Exhibit 10.1

 

EXECUTION COPY

 

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THIRD AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

 

Among

 

CDC MORTGAGE CAPITAL INC., as Buyer

 

NEW CENTURY MORTGAGE CORPORATION, as Seller

 

NC RESIDUAL II CORPORATION, as Seller

 

and

 

NC CAPITAL CORPORATION, as Seller

 

Dated as of September 10, 2004

 

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TABLE OF CONTENTS

 

          Page

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1.

   APPLICABILITY    1

2.

   DEFINITIONS    1

3.

   INITIATION; TERMINATION    18

4.

   MARGIN AMOUNT MAINTENANCE    25

5.

   INCOME PAYMENTS    26

6.

   REQUIREMENTS OF LAW    27

7.

   SECURITY INTEREST    28

8.

   PAYMENT, TRANSFER AND CUSTODY    30

9.

   HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS    31

10.

   SELLER’S REPRESENTATIONS    31

11.

   COVENANTS OF SELLER    37

12.

   EVENTS OF DEFAULT    43

13.

   REMEDIES    47

14.

   INDEMNIFICATION AND EXPENSES    49

15.

   RECORDING OF COMMUNICATIONS    50

16.

   SINGLE AGREEMENT    50

17.

   NOTICES AND OTHER COMMUNICATIONS    51

18.

   ENTIRE AGREEMENT; SEVERABILITY; MODIFICATIONS    51

19.

   NON-ASSIGNABILITY    51

20.

   TERMINABILITY    52

21.

   GOVERNING LAW    52

22.

   SUBMISSION TO JURISDICTION; WAIVERS    52

23.

   NO WAIVERS, ETC.    53

24.

   SERVICING    53

25.

   INTENT    55

26.

   BUYER’S REPRESENTATIONS    55

27.

   NETTING    56

28.

   PERIODIC DUE DILIGENCE REVIEW    57

29.

   BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT    57

 

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30.

   MISCELLANEOUS    59

31.

   CONFIDENTIALITY    59

32.

   CONFLICTS    60

33.

   SET-OFF    60

34.

   OBLIGATIONS JOINT AND SEVERAL    61

 

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EXHIBITS

    

SCHEDULE 1

   Representations and Warranties Re: Mortgage Loans

SCHEDULE 2

   Existing Financing Facilities

EXHIBIT I

   Transaction Request

EXHIBIT II

   Underwriting Guidelines

EXHIBIT III

   Form of Opinion Letter

EXHIBIT IV

   UCC Filing Jurisdictions

EXHIBIT V

   Form of Account Agreement

EXHIBIT VI

   Form of True Sale Certification

EXHIBIT VII-A

   Form of Seller’s Release Letter

EXHIBIT VII-B

   Form of Warehouse Lender’s Release Letter

EXHIBIT VIII

   Form of Servicer Notice

EXHIBIT IX

   Form of Request for Additional Transactions for Excess Margin

EXHIBIT X

   Form of Compliance Report

EXHIBIT XI

   Assignee Liability Jurisdictions

 

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THIRD AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

 

This is a THIRD AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT, dated as of
September 10, 2004, among NEW CENTURY MORTGAGE CORPORATION, a California
corporation (“NCMC”), NC RESIDUAL II CORPORATION, a Delaware corporation
(“NCRC”) and NC CAPITAL CORPORATION, a California corporation (“NCCC”, and
together with NCMC and NCRC, “Seller”) and CDC MORTGAGE CAPITAL INC., a New York
corporation (“Buyer”).

 

WHEREAS, NCMC, NCCC and the Buyer are parties to that certain Second Amended and
Restated Master Repurchase Agreement, dated as of June 23, 2003 (the “Second
Amended and Restated Repurchase Agreement”), among NCMC, NCCC and the Buyer; and

 

WHEREAS NCMC and NCCC have requested Buyer to agree to amend certain provisions
of the Second Amended and Restated Repurchase Agreement as set forth in this
Third Amended and Restated Master Repurchase Agreement. The Buyer is willing to
agree to such amendments, but only on the terms and subject to the conditions
set forth in this Third Amended and Restated Master Repurchase Agreement.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Seller and the Buyer hereby agree as follows:

 

1. APPLICABILITY

 

From time to time the parties hereto may enter into transactions in which Seller
agrees to transfer to Buyer Mortgage Loans against the transfer of funds by
Buyer, with a simultaneous agreement by Buyer to transfer to Seller such
Mortgage Loans at a date certain not later than 364 days after the date of
transfer, against the transfer of funds by Seller. Each such transaction shall
be referred to herein as a “Transaction” and shall be governed by this
Agreement, unless otherwise agreed in writing.

 

2. DEFINITIONS

 

As used herein, the following terms shall have the following meanings (all terms
defined in this Section 2 or in other provisions of this Agreement in the
singular to have the same meanings when used in the plural and vice versa).
Terms otherwise not defined herein shall have the meanings assigned thereto in
the Custodial and Disbursement Agreement.

 

“Account Agreement” shall mean a letter agreement among NCCC, NCMC, NCRC,
Servicer, Buyer and the Bank substantially in the form of Exhibit V attached
hereto.

 

“Act of Insolvency” shall mean, with respect to any Person, (i) the filing of a
petition, commencing, or authorizing the commencement of any case or proceeding
under any bankruptcy, insolvency, reorganization, liquidation, dissolution or
similar law relating to the protection of creditors, or suffering any such
petition or proceeding to be commenced by another which is consented to, not
timely contested or results in entry of an order for

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relief which is not discharged within thirty (30) days; (ii) the seeking or
consenting to the appointment of a receiver, trustee, custodian or similar
official for such Person or any substantial part of the property of such Person;
(iii) the appointment of a receiver, conservator, or manager for such Person by
any governmental agency or authority having the jurisdiction to do so; (iv) the
making or offering by such Person of a composition with its creditors or a
general assignment for the benefit of creditors; (v) the admission by such
Person of its inability to pay its debts or discharge its obligations as they
become due or mature; or (vi) that any governmental authority or agency or any
person, agency or entity acting or purporting to act under governmental
authority shall have taken any action to condemn, seize or appropriate, or to
assume custody or control of, all or any substantial part of the property of
such Person, or shall have taken any action to displace the executive officers
of such Person or the ultimate parent of such Person or to curtail its authority
in the conduct of the business of such Person.

 

“Additional Purchased Assets” shall mean Mortgage Loans or cash provided by
Seller to Buyer or its designee pursuant to Section 4.

 

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

 

“Agreement” shall mean this Third Amended and Restated Master Repurchase
Agreement, as the same may be further amended, supplemented or otherwise
modified in accordance with the terms hereof.

 

“ALTA” shall mean the American Land Title Association.

 

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

 

“Asset Schedule and Exception Report” shall have the meaning assigned thereto in
the Deutsche Custodial and Disbursement Agreement.

 

“Asset Value” shall mean as of any date of determination with respect to each
Eligible Asset, the lesser of (a) the Purchase Percentage multiplied by the
Market Value of such Mortgage Loan as of such date of determination, and (b) the
outstanding principal balance of such Eligible Asset as of such date of
determination; provided, that, the following additional limitations on Asset
Value shall apply:

 

  (1) the aggregate Asset Value of Wet-Ink Mortgage Loans may not exceed the
Wet-Ink Sub-Limit at any time;

 

  (2) the aggregate Asset Value of Second Lien Mortgage Loans may not exceed the
Second Lien Sub-Limit at any time;

 

  (3) the aggregate Asset Value of Manufactured Home Mortgage Loans shall not
exceed the Manufactured Home Sub-Limit at any time;

 

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  (4) the aggregate Asset Value of a single Mortgage Loan shall not exceed the
Mortgage Loan Sub-Limit;

 

  (5) the aggregate Asset Value of Jumbo Mortgage Loans may not exceed the Jumbo
Sub-Limit at any time;

 

  (6) the aggregate Asset Value of Jumbo(500) Mortgage Loans may not exceed the
Jumbo(500) Sub-Limit at any time;

 

  (7) the aggregate Asset Value of Jumbo(750) Mortgage Loans may not exceed the
Jumbo(750) Sub-Limit at any time;

 

  (8) the aggregate Asset Values of C Credit Mortgage Loans and C Minus Credit
Mortgage Loans may not exceed the C/C- Credit Sub-Limit at any time;

 

  (9) the aggregate Asset Value of Non-owner Occupied Mortgage Loans may not
exceed the Non-Owner Occupied Sub-Limit;

 

  (10) the aggregate Asset Value of Condominium Mortgage Loans and PUD Mortgage
Loans may not exceed the Condominium and PUD Sub-Limit at any time;

 

  (11) the aggregate Asset Value of all FICO Loans owned hereunder by Buyer as
of such date of determination may not exceed the FICO Sub-Limit;

 

  (12) the aggregate Asset Value of all Interest-Only Loans owned hereunder by
Buyer as of such date of determination may not exceed the Interest-Only
Sub-Limit; and

 

  (13) the Asset Value shall be deemed to be zero with respect to each Mortgage
Loan (i) in respect of which there is a breach of a representation and warranty
set forth in Schedule 1 (assuming each representation and warranty is made as of
the date Asset Value is determined), (ii) in respect of which there is a
delinquency in the payment of principal and/or interest which continues for a
period in excess of twenty nine (29) calendar days (without regard to any
applicable grace periods), (iii) which has not been repurchased by Seller by the
earlier to occur of (A) the Termination Date and (B) the 180th day after the
date on which it is first purchased by Buyer, (iv) which has been released from
the possession of Custodian under the Custodial and Disbursement Agreement to
Seller for a period in excess of ten (10) calendar days, (v) which exceed the
limitations on Asset Value set forth above or (vi) which is a Wet-Ink Mortgage
Loan, for which Custodian has failed to receive the related Mortgage Documents
by the eighth (8th) Business Day following the applicable Origination Date of
such Wet-Ink Mortgage Loan.

 

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“Assignment of Mortgage” shall mean, with respect to any Mortgage, an assignment
of the Mortgage in blank, notice of transfer or equivalent instrument in
recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the assignment of the Mortgage
to Buyer.

 

“Bank” shall mean Union Bank of California, N.A., a national banking
association, and its successors in interest, or such other depository
institution as may be acceptable to Buyer in its sole discretion, and their
respective successors in interest.

 

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

 

“Business Day” shall mean any day other than (i) a Saturday or Sunday or (ii) a
day on which banks in the State of New York (or state in which any of Custodian,
Disbursement Agent, Seller or Buyer is located) is authorized or obligated by
law or executive order to be closed.

 

“Buyer” shall mean CDC Mortgage Capital Inc., a New York corporation, and its
successors in interest and assigns.

 

“C Credit Mortgage Loan” shall mean each Mortgage Loan originated in accordance
with the Underwriting Guidelines criteria for “C” credit mortgage loans.

 

“C/C- Credit Sub-Limit” shall mean an amount equal to the product of 9% and the
Maximum Amount.

 

“C Minus Credit Mortgage Loans” shall mean each Mortgage Loan originated in
accordance with the Underwriting Guidelines criteria for “C-” credit mortgage
loans.

 

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

 

“Cash” shall mean all cash and Cash Equivalents, as shown on the balance sheet
of Seller prepared in accordance with GAAP.

 

“Cash Equivalents” shall mean (a) securities with maturities of 90 days or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of any commercial bank having capital
and surplus in excess of $500,000,000, (c) repurchase obligations of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than seven days with respect to securities issued or
fully guaranteed or insured by the United States Government, (d) commercial
paper of a domestic issuer rated at least A-1 or the equivalent thereof by
Standard and

 

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Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. (“S&P”)
or P-1 or the equivalent thereof by Moody’s Investors Service, Inc. (“Moody’s”)
and in either case maturing within 90 days after the day of acquisition, (e)
securities with maturities of 90 days or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which
state, commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or A by
Moody’s, (f) securities with maturities of 90 days or less from the date of
acquisition backed by standby letters of credit issued by any commercial bank
satisfying the requirements of clause (b) of this definition or (g) shares of
money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.

 

“Change of Control” shall mean the occurrence, after the Effective Date, of any
of the following circumstances: (a) Guarantor not owning, directly or
indirectly, all of the issued and outstanding capital stock of NCMC; or (b) any
Person, or two or more Persons acting in concert, other than the Management
Shareholders, acquiring beneficial ownership (within the meaning of Rule 13d-3
of the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended), directly or indirectly, of securities of Guarantor (or other
securities convertible into such securities) representing 35% or more of the
combined voting power of all securities of Guarantor entitled to vote in the
election of directors; or (c) any Person, or two or more Persons acting in
concert, other than the Management Shareholders, acquiring by contract or
otherwise, or entering into a contract or arrangement which upon consummation
will result in its or their acquisition of and, control over securities of
Guarantor (or other securities convertible into such securities) representing
35% or more of the combined voting power of all securities of Guarantor entitled
to vote in the election of directors.

 

“Class” shall mean with respect to a Purchased Asset, the designation of such
Purchased Asset as one or more of the following: (i) a Mortgage Loan, (ii) a
Wet-Ink Mortgage Loan, (iii) a Second Lien Mortgage Loan, (iv) a Jumbo Mortgage
Loan, (v) a Jumbo(500) Mortgage Loan, (vi) a Jumbo(750) Mortgage Loan, (vii) a C
Credit Mortgage Loan, (viii) a C Minus Credit Mortgage Loan, (ix) a Non-owner
Occupied Mortgage Loan, (x) a Manufactured Home Mortgage Loan, (xi) a
Condominium Mortgage Loan, (xii) a PUD Mortgage Loan, (xiii) a FICO Loan and/or
(ix) an Interest-Only Loan.

 

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

 

“Collection Account” shall mean the account established by the Bank subject to
an Account Agreement, into which all Income shall be deposited.

 

“Combined Loan-to-Value Ratio or CLTV” shall mean with respect to any Second
Lien Mortgage Loan, the sum of the original principal balance of such Mortgage
Loan and the outstanding principal balance of any related first lien as of the
date of origination of the Mortgage Loan, divided by the lesser of the Appraised
Value of the Mortgage Property as of the Origination Date or the purchase price
of the Mortgaged Property if the related Mortgaged Property was purchased within
twelve (12) months prior to the Origination Date.

 

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“Commonly Controlled Entity” shall mean an entity, whether or not incorporated,
which is under common control with Seller within the meaning of Section 4001 of
ERISA or is part of a group which includes Seller and which is treated as a
single employer under Section 414 of the Code.

 

“Condominium Mortgage Loan” shall mean an Eligible Asset secured by a
Residential Dwelling which is a unit in a condominium project.

 

“Condominium and PUD Sub-Limit” shall mean an amount equal to the product of 6%
and the Maximum Amount.

 

“Confirmation” shall have the meaning specified in Section 3(c).

 

“Custodial and Disbursement Agreement” shall mean that certain Custodial and
Disbursement Agreement, dated as of May 10, 2002, as amended by that certain
amendment and joinder to Custodial and Disbursement Agreement, dated as of
September 10, 2004, each by and among Buyer, NCCC, NCRC, NCMC, Disbursement
Agent and Custodian, as the same shall be modified and supplemented and in
effect from time to time.

 

“Custodial Identification Certificate” shall have the meaning assigned thereto
in the Custodial and Disbursement Agreement.

 

“Custodian” shall mean Deutsche Bank National Trust Company, a national banking
association, and its successors in interest, as custodian under the Custodial
and Disbursement Agreement, and any successor Custodian under the Custodial and
Disbursement Agreement.

 

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

 

“Disbursement Agent” shall mean Deutsche Bank National Trust Company, a national
banking association, and its successors in interest, as disbursement agent under
the Custodial and Disbursement Agreement, and any successor Disbursement Agent
under the Custodial and Disbursement Agreement.

 

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

 

“Due Diligence Review” shall mean the performance by Buyer of any or all of the
reviews permitted under Section 27 with respect to any or all of the Mortgage
Loans, as desired by Buyer from time to time.

 

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

 

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“Electronic Transmission” shall mean the delivery of information in an
electronic format acceptable to the applicable recipient thereof. An Electronic
Transmission shall be considered written notice for all purposes hereof (except
when a request or notice by its terms requires execution). Any document that
requires signature that is delivered by Electronic Transmission via email that
includes the sender’s name shall satisfy such signature requirement.

 

“Eligible Asset” shall mean a Mortgage Loan, including a Wet-Ink Mortgage Loan,
(i) as to which the representations and warranties in Schedule 1 attached hereto
are true and correct, (ii) which is underwritten strictly in accordance with the
Underwriting Guidelines of Seller, and (iii) which is secured by a Residential
Dwelling.

 

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

 

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

 

“Eurodollar Rate” shall mean, with respect to each day a Transaction is
outstanding, the rate per annum equal to the rate appearing at page 5 of the
Telerate Screen as one-month LIBOR at or about 9:00 a.m., New York time, on such
date (and if such date is not a Business Day, the Eurodollar Rate in effect on
the Business Day immediately preceding such date), and if such rate shall not be
so quoted, the average rate per annum at which three mutually acceptable banks
are offered Dollar deposits at or about 9:00 a.m., New York City time, on such
date by prime banks in the interbank eurodollar market where the eurodollar and
foreign currency exchange operations in respect of its Transactions are then
being conducted for delivery on such day for a period of thirty (30) days and in
an amount comparable to the amount of the Transactions to be outstanding on such
day. The Eurodollar Rate shall be reset by Buyer as described above and Buyer’s
determination of Eurodollar Rate shall be conclusive upon the parties absent
manifest error on the part of Buyer

 

“Event of Default” has the meaning specified in Section 12.

 

“Excess Margin” has the meaning specified in Section 3(o).

 

“Existing Financing Facilities” has the meaning specified in Section 10(t).

 

“Fannie Mae” shall mean the Federal National Mortgage Association, and its
successors in interest.

 

“FICO Loan” shall mean a Mortgage Loan with a FICO score less than 550 and
greater than or equal to 500.

 

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“FICO Sub-Limit” shall mean an amount not to exceed $105,000,000; provided Buyer
shall have the right, upon written notice to Seller, from time to time, to
reduce the FICO Sub-Limit to an amount not less than 15% of the then outstanding
Purchase Price of the Transactions.

 

“Foreclosed Loan” shall mean a loan the property securing which has been
foreclosed upon by Seller.

 

“Freddie Mac” shall mean the Federal Home Loan Mortgage Corporation, and its
successors in interest.

 

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

 

“Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator having jurisdiction over NCCC, NCRC, NCMC,
Guarantor, any of their respective Subsidiaries or any of their properties.

 

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

 

“Guarantor” shall mean New Century Financial Corporation, a California
corporation, and its successors in interest.

 

“Guaranty” shall mean the Guaranty, dated as of July 19, 2001, made by Guarantor
in favor of Buyer.

 

“Income” shall mean, with respect to any Mortgage Loan at any time, all
collections and proceeds on or in respect of the Mortgage Loans, including,
without limitation, any principal thereof then payable and all interest or other
distributions payable thereon less any related servicing fee(s) charged by
Servicer.

 

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“Indebtedness” shall mean, for any Person: (a) obligations created, issued or
incurred by such Person for borrowed money (whether by loan, the issuance and
sale of debt securities or the sale of Property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such Property
from such Person); (b) obligations of such Person to pay the deferred purchase
or acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable
within 90 days after the date the respective goods are delivered or the
respective services are rendered; (c) Indebtedness of others secured by a Lien
on the Property of such Person, whether or not the respective Indebtedness so
secured has been assumed by such Person; (d) obligations (contingent or
otherwise) of such Person in respect of letters of credit or similar instruments
issued or accepted by banks and other financial institutions for account of such
Person; (e) obligations of such Person under repurchase agreements,
sale/buy-back agreements or like arrangements; (f) Indebtedness of others
Guaranteed by such Person; (g) all obligations of such Person incurred in
connection with the acquisition or carrying of fixed assets by such Person; and
(h) Indebtedness of general partnerships of which such Person is a general
partner; and (i) Capital Lease Obligations of such Person; provided, however,
that for any period, the aggregate Indebtedness of the Guarantor during such
period maintained in accordance with GAAP shall be calculated less the aggregate
amount of any such Indebtedness that is reflected on the balance sheet of the
Guarantor in respect of obligations incurred pursuant to a securitization
transaction, solely to the extent such obligations are secured by the assets
securitized thereby and are non-recourse to the Guarantor. In the event that any
Indebtedness would be excluded from the calculation of Indebtedness but for the
existence of recourse, the Guarantor shall be entitled nonetheless to exclude
the amount of such Indebtedness that is not subject to recourse. The amount of
any recourse shall be the stated or determinable amount thereof or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by the Guarantor in good faith. Any calculations of
Indebtedness provided pursuant to this Agreement shall also separately set forth
any Indebtedness of Guarantor excluded from such calculation pursuant to the
proviso in the definition thereof.

 

“Interest-Only Loan” shall mean any Mortgage Loan as to which scheduled payments
only include interest for an initial period of not more than 10 years, after
which such Mortgage Loan will fully amortize to maturity.

 

“Interest-Only Sub-Limit” shall mean $140,000,000.

 

“Interest Rate Protection Agreement” shall mean, with respect to any or all of
the Mortgage Loans, any short sale of US Treasury securities, or futures
contract, or options related contract, or interest rate swap, cap or collar
agreement or similar arrangement providing for protection against fluctuations
in interest rates or the exchange of nominal interest obligations, either
generally or under specific contingencies and acceptable to Buyer.

 

“Investment” shall mean with respect to any Person, any direct or indirect
purchase or other acquisition by that Person of a beneficial interest in stock
or other securities of any

 

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other Person, or any direct or indirect loan, advance (other than advances to
employees for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by that
Person to any other Person, including all Indebtedness and accounts receivable
from that other Person which are not current assets or did not arise from sales
to that other Person in the ordinary course of business.

 

“Jumbo Mortgage Loans” shall mean each Mortgage Loan with a principal balance as
of origination of more than $333,700, or such other amount as may be designated
from time to time by Fannie Mae.

 

“Jumbo Sub-Limit” shall mean an amount equal to the product of 29% and the
Maximum Amount.

 

“Jumbo(500) Mortgage Loans” shall mean each Mortgage Loan with a principal
balance as of origination of more than $500,000 and less than or equal to
$750,000.

 

“Jumbo(500) Sub-Limit” shall mean an amount equal to the product of 20% and the
Maximum Amount.

 

“Jumbo(750) Mortgage Loans” shall mean each Mortgage Loan with a principal
balance as of origination of more than $750,000.

 

“Jumbo(750) Sub-Limit” shall mean an amount equal to the product of 12% and the
Maximum Amount.

 

“Late Payment Fee” has the meaning specified in Section 5(b).

 

“Letter Agreement” shall mean the Letter Agreement, dated as of the date hereof,
by and among Buyer, NCCC, NCRC, NCMC and Guarantor.

 

“Leverage Ratio” shall mean on any date of determination, the ratio of (a) Total
Liabilities to (b) Tangible Net Worth.

 

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

 

“Loan-to-Value Ratio” or “LTV” means with respect to any Mortgage Loan, the
ratio of the original outstanding principal amount of such Mortgage Loan at the
time of origination to the lesser of (a) the Appraised Value of the related
Mortgaged Property at origination of such Mortgage Loan and (b) if the related
Mortgaged Property was purchased within twelve (12) months of the origination of
such Mortgage Loan, the purchase price of the related Mortgaged Property.

 

“Management Shareholders” shall mean Robert K. Cole, Brad A. Morrice, and Edward
F. Gotschall.

 

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“Manufactured Home Mortgage Loan” shall mean an Eligible Asset secured by a
Residential Dwelling which is a manufactured home.

 

“Manufactured Home Sub-Limit” shall mean the product of 4% and the Maximum
Amount.

 

“Margin Base” shall mean the aggregate Asset Value of all Purchased Assets which
are Eligible Assets.

 

“Margin Deficit” has the meaning specified in Section 4.

 

“Market Value” shall mean, as of any date in respect of any Mortgage Loan, the
price at which such Mortgage Loan could readily be sold as determined in Buyer’s
sole discretion using its reasonable business judgment, which price may be
determined to be zero. Buyer’s determination of Market Value shall be conclusive
upon the parties absent manifest error on the part of Buyer.

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the
Property, business, operations, financial condition or prospects of NCCC, NCRC,
NCMC or Guarantor, (b) the ability of NCCC, NCRC or NCMC to perform its
obligations under any of the Repurchase Documents to which it is a party, (c)
the validity or enforceability of any of the Repurchase Documents, (d) the
rights and remedies of Buyer under any of the Repurchase Documents, (e) the
timely payment of any amounts payable under the Repurchase Documents, (f) the
Asset Value of the Purchased Assets or (g) the ability of Guarantor to perform
its obligations under the Guaranty.

 

“Maximum Amount” shall mean $700,000,000.

 

“Minimum Pricing Amount” means $4,950,000 less (a) the facility fee received
pursuant to Section 3(p) of the Second Amended and Restated Repurchase Agreement
and (b) amounts received by Buyer since September 10, 2004 in respect of the
aggregate amount obtained by daily application of the Pricing Spread for each
outstanding Transaction to the Purchase Price for such Transaction on a 360 day
per year basis for the actual number of days during the period commencing on
(and including) the Purchase Date for such Transaction and ending on (but
excluding) the Repurchase Date.

 

“Mortgage” shall mean the mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a first lien or second lien on a fee simple
Residential Dwelling securing the Mortgage Note.

 

“Mortgage File” shall have the meaning assigned thereto in the Custodial and
Disbursement Agreement.

 

“Mortgage Loan” shall mean a mortgage loan originated in accordance with the
Underwriting Guidelines which Custodian has been instructed to hold for Buyer
pursuant to the Custodial and Disbursement Agreement including any Wet-Ink
Mortgage Loan listed on a Transaction Request, and which Mortgage Loan includes,
without limitation, (i) a Mortgage Note and related Mortgage, and (ii) all
right, title and interest of Seller in and to the Mortgaged Property covered by
such Mortgage.

 

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“Mortgage Loan Sub-Limit” shall mean $1,000,000.

 

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

 

“Mortgage-backed Security” shall mean a security (including, without limitation,
a participation certificate) that is an interest in a pool of Mortgage Loans or
is secured by such an interest.

 

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

 

“Mortgagee” shall mean the record holder of a Mortgage Note secured by a
Mortgage.

 

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

 

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

 

“NCCC” shall mean NC Capital Corporation, a California corporation, and its
successors in interest.

 

“NCMC” shall mean New Century Mortgage Corporation, a California corporation,
and its successors in interest.

 

“NCRC” shall mean NC Residual II Corporation, a Delaware corporation, and its
successors in interest.

 

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

 

“Net Worth” shall mean with respect to any Person, on any date of determination,
the net worth of such Person as of such date, determined in accordance with
GAAP.

 

“Non-owner Occupied Mortgage Loans” shall mean each Mortgage Loan with respect
to which the improvements on the Mortgaged Property are not occupied by the
owner of such Mortgaged Property.

 

“Non-owner Occupied Sub-Limit” shall mean an amount equal to the product of 10%
and the Maximum Amount.

 

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“Origination Date” shall mean the date a Mortgage Loan is funded by any
originator and the proceeds are disbursed to a borrower under such Mortgage
Loan.

 

“Payment Calculation Date” shall mean the tenth (10th) day of each month.

 

“Payment Date” shall mean two (2) Business Days after the Payment Calculation
Date.

 

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

 

“Periodic Advance Repurchase Payment” has the meaning specified in Section 5(b).

 

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

 

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

 

“Post-Default Rate” shall mean, in respect of any day a Transaction is
outstanding or any other amount under this Agreement or any other Repurchase
Document that is not paid when due to Buyer at the stated Repurchase Date or
otherwise when due (a “Post-Default Day”), a rate per annum on a 360 day per
year basis during the period from and including the due date to but excluding
the date on which such amount is paid in full equal to 4% per annum plus the
Prime Rate on such Post-Default Day.

 

“Price Differential” means, with respect to any Transaction hereunder as of any
date, the aggregate amount obtained by daily application of the Pricing Rate for
such Transaction to the Purchase Price for such Transaction on a 360 day per
year basis for the actual number of days during the period commencing on (and
including) the Purchase Date for such Transaction and ending on (but excluding)
the Repurchase Date (reduced by any amount of such Price Differential previously
paid by Seller to Buyer with respect to such Transaction).

 

“Pricing Rate” shall mean a rate per annum equal to the sum of (a) the
Eurodollar Rate plus (b) the Pricing Spread.

 

“Pricing Spread” has the meaning specified in the Letter Agreement.

 

“Prime Rate” shall mean the prime rate announced to be in effect from time to
time, as published as the average rate in The Wall Street Journal.

 

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

 

“PUD Mortgage Loan” shall mean an Eligible Asset secured by a Residential
Dwelling which is an attached single family dwelling in a planned unit
development.

 

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“Purchase Agreement” shall mean any purchase agreement by and between NCCC, NCRC
or NCMC and any third party, including without limitation, any Affiliate of
NCCC, NCRC or NCMC, pursuant to which NCCC, NCRC or NCMC has purchased assets
subsequently sold to Buyer hereunder.

 

“Purchase Date” shall mean the date on which Purchased Assets are transferred by
Seller to Buyer or its designee (including Custodian).

 

“Purchase Percentage” has the meaning specified in the Letter Agreement.

 

“Purchase Price” shall mean on each Purchase Date, the price at which Purchased
Assets are transferred by Seller to Buyer or its designee (including Custodian)
which shall equal the Asset Value for such Purchased Assets on the Purchase
Date.

 

“Purchased Assets” shall mean the Mortgage Loans sold by Seller to Buyer in a
Transaction, and any Additional Purchased Assets.

 

“Purchased Items” has the meaning specified in Section 7.

 

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

 

“REIT” shall mean a real estate investment trust, as defined in Section 856(a)
of the Code.

 

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

 

“REO Sub” shall mean New Century REO Corp., a California corporation.

 

“Reportable Event” shall mean any of the events set forth in Section 4043(b) of
ERISA or a successor provision thereof, other than those events as to which the
thirty day notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. § 2615 or one or more successor provision thereof.

 

“Repurchase Date” shall mean the date on which Seller is to repurchase the
Purchased Assets from Buyer as specified in the related Confirmation, including
any date determined by application of the provisions of Sections 3 or 13; which
date shall be specified as “open” unless otherwise requested by Seller and
agreed by Buyer; provided that in no event shall the Repurchase Date be in
excess of 364 days after the Purchase Date. If the Transaction is “open”, the
Repurchase Date shall be one (1) Business Day after the date upon which either
Buyer (in its sole discretion) or the Seller (in its sole discretion) provides
to the other written notice of its intention to sell or repurchase, as
applicable, the applicable Mortgage Loans; provided that the Repurchase Date
shall not, in any event, exceed 364 days from the date hereof.

 

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“Repurchase Documents” shall mean this Agreement, the Custodial Agreement, the
Custodial and Disbursement Agreement, the Guaranty, the Account Agreement and
all other documents or agreements executed in connection therewith.

 

“Repurchase Obligations” shall have the meaning specified in Section 7(b).

 

“Repurchase Price” means the price at which Purchased Assets are to be
transferred from Buyer or its designee (including Custodian) to Seller upon
termination of a Transaction, which will be determined in each case (including
Transactions terminable upon demand) as the sum of the Purchase Price and the
Price Differential as of the date of such determination, including any amounts
paid pursuant to Requests for Additional Transactions for Excess Margin under
Section 3(o), decreased by all cash, Income and Periodic Advance Repurchase
Payments (including Late Payment Fees, if any) actually received by Buyer
pursuant to Sections 5(a) or 5(b), respectively.

 

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

 

“Residential Dwelling” shall mean any one of the following: (i) a detached
single family dwelling, (ii) a two-to-four family dwelling, (iii) a unit in a
condominium project, (iv) a detached single family dwelling in a planned unit
development or (v) manufactured housing units. Mortgaged Properties that consist
of the following property types are not Residential Dwellings: (a) co-operative
units, (b) log homes, (c) earthen homes, (d) underground homes, and (e) any
dwelling situated on more than ten acres of property.

 

“Responsible Officer” shall mean, as to any Person, the chief executive officer,
the president, the chief financial officer, the treasurer, the chief operating
officer or an executive vice-president of such Person.

 

“SEC” shall mean the Securities and Exchange Commission.

 

“Second Lien Mortgage Loans” shall mean an Eligible Asset secured by a lien on
the Mortgaged Property, subject to one prior lien on such Mortgaged Property.

 

“Second Lien Sub-Limit” shall mean an amount equal to the product of 15% and the
Maximum Amount.

 

“Security Agreement” shall mean with respect to any Mortgage Loan, any contract,
instrument or other document related to security for repayment thereof (other
than the related Mortgage and Mortgage Note), executed by the Mortgagor and/or
others in connection with such Mortgage Loan, including without limitation, any
security agreement, guaranty, title insurance policy, hazard insurance policy,
chattel mortgage, letter of credit or certificate of deposit or other pledged
accounts, and any other documents and records relating to any of the foregoing.

 

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“Seller” shall mean NCCC, NCRC and NCMC.

 

“Seller Asset Schedule” shall have the meaning assigned thereto in the Custodial
and Disbursement Agreement.

 

“Seller-Related Obligations” shall mean any obligations, representations,
warranties and covenants of NCCC, NCRC or NCMC hereunder and under any other
arrangement between NCCC, NCRC, NCMC or a Subsidiary of NCCC, NCRC or NCMC on
the one hand and Buyer or an Affiliate of Buyer on the other hand.

 

“Servicer” shall have the meaning specified in Section 24.

 

“Servicer Account” shall mean any account established by Servicer in connection
with the servicing of the Mortgage Loans.

 

“Servicing Agreement” has the meaning specified in Section 24.

 

“Servicing Contract” shall mean a contract or agreement purchased by NCCC, NCRC
or NCMC or entered into by NCCC, NCRC or NCMC for its own account (and not as
nominee or subservicer), whether now existing or hereafter purchased or entered
into, pursuant to which NCCC, NCRC or NCMC services Mortgage Loans or Mortgage
Loan pools for Persons other than itself or the other Seller.

 

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

 

“Servicing Records” has the meaning specified in Section 24.

 

“Settlement Agent” shall mean, with respect to any Transaction, the entity,
which may be a title company, escrow company or attorney in accordance with
local law and practice in the jurisdiction where the related Wet-Ink Mortgage
Loan is being originated, which funds such Mortgage Loan with amounts wired
pursuant to the terms of an Existing Financing Facility.

 

“Sub-Limit” shall mean any of the Web-Ink Sub-Limit, the Second Lien Sub-Limit,
the Manufactured Home Sub-Limit, the FICO Sub-Limit, the Condominium and PUD
Sub-Limit, the Mortgage Loan Sub-Limit, the Jumbo Sub-Limit, the Jumbo(500)
Sub-Limit, the Jumbo(750) Sub-Limit at any time, the C/C- Credit Sub-Limit, the
Non-owner Occupied Sub-Limit and the Interest-Only Sub-Limit.

 

“Subordinated Debt” shall mean any Indebtedness of NCCC, NCRC or NCMC, now
existing or hereafter created, incurred or arising, which is subordinated in
right of payment to the payment of all obligations hereunder in a manner and to
an extent that Buyer has approved in writing prior to the creation of such
Indebtedness.

 

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

 

“Tangible Net Worth” shall mean, with respect to any Person, as of a particular
date,

 

(a) all amounts which would be included under capital on a balance sheet of such
Person at such date, determined in accordance with GAAP, less

 

(b) (i) amounts owing to such Person from Affiliates, or from officers,
employees, partners, members, directors, shareholders or other Persons similarly
affiliated with such Person or the Guarantor or its Subsidiaries, (ii)
intangible assets, and (iii) the value of REO Property and Foreclosed Loans.

 

“Term Purchased Asset” shall mean any Purchased Asset for which Buyer and Seller
shall have agreed that the Repurchase Date is not “open”.

 

“Termination Date” shall mean the date which is 364 days from the date hereof
which shall be September 9, 2005 or such earlier date on which this Agreement
shall terminate in accordance with the provisions hereof or by operation of law,
as may be extended pursuant to Section 3(m).

 

“Test Period” has the meaning specified in Section 11(s).

 

“Total Liabilities” shall mean on any date of determination with respect to any
Person, the amount, on a consolidated basis, of the liabilities of such Person
and its respective Subsidiaries, determined in accordance with GAAP, minus
Subordinated Debt; provided, however, that for any period, the aggregate Total
Liabilities of any Person during such period maintained in accordance with GAAP
shall be calculated less the aggregate amount of any such Total Liabilities that
are reflected on the balance sheet of such Person in respect of obligations
incurred pursuant to a securitization transaction, solely to the extent such
obligations are secured by the assets securitized thereby and are non-recourse
to such Person. In the event that any liabilities would be excluded from the
calculation of Total Liabilities but for the existence of recourse, such Person
shall be entitled nonetheless to exclude the amount of such liabilities that are
not subject to recourse. The amount of any recourse shall be the stated or
determinable amount thereof or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by such Person
in good faith. Any calculations of Total Liabilities provided pursuant to this
Agreement shall also separately set forth any liabilities of such Person
excluded from such calculation pursuant to the proviso in the definition
thereof.

 

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“Transaction” has the meaning specified in Section 1.

 

“Transaction Request” means a request from Seller to Buyer, in the form attached
as Exhibit I hereto, to enter into a Transaction, which may be delivered via
Electronic Transmission.

 

“True Sale Certification” shall mean a true sale certification in the form of
Exhibit VI attached hereto.

 

“Trust Receipt” shall mean a trust receipt issued by Custodian to Buyer
confirming Custodian’s possession of certain Mortgage Files which are held by
Custodian for the benefit of Buyer or the registered holder of such trust
receipt.

 

“Underwriting Guidelines” shall mean the underwriting guidelines delivered by
Seller to Buyer on or prior to the Effective Date and as may be modified or
supplemented from time to time thereafter as approved by Buyer in its sole
discretion attached hereto as Exhibit II.

 

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

 

“Wet-Ink Mortgage Loan” shall mean an Eligible Asset which is sold to Buyer
within 8 Business Days of the origination thereof by Seller, which origination
is in accordance with the Underwriting Guidelines and is funded in part or in
whole with cash advanced directly to an escrow agent, Settlement Agent, or
Warehouse Lender approved by Buyer in its sole discretion.

 

“Wet-Ink Sub-Limit” shall mean an amount equal to (i) with respect to the first
five (5) Business Days of each calendar month, the product of 50% and the
Maximum Amount, (ii) with respect to the last four (4) Business Days of each
calendar month, the product of 50% and the Maximum Amount and (iii) at all other
times, the product of 40% and the Maximum Amount.

 

3. INITIATION; TERMINATION

 

  (a) Conditions Precedent to the Effective Date. The Effective Date hereof is
subject to the satisfaction, immediately prior to or concurrently therewith, of
the conditions precedent that Buyer shall have received from Seller any fees and
expenses payable hereunder (including, without limitation, the fee required
pursuant to Section 3(p)), and all of the following documents, each of which
shall be satisfactory in form and substance to Buyer and its counsel:

 

  (1) Third Amended and Restated Master Repurchase Agreement. This Third Amended
and Restated Master Repurchase Agreement duly completed and executed by the
parties thereto. In addition, Seller shall have taken such other action as Buyer
shall have requested in order to perfect the security interests created pursuant
to this Agreement;

 

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  (2) Opinions of Counsel. An opinion or opinions of outside counsel to each of
NCCC, NCRC, NCMC and Guarantor, substantially in the form of Exhibit III;

 

  (3) Organizational Documents. A good standing certificate and certified copies
of the charter and by-laws (or equivalent documents) of each of NCCC, NCMC, NCRC
and Guarantor and of all corporate or other authority for NCCC, NCMC, NCRC or
Guarantor, as applicable, with respect to the execution, delivery and
performance of the Repurchase Documents to which it is a party and each other
document to be delivered by NCCC, NCMC, NCRC or Guarantor from time to time in
connection herewith (and Buyer may conclusively rely on such certificate until
it receives notice in writing from NCCC, NCMC, NCRC or Guarantor, as applicable,
to the contrary);

 

  (4) Underwriting Guidelines. A copy of Seller’s current Underwriting
Guidelines, and any material changes to the Underwriting Guidelines made since
the Underwriting Guidelines were last delivered to Buyer;

 

  (5) Servicing Agreement(s). Any Servicing Agreement, certified as a true,
correct and complete copy of the original;

 

  (6) Consents and Waivers. Any and all irrevocable consents and waivers
required under the Existing Financing Facilities;

 

  (7) UCC Amendments and Releases. Any and all amendments or terminations of UCC
financing statements required by Buyer; and

 

  (8) Other Documents. Such other documents as Buyer may reasonably request, in
form and substance reasonably acceptable to Buyer.

 

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

 

  (1) Seller shall have delivered a Transaction Request via Electronic
Transmission in accordance with the procedures set forth in Section 3(c);

 

  (2) no Default or Event of Default shall have occurred and be continuing under
the Repurchase Documents;

 

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  (3) after giving effect to the requested Transaction, the aggregate
outstanding Purchase Price of the Transactions outstanding shall not exceed the
Maximum Amount;

 

  (4) both immediately prior to the requested Transaction and also after giving
effect thereto and to the intended use thereof, the representations and
warranties made by Seller in Section 10, shall be true, correct and complete on
and as of such Purchase Date in all material respects with the same force and
effect as if made on and as of such date (or, if any such representation or
warranty is expressly stated to have been made as of a specific date, as of such
specific date);

 

  (5) after giving effect to the requested Transaction, the aggregate
outstanding Purchase Price of the Transactions outstanding shall not exceed the
Asset Value of all the Purchased Assets subject to outstanding Transactions;

 

  (6) subject to Buyer’s right to perform one or more Due Diligence Reviews
pursuant to Section 28, Buyer shall have completed its due diligence review of
the Mortgage File for each Purchased Asset, and such other documents, records,
agreements, instruments, mortgaged properties or information relating to such
Purchased Asset as Buyer in its sole discretion deems appropriate to review and
such review shall be satisfactory to Buyer in its sole discretion;

 

  (7) Buyer shall have received from Seller certified copies of any Servicing
Agreement relating to the Eligible Assets and Buyer shall have reviewed and
approved each such Servicing Agreement in its sole discretion;

 

  (8) Buyer shall have received all fees and expenses of counsel to Buyer as
contemplated by Section 14(b) which amount, at Buyer’s option, may be withheld
from the sale proceeds of any Transaction hereunder;

 

  (9) Buyer shall have approved, in its sole discretion, all exceptions to the
Underwriting Guidelines;

 

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

 

(A) an event or events shall have occurred in the good faith determination of
Buyer resulting in the effective absence of a “repo market” or comparable
“lending market” for financing debt obligations secured by mortgage loans or
securities or an event or events shall have occurred resulting in Buyer not
being able to finance Purchased Assets through the “repo market” or “lending
market” with traditional counterparties at rates which would have been
reasonable prior to the occurrence of such event or events; or

 

(B) an event or events shall have occurred resulting in the effective absence of
a “securities market” for securities backed by mortgage loans

 

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or an event or events shall have occurred resulting in Buyer not being able to
sell securities backed by mortgage loans at prices which would have been
reasonable prior to such event or events; or

 

(C) there shall have occurred a material adverse change in the financial
condition of Buyer which affects (or can reasonably be expected to affect)
materially and adversely the ability of Buyer to fund its obligations under this
Agreement;

 

  (11) with respect to each Eligible Asset, Buyer shall have received from
Custodian on each Purchase Date an Asset Schedule and Exception Report or Trust
Receipt and Basic Status Report, as applicable, dated the Purchase Date, duly
completed and with exceptions acceptable to Buyer in its sole discretion in
respect of Eligible Assets to be purchased hereunder on such Business Day;

 

  (12) Buyer shall have received from Seller a Warehouse Lender’s Release Letter
substantially in the form of Exhibit VII-B hereto (or such other form acceptable
to Buyer) or a Seller’s Release Letter substantially in the form of Exhibit
VII-A hereto (or such other form acceptable to Buyer) covering each Eligible
Asset to be sold to Buyer;

 

  (13) The aggregate requested Purchase Price of Eligible Assets that are not
Wet-Ink Mortgage Loans that Seller has requested Buyer purchase pursuant to the
Transaction Request is equal to or in excess of $10,000,000;

 

  (14) Buyer shall not have determined that the introduction of, or a change in,
any Requirement of Law or in the interpretation or administration of any
Requirement of Law applicable to Buyer has made it unlawful, and no Governmental
Authority shall have asserted that it is unlawful, for Buyer to enter into
Transactions; and

 

  (15) The Repurchase Date for such Transaction shall not be later than the
Termination Date.

 

Each Transaction Request delivered by Seller hereunder shall constitute a
certification by each of NCCC, NCRC and NCMC that all the conditions set forth
in this Section 3(b) have been satisfied (both as of the date of such notice or
request and as of the date of such purchase).

 

Each of NCCC, NCRC and NCMC hereby request that Buyer, on each Business Day,
convert each Eligible Asset which is a Wet-Ink Mortgage Loan for which the
Mortgage File has been received by the Custodian in accordance with the
Custodial Agreement to a dry Mortgage Loan and this request shall constitute a
certification by each of NCCC, NCRC and NCMC that all the conditions set forth
in this Section 3(b) have been satisfied (both as of the date hereof and as of
the date of such conversion).

 

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(c) Seller shall request a Transaction by delivering to Custodian, Disbursement
Agent and Buyer via Electronic Transmission a request in the form of Exhibit I
attached hereto (a “Transaction Request”) in accordance with the timeframe set
forth in Section 3(a) of the Custodial and Disbursement Agreement. Such
Transaction Request shall describe the Purchased Assets in a Seller Asset
Schedule and set forth (i) the Purchase Date, (ii) the Purchase Price, (iii) the
Repurchase Date, (iv) the Pricing Rate applicable to the Transaction, (v) the
applicable Purchase Percentages and (vi) additional terms or conditions not
inconsistent with this Agreement. Each such Transaction Request in respect of
Eligible Assets that are not Wet-Ink Mortgage Loans shall be for an aggregate
Purchase Price equal to or in excess of $10,000,000.

 

On each Purchase Date, Buyer shall forward to Seller a confirmation (a
“Confirmation”) by Electronic Transmission setting forth with respect to each
Transaction funded on such date, (1) the mortgage loan number, (2) the Purchase
Price for such Purchased Assets, (3) the Market Value of the related Mortgage
Loans as of the date of such Confirmation, (4) the outstanding principal amount
of the related Mortgage Loans, (5) the Repurchase Date, (6) the Pricing Rate and
(7) the Class designations of such Purchased Assets. Buyer shall forward to
Seller a revised Confirmation by Electronic Transmission notifying Seller as to
any changes made by Buyer in the Pricing Spread, Purchase Percentage or
Reduction Amount pursuant to the terms hereof.

 

On each date that all the documents set forth in Section 2(a)(i) of the
Custodial and Disbursement Agreement are received by the Custodian with respect
to any Wet-Ink Mortgage Loan, and Custodian delivers to Buyer a Trust Receipt
attaching an Asset Schedule and Exception Report or Basic Status Report and
Exception Report, as applicable, with respect to such Eligible Assets, Buyer
shall forward to Seller a new Confirmation by Electronic Transmission setting
forth the following information, updated to reflect the revised Pricing Rate,
and, if applicable, Market Value as a result of the conversion of such Mortgage
Loan, (1) the mortgage loan number, (2) the Purchase Price for such Purchased
Assets, (3) the Market Value of the related Mortgage Loans, (4) the outstanding
principal amount of the related Mortgage Loans, (5) the Repurchase Date, (6) the
Pricing Rate and (7) the Class designations of such Purchased Assets.

 

In the event Seller disagrees with any terms of the Confirmation, Seller shall
notify Buyer in writing of such disagreement within one (1) Business Day after
receipt of such Confirmation unless a corrected Confirmation is sent by Buyer.
An objection sent by Seller must state specifically that it is an objection,
must specify the provision(s) being objected to by Seller, must set forth such
provision(s) in the manner that Seller believes they should be stated, and must
be received by Buyer no more than one (1) Business Day after the Confirmation
was received by Seller.

 

  (d) Any Confirmation by Buyer shall be deemed to have been received by Seller
on the date actually received by Seller.

 

  (e) Except as set forth in Section 3(c), each Confirmation, together with this
Agreement, shall constitute conclusive evidence of the terms agreed between
Buyer and Seller with respect to the Transaction to which the Confirmation

 

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relates, and Seller’s acceptance of the related proceeds shall constitute
Seller’s agreement to the terms of such Confirmation. It is the intention of the
parties that each Confirmation shall not be separate from this Agreement but
shall be made a part of this Agreement.

 

  (f) On the Repurchase Date, termination of a Transaction will be effected by
transfer to Seller or its designee of the Purchased Assets (and any Income in
respect thereof received by Buyer not previously credited or transferred to, or
applied to the obligations of, Seller pursuant to Section 5) which amount shall
be netted against the simultaneous receipt of the Repurchase Price by Buyer. To
the extent a net amount is owed to one party, the other party shall pay such
amount to such party. Seller is obligated to obtain the Mortgage Files from
Buyer or its designee (including Custodian) at Seller’s expense on the
Repurchase Date.

 

  (g) Subject to the terms and conditions of this Agreement, during the term of
this Agreement Seller may sell to Buyer, repurchase from Buyer and resell to
Buyer Eligible Assets hereunder.

 

  (h) In no event shall a Transaction be entered into when any Default or Event
of Default has occurred and is continuing or when the Repurchase Date for such
Transaction would be later than the Termination Date.

 

  (i) With respect to each Eligible Asset that is not a Wet-Ink Mortgage Loan,
Seller shall deliver to Custodian the Mortgage File pertaining to each Eligible
Asset to be purchased by Buyer no later than the time set forth in the Custodial
and Disbursement Agreement.

 

  (j) With respect to each Eligible Asset that is not a Wet-Ink Mortgage Loan,
pursuant to the Custodial and Disbursement Agreement, Custodian shall deliver to
Buyer and Seller an Asset Schedule and Exception Report with respect to the
Eligible Assets which Seller has requested Buyer purchase on such Purchase Date,
and no later than 5 p.m., New York City time, on each Purchase Date, Custodian
shall deliver to Buyer a Trust Receipt in respect of all such Eligible Assets
purchased by Buyer on such Purchase Date. Subject to the provisions of this
Section 3 and Section 11 of the Custodial and Disbursement Agreement, the
Purchase Price for each Eligible Asset that is not a Wet-Ink Mortgage Loan will
be made available to Seller by Disbursement Agent transferring, the aggregate
amount of such Purchase Price in accordance with the Custodial and Disbursement
Agreement.

 

  (k) With respect to each Eligible Asset that is a Wet-Ink Mortgage Loan,
Seller shall cause the Settlement Agent to send the Custodian a facsimile of the
associated Escrow Instruction Letter on each Purchase Date. Subject to the
provisions of this Section 3 and Section 11 of the Custodial and Disbursement
Agreement, the Purchase Price for each Eligible Asset which is a Wet-Ink
Mortgage Loan will then be made available to Seller by Disbursement Agent
transferring the aggregate amount of such Purchase Price in accordance with the
Custodial and Disbursement Agreement. Seller shall deliver the Mortgage File
related thereto to Custodian, for receipt by Custodian no later than seven (7)
Business Days following the Origination Date of such Wet-Ink Mortgage Loan.

 

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  (l) Seller may repurchase any individual Purchased Asset without penalty or
premium, but subject to the last sentence of this Section 3(l), on any date. The
Repurchase Price payable for the repurchase of any such Purchased Asset shall be
reduced as provided in Section 5(d). If Seller intends to make such a
repurchase, Seller shall give one (1) Business Day’s prior written notice
thereof to Buyer, designating the Purchased Assets to be repurchased. If such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, and, on receipt, such amount shall be applied to the
Repurchase Price for the designated Purchased Assets. The amount of the original
Purchase Price of the Purchased Assets thus repurchased shall be available for
subsequent Transactions subject to the terms of this Agreement. If any Term
Purchased Asset is repurchased on any date other than the Repurchase Date for
such Term Purchased Asset, Seller shall pay to Buyer any amount determined by
Buyer in its sole discretion, exercised in good faith, as necessary to
compensate Buyer for any additional losses, costs or expenses which it may
reasonably incur as a result of such repurchase, including, without limitation,
any loss, cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by Buyer to fund or maintain such
Transaction.

 

  (m) At the request of Seller made at least 90 days, but in no event earlier
than 360 days, prior to the then current Termination Date, Buyer may in its sole
discretion extend the Termination Date for a period of 364 additional days or
such other period to be determined by Buyer in its sole discretion by giving
written notice of such extension to Seller no later than sixty (60) days after
Buyer’s receipt of Seller’s request. Any failure by Buyer to deliver such notice
of extension shall be deemed to be Buyer’s determination not to extend the then
current Termination Date.

 

  (n) On the Termination Date, including but not limited to a termination
pursuant to Section 20 or otherwise hereunder, Seller shall pay to Buyer the
Minimum Pricing Amount. All such payments pursuant to this clause (o) shall be
made in Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to Buyer at the account set forth in Section 8(a) hereof

 

  (o) On any day on which the Margin Base for such Mortgage Loans exceeds the
aggregate outstanding Purchase Price of all Transactions with respect to such
Mortgage Loans, so long as no Default or Event of Default has occurred and is
continuing:

 

  (1) Seller may prepare a Request for Additional Transactions for Excess Margin
in the form of Exhibit IX attached hereto (“Request for Additional Transactions
for Excess Margin”), (A) specifying (i) the increase in Purchase Price for all
outstanding Transactions and the requested Purchase Date, (ii) the Excess Margin
with respect to all outstanding Transactions

 

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before giving effect to the requested Transaction, (iii) the remaining Excess
Margin after giving effect to the requested Transaction, and (iv) the aggregate
outstanding Purchase Price of the Transactions after giving effect to the
requested Transaction, and (B) including a certification that, upon the
consummation of the additional Transactions, the Margin Base will be equal to or
greater than the aggregate outstanding Purchase Price of all Transactions, and
the excess of the Margin Base over the aggregate outstanding Purchase Price,
after giving effect to the Transaction, shall be the “Excess Margin”.

 

  (2) Seller shall transmit via Electronic Transmission the Request for
Additional Transactions for Excess Margin to Disbursement Agent and Buyer prior
to 12:00 noon, New York City time, on the requested Purchase Date. Upon
confirming that the Request for Additional Transactions for Excess Margin
correctly reflects the information set forth in Section 3(o)(1) and that, after
giving effect to the requested Transaction, the amount of the Margin Base would
be equal to or greater than the aggregate outstanding Purchase Prices of all
Transactions, Buyer shall cause Disbursement Agent to remit the additional
Purchase Price in the amount set forth in such Request for Additional
Transactions for Excess Margin and send a revised Confirmation with respect to
such Purchased Assets. In the event that Buyer’s assessment of the Margin Base
would alter the information set forth in any Request for Additional Transactions
for Excess Margin, Buyer shall promptly notify Seller in writing of such
assessment.

 

  (3) Buyer shall not be obligated to cause Disbursement Agent to remit the
additional Purchase Price requested pursuant to a Request for Additional
Transactions for Excess Margin which (i) Buyer reasonably determines is based on
erroneous information or would result in a Transaction other than in accordance
with the terms of this Agreement, or (ii) does not reflect Buyer’s current
determination of Market Value as provided in the definition thereof.

 

  (p) Upon the execution of this Agreement, the Seller shall pay a facility fee
to the Buyer equal to the product of (x) $700,000,000, and (y) 15 basis points
(0.15%) less the remaining pro rata portion of the facility fee previously paid
by the Seller as described in Section 3(p) of the Second Amended and Restated
Master Repurchase Agreement, dated as of June 23, 2003.

 

4. MARGIN AMOUNT MAINTENANCE

 

  (a) If at any time the Margin Base is less than the aggregate Purchase Price
for all outstanding Transactions (a “Margin Deficit”), then Buyer may by notice
to Seller (as such notice is more particularly set forth below, a “Margin
Deficit Notice”) require Seller to transfer to Buyer or its designee (including
Custodian) cash to be applied to reduce the Purchase Price with respect to all
outstanding Transactions

 

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such that the aggregate Asset Value of the Purchased Assets will thereupon equal
or exceed the aggregate Purchase Price for all outstanding Transactions. If
Buyer delivers a Margin Deficit Notice to Seller on or prior to 6 p.m. (New York
time) on any Business Day, then Seller shall transfer such cash to Buyer no
later than 5 p.m. (New York time) the following Business Day. In the event Buyer
delivers a Margin Deficit Notice to Seller after 6 p.m. (New York time) on any
Business Day, then such Margin Deficit Notice shall be deemed to have been
delivered on the following Business Day and Seller shall be required to transfer
cash no later than 5 p.m. (New York time) on the subsequent Business Day. All
cash transferred to Buyer pursuant to this Section 4(a) shall be deposited in
the account set forth in Section 8(a) hereof.

 

  (b) Buyer’s election, in its sole discretion, not to deliver a Margin Deficit
Notice at any time there is a Margin Deficit shall not in any way limit or
impair its right to deliver a Margin Deficit Notice at any time a Margin Deficit
exists.

 

5. INCOME PAYMENTS

 

  (a) Where a particular Transaction’s term extends over an Income payment date
on the Purchased Assets subject to that Transaction such Income shall be the
property of Buyer. Buyer agrees that until a Default or an Event of Default has
occurred and Buyer otherwise directs as contemplated in each Servicer Notice,
each Servicer that is not Seller shall be permitted to continue to remit Income
in accordance with the respective Servicing Agreement. In the event that Seller
is the Servicer of any Mortgage Loans, Buyer agrees that until a Default or an
Event of Default has occurred, Seller shall be permitted to continue to remit or
retain Income with respect to such Mortgage Loans in accordance with its current
existing business practice. Upon notice of a Default or an Event of Default to
Seller hereunder or to Servicer pursuant to a Servicer Notice, Seller shall, and
pursuant to the Servicer Notice, Servicer shall be required to, deposit promptly
all Income in a deposit account (the title of which shall indicate that the
funds therein are being held in trust for Buyer) (the “Collection Account”) with
the Bank and which is subject to the Account Agreement. All funds in the
Collection Account may be withdrawn by Buyer and applied as determined by Buyer.
Seller may not give any instruction with respect to the Collection Account after
a Default or an Event of Default.

 

  (b) Notwithstanding that Buyer and Seller intend that the Transactions
hereunder be sales to Buyer of the Purchased Assets, Seller shall pay to Buyer
the accreted value of the Price Differential (less any amount of such Price
Differential previously paid by Seller to Buyer) of each Transaction through but
not including the Payment Calculation Date (each such payment, a “Periodic
Advance Repurchase Payment”) on each Payment Date. Buyer shall deliver to
Seller, via Electronic Transmission, notice of the required Periodic Advance
Repurchase Payment on or prior to the second Business Day preceding each Payment
Date. If Seller fails to make all or part of the Periodic Advance Repurchase
Payment by 5:00 p.m., New York City time, on the Payment Date, Seller shall be
obligated to

 

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pay to Buyer (in addition to, and together with, the Periodic Advance Repurchase
Payment) interest on the unpaid amount of the Periodic Advance Repurchase
Payment at a rate per annum equal to the Post-Default Rate (the “Late Payment
Fee”) until the overdue Periodic Advance Repurchase Payment is received in full
by Buyer.

 

  (c) Seller shall hold or cause to be held for the benefit of, and in trust
for, Buyer all income, including without limitation all Income received by or on
behalf of Seller with respect to such Purchased Assets. All such Income shall be
held in trust for Buyer, shall constitute the property of Buyer and shall not be
commingled with other property of Seller, any affiliate of Seller or the
applicable Servicer except as expressly permitted above in this Section 5. Funds
deposited in the Collection Account during any month shall be held therein, in
trust for Buyer.

 

  (d) Buyer shall offset against the Repurchase Price of each such Transaction
all Income and Periodic Advance Repurchase Payments actually received by Buyer
for such Transaction pursuant to Sections 5(a) and 5(b) as of the applicable
Repurchase Date, respectively, excluding any Late Payment Fees paid pursuant to
Section 5(b); it being understood that the Late Payment Fees are properties of
Buyer that are not subject to offset against the Repurchase Price.

 

6. REQUIREMENTS OF LAW

 

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

 

  (1) shall subject Buyer to any tax of any kind whatsoever with respect to this
Agreement or any Transaction (excluding net income taxes) or change the basis of
taxation of payments to Buyer in respect thereof;

 

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

 

  (3) shall impose on Buyer any other condition;

 

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

 

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

 

  (c) Any payments made by Seller to Buyer shall be free and clear of, and
without deduction or withholding for, any taxes; provided, however, that if
Seller shall be required by law to deduct or withhold any taxes from any sums
payable to Buyer, then Seller shall (A) make such deductions or withholdings and
pay such amounts to the relevant authority in accordance with applicable law,
(B) pay to Buyer the sum that would have been payable had such deduction or
withholding not been made, and (C) at the time the Price Differential is paid,
pay to Buyer all additional amounts as specified by Buyer in good faith to
preserve the after-tax yield Buyer would have been received had such tax not
been imposed.

 

  (d) If Buyer becomes entitled to claim any additional amounts pursuant to this
Section, (i) it shall promptly notify Seller of the event by reason of which it
has become so entitled and (ii) at the sole option of Buyer, (x) Buyer may
terminate this Agreement and Seller shall not be required to pay any Termination
Fee or (y) this Agreement shall continue in full force and effect, but, Seller
shall not be required to pay any Non-Use Fee with respect to each Test Period
during which Buyer is entitled to such additional amounts solely under this
Section. A certificate as to any additional amounts payable pursuant to this
Section 6(d) submitted by Buyer to Seller shall be conclusive in the absence of
manifest error.

 

7. SECURITY INTEREST

 

  (a) Each of the following items or types of property, whether now owned or
hereafter acquired, now existing or hereafter created and wherever located, is
hereinafter referred to as a “Purchased Item” and all of them are collectively,
the “Purchased Items”: all Mortgage Loans, all rights under each Purchase
Agreement (but not the obligations thereunder), all Interest Rate Protection
Agreements, all Mortgage Files, including without limitation all promissory
notes, all Servicing Records

 

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relating to the Mortgage Loans (as defined in Section 24(c)), all Servicing
Agreements relating to the Mortgage Loans and any other collateral pledged
hereunder or otherwise relating to such Mortgage Loans, together with all files,
documents, instruments, surveys, certificates, correspondence, appraisals,
computer programs, computer storage media, accounting records and other books
and records relating thereto, all mortgage guaranties and insurance (issued by
governmental agencies or otherwise) and any mortgage insurance certificate or
other document evidencing such mortgage guaranties or insurance relating to any
Mortgage Loan, all servicing fees to which such Seller is entitled and servicing
and other rights relating to the Mortgage Loans, all Servicer Accounts
established pursuant to any Servicing Agreement and all amounts on deposit
therein, from time to time, all Purchase Agreements or other agreements or
contracts relating to, constituting, or otherwise governing, any or all of the
foregoing to the extent they relate to the Purchased Assets including the right
to receive principal and interest payments with respect to the Purchased Assets
and the right to enforce such payments, the Collection Account and all monies
from time to time on deposit in the Collection Account, all “general
intangibles”, “accounts”, “chattel paper”, “deposit accounts” and “investment
property” as defined in the Uniform Commercial Code as in effect from time to
time relating to or constituting any and all of the foregoing, and any and all
replacements, substitutions, distributions on or proceeds of any and all of the
foregoing.

 

  (b) Buyer and Seller intend that the Transactions hereunder be sales to Buyer
of the Purchased Assets and not loans from Buyer to Seller secured by the
Purchased Assets. However, in order to preserve Buyer’s rights under this
Agreement in the event that a court or other forum recharacterizes the
Transactions hereunder as loans and as security for the performance by Seller of
all of Seller’s obligations to Buyer hereunder and the Transactions entered into
hereunder (“Repurchase Obligations”) and the Seller-Related Obligations, each of
NCCC, NCRC and NCMC hereby assigns, pledges and grants a security interest in
all of its right, title and interest in, to and under the Purchased Items and
Purchased Assets to Buyer to secure the Repurchase Obligations and
Seller-Related Obligations, including without limitation the repayment of all
amounts owing to Buyer hereunder. The assignment, pledge and grant of security
interest contained herein shall be, and each of NCCC, NCRC and NCMC hereby
represents and warrants to Buyer that it is, a first priority perfected security
interest to the extent such security interest relates to the Mortgage Loans.
Each of NCCC, NCRC and NCMC agrees to mark its computer records and tapes to
evidence the interests granted to Buyer hereunder. All Purchased Items shall
secure the payment of all obligations of Seller now or hereafter existing under
this Agreement, including, without limitation, Seller’s obligation to repurchase
Purchased Assets, or if such obligation is so recharacterized as a loan, to
repay such loan, for the Repurchase Price and to pay any and all other amounts
owing to Buyer hereunder.

 

  (c) Pursuant to the Custodial and Disbursement Agreement, Custodian shall hold
the Mortgage Files as exclusive bailee and agent for Buyer pursuant to the terms
of the Custodial and Disbursement Agreement and shall deliver to Buyer Trust

 

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Receipts each to the effect that Custodian has reviewed such Mortgage Files in
the manner and to the extent required by the Custodial and Disbursement
Agreement and identifying any deficiencies in such Mortgage Files as so
reviewed.

 

8. PAYMENT, TRANSFER AND CUSTODY

 

  (a) Unless otherwise mutually agreed in writing, all transfers of funds to be
made by Seller hereunder shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to Buyer at the following
account maintained by Buyer; Account No. GLA 111569, account name SER, Bank of
New York, ABA No. 021000018, Attn: Eric Seyffer, not later than 3 p.m., New York
City time, on the date on which such payment shall become due (and each such
payment made after such time shall be deemed to have been made on the next
succeeding Business Day). Seller acknowledges that it has no rights of
withdrawal from the foregoing account.

 

  (b) On the Purchase Date for each Transaction, ownership of the Purchased
Assets shall be transferred to Buyer or its designee (including Custodian)
against the simultaneous transfer of the Purchase Price to or on behalf of
Seller not later than 6 p.m., New York City time, simultaneously with the
delivery to Custodian of the Purchased Assets relating to each Transaction in
accordance with the terms hereof and of the Custodial and Disbursement
Agreement. Each of NCCC, NCRC and NCMC hereby sells, transfers, conveys and
assigns to Buyer or its designee (including Custodian) without recourse, but
subject to the terms of this Agreement, all the right, title and interest of
NCCC, NCRC and NCMC, as applicable, in and to the Purchased Assets together with
all right, title and interest in and to the proceeds of any related Purchased
Items.

 

  (c) In connection with such sale, transfer, conveyance and assignment, on or
prior to each Purchase Date, Seller shall deliver or cause to be delivered and
released to Buyer or its designee (including Custodian) (i) the Custodial
Identification Certificate and (ii) the documents identified in the Custodial
and Disbursement Agreement.

 

  (d) Any Mortgage Files not delivered to Buyer or its designee (including
Custodian) are and shall be held in trust by Seller or its designee for the
benefit of Buyer as the owner thereof. Seller or its designee shall maintain a
copy of the Mortgage File and the originals of the Mortgage File not delivered
to Buyer or its designee (including Custodian). The possession of the Mortgage
File by Seller or its designee is at the will of Buyer for the sole purpose of
servicing the related Purchased Asset, and such retention and possession by
Seller or its designee is in a custodial capacity only. Each Mortgage File
retained or held by Seller or its designee shall be segregated on Seller’s books
and records from the other assets of Seller or its designee and the books and
records of Seller or its designee shall be marked appropriately to reflect
clearly the sale of the related Purchased Asset to Buyer. Seller or its designee
shall release its custody of the Mortgage File only

 

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in accordance with written instructions from Buyer, unless such release is
required as incidental to the servicing of the Purchased Assets or is in
connection with a repurchase of any Purchased Asset by Seller.

 

9. HYPOTHECATION OR PLEDGE OF PURCHASED ASSETS

 

Title to all Purchased Assets and Purchased Items shall pass to Buyer and Buyer
shall have free and unrestricted use of all Purchased Assets and Purchased
Items. Nothing in this Agreement shall preclude Buyer from engaging in
repurchase transactions with the Purchased Assets and Purchased Items or
otherwise pledging, repledging, transferring, hypothecating, or rehypothecating
the Purchased Assets and Purchased Items, all on terms that Buyer may determine
in its sole discretion. Nothing contained in this Agreement shall obligate Buyer
to segregate any Purchased Assets and Purchased Items delivered to Buyer by
Seller.

 

10. SELLER’S REPRESENTATIONS

 

Each of NCCC, NCRC and NCMC represents and warrants to Buyer that as of the
Purchase Date for the purchase of any Purchased Assets by Buyer from Seller and
as of the date of this Agreement and any Transaction hereunder and at all times
while the Repurchase Documents and any Transaction hereunder is in full force
and effect:

 

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

 

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

 

  (c) No Broker. Seller has not dealt with any broker, investment banker, agent,
or other person, except for Buyer, who may be entitled to any commission or
compensation in connection with the sale of Purchased Assets pursuant to this
Agreement.

 

  (d) Ability to Perform. Seller does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant contained in
the Repurchase Documents applicable to it to which it is a party.

 

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  (e) No Defaults. No Default or Event of Default has occurred and is continuing
hereunder.

 

  (f) Legal Name; Existence. NCMC’s exact legal name is, and for the immediately
preceding four months has been, New Century Mortgage Corporation. NCRC’s exact
legal name is, and for the immediately preceding four months has been, NC
Residual II Corporation. NCCC’s exact legal name is, and for the immediately
preceding four months has been, NC Capital Corporation. Each of NCCC and NCMC
(a) is a corporation duly and exclusively organized, validly existing and in
good standing under the laws of California, (b) has all requisite corporate or
other power, and has all governmental licenses, authorizations, consents and
approvals necessary to own its assets and carry on its business as now being or
as proposed to be conducted, except where the lack of such licenses,
authorizations, consents and approvals would not be reasonably likely to have a
Material Adverse Effect; and (c) is qualified to do business and is in good
standing in all other jurisdictions in which the nature of the business
conducted by it makes such qualification necessary, except where failure so to
qualify could not be reasonably likely (either individually or in the aggregate)
to have a Material Adverse Effect. NCRC (a) is a corporation duly and
exclusively organized, validly existing and in good standing under the laws of
Delaware, (b) has all requisite corporate or other power, and has all
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted, except where the lack of such licenses, authorizations, consents and
approvals would not be reasonably likely to have a Material Adverse Effect; and
(c) is qualified to do business and is in good standing in all other
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary, except where failure so to qualify could not be
reasonably likely (either individually or in the aggregate) to have a Material
Adverse Effect.

 

  (g) Financial Condition. (a) Seller has heretofore furnished to Buyer a copy
of (a) its consolidated balance sheet for the fiscal year ended December 31,
2003, and the related consolidated statements of income and retained earnings
and of cash flows for Seller and its consolidated Subsidiaries for such fiscal
year, each audited by and accompanied by an opinion thereon of KPMG LLP, which
opinion shall not be qualified as to scope of audit or going concern and shall
state that said consolidated financial statements fairly present the
consolidated financial condition and results of operations of Seller and its
consolidated Subsidiaries as at the end of, and for, such fiscal year in
accordance with GAAP and (b) its consolidated balance sheet and the consolidated
balance sheets of its consolidated Subsidiaries for the quarterly fiscal period
of Seller ended June 30, 2004 and the related consolidated statements of income
and retained earnings and of cash flows for Seller and its consolidated
Subsidiaries for such quarterly fiscal period, setting forth in each case in
comparative form the figures for the previous year. All such financial
statements are complete and correct and fairly present, in all material
respects, the consolidated financial position of Seller and its Subsidiaries and
the consolidated results of their operations as at such dates and for such
fiscal periods, all in accordance with GAAP applied on a consistent basis. Since
June 30, 2004,

 

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there has been no material adverse change in the consolidated business,
operations or financial condition of Seller and its consolidated Subsidiaries
taken as a whole from that set forth in said financial statements.

 

  (h) Litigation. Except as set forth on the compliance report required under
Section 11(y), there are no actions, suits, arbitrations, investigations
(including, without limitation, any of the foregoing which are pending or
threatened) or other legal or arbitrable proceedings affecting Seller or any of
its Subsidiaries or affecting any of the Property of any of them before any
Governmental Authority which (i) questions or challenges the validity or
enforceability of the Repurchase Documents or any action to be taken in
connection with the transactions contemplated hereby, (ii) makes a claim or
claims in an aggregate amount greater than $5,000,000 (provided such claims or
claims shall be required to be set forth on the compliance report referenced
above only upon Buyer’s request), or (iii) individually or in the aggregate, if
adversely determined, could reasonably be likely to have a Material Adverse
Effect.

 

  (i) No Breach. Neither (a) the execution and delivery of the Repurchase
Documents nor (b) the consummation of the transactions therein contemplated to
be entered into by Seller in compliance with the terms and provisions thereof
will conflict with or result in a breach of the organizational documents of
NCCC, NCRC, NCMC or Guarantor, or any applicable law, rule or regulation, or any
order, writ, injunction or decree of any Governmental Authority, or any
Servicing Agreement or other material agreement or instrument to which NCCC,
NCRC, NCMC, Guarantor or any of their respective Subsidiaries is a party or by
which any of them or any of their Property is bound or to which any of them is
subject, or constitute a default under any such material agreement or instrument
or result in the creation or imposition of any Lien (except for the Liens
created pursuant to the Repurchase Documents) upon any Property of NCCC, NCRC,
NCMC or Guarantor, or any of their respective Subsidiaries pursuant to the terms
of any such agreement or instrument, other than a breach or default for which a
consent or waiver has been obtained pursuant to Section 3(a)(6).

 

  (j) Action. Each of NCCC, NCRC, NCMC and Guarantor has all necessary corporate
or other power, authority and legal right to execute, deliver and perform its
obligations under each of the Repurchase Documents to which it is a party, as
applicable; the execution, delivery and performance by NCCC, NCRC, NCMC or
Guarantor of each of the Repurchase Documents to which it is a party have been
duly authorized by all necessary corporate or other action on its part; and each
Repurchase Document to which it is a party has been duly and validly executed
and delivered by NCCC, NCRC, NCMC or Guarantor, as applicable, and constitutes a
legal, valid and binding obligation of NCCC, NCRC, NCMC or Guarantor, as
applicable, enforceable against NCCC, NCRC, NCMC or Guarantor, as applicable, in
accordance with its terms.

 

  (k) Approvals. No authorizations, approvals or consents of, and no filings or
registrations with, any Governmental Authority or any securities exchange are

 

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necessary for the execution, delivery or performance by NCCC, NCRC, NCMC or
Guarantor, as applicable, of the Repurchase Documents to which it is a party or
for the legality, validity or enforceability thereof, except for filings and
recordings in respect of the Liens created pursuant to the Repurchase Documents.

 

  (l) Margin Regulations. Neither any Transaction hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation T, U or X.

 

  (m) Taxes. Each of NCCC, NCRC, NCMC, Guarantor and their respective
Subsidiaries have filed all Federal income tax returns and all other material
tax returns that are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by it or any of
its Subsidiaries, except for any such taxes as are being appropriately contested
in good faith by appropriate proceedings diligently conducted and with respect
to which adequate reserves have been provided. The charges, accruals and
reserves on the books of NCCC, NCRC, NCMC, Guarantor and their respective
Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of NCCC, NCRC, NCMC or Guarantor, as applicable, adequate.

 

  (n) Investment Company Act. None of NCCC, NCRC, NCMC, Guarantor nor any of
their respective Subsidiaries is an “investment company”, or a company
“controlled” by an “investment company,” within the meaning of the Investment
Company Act of 1940, as amended.

 

  (o) Purchased Assets.

 

  (1) None of NCCC, NCRC nor NCMC has assigned, pledged, or otherwise conveyed
or encumbered any Mortgage Loan to any other Person (except as between NCCC,
NCRC and NCMC), and immediately prior to the sale of such Mortgage Loan to
Buyer, NCCC, NCRC and/or NCMC was the sole legal and beneficial owner of such
Mortgage Loan and had good and marketable title thereto, free and clear of all
Liens, in each case except for Liens to be released simultaneously with the sale
to Buyer hereunder. No Mortgage Loan sold to Buyer hereunder was acquired (by
purchase or otherwise) by NCCC, NCRC or NCMC from an Affiliate of NCCC, NCRC or
NCMC (except as between NCCC, NCRC and NCMC), as applicable.

 

  (2) The provisions of this Agreement are effective to either constitute a sale
of Purchased Items to Buyer or to create in favor of Buyer a valid and fully
perfected first priority security interest in all right, title and interest of
NCCC, NCRC and NCMC in, to and under the Purchased Items.

 

  (3) Upon receipt by Custodian of each Mortgage Note, endorsed in blank by a
duly authorized officer of NCCC, NCRC or NCMC, as applicable, either a purchase
shall have been completed by Buyer of each Mortgage Note or

 

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Buyer shall have a valid and fully perfected first priority security interest in
the applicable Mortgage Note and in such Seller’s interest in the related
Mortgaged Property.

 

  (4) Upon the filing of financing statements on Form UCC-1 naming Buyer as
“Secured Party”, and NCCC, NCRC and NCMC as “Debtor” and describing the
Purchased Items, in the jurisdictions and recording offices listed on Exhibit IV
attached hereto, the security interests granted hereunder in the Purchased Items
will constitute valid and fully perfected first priority security interests
under the Uniform Commercial Code in all right, title and interest of NCCC, NCRC
and NCMC in, to and under such Purchased Items, which can be perfected by filing
under the Uniform Commercial Code.

 

  (5) Upon execution and delivery of the Account Agreement, Buyer shall either
be the owner of, or have a valid and fully perfected first priority security
interest in, all deposit accounts comprising Purchased Items.

 

  (6) With respect to each Purchased Asset, each of the representations and
warranties on Schedule 1 is true and correct.

 

  (p) Chief Executive Office/Jurisdiction of Organization. On the Effective
Date, and during the four months immediately preceding the Effective Date, each
of NCCC, NCRC and NCMC’s chief executive office, is, and has been located at
18400 Von Karman, Suite 1000, Irvine, California 92612. On the Effective Date,
each of NCCC and NCMC’s jurisdiction of organization is California and NCRC’s
jurisdiction of organization is Delaware.

 

  (q) Location of Books and Records. The location where each of NCCC, NCRC and
NCMC keeps its books and records, including all computer tapes and records
related to the Purchased Items is its chief executive office.

 

  (r) Reserved.

 

  (s) Servicing Agreements. Seller has delivered to Buyer all Servicing
Agreements with respect to the Purchased Assets and no default or event of
default exists thereunder.

 

  (t) Existing Financing Facilities. All credit facilities, repurchase
facilities or substantially similar facilities of Seller which are presently in
effect on the date hereof are set forth on Schedule 2 hereto (the “Existing
Financing Facilities”). Seller has delivered to Buyer copies of all
non-confidential portions of Existing Financing Facilities and no defaults or
events of default exist thereunder. Seller shall file with the SEC copies of all
non-confidential portions of each new Existing Financing Facility to be entered
into. The financial covenants set forth in Section 11(m), (n) and (o) are at
least equal to those Seller makes under each of the Existing Financing
Facilities. Seller shall give Buyer prior notification if any amendment to any
similar financial covenant in any Existing Financing Facility

 

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increases the obligations or requirements of Seller thereunder, and such changed
financial covenant shall, with no further action of Seller or Buyer,
automatically become a part hereof and be incorporated herein upon the
effectiveness of such amendment in the other Existing Financing Facility

 

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

 

  (v) ERISA. NCCC, NCRC, NCMC, Guarantor and any of their respective ERISA
Affiliates are not and will not be in the future, required to contribute to any
Plan (including Multiemployer Plans) subject to the applicable provisions of
ERISA.

 

  (w) REIT. NCRC has not engaged in any material “prohibited transactions” as
defined in Section 857(b)(6)(B)(iii) and (C) of the Code. NCRC for its current
“tax year” (as defined in the Code) is and for all prior tax years subsequent to
its election to be a real estate investment trust has been entitled to a
dividends paid deduction under the requirements of Section 857 of the Code with
respect to any dividends paid by it with respect to each such year for which it
claims a deduction in its Form 1120-REIT filed with the United States Internal
Revenue Service for such year.

 

  (x) No Reliance. Each of NCMC, NCRC, NCCC and Guarantor has made its own
independent decisions to enter into the Repurchase Documents and each
Transaction and as to whether such Transaction is appropriate and proper for it
based upon its own judgment and upon advice from such advisors (including
without limitation, legal counsel and accountants) as it has deemed necessary.
None of NCMC, NCRC, NCCC or Guarantor is relying upon any advice from Buyer as
to any aspect of the Transactions, including without limitation, the legal,
accounting or tax treatment of such Transactions.

 

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

 

  (z) Other Security Agreements. Seller has not become bound under Section
9-203(d) of the UCC by a Security Agreement previously entered into by another
Person.

 

11. COVENANTS OF SELLER

 

On and as of the date of this Agreement and each Purchase Date and until this
Agreement is no longer in force with respect to any Transaction, each of NCCC,
NCRC and NCMC covenants that it will:

 

  (a) Financial Statements. Seller shall deliver to Buyer:

 

  (1) as soon as available and in any event within forty-five (45) calendar days
after the end of each calendar month, the unaudited consolidated balance sheets
of Guarantor, Seller and their consolidated Subsidiaries as at the end of such
period and the related unaudited consolidated statements of income and retained
earnings and of cash flows for Guarantor, Seller and their consolidated
Subsidiaries for such period and the portion of the fiscal year through the end
of such period, accompanied by a certificate of a Responsible Officer of
Guarantor and Seller, as applicable, which certificate shall state that said
consolidated financial statements fairly present in all material respects the
consolidated financial condition and results of operations of Guarantor or
Seller and its consolidated Subsidiaries, as applicable, in accordance with
GAAP, consistently applied, as at the end of, and for, such period (subject to
normal year-end adjustments);

 

  (2) as soon as available and in any event within ninety (90) days after the
end of each fiscal year of Guarantor or Seller, the consolidated balance sheets
of Guarantor and Seller and their respective consolidated Subsidiaries as at the
end of such fiscal year and the related consolidated statements of income and
retained earnings and of cash flows for Guarantor and Seller and their
respective consolidated Subsidiaries for such year, setting forth in each case
in comparative form the figures for the previous year, accompanied by an opinion
thereon of independent certified public accountants of recognized national
standing, which opinion shall not be

 

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qualified as to scope of audit or going concern and shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of Guarantor and Seller and their respective
consolidated Subsidiaries as at the end of, and for, such fiscal year in
accordance with GAAP, and a certificate of such accountants stating that, in
making the examination necessary for their opinion, they obtained no knowledge,
except as specifically stated, of any Default or Event of Default; and

 

  (3) from time to time such other information regarding the financial
condition, operations, or business of Seller as Buyer may reasonably request.

 

Seller shall furnish to Buyer, at the time Seller furnishes each set of
financial statements pursuant to paragraphs (a) and (b) above, a certificate of
a Responsible Officer of Seller to the effect that, to the best of such
Responsible Officer’s knowledge, Seller during such fiscal period or year has
observed or performed in all material respects all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and the
other Repurchase Documents to be observed, performed or satisfied by it, and
that such Responsible Officer has obtained no knowledge of any Default or Event
of Default except as specified in such certificate (and, if any Default or Event
of Default has occurred and is continuing, describing the same in reasonable
detail and describing the action Seller has taken or proposes to take with
respect thereto).

 

  (b) Litigation. Seller will promptly, and in any event within ten (10) days
after service of process on any of the following, give to Buyer notice of all
litigation, actions, suits, arbitrations, investigations (including, without
limitation, any of the foregoing which are threatened or pending) or other legal
or arbitrable proceedings affecting Seller or any of its Subsidiaries or
affecting any of the Property of any of them before any Governmental Authority
that (i) questions or challenges the validity or enforceability of any of the
Repurchase Documents or any action to be taken in connection with the
transactions contemplated hereby, (ii) makes a claim or claims in an aggregate
amount greater than $5,000,000 (provided notice with respect to such claim or
claims shall be required only upon Buyer’s request), or (iii) which,
individually or in the aggregate, if adversely determined, could be reasonably
likely to have a Material Adverse Effect.

 

  (c) Existence, etc. Each of NCCC, NCRC and NCMC shall:

 

  (1) preserve and maintain its legal existence and all of its material rights,
privileges, licenses and franchises necessary for the operation of its business
(provided that nothing in this Section 11(c)(1) shall prohibit any transaction
expressly permitted under Section 11(d));

 

  (2) comply with the requirements of all applicable laws, rules, regulations
and orders of Governmental Authorities (including, without limitation, all
environmental laws) if failure to comply with such requirements could be
reasonably likely (either individually or in the aggregate) to have a Material
Adverse Effect;

 

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

 

  (4) not (i) cause or permit any change to be made in its name, organizational
identification number, identity or corporate structure, each as described in
Section 10(f) or (ii) change its jurisdiction of organization, unless it shall
have provided Buyer thirty (30) days’ prior written notice of such change and
shall have first taken all action required by Buyer for the purpose of
perfecting or protecting the lien and security interest of Buyer established
hereunder;

 

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

 

  (6) permit representatives of Buyer, upon reasonable notice (unless a Default
shall have occurred and is continuing, in which case, no prior notice shall be
required), during normal business hours, to examine, copy and make extracts from
its books and records, to inspect any of its Properties, and to discuss its
business and affairs with its officers, all to the extent reasonably requested
by Buyer.

 

  (d) Restriction on Fundamental Changes. None of Guarantor, NCCC, NCRC nor NCMC
will enter into any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution) or sell all or substantially all of its assets; provided, that
Guarantor, NCCC, NCRC or NCMC may merge or consolidate with (i) any wholly owned
subsidiary of Guarantor, NCCC, NCRC or NCMC, as applicable, or (ii) any other
Person if Guarantor, NCCC, NCRC or NCMC is the surviving corporation; and
provided, further, that if after giving effect thereto, no Default would exist
hereunder,

 

  (e) Margin Deficit. If at any time there exists a Margin Deficit, Seller shall
cure same in accordance with Section 4.

 

  (f) Notices. Seller shall give notice to Buyer:

 

  (1) promptly upon receipt of notice or knowledge of the occurrence of any
Default or Event of Default;

 

  (2) with respect to any Purchased Asset, promptly upon receipt of any
principal prepayment (in full or partial) of such Purchased Asset;

 

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  (3) with respect to any Purchased Asset hereunder, promptly upon receipt of
notice or knowledge that the underlying Mortgaged Property has been damaged by
waste, fire, earthquake or earth movement, flood, tornado or other casualty, or
otherwise damaged so as to affect adversely the Asset Value of such Purchased
Asset (provided that Seller may satisfy its obligations under this clause (3) by
causing Servicer to notify Buyer of any such damage);

 

  (4) promptly upon receipt of notice or knowledge of (i) any material default
related to any Purchased Item, (ii) any Lien or security interest on, or claim
asserted against, any Purchased Item (other than the Lien created hereby) or
(iii) any event or change in circumstances which could reasonably be expected to
have a Material Adverse Effect;

 

  (5) promptly upon any material change in the market value of any or all of
Seller’s assets which could reasonably be expected to have a Material Adverse
Effect;

 

  (6) no later than five Business Days after the end of each such month, of all
amounts borrowed under the Existing Financing Facilities during such month;

 

  (7) upon the termination of any Existing Financing Facility, if such
termination would require Seller to have to file a Form 8-K with the SEC
pursuant to the rules governing such filings; provided, however, this notice
requirement shall be deemed satisfied once Seller files the related Form 8-K
with the SEC; and

 

  (8) promptly upon the occurrence of any default or event of default under the
Existing Financing Facilities.

 

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

 

  (g) Reports. Within 45 calendar days following the end of each calendar
quarter, Seller shall provide Buyer with a quarterly report, which report shall
include, among other items, a summary of such Seller’s delinquency and loss
experience with respect to Mortgage Loans serviced by Seller, any Servicer or
any designee of either, operating statements and the occupancy status of such
Mortgaged Property and other property level information, including internal
quality control reports, plus any such additional reports as Buyer may
reasonably request with respect to Seller or any Servicer’s servicing portfolio
or pending originations of Mortgage Loans.

 

  (h) Underwriting Guidelines. All Eligible Assets will conform with the
Underwriting Guidelines. Seller shall not make any material change in the
Underwriting Guidelines without the prior written consent of Buyer and shall
review the

 

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Underwriting Guidelines periodically to confirm that they are being complied
with in all material respects and are adequate to meet Seller’s business
objectives (and to the extent Buyer’s consent has not yet been obtained, no
Mortgage Loan underwritten in accordance with such changed Underwriting
Guidelines shall be considered an Eligible Asset). In the event Seller makes any
amendment or modification to the Underwriting Guidelines, Seller shall promptly
deliver to Buyer a complete copy of the amended or modified Underwriting
Guidelines.

 

  (i) Transactions with Affiliates. Guarantor, NCCC, NCRC and NCMC will not, and
will not permit any of their Subsidiaries to, enter into any transaction with an
Affiliate of Guarantor, NCCC, NCRC or NCMC (other than another Seller) except
transactions in the ordinary course of business on terms no less favorable to
Guarantor, NCCC, NCRC or NCMC than those that would be obtained in an
arm’s-length transaction. In no event shall Seller transfer to Buyer hereunder
any Mortgage Loan acquired by Seller from an Affiliate of Seller (other than
each other Seller).

 

  (j) Limitation on Liens. Immediately upon notice of a Lien or any circumstance
which could give rise to a Lien on the Purchased Items to the extent related to
the Mortgage Loans, Seller will defend such Purchased Items against, and will
take such other action as is necessary to remove, any Lien, security interest or
claim on or to the related Purchased Items (other than any security interest
created under this Agreement), and Seller will defend the right, title and
interest of Buyer in and to any of such Purchased Items against the claims and
demands of all persons whomsoever.

 

  (k) Guarantees. Guarantor, NCCC, NCRC and NCMC will not create, incur, assume
or suffer to exist any Guarantees of any Person other than an Affiliate without
ten (10) days prior written notice to Buyer of such Guarantee.

 

  (l) Limitation on Distributions. After the occurrence and during the
continuation of any Default, none of NCCC, NCRC nor NCMC shall make any payment
on account of, or set apart assets for, a sinking or other analogous fund for
the purchase, redemption, defeasance, retirement or other acquisition of any
equity or partnership interest of NCCC, NCRC or NCMC, as applicable, whether now
or hereafter outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of
NCCC, NCRC or NCMC, as applicable.

 

  (m) Maintenance of Tangible Net Worth. Guarantor will at all times during each
fiscal year maintain Tangible Net Worth of not less than (a) the greater of (i)
$400,000,000 or (ii) eighty-five percent (85%) of the Tangible Net Worth at the
end of its most recently completed fiscal year (or, in the case of the Tangible
Net Worth at the end of any fiscal year, its prior fiscal year) plus (b) ninety
percent (90%) of capital contributions made during such fiscal year plus (c)
fifty percent (50%) of positive year-to-date net income.

 

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  (n) Minimum Liquidity. Seller shall have at all times, on a consolidated
basis, Cash, Cash Equivalents and unused borrowing capacity on unencumbered
assets that could be drawn against (taking into account the economic terms of
committed Existing Financing Facilities, including, without limitation, any
margin or overcollateralization requirements) under committed Existing Financing
Facilities in an amount equal to not less than $125,000,000. Seller shall have
on the last day of each fiscal quarter, on a consolidated basis, Cash and Cash
Equivalents in an amount equal to not less than $75,000,000.

 

  (o) Leverage Ratio. Guarantor shall not permit the Leverage Ratio of Guarantor
and its consolidated Subsidiaries at any time to be greater than 12:1.

 

  (p) Servicer; Servicing Tape. Seller shall provide to Buyer and to
Disbursement Agent via Electronic Transmission, a remittance report on a monthly
basis by no later than the 12th day of each month (the “Reporting Date”)
containing servicing information, including without limitation those fields
reasonably requested by Buyer from time to time, on a loan-by-loan basis and in
the aggregate, with respect to the Purchased Assets serviced hereunder by Seller
or any Servicer for the month (or any portion thereof) prior to the Reporting
Date (such remittance report, an “Asset Tape”). Seller shall not cause the
Mortgage Loans to be serviced by any servicer other than a servicer expressly
approved in writing by Buyer, which approval shall be deemed granted by Buyer
with respect to Seller with the execution of this Agreement.

 

  (q) Required Filings. Seller shall promptly provide Buyer with copies of all
documents which NCCC, NCRC, NCMC or any Subsidiary of NCCC, NCRC or NCMC is
required to file with any regulatory body in accordance with its regulations
other than routine filings in the ordinary course of business with regulatory
bodies (other than the Securities and Exchange Commission) which related to
obtaining or maintaining licenses to do business or corporate qualifications.

 

  (r) Remittance of Prepayments. Seller shall remit or cause to be remitted to
Buyer, with sufficient detail via Electronic Transmission to enable Buyer to
appropriately identify the Mortgage Loan to which any amount remitted applies,
all full or partial principal prepayments on any Purchased Asset that Seller or
Servicer has received on a weekly basis, to be paid on Thursday of the next
succeeding week (or the next Business Day).

 

  (s) Maintenance of Profitability. Seller shall not permit, for any two
consecutive calendar quarters (each such period, a “Test Period”), Net Income
for such Test Period before income taxes for such Test Period and distributions
made during such Test Period, to be less than $1.00.

 

  (t) Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of an Event of Default or Default if such action is taken or
condition exists.

 

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  (u) Escrow Imbalances. Seller will, no later than five (5) Business Days after
learning (from any source) of any material imbalance in any escrow account,
fully and completely correct and eliminate such imbalance including, without
limitation, depositing its own funds into such account to eliminate any
overdrawal or deficit.

 

  (v) Reserved.

 

  (w) Custodial and Disbursement Agreement and Account Agreement. Seller shall
maintain each of the Custodial and Disbursement Agreement and Account Agreement
in full force and effect and shall not amend or modify either of the Custodial
and Disbursement Agreement or the Account Agreement or waive compliance with any
provisions thereunder without the prior written consent of Buyer.

 

  (x) Inconsistent Agreements. Guarantor, NCMC, NCRC and NCCC will not, and will
not permit any of their Subsidiaries to, directly or indirectly, enter into any
agreement containing any provision which would be violated or breached by any
Transaction hereunder or by the performance by either of Guarantor, NCCC, NCRC
or NCMC of their respective obligations under any Repurchase Document to which
it is a party.

 

  (y) Compliance Report. Seller shall provide Buyer no later than the thirtieth
(30th) calendar day of each month a compliance report, in the form of Exhibit X
attached hereto, demonstrating therein the calculations Seller utilized to
determine its compliance with the financial covenants set forth in clauses (m),
(n), (o) and (s) of this Section 11 as of the end of the immediately preceding
month. Such compliance report shall be delivered by seller to Buyer in
accordance with Section 17 and shall also be delivered by Seller to Buyer at 9
West 57th Street, New York, NY 10019, Attn: Michael Friedman, Telecopier No.:
(212) 891-6143, Telephone No.: (212) 891-6261.

 

12. EVENTS OF DEFAULT

 

If any of the following events (each, an “Event of Default”) occur, Seller and
Buyer shall have the rights set forth in Section 13, as applicable:

 

  (a) Seller shall default in the payment of any Repurchase Price due or any
amount under Section 5 when due (whether at stated maturity, upon acceleration
or at mandatory or optional prepayment); or

 

  (b) Seller shall default in the payment of any other amount payable by it
hereunder or under any other Repurchase Document after notification by Buyer of
such default, and such default shall have continued unremedied for one (1)
Business Day; or

 

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  (c) any representation, warranty or certification made or deemed made herein
or in any other Repurchase Document by Seller or any certificate furnished to
Buyer pursuant to the provisions hereof or thereof or any information with
respect to the Mortgage Loans furnished in writing by or on behalf of Seller
shall prove to have been false or misleading in any material respect as of the
time made or furnished (other than the representations and warranties set forth
in Schedule 1, which shall be considered solely for the purpose of determining
the Asset Value of the Purchased Assets, unless (i) Seller shall have made any
such representations and warranties with actual knowledge that they were
materially false or misleading at the time made; or (ii) any such
representations and warranties have been determined in good faith by Buyer in
its sole discretion to be materially false or misleading on a regular basis); or

 

  (d) Seller shall fail to comply with the requirements of 11(c), Section 11(d),
Section 11(e), Section 11(f), Section 11(h) (with respect to the Eligible Assets
as a whole and not with respect to any single Eligible Asset) or Sections 11(i)
through 11(w); and such default shall continue unremedied for a period of 5
Business Days from the earlier of (i) a responsible officer of Seller having
knowledge of such default and (ii) Buyer giving notice to Seller of such
default; or except as otherwise set forth in Sections 12(a), 12(b), 12(c) and
12(d), Seller shall fail to observe or perform any other covenant or agreement
contained in this Agreement or any other Repurchase Document and such failure to
observe or perform shall continue unremedied for a period of 10 Business Days
from the earlier of (i) a responsible officer of Seller having knowledge of such
default and (ii) Buyer giving notice to Seller of such default; or

 

  (e) a final judgment or judgments for the payment of money in excess of
$1,000,000 in the aggregate shall be rendered against NCCC, NCRC, NCMC or any of
their Affiliates by one or more courts, administrative tribunals or other bodies
having jurisdiction and the same shall not be satisfied, discharged (or
provision shall not be made for such discharge) or bonded, or a stay of
execution thereof shall not be procured, within 30 days from the date of entry
thereof; or

 

  (f) an Act of Insolvency shall have occurred with respect to Guarantor, NCCC,
NCRC, NCMC or any of their Subsidiaries; or

 

  (g) the Custodial and Disbursement Agreement, the Account Agreement or any
Repurchase Document shall for whatever reason be terminated or cease to be in
full force and effect, or the enforceability thereof shall be contested by NCCC,
NCRC or NCMC; or

 

  (h) NCCC, NCRC or NCMC shall grant, or suffer to exist, any Lien on any
Purchased Item (except any Lien in favor of Buyer); or either the Purchased
Items shall not have been sold to Buyer free and clear of any Liens in favor of
any Person other than Buyer, or the Liens contemplated hereby shall cease or
fail to be first priority perfected Liens on any Purchased Items (but not the
related Mortgaged Properties) in favor of Buyer or shall be Liens in favor of
any Person other than Buyer; or

 

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  (i) NCCC, NCRC, NCMC or any of their Affiliates shall be in default under (i)
any Indebtedness in an amount equal to $10,000,000 or more of NCCC, NCRC or NCMC
or of such Affiliate which default (1) involves the failure to pay a matured
obligation, or (2) permits the acceleration of the maturity of obligations by
any other party to or beneficiary with respect to such Indebtedness, (ii) any
other contract to which NCCC, NCRC or NCMC or such Affiliate is a party which
default (1) involves the failure to pay a matured obligation in excess of
$10,000,000, or (2) permits the acceleration of the maturity of obligations in
excess of $10,000,000 by any other party to or beneficiary of such contract, or
(iii) any Seller-Related Obligation; or

 

  (j) any material adverse change in the Property, business or financial
condition of NCCC, NCRC or NCMC or any of their Affiliates shall occur, in each
case as determined by Buyer in its sole good faith discretion, or any other
condition shall exist which, in Buyer’s sole good faith discretion, constitutes
a material impairment of Seller’s ability to perform its obligations under this
Agreement or any other Repurchase Document; or

 

  (k) Reserved;

 

  (l) upon any event of default or event which, with the passage of time or
expiration of any grace periods, would constitute an event of default under any
of the Existing Financing Facilities; or

 

  (m) a Change of Control shall have occurred; or

 

  (n) upon the failure of NCRC to at any time to continue to be (i) qualified as
a real estate investment trust as defined in Section 856 of the Code and (ii)
entitled to a dividend paid deduction under Section 857 of the Code with respect
to dividends paid by it with respect to each taxable year for which it claims a
deduction on its Form 1120 – REIT filed with the United States Internal Revenue
Service for such year, or the entering into by NCRC of any material “prohibited
transactions” as defined in Sections 857(b) and 856(c) of the Code; or

 

  (o) upon the failure by NCRC to satisfy any of the following asset or income
tests:

 

  (1) At the close of each taxable year, at least 75 percent of NCRC’s gross
income consists of (i) “rents from real property” within the meaning of Section
856(c)(3)(A) of the Code, (ii) interest on obligations secured by mortgages on
real property or on interests in real property, within the meaning of Section
856(c)(3)(B) of the Code, (iii) gain from the sale or other disposition of real
property (including interests in real property and interests in mortgages on
real property) which is not property described in Section 1221(a)(1) of the
Code, within the meaning of Section 856(c)(3)(C) of the Code, (iv) dividends or
other distributions on, and gain

 

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(other than gain from “prohibited transactions” within the meaning of Section
857(b)(6)(B)(iii) of the Code) from the sale or other disposition of,
transferable shares (or transferable certificates of beneficial interest) in
other qualifying REITs within the meaning of Section 856(d)(3)(D) of the Code,
and (v) amounts described in Sections 856(c)(3)(E) through 856(c)(3)(I) of the
Code.

 

  (2) At the close of each taxable year, at least 95 percent of NCRC’s gross
income consists of (i) the items of income described in paragraph 1 hereof
(other than those described in Section 856(c)(3)(I) of the Code), (ii) gain
realized from the sale or other disposition of stock or securities which are not
property described in Section 1221(a)(1) of the Code, (iii) interest, (iv)
dividends, and (v) income derived from payments to NCRC on interest rate swap or
cap agreements, options, futures contracts, forward rate agreements and other
similar financial instruments entered into to reduce the interest rate risks
with respect to any indebtedness incurred or to be incurred to acquire or carry
real estate assets, or gain from the sale or other disposition of such an
investment as described in section 856(c)(5)(G), in each case within the meaning
of Section 856(c)(2) of the Code.

 

  (3) At the close of each quarter of NCRC’s taxable years, at least 75 percent
of the value of NCRC’s total assets (as determined in accordance with Treasury
Regulations Section 1.856-2(d)) has consisted of and will consist of real estate
assets within the meaning of Sections 856(c)(4) and 856(c)(5)(B) of the Code,
cash and cash items (including receivables which arise in the ordinary course of
NCRC’s operations, but not including receivables purchased from another person),
and government securities.

 

  (4) At the close of each quarter of each of NCRC’s taxable years, (i) not more
than 25 percent of NCRC’s total asset value will be represented by securities
(other than those described in paragraph 3), (ii) not more than 20 percent of
NCRC’s total asset value will be represented by securities of one or more
taxable REIT subsidiaries, and (iii) (a) not more than 5 percent of the value of
NCRC’s total assets will be represented by securities of any one issuer (other
than Government securities and securities of taxable REIT subsidiaries), and (b)
NCRC will not hold securities possessing more than 10 percent of the total
voting power or value of the outstanding securities of any one issuer (other
than government securities, securities of taxable REIT subsidiaries, and
securities of a qualified REIT subsidiary within the meaning of Section 856(i)
of the Code).”of any of the REIT qualification tests pursuant to Section 856(c)
of the Code.

 

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13. REMEDIES

 

  (a) If an Event of Default occurs, the following rights and remedies are
available to Buyer; provided, that an Event of Default shall be deemed to be
continuing unless expressly waived by Buyer in writing.

 

  (1) At the option of Buyer, exercised by written notice to Seller (which
option shall be deemed to have been exercised, even if no notice is given,
immediately upon the occurrence of an Act of Insolvency of Seller), the
Repurchase Date for each Transaction hereunder, if it has not already occurred,
shall be deemed immediately to occur. Buyer shall (except upon the occurrence of
an Act of Insolvency of Seller) give notice to Seller of the exercise of such
option as promptly as practicable.

 

  (2) If Buyer exercises or is deemed to have exercised the option referred to
in subsection (a)(1) of this Section 13,

 

(A) (i) Seller’s obligations in such Transactions to repurchase all Purchased
Assets, at the Repurchase Price therefor on the Repurchase Date, and to pay all
other amounts owed by Seller hereunder, shall thereupon become immediately due
and payable, (ii) all Income paid after such exercise or deemed exercise shall
be retained by Buyer and applied to the aggregate unpaid Repurchase Prices and
any other amounts owed by Seller hereunder, and (iii) Seller shall immediately
deliver to Buyer any Purchased Assets subject to such Transactions then in
NCCC’s, NCRC’s or NCMC’s possession or control;

 

(B) to the extent permitted by applicable law, the Repurchase Price with respect
to each such Transaction shall be increased by the aggregate amount obtained by
daily application of, on a 360 day per year basis for the actual number of days
during the period from and including the date of the exercise or deemed exercise
of such option to but excluding the date of payment of the Repurchase Price, (x)
the Post-Default Rate to (y) the Repurchase Price for such Transaction as of the
Repurchase Date (decreased as of any day by (i) any amounts actually in the
possession of Buyer pursuant to clause (C) of this subsection, (ii) any proceeds
from the sale of Purchased Assets applied to the Repurchase Price pursuant to
subsection (a)(4) of this Section 13, and (iii) any amounts applied to the
Repurchase Price pursuant to subsection (a)(4) of this Section 13); and

 

(C) all Income actually received by Buyer pursuant to Section 5 (excluding any
Late Payment Fees paid pursuant to Section 5(b)) shall be applied to the
aggregate unpaid Repurchase Price owed by Seller.

 

  (3) Upon the occurrence of one or more Events of Default, Buyer shall have the
right to obtain physical possession of the Servicing Records (subject to the
provisions of the Custodial and Disbursement Agreement) and all

 

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other files of Seller relating to the Purchased Assets and all documents
relating to the Purchased Assets which are then or may thereafter come in to the
possession of Seller or any third party acting for Seller and Seller shall
deliver to Buyer such assignments as Buyer shall request and Buyer shall have
the right to appoint any Person to act as Servicer for the Purchased Assets.
Buyer shall be entitled to specific performance of all agreements of Seller
contained in the Repurchase Documents.

 

  (4) At any time on the Business Day following notice to Seller (which notice
may be the notice given under subsection (a)(1) of this Section 13), in the
event Seller has not repurchased all Purchased Assets, Buyer may (A) immediately
sell, without demand or further notice of any kind, at a public or private sale
and at such price or prices as Buyer may deem satisfactory any or all Purchased
Assets subject to such Transactions hereunder and apply the proceeds thereof to
the aggregate unpaid Repurchase Price and any other amounts owing by Seller
hereunder or (B) in its sole discretion elect, in lieu of selling all or a
portion of such Purchased Assets, to give Seller credit for such Purchased
Assets in an amount equal to the Market Value of the Purchased Assets against
the aggregate unpaid Repurchase Price and any other amounts owing by Seller
hereunder. The proceeds of any disposition of Purchased Assets shall be applied
first to the costs and expenses incurred by Buyer in connection with Seller’s
default; second to costs of related covering and/or related hedging
transactions; third to the Repurchase Price; and fourth to any other outstanding
obligation of Seller to Buyer or its Affiliates. In connection with any sale
pursuant to clause (A) of this subsection (a)(4), Buyer may (i) sell any such
Purchased Assets without giving any warranties and (ii) specifically disclaim or
modify any warranties of title or the like, and this procedure shall not be
considered to adversely affect the commercial reasonableness of any such sale of
Purchased Assets.

 

  (5) Seller agrees that Buyer may obtain an injunction or an order of specific
performance to compel Seller to fulfill its obligations as set forth in Section
24, if Seller fails or refuses to perform its obligations as set forth therein.

 

  (6) Seller shall be liable to Buyer, payable as and when incurred by Buyer,
for (A) the amount of all actual out-of-pocket expenses, including legal or
other expenses incurred by Buyer in connection with or as a consequence of an
Event of Default, and (B) all costs incurred in connection with hedging or
covering transactions.

 

  (7) Buyer shall have, in addition to its rights hereunder, any rights
otherwise available to it under any other agreement or applicable law.

 

  (b) Buyer may exercise one or more of the remedies available to Buyer
immediately upon the occurrence of an Event of Default and, except to the extent
provided in

 

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subsections (a)(1) and (4) of this Section 13, at any time thereafter without
notice to Seller. All rights and remedies arising under this Agreement as
amended from time to time hereunder are cumulative and not exclusive of any
other rights or remedies which Buyer may have.

 

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

 

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

 

14. INDEMNIFICATION AND EXPENSES

 

  (a) NCCC, NCRC and NCMC, jointly and severally, agree to hold Buyer and its
Affiliates and their present and former respective officers, directors,
employees, agents, advisors and other representatives (each an “Indemnified
Party”) harmless from and indemnify any Indemnified Party against all
liabilities, losses, damages, judgments, costs and expenses of any kind which
may be imposed on, incurred by or asserted against such Indemnified Party
(including counsel’s fees and disbursements) (collectively, “Costs”), relating
to or arising out of this Agreement, any other Repurchase Document or any
transaction contemplated hereby or thereby, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, any other Repurchase Document or any transaction contemplated hereby
or thereby, that, in each case, results from anything other than the Indemnified
Party’s gross negligence or willful misconduct. Without limiting the generality
of the foregoing, each of NCCC, NCRC and NCMC, jointly and severally, agrees to
hold any Indemnified Party harmless from and indemnify such Indemnified Party
against all Costs with respect to all Mortgage Loans relating to or arising out
of any violation or alleged violation of any environmental law, rule or
regulation or any consumer credit laws, including without limitation the federal
Truth in Lending Act and/or the federal Real Estate Settlement Procedures Act,
that, in each case, results from anything other than the Indemnified Party’s
gross negligence or willful misconduct. In any suit, proceeding or action
brought by an Indemnified Party in connection with any Mortgage Loan for any sum
owing thereunder, or to enforce any provisions of any Mortgage Loan, each of
NCCC, NCRC and NCMC, jointly

 

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and severally, will save, indemnify and hold such Indemnified Party harmless
from and against all expense, loss or damage suffered by reason of any defense,
set-off, counterclaim, recoupment or reduction or liability whatsoever of the
account debtor or obligor thereunder, arising out of a breach by NCCC, NCRC or
NCMC of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such account
debtor or obligor or its successors from NCCC, NCRC or NCMC. Each of NCCC, NCRC
and NCMC, jointly and severally, also agrees to reimburse an Indemnified Party
as and when billed by such Indemnified Party for all the Indemnified Party’s
costs and expenses incurred in connection with the enforcement or the
preservation of Buyer’s rights under this Agreement, any other Repurchase
Document or any transaction contemplated hereby or thereby, including without
limitation the fees and disbursements of its counsel.

 

  (b) Seller agrees to pay as and when billed by Buyer all of the out-of-pocket
costs and expenses (including legal fees) incurred by Buyer in connection with
the development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement, any other Repurchase Document or any other
documents prepared in connection herewith or therewith. Seller agrees to pay as
and when billed by Buyer all of the out-of-pocket costs and expenses incurred in
connection with the consummation and administration of the transactions
contemplated hereby and thereby including without limitation all fees,
disbursements and expenses of counsel to Buyer which amount shall be deducted
from the Purchase Price paid for the first Transaction hereunder. Subject to the
limitations set forth in Section 26, Seller agrees to pay Buyer all the out of
pocket due diligence, inspection, appraisals, testing and review costs and
expenses incurred by Buyer with respect to Mortgage Loans submitted by Seller
for purchase under this Agreement, including, but not limited to, those out of
pocket costs and expenses incurred by Buyer pursuant to Sections 24 and 26.

 

15. RECORDING OF COMMUNICATIONS

 

Buyer and Seller shall have the right (but not the obligation) from time to time
to make or cause to be made tape recordings of communications between its
employees and those of the other party with respect to Transactions upon notice
to the other party of such recording. Buyer and Seller consent to the
admissibility of such tape recordings in any court, arbitration, or other
proceedings. The parties agree that a duly authenticated transcript of such a
tape recording shall be deemed to be a writing conclusively evidencing the
parties’ agreement.

 

16. SINGLE AGREEMENT

 

Buyer and Seller acknowledge that, and have entered hereinto and will enter into
each Transaction hereunder in consideration of and in reliance upon the fact
that, all Transactions hereunder constitute a single business and contractual
relationship and that each has been entered into in consideration of the other
Transactions. Accordingly, each of Buyer and Seller agrees (i) to perform all of
its obligations in respect of each

 

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Transaction hereunder, and that a default in the performance of any such
obligations shall constitute a default by it in respect of all Transactions
hereunder, (ii) that each of them shall be entitled to set off claims and apply
property held by them in respect of any Transaction against obligations owing to
them in respect of any other Transaction hereunder; (iii) that payments,
deliveries, and other transfers made by either of them in respect of any
Transaction shall be deemed to have been made in consideration of payments,
deliveries, and other transfers in respect of any other Transactions hereunder,
and the obligations to make any such payments, deliveries, and other transfers
may be applied against each other and netted and (iv) to promptly provide notice
to the other after any such set off or application.

 

17. NOTICES AND OTHER COMMUNICATIONS

 

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

 

18. ENTIRE AGREEMENT; SEVERABILITY; MODIFICATIONS

 

This Agreement together with the other Repurchase Documents constitute the
entire understanding between Buyer and Seller with respect to the subject matter
it covers and shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions involving
Purchased Assets. By acceptance of this Agreement, Buyer and Seller acknowledge
that they have not made, and are not relying upon, any statements,
representations, promises or undertakings not contained in this Agreement. Each
provision and agreement herein shall be treated as separate and independent from
any other provision or agreement herein and shall be enforceable notwithstanding
the unenforceability of any such other provision or agreement. No amendment,
modification or release from any provision of this Agreement shall be effective
unless in writing and executed by or on behalf of the party or parties to be
charged therewith and shall be effective only in the specific instance and for
the specific purpose for which given.

 

19. NON-ASSIGNABILITY

 

The rights and obligations of the parties under this Agreement and under any
Transaction shall not be assigned by Seller or Buyer without the prior written
consent of the other party, and any attempted assignment without such consent
shall be null and void. Notwithstanding the foregoing, Buyer may assign its
rights and remedies under this

 

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Agreement and under any Transaction without the consent of Seller (a) to any
Affiliate of Buyer (with notice to Seller), and (b) in connection with any
pledge, rehypothecation or other right permitted pursuant to Section 9. Subject
to the foregoing, this Agreement and any Transactions shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns. Nothing in this Agreement express or implied, shall give to any person,
other than the parties to this Agreement and their successors hereunder, any
benefit of any legal or equitable right, power, remedy or claim under this
Agreement.

 

20. TERMINABILITY

 

Except as set forth below, this Agreement may be terminated (a) by Seller upon
giving written notice to Buyer and payment of the Minimum Pricing Amount
pursuant to Section 3(p), (b) by Buyer, in its sole discretion by giving 30
days’ notice to Seller, upon a decrease of 30% in the aggregate amount available
to NCCC, NCRC, NCMC or their Affiliates under the Existing Financing Facilities
in the aggregate and (c) by Buyer, in its sole discretion by giving 30 days’
notice to Seller, upon the occurrence of any event set forth in Section 3(b)(10)
except that this Agreement shall, notwithstanding such notice, remain applicable
to any Transaction then outstanding; provided that the Repurchase Date for any
such Transaction outstanding shall be the earlier to occur of the original
Repurchase Date pursuant to the applicable Confirmation and (ii) 20 days from
the date of such notice of termination. Each representation and warranty made or
deemed to be made by entering into a Transaction, herein or pursuant hereto
shall survive the making of such representation and warranty, and Buyer shall
not be deemed to have waived any Default that may arise because any such
representation or warranty shall have proved to be false or misleading,
notwithstanding that Buyer may have had notice or knowledge or reason to believe
that such representation or warranty was false or misleading at the time the
Transaction was made. Notwithstanding any such termination or the occurrence of
an Event of Default, all of the representations and warranties and covenants
hereunder shall continue and survive. The obligations of Seller under Section 14
shall survive the termination of this Agreement.

 

21. GOVERNING LAW

 

THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES.

 

22. SUBMISSION TO JURISDICTION; WAIVERS

 

EACH OF BUYER, NCCC, NCRC AND NCMC HEREBY IRREVOCABLY AND UNCONDITIONALLY:

 

(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT AND THE OTHER REPURCHASE DOCUMENTS, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE

 

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NON-EXCLUSIVE PERSONAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
SITTING IN THE BOROUGH OF MANHATTAN, THE FEDERAL COURTS OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY
THEREOF;

 

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

 

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

 

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

 

(E) WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER REPURCHASE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY.

 

 

23. NO WAIVERS, ETC.

 

No failure on the part of Buyer or Seller to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power or
privilege under any Repurchase Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege under any
Repurchase Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The remedies provided herein
are cumulative and not exclusive of any remedies provided by law. An Event of
Default shall be deemed to be continuing unless expressly waived by Buyer in
writing.

 

24. SERVICING

 

  (a) Each of NCCC, NCRC and NCMC covenants to maintain or cause the servicing
of the Mortgage Loans to be maintained in conformity with accepted and prudent
servicing practices in the industry for the same type of mortgage loans as the

 

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Mortgage Loans and in a manner at least equal in quality to the servicing Seller
provides for mortgage loans which it owns. In the event that the preceding
language is interpreted as constituting one or more servicing contracts, each
such servicing contract shall terminate automatically upon the earliest of (i)
an Event of Default, (ii) the date on which this Agreement terminates or (iii)
the transfer of servicing approved by Buyer.

 

  (b) If the Mortgage Loans are serviced by Seller, Seller agrees that Buyer is
the owner of all servicing records, including but not limited to any and all
servicing agreements, files, documents, records, data bases, computer tapes,
copies of computer tapes, proof of insurance coverage, insurance policies,
appraisals, other closing documentation, payment history records, and any other
records relating to or evidencing the servicing of the Mortgage Loans (the
“Servicing Records”). Seller covenants to safeguard such Servicing Records and
to deliver them promptly to Buyer or its designee (including Custodian) at
Buyer’s request.

 

  (c) If the Mortgage Loans are serviced by a person other than Seller (such
third party the “Servicer”), Seller (i) shall, in accordance with Section
(3)(b)(7), provide a copy of the servicing agreement to Buyer, which shall be in
form and substance acceptable to Buyer (the “Servicing Agreement”), and shall
provide a Servicer Notice to Buyer substantially in the form of Exhibit VII
hereto, fully executed by Seller and the Servicer; and (ii) hereby irrevocably
assigns to Buyer and Buyer’s successors and assigns all right, title and
interest of Seller in, to and under, and the benefits of, any Servicing
Agreement with respect to the Mortgage Loans. Seller agrees that no Person shall
assume the servicing obligations with respect to the Mortgage Loans as successor
to the Servicer unless such successor is approved in writing by Buyer prior to
such assumption of servicing obligations.

 

  (d) If the servicer of the Mortgage Loans is Seller, upon the occurrence of an
Event of Default, Buyer shall have the right to terminate the Seller as servicer
of the Mortgage Loans and transfer servicing to Buyer’s designated Servicer, at
no cost or expense to Buyer, at any time thereafter. If the Servicer of the
Mortgage Loans is not Seller, Buyer shall have the right, as contemplated in the
applicable Servicer Notice, upon the occurrence of an Event of Default, to
terminate any applicable Servicing Agreement and transfer servicing to Buyer’s
designated Servicer, at no cost or expense to Buyer, it being agreed that Seller
will pay any and all fees required to terminate such Servicing Agreement and to
effectuate the transfer of servicing to Buyer’s designated Servicer, as well as
any servicing fees and expenses payable to such Servicer.

 

  (e) After the Purchase Date, until the repurchase of any Mortgage Loan, Seller
will have no right to modify or alter the terms of such Mortgage Loan and Seller
will have no obligation or right to repossess such Mortgage Loan or substitute
another Mortgage Loan, in each case except as provided in the Custodial and
Disbursement Agreement.

 

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  (f) In the event Seller or its Affiliate is servicing the Mortgage Loans,
Seller shall permit Buyer to inspect Seller’s or its Affiliate’s servicing
facilities, as the case may be, for the purpose of satisfying Buyer that Seller
or its Affiliate, as the case may be, has the ability to service the Mortgage
Loans as provided in this Agreement.

 

25. INTENT

 

  (a) The parties recognize that each Transaction is a “repurchase agreement” as
that term is defined in Section 101 of Title 11 of the United States Code, as
amended (except insofar as the type of Purchased Assets subject to such
Transaction or the term of such Transaction would render such definition
inapplicable), and a “securities contract” as that term is defined in Section
741 of Title 11 of the United States Code, as amended (except insofar as the
type of Purchased Assets subject to such Transaction would render such
definition inapplicable).

 

  (b) It is understood that either party’s right to liquidate Purchased Assets
delivered to it in connection with Transactions hereunder or to exercise any
other remedies pursuant to Section 16 hereof is a contractual right to liquidate
such Transaction as described in Sections 555 and 559 of Title 11 of the United
States Code, as amended.

 

  (c) The parties agree and acknowledge that if a party hereto is an “insured
depository institution,” as such term is defined in the Federal Deposit
Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a
“qualified financial contract,” as that term is defined in FDIA and any rules,
orders or policy statements thereunder (except insofar as the type of Purchased
Assets subject to such Transaction would render such definition inapplicable).

 

  (d) It is understood that this Agreement constitutes a “netting contract” as
defined in and subject to Title IV of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment
obligation under any Transaction hereunder shall constitute a “covered
contractual payment entitlement” or “covered contractual payment obligation”,
respectively, as defined in and subject to FDICIA (except insofar as one or both
of the parties is not a “financial institution” as that term is defined in
FDICIA or regulations promulgated thereunder).

 

26. BUYER’S REPRESENTATIONS

 

Buyer represents and warrants to Seller that as of the Effective Date and as of
the Repurchase Date for the repurchase of any Purchased Assets by Seller from
Buyer hereunder:

 

  (a) Action. Buyer has all necessary corporate or other power, authority and
legal right to execute, deliver and perform its obligations under each of the
Repurchase Documents to which it is a party; the execution, delivery and
performance by Buyer of each of the Repurchase Documents to which it is a party
have been duly authorized by all necessary corporate or other action on its
part; and each

 

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Repurchase Document to which it is a party has been duly and validly executed
and delivered by Buyer, and constitutes a legal, valid and binding obligation of
Buyer, enforceable against Buyer, in accordance with its terms.

 

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

 

  (c) No Breach. Neither (a) the execution and delivery of the Repurchase
Documents nor (b) the consummation of the transactions therein contemplated to
be entered into by Buyer in compliance with the terms and provisions thereof
will conflict with or result in a breach of the organizational documents of
Buyer, or any applicable law, rule or regulation, or any order, writ, injunction
or decree of any Governmental Authority or other material agreement or
instrument to which Buyer or any of its Subsidiaries is a party or by which
Buyer or any of its Property is bound or to which Buyer is subject, or
constitute a default under any such material agreement or instrument or result
in the creation or imposition of any Lien upon any Property of Buyer, or any of
its respective Subsidiaries pursuant to the terms of any such agreement or
instrument.

 

  (d) Purchased Assets. Immediately prior to the repurchase of any Purchased
Assets by Seller, Buyer was the sole owner of such Purchased Assets and had good
and marketable title thereto, free and clear of all Liens, in each case except
for Liens to be released simultaneously with the repurchase by Seller hereunder.

 

27. NETTING

 

If Buyer and Seller are “financial institutions” as now or hereinafter defined
in Section 4402 of Title 12 of the United States Code (“Section 4402”) and any
rules or regulations promulgated thereunder,

 

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

 

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

 

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28. PERIODIC DUE DILIGENCE REVIEW

 

Seller acknowledges that Buyer has the right to perform continuing due diligence
reviews with respect to the Mortgage Loans, for purposes of verifying compliance
with the representations, warranties and specifications made hereunder, or
otherwise, and Seller agrees that upon reasonable (but no less than one (1)
Business Day’s) prior notice unless an Event of Default shall have occurred, in
which case no notice is required, to Seller, Buyer or its authorized
representatives will be permitted during normal business hours to examine,
inspect, and make copies and extracts of, the Mortgage Files and any and all
documents, records, agreements, instruments or information relating to such
Mortgage Loans in the possession or under the control of Seller and/or
Custodian. Seller also shall make available to Buyer a knowledgeable financial
or accounting officer for the purpose of answering questions respecting the
Mortgage Files and the Mortgage Loans. Without limiting the generality of the
foregoing, Seller acknowledges that Buyer may purchase Mortgage Loans from
Seller based solely upon the information provided by Seller to Buyer in the
Seller Asset Schedule and the representations, warranties and covenants
contained herein, and that Buyer, at its option, has the right at any time to
conduct a partial or complete due diligence review on some or all of the
Mortgage Loans purchased in a Transaction, including without limitation ordering
new credit reports and new appraisals on the related Mortgaged Properties and
otherwise re-generating the information used to originate such Mortgage Loan.
Buyer may underwrite such Mortgage Loans itself or engage a mutually agreed upon
third party underwriter to perform such underwriting. Seller agrees to cooperate
with Buyer and any third party underwriter in connection with such underwriting,
including, but not limited to, providing Buyer and any third party underwriter
with access to any and all documents, records, agreements, instruments or
information relating to such Mortgage Loans in the possession, or under the
control, of Seller. Buyer shall pay all out-of-pocket costs and expenses
incurred by Buyer in connection with Buyer’s activities pursuant to this Section
28 (“Due Diligence Costs”); provided that, (i) in the event that a Default or an
Event of Default shall have occurred or (ii) in the event that Buyer shall
determine the need to confirm compliance with local, state or federal laws
concerning the regulation of predatory lending practices, Seller shall reimburse
Buyer for all Due Diligence Costs for any and all reasonable out-of-pocket costs
and expenses incurred by Buyer in connection with Buyer’s activities pursuant to
this Section 28.

 

29. BUYER’S APPOINTMENT AS ATTORNEY-IN-FACT

 

  (a) Each of NCCC, NCRC and NCMC hereby irrevocably constitutes and appoints
Buyer and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of Seller and in the name of Seller or in its own name, from
time to time in Buyer’s discretion, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be reasonably necessary or desirable to
accomplish the

 

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purposes of this Agreement, and, without limiting the generality of the
foregoing, Seller hereby gives Buyer the power and right, on behalf of Seller,
without assent by, but with notice to, Seller, to do the following:

 

  (1) in the name of Seller, or in its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due under any mortgage insurance
with respect to a Purchased Item or with respect to any other Purchased Items
and to file any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by Buyer for the purpose of
collecting any and all such moneys due under any such mortgage insurance with
respect to a Purchased Item or with respect to any other Purchased Items
whenever payable;

 

  (2) to pay or discharge taxes and Liens levied or placed on or threatened
against the Purchased Items;

 

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

 

  (4) after a Default or an Event of Default, to direct the actions of Custodian
with respect to the Purchased Items under the Custodial and Disbursement
Agreement; and

 

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  (5) to execute, from time to time, in connection with any sale provided for in
Section 13, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Purchased Items.

 

Each of NCCC, NCRC and NCMC hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. This power of attorney is a
power coupled with an interest and shall be irrevocable. Until the occurrence of
a Default or Event of Default, Buyer shall not direct a Servicer in its
servicing of the Purchased Assets or commence any servicing actions with respect
to the Mortgage Loans pursuant to this Section 28(a). Neither Buyer nor any of
its officers, directors, employers or agents shall be responsible to Seller for
any failure to act hereunder prior to a Default or Event of Default.

 

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

 

30. MISCELLANEOUS

 

  (a) If there is any conflict between the terms of this Agreement or any
Transaction entered into hereunder and the Custodial and Disbursement Agreement,
this Agreement shall prevail.

 

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

 

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

 

  (d) Each of NCCC, NCRC and NCMC hereby acknowledges that:

 

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

 

  (2) Buyer has no fiduciary relationship to Seller; and

 

  (3) no joint venture exists between Buyer and Seller.

 

31. CONFIDENTIALITY

 

Seller hereby acknowledges and agrees that all information regarding the terms
set forth in any of the Repurchase Documents or the Transactions contemplated
thereby (the “Confidential Terms”) shall be kept confidential and shall not be
divulged to any party

 

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without the prior written consent of such other party except to the extent that
(i) it is necessary to do so in working with legal counsel, auditors, taxing
authorities or other governmental agencies or regulatory bodies or in order to
comply with any applicable federal or state laws, (ii) any of the Confidential
Terms are in the public domain other than due to a breach of this covenant, or
(iii) in the event of a Default or an Event of Default Buyer determines such
information to be necessary or desirable to disclose in connection with the
marketing and sales of the Purchased Assets or otherwise to enforce or exercise
Buyer’s rights hereunder. The provisions set forth in this Section 30 shall
survive the termination of this Agreement for a period of one year following
such termination. Notwithstanding the foregoing or anything to the contrary
contained herein or in any other Repurchase Document, the parties hereto may
disclose to any and all Persons, without limitation of any kind, the federal
income tax treatment of the Transactions, any fact relevant to understanding the
federal tax treatment of the Transactions, and all materials of any kind
(including opinions or other tax analyses) relating to such federal income tax
treatment; provided that Seller may not disclose the name of or identifying
information with respect to Buyer or any pricing terms (including, without
limitation, the Pricing Spread, Purchase Percentage and Purchase Price) or other
nonpublic business or financial information (including any sublimits and
financial covenants) that is unrelated to the purported or claimed federal
income tax treatment of the Transactions and is not relevant to understanding
the purported or claimed federal income tax treatment of the Transactions,
without the prior written consent of the Buyer. Buyer acknowledges that this
Agreement will be filed with the SEC.

 

32. CONFLICTS

 

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

 

33. SET-OFF

 

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

 

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34. OBLIGATIONS JOINT AND SEVERAL

 

  (a) Each of NCCC, NCRC and NCMC hereby acknowledges and agrees that it shall
be jointly and severally liable to Buyer for all representations, warranties,
covenants, obligations and indemnities of Seller hereunder.

 

  (b) Each Seller waives any and all notice of the creation, renewal, extension
or accrual of any of the Repurchase Obligations and notice of or proof of
reliance by the Buyer upon the obligations of such Seller set forth herein or
acceptance of such obligations by such Seller hereunder. Each Seller waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon each other Seller with respect to the Repurchase
Obligations. Each Seller’s obligations shall be construed as continuing,
absolute and unconditional obligations without regard to (i) any defense,
set-off or counterclaim (other than a defense of payment or performance) which
may at any time be available to or be asserted by any Seller against the Buyer,
or (ii) any other circumstance whatsoever (with or without notice to or
knowledge of any Seller) which constitutes, or might be construed to constitute,
an equitable or legal discharge of such Seller for the Repurchase Obligations.
Each Seller hereby waives any defense arising by reason of, and any and all
right to assert against the Buyer any claim or defense based upon, an election
of remedies by the Buyer which in any manner impairs, affects, reduces,
releases, destroys and/or extinguishes such Seller’s subrogation rights, rights
to proceed against such Seller or any other party for reimbursement or
contribution, and/or any other rights of such Seller to proceed against any
other Seller, against any other guarantor, or against any other person or
security.

 

  (c) The parties intend that the each Seller’s Repurchase Obligations are
primary obligations and not in the nature of a guaranty or suretyship.

 

[SIGNATURE PAGE FOLLOWS]

 

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

 

BUYER: CDC MORTGAGE CAPITAL INC. By:  

/s/ Joe Piscina

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

Name:   Joe Piscina Title:   Managing Director By:  

/s/ Kathy Lynch

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

Name:   Kathy Lynch Title:   Director

 

Address for Notices:   with a copy to: 9 West 57th Street   9 West 57th Street
New York, NY 10019   New York, NY 10019 Attn: Ray Sullivan   Attn: Al Zakes,
Esq., General Counsel Telecopier No.: (212) 891-3347   Telecopier No.: (212)
891-1922 Telephone No.: (212) 891-5815   Telephone No.: (212) 891-6137 Email:
r.sullivan@cdcixis-cmna.com   Email: albert.zakes@cdcixis- cmna.com     and with
a copy to:     9 West 57th Street     New York, NY 10019     Attn: Michael
Friedman     Telecopier No.: (212) 891-6143     Telephone No.: (212) 891-6261  
  Email: m.friedman@cdcixis-cmna.com

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

SELLER:

NEW CENTURY MORTGAGE

      CORPORATION

By:  

/s/ Patrick Flanagan

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

Name:   Patrick Flanagan Title:   President Address for Notices:     18400 Von
Karman, Suite 1000     Irvine, California 92612     Attn: Ralph Flick, Esq.    
Telecopier No.: (949) 440-7033     Telephone No: (949) 862-7749     Email:
rflick@ncen.com NC CAPITAL CORPORATION By:  

/s/ Patrick Flanagan

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

Name:   Patrick Flanagan Title:   Chief Executive Officer Address for Notices:  
  18400 Von Karman, Suite 1000     Irvine, California 92612     Attn: Ralph
Flick, Esq.     Telecopier No.: (949) 440-7033     Telephone No: (949) 862-7749
    Email: rflick@ncen.com

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

NC RESIDUAL II CORPORATION By:  

/s/ Patrick Flanagan

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

Name:   Patrick Flanagan Title:   President Address for Notices:     18400 Von
Karman, Suite 1000     Irvine, California 92612     Attn: Ralph Flick, Esq.    
Telecopier No.: (949) 440-7033     Telephone No: (949) 862-7749     Email:
rflick@ncen.com

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

The undersigned guarantor hereby (a) consents and agrees to the foregoing Third
Amended and Restated Master Repurchase Agreement, dated as of September 10, 2004
(the “Repurchase Agreement”), and (b) acknowledges that the terms of the
Repurchase Agreement shall be covered by the Guaranty, as defined therein:

 

NEW CENTURY FINANCIAL

CORPORATION

By:  

/s/ Patrick Flanagan

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

Name:   Patrick Flanagan Title:   Executive Vice President By:  

/s/ Edward F. Gotschall

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

Name:   Edward F. Gotschall Title:   Vice Chairman-Finance

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

SCHEDULE 1

 

REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS

 

Part I: Residential Mortgage Loans

 

Each of NCCC, NCRC and NCMC represents and warrants to Buyer, with respect to
each Mortgage Loan, that as of the Purchase Date for the purchase of any
Purchased Assets by Buyer from Seller and as of the date of this Agreement and
any Transaction hereunder and at all times while the Repurchase Documents and
any Transaction hereunder is in full force and effect. For purposes of this
Schedule 1 and the representations and warranties set forth herein, a breach of
a representation or warranty shall be deemed to have been cured with respect to
a Mortgage Loan if and when Seller has taken or caused to be taken action such
that the event, circumstance or condition that gave rise to such breach no
longer adversely affects such Mortgage Loan.

 

  (1) Mortgage Loans as Described. The information set forth in the Seller Asset
Schedule is complete, true and correct;

 

  (2) Payments Current. All payments required to be made up to the related
Purchase Date for the Mortgage Loan under the terms of the Mortgage Note have
been made and credited. No payment required under the Mortgage Loan is
delinquent nor has any payment under the Mortgage Loan been delinquent for 30
days or more than once in the 12 months preceding the related Purchase Date. In
no event has a payment been more than 59 days delinquent for such Mortgage Loan.
The first Monthly Payment shall be made, or shall have been made, with respect
to the Mortgage Loan on its Due Date or within the grace period, all in
accordance with the terms of the related Mortgage Note;

 

  (3) No Outstanding Charges. There are no defaults in complying with the terms
of the Mortgage securing the Mortgage Loan, and all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges, leasehold
payments or ground rents which previously became due and owing have been paid,
or an escrow of funds has been established in an amount sufficient to pay for
every such item which remains unpaid and which has been assessed but is not yet
due and payable. Except for (A) payments in the nature of escrow payments and
(B) interest accruing from the date of the Mortgage Note or date of disbursement
of the Mortgage proceeds, whichever is greater to the day which precedes by one
month the Due Date of the first installment of principal and interest,
including, without limitation, taxes and insurance payments, Seller has not
advanced funds, or induced, solicited or knowingly received any advance of funds
by a party other than the Mortgagor, directly or indirectly, for the payment of
any amount required under the Mortgage Loan, except for interest accruing from
the date of the Mortgage Note or date of disbursement of the Mortgage Loan
proceeds, whichever is earlier, to the day which precedes by one month the Due
Date of the first installment of principal and interest;

 

Sch. 1-1

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  (4) Original Terms Unmodified. The terms of the Mortgage Note and Mortgage
have not been impaired, waived, altered or modified in any respect, except by a
written instrument which has been recorded, if necessary to protect the
interests of Buyer and which has been delivered to Custodian and the terms of
which are reflected in the Seller Asset Schedule. The substance of any such
waiver, alteration or modification has been approved by the title insurer, to
the extent required by the policy, and its terms are reflected on the Seller
Asset Schedule. No Mortgagor has been released, in whole or in part, except in
connection with an assumption agreement approved by the title insurer, to the
extent required by the policy, and which assumption agreement is part of the
Mortgage File delivered to Custodian and the terms of which are reflected in the
Seller Asset Schedule;

 

  (5) No Defenses. The Mortgage Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including without limitation the defense of
usury, nor will the operation of any of the terms of the Mortgage Note or the
Mortgage, or the exercise of any right thereunder, render either the Mortgage
Note or the Mortgage unenforceable, in whole or in part, or subject to any right
of rescission, set-off, counterclaim or defense, including without limitation
the defense of usury, and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto, and no Mortgagor was a debtor in
any state or federal bankruptcy or insolvency proceeding at, or subsequent to,
the time the Mortgage Loan was originated;

 

  (6) Hazard Insurance. Pursuant to the terms of the Mortgage, all buildings or
other improvements upon the Mortgaged Property are insured by a generally
acceptable insurer against loss by fire, hazards of extended coverage and such
other hazards as are customary in the area where the Mortgaged Property is
located pursuant to insurance policies conforming to the requirements of Fannie
Mae and Freddie Mac in an amount not less than the greater of (i) 100% of the
replacement cost of all improvements to the Mortgaged Property or (ii) the
outstanding principal balance of the Mortgage Loan, but in any event at least
equal to the amount necessary to avoid the operation of any co-insurance
provisions with respect to the Mortgaged Property, and consistent with the
amount that would have been required as of the date of origination in accordance
with that required by Fannie Mae and Freddie Mac. If upon origination of the
Mortgage Loan, the Mortgaged Property was in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards (and such flood insurance has been made available) a flood insurance
policy meeting the requirements of the current guidelines of the Federal Flood
Insurance Administration is in effect which policy conforms

 

Sch. 1-2

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

to the requirements of Fannie Mae and Freddie Mac. All individual insurance
policies contain a standard mortgagee clause naming Seller and its successors
and assigns as mortgagee, and all premiums thereon have been paid and such
policies may not be reduced, terminated or cancelled without 30 days’ prior
written notice to the mortgagee. The Mortgage obligates the Mortgagor thereunder
to maintain the hazard insurance policy at the Mortgagor’s cost and expense, and
on the Mortgagor’s failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at such Mortgagor’s cost and expense, and to
seek reimbursement therefor from the Mortgagor. Where required by state law or
regulation, the Mortgagor has been given an opportunity to choose the carrier of
the required hazard insurance, provided the policy is not a “master” or
“blanket” hazard insurance policy covering the common facilities of a planned
unit development. The hazard insurance policy is the valid and binding
obligation of the insurer, is in full force and effect, and will be in full
force and effect and inure to the benefit of Buyer upon the consummation of the
transactions contemplated by this Agreement. Seller has not engaged in, and has
no knowledge of the Mortgagor’s or any subservicer’s having engaged in, any act
or omission which would impair the coverage of any such policy, the benefits of
the endorsement provided for herein, or the validity and binding effect of
either, including, without limitation, no unlawful fee, commission, kickback or
other unlawful compensation or value of any kind has been or will be received,
retained or realized by any attorney, firm or other person or entity, and no
such unlawful items have been received, retained or realized by Seller;

 

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

 

  (8) No Satisfaction of Mortgage. The Mortgage has not been satisfied,
canceled, subordinated or rescinded, in whole or in part, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole or in
part, nor has any instrument been executed that would effect any such release,
cancellation, subordination or rescission. Seller has not waived the performance
by the Mortgagor of any action, if the Mortgagor’s failure to perform such
action would cause the Mortgage Loan to be in default, nor has Seller waived any
default resulting from any action or inaction by the Mortgagor;

 

Sch. 1-3

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  (9) Location and Type of Mortgaged Property. The Mortgaged Property is a fee
simple property located in the state identified in the Seller Asset Schedule,
the mortgaged property consists of real property with a detached single family
residence erected thereon, or a two- to four-family dwelling, or an individual
residential condominium unit in a low-rise condominium project, an individual
unit in a planned unit development, a manufactured home, provided, however, that
any condominium unit or planned unit development shall conform with the
Underwriting Guidelines. In the case of any Mortgaged Properties that are
Manufactured Home Mortgage Loans, (i) such Manufactured Home Mortgage Loan
conforms with the applicable Fannie Mae or Freddie Mac requirements regarding
mortgage loans related to manufactured dwellings, (ii) the related manufactured
dwelling is permanently affixed to the land, (iii) the related manufactured
dwelling and the related land are subject to a Mortgage properly filed in the
appropriate public recording office and naming Seller as mortgagee, (iv) the
applicable laws of the jurisdiction in which the related Mortgaged Property is
located will deem the manufactured dwelling located on such Mortgaged Property
to be a part of the real property on which such dwelling is located, and (v)
such Manufactured Home Mortgage Loan is (x) a qualified mortgage under Section
860G(a)(3) of the Internal Revenue Code of 1986, as amended and (y) secured by
manufactured housing treated as a single family residence under Section
25(e)(10) of the Code. No portion of the Mortgaged Property is used for
commercial purposes; provided, that Mortgaged Properties which contain a home
office shall not be considered as being used for commercial purposes as long as
the Mortgaged Property has not been altered for commercial purposes and is not
storing any chemicals or raw materials other than those commonly used for
homeowner repair, maintenance and/or household purposes;

 

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

 

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

 

(B) covenants, conditions and restrictions, rights of way, easements and other
matters of the public record as of the date of recording acceptable to prudent
mortgage lending institutions generally and specifically referred to in the
lender’s title insurance policy delivered to the originator of the Mortgage Loan
and (i) referred to or otherwise considered in the appraisal made for the
originator of the Mortgage Loan or (ii) which do not adversely affect the
appraised value of the Mortgaged Property set forth in such appraisal;

 

Sch. 1-4

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

 

(D) with respect to each Second Lien Mortgage Loan, a prior mortgage lien on the
Mortgaged Property.

 

Any security agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates a valid,
subsisting and enforceable (A) first lien and first priority perfected security
interest with respect to each First Lien Mortgage Loan, or (B) second lien and
second priority perfected security interest with respect to each Second Lien
Mortgage Loan, in either case on the property described therein and Seller has
full right to sell and assign the same to Buyer. The Mortgaged Property was not,
as of the date of origination of the Mortgage Loan, subject to a mortgage, deed
of trust, deed to secure debt or other security instrument creating a lien
subordinate to the lien of the Mortgage;

 

  (11) Validity of Mortgage Loan Documents. The Mortgage Note, the Mortgage and
any other agreement executed and delivered by a Mortgagor or guarantor, if
applicable, in connection with the Mortgage Loan are genuine, and each is the
legal, valid and binding obligation of the maker thereof enforceable in
accordance with its terms. All parties to the Mortgage Note, the Mortgage and
any other related agreement had legal capacity to enter into the Mortgage Loan
and to execute and deliver the Mortgage Note, the Mortgage and any other related
agreement, and the Mortgage Note, the Mortgage and any other related agreement
have been duly and properly executed by such parties. The documents, instruments
and agreements submitted for loan underwriting were not falsified and contain no
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the information and statements therein
not misleading. No fraud, error, negligence, misrepresentation or omission of
fact with respect to a Mortgage Loan has taken place on the part of Seller or
the Mortgagor or any other party involved in the origination or servicing of the
Mortgage Loan. Seller has reviewed all of the documents constituting the
Servicing File and has made such inquiries as it deems necessary to make and
confirm the accuracy of the representations set forth herein;

 

  (12) Full Disbursement of Proceeds. The Mortgage Loan has been closed and the
proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances thereunder, and any and all requirements as to
completion of any on-site or off-site improvement and

 

Sch. 1-5

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as to disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing the Mortgage Loan and the
recording of the Mortgage were paid, and the Mortgagor is not entitled to any
refund of any amounts paid or due under the Mortgage Note or Mortgage;

 

  (13) Ownership. Seller is the sole owner of record and holder of the Mortgage
Loan. The Mortgage Loan is not assigned or pledged, and Seller has good,
indefeasible and marketable title thereto, and has full right to transfer and
sell the Mortgage Loan therein to Buyer free and clear of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or security
interest, and has full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign each
Mortgage Loan pursuant to this Agreement and following the sale of each Mortgage
Loan, Buyer will own such Mortgage Loan free and clear of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or security
interest;

 

  (14) Doing Business. All parties which have had any interest in the Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (1) in compliance
with any and all applicable licensing requirements of the laws of the state
wherein the Mortgaged Property is located, and (2) organized under the laws of
such state, or (3) qualified to do business in such state, or (4) federal
savings and loan associations or national banks having principal offices in such
state, or (5) not doing business in such state;

 

  (15) LTV; FICO. No Mortgage Loan has an LTV greater than 100%. At origination
of the Mortgage Loan, the Mortgagor did not have a FICO score of less than 500.

 

  (16) Title Insurance. The Mortgage Loan is covered by an ALTA lender’s title
insurance policy or, with respect to Mortgaged Properties located in California,
a CLTA lender’s title insurance policy, or other generally acceptable form of
policy of insurance acceptable to Fannie Mae or Freddie Mac, issued by a title
insurer acceptable to Fannie Mae or Freddie Mac and qualified to do business in
the jurisdiction where the Mortgaged Property is located, insuring Seller, its
successors and assigns, as to the first or second priority lien of the Mortgage
in the original principal amount of the Mortgage Loan, and against any loss by
reason of the invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment in the Mortgage Interest
Rate and Monthly Payment, subject only to the exceptions contained in clauses
(A), (B), and (C), and with respect to each Second Lien Mortgage Loan clause (D)
of Paragraph (10) of this Schedule I. Where required by state law or regulation,
the Mortgagor has been given the opportunity to choose the

 

Sch. 1-6

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carrier of the required mortgage title insurance. Additionally, such lender’s
title insurance policy affirmatively insures ingress and egress, and against
encroachments by or upon the Mortgaged Property or any interest therein. The
title policy does not contain any special exceptions (other than the standard
exclusions) for zoning and uses and has been marked to delete the standard
survey exception or to replace the standard survey exception with a specific
survey reading. Seller, its successors and assigns is the sole insured of such
lender’s title insurance policy, and such lender’s title insurance policy is in
full force and effect and will be in force and effect upon the consummation of
the transactions contemplated by this Agreement. No claims have been made under
such lender’s title insurance policy, and no prior holder or servicer of the
Mortgage, including Seller, has done, by act or omission, anything which would
impair the coverage of such lender’s title insurance policy, including, without
limitation, no unlawful fee, commission, kickback or other unlawful compensation
or value of any kind has been or will be received, retained or realized by any
attorney, firm or other Person, and no such unlawful items have been received,
retained or realized by Seller;

 

  (17) No Defaults. There is no default, breach, violation or event of
acceleration existing under the Mortgage or the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach, violation or event of
acceleration, and neither Seller nor its predecessors have waived any default,
breach, violation or event of acceleration. With respect to each Second Lien
Mortgage Loan, (i) the prior mortgage is in full force and effect, (ii) there is
no default, breach, violation or event of acceleration existing under such prior
mortgage or the related mortgage note, (iii) no event which, with the passage of
time or with notice and the expiration of any grace or cure period, would
constitute a default, breach, violation or event of acceleration thereunder, and
either (A) the prior mortgage contains a provision which allows or (B)
applicable law requires, the mortgagee under the Second Lien Mortgage Loan to
receive notice of, and affords such mortgagee an opportunity to cure any default
by payment in full or otherwise under the prior mortgage;

 

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

 

  (19) Location of Improvements; No Encroachments. All improvements which were
considered in determining the Appraised Value of the Mortgaged Property lay
wholly within the boundaries and building restriction lines of the Mortgaged
Property and no improvements on adjoining properties encroach upon the Mortgaged
Property. No improvement located on or being part of the Mortgaged Property is
in violation of any applicable zoning and building law, ordinance or regulation;

 

Sch. 1-7

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  (20) Origination: Payment Terms. Either (a) the Mortgage Loan was originated
by a mortgagee approved by the Secretary of Housing and Urban Development
pursuant to Sections 203 and 211 of the National Housing Act, a savings and loan
association, a savings bank, a commercial bank, credit union, insurance company
or other similar institution which is supervised and examined by a federal or
state authority, or (b) the following requirements have been met with respect to
the Mortgage Loan: Seller meets the requirements set forth in clause (a), and
(i) such Mortgage Loan was underwritten in accordance with standards established
by Seller, using application forms and related credit documents approved by
Seller, (ii) Seller approved each application and the related credit documents
before a commitment by the correspondent was issued, and no such commitment was
issued until Seller agreed to fund such Mortgage Loan, (iii) the closing
documents for such Mortgage Loan were prepared on forms approved by Seller, and
(iv) such Mortgage Loan was actually funded by Seller and was purchased by
Seller at closing or soon thereafter. No Mortgage Loan contains terms or
provisions which would result in negative amortization. Unless such Mortgage
Loan is an Interest-Only Loan, principal payments on the Mortgage Loan commenced
no more than 60 days after funds were disbursed in connection with the Mortgage
Loan. The Mortgage Interest Rate is adjusted, with respect to adjustable rate
Mortgage Loans, on each Interest Rate Adjustment Date to equal the Index plus
the Gross Margin (rounded up or down to the nearest 0.125%), subject to the
Mortgage Interest Rate Cap. Unless such Mortgage Loan is an Interest-Only Loan,
for which monthly payments include interest only and not principal until
maturity, the Mortgage Note is payable on the first day of each month in equal
monthly installments of principal and interest, which installments of interest,
with respect to adjustable rate Mortgage Loans, are subject to change due to the
adjustments to the Mortgage Interest Rate on each Interest Rate Adjustment Date,
with interest calculated and payable in arrears, sufficient to amortize the
Mortgage Loan, unless such Mortgage Loan is an Interest-Only Loan, fully by the
stated maturity date, over an original term of not more than 30 years from
commencement of amortization. The due date of the first payment under the
Mortgage Note is no more than 60 days from the date of the Mortgage Note;

 

  (21) Customary Provisions. The Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the benefits of
the security provided thereby, including, (i) in the case of a Mortgage
designated as a deed of trust, by trustee’s sale, and (ii) otherwise by judicial
foreclosure. Upon default by a Mortgagor on a Mortgage Loan and foreclosure on,
or trustee’s sale of, the Mortgaged Property pursuant

 

Sch. 1-8

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to the proper procedures, the holder of the Mortgage Loan will be able to
deliver good and merchantable title to the Mortgaged Property. There is no
homestead or other exemption available to the Mortgagor which would interfere
with the right to sell the Mortgaged Property at a trustee’s sale or the right
to foreclose the Mortgage subject to applicable federal and state laws and
judicial precedent with respect to bankruptcy and right of redemption;

 

  (22) Conformance with Underwriting Guidelines and Agency Standards. The
Mortgage Loan was underwritten in accordance with Seller’s underwriting
guidelines in effect at the time the Mortgage Loan was originated, a copy of
which underwriting guidelines are attached as Exhibit II hereto. The Mortgage
Note and Mortgage are on forms acceptable to Fannie Mae or Freddie Mac and
Seller has not made any representations to a Mortgagor that are inconsistent
with the mortgage instruments used;

 

  (23) Occupancy of the Mortgaged Property. As of the related Purchase Date the
Mortgaged Property is lawfully occupied under applicable law. All inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property and, with respect to the use and
occupancy of the same, including but not limited to certificates of occupancy
and fire underwriting certificates, have been made or obtained from the
appropriate authorities. Seller has not received notification from any
Governmental Authority that the Mortgaged Property is in material non-compliance
with such laws or regulations, is being used, operated or occupied unlawfully or
has failed to have or obtain such inspection, licenses or certificates, as the
case may be. Seller has not received notice of any violation or failure to
conform with any such law, ordinance, regulation, standard, license or
certificate;

 

  (24) No Additional Collateral. The Mortgage Note is not and has not been
secured by any collateral except the lien of the corresponding Mortgage and the
security interest of any applicable security agreement or chattel mortgage
referred to in Paragraph (10) above;

 

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

 

  (26) Acceptable Investment. The Mortgagor is not in bankruptcy or insolvent
and Seller has no knowledge of any circumstances or conditions with respect to
the Mortgage, the Mortgaged Property, the Mortgagor or the Mortgagor’s credit
standing that can reasonably be expected to cause private institutional
investors to regard the Mortgage Loan as an

 

Sch. 1-9

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

unacceptable investment, cause the Mortgage Loan to become delinquent, or
adversely affect the value or marketability of the Mortgage Loan. No Mortgaged
Property is located in a state, city, county or other local jurisdiction which
the Buyer has determined in its sole good faith discretion would cause the
related Mortgage Loan to be ineligible for whole loan sale or securitization in
a transaction consistent with the prevailing sale and securitization industry
(including, without limitation, the practice of the rating agencies) with
respect to substantially similar mortgage loans;

 

  (27) Delivery of Mortgage Loan Documents. Other than with respect to Wet-Ink
Mortgage Loans, the Mortgage Note, the Mortgage, the Assignment of Mortgage and
any other documents required to be delivered by Seller under this Agreement have
been delivered to Buyer or its Custodian. Seller is in possession of a complete,
true and accurate Mortgage File in compliance with Section 2 of the Custodial
and Disbursement Agreement, except for such documents the originals of which
have been delivered to Buyer or its Custodian;

 

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

 

  (29) Transfer of Mortgage Loans. The Assignment of Mortgage is in recordable
form and is acceptable for recording under the laws of the jurisdiction in which
the Mortgaged Property is located;

 

  (30) No Buydown Provisions; No Graduated Payments or Contingent Interests. The
Mortgage Loan does not contain provisions pursuant to which Monthly Payments are
paid or partially paid with funds deposited in any separate account established
by Seller, the Mortgagor or anyone on behalf of the Mortgagor, or paid by any
source other than the Mortgagor nor does it contain any other similar provisions
currently in effect which may constitute a “buydown” provision. The Mortgage
Loan is not a graduated payment mortgage loan and the Mortgage Loan does not
have a shared appreciation or other contingent interest feature;

 

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

 

Sch. 1-10

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  (32) Mortgaged Property Undamaged. There is no proceeding pending or
threatened for the total or partial condemnation of the Mortgaged Property. The
Mortgaged Property is undamaged by waste, fire, earthquake or earth movement,
windstorm, flood, tornado or other casualty so as to affect adversely the value
of the Mortgaged Property as security for the Mortgage Loan or the use for which
the premises were intended;

 

  (33) Collection Practices; Escrow Deposits; Adjustable Rate Mortgage Loan
Adjustments. The origination and collection practices used with respect to the
Mortgage Loan have been in accordance with Accepted Servicing Practices and in
all respects in compliance with all applicable laws and regulations. With
respect to escrow deposits and Escrow Payments (other than with respect to
Second Lien Mortgage Loans for which the mortgagee under the prior mortgage lien
is collecting Escrow Payments), all such payments are in the possession of
Seller and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. Each Mortgage
Loan is covered by a life of loan tax service contract. All Escrow Payments have
been collected in full compliance with state and federal laws. An escrow of
funds is not prohibited by applicable law and has been established in an amount
sufficient to pay for every item which remains unpaid and which has been
assessed but is not yet due and payable. No escrow deposits or Escrow Payments
or other charges or payments due Seller have been capitalized under the Mortgage
or the Mortgage Note. All Mortgage Interest Rate adjustments have been made in
strict compliance with state and federal laws and the terms of the related
Mortgage Note. Any interest required to be paid pursuant to state and local laws
has been properly paid and credited;

 

  (34) Appraisal. The related Servicing File contains an appraisal of the
Mortgaged Property signed prior to the approval of the Mortgage application by a
appraiser qualified under Fannie Mae and Freddie Mac guidelines who (i) is
licensed in the state where the Mortgaged Property is located, (ii) has no
interest, direct or indirect, in the Mortgaged Property or in any Mortgage Loan
or the security therefor, and (iii) does not receive compensation that is
affected by the approval or disapproval of the Mortgage Loan. The appraisal
shall have been made within one hundred and eighty (180) days of the origination
of the Mortgage Loan, be completed in compliance with the Uniform Standards of
Professional Appraisal Practice, and all applicable Federal and state laws and
regulations. If the appraisal was made more than one hundred and twenty (120)
days before the origination of the Mortgage Loan, Seller shall have received and
deliver to Buyer a recertification of the appraisal;

 

Sch. 1-11

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  (35) Servicemembers Civil Relief Act. The Mortgagor has not notified Seller,
and Seller has no knowledge of, any relief requested or allowed to the Mortgagor
under the Servicemembers Civil Relief Act, or any similar state statute;

 

  (36) Environmental Matters. The Mortgaged Property is free from any and all
toxic or hazardous substances and there exists no violation of any local, state
or federal environmental law, rule or regulation. There is no pending action or
proceeding directly involving any Mortgaged Property of which Seller is aware in
which compliance with any environmental law, rule or regulation is an issue; and
to the best of Seller’s knowledge, nothing further remains to be done to satisfy
in full all requirements of each such law, rule or regulation consisting a
prerequisite to use and enjoyment of said property;

 

  (37) No Construction Loans. No Mortgage Loan was made in connection with (a)
facilitating the trade-in or exchange of a Mortgaged Property or (b) the
construction or rehabilitation of a Mortgaged Property, unless the Mortgage Loan
is a construction-to-permanent mortgage loan listed on the Seller Asset Schedule
which has been fully disbursed, all construction work is complete and a
completion certificate has been issued;

 

  (38) No Denial of Insurance. No action, inaction, or event has occurred and no
state of fact exists or has existed that has resulted or will result in the
exclusion from, denial of, or defense to coverage under any applicable pool
insurance policy, primary mortgage insurance policy, special hazard insurance
policy, or bankruptcy bond, irrespective of the cause of such failure of
coverage;

 

  (39) Regarding the Mortgagor. The Mortgagor is one or more natural persons
and/or trustees for an Illinois land trust or a trustee under a “living trust”
and such “living trust” is in compliance with Fannie Mae guidelines for such
trusts;

 

  (40) Mortgagor Acknowledgment. The Mortgagor has received all disclosure
materials required by applicable law with respect to the making of Adjustable
Rate Mortgage Loans. Seller shall maintain such documents in the Mortgage File;

 

  (41) Predatory Lending Regulations; High Cost Loans. No Mortgage Loan is a
High Cost Loan or Covered Loan, as applicable, and no Mortgage Loan originated
on or after October 1, 2002 through March 6, 2003 is governed by the Georgia
Fair Lending Act. No Mortgage Loan is covered by the Home Ownership and Equity
Protection Act of 1994 and no Mortgage Loan is in violation of any comparable
state or local law. The Mortgaged Property is not located in a jurisdiction
where a breach of this representation with respect to the related Mortgage Loan
may result in

 

Sch. 1-12

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additional assignee liability to Buyer, as determined by Buyer in its reasonable
discretion and as set forth on Exhibit XI hereto, as such Exhibit may be revised
from time to time;

 

  (42) Qualified Mortgage. The Mortgage Loan is a “qualified mortgage” within
the meaning of Section 860G(a)(3) or any successor provision thereof of the
Internal Revenue Code of 1986, as amended.

 

  (43) Insurance. Seller has caused or will cause to be performed any and all
acts required to preserve the rights and remedies of Buyer in any insurance
policies applicable to the Mortgage Loans including, without limitation, any
necessary notifications of insurers, assignments of policies or interests
therein, and establishments of coinsured, joint loss payee and mortgagee rights
in favor of Buyer;

 

  (44) Simple Interest Mortgage Loans. None of the Mortgage Loans are simple
interest Mortgage Loans;

 

  (45) Prepayment Fee. With respect to each Mortgage Loan that has a prepayment
fee feature, each such prepayment fee is enforceable and will be enforced by
Seller for the benefit of Buyer, and each prepayment fee is permitted pursuant
to federal, state and local law and is only payable (i) with respect to a
Mortgage Loan originated prior to October 1, 2002, during the first 5 years of
the term of the Mortgage Loan, and (ii) with respect to a Mortgage Loan
originated on or after October 1, 2002, during the first 3 years of the term of
the Mortgage Loan. Each such prepayment fee is in an amount equal to the maximum
amount permitted under applicable law;

 

  (46) Flood Certification Contract. Seller shall have obtained a life of loan,
transferable flood certification contract for each Mortgage Loan and shall
assign all such contracts to Buyer;

 

  (47) CLTV. No Second Lien Mortgage Loan has a CLTV in excess of 100%;

 

  (48) Consent. Either (a) no consent for the Second Lien Mortgage Loan is
required by the holder of the related first lien or (b) such consent has been
obtained and is contained in the Mortgage File.

 

  (49) Wet-Ink Mortgage Loans. With respect to each Mortgage Loan that is a
Wet-Ink Mortgage Loan, the Settlement Agent has been instructed in writing by
Seller to hold the related Mortgage File as agent and bailee for Buyer or
Buyer’s agent and to promptly forward such Mortgage File in accordance with the
provisions of the Custodial Agreement.

 

  (50) No Equity Participation. No document relating to the Mortgage Loan
provides for any contingent or additional interest in the form of participation
in the cash flow of the Mortgaged Property or a sharing in

 

Sch. 1-13

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the appreciation of the value of the Mortgaged Property. The indebtedness
evidenced by the Mortgage Note is not convertible to an ownership interest in
the Mortgaged Property or the Mortgagor and Seller has not financed nor does it
own directly or indirectly, any equity of any form in the Mortgaged Property or
the Mortgagor;

 

  (51) Origination Date. The Origination Date is no earlier than 90 days prior
to the date the Mortgage Loan is first purchased by Buyer;

 

  (52) No Exception. Custodian has not noted any material exceptions on a Basic
Status Report and Exception Report or the Seller Asset Schedule and Exception
Report, as applicable (as defined in the Custodial and Disbursement Agreement),
with respect to the Mortgage Loan which would materially and adversely affect
the Mortgage Loan or Buyer’s ownership of the Mortgage Loan, unless consented to
by Buyer;

 

  (53) Mortgage Submitted for Recordation. The Mortgage either has been or will
promptly be submitted for recordation in the appropriate governmental recording
office of the jurisdiction where the Mortgaged Property is located;

 

  (54) Endorsements. Each Mortgage Note has been endorsed by Seller for its own
account and not as a fiduciary, trustee, trustor or beneficiary under a trust
agreement;

 

  (55) Accuracy of Information. All information provided to Buyer by Seller with
respect to the Mortgage Loans is accurate in all material respects;

 

  (56) Single Premium Credit Insurance. No Mortgagor is offered or required to
purchase single premium credit insurance in connection with the origination of
the related Mortgage Loan;

 

  (57) Fair Credit Reporting Act. The Seller has (or has caused the Servicer
to), in its capacity as servicer, for each Mortgage Loan, fully furnished, in
accordance with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on its
borrower credit files to Equifax, Experian and Trans Union Credit Information
Company (three of the credit repositories), on a monthly basis;

 

  (58) New Century Credit Corporation f/k/a Worth Funding Incorporated. No
Mortgage Loan sold hereunder was owned by Worth Funding Incorporated at any time
since its Origination Date; and

 

  (59) No Arbitration. No Mortgage Loan originated on or after July 1, 2004
requires the related Mortgagor to submit to arbitration to resolve any dispute
arising out of or relating in any way to the Mortgage Loan transaction.

 

Sch. 1-14

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

Part II: Defined Terms

 

In addition to terms defined elsewhere in the Repurchase Agreement, the
following terms shall have the following meanings when used in this Schedule 1:

 

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

 

“Adjustable Rate Mortgage Loan” shall mean an Adjustable Rate Mortgage Loan
purchased pursuant to this Agreement.

 

“Covered Loan” shall mean a Mortgage Loan categorized as Covered pursuant to
Appendix E of Standard & Poor’s Glossary.

 

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

 

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

 

“First Lien Mortgage Loan” shall mean a Mortgage Loan secured by a first lien
Mortgage on the related Mortgaged Property.

 

“Fixed Rate Mortgage Loan” shall mean a fixed rate Mortgage Loan purchased
pursuant to this Repurchase Agreement.

 

“Gross Margin” shall mean, with respect to each Adjustable Rate Mortgage Loan,
the fixed percentage amount set forth in the related Mortgage Note which amount
is added to the index in accordance with the terms of the related Mortgage Note
to determine on each Interest Rate Adjustment Date the Mortgage Interest Rate
for such Mortgage Loan.

 

“Ground Lease” shall mean the original executed instrument evidencing a
leasehold estate with respect to a Mortgaged Property.

 

“High Cost Loan” shall mean a Mortgage Loan classified as (a) a “high cost” loan
under the Home Ownership and Equity Protection Act of 1994, (b) a “high cost
home,” “threshold,” “covered,” (excluding New Jersey “Covered Home Loans” as
that term is defined in clause (1) of the definition of that term in the New
Jersey Home Ownership Security Act of 2002), “high risk home,” “predatory” or
similar loan under any other applicable state, federal or local law (or a
similarly classified loan using different terminology under a law imposing
heightened regulatory scrutiny or additional legal liability for residential
mortgage loans having high interest rates, points and/or fees) or (c) a Mortgage
Loan categorized as High Cost pursuant

 

Sch. 1-15

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

to Appendix E of Standard & Poor’s Glossary. For avoidance of doubt, the parties
agree that this definition shall apply to any law regardless of whether such law
is presently, or in the future becomes, the subject of judicial review or
litigation.

 

“Home Loan” shall mean a Mortgage Loan categorized as Home Loan pursuant to
Appendix E of Standard & Poor’s Glossary.

 

“Interest Rate Adjustment Date” shall mean with respect to each Adjustable Rate
Mortgage Loan, the date set forth in the related Mortgage Note on which the
Mortgage Interest Rate on the Mortgage Loan is adjusted in accordance with the
terms of the Mortgage Note.

 

“Maximum Mortgage Interest Rate” shall mean with respect to each Adjustable Rate
Mortgage Loan, a rate that is set forth on the related Seller Asset Schedule and
in the related Mortgage Note and is the maximum interest rate to which the
Mortgage Interest Rate on such Mortgage Loan may be increased on any Interest
Rate Adjustment Date.

 

“Minimum Mortgage Interest Rate” shall mean with respect to each Adjustable Rate
Mortgage Loan, a rate that is set forth on the related Seller Asset Schedule and
in the related Mortgage Note and is the minimum interest rate to which the
Mortgage Interest Rate on such Mortgage Loan may be decreased on any Interest
Rate Adjustment Date.

 

“Monthly Payment” shall mean with respect to any Mortgage Loan, the scheduled
combined payment of principal and interest payable by a Mortgagor under the
related Mortgage Note on each Due Date.

 

“Mortgage Interest Rate” shall mean with respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan from time to time in
accordance with the provisions of the related Mortgage Note.

 

“Standard & Poor’s Glossary” shall mean the Standard & Poor’s LEVELS® Glossary,
as may be in effect from time to time.

 

Sch. 1-16

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

SCHEDULE 2

 

EXISTING FINANCING FACILITIES

 

[TO BE AMENDED/REPLACED BASED ON THE MOST RECENT 10Q FILING]

 

Bank of America Financing Facility: the Master Repurchase Agreement dated as of
May 10, 2002, as may be amended from time to time, by and between New Century
Funding A and Bank of America, N.A. and all other documents or agreements
executed in connection therewith, or replacement facilities with substantially
similar terms (including, but not limited to, amounts and rates) with financial
institutions approved by Buyer.

 

Morgan Stanley Financing Facility: the Master Loan and Security Agreement dated
June 23, 2003, as may be amended from time to time, between NCCC, NCMC and
Morgan Stanley Mortgage Capital, Inc. and all other documents or agreements
executed in connection therewith, or replacement facilities with substantially
similar terms (including, but not limited to, amounts and rates) with financial
institutions approved by Buyer.

 

Salomon Financing Facility: the TBMA/ISMA Global Master Repurchase Agreement, as
may be amended from time to time, by and between Salomon Smith Barney Inc. as
agent for Salomon Brothers International Ltd. and NCCC and Annex I thereto,
dated as of March 29, 2001 and all other documents or agreements executed in
connection therewith, or replacement facilities with substantially similar terms
(including, but not limited to, amounts and rates) with financial institutions
approved by Buyer.

 

Salomon NCMC Financing Facility: the Letter Agreement, dated December 1, 2000,
as may be amended from time to time, by and among Salomon Brothers Realty Corp.,
NCCC and NCMC and all other documents or agreements executed in connection
therewith, or replacement facilities with substantially similar terms
(including, but not limited to, amounts and rates) with financial institutions
approved by Buyer.

 

Salomon REO Financing Facility: the Master Loan and Security Agreement dated as
of April 1, 2000, as may be amended from time to time, by and between NCMC, NCCC
and Salomon Brothers Realty Corp., and all other documents or agreements
executed in connection therewith, or replacement facilities with substantially
similar terms (including, but not limited to, amounts and rates) with financial
institutions approved by Buyer.

 

UBS Financing Facility: the Committed Note Purchase Agreement dated as of May
10, 2002, as may be amended from time to time, by and between New Century
Funding I and UBS Real Estate Securities Inc. (formerly known as Paine Webber
Real Estate Securities Inc.) and all other documents or agreements executed in
connection therewith, or replacement facilities with substantially similar terms
(including, but not limited to, amounts and rates) with financial institutions
approved by Buyer; provided that the UBS Financing Facility may be terminated or
amounts available to Seller thereunder may be reduced so long as it is a result
of the repayment of all amounts due thereunder other than as a result of an
acceleration or a default.

 

Exh. I-1

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

EXHIBIT I

 

FORM OF TRANSACTION REQUEST

 

[Date]

 

CDC Mortgage Capital Inc.

9 West 57th Street

New York, NY 10019

Attention:

 

Ladies/Gentlemen:

 

This letter is a request for you to purchase from us the Mortgage Loans listed
in Appendix I hereto, pursuant to the Third Amended and Restated Master
Repurchase Agreement governing purchases and sales of Mortgage Loans between us,
dated as of September 10, 2004 (the “Agreement”), as follows:

 

Requested Purchase Date:

 

Eligible Assets requested to be Purchased: See Appendix I hereto.

[Appendix I to Transaction Request will list Mortgage Loans]

 

Aggregate Principal Amount of Eligible Assets requested to be purchased:

 

Purchase Price:

 

Pricing Rate:

 

Repurchase Date1:

 

Repurchase Price:

 

Purchase Percentage:

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

1 If marked as “open”, the Repurchase Date shall be one (1) Business Day after
the date upon which either Buyer (in its sole discretion) or the Seller (in its
sole discretion) provides to the other written notice of its intention to sell
or repurchase, as applicable, the Mortgage Loans on Appendix I hereto; provided
that the Repurchase Date shall not, in any event, exceed 364 days from the date
hereof.

 

Exh. I-1

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

Names and addresses for communications:

 

Buyer:

 

CDC Mortgage Capital Inc.

9 West 57th Street

New York, NY 10019

Attention: Ray Sullivan

Email: r.sullivan@cdcixis-cmna.com

 

with copies to:

 

John Racy

Email: jracy@cdcixis-cmna.com

 

Seller:

 

New Century Mortgage Corporation

18400 Von Karman,

Suite 1000

Irvine, California 92612

Attn:

Email:

 

This Transaction Request constitutes certification by Seller that:

 

  1. No Default or Event of Default has occurred and is continuing on the date
hereof nor will occur after giving effect to such Transaction as a result of
such Transaction.

 

  2. Each of the conditions precedent set forth in Section 3 with respect to the
Transaction has been satisfied.

 

  3. Each of the representations and warranties made by Seller in or pursuant to
the Agreement is true and correct in all material respects on and as of such
date and as of the date hereof (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as of such specific
date).

 

  4. Seller is in compliance with all governmental licenses and authorizations
and is qualified to do business and is in good standing in all required
jurisdictions.

 

All capitalized terms used herein shall have the meaning assigned thereto in the
Agreement.

 

Exh. I-2

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

EXHIBIT II

 

UNDERWRITING GUIDELINES

 

Exh. II-1

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

EXHIBIT III

 

FORM OF OPINIONS

 

CDC Mortgage Capital Inc.

9 West 57th Street

New York, NY 10019

 

Dear Sirs and Mesdames:

 

You have requested our opinion as counsel to New Century Mortgage Corporation
(“NCMC”), NC Residual II Corporation (“NCRC”) and NC Capital Corporation
(“NCCC”) and New Century Financial Corporation (the “Guarantor”), each a
corporation organized and existing under the laws of California, with respect to
certain matters in connection with that certain Third Amended and Restated
Master Repurchase Agreement governing purchases and sales of certain Mortgage
Loans, dated as of September 10, 2004 (the “Repurchase Agreement”), by and among
NCCC, NCRC, NCMC and CDC Mortgage Capital Inc. (the “Buyer”), the Custodial
Agreement, dated as of May 10, 2002, as amended (the “Custodial Agreement”),
among NCCC, NCRC, NCMC, Buyer and Deutsche Bank National Trust Company, as
custodian and disbursement agent and the Account Agreement, dated as of
September 10, 2004 (the “Account Agreement”), among NCCC, NCRC, NCMC, Buyer and
Union Bank of California, N.A.. The Master Repurchase Agreement, the Custodial
Agreement and the Account Agreement are hereinafter collectively referred to as
the “Governing Agreements.” Capitalized terms not otherwise defined herein have
the meanings set forth in the Repurchase Agreement.

 

  [We] [I] have examined the following documents:

 

  1. the Repurchase Agreement;

 

  2. the Custodial and Disbursement Agreement;

 

  3. the Account Agreement;

 

  4. unfiled copies of the financing statements listed on Schedule 1
(collectively, the “Financing Statements”) naming each of NCCC, NCRC and NCMC as
Debtor and Buyer as Secured Party and describing the Purchased Items (as defined
in the Master Repurchase Agreement) as to which security interests may be
perfected by filing under the Uniform Commercial Code of the States listed on
Schedule 1 attached hereto (the “Filing Collateral”), which I understand will be
filed in the filing offices listed on Schedule 1 attached hereto (the “Filing
Offices”);

 

  5. the reports listed on Schedule 2 as to UCC financing statements
(collectively, the “UCC Search Report”); and

 

  6. such other documents, records and papers as we have deemed necessary and
relevant as a basis for this opinion.

 

To the extent [we] [I] have deemed necessary and proper, [we] [I] have relied
upon the representations and warranties of NCCC, NCRC and NCMC contained in the

 

Exh. III-1

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

Repurchase Agreement. [We] [I] have assumed the authenticity of all documents
submitted to me [us] as originals, the genuineness of all signatures, the legal
capacity of natural persons and the conformity to the originals of all
documents.

 

Based upon the foregoing, it is [our] [my] opinion that:

 

1. Each of NCCC and NCMC is a corporation duly organized, validly existing and
in good standing under the laws of the State of California and is qualified to
transact business in, and is in good standing under, the laws of the State of
California. NCRC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is qualified to transact
business in, and is in good standing under, the laws of the State of Delaware.

 

2. Guarantor is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and is qualified to transact
business in, and is in good standing under, the laws of the State of Delaware.

 

3. The execution, delivery and performance by each of NCCC, NCRC, NCMC and
Guarantor of the Governing Agreements to which it is a party, and the sales by
NCCC, NCRC and NCMC and the pledge of the Purchased Items under the Repurchase
Agreement have been duly authorized by all necessary corporate action on the
part of NCCC, NCRC, NCMC and Guarantor, as applicable. Each of the Governing
Agreements to which it is a party have been executed and delivered by NCCC,
NCRC, NCMC and Guarantor and are legal, valid and binding agreements enforceable
in accordance with their respective terms against Seller, subject to bankruptcy
laws and other similar laws of general application affecting rights of creditors
and subject to the application of the rules of equity, including those
respecting the availability of specific performance, none of which will
materially interfere with the realization of the benefits provided thereunder or
with Buyer’s purchase of the Purchased Assets and/or security interest in the
Purchased Assets.

 

4. No consent, approval, authorization or order of, and no filing or
registration with, any court or governmental agency or regulatory body is
required on the part of NCCC, NCMC or Guarantor for the execution, delivery or
performance by NCCC, NCRC, NCMC or Guarantor of the Governing Agreements to
which it is a party or for the sales by NCCC, NCRC or NCMC under the Repurchase
Agreement or the sale of the Purchased Items to Buyer and/or granting of a
security interest to Buyer in the Purchased Items, pursuant to the Repurchase
Agreement.

 

5. The execution, delivery and performance by NCCC, NCRC, NCMC or Guarantor of,
and the consummation of the transactions contemplated by the Governing
Agreements to which it is a party do not and will not (a) violate any provision
of NCCC’s, NCRC’s, NCMC’s or Guarantor’s, as applicable, charter or by-laws, (b)
violate any applicable law, rule or regulation, (c) violate any order, writ,
injunction or decree of any court or governmental authority or agency or any
arbitral award applicable to NCCC, NCRC, NCMC or Guarantor of which I [we] have
knowledge (after due inquiry) or (d) result in a breach of, constitute a default
under, require any consent under, or result in the acceleration or required
prepayment of any indebtedness pursuant to the terms of, any agreement or
instrument of which I

 

Exh. III-2

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

have knowledge (after due inquiry) to which NCCC, NCRC, NCMC or Guarantor is a
party or by which NCCC, NCRC, NCMC or Guarantor is bound or to which NCCC, NCRC,
NCMC or Guarantor is subject, or (except for the Liens created pursuant to the
Repurchase Agreement) result in the creation or imposition of any Lien upon any
Property of NCCC, NCRC, NCMC or Guarantor pursuant to the terms of any such
agreement or instrument.

 

6. There is no action, suit, proceeding or investigation pending or, to the best
of [our] [my] knowledge, threatened against NCCC, NCRC, NCMC or Guarantor which,
in [our] [my] judgment, either in any one instance or in the aggregate, could be
reasonably likely to result in any material adverse effect on (a) the Property,
business, operations, financial condition or prospects of NCCC, NCRC, NCMC or
Guarantor, (b) the ability of NCCC, NCRC or NCMC to perform its obligations
under any of the Repurchase Documents to which it is a party, (c) the validity
or enforceability of any of the Repurchase Documents, (d) the rights and
remedies of Buyer under any of the Repurchase Documents, (e) the timely payment
of any amounts payable under the Repurchase Documents, (f) the Asset Value of
the Purchased Assets or (g) the ability of Guarantor to perform its obligations
under the Guaranty.

 

7. The Repurchase Agreement is effective to create, in favor of Buyer, either a
valid sale of the Purchased Items to Buyer or a valid security interest under
the Uniform Commercial Code in all of the right, title and interest of NCCC,
NCRC and NCMC in, to and under the Purchased Items as collateral security for
the payment of NCCC’s, NCRC’s and NCMC’s obligations under the Repurchase
Agreement, except that (a) such security interests will continue in Purchased
Items after its sale, exchange or other disposition only to the extent provided
in Section 9-306 of the Uniform Commercial Code, (b) the security interests in
Purchased Items in which Seller acquires rights after the commencement of a case
under the Bankruptcy Code in respect of NCCC, NCRC or NCMC may be limited by
Section 552 of the Bankruptcy Code.

 

8. When the Mortgage Notes are delivered to Custodian, endorsed in blank by a
duly authorized officer of NCCC, NCRC or NCMC, as applicable, the security
interest referred to in Section 7 above in the Mortgage Notes will constitute a
fully perfected first priority security interest in all right, title and
interest of Seller therein.

 

9. (a) Upon the filing of financing statements on Form UCC-1 naming Buyer as
“Secured Party” and NCCC, NCRC and NCMC as “Debtor”, and describing the
Purchased Items, in the jurisdictions and recording offices listed on Schedule 1
attached hereto, the security interests referred to in Section 7 above will
constitute fully perfected security interests under the Uniform Commercial Code
in all right, title and interest of NCCC, NCRC and NCMC in, to and under such
Purchased Items, which can be perfected by filing under the Uniform Commercial
Code, or, will demonstrate a completion of the sale of the Mortgage Loans to
Buyer.

 

(b) The UCC Search Report sets forth the proper filing offices and the proper
debtors necessary to identify those Persons who have on file in the
jurisdictions listed on Schedule 1 financing statements covering the Purchased
Items as of the dates and times specified on Schedule 2. The UCC Search Report
identifies no Person who has filed in any Filing Office a financing statement
describing the Purchased Items prior to the effective dates of the UCC Search
Report.

 

Exh. III-3

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

10. None of NCCC, NCRC, NCMC nor Guarantor is an “investment company”, or a
company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended.

 

11. Commencing with NCRC’s initial taxable year ended [            ], the
Company is organized in conformity with the requirements for qualification as a
real estate investment trust (a “REIT”) under the Code, and the Company’s actual
method of operations and its proposed method of operations will enable the
Company to meet the requirements for qualification and taxation as a REIT under
the Code.

 

Very truly yours,

 

Exh. III-4

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

EXHIBIT IV

 

UCC FILING JURISDICTIONS

 

Secretary of State of California

Secretary of State of Delaware

 

Exh. IV-1

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

EXHIBIT V

 

FORM OF ACCOUNT AGREEMENT

 

[date]

 

New Century Mortgage Corporation, as Seller

NC Capital Corporation, as Seller

18400 Von Karman,

Suite 1000

Irvine, California 92612

Attn: Ralph Flick, Esq.

 

[BANK], as Bank

[ADDRESS]

Attn:

 

  Re: Collection Account Established by NEW CENTURY MORTGAGE CORPORATION
(“NCMC”), NC RESIDUAL II CORPORATION (“NCRC”), NC CAPITAL CORPORATION (“NCCC”
and, together with NCRC and NCMC, “Seller”) at [BANK] (the “Bank”) pursuant to
that certain Third Amended and Restated Master Repurchase Agreement (as amended,
supplemented or otherwise modified from time to time, the “Repurchase
Agreement”), dated as of September 10, 2004, among CDC Mortgage Capital Inc.
(the “Buyer”), NCCC, NCRC and NCMC.

 

Ladies and Gentlemen:

 

Seller has entered into a Repurchase Agreement pursuant to which Buyer may from
time to time purchase mortgage loans (the “Purchased Assets”) secured by, among
other things, the payments made by mortgagors on account of Purchased Assets
sold to Buyer under the Repurchase Agreement. As a requirement of such
transactions, upon a default or an event of default under the Repurchase
Agreement, all such payments are required to be forwarded daily to Buyer at the
Collection Account identified below within one (1) Business Day of receipt.

 

Seller has established a collection account, Account No. [        ], for the
account of Buyer, with the Bank, ABA# [                    ] (the “Collection
Account”) which the Bank maintains in the name of, and in trust for, Buyer as
the Bank’s customer. Seller has granted to Buyer a security interest in all
payments deposited in the Collection Account with respect to the Purchased
Assets sold to Buyer under the Repurchase Agreement.

 

In the event the Bank receives notice from Buyer that a default or an event of
default has occurred and is continuing under the Repurchase Agreement (a “Notice
of Event of Default”) from Buyer, the Bank shall in no event (a) transfer funds
from the Collection Account to Seller or any other person other than pursuant to
Buyer’s direction, (b) act on the instruction of Seller or any person other than
Buyer or (c) cause or permit withdrawals from the Collection

 

Exh. V-1

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

Account in any manner not approved by Buyer in writing. Until receipt of a
Notice of an Event of Default, Seller shall be permitted to withdraw funds or
cause funds to be transferred from the Collection Account without Buyer’s
approval.

 

The Bank hereby waives any right that the Bank may now or hereafter have to
security interest, bank’s or other possessory liens, rights to offset or other
claims against the funds in the Collection Account.

 

In addition, the Bank acknowledges that (a) Seller has granted to Buyer a
security interest in all of Seller’s right, title and interest in and to any
funds from time to time on deposit in the Collection Account with respect to the
Purchased Assets sold to Buyer under the Repurchase Agreement, (b) that such
funds are received by the Bank in trust for the benefit of Buyer and, except as
provided below, are for application against Seller’s obligations to Buyer, and
(c) that the Bank shall comply with Buyer’s instructions regarding the
disposition of funds in the Collection Account in accordance with Buyer’s
instructions, without the consent of Seller until the Bank receives notice from
Buyer that it has released its lien on the Collection Account and all funds
deposited therein.

 

All bank statements in respect to the Collection Account shall be sent to Buyer
at:

 

CDC Mortgage Capital Inc.

9 West 57th Street

New York, NY 10019

Attention: Ray Sullivan

Email: r.sullivan@cdcixis-cmna.com

 

with copies to Seller at:

 

[Seller]

 

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

 

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

Attention: Email:

 

This account agreement shall be governed and construed in accordance with the
laws of the State of New York without regard to conflicts of law principles.

 

Exh. V-2

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

Kindly acknowledge your agreement with the terms of this agreement by signing
the enclosed copy of this letter and returning it to the undersigned.

 

Very truly yours,

CDC MORTGAGE CAPITAL INC.

By:

 

 

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

Name:

   

Title:

   

By:

 

 

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

Name:

   

Title:

   

 

Agreed and acknowledged:

NEW CENTURY MORTGAGE CORPORATION, as Seller

By:

 

 

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

Name:

   

Title:

   

NC CAPITAL CORPORATION, as Seller

By:

 

 

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

Name:

   

Title:

   

Agreed and acknowledged:

[BANK], as Bank

By:

 

 

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

Name:

   

Title:

   

[SERVICER]

By:

 

 

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

Name:

   

Title:

   

 

Exh. V-3

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

EXHIBIT VI

 

FORM OF TRUE SALE CERTIFICATION

 

CERTIFICATE OF [NEW CENTURY MORTGAGE CORPORATION]

 

In connection with the transaction pursuant to the Third Amended and Restated
Master Repurchase Agreement, dated as of September 10, 2004 between CDC Mortgage
Capital Inc., NC Capital Corporation [(the “Purchaser”)] and New Century
Mortgage Corporation [(the “Purchaser”)], the undersigned certifies, on behalf
of Purchaser that:

 

1. I personally participated as the                      of the Purchaser in the
transaction (the “Transaction”), pursuant to which [INSERT NAME OF SELLING
ENTITY] (the “Seller”) sold [DESCRIBE ASSETS] (the “Assets”) to the Purchaser.
In such capacity, I reviewed the purchase and sale agreement relating to the
Transaction dated as of                          , 200[    ] (the “Purchase and
Sale Agreement”).

 

2. Due to my close involvement in the Transaction, I can accurately and
diligently certify the facts listed herein on behalf of the Purchaser.

 

3. Seller has shifted all of the risks and burdens which are associated with the
ownership of the Assets to the Purchaser.

 

4. Seller has shifted all of the benefits and rewards which are associated with
the Assets to the Purchaser. Subsequent to the consummation of the Transaction,
Seller had no control or other rights with respect to the Assets, and all legal
rights and title with respect to the Assets vested in the Purchaser.

 

5. There has been no recourse to Seller with respect to the performance of the
Assets.

 

6. As of the date of the consummation of the Transaction, Seller received from
the Purchaser reasonably equivalent value for the transferred Assets, in the
form of [DESCRIBE CONSIDERATION].

 

7. The Purchase and Sale Agreement represented the intention of Seller and the
Purchaser to accomplish a complete and irrevocable sale of the Assets.

 

8. Seller neither was obligated to repurchase, nor had any “call” rights with
respect to, the Assets.

 

9. The Purchaser neither was obligated to sell the Assets back to Seller, nor
had any “put” rights with respect to the Assets.

 

10. The Purchaser’s books and records reflect that the Transaction was a
purchase of the Assets from the Seller, rather than a secured financing or a
loan.

 

Exh. VI-1

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

11. The Purchaser treated the Transaction as a purchase for accounting and tax
purposes.

 

12. The Transaction was duly authorized by the Purchaser’s officers and
directors, as required by the Purchaser’s organizational documents and
applicable law.

 

I have been duly authorized to execute this certificate on behalf of Purchaser.

 

[NEW CENTURY MORTGAGE CORPORATION]

By:

 

 

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

Name:

   

Title:

   

 

Exh. VI-2

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

CERTIFICATE OF [NAME OF SELLING ENTITY]

 

In connection with the transaction pursuant to the Third Amended and Restated
Master Repurchase Agreement, dated as of September 10, 2004 between CDC Mortgage
Capital Inc., NC Capital Corporation [(the “Purchaser”)] and New Century
Mortgage Corporation [(the “Purchaser”)], the undersigned certifies, on behalf
of [NAME OF SELLING ENTITY] (the “Seller”) that:

 

1. I personally participated as the                      of Seller in the
transaction (the “Transaction”) pursuant to which Seller sold [DESCRIBE ASSETS]
(the “Assets”) to the Purchaser. In such capacity, I reviewed the purchase and
sale agreement relating to the Transaction dated as of                      ,
200[    ] (the “Purchase and Sale Agreement”).

 

2. Due to my close involvement in the Transaction, I can accurately and
diligently certify the facts listed herein on behalf of Seller.

 

3. Seller has shifted all of the risks and burdens which are associated with the
ownership of the Assets to the Purchaser.

 

4. Seller has shifted all of the benefits and rewards which are associated with
the Assets to the Purchaser. Subsequent to the consummation of the Transaction,
Seller had no control or other rights with respect to the Assets, and all legal
rights and title with respect to the Assets vested in the Purchaser.

 

5. There has been no recourse to Seller with respect to the performance of the
Assets.

 

6. As of the date of the consummation of the Transaction, Seller received from
the Purchaser reasonably equivalent value for the transferred Assets, in the
form of [DESCRIBE CONSIDERATION].

 

7. The Purchase and Sale Agreement represented the intention of Seller and the
Purchaser to accomplish a complete and irrevocable sale of the Assets.

 

8. Seller neither was obligated to repurchase, nor had any “call” rights with
respect to, the Assets.

 

9. The Purchaser neither was obligated to sell the Assets back to Seller, nor
had any “put” rights with respect to the Assets.

 

10. Seller’s books and records reflect that the Transaction was a sale of the
Assets to the Purchaser, rather than a secured financing or a loan.

 

11. Seller treated the Transaction as a sale for accounting and tax purposes.

 

12. The Transaction was duly authorized by Seller’s officers and directors, as
required by Seller’s organizational documents and applicable law.

 

Exh. VI-3

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

I have been duly authorized to execute this certificate on behalf of [Insert
name of Selling Entity].

 

[INSERT NAME OF SELLING ENTITY]

By:

 

 

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

Name:

   

Title:

   

 

Exh. VI-4

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

EXHIBIT VII-A

 

FORM OF SELLER’S RELEASE LETTER

 

[Date]

 

CDC Mortgage Capital Inc.

9 West 57th Street

New York, NY 10019

 

  Re: Third Amended and Restated Master Repurchase Agreement, dated as of
September 10, 2004 (the “Repurchase Agreement”), by and among New Century
Mortgage Corporation (“NCMC”), NC RESIDUAL II CORPORATION (“NCRC”), NC Capital
Corporation (“NCCC” and, together with NCRC and NCMC, the “Seller”) and CDC
Mortgage Capital Inc. (the “Buyer”).

 

Ladies and Gentlemen:

 

With respect to the mortgage loans described in the attached Schedule A (the
“Mortgage Loans”) (a) we hereby certify to you that the Mortgage Loans are not
subject to a lien of any third party and (b) we hereby release all right,
interest or claim of any kind with respect to such Mortgage Loans, such release
to be effective automatically without further action by any party upon payment
from CDC Mortgage Capital Inc., of the amount of the Purchase Price contemplated
under the Repurchase Agreement (calculated in accordance with the terms thereof)
in accordance with the wiring instructions set forth in the Repurchase
Agreement.

 

Very truly yours,

NEW CENTURY MORTGAGE CORPORATION

By:

 

 

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

Name:

   

Title:

   

 

Exh. VII-A-1

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

NC RESIDUAL II CORPORATION

By:

 

 

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

Name:

   

Title:

   

NC CAPITAL CORPORATION

By:

 

 

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

Name:

   

Title:

   

 

Exh. VI-2

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

EXHIBIT VII-B

 

FORM OF WAREHOUSE LENDER’S RELEASE LETTER

 

[Date]

 

CDC Mortgage Capital Inc.

9 West 57th Street

New York, NY 10019

 

  Re: Certain Mortgage Loans Identified on Schedule A hereto and owned by
[Seller]

 

The undersigned hereby releases all right, interest, lien or claim of any kind
with respect to the mortgage loan(s) described in the attached Schedule A, such
release to be effective automatically without any further action by any party
upon payment in one or more installments, in immediately available funds of
$                    , in accordance with the following wire instructions:

 

 

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

 

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

Very truly yours,

[WAREHOUSE LENDER]

By:

 

 

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

Name:

   

Title:

   

 

Exh.VII-B-1

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

EXHIBIT VIII

 

FORM OF SERVICER NOTICE

 

September 10, 2004

 

[SERVICER], as Servicer

[ADDRESS]

Attention:

 

  Re: Master Repurchase Agreement, dated as of [                    , 200  ]
(the “Agreement”), by and between [Seller] (the “Seller”) and [Buyer] (the
“Buyer”).

 

Ladies and Gentlemen:

 

[SERVICER] (the “Servicer”) is servicing certain mortgage loans for Seller
pursuant to certain [name servicing agreements] (the “Servicing Agreement”)
between the Servicer and Seller. Pursuant to the Agreement between Buyer and
Seller, the Servicer is hereby notified that Seller has sold to Buyer certain
mortgage loans which are serviced by Servicer.

 

Upon receipt of a notice (a “Default Notice”) from Buyer in which Buyer shall
(a) represent that a default or an event of default has occurred with respect to
Seller’s obligations to Buyer and (b) identify the mortgage loans which are then
owned by Buyer under the Agreement (the “Mortgage Loans”), the Servicer shall
segregate all amounts collected on account of such Mortgage Loans, hold them in
trust for the sole and exclusive benefit of Buyer, and remit such collections in
accordance with Buyer’s written instructions. Following receipt of such Default
Notice, Servicer shall follow the instructions of Buyer with respect to the
Mortgage Loans, and shall deliver to Buyer any information with respect to the
Mortgage Loans reasonably requested by Buyer.

 

Upon a receipt of a Default Notice, Buyer shall have the right to terminate the
Servicing Agreement and transfer servicing to its designee, at no cost or
expense to Buyer, and Seller shall pay any and all fees required to terminate
the Servicing Agreement and to effectuate the transfer of servicing to the
designee of Buyer.

 

Notwithstanding any contrary information which may be delivered to the Servicer
by Seller, the Servicer may conclusively rely on any information or Default
Notice delivered by Buyer, and Seller shall indemnify and hold the Servicer
harmless for any and all claims asserted against it for any actions taken in
good faith by the Servicer in connection with the delivery of such information
or Default Notice.

 

Exh. VIII-1

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

Please acknowledge receipt of this instruction letter by signing in the
signature block below and forwarding an executed copy to Buyer promptly upon
receipt. Any notices to Buyer should be delivered to the following address: 9
West 57th Street, New York, New York 10019, Attention: Ray Sullivan.

 

Very truly yours,

NEW CENTURY MORTGAGE CORPORATION

By:

 

 

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

Name:

   

Title:

   

NC CAPITAL CORPORATION

By:

 

 

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

Name:

   

Title:

   

 

ACKNOWLEDGED AND AGREED:

[SERVICER]

as Servicer

By:

 

 

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

Name:

   

Title:

   

Telephone:

   

Facsimile:

   

 

Exh. VIII-2

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

EXHIBIT IX

 

FORM OF REQUEST FOR ADDITIONAL TRANSACTIONS FOR EXCESS MARGIN

 

Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed thereto in the Third Amended and Restated Master
Repurchase Agreement dated as of             , 200   between [SELLER] (the
“Seller”) and CDC Mortgage Capital Inc. (“Buyer”).

 

Pursuant to Section 3(o) of the Repurchase Agreement, Seller hereby requests the
advance of additional Transactions, and in connection with such request provides
the following information:

 

Requested Increase in      Purchase Price    ___________ Requested Purchase Date
   $                         Excess Margin prior to giving effect to Requested
Transaction    $                         Remaining Excess Margin after giving
effect to such Transaction    $                         Aggregate Outstanding
Purchase Price of the Transactions as of Date Hereof after giving effect to the
Requested Transaction    $                        

 

Seller hereby certifies that, after giving effect to the Transaction requested
pursuant hereto, the Margin Base will be equal to or greater than the aggregate
Purchase Price of the Transactions.

 

This Request For Additional Transactions For Excess Margin is dated
                    .

 

Exh. IX-1

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

EXHIBIT X

 

FORM OF COMPLIANCE CERTIFICATE

 

OFFICER’S CERTIFICATE

 

I,                 , the duly appointed, qualified and acting                 
of [SELLER], a [            ] [                ] (the “Company”), hereby certify
on behalf of the Company to CDC Mortgage Capital Inc. (“CDC”) as follows:

 

1. This certificate is being furnished to Buyer pursuant to Section 11(y) of the
Master Repurchase Agreement, dated as of September 10, 2004 (the “Repurchase
Agreement”), between the Company and CDC.

 

2. Pursuant to Section 10(h) of the Repurchase Agreement, Schedule 1 attached
hereto sets forth (i) upon Buyer’s request, all claims in an aggregate amount
greater than $5,000,000 and (ii) all claims which individually or in the
aggregate, if adversely determined, could reasonably be likely to have a
Material Adverse Effect.

 

3. After a review of the Company’s activities during the period from
            , 200   ended             , 200   (the “Subject Period”), I have
determined the following: (a) if applicable for the Subject Period, the Company
has complied with the financial covenants set forth in Sections 11(m), 11(n),
11(o) and 11(s) of the Repurchase Agreement; (b) compliance by the Company with
the above-referenced financial covenants is accurately calculated on Schedule 2
attached hereto; and (c) that the Company has Cash, Cash Equivalents and
available borrowing capacity as follows:

 

$                           Cash $                           Cash Equivalents
$                           Available borrowing capacity calculated pursuant to
Section 11(n)     [list Existing Financing Facility]

 

4. NCRC is, and has been since             , organized and operating in
conformity with the requirements for qualification and taxation as a real estate
investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended
(“Code”). Attached hereto as Schedule 2 is a true and correct summary of the
calculations for REIT qualification of NCRC.

 

Capitalized terms used herein without definition have the meanings given them in
the Repurchase Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

Exh. X-1

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

IN WITNESS WHEREOF, I have executed this certificate on behalf of the Company
this [        ] day of [                ], 200  .

 

[_______________________]

By:

 

 

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

Name:

   

Title:

   

 

Exh. X-2

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

EXHIBIT XI

 

ASSIGNEE LIABILITY JURISDICTIONS

 

[none]

 

Exh. XI-1