

(d) all other Persons as may be approved by the Majority Banks, which approvals
may be subject to certain concentration limits;

provided that (i) except for an Approved Hedge Counterparty defined above in
section (d), if an Approved Hedge Counterparty has a short-term rating or a
long-term unsecured debt rating at the time such Person becomes an “Approved
Hedge Counterparty” and such Person’s short-term ratings or long-term unsecured
debt ratings are subsequently downgraded or withdrawn, such Person shall cease
to be an “Approved Hedge Counterparty”; provided, further, that with respect to
any Hedges issued by such Person prior to the date of such downgrade or
withdrawal, such Person shall cease to be an “Approved Hedge Counterparty” sixty
(60) days following such downgrade or withdrawal; and (ii) if an Approved Hedge
Counterparty does not have a short-term rating or a long-term unsecured debt
rating, such Person shall cease to be an “Approved Hedge Counterparty” upon
prior written notice from the Administrative Agent, which shall provide such
notice if the Administrative Agent has (or if the Majority Banks notify the
Administrative Agent that they have) good faith concerns about the future
performance of such Person; provided, further, that with respect to any Hedges
issued by such Person prior to such notice, such Person shall cease to be an
“Approved Hedge Counterparty” sixty (60) days following such notice.

“Approved Take-Out Investor” means:

(a) Fannie Mae, Freddie Mac or Ginnie Mae, or

(b) any Person with short-term ratings of at least P-1 from Moody’s, and either
at least A-1 from S&P or at least F1 from Fitch, or long-term unsecured debt
ratings (or in the case of a bank without such ratings that is the principal
subsidiary of a bank holding company, the rating of the bank holding company) of
at least Aa2 by Moody’s, and either at least AA from S&P or at least AA from
Fitch, or

(c) any Person with short-term ratings of at least P-1 from Moody’s, and either
at least A-1 from S&P or at least F1 from Fitch, or long-term unsecured debt
ratings (or in the case of a bank without such ratings that is the principal
subsidiary of a bank holding company, the rating of the bank holding company) of
at least A2 from Moody’s, and either at least A from S&P or at least A from
Fitch, limited to a concentration limit of 50% of the concentration percentage
for such Person as shown on Schedule II, or such other concentration percentage
approved by the Majority Banks, or

(d) all other Persons as may be approved by the Majority Banks, which approvals
may be subject to certain concentration limits;

provided that (i) except for an Approved Take-Out Investor defined above in
section (d), if an Approved Take-Out Investor has a short-term rating or a
long-term unsecured debt rating at the time such Person becomes an “Approved
Take-Out Investor” and such

 

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Person’s short-term ratings or long-term unsecured debt ratings are subsequently
downgraded or withdrawn, such Person shall cease to be an “Approved Take-Out
Investor”; provided, further, that with respect to any Take-Out Commitments
issued by such Person prior to the date of such downgrade or withdrawal, such
Person shall cease to be an “Approved Take-Out Investor” sixty (60) days
following such downgrade or withdrawal; and (ii) if an Approved Take-Out
Investor does not have a short-term rating or a long-term unsecured debt rating,
such Person shall cease to be an “Approved Take-Out Investor” upon prior written
notice from the Administrative Agent, which shall provide such notice if the
Administrative Agent has (or if the Majority Banks notify the Administrative
Agent that they have) good faith concerns about the future performance of such
Person; provided, further, that with respect to any Take-Out Commitments issued
by such Person prior to such notice, such Person shall cease to be an “Approved
Take-Out Investor” sixty (60) days following such notice.

As of the date of this Agreement, Schedule II hereto sets forth the Approved
Take-Out Investors pursuant to the preceding clauses (b) and (c) (and any
applicable concentration limits). Schedule II shall be updated from time to time
as Approved Take-Out Investors are added or deleted or concentration limits are
changed pursuant to the preceding clauses (b) and (c).

“Assignment” is defined in the Custodial Agreement.

“Assignment and Acceptance” means an assignment and acceptance agreement entered
into by a Bank, an Eligible Assignee and the Administrative Agent, pursuant to
which such Eligible Assignee may become a party to this Agreement, in
substantially the form of Exhibit A hereto.

“Availability” means, at the time determined, the Maximum Facility Amount minus
the Invested Amount.

“Available Recognized Value” means, at the time determined, the excess of the
Recognized Value of all Eligible Mortgage Assets over the Invested Amount.

“Bailee and Security Agreement Letter” is defined in Section 3.4(b)(i) of the
Custodial Agreement.

“Bank” means each of Calyon, Lloyds, ABN AMRO, SG, JPMorgan, BNP and each
respective Eligible Assignee that shall become a party to this Agreement
pursuant to an Assignment and Acceptance and in accordance with Section 13.9
hereof.

“Bank Commitment” means, (a) with respect to Calyon, Lloyds, ABN AMRO, SG,
JPMorgan and BNP, the amounts set forth on Schedule I hereto, and (b) with
respect to a Bank that has entered into an Assignment and Acceptance, the amount
set forth therein as such Bank’s Bank Commitment, in each case as such amount
may be reduced by each Assignment and Acceptance entered into between such Bank
and an Eligible Assignee, and as may be further reduced (or terminated) pursuant
to the next sentence. Any reduction (or termination) of the Maximum Facility
Amount pursuant to the terms of this Agreement shall (unless otherwise agreed by
all the Banks) reduce ratably (or terminate) each Bank’s Bank Commitment. At no
time shall the aggregate Bank Commitments of all Banks exceed the Maximum
Facility Amount.

 

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Notwithstanding anything to the contrary herein, the Group Banks related to
Barton shall have no commitment hereunder to make Purchases, but Barton shall
have a commitment equal to the Bank Commitment of its related Group Banks.

“Bank Commitment Percentage” means, for any Bank as of any date, the amount
obtained by dividing such Bank’s Bank Commitment on such date by the aggregate
Bank Commitments of all related Group Banks on such date. As of the date of this
Agreement, the Bank Commitment Percentage for each Bank is as set forth on
Schedule I hereto.

“Bank Margin” means the margin set forth in the Amended and Restated Managing
Agents Fee Letter.

“Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. §§
101-1532, as amended.

“Barton” has the meaning specified in the preamble of this Agreement.

“Base Rate Purchase” means a Purchase that accrues Price Differential at a rate
per annum determined on the basis of the Alternate Base Rate.

“BNP” has the meaning set forth in the preamble of the Agreement.

“BNP Group” means Starbird, and each Group Bank of Starbird.

“Business Day” means (a) a day on which (i) commercial banks in New York City,
New York and Chicago, Illinois, are not authorized or required to be closed and
(ii) commercial banks in the State in which the Custodian has its principal
office are not authorized or required to be closed, and (b) if this definition
of “Business Day” is utilized in connection with a Eurodollar Purchase, a day on
which dealings in United States dollars are carried out in the London interbank
market.

“Calyon” has the meaning set forth in the preamble of this Agreement and its
successors and assigns.

“Calyon Group” means La Fayette, and each Group Bank of La Fayette.

“Closing Protection Rights” means any rights of the Sellers to or under (i) a
letter issued by a title insurance company to any of the Sellers assuming
liability for certain acts or failure to act on behalf of a named closing escrow
agent, approved attorney or similar Person in connection with the closing of a
Mortgage Loan transaction, (ii) a bond, insurance or trust fund established to
protect a mortgage lender against a loss or damage resulting from certain acts
or failure to act of a closing escrow agent, approved attorney, title insurance
company or similar Person, or (iii) any other right or claim that any of the
Sellers may have against any Person for any loss or damage resulting from such
Person’s acts or failure to act in connection with the closing of a Mortgage
Loan and the delivery of the related Mortgage Loan Collateral to the Custodian
or to the Sellers.

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

 

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“Collection Account” means the account established pursuant to Section 2.7(b) to
be used for (i) the deposit of proceeds from the sale of Mortgage Loans; and
(ii) the payment of the Repurchase Obligations, it being understood that such
account is controlled by the Administrative Agent pursuant to the Collection
Account Control Agreement, and the Administrative Agent has the authority to
direct the transfer of all funds from the Collection Account.

“Collection Account Bank” means, initially, Deutsche Bank National Trust Company
and, at any time, the institution then holding the Collection Account in
accordance with the terms of the Collection Account Control Agreement.

“Collection Account Control Agreement” means the Second Amended and Restated
Collection Account Control Agreement, dated as of the date hereof, among the
Sellers, the Servicer, the Administrative Agent and the Collection Account Bank,
substantially in the form of Exhibit D-3 hereto, as amended, modified or
supplemented from time to time.

“Collection Period” means each calendar month, beginning on the first day of
each month and including the last day of the month.

“Collections” means, with respect to any Mortgage Asset, all cash collections
(other than in respect of escrows for taxes and insurance premiums payable under
the related Mortgage Loan) and other cash proceeds of such Mortgage Asset.

“Commercial Paper Notes” means short-term promissory notes issued or to be
issued by the Issuers to fund or maintain their Purchases or investments in
other financial assets.

“Commercial Paper Rate” for any Price Differential Calculation Period for the
related Purchase means:

(A) (a) with respect to the portion of such Purchase funded by La Fayette, a
rate per annum equal to the sum of

(i) the rate or, if more than one rate, the weighted average of the rates,
determined by converting to an interest-bearing equivalent rate per annum the
discount rate (or rates) at which Commercial Paper Notes having a term equal to
such Price Differential Calculation Period and to be issued to fund or to
maintain such Purchase by La Fayette (including, without limitation, Invested
Amount and accrued and unpaid interest), may be sold by any placement agent or
commercial paper dealer selected by the Managing Agent for La Fayette, as agreed
between each such agent or dealer and such Managing Agent, plus

(ii) the commissions and charges charged by such placement agent or commercial
paper dealer with respect to such Commercial Paper Notes expressed as a
percentage of such face amount and converted to an interest-bearing equivalent
rate per annum, provided the commissions and charges by the agent or dealer must
in the good faith judgment of the Managing Agent for La Fayette be within market
range; plus

(iii) the Conduit Spread; or

 

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(b) such other rate as La Fayette and the Sellers shall agree to in writing;

(B) with respect to the portion of such Purchase funded by Amsterdam, a rate per
annum equal to the Conduit Spread plus the weighted average of the rates at
which commercial paper notes having a term equal to such Price Differential
Calculation Period may be sold by any CP Dealer selected by Amsterdam, as agreed
between each such CP Dealer and Amsterdam. If such rate is a discount rate, the
CP Rate shall be the rate resulting from Amsterdam’s converting such discount
rate to an interest-bearing equivalent rate. The Commercial Paper Rate shall
include all costs and expenses to Amsterdam of issuing the related commercial
paper notes, including all dealer commissions and note issuance costs in
connection therewith;

(C) with respect to the portion of such Purchase funded by Barton, a rate (or,
if more than one rate, the weighted average of the rates) per annum equal to the
Conduit Spread plus the applicable commercial paper issued by Barton and
allocated to fund Purchases hereunder, which Commercial Paper Notes may be sold
by any placement agent or commercial paper dealer selected by Barton, and which
rate shall incorporate (i) applicable commercial paper dealer and placement
agent fees, and commissions and (ii) other funding costs (excluding costs
associated with an Issuer’s liquidity fundings) of such Issuer relating to the
facility, such as the costs of funding odd lots or small dollar amounts;
provided that if the rate (or rates) as agreed between such agent or dealer and
such Issuer is a discount rate, then the rate (or if more than one rate, the
weighted average of the rates) resulting from such Issuer’s converting such
discount rate (or rates) to an interest-bearing rate per annum;

(D) with respect to the portion of such Purchase funded by Park Avenue, a rate
per annum equal to the sum of

(i) the rate (or, if more than one rate, the weighted average of the rates) at
which Commercial Paper Notes having a term equal to such Price Differential
Calculation Period (or portion thereof) may be sold by any placement agent or
commercial paper dealer selected by Park Avenue, as agreed between each such
agent or dealer and Park Avenue, provided, however, that if the rate (or rates)
as agreed between any such agent or dealer and Park Avenue is a discount rate
(or rates), the “Commercial Paper Rate” for such Price Differential Calculation
Period (or portion thereof) shall be the rate (or if more than one rate, the
weighted average of the rates) resulting from Park Avenue’s converting such
discount rate (or rates) to an interest-bearing equivalent rate per annum, plus

(ii) accrued commissions in respect of placement agents and commercial paper
dealers and issuing and paying agent fees incurred, in respect of such
Commercial Paper Notes, minus

(iii) any payment received on such date net of expenses in respect of
Consequential Losses related to the prepayment of any purchased interest of Park
Avenue pursuant to the terms of any receivable purchase facilities funded
substantially with such Commercial Paper Notes plus

(iv) the Conduit Spread.

 

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(E) with respect to the portion of such Purchase funded by Starbird, a rate per
annum equal to the sum of

(i) the rate or, if more than one rate, the weighted average of the rates,
determined by converting to an interest-bearing equivalent rate per annum the
discount rate (or rates) at which Commercial Paper Notes having a term equal to
such Price Differential Calculation Period and to be issued to fund or to
maintain such Purchase by Starbird (including, without limitation, Invested
Amount and accrued and unpaid interest), may be sold by any placement agent or
commercial paper dealer selected by the Managing Agent for Starbird, as agreed
between each such agent or dealer and such Managing Agent, plus

(ii) the commissions and charges charged by such placement agent or commercial
paper dealer with respect to such Commercial Paper Notes expressed as a
percentage of such face amount and converted to an interest-bearing equivalent
rate per annum, provided the commissions and charges by the agent or dealer must
in the good faith judgment of the Managing Agent for Starbird be within market
range; plus

(iii) the Conduit Spread.

“Conduit Spread” means the margin set forth in the Amended and Restated Managing
Agents Fee Letter.

“Conforming FICO Score Trigger Event” means, with respect to Conforming Loans,
that (A)(i) the Conforming Pool Weighted Average FICO Score has been reported,
in a Custodian Daily Report, as less than 675 but more than 650, (ii) a period
of ten (10) days has elapsed from the date of receipt of such report by the
Administrative Agent and (iii) the Servicer has not provided to the
Administrative Agent a revised Conforming Pool Weighted Average FICO Score that
is at least 675 or (B)(i) the Conforming Pool Weighted Average FICO Score has
been reported, in a Custodian Daily Report, as less than 650, (ii) a period of
five (5) days has elapsed from the date of receipt of such report by the
Administrative Agent and (iii) the Servicer has not provided to the
Administrative Agent a revised Conforming Pool Weighted Average FICO Score that
is at least 675.

“Conforming Loan” means (i) a Mortgage Loan that complies with all applicable
requirements for purchase under a Fannie Mae, Freddie Mac or similar
Governmental Authority standard form of conventional mortgage loan purchase
contract, then in effect, or (ii) an FHA Loan or a VA Loan.

“Conforming Loan-to-Value Ratio Trigger Event” means, with respect to Conforming
Loans, that (A)(i) the weighted average Loan-to-Value Ratio has been reported,
in a Custodian Daily Report, as greater than 83% but equal to or less than 90%,
(ii) a period of ten (10) days has elapsed from the date of receipt of such
report by the Administrative Agent and (iii) the Servicer has not provided to
the Administrative Agent a revised weighted average Loan-to-Value Ratio that is
equal to or less than 83% or (B)(i) the weighted average Loan-to-Value Ratio has
been reported, in a Custodian Daily Report, as greater than 90%, (ii) a period
of five (5) days has elapsed from the date of receipt of such report by the
Administrative Agent and (iii) the Servicer has not provided to the
Administrative Agent a revised weighted average Loan-to-Value Ratio that is
equal to or less than 83%.

 

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“Conforming Pool Weighted Average FICO Score” means the ratio of (a) the sum,
for all Conforming Loans, of the product for each Conforming Loan of (i) its
FICO Score and (ii) its original principal balance to (b) the sum of the
original principal balances of all Conforming Loans.

“Consequential Loss” means any loss (measured by the diminution in yield to the
Affected Party as a result of a prepayment) and/or expense (such as any
transaction costs incurred in connection with the reinvestment of a prepayment
or any cost associated with the issuance of Commercial Paper Notes in
anticipation of a Purchase reported but not accepted by the Sellers) that any
Affected Party reasonably incurs in respect of a Purchase as a consequence of
(a) any failure or refusal of Sellers (for any reasons whatsoever other than a
default by the Administrative Agent, any Purchaser or any Affected Party) to
take such Purchase after Sellers shall have requested it under this Agreement,
(b) any prepayment or payment of such Purchase that is a Eurodollar Purchase or
a Purchase bearing interest by reference to the Commercial Paper Rate (including
an assignment of a Purchase bearing interest at the Commercial Paper Rate
pursuant to a Liquidity Agreement) on a day other than the last day of the Price
Differential Calculation Period applicable to such Purchase, (c) any prepayment
of any Purchase that is not made in compliance with the provisions of
Section 2.5; provided, that so long as an Event of Default shall not have
occurred, the Sellers shall not be responsible for any Consequential Loss
resulting from changes in the Settlement Date made by the Administrative Agent,
as described in the proviso contained in the definition of “Settlement Date,” or
(d) Sellers’ failure to make a prepayment after giving notice under Section 2.5
that a prepayment will be made.

“Consolidated Funded Debt” means, with respect to any Person and on any date of
determination, Indebtedness in any of the following categories:

(a) Debt for borrowed money, including the Credit Agreement Obligations;

(b) Debt constituting an obligation to pay the deferred purchase price of
property;

(c) Debt evidenced by a bond, debenture, note or similar instrument;

(d) Debt constituting, as of any date, any lease of property, real or personal,
which would be capitalized on a balance sheet of the lessee prepared as of such
date in accordance with GAAP, together with any other lease by such lessee which
is in substance a financing lease, including, without limitation, any lease
under which (i) such lessee has or will have an option to purchase the property
subject thereto at a nominal amount or an amount less than a reasonable estimate
of the fair market value of such property as of the date such lease is entered
into, or (ii) the term of the lease approximates or exceeds the expected useful
life of the property leased thereunder.

(e) Debt constituting a non-contingent obligation to reimburse the issuer of any
letter of credit or any guarantor or surety for payments made by such issuer,
guarantor or surety; and

 

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(f) Any obligation under any guaranty with respect to Debt of any other Person
of the types described in clauses (a) through (e) above.

“CP Allocation” means all or any portion of Invested Amount if Price
Differential thereon is calculated by reference to the Commercial Paper Rate.

“CP Dealer” means, at any time, each Person Amsterdam then engages as a
placement agent or commercial paper dealer.

“CP Purchase” means a Purchase on which Price Differential accrues by reference
to the Commercial Paper Rate.

“Credit Agreement” means the Second Amended and Restated Credit Agreement, dated
as of August 10, 2006, as may be amended from time to time, by and among AHMIC,
American Home Mortgage Corp., American Home Mortgage Servicing, Inc., American
Home Mortgage Acceptance, Inc., certain Purchasers from time to time party
thereto, and Bank of America, N.A.

“Credit Agreement Obligations” mean any and all debts, obligations and
liabilities of American Home Mortgage Corp., the Servicer, the Performance
Guarantor and American Home Mortgage Acceptance, Inc. to Bank of America, N.A.
as administrative agent under the Credit Agreement and the lenders from time to
time party thereto (whether now existing or hereafter arising, voluntary or
involuntary, whether or not jointly owed with others, direct or indirect,
absolute or contingent, liquidated or unliquidated, and whether or not from time
to time decreased or extinguished and later increased, created or incurred),
arising out of or related to the Loan Documents (as defined in the Credit
Agreement).

“Custodial Agreement” means the Custodial Agreement, dated as of the date
hereof, among the Sellers, the Custodian and the Administrative Agent,
substantially in the form of Exhibit D hereto, as amended, supplemented,
restated or otherwise modified from time to time.

“Custodian” means Deutsche Bank National Trust Company, and its successors and
assigns.

“Custodian Daily Report” is defined in Section 3.8(a) of the Custodial
Agreement.

“Debt” means (a) all indebtedness or other obligations of a Person (and, if
applicable, that Person’s subsidiaries, on a consolidated basis) that, in
accordance with GAAP consistently applied, would be included in determining
total liabilities as shown on the liabilities side of a balance sheet of that
Person on the date of determination, plus (b) all indebtedness or other
obligations of that Person (and, if applicable, that Person’s subsidiaries, on a
consolidated basis) for borrowed money or for the deferred purchase price of
property or services. For purposes of calculating a Person’s Debt, Subordinated
Debt (as defined below) not due within one year of that date may be excluded
from that Person’s indebtedness. For purposes of this definition, “Subordinated
Debt” means all indebtedness of a Person for borrowed money that is effectively
subordinated in right of payment to all other present and future obligations on
terms acceptable to the Majority Banks.

 

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“Debtor Laws” means all applicable liquidation, conservatorship, bankruptcy,
fraudulent transfer or conveyance, moratorium, arrangement, receivership,
insolvency, reorganization or similar laws from time to time in effect affecting
the rights of creditors generally.

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

“Default Rate” means a per annum rate of interest equal from day to day to the
lesser of (a) the sum of the Alternate Base Rate plus two percent and (b) the
Maximum Rate.

“Deferred Income” means the amount of income that any of the Sellers have
deferred, for accounting purposes, pending the sale of Mortgage Loans, in
accordance with Statement of Financial Accounting Standards Number 91 (“SFAS
91”) and Statement of Financial Accounting Standards Number 122 (“SFAS 122”),
each as currently published by the Financial Accounting Standards Board.

“Delinquent Mortgage Loan” means a Mortgage Asset under which the Obligor is 30
or more days in payment default or the Obligor has taken any action, or suffered
any event of the type described in Sections 8.1(f), 8.1(g) or 8.1(h) or is in
foreclosure.

“Delinquent Ratio” means as of the end of any Collection Period, the ratio of
(i) the principal amount of all Mortgage Loans that were Delinquent Mortgage
Loans at such time, to (ii) the aggregate principal amount of all Mortgage Loans
at such time.

“Dollars” or “$” means the lawful currency of the United States of America.

“Disbursement Account” means the account established by the Sellers with the
Deutsche Bank National Trust Company or another Eligible Institution acceptable
to the Administrative Agent, it being understood that such account is controlled
by the Administrative Agent pursuant to the Disbursement Account Control
Agreement, and the Administrative Agent has the authority to direct the transfer
of all funds from the Disbursement Account.

“Disbursement Account Control Agreement” means the Second Amended and Restated
Disbursement Account Control Agreement, dated as of even date herewith, between
the Sellers, the Servicer, the Administrative Agent and Deutsche Bank National
Trust Company, substantially in the form attached as Exhibit D-13 to the
Custodial Agreement, as amended, modified, supplemented or replaced from time to
time.

“Eligible Assignee” means (i) Calyon or any of its Affiliates, Lloyds or any of
its Affiliates, ABN AMRO or any of its Affiliates, SG or any of its Affiliates,
JPMorgan or any of its Affiliates or BNP or any of its Affiliates, (ii) any
Person managed by Calyon or any of its Affiliates, Lloyds or any of its
Affiliates, ABN AMRO or any of its Affiliates, SG or any of its Affiliates,
JPMorgan or any of its Affiliates, or BNP or any of its Affiliates, or (iii) any
financial or other institution that is acceptable to the Managing Agent related
to the Purchaser that is making the assignment and, unless an Event of Default
has occurred or is continuing, the Sellers (which consent shall not be
unreasonably withheld).

 

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“Eligible Institution” means any depository institution, organized under the
laws of the United States or any state, having capital and surplus in excess of
$200,000,000, the deposits of which are insured to the full extent permitted by
law by the Federal Deposit Insurance Corporation and that is subject to
supervision and examination by federal or state banking authorities; provided
that such institution also must have short-term debt ratings no lower than P-1
by Moody’s and A-1 by S&P and, if rated, F1 by Fitch. If such depository
institution publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published.

“Eligible Mortgage Assets” means Eligible Mortgage Loans and the Collection
Account.

“Eligible Mortgage Loan” means a Mortgage Loan:

(a) that (i) is a closed and fully funded Mortgage Loan, (ii) has a maximum term
to maturity of 40 years and the proceeds of which were used either to finance a
portion of the purchase price of a Property encumbered by the related Mortgage
or to refinance a loan secured by such Property, (iii) is secured by a perfected
first-priority Lien on residential real Property consisting of land and a
one-to-four family dwelling thereon which is completed and ready for owner
occupancy, including townhouses and condominiums, and (iv) was underwritten
according to the applicable Seller’s Underwriting Guidelines and was originated
or purchased by one of the Sellers;

(b) that is a Conforming Loan, a Jumbo Loan, an Alt-A Loan, a Second-Lien Loan
or an Uncovered Mortgage Loan;

(c) for which the Mortgage Note is payable to or endorsed (without recourse) in
blank and each of such Mortgage Loan and the related Mortgage Note is a legal,
valid and binding obligation of the Obligor thereof;

(d) for which, other than in respect of Wet Loans, the Principal Mortgage
Documents have been received by the Custodian and are in form and substance
acceptable to the Custodian;

(e) that, upon purchase by the Purchasers thereof under this Agreement and
application of any related Purchase to pay off any prior lienholder as required
by the Custodial Agreement and hereunder, together with the related Mortgage
Loan Collateral, is owned beneficially by the Purchasers free and clear of any
Lien of any other Person other than the Administrative Agent for the benefit of
the Purchasers;

(f) that, together with the related Mortgage Loan Collateral, does not
contravene any Governmental Requirements applicable thereto (including, without
limitation, the Real Estate Settlement Procedures Act of 1974, as amended, and
all laws, rules and regulations relating to usury, truth-in-lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt collection
practices, privacy and other applicable federal, state and local consumer
protection laws) and with respect to which no party to the related Mortgage Loan
Collateral is in violation of any Governmental Requirements (or procedure
prescribed thereby) if such violation would impair the collectability of such
Mortgage Loan or the saleability of such Mortgage Loan under the applicable Take
Out Commitment or Hedge;

 

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(g) that, (i) is not a Delinquent Mortgage Loan at the time it is transferred to
the Purchasers pursuant to this Agreement; (ii) has not previously been sold to
an Approved Take-Out Investor and repurchased by a Seller; (iii) if it was a Wet
Loan when it was assigned to the Sellers and the time periods set forth in
Section 2.3(c) have occurred, the Principal Mortgage Documents relating to such
Wet Loan were delivered to the Custodian; provided, however, that upon delivery
of such Principal Mortgage Documents to the Custodian, such Mortgage Loans may
subsequently qualify as Eligible Mortgage Loans to support Purchases subsequent
to such delivery; (iv) has a Loan-to-Value Ratio not in excess of 100%; or
(v) has an original principal balance not in excess of $3,000,000;

(h) that if the Mortgage Loan Collateral has been withdrawn for correction
pursuant to Section 3.4 such Mortgage Loan Collateral has been returned to the
Custodian within 20 calendar days after withdrawal as required by Section 3.4;

(i) that is denominated and payable in U.S. dollars in the United States and the
Obligor of which is a natural person who is a U.S. citizen or resident alien or
a corporation or an inter vivos revocable trust or other legal entity organized
under the laws of the United States or any State thereof or the District of
Columbia;

(j) that is not subject to any right of rescission, setoff, counterclaim or
other dispute whatsoever;

(k) that was acquired by the Purchasers from any of the Sellers within 60 days
after its Mortgage Origination Date;

(l) that is covered by the types and amounts of insurance required by
Section 6.6(b);

(m) with respect to which all representations and warranties made by the related
Seller herein are true and correct in all material respects and with respect to
which all loan level covenants made herein have been complied with; and

(n) that is subjected to the following “Quality Control” measures by personnel
of any of the Sellers before the Mortgage Note is funded by such Seller:

(i) for those Mortgage Loans not originated by any of the Sellers, is subject to
being selected at random for a review for thoroughness and compliance (including
truth-in-lending, good faith estimates and other disclosures); and

(ii) with respect to which, all Mortgage Loan Collateral is prepared by any of
the Sellers and submitted to the closing agent at the time of funding the
related Mortgage Loans;

“Employee Plan” means an employee pension benefit plan covered by Title IV of
ERISA and established or maintained by any of the Sellers or any ERISA
Affiliate.

 

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

“ERISA Affiliate” means any corporation, trade or business that is, along with
the Performance Guarantor, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Sections 414(b), (c),
(m) and (o) of the Code, or Section 4001 of ERISA.

“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D
of the Federal Reserve Board, as in effect from time to time.

“Eurodollar Purchase” means a Purchase that accrues Price Differential at a rate
per annum determined on the basis of the Eurodollar Rate.

“Eurodollar Rate” means, for any Price Differential Calculation Period for any
Eurodollar Purchase, for each Purchaser, an interest rate per annum (expressed
as a decimal and rounded upwards, if necessary, to the nearest one hundredth of
a percentage point) equal to the offered rate per annum for deposits in Dollars
in a principal amount of not less than $10,000,000 for such Price Differential
Calculation Period as of 11:00 A.M., London time, two Business Days before (and
for value on) the first day of such Price Differential Calculation Period, that
appears on the display designated as “Page 3750” on the Telerate Service (or
such other page as may replace “Page 3750” on that service for the purpose of
displaying London interbank offered rates of major banks); provided, that if
such rate is not available on any date when the Eurodollar Rate is to be
determined, then an interest rate per annum determined by the Administrative
Agent equal to the rate at which it would offer deposits in Dollars to prime
banks in the London interbank market for a period equal to such Price
Differential Calculation Period and in a principal amount of not less than
$10,000,000 at or about 11:00 A.M. (London time) on the second Business Day
before (and for value on) the first day of such Price Differential Calculation
Period.

“Eurodollar Reserve Percentage” means, with respect to any Bank and for any
Price Differential Calculation Period for such Bank’s Eurodollar Purchase, the
reserve percentage applicable during such Price Differential Calculation Period
(or, if more than one such percentage shall be so applicable, the daily average
of such percentages for those days in such Price Differential Calculation Period
during which any such percentage shall be so applicable) under regulations
issued from time to time by the Federal Reserve Board (or any successor) for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for such Bank
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Price Differential Calculation Period.

“Event of Default” is defined in Section 8.1.

“Excess Spread” means, as of the last day of each Collection Period, a
percentage equal to the Portfolio Yield for such Collection Period minus the
Eurodollar Rate minus the Conduit Spread and/or Bank Margin, as applicable,
minus the Servicer Fee Rate.

 

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“Fannie Mae” means the government sponsored enterprise formerly known as the
Federal National Mortgage Association, or any successor thereto.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System, or any successor thereto.

“Fee Letters” means (i) the Second Amended and Restated Administrative Agent Fee
Letter and (ii) the Amended and Restated Managing Agents Fee Letter.

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

“FHA Loan” means a Mortgage Loan, the ultimate payment of which is partially or
completely insured by the FHA or with respect to which there is a current,
binding and enforceable commitment for such insurance issued by the FHA.

“FICO Score” means, with respect to the Obligor under a particular Mortgage
Loan, a credit rating established by Fair Isaac Corporation.

“Financial Officer” means with respect to the Servicer, the Sellers or the
Performance Guarantor, the chief financial officer, treasurer or a vice
president having the knowledge and authority necessary to prepare and deliver
the financial statements and reports required pursuant to Sections 6.1(b) and
Section 3.8.

“First Lien Mortgage Loan” means a loan secured by a perfected first lien
mortgage on real property.

“Fitch” means Fitch, Inc., and any successor thereto.

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

“GAAP” means generally accepted accounting principles as in effect in the United
States from time to time.

“GAAP Net Worth” means with respect to any Person at any date, the excess of
total assets over total liabilities of such Person on such date, each to be
determined in accordance with GAAP consistent with those applied in the
preparation of the financial statements referred to in Section 6.1 of this
Agreement.

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

“Governmental Authority” means any applicable nation or government, any agency,
department, state or other political subdivision thereof, or any instrumentality
thereof, and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government. Governmental
Authority shall include, without limitation, each of Freddie Mac, Fannie Mae,
FHA, HUD, VA and Ginnie Mae.

 

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“Governmental Requirement” means any applicable law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, franchise, permit,
certificate, license, authorization or other requirement (including, without
limitation, any of the foregoing that relate to energy regulations and
occupational, safety and health standards or controls and any hazardous
materials laws) of any Governmental Authority that has jurisdiction over the
Servicer, the Custodian or any of the Sellers or any of their respective
Properties.

“Group” means the Calyon Group or the ABN AMRO Group or the JPMorgan Group or
the SG Group.

“Group Bank” means (1) with respect to La Fayette, Calyon, each Bank that has
entered into an assignment and Acceptance with Calyon, including Lloyds, and
each assignee (directly or indirectly) of any such Bank, which assignee has
entered into an Assignment and Acceptance; (2) with respect to Amsterdam, ABN
AMRO, each Bank that has entered into an Assignment and Acceptance with ABN AMRO
and each assignee (directly or indirectly) of any such Bank, which assignee has
entered into an Assignment and Acceptance; (3) with respect to Barton, SG, each
Bank that has entered into an Assignment and Acceptance with SG and each
assignee (directly or indirectly) of any such Bank, which assignee has entered
into an Assignment and Acceptance; (4) with respect to Park Avenue, JPMorgan,
each Bank that has entered into an Assignment and Acceptance with JPMorgan and
each assignee (directly or indirectly) of any such Bank, which assignee has
entered into an Assignment and Acceptance; and (5) with respect to Starbird,
BNP, each Bank that has entered into an Assignment and Acceptance with BNP and
each assignee (directly or indirectly) of any such Bank, which assignee has
entered into an Assignment and Acceptance.

“Hedge” means a current, valid, binding, enforceable, written commitment,
including, without limitation, a forward purchase commitment, issued by an
Approved Hedge Counterparty, to purchase mortgage loans from one of the Sellers
from time to time at a specified price (or a specified spread to an agreed-upon
index), which commitment is not subject to any term or condition (i) that is not
customary in commitments of like nature or (ii) that, in the reasonably
anticipated course of events, cannot be fully complied with prior to the
expiration thereof, in which a perfected security interest has been granted to
the Administrative Agent.

“Hedge Report” means, a report prepared by the Servicer prepared pursuant to
Section 3.6 hereof, showing, as of the close of business on the last Business
Day of each week, all Take-Out Commitments or Hedges obtained by the Sellers to
cover all closed loans owned by the Sellers, to the extent that such mortgage
loans have been pledged hereunder or pursuant to another lending arrangement,
and certain information with respect to such trades including such information
as the Administrative Agent may request, in the form of Exhibit J hereto. Each
such Take-Out Commitment or Hedge shall have been pledged to the Administrative
Agent; provided, however, that any Hedges may have been pledged previously or
may be pledged in the future by the Sellers on a pari passu basis.

“HELOC” means a home equity line of credit.

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

 

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“Indebtedness” means, for any Person, without duplication, and at any time,
(a) all obligations required by GAAP to be classified on such Person’s balance
sheet as liabilities, (b) obligations secured (or for which the holder of the
obligations has an existing contingent or other right to be so secured) by any
Lien existing on property owned or acquired by such Person, (c) obligations that
have been (or under GAAP should be) capitalized for financial reporting
purposes, and (d) all guaranties, endorsements, and other contingent obligations
with respect to obligations of others.

“Indemnified Amounts” is defined in Section 10.1.

“Indemnified Party” is defined in Section 10.1.

“Initial Purchase Date” means November 21, 2006.

“Invested Amount” means, at the time determined, with respect to all Purchasers,
the aggregate Purchase Price for all Purchases under this Agreement, to the
extent the Purchased Mortgage Loans have not been repurchased and the Repurchase
Price therefor has not been paid, and with respect to a particular Purchaser,
the aggregate Purchase Price for all Purchases of such particular Purchaser
under this Agreement, to the extent the Purchased Mortgage Loans have not been
repurchased and the Repurchase Price therefor has not been paid.

“Issuer” means each of La Fayette, Amsterdam, Barton, Park Avenue and Starbird
and their respective successors and assigns.

“Issuer Facility Amount” means, (a) with respect to La Fayette, Amsterdam,
Barton, Park Avenue and Starbird, the amounts set forth on Schedule I hereto,
and (b) with respect to an Issuer that has entered into an Assignment and
Acceptance, the amount set forth therein as such Issuer’s Issuer Facility
Amount, in each case as such amount may be reduced by each Assignment and
Acceptance entered into between such Issuer and an Eligible Assignee, and as may
be further reduced (or terminated) pursuant to the next sentence. Any reduction
(or termination) of the Maximum Facility Amount pursuant to the terms of this
Agreement shall (unless otherwise agreed by all the Issuers) reduce ratably (or
terminate) each Issuer’s Issuer Facility Amount. At no time shall the aggregate
Issuer Facility Amounts of all Issuers exceed the Maximum Facility Amount.

“JPMorgan” has the meaning specified in the preamble of this Agreement.

“JPMorgan Group” means Park Avenue and each Group Bank of Park Avenue.

“Jumbo Loan” means a Mortgage Loan (other than a Conforming Loan) that (1) is
underwritten in a manner designed to be purchased by an Approved Take-Out
Investor (other than Fannie Mae, Freddie Mac or Ginnie Mae), (2) matches all
applicable requirements for purchase under the requirements of a Take Out
Commitment or Hedge issued for the purchase of such Mortgage Loan, and
(3) differs from a Conforming Loan solely because the principal amount of such
Mortgage Loan exceeds the limit set for Conforming Loans by Fannie Mae or
Freddie Mac from time to time, but shall not exceed $999,999; provided, however,
that a Jumbo Loan having an original principal balance in excess of $999,999 but
not more than $3,000,000 shall qualify as a Super Jumbo Loan. The term Jumbo
Loan includes Super Jumbo Loans.

 

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“La Fayette” has the meaning set forth in the preamble to this Agreement.

“LIBOR” means, for any Price Differential Calculation Period, the London
interbank offered rate for one-month Dollar deposits determined by the Servicer
on the LIBOR Determination Date for such Price Differential Calculation Period
in accordance with Section 2.21.

“LIBOR Determination Date” shall mean, with respect to each Price Differential
Calculation Period, the second London Business Day immediately preceding the
first day of such Price Differential Calculation Period.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (whether statutory, consensual or otherwise), or
other security arrangement of any kind (including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the uniform commercial code or comparable law
of any jurisdiction in respect of any of the foregoing).

“Liquidity Agreement” means, with respect to an Issuer, a liquidity loan
agreement, liquidity asset purchase agreement or similar agreement entered into
by the related Group Banks and providing for the making of loans to such Issuer,
or the purchase of Invested Amounts (or interests therein) from such Issuer, to
support such Issuer’s payment obligations under its Commercial Paper Notes.

“Lloyds” has the meaning specified in the preamble of this Agreement.

“Loan to Value Ratio” means, with respect to any Mortgage Loan, the fraction,
expressed as a percentage found by dividing the original principal balance of a
Mortgage Loan by the value of the related mortgage property, such value being
measured by (i) the appraised value of such property at such time, if the
Mortgage Loan is a refinance of any existing lien or (ii) the lower of the sales
price of the related property at the time of origination of the Mortgage Loan or
the appraised value of such property at such time, if the Mortgage Loan is a
purchase money loan.

“Majority Banks” means, at any time, Banks, including Banks that have become
party to this Agreement pursuant to an Assignment and Acceptance, having
outstanding Invested Amounts equal to more than 50% of the aggregate outstanding
Invested Amounts held by Banks or, if no Invested Amount is then outstanding
from any Bank, Banks having more than 50% of the Bank Commitments.

“Managing Agent” means, (a) with respect to La Fayette, Calyon or any successor
managing agent designated by such party; (b) with respect to Amsterdam, ABN AMRO
or any successor managing agent designated by such party; (c) with respect to
Park Avenue, JPMorgan or any successor managing agent designated by such party;
(d) with respect to Barton, SG or any successor managing agent designated by
such party; and (e) with respect to Starbird, BNP or any successor managing
agent designated by such party.

“Managing Agent’s Account” means (a) with respect to Calyon, the special account
(account number 01-25680-001-00-001 ABA No. 026008073) of Calyon maintained at
Calyon; (b) with respect to ABN AMRO, account number 671042302550 ABA

 

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No. 026 0095 80 of ABN AMRO maintained at ABN AMRO; (c) with respect to
JPMorgan, account number 645475302 ABA No. 021000021 of JPMorgan maintained at
JPMorgan; (d) with respect to SG, account number 9030425 ABA No. 026004226 of SG
maintained SG; and (e) with respect to BNP, account number 01419647 - CTAS, ABA
No. 021-001-033, Ref: A/C 30814 Starbird Funding Corporation of BNP maintained
at Deutsche Bank Trust Company Americas.

“Margin Call” is defined in Section 2.5(c) hereof.

“Margin Deficit” is defined in Section 2.5(c) hereof.

“Margin Maintenance” is defined in Section 2.5(c) hereof.

“Margin Maintenance Payment Date” is defined in Section 2.5(c) hereof.

“Margin Sufficiency” is defined in Section 3.3(a)(ii) hereof.

“Market Value” means at the time determined, for any Mortgage Loan (a) the
market value of such Mortgage Loan determined by the Servicer based upon the
then most recent posted net yield for 30-day mandatory future delivery furnished
by Fannie Mae, Freddie Mac, Ginnie Mae or another entity deemed most appropriate
by the Servicer and published and distributed by Telerate Mortgage Services, or,
if such posted net yield is not available from Telerate Mortgage Services, such
posted net yield obtained directly from Fannie Mae, Freddie Mac, Ginnie Mae or
another entity deemed most appropriate by the Servicer, or (b) if an appropriate
posted rate is not available, the value determined by the Servicer in good
faith, using commercially reasonable efforts, which efforts shall include
consulting with two or more entities that make a market in similar mortgage
loans, to determine such Market Value. Notwithstanding the foregoing, within
three (3) Business Days of the date upon which a Market Value determination is
provided, the Administrative Agent or any Purchaser may dispute the Servicer’s
determination of Market Value in writing to the Servicer and each of the
Purchasers. Upon receipt of such a notice, the Servicer and the Purchasers shall
make a good faith effort to resolve the discrepancy. If the discrepancy is not
resolved within seven (7) days in a manner satisfactory to each of the
Purchasers (an “Unresolved Dispute”), then the Administrative Agent shall obtain
a different market valuation (an “Additional Determination”). At any time the
Administrative Agent may, and upon an Unresolved Dispute, shall, obtain an
Additional Determination. If the Administrative Agent shall have obtained an
Additional Determination as of any determination date (which Additional
Determination may be from the Administrative Agent or any Affiliate thereof) and
the amount of the Additional Determination as of such determination date is more
than 0.50% less than the amount of the aggregate Market Values determined by the
Servicer on such determination date, then, the amount of the Additional
Determination shall be used as the Market Value for purposes of clause (A)(2)
and (A)(3) of the definition of “Recognized Value.” The Sellers shall be solely
responsible for the costs incurred with respect to such Additional
Determinations. The Administrative Agent shall notify the Servicer of the
variance between the Servicer’s determination of the Market Value and the
Additional Determinations and the source(s) used by the Administrative Agent to
determine the Additional Determinations. Following such notice and prior to the
next determination date, either (i) the Servicer and the Administrative Agent
will determine a mutually acceptable, reasonable, alternative valuation for the
Market Value of such Mortgage

 

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Loan or (ii) the Servicer shall use an amount equal to the Additional
Determination as the Market Value of such Mortgage Loan for subsequent
determination dates until clause (i) is satisfied in good faith.

“Material Adverse Effect” means, with respect to any Person, any material
adverse effect on (i) the validity or enforceability of this Agreement or any
other Transaction Document, (ii) the business, operations, total Property or
financial condition of such Person, (iii) the Mortgage Assets taken as a whole,
(iv) the enforceability or priority of the Lien in favor of the Administrative
Agent on any material portion of the Mortgage Assets, or (v) the ability of such
Person to fulfill its obligations under this Agreement or any other Transaction
Document.

“Maximum Facility Amount” means $1,500,000,000, as such amount may be reduced
pursuant to Section 2.1(c) of this Agreement.

“Maximum Rate” means the maximum non-usurious rate of interest that, under
applicable law, each of the Purchasers is permitted to contract for, charge,
take, reserve, or receive on the Repurchase Obligations.

“MERS” means Mortgage Electronic Registration Systems, Inc., a Delaware
corporation.

“MERS Designated Mortgage Loan” means a Mortgage Loan registered to or by the
related Seller on the MERS electronic mortgage registration system.

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

“Mortgage” means a mortgage or deed of trust or other security instrument
creating a Lien on real property, on a standard form as approved by Fannie Mae,
Freddie Mac or Ginnie Mae or such other form as any of the Sellers determines is
satisfactory for any Approved Take-Out Investor unless otherwise directed by the
Administrative Agent and communicated to the Custodian.

“Mortgage Assets” means, collectively:

(a) any and all Mortgage Loans purchased by or transferred to the Purchasers
pursuant to this Agreement that the Custodian has been instructed to hold for
the Administrative Agent for the benefit of the Purchasers pursuant to the
Custodial Agreement;

(b) any and all instruments, documents and other property of every kind or
description relating to the Mortgage Loans purchased by or transferred to the
Purchasers pursuant to the Agreement, of or in the name of any Seller, now or
hereafter for any reason or purpose whatsoever, in the possession or control of,
or in transit to, the Custodian;

(c) any and all general intangibles and Mortgage Loan Collateral that relate in
any way to the Mortgage Assets;

(d) any and all Take-Out Commitments and Hedges identified on Hedge Reports from
time to time prepared by the Servicer on behalf of any of the Sellers;

 

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(e) any and all contract rights, chattel paper, certificated securities,
uncertificated securities, financial assets, securities accounts or investment
property which constitute proceeds of the Mortgage Assets;

(f) this Agreement, the Servicer Performance Guaranty and the Subordination
Agreement, including all moneys due or to become due thereunder, claims of the
Sellers arising out of or for breach or default thereunder, and the right of the
Sellers to compel performance and otherwise exercise all remedies thereunder;

(g) any Advanced Funds; and

(h) any and all proceeds of any of the foregoing, including all Collections.

“Mortgage Asset Proceeds” means all amounts received by the Sellers, the
Servicer, the Administrative Agent, the Purchasers, the Custodian or any other
Person, in respect of the Mortgage Loans, whether in respect of principal,
interest, fees or other amounts, including, without limitation, (i) all amounts
received pursuant to Take Out Commitments or Hedges, and (ii) with respect to
any Mortgage Loan, all funds that are received from or on behalf of the related
Obligors in payment of any amounts owed (including, without limitation, purchase
prices, finance charges, escrow payments, interest and all other charges) in
respect of such Mortgage Loan, or applied to such amounts owed by such Obligors
(including, without limitation, insurance payments that Sellers or Servicer
applies in the ordinary course of its business to amounts owed in respect of
such Mortgage Loan and net proceeds of sale or other disposition of Property of
the Obligor or any other party directly or indirectly liable for payment of such
Mortgage Loan and available to be applied thereon).

“Mortgage File” means the mortgage documents pertaining to a particular Mortgage
Loan.

“Mortgage Loan” means a loan evidenced by a Mortgage Note and secured by a
Mortgage, which Mortgage Loan has been acquired by the Purchasers from any of
the Sellers by purchase pursuant to this Agreement (it being understood that
legal title thereof shall be retained by such Seller, or, in the case of a MERS
Designated Mortgage Loan, MERS as nominee for such Seller, and its successors
and assigns, in each case in trust for the Purchasers, solely for the purpose of
servicing such Mortgage Loan).

“Mortgage Loan Collateral” means all Mortgage Notes and related Principal
Mortgage Documents, Other Mortgage Documents, and other related collateral.

“Mortgage Note” means a promissory note, on a standard form approved by Fannie
Mae, Freddie Mac or Ginnie Mae or such other form as the Sellers determine is
satisfactory for any Approved Take-Out Investor unless otherwise directed by the
Administrative Agent and communicated to the Custodian.

“Mortgage Origination Date” means, with respect to each Mortgage Loan, the date
(transmitted to the Custodian) that is the later of (1) the date of the Mortgage
Note or (2) the date such Mortgage Loan was funded and disbursed to or at the
direction of the Obligor.

 

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“Multiemployer Plan” means a multiemployer plan defined in Sections 3(37) or
4001(a)(3) of ERISA or Section 414(f) of the Code to which Sellers or any ERISA
Affiliate is required to make contributions.

“Net Cash Proceeds” means, with respect to the issuance of any capital stock by
AHMIC, the amount of cash received by AHMIC in connection with such transaction
after deducting therefrom all fees (including, without limitation, investment
banking fees), commissions, costs and other expenses to the extent attributable
to such transaction.

“Non-Conforming FICO Score Trigger Event” means, with respect to Non-Conforming
Loans, that (A)(i) the Non-Conforming Pool Weighted Average FICO Score has been
reported, in a Custodian Daily Report, as less than 675 but equal to or more
than 650, (ii) a period of ten (10) days has elapsed from the date of receipt of
such report by the Administrative Agent and (iii) the Servicer has not provided
to the Administrative Agent a revised Non-Conforming Pool Weighted Average FICO
Score that is at least 675 or (B)(i) the Non-Conforming Pool Weighted Average
FICO Score has been reported, in a Custodian Daily Report, as less than 650,
(ii) a period of five (5) days has elapsed from the date of receipt of such
report by the Administrative Agent and (iii) the Servicer has not provided to
the Administrative Agent a revised Non-Conforming Pool Weighted Average FICO
Score that is at least 675.

“Non-Conforming Loan” means a Jumbo Loan, an Alt-A Loan, a Second-Lien Loan or
an Uncovered Mortgage Loan.

“Non-Conforming Loan-to-Value Ratio Trigger Event” means, with respect to
Non-Conforming Loans, that (A)(i) the weighted average Loan-to-Value Ratio has
been reported, in a Custodian Daily Report, as greater than 83% but equal to or
less than 90%, (ii) a period of ten (10) days has elapsed from the date of
receipt of such report by the Administrative Agent and (iii) the Servicer has
not provided to the Administrative Agent a revised weighted average
Loan-to-Value Ratio that is equal to or less than 83% or (B)(i) the weighted
average Loan-to-Value Ratio has been reported, in a Custodian Daily Report, as
greater than 90%, (ii) a period of five (5) days has elapsed from the date of
receipt of such report by the Administrative Agent and (iii) the Servicer has
not provided to the Administrative Agent a revised weighted average
Loan-to-Value Ratio that is equal to or less than 83%.

“Non-Conforming Pool Weighted Average FICO Score” means the ratio of (a) the
sum, for all Non-Conforming Loans, of the product for each Non-Conforming Loan
of (i) its FICO Score and (ii) its original principal balance to (b) the sum of
the original principal balances of all Non-Conforming Loans.

“Non-Continuing Purchasers” is defined in Section 2.7(c)(iii)(E).

“Obligor” means (i) with respect to each Mortgage Note included in the Mortgage
Assets, the obligor on such Mortgage Note and (ii) with respect to any other
agreement included in the Mortgage Assets, any person from whom any of the
Sellers is entitled to performance.

“Other Mortgage Documents” is defined in Section 3.2(c).

“Park Avenue” has the meaning specified in the preamble of this Agreement.

 

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“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

“Performance Guarantor” means AHMIC and its successors and assigns.

“Periodic Visit” is defined in Section 6.8.

“Permitted Transferee” is defined in Section 3.3(c).

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

“Portfolio Yield” means, with respect to any Collection Period, the percentage
equivalent to the amount computed as of the last day of such Collection Period
by multiplying (i) 12 by (ii) (a) the aggregate amount of interest accrued
(whether or not paid) with respect to all Eligible Mortgage Loans included in
the Mortgage Assets during such Collection Period divided by (b) the daily
average outstanding principal amount of all Eligible Mortgage Loans included in
the Mortgage Assets during such Collection Period.

“Price Differential” means, with respect to any Purchase outstanding hereunder
as of any date, the aggregate amount obtained by daily application of the
Pricing Rate for such Purchase to the Purchase Price for the Mortgage Loans
subject to such Purchase during the period commencing on (and including) the
Purchase Date for such Purchase and ending on (but excluding) the applicable
Repurchase Date (reduced by any amount of such Price Differential previously
paid by any Seller to the Administrative Agent, for the account of the
Purchasers, with respect to such Purchase).

“Price Differential Calculation Period” is defined in Section 2.15.

“Pricing Rate” means, for any Price Differential Calculation Period, either
(i) the Commercial Paper Rate, (ii) the Eurodollar Rate plus Bank Margin or
(iii) the Alternate Base Rate, as applicable and as determined in accordance
with Sections 2.9 and 2.10; provided, however, that if an Event of Default
exists, the Default Rate shall apply in accordance with Section 2.12.

“Principal Mortgage Documents” is defined in Section 3.2(b).

“Program Documents” means, in the case of an Issuer, the related Liquidity
Agreement relating to this Agreement and the other documents executed and
delivered in connection therewith, as each may be amended, supplemented or
otherwise modified from time to time.

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

“Purchase” means any Transaction pursuant to which the Purchasers purchase
Mortgage Assets from the Sellers.

 

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“Purchase Date” means the date, identified by the Sellers in the relevant
Purchase Report, as the date on which a Purchase is to be made.

“Purchase Price” for any Purchase means an amount equal to the Recognized Value
of the Mortgage Assets that are the subject of such Purchase.

“Purchase Report” means a request, in the form of Exhibit C to this Agreement,
for a Purchase pursuant to Article II.

“Purchased Mortgage Assets” means any Mortgage Asset which has been purchased by
any Purchaser pursuant to Section 2.1(a).

“Purchased Mortgage Loan” means a Mortgage Loan included in the Purchased
Mortgage Assets.

“Purchasers” means, collectively, the Issuers and the Banks.

“Rating Agency” means S&P, Moody’s and Fitch.

“Recognized Value” means

(A) with respect to each Eligible Mortgage Loan and at all times, an amount
equal to the Applicable Purchase Rate for such Eligible Mortgage Loan times the
least of:

(1) the lesser of the original principal amount of such Eligible Mortgage Loan
or the acquisition price paid by the related Seller on the closing and funding
of such Eligible Mortgage Loan;

(2) a ratable amount determined by multiplying (a) the weighted average Market
Value (expressed as a percentage of aggregate par) of all Mortgage Loans owned
by the Sellers, as reflected on the most recent Custodian Daily Report (it being
understood that the Servicer shall provide to the Custodian such Market Values
as of the close of business on the last Business Day of the previous week (or,
while a Default or Event of Default is continuing, more frequently if so
directed by the Administrative Agent) times (b) the original principal amount of
such Eligible Mortgage Loan; and

(3) while a Default or Event of Default is continuing or upon the direction of
any Managing Agent, the Market Value of such Eligible Mortgage Loan; and

(B) with respect to the Collection Account, the balance of collected funds
therein that is not subject to any Lien in favor of any Person other than the
Lien in favor of the Administrative Agent for the benefit of the Purchasers;

provided, however, that

(a) at any time, the portion of total Recognized Value that may be attributable
to Jumbo Loans shall not exceed fifty percent (50%) of the Maximum Facility
Amount;

 

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(b) at any time, the portion of total Recognized Value that may be attributable
to Super Jumbo Loans shall not exceed five percent (5%) of the Maximum Facility
Amount, which percentage is a sublimit of the limitation set forth in clause
(a), equal to 10% of the 50% set forth in clause (a) above;

(c) at any time, the portion of total Recognized Value that may be attributable
to Alt-A Loans shall not exceed thirty-five percent (35%) of the Maximum
Facility Amount;

(d) at any time, the portion of total Recognized Value that may be attributable
to Non-Conforming Loans shall not exceed fifty percent (50%) of the Maximum
Facility Amount;

(e) at any time, the portion of total Recognized Value that may be attributable
to Mortgage Loans with a Loan-to-Value Ratio greater than 95% shall not exceed
five percent (5%) of the Maximum Facility Amount;

(f) at any time, the portion of total Recognized Value that may be attributable
to Eligible Mortgage Loans (a) with a FICO Score less than or equal to 640 shall
not exceed twenty-five percent (25%) of the Maximum Facility Amount and (b) with
a FICO Score less than or equal to 620 shall not exceed five percent (5%) of the
Maximum Facility Amount;

(g) at any time, the portion of total Recognized Value that may be attributable
to Mortgage Loans for which the Mortgage Notes have been withdrawn pursuant to
Section 3.5 of the Custodial Agreement shall not exceed 2.5% of the Maximum
Facility Amount;

(h) [Reserved];

(i) at any time, the portion of total Recognized Value that may be attributable
to Mortgage Loans that have been Eligible Mortgage Loans owned by the Sellers
for more than 90 days shall be zero; provided, that, this clause (i) shall not
apply to 5% of the total Recognized Value that may be attributable to Mortgage
Loans that have been Eligible Mortgage Loans owned by the Purchasers for more
than 90 days but less than 180 days;

(j) a Mortgage Loan that ceases to be an Eligible Mortgage Loan shall have a
Recognized Value of zero;

(k) at any time, (A) except the first five and last five Business Days of any
month, the portion of total Recognized Value that may be attributable to Wet
Loans shall not exceed thirty percent (30%) of the Maximum Facility Amount, and
(B) during the first five and last five Business Days of any month, the portion
of total Recognized Value that may be attributable to Wet Loans shall not exceed
fifty percent (50%) of the Maximum Facility Amount (it being understood that on
any day the Recognized Value of a Wet Loan with respect to which the related
Principal Mortgage Documents have not been delivered to the Custodian within
nine (9) Business Days after the date of origination of the Wet Loan shall be
zero until such Principal Mortgage Documents are so delivered);

(l) at any time, a Mortgage Loan with respect to which to the related Obligor is
sixty (60) days or more in payment default, shall have a Recognized Value of
zero;

 

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(m) at any time, the portion of Recognized Value that may be attributable to
Second-Lien Loans shall not exceed fifteen percent (15%) of the Maximum Facility
Amount;

(n) at any time, the portion of Recognized Value that may be attributable to
Uncovered Mortgage Loans shall not exceed fifteen percent (15%) of the Maximum
Facility Amount; provided that any Uncovered Mortgage Loan shall have a
Recognized Value of zero if it is not a Second-Lien Loan or HELOC; provided,
further, that any Mortgage Loan that is not subject to significant interest rate
volatility and is approved by the Managing Agents may be included in the portion
of total Recognized Value that may be attributable to Uncovered Mortgage Loans.;
and

(o) at any time, the portion of Recognized Value that may be attributable to any
Mortgage Loan with maximum term to maturity in excess of thirty years but not
greater than forty years shall not exceed ten percent (10%) of the Maximum
Facility Amount.

“Reference Banks” shall mean leading banks selected by the Administrative Agent
and engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London and
(ii) which have been designated as such by the Administrative Agent.

“Regulation T, U, X and Z,” respectively, mean Regulation T, U, X and Z
promulgated by the Federal Reserve Board as in effect from time to time, or any
successor regulations thereto.

“Regulatory Change” is defined in Section 2.16.

“Report of Visit” is defined in Section 6.8.

“Repurchase Agreement” means this Repurchase Agreement.

“Repurchase Date” shall mean, with respect to any Transaction and each Purchased
Mortgage Loan, the earlier of (a) the Termination Date and (b) the date on which
such Purchased Mortgage Loan shall be repurchased by a Seller hereunder, which
Repurchase Date, under any circumstance, shall not be later than the date that
is one hundred eighty (180) calendar days after the initial Purchase Date
therefor.

“Repurchase Obligations” means any and all present and future indebtedness,
obligations, and liabilities of the Sellers to any of the Purchasers, the
Custodian, each Managing Agent, each Affected Party, each Indemnified Party and
the Administrative Agent, including all Repurchase Prices, and all renewals,
rearrangements and extensions thereof, or any part thereof, arising pursuant to
this Agreement or any other Transaction Document, and all Price Differential and
fees accrued thereon, and attorneys’ fees and other costs incurred in the
drafting, negotiation, enforcement or collection thereof, regardless of whether
such indebtedness, obligations, and liabilities are direct, indirect, fixed,
contingent, joint, several or joint and several.

“Repurchase Price” means the price at which the Purchased Mortgage Assets are to
be transferred from the Purchasers to any of the Sellers upon termination of a
Transaction, which will be determined in each case as the sum of the Purchase
Price and the Price Differential as of the end of the related Price Differential
Calculation Period.

 

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“Reserve Account” is defined in Section 2.8, it being understood that such
account is assigned to the Administrative Agent pursuant to the Reserve Account
Control Agreement and the Administrative Agent has the authority to direct the
transfer of funds from the Reserve Account.

“Reserve Account Bank” means the institution then holding the Reserve Account
pursuant to Section 2.8, which institution shall be an Eligible Institution.

“Reserve Account Control Agreement” means the Second Amended and Restated
Reserve Account Control Agreement, dated as of even date herewith, between the
Sellers, the Servicer, the Administrative Agent and the Reserve Account Bank,
substantially in the form attached hereto as Exhibit K, as may be amended,
modified, supplemented or replaced.

“Required Reserve Account Amount” means (i) on any date on which the most recent
Servicer Monthly Report shows LIBOR is less than 4%, 0.25% of the Maximum
Facility Amount on such date, (ii) on any date on which the most recent Servicer
Monthly Report shows LIBOR is less than 5% but greater than or equal to 4%,
0.34% of the Maximum Facility Amount on such date, (iii) on any date on which
the most recent Servicer Monthly Report shows LIBOR is less than 6% but greater
than or equal to 5%, 0.42% of the Maximum Facility Amount on such date and
(iv) on any date on which the most recent Servicer Monthly Report shows LIBOR is
equal to or greater than 6%, 0.50% of the Maximum Facility Amount on such date.

“Requirement of Law” as to any Person means the articles of incorporation,
by-laws, certificate of formation and limited liability company agreement or
other organizational or governing documents of such Person, and any law,
statute, code, ordinance, order, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other determination,
direction or requirement (including, without limitation, any of the foregoing
that relate to energy regulations and occupational, safety and health standards
or controls and any hazardous materials laws) of any 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.

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

“Second Amended and Restated Administrative Agent Fee Letter” means that certain
letter, dated as of the date hereof, among the Administrative Agent, the Sellers
and the Servicer, regarding fees for the Administrative Agent.

“Second-Lien Loan” means a Mortgage Loan that is secured by particular property
with respect to which at least one other higher-priority Mortgage Loan exists
secured by the same property.

“Sellers” has the meaning specified in the preamble of this Agreement.

“Seller’s Credit and Collection Policy” means with respect to each Seller, the
Seller’s Credit and Collection Policy, attached hereto as Exhibit L.

 

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“Servicer” means at any time the Person then authorized pursuant to Section 11.1
to administer and collect Mortgage Loans on behalf of the Purchasers. The
initial Servicer shall be American Home Mortgage Servicing, Inc.

“Servicer Default” means (a) any Event of Default, to the extent relating to the
Servicer (in its capacity as Servicer only), arising under Sections 8.1(a), (b),
(c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o), (u), (v), (w),
(x), (cc) in each case, without giving effect to any provisions in such sections
that make such sections applicable only so long as the Servicer is one of the
Sellers, (b) if the Servicer is one of the Sellers, American Home Mortgage
Investment Corp., as the Performance Guarantor, shall cease to own directly or
indirectly 100% of all of the stock of the Servicer, or (c) if the Servicer is
one of the Sellers, (i) the Servicer’s Tangible Net Worth shall be less than
$30,000,000 or (ii) the Servicer’s Tangible Net Worth, combined with the
Tangible Net Worth of American Home Mortgage Corp. and American Mortgage
Acceptance, Inc., shall be less than $147,000,000.

“Servicer Fee” is defined in Section 2.4(b).

“Servicer Fee Rate” is defined in Section 2.4(b).

“Servicer Monthly Report” is defined in Section 3.7.

“Servicer Performance Guaranty” means the Second Amended and Restated Servicer
Performance Guaranty, in the form attached hereto as Exhibit G, of even date
herewith, made by the Performance Guarantor in favor of the Administrative Agent
for the benefit of the Purchasers.

“Settlement Date” means the 15th day of each calendar month or, if such day is
not a Business Day, the next succeeding Business Day, provided, however, that on
and after the Termination Date, the Administrative Agent may, with the consent
of the Managing Agents, by notice to the Sellers and the Servicer, select other
days to be Settlement Dates (including days occurring more frequently than once
per month).

“Shipping Request” means the shipping request presented by the Sellers or the
Servicer to the Custodian substantially on the form attached as Exhibit D-5A (as
amended, modified or supplemented from time to time as agreed to by the
Administrative Agent, the Managing Agents, the Sellers and the Custodian).

“Shortfall Amount” means, with respect to the last day of any Price Differential
Calculation Period or any Settlement Date, the excess, if any, of (a) all
amounts due pursuant to (i) Section 2.7(c)(iii)(B) or Section 2.7(c)(iv)(C) on
the last day of such Price Differential Calculation Period occurring prior to,
on or after the Termination Date, as applicable, (ii) Section 2.7(c)(iii)(A),
(C), (D), (E), or (G), on any such Settlement Date occurring prior to the
Termination Date or (iii) Section 2.7(c)(iv)(A), (B), (E), (F), or (H), on any
such Settlement Date occurring on or after the Termination Date, over (b) the
sum of the collections then held by the Servicer for the Purchasers and the
Administrative Agent pursuant to Section 2.7(c)(ii) plus collected funds then on
deposit in the Collection Account.

“SG” has the meaning specified in the preamble of this Agreement.

 

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“SG Group” means Barton and each Group Bank of Barton.

“Special Indemnified Amounts” is defined in Section 11.5.

“Special Indemnified Party” is defined in Section 11.5.

“Starbird” has the meaning specified in the preamble of this Agreement.

“Subordinated Debt” means the Debt of AHMIC and its Subsidiaries subordinated to
the Credit Agreement Obligations in the manner and to the extent required by
Bank of America, N.A., as administrative agent under the Credit Agreement,
pursuant to written subordination agreements satisfactory in form and substance
to Bank of America, N.A., as administrative agent under the Credit Agreement.

“Subordination Agreement” means the Second Amended and Restated Subordination
Agreement, dated as of the date hereof, substantially in the form attached as
Exhibit B hereto, executed by the Performance Guarantor and certain of their
respective Affiliates, if applicable, in favor of the Sellers and the
Administrative Agent for the benefit of the Purchasers.

“Subsidiary” means, with respect to any Person, any corporation or other entity
of which securities having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the time
directly or indirectly owned by such Person, or one or more of its Subsidiaries,
or by such Person and one or more of its Subsidiaries.

“Super Jumbo Loan” means a Jumbo Loan having an original principal balance in
excess of $999,999 but not more than $3,000,000.

“Take-Out Commitment” means a current, valid, binding, enforceable, written
commitment, issued by an Approved Take-Out Investor, to purchase mortgage loans
from one of the Sellers from time to time at a specified price (or a specified
spread to an agreed-upon index), which commitment is not subject to any term or
condition (i) that is not customary in commitments of like nature or (ii) that,
in the reasonably anticipated course of events, cannot be fully complied with
prior to the expiration thereof, in which a perfected and first-priority
security interest has been granted to the Administrative Agent.

“Take-Out Commitment Master Agreement” means with respect to which there is a
loan-specific Take-Out Commitment, the master flow sale agreement, investor bulk
sales agreement, or similar agreement setting forth the basic terms of sales to
the related Approved Take-Out Investor.

“Tangible Net Worth” means, with respect to any Person, the excess of total
assets of such Person over the total liabilities of such Person determined in
accordance with GAAP, but excluding from the determination of total assets:
(a) all assets which would be classified as intangible assets under GAAP,
including, without limitation, goodwill (whether representing the excess cost
over book value of assets acquired or otherwise), patents, trademarks, trade
names, copyrights, franchises and deferred charges (including, without
limitation, unamortized debt discount and expense, organization costs and
research and product development costs), (b) loans or other extensions of credit
to officers, employees, shareholders or Affiliates of such Person (other than
the Servicer, the Sellers and the Performance Guarantor) and (c) investments in
Subsidiaries of such Person (other than the Servicer, the Sellers and the
Performance Guarantor).

 

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“Termination Date” means the earliest to occur of (a) November 20, 2007 unless
such date shall be extended pursuant to Section 2.1(b) then the date specified
in such Extension Request, (b) the date on which the Maximum Facility Amount is
terminated by the Sellers pursuant to Section 2.1(d), and (c) the date, on or
after the occurrence of an Event of Default, determined pursuant to Section 8.2.

“Transaction Document” means any of this Agreement, the Collection Account
Control Agreement, the Reserve Account Control Agreement, the Disbursement
Account Control Agreement, the Custodial Agreement, the Second Amended and
Restated Administrative Agent Fee Letter, the Amended and Restated Managing
Agents Fee Letter, the Subordination Agreement, the Servicer Performance
Guaranty, and any and all other agreements or instruments now or hereafter
executed and delivered by or on behalf of the Sellers in connection with, or as
security for the payment or performance of any or all of the Repurchase
Obligations, as any of such documents may be renewed, amended, restated or
supplemented from time to time.

“Transactions” has the meaning set forth in the recitals of this Agreement.

“Transfer Request” is defined in Section 3.3(a).

“UCC” means the Uniform Commercial Code as adopted in the applicable state, as
the same may hereafter be amended.

“Uncovered Mortgage Loan” means a Mortgage Loan that is not covered by a Hedge
or a loan specific Take-Out Commitment.

“Underwriting Guidelines” means, with respect to each Seller, the Seller’s
Underwriting Guidelines, a copy of which has been provided to the Administrative
Agent.

“VA” means the Department of Veterans Affairs, or any successor thereto.

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

“Wet Loans” is defined in Section 2.3(c).

“Wet Purchase” is defined in Section 2.3(c).

1.2. Other Definitional Provisions.

(a) Unless otherwise specified therein, all terms defined in this Agreement have
the above-defined meanings when used in any Transaction Document, certificate,
report or other document made or delivered pursuant hereto.

 

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(b) The words “hereof,” “herein,” “hereunder” and similar terms when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references herein are references to articles, sections,
subsections, schedules and exhibits to this Agreement unless otherwise
specified.

(c) As used herein or in any Transaction Document, certificate, report or other
document made or delivered pursuant hereto, accounting terms relating to any
Person and not specifically defined in this Agreement or therein shall have the
respective meanings given to them under GAAP.

(d) All accounting and financial terms used — and compliance with each financial
covenant — in the Transaction Documents shall be determined under GAAP; however,
unless the Administrative Agent and the Managing Agents have agreed (in writing)
to the contrary, the determinations concerning the financial covenant found in
Section 7.1 and the Tangible Net Worth of the Servicer (so long as the Servicer
is one of the Sellers), including determinations of Deferred Income under SFAS
91 and SFAS 122, shall be made under GAAP, and SFAS 91 and SFAS 122, as in
effect on the date of this Agreement. All accounting principles shall be applied
on a consistent basis so that the accounting principles in a current period are
comparable in all material respects to those applied during the preceding
comparable period.

ARTICLE II

TRANSACTIONS, REPURCHASES AND MARGIN MAINTENANCE

2.1. Maximum Facility Amount.

(a) Subject to the terms of this Agreement, and so long as (i) the total
Invested Amount never exceeds the Maximum Facility Amount, (ii) the Invested
Amount never exceeds the total Recognized Value of all Eligible Mortgage Assets,
(iii) no Purchase ever exceeds the Availability, and (iv) Purchases are only
made on Business Days before the Termination Date, an Issuer may, in its sole
discretion, make a Purchase (which Purchases are to be made pro rata based on
the Issuer Facility Amounts) and to the extent that an Issuer does not make such
Purchase, its Group Banks shall, ratably in accordance with their Bank
Commitments, make Purchases from the Sellers from time to time in such amounts
as may be requested by the Sellers pursuant to Section 2.3, so long as each
Purchase is the least of (x) the Availability, (y) the Available Recognized
Value, and (z) $25,000,000 or integral multiples of $50,000 in excess thereof.
Within the limits of the Maximum Facility Amount, the Sellers may sell, and,
after any repurchase (whether pursuant to Section 2.5 or Section 3.3(a) of this
Agreement or otherwise), may resell under this Section 2.1. Notwithstanding the
foregoing, subject to the terms of this Agreement, Barton shall not decline to
make any Purchase requested by the Sellers as long as the conditions set forth
in the first sentence of this paragraph are satisfied; provided that, Barton may
fund such Purchase with the issuance of commercial paper or may assign such
Purchase to its related Group Banks; and provided further that, the Group Banks
related to Barton shall have no obligation hereunder to make Purchases.
Furthermore, it is understood that the Sellers shall request a new Purchase with
a requested Purchase Date on the Initial Purchase Date, and upon such date the
Purchases made by the Purchasers in each Bank Group shall be adjusted so that
they are pro rata in accordance with the Issuer Facility Amounts.

 

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(b) The Sellers may, from time to time by written request to the Purchasers, the
Managing Agents and the Administrative Agent (each such notice being an
“Extension Request”) given not later than 60 days and not sooner than 75 days
prior to each Annual Extension Date, request an extension of the then applicable
Annual Extension Date. If the Purchasers, the Managing Agents and the
Administrative Agent consent, in their sole discretion, to such Extension
Request, then (x) the Termination Date shall not occur as of the then applicable
Annual Extension Date, and (y) the Annual Extension Date shall be extended as
described in the definition of “Annual Extension Date.” With respect to any
Group Bank, if the related Managing Agent, in its capacity as a Bank, declines
to consent to an Extension Request, then the other Purchasers in such Group Bank
shall be deemed to have declined to consent to such Extension Request, unless a
new Managing Agent is selected and approved by both the Sellers and the
Administrative Agent (which approval shall not be unreasonably withheld). If any
Purchaser declines to consent to an extension requested pursuant to this
Section 2.1, but the other Purchasers nevertheless desire to consent to the
extension or confirmation, then the extension shall be granted, and at the
option of the Managing Agent(s) of the extending Purchasers, either (a) the
Maximum Facility Amount shall be reduced by the Bank Commitment of such
non-extending Purchaser on what would have been the then existing Annual
Extension Date but for the extension, or (b) the Managing Agent(s) of the
extending Purchasers shall find a replacement for such non-extending Purchaser.
If Calyon and La Fayette decline to consent to the extension, but the other
Purchasers nevertheless desire to consent to the extension, then the extension
shall be granted, and Calyon shall cease to be the Administrative Agent and one
of the Managing Agents selected by the Sellers shall become the Administrative
Agent hereunder. To the extent that any Purchaser declines to consent to the
extension of the Annual Extension Date, the Repurchase Obligations of such
non-extending Purchaser will be repaid pursuant to Section 2.7(c)(iii) hereof
and its Bank Commitment permanently reduced to $0 as of the date of the then
existing Annual Extension Date. Any failure of any party to respond to the
Sellers’ request for an extension within thirty (30) days of such request shall
be deemed a denial of such request by such party. Any such extension may be
accompanied by such additional fees as the parties shall mutually agree.
Notwithstanding anything else to the contrary herein, the Termination Date shall
occur automatically without further action on the part of the Purchasers, the
Managing Agents or the Administrative Agent, on each Annual Extension Date
unless an Extension Request has been granted pursuant to this paragraph.

(c) The Sellers may, upon at least thirty (30) days prior irrevocable notice to
the Administrative Agent, but no more than once every three months, reduce the
Maximum Facility Amount; provided, however, that each partial reduction shall be
in the aggregate amount of $50,000,000 and in integral multiples of $5,000,000
in excess thereof; provided further, however that no such reduction shall reduce
the Maximum Facility Amount below the greater of (i) the total Invested Amount
or (ii) $250,000,000. Any partial reduction in the Maximum Facility Amount will
reduce the Bank Commitment of each Group Bank ratably.

(d) The Sellers may, upon at least thirty (30) days prior irrevocable notice to
the Administrative Agent, terminate the Maximum Facility Amount in its entirety
upon payment in full of all Repurchase Obligations.

 

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(e) The Administrative Agent shall give each Managing Agent prompt notice of
each written notice received by it from the Sellers pursuant to this
Section 2.1.

2.2. [Reserved].

2.3. Notice and Manner of Obtaining Purchases.

(a) Purchases.

(i) The Sellers shall give the Administrative Agent and the Custodian notice of
each request for a Purchase, pursuant to a Purchase Report, and in accordance
with the provisions of Section 4.1 and Section 4.2 hereof. The Administrative
Agent shall promptly forward a copy of such Purchase Report to each Managing
Agent. On the Purchase Date specified in the Purchase Report and subject to all
other terms and conditions of this Agreement, each Issuer may, in its discretion
(except that Barton shall), make available to its Managing Agent at the office
of such Managing Agent set forth in Section 13.1, in immediately available
funds, its share of the Purchase.

(ii) In the event that an Issuer (other than Barton) shall elect not to fund a
Purchase requested by the Sellers, each related Group Bank agrees that it shall,
on the Purchase Date specified in the Purchase Report and subject to all other
terms and conditions of this Agreement, make available to its Managing Agent at
the office of the Managing Agent set forth in Section 13.1, in immediately
available funds, an amount equal to the product of (x) such Bank’s Bank
Commitment Percentage, multiplied by (y) the portion of such Purchase that such
Issuer or Issuers have elected not to fund.

(iii) After each Managing Agent’s receipt of funds pursuant to the preceding
paragraph (i) or (ii) and upon fulfillment of the applicable conditions set
forth in Article IV, each Managing Agent will make such funds as requested by
the Sellers in the related Purchase Report available to the Sellers in
immediately available funds. So long as the Sellers are otherwise entitled to
make a specific request to purchase Purchases, Purchase Reports that are
received timely in accordance with Section 4.2(a), on a Business Day will be
funded on the next Business Day following receipt of the Purchase Report.

(iv) Notwithstanding the foregoing, a Bank shall not be obligated to make
Purchases under this Section 2.3 at any time to the extent that the amount of
all Purchases made by such Bank would exceed such Bank’s Bank Commitment less
the outstanding and unpaid principal amount of any loans or purchases made by
such Bank under a Liquidity Agreement. In addition, notwithstanding the
foregoing, Barton shall not be obligated to make Purchases under this
Section 2.3 at any time to the extent that the principal amount of all Purchases
made by Barton would exceed Barton’s Issuer Facility Amount less the outstanding
and unpaid principal amount of any loans or purchases made by the related Group
Banks under the related Liquidity Agreement. Each Bank’s obligation shall be
several, such that the failure of any Bank to make available to the Sellers any
funds in connection with any Purchase shall not relieve any other Bank of its
obligation, if any, hereunder to make funds available on the date of such
Purchase, but no Bank shall be responsible for the failure of any other Bank to
make funds available in connection with any Purchase. No Bank that is a member
of one Group shall be obligated to make funds available in respect of another
Group of which it is not a member.

 

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(b) Type of Purchase.

(i) Each Purchase by an Issuer shall initially be funded by the issuance of
commercial paper by such Issuer; provided that Purchases made by Barton may be
initially funded by the issuance of Commercial Paper Notes or by assigning such
Purchases to the related Group Bank.

(ii) Each Purchase by a Bank shall be either a Base Rate Purchase or a
Eurodollar Purchase, as determined pursuant to Section 2.15(a).

(c) Wet Purchases. The Sellers may from time to time request that certain
Purchases be funded prior to the delivery to the Custodian of the corresponding
Principal Mortgage Documents (individually, a “Wet Purchase”; collectively, “Wet
Purchases”). Purchases in respect of Wet Purchases shall be made in accordance
with Section 2.3(a), subject to the terms and conditions of this Agreement,
including, without limitation, the following additional terms and conditions:

(i) Pursuant to an Assignment, the Sellers shall grant to the Administrative
Agent for the benefit of the Purchasers, from the Purchase Date of each Wet
Purchase, all right, title and interest (subject to the repurchase right
hereunder) in the Mortgage Loans identified in Schedule III to said Assignment
(such Mortgage Loans being sometimes called “Wet Loans,” it being understood
that the term “Wet Loans” shall include Advanced Funds);

(ii) The Assignment in connection with the Purchase Report delivered by the
Sellers to the Administrative Agent and the Custodian, pursuant to which the
Sellers requests a Wet Purchase, shall describe the Mortgage Note or Mortgage
Notes to be delivered to the Custodian in connection therewith by the loan
number assigned by one of the Sellers, original principal amount, the amount
funded (minus discount points paid to such Seller) by one of the Sellers,
Obligor’s name and interest rate;

(iii) Within nine (9) Business Days after the date of origination of a Wet Loan,
the Sellers shall deliver to the Custodian the Principal Mortgage Documents
pertaining to such Wet Loan identified on Schedule III of the related
Assignment;

(iv) At any time, (A) except the first five and last five Business Days of any
month, the portion of total Recognized Value that may be attributable to Wet
Loans shall not exceed thirty percent (30%) of the Maximum Facility Amount and
(B) during the first five and last five Business Days of any month, the portion
of total Recognized Value that may be attributable to Wet Loans shall not exceed
fifty percent (50%) of the Maximum Facility Amount (it being understood that on
any day the Recognized Value of a Wet Loan with respect to which the related
Principal Mortgage Documents have not been delivered to the Custodian within
nine (9) Business Days after the date of origination of the applicable Wet Loan
shall be zero until such Principal Mortgage Documents are so delivered);

 

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(v) The Sellers shall not request any Wet Purchase, and no Wet Purchase shall be
made, in respect of any Mortgage Loan that is closed with an escrow agent other
than the relevant title insurance company, unless at the time of such request,
the Sellers are entitled to the benefit of Closing Protection Rights with
provisions required by the Administrative Agent (it being understood that the
Administrative Agent has a security interest in all Closing Protection Rights).

Each request by the Sellers for a Wet Purchase shall be automatically deemed to
constitute a representation and warranty by the Sellers to the effect that
immediately before and after giving effect to such Purchase, the terms and
conditions specified in the foregoing clauses (i) through (v) and specified in
Section 4.1 are and shall be satisfied in full as of the related Purchase Date.

(d) Failure to Deliver Principal Mortgage Documents. The failure to deliver
Principal Mortgage Documents by the ninth Business Day, as required by
subparagraph (iii) of Section 2.3(c) and elsewhere in this Agreement, shall not
be treated as a Default or an Event of Default so long as the Administrative
Agent is satisfied that each such failure, when considered in the light of past
and other contemporaneous failures, does not have a Material Adverse Effect;
however, (i) if any such Principal Mortgage Documents related to such Wet Loans
are not so delivered by such ninth Business Day, the Sellers shall make a
mandatory repurchase or transfer of additional Mortgage Assets so that after
giving effect thereto, the Recognized Value of Eligible Mortgage Assets
(excluding such Wet Loans) shall equal or exceed the Invested Amount, and
(ii) such Wet Loan shall not be an Eligible Mortgage Loan and shall have a
Recognized Value of zero until such Principal Mortgage Documents shall have been
delivered to the Custodian in connection with a subsequent Purchase.

The Sellers diligently shall pursue delivery to the Custodian of all Principal
Mortgage Documents pertaining to any Wet Purchases.

2.4. Fees.

(a) The Sellers shall pay to the Administrative Agent and to each Managing Agent
(for itself and the Purchasers for which it acts) the related fees, costs and
expenses set forth in the Second Amended and Restated Administrative Agent Fee
Letter and the Amended and Restated Managing Agents Fee Letter, as applicable,
such fees, costs and expenses to be payable at such times and in such amounts as
shall be specified thereunder.

(b) The Sellers shall pay to the Servicer a fee (the “Servicer Fee”) of 0.5% per
annum (the “Servicer Fee Rate”) on the aggregate outstanding principal balance
of the Eligible Mortgage Loans from the date hereof until the Invested Amount is
indefeasibly paid in full, payable monthly in arrears on each Settlement Date.
The Servicer Fee shall be payable only from Collections pursuant to, and subject
to the priority of payments set forth in, Section 2.7(c).

2.5. Repurchases, Prepayments and Margin Maintenance.

(a) Repurchases.

 

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(i) Simultaneously with each Purchase, the Sellers hereby promise, jointly and
severally, to pay in full on the related Repurchase Date the aggregate
Repurchase Price relating to the Purchased Mortgage Assets being repurchased by
the Sellers.

(ii) The Sellers hereby promise, jointly and severally, to pay to the related
Managing Agent, for the account of the related Purchaser as part of the
Repurchase Price, Price Differential at the rate specified in the applicable
Purchase Report on each Purchase entered into hereunder with such Price
Differential to be calculated for the period from and including the Purchase
Date of such Purchase up to but excluding the date on which the related
Repurchase Price shall be paid in full. Notwithstanding the foregoing, the
Sellers hereby promise, jointly and severally, to pay to the related Managing
Agent, for the account of the related Purchaser, Price Differential at the
Default Rate on the amount of any Repurchase Price and on any other amount
payable by the Sellers hereunder that shall not be paid in full when due
(whether at stated maturity, by acceleration or by mandatory prepayment or
otherwise) for the period on each Settlement Date. Price Differential shall be
payable on each Settlement Date in accordance with Section 2.7.

(iii) It is understood and agreed that, unless and until a Default or an Event
of Default shall have occurred and be continuing, the applicable Seller shall be
entitled to the proceeds of all Purchased Mortgage Loans subject to Purchases
outstanding hereunder subject to Margin Maintenance; provided, that at any time
while a Default or Event of Default has occurred and is continuing, upon notice
from the Administrative Agent, the Sellers shall promptly deliver to the
Administrative Agent, for the account of the Purchasers, all proceeds of such
Purchased Mortgage Loans.

(iv) Unless otherwise indicated in an Assignment relating to a Purchase, all
Purchases may be repurchased upon demand. In the case of Purchases repurchasable
on demand, such demand by any of the Sellers shall be for a repurchase of all
Purchased Mortgage Assets subject to the related Transaction and shall be made
no later than 11:00 a.m. New York City time on the Business Day immediately
preceding the day on which such repurchase will be effected, which repurchase
must also be on a Business Day, all subject to Section 2.5(b).

(v) The Bank Commitments shall continue in effect until the expiration of the
Termination Date or the earlier termination by the Sellers in accordance with
Section 2.1(d) hereof.

(b) Early Repurchases without Corresponding Assignments. The Purchasers hereby
agree that the Sellers may, at any time and from time to time with two
(2) Business Days’ notice to the Administrative Agent, repurchase Mortgage
Assets that are the subject of a Transaction without a corresponding
substitution or assignment of new Mortgage Assets by paying the applicable
Repurchase Price so long as the aggregate Repurchase Price is at least
$5,000,000 or integral multiples of $500,000 in excess thereof, without premium
or penalty other than Consequential Loss, if any. The Administrative Agent shall
give each Managing Agent prompt notice of any such notice. Notwithstanding the
foregoing, any Repurchase Price shall include accrued Price Differential on the
related Purchase Price. After giving notice that a repurchase will be made, the
Sellers shall be liable to each Affected Party for any Consequential Loss
resulting from such repayment (including repurchases where the Price
Differential forming a part of the

 

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Repurchase Price at the Commercial Paper Rate or Eurodollar Rate and such
repurchase is to be on a day other than the last day of the related Price
Differential Calculation Period) or the failure to make a repurchase (with
accrued and unpaid Price Differential thereon) designated in any such notice.

(c) Margin Maintenance.

(i) Daily until the expiration of the Termination Date (or less frequently if
all Purchasers, in their sole and absolute discretion, so elect), the Custodian
shall determine (A) the aggregate Recognized Value of all Purchased Mortgage
Assets held by the Purchasers and (B) the Repurchase Price as of such date, and
the Maximum Facility Amount as of such date.

(ii) If, on any date, the aggregate Purchase Price exceeds the total Recognized
Value of all Purchased Mortgage Assets held by the Purchasers that are Eligible
Mortgage Assets (a “Margin Deficit”), the Administrative Agent may, in its sole
and absolute discretion, or shall if directed by the Majority Banks, by notice
to the Sellers (a “Margin Call”), require the Sellers to transfer to the
Purchasers cash or additional Eligible Mortgage Assets that are reasonably
acceptable to the Purchasers (“Additional Purchased Mortgage Assets”) to
eliminate such deficiency (“Margin Maintenance”).

(iii) Upon receipt of notice from the Administrative Agent at or prior to 11:00
a.m. New York City time (which may be transmitted by facsimile), each of the
Sellers, as applicable, in its sole discretion, shall transfer either cash or
the Additional Purchased Mortgage Assets no later than the close of business on
the Business Day immediately following the date on which a Margin Call is given
(“Margin Maintenance Payment Date”). Any cash transferred to any Purchaser
pursuant hereto shall be held by the Custodian until the Repurchase Date and
shall be applied against the Repurchase Price on the next Repurchase Date.

(iv) Each Purchaser’s election, in its sole and absolute discretion, not to make
a Margin Call at any time there is a Margin Deficit shall not in any way limit
or impair its right to make a Margin Call at any time a Margin Deficit exists.

2.6. Business Days.

If the date for any payment under this Agreement falls on a day that is not a
Business Day, then for all purposes of this Agreement the same shall be deemed
to have fallen on either (a) the next following Business Day, and such extension
of time shall in such case be included in the computation of payments of
interest and fees or (b) if the next following Business Day is in another
calendar month and payment is being made with respect to a Eurodollar Purchase,
then on the immediately previous Business Day.

2.7. Payment Procedures.

(a) In General. Subject to the provisions of this Section 2.7, all payments of
Repurchase Prices and fees, costs and expenses under this Agreement shall be
made by the Sellers (or the Custodian or the Servicer on behalf of the Sellers)
to the Administrative Agent for the account of the Purchasers. All such payments
shall be made before 11:00 a.m. (New York City time) on the respective

 

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Repurchase Date or Margin Maintenance Payment Date in federal or other funds
immediately available by that time of day and at the Administrative Agent’s
Account. Funds received after 11:00 a.m. (New York City time) shall be treated
for all purposes as having been received by the Administrative Agent on the
Business Day next following the date of receipt of such funds from the Sellers.
Upon receipt of funds deposited into the Administrative Agent’s Account, the
Administrative Agent shall distribute such funds to the related Managing Agent
for the account of the Purchasers represented by such Managing Agent. All
payments made by the Sellers under this Agreement shall be without set off,
deduction or counterclaim and the Sellers agree, jointly and severally, to pay
on demand any present or future stamp or documentary taxes or any other taxes,
levies, imposts, duties, charges or fees which arise from payment made hereunder
or from the execution or delivery or otherwise with respect to this Agreement.

(b) The Sellers shall establish and maintain an account (the “Collection
Account”) with the Collection Account Bank. The Collection Account shall be a
fully segregated trust account, unless the Collection Account Bank shall be an
Eligible Institution, in which case the account need not be a trust account. The
Collection Account shall be under the control of the Administrative Agent
pursuant to the Collection Account Control Agreement, and the Sellers shall have
no right to withdraw any amount from the Collection Account until the Repurchase
Obligations are indefeasibly paid in full. The Servicer shall have no right to
access the Collection Account except as otherwise contemplated in
Section 2.7(c).

(c) Collections.

(i) The Servicer shall administer Collections in accordance with the provisions
of this Section 2.7. Approved Take-Out Investors shall be instructed to pay
proceeds from the sale of Mortgage Loans into the Collection Account, and such
amounts may be released only in accordance with the procedures set forth in
Section 3.3 hereof.

(ii) The Servicer shall hold, on behalf of the Purchasers and the Administrative
Agent, from Collections received by it with respect to any Mortgage Asset,
amounts necessary to make payments on the following Settlement Date (or end of
the related Price Differential Calculation Period) pursuant to Section 2.7(c) or
(iv), as applicable. Such amounts shall be deposited into the Collection Account
no later than such Settlement Date or at the end of such Price Differential
Calculation Period, or, on or after the Termination Date or upon the occurrence
and during the continuation of an Event of Default, within one Business Day
after receipt before 11:00 a.m. (New York City time) by the Servicer.

(iii) Prior to the Termination Date, the Servicer shall withdraw funds from the
Collection Account (to the extent of collected funds therein) and shall make
payments from the Collection Account at the following times and in the following
order of priority:

(A) To the extent not previously paid, on each Settlement Date, the Servicer
shall deposit an amount equal to the costs, fees and expenses then due and
payable to the Custodian to an account designated by the Custodian.

 

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(B) On each Settlement Date, the Servicer shall deposit an amount equal to Price
Differential on each Purchase accrued during the most recently ended Price
Differential Calculation Period (or earlier Price Differential Calculation
Periods, to the extent unpaid) to the Administrative Agent’s Account, and the
Administrative Agent shall forward such funds to the applicable Managing Agent’s
Account for the related Purchasers.

(C) To the extent not previously paid, on each Settlement Date, the Servicer
shall deposit an amount equal to the fees, costs and expenses then due and
payable pursuant to the Fee Letters, to the Administrative Agent’s Account, and
the Administrative Agent shall forward such funds, on a pro rata basis in
proportion to the outstanding fees, costs and expenses owed to each Group Bank,
to (a) ABN AMRO, as a Managing Agent, to ABN AMRO’s Managing Agent Account,
(b) Calyon, as a Managing Agent, to Calyon’s Managing Agent Account,
(c) JPMorgan, as a Managing Agent, to JPMorgan’s Managing Agent Account, (d) SG,
as a Managing Agent, to SG’s Managing Agent Account, (e) BNP, as Managing Agent,
to BNP’s Managing Agent Account and (f) the Administrative Agent, to the
Administrative Agent’s Account.

(D) On each Settlement Date on which the Required Reserve Account Amount exceeds
the amount then on deposit in the Reserve Account, the Servicer shall deposit an
amount equal to such excess to the Reserve Account.

(E) On each Settlement Date, if either (x) any Purchaser has not consented to an
extension of the Annual Extension Date, but the other Purchasers have so
consented and such non-extending Purchaser has not assigned its respective
Purchases and Bank Commitments to one or more other Purchasers in accordance
with Section 2.1(b) and Section 13.9, or (y) any Purchaser has terminated its
Bank Commitment as permitted under Section 2.1(e), but other Purchasers have not
so terminated their Bank Commitments and the terminating Purchaser has not
assigned its respective Purchases and Bank Commitments to one or more other
Purchasers in accordance with Section 13.9, or (z) the Sellers have provided
prior written notice to the Administrative Agent that the Sellers are seeking a
Replacement Bank for the Affected Party pursuant to Section 2.20, (in either the
case of clause (x) or (y) or (z) above, the non-extending Purchaser, the
terminating Purchaser, or the Affected Party, respectively, are referred to as
the “Non-Continuing Purchasers” for purposes of this subparagraph
2.7(c)(iii)(E)), until the entire unpaid balance of all Repurchase Obligations
owing to the Non-Continuing Purchasers are paid, the Servicer shall deposit into
the Administrative Agent’s Account, and the Administrative Agent shall forward
to relevant Managing Agent’s Account an amount, to the extent available from
Collections, equal to that portion of the amount of Collections remaining after
the payment of the items specified in Sections 2.7(c)(iii)(A) through (D),
multiplied by a fraction, the numerator of which is the Bank Commitments of
Banks or Barton, as applicable, that are the Non-Continuing Purchasers and the
denominator of which is the total Bank Commitments of all Banks (such fraction
shall be calculated by using the Bank Commitments in effect on the day prior to
the reduction of the Bank Commitments to zero for the Banks that are among the
Non-Continuing Purchasers).

 

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(F) To the extent not previously paid, on each Settlement Date, the Servicer
shall deposit any amounts, other than those listed in clauses (A), (B) and
(C) above and other than Purchase Price related to the Purchases, that are then
due and payable and of which the Servicer has received prior written notice,
including without limitation additional costs under Section 2.16, any additional
interest under Section 2.17, Consequential Losses under Section 2.18,
indemnities under Section 10.1 and costs, expenses and taxes under Section 2.19,
to the Administrative Agent’s Account, and the Administrative Agent shall
forward to relevant applicable Managing Agent’s Account.

(G) If requested by the Sellers, the Servicer (1) shall remit the amount of any
Repurchase Price not comprising Price Differential to be made hereunder to the
applicable Managing Agent’s Account, and (2) to the extent not required to make
payments pursuant to clauses (A) through (F) on any Settlement Date or at the
end of any Price Differential Calculation Period occurring within 30 days after
the Sellers’ request, to an account designated by the Sellers to pay for the
purchase of Mortgage Assets by the Sellers.

(H) On each Settlement Date, the Servicer shall retain for its own account an
amount equal to accrued Servicer Fee then due and payable.

(iv) On the Termination Date and thereafter, the Administrative Agent shall make
payments from the Collection Account (to the extent of collected funds therein)
at the following times and in the following order of priority:

(A) On each Settlement Date, if the Servicer is not one of the Sellers or an
Affiliate of one of the Sellers, an amount equal to accrued Servicer Fee then
due and payable shall be paid to the Servicer.

(B) On each Settlement Date, an amount equal to accrued Price Differential on
each Purchase accrued during the most recently ended Price Differential
Calculation Period (or earlier Price Differential Calculation Periods, to the
extent unpaid) to the applicable Managing Agent’s Account.

(C) [Reserved].

(D) To the extent not previously paid, on each Settlement Date, an amount equal
to the costs, fees and expenses then due and payable to the Custodian shall be
paid to an account designated by the Custodian.

(E) On each Settlement Date, an amount equal to the unpaid Repurchase Price for
each Transaction, or such lesser amount as is available from Collections, shall
be paid to the applicable Managing Agent’s Account.

 

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(F) To the extent not previously paid, on each Settlement Date, an amount equal
to the fees, costs and expenses then due and payable pursuant to the Fee
Letters, on a pro rata basis in proportion to the fees, costs and expenses then
owing to each Group Bank, to (a) ABN AMRO, as a Managing Agent, to ABN AMRO’s
Managing Agent Account, (b) Calyon, as a Managing Agent, to Calyon’s Managing
Agent Account, (c) JPMorgan, as a Managing Agent, to JPMorgan’s Managing Agent
Account, (d) SG, as a Managing Agent, to SG’s Managing Agent Account, (e) BNP as
Managing Agent, to BNP’s Managing Agent Account and (f) the Administrative
Agent, to Calyon’s Managing Agent Account.

(G) To the extent not previously paid, on each Settlement Date, any amounts of
the type described in Section 2.7(c)(iii)(F) are then due and payable and any
other unpaid Repurchase Obligations shall be paid to the applicable Managing
Agent’s Account.

(H) On the Settlement Date on which all Repurchase Obligations are paid in full,
if the Servicer is one of the Sellers or an Affiliate of one of the Sellers, an
amount equal to accrued Servicer Fee then due and payable shall be paid to the
Servicer.

(v) Upon receipt of funds deposited into its Managing Agent’s Account, each
Managing Agent shall distribute such funds to the Purchasers in its Group or to
itself for application to the Repurchase Obligations in accordance with the
order of priority set forth in Section 2.7(c)(iii) or (iv), as applicable.

(vi) On the Termination Date and thereafter, the Issuers shall use commercially
reasonable efforts to coordinate Price Differential Calculation Periods for
Purchases so that Consequential Losses and other expenses charged to Sellers are
mitigated.

(d) Price Differential Payments. Price Differential relating to each Purchase
shall be due and payable in arrears on each Settlement Date, each Repurchase
Date, on the Termination Date, and, after the Termination Date, on demand.

(e) Payments from Collection Account. To effect payments (including prepayments)
hereunder, the Sellers may use the collected funds (if any) then held on deposit
in the Collection Account.

 

  2.8. The Reserve Account.

(a) Establishment. An account (the “Reserve Account”) shall be established with
the Reserve Account Bank. The Sellers, the Servicer, the Administrative Agent
and the Reserve Account Bank have entered into the Reserve Account Control
Agreement. The Reserve Account is and shall be under the control of the
Administrative Agent, and the Sellers have and shall have no right to withdraw
any amount from the Reserve Account until the Repurchase Obligations are
indefeasibly paid in full.

 

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(b) Taxation. The taxpayer identification number associated with the Reserve
Account shall be that of the Sellers, and the Sellers will report for federal,
state and local income tax purposes the income, if any, earned on funds in the
Reserve Account.

(c) New Reserve Account. The Reserve Account Bank shall be an Eligible
Institution. In the event the Reserve Account Bank ceases to be an Eligible
Institution, the Sellers shall, within ten days after learning thereof,
establish a new Reserve Account (and transfer any balance and investments then
in the Reserve Account to such new Reserve Account) at another Eligible
Institution, which new Reserve Account shall be subject to a replacement Reserve
Account Control Agreement.

(d) Statements for Reserve Account. On a monthly basis, the Servicer shall cause
the Reserve Account Bank to provide the Servicer, the Sellers and (upon request)
the Administrative Agent with a written statement with respect to the preceding
calendar month regarding the Reserve Account in a form customary for statements
provided by the Reserve Account Bank for other accounts held by it, which
statement shall include, at a minimum, the amount on deposit in the Reserve
Account, and the dates and amounts of all deposits, withdrawals and investment
earnings with respect to the Reserve Account.

(e) Payments from Reserve Account.

(i) On the Business Day preceding the last day of each Price Differential
Calculation Period and each Settlement Date, the Servicer will determine whether
any Shortfall Amount will arise with respect to such Price Differential
Calculation Period or Settlement Date and will give the Administrative Agent
notice of the amount thereof by noon New York City time. By 2:00 p.m. New York
City time on the Business Day prior to the last day of each Price Differential
Calculation Period and each Settlement Date on which the amount of the Shortfall
Amount is greater than zero, the Servicer shall notify the Reserve Account Bank
requesting payment thereof. To the extent funds are available in the Reserve
Account, the Servicer shall cause the Reserve Account Bank to pay the amount
requested to the Administrative Agent’s Account, as specified by the
Administrative Agent, by 11:00 a.m. New York City time on the last day of such
Price Differential Calculation Period or on such Settlement Date.

(ii) On each Settlement Date prior to the Termination Date on which the funds on
deposit in the Reserve Account exceed the Required Reserve Account Amount (after
giving effect to any payments pursuant to Section 2.8(e)(i)), the Servicer may
withdraw and pay to the Sellers such excess from the Reserve Account.

(f) Payments to Reserve Account. On the date hereof, the Sellers shall remit to
the Reserve Account immediately available funds so that the amount on deposit in
the Reserve Account equals the Required Reserve Account Amount. Additional
payments shall be deposited to the Reserve Account from time to time pursuant to
Section 2.7(c)(iii)(D).

(g) Pledge. To secure the payment and performance of the Repurchase Obligations,
the Sellers hereby pledges and assigns to the Administrative Agent for the
benefit of the Purchasers, and hereby grants to the Administrative Agent for the
benefit of the Purchasers, a security interest in, all of the Sellers’ right,
title and interest in and to the Reserve Account, including, without

 

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limitation, all funds on deposit therein, all investments arising out of such
funds, all interest and any other income arising therefrom, all claims
thereunder or in connection therewith, and all cash, instruments, securities,
rights and other property at any time and from time to time received, receivable
or otherwise distributed in respect of such account, such funds or such
investments, and all money at any time in the possession or under the control
of, or in transit to such account, or any bailee, nominee, agent or custodian of
the Reserve Account Bank, and all proceeds and products of any of the foregoing.
Except as provided in the preceding sentence, the Sellers may not assign,
transfer or otherwise convey its rights under this Agreement to receive any
amounts from the Reserve Account.

(h) Termination of Reserve Account. On the date following the Termination Date
on which all Repurchase Obligations have been indefeasibly paid in full, all
funds then on deposit in the Reserve Account shall be paid to the Sellers and
the Reserve Account shall be closed.

2.9. Price Differential Allocations.

Each Managing Agent shall, from time to time and in its sole discretion,
determine whether a Purchase shall be part of the “CP Allocation” or the “ABR
Allocation”; provided, however, that each Purchase made by a Bank hereunder
shall be allocated to the ABR Allocation. Each Managing Agent shall provide the
Sellers with reasonably prompt notice of the allocations made by it pursuant to
this Section 2.9.

2.10. Price Differential Rates.

Except where specifically otherwise provided, Purchases in respect of any CP
Allocation shall accrue Price Differential with respect to each Price
Differential Calculation Period comprising such CP Allocation at a rate per
annum equal to the Commercial Paper Rate applicable to such Price Differential
Calculation Period, and Purchases in respect of any ABR Allocation shall accrue
Price Differential at either the Eurodollar Rate plus the Bank Margin, or the
Alternate Base Rate; provided, however, that in no event shall accrued Price
Differential with respect to any Purchases or portion thereof exceed the Maximum
Rate. Each change in the Alternate Base Rate and Maximum Rate, subject to the
terms of this Agreement, will become effective, without notice to the Sellers or
any other Person, upon the effective date of such change.

2.11. Quotation of Rates.

It is hereby acknowledged that an officer or other individual appropriately
designated by an officer previously identified to a Managing Agent in a
certificate of incumbency or other appropriately designated officer of the
Sellers may call such Managing Agent from time to time in order to receive an
indication of the rates then in effect, but such indicated rates shall neither
be binding upon such Managing Agent nor the Purchasers nor affect the rate of
interest which thereafter is actually in effect.

 

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2.12. Default Rate.

So long as any Event of Default exists, all Repurchase Obligations shall accrue
Price Differential at the Default Rate until paid, regardless of whether such
payment is made before or after entry of a judgment. For the avoidance of doubt,
once such Event of Default is cured all Repurchase Obligations shall bear
interest in accordance with Section 2.10.

2.13. Price Differential Recapture.

If the Pricing Rate applicable to any Purchase exceeds the Maximum Rate, the
Pricing Rate on such Purchase shall be limited to the Maximum Rate, but any
subsequent reductions in such Pricing Rate shall not reduce the Pricing Rate
thereon below the Maximum Rate until the total amount of accrued Price
Differential thereon equals the amount of Price Differential that would have
accrued thereon if such Pricing Rate had at all times been in effect. If at the
applicable Repurchase Date (stated or by acceleration) the total amount of Price
Differential paid or accrued is less than the amount of Price Differential that
would have accrued if such designated rates had at all times been in effect,
then, at such time and to the extent permitted by applicable Governmental
Requirements, the Sellers shall pay an amount equal to the difference between
(a) the lesser of the amount of Price Differential that would have accrued if
such Pricing Rate had at all times been in effect and the amount of interest
that would have accrued if the Maximum Rate had at all times been in effect, and
(b) the amount of Price Differential actually paid or accrued.

2.14. Price Differential Calculations.

All computations of Price Differential and any other fees, costs and expenses
hereunder shall be made on the basis of a year of 360 days for the actual number
of days (including the first day but excluding the last day) elapsed; provided,
however, that any calculations of Price Differential based on the rate set forth
in clause (a) of the definition of Alternate Base Rate shall be made on the
basis of a year of 365/366 days for the actual number of days (including the
first day but excluding the last day) elapsed. All such determinations and
calculations by the Administrative Agent and the Managing Agents shall be
conclusive and binding absent manifest error.

2.15. Price Differential Calculation Period.

(a) “Price Differential Calculation Period” means, (i) with respect to any
Purchase included in the CP Allocation that is “tranche funded,” each period
(x) commencing on, and including, the date that such Purchase was initially
designated by the related Managing Agent as comprising a part of the CP
Allocation hereunder, or the last day of the immediately preceding Price
Differential Calculation Period for such Purchase (whichever is latest); and
(y) ending on, but excluding, the date that falls such number of days (not to
exceed 30 days) thereafter as such Managing Agent shall select, (ii) with
respect to any Purchase included in the CP Allocation that is “pool funded,”
with respect to each Settlement Date, the most recently ended Collection Period,
(iii) with respect to any Eurodollar Purchase, a period of one month, beginning
on a Business Day selected by the related Managing Agent and ending on the day
in the succeeding calendar month which corresponds numerically to the beginning
day of such period; provided that if there is no

 

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such corresponding day, such Price Differential Calculation Period shall end on
the last Business Day in such succeeding month, and provided further that if
such Price Differential Calculation Period would otherwise end on a day that is
not a Business Day, and there is no subsequent Business Day in the same calendar
month as such day, such Price Differential Calculation Period shall end on the
immediately preceding Business Day, and (iv) with respect to any other Purchase,
a period beginning and ending on the days selected by the related Managing
Agent, such period not to exceed thirty days.

(b) Each Purchase included in the ABR Allocation shall be a Eurodollar Purchase,
unless,

(i) on or prior to the first day of such Price Differential Calculation Period
the Purchaser with respect to such Purchase shall have notified the
Administrative Agent that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or any central bank
or other governmental authority asserts that it is unlawful, for such Purchaser
to fund such Purchase at the Eurodollar Rate (and such Purchaser shall not have
subsequently notified the Administrative Agent and the Managing Agent that such
circumstances no longer exist), or

(ii) the Sellers shall have requested a Base Rate Purchase or an Price
Differential Calculation Period shorter than one month, or

(iii) the Administrative Agent and the Managing Agents do not receive notice, by
12:00 noon (New York City time) on the third Business Day preceding the first
day of such Price Differential Calculation Period, that the related Purchase
will not be funded by issuance of commercial paper, or

(iv) the principal amount of such Purchase is less than $2,500,000, or

(v) an Event of Default shall have occurred and be continuing, or

(vi) the Eurodollar Rate determined pursuant hereto does not accurately reflect
the cost of funds to the Issuer or the Banks (as conclusively determined by the
Administrative Agent and the Managing Agents) during such Price Differential
Calculation Period, or

(vii) adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for the relevant Price Differential Calculation Period,

in which case (if any of the foregoing events occurs) such Purchase shall be a
Base Rate Purchase.

(c) Notwithstanding any provision in this Agreement to the contrary, (x) any
Price Differential Calculation Period that would otherwise end on a day that is
not a Business Day shall be extended to the next succeeding Business Day
(provided, however, if interest in respect of such Price Differential
Calculation Period is computed by reference to the Eurodollar Rate, and such
Price Differential Calculation Period would otherwise end on a day that is not a
Business Day, and there is no subsequent Business Day in the same calendar month
as such day, such Price Differential Calculation Period shall end on the
immediately preceding Business

 

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Day); (y) any Price Differential Calculation Period that commences before the
Termination Date and would otherwise end after the Termination Date shall end on
the Termination Date; and (z) the duration of each Price Differential
Calculation Period that commences on or after the Termination Date shall be of
such duration as shall be selected by the applicable Managing Agent and
communicated by notice to the Sellers.

2.16. Additional Costs.

(a) If any Affected Party determines in its reasonable discretion that
compliance with any law or regulation or any guideline or request, or any change
in such law, regulation, guideline or request, or any change in the
interpretation, administration or application thereof, from any central bank,
any governmental authority or any accounting board or authority (whether or not
having the force of law), which is responsible for the establishment or
interpretation of national or international accounting principles, in each case
whether foreign or domestic (whether or not having the force of law):

(i) affects or would affect the amount of capital required or expected to be
maintained by such Affected Party and such Affected Party determines that the
amount of such capital is increased by or based upon the existence of any
commitment to lend or maintain a loan against Mortgage Loan Collateral hereunder
or under any commitments of a Purchaser related to this Agreement or to the
funding thereof or any related liquidity facility or credit enhancement facility
(or any participation therein) and other commitments of the same type related to
this Agreement, or

(ii) increases the cost to or imposes a cost on (A) an Affected Party funding or
making or maintaining any Purchases or any liquidity loan to an Issuer or any
commitment of such Affected Party with respect to any of the foregoing, or
(B) the Administrative Agent for continuing its, or the Sellers’, relationship
with the Purchasers;

then, upon the Sellers’ receipt of a certificate (with a copy to the
Administrative Agent) as to any additional amounts payable to such Affected
Party pursuant to this Section 2.16(a), which contains the calculation thereof
and an explanation therefor in reasonable detail (an “Additional Cost
Certificate”), delivered no later than 180 days after such circumstances first
arise, the Sellers, jointly and severally, shall pay to the Affected Party
within 30 days of the delivery of such Additional Cost Certificate, from time to
time as specified by such Affected Party, additional amounts sufficient to
compensate such Affected Party in the light of such circumstances, to the extent
that such Affected Party reasonably determines such increase in capital or
increased costs to be allocable to the existence of any of such commitments.
Such Additional Cost Certificate as to such amounts submitted to the Sellers and
the Administrative Agent by such Affected Party shall be conclusive and binding
for all purposes, absent manifest error.

(b) In the event that any change in any requirement of law or in the
interpretation by any governmental authority or application to an Affected Party
of a requirement of law or change thereto by the relevant governmental authority
after the date hereof or compliance by an Affected Party with any request or
directive (whether or not having the force of law) from any central bank or

 

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other governmental authority after the date of this Agreement does or shall
impose, modify or hold applicable any reserve, special deposit, compulsory loan
or similar requirement against assets held by, or deposits or other liabilities
in or for the account of, purchases, advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of such Affected
Party which are not otherwise included in the determination of the Alternate
Base Rate or Eurodollar Rate (Reserve Adjusted) hereunder and the result of any
of the foregoing is to increase the cost to or impose a cost on such Affected
Party or to reduce any amount received or receivable by any Affected Party under
this Agreement, any Note, the Liquidity Agreement with respect thereto, the
Amended and Restated Managing Agents Fee Letter or under the Second Amended and
Restated Administrative Agent Fee Letter, then, upon Sellers’ receipt of an
Additional Cost Certificate from the Affected Party delivered no later than 180
days after such circumstances first arise, the Sellers shall pay to the
Administrative Agent within 30 days of the delivery of such Additional Cost
Certificate, any additional amounts (without duplication of amounts referred to
in Section 2.16(a)) necessary to compensate such Affected Party for such
additional cost or reduced amount. Such Additional Cost Certificate as to such
additional cost or reduced amount receivable submitted to the Sellers by the
Affected Party shall be conclusive and binding for all purposes, absent manifest
error.

(c) For the avoidance of doubt, any interpretation of Accounting Research
Bulletin No. 51 by the Financial Accounting Standards Board or any other change
in national or international generally accepted principles of accounting
(whether foreign or domestic) that would require the consolidation of some or
all of the assets and liabilities of any Purchaser, including the assets and
liabilities which are the subject of this Agreement and/or other Transaction
Documents, with those of any Affected Party (other than such Purchaser), shall
constitute a change in the interpretation, administration or application of a
law, regulation, guideline or request subject to Section 2.16(a) and (b).

2.17. Additional Price Differential on Purchases Bearing a Eurodollar Rate.

The Sellers, jointly and severally, shall pay to any Affected Party, so long as
such Affected Party shall be required under regulations of the Federal Reserve
Board to maintain reserves with respect to liabilities or assets consisting of
or including Eurocurrency Liabilities, additional Price Differential on the part
of the Repurchase Price not comprising Price Differential in connection with a
Purchase made or funded (including fundings to an Issuer for the purpose of
maintaining a Purchase) by such Affected Party during each Price Differential
Calculation Period in respect of which interest is computed by reference to the
Eurodollar Rate, for such Price Differential Calculation Period, at a rate per
annum equal at all times during such Price Differential Calculation Period to
the remainder obtained by subtracting (i) the Eurodollar Rate for such Price
Differential Calculation Period from (ii) the rate obtained by dividing such
Eurodollar Rate referred to in clause (i) above by that percentage equal to 100%
minus the Eurodollar Rate Reserve Percentage of such Affected Party for such
Price Differential Calculation Period, payable on each date on which Price
Differential is payable on such Purchase. Such additional Price Differential
shall be reasonably determined by such Affected Party and notice thereof given
to the Sellers (with a copy to the Administrative Agent and the applicable
Managing Agent) within 30 days after any interest payment is made with respect
to which such additional Price Differential is requested. Such notice shall be
in the form of a certificate as to such additional Price Differential submitted
to the Sellers and the Administrative Agent and

 

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the applicable Managing Agent by such Affected Party shall contain a calculation
of such additional Price Differential and an explanation thereof in reasonable
detail. If such certificate contains a calculation of such additional Price
Differential and a reasonable explanation thereof, it shall be conclusive and
binding for all purposes, absent manifest error.

2.18. Consequential Loss.

The Sellers, jointly and severally, shall indemnify each Affected Party against,
and shall pay to the Administrative Agent for such Affected Party within ten
(10) Business Days after Sellers’ receipt of the request therefor, any
Consequential Loss of any Affected Party. Such request by any Affected Party
that Sellers pay any Consequential Loss shall be in the form of a certificate
setting forth the basis for imposing such Consequential Loss and the calculation
of such amount thereof, which calculation shall be conclusive and binding absent
manifest error and shall be delivered to the Sellers, the Administrative Agent
and the applicable Managing Agent.

2.19. Taxes.

(a) All payments made by the Sellers under this Agreement shall be without
setoff, deduction or counterclaim, and the Sellers agree to pay on demand any
present or future stamp or documentary taxes or any other taxes, levies,
imposts, duties, charges, fees or withholdings which arise from payment made
hereunder or from the execution or delivery or otherwise with respect to this
Agreement but excluding franchise taxes and taxes imposed on or measured by all
or part of the gross or net income (but not including any such tax in the nature
of a withholding tax) of such Affected Party by the jurisdiction under the laws
of which such Affected Party is organized or has its applicable lending office
or any political subdivision of any thereof (all such excluded taxes, levies,
imposts, deductions, changes, withholding and liabilities collectively or
individually referred to herein as “Excluded Taxes” and all such nonexcluded
taxes, levies, imposts, deductions, charges, withholdings, and liabilities
collectively or individually referred to herein as “Taxes”). If the Sellers
shall be required to deduct any Taxes from or in respect of any sum payable
hereunder to any Affected Party: (i) the sum payable shall be increased by the
amount (an “additional amount”) necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.19) such Affected Party shall receive an amount equal to the sum
it would have received had no such deductions been made, (ii) the Sellers shall
make such deductions and (iii) the Sellers shall pay the full amount deducted to
the relevant Governmental Authority in accordance with applicable law.

(b) The Sellers agree, jointly and severally, to pay to the relevant
Governmental Authority in accordance with applicable law all taxes, levies,
imposts, deductions, charges, assessments or fees of any kind (including but not
limited to any current or future stamp or documentary taxes or any other excise
or property taxes, charges, or similar levies, but excluding any Excluded Taxes)
imposed upon any Affected Party as a result of the transactions contemplated by
this Agreement or that arise from any payment made hereunder or from the
execution, delivery, or registration of or otherwise similarly with respect to,
this Agreement (“Other Taxes”).

 

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(c) Each Purchaser that is not a U.S. Person (each a “Non-U.S. Purchaser”) shall
deliver to the Sellers: (i) two copies of either (A) United States Internal
Revenue Service Form W-8BEN (including any successor forms thereto) or
(B) United States Internal Revenue Service Form W-8ECI (including any successor
forms thereto), or (ii) in the case of a Non-U.S. Purchaser claiming an
exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of “portfolio interest,” a Form W-8BEN (or any
subsequent versions thereof or successors thereto) and a certificate
representing that such Non-U.S. Purchaser is not a bank for purposes of
Section 881(c) of the Code, in either case properly completed and duly executed
by such Non-U.S. Purchaser claiming complete exemption from U.S. federal
withholding tax on payments by the Sellers under this Agreement. Such forms
shall be delivered by each Non-U.S. Purchaser on or before the date it becomes a
Purchaser hereunder. If such Non-U.S. Purchaser changes its applicable lending
office by designating a different lending office (a “New Lending Office”), such
forms shall be delivered on or before the date of such change. In addition, each
Non-U.S. Purchaser shall deliver such forms promptly after (or, if reasonably
practicable, prior to) the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Purchaser. Notwithstanding any other provision of
this Section 2.19(c), a Non-U.S. Purchaser shall not be required to deliver any
form pursuant to this Section 2.19(c) that such Non-U.S. Purchaser is not
legally able to deliver.

(d) Within 30 days after the Sellers pays any amount to any Affected Party from
which it is required by law to make any deduction or withholding, and within 30
days after it is required by law to remit such deduction or withholding to any
relevant taxing or other authority, the Sellers shall deliver to the
Administrative Agent for delivery to such Affected Party evidence reasonably
satisfactory to such Person of such deduction, withholding or payment (as the
case may be).

(e) If an Affected Party receives the benefit of a tax refund, credit or other
benefit which is attributable to any Taxes as to which such Affected Party has
been reimbursed by the Sellers, or with respect to which the Sellers have paid
an additional amount hereunder, such Affected Party shall within 30 days after
the date of such receipt pay over the amount of such refund or credit (to the
extent so attributable) to the Sellers, net of all reasonable out-of-pocket
third party expenses of such Affected Party related to claiming such refund or
credit; provided, however, that (i) such Affected Party, as the case may be,
acting in good faith will be the sole judge of the amount of any such refund,
credit or reduction and of the date on which such refund, credit or reduction is
received, (ii) such Affected Party, as the case may be, acting in good faith
shall have absolute discretion as to the order and manner in which it employs or
claims tax refunds, credits, reductions and allowances available to it,
(iii) the Sellers agree to repay such Affected Party, as the case may be, upon
written request from such Affected Party the amount of such refund, credit or
reduction received by the Sellers, in the event and to the extent, such Affected
Party is required to repay such refund, credit or reduction to any relevant
Governmental Authority, and (iv) such Affected Party shall not be required to
make available its tax returns or any other information relating to its taxes
and the computation thereof.

(f) Nothing contained in this Section 2.19 shall require an Affected Party to
make available any of its tax returns (or any other information that it deems to
be confidential or proprietary).

 

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2.20. Replacement Banks.

(a) Upon the election of any Affected Party to request reimbursement by the
Sellers for increased costs under Sections 2.16 or 2.17 or for compensation in
respect of withholding taxes under Section 2.19, the Sellers may, upon prior
written notice to the Administrative Agent and such Affected Party, seek a
replacement Bank to whom such additional costs or taxes shall not apply and
which shall be reasonably satisfactory to the Administrative Agent (a
“Replacement Bank”); provided, however, that the Sellers may not seek a
replacement for a Managing Agent, in its capacity as a Bank, unless the Issuer
in the related Group and any other Bank, at such Bank’s option, in such Group,
is also to be replaced as a party to this Agreement and all Repurchase
Obligations owing to such Bank, the related Issuer and the related Managing
Agent are to be repaid in full as they become due pursuant to
Section 2.7(c)(iii). Each Affected Party agrees that, should it be identified
for replacement pursuant to this Section 2.20, upon payment in full of all
amounts due and owing to such Affected Party hereunder and under the other
Transaction Documents, it will promptly execute and deliver all documents and
instruments reasonably required by the Sellers to assign such Affected Party’s
portion of the Purchases to the applicable Replacement Bank. Any such
replacement shall not relieve the Sellers of their obligation to reimburse the
Affected Party for any such increased costs or taxes incurred through the
effective date of such replacement. Pending designation of a Replacement Bank
(and the related Issuer and Managing Agent), the Sellers may, at their option,
instruct the Administrative Agent, in a written notice provided to the
Administrative Agent, with a copy provided to the Affected Party, that all
Purchases subsequent to such notice be made only by the Group that does not
include such Affected Party. As of the date of such notice, the Maximum Facility
Amount shall be reduced by the amount of the Bank Commitments of the Banks in
the Group that includes the Affected Party.

2.21. LIBOR Determination Date.

On each LIBOR Determination Date, the Servicer shall determine LIBOR on the
basis of the rate for deposits in Dollars for a one-month period which appears
on Telerate Page 3750 as of 11:00 a.m., London time, on such date. If such rate
does not appear on Telerate Page 3750, the rate for that LIBOR Determination
Date will be determined on the basis of the rates at which deposits in United
States dollars are offered by the Reference Banks at approximately 11:00 a.m.,
London time, on that day to prime banks in the London interbank market for a
one-month period. If on such LIBOR Determination Date two or more Reference
Banks provide such offered quotations, LIBOR for such related Price Differential
Calculation Period will be the arithmetic mean of such offered quotations
(rounded upwards if necessary to the nearest whole multiple of 0.0001%). If on
such LIBOR Determination Date fewer than two Reference Banks provide such
offered quotations, LIBOR for the related Price Differential Calculation Period
will be the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 0.0001%) of the one-month Dollar lending rates that three New York
City banks selected by the Servicer are quoting at approximately 11:00 a.m. (New
York City time) on the relevant LIBOR Determination Date to leading European
banks.

 

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2.22. Repurchase or Substitution Procedures.

(a) Upon discovery by any of the Sellers or the Purchasers of a breach of any of
the representations and warranties made by any of the Sellers in Section 5.1 of
this Agreement with respect to any Purchased Mortgage Asset, such party shall
give prompt written notice thereof to the other party, as soon as practicable
and in any event within three Business Days following such discovery. The
Sellers shall, jointly and severally, upon not less than two Business Days’
notice from the Purchasers or its assignee or designee, repurchase such
Purchased Mortgage Asset on the next succeeding Settlement Date for a repurchase
price equal to the Repurchase Price of such Purchased Mortgage Asset. Each
repurchase of a Purchased Mortgage Asset shall include the Mortgage Loan
Collateral with respect to such Purchased Mortgage Asset. The proceeds of any
such repurchase shall be deemed to be a Collection in respect of such Purchased
Mortgage Asset. If the Servicer is not one of the Sellers, the Sellers, jointly
and severally, shall pay to the Servicer for deposit to the Collection Account
on or prior to the next Settlement Date the Repurchase Price required to be paid
pursuant to this subsection. If the Servicer is one of the Sellers, the Sellers
shall, jointly and severally, deposit such Repurchase Price to the Collection
Account on or prior to the next Settlement Date.

(b) Upon discovery by any of the Sellers or the Purchasers of a breach by any of
the Sellers of its covenant in Section 7.15 of this Agreement with respect to
any Wet Loan, such party shall give prompt written notice thereof to the other
parties, as soon as practicable and in any event within three Business Days
following such discovery. The Sellers shall, jointly and severally, upon not
less than two Business Days’ notice from the Purchasers or its assignee or
designee or from the Custodian on its behalf, repurchase such Wet Loan for a
repurchase price equal to the Repurchase Price of such Wet Loan. Each repurchase
of a Wet Loan shall include the Mortgage Loan Collateral with respect to such
Wet Loan. The proceeds of any such repurchase shall be deemed to be a Collection
in respect of such Wet Loan. If the Servicer is not one of the Sellers, the
Sellers shall pay, jointly and severally, to the Servicer for deposit to the
Collection Account on or prior to the repurchase date the Repurchase Price
required to be paid pursuant to this subsection. If the Servicer is one of the
Sellers, the Sellers, jointly and severally, shall deposit such Repurchase Price
to the Collection Account on or prior to the next Settlement Date.

(c) If a Mortgage Note has been withdrawn for correction pursuant to Section 3.4
of this Agreement and the applicable Seller has not delivered the corrected
Mortgage Note to the Custodian within twenty calendar days after such
withdrawal, the Sellers shall, jointly and severally, upon not less than two
Business Days’ notice from the Purchasers or its assignee or designee or from
the Custodian on its behalf, repurchase the related Mortgage Loan for a
repurchase price equal to the Repurchase Price of such Mortgage Loan. Each
repurchase of a Mortgage Loan shall include the Mortgage Loan Collateral with
respect to such Mortgage Loan. The proceeds of any such repurchase shall be
deemed to be a Collection in respect of such Mortgage Loan. If the Servicer is
not one of the Sellers, the Sellers, jointly and severally, shall pay to the
Servicer for deposit to the Collection Account on or prior to the repurchase
date the Repurchase Price required to be paid pursuant to this subsection. If
the Servicer is one of the Sellers, the Sellers, jointly and severally, shall
deposit such Repurchase Price to the Collection Account on or prior to the next
Settlement Date.

 

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(d) To the extent that any of the events occur that require the Sellers, jointly
and severally, to repurchase pursuant to clauses (a), (b) and (c) of this
Section, but only so long as a Margin Deficit does not exist, the Sellers may
elect not to repurchase the effected purchased loans by delivering written
notice to the Purchasers, its successors and assigns.

2.23. Intent of the Sellers and the Purchasers.

(a) The Sellers and the Purchasers intend and acknowledge that this Agreement
and each Transaction hereunder is a “repurchase agreement” and a “master netting
agreement” as each such term is defined in Section 101 of the Bankruptcy Code,
and a “securities contract” as that term is defined in Section 741 of Title 11
the Bankruptcy Code, as amended.

(b) It is understood that any party’s right to liquidate Mortgage Loans
delivered to it in connection with any Transaction entered into hereunder, or to
exercise any other remedies pursuant to the terms of this Repurchase Agreement,
is a contractual right to liquidate, terminate or accelerate such Transaction as
described in Sections 555, 559 and 561 of the Bankruptcy Code.

(c) The Sellers and the Purchasers have structured this Agreement with the
intention that each Purchase of Mortgage Assets hereunder be treated as a sale
of such Mortgage Assets by the Sellers to the Purchasers for all purposes. Each
of the Sellers and the Purchasers shall record each related Purchase on its
books and records, and reflect each related Purchase in its financial
statements, in accordance with GAAP, and each of the Sellers and the Purchasers
shall report each related Purchase on its tax returns as required by applicable
tax law. In the event that, contrary to the mutual intent of the Sellers and the
Purchasers, any Purchase of Mortgage Assets hereunder is not characterized as a
sale or absolute transfer, the Sellers shall, effective as of the date hereof,
be deemed to have granted (and the Sellers hereby grant) to the Purchasers a
first priority security interest in and to any and all Mortgage Assets, the
related Mortgage Loan Collateral and the proceeds thereof to secure the
repayment of all amounts advanced to the Sellers hereunder with accrued interest
thereon, and this Agreement shall be deemed to be a security agreement.

(d) The Administrative Agent, on behalf of the Purchasers, shall have free and
unrestricted use of all Mortgage Loans, and nothing in this Repurchase Agreement
shall preclude the Administrative Agent, on behalf of the Purchasers, from
engaging in repurchase transactions with the Mortgage Loans or otherwise
pledging, repledging, transferring, hypothecating, or rehypothecating the
Mortgage Loans, on terms, and subject to conditions, within the Administrative
Agent’s absolute discretion on behalf of the Purchasers, in all cases subject to
Purchasers’ obligation to reconvey the Mortgage Loans on the Repurchase Date.
The Administrative Agent shall give notice to the Sellers of any such pledge,
repledge, transfer, hypothecation, or rehypothecation.

2.24. No Segregation of Assets.

Upon transfer of the Mortgage Loans to Purchasers as set forth in Section 2.3,
ownership of each Mortgage Loan, including each document in the related Mortgage
File, is vested in the Purchasers. Upon transfer of the Mortgage Loans to
Purchasers as set forth in Section 2.3 and until termination of any Transactions
as set forth in Sections 2.5 and 8.1 and prior to the recordation of the

 

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assignments of mortgage by the Custodian as provided for in the Custodial
Agreement, record title in the name of the applicable Seller, or in the case of
a MERS Designated Mortgage Loan MERS as nominee for the beneficial owner to each
Mortgage, shall be retained thereby in trust, for the benefit of the Purchasers,
for the sole purpose of facilitating the servicing and the supervision of the
servicing of the Mortgage Loans. Nothing in this Repurchase Agreement shall
preclude the Purchasers from engaging in repurchase transactions with the
Purchased Mortgage Assets or otherwise pledging, selling, assigning or
hypothecating the Purchased Mortgage Assets without the prior consent of the
applicable Seller, but no such transaction or provision hereof or provision of
the Custodial Agreement shall relieve the Purchasers of their obligations to
transfer Purchased Mortgage Assets (and with respect to the Mortgage Loans, the
same Mortgage Loans and not substitutes therefor) to such Seller pursuant and
subject to Sections 2.3, 2.5, or 8.1 hereof. Upon termination of any
Transactions as set forth in Section 2.5 or 8.1, the Purchasers agree to execute
promptly endorsements of the mortgage notes, assignments of the mortgages and
UCC-3 assignments, release or termination related to such Transactions, to the
extent that such documents are prepared by the applicable Seller for execution
by the Purchasers, are delivered to the Purchasers by such Seller and are
necessary and appropriate, as reasonably determined by such Seller, to reconvey,
without recourse, to such Seller and perfect title of like tenor to that
conveyed to the Purchasers to the related Mortgage Loans. The Purchasers shall
provide cooperation in assisting and directing the Custodian to facilitate such
preparation (without expense to the Purchasers).

Notwithstanding anything to the contrary set forth in this Repurchase Agreement,
in no event shall Purchased Mortgage Assets remain in the custody of any of the
Sellers or any affiliate of any of the Sellers, except as permitted under the
Custodial Agreement.

2.25. Substitution.

In the case of any Transaction for which the Repurchase Date is other than the
Business Day immediately following the Purchase Date, such Seller shall have the
right, subject to the proviso to this sentence, upon notice to the Purchasers,
which notice shall be given at or prior to noon (12:00 p.m.) (New York time) on
the preceding Business Day, to substitute substantially the same Mortgage Assets
for any Purchased Mortgage Assets; provided, however, that the Administrative
Agent, in its sole and absolute discretion, may elect, by the close of business
on the Business Day next following the Business Day on which notice is received
not to accept such substitution. In the event such substitution is accepted by
the Administrative Agent, such substitution shall be made by such Seller’s
transfer to the Purchasers of additional Mortgage Assets, and after
substitution, the substituted additional Mortgage Loans shall be deemed to be
the Purchased Mortgage Assets relating to the Transaction pursuant to which the
original Purchased Mortgage Assets were purchased. In the event the
Administrative Agent elects not to accept such substitution, the Purchasers
shall offer such Seller the right to terminate the Transaction. If such Seller
elects to terminate such Transaction (which election shall be made in writing
within five (5) Business Days of the Purchasers’ offer to such Seller of the
right to terminate the transaction), the date of termination will be determined
in accordance with Section 2.5.

 

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In the event any of the Sellers exercises its right to substitute or terminate
pursuant to subparagraph (a), the Sellers shall be jointly and severally
obligated to pay to the Purchasers, by the close of the Business Day of such
substitution or termination, as the case may be, an amount equal to (A) the
Purchasers’ actual cost (including all fees, expenses and commissions) of
(i) entering into replacement Transactions; and (ii) entering into or
terminating hedge transactions, (B) to the extent Purchasers determine not to
enter into replacement Transactions, the loss incurred by the Purchasers
directly arising or resulting from such substitution or termination and (C) in
the case of the termination of any Transaction, the related Repurchase Price for
such Purchased Mortgage Assets. The foregoing amounts shall be determined and
calculated solely by the Purchasers on a commercially reasonable basis.

ARTICLE III

MORTGAGE ASSETS

3.1. Mortgage Assets.

The Sellers have executed and delivered to the Administrative Agent and the
Custodian, as applicable:

(a) the Collection Account Control Agreement, and

(b) the Reserve Account Control Agreement;

all as more fully provided for in the Custodial Agreement. The Sellers further
agree to execute all documents and instruments, and perform all other acts
deemed necessary by the Administrative Agent or any Managing Agent to further
the intent and purposes of this Agreement, to create and perfect, and maintain
the interests of the Purchasers in the Mortgage Assets and assignments in favor
of the Administrative Agent for the benefit of the Purchasers and to assure and
confirm the Purchasers’ rights, powers and remedies hereunder. Any interest or
assignments granted to the Administrative Agent under any Transaction Document
is for the benefit of the Purchasers, whether or not reference is made to such
holders.

3.2. Delivery of Mortgage Assets to Custodian.

(a) Periodically, the Sellers may deliver Mortgage Assets to the Custodian to
hold as bailee for the Administrative Agent. Each delivery shall be made in
association with an Assignment to the Administrative Agent, for the benefit of
the holders of the Repurchase Obligations, in all Mortgage Loans and related
Mortgage Assets delivered with or described in such Assignment or any schedules
thereto. The Sellers shall use the form of Assignment provided for in the
Custodial Agreement.

(b) Each Assignment delivered to the Custodian shall be accompanied by a
completed Schedule I, Schedule II and Schedule III using the forms of such
schedules as prescribed in the Custodial Agreement and, with respect to each
Mortgage Loan described in Schedule II to each Assignment, shall deliver or
cause to be delivered the following items (collectively, the “Principal Mortgage
Documents”):

(i) the original of each Mortgage Note, endorsed in blank (without recourse) and
all intervening endorsements thereto;

 

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(ii) an original executed assignment in blank for each Mortgage securing such
Mortgage Loan, in recordable form, executed by the Seller, in the case of each
Mortgage Loan that is not a MERS Designated Mortgage Loan, or by an authorized
signatory of MERS, in the case of each MERS Designated Mortgage Loan; and

(iii) a certified copy of the executed Mortgage related to such Mortgage Note;

(c) The Servicer shall hold in trust for the Administrative Agent for the
benefit of the Purchasers, with respect to each Mortgage Loan included in the
Mortgage Assets:

(i) the original filed Mortgage relating to such Mortgage Loan, provided,
however, that, until an original Mortgage is received from the public official
charged with its filing and recordation, a copy, certified by the closing agent
to be a true and correct copy of the original sent to be filed and recorded, may
be used by the Sellers to satisfy this requirement; however, the Sellers shall
thereafter pursue, with reasonable diligence, receipt of the filed and recorded
original Mortgage and, if received, shall deliver such original to the Servicer;

(ii) other than with respect to a HUD repossessed Property that is sold to a
consumer, a mortgagee’s policy of title insurance (or binding unexpired
commitment to issue such insurance if the policy has not yet been delivered to
the Servicer) insuring the Sellers’ perfected, first-priority Lien created by
the Mortgage securing such Mortgage Loan (subject to such title exceptions that
are acceptable to prudent mortgage lenders) in a policy amount not less than the
principal amount of such Mortgage Loan;

(iii) the original hazard insurance policy, appropriately endorsed to provide
that all insurance proceeds will be paid to any of the Sellers or any of the
assigns of such Seller, referred to in Section 6.6(b) hereof which relate to
such Mortgage Loan, or other evidence of insurance acceptable to the
Administrative Agent;

(iv) the form of current appraisal of the Property described in the Mortgage,
prepared by a state licensed appraiser, that complies with all applicable
Governmental Requirements, including all Governmental Requirements that are
applicable to the Purchasers or any other Affected Party; provided, however,
that no appraisal shall be required for Mortgage Loans (x) financing HUD
repossessed Property that is sold to a consumer, financed with an FHA loan,
fully insurable and in accordance with FHA guidelines, but for which an
appraisal is not required, and (y) representing so called VA Rate Reduction or
FHA streamline refinances, insurable in accordance with VA and FHA guidelines,
but for which an appraisal is not required ; and

(v) all other original documents (collectively, the “Other Mortgage Documents”).

 

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Upon request of the Administrative Agent or any Managing Agent, and three
(3) Business Days’ prior notice by the Administrative Agent to the Custodian,
the Servicer shall immediately deliver, or shall cause to be delivered, all such
items, held in trust, to the Custodian as bailee for the Administrative Agent or
such other party as may be designated in such notice.

(d) The Servicer shall provide the Custodian and the Administrative Agent with
full access to all Other Mortgage Documents held in trust for the Administrative
Agent at all times.

(e) With respect to each Assignment that is received by the Custodian, the
Custodian shall review such Assignment and make a written report to the Sellers
and the Administrative Agent, all as more fully provided in the Custodial
Agreement.

3.3. Transfer and Shipping of Mortgage Assets.

(a) Generally. It is understood and agreed that the Purchasers own 100% of the
beneficial interests in and to the Mortgage Loans purchased hereunder. In order
to maximize the value for the Mortgage Loans, however, the Purchasers will
permit the Servicer to determine, in certain circumstances, when to ship
Mortgage Loans to potential investors and when to take other actions with
respect to the Mortgage Loans. Accordingly, the Purchasers will be deemed to
have consented to transfers and sales made in accordance with this Section 3.3.
Subject to the limitations contained in this Section 3.3, in connection with a
sale or other transfer contemplated by clause (a) or (b), and so long as no
Default or Event of Default is continuing, the Sellers or the Servicer (on
behalf of the Sellers) may request releases of the Administrative Agent’s
interest in all or any part of the Mortgage Assets (including releases from the
Collection Account and release of funds owned by the Sellers and held in the
Collection Account) at any time, and from time to time; provided that no such
request shall be granted unless, in addition to the satisfaction of the other
conditions contained in this Section 3.3,

(i) (immediately after giving effect to any requested release) the total
Recognized Value of all Eligible Mortgage Assets shall equal or exceed the
Invested Amount, or

(ii) (A) the Sellers pay a Repurchase Price in an amount, or (B) the Sellers
deliver to the Custodian as bailee for the Administrative Agent substitute
Eligible Mortgage Assets with a Recognized Value, such that after giving effect
to such payment or delivery, the total Recognized Value of all Eligible Mortgage
Assets will equal or exceed the Invested Amount (the satisfaction of such
conditions, a “Margin Sufficiency”).

So long as no Default or Event of Default is continuing, and there is a Margin
Sufficiency, the Purchasers will be deemed to consent if the Servicer (on behalf
of the Sellers) transfers funds from the Collection Account to the Disbursement
Account; provided, that the Servicer shall not request and the Custodian shall
not permit funds to be released from the Disbursement Account unless the total
Recognized Value of all Purchased Mortgage Assets which are Eligible Mortgage
Assets (immediately after giving effect to the requested release) equals or
exceeds the Invested Amount, as shown on the most recent Purchase Report. Each
request for a partial release of Mortgage Assets (a “Transfer Request”) shall be
addressed to the Custodian and shall be substantially in the form provided in
the Custodial Agreement (or such other form as may be reasonably acceptable to
or required by the Administrative Agent, from time to time).

 

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(b) Shipping Pursuant to Sale. So long as no Default or Event of Default is
continuing and there is a Margin Sufficiency, the Sellers or the Servicer (on
behalf of the Sellers) may (and, while a Default or Event of Default is
continuing, upon direction of the Administrative Agent, the Sellers shall) from
time to time submit a Shipping Request that would permit the repurchase by the
Sellers of Purchased Mortgage Loans from the respective Purchasers and a
simultaneous sale of such Mortgage Loans to, or the pooling of Mortgage Loans
for, an Approved Take-Out Investor, pursuant to a Take-Out Commitment. Upon the
receipt by the Custodian of a Shipping Request from the Sellers identifying
Mortgage Assets to be delivered to an Approved Take-Out Investor, and so long as
(x) (i) there is a Margin Sufficiency, and (ii) no Default or Event of Default
shall be in existence or would be caused thereby or, (y) if a Default or Event
of Default is in existence or would be caused thereby, or there is not a Margin
Sufficiency, the Administrative Agent has approved the Shipping Request:

(i) The Custodian shall deliver to the Approved Take-Out Investor, or its loan
servicing provider or custodian, under the Custodian’s “Bailee and Security
Agreement Letter” substantially in the form provided for in the Custodial
Agreement, as appropriate, the items of Mortgage Loan Collateral being sold that
are held by the Custodian as bailee for the Administrative Agent pursuant to
Section 3.2 hereof, with the transfer of the Purchasers’ interest in such items
being conditioned upon timely payment to the Collection Account of the amount
described in Section 3.3(b)(iii) or delivery of additional Eligible Mortgage
Assets;

(ii) The Servicer shall, as agent for the Administrative Agent, deliver to such
Approved Take-Out Investor, or such Approved Take-Out Investor’s loan servicing
provider or custodian, pursuant to procedures provided for in the Custodial
Agreement, the items held by the Servicer pursuant to Section 3.2(c) that are
related to the Mortgage Loan Collateral to be transferred on the condition that
such Approved Take-Out Investor or its loan servicing provider or custodian
shall hold or control such Other Mortgage Documents as bailee for the
Administrative Agent (for the benefit of the Purchasers) until the Approved
Take-Out Investor has paid the full purchase price for such Mortgage Loan
Collateral to the Collection Account, as required by the relevant Take-Out
Commitment;

(iii) Within forty-five (45) days after the delivery by the Custodian to such
Approved Take-Out Investor or its loan servicing provider or custodian of the
items of Mortgage Loan Collateral described in Section 3.3(b)(i) or (ii), the
Sellers shall make a payment, or shall cause a payment to be made, to the
Collection Account, for distribution to the Administrative Agent for the account
of the Purchasers in an amount equal to at least the full Repurchase Price for
such Mortgage Loan Collateral or shall substitute Eligible Mortgage Assets as
permitted by this Section 3.3; and

(iv) With respect to each Shipping Request that is received by the Custodian by
11:30 a.m. (New York City time) on a Business Day, the Custodian shall use due
diligence and efforts to review such Shipping Request and prepare the Mortgage
Loan files identified in each Shipping Request, for shipment prior to the close
of business on such day.

 

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(c) Transfers. So long as no Default or Event of Default is continuing, and
there is a Margin Sufficiency, the Purchasers hereby consent to permit the
Sellers, at any time, to transfer Mortgage Loans to any Permitted Transferees
(as defined below) by means of its daily electronic transmissions to the
Custodian, together with delivery of a Transfer Request delivered to the
Custodian, identifying each Mortgage Loan being transferred. The Custodian’s
sole responsibility with respect to any such transfers shall be to correctly
reflect such transfers on its computer system and books and records and to
indicate, on its Custodian’s Daily Report on the next Business Day, that such
transfers have been effected. “Permitted Transferees” means (i) the related
Seller, in connection with any sale and transfer thereto effected pursuant to
the terms herein and (ii) any Approved Take-Out Investor. However, requested
transfers will not be made if (A) as reflected on the most recent Purchase
Report, total Invested Amount will equal or exceed the total Recognized Value of
Eligible Mortgage Assets immediately after giving effect to a requested transfer
and any accompanying substitution of Mortgage Assets, or (B) the Custodian shall
have received written notice from the Administrative Agent that a Default or
Event of Default has occurred.

(d) Continuation of Purchasers’ Interest in Mortgage Loans. Unless released in
writing by the Administrative Agent as herein provided, the Purchasers’ interest
in all Purchased Mortgage Loans and Purchased Mortgage Loan Collateral
transmitted pursuant to Section 3.3(b) shall continue in effect until such time
as payment in full of the amount described in Section 3.3(b)(iii) shall have
been received.

(e) Application of Proceeds; No Duty. Neither the Administrative Agent nor the
Purchasers shall be under any duty at any time to credit Sellers for any amount
due from any Approved Take-Out Investor in respect of any purchase of any
Mortgage Assets contemplated under Section 3.3(b) above, until such amount has
actually been received in immediately available funds and deposited to the
Collection Account. Neither the Custodian, nor the Purchasers, nor the
Administrative Agent shall be under any duty at any time to collect any amounts
or otherwise enforce any obligations due from any Approved Take-Out Investor in
respect of any such purchase.

(f) Mandatory Redemption of Mortgage Assets. Notwithstanding any provision
herein to the contrary, if at any time a Margin Deficit exists, the Sellers
shall, as promptly as possible and in any event within one (1) Business Day,
make a payment to the Collection Account or pledge, assign and deliver
additional or substitute Eligible Mortgage Assets to the Administrative Agent
for the benefit of the Purchasers, so that, immediately after giving effect to
such payment or pledge and assignment, total Recognized Value of Eligible
Mortgage Assets shall be equal or greater than the Invested Amount.

(g) Representation in Connection with Releases, Sales and Transfers. The Sellers
jointly and severally represent and warrant that each request for any release or
transfer pursuant to Section 3.3(a) or Section 3.3(b) shall automatically
constitute a representation and warranty to the effect that immediately before
and after giving effect to such release or Transfer Request, the Recognized
Value of Eligible Mortgage Assets shall equal or exceed the Invested Amount.

(h) Limitation on Releases. Notwithstanding any provision to the contrary, the
Custodian shall not release any Mortgage Assets unless payment of the purchase
price by the Approved Take-Out Investor shall have been made in immediately
available funds to the Collection Account; provided, however, that the foregoing
shall not apply if immediately before and after giving effect thereto, the total
Recognized Value of Eligible Mortgage Assets shall equal or exceed the Invested
Amount.

 

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3.4. Releases of Mortgage Notes for Servicing.

The Servicer may from time to time request, in writing, that the Custodian
deliver Mortgage Notes for correction or servicing actions under the Custodian’s
“Trust Receipt and Security Agreement Letter”, in the form provided for in the
Custodial Agreement, as and to the extent permitted pursuant to Section 3.5 of
the Custodial Agreement.

3.5. Mortgage Asset Reporting.

Pursuant to the Custodial Agreement, on each Business Day, and in no event later
than 10:30 a.m. (New York City time), the Custodian shall furnish to the Sellers
and each Managing Agent by facsimile (a hard copy of which shall not
subsequently be mailed, sent or delivered to any Managing Agent, unless so
requested by such Managing Agent) a duly completed Custodian Daily Report in the
form of Exhibit D-8 to the Custodial Agreement.

3.6. Hedge Reporting.

The Servicer shall prepare a duly completed Hedge Report in the form of Exhibit
J on the close of business on the last Business Day of each week and shall
provide such Hedge Report to the Sellers and the Administrative Agent no later
than 10:00 a.m. (New York City time) on the following Business Day. Upon request
of any Purchaser, the Administrative Agent shall furnish or cause to be
furnished to such Purchaser a copy of the most recent Hedge Report received by
the Administrative Agent.

3.7. Servicer Monthly Reporting.

No later than the Settlement Date in each month, the Servicer shall furnish the
Sellers and the Administrative Agent and the Managing Agents (by facsimile or
electronic transmission (a hard copy of which shall not subsequently be mailed,
sent or delivered to the Administrative Agent and the Managing Agents, unless so
requested by the Administrative Agent and the Managing Agents) a report executed
by a Financial Officer of the Servicer or the Seller, in the form of Exhibit F
hereto (“Servicer Monthly Report”) which shall provide as of the last day of the
previous month (i) a computation of the Delinquent Ratio, and delinquency of
Mortgage Loans serviced by the Servicer, (ii) delinquency of Mortgage Loans
owned by the Purchasers that have been purchased from the Sellers and constitute
Mortgage Assets hereunder, (iii) LIBOR, and (iv) the other information provided
for therein. If such Servicer Monthly Report reflects a Conforming FICO Score
Trigger Event, a Conforming Loan-to-Value Ratio Trigger Event, a Non-Conforming
FICO Score Trigger Event or a Non-Conforming Loan-to-Value Ratio Trigger Event,
the Servicer shall so notify the Custodian.

 

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3.8. Approved Take-Out Investor Reporting.

No later than the Settlement Date in each month, the Sellers shall furnish to
the Administrative Agent (by facsimile or electronic transmission (a hard copy
of which shall not subsequently be mailed, sent or delivered to the
Administrative Agent, unless so requested by the Administrative Agent)) a report
which shall provide as of the last day of the previous month (i) a list of
Approved Take-Out Investors that committed to purchase one or more Mortgage
Loans from one of the Sellers during such previous month and (ii) the percentage
of the Mortgage Loans each such Approved Take-Out Investor committed to purchase
either in the form of loan-specific Take-Out Commitments or Hedges. It is
understood that some Mortgage Loans may have been sold and then financed
pursuant to warehouse facilities. This will be reflected on the foregoing
report. Upon request of any Purchaser, the Administrative Agent shall provide or
cause to be provided to such Purchaser a copy of the most recent report received
by it pursuant to this Section 3.8.

ARTICLE IV

CONDITIONS PRECEDENT

4.1. Initial Purchase under this Agreement.

The effectiveness of this Agreement and the making of the initial Purchase
hereunder shall not occur until the satisfaction of the conditions precedent
specified in this Section 4.1 hereof and delivery to the Administrative Agent of
the following (each of the following documents being duly executed and delivered
and in form and substance reasonably satisfactory to the Managing Agents, and
each in a sufficient number of originals that each Managing Agent may have an
executed original of each document):

(a) an executed counterpart of this Agreement;

(b) executed counterparts of the Custodial Agreement, the Collection Account
Control Agreement, the Disbursement Account Control Agreement and the Reserve
Account Control Agreement;

(c) a certificate of the Secretary or Assistant Secretary of each of the Sellers
and the Performance Guarantor certifying as to (i) resolutions of the Sellers’
and the Performance Guarantor’s board of directors authorizing the execution,
delivery, and performance by each of them of the Transaction Documents to which
they are a party and identifying the officers of the Sellers and the Performance
Guarantor who are authorized to sign such Transaction Documents, (ii) specimen
signatures of the officers so authorized, (iii) the certificate of incorporation
or formation, as applicable and (iv) bylaws or resolutions or other similar
governing documents, as applicable;

(d) a favorable written opinion from counsel to the Sellers and the Performance
Guarantor which counsel may be an employee of such Person on entity matters and
a favorable written opinion from counsel to the Sellers and the Performance
Guarantor on corporate matters, each in a form reasonably acceptable to the
Administrative Agent;

 

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(e) favorable written opinion from Hunton & Williams LLP, counsel to the
Administrative Agent, to the effect that this Agreement is covered by the safe
harbor for the “repurchase agreements” under the Bankruptcy Code;

(f) a favorable written opinion from Cadwalader, Wickersham & Taft LLP, counsel
to the Sellers, as to security interest and enforceability matters;

(g) a certificate from the Secretary of State for the state or states in which
each Seller is incorporated and has its principal place of business, as to the
good standing of the Sellers and/or the Performance Guarantor, as applicable;

(h) executed counterparts of the Fee Letters;

(i) evidence of a deposit to the Reserve Account in the amount needed to
increase the balance therein to equal the Required Reserve Account Amount;

(j) with respect to each Issuer, written confirmation from each Rating Agency
rating the Commercial Paper Notes of such Issuer that the Issuer’s execution of
and performance under this Agreement will not result in a downgrade or
withdrawal of the ratings assigned to any of such Commercial Paper Notes;

(k) all amounts owing under the Existing Loan Agreement have been paid; and

(l) such other documents as any Managing Agent may reasonably request at any
time at or prior to the Purchase Date of the initial Purchase hereunder.

4.2. All Purchases.

Each Purchase (including, without limitation, the initial Purchase) pursuant to
this Agreement is subject to the following further conditions precedent:

(a) prior to 2:00 p.m. (New York City time) on the Business Day before the
designated Purchase Date, the Sellers shall have provided to the Administrative
Agent and the Custodian, a Purchase Report (together with any related
Assignment) and prior to 4:00 p.m. (New York City time), the Administrative
Agent shall have provided a copy of such Purchase Report to each Managing Agent
(it being understood that any such Purchase Request shall constitute a
representation that after giving effect to the Purchase and close of business on
such Purchase Date, the Recognized Value of all Eligible Mortgage Assets shall
equal or exceed the Invested Amount);

(b) all Mortgage Assets that will become Purchased Mortgage Assets on the
Purchase Date, with the exception of Wet Loans pursuant to Section 2.3(c), shall
have been physically delivered to the possession of the Custodian in accordance
with Section 3.2;

(c) the representations and warranties of the Sellers and (so long as the
Servicer and one of the Sellers is the same entity) the Servicer contained in
this Agreement, any Assignment or Purchase Report, the Collection Account
Control Agreement, the Reserve Account Control Agreement, the Disbursement
Account Control Agreement or other Transaction Document (other than those
representations and warranties that, by their express terms, are limited to the
effective date of the document or agreement in which they are initially made)
shall be true and correct in all material respects on and as of the date of such
Purchase;

 

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(d) no Default or Event of Default or Servicer Default shall have occurred and
be continuing, or would result from such Purchase, and no change or event that
constitutes a Material Adverse Effect shall have occurred and be continuing as
of the date of such Purchase;

(e) the Collection Account shall be established and in existence and free from
any Lien other than pursuant to the Collection Account Control Agreement;

(f) delivery of a sufficient number of originals such that the Administrative
Agent may have an executed original thereof, of such other documents and
opinions of counsel, including such other documents as may be necessary or
desirable to perfect or maintain the priority of any Lien granted or intended to
be granted hereunder or otherwise and including favorable written opinions of
counsel with respect thereto, as the Administrative Agent may reasonably
request;

(g) the Termination Date shall not have occurred and the Purchasers shall not
have delivered to the applicable Seller a notice that the Purchasers shall not
make any further Purchases hereunder;

(h) with respect to the initial Purchase, all fees, costs and expenses due on
the Initial Purchase Date shall have been paid, as provided in the Fee Letters;

(i) prior to 12:00 noon (New York City time) on the Business Day prior to the
date of such Purchase, the Purchasers and the Custodian shall have received a
bill of sale and blanket assignment, in the form set forth in Exhibit I hereto,
and duly executed and delivered by the applicable Seller, with respect to the
Mortgage Assets included in such Purchase; and

(j) the Principal Mortgage Documents with respect to each Mortgage Loan included
in such Purchase, other than Wet Loans, shall have been physically delivered to
the possession of the Custodian;

Each Purchase Report shall be automatically deemed to constitute a
representation and warranty by the Sellers on the Purchase Date set forth
therein to the effect that all of the conditions of Sections 4.1 and 4.2 are
satisfied as of such Purchase Date.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

5.1. Representations of the Sellers and the Servicer.

The Sellers and the Servicer each represents and warrants, as to itself, to the
Administrative Agent, the Managing Agents and the Purchasers as follows:

(a) Organization and Good Standing. It (i) is a corporation, duly organized and
existing in good standing under the laws of the jurisdiction of its
organization, (ii) is duly qualified to do business and in good standing in all
jurisdictions in which its failure to be so qualified could have a Material
Adverse Effect, (iii) has the requisite entity power and authority to own its
properties and assets and to transact the business in which it is engaged and is
or will be qualified in those states wherein it proposes to transact business in
the future and (iv) is in compliance with all Requirements of Law. American Home
Mortgage Corp. is incorporated in New York and in no other jurisdiction,
American Home Mortgage Servicing, Inc. is incorporated in Maryland and in no
other jurisdiction, American Home Mortgage Acceptance, Inc. is incorporated in
Maryland and no other jurisdiction and American Home Mortgage Investment Corp.
is incorporated in Maryland and in no other jurisdiction.

 

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(b) Authorization and Power. It has the requisite entity power and authority to
execute, deliver and perform this Agreement and the other Transaction Documents
to which it is a party; it is duly authorized to and has taken all requisite
entity action necessary to authorize it to, execute, deliver and perform this
Agreement and the other Transaction Documents to which it is a party and is and
will continue to be duly authorized to perform this Agreement and such other
Transaction Documents.

(c) No Conflicts or Consents. Neither the execution and delivery by it of this
Agreement or the other Transaction Documents to which it is a party, nor the
consummation of any of the transactions herein or therein contemplated, nor
compliance with the terms and provisions hereof or with the terms and provisions
thereof, will (i) contravene or conflict with any Requirement of Law to which it
is subject, or any indenture, mortgage, deed of trust, or other agreement or
instrument to which it is a party or by which it may be bound, or to which its
Property may be subject, or (ii) result in the creation or imposition of any
Lien, except to the extent of the Liens in favor of the Administrative Agent on
behalf of the Purchasers, on the Property of the Sellers.

(d) Enforceable Obligations. This Agreement and the other Transaction Documents
to which it is a party have been duly and validly executed by it and are its
legal, valid and binding obligations, enforceable in accordance with their
respective terms, except as limited by Debtor Laws.

(e) Full Disclosure. There is no fact known to it that it has not disclosed to
the Administrative Agent and the Managing Agents that could reasonably be
expected to have a Material Adverse Effect. Neither its financial statements nor
any Purchase Report, officer’s certificate or statement delivered by it to the
Managing Agents in connection with this Agreement, contains any untrue or
inaccurate statement of material fact or omits to state a material fact
necessary to make such information not misleading.

(f) No Default. It is not in default under any loan agreement, mortgage,
security agreement or other agreement or obligation to which it is a party or by
which any of its Property is bound, if such default would also be a Default or
an Event of Default (or, with notice or passage of time would become a Default
or Event of Default) under either of subparagraphs (e) or (i) of Section 8.1 of
this Agreement.

 

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(g) Litigation.

(i) Except as set forth on Schedule III, there are no actions, suits or
proceedings, including arbitrations and administrative actions, at law or in
equity, either by or before any Governmental Authority, now pending or, to its
knowledge, threatened by or against it or any of its Subsidiaries, and
pertaining to any Governmental Requirement affecting any Seller’s Property or
rights or any of its Subsidiaries with damage claims in excess of $1,000,000.

(ii) Neither it nor any of its Subsidiaries is in default with respect to any
Governmental Requirements.

(iii) The Servicer is not liable on any judgment, order or decree (or any series
of judgments, orders, or decrees) that could reasonably be expected to have a
Material Adverse Effect and that has not been paid, stayed or dismissed within
60 days and the Sellers are not liable on any judgment, order or decree (or any
series of judgments, orders or decrees).

(h) Taxes. All tax returns required to be filed by it in any jurisdiction have
been filed, except where extensions of time to make those filings have been
granted by the appropriate taxing authorities and the extensions have not
expired, and all taxes, assessments, fees and other governmental charges upon it
or upon any of its properties, income or franchises have been paid prior to the
time that such taxes could give rise to a Lien thereon, unless protested in good
faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been established on its books. There is no tax
assessment or to Sellers’ and Servicer’s best knowledge, proposed tax assessment
against it that could reasonably be expected to have a Material Adverse Effect.

(i) Aggregate Collateral Value. AHMIC’s ratio of its Aggregate Collateral Value
to its Adjusted Consolidated Funded Debt is not less than 1.00 to 1.00.

(j) Permits, Patents, Trademarks, Etc.

(i) It has all permits and licenses necessary for the operation of its business.

(ii) It owns or possesses (or is licensed or otherwise has the necessary right
to use) all patents, trademarks, service marks, trade names and copyrights,
technology, know-how and processes, and all rights with respect to the
foregoing, which are necessary for the operation of its business, without any
conflict with the rights of others. The consummation of the transactions
contemplated hereby will not alter or impair any of such rights of it.

(k) Status Under Certain Federal Statutes. It is not (i) a “holding company”, or
a “subsidiary company” of a “holding company” or an “affiliate” of a “holding
company,” or of a “subsidiary company” of a “holding company,” as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended, (ii) a
“public utility,” as such term is defined in the Federal Power Act, as amended,
(iii) an “investment company,” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as amended,
or (iv) a “rail carrier,” or a “person controlled by or affiliated with a rail
carrier,” within the meaning of Title 49, U.S.C., and it is not a “carrier” to
which 49 U.S.C. § 11301(b)(1) is applicable.

 

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(l) Securities Acts. It has not issued any unregistered securities in violation
of the registration requirements of the Securities Act of 1933, as amended, or
of any other Requirement of Law, and is not violating any rule, regulation, or
requirement under the Securities Act of 1933, as amended, or the Securities and
Exchange Act of 1934, as amended.

(m) No Approvals Required. Other than consents and approvals previously obtained
and actions previously taken, neither the execution and delivery of this
Agreement and the other Transaction Documents to which it is a party, nor the
consummation of any of the transactions contemplated hereby or thereby requires
the consent or approval of, the giving of notice to, or the registration,
recording or filing by it of any document with, or the taking of any other
action in respect of, any Governmental Authority that has jurisdiction over it
or any of its Property.

(n) Environmental Matters. There have been no past, and there are no pending or
to Sellers’ knowledge threatened, claims, complaints, notices, or governmental
inquiries against it regarding any alleged violation of, or potential liability
under, any environmental laws that could reasonably be expected to have a
Material Adverse Effect. It and its properties are in substantial compliance in
all respects with all environmental laws and related licenses and permits,
unless the failure to comply strictly in all respects with all environmental
laws and related licenses and permits could reasonably be expected to have a
Material Adverse Effect. No conditions exist at, on or under any Property now or
previously owned or leased by it that could give rise to liability under any
environmental law that could be expected to have a Material Adverse Effect.

(o) Principal Office, Etc. The principal office, chief executive office and
principal place of business of (i) American Home Mortgage Corp., American Home
Mortgage Acceptance, Inc. and American Home Mortgage Investment Corp. is at 538
Broadhollow Road, Melville, New York 11747 and (ii) American Home Mortgage
Servicing, Inc. is at 538 Broadhollow Road, Melville, New York 11747 (executive
offices), and its principal office is at 4600 Regent Blvd., Suite 201, Irving,
Texas 75063.

(p) Eligibility. The Servicer and each Seller are approved and qualified and in
good standing as a lender or seller/servicer, as follows:

(i) The Servicer and each Seller is a Fannie Mae approved seller/servicer (in
good standing) of Mortgage Loans, eligible to originate, purchase, hold, sell
and, with respect to each Seller and the Servicer, service Mortgage Loans to be
sold to Fannie Mae.

(ii) The Servicer and each Seller is a Freddie Mac approved seller/servicer (in
good standing) of Mortgage Loans, eligible to originate, purchase, hold, sell
and service Mortgage Loans to be sold to Freddie Mac.

(iii) The Servicer and each Seller is an approved FHA servicer, VA servicer and
Ginnie Mae issuer (in good standing) of mortgage loans, eligible to originate,
purchase, hold, sell and service mortgage loans to be pooled into Ginnie Mae
mortgage-backed securities pools and to issue Ginnie Mae mortgage-backed
securities.

 

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(iv) Each Mortgage Loan reported as an Eligible Mortgage Loan is an Eligible
Mortgage Loan.

(q) Solvency. Both prior to and after giving effect to each Purchase, (i) the
fair value of the property of each Seller is greater than the total amount of
liabilities, including contingent liabilities, of each Seller, (ii) the present
fair salable value of the assets of each Seller is not less than the amount that
will be required to pay all probable liabilities of each Seller on their debts
as they become absolute and matured, (iii) each Seller does not intend to, and
does not believe that it will, incur debts or liabilities beyond each Seller’s
abilities to pay such debts and liabilities as they mature and (iv) each Seller
is not engaged in a business or a transaction, and is not about to engage in a
business or a transaction, for which the Sellers’ property would constitute
unreasonably small capital.

(r) No Liens. The Sellers have (or, as to all Mortgage Loan Collateral delivered
to the Custodian after the date of this Agreement, will have) good and
indefeasible title to all Mortgage Assets, and the Mortgage Loan Collateral and
all proceeds thereof are (or, as to all Mortgage Loan Collateral delivered to
the Custodian after the date of this Agreement, will be) free and clear of all
Liens and other adverse claims, other than (i) the right of the related Seller
to repurchase such Mortgage Loan Collateral pursuant to the terms herein and/or
(ii) Liens in the Mortgage Loan Collateral or proceeds in favor of the
Administrative Agent for the benefit of the Purchasers.

(s) Financial Condition.

(i) The balance sheet of each of the Sellers as at June 30, 2006, a copy of
which has been furnished to the Managing Agents, fairly presents the financial
condition of such Sellers as at such date, in accordance with GAAP, and since
June 30, 2006, there has been no material adverse change in the business,
operations, property or financial condition of the Sellers.

(ii) The Servicer has delivered to the Administrative Agent copies of the
Performance Guarantor’s balance sheet, as of June 30, 2006, and the related
consolidated statements of income, and with respect to AHMIC only, stockholder’s
equity and cash flows for the six months ended on such date, (“Interim
Statements”); and all such financial statements fairly present the financial
condition of the Servicer as of their respective dates, subject, in the case of
the Interim Statements, to normal year end adjustments and the results of
operations of the Servicer for the periods ended on such dates and have been
prepared in accordance with GAAP.

(iii) As of the date thereof, there are no obligations, liabilities or
Indebtedness (including contingent and indirect liabilities and obligations or
unusual forward or long-term commitments) of the Servicer or any Seller required
to be recorded under GAAP that are not reflected therein.

 

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(iv) No change that constitutes a Material Adverse Effect has occurred in the
financial condition or business of the Servicer since June 30, 2006.

(t) UCC Financing Statements. No effective financing statement or other
instrument similar in effect covering any Mortgage Loan, any interest therein,
or the related Mortgage Assets with respect thereto is on file in any recording
office except such as may be filed in favor of the Sellers in accordance with
the Mortgage Loans, or in favor of the Administrative Agent or the Purchasers in
accordance with this Agreement or in connection with a Lien arising solely as
the result of any action taken by the Purchasers (or any assignee thereof) or by
the Administrative Agent.

(u) Origination of Eligible Mortgage Loans.

(i) Each Eligible Mortgage Loan was originated in compliance with local, state
and federal law applicable thereto at the time of origination, including without
limitation, required disclosures of points, charges and fees.

(ii) Each Eligible Mortgage Loan was originated using credit policies in effect
at the time such origination, which were designated to provide guidelines in
underwriting the creditworthiness of the Obligors and to determine the Obligors’
ability to repay the debt. In accordance with such policies, each of the Sellers
considered, among other things, the credit history of the Obligor and other
credit indicators such as income verification and/or debt-to-income ratios of
the Obligor. No Mortgage Loan was originated based solely on an estimation of
the value of the mortgaged property without any consideration of the potential
ability of the Obligor to repay the amount owed under the Mortgage Loan.

(iii) No Mortgage Loan violates any of the provisions of the Home Ownership and
Equity Protection Act of 1994 (14 U.S.C. § 1602(aa)) or Regulation Z (12 C.F.R.
226.32).

(iv) No Obligor was required to purchase any credit life, disability, accident
or health insurance product as a condition of obtaining the Mortgage Loan. No
Obligor obtained a prepaid single-premium credit life, disability, accident or
health policy in connection with the origination of the Mortgage Loan.

(v) Each Mortgage Loan was originated in a manner designed to be eligible for
purchase by an Approved Take-Out Investor.

(v) Eligible Mortgage Assets. Each Mortgage Asset purported to be sold by any of
the Sellers hereunder is an Eligible Mortgage Asset as of the date of such sale,
and each such Mortgage Asset, together with the related Mortgage Loan
Collateral, is owned (immediately prior to its sale hereunder) by the applicable
Seller free and clear of any Adverse Claim (other than any Adverse Claim arising
solely as the result of any action taken by the Purchasers). When any Purchaser
acquires a Purchased Mortgage Asset by Purchase hereunder, it shall acquire good
and marketable title to such Purchased Mortgage Asset and the related Mortgage
Loan Collateral and Collections with respect thereto free and clear of any
Adverse Claim (other than any Adverse Claim arising solely as the result of any
action taken by the Purchasers), and no effective financing statement or other
instrument similar in effect covering any Purchased Mortgage Asset, any interest
therein, the related Mortgage Loan Collateral or Collections with respect
thereto is on file

 

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in any recording office except such as may be filed in favor of the Purchasers
in accordance with this Agreement or in connection with any Adverse Claim
arising solely as the result of any action taken by the Purchasers. In addition,
with respect to each Mortgage Loan sold to the Purchasers that is subsequently
sold to Freddie Mac, such Seller hereby makes the representations and warranties
set forth in the Freddie Mac Selling Guide and such Seller’s Master Agreement
and Mortgage Loan Purchase Agreement with Freddie Mac. In addition, with respect
to each Mortgage Loan sold to the Purchasers that is subsequently sold to Fannie
Mae, such Seller hereby makes the representations and warranties (collectively,
the “Fannie Mae Representations and Warranties”) set forth in the Fannie Mae
Selling and Servicing Guides, the Mortgage Selling and Servicing Contract
between such Seller and Fannie Mae, and Master Agreement No. MC03136.1 by and
among Fannie Mae and such Seller, as amended from time to time, and all
subsequent master agreements entered into by and among Fannie Mae and such
Seller (collectively, the “Fannie Mae Incorporated Documents”) as though the
Fannie Mae Representations and Warranties were fully set forth herein. The
Fannie Mae Incorporated Documents are incorporated herein by reference as though
fully set forth herein, and the Fannie Mae Representations and Warranties shall
survive the delivery of any Mortgage Loan to Fannie Mae. Further, with respect
to each Non-Conforming Loan, such Seller hereby makes the representations and
warranties set forth in the related mortgage loan purchase agreement,
seller/servicer guide or other similar agreement with the applicable Approved
Take-Out Investor.

(w) Employee Benefit Plans. (i) No Employee Plan of the Servicer or any ERISA
Affiliate has incurred an “accumulated funding deficiency” (as defined in
Section 302 of ERISA or Section 412 of the Code), (ii) neither the Servicer nor
any ERISA Affiliate has incurred liability under ERISA to the PBGC,
(iii) neither the Servicer nor any ERISA Affiliate has partially or fully
withdrawn from participation in a Multiemployer Plan, (iv) no Employee Plan of
the Servicer or any ERISA Affiliate has been the subject of involuntary
termination proceedings, (v) neither the Servicer nor any ERISA Affiliate has
engaged in any “prohibited transaction” (as defined in Section 406 of ERISA or
Section 4975 of the Code), and (vi) no “reportable event” (as defined in
Section 4043 of ERISA) has occurred in connection with any Employee Plan of the
Servicer or any ERISA Affiliate other than events for which the notice
requirement is waived under applicable PBGC regulations.

(x) Ownership. On the date of this Agreement, AHMIC has beneficial ownership,
directly or indirectly, of 100% of the issued and outstanding shares of each
class of the stock of the Servicer and each Seller.

5.2. Survival of Representations.

All representations and warranties by the Sellers and the Servicer herein shall
survive the making of the Purchases, and any investigation at any time made by
or on behalf of the Administrative Agent or the Purchasers shall not diminish
the right of the Administrative Agent, the Managing Agents or the Purchasers to
rely thereon.

 

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ARTICLE VI

AFFIRMATIVE COVENANTS

The Sellers and the Servicer shall each at all times comply with the covenants
applicable to it contained in this Article VI, from the date hereof until the
later of the Termination Date and the date all of the Repurchase Obligations are
indefeasibly paid in full.

6.1. Financial Statements and Reports.

The Servicer, for so long as the Servicer is one of the Sellers, and thereafter
the Sellers, shall furnish to the Managing Agents the following, all in form and
detail reasonably satisfactory to the Managing Agents:

(a) promptly after becoming available, and in any event within 120 days after
the close of each fiscal year of AHMIC, such Person’s audited consolidated and
consolidating balance sheet as of the end of such fiscal year, and the related
statements of income, stockholder’s equity and cash flows of such Person for
such year showing within such consolidating balance sheets and statements of
income the balance sheet and statements of income for the Sellers accompanied by
(i) the related report of independent certified public accountants reasonably
acceptable to the Managing Agents, which report shall be to the effect that such
statements have been prepared in accordance with GAAP applied on a basis
consistent with prior periods except for such changes in such principles with
which the independent certified public accountants shall have concurred and
(ii) if issued, the auditor’s letter or report to management customarily given
in connection with such audit;

(b) promptly after becoming available, and in any event within 60 days after the
end of each fiscal quarter, excluding the fourth fiscal quarter, of each fiscal
year of AHMIC, the unaudited consolidated and consolidating balance sheet of
AHMIC as of the end of such fiscal quarter and the related statements of income,
stockholders’ equity and cash flows of AHMIC for such fiscal quarter and the
period from the first day of the then current fiscal year of the Performance
Guarantor through the end of such fiscal quarter, showing within such
consolidating balance sheets and statements of income the balance sheet and
statements of income for the Sellers certified by a Financial Officer of AHMIC,
to have been prepared in accordance with GAAP applied on a basis consistent with
prior periods, subject to normal year-end adjustments;

(c) promptly upon receipt thereof, a copy of each other report submitted to each
of the Servicer, the Sellers and the Performance Guarantor by independent
certified public accountants in connection with any annual, interim or special
audit of the books of such Person;

(d) promptly and in any event within twenty (20) days after the request of the
Administrative Agent or the Managing Agents at any time and from time to time, a
certificate, executed by a responsible officer of the Servicer and the Sellers,
setting forth all of such Person’s warehouse borrowings and a description of the
collateral related thereto;

(e) promptly and in any event within 60 days after the end of each of the first
three (3) quarters in each fiscal year of the Sellers, and within 120 days after
the close of the Sellers’ fiscal year, completed officer’s certificates in the
from of H-1 and H-2 hereto, executed by the president or chief financial officer
of each of the Servicer and the Sellers, respectively;

 

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(f) upon written request of the Administrative Agent (who shall so request at
the request of any Managing Agent), promptly and in any event within 60 days
after the end of each quarter (120 days in the case of the fourth quarter), a
management report regarding the Sellers’ Mortgage Loan production for the prior
quarter and year-to-date, in form and detail as reasonably required by the
Administrative Agent;

(g) promptly furnish copies of all reports and notices with respect to any
“reportable event” defined in Title IV of ERISA that the Sellers or the Servicer
files or that the Sellers or the Servicer is required to file under ERISA with
the Internal Revenue Service, the PBGC or the U.S. Department of Labor or that
the Sellers or the Servicer receives from the PBGC;

(h) immediately after becoming aware of the expiration, forfeiture, termination,
or cancellation of, or default under, any Take-Out Commitment or Hedge relating
to any Mortgage Assets, telephone notice thereof confirmed in writing within one
Business Day, together with a statement as to what action the Sellers propose to
take with respect thereto; provided that no such notice need be given if such
Take-Out Commitment or Hedge is replaced by another Take-Out Commitment or Hedge
within one Business Day;

(i) promptly after becoming available, and in any event within 60 days after the
end of each fiscal quarter, excluding the fourth fiscal quarter, of each fiscal
year of the Sellers, the unaudited balance sheet of the Sellers as of the end of
such fiscal quarter and the related statements of income, stockholders’ equity
and cash flows of the Sellers for such fiscal quarter and the period from the
first day of such fiscal year through the end of such fiscal quarter, certified
by the chief financial officer of the Sellers, to have been prepared in
accordance with GAAP applied on a basis consistent with prior periods, subject
to normal year-end adjustments;

(j) promptly after the Sellers obtain knowledge thereof, notice of any “Event of
Default” or “Termination Date” under this Agreement;

(k) [Reserved]

(l) promptly after the Servicer obtains knowledge thereof, notice of any
Servicer Default or of any condition or event that, with the giving of notice or
lapse of time or both and unless cured or waived, would constitute a Servicer
Default; and

(m) such other material information concerning the business, properties or
financial condition of the Sellers as the Administrative Agent or any Managing
Agent may reasonably request.

6.2. Taxes and Other Liens.

The Sellers shall pay and discharge promptly all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or upon any of
its Property as well as all claims of any kind (including claims for labor,
materials, supplies and rent) that, if unpaid, might become a Lien upon any or
all of its Property; provided, however, the Sellers shall not be required to pay
any such tax,

 

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assessment, charge, levy or claim if the amount, applicability or validity
thereof shall currently be contested in good faith by appropriate proceedings
diligently conducted by it or on its behalf and if it shall have set up reserves
therefor adequate under GAAP.

6.3. Maintenance.

The Sellers shall maintain their corporate existence and shall comply with all
Governmental Requirements.

6.4. Further Assurances.

The Sellers and the Servicer shall, each within three (3) Business Days (or, in
the case of Mortgage Notes, such longer period as provided under Section 3.4 of
this Agreement) after the request of the Administrative Agent, cure any defects
in the execution and delivery this Agreement or any other Transaction Document.
The Sellers and the Servicer shall, each at its expense, promptly execute and
deliver to the Administrative Agent, upon the Administrative Agent’s reasonable
request, all such other and further documents, agreements and instruments
necessary to keep the Sellers and the Servicer, as applicable, in compliance
with the covenants and agreements of the Sellers and the Servicer, respectively,
in this Agreement and in the other Transaction Documents or to further evidence
and more fully describe the Mortgage Assets, or to correct any omissions in this
Agreement or the other Transaction Documents, or more fully to state the
security for the obligations set out herein or in any of the other Transaction
Documents, or to perfect, protect or preserve any Liens created (or intended to
be created) pursuant to any of the other Transaction Documents, or to make any
recordings, to file any notices, or obtain any consents.

6.5. Compliance with Laws.

The Servicer shall comply with all applicable laws, rules, regulations and
orders in connection with servicing the Mortgage Assets.

6.6. Insurance.

(a) The Sellers and the Servicer shall each maintain with financially sound and
reputable insurers, insurance with respect to its Properties and business
against such liabilities, casualties, risks and contingencies and in such types
and amounts as is customary in the case of Persons engaged in the same or
similar businesses and similarly situated, including, without limitation, a
fidelity bond or bonds in form and with coverage and with a company reasonably
satisfactory to the Administrative Agent and with respect to such individuals or
groups of individuals as the Administrative Agent may designate. Upon request of
the Administrative Agent, the Sellers and the Servicer shall each furnish or
cause to be furnished to the Administrative Agent from time to time a summary of
the insurance coverage of the Sellers and the Servicer, respectively, in form
and substance reasonably satisfactory to the Administrative Agent and if
requested shall furnish the Administrative Agent with copies of the applicable
policies.

 

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(b) With respect to Mortgages comprising the Mortgage Assets (i) the Servicer,
for as long as the Servicer is one of the Sellers, and thereafter the Sellers,
shall cause the improvements on the land covered by each Mortgage to be kept
continuously insured at all times by responsible insurance companies against
fire and extended coverage hazards under policies, binders, letters, or
certificates of insurance, with a standard mortgagee clause in favor of the
original mortgagee and its successors and assigns or, in the case of a MERS
Designated Mortgage Loan, the beneficial owner of such mortgage loan, and
(ii) the Servicer, for so long as the Servicer is one of the Sellers, and
thereafter the Sellers, shall cause each such policy to be in an amount equal to
the lesser of the maximum insurable value of the improvements or the original
principal amount of the Mortgage, without reduction by reason of any
co-insurance, reduced rate contribution, or similar clause of the policies or
binders.

6.7. Accounts and Records.

The Sellers and, so long as the Servicer and one of the Sellers are the same
entity, the Servicer shall each keep books of record and account in which full,
true and correct entries will be made of all material dealings or transactions
in relation to its business and activities, in accordance with GAAP. The Sellers
and the Servicer shall each maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate all records
pertaining to the performance of the Sellers’ obligations under the Take-Out
Commitments and Hedges and other agreements made with reference to any Mortgage
Loans in the event of the destruction of the originals of such records) and keep
and maintain all documents, books, records, computer tapes and other information
necessary or advisable for the performance by the Sellers of their Repurchase
Obligations.

6.8. Periodic Visits.

The Sellers and, so long as the Servicer and one of the Sellers are the same
entity, the Servicer shall permit any officer, employee or agent of the
Administrative Agent (including an independent certified public accountant
selected by the Administrative Agent) to visit (each such visit, a “Periodic
Visit”) and inspect any of its Properties, examine its books of record and
accounts, documents (including without limitation computer tapes and disks),
telecopies and extracts from the foregoing, and discuss its affairs, finances
and accounts with its officers, accountants, and auditors, and to review the
business of originating the Mortgage Loans, the sale of the Mortgage Loans by
the Sellers, and the servicing of the Mortgage Loans by the Servicer, including
the Servicer’s collections systems, all during reasonable business hours and as
often as the Administrative Agent may desire and no more than twice a year
unless an Event of Default has occurred and is continuing. The Sellers agree to
pay the reasonable costs of reviews and inspections performed pursuant to this
Section 6.8, including the costs and expenses charged by the certified public
accountant in preparing and delivering to the Administrative Agent with respect
to the certified public accountant’s review on a scope and in a form reasonably
acceptable to the Administrative Agent and each Managing Agent (such report, a
“Report of Visit”). A Report of Visit shall be delivered no later than sixty
(60) days prior to each Annual Extension Date.

 

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6.9. Notice of Certain Events.

The Sellers and, so long as the Servicer and one of the Sellers are the same
entity (other than with respect to clause (g) hereof), the Servicer shall each
promptly notify the Administrative Agent in writing upon (a) the receipt of any
notice from, or the taking of any other material action by, the holder of any of
its promissory notes, debentures or other evidences of Indebtedness with respect
to a claimed default, together with a detailed statement by a responsible
officer of the Sellers or the Servicer, as the case may be, specifying the
notice given or other material action taken by such holder and the nature of the
claimed default and what action the Sellers or the Servicer is taking or
proposes to take with respect thereto, but only if such alleged default or event
of default (if it were true) would also be a Default or Event of Default under
this Agreement; (b) the commencement of, or any determination in, any legal,
judicial or regulatory proceedings that, if adversely determined, could also be
a Default or Event of Default under this Agreement; (c) any dispute between the
Sellers or the Servicer, as the case may be, and any Governmental Authority or
any other Person that, if adversely determined, could have a Material Adverse
Effect; (d) any change in the business or financial condition of the Servicer,
including, without limitation, the Servicer’s insolvency, that could reasonably
be expected to have a Material Adverse Effect, or any adverse change in the
business or financial condition of the Sellers, including, without limitation,
the Sellers’ insolvency; (e) any other event or condition known to it that could
reasonably be expected to have a Material Adverse Effect; (f) the receipt of any
notice from, or the taking of any other action by any Approved Take-Out Investor
indicating an intent not to honor, or claiming a default under a Take-Out
Commitment that could reasonably be expected to have a Material Adverse Effect
if such Take-Out Commitment is not replaced with another Take-Out Commitment or
Hedge, together with a detailed statement by a responsible officer of the
Sellers specifying the notice given or other action taken by such Approved
Take-Out Investor and the nature of the claimed default and what action the
Sellers are taking or proposes to take with respect thereto; (g) the receipt of
any notice from, and or the taking of any action by any Governmental Authority
indicating an intent to cancel the Sellers’ or the Servicer’s right to be either
a seller or servicer of such Governmental Authority’s insured or guaranteed
Mortgage Loans; and (h) the receipt of any notice of any final judgment or order
for payment of money applicable to the Servicer that could reasonably be
expected to have a Material Adverse Effect, or the receipt of any notice of any
final judgment or order for payment of money applicable to the Sellers. Upon
receipt of any notice under this Section 6.9, the Administration Agent shall
provide a copy of such notice to each of the Managing Agents.

6.10. Performance of Certain Obligations.

The Sellers and, so long as the Servicer and any of the Sellers are the same
entity, the Servicer shall each perform and observe each of the provisions of
each Mortgage Loan, Take-Out Commitment and Hedge on its part to be performed or
observed and will cause all things to be done that are necessary to have each
Mortgage Loan covered by a Take-Out Commitment or Hedge comply with the
requirements of such Take-Out Commitment or Hedge.

 

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6.11. Use of Proceeds; Margin Stock.

None of the proceeds of the Purchases shall be used for the purpose of
purchasing or carrying any “margin stock” as defined in Regulation U, or for the
purpose of reducing or retiring any Indebtedness that was originally incurred to
purchase or carry margin stock or for any other purpose that might constitute
this transaction a “purpose credit” within the meaning of such Regulation U.
Neither the Sellers nor any Person acting on behalf of the Sellers shall take
any action in violation of Regulations U or X or shall violate Section 7 of the
Securities Exchange Act of 1934, as amended, or any rule or regulation
thereunder, in each case as now in effect or as the same may hereafter be in
effect.

6.12. Notice of Default.

The Sellers shall furnish to the Administrative Agent immediately upon becoming
aware of the existence of any Default or Event of Default, a written notice
specifying the nature and period of existence thereof and the action that the
Sellers are taking or proposes to take with respect thereto.

6.13. [Reserved].

6.14. Compliance with Material Agreements.

The Sellers and, so long as the Servicer and one of the Sellers are the same
entity, the Servicer shall each comply in all material respects with all
agreements, indentures, Mortgages or documents (including, with respect to the
Sellers, the Articles of Organization) binding on it or materially affecting its
Property or business in all cases where the failure to so comply could
reasonably be expected to result in a Material Adverse Effect.

6.15. Operations and Properties.

The Sellers and, so long as the Servicer and one of the Sellers are the same
entity, the Servicer shall each act prudently and in accordance with customary
industry standards in managing and operating its Property and shall continue to
underwrite, hedge and sell Mortgage Loans in the same diligent manner it has
applied in the past.

6.16. Hedges.

The Sellers shall obtain and maintain in full force and effect, Hedges as of
each date of determination, with an aggregate purchase price at least equal to
the total of the original principal balances of the Sellers’ entire portfolio of
Mortgage Loans.

6.17. Full Disclosure.

Neither any financial statements nor any Purchase Report, officer’s certificate
or statement delivered by the Sellers or the Servicer to the Managing Agents in
connection with this Agreement, will contain any untrue or inaccurate statement
of material fact or omit to state a material fact necessary to make such
information not misleading.

 

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6.18. Environmental Compliance.

The Sellers and, so long as the Servicer and one of the Sellers are the same
entity, the Servicer shall each use and operate all of its facilities and
properties in compliance with all environmental laws, keep all necessary
permits, approvals, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in compliance therewith, and handle
all hazardous materials in compliance with all applicable environmental laws.

6.19. Closing Instructions.

The Sellers agree to indemnify and hold the Purchasers, the Administrative Agent
and the Managing Agents harmless from and against any loss, including reasonable
attorneys’ fees, expenses and costs, attributable to the failure of a title
insurance company, agent or approved attorney to comply with the disbursement or
instruction letter or letters of the Sellers, the Managing Agents or of the
Administrative Agent relating to any Mortgage Loan. The Servicer shall direct,
via the closing instruction letter, each addressee title insurance company,
agent or attorney to remit into the Collection Account any funds held in escrow
for a Mortgage Loan that ultimately fails to close by the second Business Day
after the originally scheduled closing date for such Mortgage Loan. In the
absence of such remittance, the Sellers shall either (i) substitute for the
subject Mortgage Loan a substantially similar Mortgage Loan or (ii) remit into
the Collection Account, from its own funds, funds sufficient to repay funds
advanced for the subject Mortgage Loan. The Administrative Agent shall have the
right to pre-approve (in its reasonable discretion) the closing instructions of
the Seller to the title insurance company, agent or attorney in any case where
the Mortgage Loan to be created at settlement is intended to be sold to the
Purchasers pursuant hereto.

6.20. Special Affirmative Covenants Concerning Mortgage Assets.

(a) The Sellers shall at all times warrant and defend the right, title and
interest of the Purchasers, the Custodian and the Administrative Agent in and to
the Mortgage Assets against the claims and demands of all Persons whomsoever.

(b) The Sellers and the Servicer shall each service or cause to be serviced all
Mortgage Loans in the best interests of and for the benefit of the Purchasers,
in accordance with the terms of this Agreement, the terms of the Principal
Mortgage Documents, the standard requirements of the issuers of Take-Out
Commitments or Hedges covering the same and to the extent consistent with such
terms, in accordance with Accepted Servicing Standards, including without
limitation taking all actions necessary to enforce the obligations of the
Obligors under such Eligible Mortgage Loans. The Sellers and the Servicer each
shall hold all escrow funds collected in respect of Eligible Mortgage Loans in
trust, without commingling the same with any other funds, and apply the same for
the purposes for which such funds were collected.

(c) The Servicer shall, no less than on an annual basis, review financial
statements, compliance with financial parameters, Fannie Mae/Freddie Mac
approvals (if applicable), and state licenses of all Persons from whom the
Sellers acquire Mortgage Loans.

 

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ARTICLE VII

NEGATIVE COVENANTS

The Sellers and the Servicer shall each at all times comply with the covenants
applicable to it contained in this Article VII, from the date hereof until the
later of the Termination Date and the date all of the Repurchase Obligations are
indefeasibly paid in full:

7.1. Limitations on Mergers and Acquisitions.

(a) The Servicer (so long as the Servicer and one of the Sellers are the same
entity) shall not (i) merge or consolidate with or into any corporation or other
entity unless the Servicer or one of the Sellers is the surviving entity of any
such merger or consolidation or (ii) liquidate or dissolve.

7.2. Fiscal Year.

Neither the Sellers nor, so long as the Servicer and one of the Sellers are the
same entity, the Servicer shall change its fiscal year other than to conform
with changes that may be made to the Performance Guarantor’s fiscal year and
then only after notice to the Administrative Agent and after whatever amendments
are made to this Agreement as may be reasonably required by the Administrative
Agent, in order that the reporting criteria for the financial covenants
contained in Articles VI and VII remain substantially unchanged.

7.3. [Reserved].

7.4. Use of Proceeds.

The Sellers shall not, directly or indirectly, use any of the proceeds of the
Purchases for the purpose, whether immediate, incidental or ultimate, of buying
any “margin stock” or of maintaining, reducing or retiring any Indebtedness
originally incurred to purchase a stock that is currently any “margin stock,” or
for any other purpose that might constitute this transaction a “purpose credit,”
in each case within the meaning of Regulation U, or otherwise take or permit to
be taken any action that would involve a violation of such Regulation U or of
Regulation T or Regulation Z (12 C.F.R. 224, as amended) or any other regulation
promulgated by the Federal Reserve Board.

7.5. Actions with Respect to Mortgage Assets.

Neither the Sellers nor the Servicer shall:

(a) Compromise, extend, release, or adjust payments on any Mortgage Assets,
accept a conveyance of mortgaged Property in full or partial satisfaction of any
Mortgage debt or release any Mortgage securing or underlying any Mortgage
Assets, except as permitted by the related Approved Take-Out Investor or as
contemplated in the servicing guidelines distributed thereby and only if such
action would not result in a Default or Event of Default;

 

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(b) Agree to the amendment or termination of any Take-Out Commitment or Hedge in
which the Administrative Agent has an interest or to substitution of a Take-Out
Commitment or Hedge for a Take-Out Commitment or Hedge in which the
Administrative Agent has an interest hereunder, if such amendment, termination
or substitution may be expected (as determined by the Custodian or the
Administrative Agent in either of their sole discretion) to have a Material
Adverse Effect or to result in a Default or Event of Default;

(c) Transfer, sell, assign or deliver any Mortgage Loan Collateral pledged to
the Administrative Agent to any Person other than the Administrative Agent,
except pursuant to a Take-Out Commitment or Hedge or pursuant to either
Section 3.3 or Section 3.4; or

(d) Grant, create, incur, permit or suffer to exist any Lien upon any Mortgage
Loan Collateral except for (i) Liens granted to the Administrative Agent to
secure the Repurchase Obligations, (ii) any rights created herein and
(iii) Liens granted to other Persons with respect to Take-Out Commitments or
Hedges, so long as the amounts owing to all such Persons and the Administrative
Agent hereunder shall not exceed the principal amount of all Take-Out
Commitments or Hedges.

7.6. Liens.

The Sellers will not sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Lien upon or with respect
to, any Mortgage Asset, or upon or with respect to any account to which any
Collections of any Mortgage Asset are sent, or assign any right to receive
income in respect thereof except as contemplated hereby.

7.7. Employee Benefit Plans.

Neither the Sellers nor, so long as the Servicer and one of the Sellers are the
same entity, the Servicer may permit any of the events or circumstances
described in Section 5.1(w) to exist or occur.

7.8. Change of Principal Office.

No Seller shall move its principal office, executive office or principal place
of business from the address set forth in Section 5.1(o) without 30-days’ prior
written notice to the Administrative Agent. The Sellers shall not change their
place of organization or add a new jurisdiction of organization without 30 days’
prior written notice to the Administrative Agent.

7.9. No Commercial, A&D, Etc. Loans.

The Sellers shall not make or acquire any direct outright ownership interest,
participation interest or other creditor’s interest in any commercial real
estate loan, acquisition and/or development loan, unimproved real estate loan,
personal property loan, oil and gas loan, commercial loan, wrap-around real
estate loan, unsecured loan, acquisition, development or construction loan.

 

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7.10. [Reserved].

7.11. [Reserved].

7.12. Deposits to Collection Account.

Neither the Sellers nor the Servicer shall deposit or otherwise credit, or cause
or permit to be so deposited or credited, to the Collection Account, cash or
cash proceeds other than Mortgage Asset Proceeds.

7.13. Transaction Documents.

The Sellers will perform all of their obligations under each Transaction
Document to which it is a party and will enforce each Transaction Document to
which it is a party in accordance with its terms in all respects.

7.14. [Reserved].

7.15. Delivery of Wet Loans.

Each of the Sellers shall deliver to the Custodian, within nine (9) Business
Days after the date of origination of any Wet Loan from such Seller, the
Principal Mortgage Documents relating to such Wet Loan.

7.16. Minimum Tangible Net Worth.

The Sellers and the Servicer shall not:

(i) Permit at any time AHMIC’s Tangible Net Worth to be less than $914,000,000,
plus 75% of the Net Cash Proceeds of any capital stock (including preferred
stock) issued by AHMIC after June 30, 2006;

(ii) Permit at any time the Tangible Net Worth of American Home Mortgage
Servicing, Inc. to be less than $30,000,000;

(iii) Permit at any time the Tangible Net Worth of American Home Mortgage Corp.
to be less than $21,000,000;

(iv) Permit at anytime the Tangible Net Worth of American Mortgage Acceptance,
Inc. to be less than $41,000,000; or

(v) Permit at any time the Tangible Net Worth of American Home Mortgage
Servicing, Inc., American Home Mortgage Corp. and American Home Mortgage
Acceptance, Inc. to be less than $147,000,000.

7.17. Positive Net Income of Performance Guarantor.

AHMIC shall not permit its net income to be less than $1.00 for any period of
two consecutive fiscal quarters.

 

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7.18. Collateral Value to Adjusted Consolidated Funded Debt Ratio.

AHMIC shall not permit at any time the ratio of its Aggregate Recognized Value
to its Adjusted Consolidated Funded Debt to be less than 1.00 to 1.00.

7.19. Approved Take-Out Investor Concentration Limits.

The Sellers covenant that, at any time:

(a) the portion of the total Recognized Value that may be attributable to any
single Approved Take-Out Investor listed on Schedule II pursuant to one or more
Take-Out Commitments shall not exceed the concentration limit for such Approved
Take-Out Investor as set forth on Schedule II (as the same may be updated from
time to time), and

(b) the portion of Mortgage Loans covered by a single Approved Take-Out Investor
with (i) a rating of its short-term debt of A-3 or lower (or, if a short-term
rating is not available, a rating of long-term debt of BBB- or lower) by S&P, a
rating of its short-term debt of P-3 or lower (or, if a short-term rating is not
available, a rating of the long-term debt of Baa3 or lower) by Moody’s or a
rating of its short-term debt of F3 or lower (or, if a short-term rating is not
available, a rating of long-term debt of BBB- or lower) by Fitch (it being
understood that if the ratings assigned by S&P, Moody’s and Fitch are split, the
lowest rating will control, and it being understood that if only one Rating
Agency has assigned a rating, that rating will control) shall not exceed fifteen
percent (15%) of the Maximum Facility Amount.

ARTICLE VIII

EVENTS OF DEFAULT

8.1. Nature of Event.

An “Event of Default” shall exist if any one or more of the following occurs:

(a) any Seller fails (i) to make any payment when due, of any fee, expense or
other amount due hereunder, or under any other Transaction Document if such
failure is not cured within five calendar days of the due date or, (ii) so long
as the Servicer is one of the Sellers, the Servicer fails to make any payment or
deposit to be made by it under this Agreement when due if such failure is not
cured within five calendar days of the due date of such payment or deposit; or

(b) any Seller or, so long as the Servicer and one of the Sellers are the same
entity, the Servicer fails to keep or perform any covenant or material
obligations contained in this Agreement (other than as referred to in
Section 8.1(a)) and such failure continues unremedied beyond the expiration of
any applicable grace or notice period that may be expressly provided for in such
covenant or material obligations; or

(c) any Seller, the Servicer (so long as the Servicer and one of the Sellers are
the same entity) or the Performance Guarantor defaults in the due observance or
performance of any of the covenants or agreements contained in any Transaction
Document other than this Agreement, and (unless such default otherwise
constitutes a Default or an Event of Default pursuant to other provisions of
this Section 8.1) such default continues unremedied beyond the expiration of any
applicable grace or notice period that may be expressly provided for in such
Transaction Document; or

 

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(d) any warranty or representation by or on behalf of any Seller, the Servicer
(so long as the Servicer and one of the Sellers are the same entity) or the
Performance Guarantor contained in this Agreement or any other Transaction
Document or any statement, warranty or representation in any Purchase Report,
officer’s certificate or other writing furnished in connection with this
Agreement, proves to have been incorrect or misleading in any material respect
as of the date made or deemed made; provided, that, this shall not include
representations or warranties with respect to specific Mortgage Loans, including
but not limited to, clause (k) of Section 5.2 hereof unless such incorrect
statements are made knowingly or intentionally; or

(e) (i) any Seller fails to make when due or within any applicable grace period
any payment on any Indebtedness with an unpaid principal balance of over
$1,500,000.00; or (ii) any event or condition occurs under any provision
contained in any such obligation or any agreement securing or relating to such
obligation (or any other breach or default under such obligation or agreement
occurs) if the effect thereof is to cause or permit with the giving of notice or
lapse of time or both the holder or trustee of such obligation to cause such
obligation to become due prior to its stated maturity; or (iii) any such
obligation becomes due (other than by regularly scheduled payments) prior to its
stated maturity; or (iv) regarding each of the Sellers or the Servicer (so long
as the Servicer and one of the Seller are the same entity) any of the foregoing
occurs with respect to any one or more items of Indebtedness with unpaid
principal balances exceeding, in the aggregate, $1,500,000.00 with respect to
each Seller and the Servicer; or

(f) any Seller, the Servicer (so long as the Servicer and one of the Sellers are
the same entity) or the Performance Guarantor generally shall not pay its debts
as they become due or shall admit in writing its inability to pay its debts, or
shall make a general assignment for the benefit of creditors; or

(g) any Seller, the Servicer (so long as the Servicer and one of the Sellers are
the same entity) or the Performance Guarantor shall (i) apply for or consent to
the appointment of a receiver, trustee, custodian, intervenor or liquidator of
it or of all or a substantial part of its assets, (ii) file a voluntary petition
in bankruptcy, (iii) file a petition or answer seeking reorganization or an
arrangement with creditors or to take advantage of any Debtor Laws, (iv) file an
answer admitting the allegations of, or consent to, or default in answering, a
petition filed against it in any bankruptcy, reorganization or insolvency
proceeding, or (v) take action for the purpose of effecting any of the
foregoing; or

(h) an involuntary petition or complaint shall be filed against any Seller, the
Servicer (so long as the Servicer and one of the Sellers are the same entity) or
the Performance Guarantor seeking bankruptcy or reorganization of any of the
Sellers, the Servicer, or the Performance Guarantor or the appointment of a
receiver, custodian, trustee, intervenor or liquidator of the Sellers, the
Servicer or the Performance Guarantor, all or substantially all of the assets of
either the Sellers, the Servicer, or the Performance Guarantor; or an order,
order for relief, judgment or, decree shall be entered by any court of competent
jurisdiction or other competent authority

 

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approving a petition or complaint seeking reorganization of the Sellers, the
Servicer (so long as the Servicer and one of the Sellers are the same entity) or
the Performance Guarantor or appointing a receiver, custodian, trustee,
intervenor or liquidator of the Sellers, the Servicer or the Performance
Guarantor, or of all or substantially all of assets of the Sellers, the Servicer
or the Performance Guarantor; or

(i) any Seller, the Servicer (so long as the Servicer and one of the Sellers are
the same entity) or the Performance Guarantor shall fail within 30 days to pay,
bond or otherwise discharge any final judgment or order (or judgments or orders)
for payment of money in excess of $5,000,000.00 (singly or in the aggregate);

(j) any Person shall levy on, seize or attach all or any material portion of the
assets of any Seller, the Servicer (so long as the Servicer and one of the
Sellers are the same entity) or the Performance Guarantor and within thirty
(30) days thereafter the Sellers, the Servicer or the Performance Guarantor
shall not have dissolved such levy or attachment, as the case may be, and, if
applicable, regained possession of such seized assets; or

(k) if an event or condition specified in Section 5.1(w) shall occur or exist;
or

(l) any of the Sellers or the Servicer (so long as the Servicer and one of the
Sellers are the same entity) becomes ineligible to originate, sell or service
Mortgage Loans to Fannie Mae, Freddie Mac or Ginnie Mae, or Fannie Mae, Freddie
Mac or Ginnie Mae shall impose any sanctions upon or terminate or revoke any
rights of the Servicer (so long as the Servicer and one of the Sellers are the
same entity) or any of the Sellers; or

(m) if (x) any Governmental Authority cancels any Seller’s right to be either a
seller or servicer of such Governmental Authority’s insured or guaranteed
Mortgage Loans or mortgage-backed securities, (y) any Approved Take-Out Investor
cancels for cause any servicing or underwriting agreement between any of the
Sellers and such Approved Take-Out Investor that could reasonably be expected to
have a Material Adverse Effect or (z) any Seller receives notice from a
Governmental Authority that such Governmental Authority intends to revoke such
Seller’s right to be a seller or servicer of such Governmental Authority’s
insured or guaranteed Mortgage Loans or mortgaged-backed securities and such
notice is not withdrawn within (10) ten days of the receipt thereof; or

(n) failure of any Seller to correct an imbalance in any escrow account
established with such Seller as either an originator, purchaser or servicer of
Mortgage Loans, which imbalance may have a Material Adverse Effect, within
two (2) Business Days after demand by any beneficiary of such account or by the
Administrative Agent; or

(o) failure of any of the Sellers or the Servicer to meet, at all times, the
minimum net worth requirements of Fannie Mae, Freddie Mac or Ginnie Mae as an
originator, seller or servicer, as applicable; or

(p) any material provision of this Agreement or any other Transaction Document
shall for any reason cease to be in full force and effect, or be declared null
and void or unenforceable in whole or in part; or the validity or enforceability
of any such document shall be challenged or denied; or

 

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(q) a “change in control,” with respect to the ownership of AHMIC shall have
occurred after the date hereof (and as used in this subparagraph, the term
“change in control” shall mean an acquisition by any Person, partnership or
group, as defined under the Securities Exchange Act of 1934, as amended, of a
direct or indirect beneficial ownership of 10% or more of the then-outstanding
voting stock of the Performance Guarantor); or AHMIC shall cease at any time to
own directly or indirectly 100% of the stock of each Seller; or

(r) the total Recognized Value of all Eligible Mortgage Assets shall be less
than the Invested Amount, at any time, and the Sellers, jointly and severally,
shall fail either to provide cash or additional Eligible Mortgage Assets with a
sufficient Recognized Value in an amount sufficient to correct the deficiency
within the time period set forth in Section 2.5; or

(s) if, as a result of any Seller’s failure to obtain and deliver to the
Custodian, Principal Mortgage Documents as required by Section 2.3(c), the
Administrative Agent shall determine that the continuation of such condition
could be reasonably expected to have a Material Adverse Effect on the Sellers or
the Purchasers; or

(t) there shall have occurred any event that could be reasonably expected to
have a Material Adverse Effect on the enforceability or collectability of any
significant portion of the Mortgage Loans or the Take-Out Commitments or the
Hedges (provided that to the extent such event gives rise to an obligation by
any of the Sellers to repurchase such Mortgage Loans pursuant to this Agreement
and such Seller does so repurchase in accordance with the provisions of the this
Agreement, no Event of Default shall occur under this Section 8.1(t) or there
shall have occurred any other event that could be reasonably expected to have a
Material Adverse Effect on the ability of any Seller, the Servicer or the
Custodian to collect a significant portion of Mortgage Loans or Take-Out
Commitments or Hedges or the ability of the Sellers or, so long as the Servicer
and any of the Sellers are the same entity, the Servicer to perform hereunder or
a Material Adverse Effect has occurred in the financial condition or business of
the Sellers since inception or, so long as the Servicer and any one of the
Sellers are the same entity, the Servicer since June 30, 2006; or

(u) (i) any litigation (including, without limitation, derivative actions),
arbitration proceedings or governmental proceedings not disclosed in writing by
any Seller to the Purchasers, the Administrative Agent and the Managing Agents
prior to the date of execution and delivery of this Agreement is pending against
the Sellers or any Affiliate thereof, or (ii) any development not so disclosed
has occurred in any litigation (including, without limitation, derivative
actions), arbitration proceedings or governmental proceedings so disclosed,
which, in the case of either clause (i) and/or (ii), in the reasonable opinion
of the Majority Banks, could reasonably be expected to have a Material Adverse
Effect or impair the ability of any Seller, the Servicer or the Performance
Guarantor to perform its obligations under this Agreement or any other
Transaction Document; or

(v) the Internal Revenue Service shall file notice of a lien pursuant to
Section 6323 of the Code with regard to any of the assets of any Seller or the
Servicer (so long as the Servicer and one of the Sellers are the same entity)
and such lien shall not have

 

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been released within 30 days, or the PBGC shall, or shall indicate its intention
to, file notice of a lien pursuant to Section 4068 of ERISA with regard to any
of the assets of any Seller or the Servicer (so long as the Servicer and one of
the Sellers are the same entity); or

(w) as at the end of any Collection Period, the Delinquent Ratio shall exceed
1%; or

(x) a successor Custodian shall not have been appointed and accepted such
appointment within 180 days after the retiring Custodian shall have given
written notice of resignation pursuant to Section 4.4 of the Custodial
Agreement; or

(y) [Reserved]

(z) [Reserved]

(aa) the Sellers shall cease or otherwise fail to have a good and valid title to
(or, to the extent that Article 9 of the UCC is applicable to the Sellers’
acquisition thereof, a valid perfected security interest in) a significant
portion of the Mortgage Assets (other than Mortgage Assets released in
accordance with Section 3.3(a)) or the Collection Account Control Agreement, the
Reserve Account Control Agreement, the Disbursement Account Control Agreement
shall for any reason (other than pursuant to the terms hereof) fail or cease to
create a valid and perfected first priority security interest in the Mortgage
Loans and the other Mortgage Assets for the benefit of the Purchasers; or

(bb) as at the end of any Collection Period the amount of the Excess Spread for
the three immediately preceding Collection Periods averages less than fifty
(50) basis points; or

(cc) as of the Settlement Date following any withdrawal from the Reserve Account
pursuant to Section 2.8(e)(i) (after giving effect to any deposit to the Reserve
Account pursuant to Section 2.7(c)(iii)(D) on such Settlement Date) the amount
on deposit in the Reserve Account shall be less than the Required Reserve
Account Amount.

 

  8.2. Default Remedies.

(a) Upon the occurrence and continuation of an Event of Default under Sections
8.1(f), (g), (h), (j), or (v) of this Agreement, the entire unpaid balance of
the Repurchase Obligations shall automatically become due and payable, the
Termination Date and all Repurchase Dates shall immediately occur and the
Maximum Facility Amount shall immediately terminate, all without any notice or
action of any kind whatsoever.

(b) Upon the occurrence and continuation of an Event of Default under any
provision of Section 8.1 other than those set forth in Section 8.2(a), the
Administrative Agent may do any one or both of the following on behalf of the
Managing Agents (and shall at the direction of the Majority Banks): (i) declare
the entire unpaid balance of the Repurchase Obligations immediately due and
payable, whereupon it shall be due and payable; and (ii) declare the Termination
Date and all Repurchase Dates to have occurred and terminate the Maximum
Facility Amount; provided, however that any declaration made by the
Administrative Agent in clauses (i) and (ii) above shall be in writing.

 

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(c) Upon the occurrence of an Event of Default under any provision of
Section 8.1 and the acceleration of the unpaid balance of the Repurchase
Obligations pursuant to Section 8.2(a) or (b), the Administrative Agent, on
behalf of the Managing Agents, may (and shall at the direction of the Majority
Banks) do any one or more of the following: (i) sell, without any notice or
demand of any kind, at a public or private sale and at such price or prices as
the Administrative Agent may reasonably deem satisfactory any or all Mortgage
Loans; (ii) elect, in lieu of selling all or a portion of such Mortgage Loans,
to give Sellers credit for such Mortgage Loans in an amount equal to the
Recognized Value of such Mortgage Loans against the aggregate and unpaid
Repurchase Price and any other amounts owing to Purchasers for hereunder;
(iii) exercise the rights of offset or banker’s Lien against the interest of the
Sellers in and to every account and other Property of the Sellers that are in
the possession of the Purchasers, the Managing Agents, the Custodian or the
Administrative Agent to the extent of the full amount of the Repurchase
Obligations (the Sellers being deemed directly obligated to the Purchasers, the
Managing Agents and the Administrative Agent in the full amount of the
Repurchase Obligations for such purposes). Sellers shall remain liable to
Purchasers for any amounts owing to Purchasers following any action taken under
the preceding sentence. In addition, the Administrative Agent, on behalf of the
Managing Agents, may (and shall at the direction of the Majority Banks) exercise
any and all other legal or equitable rights afforded by the Transaction
Documents, applicable Governmental Requirements, or otherwise, including, but
not limited to, the right to bring suit or other proceedings before any
Governmental Authority either for specific performance of any covenant or
condition contained in any of the Transaction Documents or in aid of the
exercise of any right granted to the Purchasers, the Managing Agents or the
Administrative Agent in any of the Transaction Documents.

(d) Upon any declaration or designation of termination or upon automatic
termination, the Purchasers shall have, in addition to the rights and remedies
under this Agreement, all other rights and remedies with respect to the
Purchased Mortgage Assets provided after default under the UCC and under other
applicable law, which rights and remedies shall be cumulative.

(e) Upon the occurrence and continuation of a Default hereunder or under any
Transaction Document, the Administrative Agent may, and shall, at the direction
of the Majority Banks, in addition to any and all other legal or equitable
rights afforded by the Transaction Documents, deliver an Activation Notice under
the Collection Account Control Agreement and/or the Reserve Account Control
Agreement.

(f) The parties hereto recognize that each of the Sellers’ obligations to the
Purchasers under this Agreement are special, unique and of extraordinary
character. If an Event of Default occurs hereunder, each of the Sellers agrees
that the Purchasers may enforce this Agreement by a proceeding for specific
performance or other equitable remedy including, without limitation, a
proceeding in which replevin or injunction is sought by any Purchaser. Each of
the Sellers hereby waives to the fullest extent permitted by law any and all
rights it may have by statute, constitution or otherwise, to (i) assert the
defense of adequacy of a remedy at law that might be asserted as a bar to such
proceeding, and (ii) the fixing, imposition or posting of a bond or other
security by the

 

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Purchasers as a condition to obtaining any equitable relief sought by any
Purchaser, which relief each of the Sellers further agrees may be obtained ex
parte without prior notice to any of the Sellers provided a hearing is
substantially provided the applicable Seller within a reasonable time after any
ex parte relief may be granted the Purchasers. Each of the Sellers further
agrees that the rights and remedies hereunder are cumulative, and are not
exclusive of any rights, powers, privileges, or remedies, now or thereafter
existing, at law, or in equity or otherwise.

8.3. [Reserved]

8.4. Waivers of Notice, Etc.

Except as otherwise provided in this Agreement, the Sellers and each surety,
endorser, guarantor and other party liable for payment of any sum or sums of
money that may become due and payable, or the performance or any undertaking
that may be owed, to the Purchasers, the Managing Agents or the Administrative
Agent pursuant to this Agreement or the other Transaction Documents, including
the Repurchase Obligations, jointly and severally waive demand for payment,
presentment, protest, notice of protest and nonpayment or other notice of
default, notice of acceleration and notice of intention to accelerate, and agree
that its or their liability under this Agreement or other Transaction Documents
shall not be affected by any renewal or extension of the time or place of
payment or performance hereof, or any indulgences by the Purchasers or the
Administrative Agent, or by any release or change in any security for the
payment of the Repurchase Obligations, and hereby consent to any and all
renewals, extensions, indulgences, releases or changes, regardless of the number
of such renewals, extensions, indulgences, releases or changes.

ARTICLE IX

THE ADMINISTRATIVE AGENT

9.1. Authorization.

Each Purchaser has appointed the Administrative Agent as its agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Administrative Agent by the terms hereof, together with
such powers as are reasonably incidental thereto. As to any matters not
expressly provided for by this Agreement (including, without limitation,
enforcement of this Agreement), the Administrative Agent shall not be required
to exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Majority Banks, and such instructions
shall be binding upon all Purchasers; provided, however, that the Administrative
Agent shall not be required to take any action that exposes the Administrative
Agent to personal liability or that is contrary to this Agreement or applicable
law.

 

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9.2. Reliance by Agent.

Notwithstanding anything to the contrary in this Agreement or any other
Transaction Document, neither the Administrative Agent nor any of its directors,
officers, agents, representatives, employees, attorneys-in-fact or Affiliates
shall be liable for any action taken or omitted to be taken by it or them (in
their capacity as or on behalf of the Administrative Agent) under or in
connection with this Agreement or the other Transaction Documents, except for
its or their own gross negligence or willful misconduct. Without limitation of
the generality of the foregoing, the Administrative Agent: (a) may consult with
legal counsel (including counsel for the Sellers), independent certified public
accountants and other experts selected by it or the Sellers and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (b) makes no
warranty or representation to any Purchaser or the Managing Agents and shall not
be responsible to any Purchaser or the Managing Agents for any statements,
warranties or representations made in or in connection with this Agreement or
the other Transaction Documents; (c) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of the Sellers or to inspect the
Property (including the books and records) of the Sellers, except that the
Administrative Agent shall coordinate Periodic Visits; (d) shall not be
responsible to any Purchaser or the Managing Agents for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished pursuant hereto or the
enforceability or perfection or priority of any Mortgage Assets; and (e) shall
incur no liability under or in respect of this Agreement or any other
Transaction Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, cable or telex) believed by the
Administrative Agent to be genuine and signed or sent by the proper Person or
party.

9.3. Agent and Affiliates.

With respect to any Purchase made by Calyon, Calyon shall have the same rights
and powers under this Agreement as would any Purchaser and may exercise the same
as though it were not the Administrative Agent. Calyon and its Affiliates may
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with, the Sellers, the Managing Agents,
any of the Sellers’ Affiliates and any Person who may do business with or own
securities of the Sellers, the Managing Agents or any such Affiliate, all as if
Calyon were not the Administrative Agent and without any duty to account
therefor to the Purchasers. If Calyon is removed as Administrative Agent, such
removal will not affect Calyon’s rights and interests as a Purchaser.

9.4. Purchaser Decision.

Each Purchaser (including each Purchaser that becomes a party hereto by
assignment) acknowledges that it has, independently and without reliance on the
Administrative Agent, any of its Affiliates or any other Purchaser and based on
such documents and information as it has deemed appropriate, made its own
evaluation and decision to enter into this Agreement. Each Purchaser also
acknowledges that it will, independently and without reliance on the
Administrative Agent, any of its Affiliates or any other Purchaser and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own decisions in taking or not taking action under this
Agreement.

 

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9.5. Rights of the Administrative Agent.

Each right and remedy expressly provided by this Agreement as being available to
the Administrative Agent shall be exercised by the Administrative Agent only at
the direction of the Majority Banks.

9.6. Indemnification of Administrative Agent.

Each Bank agrees to indemnify the Administrative Agent (to the extent not
reimbursed by or on behalf of the Sellers), ratably according to the respective
principal amounts held by it (or if no Purchases are then outstanding, each Bank
shall indemnify the Administrative Agent ratably according to the amount of its
Bank Commitment), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement or the other Transaction Documents or any action taken or
omitted by the Administrative Agent under this Agreement or the other
Transaction Documents, provided that no Bank shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent’s gross negligence or willful misconduct.

9.7. UCC Filings.

The Purchasers and the Sellers expressly recognize and agree that the
Administrative Agent may be listed as the assignee or secured party of record on
the various UCC filings required to be made hereunder in order to perfect the
back-up security interest in the Mortgage Assets granted by the Sellers for the
benefit of the holders of the Repurchase Obligations and that such listing shall
be for administrative convenience only in creating a record-holder or nominee to
take certain actions hereunder on behalf of the holders of the Repurchase
Obligations.

9.8. Notices and Payments to Managing Agents.

(a) The Administrative Agent shall give each Managing Agent prompt notice of
each written notice received by it from the Sellers pursuant to Section 2.1 and
Section 2.3 hereof if such notice is delivered to the Administrative Agent for
the benefit of the Purchasers.

(b) Any payments received by the Administrative Agent from the Sellers for the
account of the Purchasers shall be promptly distributed to the related Managing
Agent’s Account.

 

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ARTICLE X

INDEMNIFICATION

10.1. Indemnities by the Sellers.

(a) General Indemnity. Without limiting any other rights that any such Person
may have hereunder or under applicable law, the Sellers hereby agree to
indemnify each of the Purchasers, each Managing Agent, the Administrative Agent,
any Affected Party, their respective successors, transferees, participants and
assigns and all affiliates, officers, directors, shareholders, controlling
persons, employees and agents of any of the foregoing (each an “Indemnified
Party”), forthwith on demand, from and against any and all damages, losses,
claims, liabilities and related reasonable costs and expenses, including
attorneys’ fees and disbursements (all of the foregoing being collectively
referred to as “Indemnified Amounts”) awarded against or incurred by any of them
arising out of or relating to this Agreement or the exercise or performance of
any of its or their powers or duties, in respect of any Mortgage Loan or
Take-Out Commitment or Hedge, or related to its or their possession of, or
dealings with, the Mortgage Assets, excluding, however, any Indemnified Amounts
resulting from gross negligence, willful misconduct, or unlawful collection
activity directed against a Seller under a mortgage loan included in the
Mortgage Assets on the part of such Indemnified Party.

(b) Contribution. If for any reason the indemnification provided above in this
Section 10.1 is unavailable to an Indemnified Party or is insufficient to hold
an Indemnified Party harmless, then the Sellers shall jointly and severally
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, claim, damage or liability in such proportion as is appropriate to
reflect not only the relative benefits received by such Indemnified Party on the
one hand and Sellers on the other hand but also the relative fault of such
Indemnified Party as well as any other relevant equitable considerations.

ARTICLE XI

ADMINISTRATION AND COLLECTION OF MORTGAGE LOANS

11.1. Designation of Servicer.

The servicing, administration and collection of the Mortgage Assets shall be
conducted by the Servicer so designated hereunder from time to time. Until the
Administrative Agent gives notice to the Sellers of the designation of a new
Servicer after the occurrence of a Default or an Event of Default, American Home
Mortgage Servicing, Inc. is hereby designated as, and hereby agrees to perform
the duties and obligations of, the Servicer pursuant to the terms hereof. The
Administrative Agent may at any time following the occurrence of a Servicer
Default designate as Servicer any Person (including itself) to succeed the
Sellers or any successor Servicer, if such Person shall consent and agree to the
terms hereof. The Servicer may, with the prior consent of the Majority Banks
(which shall not be unreasonably withheld or delayed), subcontract with any
other Person for the servicing, administration or collection of the Mortgage
Assets. Any such subcontract shall not affect the Servicer’s liability for
performance of its duties and obligations pursuant to the terms hereof.

 

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11.2. Duties of Servicer.

(a) The Servicer shall take or cause to be taken all such actions as may be
necessary or advisable to collect each Mortgage Asset from time to time, all in
accordance with applicable laws, rules and regulations, with care and diligence,
and in accordance with the servicing guide issued by the Governmental Authority
applicable to such Mortgage Asset or, in the case of Non-Conforming Loans, the
servicing criteria specified by the Approved Take-Out Investor that has issued a
Take-Out Commitment with respect thereto. The Sellers and the Administrative
Agent hereby appoint the Servicer, from time to time designated pursuant to
Section 11.1, as agent for themselves and for the Purchasers to enforce their
respective rights and interests in the Mortgage Assets and the Collections
thereof. In performing its duties as Servicer, the Servicer shall exercise the
same care and apply the same policies as it would exercise and apply if it owned
such Mortgage Loans and shall act in the best interests of the Sellers and the
Purchasers.

(b) The Servicer shall administer the Collections in accordance with the
procedures described in Section 2.7 and shall service the Mortgage Assets in
accordance with Section 6.20 and Section 7.5.

(c) The Servicer shall hold in trust for the Sellers and the Purchasers, in
accordance with their respective interests, all books and records (including,
without limitation, computer tapes or disks) that relate to the Mortgage Assets.

(d) The Servicer shall, as soon as practicable following receipt, turn over to
the Sellers, any cash collections or other cash proceeds received with respect
to Property not constituting Mortgage Assets.

(e) The Servicer shall, from time to time at the request of the Administrative
Agent, furnish to the Administrative Agent (promptly after any such request) a
calculation of the amounts set aside for the Purchasers pursuant to
Section 2.7(c). Upon request of any Managing Agent, the Administrative Agent
shall provide or cause to be provided to such Managing Agent a calculation of
the amounts set aside for the Purchasers pursuant to Section 2.7(c).

(f) The Servicer shall perform the duties and obligations of the Servicer set
forth in the Custodial Agreement, the Collection Account Control Agreement, the
Reserve Account Control Agreement and the Disbursement Account Control Agreement

11.3. Certain Rights of the Administrative Agent.

At any time following the designation of a Servicer other than the Sellers
pursuant to Section 11.1 or following an Event of Default:

(a) The Administrative Agent may direct the Obligors that all payments
thereunder be made directly to the Administrative Agent or its designee.

(b) At the Administrative Agent’s request and at the Sellers’ expense, the
Sellers shall notify each Obligor of the Lien on the Mortgage Assets and direct
that payments be made directly to the Administrative Agent or its designee.

 

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(c) At the Administrative Agent’s reasonable request and at the Seller’ expense,
the Sellers and the Servicer shall (i) assemble all of the documents,
instruments and other records (including, without limitation, computer tapes and
disks) that evidence or relate to the Mortgage Assets and Collections and
Mortgage Loan Collateral, or that are otherwise necessary or desirable to
collect the Mortgage Assets, and shall make the same available to the
Administrative Agent at a place selected by the Administrative Agent or its
designee, and (ii) segregate all cash, checks and other instruments received by
it from time to time constituting Collections in a manner reasonably acceptable
to the Administrative Agent and, promptly upon receipt, remit all such cash,
checks and instruments, duly endorsed or with duly executed instruments of
transfer, to the Administrative Agent or its designee.

(d) The Sellers authorize the Administrative Agent to take any and all steps in
the Sellers’ name and on behalf of the Sellers that are necessary or desirable,
in the determination of the Administrative Agent, to collect amounts due under
the Mortgage Assets, including, without limitation, endorsing the Sellers’ name
on checks and other instruments representing Collections and enforcing the
Mortgage Assets and the other related assets.

11.4. Rights and Remedies.

(a) If the Servicer fails to perform any of its obligations under this
Agreement, the Administrative Agent may (but shall not be required to) itself
perform, or cause performance of, such obligation; and the Administrative
Agent’s reasonable costs and expenses incurred in connection therewith shall be
payable by the Servicer.

(b) With respect to each Mortgage Loan, the Servicer shall follow procedures
(including collection procedures) that the Servicer customarily employs and
exercises in servicing and administering mortgage loans for its own account and
that are in accordance with accepted mortgage servicing practices of prudent
lending institutions servicing mortgage loans of the same type as the Mortgage
Loans in the jurisdictions in which the related Mortgaged Properties are
located. The exercise by the Administrative Agent on behalf of the Purchasers of
their rights under this Agreement shall not release the Servicer from any of
their duties or obligations with respect to any Mortgage Loans. Neither the
Administrative Agent, nor the Purchasers shall have any obligation or liability
with respect to any Mortgage Loans, nor shall any of them be obligated to
perform the obligations of the Sellers thereunder.

11.5. Indemnities by the Servicer.

Without limiting any other rights that the Administrative Agent, any Purchaser
or Managing Agent or any of their respective Affiliates (each, a “Special
Indemnified Party”) may have hereunder or under applicable law, and in
consideration of its appointment as Servicer, the Servicer hereby agrees to
indemnify each Special Indemnified Party from and against any and all claims,
losses and liabilities (including attorneys’ fees) (all of the foregoing being
collectively referred to as “Special Indemnified Amounts”) arising out of or
resulting from any of the following excluding, however, (x) Special Indemnified
Amounts to the extent resulting from gross negligence or willful misconduct on
the part of such Special Indemnified Party, (y) recourse for Mortgage Assets
that are not collected, not paid or uncollectible on account of the insolvency,
bankruptcy or financial inability to pay of the applicable Obligor or (z) any
income taxes or any other tax or fee measured by income incurred by such Special
Indemnified Party arising out of or as a result of this Agreement or the
Purchases hereunder):

(a) any representation or warranty or statement made or deemed made by the
Servicer under or in connection with this Agreement that shall have been
incorrect in any respect when made;

 

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(b) the failure by the Servicer to comply in any material respect with any
applicable law, rule or regulation with respect to any Mortgage Asset or the
failure of any Mortgage Loan to conform to any such applicable law, rule or
regulation;

(c) the failure (i) to have filed, or any delay in filing, Mortgages or
assignments of Mortgages under the applicable laws of any applicable
jurisdiction or (ii) to have caused a first priority perfected interest in the
Mortgage Assets to have been granted to the Administrative Agent, in each case
with respect to any Mortgage Assets and the other assets and Collections in
respect thereof, whether at the time of any purchase under this Agreement or at
any subsequent time;

(d) any failure of the Servicer to perform its duties or obligations in
accordance with the provisions of this Agreement;

(e) the commingling of Collections at any time by the Servicer with other funds;

(f) any action or omission by the Servicer reducing or impairing the rights of
the Administrative Agent or the Purchasers with respect to any Mortgage Asset or
the value of any Mortgage Asset;

(g) any Servicer Fees or other costs and expenses payable to any replacement
Servicer, to the extent in excess of the Servicer Fees payable to the Servicer
hereunder; or

(h) any claim brought by any Person other than a Special Indemnified Party
arising from any activity by the Servicer or its Affiliates in servicing,
administering or collecting any Mortgage Asset.

ARTICLE XII

THE MANAGING AGENTS

12.1. Authorization.

Each Purchaser hereby appoints and authorizes the related Managing Agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to such Managing Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. As to any matters not
expressly provided for by this Agreement (including, without limitation,
enforcement of this Agreement), each Managing Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Banks included in the related Group,
having outstanding Bank Commitments equal to more than 50% of the aggregate
outstanding

 

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Bank Commitments of the Banks in such Group (or all the Banks where unanimity is
required), and such instructions shall be binding upon all Purchasers in its
Group; provided, however, that such Managing Agent shall not be required to take
any action which exposes such Managing Agent to personal liability or which is
contrary to this Agreement or applicable law.

12.2. Reliance by Agent.

Notwithstanding anything to the contrary in this Agreement or any other
Transaction Document, none of the Managing Agents nor any of their respective
directors, officers, agents, representatives, employees, attorneys-in-fact or
Affiliates shall be liable for any action taken or omitted to be taken by it or
them (in their capacity as or on behalf of such Managing Agent) under or in
connection with this Agreement or the other Transaction Documents, except for
its or their own gross negligence or willful misconduct. Without limitation of
the generality of the foregoing, each Managing Agent: (a) may consult with legal
counsel (including counsel for the Sellers), independent certified public
accountants and other experts selected by it or any such party and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (b) makes no
warranty or representation to any Purchaser or to the other Managing Agents and
shall not be responsible to any Purchaser or to the other Managing Agents for
any statements, warranties or representations made in or in connection with this
Agreement or the other Transaction Documents; (c) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement on the part of the Sellers or to
inspect the property (including the books and records) of the Sellers; (d) shall
not be responsible to any Purchaser or to the other Managing Agents for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other instrument or document furnished pursuant hereto
or the enforceability or perfection or priority of any Mortgage Assets; and
(e) shall incur no liability under or in respect of this Agreement or any other
Transaction Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, cable or telex) believed by
such Managing Agent to be genuine and signed or sent by the proper Person or
party.

12.3. Agent and Affiliates.

With respect to any Purchase made by a Managing Agent, such Managing Agent shall
have the same rights and powers under this Agreement as would any Purchaser and
may exercise the same as though it were not a Managing Agent. The Managing
Agents and their respective Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of business
with, the Sellers, any of the Sellers’ respective Affiliates and any Person who
may do business with the Sellers or any such Affiliates or own the Sellers’
securities or those of any such Affiliate, all as if no such Managing Agent were
a Managing Agent and without any duty to account therefor to the Purchasers. If
any Managing Agent is removed as a Managing Agent, such removal will not affect
the rights and interests of such Managing Agent as a Purchaser.

 

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12.4. Notices.

Each Managing Agent shall give each Purchaser in its Group prompt notice of each
written notice received by it from the Sellers or the Administrative Agent
pursuant to the terms of this Agreement.

12.5. Purchaser Decision.

Each Purchaser (including each Purchaser that becomes a party hereto by
assignment) acknowledges that it has, independently and without reliance on any
Managing Agent, any Managing Agent’s Affiliates or any other Purchaser and based
on such documents and information as it has deemed appropriate, made its own
evaluation and decision to enter into this Agreement. Each Purchaser also
acknowledges that it will, independently and without reliance on any Managing
Agent, any Managing Agent’s Affiliates or any other Purchaser and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own decisions in taking or not taking action under this Agreement.

12.6. Indemnification of Managing Agents.

Each Bank agrees to indemnify the related Managing Agent (to the extent not
reimbursed by or on behalf of the Sellers), ratably according to the respective
principal amounts held by it (or if no Purchases are then outstanding, each Bank
shall indemnify the related Managing Agent ratably according to the amount of
its Bank Commitment), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by, or asserted against such Managing Agent in any way relating to or arising
out of this Agreement or the other Transaction Documents or any action taken or
omitted by the related Managing Agent under this Agreement or the other
Transaction Documents, provided that no Bank shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from a Managing Agent’s gross
negligence or willful misconduct.

ARTICLE XIII

MISCELLANEOUS

13.1. Notices.

Any notice, demand or request required or permitted to be given under or in
connection with this Agreement or the other Transaction Documents (except as may
otherwise be expressly required therein) shall be in writing and shall be mailed
by first class or express mail, postage prepaid, or sent by telex, telegram,
telecopy or other similar form of rapid transmission, confirmed by mailing (by
first class or express mail, postage prepaid) written confirmation at
substantially the same time as such rapid transmission, or personally delivered
to an officer of the receiving party. With the exception of certain
administrative and mortgage asset reports that may be directed to specific
departments of the Administrative Agent, all such communications shall be
mailed, sent or delivered to the parties hereto at their respective addresses as
follows:

 

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The Sellers:  

AMERICAN HOME MORTGAGE CORP.

538 Broadhollow Road

Melville, New York 11747

Facsimile: (800) 209-7276

Telephone: (516) 396-7703

Attention: General Counsel

 

AMERICAN HOME MORTGAGE ACCEPTANCE, INC.

538 Broadhollow Road

Melville, New York 11747

Facsimile: (800) 209-7276

Telephone: (516) 396-7703

Attention: General Counsel

 

AMERICAN HOME MORTGAGE SERVICING, INC.

538 Broadhollow Road

Melville, New York 11747

Facsimile: (800) 209-7276

Telephone: (516) 396-7703

Attention: General Counsel

 

AMERICAN HOME MORTGAGE INVESTMENT CORP.

538 Broadhollow Road

Melville, New York 11747

Facsimile: (800) 209-7276

Telephone: (516) 396-7703

Attention: General Counsel

The Issuers:  

LA FAYETTE ASSET SECURITIZATION LLC

c/o Calyon Building

1301 Avenue of the Americas

New York, New York 10019

Facsimile: (212) 459-3258

Attention: Liquid Assets Securitization

  With a copy to the Administrative Agent (except in the case of notice from the
Administrative Agent).  

AMSTERDAM FUNDING CORPORATION

540 West Madison Street, 27th Floor

Mail Code C540-2721

Chicago, IL 60661

Facsimile: (312) 992-1527

Attention: Kevin J. Hayes

 

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PARK AVENUE RECEIVABLES COMPANY, LLC

131 South Dearborn

Mail Code IL1-0597

Chicago, IL 60603

Telephone No.: (312) 732-6163

Facsimile: (312) 732-3600

 

BARTON CAPITAL LLC

c/o AMACAR Group

6525 Morrison Boulevard, Suite 318

Charlotte, NC 28211

Telephone No.: (212) 278-6373

Facsimile: (212) 278-7320

 

STARBIRD FUNDING CORPORATION

c/o J.H. Management Corporation

One International Place, Room 3218

Boston, MA 02110-2916

Facsimile: (617) 951-7050

The Banks and Managing Agents:  

CALYON NEW YORK BRANCH

Calyon Building

1301 Avenue of the Americas

New York, New York 10019

Facsimile: (212) 459-3258

Attention: Liquid Assets Securitization

 

LLOYDS TSB BANK PLC

1251 Avenue of the Americas, 39th Floor

New York, NY 10020

Facsimile: (212) 930-5071

Attention: Michelle White

 

ABN AMRO BANK N.V.

540 West Madison Street, 27th Floor

Mailcode C540-2721

Chicago, IL 60661

Facsimile: (312) 992-1527

Attention: Kevin J. Hayes

 

SOCIETE GENERALE

1221 Avenue of Americas

New York, NY 10020

Telephone No.: (212) 278-6373

Facsimile: (212) 278-7320

 

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JPMORGAN CHASE BANK

131 South Dearborn

Mail Code IL1-0597

Chicago, IL 60603

Telephone No.: (312) 732-6163

Facsimile: (312) 732-3600

 

BNP PARIBAS

787 Seventh Avenue, 7th Floor

New York, NY 10019

Telephone: (212) 841-2289

Fax: (212) 841-2689

Attention: Tara Netherton

The Administrative Agent:  

CALYON NEW YORK BRANCH

Calyon Building

1301 Avenue of the Americas

New York, New York 10019

Telephone No.: (212) 261-7819

Telex No.: 62410

(Answerback: CRED A 62410 UW)

Facsimile: (212) 459-3258

Attention: Liquid Assets Securitization

The Servicer:  

AMERICAN HOME MORTGAGE SERVICING, INC.

538 Broadhollow Road

Melville, New York 11747

Facsimile: (800) 209-7276

Telephone: (516) 396-7703

Attention: General Counsel

The Performance Guarantor:  

AMERICAN HOME MORTGAGE INVESTMENT CORP.

538 Broadhollow Road

Melville, New York 11747

Facsimile: (800) 209-7276

Telephone: (516) 396-7703

Attention: General Counsel

or at such other addresses or to such officer’s, individual’s or department’s
attention as any party may have furnished the other parties in writing. Any
communication so addressed and mailed shall be deemed to be given when so
mailed, except with respect to notices and requests given pursuant to
Sections 2.3 and 3.3. Purchase Reports and communications related thereto shall
not be effective until actually received by the Custodian, the Administrative
Agent, the Issuers or the Sellers, as the case may be; and any notice so sent by
rapid transmission shall be deemed to be given when receipt of such transmission
is acknowledged, and any communication so delivered in person shall be deemed to
be given when receipted for by, or actually received by, an authorized officer
of the Sellers, the Custodian, the Issuers, or the Administrative Agent.

 

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13.2. Amendments, Etc.

No amendment or waiver of any provision of this Agreement or consent to any
departure by the Sellers therefrom shall be effective unless in a writing signed
by the Majority Banks, the applicable Managing Agent (as agent for the Issuer)
and the Administrative Agent (and, in the case of any amendment, also signed by
the Sellers and the Servicer), and then such amendment, waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given. No Bank Commitment of any Bank shall be increased without the
consent of the Purchasers and the Managing Agent of the applicable Group.
Notwithstanding the foregoing, unless an amendment, waiver or consent shall be
made in writing and signed by each of the Banks, the Managing Agents and the
Administrative Agent (and in the case of any amendment or modification, the
Sellers and the Servicer), and each of the Rating Agencies shall confirm that
any amendment will not result in a downgrade or withdrawal of the ratings
assigned to any Commercial Paper Notes, no amendment, waiver or consent shall do
any of the following:

(a) amend the definitions of Eligible Mortgage Loan, Recognized Value,
Applicable Purchase Rate or Majority Banks or

(b) amend, modify or waive any provision of this Agreement in any way that
would:

(i) reduce the amount of Purchase Price, Price Differential or Repurchase Price
that is payable on account of any Purchase or delay any scheduled date for
payment thereof, or

(ii) impair any rights expressly granted to an assignee or participant under
this Agreement, or

(iii) reduce the fees, costs and expenses payable by the Sellers, to the
Administrative Agent, the Managing Agents or the Purchasers, or

(iv) delay the dates on which such fees, costs and expenses are payable, or

(c) amend or waive the Event of Default set forth in Sections 8.1(f), (g) or
(h) relating to the bankruptcy of the Performance Guarantor or the Sellers, or

(d) amend or waive the Event of Default set forth in Section 8.1(a),
(h), (i), (j), (r), (v) (w), (bb), or (cc), or

(e) amend clause (a) of the definition of Termination Date, or

(f) release the Performance Guarantor or the Servicer Performance Guaranty
(other than as expressly provided for in the Transaction Documents), or

 

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(g) release any Mortgage Assets (other than expressly provided for in the
Transaction Documents), or

(h) amend this Section 13.2;

and provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Servicer in addition to the other parties required
above to take such action, affect the rights or duties of the Servicer under
this Agreement. No failure on the part of the Purchasers, the Managing Agents or
the Administrative Agent to exercise, and no delay in exercising, any right
thereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right.

13.3. Invalidity.

In the event that any one or more of the provisions contained in this Agreement
or any other Transaction Document shall, for any reason, be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of such document.

13.4. Restrictions on Informal Amendments.

No course of dealing or waiver on the part of the Administrative Agent, the
Custodian, the Managing Agents, any Purchaser or any Affected Party, or any of
their officers, employees, consultants or agents, or any failure or delay by any
such Person with respect to exercising any right, power or privilege under this
Agreement or any other Transaction Document shall operate as an amendment to the
express written terms of this Agreement or any other Transaction Document or
shall act as a waiver of any right, power or privilege of any such Person.

13.5. Cumulative Rights.

The rights, powers, privileges and remedies of each of the Purchasers, the
Custodian, each Managing Agent, and the Administrative Agent under this
Agreement, and any other Transaction Document shall be cumulative, and the
exercise or partial exercise of any such right, power, privilege or remedy shall
not preclude the exercise of any other right or remedy.

13.6. Construction; Governing Law.

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF, OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW WHICH SHALL APPLY HERETO).

13.7. Price Differential.

Any provisions herein, in any other Transaction Document, or any other document
executed or delivered in connection herewith, or in any other agreement or
commitment, whether written or oral, expressed or implied, to the contrary
notwithstanding, the Purchasers shall in no event be entitled to receive or
collect, nor shall or may amounts received hereunder be credited, so that the

 

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Purchasers shall be paid, as Price Differential, a sum greater than the maximum
amount permitted by applicable law to be charged to the Person primarily
obligated to pay a Repurchase Price at the time in question. If any construction
of this Agreement, or any other Transaction Document, or any and all other
papers, agreements or commitments indicate a different right given to a
Purchaser to ask for, demand or receive any larger sum as Price Differential,
such is a mistake in calculation or wording that this clause shall override and
control, it being the intention of the parties that this Agreement and all other
Transaction Documents or other documents executed or delivered in connection
herewith shall in all things comply with applicable law and proper adjustments
shall automatically be made accordingly. In the event that any of the Purchasers
shall ever receive, collect or apply as Price Differential, any sum in excess of
the maximum nonusurious rate permitted by applicable law (the “Maximum Rate”),
if any, such excess amount shall be applied to the reduction of the Invested
Amounts held by such Purchaser, and if such Repurchase Price is paid in full,
any remaining excess shall be paid to the Sellers. In determining whether or not
the Price Differential paid or payable, under any specific contingency, exceeds
the Maximum Rate, if any, the Sellers and each of the Purchasers shall, to the
maximum extent permitted under applicable law: (a) characterize any nonprincipal
payment as an expense or fee rather than as Price Differential, (b) exclude
voluntary prepayments and the effects thereof, and (c) “spread” the total amount
of Price Differential throughout the entire term of the respective Repurchase
Obligations; provided that if any Repurchase Price is paid and the related
Repurchase Obligations are performed in full prior to the end of the full
contemplated term hereof, and if the Price Differential received for the actual
period of existence thereof exceeds the Maximum Rate, if any, the respective
Purchaser shall refund to the Sellers the amount of such excess, or credit the
amount of such excess against the aggregate unpaid principal balance of all
Purchases made by such Purchaser hereunder at the time in question.

13.8. Right of Offset.

The Sellers hereby grant to each of the Purchasers, the Managing Agents and the
Administrative Agent and to any assignee or participant a right of offset, to
secure the repayment of the Repurchase Obligations, upon any and all monies,
securities or other Property of the Sellers, and the proceeds therefrom now or
hereafter held or received by or in transit to such Person, from or for the
account of the Sellers, whether for safekeeping, custody, pledge, transmission,
collection or otherwise, and also upon any and all deposits (general or special,
time or demand, provisional or final) and credits of the Sellers, and any and
all claims of the Sellers against such Person at any time existing. Upon the
occurrence of any Event of Default, such Person is hereby authorized at any time
and from time to time, without notice to the Sellers, to offset, appropriate,
and apply any and all items hereinabove referred to against the Repurchase
Obligations. Notwithstanding anything in this Section 13.8 or elsewhere in this
Agreement to the contrary, the Administrative Agent and the Purchasers and any
assignee or participant shall not have any right to offset, appropriate or apply
any accounts of the Sellers that consist of escrowed funds (except and to the
extent of any beneficial interest of the Sellers in such escrowed funds) that
have been so identified by the Sellers in writing at the time of deposit
thereof.

 

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13.9. Successors and Assigns.

(a) This Agreement and the Issuers’ rights and obligations herein (including
ownership of each Purchase) shall be assignable by the Issuers and their
successors and assigns to any Eligible Assignee. Each assignor of a Purchase or
any interest therein shall notify the Administrative Agent, the related Managing
Agent and the Sellers of any such assignment.

(b) Each Bank may assign to any Eligible Assignee or to any other Bank all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Bank Commitment and any Purchases or
interests therein owned by it), provided however, that:

(i) each such assignment shall be of a constant, and not a varying, percentage
of all rights and obligations under this Agreement,

(ii) the amount being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance Agreement with respect to such
assignment) shall in no event be less than the lesser of (x) $20,000,000 and
(y) all of the assigning Bank’s Bank Commitment,

(iii) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance Agreement, together with a processing and recordation
fee of $3,500, and

(iv) concurrently with such assignment, such assignor Bank shall assign to such
assignee Bank an equal percentage of its rights and obligations under the
related Liquidity Agreement.

Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in such Assignment and Acceptance Agreement, (x) the
assignee thereunder shall be a party to this Agreement and, to the extent that
rights and obligations hereunder or under this Agreement have been assigned to
it pursuant to such Assignment and Acceptance Agreement, have the rights and
obligations of a Bank hereunder and thereunder and (y) the assigning Bank shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance Agreement, relinquish such rights and
be released from such obligations under this Agreement (and, in the case of an
Assignment and Acceptance Agreement covering all or the remaining portion of an
assigning Bank’s rights and obligations under this Agreement, such Bank shall
cease to be a party thereto).

(c) The Administrative Agent shall maintain at its address referred to in
Section 13.1 a copy of each Assignment and Acceptance Agreement delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Banks and the Bank Commitment of, and the portion of the Invested Amount of
Purchases or interests therein owned by, each Bank from time to time (the
“Register”). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Sellers, the Servicer, the Managing
Agents, the Administrative Agent and the Banks may treat each person whose name
is recorded in the Register as a Bank under this Agreement for all purposes of
this Agreement. The Register shall be available for inspection by the Sellers,
the Servicer, the Managing Agents, the Administrative Agent or any Bank at any
time and from time to time upon prior notice.

 

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(d) Each Purchaser may sell participations, to one or more banks or other
entities that are Eligible Assignees, in or to all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of its Bank Commitment and the Purchases or interests therein owned by
it); provided, however, that:

(i) such Purchaser’s obligations under this Agreement (including, without
limitation, its Bank Commitment to the Sellers thereunder) shall remain
unchanged,

(ii) such Purchaser shall remain solely responsible to the other parties to this
Agreement for the performance of such obligations,

(iii) concurrently with such participation, the selling Purchaser shall sell to
such bank or other entity a participation in an equal percentage of its rights
and obligations under the related Liquidity Agreement, and

(iv) the agreement to enter into a participation, signed by Purchaser and any
participant must contain the confidentiality provision set forth in
Section 13.15 herein.

The Administrative Agent, the other Purchasers, the Managing Agents, the
Servicer and the Sellers shall have the right to continue to deal solely and
directly with such Purchasers in connection with such Purchaser’s rights and
obligations under this Agreement.

(e) The Sellers may not assign its rights or obligations hereunder or any
interest herein without the prior written consent of the Administrative Agent,
each Managing Agent and each Purchaser and any attempted assignment shall be
null and void.

(f) The parties hereto acknowledge that each of the Issuers has granted to the
related Managing Agent, as program agent, for the benefit of holders of its
Commercial Paper Notes, its liquidity banks, and certain other related
creditors, a security interest in its right, title and interest in and to the
Purchases, the Transaction Documents and the Mortgage Assets. Each reference
herein or in any of the other Transaction Documents to the Liens in the Mortgage
Assets granted to the Issuers under the Transaction Documents shall be deemed to
include a reference to such security interest of the related program agent.

13.10. Survival of Termination.

The provisions of Article X and Sections 2.12, 11.4, 11.5, 13.14, 13.15, 13.19,
13.20 and 13.21 shall survive any termination of this Agreement.

13.11. Exhibits.

The exhibits attached to this Agreement are incorporated herein and shall be
considered a part of this Agreement for the purposes stated herein, except that
in the event of any conflict between any of the provisions of such exhibits and
the provisions of this Agreement, the provisions of this Agreement shall
prevail.

 

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13.12. Titles of Articles, Sections and Subsections.

All titles or headings to articles, sections, subsections or other divisions of
this Agreement or the exhibits hereto are only for the convenience of the
parties and shall not be construed to have any effect or meaning with respect to
the other content of such articles, sections, subsections or other divisions,
such other content being controlling as to the agreement between the parties
hereto.

13.13. Counterparts.

This Agreement may be executed in two or more counterparts, and it shall not be
necessary that the signatures of each of the parties hereto be contained on any
one counterpart hereof; each counterpart shall be deemed an original, but all
counterparts together shall constitute one and the same instrument.

13.14. No Proceedings.

The Sellers, the Servicer, the Administrative Agent and each Bank hereby agrees
that it will not institute against any Issuer, or join any other Person in
instituting against any Issuer, any bankruptcy, reorganization, arrangement,
insolvency, or liquidation proceeding, or other proceeding under any federal or
state bankruptcy or similar law so long as any Commercial Paper Notes issued by
such Issuer shall be outstanding or there shall not have elapsed one year plus
one day since the last day on which any such Commercial Paper Notes shall have
been outstanding. The foregoing shall not limit the rights of the Sellers, the
Servicer, the Administrative Agent, any Managing Agent or any Bank to file any
claim in or otherwise take any action with respect to any insolvency proceeding
that was instituted by any other Person.

13.15. Confidentiality.

Except as required by any Governmental Authority or subject to any Governmental
Requirement, with respect to either of them or any of their Affiliates, the
Sellers and the Servicer each hereby agrees that it will maintain and cause its
respective employees to maintain the confidentiality of this Agreement, and the
other Transaction Documents (and all drafts thereof), and each Purchaser, each
Managing Agent and the Administrative Agent agrees that it will maintain and
cause its respective employees to maintain the confidentiality of the Mortgage
Assets and all other non-public information with respect to the Sellers and the
Servicer, and their respective businesses obtained by such party in connection
with the structuring, negotiating and execution of the transactions contemplated
herein, in each case except (a) as may be required or appropriate in
communications with its respective independent certified public accountants,
legal advisors, or with independent financial rating agencies, (b) as may be
required or appropriate in any report, statement or testimony submitted to any
municipal, state or Federal regulatory body having or claiming to have
jurisdiction over it, (c) as may be required or appropriate in response to any
summons or subpoena or in connection with any litigation, (d) as may be required
by or in order to comply with any law, order, regulation or ruling including,
without limitation, the federal securities laws, (e) as may be required or
appropriate in connection with disclosures to any and all persons, without
limitation of any kind, of information relating in the tax treatment and tax
structure of the transaction and all materials of any kind (including opinions
and other

 

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tax analyses) that are provided to the Purchasers or any of the Sellers relating
to such tax treatment and tax structure, (f) in the case of any Bank, any
Issuer, each Managing Agent or the Administrative Agent, to any Liquidity Bank
or provider of credit support to an Issuer, any dealer or placement agent for
such Issuer’s commercial paper, and any actual or potential assignee of, or
participant in, any of the rights or obligations of such Purchaser, or (g) in
the case of any Issuer, any Managing Agent or the Administrative Agent, to any
Person whom any dealer or placement agent for such Issuer shall have identified
as an actual or potential investor in Commercial Paper Notes; provided that any
proposed recipient under clause (e), (f) or (g) shall, as a condition to the
receipt of any such information, agree to maintain the confidentiality thereof;
provided, further that all other disclosures shall require the prior written
consent of the relevant party.

13.16. Recourse Against Directors, Officers, Etc.

The Repurchase Obligations are solely the entity obligations of the Sellers. No
recourse for the Repurchase Obligations shall be had hereunder against any
director, officer, employee (in its capacity as such, and not as Servicer),
trustee, agent or any Person owning, directly or indirectly, any legal or
beneficial interest in the Sellers (in its capacity as such owner, and not as
Servicer or otherwise as a party to any Transaction Document). This
Section 13.16 shall not, however, (a) constitute a waiver, release or impairment
of the Repurchase Obligations, or (b) affect the validity or enforceability of
any other Transaction Document to which the Sellers, the Servicer, the
Performance Guarantor or any of their Affiliates are a party.

13.17. Waiver of Jury Trial.

EACH OF THE PARTIES HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR
DOCUMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH
OR ARISING FROM ANY BANKING OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH ACTION
OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

13.18. Consent to Jurisdiction; Waiver of Immunities.

EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT:

(a) IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION, FIRST, OF ANY UNITED STATES
FEDERAL COURT, AND, SECOND, IF FEDERAL JURISDICTION IS NOT AVAILABLE, OF ANY NEW
YORK STATE COURT, IN EITHER CASE SITTING IN NEW YORK CITY, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, (ii) AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY
IN SUCH NEW YORK STATE OR FEDERAL COURT AND NOT IN ANY OTHER COURT, AND
(iii) WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN
INCONVENIENT FORUM TO MAINTENANCE OF SUCH ACTION OR PROCEEDING.

 

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(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID TO EXECUTION, EXECUTION
OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, IT HEREBY IRREVOCABLY
WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER OR IN CONNECTION WITH
THIS AGREEMENT.

13.19. Costs, Expenses and Taxes.

In addition to its obligations under Articles II and X, the Sellers agree to pay
on demand:

(a)(i) all reasonable costs and expenses incurred by the Administrative Agent,
the Managing Agents and the Purchasers, in connection with the negotiation,
preparation, execution and delivery or the administration (including periodic
auditing) of this Agreement, the other Transaction Documents, and, to the extent
related to this Agreement, the Program Documents (including any amendments or
modifications of or supplements to the Program Documents entered into in
connection herewith), and any amendments, consents or waivers executed in
connection therewith, including, without limitation, (A) the fees and expenses
of outside counsel to any of such Persons incurred in connection with any of the
foregoing or in advising such Persons as to their respective rights and remedies
under any of the Transaction Documents or (to the extent related to this
Agreement) the Program Documents, and (B) all out-of-pocket expenses (including
fees and expenses of independent accountants) incurred in connection with any
review of the books and records of the Sellers or the Servicer either prior to
the execution and delivery hereof or pursuant to Section 6.8, and (ii) all costs
and expenses actually incurred by the Administrative Agent, the Managing Agents
and the Purchasers, in connection with the enforcement of, or any breach of,
this Agreement, the other Transaction Documents and, to the extent related to
this Agreement, the Program Documents (including any amendments or modifications
of or supplements to the Program Documents entered into in connection herewith),
including, without limitation, the fees and expenses of outside counsel to any
of such Persons incurred in connection therewith, including without limitation,
with respect to each Issuer, the cost of rating the Commercial Paper Notes by
the Rating Agencies and the reasonable fees and out-of-pocket expenses of
counsel to each Issuer; and

(b) all stamp and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement,
the other Transaction Documents or (to the extent related to this Agreement) the
Program Documents, and agrees to indemnify each Indemnified Party against any
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees.

13.20. Entire Agreement.

THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS EXECUTED AND DELIVERED AS OF
EVEN DATE HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND
THERETO ANY MAY

 

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NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES. TO THE EXTENT THAT ANY PROVISIONS OF THE TRANSACTION DOCUMENTS ARE
INCONSISTENT WITH THE TERMS OF THIS AGREEMENT, THIS AGREEMENT SHALL CONTROL.

13.21. Excess Funds.

An Issuer shall not be obligated to pay any amount pursuant to this Agreement
unless such Issuer has excess cash flow from operations or has received funds
with respect to such obligation which may be used to make such payment and which
funds or excess cash flow are not required to repay when due its Commercial
Paper Note or other short term funding backing its Commercial Paper Notes, and
after giving effect to such payment either (i) the Issuer could issue Commercial
Paper Notes to refinance all of is outstanding Commercial Paper Notes (assuming
such Commercial Paper Notes matured at such time) in accordance with the program
documents governing such Issuer’s securitization program, or (ii) all of
Issuer’s Commercial Paper Notes are paid in full. Any amount which an Issuer
does not pay pursuant to the operation of the preceding sentence shall not
constitute a claim, as defined in Section 101(5) of the United States Bankruptcy
Code, against such Issuer for any such insufficiency unless and until such
Issuer does have excess cash flow or excess funds.

13.22. Previous Agreements.

Upon the execution of this Agreement, the Existing Loan Agreement and the
Existing Repurchase Agreement shall be deemed to be terminated

[Signatures appear on the following page.]

 

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

 

SELLERS

  AMERICAN HOME MORTGAGE CORP.   By:  

/s/ Alan B. Horn

  Name:   Alan B. Horn   Title:   Executive Vice President     General Counsel &
Secretary   AMERICAN HOME MORTGAGE SERVICING, INC.   By:  

/s/ Alan B. Horn

  Name:   Alan B. Horn   Title:   Executive Vice President     General Counsel &
Secretary   AMERICAN HOME MORTGAGE ACCEPTANCE, INC.   By:  

/s/ Alan B. Horn

  Name:   Alan B. Horn   Title:   Executive Vice President     General Counsel &
Secretary   AMERICAN HOME MORTGAGE INVESTMENT CORP.   By:  

/s/ Alan B. Horn

  Name:   Alan B. Horn   Title:   Executive Vice President     General Counsel &
Secretary

SERVICER

  AMERICAN HOME MORTGAGE SERVICING, INC.   By:  

/s/ Alan B. Horn

  Name:   Alan B. Horn   Title:   Executive Vice President     General Counsel &
Secretary

(Signature Page One to the Repurchase Agreement)

--------------------------------------------------------------------------------

ISSUERS

  LA FAYETTE ASSET SECURITIZATION LLC     By:   Calyon New York Branch, as
Attorney-in-Fact   By:  

/s/ Gary Miller

  Title:   Managing Director   By:  

/s/ Anthony Brown

  Title:   Vice President   BARTON CAPITAL LLC   By:  

/s/ Evelyn Echevarria

  Title:   Vice President   AMSTERDAM FUNDING CORPORATION   By:  

 

  Title:   Vice President   PARK AVENUE RECEIVABLES COMPANY, LLC   By:  

/s/ Julie C. Kraft

  Title:   Vice President   STARBIRD FUNDING CORPORATION   By:  

/s/ R. Douglas Donaldson

  Name:   R. Douglas Donaldson   Title:   Treasurer

(Signature Page Two to the Repurchase Agreement)

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BANKS

      CALYON NEW YORK BRANCH   By:  

/s/ Gary Miller

  Name:   Gary Miller   Title:   Managing Director   By:  

/s/ Anthony Brown

  Name:   Anthony Brown   Title:   Vice President   LLOYDS TSB BANK PLC   By:  

/s/ Michelle White

  Name:   Michelle White   Title:   Assistant Vice President     Structured
Finance     W 154   By:  

/s/ Daniela Chun

  Name:   Daniela Chun   Title:   Assistant Vice President     Structured
Finance, USA     C-031   SOCIETE GENERALE   By:  

/s/ James F. Ahern

  Title:   Managing Director

(Signature Page Three to the Repurchase Agreement)

--------------------------------------------------------------------------------

  ABN AMRO BANK N.V.   By:  

/s/ Kristina Neville

  Title:   Vice President   By:  

/s/ Michael McIntyre

  Title:   Vice President   JPMORGAN CHASE BANK, N.A.   By:  

/s/ Julie C. Kraft

  Title:   Vice President   BNP PARIBAS   By:  

/s/ Sean Reddington

  Name:   Sean Reddington   Title:   Managing Director   By:  

/s/ Brian Leach

  Name:   Brian Leach   Title:   Vice President

MANAGING AGENTS

  CALYON NEW YORK BRANCH   By:  

/s/ Gary Miller

  Name:   Gary Miller   Title:   Managing Director   By:  

/s/ Anthony Brown

  Name:   Anthony Brown   Title:   Vice President

(Signature Page Four to the Repurchase Agreement)

--------------------------------------------------------------------------------

  SOCIETE GENERALE   By:  

/s/ James F. Ahern

  Title:   Managing Director   ABN AMRO BANK N.V.   By:  

/s/ Kristina Neville

  Title:   Vice President   By:  

/s/ Michael McIntyre

  Title:   Vice President   JPMORGAN CHASE BANK, N.A.   By:  

/s/ Julie C. Kraft

  Title:   Vice President   BNP PARIBAS   By:  

/s/ Sean Reddington

  Name:   Sean Reddington   Title:   Managing Director   By:  

/s/ Brian Leach

  Name:   Brian Leach   Title:   Vice President

ADMINISTRATIVE AGENT

  CALYON NEW YORK BRANCH   By:  

/s/ Gary Miller

  Name:   Gary Miller   Title:   Managing Director   By:  

/s/ Anthony Brown

  Name:   Anthony Brown   Title:   Vice President

(Signature Page Five to the Repurchase Agreement)

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SCHEDULE I

BANK COMMITMENTS AND PERCENTAGES

 

Bank

   Bank Commitment    Bank Commitment
Percentage  

ABN AMRO BANK N.V.

   $ 250,000,000    100 %

CALYON NEW YORK BRANCH

   $ 340,000,000    75.6 %

LLOYDS TSB BANK PLC

   $ 110,000,000    24.4 %

JPMORGAN CHASE BANK

   $ 250,000,000    100 %

SOCIETE GENERALE

   $ 275,000,000    100 %

BNP PARIBAS

   $ 275,000,000    100 %

 

Issuer

   Issuer Facility
Amount

AMSTERDAM FUNDING CORPORATION

   $ 250,000,000

BARTON CAPITAL LLC

   $ 275,000,000

LA FAYETTE ASSET SECURITIZATION LLC

   $ 450,000,000

PARK AVENUE RECEIVABLES COMPANY, LLC

   $ 250,000,000

STARBIRD FUNDING CORPORATION

   $ 275,000,000

 

I-1