EXHIBIT 10.1

 

MASTER REPURCHASE AGREEMENT

 

Dated as of December 2, 2003

 

BETWEEN:

 

Bank of America, N.A., as buyer (“Buyer”, which term shall include any
“Principal” as defined and provided for in Annex I), or as agent pursuant hereto
(“Agent”), and

 

NC Capital Corporation, as seller (“Seller”).

 

1. APPLICABILITY

 

Buyer shall, upon the terms and conditions set forth herein, enter into this
transaction in which Seller transfers to Buyer Eligible Assets against the
transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer
to Seller such Purchased Assets at a date certain, against the transfer of funds
by Seller. The transaction shall be referred to herein as the “Transaction”,
and, unless otherwise agreed in writing, shall be governed by this Agreement.

 

2. DEFINITIONS AND INTERPRETATION

 

a. Defined Terms.

 

“Additional Purchased Assets” shall have the meaning assigned thereto in Section
6(a) hereof.

 

“Affiliate” means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
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 equity, by contract or otherwise.

 

“Agent” means Bank of America, N.A. or any successor.

 

“Agreement” means this Master Repurchase Agreement, as it may be amended,
supplemented or otherwise modified from time to time.

 

“Borrower” means the obligor or obligors on a Note, including any Person that
has acquired the related collateral and assumed the obligations of the original
obligor or obligors under the Note.

 

“Business Day” means any day other than (i) a Saturday or Sunday or (ii) a day
upon which the New York Stock Exchange, the Federal Reserve Bank of New York or
the Custodian is obligated by law or executive order to be closed.

 

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“Buyer’s Margin Amount” means with respect to the Transaction as of any date of
determination, the amount obtained by application of Buyer’s Margin Percentage
to the Repurchase Price for such Transaction as of such date.

 

“Buyer’s Margin Percentage” shall have the meaning assigned thereto in the Side
Letter.

 

“Change in Control” shall mean the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of outstanding shares of voting stock of an entity at any time if
after giving effect to such acquisition such Person or Persons owns fifty
percent (50%) or more of such outstanding voting stock.

 

“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 Buyer (or any Affiliate of Buyer)
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” shall mean the Internal Revenue Code of 1986, as amended.

 

“Collateral” shall have the meaning assigned thereto in Section 8 hereof.

 

“Computer Medium” means a computer or other electronic medium generated by or on
behalf of Seller and delivered or transmitted to Buyer and Custodian which
provides information relating to the Purchased Assets, including the identity of
the related servicer with respect to each Loan and the information set forth in
the Loan Schedule, in a format reasonably acceptable to Buyer.

 

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

 

“Custody Agreement” means the Custodial Agreement, dated as of [May 13, 2002]
among Seller, Buyer, NCMC and Custodian.

 

“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” means, as of any date of determination, the lesser of (i) the
Pricing Rate plus 4% and (ii) the maximum rate permitted by applicable law.

 

“Effective Date” shall mean the date set forth on the top of the first page of
this Agreement.

 

“Eligible Asset” shall have the meaning assigned thereto in the Side Letter.

 

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

 

“Event of Default” shall have the meaning assigned thereto in Section 18 hereof.

 

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

 

“Governmental Authority” shall mean any nation or government, any state or other
political subdivision thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions over Seller or Guarantors.

 

“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.

 

“Guarantors” means each of NCFC and NCMC, or any successors thereto.

 

“Guaranty” means the Guaranty Agreement of the Guarantors in favor of the Buyer,
dated as of December 2, 2003.

 

“Hedge Counterparty”: A Person (i) (A) with long-term and commercial paper or
short-term deposit ratings of “P-1” by Moody’s Investors Service and “A-1” by
Standard & Poor’s and (B) which shall agree in writing that, in the event that
any of its long-term or commercial paper or short-term deposit ratings cease to
be at or above “A-2” by Moody’s and “A” by Standard & Poor’s, it shall secure
its obligations in accordance with the request of the Buyer or Buyer shall have
the option to treat such failure as an Early Termination Event (as defined in
the ISDA Master Agreement) by such Hedge Counterparty, and (ii) that has entered
into a Hedge Instrument.

 

“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 the Seller or a Guarantor with a Hedge Counterparty that relates
to or applies to the Purchased Assets or assets similar to the Purchased Assets.

 

“Income” means, with respect to any Purchased Asset at any time, any principal
and/or interest thereon and all dividends, sale proceeds and other collections
and distributions thereon, but not including any commitment fees, origination
fees and/or servicing fees (with respect to third party servicers that are not
an Affiliate of Seller or any Guarantor).

 

“Indebtedness” shall mean, for any Person: (a) all obligations for borrowed
money; (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
and paid within ninety (90) days of the date the related invoice is received for
the respective goods delivered or the respective services 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 for account of such Person; (e) capital
lease obligations of such Person; (f) obligations of such Person under
repurchase agreements or like arrangements; (g) indebtedness of others
guaranteed on a recourse basis 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

 

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partnerships of which such Person is a general partner; and (j) any other
contingent liabilities of such Person.

 

“Interim Servicer” means (i) NCMC, or (ii) any other servicer approved by Buyer
in its sole discretion exercised in good faith.

 

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

 

“Jumbo Loan” means a Loan with an original unpaid principal balance greater than
[$350,000].

 

“LIBOR” shall mean, for each day, the rate determined by the Buyer on such date
(or, in the event such day is not a Business Day, the prior Business Day) on the
basis of the offered rate for one-month or overnight U.S. dollar deposits (as
applicable), as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the offered
rates of the Reference Banks for one-month or overnight U.S. dollar deposits (as
applicable), as of 11:00 a.m. (London time) on such date. In such event, the
Buyer will request the principal London office of each of the Reference Banks to
provide a quotation of its rate. If on such date, two or more Reference Banks
provide such offered quotations, LIBOR shall be the arithmetic mean of all such
offered quotations (rounded to the nearest whole multiple of 1/16%). If on such
date, fewer than two Reference Banks provide such offered quotations, LIBOR
shall be the higher of (i) LIBOR as determined on the previous LIBOR
determination date and (ii) the Reserve Interest Rate. With respect to each
transaction, on the related Purchase Date and for each day that the Transaction
is outstanding, LIBOR shall be calculated at the overnight rate unless otherwise
elected by the Seller in writing on the related Purchase Date.

 

“Loan” means (i) a first or second lien single family (one-to-four units)
non-conforming residential loan, (ii) such other type of loan, lease or other
receivable as shall be agreed upon by the parties as evidenced by Appendix A to
the Custody Agreement, as amended or supplemented by mutual agreement of the
parties, or (iii) any interest in, or secured by, any such loan, lease or other
receivable.

 

“Loan Documents” shall have the meaning assigned thereto in the Custody
Agreement.

 

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

 

“Loan Schedule” means the list of Loans delivered by a Guarantor or the Seller
to Buyer and Custodian together with the Transaction Notice and attached by the
Custodian to the related Trust Receipt. Each Loan Schedule shall set forth as to
each Loan the related Borrower name, the address of the related Mortgaged
Property and the outstanding principal balance of the Loan as of the initial
Purchase Date, together with any other information specified by Buyer from time
to time in good faith.

 

“Margin Call” As defined in Section 6(a).

 

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“Margin Deficit” shall have the meaning assigned thereto in Section 6(a) hereof.

 

“Market Value” means (i) with respect to any Purchased Asset that is an Eligible
Asset, as of any date of determination, the value ascribed to such asset by
Buyer in its sole discretion, and (ii) with respect to a Purchased Asset that is
not an Eligible Asset, zero.

 

“Master Contribution Agreement” means the Master Contribution Agreement, dated
as of December 2, 2003 between NCMC and Seller.

 

“Master Netting Agreement” means the Master Collateral Security and Master
Netting Agreement dated as of December 2, 2003 among Buyer and certain
Affiliates and the Guarantors and certain Affiliates.

 

“Material Adverse Change” means, with respect to a Person, any material adverse
change in the business, condition (financial or otherwise), operations,
performance, properties or prospects taken as a whole or prospects of such
Person.

 

“Material Adverse Effect” means (a) a Material Adverse Change with respect to a
Guarantor or such Guarantor and its Affiliates that are party to any Program
Document taken as a whole; (b) a material impairment of the ability of a
Guarantor or any Affiliate that is a party to any Program Document to perform
under any Program Document and to avoid any Event of Default; (c) a material
adverse effect upon the legality, validity, binding effect or enforceability of
any Program Document against either Guarantor or any Affiliate that is a party
to any Program Document; or (d) a material adverse effect upon the value or
marketability of a material portion of the Purchased Assets.

 

“Maximum Aggregate Purchase Price” means the amount set forth in Section 37
hereof.

 

“Mortgage” means a mortgage, deed of trust, or other instrument that creates a
lien on the related Mortgaged Property and secures a Note.

 

“Mortgaged Property” means, with respect to a Loan, the related Borrower’s fee
interest in real property or leasehold interest in real property and all other
collateral securing repayment of the debt evidenced by the related Note.

 

“NCFC” means New Century Financial Corporation, or any successor thereto.

 

“NCMC” means New Century Mortgage Corporation, or any successor thereto.

 

“Note” means, with respect to any Loan, the related promissory note together
with all riders thereto and amendments thereof or other evidence of indebtedness
of the related Borrower.

 

“Obligations” means (a) all of Seller’s and Guarantors’ obligation to pay the
Repurchase Price on the Repurchase Date and other obligations and liabilities of
Seller and Guarantors to Buyer, its Affiliates or Custodian 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
Buyer or on behalf of Buyer pursuant to the Program Documents in order to
preserve any

 

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Purchased Asset or its interest therein; (c) in the event of any proceeding for
the collection or enforcement of any of Seller’s or Guarantors’ 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 Buyer or
such Affiliate of its rights under the Program Documents, including without
limitation, reasonable attorneys’ fees and disbursements and court costs; and
(d) all of Seller’s and Guarantor’s obligations to Buyer, Custodian or any other
Person pursuant to the Program Documents.

 

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

 

“Pricing Rate” means the per annum percentage rate for determination of the
Price Differential as set forth in the Side Letter.

 

“Prime Rate” means a rate set by Buyer based upon various factors including
Buyer’s costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which may be priced at,
above, or below such announced rate. Any change in such rate announced by Buyer
shall take effect at the opening of business on the day specified in the public
announcement of such change.

 

“Principal” shall have the meaning given to it in Annex I.

 

“Program Documents” means this Agreement, the Custody Agreement, any Servicing
Agreement, the Master Netting Agreement, the Guaranty, any assignment of Hedge
Instrument, the Master Contribution Agreement, the Side Letter and any other
agreement entered into by Seller and/or Guarantor, on the one hand, and Buyer or
one of its Affiliates (or Custodian on its behalf) on the other, in connection
herewith or therewith.

 

“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 the date on which Purchased Assets are to be transferred
by Seller to Buyer.

 

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

 

“Purchased Assets” means, with respect to a Transaction, the Loans set forth on
the related Loan Schedule, together with the related Records, Servicing Rights,
Seller’s or Guarantor’s rights under any related Hedge Instruments (which
interest in Hedge Instruments shall be pro rata and

 

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subject to rights of other parties holding security interest therein), and other
Collateral, and all instruments, chattel paper, and general intangibles
comprising or relating to all of the foregoing. The term “Purchased Assets” with
respect to the Transaction at any time also shall include Additional Purchased
Assets delivered pursuant to Section 6(a) hereof.

 

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

 

“Reference Banks” Any leading banks selected by the Agent which are engaged in
transactions in Eurodollar deposits in the international Eurocurrency market
with an established place of business in London.

 

“Repurchase Date” shall mean December 19, 2003 or the earlier date determined by
application of Section 19.

 

“Repurchase Price” means the price at which Purchased Assets are to be
transferred from Buyer to Seller upon termination of the Transaction, which will
be determined in each case (including Transactions terminable upon demand) as
the sum of the Purchase Price and the Price Differential as of the date of such
determination.

 

“Reserve Interest Rate” means with respect to any LIBOR determination date, the
rate per annum that the Agent determines to be either (i) the arithmetic mean
(rounded to the nearest whole multiple of 1/16%) of the one-month or overnight
U.S. dollar lending rates (as applicable) which New York City banks selected by
the Agent are quoting on the relevant LIBOR determination date to the principal
London offices of leading banks in the London interbank market or (ii) in the
event that the Agent can determine no such arithmetic mean, the lowest one-month
or overnight U.S. dollar lending rate (as applicable) which New York City banks
selected by the Agent are quoting on such LIBOR determination date to leading
European banks.

 

“Servicing Agreement” means any agreement (other than the Custody Agreement)
giving rise or relating to Servicing Rights with respect to a Purchased Asset,
including any assignment or other agreement relating to such agreement.

 

“Servicing Rights” means contractual, possessory or other rights of Seller or
any other Person arising under a Servicing Agreement, the Custody Agreement or
otherwise, to administer or service a Purchased Asset or to possess related
Records.

 

“Side Letter” means the pricing side letter, dated as of December 2, 2003, among
Seller, Guarantors and Buyer, as the same may be amended, supplemented or
modified from time to time.

 

“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

 

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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.

 

“Substitute Assets” has the meaning assigned thereto in Section 16(a).

 

“Termination Date” has the meaning assigned thereto in Section 27.

 

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

 

“Transaction Notice” means a written request of Seller to enter into a
Transaction, in the form attached to the Custody Agreement which is delivered to
Buyer and Custodian.

 

“Trust Receipt” means a Trust Receipt and Certification as defined in the
Custody Agreement.

 

“Underwriting Guidelines” means NCMC’s underwriting guidelines in effect as of
the date of this Agreement, which have been approved in writing by Buyer, as the
same may be amended from time to time in accordance with terms of this
Agreement.

 

“Uniform Commercial Code” means the Uniform Commercial Code as in effect on the
date hereof in the State of New York or the Uniform Commercial Code as in effect
in the applicable jurisdiction.

 

“Wet Funded Loan” means a Loan for which, as of the Purchase Date, the documents
in the related Loan File has not been delivered to the Custodian, and
thereafter, each date until the documents in the related Loan File has been
delivered to the Custodian.

 

“Wet Funding Package” shall have the meaning assigned thereto in the Custody
Agreement.

 

b. Capitalized terms used but not defined in this Agreement shall have the
meanings assigned thereto in the Custody Agreement.

 

c. Interpretation.

 

Headings are for convenience only and do not affect interpretation. The
following rules of this subsection (c) 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 a modification or re-enactment of it, a
legislative provision substituted for it and a regulation or statutory
instrument issued

 

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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 subsists until it has been waived
in writing by the Buyer or has been timely 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 the Seller.
Except where otherwise provided in this Agreement any determination, statement
or certificate by the Buyer or an authorized officer of the Buyer provided for
in this Agreement is conclusive and binds the parties 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 (as so
defined) in writing or a certificate, notice, instrument or document, or any
information recorded in computer disk form. Where the Seller or a Guarantor is
required to provide any document to the Buyer under the terms of this Agreement,
the relevant document shall be provided in writing or printed form unless the
Buyer requests otherwise. At the request of the Buyer, the document shall be
provided in computer readable format or both printed and computer readable
format. This Agreement is the result of negotiations among and has been reviewed
by counsel to the Buyer, Guarantors and the 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 the Buyer may
give or withhold, or give conditionally, approvals and consents, and may form
opinions and make determinations at its absolute discretion. Any requirement of
good faith, discretion or judgment by the Buyer shall not be construed to
require Buyer to request or await receipt of information or documentation not
immediately available from or with respect to the Seller, Guarantor, a servicer
of the Purchased Assets, any other Person or the Purchased Assets themselves.

 

3. THE TRANSACTION

 

a. Seller shall repurchase Purchased Assets from Buyer on the Repurchase Date at
the Repurchase Price. This obligation to repurchase subsists without regard to
any prior or intervening liquidation or foreclosure with respect to any
Purchased Asset. Seller is obligated to obtain the Purchased Assets from Buyer
or its designee (including the Custodian) at Seller’s expense on (or after) the
Repurchase Date.

 

b. Reserved.

 

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c. Reserved.

 

4. ENTERING INTO THE TRANSACTION, TRANSACTION NOTICE

 

Under the terms and conditions of the Program Documents, Buyer hereby agrees to
enter into the Transaction with a Purchase Price up to the Maximum Aggregate
Purchase Price. On the Effective Date, Seller or a Guarantor shall (i) request
that Buyer enter into a Transaction by furnishing to Buyer and Custodian a
Transaction Notice and Loan Schedule, (ii) deliver to Buyer a Computer Medium
for the related Purchased Assets and (iii) deliver to Custodian the Loan File or
Wet Funding Package for each Loan subject to the Transaction.

 

5. PAYMENT AND TRANSFER

 

Unless otherwise agreed, all transfers of funds hereunder shall be in
immediately available funds and all Purchased Assets transferred shall be
transferred to the Custodian pursuant to the Custody Agreement. Any Repurchase
Price or Price Differential received by Buyer after 2:30 p.m. noon New York City
time shall be applied on the next succeeding Business Day.

 

6. MARGIN MAINTENANCE

 

a. If at any time the aggregate Market Value of all Purchased Assets subject to
the Transaction is less than the aggregate Buyer’s Margin Amount for the
Transaction (a “Margin Deficit”), then Buyer may by notice to Seller require
Seller in the Transaction to transfer to Buyer cash or, at Buyer’s option (and
provided Seller has additional Eligible Assets), additional Eligible Assets
(“Additional Purchased Assets”), so that the cash and aggregate Market Value of
the Purchased Assets, including any such Additional Purchased Assets, will
thereupon equal or exceed such aggregate Buyer’s Margin Amount (such
requirement, a “Margin Call”).

 

b. Notice required pursuant to Section 6(a) may be given by any means provided
in Section 35 hereof. Any notice given before 10:00 a.m. New York time on a
Business Day shall be satisfied no later than 5:00 p.m. New York time on such
Business Day. Any notice given on or after 10:00 a.m. New York time on a
Business Day shall be satisfied no later than 5:00 p.m. New York time on the
Business Day following the date of such notice. The failure of Buyer, on any one
or more occasions, to exercise its rights hereunder, shall not change or alter
the terms and conditions to which this Agreement is subject or limit the right
of Buyer to do so at a later date. Seller, Guarantors and Buyer each agree that
a failure or delay by Buyer to exercise its rights hereunder shall not limit or
waive Buyer’s rights under this Agreement or otherwise existing by law or in any
way create additional rights for Seller or a Guarantor.

 

7. INCOME PAYMENTS

 

Where a particular term of the Transaction extends over the date on which Income
is paid in respect of any Purchased Assets subject to the Transaction, such
Income shall be the property of Buyer. Notwithstanding the foregoing, Buyer
agrees that prior to the occurrence of an Event of Default, Seller shall be
entitled to receive an amount equal to all Income received, whether by

 

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Guarantors, Buyer, Custodian, Interim Servicer or any servicer or any other
Person, which is not otherwise received by Seller, in respect of the Purchased
Assets; provided, however, that any income received by or on behalf of Seller
while the Transaction is outstanding shall be deemed held by Seller solely in
trust for Buyer pending the repurchase on the Repurchase Date. Upon the
occurrence of an Event of Default, the Seller and each Guarantor shall cause all
Income to be immediately delivered to the Buyer.

 

8. SECURITY INTEREST

 

Seller and Buyer intend that the Transaction hereunder be sales to Buyer of the
Purchased Assets and not loans from Buyer to Seller secured by the Purchased
Assets. However, in order to preserve Buyer’s rights under this Agreement in the
event that a court or other forum recharacterizes the Transaction hereunder as
other than sales, and as security for Seller’s performance of all of its
Obligations, Seller hereby grants Buyer a fully perfected first priority
security interest in the following property, whether now existing or hereafter
acquired: the Purchased Assets, the related Records, all mortgage guaranties and
insurance relating to such Purchased Assets (issued by governmental agencies or
otherwise) and any mortgage insurance certificate or other document evidencing
such mortgage guaranties or insurance relating to such Purchased Assets and all
claims and payments thereunder, any purchase agreements or other agreements or
contracts relating to or constituting any or all of the foregoing, all
“accounts” as defined in the Uniform Commercial Code relating to or constituting
any or all of the foregoing, all other insurance policies and insurance proceeds
relating to any Purchased Asset or the related Mortgaged Property, any security
account and all rights to Income and the rights to enforce such payments arising
from any of the Purchased Assets, and any and all replacements, substitutions,
distributions on or proceeds with respect to any of the foregoing (collectively
the “Collateral”).

 

9. CONDITIONS PRECEDENT

 

a. As conditions precedent to the Transaction, Buyer shall have received on or
before the day of the Transaction the following, in form and substance
satisfactory to Buyer and duly executed by each party thereto (as applicable):

 

(i) The Program Documents duly executed and delivered by the parties thereto and
being in full force and effect, free of any modification, breach or waiver;

 

(ii) Evidence that all other actions necessary or, in the opinion of Buyer,
desirable to perfect and protect Buyer’s interest in the Purchased Assets and
other Collateral have been taken, including, without limitation, duly executed
and filed Uniform Commercial Code financing statements on Form UCC-1;

 

(iii) A certified copy of Seller’s and Guarantors’ consents or corporate
resolutions, as applicable, approving the Program Documents and the Transaction,
and all documents evidencing other necessary corporate action or governmental
approvals as may be required in connection with the Program Documents;

 

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(iv) An incumbency certificate of the secretaries of Seller and Guarantors
certifying the names, true signatures and titles of Seller’s and Guarantors’
representatives duly authorized to request Transactions hereunder and to execute
the Program Documents and the other documents to be delivered thereunder;

 

(v) An opinion of Seller’s and Guarantors’ counsel as to such matters as Buyer
may reasonably request and in form and substance acceptable to Buyer;

 

(vi) A copy of the Underwriting Guidelines certified by an officer of NCMC;

 

(vii) [Reserved];

 

(viii) All of the conditions precedent in the Guaranty shall have been
satisfied; and

 

(ix) Any other documents reasonably requested by Buyer.

 

(x) Buyer’s legal, tax, business and environmental due diligence of the Seller
and Guarantors each shall have been completed to the satisfaction of the Buyer.

 

(xi) Buyer or its designee shall have received on or before the Effective Date
(unless otherwise specified in this Agreement) the following, in form and
substance satisfactory to Buyer and (if applicable) duly executed:

 

  (A) Transaction Notice, Loan Schedule and Computer Medium delivered pursuant
to Section 4; and

 

  (B) The related Trust Receipt;

 

(xii) No Default or Event of Default shall have occurred and be continuing.

 

10. RELEASE OF PURCHASED ASSETS

 

Upon timely payment in full of the Repurchase Price and all other Obligations
that relate to and are owed with respect to a Purchased Asset, if no Default or
Event of Default has occurred and is continuing, Buyer shall, and shall direct
Custodian to, release such Purchased Asset unless such release would give rise
to or perpetuate a Margin Deficit.

 

If such a Margin Deficit is applicable, Buyer shall notify Seller of the amount
thereof and Seller may thereupon satisfy the Margin Call in the manner specified
in Section 6.

 

11. RELIANCE

 

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

 

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12. REPRESENTATIONS AND WARRANTIES

 

Each of the Seller and each Guarantor hereby represents and warrants on the date
hereof and shall on the Repurchase Date be deemed to represent and warrant,
that:

 

a. Due Organization and Qualification. Each of the Seller and each Guarantor is
duly organized, validly existing and in good standing under the laws of the
jurisdiction under whose laws it is organized. Each of the Seller and each
Guarantor is duly qualified to do business, is in good standing and has obtained
all necessary licenses, permits, charters, registrations and approvals necessary
for the conduct of its business as currently conducted and the performance of
its obligations under the Program Documents or any failure to obtain such a
license, permit, charter, registration or approval will not cause a Material
Adverse Effect or impair the enforceability of any Loan.

 

b. Power and Authority. Each of the Seller and each Guarantor has all necessary
power and authority to conduct its business as currently conducted, to execute,
deliver and perform its obligations under the Program Documents and to
consummate the Transaction.

 

c. Due Authorization. The execution, delivery and performance of the Program
Documents by each of the Seller and each Guarantor have been duly authorized by
all necessary 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.

 

d. Noncontravention. None of the execution and delivery of the Program Documents
by Seller or either Guarantor or the consummation of the Transaction and
transactions thereunder:

 

i) conflicts with, breaches or violates any provision of any material agreements
of Seller or a Guarantor or in any material respect any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award currently in
effect having applicability to Seller or either Guarantor or its properties;

 

ii) constitutes a material default by Seller or a Guarantor under any loan or
repurchase agreement, mortgage, indenture or other agreement or instrument to
which Seller or a Guarantor is a party or by which it or any of its properties
is or may be bound or affected; or

 

iii) results in or requires the creation of any lien upon or in respect of any
of the assets of Seller or a Guarantor except the lien relating to the Program
Documents.

 

e. Legal Proceeding. Except as otherwise disclosed in the financial statements
of NCFC or NCMC, there is no action, proceeding or investigation by or before
any court, governmental or administrative agency or arbitrator affecting any of
the Purchased Assets, Seller, a Guarantor or any of their Affiliates, pending or
threatened, which has a reasonable likelihood of having a Material Adverse
Effect.

 

f. Valid and Binding Obligations. Each of the Program Documents to which the
Seller or a Guarantor is a party, when executed and delivered by such Seller or
Guarantor, will constitute the legal, valid and binding obligations of such
Seller or Guarantor, enforceable against such Seller or

 

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Guarantor, in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors’ rights generally and
general equitable principles.

 

g. Financial Statements. The financial statements of Guarantors, copies of which
have been furnished to Buyer, (i) are, as of the dates and for the periods
referred to therein, complete and correct in all material respects, (ii) present
fairly the financial condition and results of operations of each Guarantor as of
the dates and for the periods indicated and (iii) have been prepared in
accordance with GAAP consistently applied, except as noted therein (subject as
to interim statements to normal year-end adjustments). Since the date of the
most recent financial statements, there has been no Material Adverse Change with
respect to either Guarantor. Except as disclosed in such financial statements,
neither Guarantor is subject to any contingent liabilities or commitments that,
individually or in the aggregate, have a reasonably likelihood of causing a
Material Adverse Change with respect to either Guarantor.

 

h. Accuracy of Information. None of the documents or information prepared by or
on behalf of Seller or a Guarantor and provided by Seller or a Guarantor to
Buyer relating to Seller’s or a Guarantor’s financial condition contain any
statement of a material fact with respect to Seller or Guarantors or the
Transaction that was untrue or misleading in any material respect when made.
Since the furnishing of such documents or information, there has been no change,
nor any development or event involving a prospective change known to Seller or
either Guarantor, that would render any of such documents or information untrue
or misleading in any material respect.

 

i. 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 either Guarantor of this Agreement or the consummation by Seller or either
Guarantor of any other Program Document, other than any that have heretofore
been obtained, given or made.

 

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

 

k. Solvency: Fraudulent Conveyance. Each of the Seller and each Guarantor is
solvent and will not be rendered insolvent by the Transaction and, after giving
effect to the Transaction, neither Seller nor either Guarantor will be left with
an unreasonably small amount of capital with which to engage in its business.
Neither Seller nor a Guarantor intends to incur, nor believes that it has
incurred, debts beyond its ability to pay such debts as they mature. Neither
Seller nor a Guarantor is 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 or either Guarantor or any of their assets. The amount of consideration
being received by Seller upon the sale of the Purchased Assets to Buyer
constitutes reasonably equivalent value and fair consideration for such
Purchased Assets. Seller is not transferring any Purchased Assets with any
intent to hinder, delay or defraud any of its creditors. The amount of
consideration being

 

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received by NCMC upon the sale and/or contribution of the Purchased Assets to
Seller, respectively, constitutes reasonably equivalent value and fair
consideration for such Purchased Assets. Neither Guarantor is transferring any
Purchased Assets with any intent to hinder, delay or defraud any of its
creditors.

 

l. Investment Company Act Compliance. Seller is not required to be registered as
an “investment company” as defined under the Investment Company Act nor as an
entity under the control of an “investment company” as defined under the
Investment Company Act.

 

m. Taxes. Each of the Seller and each Guarantor has filed all federal and state
tax returns which 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 or a Guarantor in connection with the Transaction and the
execution and delivery of the Program Documents have been paid.

 

n. Additional Representations. With respect to each Loan, Seller and Guarantors,
jointly and severally, hereby make all of the applicable representations and
warranties set forth in Appendix A to the Custody Agreement as of the date the
Loan File or Wet Funding Package, as applicable, is delivered to the Custodian.

 

o. No Broker. Neither Seller nor a Guarantor has dealt with any broker,
investment banker, agent, or other person, except for Buyer, who may be entitled
to any commission or compensation in connection with the sale of Purchased
Assets pursuant to this Agreement; provided, that if Seller or either Guarantor
has dealt with any broker, investment banker, agent, or other person, except for
Buyer, who may be entitled to any commission or compensation in connection with
the sale of Purchased Assets pursuant to this Agreement, such commission or
compensation shall have been paid in full by Seller or a Guarantor, as
applicable.

 

p. Corporate Separateness.

 

(i) The capital of Seller and Guarantors is adequate for the respective business
and undertakings of Seller and Guarantors.

 

(ii) Other than as provided in this Agreement and the other Program Documents,
Seller is not engaged in any business transactions with either Guarantor or any
of their Affiliates other than transactions in the ordinary course of its
business on an “arms-length” basis.

 

(iii) The funds and assets of the Seller are not and will not be, commingled
with the funds of any other Person.

 

(iv) The Seller and Guarantors have complied with all applicable anti-money
laundering laws and regulations, including without limitation the USA Patriot
Act of 2001 (collectively, the “Anti-Money Laundering Laws”). The Seller and
Guarantors have established an anti-money laundering compliance program as
required by the Anti-Money Laundering Laws, have conducted the requisite due
diligence in connection with the origination of each Loan for purposes of the
Anti-Money Laundering Laws, including with

 

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respect to the legitimacy of the applicable Borrower and the origin of the
assets used by the said Borrower to purchase the property in question, and
maintains, and will maintain, sufficient information to identify the applicable
Borrower for purposes of the Anti-Money Laundering Laws; no Loan is subject to
nullification pursuant to Executive Order 13224 (the “Executive Order”) or the
regulations promulgated by the Office of Foreign Assets Control of the United
States Department of the Treasury (the “OFAC Regulations”) or in violation of
the Executive Order or the OFAC Regulations, and no Borrower is subject to the
provisions of such Executive Order or the OFAC Regulations nor listed as a
“blocked person” for purposes of the OFAC Regulations

 

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

 

13. COVENANTS OF SELLER AND GUARANTOR

 

Each of Seller and each Guarantor, as applicable, hereby covenants with Buyer as
follows:

 

a. Defense of Title. Each of Seller and each Guarantor warrants and will defend
the right, title and interest of Buyer in and to all Collateral against all
adverse claims and demands.

 

b. No Amendment or Compromise. Following an Event of Default, without the prior
written consent of the Buyer, neither Seller, either Guarantor nor those acting
on Seller’s or either Guarantor’s behalf shall amend or modify, or waive any
term or condition of, or settle or compromise any claim in respect of, any item
of the Purchased Assets, any related rights or any of the Program Documents,
provided that any such party may amend or modify a Loan if such amendment or
modification does not affect the amount or timing of any payment of principal or
interest, extend its scheduled maturity date, modify its interest rate, or
constitute a cancellation or discharge of its outstanding principal balance and
does not materially and adversely affect the security afforded by the real
property, finishings, fixtures, or equipment securing the Loan.

 

c. No Assignment. Except as permitted herein, neither Seller, NCMC nor any
servicer shall 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
shall not prevent any of the following: any transfer of Purchased Assets in
accordance with the Program Documents; any Hedging Instruments for the related
Purchased Assets; any servicing arrangement between the Interim Servicer and
Seller or its Affiliates; and any forward purchase commitment or other types of
take out commitment for the Purchased Assets.

 

d. Servicing of Loans. Seller and each Guarantor shall cause Interim Servicer to
service, or cause to be serviced, all Loans that are part of the Purchased
Assets in accordance with prudent servicing practices, pending any delivery of
such servicing to Buyer pursuant to this Agreement, employing at least the same
procedures and exercising the same care that Interim Servicer customarily
employs in servicing Loans for its own account. Seller shall notify servicers of
Buyer’s interest hereunder and Seller shall notify Buyer of the name and address
of all servicers of Loans and shall identify each servicer with respect to each
Purchased Asset on a loan-by-loan basis. Buyer shall have

 

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the right to approve each servicer and the form of all Servicing Agreements or
servicing side letter agreements. Seller shall cause each servicer to hold or
cause to be held all escrow funds collected with respect to such Loans in
customary custodial accounts and shall apply the same for the purposes for which
such funds were collected. Upon Buyer’s request, Seller shall provide reasonably
promptly to Buyer a letter addressed to and agreed to by each servicer of Loans,
in form and substance reasonably satisfactory to Buyer, advising such servicer
of such matters as Buyer may reasonably request relating to the Loans. If Seller
should discover that, for any reason whatsoever, Seller or any entity
responsible to Seller by contract for the administration and/or servicing any
such Loan has failed to perform fully Seller’s obligations under the Program
Documents or any of the obligations of such entities with respect to the
Purchased Assets, Seller shall promptly notify Buyer.

 

e. Preservation of Collateral: Collateral Value. Each of Seller and each
Guarantor shall do all things necessary to preserve the Collateral so that it
remains subject to a first priority perfected security interest hereunder.
Without limiting the foregoing, Seller and each Guarantor will comply with all
rules, regulations and other laws of any Governmental Authority and cause the
Collateral to comply with all applicable rules, regulations and other laws.
Neither Seller nor a Guarantor will allow any default by Seller or either
Guarantor to occur under any Collateral or any Program Documents and Seller and
each Guarantor shall fully perform or cause to be performed when due all of its
obligations under any Collateral or the Program Documents.

 

f. Maintenance of Papers, Records and Files. Seller and each Guarantor shall
require, and Seller or either Guarantor shall build, maintain and have
available, a complete file in accordance with lending industry custom and
practice for each Purchased Asset. Seller or either Guarantor will maintain or
cause to be maintained all such Records not in the possession of Custodian in
good and complete condition in accordance with industry practices and preserve
them against loss.

 

i) Seller and each Guarantor shall collect and maintain or cause to be collected
and maintained all Records relating to the Purchased Assets in accordance with
industry custom and practice, including those maintained pursuant to the
preceding subsection, and all such Records shall be in the possession of the
Custodian, the Interim Servicer, the Seller or a Guarantor unless Buyer
otherwise approves. Neither Seller nor a Guarantor will allow 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 Loan, in which event Seller or a Guarantor will obtain or cause to be
obtained a receipt from a financially responsible person for any such paper,
record or file.

 

ii) For so long as Buyer has an interest in or lien on any Purchased Asset,
Seller and each Guarantor will hold or cause to be held all related Records in
trust, as the custodian and bailee, for Buyer. Seller or Guarantor shall notify,
or cause to be notified, every other party holding any such Records of the
interests and liens granted hereby.

 

iii) Upon reasonable advance notice from Custodian or Buyer, Seller and each
Guarantor shall (x) make any and all such Records available to Custodian or
Buyer to examine any such Records, 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 Buyer or its authorized agents to discuss the affairs,
finances and accounts of Seller or either Guarantor with its respective chief
operating officer and chief financial officer and to discuss the affairs,

 

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finances and accounts of Seller or either Guarantor with its independent
certified public accountants and (z) provide a loan tape of the Loans in a form
as reasonably requested by the Buyer.

 

g. Financial Statements: Other Information. Seller and each Guarantor shall keep
or cause to be kept in reasonable detail books and records of account of its
assets and business and shall clearly reflect therein the transfer of Purchased
Assets to Buyer.

 

h. Notice of Material Events. Each of Seller and each Guarantor shall promptly
inform Buyer in writing of any of the following:

 

i) any Default, Event of Default or default or breach by Seller or either
Guarantor of any other material obligation under any Program Document, or the
occurrence or existence of any event or circumstance that Seller or either
Guarantor with the passage of time expects to have a reasonably likelihood of
becoming an Event of Default;

 

ii) any material change in the insurance coverage required of Seller or either
Guarantor or any other Person pursuant to any Program Document, with copy of
evidence of same attached;

 

iii) any material dispute, litigation, investigation, proceeding or suspension
between Seller or a Guarantor, on the one hand, and any Governmental Authority
or any other Person;

 

iv) any material adverse change in accounting policies or financial reporting
practices of Seller or a Guarantor;

 

v) the occurrence of any material employment dispute and a description of the
strategy for resolving it; and

 

vi) any event, circumstance or condition that has resulted, or has a reasonably
likelihood of resulting, in either a Material Adverse Change with respect to
Seller or a Guarantor or a Material Adverse Effect.

 

i. Maintenance of Licenses. Each of Seller and each Guarantor shall maintain,
all licenses, permits or other approvals necessary for each of Seller and each
Guarantor to conduct its business and to perform its obligations under the
Program Documents, and each of Seller and each Guarantor shall conduct its
business strictly in accordance with applicable law.

 

j. No Withholdings for Taxes. Any payments made by Seller to Buyer shall be free
and clear of, and without deduction or withholding for, any taxes; provided,
however, that if Seller shall be required by law to deduct or withhold any taxes
from any sums payable to Buyer, then Seller shall (A) make such deductions or
withholdings and pay such amounts to the relevant authority in accordance with
applicable law, (B) pay to Buyer the sum that would have been payable had such
deduction or withholding not been made, and (C) at the time the Price
Differential is paid, pay to Buyer all additional amounts as specified by Buyer
to preserve the after-tax yield Buyer would have

 

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received if such tax had not been imposed. This provision does not apply to
income taxes payable by Buyer on its taxable income.

 

k. Nature of Business. Neither Seller nor a Guarantor shall make any material
change in the nature of its business as carried on at the date hereof.

 

l. Limitation on Distributions. If a Default has occurred and is occurring,
neither Seller nor either Guarantor shall pay any dividends or distributions
with respect to any capital stock or other equity interests in Seller or either
Guarantor, 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 or either Guarantor.

 

m. Reserved.

 

n. Merger of Guarantor. Neither Guarantor shall 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 without Buyer’s prior consent; (ii) form or
enter into any partnership, joint venture, syndicate or other combination which
would have a Material Adverse Effect; or (iii) make any Material Adverse Change
with respect to a Guarantor or such Guarantor’s Subsidiaries.

 

o. Insurance. Seller will, and shall cause the Interim Servicer to, 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, and will furnish Buyer on request full
information as to all such insurance, and provide within (15) days after receipt
of such request the certificates or other documents evidencing renewal of each
such policy.

 

p. Affiliate Transaction. Neither Seller nor a Guarantor will 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 their Affiliates unless the terms thereof are no less
favorable to such Seller or Guarantor, as applicable, 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. Neither Seller nor a Guarantor will at any time,
directly or indirectly, except upon ninety (90) days’ prior written notice to
Buyer, change the date on which such Seller’s or Guarantor’s fiscal year begins
from such Seller’s or Guarantor’s current fiscal year beginning date.

 

r. Delivering of Servicing Rights. With respect to the Servicing Rights of each
Loan, Seller and Guarantors shall deliver such Servicing Rights to the designee
of Buyer, within 17 days of the Purchase Date, the Seller’s and Guarantors’
transfer of the Servicing Rights under this Section shall be in accordance with
customary standards in the industry.

 

s. Underwriting Guidelines. NCMC shall not permit any material modifications to
be made to the Underwriting Guidelines without the prior consent of the Buyer
(such consent not to be unreasonably withheld).

 

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t. No Other Indebtedness. Without the prior written consent of the Buyer, the
Seller shall not incur any Indebtedness or guaranty the Indebtedness of any
other Person other than the Indebtedness incurred under the Program Documents.

 

u. Facility Fee. Seller agrees to pay to Buyer on the date of execution of this
Agreement, a facility fee in the amount of the Facility Fee Amount, such payment
to be made in United States dollars, in immediately available funds, without
deduction, set-off or counterclaim. The Buyer may, in its sole discretion, net
such commitment fee from the proceeds of any Purchase Price payable to the
Seller.

 

14. REPURCHASE DATE PAYMENTS

 

On the Repurchase Date, Seller shall remit or shall cause to be remitted to
Buyer the Repurchase Price.

 

15. REPURCHASE OF PURCHASED ASSETS, CHANGE OF LAW

 

a. Upon discovery by Seller or a Guarantor of a breach of any of the
representations and warranties set forth in Appendix A to the Custody Agreement,
Seller or a Guarantor shall give prompt written notice thereof to Buyer. Upon
any such discovery by Buyer, Buyer will notify Seller. It is understood and
agreed that the representations and warranties set forth in Appendix A to the
Custody Agreement shall survive delivery of the respective Loan Files to the
Custodian and shall inure to the benefit of Buyer. The fact that Buyer has
conducted or has failed to conduct any partial or complete due diligence
investigation in connection with its purchase of any Purchased Asset shall not
affect Buyer’s right to demand repurchase as provided under this Agreement. The
Seller shall within two (2) Business Days of the earlier of the Seller’s or a
Guarantor’s discovery or either Seller or a Guarantor receiving notice, with
respect to any Purchased Asset, of (i) any breach of a representation or
warranty contained in Appendix A to the Custody Agreement or (ii) any failure to
deliver any of the items required to be delivered as part of the Loan File
within the time period required for delivery pursuant to the Custody Agreement,
promptly cure such breach or delivery failure in all material respects. If
within two (2) Business Days after the earlier of Seller’s or a Guarantor’s
discovery of such breach or delivery failure or Seller or a Guarantor receiving
notice thereof that such breach or delivery failure has not been remedied by the
Seller, the Seller shall promptly upon receipt of written instructions from
Buyer, at Buyer’s option, either (i) purchase 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 Buyer, or (ii) transfer comparable
Substitute Assets to Buyer, as provided in Section 16 hereof.

 

b. If Buyer determines that the introduction of, any change in, or the
interpretation or administration of any requirement of law has made it unlawful
or commercially impracticable to engage in the Transaction with a Pricing Rate
based on LIBOR, then Seller shall, upon its receipt of notice of such fact and
demand from Buyer (with a copy of such notice to Custodian), repurchase the
Purchased Assets subject to the Transaction on the next succeeding Business Day
and, at Seller’s election, concurrently enter into a new Transaction with Buyer
with a Pricing Rate based on the Prime Rate plus the margin set forth in the
Side Letter as part of the Pricing Rate.

 

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c. If Buyer determines in its sole discretion that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on Buyer’s capital or on the capital of any Affiliate of Buyer as a consequence
of such Change in Law on this Agreement, then from time to time Seller will
compensate Buyer or Buyer’s Affiliate, as applicable, for such reduced rate of
return suffered as a consequence of such Change in Law on terms similar to those
imposed by Buyer on its other similarly affected customers. Buyer shall provide
Seller with prompt notice as to any Change in Law. Notwithstanding any other
provisions in this Agreement, in the event of any such Change in Law Seller will
have the right to terminate the Transaction without any prepayment penalty as of
a date selected by Seller, which date shall be prior to the Repurchase Date and
which date shall thereafter for all purposes hereof be deemed to be the
Repurchase Date.

 

16. SUBSTITUTION

 

Seller may, subject to agreement with and acceptance by Buyer, substitute other
assets which are substantially the same as the Purchased Assets (the “Substitute
Assets”) for any Purchased Assets. Such substitution shall be made by transfer
to Buyer of such other Substitute Assets and transfer to Seller of such
Purchased Assets. After substitution, the Substitute Assets shall be deemed to
be Purchased Assets.

 

17. REPURCHASE TRANSACTIONS

 

Buyer may, in its sole election, engage in repurchase transactions with the
Purchased Assets or otherwise pledge, hypothecate, assign, transfer or otherwise
convey the Purchased Assets with a counterparty of Buyer’s choice, in all cases
subject to Buyer’s obligation to reconvey the Purchased Assets (and not
substitutes therefor) on the Repurchase Date. In the event Buyer engages in a
repurchase transaction with any of the Purchased Assets or otherwise pledges or
hypothecates any of the Purchased Assets, Buyer shall have the right to assign
to Buyer’s counterparty any of the applicable representations or warranties in
Appendix A to the Custody Agreement and the remedies for breach thereof, as they
relate to the Purchased Assets that are subject to such repurchase transaction.

 

18. EVENTS OF DEFAULT

 

With respect to the Transaction 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 Buyer on the Purchase Date
(provided Buyer has tendered the Purchase Price);

 

b. Seller either fails to repurchase the Purchased Assets on the Repurchase Date
or fails to perform its obligations under Section 6;

 

c. either Seller or a Guarantor shall fail to perform, observe or comply with
any other material term, covenant or agreement contained in the Program
Documents (other than Appendix A to the Custody Agreement) and such failure is
not cured within the time period expressly provided or, if no such cure period
is provided, within two (2) Business Days of the earlier of (i) such party’s

 

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receipt of written notice from Buyer or Custodian of such breach or (ii) the
date on which such party obtains notice or knowledge of the facts giving rise to
such breach;

 

d. any representation or warranty made by Seller or a Guarantor (or any of
Seller’s or a Guarantor’s officers) in the Program Documents or in any other
document delivered in connection therewith (other than the representations or
warranties in Appendix A to the Custody Agreement) shall have been incorrect or
untrue in any material respect when made or repeated or deemed to have been made
or repeated;

 

e. Seller, a Guarantor, or any of Seller’s or a Guarantor’s Subsidiaries shall
fail (i) to pay any of Seller’s, a Guarantor’s or Seller’s or a Guarantor’s
Subsidiaries’ Indebtedness (aggregating in excess of $2,500,000 with respect to
a Guarantor or a Guarantor and its Subsidiaries, taken as a whole), or any
interest or premium thereon when due (whether by scheduled maturity, requirement
prepayment, acceleration, demand or otherwise), or (ii) to make any payment when
due under Seller’s, a Guarantor’s or Seller’s or a Guarantor’s Subsidiaries’
Guarantee of another person’s Indebtedness for borrowed money, and, in either
case, such failure shall entitle any related counterparty to declare any such
Indebtedness or Guarantee to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof;

 

f. a custodian, receiver, conservator, liquidator, trustee, sequestrator or
similar official for Seller, a Guarantor or any of Seller’s or a Guarantor’s
Subsidiaries, or of any of Seller’s, a Guarantor’s or their respective Property
(as a debtor or creditor protection procedure), is appointed or takes possession
of such property; or Seller, a Guarantor or any of Seller’s or a Guarantor’s
Subsidiaries generally fails to pay Seller’s, a Guarantor’s or Seller’s or a
Guarantor’s Subsidiaries’ debts as they become due; or Seller, a Guarantor or
any of Seller’s or a Guarantor’s Subsidiaries is adjudicated bankrupt or
insolvent; or an order for relief is entered under the Federal Bankruptcy Code,
or any successor or similar applicable statute, or any administrative insolvency
scheme, against Seller, a Guarantor or any of Seller’s or a Guarantor’s
Subsidiaries; or any of Seller’s, a Guarantor’s or Seller’s or a Guarantor’s
Subsidiaries’ Property is sequestered by court or administrative order; or a
petition is filed against Seller, a Guarantor or any of Seller’s or a
Guarantor’s Subsidiaries under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, moratorium, delinquency or
liquidation law of any jurisdiction, whether now or subsequently in effect;

 

g. Seller, a Guarantor or any of Seller’s or a Guarantor’s Subsidiaries files a
voluntary petition in bankruptcy, seeks relief under any provision of any
bankruptcy, reorganization, moratorium, delinquency, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction whether
now or subsequently in effect; or consents to the filing of any petition against
it under any such law; or consents to the appointment of or taking possession by
a custodian, receiver, conservator, trustee, liquidator, sequestrator or similar
official for Seller, a Guarantor or any of Seller’s or a Guarantor’s
Subsidiaries, or of all or any part of Seller’s, a Guarantor’s or Seller’s or a
Guarantor’s Subsidiaries’ Property; or makes an assignment for the benefit of
Seller, a Guarantor or Seller’s or a Guarantor’s Subsidiaries’ creditors;

 

h. any final, nonappealable judgment or order for the payment of money in excess
of $2,500,000 is rendered against Seller, a Guarantor or any of Seller’s or a
Guarantor’s Subsidiaries

 

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and remains undischarged or unsatisfied after the passage of 30 days following
the date on which it is entered;

 

i. any Governmental Authority or any person, agency or entity acting or
purporting to act under governmental authority shall have taken any action to
condemn, seize or appropriate, or to assume custody or control of, all or any
substantial part of the Property of Seller, a Guarantor or any of Seller’s or a
Guarantor’s Subsidiaries, or shall have taken any action to displace the
management of Seller, a Guarantor or any of Seller’s or a Guarantor’s
Subsidiaries or to curtail its authority in the conduct of the business of
Seller, a Guarantor or any of Seller’s or a Guarantor’s Subsidiaries, or takes
any action in the nature of enforcement to remove, limit or restrict the
approval of Seller, a Guarantor or any of Seller’s or a Guarantor’s Subsidiaries
as an issuer, buyer or a seller/servicer of Loans or securities backed thereby;

 

j. Seller, a Guarantor or any of Seller’s or a Guarantor’s Subsidiaries shall
default under, or fail to perform as requested under, or shall otherwise breach
the material terms of any instrument, agreement or contract relating to
Indebtedness (aggregating in excess of $2,500,000 with respect to a Guarantor or
a Guarantor and its Subsidiaries, taken as a whole), and such default, failure
or breach shall entitle any counterparty to declare such Indebtedness to be due
and payable prior to the maturity thereof;

 

k. in the reasonable good faith judgment of Buyer any Material Adverse Change
shall have occurred with respect to Seller, a Guarantor or any of Seller’s or a
Guarantor’s Subsidiaries taken as a whole;

 

l. Seller or a Guarantor shall admit in writing its inability to, or intention
not to, perform any of such Seller’s or a Guarantor’s respective material
Obligations;

 

m. except as expressly permitted in this Agreement, Seller or a Guarantor
dissolves, merges or consolidates with another entity, or sells, transfers, or
otherwise disposes of a material portion of such Seller’s or a Guarantor’s (as
applicable) business or assets unless Buyer’s written consent is given;

 

n. 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 or Collateral purported to be covered hereby;

 

o. [Reserved];

 

p. a Change in Control of Seller or a Guarantor shall have occurred which has
not been approved by Buyer;

 

q. any default shall have occurred and be continuing under that certain Master
Repurchase Agreement among Buyer and New Century Funding A dated as of May 13,
2002 (the “First Repurchase Agreement”);

 

r. [Reserved];

 

s. [Reserved];

 

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t. [Reserved];

 

u. [Reserved];

 

v. [Reserved]; and

 

w. any material amendment is made to the Underwriting Guidelines which was not
previously approved in writing by Buyer.

 

It is understood and agreed that any default, cure or notice period provided for
in the Program Documents may be accelerated by Buyer unilaterally upon Buyer’s
or Agent’s reasonable determination that it is reasonable to do so under the
circumstances, with due consideration to the volatility of markets, the
seriousness of any Defaults and the perceived risk to Buyer of delay.

 

19. REMEDIES

 

Upon the occurrence of an Event of Default, Buyer, at its option (which option
shall be deemed to have been exercised immediately upon the occurrence of an
Event of Default pursuant to Section 18(f) or (g) hereof), shall have any or all
of the following rights and remedies, which may be exercised by Buyer:

 

a. The Repurchase Date for the Transaction hereunder shall be deemed immediately
to occur.

 

b. Seller’s obligations hereunder to repurchase all Purchased Assets at the
Repurchase Price therefor on the Repurchase Date in the Transaction shall
thereupon become immediately due and payable; all Income paid after such
exercise or deemed exercise shall be remitted to and retained by Buyer and
applied to the aggregate Repurchase Prices and any other amounts owing by Seller
hereunder; Seller and Guarantors shall immediately deliver to Buyer or its
designee any and all Records relating to the Purchased Assets subject to the
Transaction then in Seller’s and Guarantor’s possession and/or control; and all
right, title and interest in and entitlement to such Purchased Assets and
Servicing Rights thereon shall be deemed transferred to Buyer.

 

Buyer may (A) sell, on or following the Business Day following the date on which
the Repurchase Price became due and payable pursuant to Section 19(b) without
notice or demand of any kind, at a public or private sale and at such price or
prices as Buyer may reasonably deem satisfactory any or all Purchased Assets or
(B) in its sole discretion elect, in lieu of selling all or a portion of such
Purchased Assets, to give Seller credit for such Purchased Assets in an amount
equal to the Market Value of the Purchased Assets against the aggregate unpaid
Repurchase Price and any other amounts owing by Seller hereunder. The Seller
shall remain liable to the Buyer for any amounts that remain owing to Buyer
following a sale or credit under the preceding sentence. The proceeds of any
disposition of Purchased Assets shall be applied first to the reasonable costs
and expenses incurred by Buyer in connection with or as a result of an Event of
Default; second to breakage costs, costs of cover and/or related hedging
transactions; third to the aggregate Repurchase Prices; and fourth to all other
Obligations.

 

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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 the nature of the Purchased Assets, the parties
agree that liquidation of the 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, Buyer may elect the time and manner of liquidating any
Purchased Asset and nothing contained herein shall obligate Buyer to liquidate
any Purchased Asset on the occurrence of an Event of Default or to liquidate all
Purchased Assets in the same manner or on the same Business Day or constitute a
waiver of any right or remedy of Buyer.

 

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

 

The Buyer shall have the right to obtain physical possession of the Records and
all other files of the 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 the Seller or any third party acting for the Seller and the Seller
shall deliver to the Buyer such assignments as the Buyer shall request.

 

Buyer may direct all Persons servicing the Purchased Assets to take such action
with respect to the Purchased Assets as Buyer determines appropriate.

 

Each of Seller and each Guarantor shall cause all sums received by it with
respect to the Purchased Assets to be deposited with Custodian (or such other
Person as Buyer may direct) after receipt thereof.

 

Buyer 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 and any other Collateral or any portion thereof,
collect the payments due with respect to the Purchased Assets and any other
Collateral or any portion thereof, and do anything that Buyer is authorized
hereunder to do. Seller shall pay all costs and expenses incurred by Buyer in
connection with the appointment and activities of such receiver.

 

Buyer 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 Buyer 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, arising from use of
nonjudicial process, enforcement and sale of all or any portion of the Purchased
Assets and any other Collateral or from any other election of remedies. Seller
recognizes that nonjudicial remedies are

 

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consistent with the usages of the trade, are responsive to commercial necessity
and are the result of a bargain at arm’s length.

 

In addition to all the rights and remedies specifically provided herein, Buyer
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.

 

Upon the occurrence of an Event of Default, Buyer shall have, except as
otherwise expressly provided in this Agreement, 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.

 

Seller hereby authorizes Buyer, at Seller’s expense, to file such financing
statement or statements relating to the Purchased Assets and the Collateral
without Seller’s signature thereon as Buyer at its option may deem appropriate,
and appoints Buyer as Seller’s attorney-in-fact to execute any such financing
statement or statements in Seller’s name and to perform all other acts which
Buyer deems appropriate to perfect and continue the lien and security interest
granted hereby and to protect, preserve and realize upon the Purchased Assets
and the Collateral, including, but not limited to, the right to endorse notes,
complete blanks in documents and execute assignments on behalf of Seller as its
attorney-in-fact. This power of attorney is coupled with an interest and is
irrevocable without Buyer’s consent.

 

20. DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE

 

No failure on the part of Buyer to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by Buyer 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 Buyer 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
Buyer to exercise any of its rights under any other related document. Buyer may
exercise at any time after the occurrence of an Event of Default one or more
remedies, as it so desires, and may thereafter at any time and from time to time
exercise any other remedy or remedies.

 

21. USE OF EMPLOYEE PLAN ASSETS

 

No assets of an employee benefit plan subject to any provision of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) shall be used by
either party hereto in a Transaction.

 

22. INDEMNITY

 

a. Seller agrees to pay on demand (i) all reasonable out-of-pocket costs and
expenses of Buyer in connection with the preparation, execution, delivery,
modification, administration 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 counsel for

 

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Buyer with respect to advising Buyer as to its rights and responsibilities, or
the perfection, protection or preservation of rights or interests, under this
Agreement, with respect to negotiations with Seller or with other creditors of
Seller or any of its Subsidiaries arising out of any Default or any events or
circumstances that may 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) and (ii) all costs and expenses of Buyer in
connection with the enforcement of this Agreement (including any waivers),
whether in any action, suit or litigation, any bankruptcy, insolvency or other
similar proceeding affecting creditors’ rights generally (including, without
limitation, the reasonable fees and expenses of counsel for Buyer) whether or
not the transactions contemplated hereby are consummated.

 

b. Seller agrees to indemnify and hold harmless Buyer and each of its respective
Affiliates and their officers, directors, employees, agents and advisors (each,
an “Indemnified Party”) from and against (and will reimburse each Indemnified
Party as the same is incurred) any and all claims, damages, losses, liabilities
and expenses (including, without limitation, reasonable fees and expenses of
counsel) 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 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 of a representation or warranty
of Seller or a Guarantor or Seller’s or a Guarantor’s officer in this Agreement
or any other Program Document, and all actions taken pursuant thereto) (i) the
Transaction, the actual or proposed use of the proceeds of the Transaction, this
Agreement or any of the transactions contemplated thereby, including, without
limitation, any acquisition or proposed acquisition or (ii) the actual or
alleged presence of hazardous materials on any Property or any environmental
action relating in any way to any Property, except to the extent such claim,
damage, class, liability or expense is found in a final, non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnified
Party’s gross negligence or willful misconduct or is the result of a claim made
by Seller or a Guarantor against the Indemnified Party, and Seller or a
Guarantor is ultimately the successful party in any resulting litigation or
arbitration. Seller also agrees not to assert any claim against Buyer 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
Transaction, 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.

 

c. Without limitation on the provisions of Section 4, if any payment of the
Repurchase Price of the Transaction is made by Seller other than on the then
scheduled Repurchase Date thereto as a result of an acceleration of the
Repurchase Date pursuant to Section 19 or for any other reason, Seller shall,
except as otherwise provided in Sections 15(c) and 24, upon demand by Buyer, pay
to Buyer any breakage costs incurred as of a result of such payment.

 

d. 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 Buyer, in its sole discretion.

 

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

 

23. 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 Buyer or Custodian
contained in the Program Documents or any other instrument delivered in
connection therewith, and any right that it 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.

 

24. REIMBURSEMENT

 

All sums reasonably expended by Buyer in connection with the exercise of any
right or remedy provided for herein shall be and remain Seller’s obligation.
Seller agrees to pay, with interest at the Default Rate, to the extent that an
Event of Default has occurred, the reasonable out-of-pocket expenses and
reasonable attorneys’ fees incurred by Buyer and/or Custodian in connection with
the preparation, enforcement (including any waivers), administration and
amendments of the Program Documents, the taking of any action, including a
Guarantor action, required or permitted to be taken by Buyer (without
duplication to Buyer) and/or Custodian pursuant thereto, any “due diligence” or
loan agent reviews conducted by Buyer or on its behalf or by refinancing or
restructuring in the nature of a “workout.” If Buyer determines that, due to the
introduction of, any change in, or the compliance by Buyer 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 Buyer in engaging in the present or any future
Transactions, then Seller agrees to pay to Buyer, from time to time, upon demand
by Buyer (with a copy to Custodian) the actual cost of additional amounts as
specified by Buyer to compensate Buyer for such increased costs. Notwithstanding
any other provisions in this Agreement, in the event of any such change in the
eurocurrency reserve requirement or the interpretation of any law, regulation or
any guideline or request from any central bank or other Governmental Authority,
Seller will have the right to terminate all Transactions then outstanding as of
a date selected by Seller (without the payment by Seller of any prepayment
penalty or breakage costs), which date shall be prior to the applicable
Repurchase Date and which date shall thereafter for all purposes hereof, be
deemed to be the Repurchase Date. In addition, Buyer shall promptly notify
Seller if any events in clause (i) or (ii) of this Section 24 occur.

 

25. FURTHER ASSURANCES

 

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

 

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26. 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 Assets thereto, 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.

 

27. TERMINATION

 

This Agreement shall remain in effect until the earlier of (i) 17 days following
the Effective Date or (ii) at Buyer’s option upon the occurrence of an Event of
Default (such date, the “Termination Date”). However, no such termination shall
affect Seller’s outstanding obligations to Buyer at the time-of such
termination. Seller’s obligations to indemnify Buyer pursuant to this Agreement
shall survive the termination hereof.

 

28. ASSIGNMENT

 

The Program Documents are not assignable by Seller except that the Seller shall
have the right to assign the Program Documents to NC Residual II Corporation
pursuant to an assignment and assumption agreement. Buyer may from time to time
assign all or a portion of its rights and obligations under this Agreement and
the Program Documents; provided, however, that Buyer shall maintain, for review
by Seller upon written request, a register of assignees and a copy of an
executed assignment and acceptance by Buyer and assignee (“Assignment and
Acceptance”), specifying the percentage or portion of such rights and
obligations assigned. 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 Buyer hereunder, and (b) Buyer shall, to the extent
that such rights and obligations have been so assigned by it to either (i) an
Affiliate of Buyer which assumes the obligations of Buyer or (ii) to another
Person approved by Seller (such approval not to be unreasonably withheld) which
assumes the obligations of Buyer, be released from its obligations hereunder
accruing thereafter and under the Program Documents. Unless otherwise stated in
the Assignment and Acceptance, Seller shall continue to take directions solely
from Buyer unless otherwise notified by Buyer in writing. Buyer may distribute
to any prospective assignee any document or other information delivered to Buyer
by Seller. Notwithstanding any assignment by Buyer pursuant to this Section 28,
Buyer shall remain liable as to the Transaction.

 

29. 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 and Buyer, and then such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

 

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30. 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.

 

31. BINDING EFFECT: GOVERNING LAW

 

This Agreement shall be binding and inure to the benefit of the parties hereto
and their respective successors and assigns, except that Seller may not assign
or transfer any of its rights or obligations under this Agreement or any other
Program Document without the prior written consent of Buyer. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAW OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

 

32. CONSENT TO JURISDICTION

 

SELLER HEREBY WAIVES TRIAL BY JURY. SELLER HEREBY IRREVOCABLY CONSENTS 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, ARISING OUT
OF OR RELATING TO THE PROGRAM DOCUMENTS IN ANY ACTION OR PROCEEDING. SELLER
HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION SELLER 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.

 

33. SINGLE AGREEMENT

 

Reserved.

 

34. INTENT

 

Seller and Buyer recognize that the Transaction is a “repurchase agreement” as
that term is defined in Section 101 of Title 11 of the United States Code, as
amended (“USC”) (except insofar as the Loans subject to the Transaction or the
term of the Transaction would render such definition inapplicable), a “forward
contract” as that term is defined in Section 101 of Title 11 of the USC and a
“securities contract” as that term is defined in Section 741 of Title 11 of the
USC (except insofar as the Loans subject to the Transaction or the term of the
Transaction would render such definition inapplicable).

 

It is understood that Buyer’s right to liquidate the Purchased Assets delivered
to it in connection with the Transaction hereunder or to exercise any other
remedies pursuant to Section 19 hereof is a contractual right to liquidate the
Transaction as described in Sections 555 and 559 of Title 11 of the USC.

 

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35. NOTICES AND OTHER COMMUNICATIONS

 

Except as provided herein, any notice required or permitted by this Agreement
shall be in writing and shall be effective and deemed delivered only when
received by the party to which it is sent; provided, however, that a facsimile
transmission shall be deemed to be received when transmitted so long as the
transmitting machine has provided an electronic confirmation (without error
message) of such transmission. Any such notice shall be sent to a party at the
address or facsimile transmission number set forth below:

 

if to Seller:

 

NC Capital Corporation Attention:                                          with
a copy to:

New Century Funding Corporation

as administrator of NC Capital Corporation

18400 Von Karman

Irvine, California 92612

Attention:    Stergios Theologides, Esq. Telephone:    (949) 863-7243 Facsimile:
   (949) 440-7033

 

if to NCMC:

 

New Century Mortgage Corporation 18400 Van Karman, Suite 1000 Irvine, California
92612 Attention:    Stergios Theologides, Esq. Telephone:    (949) 863-7243
Facsimile:    (949) 440-7033

 

if to Buyer or Agent:

 

Bank of America, N.A.

TX1-492-66-01

901 Main Street, 66th Floor

Dallas, Texas 75202-3714

Attention:    Agnes McAlpine Telephone:    (214) 209-3566 Facsimile:    (214)
209-0338 with a copy to: Attention:    Mark G. Short, Associate Telephone:   
(214) 209-0670 Facsimile:    (214) 209-0338

 

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or, for Transaction Notices and related documents: Attention:    Uma
Subramanian, Loan Administrator Telephone:    (214) 209-1076 Facsimile:    (214)
209-2710

 

as such address or number may be changed by like notice.

 

36. CONFIDENTIALITY

 

This Agreement and its terms, provisions, supplements and amendments, and
transactions and notices hereunder, are proprietary to Buyer and Agent and shall
be held by Seller and each Guarantor (and Seller and Guarantors shall cause
Interim Servicer to hold it) in strict confidence and shall not be disclosed to
any third party without the consent of Buyer except for (i) disclosure to
Seller’s or a Guarantor’s direct and indirect parent companies, attorneys,
agents or accountants, provided that such attorneys or accountants likewise
agree to be bound by this covenant of confidentiality or (ii) disclosure
required by law, rule, regulation or order of a court or other regulatory body
or (iii) disclosure to any approved Hedge Counterparty to the extent necessary
to obtain any Hedge Instrument hereunder or (iv) any disclosures or filing
required under Securities and Exchange Commission or state securities’ laws;
provided that neither the Seller nor any Guarantor shall file the Side Letter
with the Securities and Exchange Commission or state securities office, unless
otherwise agreed by Buyer in writing, and the Seller and Guarantor agree to use
best efforts not to file the terms of the Side Letter with any such filing;
provided, that in the case of (ii), (iii) and (iv), Seller shall take reasonable
actions to provide Buyer with prior written notice. 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 of 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.

 

37. MAXIMUM AGGREGATE PURCHASE PRICE

 

The Maximum Aggregate Purchase Price under this Agreement shall equal
$1,138,383,167.

 

[Signature Page Follows]

 

32

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IN WITNESS WHEREOF, Seller, Guarantors and Buyer 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.

 

NC CAPITAL CORPORATION, as Seller

By:  

/s/    KEVIN CLOYD

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Name:

 

Kevin Cloyd

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

Title:

 

President

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BANK OF AMERICA, N.A., as Buyer and

Agent, as applicable

By:  

/s/    GARRETT DOLT        

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

Name:

  Garrett Dolt

Title:

  Principal

 

Acknowledged and Agreed:

 

NEW CENTURY MORTGAGE CORPORATION,

as Guarantor

By:  

/s/    KEVIN CLOYD

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

Name:

 

Kevin Cloyd

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Title:

 

Senior Vice President

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NEW CENTURY FINANCIAL CORPORATION,

as Guarantor

By:  

/s/    PATRICK FLANAGAN

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

Name:

 

Patrick Flanagan

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

Title:

 

Executive Vice President

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ANNEX I

 

BUYER ACTING AS AGENT

 

This Annex I forms a part of the Master Repurchase Agreement dated as of
December 2, 2003 (the “Agreement”) between Bank of America, N.A. and NC Capital
Corporation. This Annex I sets forth the terms and conditions governing all
transactions in which a party selling assets or buying assets, as the case may
be (“Agent”), in a Transaction is acting as agent for one or more third parties
(each, a “Principal”). Capitalized terms used but not defined in this Annex I
shall have the meanings ascribed to them in the Agreement.

 

1. Additional Representations. Agent hereby makes the following representations,
which shall continue during the term of the Transaction: Principal has duly
authorized Agent to execute and deliver the Agreement on its behalf, has the
power to so authorize Agent and to enter into the Transaction contemplated by
the Agreement and to perform the obligations of Seller or Buyer, as the case may
be, under the Transactions, and has taken all necessary action to authorize such
execution and delivery by Agent and such performance by it.

 

2. Identification of Principals. Agent agrees (a) to provide the other party,
prior to the date on which the parties agree to enter into the Transaction under
the Agreement, with a written list of Principals for which it intends to act as
Agent (which list may be amended in writing from time to time with the consent
of the other party) and (b) to provide the other party, before the close of
business on the next business day after orally agreeing to enter into the
Transaction, with notice of the specific Principal or Principals for whom it is
acting in connection with such transaction. If (i) Agent fails to identify such
Principal or Principals prior to the close of business on such next business day
or (ii) the other party shall determine in its sole discretion any Principal or
Principals identified by Agent are not acceptable to it, the other party may
reject and rescind the Transaction with such Principal or Principals, return to
Agent any Purchased Assets or portion of the Purchase Price, as the case may be,
previously transferred to the other party and refuse any further performance
under the Transaction, and Agent shall immediately return to the other party any
portion of the Purchase Price or Purchased Assets, as the case may be,
previously transferred to Agent in connection with the Transaction; provided,
however, that (A) the other party shall promptly (and in any event within one
business day) notify Agent of its determination to reject and rescind the
Transaction and (B) to the extent that any performance was rendered by any party
under the Transaction rejected by the other party, such party shall remain
entitled to any Price Differential or other amounts that would have been payable
to it with respect to such performance if the Transaction had not been rejected.
The other party acknowledges that Agent shall not have any obligation to provide
it with confidential information regarding the financial status of its
Principals; Agent agrees, however, that it will assist the other party in
obtaining from Agent’s Principals such Information regarding the financial
status of such Principals as the other party may reasonably request.

 

3.

Limitation of Agent’s Liability. The parties expressly acknowledge that if the
representations of Agent under the Agreement, including this Annex I, are true
and correct in all material respects during the term of the Transaction and
Agent otherwise complies with the provisions of this Annex I, then (a) Agent’s
obligations under the Agreement shall not include a

 

Annex - 1

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guarantee of performance by its Principal or Principals; provided that Agent
shall remain liable for performance pursuant to Section 10 of the Agreement, and
(b) the other party’s remedies shall not include a right of setoff in respect of
rights or obligations, if any, of Agent arising in other transactions in which
Agent is acting as principal.

 

4. Multiple Principals.

 

  (a) Reserved.

 

  (b) In the event that Agent and the other party elect (or are deemed to elect)
to treat the Transaction under the Agreement as transactions on behalf of
separate Principals, the parties agree that (i) Agent will provide the other
party, together with the notice described in Section 2(b) of this Annex I,
notice specifying the portion of the Transaction allocable to the account of
each of the Principals for which it is acting; (ii) the portion of the
Transaction allocable to each Principal shall be deemed a separate Transaction
under the Agreement; (iii) the margin maintenance obligations of Seller under
Section 6(a) of the Agreement shall be determined on a
Transaction-by-Transaction basis (unless the parties agree to determine such
obligations on a Principal-by-Principal basis); and (iv) Buyer’s and Seller’s
remedies under the Agreement upon the occurrence of an Event of Default Shall be
determined as if Agent had entered into a separate Agreement with the other
party on behalf of each of its Principals.

 

  (c) Reserved.

 

  (d) Notwithstanding any other provision of the Agreement (including, without
limitation, this Annex I), the parties agree that the Transaction by Agent on
behalf of an employee benefit plan under ERISA shall be treated as a Transaction
on behalf of separate Principals in accordance with Section 4(b) of this Annex I
(and all margin maintenance obligations of the parties shall be determined on a
Transaction-by-Transaction basis).

 

5. Interpretation of Terms. All references to “Seller” or “Buyer”, as the case
may be, in the Agreement shall, subject to the provisions of this Annex I
(including, among other provisions, the limitations on Agent’s liability in
Section 3 of this Annex 1), be construed to reflect that (i) each Principal
shall have, in connection with the Transaction or Transactions entered into by
Agent on its behalf, the rights, responsibilities, privileges and obligations of
a “Seller” or “Buyer”, as the case may be, directly entering into such
Transaction or Transactions with the other party under the Agreement, and (ii)
Agent’s Principal or Principals have designated Agent as their sole agent for
performance of Seller’s obligations to Buyer or Buyer’s obligations to Seller,
as the case may be, and for receipt of performance by Buyer of its obligations
to Seller or Seller of its obligations to Buyer, as the case may be, in
connection with the Transaction or Transactions under the Agreement (including,
among other things, as Agent for each Principal in connection with transfers of
Securities, cash or other property and as agent for giving and receiving all
notices under the Agreement). Both Agent and its Principal or Principals shall
be deemed “parties” to the Agreement and all references to a “party” or “either
party” in the Agreement shall be deemed revised accordingly.

 

Annex - 2