Master Repurchase Agreement, dated 10/31/2003



 EXHIBIT 10.1 
  
 [EXECUTION COPY] 
  
 MASTER REPURCHASE AGREEMENT 
  
 Dated as of October 31, 2003 
  
 Between: 
  
 BEAR STEARNS MORTGAGE CAPITAL CORPORATION 
  
 and 
  
 NC CAPITAL CORPORATION 
  

	1.	Applicability 

  
 From time to time the parties hereto may enter into transactions in which NC Capital Corporation (“Seller”) agrees to transfer to Bear Stearns
Mortgage Capital Corporation (“Buyer”) Mortgage Loans against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Mortgage Loans at a date certain or on demand, against the transfer of funds by
Seller. Each such transaction shall be referred to herein as a “Transaction” and shall be governed by this Agreement, as the same shall be amended from time to time. 
  

	2.	Definitions 

  
 (a) “Act of Insolvency”, with respect to either Buyer or Seller, (i) the commencement by such party as debtor of any case or proceeding under
any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law, or such party seeking the appointment of a receiver, trustee, custodian or similar official for such party or any substantial part of its property, or (ii) the
commencement of any such case or proceeding against such party, or another seeking such an appointment, or the filing against a party of an application for a protective decree under the provisions of the Securities Investor Protection Act of 1970,
which (A) is consented to or not timely contested by such party, (B) results in the entry of an order for relief, such an appointment, the issuance of such a protective decree or the entry of an order having a similar effect, or (C) is not dismissed
within 15 days, (iii) the making by a party of a general assignment for the benefit of creditors, or (iv) the admission in writing by a party of such party’s inability to pay such party’s debts as they become due; 







 (b) “Additional Purchased Mortgage Loans”, Mortgage Loans provided by Seller to Buyer pursuant
to Section 4(a) hereof; 
  
 (c) “Bailee Letter”, shall
have the meaning assigned in the Custodial Agreement; 
  
 (d)
“Breakage Fee”, in the event that Seller terminates this Agreement (other than a termination resulting from a default by Buyer), an amount equal to (A) Buyer’s actual cost (including all fees, expenses and commissions) of (i) entering
into replacement transactions, (ii) entering into or terminating hedge transactions; and/or (iii) terminating transactions or substituting whole loans or cash in like transactions with third parties in connection with or as a result of termination,
and (B) to the extent Buyer determines not to enter into replacement transactions, the loss incurred by Buyer directly arising or resulting from such termination (the foregoing amounts shall be solely determined and calculated by Buyer in good
faith); 
  
 (e) “Business Day”, any day excluding
Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or the State of California or any day on which a bank located in the State of New York or the State of California or the New York Stock Exchange is
authorized or permitted to close for business; 
  
 (f)
“Buyer’s Margin Amount”, with respect to any Transaction as of any date, the amount obtained by application of a percentage, agreed to by Buyer and Seller prior to entering into the Transaction and specified in the related
Request/Confirmation, to the Repurchase Price for such Transaction as of such date; 
  
 (g) “Cash Purchase Price” shall refer the cash price, and to the corresponding cash proceeds, to be paid by a Trade Investor, under its cash purchase program, for Mortgage Loans sold by Seller that are the
subject of a Transaction; 
  
 (h) “Committed
Transaction”, a Transaction involving Eligible Loans with respect to which the Repurchase Price is due and payable on the earliest of (i) the related Repurchase Date and (ii) October 31, 2004; 
  
 (i) “Compliance Certificate”, a certificate of Guarantor to the
effect that, as of the end of the previous fiscal quarter of Guarantor, Guarantor is in compliance with the Financial Covenants. 
  
 (j) “Custodian”, the custodian named in the Custodial Agreement and any permitted successor thereto; 
  
 (k) “Custodial Agreement”, the Custodial Agreement among Buyer,
Seller and the Custodian providing for the custody of records relating to the Purchased Mortgage Loans; 
  
 (l) “Disbursement Account”, the account described in the Custodial Agreement; 
  

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 (m) “Dry Mortgage Loans” shall refer to Mortgage Loans other than Wet Mortgage Loans;

  
 (n) “Eligible Loan”, means any Mortgage Loan which
is determined in the reasonable judgment of Buyer to meet the criteria set forth in the Underwriting Guidelines (subject, however, to the restriction described in the covenant of Seller set forth in Section 10(e)(xxi) hereof); 
  
 (o) “Financial Covenants”, the financial covenants of Guarantor set
forth in Exhibit G attached hereto; 
  
 (p) “FNMA”, the
Federal National Mortgage Association; 
  
 (q)
“Guarantor”, New Century Financial Corporation; 
  
 (r)
“Guarantee”, the guaranty in the form attached hereto as Exhibit F; 
  
 (s) “High-Cost Mortgage Loan”, a Mortgage Loan (1) any Mortgage triggering the protections of HOEPA or (2) a “home loan”, “covered home loan” or “high-cost home loan” as defined
in the Georgia Fair Lending Act, as amended, “high cost home loan” under the New York Predatory Lending Law, codified as N.Y. Banking Law §6-1, N.Y. Gen. Bus. Law §771-a, and N.Y. Real Prop. Acts Law §1302 or in New York
City Ordinance 67-A, “high cost home loan” under North Carolina General Statutes Section 24-1.1E et seq., “high cost home loan” under Kentucky Revised Statutes §360.100 et seq. or “high-cost home loan” under
Arkansas Code of 1987 Annotated §23-53-101 et seq.; 
  
 (t)
“HOEPA”: The Home Ownership and Equity Protection Act of 1994, as amended; 
  
 (u) “Home Improvement Loan”, a home improvement retail installment sales contract that is secured by first or junior liens on one to four-family residential properties or by purchase money security interests
in the home improvements financed by such home improvement contract; 
  
 (v) “Income”, with respect to any Mortgage Loan at any time, any principal thereof then payable and all payments of interest and principal together with other distributions thereon or proceeds thereof; 
  
 (w) “Loan Schedule”, a schedule of Mortgage Loans identifying each
Mortgage Loan: (1) in the case of all Mortgage Loans, by Seller’s loan number, Mortgagor’s name and address (including the state and zip code) of the mortgaged property, whether such Mortgage Loan is a Dry Mortgage Loan or a Wet Mortgage
Loan, whether such Mortgage Loan bears a fixed or adjustable interest rate, the loan-to-value ratio, the outstanding principal amount as of a specified date, the initial interest rate borne by such Mortgage Loan, the original principal balance
thereof, the current scheduled monthly payment of principal and interest, the maturity of the related Note, the property type, the occupancy status, the appraised value, the original term to maturity and whether or not the Mortgage Loan (including
the related Note) has been modified; and (2) in the case of adjustable rate Mortgage Loans, the interest rate borne by such Mortgage Loan on the 
  

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 Purchase Date, the index and applicable determination date for each adjustment period, the gross margin, the payment
adjustment period (in months), months to next payment adjustment, periodic payment adjustment cap, lifetime payment adjustment cap, lifetime payment cap, interest rate adjustment, periodic interest adjustment cap and lifetime interest rate
adjustment cap; 
  
 (x) “Margin Deficit”, the meaning
specified in Section 4(a) hereof; 
  
 (y) “Market
Value”, with respect to any Mortgage Loans as of any date, the fair market value of such Mortgage Loans on such date as determined by Buyer in its reasonable business judgment from time to time and at such times as it may elect in its sole
discretion; provided, however, that a Market Value of zero shall be assigned to (i) any Mortgage Loan that has been delinquent for at least sixty (60) days, (ii) any Mortgage Loan that has been subject to this Agreement for more than
one hundred and eighty (180) days in aggregate, (iii) any Mortgage Loan with respect to which there has been a breach of the covenant set forth in Section 10(e)(ix) hereof, (iv) any Mortgage Loan with respect to which there is a breach of a
representation or warranty made by Seller in this Agreement or the Custodial Agreement that materially adversely affects Buyer’s interests hereunder or (v) any Wet Mortgage Loan that is subject to this Agreement or the Custodial Agreement for
more than the aggregate number of days provided herein without having become a Dry Mortgage Loan; 
  
 (z) “MERS”, Mortgage Electronic Registration Systems, Inc., a corporation organized and existing under the laws of the State of Delaware, or any
successor thereto; 
  
 (aa) “MERS Mortgage Loan”, means
any MOM Mortgage Loan or any other Mortgage Loan as to which MERS is (or is intended to be) the mortgagee of record and as to which a MIN has been assigned; 
  
 (bb) “MIN”, a MERS Mortgage Identification Number assigned to a Mortgage Loan in accordance with the MERS Procedures Manual; 
  
 (cc) “MLPA”, refers to that certain Mortgage Loan Purchase and
Interim Servicing Agreement, dated as of October 31, 2003, between EMC Mortgage Corporation and Buyer together with the related commitment letter from EMC Mortgage Corporation to Buyer, dated October 31, 2003, as the same shall be amended from time
to time; 
  
 (dd) “MOM Mortgage Loan”, means a Mortgage
Loan where the related Mortgage names MERS as the original mortgagee thereof, as to which a MIN has been assigned, and which Mortgage has not been assigned to any other person; 
  
 (ee) “Mortgage”, the mortgage, deed of trust or other instrument creating a first or second lien on an estate in
fee simple interest in real property securing a Note; 
  
 (ff)
“Mortgage Loan”, a first or second priority lien mortgage loan on single family residential property consisting of a Note secured by a Mortgage; 
  
 (gg) “Mortgagor”, the obligor on a Note; 
  

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 (hh) “Non-MERS Mortgage Loan”, any Mortgage Loan as to which MERS is not (and is not intended
to be) the mortgagee of record; 
  
 (ii) “Note”, the
Note or other evidence of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan; 
  
 (jj) “Originator”, New Century Mortgage Corporation; 
  
 (kk) “Price Differential”, with respect to any Transaction hereunder as of any date, the aggregate amount obtained by daily application of the
Pricing Rate for such Transaction to the Purchase Price for such Transaction on a 360 day per year basis for the actual number of days during the period commencing on (and including) the Purchase Date for such Transaction and ending on (but
excluding) the date of determination (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Transaction); 
  
 (ll) “Pricing Rate”, the per annum percentage rate for determination of the Price Differential, which rate shall be specified in the related
Request/Confirmation; 
  
 (mm) “Prime Rate”, the prime
rate of U.S. money center commercial banks as published in The Wall Street Journal; 
  
 (nn) “Purchase Date”, the date with respect to each Transaction on which Purchased Mortgage Loans are sold by Seller to Buyer hereunder; 
  
 (oo) “Purchase Price”, (i) on the Purchase Date, the price at which Purchased Mortgage Loans are sold by Seller to
Buyer hereunder, and (ii) thereafter, such price decreased by the amount of any funds transferred by Seller to Buyer pursuant to Section 4(a) hereof; 
  
 (pp) “Purchased Mortgage Loans”, the Mortgage Loans sold by Seller to Buyer in a Transaction hereunder, and any Mortgage Loans substituted
therefor in accordance with Section 9 hereof. The term “Purchased Mortgage Loans” with respect to any Transaction at any time also shall include Additional Purchased Mortgage Loans delivered pursuant to Section 4(a); 
  
 (qq) “Replacement Mortgage Loans”, the meaning specified in Section
11(e)(ii) hereof; 
  
 (rr) “Repurchase Date”, the date
on which Seller is to repurchase the Purchased Mortgage Loans from Buyer, including any date determined by application of the provisions of Sections 3(e) or 11 hereof; 
  
 (ss) “Repurchase Price”, the price at which Purchased Mortgage Loans are to be resold by Buyer to Seller upon
termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the Price Differential as of the date of such determination, increased by any amount determined
by the application of the provisions of Section 11 hereof; 
  

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 (tt) “Qualified Eligible Loan”, any Mortgage Loan which Buyer determines is an Eligible Loan,
and which Mortgage Loan has an outstanding principal balance and interest rate equal to or in excess of the Mortgage Loan that is being substituted; 
  
 (uu) “Request/Confirmation”, the request and confirmation substantially in the form of Exhibit A hereto delivered pursuant to Section 3 hereof;

  
 (vv) “Request for Wire”, the request to Buyer
substantially in the form of Exhibit B hereto delivered pursuant to Section 3 hereof; 
  
 (ww) “Sales Commitment”, Seller’s commitment to sell to Buyer or EMC Mortgage Corporation fifty percent (50%) of the aggregate outstanding principal amount of Eligible Loans which have been purchased by
Buyer in all Transactions, commencing with the initial Transaction entered into upon the signing of the Agreement; 
  
 (xx) “Servicer”, New Century Mortgage Corporation; 
  
 (yy) “Trade Commitment” shall refer to a trade confirmation or similar document from the Trade Investor to Seller confirming the details of a
mandatory forward trade or similar arrangement between the Trade Investor and Seller with respect to one or more Mortgage Loans; 
  
 (zz) “Trade Investor” shall refer to a securities dealer, financial institution or other entity, who has made a Trade Commitment. 
  
 (aaa) “Underwriting Guidelines” shall mean the written guidelines
of Seller as described in the MLPA; 
  
 (bbb)
“Transaction” shall have the meaning set forth in Section 1 of this Agreement. 
  
 (ccc) “Wet Mortgage Loan” shall have the meaning set forth in the Custodial Agreement. 
  
 3. Initiation; Request/Confirmation; Termination; Transactions Optional 
  

(a) Any agreement to enter into a Transaction shall be made in writing at the initiation of Seller. In the event that Seller desires to enter into a
Transaction hereunder, Seller shall give notice to Buyer via facsimile or telephone prior to 5:00 p.m., New York City time, on the Business Day prior to the proposed Purchase Date. In addition, Seller shall simultaneously deliver to Buyer a Request
for Wire executed by an authorized representative of Seller. 
  
 (b) In the event that Seller requires additional funds on a particular Purchase Date, Seller shall give Buyer notice of such request via facsimile or telephone no later than 3:30 p.m. New York City time on such Purchase Date. Seller shall
send Buyer a Request/Confirmation indicating the final amount of the Transaction for such Purchase Date no later than 5:00 p.m. New York City time on such Purchase Date. The Request/Confirmation shall be complete in every respect except for the
signature of an authorized representative of Buyer. Buyer shall, upon its receipt and approval thereof, promptly execute and return the signed Request/Confirmation to Seller. 
  

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 (c) The Request/Confirmation shall describe the Purchased Mortgage Loans in a manner satisfactory to
Buyer (which may be by attaching a Loan Schedule thereto), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price, (iii) the Repurchase Date, unless the Transaction is to be terminable on demand, (iv) the Pricing Rate
or Repurchase Price applicable to the Transaction, (v) whether the Mortgage Loan is a Wet Mortgage Loan or a Dry Mortgage Loan and (vi) any additional terms or conditions of the Transaction mutually agreeable to Buyer and Seller. 
  
 (d) Each Request/Confirmation shall be binding upon the parties hereto unless
written notice of objection is given by the objecting party to the other party promptly after Buyer has delivered the completed Request/Confirmation to Seller. 
  

(e) In the event of any conflict between the terms of a Request/Confirmation and this Agreement, such Request/Confirmation shall prevail. 

 
 (f) In the case of Transactions terminable upon demand, such demand shall
be made by Buyer or Seller, no later than such time as is customary in accordance with market practice, by telephone or otherwise on or prior to the Business Day on which such termination will be effective. On the date specified in such demand, or
on the date fixed for termination in the case of Transactions having a fixed term, termination of the Transaction will be effected by resale by Buyer to Seller or its agent of the Purchased Mortgage Loans and any Income in respect thereof received
by Buyer (and not previously credited or transferred to, or applied to the obligations of, Seller hereunder) against the transfer of the Repurchase Price to an account of Buyer. 
  
 (g) The adjustment mechanism and the index for any adjustable rate Mortgage Loan (in each case, an “Adjustment
Mechanism”) shall be one of the Adjustment Mechanisms set forth in the Underwriting Guidelines; provided, however, that Buyer may, on a prospective basis and in its sole discretion, refuse to fund Mortgage Loans having an
Adjustment Mechanism set forth in the Underwriting Guidelines by providing written notice of its decision to Seller, which notice shall be effective 60 days after the date thereof. 
  
 (h) Buyer may, in its sole discretion, reject any Mortgage Loan from inclusion in a Transaction hereunder for any reason;
provided, however, that, subject to the limitation set forth in Section 10(e)(xvii) herein, if Buyer determines that a Mortgage Loan is an Eligible Loan, Seller has otherwise complied with this Agreement and no Event of Default has
occurred and is continuing, Buyer shall be obligated to purchase such Eligible Loan in a Committed Transaction. 
  
 4. Margin Maintenance 
  
 (a) If at any time the aggregate Market Value of all Purchased Mortgage Loans subject to all Transactions hereunder is less than the aggregate
Buyer’s Margin Amount for all such Transactions (a “Margin Deficit”), then Buyer may by notice to Seller require Seller in such Transactions, at Buyer’s option, to transfer to Buyer cash or additional Mortgage Loans reasonably
acceptable to Buyer (“Additional Purchased Mortgage Loans”), so that the cash and aggregate Market Value of the Purchased Mortgage Loans, including any such Additional Purchased Mortgage Loans, will thereupon equal or exceed such aggregate
Buyer’s Margin 
  

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 Amount; provided, however, that no Additional Purchased Mortgage Loans may be Wet Mortgage Loans.

  
 (b) If the notice to be given by Buyer to Seller under
subparagraph (a) above is given at or prior to 10:00 a.m. New York city time on a Business Day, Seller shall transfer cash or Additional Purchased Mortgage Loans to Buyer prior to the close of business in New York City on the date of such notice,
and if such notice is given after 10:00 a.m. New York City time, Seller shall transfer cash or Additional Purchased Mortgage Loans prior to the close of business in New York City on the Business Day following the date of such notice. 
  
 (c) Any cash transferred pursuant to this Section shall be held by Buyer as
though it were Additional Purchased Mortgage Loans and, unless Buyer shall otherwise consent, shall not reduce the Repurchase Price of the related Transaction. 
  

5. Income Payments 
  
 Where a particular Transaction’s term extends over an Income payment date on the Mortgage Loans subject to that Transaction, all payments and
distributions, whether in cash or in kind, made on or with respect to the Purchased Mortgage Loans shall, unless otherwise mutually agreed by Buyer and Seller and so long as an Event of Default on the part of Seller shall not have occurred and be
continuing, be paid directly to Seller by the related Mortgagor. 
  
 6.
Security Interest 
  
 Although the parties intend that all
Transactions hereunder be sales and purchases and not loans, in the event any such Transactions are deemed to be loans, Seller shall be deemed to have pledged to Buyer as security for the performance by Seller of its obligations under each such
Transaction, and shall be deemed to have granted to Buyer a security interest in, all of the Purchased Mortgage Loans with respect to all Transactions hereunder and all proceeds thereof. Seller shall pay all fees and expenses associated with
perfecting such security interest including, without limitation, the cost of filing financing statements under the Uniform Commercial Code and recording assignments of mortgage as and when required by Buyer in its sole discretion. 
  
 7. Payment and Transfer 
  
 Unless otherwise mutually agreed, all transfers of funds hereunder shall be in immediately available funds. All Mortgage
Loans transferred by one party hereto to the other party shall be transferred by notice to the Custodian to the effect that the Custodian is now holding for the benefit of the transferee the related documents and assignment forms delivered to it
under the Custodial Agreement. 
  
 8. Segregation of Documents Relating to
Purchased Mortgage Loans 
  
 All documents relating to
Purchased Mortgage Loans in the possession of Seller shall be identified on the books and records of Seller as being subject to this Agreement. Ownership of all Purchased Mortgage Loans shall pass to Buyer and nothing in this Agreement shall
preclude Buyer from engaging in repurchase transactions with the Purchased Mortgage Loans or otherwise pledging or hypothecating the Purchased Mortgage Loans, but no such transaction 
  

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 shall relieve Buyer of its obligations to resell and transfer Purchased Mortgage Loans to Seller pursuant to the terms
hereof. 
  
 9. Substitution 
  
 Seller may, subject to acceptance by and upon notice to Buyer, substitute
Mortgage Loans substantially similar to the Purchased Loans for any Purchased Loans. If Seller gives notice to the Buyer at or prior to 12:30 p.m. New York City time on a Business Day, Buyer may elect, by the close of business on the Business Day
notice is received or by the close of the next Business Day if notice is given after 12:30 p.m. New York City time on such day, not to accept such substitution. In the event such substitution is accepted by Buyer, such substitution shall be made by
Seller’s transfer to Buyer of such other Loans and Buyer’s transfer to Seller of such Purchased Loans, and after such substitution, the substituted Loans shall be deemed to be Purchased Loans. In the event Buyer elects not to accept such
substitution, Buyer shall offer Seller the right to terminate the Transaction. Seller shall have the right at any time to substitute a Qualified Eligible Loan or Qualified Eligible Loans for another Eligible Loan or for other Eligible Loans and
Buyer shall not have the right to reject any such substitution. 
  
 In the event Seller exercises its right to terminate under this Section 9, Seller shall be obligated to pay to Buyer, by the close of the Business Day of such termination, as the case may be, an amount equal to the Breakage Fee. 

 
 10. Representations, Warranties and Covenants 
  
 (a) Buyer and Seller each represents and warrants, and shall on and as of
the Purchase Date of any Transaction be deemed to represent and warrant, to the other that: 
  
 (i) it is duly authorized to execute and deliver this Agreement, to enter into the Transactions contemplated hereunder and to perform its
obligations hereunder and has taken all necessary action to authorize such execution, delivery and performance; 
  
 (ii) it will engage in such Transactions as principal (or, if agreed in writing in advance of any Transaction by the other party hereto,
as agent for a disclosed principal); 
  
 (iii) the
person signing this Agreement on its behalf is duly authorized to do so on its behalf (or on behalf of any such disclosed principal); 
  
 (iv) it has obtained all authorizations of any governmental body required in connection with this Agreement and the Transactions hereunder
and such authorizations are in full force and effect; and 
  
 (v) the execution, delivery and performance of this Agreement and the Transactions hereunder will not violate in any material respect any law, ordinance, charter, by-law or rule applicable to it or any material
agreement by which it is bound or by which any of its assets are affected. 
  
 (b) Seller represents and warrants to Buyer, and shall on and as of the Purchase Date of any Transaction be deemed to represent and warrant, as follows: 
  

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 (i) The documents disclosed by Seller to Buyer pursuant to this Agreement are either
original documents or genuine and true copies thereof; 
  
 (ii) Seller, Originator and Guarantor are each a separate and independent corporate entity from the Custodian, none of Seller, Originator or Guarantor owns a controlling interest in the Custodian either directly or through affiliates and no
director or officer of any of them is also a director or officer of the Custodian; 
  
 (iii) None of the Purchase Price for any Mortgage Loan will be used by Seller either directly or indirectly to acquire any security, as
that term is defined in Regulation T of the Regulations of the Board of Governors of the Federal Reserve System, and Seller has not taken any action that might cause any Transaction to violate any regulation of the Federal Reserve Board; 

 
 (iv) Each Mortgage Loan was underwritten in accordance
with the Underwriting Guidelines and no change to the Underwriting Guidelines has occurred since the date of the last written revision to the Underwriting Guidelines was furnished to Buyer by Seller; 
  
 (v) Seller has purchased the Mortgage Loans from Originator
pursuant to a bill of sale, a copy of which has been provided to Buyer; 
  
 (vi) Seller shall be at the time it transfers to Buyer any Mortgage Loans for any Transaction the legal and beneficial owner of such Mortgage Loans, free of any lien, security interest, option or encumbrance;

  
 (vii) Each Trade Commitment is enforceable
again the related Trade Investor in accordance with its terms, subject to the effect of bankruptcy, insolvency or other laws affecting creditors generally and to equitable principles; 
  
 (viii) Seller used no selection procedures that identified the Mortgage Loans relating to a Transaction as
being less desirable or valuable than other comparable assets in Seller’s portfolio on the related Purchase Date; and 
  
 (ix) Each Transaction involving Mortgage Loans is entered into in contemplation of (i) the sale of the Mortgage Loans to a Trade Investor,
(ii) liquidation, sale or other disposition, or (iii) the issuance of asset backed securities. The parties intend that, in the case of clause (i) of the preceding sentence, the appropriate portion of the Cash Purchase Price relating to such Mortgage
Loans will be paid by the related Trade Investor directly to Buyer; provided, however, that Seller shall pay Buyer the excess of amounts due to Buyer by Seller with respect to the related Mortgage Loans over the amount received by
Buyer with respect to such Mortgage Loans and if the amount paid by the Trade Investor to Buyer exceeds the amount due Buyer from Seller with respect to such Mortgage Loans, such excess shall be paid by Buyer to Seller. 
  
 (c) Seller makes the representations and warranties set forth at Exhibit C
with respect to the Mortgage Loans included in the related Transaction as of the related Purchase Date. 
  

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 (d) Seller makes the representations and warranties set forth at Exhibit D with respect to the Mortgage
Loans included in all Transactions, as of each Purchase Date. 
  
 (e) Seller covenants with Buyer, from and after the date hereof, as follows: 
  
 (i) Seller shall immediately notify Buyer if an Event of Default shall have occurred; 
  
 (ii) Seller shall deliver to Buyer a current Loan Schedule
with respect to all Mortgage Loans subject to this Agreement with such frequency as Buyer may require but in no event less frequently than weekly; 
  
 (iii) No Mortgage Loan shall be subject to this Agreement for more than one hundred and eighty (180) days in aggregate; 
  
 (iv) The aggregate outstanding principal amount of Mortgage
Loans subject to the Agreement at any time that are Wet Mortgage Loans shall not exceed $100,000,000; 
  
 (v) Seller shall comply with all applicable provisions of the Custodial Agreement and the Underwriting Guidelines; 
  
 (vi) Seller shall promptly notify Buyer of (i) the
acceleration of any debt obligation or the termination of any credit facility of Seller, in each case in excess of $10,000,000; (ii) the amount and maturity of any such debt assumed after the date hereof; (iii) any adverse developments with respect
to pending or future litigation involving Seller or Guarantor where the amount in controversy is in excess of $1,000,000 and the case is reasonably likely to be decided against Seller or Guarantor, as applicable; and (iv) any other developments
(other than general economic conditions or developments affecting the mortgage industry generally that do not disproportionately affect Seller) which might materially and adversely affect the financial condition of Seller; 
  
 (vii) Each Trade Commitment shall be enforced against the
related Trade Investor, subject to the effect of bankruptcy, insolvency or other laws affecting creditors generally and to equitable principles; 
  
 (viii) Without Buyer’s express prior written approval, Seller shall not execute, in favor of any third party other than Buyer, any
assignment of rights held or purportedly held by Seller under a given Trade Commitment; 
  
 (ix) Seller shall cause each Trade Investor to pay the sales proceeds for, or return to the Custodian the documents relating to, each
Mortgage Loan delivered to such Trade Investor under a Bailee Letter within ten (10) days of the date of such Bailee Letter; 
  
 (x) With respect to Wet Mortgage Loans subject to this Agreement, Seller shall deliver the Mortgage Files no later than seven (7) Business
Days after the related Purchase Date; 
  

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 (xi) For each Mortgage Loan that is a Wet Mortgage Loan, Seller has obtained an insured
closing letter issued by a title insurance company effective not later than the closing date for such Mortgage Loan; 
  
 (xii) In the event that Buyer purchases a Mortgage Loan that is a Wet Mortgage Loan and the Wet Mortgage Loan is not originated by
Originator for any reason, Seller shall return the funds constituting the Purchase Price for such Wet Mortgage Loan via wire transfer within twenty four (24) hours after Seller’s failure to complete the Wet Mortgage Loan; 
  
 (xiii) For all Mortgage Loans with Mortgages that are
recorded into MERs, Seller agrees to take all actions necessary to cause MERs to provide to Buyer all reports that would customarily be provided to an Associate Member; 
  
 (xiv) Notwithstanding any provision of this Agreement or the Custodial Agreement to the contrary, any funds
distributed in accordance with the terms hereof and the Custodial Agreement for the funding of a Mortgage Loan through the Disbursement Account, shall constitute the Purchase Price for such Mortgage Loan; 
  
 (xv) Seller agrees to cause Guarantor to deliver, to Buyer a
Compliance Certificate, certifying Guarantor’s compliance with the Financial Covenants as of the end of the relevant reporting period, within 45 days after the end of each fiscal quarter of Guarantor or within five Business Days after a request
by Buyer during the term of this Agreement; 
  
 (xvi) Seller shall provide Buyer or its agents, with copies of all filings made by or on behalf of Guarantor or any entity that controls Guarantor, with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934,
as amended, promptly upon making such filings; 
  
 (xvii) The aggregate outstanding Purchase Price for all Transactions (which may be Committed Transactions) shall not exceed four hundred million dollars ($400,000,000); 
  
 (xviii) The aggregate outstanding Purchase Price for all Wet Mortgage Loans shall not exceed one hundred
million dollars ($100,000,000); 
  
 (xix) Seller
shall satisfy the terms of the Sales Commitment at all times; 
  
 (xx) In the event that the covenant set forth in Section 10(e)(xix) above is not satisfied by Seller, and Seller fails to satisfy the Sales Commitment within the next calendar month, then the Buyer’s Margin
Amount for the related Transaction shall be modified in a manner mutually agreeable to Buyer and Seller; and 
  
 (xxi) Seller shall provide Buyer with written notice of any material change that Seller has made to the Underwriting Guidelines and Buyer
shall have fifteen (15) days to determine whether such change is acceptable to Buyer in its reasonable business judgment; if Buyer, in its reasonable business judgment, determines that any such change 
  

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 to the Underwriting Guidelines is unacceptable to Buyer, then a new Pricing Rate for Mortgage Loans
originated under such change shall be determined by mutual agreement of Buyer and Seller or the Mortgage Loans originated under such change shall not be Eligible Loans. 
  

	11.    Events	of Default; Event of Termination 

  
 (a) The following events shall constitute events of default (each an “Event of Default”) hereunder with respect to Buyer or Seller, as
applicable: 
  
 (i) Seller fails to repurchase or
Buyer fails to transfer Purchased Mortgage Loans upon the applicable Repurchase Date pursuant to the terms hereof; 
  
 (ii) Seller or Buyer fails, after one (1) Business Day’s notice, to comply with Section 4 hereof; 
  
 (iii) An Act of Insolvency occurs with respect to Seller or
Buyer or any entity directly or indirectly controlling Seller or Buyer; 
  
 (iv) Any representation or warranty made by Seller or Buyer shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated; provided, however,
that in the case of representations and warranties made with respect to the Purchased Mortgage Loans, (including without limitation the representations and warranties contained in Exhibit C and Exhibit D hereto), such circumstance shall not
constitute an Event of Default if, after determining the Market Value of the Purchased Mortgage Loans without taking into account the Purchased Mortgage Loans with respect to which such circumstance has occurred, and after following the procedures
and time frames set forth in Section 4 hereof if any Margin Deficit exists following such Market Value determination, no other Event of Default shall have occurred and be continuing; 
  
 (v) Any covenant shall have been breached in any material respect and, other than with respect to a breach
of Seller’s obligation to pay any amounts owed under Sections 1, 3 and 4 of this Agreement or Seller’s obligation pursuant to Section 10(e)(x) herein, Seller fails to cure such breach within five (5) Business Days following the earlier of
(A) an officer of Seller discovering the existence of such breach or (B) receipt by Seller of notice from Buyer of the existence of such breach; provided, however, that in the case of covenants made with respect to the Purchased
Mortgage Loans (including Section 10(e)(x)), such circumstance shall not constitute an Event of Default if, after determining the Market Value of the Purchased Mortgage Loans without taking into account the Purchased Mortgage Loans with respect to
which such circumstance has occurred, and after following the procedures and time frames set forth in Section 4 hereof if any Margin Deficit exists following such Market Value determination, no other Event of Default shall have occurred and be
continuing; and provided further, that Seller’s breach of Section 10(e)(xix) herein shall not constitute an Event of Default but shall trigger the terms of Section 10(e)(xx) herein; 
  

 13 








 (vi) Buyer shall have reasonably determined that Seller is or will be unable to meet its
commitments under this Agreement, shall have notified Seller of such determination and Seller shall not have responded with appropriate information to the contrary to the satisfaction of Buyer within five (5) Business Days; 
  
 (vii) This Agreement shall for any reason cease to create a
valid, first priority security interest in any of the Purchased Mortgage Loans purported to be covered hereby; 
  
 (viii) A final, non-appealable judgment by any competent court in the United States of America for the payment of money in an amount of at
least $1,000,000 is rendered against Seller, and the same remains undischarged for a period of sixty (60) days; 
  
 (ix) Any event of default or any event which with notice, the passage of time or both shall constitute an event of default shall occur and
be continuing under any repurchase or other financing agreement for borrowed funds in excess of $10,000,000 or indenture for borrowed funds in excess of $10,000,000 by which Seller is bound or affected shall occur and be continuing; 
  
 (x) In the commercially reasonable judgment of Buyer a
material adverse change shall have occurred in the business, operations, properties, prospects or condition (financial or otherwise) of Seller; 
  
 (xi) Seller, Servicer or Guarantor shall be in default with respect to any normal and customary covenants under any debt contract or
agreement, any servicing agreement or any lease to which it is a party, which default could materially adversely affect the financial condition of Guarantor and its subsidiaries taken as a whole (which covenants include, but are not limited to, an
Act of Insolvency of Seller or the failure of Seller to make required payments under such contract or agreement as they become due); 
  
 (xii) Seller shall have failed to comply in any material respect with its obligations under the Custodial Agreement and, other than with
respect to a breach of Seller’s obligation pursuant to Section 10(e)(x) herein or Section 3(c) of the Custodial Agreement, Seller fails to cure such breach within five (5) Business Days following the earlier of (A) an officer of Seller
discovering the existence of such breach or (B) receipt by Seller of notice from Buyer of the existence of such breach; provided, however, that in the case of obligations with respect to the Purchased Mortgage Loans (including Section
10(e)(x) herein and Section 3(c) of the Custodial Agreement) such circumstance shall not constitute an Event of Default if, after determining the Market Value of the Purchased Mortgage Loans without taking into account the Purchased Mortgage Loans
with respect to which such circumstance has occurred, and after following the procedures and time frames set forth in Section 4 hereof if any Margin Deficit exists following such Market Value determination, no other Event of Default shall have
occurred and be continuing; 
  
 (xiii) The
Guaranty shall no longer be in full force and effect; 
  
 (xiv) An “Event of Default” (as such term is defined under the MLPA) shall have occurred under the MLPA with respect to Seller; or 
  

 14 








 (xv) If an Event of Default shall have occurred and be continuing, then, at the option of
the nondefaulting party, exercised by written notice to the defaulting party (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Act of Insolvency), the Repurchase Date for each
Transaction hereunder shall be deemed immediately to occur. 
  
 (b) In all Transactions in which the defaulting party is Seller, if Buyer is deemed to have exercised the option referred to in subparagraph (b) of this Section, (i) Seller’s obligations hereunder to repurchase all Purchased Mortgage
Loans in such Transactions shall thereupon become immediately due and payable, (ii) to the extent permitted by applicable law, the Repurchase Price with respect to each such Transaction shall be increased by the aggregate amount obtained by daily
application of (x) the greater of the Pricing Rate for such Transaction and the Prime Rate to (y) the Repurchase Price for such Transaction as of the Repurchase Date as determined pursuant to subparagraph (b) of this Section (decreased as of any day
by (A) any amounts retained by Buyer with respect to such Repurchase Price pursuant to clause (iii) of this subparagraph, (B) any proceeds from the sale of Purchased Mortgage Loans pursuant to subparagraph (e)(i) of this Section, and (C) any amounts
credited to the account of Seller pursuant to subparagraph (f) of this Section) on a 360 day per year basis for the actual number of days during the period from and including the date of the Event of Default giving rise to such option to but
excluding the date of payment of the Repurchase Price as so increased, (iii) all Income paid after such exercise or deemed exercise shall be payable to and retained by Buyer and applied to the aggregate unpaid Repurchase Prices owed by Seller, (iv)
in the event that Seller does not pay the Repurchase Price, Seller shall immediately deliver or cause the Custodian to deliver to Buyer any documents relating to Purchased Mortgage Loans subject to such Transactions then in Seller’s possession,
and (v) Seller shall be obligated to pay any related Breakage Fees. 
  
 (c) In all Transactions in which the defaulting party is Buyer, upon tender by Seller of payment of the aggregate Purchase Prices and accrued and unpaid Price Differentials for all such Transactions, Buyer’s right, title and interest
in all Purchased Mortgage Loans subject to such Transactions shall be deemed transferred to Seller, and Buyer shall deliver or cause the Custodian to deliver all documents relating to such Purchased Mortgage Loans to Seller. 
  
 (d) After one (1) Business Day’s notice to the defaulting party (which
notice need not be given if an Act of Insolvency shall have occurred, and which may be the notice given under subparagraph (b) of this Section or the notice referred to in clause (ii) of the first sentence of subparagraph (a) of this Section), the
nondefaulting party may: 
  
 (i) as to
Transactions in which the defaulting party is Seller, (A) immediately sell on a servicing released or servicing retained basis as Buyer deems desirable, in a recognized market at such price or prices as Buyer may in its sole discretion deem
satisfactory, any or all Purchased Mortgage Loans subject to such Transactions and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by Seller hereunder or (B) in its sole discretion elect, in lieu of
selling all or a portion of such Purchased Mortgage Loans, to give Seller credit for such Purchased Mortgage Loans in an amount equal to the Market Value therefor on such date against the aggregate unpaid Repurchase Prices and any other amounts
owing by Seller hereunder; and 

	

  

 15 








 (ii) as to Transactions in which the defaulting party is Buyer, (A) purchase mortgage
loans (“Replacement Mortgage Loans”) having substantially the same outstanding principal amount, maturity and interest rate as any Purchased Mortgage Loans that are not transferred by Buyer to Seller as required hereunder or (B) in its
sole discretion elect, in lieu of purchasing Replacement Mortgage Loans, to be deemed to have purchased Replacement Mortgage Loans at the price therefor on such date, calculated as the average of the prices obtained from three (3) nationally
recognized registered broker/dealers that buy and sell comparable mortgage loans in the secondary market. 
  
 (e) As to Transactions in which the defaulting party is Buyer, Buyer shall be liable to Seller (i) with respect to Purchased Mortgage Loans (other than
Additional Purchased Mortgage Loans), for any excess of the price paid (or deemed paid) by Seller for Replacement Mortgage Loans therefor over the Repurchase Price for such Purchased Mortgage Loans and (ii) with respect to Additional Purchased
Mortgage Loans, for the price paid (or deemed paid) by Seller for the Replacement Mortgage Loans therefor. In addition, Buyer shall be liable to Seller for interest on such remaining liability with respect to each such purchase (or deemed purchase)
of Replacement Mortgage Loans from the date of such purchase (or deemed purchase) until paid in full by Buyer. Such interest shall be at a rate equal to the greater of the Pricing Rate for such Transaction or the Prime Rate. Seller may, in the event
of a Buyer default, terminate this Agreement and shall not incur a Breakage Fee in connection with such termination. In the event that Seller exercises its right to terminate this Agreement, Seller shall provide Buyer with written notice of
termination specifying the date the Agreement shall terminate, which date of termination shall be not less than one (1) Business Day following the date of the written notice. The date of termination specified in such written notice shall be deemed
to be the Repurchase Date for all Transactions. 
  
 (f) For
purposes of this Section 11, the Repurchase Price for each Transaction hereunder in respect of which the defaulting party is Buyer shall not increase above the amount of such Repurchase Price for such Transaction determined as of the date of the
exercise or deemed exercise by Seller of its option under subparagraph (b) of this Section 11. 
  
 (g) The defaulting party shall be liable to the nondefaulting party for the amount of all reasonable legal or other expenses incurred by the nondefaulting party in connection with or as a consequence of an Event of
Default, together with interest thereon at a rate equal to the greater of the Pricing Rate for the relevant Transaction or the Prime Rate. Expenses incurred in connection with an Event of Default shall include without limitation those costs and
expenses incurred by the nondefaulting party as a result of the early termination of any repurchase agreement or reverse repurchase agreement entered into by the nondefaulting party in connection with the Transaction then in default. 
  
 (h) The nondefaulting party shall have, in addition to its rights hereunder,
any rights otherwise available to it under any other agreement or applicable law. 
  

 16 








 (i) At the option of Buyer, exercised by written notice to Seller, the Repurchase Date for any or all
Transactions shall be deemed to occur sixty (60) days after the date of such notice in the event that the senior debt obligations or short-term debt obligations of Bear Stearns & Co. Inc. shall be rated below the four highest generic grades
(without regard to any pluses or minuses reflecting gradations within such generic grades) by any nationally recognized statistical rating organization. 
  
 (j) The exercise by any party of remedies after the occurrence of an Event of Default shall be conducted in a commercially reasonable manner. 

 
 (k) Buyer, at its option, may terminate this Agreement and all outstanding
Transactions prior to the Termination Date, and in such case all outstanding Transactions shall terminate (subject to the notice requirement set forth in Section 11(m) below) upon the occurrence of any one of the following Events of Termination:

  
 (i) Buyer shall have reasonably determined
that Seller or Guarantor is or will be unable to meet its commitments under this Agreement or the Guaranty, shall have notified Seller of such determination and Seller shall not have responded or caused the Guarantor to respond with appropriate
information to the contrary to the satisfaction of Buyer within five (5) Business Days; 
  
 (ii) A material adverse change shall have occurred in the business, operations, properties, prospects or condition (financial or
otherwise) of Seller or Guarantor; 
  
 (iii) Any
event of default or any event which with notice, the passage of time or both shall constitute an event of default shall occur and be continuing under any repurchase or other financing agreement for borrowed funds in excess of $10,000,000 or
indenture for borrowed funds in excess of $10,000,000 by which Seller or Guarantor is bound shall occur and be continuing; 
  
 (iv) Guarantor shall have terminated the Guarantee in accordance with its provisions and a replacement guarantor satisfactory to the Buyer
has not been appointed; or 
  
 (v) Guarantor
shall have failed to comply with the Financial Covenants. 
  
 (l)
If Buyer exercises its right to terminate this Agreement pursuant to Section 11(l) hereof, Buyer shall provide Seller with written notice of termination specifying the date the Agreement shall terminate, which date of termination shall be not less
than one (1) Business Day following the date of the written notice. The date of termination specified in such written notice shall be deemed to be the Repurchase Date for all Transactions. 
  

	12.	Servicing of the Purchased Mortgage Loans 

  
 (a) The parties hereto agree and acknowledge that, notwithstanding the purchase and sale of the Purchased Mortgage Loans contemplated hereby, Seller shall
service the Purchased Mortgage Loans for the benefit of Buyer and, if Buyer shall exercise its rights to sell the Purchased Mortgage Loans pursuant to this Agreement prior to the related Repurchase Date, 
  

 17 








 Buyer’s assigns; provided, however, that the obligation of Servicer to service Purchased Mortgage
Loans for the benefit of Buyer as aforesaid shall cease upon the payment to Buyer of the Repurchase Price therefor. 
  
 (b) Servicer shall service and administer the Purchased Mortgage Loans and shall have full power and authority, acting alone, to do any and all things in
connection with such servicing which Servicer may deem necessary or desirable and consistent with the terms of this Agreement, and shall retain all principal prepayments and Income received by Servicer with respect to such Purchased Mortgage Loans
pursuant to the terms hereof. Servicer, in administering and servicing the Purchased Mortgage Loans, shall employ procedures (including collection procedures) and exercise the same care it customarily employs and exercises in servicing and
administering mortgage loans for its own account, in accordance with accepted mortgage loan servicing practices of prudent mortgage lending institutions servicing mortgage loans that are similar to the Purchased Mortgage Loans and giving due
consideration to Buyer’s reliance on Servicer. Servicer will provide Buyer with monthly reports, substantially identical in form to FNMA’s standard form of remittance report with respect to all Purchased Mortgage Loans then involved in any
Transaction hereunder. 
  
 (c) Buyer may, in its sole discretion
if an Event of Default shall have occurred and be continuing, without payment of any termination fee or any other amount to Seller, (i) sell the Mortgage Loans in accordance with the terms hereof or (ii) terminate Servicer as the servicer of the
Purchased Mortgage Loans with or without cause without the imposition of a termination fee. 
  

	13.	Single Agreement 

  
 Buyer and Seller acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the
fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, each of Buyer and Seller agrees (i) to perform all of its obligations in respect of each
Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by
them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (iii) that payments, deliveries and other transfers made by either of them in respect of any Transaction shall be deemed to have
been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted.

  

	14.	Notices and Other Communications 

  
 Except as otherwise expressly provided herein, all such notices or communications shall be in writing (including, without limitation, telegraphic,
facsimile or telex communication) or confirmed in writing and such notices and other communications shall, when mailed, sent by overnight courier, hand-delivered, telegraphed, communicated by facsimile transmission or telexed, be effective when
received at the address for notices for the party to whom such notice or communications is to be given as follows: 
  

 18 








 if to Seller: 
  

NC Capital Corporation 
 18400 Von Karman 
 Suite 1000 
 Irvine, California 92612 
 Attention: Rick Holguin 
 Telephone: (949) 250-5143 
 Telecopy: (949) 224-5750 
  
 if to Buyer: 
  
 Bear Stearns Mortgage Capital Corporation 
 383 Madison Avenue 
 New York, New York 10179 
 Attention: Eileen Albus 
 Telephone: (212) 272-7502 
 Telecopy: (212) 272-2053 
  
 Notwithstanding the foregoing, however, that a facsimile transmission shall
be deemed to be received when transmitted so long as the transmitting machine has provided an electronic confirmation of such transmission, and provided further, however, that all financial statements delivered shall be
hand-delivered or sent by overnight delivery or first-class mail. Either party may revise any information relating to it by notice in writing to the other party, which notice shall be effective on the third business day following receipt thereof.

  

	15.	Payment of Expenses 

  
 Seller shall pay on demand all fees and expenses (including, without limitation, the fees and expenses for legal services of any kind whatsoever) incurred
by Buyer or the Custodian in connection with this Agreement and the Custodial Agreement and the transactions contemplated hereby and thereby, whether or not any Transactions are entered into hereunder, including, by way of illustration and not by
way of limitation, the fees and expenses incurred in connection with (i) the preparation, reproduction and distribution of this Agreement and the Custodial Agreement and any opinions of counsel, certificates of officers or other documents
contemplated by the aforementioned agreements and (ii) any Transaction under this Agreement; provided, however, that Seller shall not be required to pay the fees and expenses of Buyer incurred as a result of Buyer’s default under
this Agreement. The obligation of Seller to pay such fees and expenses incurred prior to or in connection with the termination of this Agreement shall survive the termination of this Agreement. 
  

	16.	Opinions of Counsel 

  
 Seller shall, on the Purchase Date of the first Transaction hereunder and, upon the request of Buyer, on the Purchase Date of any subsequent Transaction,
cause to be delivered to Buyer, with reliance thereon permitted as to any person or entity that purchases the Mortgage Loans from Buyer in a repurchase transaction, a favorable opinion of counsel with respect to the matters set forth in Exhibit C
and Exhibit D hereto, in form and substance acceptable to Buyer and its counsel. 
  

 19 









	17.	Further Assurances; Additional Information 

  
 (a) Seller shall promptly provide such further assurances or agreements as Buyer may request in order to effect the purposes of this Agreement.

  
 (b) At any reasonable time, Seller shall permit Buyer, its
agents or attorneys, to inspect and copy any and all documents and data in its possession pertaining to each Purchased Mortgage Loan that is the subject of such Transaction. Such inspection shall occur upon the request of Buyer at a mutually
agreeable location during regular business hours and if no Event of Default has occurred on a date not more than five (5) Business Days after the date of such request. If an Event of Default has occurred, such inspection shall occur on a date not
later than one (1) Business Day after the date of such request. 
  
 (c) Seller agrees to provide Buyer or its agents, from time to time, with such information concerning Seller of a financial or operational nature as Buyer may reasonably request. 
  
 (d) Amounts advanced in connection with Transactions under this Agreement shall first be deemed to be Committed Transactions
until the limitation on the aggregate outstanding Purchase Price for Committed Transactions as provided in Section 10(e)(xix) is reached. 
  

	18.	Buyer as Attorney-in-Fact 

  
 Buyer is hereby appointed the attorney-in-fact of Seller for the purpose of carrying out the provisions of this Agreement and taking any action and
executing any instruments that Buyer may deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, Buyer shall
have the right and power during the occurrence and continuation of any Event of Default to receive, endorse and collect all checks made payable to the order of Seller representing any payment on account of the principal of or interest on any of the
Purchased Mortgage Loans and to give full discharge for the same. 
  

	19.	Wire Instructions 

  
 (a) Any amounts to be transferred by Buyer to Seller hereunder shall be sent by wire transfer in immediately available funds to the account of Seller at:

  
 Deutsche Bank National Trust Company

 Acct.: 0424-583 
 ABA No.: 021-001-033 
 Name: New Century Mortgage 
  
 (b) Any amounts to be transferred by Seller to Buyer hereunder shall be sent
by wire transfer in immediately available funds to the account of Buyer at: 
  

 20 








 FNB Chicago/Bear Stearns MBS 
 Acct.: 071-000-013 
 ABA No.: 5801230 
 Attn: Eileen Albus 
  
 (c) Amounts received after 3:30 p.m., New York City time, on any Business Day
shall be deemed to have been paid and received on the next succeeding Business Day. 
  
 20.    Entire Agreement; Severability 
  
 This Agreement shall supersede any existing agreements between the parties containing general terms and conditions for repurchase transactions. Each provision and agreement herein shall be treated as separate and
independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement. 
  

21.    Non-assignability; Termination 
  
 (a) The rights and obligations of the parties under this Agreement and under any Transaction shall not be assigned by either party without the prior
written consent of the other party; provided, however, that Buyer may assign all of its rights under this Agreement, any Transaction or the Guaranty to its affiliates without the consent of Seller or Guarantor. Subject to the foregoing, this
Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. 
  
 (b) This Agreement and all Transactions outstanding hereunder shall terminate automatically without any requirement for notice on the date occurring three
hundred and sixty-four (364) days after the date as of which this Agreement is entered into; provided, however, that this Agreement and any Transaction outstanding hereunder may be extended by mutual agreement of Buyer and Seller; and provided
further, however, that no such party shall be obligated to agree to such an extension. 
  
 22.    Counterparts 
  
 This
Agreement may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and such counterparts shall constitute but one and the same instrument. 
  
 23.    Governing Law 
  
 This Agreement shall be governed by the laws of the State of New York without
giving effect to the conflict of law principles thereof. 
  
 24.    No Waivers, Etc. 
  
 No
express or implied waiver of any Event of Default by either party shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a waiver of its right to exercise any other remedy
hereunder. No modification or 
  

 21 








 waiver of any provision of this Agreement and no consent by any party to a departure herefrom shall be effective unless
and until such shall be in writing and duly executed by both of the parties hereto. Without limitation on any of the foregoing, the failure to give a notice pursuant to subparagraph 4(a) hereof will not constitute a waiver of any right to do so at a
later date. 
  
 25.    Use of Employee Plan Assets

  
 (a) If assets of an employee benefit plan subject to any
provision of the Employee Retirement Income Security Act of 1974 (“ERISA”) are intended to be used by either party hereto (the “Plan Party”) in a Transaction, the Plan Party shall so notify the other party prior to the
Transaction. The Plan Party shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall
not be required so to proceed. 
  
 (b) Subject to the last
sentence of subparagraph (a) of this Section, any such Transaction shall proceed only if Seller furnishes or has furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited
statement of its financial condition. 
  
 (c) By entering into a
Transaction pursuant to this Section, Seller shall be deemed (i) to represent to Buyer that since the date of Seller’s latest such financial statements, there has been no material adverse change in Seller’s financial condition which Seller
has not disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial condition as they are issued, so long as it is a Seller in any outstanding Transaction involving a Plan Party. 

 
 26.    Intent 
  
 (a) The parties intend and acknowledge that each Transaction is a
“repurchase agreement” as that term is defined in Section 101 of Title 11 of the United States Code, as amended (except insofar as the type of Mortgage Loans subject to such Transaction or the term of such Transaction would render such
definition inapplicable), and a “securities contract” as that term is defined in Section 741 of Title 11 of the United States Code, as amended. 
  
 (b) It is understood that either party’s right to liquidate Mortgage Loans delivered to it in connection with Transactions hereunder or to exercise
any other remedies pursuant to Section 11 hereof, is a contractual right to liquidate such Transaction as described in Sections 555 and 559 of Title 11 of the United States Code, as amended. 
  
 27.    Disclosure Relating to Certain Federal Protections

  
 The parties acknowledge that they have been advised that:

  
 (a) in the case of Transactions in which one of the parties is
a broker or dealer registered with the Securities and Exchange Commission (“SEC”) under Section 15 of the Securities Exchange Act of 1934 (“1934 Act”), the Securities Investor Protection Corporation has taken the position that
the provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other party with respect to any Transaction hereunder; 
  

 22 








 (b) in the case of Transactions in which one of the parties is a government securities broker or a
government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and 
  
 (c) in the case of Transactions in which one of the parties is a financial institution, funds held by the financial
institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation or the National Credit Union Share Insurance Fund, as
applicable. 
  

 23 









	 BEAR STEARNS MORTGAGE CAPITAL CORPORATION
  
	 	 	 	 NC CAPITAL CORPORATION

					
	By	 	/s/    Paul Friedman        	 	 	 	By	 	/s/    Kevin Cloyd        
	 	
	 	 	 	 	

					
	Title	 	Senior Vice President        	 	 	 	Title	 	President        
	 	
	 	 	 	 	

					
	Date	 	October 31, 2003        	 	 	 	Date	 	October 31, 2003        
	 	
	 	 	 	 	


  
 New Century Mortgage Corporation, in
its 
 capacity as Servicer hereunder, hereby acknowledges 
 and
agrees to the provision of Section 12(c)(ii) of the 
 Agreement. 
  

	 NEW CENTURY MORTGAGE CORPORATION
  
	 	 	 	 
					
	By	 	/s/    Kevin Cloyd        	 	 	 	 	 	 
	 	
	 	 	 	 	 	 
					
	Title	 	Senior Vice President        	 	 	 	 	 	 
	 	
	 	 	 	 	 	 
					
	Date	 	October 31, 2003        	 	 	 	 	 	 
	 	
	 	 	 	 	 	 

  

 24 








 EXHIBIT A 
  
 REQUEST/CONFIRMATION 
  

	TO:	NC Capital Corporation  

 18400 Von Karman
 
 Suite 1000  
 Irvine, California 92612  
 Attention: Rick Holguin 
  

	FROM:	Bear Stearns Mortgage Capital Corporation 

  

	RE:	Request/Confirmation under Master Repurchase Agreement, dated as of October 31, 2003, between Bear Stearns Mortgage Capital Corporation and NC Capital Corporation


  
 Bear Stearns Mortgage Capital Corporation (“Buyer”) is
pleased to confirm your sale and its purchase of the Mortgage Loans described below and listed on the attached Loan Schedule pursuant to the above-referenced Master Repurchase Agreement under the following terms and conditions: 
  

	 	  	Additional        	  	 	  	Aggregate        
	 ORIG. PRINCIPAL AMOUNT OF MORTGAGE LOANS:
	  	 	  	 	  	 
	 	
	 	 	

	 CURRENT PRINCIPAL AMOUNT OF MORTGAGE LOANS:
	  	 	  	 	  	 
	 	
	 	 	

	 PURCHASE DATE:
	  	 	  	 	  	 
	 	
	 	 	

	 REPURCHASE DATE:
	  	 	  	 	  	 
	 	
	 	 	

	 PURCHASE PRICE:
	  	 	  	 	  	 
	 	
	 	 	

	 PRICING RATE:
	  	 	  	 	  	 
	 	
	 	 	

	 MINIMUM REQUIRED MARGIN PERCENTAGE:
	  	 	  	 	  	 
	 	
	 	 	

	 PRICE DIFFERENTIAL DUE DATE:
	  	 	  	 	  	 
	 	
	 	 	

	 PRINCIPAL AMOUNT OF WET MORTGAGE LOANS
	  	 	  	 	  	 
	 	
	 	 	


  

 A-1 








 The Master Repurchase Agreement is incorporated by reference into this Request/Confirmation and made a part hereof as if
it were fully set forth herein. All capitalized terms used herein but not otherwise defined shall have the meanings specified in the Master Repurchase Agreement. 
  

	 BEAR STEARNS MORTGAGE CAPITAL
 CORPORATION

		
	BY:	 	 
	 	

		
	NAME:	 	 
	 	

		
	TITLE:	 	 
	 	



  

 A-2 








 EXHIBIT B 
  

REQUEST FOR WIRE 
  

	FROM:	 	Bear Stearns Mortgage Capital Corporation 

  

	TO:	 	NC Capital Corporation 


	 	 	18400 Von Karman 


	 	 	Suite 1000 


	 	 	Irvine, California 92612 


	 	 	Attention: Rick Holguin 

  

	RE:	 	Request for Wire under Master Repurchase Agreement, dated as of October 31, 2003, between Bear Stearns Mortgage Capital Corporation and NC Capital Corporation


  
 NC Capital Corporation, as seller under the above-referenced
repurchase agreement (the “Seller”), hereby notifies Bear Stearns Mortgage Capital Corporation (the “Buyer”) that Seller intends to enter into a Transaction on [Purchase Date]. Accordingly, please deliver
[$            ] to Deutsche Bank National Trust Company via wire to the following account: 
  
 [account information to be supplied by Deutsche Bank] 
  
 Seller hereby agrees to deliver to Buyer an executed Request/Confirmation no later than 5:00 p.m. on the Purchase Date. The Master Repurchase Agreement is
incorporated by reference into this Request for Wire and made a part hereof as if it were fully set forth herein. All capitalized terms used herein but not otherwise defined shall have the meanings specified in the Master Repurchase Agreement.

  

	 NC CAPITAL CORPORATION

		
	By:	 	 
	 	

	 	 	 Name:
 Title:



  

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 EXHIBIT C 
  

REPRESENTATIONS AND WARRANTIES 
 RELATING TO THE PURCHASED MORTGAGE LOANS 
  
 (i)
The information with respect to each Mortgage Loan set forth in the related Loan Schedule is true and correct; 
  
 (ii) All documentation required to be delivered to the Custodian under the Custodial Agreement has been so delivered; 
  
 (iii) Each Purchased Mortgage Loan is a Mortgage; 
  
 (iv) Each mortgaged property is improved by a single (one-to-four) family
residential dwelling; 
  
 (v) Each Purchased Mortgage Loan is
being serviced by Seller in accordance with the terms of this Agreement; 
  
 (vi) The Note related to each Purchased Mortgage Loan bears a fixed or adjustable interest rate; 
  
 (vii) Each Mortgage is a valid and subsisting first or second lien of record (or is in the process of being recorded) on the mortgaged property subject in
the case of any second-lien Mortgage Loan only to a single senior lien on such mortgaged property and subject in all cases to the exceptions to title set forth in the title insurance policy or attorney’s opinion of title, with respect to the
related Mortgage Loan, which exceptions are generally acceptable to banking institutions in connection with their regular mortgage lending activities, and such other exceptions to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the benefits of the security intended to be provided by such Mortgage; 
  
 (viii) Immediately prior to the transfer and assignment of the Mortgage Loans by Seller to Buyer as contemplated by this Agreement, Seller held good and
indefeasible title to, and was the sole owner of, each Mortgage Loan (including the related Note) and each Mortgage Loan (including the related Note) will be conveyed by Seller to Buyer subject to no liens, charges, mortgages, encumbrances or rights
of others except as set forth in clause (vii) or other liens which will be released simultaneously with such transfer and assignment; 
  
 (ix) No Purchased Mortgage Loan is thirty (30) days or more delinquent; 
  
 (x) There is no delinquent tax or assessment lien on any mortgaged property, and each mortgaged property is free of
substantial damage and is in good repair; 
  
 (xi) There is no
valid and enforceable offset, defense or counterclaim to any Note or Mortgage, including the obligation of the related Mortgagor to pay the unpaid principal of or interest on such Note; 
  

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 (xii) There is no mechanics’ lien or claim for work, labor or material affecting any mortgaged
property which is or may be a lien prior to, or equal with, the lien of the related Mortgage except those which are insured against by any title insurance policy referred to in subparagraph (xvi) below; 
  
 (xiii) Each Purchased Mortgage Loan at the time it was made complied in all
material respects with applicable state and federal laws and regulations, including, without limitation, the federal Truth-in-Lending Act (including the Riegle Community Development Act of 1994) and other consumer protection laws, usury, equal
credit opportunity, disclosure and recording laws; 
  
 (xiv) With
respect to each Purchased Mortgage Loan either (a) an attorney’s opinion of title has been obtained but no title policy has been obtained or (b) a lender’s title insurance policy, issued in standard American Land Title Association form by
a title insurance company authorized to transact business in the state in which the related mortgaged property is situated, in an amount at least equal to the original balance of such Purchased Mortgage Loan together, in the case of a second-lien
Mortgage Loan, with the then-original principal amount of the mortgage note relating to the senior lien, insuring the mortgagee’s interest under the related Mortgage Loan as the holder of a valid first or second mortgage lien of record on the
real mortgaged property described in the related Mortgage, as the case may be, subject only to exceptions of the character referred to in paragraph (ix) above, was effective on the date of the origination of such Mortgage Loan, and such policy is
valid and thereafter such policy shall continue in full force and effect; 
  
 (xv) The improvements upon each mortgaged property are covered by a valid and existing hazard insurance policy with a carrier generally acceptable to Seller that provides for fire and extended coverage representing
coverage not less than the least of (A) the outstanding principal balance of the related Purchased Mortgage Loan (together, in the case of a second-lien Mortgage Loan, with the outstanding principal balance of the senior lien), (B) the minimum
amount required to compensate for damage or loss on a replacement cost basis or (C) the full insurable value of the mortgaged property; 
  
 (xvi) If any mortgaged property is in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy in a form meeting the requirements of the current guidelines of the Flood Insurance Administration is in effect with respect to such mortgaged property with a carrier generally acceptable to Seller in an amount
representing coverage not less than the least of (A) the outstanding principal balance of the related Purchased Mortgage Loan (together, in the case of a second-lien Mortgage Loan, with the outstanding principal balance of the senior lien), (B) the
minimum amount required to compensate for damage or loss on a replacement cost basis or (C) the maximum amount of insurance that is available under the Flood Disaster Protection Act of 1973; 
  
 (xvii) Each Mortgage and Note is the legal, valid and binding obligation of
the maker thereof and is enforceable in accordance with its terms, except only as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights
generally and by general principles of equity (whether considered in a proceeding or action in equity or at law), and all parties to each Purchased Mortgage Loan had full legal capacity to execute all documents relating to such Mortgage Loan and
convey the estate therein purported to be conveyed; 
  

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 (xviii) Seller has caused and will cause to be performed any and all acts required to be performed to
preserve the rights and remedies of Buyer in any insurance policies applicable to any Purchased Mortgage Loans transferred by Seller including, without limitation, any necessary notifications of insurers, assignments of policies or interests
therein, and establishments of co-insured, joint loss payee and mortgagee rights in favor of Buyer; 
  
 (xix) Each original Mortgage was recorded or is in the process of being recorded in the appropriate jurisdictions wherein such recordation is necessary to
perfect the lien thereof as against creditors of or purchasers from Seller; 
  
 (xx) The terms of each Note and each Mortgage have not been impaired, altered or modified in any respect, except by a written instrument which has been recorded, if necessary, to protect the interest of Buyer and
which has been delivered to the Custodian. The substance of any such alteration or modification is reflected on the related Loan Schedule; 
  
 (xxi) The proceeds of each Purchased Mortgage Loan have been fully disbursed, and there is no obligation on the part of the mortgagee to make future
advances thereunder; any and all requirements as to completion of any on-site or off-site improvements and as to disbursements of any escrow funds therefor have been complied with; all costs, fees and expenses incurred in making or closing or
recording such Mortgage Loans were paid; 
  
 (xxii) The related
Note is not and has not been secured by any collateral, pledged account or other security except the lien of the corresponding Mortgage; 
  
 (xxiii) No Purchased Mortgage Loan has a shared appreciation feature, or other contingent interest feature; 
  
 (xxiv) Each mortgaged property is located in the state identified in the
respective Loan Schedule and consists of one or more parcels of real mortgaged property with a residential dwelling erected thereon; 
  
 (xxv) Each Mortgage contains a provision for the acceleration of the payment of the unpaid principal balance of the related Purchased Mortgage Loan in the
event the related mortgaged property is sold without the prior consent of the mortgagee thereunder; 
  
 (xxvi) Any advances made after the date of origination of a Purchased Mortgage Loan have been consolidated with the outstanding principal amount secured
by the related Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term reflected on the respective Loan Schedule; the consolidated principal amount does not exceed the original principal
amount of the related Purchased Mortgage Loan; no Note permits or obligates Seller to make future advances to the related Mortgagor at the option of the Mortgagor; 
  

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 (xxvii) There is no proceeding pending or threatened for the total or partial condemnation of any
mortgaged property, nor is such a proceeding currently occurring, and each mortgaged property is undamaged by waste, fire, water, flood, earthquake or earth movement; 
  
 (xxviii) All of the improvements which were included for the purposes of determining the appraised value of any mortgaged
property lie wholly within the boundaries and building restriction lines of such mortgaged property, and no improvements on adjoining properties encroach upon such mortgaged property, and are stated in the title insurance policy and affirmatively
insured; 
  
 (xxix) No improvement located on or being part of any
mortgaged property is in violation of any applicable zoning law or regulation; all inspections, licenses and certificates required to be made or issued with respect to all occupied portions of each mortgaged property and, with respect to the use and
occupancy of the same, including but not limited to certificates of occupancy and fire underwriting certificates, have been made or obtained from the appropriate authorities and such mortgaged property is lawfully occupied under the applicable law;

  
 (xxx) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in such Mortgage, and no fees or expenses are or will become payable by the owner of the Mortgage Loan to the
trustee under the deed of trust, except in connection with a trustee’s sale after default by the related Mortgagor; 
  
 (xxxi) Each Mortgage contains customary and enforceable provisions which render the rights and remedies of the holder thereof adequate for the realization
against the related mortgaged property of the benefits of the security, including (A) in the case of a Mortgage designated as a deed of trust, by trustee’s sale and (B) otherwise by judicial foreclosure. There is no homestead or other exemption
other than any applicable Mortgagor redemption rights available to the related Mortgagor which would materially interfere with the right to sell the related mortgaged property at a trustee’s sale or the right to foreclose the related Mortgage;

  
 (xxxii) Except with respect to the period of delinquency
contemplated in clause (x) above, there is no default, breach, violation or event of acceleration existing under any Mortgage or the related Note and no event which, with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of acceleration; and Seller has not waived any default, breach, violation or event of acceleration; 
  
 (xxxiii) No instrument of release or waiver has been executed in connection with any Purchased Mortgage Loan, and no
Mortgagor has been released, in whole or in part, except in connection with an assumption agreement which has been approved by the primary mortgage guaranty insurer, if any, and which has been delivered to the Custodian; 
  
 (xxxiv) Each Purchased Mortgage Loan was originated based upon a full
appraisal, which included an interior inspection of the subject mortgaged property; 
  
 (xxxv) There do not exist any hazardous substances, hazard wastes or solid wastes, as such terms are defined in the Comprehensive Environmental Response Compensation and Liability Act, the Resource Conservation and
Recovery Act of 1976, or other federal, state or local environmental legislation on the mortgaged property securing any Purchased Mortgage Loan; 
  

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 (xxxvi) Originator is properly licensed or otherwise authorized, to the extent required by applicable
law, to originate each Purchased Mortgage Loan; and the consummation of the transactions herein contemplated, including, without limitation, the ownership of the Purchased Mortgage Loans by Buyer will not involve the violation of such laws;

  
 (xxxvii) Seller is properly licensed or otherwise authorized,
to the extent required by applicable law, to purchase each Purchased Mortgage Loan; and the consummation of the transactions herein contemplated, including, without limitation, the ownership of the Purchased Mortgage Loans by Buyer will not involve
the violation of such laws; 
  
 (xxxviii) With respect to each
mortgaged property subject to a ground lease (i) the current ground lessor has been identified and all ground rents which have previously become due and owing have been paid; (ii) the ground lease term extends, or is automatically renewable, for at
least five (5) years beyond the maturity date of the related Purchased Mortgage Loan; (iii) the ground lease has been duly executed and recorded; (iv) the amount of the ground rent and any increases therein are clearly identified in the lease and
are for predetermined amounts at predetermined times; (v) the ground rent payment is included in the mortgagor’s monthly payment as an expense item in determining the qualification of the mortgagor for such Mortgage Loan; (vi) Buyer has the
right to cure defaults on the ground lease; and (vii) the terms and conditions of the leasehold do not prevent the free and absolute marketability of the mortgaged property. The outstanding principal balance of Purchased Mortgage Loans with related
mortgaged properties subject to ground leases does not exceed 5% of the aggregate original outstanding principal balance of the Purchased Mortgage Loans; 
  
 (xxxix) Seller has not received a notice of default of any first-lien Mortgage Loan secured by any mortgaged property which has not been cured by a party
other than Seller; 
  
 (xl) No Purchased Mortgage Loan is subject
to a temporary rate reduction pursuant to a buydown program; 
  
 (xli) The interest rate on each Purchased Mortgage Loan is calculated on the basis of a year of 360 days with twelve 30-day months; 
  
 (xlii) No Purchased Mortgage Loan is a High-Cost Loan; 
  
 (xliii) For all Mortgage Loans with Mortgages that are recorded into MERS, Buyer will be treated as an associate investor; 
  
 (xliv) For each Mortgage Loan that is designated by Seller as a
“Non-MERS Mortgage Loan” that Seller intends to convert to a MERS Mortgage Loan, the Buyer will be treated as an associate investor within one (1) Business Day after Seller’s designation of such Purchased Mortgage Loan as a MERS
Mortgage Loan; and 
  
 (xlv) No Mortgage Loan is a Home
Improvement Loan. 
  
  

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 EXHIBIT D 
  

REPRESENTATIONS AND WARRANTIES 
 RELATING TO THE PURCHASED MORTGAGE LOANS 
  
 (i)
No more than 35% by original principal balance of the Purchased Mortgage Loan had loan-to-value ratios in excess of 85%; 
  
 (ii) No more than 15% of the aggregate original outstanding principal balance will be secured by mortgaged properties located within any single zip code
area; 
  
 (iii) No more than 20% of the aggregate original
outstanding principal balance is secured by mortgaged properties that are non-owner occupied mortgaged properties (i.e., investor-owned and vacation); and 
  
 (iv) No more than 70% of the aggregate original outstanding principal balance of the Purchased Mortgage Loans was originated under Originator’s
non-full income document verification program. 
  
 (v) No more
than 10% of the outstanding principal balance of the Purchased Mortgage Loans are second lien Mortgage Loans. 
  
  

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 EXHIBIT E 
  

OPINION OF COUNSEL TO SELLER AND GUARANTOR 
  
 1. Seller is duly organized and validly existing as a corporation in good standing under the laws of the State of California and has power and authority
to enter into and perform its obligations under this Agreement and the Custodial Agreement. Seller is duly qualified to do business and is in good standing in each jurisdiction in which the character of the business transacted by it requires such
qualification and in which the failure so to qualify would have a material adverse effect on the business, properties, assets or condition (financial or other) of Seller and its subsidiaries, considered as a whole. 
  
 2. This Agreement and the Custodial Agreement have each been duly authorized,
executed and delivered by Seller, and each constitutes a valid and legally binding obligation of Seller enforceable against Seller in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors’ rights generally and to general equity principles. 
  
 3. No consent, approval, authorization or order of any state or federal court or government agency or body is required to be obtained by Seller for the
consummation of the transactions contemplated by this Agreement or the Custodial Agreement. 
  
 4. The consummation of any of the transactions contemplated by this Agreement and the Custodial Agreement will not conflict with, result in a breach of, or constitute a default under the articles of incorporation or
bylaws of Seller or the terms of any indenture or other agreement or instrument known to us to which Seller is party or bound, or any order known to such counsel to be applicable to Seller or any regulations applicable to Seller, of any state or
federal court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over Seller. 
  
 5. There is no pending or threatened action, suit or proceeding before any court or governmental agency, authority or body or any arbitrator involving
Seller or relating to the transaction contemplated by this Agreement or the Custodial Agreement which, if adversely determined, would have a material adverse effect on Buyer. 
  
 6. Originator is duly registered or licensed as a finance company in each state in which Mortgage Loans were originated, to
the extent such registration or license is required by applicable law. 
  
 7. Seller is duly registered or licensed in each state in which such registration or license is required in order to purchase the Mortgage Loans. 
  
 8. Guarantor is duly organized and validly existing as a corporation in good standing under the laws of the State of Delaware and has power and authority
to enter into and perform its obligations under the Guaranty. Guarantor is duly qualified to do business and is in good standing in each jurisdiction in which the character of the business transacted by it requires such qualification and in which
the failure so to qualify would have a material adverse effect on the business, properties, assets or condition (financial or other) of Guarantor and its subsidiaries, considered as a whole. 
  

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 9. The Guaranty has been duly authorized, executed and delivered by Guarantor, and each constitutes a
valid and legally binding obligation of Guarantor enforceable against Guarantor in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting
creditors’ rights generally and to general equity principles. 
  
 10. No consent, approval, authorization or order of any state or federal court or government agency or body is required to be obtained by Guarantor for the consummation of the transactions contemplated by the Guaranty. 
  
 11. The consummation of any of the transactions contemplated by the Guaranty
will not conflict with, result in a breach of, or constitute a default under the articles of incorporation or bylaws of Guarantor or the terms of any indenture or other agreement or instrument known to us to which Guarantor is party or bound, or any
order known to such counsel to be applicable to Guarantor or any regulations applicable to Guarantor, of any state or federal court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over Guarantor.

  
 12. There is no pending or threatened action, suit or
proceeding before any court or governmental agency, authority or body or any arbitrator involving Guarantor or relating to the Guaranty which, if adversely determined, would have a material adverse effect on Buyer. 
  
 13. Each Mortgage Loan will have been endorsed in a manner which satisfies
any requirement of endorsement in order to transfer all right, title and interest in and to that Mortgage Loan from Seller to Buyer. Each assignment of Mortgage related to each such Mortgage Loan is in recordable form and is sufficient under
applicable law to validly and effectively transfer all right, title and interest of Seller to Buyer. This Agreement together with (a) the delivery of such related Mortgage Loans to Custodian, (b) the endorsement of such Mortgage Loans to Buyer and
(c) the delivery of the assignments of Mortgages related to the Mortgage Loans to the Custodian in recordable form assigning such Mortgages to Buyer, creates a valid, perfected security interest in such Mortgage Loans in favor of Buyer. Such
security interest will have the same priority and will be subject to the same security interests and liens as apply to such Mortgage Loans in the hands of Seller. 
  
  

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 EXHIBIT F 
  

FORM OF GUARANTY 
  
 October 31, 2003 
  
 Bear Stearns Mortgage Capital Corporation 
 383 Madison Avenue 
 New York, New York 10179 
  
 Ladies and Gentlemen:

  
 This letter will confirm that New Century Financial
Corporation, a Delaware corporation (“Guarantor”), agrees to absolutely and unconditionally guaranty to Bear Stearns Mortgage Capital Corporation, its successors and assigns (the “Beneficiary”), the full and prompt payment and
performance of all of the obligations, undertakings and liabilities of NC Capital Corporation., a California corporation (the “Seller”), arising under the terms and provisions of a Master Repurchase Agreement (the “Master Repurchase
Agreement”), dated as of October 31, 2003 by and among Seller and Bear Stearns Mortgage Capital Corporation and a Custodial Agreement, dated as of October 31, 2003 (the “Custodial Agreement”, and together with the Master Repurchase
Agreement, the “Agreements”), by and among Buyer, Seller and Deutsche Bank National Trust Company, as custodian (such obligations, undertakings and liabilities are herein referred to as the “Obligations”), Guarantor hereby
expressly consents to any amendment to the Agreements as may be agreed upon by Seller and Buyer and waives notice of any such amendment. A copy of the Master Repurchase Agreement is attached hereto as Exhibit A and a copy of the Custodial Agreement
is attached hereto as Exhibit B. Capitalized terms used and not otherwise defined herein shall have the meanings assigned in the Master Repurchase Agreement. 
  
 Guarantor hereby represents and warrants to you that each Seller is an indirect wholly-owned subsidiary of Guarantor. 
  
 Guarantor covenants and agrees to immediately notify Buyer if a
representation, warranty or covenant of Seller under either Agreement has been breached or that an Event of Default shall have occurred. 
  
 Payments required under this guaranty shall be payable whenever any Obligation, not to exceed the Guaranty Amount, has not been promptly paid to
Beneficiary in accordance with the Agreements, without regard to any stay or delay with respect to such payment permitted or required by bankruptcy or any other applicable law. Buyer or Custodian on behalf of Buyer shall realize upon the Purchased
Mortgage Loans prior to making a demand under this guarantee; provided, however, neither Buyer nor Custodian on behalf of Buyer shall be required to realize upon any security other than the Purchased Mortgage Loans or, except as set
forth above with respect to realizing upon the Purchased Mortgage Loans, exercise any remedies prior to making a payment demand under this guaranty. 
  

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 Guarantor hereby waives any requirement that the Beneficiary take legal action against Obligor before
enforcing this guaranty; agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Guarantied Obligations or the dissolution, liquidation, reorganization or other change regarding
Obligor or Obligor seeking protection, or having a case or proceeding commenced against it, under any law for the protection of debtors or creditors; waives diligence, presentment, demand for payment or performance, protest or notice or other
formality of any kind whatsoever; waives filing of claims with any court in case of the insolvency, reorganization or bankruptcy of Obligor; and waives any fact, event or circumstance (other than payment in full) that might otherwise constitute a
legal or equitable defense to or discharge of Guarantor, including (but without typifying or limiting this waiver) failure by the Beneficiary to perfect a security interest in any collateral securing performance of any Obligation and any delay by
the Beneficiary in exercising any of its rights hereunder, Guarantor covenants that this guaranty will not be discharged except by full and final payment and performance to the Beneficiary of the Guarantied Amount incurred while it is effective, and
agrees that this guaranty shall continue to be effective or be reinstated (as the case may be) if at any time all or any part of any payment or interest thereon or other performance by Obligor is avoided or must otherwise be restored by the
Beneficiary. Guarantor hereby further consents to any renewal or modification of any Obligation or any extension of the time within which such is to be performed and to any other indulgences, whether before or after the date of this guaranty.

  
 Guarantor agrees to pay on demand all out-of-pocket expenses
(including legal fees and disbursements) incurred by the Beneficiary in connection with the enforcement and protection of its rights hereunder. Guarantor further covenants and agrees with Beneficiary to observe the financial covenants set forth in
Exhibit G to the Master Repurchase Agreement and to promptly notify Beneficiary if Guarantor breaches any of those covenants. Guarantor hereby waives all suretyship defenses and agrees that the beneficiary may assign all its rights and obligations
hereunder to any of its affiliates without the consent or approval of any party. 
  
 This is a continuing guaranty and will remain in effect until thirty (30) days after written notice of termination is received by Bear Stearns Mortgage Capital Corporation, 383 Madison Avenue, New York, New York
10179, Attention: Eileen Albus. Any such termination shall not affect or reduce Guarantor’s obligations hereunder for any liability of Obligor that arose prior to the expiration of said thirty-day period. This guaranty shall terminate and shall
be of no further force or effect upon full payment of all amounts due to Buyer under the Agreement. This guaranty shall inure to the benefit of any successor of the Beneficiary and be binding on any successor or assignee of Guarantor. 
  
 This guaranty shall be governed by and construed in accordance with the laws
of the State of New York. Guarantor hereby agrees that (i) any dispute or controversy arising out of or relating to this guaranty, the Master Repurchase Agreement or the Custodial Agreement shall be submitted to arbitration before the American
Arbitration Association utilizing its Rules for the Arbitration of Commercial Disputes and allowing for discovery by the parties, (ii) the arbitration proceedings shall be conducted in New York, New York and (iii) the decision of the arbitrators
shall be final and judgment may be entered on the award. In the event that such arbitration is unavailable, Guarantor hereby submits to the personal jurisdiction of the United States Federal and New York State courts situated in the City, County,
and State of New York and hereby 
  

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 agrees that any litigation arising out of or relating to this guaranty, the Master Repurchase Agreement or the Custodial
Agreement shall be brought in such courts. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the non-enforceability of any such
other provision or agreement. 
  
 Any demand by Buyer for payment
or performance by Guarantor shall be by a written demand to Guarantor, which shall be deemed to have been duly given if made by facsimile transmission to New Century Financial Corporation, Attention: General Counsel, Phone: (949) 440-7030 , Fax:
(949) 440-7033 or if personally delivered at or upon the fifth day after deposit in the mails, mailed by registered mail, postage prepaid, to 18400 Von Karman, Suite 1000, Irvine, California 92612, Attention: General Counsel. 
  

	Very truly yours,
	
	NEW CENTURY FINANCIAL CORPORATION
		
	By:	 	 
	 	

	Name:	 	 
	 	

	Title:	 	 
	 	

	 	 	 


  

 F-3 








 EXHIBIT G 
  

Financial Covenants of the Guarantor 
  
 The Guarantor shall: 
  
 (i) Maintain a Tangible Net Worth not less than the greater of (1) $250,000,000, and (2) seventy-five percent (75%) of (w) its Tangible
Net Worth as of December 31, 2002, plus, (x) ninety percent (90%) of all capital contributions made during the fiscal year ending on December 31, 2003, plus, (y) fifty percent (50%) of positive year-to-date net income for the Guarantor, minus, (z)
the dollar value of all repurchases of common stock in New Century Financial Corporation by New Century Financial Corporation, in an amount not to exceed the lesser of: (i) the dollar equivalent of repurchases of 1,800,000 shares (or share
equivalents in the case of stock splits/reverse splits), or (ii) $40,000,000. 
  
 (ii) Maintain a ratio of Total Indebtedness to Tangible Net Worth not greater than 12:1, measured on a consolidated basis on the last day of each fiscal quarter. 
  
 (iii) Maintain a ratio of Total Indebtedness to Tangible Net
Worth not greater than 12:1, measured on the last day of each of its fiscal quarters. 
  
 (iv) Maintain, on a consolidated basis, Liquidity in an amount equal to not less than $60,000,000. 
  
 “Indebtedness”: With respect to any Person at any time,
without duplication, all obligations of such Person which, in accordance with GAAP, consistently applied, should be classified as liabilities on a consolidated balance sheet of such Person, but in any event including: (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid or accrued, (d) all obligations of
such Person under conditional sale or other title retention agreements relating to property purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of property or services, but excluding accrued
expenses and trade payables incurred and paid in the ordinary course of business, (f) all obligations of others secured by any lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g)
all capitalized lease obligations of such Person, (h) all obligations of such Person in respect of interest rate protection agreements, (i) all obligations of such Person, actual or contingent, in respect of letters of credit or banker’s
acceptances, (j) all obligations of any partnership or joint venture as to which such Person is or may become personally liable, and (k) all guarantees by such Person of Indebtedness of others, less (l) the aggregate amount of any indebtedness that
is reflected on the balance sheet of such Person in respect of obligations incurred pursuant to a securitization transaction, solely to the extent such obligations are secured by the assets securitized thereby and are non-recourse to such Person.

  

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 “Contractual Obligation”: As to any Person, any material provision of any agreement,
instrument or other undertaking to which such Person is a party or by which it or any of its property is bound or any material provision of any security issued by such Person. 
  
 “Liquidity”: For each relevant Person, the aggregate of all cash, Cash Equivalent Investments, and
Overcollateralization, less the amount of Restricted Cash owned by such Person. 
  
 “Overcollateralization”: As of any date of determination for any Person, the excess of (i) the collateral value of assets pledged by that Person to a lender under a committed warehouse or repurchase
facility (after taking into account required haircuts) over (ii) the aggregate amount of the advances or loans made by the lender to the Borrower under any such committed warehouse or repurchase facility. 
  
 “Restricted Cash”: All cash and Cash Equivalent Investments
that are subject to a Lien in favor of any Person that are required to be maintained by the Buyer pursuant to a Contractual Obligation or as a result of the operation of law. 
  
 “Tangible Net Worth”: With respect to any Person, as of any date of determination, the consolidated Net
Worth of such Person and its subsidiaries, less the consolidated net book value of all assets of such Person and its subsidiaries (to the extent reflected as an asset on the balance sheet of such Person or any subsidiary of such Person at such date)
which will be treated as intangibles under GAAP, including, without limitation, such items as deferred financing expenses, net leasehold improvements, goodwill, trademarks, trade names, service marks, copyrights, patents, licenses and unamortized
debt discount and expense; provided, that, residual securities owned by such Person shall not be treated as intangibles for purposes of this definition. 
  
 “Total Indebtedness”: At any time, the aggregate Indebtedness of any Person and its subsidiaries. 
  

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