Exhibit 10.3

 

EXECUTION VERSION

 

 

 

MASTER REPURCHASE AGREEMENT

 

Between

 

BARCLAYS BANK PLC, as Purchaser and Agent,

 

FIVE OAKS ACQUISITION CORP., as Seller

 

and

 

FIVE OAKS INVESTMENT CORP., as Guarantor

 

Dated as of July 29, 2014

 

 

  

 

 

 

TABLE OF CONTENTS

 

1. APPLICABILITY   1 2. DEFINITIONS AND INTERPRETATION   1 3. THE TRANSACTIONS  
15 4. CONFIRMATION   17 5. TAKEOUT COMMITMENTS   17 6. PAYMENT AND TRANSFER   18
7. MARGIN MAINTENANCE   18 8. TAXES; TAX TREATMENT   19 9. SECURITY INTEREST;
PURCHASER’S APPOINTMENT AS ATTORNEY-IN-FACT   20 10. CONDITIONS PRECEDENT   21
11. RELEASE OF PURCHASED ASSETS   24 12. RELIANCE   24 13. REPRESENTATIONS AND
WARRANTIES   24 14. COVENANTS OF SELLER AND GUARANTOR   27 15. REPURCHASE OF
PURCHASED ASSETS   34 16. SERVICING OF THE MORTGAGE LOANS; SERVICER TERMINATION
  34 17. EVENTS OF DEFAULT   37 18. REMEDIES   40 19. DELAY NOT WAIVER; REMEDIES
ARE CUMULATIVE   42 20. USE OF EMPLOYEE PLAN ASSETS   42 21. INDEMNITY   42 22.
WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS   43 23. REIMBURSEMENT; SET-OFF   43
24. FURTHER ASSURANCES   44 25. ENTIRE AGREEMENT; PRODUCT OF NEGOTIATION   44
26. TERMINATION   45 27. REHYPOTHECATION; ASSIGNMENT   45 28. AMENDMENTS, ETC.  
46 29. SEVERABILITY   46 30. BINDING EFFECT; GOVERNING LAW   46 31. WAIVER OF
JURY TRIAL; CONSENT TO JURISDICTION AND VENUE; SERVICE OF PROCESS   46 32.
SINGLE AGREEMENT   47 33. INTENT   47 34. NOTICES AND OTHER COMMUNICATIONS   47
35. CONFIDENTIALITY   49 36. DUE DILIGENCE   50

 

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SCHEDULES AND EXHIBITS

 

EXHIBIT A MONTHLY CERTIFICATION EXHIBIT B REPRESENTATIONS AND WARRANTIES WITH
RESPECT TO MORTGAGE LOANS EXHIBIT C FORM OF TRANSACTION NOTICE EXHIBIT D FORM OF
GOODBYE LETTER EXHIBIT E FORM OF WAREHOUSE LENDER’S RELEASE EXHIBIT F [RESERVED]
EXHIBIT G [RESERVED] EXHIBIT H FORM OF SELLER MORTGAGE LOAN SCHEDULE EXHIBIT I
EXISTING INDEBTEDNESS

 

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MASTER REPURCHASE AGREEMENT

 

Dated as of July 29, 2014

 

BETWEEN:

 

BARCLAYS BANK PLC, in its capacity as purchaser (“Purchaser”) and agent pursuant
hereto (“Agent”),

 

FIVE OAKS ACQUISITION CORP. (“Seller”),

 

and

 

FIVE OAKS INVESTMENT CORP. (“Guarantor”).

 

1.           APPLICABILITY

 

Purchaser may from time to time, upon the terms and conditions set forth herein,
agree to enter into transactions on an uncommitted basis in which Seller sells
to Purchaser Eligible Mortgage Loans, on a servicing-released basis, against the
transfer of funds by Purchaser, with a simultaneous agreement by Purchaser to
transfer to Seller such Purchased Assets on a date certain less than one year
following such transfer, against the transfer of funds by Seller; provided, that
the Aggregate MRA Purchase Price shall not exceed, as of any date of
determination, the lesser of (a) the Maximum Aggregate Purchase Price and (b)
the Asset Base. Each such transaction shall be referred to herein as a
“Transaction,” and shall be governed by this Agreement. This Agreement is not a
commitment by Purchaser to enter into Transactions with Seller but rather sets
forth the procedures to be used in connection with periodic requests for
Purchaser to enter into Transactions with Seller.

 

2.           DEFINITIONS AND INTERPRETATION

 

(a)           Defined Terms.

 

“30+ Day Delinquent Mortgage Loan” means any Mortgage Loan for which, at any
time of determination, an outstanding Monthly Payment has not been received
within twenty-nine (29) days after its Due Date.

 

“Accepted Servicing Practices” means with respect to any Mortgage Loan, those
accepted, customary and prudent mortgage servicing practices (including
collection procedures) of prudent mortgage banking institutions that service
mortgage loans of the same type as the Mortgage Loans in the jurisdiction where
the related Mortgaged Property is located, and which are in accordance with the
requirements of applicable law and the requirements of any private mortgage
insurer so that any applicable insurance or guarantee in respect of any Mortgage
Loan is not voided or reduced.

 

“Accrual Period” means, with respect to each Monthly Payment Date for any
Transaction, the period from and including the immediately prior Monthly Payment
Date to but excluding such Monthly Payment Date; provided that with respect to
the first Monthly Payment Date of a Transaction following the related Purchase
Date, the Accrual Period shall commence on the related Purchase Date.

 

“Act of Insolvency” means, with respect to any Person,

 

 

 

 

(i)           the filing of a voluntary petition (or the consent by such Person
to the filing of any such petition against it), 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; or such Person shall consent to or seek the appointment of
or taking possession by a custodian, receiver, conservator, trustee, liquidator,
sequestrator or similar official of such Person, or for any substantial part of
its Property, or any general assignment for the benefit of creditors;

 

(ii)         a proceeding shall have been instituted against such Person under
any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution,
moratorium, delinquency or liquidation law of any jurisdiction, whether now or
subsequently in effect, or a custodian, receiver, conservator, liquidator,
trustee, sequestrator or similar official for such Person or such Person’s
Property (as a debtor or creditor protection procedure) is appointed by any
Governmental Authority having the jurisdiction to do so or takes possession of
such Property and any such proceeding is not dismissed within sixty (60) days of
filing; provided, that if, under any other agreement for Indebtedness, Seller or
Guarantor is subject to a shorter time period to dismiss any such proceeding,
such shorter time period shall be automatically incorporated into this Agreement
as if fully set forth herein without the need of any further action on the part
of any party;

 

(iii)        that such Person or any Affiliate shall become insolvent;

 

(iv)        that such Person shall (a) admit in writing its inability to pay or
discharge its debts or obligations generally as they become due or mature, (b)
admit in writing its inability to, or intention not to, perform any of its
material obligations, or (c) generally fail to pay any of its debts or
obligations as they become due or mature;

 

(v)         any Governmental Authority shall have seized or appropriated, or
assumed 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 management
of such Person; or

 

(vi)        the audited annual financial statements of such Person or the notes
thereto or other opinions or conclusions stated therein shall be qualified or
limited by reference to the status of such Person as a “going concern” or a
reference of similar import or shall indicate that such Person has a negative
net worth or is insolvent; or

 

(vii)       if such Person or any Affiliate is a corporation or limited
liability company, such Person or any Affiliate or any of their Subsidiaries,
shall take any entity action in furtherance of, or the action of which would
result in any of the foregoing actions.

 

“Additional Eligible Loan Criteria” shall have the meaning assigned thereto in
the Pricing Side Letter.

 

“Additional Purchased Mortgage Loans” shall have the meaning assigned thereto in
Section 7(b) hereof.

 

“Adjustable Rate Mortgage Loan” means a Mortgage Loan which provides for the
adjustment of the Mortgage Interest Rate payable in respect thereto.

 

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“Affiliate” means, with respect to (i) any specified Person (other than Seller
or Guarantor), any other Person controlling or controlled by or under common
control with such specified Person, (ii) Seller, its Subsidiaries and Guarantor,
and (iii) Guarantor, Seller. For the purposes of this definition, “control”
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise and the terms “controlling,” “controlled by” and “under common
control with” have meanings correlative to the meaning of “control.”

 

“Agency Guide” means the Freddie Mac Guide, the Fannie Mae Guide, or the Ginnie
Mae Guide, as applicable.

 

“Agent” means Barclays Bank PLC and its successors in interest, as
administrative agent for Purchaser and any additional purchasers that may become
a party hereto.

 

“Aggregate MRA Purchase Price” means as of any date of determination, an amount
equal to the aggregate Purchase Price for all Mortgage Loans then subject to
Transactions under this Agreement.

 

“Agreement” means this Master Repurchase Agreement (including all exhibits,
schedules and other addenda thereto), as it may be amended, further supplemented
or otherwise modified from time to time.

 

“Applicable Margin” shall have the meaning assigned thereto in the Pricing Side
Letter.

 

“Applicable Agency” means Ginnie Mae, Fannie Mae, or Freddie Mac, as applicable.

 

“Approvals” means with respect to Seller and Servicer the approvals obtained
from the Applicable Agency or HUD in designation of Seller and/or Servicer as a
Ginnie Mae-approved issuer, an FHA-approved mortgagee, a VA-approved lender, a
Fannie Mae-approved lender or a Freddie Mac-approved Seller/Servicer, as
applicable, in good standing.

 

“Asset Base” means, on any date of determination and with respect to all
Purchased Assets then subject to Transactions and, to the extent applicable, all
Eligible Mortgage Loans proposed to be sold to Purchaser as of such date of
determination, the lesser of (i) 100% of the unpaid principal balance of such
Purchased Assets and Eligible Mortgage Loans as of such date of determination
and (ii) the product of the applicable Purchase Price Percentage multiplied by
the Market Value of such Purchased Assets and Eligible Mortgage Loans.

 

“Assignment and Acceptance” shall have the meaning assigned thereto in Section
27(b).

 

“Assignment of Mortgage” means, with respect to any Mortgage, an assignment of
the Mortgage, 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 Purchaser.

 

“Backup Servicer Agreement” means any backup servicing agreement among
Purchaser, Seller and a backup servicer appointed pursuant to Section 16(d), as
the same may be amended, modified or supplemented from time to time.

 

“Bank” means (i) Wells Fargo Bank, National Association and its successors and
permitted assigns or (ii) such other bank as may be mutually acceptable to
Seller and Purchaser.

 

“Bankruptcy Code” means 11 U.S.C. Section 101 et seq., as amended from time to
time.

 

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“Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day
upon which the New York Stock Exchange or the Federal Reserve Bank of New York
is closed or (iii) with respect to any day on which the parties hereto have
obligations to Custodian or on which Custodian has obligations to any party
hereto, a day upon which Custodian’s offices are closed.

 

“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.

 

“Certified Mortgage Loan Trust Receipt” shall have the meaning assigned thereto
in the Custodial Agreement.

 

“Change in Control” shall mean (a) any transaction or event as a result of which
Guarantor ceases to own, directly or indirectly, beneficially or of record, at
least 50.1% of the membership interests of Seller, (b) the sale, transfer, or
other disposition of all or substantially all of Seller’s assets (excluding any
such action taken in connection with any securitization transaction or routine
sales of Mortgage Loans), or (c) the consummation of a merger or consolidation
of Seller with or into another entity or any other corporate reorganization, if
more than 50% of the combined voting power of the continuing or surviving
entity’s equity outstanding immediately after such merger, consolidation or such
other reorganization is owned by persons who were not equityholders of Seller
immediately prior to such merger, consolidation or other reorganization.

 

“Change in Law” means (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement, or (c) compliance by Purchaser (or any Affiliate
thereof) with any request, guideline or directive (whether or not having the
force of law) of any Governmental Authority made or issued after the date of
this Agreement.

 

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

 

“Collection Account” means the account to be established by Seller in accordance
with Section 16(e) for the benefit of Purchaser.

 

“Collection Account Control Agreement” means that certain Deposit Account
Control Agreement, entered into with respect to the Collection Account as
provided in Section 16(e), as the same may be amended, modified or supplemented
from time to time.

 

“Collection Account Direction Letter” means that certain direction letter, dated
on or about July 29, 2014, among Purchase, Seller and Bank, entered into with
respect to the Collection Account and in form and substance acceptable to
Purchaser and Seller.

 

“Confirmation” shall have the meaning assigned thereto in Section 4 hereof.

 

“Custodial Agreement” means that certain Custodial Agreement, to be dated on or
about July 29, 2014, among Seller, Purchaser, and Custodian, entered into in
connection with this Agreement, as the same may be amended, modified or
supplemented from time to time.

 

“Custodian” means (i) Wells Fargo Bank, N.A., and its successors and permitted
assigns or (ii) a custodian mutually acceptable to Seller, Purchaser and Agent.

 

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

 

“Default Rate” shall have the meaning assigned thereto in the Pricing Side
Letter.

 

“Dodd-Frank Act” shall mean the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, as amended, and any regulations, rulings,
interpretations or orders promulgated by any Governmental Authority having
jurisdiction thereunder including, without limitation, the Consumer Financial
Protection Bureau.

 

“Dollars” or “$” means, unless otherwise expressly stated, lawful money of the
United States of America.

 

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

 

“Effective Date” means July 29, 2014.

 

“Electronic Tracking Agreement” means the electronic tracking agreement in form
and substance acceptable to Purchaser and Seller, to be dated on or about
July 29, 2014 among Purchaser, Seller, MERSCORP Holdings, Inc. and MERS, entered
into in connection with this Agreement, as the same may be amended, modified or
supplemented from time to time.

 

“Electronic Transmission” means 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).

 

“Eligible Mortgage Loan” means a Mortgage Loan that (i) satisfies each of the
representations and warranties in Exhibit B to this Agreement in all material
respects, (ii) contains all required documents in the Mortgage Loan File without
exceptions unless otherwise waived by Purchaser or permitted pursuant to this
Agreement, and (iii) meets each of the applicable Additional Eligible Loan
Criteria.

 

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

 

“Escrow Payments” means, with respect to a 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 the
Mortgage or any other document.

 

“Event of Default” shall have the meaning assigned thereto in Section 17 hereof.

 

“Existing Indebtedness” means all Indebtedness in excess of $25,000,000 (other
than Indebtedness evidenced by this Agreement) of Seller existing on the date
hereof listed on Exhibit I hereto.

 

“Fannie Mae” means Fannie Mae or any successor thereto.

 

“Fannie Mae Guide” means the Fannie Mae MBS Selling and Servicing Guide, as such
guide may hereafter from time to time be amended.

 

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

 

“FHA” means the Federal Housing Administration, an agency within HUD, or any
successor thereto, and including the Federal Housing Commissioner and the
Secretary of Housing and Urban Development where appropriate under the FHA
regulations.

 

“Foreign Purchaser” shall have the meaning assigned thereto in Section 8(d).

 

“Freddie Mac” means Freddie Mac, and its successors in interest.

 

“Freddie Mac Guide” means the Freddie Mac Sellers’ and Servicers’ Guide, as such
Guide may hereafter from time to time be amended.

 

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

 

“Ginnie Mae” means the Government National Mortgage Association and its
successors in interest, a wholly-owned corporate instrumentality of the
government of the United States of America.

 

“Ginnie Mae Guide” means the Ginnie Mae Mortgage-Backed Securities Guide, as
such Guide may hereafter from time to time be amended.

 

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

 

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

 

“Guarantor” shall have the meaning set forth in the preamble hereof.

 

“Guaranty” means the Guaranty Agreement of Guarantor in favor of Purchaser,
dated as of the date hereof, as the same may be amended, supplemented or
otherwise modified from time to time.

 

“Hedge Instrument” means any interest rate cap agreement, interest rate floor
agreement, interest rate swap agreement or other interest rate hedging agreement
entered into by Seller with a counterparty reasonably acceptable to Agent, in
each case with respect to the Mortgage Loans.

 

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“High Cost Mortgage Loan” means a Mortgage Loan that is (a) subject to, covered
by or in violation of the provisions of the Homeownership and Equity Protection
Act of 1994, as amended, (b) a “high cost,” “covered,” “abusive,” “predatory” or
“high risk” mortgage loan under any federal, state or local law, or any
similarly classified loan using different terminology under any law imposing
heightened regulation, scrutiny or additional legal liability for residential
mortgage loans having high interest rates, points and/or fees, or any other
state or other regulation providing assignee liability to holders of such
mortgage loans, (c) subject to or in violation of any such comparable federal,
state or local statutes or regulations, or (d) a “High Cost Loan” or “Covered
Loan,” as applicable, as such terms are defined in the current version of the
Standard & Poor’s LEVELS® Glossary Revised, Appendix E.

 

“HUD” means the Department of Housing and Urban Development, or any federal
agency or official thereof which may from time to time succeed to the functions
thereof with regard to FHA mortgage insurance. The term “HUD,” for purposes of
this Agreement, is also deemed to include subdivisions thereof such as the FHA
and Government National Mortgage Association.

 

“Income” means, with respect to any Purchased Asset at any time, any principal
and/or interest thereon and all dividends, sale proceeds and all other proceeds
as defined in Section 9-102(a)(64) of the Uniform Commercial Code and all other
collections and distributions thereon (including, without limitation, any
proceeds received in respect of mortgage insurance).

 

“Indebtedness” means, 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 ninety (90) days of the date the respective goods are delivered or the
respective services are rendered; (c) indebtedness of others secured by a Lien
on the Property of such Person, whether or not the respective indebtedness so
secured has been assumed by such Person; (d) obligations (contingent or
otherwise) of such Person in respect of letters of credit or similar instruments
issued or accepted by banks and other financial institutions for account of such
Person; (e) obligations of such Person under Capital Lease Obligations; (f)
obligations of such Person under repurchase agreements or like arrangements; (g)
indebtedness of others guaranteed by such Person; (h) all obligations of such
Person incurred in connection with the acquisition or carrying of fixed assets
by such Person; (i) indebtedness of general partnerships of which such Person is
a general partner; and (j) any other indebtedness of such Person by a note,
bond, debenture or similar instrument.

 

“Indemnified Party” shall have the meaning assigned thereto in Section 21(a).

 

“Investment Company Act” means the Investment Company Act of 1940, as amended,
including all rules and regulations promulgated thereunder.

 

“Investment Manager” means Oak Circle Capital Partners LLC.

 

“Jumbo Mortgage Loan” means a first lien mortgage loan that is underwritten as a
jumbo mortgage loan in compliance with Purchaser’s underwriting guidelines as in
effect as of the date hereof, or in compliance with such other underwriting
guidelines as approved by Agent in its discretion.

 

“LIBOR” means for each day, the rate (adjusted for statutory reserve
requirements for eurocurrency liabilities) for eurodollar deposits for a period
equal to one month appearing on Bloomberg Screen US 0001M Page or if such rate
ceases to appear on Bloomberg Screen US 0001M Page, or any other service
providing comparable rate quotations at approximately 11:00 a.m., London time,
on the applicable date of determination, or such interpolated rate as determined
by Agent.

 

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“Lien” means any mortgage, deed of trust, lien, claim, pledge, charge, security
interest or similar encumbrance.

 

“Margin Call” shall have the meaning assigned thereto in Section 7(b) hereof.

 

“Margin Deficit” shall have the meaning assigned thereto in Section 7(b) hereof.

 

“Market Value” means, with respect to any Transaction and as of any date of
determination, (i) the value ascribed to a Purchased Asset or a Mortgage Loan by
Agent, in its sole good faith discretion, using methodology and parameters
customarily used by Agent to value similar assets, as may be as marked to market
daily, and (ii) zero, with respect to any Mortgage Loan that is not an Eligible
Mortgage Loan.

 

“Material Adverse Change” means, with respect to a Person, any material adverse
change in the business, condition (financial or otherwise), operations,
performance or Property of such Person including the insolvency of such Person
or its Parent Company, if applicable.

 

“Material Adverse Effect” means (a) a Material Adverse Change with respect to
Seller, Servicer, Guarantor or any of their respective Affiliates; (b) a
material impairment of the ability of Seller, Servicer, Guarantor or any of
their respective Affiliates that is a party to any Program Document to perform
under any Program Document to which it is a party; (c) a material adverse effect
upon the legality, validity, binding effect or enforceability of any Program
Document against Seller, Servicer, Guarantor or any of their respective
Affiliates that is a party to any Program Document; or (d) a material adverse
effect on the Market Value of the Purchased Assets, in each case as determined
by Purchaser in its sole good faith discretion.

 

“Maturity Date” means July 28, 2015.

 

“Maximum Age Since Origination” shall have the meaning assigned thereto in the
Pricing Side Letter.

 

“Maximum Aggregate Purchase Price” shall have the meaning assigned thereto in
the Pricing Side Letter.

 

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

 

“MERS Designated Mortgage Loan” means any Mortgage Loan as to which the related
Mortgage or Assignment of Mortgage, has been recorded in the name of MERS, as
agent for the holder from time to time of the Mortgage Note.

 

“MERS Identification Number” shall have the meaning assigned thereto in the
Custodial Agreement.

 

“Monthly Payment” shall mean the scheduled monthly payment of principal and
interest on a Mortgage Loan as adjusted in accordance with changes in the
mortgage interest rate pursuant to the provisions of the Mortgage Note for an
Adjustable Rate Mortgage Loan.

 

“Monthly Payment Date” means the twentieth (20th) day of each calendar month
beginning with August 2014; provided that if such day is not a Business Day, the
next succeeding Business Day.

 

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“Mortgage” means a mortgage, deed of trust, or other security instrument,
securing a Mortgage Note.

 

“Mortgage Interest Rate” means, 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.

 

“Mortgage Loan” means a Jumbo Mortgage Loan.

 

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

 

“Mortgage Note” means a promissory note or other evidence of indebtedness of the
obligor thereunder, evidencing a Mortgage Loan, and secured by the related
Mortgage.

 

“Mortgaged Property” means the real property (or leasehold estate, if
applicable) securing repayment of the debt evidenced by a Mortgage Note.

 

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

 

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

 

“Negative Amortization” means the portion of interest accrued at the Mortgage
Interest Rate in any month which exceeds the Monthly Payment on the related
Mortgage Loan for such month and which, pursuant to the terms of the Mortgage
Note, is added to the principal balance of the Mortgage Loan.

 

“Notice Date” shall have the meaning assigned thereto in Section 3(c) hereof.

 

“Obligations” means (a) all amounts due and payable by Seller to Purchaser in
connection with a Transaction hereunder, together with interest thereon
(including interest which would be payable as post-petition interest in
connection with any bankruptcy or similar proceeding) and other obligations and
liabilities of Seller to Purchaser arising under, or in connection with, the
Program Documents or directly related to the Purchased Assets, whether now
existing or hereafter arising; (b) any and all sums paid by Purchaser or on
behalf of Purchaser pursuant to the Program Documents in order to preserve any
Purchased Asset or its interest therein; (c) in the event of any proceeding for
the collection or enforcement of any of Seller’s indebtedness, obligations or
liabilities referred to in clause (a), the reasonable expenses of retaking,
holding, collecting, preparing for sale, selling or otherwise disposing of or
realizing on any Purchased Asset, or of any exercise by Purchaser of its rights
under the Program Documents, including without limitation, reasonable attorneys’
fees and disbursements and court costs; and (d) all of Seller’s indemnity
obligations to Purchaser pursuant to the Program Documents.

 

“Origination Date” means the date on which a Mortgage Loan was originated by
Seller, or purchased or acquired by Seller and subsequently sold to Purchaser,
as applicable.

 

“Other Taxes” shall have the meaning assigned thereto in Section 8(b).

 

“OTS” means Office of Thrift Supervision or any successor thereto.

 

“Parent Company” means a corporation or other entity owning at least 50% of the
outstanding shares of voting stock of Seller.

 

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“Person” means any legal person, including any individual, corporation,
partnership, association, joint stock company, trust, limited liability company,
unincorporated organization, governmental entity or other entity of similar
nature.

 

“Price Differential” means, with respect to any Purchased Asset or Transaction
as of any date of determination, an amount equal to the product of (A) the
Pricing Rate (or during the continuation of an Event of Default, by daily
application of the Default Rate) and (B) the Purchase Price for such Purchased
Asset or Transaction. Price Differential will be calculated in accordance with
Section 3(e) herein for the actual number of days elapsed during the applicable
Accrual Period on the basis of a 360-day year.

 

“Price Differential Determination Date” means, with respect to any Monthly
Payment Date, the second (2nd) Business Day preceding such date.

 

“Pricing Rate” means, as of any date of determination and with respect to an
Accrual Period for any Purchased Asset or Transaction, an amount equal to the
sum of (i) LIBOR plus (ii) the Applicable Margin.

 

“Pricing Side Letter” means that certain Pricing Side Letter, dated as of
July 29, 2014, among Seller, Guarantor and Purchaser, entered into in connection
with this Agreement, as the same may be amended, modified or supplemented from
time to time.

 

“Program Documents” means this Agreement, the Pricing Side Letter, the Custodial
Agreement, the Servicing Side Letter, the Collection Account Direction Letter,
the Collection Account Control Agreement, any assignment of Hedge Instrument,
the Electronic Tracking Agreement, the Guaranty, any Backup Servicer Agreement,
and all other agreements, documents and instruments entered into by Seller on
the one hand, and Purchaser or one of its Affiliates (or Custodian on its
behalf) and/or Agent or one of its Affiliates on the other, in connection
herewith or therewith with respect to the transactions contemplated hereunder or
thereunder and all amendments, restatements, modifications or supplements
thereto.

 

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

 

“Purchase Date” means, with respect to each Transaction, the date on which
Purchased Assets are sold by Seller to Purchaser or its designee hereunder.

 

“Purchase Price” means the price at which Purchased Assets subject to a
Transaction are sold by Seller to Purchaser or its designee on a Purchase Date
(which includes a mutually negotiated premium allocable to the portion of the
related Purchased Assets that constitutes the related Servicing Rights), which
shall (unless otherwise agreed to by Seller and Purchaser) be equal to the
lesser of (i) 100% of the unpaid principal balance of such Purchased Assets as
of such date of determination and (ii) the product of the applicable Purchase
Price Percentage multiplied by the Market Value of such Purchased Assets as of
such date of determination.

 

“Purchase Price Percentage” shall have the meaning assigned thereto in the
Pricing Side Letter.

 

- 10 -

 

 

“Purchased Assets” means, with respect to each Eligible Mortgage Loan sold by
Seller to Purchaser in a Transaction, whether now existing or hereafter
acquired: (i) the Mortgage Loans, (ii) the Servicing Rights, (iii) Seller’s
rights under any related Hedge Instruments to the extent related to the Mortgage
Loans, (iv) such other Property, rights, titles or interest as are specified on
the related Transaction Notice, (v) all mortgage guarantees and insurance
relating to the individual Mortgage Loans (issued by governmental agencies or
otherwise) or the related Mortgaged Property and any mortgage insurance
certificate or other document evidencing such mortgage guarantees or insurance
and all claims and payments related to the Mortgage Loans, (vi) all guarantees
or other support for the Mortgage Loans, (vii) all rights to Income and the
rights to enforce such payments arising from the Mortgage Loans and any other
contract rights, payments, rights to payment (including payments of interest or
finance charges) with respect thereto, (viii) all Takeout Commitments and Trade
Assignments, (ix) the Collection Account and all amounts on deposit therein, (x)
all Additional Purchased Mortgage Loans, (xi) all “accounts,” “deposit
accounts,” “securities accounts,” “chattel paper,” “commercial tort claims,”
“deposit accounts,” “documents,” “general intangibles,” “instruments,”
“investment property,” and “securities accounts,” relating to the foregoing as
each of those terms is defined in the Uniform Commercial Code and all cash and
cash equivalents and all products and proceeds relating to or constituting any
or all of the foregoing, (xii) any purchase agreements or other agreements or
contracts relating to or constituting any or all of the foregoing, (xiii) any
other collateral pledged or otherwise relating to any or all of the foregoing,
together with all files, material documents, instruments, surveys (if
available), certificates, correspondence, appraisals, computer records, computer
storage media, accounting records and other books and records relating to the
foregoing, and (xiv) any and all replacements, substitutions, distributions on,
or proceeds with respect to, any of the foregoing. The term “Purchased Assets”
with respect to any Transaction at any time also shall include Additional
Purchased Mortgage Loans delivered pursuant to Section 7(b) hereof.

 

“Purchaser” shall have the meaning set forth in the preamble hereof.

 

“Purchaser’s Wire Instructions” shall have the meaning set forth in the Pricing
Side Letter.

 

“Quality Control Program” shall have the meaning assigned thereto in
Section 14(z).

 

“Records” means all instruments, agreements and other books, records, and
reports and data generated by other media for the storage of information
maintained by Seller or any other person or entity with respect to a Purchased
Asset. Records shall include, without limitation, the Mortgage Notes, any
Mortgages, the Mortgage Loan Files, the Servicing Files, and any other
instruments necessary to document or service a Mortgage Loan that is a Purchased
Asset, including, without limitation, the complete payment and modification
history of each Mortgage Loan that is a Purchased Asset.

 

“REIT” means a real estate investment trust, as defined in Section 856 of the
Code.

 

“REO Property” means a residential real property including land and
improvements, together with all buildings, fixtures and attachments thereto, all
insurance proceeds, liquidation proceeds, condemnation proceeds, and all other
rights, benefits, proceeds and obligations arising from or in connection
therewith.

 

“Repurchase Date” means, with respect to any Transaction, the earliest of (i)
the Termination Date, (ii) the date set forth in the related Transaction Notice
as the scheduled Repurchase Date, (iii) the second Business Day following
Seller’s written notice to Purchaser requesting a repurchase of such
Transaction, (iv) the conclusion of the Maximum Age Since Origination for each
such Transaction, or if such day is not a Business Day, the immediately
following Business Day, or (v) the conversion of the related Mortgage Loan into
an REO Property.

 

“Repurchase Price” means the price at which Purchased Assets are to be
transferred from Purchaser or its designee to Seller upon termination of a
Transaction, which will be determined in each case as the sum of: (i) any
portion of the Purchase Price not yet repaid to Purchaser, (ii) the Price
Differential accrued and unpaid thereon, and (iii) any accrued and unpaid fees
or expenses or indemnity amounts and any other outstanding amounts owing under
the Program Documents from Seller to Purchaser.

 

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“Request for Release of Documents” shall mean the Request for Release of
Documents set forth as Exhibit 15 to the Custodial Agreement, as applicable.

 

“Requirement of Law” means 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.

 

“Restricted Mortgage Loan” means (i) a “Growing Equity Loan,” “Manufactured Home
Loan,” “Graduated Payment Loan,” “Buydown Loan,” “Project Loan,” “Construction
Loan” or “HECM Loan,” each as defined in the applicable Agency Guide, (ii) a 30+
Day Delinquent Mortgage Loan, (iii) a Mortgage Loan for which the related Escrow
Payments have not been made by the next succeeding Due Date, or (iv) a High Cost
Mortgage Loan.

 

“SEC” shall have the meaning ascribed thereto in Section 35.

 

“Section 404 Notice” means the notice required pursuant to Section 404 of the
Helping Families Save Their Homes Act of 2009 (P.L. 111-22), which amends 15
U.S.C. Section 1641 et seq., to be delivered by a creditor that is an owner or
an assignee of a Mortgage Loan to the related Mortgagor within thirty (30) days
after the date on which such Mortgage Loan is sold or assigned to such creditor.

 

“Seller” shall have the meaning set forth in the preamble hereof.

 

“Seller Mortgage Loan Schedule” means the list of Purchased Assets proposed to
be purchased by Purchaser, in the form of Exhibit H hereto, that will be
delivered in an excel spreadsheet format by Seller to Agent, Purchaser and
Custodian together with each Transaction Notice and attached by Custodian to the
related Certified Mortgage Loan Trust Receipt.

 

“Servicer” means PHH Mortgage Corporation, or any other servicer approved by
Agent, in its sole discretion, which may be Seller.

 

“Servicing Agreement” means that certain Mortgage Loan Subservicing Agreement,
dated as of February 25, 2014, between Seller and Servicer, or such other
servicing agreement acceptable to Purchaser.

 

“Servicing File” means with respect to each Mortgage Loan, the file retained by
Seller or its designee consisting of all documents that a prudent originator and
servicer would include (including copies of the Mortgage Loan File), all
documents necessary to document and service the Mortgage Loans and any and all
documents required to be delivered in connection with any transfer of servicing
pursuant to the Program Documents.

 

“Servicing Records” means with respect to a Mortgage Loan, the related 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 such Mortgage Loan.

 

- 12 -

 

 

“Servicing Rights” means contractual, possessory or other rights of Seller or
any other Person to administer or service a Mortgage Loan or to possess the
Servicing File.

 

“Servicing Side Letter” means that certain servicing side letter agreement,
dated as of July 29, 2014, among Seller, Guarantor, Servicer and Purchaser,
entered into in connection with this Agreement and the Servicing Agreement, in
form and substance acceptable to Purchaser.

 

“Servicing Term” shall have the meaning assigned thereto in Section 16(b).

 

“Set Off Eligible Agreement” means any lending or hedging agreement (including,
without limitation, the Master Repurchase Agreement) entered into between Seller
on the one hand, and Purchaser or any of its Affiliates on the other hand. For
avoidance of doubt, Purchaser agrees that any flow agreement for the purchase
and sale of Mortgage Loans or any securitization, debt or equity transaction
with respect to which Purchaser or any of its Affiliates acts as underwriter,
placement agent, securities administrator or in a similar capacity shall not
constitute a Set Off Eligible Agreement.

 

“Statement Date” shall have the meaning assigned thereto in Section 13(e).

 

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

 

“Takeout Commitment” means a fully executed trade confirmation from the related
Takeout Investor to Seller confirming the details of a forward trade between the
Takeout Investor and Seller with respect to one or more Purchased Assets, which
trade confirmation shall be enforceable and in full force and effect, and shall
be validly and effectively assigned to Purchaser pursuant to a Trade Assignment,
and relate to pools of Mortgage Loans that satisfy the “good delivery standards”
of the Securities Industry and Financial Markets Association as set forth in the
Securities Industry and Financial Markets Association Uniform Practices Manual,
as amended from time to time.

 

“Takeout Investor” means either (i) Barclays Capital Inc., or any successor
thereto, (ii) any member of the Mortgage Backed Securities Division of the Fixed
Income Clearing Corporation or (iii) any other Person approved by Agent, in its
sole discretion.

 

“Taxes” shall have the meaning assigned thereto in Section 8(a).

 

“Termination Date” means the earliest to occur of (i) the Maturity Date, (ii) at
the option of Agent, the occurrence of an Event of Default under this Agreement
after the expiration of any applicable grace period and (iii) the later of (A)
the fifteenth (15th) Business Day after Purchaser delivers a notice of
termination to Seller, or (B) the Monthly Repayment Date following delivery of
such notice by Purchaser, and (iv) the thirtieth (30th) day after Seller
delivers a notice of termination to Purchaser.

 

“Trade Assignment” means an assignment to Purchaser of a forward trade between
the Takeout Investor and Seller with respect to one or more Purchased Assets,
together with the related trade confirmation from the Takeout Investor to Seller
that has been fully executed, is enforceable and is in full force and effect and
confirms the details of such forward trade.

 

- 13 -

 

 

“Transaction” has the meaning assigned thereto in Section 1.

 

“Transaction Notice” means a written request of Seller to enter into a
Transaction in a form attached as Exhibit C hereto or such other form as shall
be mutually agreed upon between Seller and Purchaser, which is delivered to
Purchaser in accordance with Section 3(c) herein.

 

“Uniform Commercial Code” means the Uniform Commercial Code as in effect from
time to time in the State of New York; provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the security interest in any Purchased Assets or the continuation, renewal or
enforcement thereof is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, “Uniform Commercial Code” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or effect of perfection or
non-perfection.

 

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

 

“Warehouse Lender” means any lender providing financing to Seller for the
purpose of warehousing, originating or purchasing a Mortgage Loan, which lender
has a security interest in such Mortgage Loan to be purchased by Purchaser.

 

“Warehouse Lender’s Release” means a letter, substantially in the form of
Exhibit E, from a Warehouse Lender to Purchaser, unconditionally releasing all
of Warehouse Lender’s right, title and interest in certain Mortgage Loans
identified therein upon payment to the Warehouse Lender.

 

(b)          Interpretation.

 

Headings are for convenience only and do not affect interpretation. The
following rules of this subsection (b) apply unless the context requires
otherwise. The singular includes the plural and conversely. A gender includes
all genders. Where a word or phrase is defined, its other grammatical forms have
a corresponding meaning. A reference to a subsection, Section, Annex or Exhibit
is, unless otherwise specified, a reference to a section of, or annex or exhibit
to, this Agreement. A reference to a party to this Agreement or another
agreement or document includes the party’s successors and permitted substitutes
or assigns. A reference to an agreement or document is to the agreement or
document as amended, modified, novated, supplemented or replaced, except to the
extent prohibited by any Program Document. A reference to legislation or to a
provision of legislation includes any modification or re-enactment of it, a
legislative provision substituted for it and a regulation or statutory
instrument issued under it. A reference to writing includes a facsimile
transmission and any means of reproducing words in a tangible and permanently
visible form. A reference to conduct includes, without limitation, an omission,
statement or undertaking, whether or not in writing. An Event of Default exists
until it has been waived in writing by Purchaser or has been cured. The words
“hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a
whole and not to any particular provision of this Agreement. The term
“including” is not limiting and means “including without limitation.” In the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including,” the words “to” and “until” each mean
“to but excluding,” and the word “through” means “to and including.” This
Agreement may use several different limitations, tests or measurements to
regulate the same or similar matters. All such limitations, tests and
measurements are cumulative and shall each be performed in accordance with their
terms. Unless the context otherwise clearly requires, all accounting terms not
expressly defined herein shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with GAAP,
consistently applied. References herein to “fiscal year” and “fiscal quarter”
refer to such fiscal periods of Seller.

 

- 14 -

 

 

Except where otherwise provided in this Agreement, any determination, consent,
approval, statement or certificate made or confirmed in writing with notice to
Seller by Purchaser or an authorized officer of Purchaser as required by this
Agreement is conclusive in the absence of manifest error. A reference to an
agreement includes a security interest, guarantee, agreement or legally
enforceable arrangement whether or not in writing related to such agreement.

 

A reference to a document includes an agreement in writing or a certificate,
notice, instrument or document, or any information recorded in electronic form.
Where Seller is required to provide any document to Purchaser under the terms of
this Agreement, the relevant document shall be provided in writing or printed
form unless Purchaser requests otherwise.

 

This Agreement is the result of negotiations among, and has been reviewed by
counsel to, Purchaser and Seller, and is the product of all parties. In the
interpretation of this Agreement, no rule of construction shall apply to
disadvantage one party on the ground that such party proposed or was involved in
the preparation of any particular provision of this Agreement or this Agreement
itself. Except where otherwise expressly stated, Purchaser may give or withhold,
or give conditionally, approvals and consents and may form opinions and make
determinations in its absolute sole discretion. Except as specifically required
herein, any requirement of good faith, discretion or judgment by Purchaser or
Agent shall not be construed to require Purchaser to request or await receipt of
information or documentation not immediately available from or with respect to
Seller, any other Person or the Purchased Assets themselves.

 

3.           THE TRANSACTIONS

 

(a)           It is acknowledged and agreed that, notwithstanding any other
provision of this Agreement to the contrary, the facility provided under this
Agreement is an uncommitted facility and Purchaser shall have no obligation to
enter into any Transactions hereunder.

 

(b)           Subject to the terms and conditions of the Program Documents,
Purchaser may enter into Transactions provided, that the Aggregate MRA Purchase
Price shall not exceed, as of any date of determination, the lesser of (a) the
Maximum Aggregate Purchase Price and (b) the Asset Base.

 

(c)           Unless otherwise agreed, Seller shall request that Purchaser enter
into a Transaction with respect to any Eligible Loan by delivering to the
indicated required parties (each, a “Required Recipient”) the required delivery
items (each, a “Required Delivery Item”) set forth in the table below by the
corresponding required delivery time (the “Required Delivery Time”), and such
Transaction shall occur no later than the corresponding required purchase time
(the “Required Purchase Time”):

 

Purchased
Asset Type   Required Delivery Items   Required Delivery Time   Required
Recipient   Required
Purchase Time Eligible Mortgage Loans   (i) a Transaction Notice and (ii) Seller
Mortgage Loan Schedule   No later than 3:00 p.m. (New York City time) on the
Business Day prior to the requested Purchase Date   Purchaser and Custodian   No
later than 5:00 p.m. (New York City time) on the requested Purchase Date

 

- 15 -

 

 

Purchased
Asset Type   Required Delivery Items   Required Delivery Time   Required
Recipient   Required
Purchase Time     The complete Mortgage Files to Custodian for each Mortgage
Loan subject to such Transaction   No later than 3:00 p.m. (New York City time)
on the Business Day prior to the requested Purchase Date   Custodian    

 

The date on which any notice pursuant to this Section 3(c) is given is known as
the “Notice Date.”

 

(d)          Upon Seller’s request to enter into a Transaction pursuant to
Section 3(c) and assuming all conditions precedent set forth in this Section 3
and in Sections 10(a) and (b) have been met, and provided no Default or Event of
Default shall have occurred and be continuing, on the requested Purchase Date,
Purchaser may, in its sole discretion, purchase the Eligible Mortgage Loans
included in the related Transaction Notice by transferring the Purchase Price
(net of any fees and expenses then due and payable by Seller to Purchaser
pursuant to this Agreement) in accordance with the following wire instructions
or as otherwise provided:

 

Receiving Bank: Bank of America

ABA#: 026009593

Account Name: Five Oaks Acquisition Corp.

Account Number: 237025398780

 

Seller acknowledges and agrees that the Purchase Price includes a mutually
negotiated premium allocable to the portion of the Purchased Assets that
constitutes the related Servicing Rights.

 

(e)          On the related Price Differential Determination Date, Agent shall
calculate the Price Differential for each outstanding Transaction payable on the
Monthly Payment Date utilizing the Pricing Rate. Not less than two (2) Business
Days prior to each Monthly Payment Date, Agent shall provide Seller with an
invoice for the amount of the Price Differential due and payable with respect to
all outstanding Transactions, setting forth the calculations thereof in
reasonable detail and all accrued fees and expenses then due and owing to
Purchaser. On the earliest of (1) the Monthly Payment Date or (2) the
Termination Date, Seller shall pay to Purchaser the Price Differential then due
and payable for (x) all outstanding Transactions and (y) Purchased Assets for
which Purchaser has received the related Repurchase Price (other than Price
Differential) pursuant to Section 3(f).

 

(f)           With respect to a Transaction, upon the earliest of (1) the
Repurchase Date and (2) the Termination Date, Seller shall pay to Purchaser the
related Repurchase Price (other than the related accrued Price Differential)
together with any other Obligations then due and payable, and shall repurchase
all Purchased Assets then subject to such Transaction. The Repurchase Price
shall be transferred directly to Purchaser.

 

- 16 -

 

 

(g)           If Agent determines in its sole discretion that any Change in Law
or any change in accounting rules regarding capital requirements has the effect
of reducing the rate of return on Purchaser’s capital or on the capital of any
Affiliate of Purchaser in respect of Transactions under this Agreement as a
consequence of such Change in Law or change in accounting rules, then from time
to time Seller will compensate Purchaser or Purchaser’s Affiliate, as
applicable, for such reduced rate of return suffered as a consequence of such
Change in Law or change in accounting rules on terms similar to those imposed by
Purchaser. Further, if due to the introduction of, any change in, or the
compliance by Purchaser with (i) any eurocurrency reserve requirement, or (ii)
the interpretation of any law, regulation or any guideline or request from any
central bank or other Governmental Authority whether or not having the force of
law, there shall be an increase in the cost to Purchaser or any Affiliate of
Purchaser in engaging in the present or any future Transactions, then Seller
shall, from time to time and upon demand by Purchaser, compensate Purchaser or
Purchaser’s Affiliate for such increased costs, and such amounts shall be deemed
a part of the Obligations hereunder. Purchaser shall provide Seller with notice
as to any such Change in Law, change in accounting rules or change in compliance
promptly following Purchaser’s receipt of actual knowledge thereof.

 

(h)           [Reserved].

 

(i)           If on any Business Day Agent determines (which determination shall
be conclusive absent manifest error) (a) that adequate and reasonable means do
not exist for ascertaining LIBOR; or (b) that LIBOR will not adequately and
fairly reflect the cost to Purchaser of entering into or maintaining outstanding
Transactions; or (c) that it has become unlawful for it to honor its obligation
to enter into or maintain outstanding Transactions hereunder using LIBOR, then
Purchaser may give written notice thereof to Seller and, until Purchaser
notifies Seller that the circumstances giving rise to such notice no longer
exist, the Pricing Rate included in any Confirmation with respect to new
Transactions and in any calculation of the Price Differential with respect to
outstanding Transactions will be determined at such other rate per annum or
based on such other index that Purchaser determines in it reasonable discretion
adequately reflects the cost to Purchaser of making or maintaining such
Transactions. Any alternative rate selected by Purchaser shall be consistent
with the rate selected by Purchaser for similar facilities offered by Purchaser
with respect to mortgage loans similar to the Mortgage Loans.

 

4.           CONFIRMATION

 

In the event that parties hereto desire to enter into a Transaction on terms
other than as set forth in this Agreement, the parties shall execute a
confirmation prior to entering into such Transaction, which confirmation shall
be in a form that is mutually acceptable to Purchaser and Seller and shall
specify such terms, including, without limitation, the Purchase Date, the
Purchase Price, the Pricing Rate therefor and the Repurchase Date (a
“Confirmation”). Any such Confirmation and the related Transaction Notice,
together with this Agreement, shall constitute conclusive evidence of the terms
agreed to between Purchaser and Seller with respect to the Transaction to which
the Confirmation relates. In the event of any conflict between this Agreement
and a Confirmation, the terms of the Confirmation shall control with respect to
the related Transaction.

 

5.           TAKEOUT COMMITMENTS

 

Seller hereby assigns to Purchaser, free of any security interest, lien, claim
or encumbrance of any kind, Seller’s rights under each Takeout Commitment to
deliver the Purchased Assets specified therein to the related Takeout Investor
and to receive the purchase price therefor from such Takeout Investor. Seller
shall deliver to Purchaser a duly executed and enforceable Trade Assignment on
the date such Trade Assignment is executed by the related Takeout Investor.
Subject to Purchaser’s rights hereunder, Purchaser agrees that it will satisfy
the obligation under the Takeout Commitment to deliver the related Purchased
Assets to the Takeout Investor on the date specified therein. Seller understands
that, as a result of this Section 5 and each Trade Assignment, Purchaser will
succeed to the rights and obligations of Seller with respect to each Takeout
Commitment subject to a Trade Assignment, and that in satisfying each such
Takeout Commitment, Purchaser will stand in the shoes of Seller and,
consequently, will be acting as a non-dealer in exercising its rights and
fulfilling its obligations assigned pursuant to this Section 5 and each Trade
Assignment. Each Trade Assignment delivered by Seller to Purchaser shall be
delivered by Seller in a timely manner sufficient to enable Purchaser to
facilitate the settlement of the related trade on the trade date in accordance
with “good delivery standards” of the Securities Industry and Financial Markets
Association as set forth in the Securities Industry and Financial Markets
Association Uniform Practices Manual, as amended from time to time.

 

- 17 -

 

 

6.           PAYMENT AND TRANSFER

 

Unless otherwise agreed by Seller and Purchaser, all transfers of funds
hereunder shall be in Dollars in immediately available funds. Seller shall remit
(or, if applicable, shall cause to be remitted) directly to Purchaser all
payments required to be made by it to Purchaser hereunder or under any other
Program Document in accordance with wire instructions provided by Purchaser. Any
payments received by Purchaser after 5:00 p.m. (New York City time) shall be
applied on the next succeeding Business Day.

 

7.           MARGIN MAINTENANCE

 

(a)           Agent shall determine the Market Value of the Purchased Assets on
a daily basis as determined by Agent, in its sole good faith discretion.

 

(b)           If, as of any date of determination, the lesser of (i) 100% of the
unpaid principal balance as of such date of all Purchased Assets then subject to
all Transactions and (ii) the product of (x) the aggregate Market Value of all
Purchased Assets then subject to all Transactions, taking into account the cash
then on deposit in the Collection Account, multiplied by (y) the applicable
Purchase Price Percentage, is less than the Repurchase Price (less the related
Price Differential) for all such Transactions (a “Margin Deficit”), then Agent
may, by notice to Seller (as such notice is more particularly set forth below, a
“Margin Call”), require Seller to transfer to Purchaser or its designee cash or,
at Purchaser’s option (and provided Seller has additional Eligible Mortgage
Loans), additional Eligible Mortgage Loans to Purchaser (“Additional Purchased
Mortgage Loans”) to cure the Margin Deficit. If Agent delivers a Margin Call to
Seller on or prior to 11:00 a.m. (New York City time) on any Business Day, then
Seller shall transfer cash or Additional Purchased Mortgage Loans to Purchaser
or its designee no later than (i) 5:00 p.m. (New York City time) on the same
Business Day. In the event Agent delivers a Margin Call to Seller after
11:00 a.m. (New York City time) on any Business Day, Seller shall be required to
transfer cash or Additional Purchased Mortgage Loans no later than (i) 12:00
p.m. (New York City time) on the next succeeding Business Day.

 

(c)           Any cash transferred to Purchaser or its designee pursuant to
Section 16(f)(ii) herein shall reduce the Repurchase Price of the related
Transactions.

 

(d)           The failure of Purchaser, on any one or more occasions, to
exercise its rights hereunder, shall not change or alter the terms and
conditions of this Agreement or limit the right of Purchaser to do so at a later
date. Seller and Purchaser each agree that a failure or delay by a Purchaser to
exercise its rights hereunder shall not limit or waive Purchaser’s rights under
this Agreement or otherwise existing by law or in any way create additional
rights for Seller.

 

(e)           For the avoidance of doubt, it is hereby understood and agreed
that Seller shall be responsible for satisfying any Margin Deficit existing as a
result of any cram down of the unpaid principal balance of any Purchased Asset
pursuant to any action by any bankruptcy court.

 

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8.           TAXES; TAX TREATMENT

 

(a)           All payments made by Seller under this Agreement shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities (including penalties, interest and additions
to tax) with respect thereto imposed by any Governmental Authority therewith or
thereon, excluding income taxes, branch profits taxes, franchise taxes or any
other tax imposed on net income by the United States, a state or a foreign
jurisdiction under the laws of which Purchaser is organized or of its applicable
lending office, or a state or foreign jurisdiction with respect to which
Purchaser has a present or former connection, or any political subdivision
thereof (collectively, “Taxes”), all of which shall be paid by Seller for its
own account not later than the date when due. If Seller is required by law or
regulation to deduct or withhold any Taxes from or in respect of any amount
payable hereunder, it shall: (a) make such deduction or withholding, (b) pay the
amount so deducted or withheld to the appropriate Governmental Authority not
later than the date when due, (c) deliver to Purchaser, promptly, original tax
receipts and other evidence satisfactory to Purchaser of the payment when due of
the full amount of such Taxes; and (d) pay to Purchaser such additional amounts
as may be necessary so that Purchaser receives, free and clear of all Taxes, a
net amount equal to the amount it would have received under this Agreement, as
if no such deduction or withholding had been made.

 

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

 

(c)           Seller agrees to indemnify Purchaser for the full amount of Taxes
and Other Taxes, and the full amount of Taxes of any kind imposed by any
jurisdiction on amounts payable under this Section 8, and any liability
(including penalties, interest and expenses arising thereon or with respect
thereto) arising therefrom or with respect thereto, provided that Purchaser
shall have provided Seller with evidence, reasonably satisfactory to Seller, of
payment of Taxes or Other Taxes, as the case may be.

 

(d)           Agent and any Purchaser that either (i) is not incorporated under
the laws of the United States, any State thereof, or the District of Columbia or
(ii) whose name does not include “Incorporated,” “inc.,” “Corporation,” “Corp.,”
“P.C.,” “insurance company,” or “assurance company” (a “Foreign Purchaser”)
shall provide Seller and Agent with original properly completed and duly
executed United States Internal Revenue Service (“IRS”) Forms W-8BEN, W-8BEN-E
or W-8ECI or any successor form prescribed by the IRS, certifying that such
Person is entitled to benefits under an income tax treaty to which the United
States is a party which eliminates withholding tax on payments to it or
certifying that the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States on or
prior to the date upon which each such Foreign Purchaser becomes a Purchaser. In
addition, Agent shall be a “qualified intermediary” (as defined in Treas. Reg.
Section 1.1441-1(e)(5)) and provide Seller with an original properly completed
and duly executed IRS Form W-8IMY with “qualified intermediary” checked in Part
I and Part II properly completed to provide that Agent is a “qualified
intermediary” for Purchaser with respect to payments under this Agreement and
the other Program Documents (with all appropriate attachments) for any amount
received on behalf of a Purchaser which eliminates withholding tax on payments
to it on or prior to the date it becomes an Agent. Agent and each Foreign
Purchaser will resubmit the appropriate form eliminating withholding tax on
payments to it on the earliest of (A) the third anniversary of the prior
submission, or (B) on or before the expiration of thirty (30) days after there
is a “change in circumstances” with respect to such Person as defined in Treas.
Reg. Section 1.1441-1(e)(4)(ii)(D). For any period with respect to which Agent
or a Foreign Purchaser has failed to provide Seller with the appropriate form or
other relevant document pursuant to this Section 8(d) (unless such failure is
due to a change in treaty, law, or regulation occurring subsequent to the date
on which a form originally was required to be provided) such Person shall not be
entitled to “gross-up” of Taxes or indemnification under Section 8(c) with
respect to Taxes imposed by the United States; provided, however that should a
Foreign Purchaser, which is otherwise exempt from a withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
Seller shall take such steps as such Foreign Purchaser shall reasonably request
to assist such Foreign Purchaser to recover such Taxes.

 

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(e)           Without prejudice to the survival or any other agreement of Seller
hereunder, the agreements and obligations of Seller contained in this Section 8
shall survive the termination of this Agreement. Nothing contained in this
Section 8 shall require Purchaser to make available any of their tax returns or
other information that it deems to be confidential or proprietary.

 

(f)           Each party to this Agreement acknowledges that it is its intent
solely for purposes of U.S. federal, state and local income and franchise taxes
to treat each Transaction as indebtedness of Seller that is secured by the
Purchased Assets and that the Purchased Assets are owned by Seller in the
absence of an Event of Default by Seller. All parties to this Agreement agree to
such treatment and agree to take no action inconsistent with this treatment,
unless required by law.

 

9.           SECURITY INTEREST; PURCHASER’S APPOINTMENT AS ATTORNEY-IN-FACT

 

(a)           Seller and Purchaser intend that (other than for tax and
accounting purposes) the Transactions hereunder be sales to Purchaser of the
Purchased Assets and not loans from Purchaser to Seller secured by the Purchased
Assets. However, in order to preserve Purchaser’s rights under this Agreement in
the event that a court or other forum recharacterizes the Transactions hereunder
as other than sales, and as security for Seller’s performance of all of its
Obligations, Seller hereby grants to Purchaser a first priority security
interest in the Purchased Assets. Seller acknowledges and agrees that its rights
with respect to the Purchased Assets are and shall continue to be at all times
junior and subordinate to the rights of Purchaser hereunder.

 

(b)           Seller hereby irrevocably constitutes and appoints Purchaser 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 Purchaser’s discretion, to file such financing statement or statements
relating to the Purchased Assets as Purchaser at its option may deem
appropriate, and if an Event of Default shall have occurred and be continuing,
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 purposes of this
Agreement, and, without limiting the generality of the foregoing, Seller hereby
gives Purchaser the power and right, on behalf of Seller, without assent by, but
with notice to, Seller, to do the following if an Event of Default shall have
occurred and be continuing and Purchaser has elected to exercise its remedies
pursuant to Section 18 hereof:

 

(i)           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 with respect to any Purchased
Assets and to file any claim or to take any other action or initiate and
maintain any appropriate proceeding in any appropriate court of law or equity or
otherwise deemed appropriate by Purchaser for the purpose of collecting any and
all such moneys due with respect to any Purchased Assets whenever payable;

 

- 20 -

 

 

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

 

(iii)        (A) to direct any party liable for any payment under any Purchased
Assets to make payment of any and all moneys due or to become due thereunder
directly to Purchaser or as Purchaser shall direct, (B) in the name of Seller,
or in its own name, or otherwise as appropriate, to directly send or cause the
applicable servicer to send “hello” letters, “goodbye” letters in the form of
Exhibit D, and Section 404 Notices; (C) 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 Assets;
(D) to sign and endorse any invoices, assignments, verifications, notices and
other documents in connection with any Purchased Assets; (E) to commence and
prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Purchased Assets or any proceeds thereof
and to enforce any other right in respect of any Purchased Assets; (F) to defend
any suit, action or proceeding brought against Seller with respect to any
Purchased Assets; (G) to settle, compromise or adjust any suit, action or
proceeding described in clause (F) above and, in connection therewith, to give
such discharges or releases as Purchaser may deem appropriate; and (H)
generally, to sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any Purchased Assets as fully and completely as though
Purchaser was the absolute owner thereof for all purposes, and to do, at
Purchaser’s option and Seller’s expense, at any time, and from time to time, all
acts and things which Purchaser deems necessary to protect, preserve or realize
upon the Purchased Assets and Purchaser’s Liens thereon and to effect the intent
of this Agreement, all as fully and effectively as Seller might do.

 

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

 

Seller also authorizes Purchaser, from time to time if an Event of Default shall
have occurred and be continuing, to execute any endorsements, assignments or
other instruments of conveyance or transfer with respect to the Purchased Assets
in connection with any sale provided for in Section 18 hereof.

 

The powers conferred on Purchaser hereunder are solely to protect Purchaser’s
interests in the Purchased Assets and shall not impose any duty upon it to
exercise any such powers. Purchaser shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers, and neither
Purchaser nor any of its officers, directors, employees or agents shall be
responsible to Seller for any act or failure to act hereunder.

 

10.         CONDITIONS PRECEDENT

 

(a)           As conditions precedent to the effectiveness of this Agreement,
Seller shall have paid to Purchaser and Purchaser shall have received on or
before the Effective Date all accrued and unpaid fees and expenses owed to
Purchaser in accordance with the Program Documents, in immediately available
funds, and without deduction, set-off or counterclaim.

 

(b)           As conditions precedent to each Transaction (including the initial
Transaction), each of the following conditions shall have been satisfied:

 

(i)           Purchaser or its designee shall have received on or before the
Purchase Date with respect to Eligible Mortgage Loans that are to be the subject
of such Transaction (unless otherwise specified in this Agreement) the
following, in form and substance satisfactory to Purchaser and (if applicable)
duly executed:

 

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(A)Seller shall have paid to Purchaser and Purchaser shall have received all
accrued and unpaid fees and expenses owed to Purchaser in accordance with the
Program Documents in immediately available funds, and without deduction, set-off
or counterclaim;

 

(B)The Transaction Notice and Seller Mortgage Loan Schedule with respect to such
Purchased Assets, delivered pursuant to Section 3(c);

 

(C)Such certificates, customary opinions of counsel or other documents as
Purchaser or Agent may reasonably request, provided that such opinions of
counsel shall not be required routinely in connection with each Transaction but
shall only be required from time to time as deemed necessary by Purchaser in its
commercially reasonable judgment;

 

(D)An original trust receipt executed by Custodian without exceptions;

 

(E)Such other certifications of Custodian as are required under Sections 2 and 4
of the Custodial Agreement; and

 

(F)a duly executed Warehouse Lender’s Release from any Warehouse Lender
(including any party that has a precautionary security interest in a Mortgage
Loan) having a security interest in any Mortgage Loans, addressed to Purchaser,
releasing any and all of its right, title and interest in, to and under such
Mortgage Loan (including, without limitation, any security interest that such
secured party or secured party’s agent may have by virtue of its possession,
custody or control thereof) and, to the extent applicable, has filed Uniform
Commercial Code termination statements in respect of any Uniform Commercial Code
filings made in respect of such Mortgage Loan, and each such Warehouse Lender’s
Release and Uniform Commercial Code termination statement has been delivered to
Purchaser prior to such Transaction and to Custodian as part of the Mortgage
Loan File.

 

(ii)         No Default or Event of Default shall have occurred and be
continuing;

 

(iii)        Purchaser shall not have reasonably 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 Purchaser has made it
unlawful, and no Governmental Authority shall have asserted that it is unlawful,
for Purchaser to enter into Transactions with the applicable Pricing Rate;

 

(iv)        All representations and warranties in the Program Documents shall be
true and correct on the date of such Transaction and Seller is in compliance
with the terms and conditions of the Program Documents, other than as may be
expressly waived by Purchaser;

 

(v)         The then Aggregate MRA Purchase Price when added to the Purchase
Price for the requested Transaction, shall not exceed the lesser of (a) the
Maximum Aggregate Purchase Price and (b) the Asset Base;

 

(vi)        The Purchase Price for the requested Transaction shall not be less
than $500,000;

 

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(vii)       Satisfaction of any conditions precedent to the initial Transaction
as set forth in clause (a) of this Section 10 that were not satisfied prior to
such initial Purchase Date;

 

(viii)      Purchaser shall have determined that all actions necessary to
maintain Purchaser’s perfected security interest in the Purchased Assets have
been taken;

 

(ix)         Purchaser or its designee shall have received any other documents
reasonably requested by Purchaser;

 

(x)           There is no Margin Deficit at the time immediately prior to
entering into a new Transaction (other than a Margin Deficit that will be cured
contemporaneous with such Transaction in accordance with the provisions of
Section 7 hereof);

 

(xi)         Purchaser and/or Agent shall have completed the due diligence
review pursuant to Section 36, and such review shall be satisfactory to
Purchaser and Agent in their sole discretion;

 

(xii)        Each of the Program Documents has been duly executed and delivered
by the parties thereto prior to such Transaction or, with respect to the
Collection Account Control Agreement, in accordance with Section 16(e), and is
in full force and effect, free of any modification, breach or waiver;

 

(xiii)       Certificates of an officer of each of Seller and Guarantor
attaching certified copies of Seller’s and Guarantor’s respective charter,
bylaws and corporate resolutions, as applicable, approving the Program Documents
and Transactions thereunder (either specifically or by general resolution), and
all documents evidencing other necessary corporate action or governmental
approvals as may be required in connection with the Program Documents;

 

(xiv)      A certificate of an officer of Seller reporting on Quality Control
Program and certifying to the compliance of the Quality Control Program with the
requirements of Section 14(z);

 

(xv)       Certified copies of good standing certificates from the jurisdictions
of organization of each of Seller and Guarantor, dated as of no earlier than the
date which is ten (10) Business Days prior to the Purchase Date with respect to
the initial Transaction hereunder;

 

(xvi)      An incumbency certificate of the secretary of each of Seller and
Guarantor certifying the names, true signatures and titles of Seller’s and
Guarantor’s representatives who are duly authorized to request Transactions
hereunder and to execute the Program Documents and the other documents to be
delivered thereunder;

 

(xvii)     An opinion of Seller’s counsel as to such matters as Purchaser or
Agent may reasonably request including, without limitation, with respect to
Purchaser’s first priority lien on and perfected security interest in the
Purchased Assets, a no material litigation, non-contravention, enforceability
and corporate opinion with respect to Seller, an opinion with respect to the
inapplicability of the Investment Company Act to Seller and Guarantor, an
opinion that this Agreement constitutes a “repurchase agreement” and a
“securities contract” within the meaning of the Bankruptcy Code and that no
Transaction constitutes an avoidable transfer under Section 546(f) of the
Bankruptcy Code, in form and substance acceptable to Purchaser and Agent in
their reasonable discretion, and from nationally recognized outside counsel
acceptable to Purchaser and Agent in their reasonable discretion;

 

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(xviii)    A copy of the insurance policies required by Section 14(o) of this
Agreement;

 

(xix)       Evidence that all other actions necessary to perfect and protect
Purchaser’s interest in the Purchased Assets have been taken, including, without
limitation, the establishment of the Collection Account, and duly executed and
filed Uniform Commercial Code financing statements acceptable to Purchaser and
covering the Purchased Assets on Form UCC1; and

 

(xx)        Any other documents reasonably requested by Purchaser or Agent.

 

11.         RELEASE OF PURCHASED ASSETS

 

Upon timely payment in full of the Repurchase Price and all other Obligations
(if any) then owing with respect to a Purchased Asset pursuant to Section 3(f)
hereof, unless a Margin Deficit or an Event of Default shall have occurred and
be continuing: (a) Purchaser shall be deemed to have terminated any security
interest that Purchaser may have in such Purchased Asset, (b) all of Purchaser’s
right, title and interest in such Purchased Assets shall automatically transfer
to Seller, and (c) with respect to such Purchased Asset, Purchaser shall or
shall direct Custodian to release such Purchased Asset to Seller. Except as set
forth in Sections 15 and 16(f)(ii), Seller shall give at least two (2) Business
Days prior written notice to Purchaser if such repurchase shall occur on any
date other than the Repurchase Date.

 

If such a Margin Deficit is applicable, Purchaser shall notify Seller of the
amount thereof and Seller may thereupon satisfy the Margin Call in the manner
specified in Section 7.

 

12.         RELIANCE

 

With respect to any Transaction, Purchaser may conclusively rely upon, and shall
incur no liability to Seller in acting upon, any request or other communication
that Purchaser reasonably believed to have been given or made by a person
authorized to enter into a Transaction on Seller’s behalf.

 

13.         REPRESENTATIONS AND WARRANTIES

 

Seller and Guarantor hereby represent and warrant to Purchaser and Agent, and
shall on and as of the Purchase Date for any Transaction and on and as of each
date thereafter through and including the related Repurchase Date be deemed to
represent and warrant to Purchaser and Agent that:

 

(a)           Due Organization, Qualification, Power, Authority and Due
Authorization. Seller is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and it has qualified to
do business in each jurisdiction in which it is legally required to do so.
Seller has the power and authority under its certificate of incorporation,
bylaws and applicable law to enter into this Agreement and the Program Documents
and to perform all acts contemplated hereby and thereby or in connection
herewith and therewith; this Agreement and the Program Documents and the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action and do not require any additional approvals or
consents or other action by, or any notice to or filing with, any Person other
than any that have heretofore been obtained, given or made.

 

(b)           Noncontravention. The consummation of the transactions
contemplated by this Agreement and the Program Documents are in the ordinary
course of business of Seller and will not conflict with, result in the breach of
or violate any provision of the charter or by-laws of Seller or result in the
breach of any provision of, or conflict with or constitute a default under or
result in the acceleration of any obligation under, any agreement, indenture,
loan or credit agreement or other instrument to which Seller, the Mortgage Loans
or any of Seller’s Property is or may be subject to, or result in the violation
of any law, rule, regulation, order, judgment or decree to which Seller, the
Mortgage Loans or Seller’s Property is subject.

 

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(c)           Legal Proceeding. There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before or by any court, public board or
body pending or, to Seller’s knowledge, threatened against or affecting Seller
or Guarantor (or, to Seller’s knowledge, any basis therefor) wherein an
unfavorable decision, ruling or finding would adversely affect the validity or
enforceability of this Agreement, the Program Documents or any agreement or
instrument to which Seller or Guarantor is a party and which is used or
contemplated for use in the consummation of the transactions contemplated
hereby, would adversely affect the proceedings of Seller or Guarantor in
connection herewith or would or could materially and adversely affect Seller’s
ability to carry out its obligations hereunder or Guarantor’s obligations under
the Guaranty.

 

(d)           Valid and Binding Obligations. This Agreement, the Program
Documents and every other document to be executed by Seller in connection with
this Agreement is and will be legal, valid, binding and subsisting obligations
of Seller, enforceable in accordance with their respective terms, except that
(A) the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, receivership and other similar laws relating to creditors’ rights
generally and (B) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.

 

(e)           Financial Statements. Guarantor has heretofore furnished to
Purchaser a copy of (a) its consolidated balance sheet and the consolidated
balance sheets of its consolidated Subsidiaries for the fiscal year of Guarantor
ended December 31, 2013 and the related consolidated statements of income and
retained earnings and of cash flows for Guarantor and its consolidated
Subsidiaries for such fiscal year, setting forth in each case in comparative
form the figures for the previous year, with the opinion thereon of Grant
Thornton LLP and (b) its consolidated balance sheet and the consolidated balance
sheets of its consolidated Subsidiaries for the quarterly fiscal period of
Guarantor ended March 31, 2014 and the related consolidated statements of income
and retained earnings and of cash flows for Guarantor and its consolidated
Subsidiaries for such quarterly fiscal period, setting forth in each case in
comparative form the figures for the previous year. All such financial
statements are complete and correct and fairly present, in all material
respects, the consolidated financial condition of Guarantor and its Subsidiaries
and the consolidated results of their operations as at such dates and for such
fiscal periods, all in accordance with GAAP (other than monthly financial
statements solely with respect to footnotes, year-end adjustments and cash flow
statements) applied on a consistent basis. Since December 31, 2013, there has
been no material adverse change in the consolidated business, operations or
financial condition of Guarantor and its consolidated Subsidiaries taken as a
whole from that set forth in said financial statements nor is Seller aware of
any state of facts which (with notice or the lapse of time) would or could
result in any such material adverse change. Guarantor has, on the date of the
statements delivered pursuant to this Section (the “Statement Date”) no
liabilities, direct or indirect, fixed or contingent, matured or unmatured,
known or unknown, or liabilities for taxes, long-term leases or unusual forward
or long-term commitments not disclosed by, or reserved against in, said balance
sheet and related statements.

 

(f)           Accuracy of Information. Neither this Agreement nor any
representations and warranties or information relating to Seller, Guarantor or
any Affiliate thereof that Seller has delivered or caused to be delivered to
Purchaser, including, but not limited to, all documents related to this
Agreement, the Program Documents or financial statements, contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements made therein or herein in light of the circumstances under which
they were made, not misleading. Since the furnishing of such documents or
information, there has been no change, nor any development or event involving a
prospective change that would render any of such documents or information untrue
or misleading in any material respect.

 

- 25 -

 

 

(g)           No Consents. No consent, license, approval or authorization from,
or registration, filing or declaration with, any regulatory body, administrative
agency or other governmental instrumentality, nor any consent, approval, waiver
or notification of any creditor, lessor or other non-governmental Person, is
required in connection with the execution, delivery and performance by Seller or
Guarantor of this Agreement or the Guaranty, respectively, or any other Program
Document to which it is a party, other than any that have heretofore been
obtained, given or made.

 

(h)           Compliance With Law, Etc. No practice, procedure or policy
employed or proposed to be employed by Seller in the conduct of its businesses
violates any law, regulation, judgment, agreement, regulatory consent, order or
decree applicable to it which, if enforced, would result in a Material Adverse
Effect.

 

(i)           Solvency. Each of Seller and Guarantor is solvent and will not be
rendered insolvent by any Transaction and, after giving effect to each such
Transaction, neither Seller nor Guarantor will be left with an unreasonably
small amount of capital with which to engage in its business. Each of Seller and
Guarantor does not intend to incur, nor believes that it has incurred, debts
beyond its ability to pay such debts as they mature. Each of Seller and
Guarantor is not contemplating the commencement of insolvency, bankruptcy,
liquidation or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of Seller,
Guarantor or any of its respective assets.

 

(j)           Fraudulent Conveyance. The amount of consideration being received
by Seller in respect of each Transaction, taken as a whole, constitutes
reasonably equivalent value and fair consideration for the related Purchased
Assets. Seller is not transferring any Purchased Assets with any intent to
hinder, delay or defraud any of its creditors. This Agreement and the Program
Documents, any other document contemplated hereby or thereby and each
transaction have not been entered into fraudulently by Seller hereunder, or with
the intent to hinder, delay or defraud any creditor or Purchaser.

 

(k)           Investment Company Act Compliance. Neither Seller, Guarantor nor
any of their Subsidiaries is required to be registered as an “investment
company” as defined under the Investment Company Act or as an entity under the
control of an entity required to be registered as an “investment company” as
defined under the Investment Company Act.

 

(l)           Taxes. Each of Seller, Guarantor and their Subsidiaries have filed
all federal and state tax returns that are required to be filed and paid all
taxes, including any assessments received by it, to the extent that such taxes
have become due (other than for taxes that are being contested in good faith or
for which it has established adequate reserves). Any taxes, fees and other
governmental charges payable by Seller, Guarantor or their Subsidiaries in
connection with a Transaction and the execution and delivery of the Program
Documents have been paid.

 

(m)           Additional Representations. With respect to each Mortgage Loan to
be sold hereunder by Seller to Purchaser, Seller hereby makes all of the
applicable representations and warranties set forth in Exhibit B as of the date
the related Mortgage Loan File is delivered to Purchaser or Custodian with
respect to the Mortgage Loans and continuously while such Mortgage Loan is
subject to a Transaction. Further, as of each Purchase Date, Seller shall be
deemed to have represented and warranted in like manner that Seller has no
knowledge that any such representation or warranty may have ceased to be true in
a material respect as of such date, except as otherwise stated in a Transaction
Notice, any such exception to identify the applicable representation or warranty
and specify in reasonable detail the related knowledge of Seller.

 

- 26 -

 

 

(n)           No Broker. Seller has not dealt with any broker, investment
banker, agent, or other person, except for Purchaser, who may be entitled to any
commission or compensation in connection with the sale of Purchased Assets
pursuant to this Agreement; provided, that if Seller has dealt with any broker,
investment banker, agent, or other person, except for Purchaser, who may be
entitled to any commission or compensation in connection with the sale of
Purchased Assets pursuant to this Agreement, such commission or compensation
shall have been paid in full by Seller.

 

(o)           Good Title. Seller has not sold, assigned, transferred, pledged or
hypothecated any interest in any individual Mortgage Loan to any person other
than any sale, assignment, transfer, pledge or hypothecation that is released in
conjunction with the sale to Purchaser hereunder, and upon delivery of a
Purchased Asset to Purchaser, Purchaser will be the sole owner thereof (other
than for tax and accounting purposes), free and clear of any lien, claim or
encumbrance other than those arising under this Agreement.

 

(p)           [Reserved].

 

(q)           No Adverse Actions. Neither Seller nor Servicer has received from
any Agency a notice of extinguishment or a notice indicating material breach,
default or material non-compliance which could entitle an Agency to terminate,
suspend, sanction or levy penalties against Seller or reasonably be expected to
have a Material Adverse Effect, or a notice from any Agency, HUD, FHA or VA
indicating any adverse fact or circumstance in respect of Seller (i) which could
entitle such Agency, HUD, FHA or VA, as the case may be, to revoke any Approval
or otherwise terminate or suspend Seller as an Agency approved issuer or
servicer, (ii) which could reasonably be expected to have a Material Adverse
Effect, or (iii) with respect to which such adverse fact or circumstance has
caused any Agency, HUD, FHA or VA, as the case may be, to terminate Seller,
without any subsequent rescission thereof in such notice.

 

(r)           Mortgage Recordation. Seller has submitted the original Mortgage
in respect of each Mortgage Loan for recordation in the appropriate public
recording office in the applicable jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the applicable
Mortgagor.

 

(s)           Affiliated Parties. Seller is not an Affiliate of Custodian or any
other party to a Program Document hereunder other than Guarantor.

 

The representations and warranties set forth in this Agreement shall survive
transfer of the Purchased Assets to Purchaser and shall continue for so long as
the Purchased Assets are subject to this Agreement.

 

14.         COVENANTS OF SELLER AND GUARANTOR

 

Seller and Guarantor hereby covenant and agree with Purchaser and Agent as
follows:

 

(a)           Defense of Title. Seller warrants and will defend the right, title
and interest of Purchaser in and to all Purchased Assets against all adverse
claims and demands.

 

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(b)           No Amendment or Compromise. None of Seller or those acting on
Seller’s behalf shall amend, modify, or waive any term or condition of, or
settle or compromise any claim in respect of, any item of the Purchased Assets,
any related rights or any of the Program Documents without the prior written
consent of Purchaser, unless such amendment or modification does not (i) affect
the amount or timing of any payment of principal or interest payable with
respect to a Purchased Asset, extend its scheduled maturity date, modify its
interest rate, or constitute a cancellation or discharge of its outstanding
principal balance or (ii) materially and adversely affect the security afforded
by the real property, furnishings, fixtures, or equipment securing the Purchased
Asset. Notwithstanding the foregoing, Seller may amend, modify or waive any term
or condition of the individual Mortgage Loans in accordance with Accepted
Servicing Practices; provided, that Seller shall promptly notify Purchaser of
any amendment, modification or waiver that causes any Mortgage Loan to cease to
be an Eligible Mortgage Loan.

 

(c)           No Assignment. Except as permitted herein, Seller shall not sell,
assign, transfer or otherwise dispose of, or grant any option with respect to,
or pledge, hypothecate or grant a security interest in, or Lien on or otherwise
encumber (except pursuant to the Program Documents) any of the Purchased Assets
or any interest therein, provided that this Section 14(c) shall not prevent any
of the following: any contribution, sale, assignment, transfer or conveyance of
Purchased Assets in accordance with the Program Documents and any forward
purchase commitment or other type of take out commitment for the Purchased
Assets (without vesting rights in the related purchasers as against Purchaser
until the Repurchase Price for such Purchased Assets is paid).

 

(d)           No Economic Interest. None of Seller, Guarantor nor any of their
respective Affiliates will acquire any economic interest in or obligation with
respect to any Mortgage Loan except for record title to the Mortgage relating to
the Mortgage Loan and the right and obligation to repurchase the Mortgage Loan
hereunder.

 

(e)           Preservation of Purchased Assets. Seller shall take all actions
necessary or, in the opinion of Purchaser, desirable, to preserve the Purchased
Assets so that they remain subject to a first priority perfected security
interest hereunder and deliver evidence that such actions have been taken,
including, without limitation, duly executed and filed Uniform Commercial Code
financing statements on Form UCC1. Without limiting the foregoing, Seller will
comply with all applicable laws, rules, regulations and other laws of any
Governmental Authority applicable to Seller relating to the Purchased Assets and
cause the Purchased Assets to comply with all applicable laws, rules,
regulations and other laws of any such Governmental Authority. Seller will not
allow any default to occur for which Seller is responsible under any Purchased
Assets or any Program Documents and Seller shall fully perform or cause to be
performed when due all of its obligations under any Purchased Assets or the
Program Documents.

 

(f)           Maintenance of Papers, Records and Files.

 

(i)           Seller shall maintain all Records relating to the Purchased Assets
not in the possession of Custodian in good and complete condition in accordance
with industry practices and preserve them against loss. Seller shall collect and
maintain or cause to be collected and maintained all such Records in accordance
with industry custom and practice, and all such Records shall be in Purchaser’s
or Custodian’s possession unless Purchaser otherwise approves in writing. Seller
will not cause or authorize any such papers, records or files that are an
original or an only copy to leave Custodian’s possession, except for individual
items removed in connection with servicing a specific Mortgage Loan, in which
event Seller will obtain or cause to be obtained a receipt from Custodian for
any such paper, record or file, or as otherwise permitted under the Custodial
Agreement.

 

(ii)         For so long as Purchaser has an interest in or Lien on any
Purchased Asset, Seller will hold or cause to be held all related Records for
the sole benefit of Purchaser.

 

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(iii)        Upon reasonable advance notice from Custodian, Agent or Purchaser,
Seller shall (x) make any and all such Records available to Custodian or Agent
for examination, either by its own officers or employees, or by agents or
contractors, or both, and make copies of all or any portion thereof, (y) permit
Agent or its authorized agents to discuss the affairs, finances and accounts of
Seller with its chief operating officer and chief financial officer and to
discuss the affairs, finances and accounts of Seller with its independent
certified public accountants.

 

(g)           Financial Statements and Other Information; Financial Covenants.

 

(i)           Seller and Guarantor shall keep or cause to be kept in reasonable
detail books and records setting forth an account of its assets and business
and, as applicable, shall clearly reflect therein the transfer of Purchased
Assets to Purchaser. Seller shall furnish or cause to be furnished to Purchaser
and Agent the following:

 

(A)         Financial Statements.

 

(1)         Within ninety (90) days after the end of each fiscal year of
Guarantor, the consolidated audited balance sheets of Guarantor and its
consolidated Subsidiaries, which will be in conformity with GAAP, and the
related consolidated audited statements of income and changes in equity showing
the financial condition of Guarantor and its consolidated Subsidiaries as of the
close of such fiscal year and the results of operations during such year, and
consolidated audited statements of cash flows, as of the close of such fiscal
year, setting forth, in each case, in comparative form the corresponding figures
for the preceding year. The foregoing consolidated financial statements are to
be reported on by, and to carry the unqualified report (acceptable in form and
content to Purchaser and Agent) of, an independent public accountant of national
standing acceptable to Purchaser and Agent, which shall include KPMG LLP,
PricewaterhouseCoopers LLP, Deloitte LLP, Grant Thornton LLP and any other
similarly situated independent public account;

 

(2)         Within forty-five (45) days after the end of each of the first three
fiscal quarters of each fiscal year of Guarantor, consolidated unaudited balance
sheets and consolidated statements of income and changes in equity and unaudited
statement of cash flows, all to be in a form acceptable to Purchaser and Agent,
showing the financial condition and results of operations of Guarantor and its
consolidated Subsidiaries, each on a consolidated basis as of the end of each
such quarter and for the then elapsed portion of the fiscal year, setting forth,
in each case, in comparative form the corresponding figures for the
corresponding periods of the preceding fiscal year, certified by a financial
officer of Guarantor (acceptable to Purchaser and Agent) as presenting fairly
the financial position and results of operations of Guarantor and its
consolidated Subsidiaries and as having been prepared in accordance with GAAP
consistently applied, in each case, subject to normal year-end audit
adjustments;

 

(3)         Within forty-five (45) days after the end of each month,
consolidated unaudited balance sheets and consolidated statements of income and
changes in equity and unaudited statement of cash flows, all to be in a form
acceptable to Purchaser and Agent, showing the financial condition and results
of operations of Guarantor and its consolidated Subsidiaries on a consolidated
basis as of the end of each such month and for the then elapsed portion of the
fiscal year, setting forth, in each case, in comparative form the corresponding
figures for the corresponding month of the preceding fiscal year, certified by a
financial officer of Guarantor (acceptable to Purchaser and Agent) as presenting
fairly the financial position and results of operations of Guarantor and its
consolidated Subsidiaries and as having been prepared in accordance with GAAP
consistently applied, in each case, subject to normal year-end audit
adjustments;

 

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(4)         Promptly upon receipt thereof, a copy of each other report submitted
to Seller or Guarantor by its independent public accountants in connection with
any annual, interim or special audit of Seller or Guarantor;

 

(5)         Promptly upon becoming available, copies of all financial
statements, reports, notices and proxy statements sent by Seller or Guarantor or
any of their respective consolidated Subsidiaries in a general mailing to their
respective stockholders and of all reports and other material (including copies
of all registration statements under the Securities Act of 1933, as amended)
filed by any of them with any securities exchange or with the SEC or any
governmental authority succeeding to any or all of the functions of the SEC;

 

(6)         Promptly upon becoming available, copies of any press releases
issued by Seller or Guarantor and copies of any annual and quarterly financial
reports and any reports on Form H-(b)12 that Seller or Guarantor may be required
to file with the SEC, the FDIC or the OTS or comparable reports which such
Seller or Guarantor may be required to file with the SEC, the FDIC or the OTS or
any other federal banking agency containing such financial statements and other
information concerning such Seller’s or Guarantor’s business and affairs as is
required to be included in such reports in accordance with the rules and
regulations of the SEC, the OTS, the FDIC or such other banking agency, as may
be promulgated from time to time;

 

(7)         Such supplements to the aforementioned documents and such other
information regarding the operations, business, affairs and financial condition
of Seller or Guarantor or any of their respective consolidated Subsidiaries as
Purchaser may reasonably request.

 

Seller’s obligation to deliver any report or other document under this Section
14(g)(i)(A) shall be deemed to have been satisfied if, and as of the date, such
report or other document is filed with the SEC pursuant to the SEC’s Electronic
Data Gathering & Analysis Recovery system.

 

(A)         Warehouse Capacity. On or prior to the date on which Seller is
required to deliver the monthly financial report required in Section
14(g)(i)(A)(3), Seller shall provide to Agent a report detailing its total
warehouse capacity and utilization for the prior calendar month. Such warehouse
capacity shall be (i) issued directly to Seller or Guarantor and (ii) in an
amount equal to or greater than $1,000,000 or such other amount as may be
required by a Governmental Authority.

 

(B)         Other Information. Upon the request of Purchaser or Agent, such
other information or reports as Purchaser or Agent may from time to time
reasonably request.

 

(ii)         Guarantor shall at all times satisfy the financial covenants set
forth in Section 3 of the Pricing Side Letter.

 

(iii)        [Reserved].

 

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(iv)        Certifications. Seller shall execute and deliver a monthly
certification substantially in the form of Exhibit A attached hereto within ten
(10) days after the end of each calendar month.

 

(h)          Notice of Material Events. Seller shall promptly inform Purchaser
and Agent in writing of any of the following:

 

(i)           any Default, Event of Default by Seller or Guarantor or any other
Person (other than Purchaser or Purchaser’s Affiliates) of any material
obligation under any Program Document, or the occurrence or existence of any
event or circumstance that Seller reasonably expects will with the passage of
time become an Event of Default by Seller or any other Person;

 

(ii)         any material change in the insurance coverage of Seller as required
to be maintained pursuant to Section 14(o) hereof, or any other Person pursuant
to any Program Document, with copy of evidence of same attached;

 

(iii)        the commencement of, or any determination in, any material dispute,
litigation, investigation, proceeding, sanctions or suspension between Seller or
Guarantor, on the one hand, and any Governmental Authority or any other Person,
on the other;

 

(iv)        any material change in accounting policies or financial reporting
practices of Seller or Guarantor which could reasonably be expected to have a
Material Adverse Effect;

 

(v)         any event, circumstance or condition that has resulted, or has a
reasonable likelihood of resulting in either a Material Adverse Change or a
Material Adverse Effect with respect to Seller or Guarantor;

 

(vi)        any material modifications to the underwriting or acquisition
guidelines used by Seller with respect to the origination or acquisition of
Eligible Mortgage Loans;

 

(vii)       any additional material Indebtedness incurred by Seller, including
without limitation, any Indebtedness relating to any mortgage servicing rights
or corporate or servicing advances, (other than (i) the Existing Indebtedness in
amounts not to exceed the amounts specified on Exhibit I hereto and (ii) usual
and customary accounts payable for a mortgage company) without the prior written
consent of Purchaser;

 

(viii)      any penalties, sanctions or charges levied, or threatened to be
levied, against Seller or any change, or threatened change, in Approval status,
or actions taken, or threatened to be taken, against Seller by or disputes
between Seller and any Applicable Agency, or any supervisory or regulatory
Government Authority supervising or regulating the origination or servicing of
mortgage loans by, or the issuer status of, Seller; or

 

(ix)         any Change in Control of Seller or Guarantor.

 

(i)           Maintenance of Licenses. Seller shall (i) maintain all licenses,
permits or other approvals necessary for Seller to conduct its business and to
perform its obligations under the Program Documents, (ii) remain in good
standing under, and comply in all material respects with, all laws of each state
in which it conducts business or any Mortgaged Property is located, and (iii)
conduct its business strictly in accordance with applicable law.

 

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(j)           Taxes, Etc. Seller shall pay and discharge or cause to be paid and
discharged, when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income and profits or upon any of its Property,
real, personal or mixed (including without limitation, the Purchased Assets) or
upon any part thereof, as well as any other lawful claims which, if unpaid,
might become a Lien upon such properties or any part thereof, except for any
such taxes, assessments and governmental charges, levies or claims as are
appropriately contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are provided. Seller shall
file on a timely basis all federal, and state and local tax and information
returns, reports and any other information statements or schedules required to
be filed by or in respect of it.

 

(k)           Nature of Business. Seller shall not make any material change in
the nature of its business as carried on at the date hereof.

 

(l)           Limitation on Distributions. Seller shall not make any payment of
any dividends or make distributions 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 capital stock, senior or subordinate
debt of Seller or other equity interests, respectively, thereof, 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 Seller.

 

(m)           Use of Custodian. Without the prior written consent of Purchaser,
Seller shall use no third party custodian as document custodian other than
Custodian for the Mortgage Loan File relating to the Mortgage Loans.

 

(n)           Merger of Seller. Seller shall not, at any time, directly or
indirectly (i) liquidate or dissolve or enter into any consolidation or merger
or be subject to a Change in Control or sell all or substantially all of its
Property (other than in connection with an asset-based financing or other
secondary market transaction related to Seller’s assets in the ordinary course
of Seller’s business); (ii) form or enter into any partnership, joint venture,
syndicate or other combination which would have a Material Adverse Effect with
respect to Seller; or (iii) make any Material Adverse Change with respect to
Seller.

 

(o)           Insurance. Seller shall obtain and maintain insurance with
responsible companies in such amounts and against such risks as are customarily
carried by business entities engaged in similar businesses similarly situated
including, without limitation, the insurance required to be obtained and
maintained by the Fannie Mae Guide, and will furnish Purchaser on request full
information as to all such insurance, and provide within fifteen (15) days after
receipt of such request the certificates or other documents evidencing renewal
of each such policy. Seller shall continue to maintain coverage, for itself and
its Subsidiaries, that encompasses employee dishonesty, forgery or alteration,
theft, disappearance and destruction, robbery and safe burglary, Property (other
than money and securities), and computer fraud in an aggregate amount of at
least such amount as required by the Fannie Mae Guide.

 

(p)           Affiliate Transactions. Seller shall not, at any time, directly or
indirectly, sell, lease or otherwise transfer any Property or assets to, or
otherwise acquire any Property or assets from, or otherwise engage in any
transactions with, any of its Affiliates unless the terms thereof are no less
favorable to Seller, than those that could be obtained at the time of such
transaction in an arm’s length transaction with a Person who is not such an
Affiliate.

 

(q)           Change of Fiscal Year. Seller shall not, at any time, directly or
indirectly, except upon sixty (60) days’ prior written notice to Purchaser,
change the date on which its fiscal year begins from its current fiscal year
beginning date.

 

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(r)           Transfer of Servicing Rights, Servicing Files and Servicing. With
respect to the Servicing Rights of each Mortgage Loan, Seller shall transfer
such Servicing Rights to Purchaser or its designee on the related Purchase Date.
With respect to the Servicing Files and the physical and contractual servicing
of each Mortgage Loan to the extent in the possession of Seller, Seller shall
deliver such Servicing Files and the physical and contractual servicing to
Purchaser or its designee upon the expiration of the Servicing Term unless
either such Servicing Term is renewed by Purchaser or the termination of Seller
as servicer pursuant to Section 16. Seller’s transfer of the Servicing Rights,
Servicing Files and the physical and contractual servicing under this Section
shall be in accordance with customary standards in the industry including the
transfer of the gross amount of all escrows held for the related Mortgagors
(without reduction for unreimbursed advances or “negative escrows”).

 

(s)           MERS. Seller is a member of MERS in good standing and current in
the payment of all fees and assessments imposed by MERS, and has complied with
all rules and procedures of MERS. In connection with the assignment of any
Mortgage Loan registered on the MERS System, Seller agrees that at the request
of Purchaser it will, at Purchaser’s cost and expense prior to the occurrence of
an Event of Default, but at Seller’s cost and expense following the occurrence
and during the continuance of an Event of Default, cause the MERS System to
indicate that such Mortgage Loan has been transferred to Purchaser in accordance
with the terms of this Agreement by including in MERS’ computer files (a) the
code in the field which identifies the specific owner of the Mortgage Loans and
(b) the code in the field “Pool Field” which identifies the series in which such
Mortgage Loans were sold. Seller further agrees that it will not alter codes
referenced in this paragraph with respect to any Mortgage Loan at any time that
such Mortgage Loan is subject to this Agreement, and Seller shall retain its
membership in MERS at all times during the term of this Agreement.

 

(t)           Fees and Expenses. Seller shall timely pay to Purchaser all fees
and actual out of pocket expenses required to be paid by Seller hereunder and
under any other Program Document to Purchaser in immediately available funds,
and without deduction, set-off or counterclaim in accordance with Purchaser’s
Wire Instructions.

 

(u)           Further Documents. Seller shall, upon request of Purchaser or
Agent, promptly execute and deliver to Purchaser or Agent all such other and
further documents and instruments of transfer, conveyance and assignment, and
shall take such other action as Purchaser or Agent may require more effectively
to transfer, convey, assign to and vest in Purchaser and to put Purchaser in
possession of the Property to be transferred, conveyed, assigned and delivered
hereunder and otherwise to carry out more effectively the intent of the
provisions under this Agreement.

 

(v)           Due Diligence. Seller will permit Purchaser, Agent or their
respective agents or designees to perform due diligence reviews on the Mortgage
Loans subject to each Transaction hereunder and within thirty (30) days
following the related Purchase Date. Seller shall cooperate in all respects with
such diligence and shall provide Purchaser, Agent or their respective agents or
designees with all loan files and other information (including, without
limitation, Seller’s quality control procedures and results) reasonably
requested by Purchaser, Agent or their respective agents or designees and shall
bear all costs and expenses associated with such due diligence identified in
this Section 14(v).

 

(w)           Guarantees. Seller shall not create, incur, assume or suffer to
exist any Guarantees, except (i) to the extent reflected in Seller’s financial
statements or notes thereto or (ii) to the extent the aggregate Guarantees of
Seller do not exceed $100,000.

 

(x)            [Reserved].

 

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(y)           Plan Assets. Neither Seller nor Guarantor shall be an employee
benefit plan as defined in Section 3 of Title I of ERISA, or a plan described in
Section 4975(e)(1) of the Code and Seller shall not use “plan assets” within the
meaning of 29 CFR §2510.3-101, as amended by Section 3(42) of ERISA to engage in
this Agreement or any Transaction hereunder. Transactions by or with Seller or
Guarantor shall not be subject to any state or local statute regulating
investments of or fiduciary obligations with respect to governmental plans
within the meaning of Section 3(32) of ERISA.

 

(z)           Quality Control. Seller shall maintain or shall cause a
third-party to maintain an internal quality control program (the “Quality
Control Program”) that verifies, on a regular basis, the existence and accuracy
of all legal documents, credit documents, property appraisals, and underwriting
decisions related to Mortgage Loans and shall provide a report on the results of
the Quality Control Program in the officer’s certificate provided pursuant to
Section 10(b)(xiv). Such program shall be capable of evaluating and monitoring
the overall quality of Seller’s loan production and servicing activities. Such
program shall (i) ensure that the Mortgage Loans are originated and serviced in
accordance with prudent mortgage banking practices and accounting principles;
(ii) guard against dishonest, fraudulent, or negligent acts; and (iii) guard
against errors and omissions by officers, employees, or other authorized
persons.

 

15.         REPURCHASE OF PURCHASED ASSETS

 

Upon discovery by Seller of a breach of any of the representations and
warranties set forth on Exhibit B to this Agreement, Seller shall give prompt
written notice thereof to Purchaser. Upon any such discovery by Purchaser,
Purchaser will notify Seller. It is understood and agreed that the
representations and warranties set forth in Exhibit B to this Agreement with
respect to the Purchased Assets shall survive delivery of the respective
Mortgage Loan Files to Purchaser or Custodian with respect to the Purchased
Assets and shall inure to the benefit of Purchaser. The fact that Purchaser has
conducted or has failed to conduct any partial or complete due diligence
investigation in connection with their purchase of any Purchased Asset shall not
affect Purchaser’s right to demand repurchase or any other remedy as provided
under this Agreement. Seller shall, within five (5) Business Days of the earlier
of Seller’s discovery or receipt of notice with respect to any Purchased Asset
of (i) any breach of a representation or warranty contained in Exhibit B of this
Agreement or (ii) any failure to deliver any of the items required to be
delivered as part of the Mortgage Loan File within the time period required for
delivery pursuant to the Custodial Agreement, promptly cure such breach or
delivery failure in all material respects. If within five (5) Business Days
after the earlier of Seller’s discovery of such breach or delivery failure or
receipt of notice thereof that such breach or delivery failure has not been
remedied by Seller, Seller shall promptly upon receipt of written instructions
from Purchaser, at Purchaser’s option, repurchase such Purchased Asset at a
purchase price equal to the Repurchase Price with respect to such Purchased
Asset by wire transfer to the account designated by Purchaser.

 

16.         SERVICING OF THE MORTGAGE LOANS; SERVICER TERMINATION

 

(a)           Seller to Subservice.

 

(i)           Upon payment of the Purchase Price, Purchaser shall own the
servicing rights related to the Mortgage Loans including the Mortgage Loan File.
Seller and Purchaser each agrees and acknowledges that the Mortgage Loans sold
hereunder shall be sold to Purchaser on a servicing released basis, and that
Purchaser is engaging and hereby does engage Seller to provide subservicing of
each Mortgage Loan for the benefit of Purchaser.

 

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(ii)         So long as a Mortgage Loan is outstanding, subject to subsection
(h) below, Seller shall neither assign, encumber or pledge its obligation to
subservice the Mortgage Loans in whole or in part, nor delegate its rights or
duties under this Agreement (to other than a subservicer) without the prior
written consent of Purchaser, the granting of which consent shall be in the sole
discretion of Purchaser. Seller hereby acknowledges and agrees that (i)
Purchaser is entering into this Agreement in reliance upon Seller’s
representations as to the adequacy of its financial standing, servicing
facilities, personnel, records, procedures, reputation and integrity, and the
continuance thereof; and (ii) Seller’s engagement hereunder to provide mortgage
servicing for the benefit of Purchaser is intended by the parties to be a
“personal service contract” and Seller is hereunder intended by the parties to
be an “independent contractor.”

 

(iii)        Seller shall subservice and administer the Mortgage Loans on behalf
of Purchaser in accordance with Accepted Servicing Practices. Seller shall have
no right to modify or alter the terms of any Mortgage Loan or consent to the
modification or alteration of the terms of any Mortgage Loan except in
accordance with Accepted Servicing Practices. Seller shall at all times maintain
accurate and complete records of its servicing of the Mortgage Loans, and Agent
may, at any time during Seller’s business hours on reasonable notice, examine
and make copies of such Servicing Records. Seller agrees that Purchaser is the
100% beneficial owner of all Servicing Records relating to the Mortgage Loans.
Seller covenants to hold such Servicing Records for the benefit of Purchaser and
to safeguard such Servicing Records and to deliver them promptly to Agent or its
designee (including Custodian) at Agent’s request or otherwise as required by
operation of this Section 16.

 

(b)           Servicing Term. Seller shall subservice such Mortgage Loans for a
term of thirty (30) days commencing as of the related Purchase Date, which term
may be extended in writing by Purchaser (which writing may be, without
limitation, the monthly invoice provided by Purchaser) in its sole discretion
for an additional thirty-day period (each, a “Servicing Term”); provided, that
Purchaser shall have the right to immediately terminate the Servicer at any time
following the occurrence of a Servicer Termination Event. If such Servicing Term
is not extended by Purchaser or if Purchaser has terminated Seller as a result
of a Servicer Termination Event, Seller shall transfer such servicing to
Purchaser or its designee at no cost or expense to Purchaser as provided in
Section 14(r). Seller shall hold or cause to be held all Escrow Payments
collected with respect to the Mortgage Loans in segregated accounts for the sole
benefit of the Mortgagor and shall apply the same for the purposes for which
such funds were collected. If Seller should discover that, for any reason
whatsoever, it has failed to perform its servicing obligations in any material
respect with respect to the Mortgage Loans, Seller shall promptly notify
Purchaser.

 

(c)           Servicing Reports. As requested by Purchaser from time to time,
Seller shall furnish to Purchaser reports in form and scope satisfactory to
Purchaser, setting forth (i) data regarding the performance of the individual
Mortgage Loans, (ii) a summary report of all Mortgage Loans serviced by Seller
(on a portfolio basis), in each case, for the immediately preceding month,
including, without limitation, all collections, delinquencies, defaults,
defects, claim rates, losses and recoveries, and (iii) any other information
reasonably requested by Purchaser or Agent.

 

(d)           Backup Servicer. Agent, in its sole discretion, may appoint a
backup servicer at any time during the term of this Agreement. In such event,
Seller shall commence monthly delivery to such backup servicer of the servicing
information required to be delivered to Purchaser pursuant to Section 16(c)
hereof and any other information reasonably requested by backup servicer, all in
a format that is reasonably acceptable to such backup servicer. Purchaser shall
pay all costs and expenses of such backup servicer, including, but not limited
to all fees of such backup servicer in connection with the processing of such
information and the maintenance of a servicing file with respect to the
Purchased Assets. Seller shall cooperate fully with such backup servicer in the
event of a transfer of servicing hereunder and will provide such backup servicer
with all documents and information necessary for such backup servicer to assume
the servicing of the Purchased Assets.

 

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(e)           Collection Account. Prior to the initial Purchase Date, Seller
shall establish and maintain, or cause to be established and maintained, a
separate account (the “Collection Account”) with the Bank in Agent’s name for
the sole and exclusive benefit of Purchaser. On or before the ninetieth (90th)
day after the Closing Date, Purchaser, Seller and Bank shall enter into a
Collection Account Control Agreement, in form and substance acceptable to
Purchaser in its reasonable discretion, with respect to the Collection Account.
Seller shall deposit or credit, or cause to be deposited and credited, to the
Collection Account all amounts collected on account of the Mortgage Loans within
two (2) Business Days of receipt and such amounts shall be deposited or credited
irrespective of any right of setoff or counterclaim arising in favor of Seller
(or any third party claiming through it) under any other agreement or
arrangement. Amounts on deposit in the Collection Account shall be distributed
as provided in Section 16(f). Seller shall have the right to withdraw amounts on
deposit therein at any time subject to the restrictions set forth in subsections
16(f)(ii) and (iv); provided, that Agent shall have the right to block such
withdrawals at any time by providing written notice thereof to Seller and Bank
in accordance with the terms of the Collection Account Control Agreement. Seller
shall deliver, or cause Bank to deliver, to Purchaser, daily account statements
in respect of the Collection Account.

 

(f)           Income Payments.

 

(i)           Where a particular term of a Transaction extends over the date on
which Income is paid in respect of any Purchased Asset subject to that
Transaction, (i) Seller shall deposit or cause to be deposited such Income into
the Collection Account no later than two (2) Business Days after receipt
thereof, and (ii) such Income shall be the Property of Purchaser subject to
subsections 16(f)(ii), (iii) and (iv) below.

 

(ii)         Seller shall have the right to withdraw from the Collection Account
up to $25,000 in the aggregate on any day without Purchaser’s prior written
consent (the “Daily Withdrawal Limit”), and may withdraw larger amounts with
Purchaser’s prior written consent, which consent may be given or withheld by
Purchaser in its sole discretion and a copy of which shall be delivered by
Purchaser to the Bank. If, on any day, the amounts on deposit in the Collection
Account exceed $25,000 (such excess amounts, the “Excess Funds”), Seller shall
cause the Bank to disburse such Excess Funds to Purchaser or as directed by
Purchaser, which amounts, unless otherwise directed by Purchaser, shall be
applied by Purchaser in the following order of priority (i) to reduce
outstanding Price Differential due and payable in respect of Purchased Assets
for which Purchaser has received the related Repurchase Price (other than Price
Differential) pursuant to Section 3(f) during the prior calendar month, (ii) to
reduce the Repurchase Price for all outstanding Transactions, and (iii) to pay
all other Obligations then due and payable to Purchaser.

 

(iii)        Notwithstanding anything herein or in the Collection Account
Control Agreement to the contrary, Seller shall in no event be permitted to
withdraw funds from the Collection Account to the extent that such action would
result in the creation of a Margin Deficit (unless prior thereto or
simultaneously therewith Seller cures such Margin Deficit in accordance with
Section 16), or if an Event of Default is then continuing. Further, if an
uncured Margin Deficit exists as of such Monthly Payment Date, Seller shall
cause the Bank to disburse the Income related to the Transaction for which the
Margin Deficit exists to Purchaser (up to the amount of such Margin Deficit),
which amounts shall be applied by Purchaser to reduce the related Repurchase
Price.

 

(iv)        If successor Servicer takes delivery of such Mortgage Loans either
under the circumstances set forth in Section 16(g) or otherwise, all amounts
deposited in the Custodial Account shall be paid to Purchaser promptly upon such
delivery.

 

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(g)           Servicer Termination. Purchaser, in its sole discretion, may
terminate Seller’s rights and obligations as subservicer of the affected
Mortgage Loans and require Seller to deliver the related Servicing Records to
Purchaser or its designee upon the occurrence of (i) an Event of Default or (ii)
upon the expiration of the Servicing Term as set forth in Section 16(b) by
delivering written notice to Seller requiring such termination. Such termination
shall be effective upon Seller’s receipt of such written notice; provided, that
Seller’s subservicing rights shall be terminated immediately upon the occurrence
of any event described in Section 17(t), regardless of whether notice of such
event shall have been given to or by Purchaser or Seller. Upon any such
termination, all authority and power of Seller respecting its rights to
subservice and duties under this Agreement relating thereto, shall pass to and
be vested in the successor Servicer appointed by Purchaser and Purchaser is
hereby authorized and empowered to transfer such rights to subservice the
Mortgage Loans for such price and on such terms and conditions as Purchaser
shall reasonably determine. Seller shall promptly take such actions and furnish
to Purchaser such documents that Purchaser deems necessary or appropriate to
enable Purchaser to enforce such Mortgage Loans and shall perform all acts and
take all actions so that the Mortgage Loans and all files and documents relating
to such Mortgage Loans held by Seller, together with all escrow amounts relating
to such Mortgage Loans, are delivered to successor Servicer, including but not
limited to preparing, executing and delivering to the successor Servicer any and
all documents and other instruments, placing in the successor Servicer’s
possession all Servicing Records pertaining to such Mortgage Loans and doing or
causing to be done, all at Seller’s sole expense. All amounts paid by any
purchaser of such rights to service or subservice the Mortgage Loans shall be
the Property of Purchaser. The subservicing rights required to be delivered to
successor Servicer in accordance with this Section 16(g) shall be delivered free
of any servicing rights in favor of Seller or any third party (other than
Purchaser) and free of any title, interest, lien, encumbrance or claim of any
kind of Seller other than record title to the Mortgages relating to the Mortgage
Loans and the right and obligation to repurchase the Mortgage Loans hereunder.
No exercise by Purchaser of its rights under this Section 16(g) shall relieve
Seller of responsibility or liability for any breach of this Agreement.

 

(h)           Subservicing by Servicer. Notwithstanding anything else to the
contrary set forth herein, Purchaser acknowledges that Seller shall engage
Servicer to subservice the Mortgage Loans on behalf of Seller, and Purchaser
hereby consents to the subservicing of the Mortgage Loans by Servicer and agrees
that the subservicing of the Mortgage Loans by Servicer for Seller, in and of
itself, shall not constitute a default hereunder or under any other Program
Document; provided, that Seller and Servicer have each executed the Servicing
Side Letter and are in compliance with each provision thereof.

 

17.         EVENTS OF DEFAULT

 

With respect to any Transactions covered by or related to this Agreement, the
occurrence of any of the following events shall constitute an “Event of
Default”:

 

(a)           Seller fails to transfer the Purchased Assets to the applicable
Purchaser on the applicable Purchase Date (provided Purchaser has tendered the
related Purchase Price);

 

(b)           Seller either fails to repurchase the Purchased Assets on the
applicable Repurchase Date or fails to perform its obligations under Section 7
or the last sentence of Section 15;

 

(c)           Seller or Servicer shall fail to (i) remit to Purchaser when due
any payment required to be made under the terms of this Agreement, any of the
other Program Documents or any other contracts or agreements delivered in
connection herewith or therewith, or (ii) perform, observe or comply with any
material term, condition, covenant or agreement contained in this Agreement or
any of the other Program Documents (other than the other “Events of Default” set
forth in this Section 17) or any other contracts or agreements delivered in
connection herewith or therewith, and such failure is not cured within the time
period expressly provided for therein, or, if no such cure period is provided,
within two (2) Business Days of the earlier of (x) Seller’s receipt of written
notice from Purchaser or Custodian of such breach or (y) the date on which
Seller obtains notice or knowledge of the facts giving rise to such breach;

 

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(d)           Any representation or warranty made by Seller or Guarantor (or any
of Seller’s or Guarantor’s officers) in the Program Documents or in any other
document delivered in connection therewith, or in any other contract or
agreement, shall have been incorrect or untrue in any material respect when made
or repeated or deemed by the terms thereof to have been incorrect or untrue in
any material respect when made or repeated (other than the representations or
warranties in Exhibit B which shall be considered solely for the purpose of
determining whether the related Purchased Asset is an Eligible Mortgage Loan,
unless (i) Seller shall have made any such representation or warranty with the
knowledge that it was materially false or misleading at the time made or
repeated or deemed to have been made or repeated, or (ii) any such
representation or warranty shall have been determined by Purchaser in its sole
discretion to be materially false or misleading on a regular basis);

 

(e)           Seller, Guarantor or any of their Affiliates or Subsidiaries shall
be in default under, or fail to perform as requested under, or shall otherwise
breach, beyond any applicable cure period, the (i) the terms of any warehouse,
credit, repurchase, line of credit, financing or other similar agreement
relating to any Indebtedness between Seller, Guarantor or any of their
respective Affiliates, on the one hand, and any Person, on the other, which
default or failure entitles any party to require acceleration or prepayment of
any Indebtedness thereunder; (ii) any payment obligation under any other
material agreement between Seller, Guarantor or any of their respective
Affiliates, on the one hand, and any Person, on the other (it being understood
that an agreement is material if the payment obligations thereunder exceed three
percent (3%) of Stockholder’s Equity in the aggregate, over the term of such
agreement).

 

(f)           Any Act of Insolvency of Seller or Guarantor or any of their
respective Affiliates;

 

(g)           Any final judgment or order for the payment of money in excess of
$1,000,000 in the aggregate (to the extent that it is, in the reasonable
determination of Purchaser, uninsured and provided that any insurance or other
credit posted in connection with an appeal shall not be deemed insurance for
these purposes) shall be rendered against Seller or Guarantor or any of their
respective Affiliates by one or more courts, administrative tribunals or other
bodies having jurisdiction over them and the same shall not be discharged (or
provisions shall not be made for such discharge) satisfied, or bonded, or a stay
of execution thereof shall not be procured, within sixty (60) days from the date
of entry thereof or Seller, Guarantor or any of their respective Affiliates, as
applicable, shall not, within said period of sixty (60) days, or such longer
period during which execution of the same shall have been stayed or bonded,
appeal therefrom and cause the execution thereof to be stayed during such
appeal;

 

(h)           Any Governmental Authority or any person, agency or entity acting
or purporting to act under governmental authority (i) 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 Seller or Guarantor or any of their
respective Affiliates, or shall have taken any action to displace the management
of Seller, Guarantor or any of their respective Affiliates or to curtail its
authority in the conduct of the business of Seller, Guarantor or any of their
respective Affiliates, or (ii) takes any action in the nature of enforcement to
remove, limit or restrict the approval of Seller, Guarantor or any of their
respective Affiliates as an issuer, Purchaser or a seller/servicer of Mortgage
Loans or securities backed thereby;

 

(i)           Guarantor fails to comply with any of the financial covenants set
forth in or incorporated by operation of Section 3 of the Pricing Side Letter,
or as set forth in the Guaranty;

 

(j)           Any Material Adverse Effect shall have occurred;

 

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(k)           This Agreement shall for any reason cease to create a valid first
priority security interest or ownership interest upon transfer in any material
portion of the Purchased Assets purported to be covered hereby;

 

(l)            A Change in Control of Seller or Guarantor shall have occurred
that has not been approved by Agent;

 

(m)           Purchaser or Agent shall reasonably request, specifying the
reasons for such request, reasonable information, and/or written responses to
such requests, regarding the financial well-being of Seller or Guarantor, and
such reasonable information and/or responses shall not have been provided within
ten (10) Business Days of such request;

 

(n)           A default by Seller or Guarantor or any of their respective
Affiliates or Subsidiaries shall have occurred and be continuing beyond the
expiration of any applicable cure periods under any material agreement
(including, without limitation, the Program Documents) or obligation entered
into between such Person and Purchaser or any of its Affiliates;

 

(o)           Seller ceases to be a member of MERS in good standing for any
reason (unless MERS is no longer acting in such capacity);

 

(p)           A change or the resignation of Servicer without the appointment of
a successor Servicer, acceptable to Agent, within thirty (30) days of such
change or resignation;

 

(q)           Failure of Servicer to service the Mortgage Loans in accordance
with Accepted Servicing Practices or breach by Servicer of the applicable
Servicing Agreement and Seller has not appointed a successor Servicer reasonably
acceptable to Purchaser within thirty (30) days;

 

(r)            Failure of Servicer to meet the qualifications to obtain or
maintain all requisite Approvals, any such Approvals are revoked or any such
Approvals are materially modified;

 

(s)            If, at any time, Servicer’s HUD ranking falls below “Tier 2”
lender;

 

(t)            Failure by Servicer to remit when due Income payments required to
be made under the terms of this Agreement or such Mortgage Loan;

 

(u)           Guarantor or any of its respective Affiliates fails to operate or
conduct its business operations or any material portion thereof in the ordinary
course;

 

(v)           Guarantor shall fail to maintain its status as a REIT;

 

(w)           The Investment Manager shall cease to act at any time as the
investment manager of Guarantor in the same or similar capacity as it does as of
the date of this Agreement;

 

(x)           Any repudiation of the Guaranty by Guarantor or if the Guaranty is
not enforceable against Guarantor;

 

(y)           Seller’s or Guarantor’s audited annual financial statements or the
notes thereto or other opinions or conclusions stated therein shall be qualified
or limited by reference to the status of Seller or Guarantor as a “going
concern” or a reference of similar import;

 

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(z)           Seller agrees to any amendment or modification of the Servicing
Agreement that may affect the Purchased Assets without the prior written consent
of Purchaser; or

 

(aa)         Seller, Purchaser and Bank have not entered into the Collection
Account Control Agreement within the timeframe provided for execution thereof in
Section 16(e) of this Agreement.

 

18.         REMEDIES

 

Upon the occurrence of an Event of Default, Purchaser, at its option, shall have
the right to exercise any or all of the following rights and remedies:

 

(a)           (i)           The Repurchase Date for each Transaction hereunder
shall, if it has not already occurred, be deemed immediately to occur (except
that, in the event that the Purchase Date for any Transaction has not yet
occurred as of the date of such exercise or deemed exercise, such Transaction
shall be deemed immediately canceled). Seller’s Obligations hereunder, to
repurchase all Purchased Assets at the Repurchase Price therefor on the
Repurchase Date in such Transactions shall thereupon become immediately due and
payable; all Income paid after such exercise or deemed exercise shall be
remitted to and retained by Purchaser and applied to the aggregate Repurchase
Prices and any other amounts owing by Seller hereunder; Seller shall immediately
deliver to Purchaser or its designee any and all original papers, records and
files relating to the Purchased Assets subject to such Transaction then in its
possession and/or control; and all right, title and interest in and entitlement
to such Purchased Assets and Servicing Rights thereon shall become Property of
Purchaser.

 

(ii)         Purchaser may (A) sell, on or following the Business Day following
the date on which the Repurchase Price becomes due and payable pursuant to
Section 18(a)(i) without notice or demand of any kind, at a public or private
sale and at such price or prices as Purchaser may reasonably deem satisfactory,
any or all or portions of the Purchased Assets on a servicing-released or
servicing-retained basis, as Purchaser may determine in its sole discretion
and/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
(including the Servicing Rights in respect of sales on a servicing-retained
basis) 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. Seller shall remain liable to Purchaser for any amounts that remain
owing to Purchaser following a sale and/or credit under the preceding sentence.
The proceeds of any disposition of Purchased Assets shall be applied first to
the reasonable costs and expenses including but not limited to legal fees
incurred by Purchaser in connection with or as a result of an Event of Default;
second to costs of cover and/or related hedging transactions; third to the
aggregate Repurchase Prices; fourth to all other Obligations; and fifth, to
Seller.

 

(iii)        The parties recognize that it may not be possible to purchase or
sell all of the Purchased Assets on a particular Business Day, or in a
transaction with the same purchaser, or in the same manner because the market
for such Purchased Assets may not be liquid. In view of these characteristics of
the Purchased Assets, the parties agree that liquidation of a Transaction or the
underlying Purchased Assets does not require a public purchase or sale and that
a good faith private purchase or sale shall be deemed to have been made in a
commercially reasonable manner. Accordingly, Purchaser may elect the time and
manner of liquidating any Purchased Asset and nothing contained herein shall
obligate Purchaser to liquidate any Purchased Asset upon the occurrence of an
Event of Default or to liquidate all Purchased Assets in the same manner or on
the same Business Day or shall constitute a waiver of any right or remedy of
Purchaser. Notwithstanding the foregoing, the parties to this Agreement agree
that the Transactions have been entered into in consideration of and in reliance
upon the fact that all Transactions hereunder constitute a single business and
contractual obligation and that each Transaction has been entered into in
consideration of the other Transactions.

 

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(iv)        Purchaser may terminate this Agreement.

 

(b)           Seller hereby acknowledges, admits and agrees that Seller’s
obligations under this Agreement are recourse obligations of Seller. In addition
to their rights hereunder, Purchaser shall have the right to proceed against any
of Seller’s assets which may be in the possession of Purchaser, any of
Purchaser’s Affiliates or their designee (including Custodian), including the
right to liquidate such assets and to set-off the proceeds against monies owed
by Seller to Purchaser pursuant to this Agreement. Purchaser may set off cash,
the proceeds of the liquidation of the Purchased Assets and Additional Purchased
Mortgage Loans and all other sums or obligations owed by Purchaser to Seller or
against all of Seller’s Obligations to Purchaser, or Seller’s obligations to
Purchaser under any other agreement between the parties, or otherwise, whether
or not such obligations are then due, without prejudice to Purchaser’s right to
recover any deficiency.

 

(c)           Purchaser shall have the right to obtain physical possession of
the Records and all other files of Seller relating to the Purchased Assets and
all documents relating to the Purchased Assets which are then or may thereafter
come into the possession of Seller or any third party acting for Seller and
Seller shall deliver to Purchaser such assignments as Purchaser shall request.

 

(d)           Purchaser shall have the right to direct all Persons servicing the
Purchased Assets to take such action with respect to the Purchased Assets as
Purchaser determines appropriate, including, without limitation, using its
rights under a power of attorney granted pursuant to Section 9(b) hereof.

 

(e)           Purchaser shall, without regard to the adequacy of the security
for the Obligations, be entitled to the appointment of a receiver by any court
having jurisdiction, without notice, to take possession of and protect, collect,
manage, liquidate, and sell the Purchased Assets or any portion thereof, collect
the payments due with respect to the Purchased Assets or any portion thereof,
and do anything that Purchaser is authorized hereunder to do. Seller shall pay
all costs and expenses incurred by Purchaser in connection with the appointment
and activities of such receiver, and such shall be deemed part of the
Obligations hereunder.

 

(f)           Purchaser may, at its option, enter into one or more hedging
transactions covering all or a portion of the Purchased Assets, and Seller shall
be responsible for all damages, judgments, costs and expenses of any kind which
may be imposed on, incurred by or asserted against Purchaser relating to or
arising out of such hedging transactions; including without limitation any
losses resulting from such hedging transactions, and such shall be deemed part
of the Obligations hereunder.

 

(g)           In addition to all the rights and remedies specifically provided
herein, Purchaser shall have all other rights and remedies provided by
applicable federal, state, foreign and local laws, whether existing at law, in
equity or by statute, including, without limitation, all rights and remedies
available to a purchaser/secured party under the Uniform Commercial Code.

 

Except as otherwise expressly provided in this Agreement, Purchaser shall have
the right to exercise any of its rights and/or remedies without presentment,
demand, protest or further notice of any kind, other than as expressly set forth
herein, all of which are hereby expressly waived by Seller.

 

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Purchaser may enforce its rights and remedies hereunder without prior judicial
process or hearing, and Seller hereby expressly waives, to the extent permitted
by law, any right Seller might otherwise have to require Purchaser to enforce
its rights by judicial process. Seller also waives, to the extent permitted by
law, any defense Seller might otherwise have to the Obligations, or any guaranty
thereof, arising from use of nonjudicial process, enforcement and sale of all or
any portion of the Purchased Assets 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.

 

Seller shall be liable to Purchaser for the amount of all losses, costs and/or
expenses (plus interest thereon at a rate equal to the Default Rate) which
Purchaser may sustain or incur in connection with hedging transactions relating
to the Purchased Assets, conduit advances and payments for mortgage insurance.

 

19.         DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE

 

No failure on the part of Purchaser to exercise, and no delay by Purchaser in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by Purchaser of any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All rights and remedies of
Purchaser provided for herein are cumulative and in addition to any and all
other rights and remedies provided by law, the Program Documents and the other
instruments and agreements contemplated hereby and thereby, and are not
conditional or contingent on any attempt by Purchaser to exercise any of its
rights under any other related document. Purchaser may exercise at any time
after the occurrence of an Event of Default one or more remedies permitted
hereunder, as it so desires, and may thereafter at any time and from time to
time exercise any other remedy or remedies permitted hereunder.

 

20.         USE OF EMPLOYEE PLAN ASSETS

 

No assets of an employee benefit plan subject to any provision of ERISA shall be
used by either party hereto in a Transaction.

 

21.         INDEMNITY

 

(a)           Seller agrees to indemnify and hold harmless Purchaser, Agent and
their Affiliates and their respective officers, directors, employees, agents and
advisors (each, an “Indemnified Party”) from and against (and will reimburse
each Indemnified Party as the same is incurred within thirty (30) days following
receipt of an invoice therefor) any and all claims, damages, losses,
liabilities, Taxes and Other Taxes (as provided in Section 8), increased costs
(as provided in this Agreement) and all other related expenses including
out-of-pocket expenses (including, without limitation, reasonable fees and
expenses of outside counsel and audit and due diligence fees) that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of (including without
limitation, in connection with) (i) any investigation, litigation or other
proceeding (whether or not such Indemnified Party is a party thereto) relating
to, resulting from or arising out of any of the Program Documents and all other
documents related thereto, any breach by Seller of any representation or
warranty or covenant in this Agreement or any other Program Document, and all
actions taken pursuant thereto, (ii) the Transactions, the actual or proposed
use of the proceeds of the Transactions, this Agreement or any of the
transactions contemplated thereby, including, without limitation, any
acquisition or proposed acquisition, or any indemnity payable under the
servicing agreement or other servicing arrangement, (iii) the actual or alleged
presence of hazardous materials on any Property or any environmental action
relating in any way to any Property, (iv) the actual or alleged violation of any
federal, state, municipal or local predatory lending laws, or (v) the reduction
of the unpaid principal balance due to a cram down or similar action authorized
by any bankruptcy proceeding or other case arising out of or relating to any
petition under the Bankruptcy Code, in each case, except to the extent such
claim, damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted directly from
such Indemnified Party’s gross negligence or willful misconduct or is the result
of a claim made by Seller against the Indemnified Party, and Seller is
ultimately the successful party in any resulting litigation or arbitration.
Seller hereby agrees not to assert any claim against Purchaser or any of its
Affiliates, or any of their respective officers, directors, employees, attorneys
and agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the Program Documents,
the actual or proposed use of the proceeds of the Transactions, this Agreement
or any of the transactions contemplated thereby. THE FOREGOING INDEMNITY AND
AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE
NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED
PARTIES.

 

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(b)           If Seller fails to pay when due any costs, expenses or other
amounts payable by it under this Agreement, including, without limitation,
reasonable fees and expenses of counsel and indemnities, such amount may be paid
on behalf of Seller by Purchaser, in its sole discretion, and Seller shall
remain liable for any such payments by Purchaser and such amounts shall be
deemed part of the Obligations hereunder. No such payment by Purchaser shall be
deemed a waiver of any of Purchaser’s rights under the Program Documents.

 

(c)           Without prejudice to the survival of any other agreement of Seller
hereunder, the covenants and obligations of Seller contained in this Section 21
shall survive the payment in full of the Repurchase Price and all other amounts
payable hereunder and delivery of the Purchased Assets by Purchaser against full
payment therefor.

 

22.         WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS

 

Seller hereby expressly waives, to the fullest extent permitted by law, every
statute of limitation on a deficiency judgment, any reduction in the proceeds of
any Purchased Assets as a result of restrictions upon Purchaser or Custodian
contained in the Program Documents or any other instrument delivered in
connection therewith, and any right that they may have to direct the order in
which any of the Purchased Assets shall be disposed of in the event of any
disposition pursuant hereto.

 

23.         REIMBURSEMENT; SET-OFF

 

(a)           Seller agrees to pay on demand all reasonable out-of-pocket costs
and expenses of Purchaser in connection with the initial and subsequent
negotiation, modification, renewal and amendment of the Program Documents
(including, without limitation, (A) all collateral review and UCC search and
filing fees and expenses and (B) the reasonable fees and expenses of outside
counsel for Purchaser with respect to advising Purchaser as to its rights and
responsibilities, or the perfection, protection or preservation of rights or
interests, under this Agreement and any other Program Document, with respect to
negotiations with Seller or with other creditors of Seller arising out of any
Default or any events or circumstances that may give rise to a Default and with
respect to presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors’ rights
generally and any proceeding ancillary thereto). Seller agrees to pay on demand,
with interest at the Default Rate to the extent that an Event of Default has
occurred, all costs and expenses, including without limitation, reasonable
attorneys’ fees and disbursements (and fees and disbursements of Purchaser’s
outside counsel) expended or incurred by Purchaser in connection with the
modification, renewal, amendment and enforcement (including any waivers) of the
Program Documents (regardless of whether a Transaction is entered into
hereunder), the taking of any action, including legal action, required or
permitted to be taken by Purchaser and/or Custodian (without duplication to
Purchaser) pursuant thereto or by refinancing or restructuring in the nature of
a “workout.” Further, Seller agrees to pay, with interest at the Default Rate to
the extent that an Event of Default has occurred and is continuing, all costs
and expenses, including without limitation, reasonable attorneys’ fees and
disbursements (and fees and disbursements of Purchaser’s outside counsel)
expended or incurred by Purchaser in connection with (a) the rendering of legal
advice as to Purchaser’s rights, remedies and obligations under any of the
Program Documents, (b) the collection of any sum which becomes due to Purchaser
under any Program Document, (c) any proceeding for declaratory relief, any
counterclaim to any proceeding, or any appeal, or (d) the protection,
preservation or enforcement of any rights of Purchaser. For the purposes of this
Section 23(a), attorneys’ fees shall include, without limitation, fees incurred
in connection with the following: (1) discovery; (2) any motion, proceeding or
other activity of any kind in connection with a bankruptcy proceeding or case
arising out of or relating to any petition under Title 11 of the United States
Code, as the same shall be in effect from time to time, or any similar law; (3)
garnishment, levy, and debtor and third party examinations; and (4)
post-judgment motions and proceedings of any kind, including without limitation
any activity taken to collect or enforce any judgment. Any and all of the
foregoing amounts referred to in this Section 23(a) shall be deemed a part of
the Obligations hereunder. Without prejudice to the survival of any other
agreement of Seller hereunder, the covenants and obligations of Seller contained
in this Section 23(a) shall survive the payment in full of the Repurchase Price
and all other amounts payable hereunder and delivery of the Purchased Assets by
Purchaser against full payment therefor.

 

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(b)           In addition to any rights and remedies of Purchaser under this
Agreement and by law, Purchaser and its Affiliates 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
(whether at the stated maturity, by acceleration or otherwise) by Seller
hereunder or under any Set Off Eligible Agreement, to set-off and appropriate
and apply against such amount (subject to any existing limitations on recourse)
any and all Property and deposits (general or special, time or demand,
provisional or final), in any currency, or any other credits, indebtedness or
claims, in any currency, or any other collateral (in the case of collateral not
in the form of cash or such other marketable or negotiable form, by selling such
collateral in a recognized market therefor or as otherwise permitted by law or
as may be in accordance with custom, usage or trade practice), in each case,
whether direct or indirect, absolute or contingent, matured or unmatured, at any
time held or owing by Purchaser or any Affiliate thereof to or for the credit or
the account of Seller except and to the extent that any of the same are held by
Seller for the account of another Person. Purchaser may also (subject to any
existing limitations on recourse) set-off cash and all other sums or obligations
owed by Purchaser or its Affiliates to Seller hereunder or under any Set Off
Eligible Agreement against all of Seller’s obligations to Purchaser or its
Affiliates hereunder or under any Set Off Eligible Agreement, whether or not
such obligations are then due. The exercise of any such right of set-off shall
be without prejudice to Purchaser’s or its Affiliate’s right to recover any
deficiency. Purchaser agrees to promptly notify Seller after any such set-off
and application made by Purchaser; provided that the failure to give such notice
shall not affect the validity of such set-off and application.

 

24.         FURTHER ASSURANCES

 

Seller agrees to do such further acts and things and to execute and deliver to
Purchaser such additional assignments, acknowledgments, agreements, powers and
instruments as are reasonably required by Purchaser and Agent to carry into
effect the intent and purposes of this Agreement, to perfect the interests of
Purchaser in the Purchased Assets or to better assure and confirm unto Purchaser
its rights, powers and remedies hereunder.

 

25.         ENTIRE AGREEMENT; PRODUCT OF NEGOTIATION

 

This Agreement supersedes and integrates all previous negotiations, contracts,
agreements and understandings between the parties relating to a sale and
repurchase of Purchased Assets and Additional Purchased Mortgage Loans, and it,
together with the other Program Documents, and the other documents delivered
pursuant hereto or thereto, contains the entire final agreement of the parties.
No prior negotiation, agreement, understanding or prior contract shall have any
validity hereafter.

 

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26.         TERMINATION

 

This Agreement shall remain in effect until the Termination Date. However, no
such termination shall affect Seller’s outstanding obligations to Purchaser at
the time of such termination. Seller’s obligations to indemnify Purchaser
pursuant to this Agreement and the other Program Documents shall survive the
termination hereof.

 

27.         REHYPOTHECATION; ASSIGNMENT

 

(a)           Purchaser may, in its sole election, and without the consent of
Seller engage in repurchase transactions with the Purchased Assets or otherwise
pledge, hypothecate, assign, transfer or otherwise convey the Purchased Assets
with a counterparty of Purchaser’s choice, in all cases subject to Purchaser’s
obligation to re-convey the Purchased Assets (and not substitutes therefor) on
the Repurchase Date, all at no cost to Seller. In the event Purchaser engages in
a repurchase transaction with any of the Purchased Assets or otherwise pledges
or hypothecates any of the Purchased Assets, Purchaser shall have the right to
assign to Purchaser’s counterparty any of the applicable representations or
warranties in Exhibit B to this Agreement and the remedies for breach thereof,
as they relate to the Purchased Assets that are subject to such repurchase
transaction.

 

(b)           The Program Documents and Seller’s rights and obligations
thereunder are not assignable by Seller without the prior written consent of
Purchaser. Any Person into which Seller may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which
Seller shall be a party, or any Person succeeding to the business of Seller,
shall be the successor of Seller hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. Without any requirement for further
consent of Seller and at no cost or expense to Seller, each of Purchaser and
Agent may, in its sole discretion, elect to assign or participate all or a
portion of its rights and obligations under this Agreement and the Program
Documents with a counterparty of Purchaser’s or Agent’s choice. Purchaser or
Agent shall notify Seller of any such assignment and participation and shall
maintain, for review by Seller upon written request, a register of assignees and
participants and a copy of any executed assignment and acceptance by Purchaser
or Agent and assignee (“Assignment and Acceptance”), specifying the percentage
or portion of such rights and obligations assigned. Seller agrees that, for any
such permitted assignment, Seller will cooperate with the prompt execution and
delivery of documents reasonably necessary for such assignment process to the
extent that Seller incurs no cost or expense that is not paid by Purchaser or
Agent, as applicable. Upon such assignment, (a) such assignee shall be a party
hereto and to each Program Document to the extent of the percentage or portion
set forth in the Assignment and Acceptance, and shall succeed to the applicable
rights and obligations of Purchaser or Agent hereunder, and (b) Purchaser or
Agent shall, to the extent that such rights and obligations have been so
assigned by it to either (i) an Affiliate of Purchaser or Agent which assumes
the obligations of Purchaser or Agent hereunder or (ii) to another Person which
assumes the obligations of Purchaser or Agent hereunder, be released from their
obligations hereunder accruing thereafter and under the Program Documents.

 

(c)           Purchaser and Agent may distribute to any prospective assignee,
participant or pledgee any document or other information delivered to Purchaser
by Seller subject to the confidentiality restrictions contained in Section 35
hereof; accordingly, such prospective assignee, participant or pledgee shall be
required to agree to confidentiality provisions similar to those set forth in
Section 35.

 

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28.         AMENDMENTS, ETC.

 

No amendment or waiver of any provision of this Agreement nor any consent to any
failure to comply herewith or therewith shall in any event be effective unless
the same shall be in writing and signed by Seller, Purchaser and Agent, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.

 

29.         SEVERABILITY

 

If any provision of any Program Document is declared invalid by any court of
competent jurisdiction, such invalidity shall not affect any other provision of
the Program Documents, and each Program Document shall be enforced to the
fullest extent permitted by law.

 

30.         BINDING EFFECT; GOVERNING LAW

 

This Agreement shall be binding and inure to the benefit of the parties hereto
and their respective successors and assigns. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

31.         WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION AND VENUE; SERVICE OF
PROCESS

 

SELLER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, THE PROGRAM DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY
CONSENTS, ON BEHALF OF ITSELF AND ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THE PROGRAM DOCUMENTS IN ANY ACTION OR
PROCEEDING. SELLER HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION IT MAY HAVE TO,
NON-EXCLUSIVE PERSONAL JURISDICTION AND VENUE IN THE COURTS OF THE STATE OF NEW
YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK,
WITH RESPECT TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE PROGRAM
DOCUMENTS. SELLER HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF A SUMMONS AND
COMPLAINT AND OTHER PROCESS IN ANY ACTION, CLAIM OR PROCEEDING BROUGHT BY
ANOTHER PARTY IN CONNECTION WITH THIS AGREEMENT OR THE OTHER PROGRAM DOCUMENTS,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS, ON BEHALF OF ITSELF OR ITS PROPERTY, IN THE MANNER
SPECIFIED IN THIS SECTION 31 AND TO SUCH PARTY’S ADDRESS SPECIFIED IN SECTION 34
OR SUCH OTHER ADDRESS AS SUCH PARTY SHALL HAVE PROVIDED IN WRITING TO THE OTHER
PARTIES HERETO. NOTHING IN THIS SECTION 31 SHALL AFFECT THE RIGHT OF ANY PARTY
HERETO TO (I) SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE
LAW, OR (II) BRING ANY ACTION OR PROCEEDING AGAINST ANY OTHER PARTY OR ITS
PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.

 

- 46 -

 

 

32.         SINGLE AGREEMENT

 

Seller, Purchaser and Agent 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 have been made in consideration of each other.
Accordingly, Seller, Purchaser and Agent each agree (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, and (ii) that payments, deliveries and other
transfers made by any 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 Transaction hereunder, and the obligations to make any such
payments, deliveries and other transfers may be applied against each other and
netted.

 

33.         INTENT

 

Seller, Purchaser and Agent recognize that each of the Transactions and this
Agreement is a “repurchase agreement” as that term is defined in Section 101 of
the Bankruptcy Code, and a “securities contract” as that term is defined in
Section 741 of the Bankruptcy Code, or a “qualified financial contract” as that
term is defined in the Federal Deposit Insurance Act, as applicable, and a
“master netting agreement” as that term is defined in Section 101 of the
Bankruptcy Code.

 

It is understood that Purchaser’s right to liquidate, the Purchased Assets and
terminate and accelerate the Transactions and this Agreement or to exercise any
other remedies pursuant to Section 18 hereof is a contractual right to
liquidate, terminate and accelerate the Transactions under a repurchase
agreement, a securities contract, a master netting agreement, and a qualified
financial contract as described in Sections 559, 555 and 561 of the Bankruptcy
Code and Section 1821(e)(8)(A)(i) of the Federal Deposit Insurance Act, as
applicable, and a contractual right to offset under a master netting agreement
and across contracts, as described in Section 561 of the Bankruptcy Code. It is
understood that Seller’s right to accelerate the Repurchase Date with respect to
the Purchased Assets and any Transaction hereunder pursuant to Section 22 hereof
is a contractual right to liquidate, terminate and accelerate the Transactions
under a repurchase agreement, a securities contract, a master netting agreement,
and a qualified financial contract as described in Sections 559, 555 and 561 of
the Bankruptcy Code and Section 1821(e)(8)(A)(i) of the Federal Deposit
Insurance Act, as applicable.

 

The parties hereby intend that any provisions hereof or in any other document,
agreement or instrument that is related in any way to the servicing of the
individual Mortgage Loans shall be deemed “related to” this Agreement within the
meaning of Sections 101(38A)(A) and 101(47)(A)(v) of the Bankruptcy Code and
part of the “contract” as such term is used in Section 741 of the Bankruptcy
Code.

 

34.         NOTICES AND OTHER COMMUNICATIONS

 

Except as provided herein, all notices required or permitted by this Agreement
shall be in writing (including without limitation by Electronic Transmission,
email or facsimile) and shall be effective and deemed delivered only when
received by the party to which it is sent; provided that notices of Events of
Default and exercise of remedies or under Sections 6 or 18 shall be sent via
overnight mail and by electronic transmission. Any such notice shall be sent to
a party at the address, electronic mail or facsimile transmission number set
forth below:

 

- 47 -

 

 

if to Seller:   Five Oaks Acquisition Corp.     c/o Oak Circle Capital Partners
LLC     540 Madison Avenue, 19th Floor     New York, New York 10022     Email:
LOANOPS@oakcirclecapital.com     Telephone: (212) 257-5072     Facsimile: (212)
257-5099       if to Guarantor:   Five Oaks Investment Corp.     c/o Oak Circle
Capital Partners LLC     540 Madison Avenue, 19th Floor     New York, New York
10022     Email: OPS@oakcirclecapital.com     Telephone: (212) 257-5072    
Facsimile: (212) 257-5099       if to Purchaser:   Barclays Bank PLC – Mortgage
Finance     745 Seventh Avenue, 4th Floor     New York, New York 10019    
Attention:  Joseph O’Doherty     Telephone:  (212) 412-7990     Facsimile: (212)
412-7333     E-mail: joseph.o’doherty@barclayscapital.com           With a copy
to:           Barclays Bank PLC – Legal Department     745 Seventh Avenue, 20th
Floor     New York, New York 10019     Telephone:  (212) 412-1494        
Facsimile: (212) 412-1288           Barclays Capital – Operations     1301
Avenue of the Americas, 8th Floor     New York, NY 10019     Attention: Hánsel
Nieves     Telephone: (212) 320-7370     Facsimile:  (646) 845-6464     Email:
hansel.nieves@barclayscapital.com       if to Agent:   Barclays Bank PLC –
Mortgage Finance     745 Seventh Avenue, 4th Floor     New York, New York 10019
    Attention:  Joseph O’Doherty     Telephone:  (212) 412-7990     Facsimile:
(212) 412-7333     E-mail: joseph.o’doherty@barclayscapital.com           With a
copy to:

 

- 48 -

 

 

    Barclays Bank PLC – Legal Department     745 Seventh Avenue, 20th Floor    
New York, New York 10019     Telephone:  (212) 412-1494         Facsimile: (212)
412-1288           Barclays Capital – Operations     1301 Avenue of the
Americas, 8th Floor     New York, NY 10019     Attention: Hánsel Nieves    
Telephone: (212) 320-7370     Facsimile:  (646) 845-6464     Email:
hansel.nieves@barclayscapital.com

 

or to such other address, e-mail address or facsimile number as either party may
notify to the others in writing from time to time.

 

35.         CONFIDENTIALITY

 

Seller, Purchaser and Agent each hereby acknowledge and agree that all written
or computer-readable information provided by one party to the other in
connection with the Program Documents or the Transactions contemplated thereby,
including without limitation, Seller’s Mortgagor information in the possession
of Purchaser (the “Confidential Terms”) shall be kept confidential and shall not
be divulged to any party without the prior written consent of such other party
except for (i) disclosure to Seller’s direct and indirect parent companies,
directors, attorneys, agents or accountants, provided that such attorneys or
accountants likewise agree to be bound by this covenant of confidentiality, or
are otherwise subject to confidentiality restrictions or (ii) with prior (if
feasible, and if not feasible, as promptly as possible) written notice to
Purchaser, disclosure required by law, rule, regulation or order of a court or
other regulatory body or (iii) with prior (if feasible, and if not feasible, as
promptly as possible) written notice to Purchaser, disclosure to any approved
hedge counterparty to the extent necessary to obtain any Hedge Instrument
hereunder or (iv) with prior (if feasible) written notice to Purchaser, any
disclosures or filing required under Securities and Exchange Commission (“SEC”)
or state securities’ laws; provided that in the case of clause (iv), Seller
shall not file the Pricing Side Letter. Notwithstanding anything herein to the
contrary, except as reasonably necessary to comply with applicable securities
laws, each party (and each employee, representative, or other agent of each
party) may disclose to any and all persons, without limitation of any kind, the
tax treatment and tax structure of the transaction and all materials of any kind
(including opinions or other tax analyses) that are provided to it relating to
such tax treatment and tax structure. For this purpose, tax treatment and tax
structure shall not include (i) the identity of any existing or future party (or
any Affiliate of such party) to this Agreement or (ii) any specific pricing
information or other commercial terms, including the amount of any fees,
expenses, rates or payments arising in connection with the transactions
contemplated by this Agreement.

 

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36.         DUE DILIGENCE

 

Subject to Section 14(v), (i) Purchaser, Agent or any of their respective
agents, representatives or permitted assigns shall have the right, upon
reasonable prior notice and during normal business hours, to conduct inspection
and perform continuing due diligence reviews of (x) Seller, Guarantor and their
respective Affiliates, directors, officers, employees and significant
shareholders, including, without limitation, their respective financial
condition and performance of its obligations under the Program Documents, and
(y) the Servicing File and the Purchased Assets and (ii) Seller agrees promptly
to provide Purchaser, Agent and their respective agents with access to, copies
of and extracts from any and all documents, records, agreements, instruments or
information (including, without limitation, any of the foregoing in computer
data banks and computer software systems) relating to Seller’s respective
business, operations, servicing, financial condition, performance of their
obligations under the Program Documents, the documents contained in the
Servicing Files or the Purchased Assets or assets proposed to be sold hereunder
in the possession, or under the control, of Seller. In addition, Seller shall
also make available to Purchaser and/or Agent, upon reasonable prior notice and
during normal business hours, a knowledgeable financial or accounting officer of
Seller for the purpose of answering questions respecting any of the foregoing.
Without limiting the generality of the foregoing, Seller acknowledges that
Purchaser shall enter into transactions with Seller based solely upon the
information provided by Seller to Purchaser and/or Agent and the
representations, warranties and covenants contained herein, and that Purchaser
and/or Agent, at its option, shall have the right at any time to conduct itself
or through its agents, or require Seller to conduct quality reviews and
underwriting compliance reviews of the individual Mortgage Loans at the expense
of Seller. Any such diligence conducted by Purchaser and/or Agent shall not
reduce or limit Seller’s representations, warranties and covenants set forth
herein. Seller agrees to reimburse Purchaser and/or Agent for all reasonable
out-of-pocket due diligence costs and expenses incurred pursuant to this Section
36.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, Seller, Agent and Purchaser have caused their names to be
signed to this Master Repurchase Agreement by their respective officers
thereunto duly authorized as of the date first above written.

 

  FIVE OAKS ACQUISITION CORP.,   as Seller       By: /s/ Darren Comisso   Name:
Darren Comisso   Title: Executive Vice President       FIVE OAKS INVESTMENT
CORP.,   as Guarantor       By: /s/ David Carroll   Name: David Carroll   Title:
Chief Executive Officer       BARCLAYS BANK PLC, as Purchaser and Agent      
By: /s/ Ellen V. Kiernan   Name: Ellen V. Kiernan   Title: Director

 

Signature Page to Master Repurchase Agreement

 

 

 

  

EXHIBIT A

 

MONTHLY CERTIFICATION

 

I, _______________________, _______________________ of Five Oaks Acquisition
Corp. (“Seller”), in accordance with that certain Master Repurchase Agreement
(the “Agreement”), dated as of July 29, 2014, by and between Barclays Bank PLC,
Five Oaks Investment Corp. and Seller do hereby certify that:

 

(i)To the best of my knowledge, no Default or Event of Default has occurred and
is continuing;

 

(ii)Attached hereto as Schedule One is a schedule of each financial covenant
that Seller is subject to under any agreement (other than this Agreement), and a
calculation which demonstrates compliance with each such financial covenant; and

 

(iii)Seller has complied with each of the covenants set forth in Section
14(g)(ii), as evidenced by the worksheet attached hereto as Schedule Two.

 

[Signature Page Follows]

 

A - 1

 

  

Capitalized terms used but not defined herein shall have the meanings assigned
thereto in the Agreement.

 

IN WITNESS WHEREOF, I have signed this certificate.

 

Date: ____________________, 201[     ]               FIVE OAKS ACQUISITION CORP.
          By:       Name:     Title:

 

[SEAL]

 

I, ________________________, ___________________ of Seller, do hereby certify
that _____________________ is the duly elected or appointed, qualified and
acting __________________of Seller, and the signature set forth above is the
genuine signature of such officer on the date hereof.

 

A - 2

 

  

SCHEDULE ONE TO EXHIBIT A

 

OTHER FINANCIAL COVENANTS

 

A - 3

 

 

SCHEDULE TWO TO EXHIBIT B

 

FINANCIAL COVENANTS WORKSHEET

 

A - 4

 

  

EXHIBIT B

 

REPRESENTATIONS AND WARRANTIES
with respect to Mortgage Loans

 

Capitalized terms used but not defined in this Exhibit B have the meanings
assigned to such terms in the Master Repurchase Agreement dated as of July 29,
2014 (the “Agreement”), by and between Barclays Bank PLC (“Purchaser” or
“Agent”), Five Oaks Investment Corp. (“Guarantor”) and Five Oaks Acquisition
Corp. (“Seller”). Seller and Guarantor hereby represent and warrant to Purchaser
and Agent that, for each Mortgage Loan as of the related Purchase Date and the
related Repurchase Date and on each date that such Mortgage Loan is subject to a
Transaction:

 

(a)           All information provided to Purchaser by Seller, including without
limitation the information set forth in Seller Mortgage Loan Schedule, with
respect to the Mortgage Loan is true and correct in all material respects;

 

(b)           Such Mortgage Loan is an Eligible Mortgage Loan;

 

(c)           Such Mortgage Loan was owned solely by Seller, is not subject to
any lien, claim or encumbrance, including, without limitation, any such interest
pursuant to a loan or credit agreement for warehousing mortgage loans, and was
originated or acquired by Seller, underwritten and serviced in accordance with
Purchaser’s underwriting guidelines or such other underwriting guidelines as
approved by Agent in its discretion, Accepted Servicing Practices and all
applicable law and regulations, including without limitation the Federal
Truth-in-Lending Act, the Real Estate Settlement Procedures Act, regulations
issued pursuant to any of the aforesaid;

 

(d)           The improvements on the land securing such Mortgage Loan are and
will be kept insured at all times by responsible insurance companies reasonably
acceptable to Purchaser against fire and extended coverage hazards under
policies, binders or certificates of insurance with a standard mortgagee clause
in favor of Seller and its assigns, providing that such policy may not be
canceled without prior notice to Seller. Any proceeds of such insurance shall be
held in trust for the benefit of Purchaser. The scope and amount of such
insurance shall satisfy Accepted Servicing Practices, and shall in all cases be
at least equal to the lesser of (A) the principal amount of such Mortgage Loan
or (B) the maximum amount permitted by applicable law, and shall not be subject
to reduction below such amount through the operation of a coinsurance, reduced
rate contribution or similar clause;

 

(e)           Each Mortgage is a valid first lien on the Mortgaged Property and
is covered by an attorney’s opinion of title or by a policy of title insurance
on a standard ALTA or similar lender’s form (or a binding commitment therefor)
in favor of Seller and its assigns. Seller shall hold for the benefit of
Purchaser such policy of title insurance, and, upon request of Purchaser, shall
immediately deliver such policy to Purchaser or to Custodian on behalf of
Purchaser;

 

(f)           A mortgage identification number (“MIN”) has been assigned by MERS
and such MIN is accurately provided on Seller Mortgage Loan Schedule. Either the
Mortgage is in favor of MERS or an Assignment of Mortgage to MERS has been duly
and properly recorded;

 

(g)           Seller has not received any notice of liens or legal actions with
respect to such Mortgage Loan and no such notices have been electronically
posted by MERS;

 

(h)           There are no restrictions, contractual or governmental, which
would impair the ability of Seller from servicing the Mortgage Loans;

 

B - 1

 

  

(i)           The terms of such Mortgage Loan may not result in Negative
Amortization;

 

(j)           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 Applicable Agency guidelines for such trusts;

 

(k)           Such Mortgage Loan is not a High Cost Mortgage Loan;

 

(l)           No predatory, abusive or deceptive lending practices, including
but not limited to, the extension of credit to a Mortgagor without regard for
the Mortgagor’s ability to repay the Mortgage Loan and the extension of credit
to a Mortgagor which has no tangible net benefit to the Mortgagor, were employed
in connection with the origination of the Mortgage Loan;

 

(m)           [Reserved.]

 

(n)           If such Mortgage Loan was pledged to another warehouse, credit,
repurchase or other financing facility immediately prior to the related Purchase
Date, (i) such pledge has been released immediately prior to, or concurrently
with, the related Purchase Date hereunder and (ii) Purchaser has received a
Warehouse Lender’s Release Letter in respect of such Mortgage Loan;

 

(o)           Such Mortgage Loan has not been released from the possession of
Custodian under Section 9 of the Custodial Agreement to Seller or its bailee for
a period in excess of thirty (30) calendar days (or if such thirtieth (30th) day
is not a Business Day, the next succeeding Business Day) or such earlier time
period as indicated on the related Request for Release of Documents;

 

(p)           Such Mortgage Loan is a MERS Designated Mortgage Loan;

 

(q)           Each Mortgage Loan has been fully disbursed and is secured by a
first lien on an underlying property as a “closed-end” Mortgage Loan with no
further disbursements required by any party;

 

(r)           The Mortgage Loan is not secured by property located in (a) a
state where Seller is not licensed as a lender/mortgage banker or (b) a state
that Purchaser has notified Seller is unacceptable due to a high cost, predatory
lending or other law in such state;

 

(s)           The Mortgage Loan has not been converted to an ownership interest
in real property through foreclosure or deed-in-lieu of foreclosure;

 

(t)           The Mortgage Loan relates to a Mortgaged Property that consists of
(i) a detached single family dwelling, (ii) a two-to-four family dwelling, (iii)
a one-family dwelling unit in a condominium project, (iv) a townhouse, or (v) a
detached single family dwelling in a planned unit development none of which is a
cooperative or commercial property; and is not related to a Mortgaged Property
that consists of (a) mixed use properties, (b) log homes, (c) earthen homes, (d)
underground homes, (e) mobile homes or manufactured housing units (whether or
not secured by real property), (f) any dwelling situated on more than ten acres
of property or (g) any dwelling situated on a leasehold estate;

 

(u)           The Mortgage Loan is not a Restricted Mortgage Loan;

 

(v)           The related Mortgagor under the related Mortgage Loan made its
first scheduled Monthly Payment when it was due (inclusive of any applicable
grace period), unless such time frame has not occurred yet;

 

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(w)          The Mortgage Loan is a “qualified mortgage” within the meaning of
Section 860G(a)(3) of the Code and Treasury Regulations Section 1.860G-2(a)(1);
and

 

(x)           The Mortgage Loan is both a “qualified mortgage” and a “qualified
residential mortgage” as each such term is defined in the Dodd-Frank Act. Seller
has made a reasonable and good faith determination that the Mortgagor with
respect to each Mortgage Loan had, at the time of origination of such Mortgage
Loan, a reasonable ability to repay the related Mortgage Loan in accordance with
its terms in compliance with the Dodd-Frank Act.

 

B - 3

 

  

EXHIBIT C

 

FORM Of TRANSACTION NOTICE

 

  [insert date]

 

Barclays Bank PLC

745 Seventh Avenue, 4th Floor

New York, New York 10019

Attention: Mary Logan

 

Re:Master Repurchase Agreement, dated as of July 29, 2014 by and between
Barclays Bank PLC (“Purchaser” and “Agent”), Five Oaks Investment Corp. and Five
Oaks Acquisition Corp. (“Seller”)

 

Ladies/Gentlemen:

 

Reference is made to the above-referenced Master Repurchase Agreement (the
“Repurchase Agreement”; capitalized terms used but not otherwise defined herein
shall have the meaning given them in the Repurchase Agreement).

 

In accordance with Section 3(c) of the Repurchase Agreement, the undersigned
Seller hereby requests, and Purchaser agrees, to enter into a Transaction with
us, in connection with our delivery of Eligible Mortgage Loans and all related
Servicing Rights, on ____________________ [insert requested Purchase Date, which
must be at least one (1) Business Day following the date of the request] (the
“Purchase Date”), in connection with which we shall sell to you such Eligible
Mortgage Loans on the Seller Mortgage Loan Schedule attached hereto. The unpaid
principal balance of the Eligible Mortgage Loans is $________ and the Purchase
Price shall be ______ [insert applicable Purchase Price]. Purchaser shall
transfer to Seller an amount equal to $ _______ [insert amount which represents
the Purchase Price net of any fees then due and payable by Seller to Purchaser
pursuant to the Repurchase Agreement]. Seller agrees to repurchase such
Purchased Asset on the Repurchase Date(s) at the Repurchase Price(s) listed
below.

 

The Eligible Mortgage Loans have the characteristics on the electronic file or
computer tape or disc delivered by Seller to Purchaser with respect thereto in
connection with this Transaction Notice.

 

Seller hereby certifies, as of such Purchase Date, that:

 

(1)          no Default or Event of Default has occurred and is continuing on
the date hereof (or to the extent existing, shall be cured after giving effect
to such Transaction) nor will occur after giving effect to such Transaction as a
result of such Transaction;

 

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

 

C - 1

 

  

(3)          Seller is in compliance with all governmental licenses and
authorizations and are qualified to do business and are in good standing in all
required jurisdictions, except as would not be reasonably likely to have a
Material Adverse Effect; and

 

(4)          Seller has satisfied all applicable conditions precedent in
Sections 10(a) and (b) of the Repurchase Agreement and all other requirements of
the Program Documents.

 

The undersigned duly authorized officer of Seller further represents and
warrants that (1) with respect to the Eligible Mortgage Loans subject to the
Transaction requested herein, the documents constituting the Mortgage Loan Files
(as defined in the Custodial Agreement), as more specifically identified on the
Seller Mortgage Loan Schedule delivered to Purchaser and Custodian in connection
herewith (the “Receipted Assets”), have been or are hereby submitted to
Custodian and such required documents are to be held by Custodian for Purchaser,
(2) all other documents related to such Receipted Assets (including, but not
limited to, mortgages, insurance policies, loan applications and appraisals)
have been or will be created and held by Seller for Purchaser, (3) all documents
related to such Receipted Assets withdrawn from Custodian shall be held by
Seller for Purchaser, and (4) upon Purchaser’s wiring of the Purchase Price
pursuant to Section 3(b) of the Repurchase Agreement, Purchaser will have agreed
to the terms of the Transaction as set forth herein and purchased the Receipted
Assets from Seller.

 

Seller hereby represents and warrants that (x) the Receipted Assets have an
unpaid principal balance as of the date hereof of $__________ and (y) the number
of Receipted Assets is ______.

 

  Very truly yours,       FIVE OAKS ACQUISITION CORP.       By:     Name:  
Title:

 

C - 2

 

  

EXHIBIT D

 

FORM OF GOODBYE LETTER

 

«Primary_Borrower»
                                                                                           [_______]
[__], 201[  ]

«Mailing_address_line_1»

«Mail_city», «Mail_state» «Mail_zip»

 

RE: Transfer of Mortgage Loan Servicing   Mortgage Loan «Account_number»

 

Dear Customer:

 

[_____] is the present servicer of your mortgage loan. Effective [Date] the
servicing of your mortgage will be transferred to _______. This transfer does
not affect the terms and conditions of your mortgage, other than those directly
related to servicing. Because of the change in servicer, we are required to
provide you with this disclosure.

 

[_____] cannot accept any payments received after [Date]. Effective [Date], all
payments are to be made to __________. Any payments received by [_____] after
[Date] will be forwarded to _________________. ___________________ will be
contacting you shortly with payment instructions. Please make future payments
to:

 

_______________________                     

Attn:  ______________

[Address]

 

If you currently make payments by an automatic checking or savings account
deduction, that service will discontinue effective with the transfer date. After
the servicing transfer, you may request this service from _____________.

 

In [Date], you will receive a statement from [_____] reflecting the amount, if
any, of the interest and taxes paid on your behalf in 201[ ]. A similar
statement will be sent __________________ for the period beginning [Date]
through year-end. Both statements must be added together for income tax
purposes.

 

If you have any questions concerning your account through [Date], you should
continue to contact [_____], at <Servicer’s Phone Number>, <HOURS OF OPERATION>.
Questions after the transfer date should be directed to
___________________Customer Service Department at 1-800-_____________, Monday –
Friday, 7 a.m. – 7 p.m. EST.

 

Sincerely,

 

Loan Servicing Department

[_____]

 

D - 1

 

  

NOTICE OF ASSIGNMENT, SALE OR TRANSFER

 

OF SERVICING RIGHTS

 

You are hereby notified that the servicing of your mortgage loan, that is the
right to collect payments from you, is being assigned, sold or transferred.

 

The assignment, sale or transfer of the servicing of the mortgage loan does not
affect any term or condition of the mortgage instruments, other than the terms
directly related to the servicing of your loan.

 

Except in limited circumstances, the law requires that your present servicer
send you a notice at least 15 days before the effective date, or at closing.
Your new servicer must also send you this notice no later than 15 days after
this effective date.

 

This notification is a requirement of Section 6 of the Real Estate Settlement
Procedures Act (RESPA) (12 U.S.C. 2605). You should also be aware of the
following information, which is set out in more detail in Section 6 of RESPA (12
U.S.C. 2605).

 

During the 60 day period following the effective date of the transfer of the
loan servicing, a loan payment received by your old servicer before its due date
may not be treated by the new loan servicer as late, and a late fee may not be
imposed upon you.

 

Section 6 of RESPA (12 U.S.C. 2605) gives you certain consumer rights. If you
send a “qualified written request” to you loan servicer concerning the servicing
of your loan, your servicer must provide you with a written acknowledgement
within 20 Business Days of receipt of your request. A “qualified written
request” is written correspondence, other than notice on a payment coupon or
other payment medium supplied by the servicer, which includes your name and
account number and your reasons for the request. If you want to send a
“qualified written request” regarding the servicing of your loan, it must be
sent to this address:

 

___________________

[Address]

 

No later than 60 Business Days after receiving your request, your servicer must
make any appropriate corrections to your account, and must provide you with a
written clarification regarding any dispute. During this 60 Business Day period,
your servicer may not provide information to a consumer reporting agency
concerning any overdue payment related to such period or qualified written
request. However, this does not prevent the servicer from initiating foreclosure
if proper grounds exist under the mortgage documents.

 

A Business Day is any day excluding legal public holidays (State or federal),
Saturday and Sunday.

 

Section 6 of RESPA also provides for damages and costs for individuals or
classes of individuals, in circumstances where servicers are shown to have
violated the requirements of that Section. You should seek legal advice if you
believe your rights have been violated.

 

MIRANDA DISCLOSURE – For your protection, please be advised that we are
attempting to collect a debt and any information obtained will be used for that
purpose. Calls will be monitored and recorded for quality assurance purposes. If
you do not wish for your call to be recorded please notify the customer service
associate when calling.

 

D - 2

 

  

BANKRUPTCY INSTRUCTION – Attention to any customer in Bankruptcy or who has
received a bankruptcy discharge of this debt. Please be advised that this letter
constitutes neither a demand for payment of the captioned debt nor a notice of
personal liability to any recipient hereof who might have received a discharge
of such debt in accordance with applicable bankruptcy laws or who might be
subject to the automatic stay of Section 362 of the United States Bankruptcy
Code. However, it may be a notice of possible enforcement of our lien against
the collateral property, which has not been discharged in your bankruptcy.

 

D - 3

 

  

EXHIBIT E

 

FORM OF WAREHOUSE LENDER’S RELEASE

 

                        (Date)    

Barclays Bank PLC – Mortgage Finance

745 Seventh Avenue, 4th Floor

New York, New York 10019

Attention: Joseph O’Doherty

 

Barclays Bank PLC – Legal Department

745 Seventh Avenue, 20th Floor

New York, New York 10019

 

Barclays Capital – Operations

1301 Avenue of the Americas, 8th Floor

New York, NY 10019

Attention: Hánsel Nieves

Five Oaks Acquisition Corp.
c/o Oak Circle Capital Partners LLC
540 Madison Avenue, 19th Floor
New York, New York 10022

 

Five Oaks Investment Corp.
c/o Oak Circle Capital Partners LLC
540 Madison Avenue, 19th Floor
New York, New York 10022

 

Re: Certain Assets Identified on Schedule A hereto and owned by Five Oaks
Acquisition Corp.

 

Capitalized terms used herein but not defined herein shall have the meanings
ascribed to such terms in the Master Repurchase Agreement, dated as of July 29,
2014 (the “Repurchase Agreement”), between Barclays Bank PLC, Five Oaks
Investment Corp. and Five Oaks Acquisition Corp.

 

The undersigned hereby releases all right, interest, lien or claim of any kind
with respect to the Mortgage Loans described in the attached Schedule A, such
release to be effective automatically without any further action by any party
upon receipt by Barclays Bank PLC in immediately available funds of
$__________________, in accordance with the following wire instructions:

 

[                             ]

 

  Very truly yours,       [WAREHOUSE LENDER]       By:     Name:   Title:

 

E - 1

 

  

[Schedule A to exhibit E – List of Assets to be Released]

 

E - 2

 

  

EXHIBIT F

 

[RESERVED]

 

F - 1

 

  

EXHIBIT G

 

[RESERVED]

 

G - 1

 

 

EXHIBIT H

 

form of SELLER mortgage loan schedule

 

[SEE ATTACHED]

 

H - 1

 

  

EXHIBIT I

 

EXISTING INDEBTEDNESS

 

I - 1