Exhibit 10.14


 


MASTER REPURCHASE AGREEMENT

(the “Agreement”)


 


between


 


COUNTRYWIDE BANK, FSB

(“Buyer”)


 


and


 


HOME LOAN CENTER, INC.

(“Seller”)


 


dated as of


 


January 25, 2008


 

















 


TABLE OF CONTENTS


 


ARTICLE 1

DEFINITIONS AND PRINCIPLES OF CONSTRUCTION


 


	
  Section 1.1

  	
  Defined Terms

  	
  1

  
	
  Section 1.2

  	
  Principles of
  Constructions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  
	
  AMOUNTS AND
  TERMS OF TRANSACTIONS

  
	
   

  
	
  Section 2.1

  	
  Agreement to Enter into
  Transactions

  	
  1

  
	
  Section 2.2

  	
  Transaction Limits

  	
  2

  
	
  Section 2.3

  	
  Description of
  Purchased Assets

  	
  2

  
	
  Section 2.4

  	
  Maximum Transaction
  Amounts

  	
  2

  
	
  Section 2.5

  	
  Use of Proceeds

  	
  2

  
	
  Section 2.6

  	
  Price Differential

  	
  2

  
	
  Section 2.7

  	
  Terms and Conditions of
  Transactions

  	
  3

  
	
  Section 2.8

  	
  Guarantee

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  
	
  PROCEDURES FOR
  REQUESTING AND ENTERING INTO TRANSACTIONS

  
	
   

  
	
  Section 3.1

  	
  Policies and Procedures

  	
  3

  
	
  Section 3.2

  	
  Request for
  Transaction; Asset Data Record

  	
  3

  
	
  Section 3.3

  	
  Delivery of Mortgage
  Loan Documents

  	
  4

  
	
  Section 3.4

  	
  Haircut

  	
  4

  
	
  Section 3.5

  	
  Over/Under Account

  	
  4

  
	
  Section 3.6

  	
  Payment of Purchase
  Price

  	
  6

  
	
  Section 3.7

  	
  Approved Payees

  	
  7

  
	
  Section 3.8

  	
  Funding Drafts

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  
	
  REPURCHASE

  
	
   

  
	
  Section 4.1

  	
  Repurchase Price

  	
  9

  
	
  Section 4.2

  	
  Repurchase Acceleration
  Events

  	
  10

  
	
  Section 4.3

  	
  Reduction of Asset
  Value as Alternative Remedy

  	
  10

  
	
  Section 4.4

  	
  Designation as Noncompliant
  Mortgage Loan as Alternative Remedy

  	
  10

  
	
  Section 4.5

  	
  Illegality or
  Impracticability

  	
  10

  
	
  Section 4.6

  	
  Payments Pursuant to
  Sale to Approved Investors

  	
  11

  
	
  Section 4.7

  	
  Application of Payments
  from Seller or Approved Investors

  	
  12

  
	
  Section 4.8

  	
  Method of Payment

  	
  12

  
	
  Section 4.9

  	
  Notification of Payment

  	
  12

  
	
  Section 4.10

  	
  Authorization to Debit

  	
  13

  
	
  Section 4.11

  	
  Book Account

  	
  13

  
	
  Section 4.12

  	
  Full Recourse

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  
	
  FEES

  
	
   

  
	
  Section 5.1

  	
  Payment of Fees

  	
  12

  



 


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  ARTICLE 6

  
	
  SECURITY;
  SERVICING; MARGIN ACCOUNT MAINTENANCE; CUSTODY OF MORTGAGE LOAN

  
	
  DOCUMENTS AND
  REPURCHASE TRANSACTIONS

  
	
   

  
	
  Section 6.1

  	
  Precautionary Grant of
  Security Interest

  	
  13

  
	
  Section 6.2

  	
  Servicing

  	
  13

  
	
  Section 6.3

  	
  Margin Account
  Maintenance

  	
  17

  
	
  Section 6.4

  	
  Custody of Mortgage
  Loan Documents

  	
  18

  
	
  Section 6.5

  	
  Release of Mortgage
  Loan Documents

  	
  19

  
	
  Section 6.6

  	
  Sales Transactions;
  Repurchase Transactions

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  
	
  CONDITIONS
  PRECEDENT

  
	
   

  
	
  Section 7.1

  	
  Initial Transaction

  	
  20

  
	
  Section 7.2

  	
  All Transactions

  	
  21

  
	
  Section 7.3

  	
  Intercreditor
  Agreements

  	
  22

  
	
  Section 7.4

  	
  Satisfaction of
  Conditions

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  
	
  REPRESENTATIONS
  AND WARRANTIES

  
	
   

  
	
  Section 8.1

  	
  Representations and
  Warranties Concerning Seller

  	
  22

  
	
  Section 8.2

  	
  Representations and
  Warranties Concerning Purchased Assets

  	
  25

  
	
  Section 8.3

  	
  Continuing
  Representations and Warranties

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  
	
  AFFIRMATIVE
  COVENANTS

  
	
   

  
	
  Section 9.1

  	
  Financial Statements
  and Other Reports

  	
  27

  
	
  Section 9.2

  	
  Inspection of
  Properties and Books

  	
  28

  
	
  Section 9.3

  	
  Notice

  	
  29

  
	
  Section 9.4

  	
  Additional Financing

  	
  30

  
	
  Section 9.5

  	
  Servicing of Mortgage
  Loans

  	
  30

  
	
  Section 9.6

  	
  Evidence of Purchased
  Assets

  	
  30

  
	
  Section 9.7

  	
  Protection of Purchased
  Mortgage Loans

  	
  30

  
	
  Section 9.8

  	
  Further Assurances

  	
  31

  
	
  Section 9.9

  	
  Fidelity Bonds and
  Insurance

  	
  31

  
	
  Section 9.10

  	
  Wet Mortgage Loans

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  
	
  NEGATIVE
  COVENANTS

  
	
   

  
	
  Section 10.1

  	
  Liabilities and
  Advances

  	
  31

  
	
  Section 10.2

  	
  Debt and Subordinated
  Debt

  	
  31

  
	
  Section 10.3

  	
  Loss of Eligibility

  	
  32

  
	
  Section 10.4

  	
  Financial Covenants and
  Ratios

  	
  32

  
	
  Section 10.5

  	
  Loans to Officers,
  Employees and Shareholders

  	
  32

  
	
  Section 10.6

  	
  Liens on Purchased
  Mortgage Loans and Purchased Assets; Liens on Other Assets

  	
  32

  
	
  Section 10.7

  	
  Transactions with
  Affiliates

  	
  32

  
	
  Section 10.8

  	
  Consolidation, Merger,
  Sale of Assets and Change of Control

  	
  32

  
	
  Section 10.9

  	
  Payment of Dividends
  and Retirement of Stock

  	
  33

  
	
  Section 10.10 

  	
  Purchased Assets

  	
  33

  



 


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  Section 10.11 

  	
  Secondary Marketing,
  Underwriting, Third Party Origination and Interest Rate Risk Management
  Practices

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  
	
  DEFAULTS AND
  REMEDIES

  
	
   

  
	
  Section 11.1

  	
  Events of Default

  	
  33

  
	
  Section 11.2

  	
  Remedies

  	
  35

  
	
  Section 11.3

  	
  Treatment of Custodial
  Account

  	
  36

  
	
  Section 11.4

  	
  Sale of Purchased
  Assets

  	
  36

  
	
  Section 11.5

  	
  No Obligation to Pursue
  Remedy

  	
  36

  
	
  Section 11.6

  	
  Reimbursement of Costs
  and Expenses

  	
  36

  
	
  Section 11.7

  	
  Application of Proceeds

  	
  37

  
	
  Section 11.8

  	
  Rights of Set-Off

  	
  37

  
	
  Section 11.9

  	
  Reasonable Assurances

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  
	
  INDEMNIFICATION

  
	
   

  
	
  Section 12.1

  	
  Indemnification

  	
  38

  
	
  Section 12.2

  	
  Payment of Taxes

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13

  
	
  TERM AND
  TERMINATION

  
	
   

  
	
  Section 13.1

  	
  Term

  	
  38

  
	
  Section 13.2

  	
  Termination

  	
  38

  
	
  Section 13.3

  	
  Extension of Term

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14

  
	
  GENERAL

  
	
   

  
	
  Section 14.1

  	
  Integration

  	
  39

  
	
  Section 14.2

  	
  Amendments

  	
  39

  
	
  Section 14.3

  	
  No Waiver

  	
  39

  
	
  Section 14.4

  	
  Remedies Cumulative

  	
  40

  
	
  Section 14.5

  	
  Assignment

  	
  40

  
	
  Section 14.6

  	
  Successors and Assigns

  	
  40

  
	
  Section 14.7

  	
  Participations

  	
  40

  
	
  Section 14.8

  	
  Invalidity

  	
  40

  
	
  Section 14.9

  	
  Additional Instruments

  	
  40

  
	
  Section 14.10 

  	
  Survival

  	
  40

  
	
  Section 14.11 

  	
  Notices

  	
  40

  
	
  Section 14.12 

  	
  Personal Identification
  Number

  	
  41

  
	
  Section 14.13 

  	
  Governing Law

  	
  41

  
	
  Section 14.14 

  	
  Counterparts

  	
  41

  
	
  Section 14.15 

  	
  Headings

  	
  42

  
	
  Section 14.16 

  	
  Joint and Several
  Liability of Each Seller

  	
  42

  
	
  Section 14.17 

  	
  Confidential information

  	
  42

  
	
  Section 14.18 

  	
  Intent

  	
  42

  
	
  Section 14.19 

  	
  Right to Liquidate

  	
  43

  
	
  Section 14.20 

  	
  Insured Depository
  Institution

  	
  43

  
	
  Section 14.21 

  	
  Netting Contract

  	
  43

  
	
  Section 14.22 

  	
  Reimbursement of
  Expenses

  	
  43

  



 


iii

















 


EXHIBITS


 


	
  Exhibit A:

  	
  Glossary of Defined Terms

  
	
  Exhibit B:

  	
  Irrevocable Closing Instructions

  
	
  Exhibit C:

  	
  Secretary’s Certificate

  
	
  Exhibit D:

  	
  Corporate Resolutions

  
	
  Exhibit E:

  	
  Officer’s Certificate

  
	
  Exhibit F:

  	
  Assignment of Closing Protection Letter

  
	
  Exhibit G:

  	
  Assignment of Fidelity Bond and Errors and Omission
  Policy

  
	
  Exhibit H:

  	
  Form of Power of Attorney

  
	
  Exhibit I:

  	
  Acknowledgement of Password Confidentiality
  Agreement

  
	
  Exhibit J:

  	
  Reserved

  
	
  Exhibit K:

  	
  Form of Servicer Notice

  
	
   

  	
   

  
	
  SCHEDULES

  
	
   

  
	
  Schedule 1:

  	
  Filing Jurisdictions and Offices

  



 


iv

















 


MASTER REPURCHASE
AGREEMENT


 


THIS
MASTER REPURCHASE AGREEMENT (the “Agreement”)  is
made and entered into as of January 25, 2008 by and between Countrywide
Bank, FSB, a California corporation (“Buyer”),
and Home Loan Center, Inc., a California corporation (“Seller”).


 


RECITALS


 


A.            Seller has requested Buyer to
enter into transactions with Seller whereby Seller may, from time to time, sell
to Buyer certain 1st and 2nd
lien residential mortgage loans and/or other mortgage related assets and
interests, against the transfer of funds by Buyer, with a simultaneous
agreement by Buyer to sell to Seller such purchased assets at a date certain
after the Purchase Date, against the transfer of funds by Seller (each such
transaction, a “Transaction”).


 


B.            Buyer has agreed to enter into such Transactions,
subject to the terms and conditions set forth in this Agreement.


 


C.            Seller and Buyer have previously entered into that
certain Revolving Credit and Security Agreement dated March 17, 2003 (the “Warehouse Agreement”). As of the date of this Agreement,
Seller has one or more outstanding Advances (as defined in the Warehouse
Agreement) under the Warehouse Agreement and Buyer has a secured interest in
the Collateral (as defined in the Warehouse Agreement) pledged by Seller for
such outstanding Advances. By execution of this Agreement, Seller and Buyer
restate their respective rights, obligations and interests with respect to such
Advances and Collateral, and hereby agree that such Collateral shall constitute
Purchased Assets and that such outstanding Advances shall constitute the
Purchase Price for the Purchased Mortgage Loans relating to such Purchased
Assets (as each such term is defined in this Agreement). Further, each
Purchased Mortgage Loan shall be subject to a Transaction hereunder as of the
Effective Date. The restatement of rights, obligations and interests of Seller
and Buyer under this recital shall not be a novation of the Warehouse Agreement
and such rights, obligations and interests shall be continuous.


 


NOW,
THEREFORE, in consideration of the mutual rights and obligations provided
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Seller and Buyer agree as follows:


 


ARTICLE 1

DEFINITIONS AND PRINCIPLES OF CONSTRUCTION


 


1.1           Defined Terms.   As used in this
Agreement, capitalized terms shall have the meanings set forth in Exhibit A hereto, unless
the context otherwise requires. All such defined terms shall, unless
specifically provided to the contrary, have the defined meanings set forth
herein when used in any other agreement, certificate or document made or
delivered pursuant hereto.


 


1.2           Principles of
Constructions.


 


(a)                                  Accounting Terms. Accounting terms not
otherwise defined herein shall have the meanings given under GAAP.


 


(b)                                 Number. All terms defined in this Agreement may be
used in the singular or the plural, as the context requires.


 


(c)                                  Successors and Assigns. Reference to any party shall
mean that party and its successors and assigns permitted by the terms of this
Agreement.


 


1

















 


ARTICLE 2

AMOUNT AND TERMS OF TRANSACTIONS


 


2.1           Agreement
to Enter into Transactions.   Subject
to the terms and conditions of this Agreement and provided that no Event of
Default has occurred and is continuing, Buyer agrees, from time to time during
the term of this Agreement, to enter into Transactions with Seller; provided,
however, that the Buyer shall not have any obligation to enter into any
Transaction which will cause the total aggregate Transactions outstanding at
any one time to exceed the Aggregate Transaction Limit or the aggregate type of
Transactions outstanding at any one time to exceed the applicable Type
Sublimit.


 


2.2           Transaction
Limits.   The
Aggregate Transaction Limit and each Type Sublimit shall be as set forth in the
Transactions Terms Letter. Upon the occurrence of an Event of Default, Buyer
shall have the right, in its sole and good faith discretion, to reduce, whether
permanently or temporarily, and without refund of any fee or other amount
previously paid by Seller, the Aggregate Transaction Limit and/or each Type
Sublimit. In the event of any reduction pursuant to this Section 2.2,
Buyer shall give Seller prior written notice thereof, which notice shall
designate (a) the effective date of any such reduction, (b) the
amount of the reduction and (c) the
Transaction and/or Type Sublimit limit(s) to which such reduction amount
shall apply. Buyer shall not be liable to Seller for any costs, losses or
damages arising from or relating to a reduction by Buyer in the Aggregate
Transaction Limit or any Type Sublimit.


 


2.3           Description of Purchased
Assets.   With respect to each Transaction, Seller shall cause
to be maintained with Buyer Purchased Assets consisting of a Purchased Mortgage
Loan(s) with a Asset Value not less than, at any date, the related
Purchase Price for such Transaction. With respect to each Transaction, the type
of Purchased Mortgage Loan shall be the type of Mortgage Loan as specified in
the Transactions Terms Letter as the Type, and in each case shall consist of
the type of mortgage loans, mortgage related securities, or interests therein
as described in Bankruptcy Code section 101(47)(A). If there is uncertainty as
to the Type of a Purchased Mortgage Loan, Buyer, in its sole and good faith
discretion, shall determine the correct Type for such Purchased Mortgage Loan.


 


2.4           Maximum
Transaction Amounts.   Each
Transaction shall not exceed the lesser of:


 


(a)                                  the applicable
Type Sublimit, as determined by the type of Purchased Mortgage Loan;


 


(b)                                 the Aggregate
Transaction Limit, minus the aggregate amount of all other Transactions
outstanding, if any; and


 


(c)                                  the Asset Value
of the related Purchased Mortgage Loan(s).


 


2.5           Use of
Proceeds.   Seller
shall use the Purchase Price of each Transaction solely for the purpose of
originating and/or acquiring the related Purchased Mortgage Loan(s).


 


2.6           Price
Differential.


 


(a)                                  Pricing Rate.   Notwithstanding
that Buyer and Seller intend that the Transactions hereunder be sales by Seller
to Buyer of the Purchased Mortgage Loans for all purposes except accounting and
tax purposes, Seller shall pay Buyer a price differential on the Purchase Price
for each Purchased Mortgage Loan from the Date of Disbursement until, but not
including, the date of repurchase, at an annual rate equal to the sum of the
Applicable Pricing Rate plus the applicable Margin; provided, however, that if
a Purchased Mortgage Loan is deemed to be a Noncompliant Mortgage Loan,
thereafter, such Purchase Price shall bear a price differential at an annual
rate equal to the sum of the Applicable Pricing Rate plus the Type Margin for a
Noncompliant Mortgage Loan.


 


2

















 


Notwithstanding
the foregoing, if the Repurchase Price for a Transaction is not paid by Seller
when due (whether at the Repurchase Date, upon acceleration or otherwise), the
Purchase Price shall bear a price differential from the date due until paid in
full at an annual rate equal to the Default Rate.


 


(b)                                 Time for Payment. Accrued
interest for each Purchase Price shall be due and payable on each Payment Date
which occurs prior to the date on which the Repurchase Price is paid. On the
date that the Repurchase Price is paid, all accrued interest not otherwise paid
by Seller shall be due and payable.


 


(c)                                  Computations. All
computations of price differentials and fees payable hereunder shall be based
upon a year of three-hundred sixty (360) days.


 


2.7           Terms and
Conditions of Transactions.   Upon
the occurrence of an Event of Default, the terms and conditions of the
Transactions as set forth in the Transactions Terms Letter, this Agreement or
otherwise may be changed from time to time by Buyer at its sole and good faith
discretion by providing prior notice to Seller.


 


2.8           Guarantee.   As may be determined necessary by Buyer from time to
time in its sole and good faith discretion and as indicated in the Transactions
Terms Letter, Seller agrees to cause to be executed and delivered to Buyer such
Guarantees and/or additional security agreements as additional support for
Seller’s obligations hereunder, which Guarantees and/or additional security
agreements shall be considered “margin payments” as such term is defined in
Bankruptcy Code Section 741(5).


 


ARTICLE 3

PROCEDURES FOR REQUESTING AND ENTERING INTO TRANSACTIONS


 


3.1           Policies
and Procedures.   In
connection with the Transactions contemplated hereunder, Seller shall comply
with all applicable policies and procedures of Buyer as may currently exist or
as hereafter created to conform to current legal and reasonable market
requirements. Such policies and procedures may be in writing, published on
Buyer’s website(s) or otherwise contained in the Handbook. Buyer shall
have the right to change, revise, amend or supplement its policies and
procedures and the Handbook from time to time to conform to current legal
requirements or Buyer practices by giving advance notice via Buyer’s website
thereof to Seller.


 


3.2           Request for
Transaction; Asset Data Record.


 


(a)                                  Request for
Transaction.   Seller shall request a Transaction
by delivering to Buyer, electronically or in writing, an Asset Data Record for
each Mortgage Loan intended to be the subject of the Transaction no later than
the Transaction Request Deadline; provided, however, that if Seller intends to
request a Transaction or series of Transactions equal to or greater than ten
million ($10,000,000) dollars, Seller shall provide Buyer not fewer than one (1) Business
Day prior written notice thereof. If Buyer determines that the requested
Transaction complies with the terms and conditions of this Agreement, Buyer
shall confirm to Seller the terms of Transactions electronically or in writing.
Buyer reserves the right to reject any Transaction request that Buyer
determines, in its sole and good faith discretion, fails to comply with the
terms and conditions of this Agreement or Buyer’s then current policies and
procedures, which current policies and procedures shall be available via Buyer’s
website prior to any request for a Transaction.


 


(b)                                 Failure to Enter
into Transaction: Cancellation of Transaction.   Other than
those Transactions that Buyer declines, or a return of Repurchase Price of a
Wet Mortgage Loan as defined in Section 3.6(d) if Seller fails five (5) times
or more to enter into a particular Transaction after Seller has requested a
particular Transaction and submitted a


 


3

















 


Asset
Data Record in connection with such request, for each Transaction requested by
Seller thereafter for which Seller fails to enter into such Transaction, Seller
shall pay Buyer the Breakage Fee and reimburse Buyer for any reasonable
out-of-pocket losses, costs and expenses incurred by Buyer in connection with
such failure to enter into the Transaction, including, without limitation,
costs relating to re-employment of funds obtained by Buyer and fees payable to
terminate the arrangements through which such funds were obtained. In addition,
if following disbursement by Buyer of the Purchase Price relating to any
Transaction, Seller cancels such Transaction, regardless of the number of
Transactions Seller has previously cancelled, Seller shall pay Buyer a price
differential on such Purchase Price from the Date of Disbursement until, but
not including, the date the Purchase Price is returned to Buyer.


 


(c)                                  Form of Asset Data Record.   Buyer shall
have the right to revise or supplement the form of the Asset Data Record from
time to time by giving reasonable prior notice thereof to Seller via Buyer’s
website.


 


3.3           Delivery of
Mortgage Loan Documents.


 


(a)                                  Dry Mortgage Loans.   Prior to
any Transaction related to a Dry Mortgage Loan, Seller shall deliver to Buyer
acting as custodian or its Custodian, or authorize and direct the Closing Agent
to deliver to Buyer acting as custodian or its Custodian, the related Mortgage
Loan Documents.


 


(b)                                 Wet Mortgage Loans.   With
respect to a Transaction the subject of which is a Wet Mortgage Loan, Seller
shall deliver to Buyer or its Custodian, or authorize and direct the Closing
Agent to deliver to Buyer or its Custodian, the related Mortgage Loan Documents
within the Wet Mortgage Loans Maximum Dwell Time.


 


(c)                                  Government Mortgage Loans.   If a
Government Mortgage Loan is the subject of a Transaction, Seller shall, at the
request of Buyer, deliver to Buyer acting as custodian or its Custodian, within
sixty (60) calendar days following the date of such Transaction, a mortgage insurance
policy issued under an FHA insurance program or a guaranty for the full and
timely payment of principal and interest issued by the VA, as applicable, or
evidence of such insurance or guaranty, as applicable, including proof of
payment of the premium and the case number so Buyer can access the information
on the computer system maintained by FHA or the VA.


 


(d)                                 Mortgage Loan Documents in Seller’s
Possession.   At
all times during which the Mortgage Loan Documents related to any Purchased
Mortgage Loan are in the possession of Seller, and until such Purchased
Mortgage Loan is repurchased by Seller, Seller shall hold such Mortgage Loan
Documents in trust for the exclusive benefit of Buyer and shall act only in
accordance with Buyer’s written instructions thereto.


 


(e)                                  Other Mortgage Loan Documents in Seller’s
Possession.   With respect to
each Purchased Mortgage Loan, until such Purchased Mortgage Loan is repurchased
by Seller, Seller shall hold in trust all mortgage loan documents related to
such Purchased Mortgage Loan and not delivered to Buyer, including, without
limitation, the Other Mortgage Loan Documents, as applicable.


 


3.4           Haircut.   With respect to each Transaction, Seller shall ensure
that there are sufficient funds on deposit in the Over/Under Account such that
following the withdrawal of the Haircut by Buyer, the balance of the Over/Under
Account is equal to or greater than the minimum required balance, as set forth
in the Transactions Terms Letter.


 


4

















 


3.5           Over/Under Account.


 


(a)                                  Minimum Balance.   Seller shall at all
times maintain a margin balance in the Over/Under Account of not than less than
that amount set forth in the Transactions Terms Letter, which account shall be
used to assist in settling the Transactions and any other obligations under
this Agreement. Buyer shall not be required to segregate and hold funds
deposited by or on behalf of Seller in the Over/Under Account separate and
apart from Buyer’s own funds or funds deposited by or held for others. Upon the
occurrence of an Event of Default, Buyer shall have the right, in its sole and
good faith discretion, to increase the minimum margin balance Seller is
required to maintain in the Over/Under Account by giving notice to Seller thereof.


 


(b)                                 Deposits.


 


(i)            Seller.   Seller
shall deposit margin in the form of funds in the Over/Under Account in
accordance with the terms of this Agreement, including, without limitation, Section 3.4 and Section 3.5(a).


 


(ii)           Buyer.   Buyer
shall credit to the Over/Under Account all amounts in excess of those amounts
due to Buyer in accordance with the Principal Agreements on the date Buyer
receives or has received both (1) a payment by Seller or an Approved
Investor pursuant to a Purchase Commitment and (2) a Purchase Advice
relating to such payment without discrepancy; provided, however, that funds and
Purchase Advices received by Buyer after that time set forth in the
Transactions Terms Letter, shall be deemed to have been received on the next
Business Day. Buyer shall use reasonable efforts to notify Seller if there is a
discrepancy between a wire transfer and the related Purchase Advice, and
thereafter, Seller shall notify Buyer as to whether Buyer should accept such
settlement payment despite the discrepancy between the amount received and the
related Purchase Advice; provided, however, that if an Event of Default has
occurred and is continuing, Buyer is not obligated to receive approval from
Seller prior to accepting any amounts received and releasing the related
Purchased Assets.


 


(iii)          Settlement Statement.   Buyer
shall deliver to Seller via facsimile or make available to Seller via the
Internet within one (1) Business Day following settlement of an
Transaction, or as soon thereafter as is reasonably possible, a settlement
statement, which includes an explanation of all amounts credited by Buyer to
the Over/Under Account to settle the Transaction.


 


(c)                                  Withdrawals.


 


(i)                                     Seller.   If the amount credited to the
Over/Under Account creates a balance in excess of the minimum margin balance
required pursuant to Section 3.5(a) above, provided that no
Event of Default has occurred and is continuing, Seller may submit a written
request to Buyer for return or payment of such excess funds. If any such
request is received by Buyer prior to 10:00 a.m. (Pacific time) on a
Business Day, Buyer shall use commercially reasonable efforts to wire such
requested excess funds to Seller by the end of such Business Day and in no
event no later than two (2) Business Days after Buyer’s receipt of such
request. Notwithstanding anything contained in this Section 3.5(c)(i) to the contrary,
Buyer reserves the right to reject any request for excess funds from the
Over/Under Account if Buyer determines, in its sole and good faith discretion,
that such excess funds shall be used to satisfy Seller’s outstanding
obligations under this Agreement or are subject to other rights as provided in
this Agreement.


 


5














 


(ii)                                  Buyer. Buyer may, from time to time and without
separate authorization by Seller or notice to Seller, withdraw funds from the
Over/Under Account to settle amounts owed in accordance with the terms of this
Agreement or to otherwise satisfy Seller’s obligations under this Agreement,
including, without limitation:


 


(1)           with respect to
any Transaction, to deliver the Haircut to the Closing Agent;


 


(2)           to reimburse
itself for any reasonable costs and expenses incurred by Buyer as contemplated
by this Agreement, and as permitted herein;


 


(3)           to pay itself
any price differential on a Purchase Price that is due and owing;


 


(4)           to Seller as
provided in Section 3.5(c)(i);


 


(5)           as security for
the performance of Seller’s obligations hereunder;


 


(6)           without limiting
the generality of Section 3.5(c)(ii)(5), as security for a
Transaction as provided in Section 6.3(a) or as repayment
of a Repurchase Price as provided in Section 6.3(b); and


 


(7)           in the exercise
of Buyer’s or its Affiliates’ rights under Section 6.3(d) or Section 11.8.


 


(d)                                 Failure to Maintain Balance.  If, at any time, Seller fails to maintain in
the Over/Under Account the minimum margin balance as required hereunder, in
addition to any other rights and remedies that Buyer may have against Seller,
and upon one (1) Business Day notice, Buyer shall have the right, at its
sole and good faith discretion, to stop entering into Transactions with Seller
and/or to charge Seller accrued interest on that portion of the minimum margin
balance that Seller has failed to maintain, at the Default Rate, from the time
that such balance failed to be maintained until the time that funds are
deposited into or held in the Over/Account to comply with such minimum margin
balance requirements hereunder. Without limiting the generality of the
foregoing, it is understood and agreed that should the balance in the
Over/Under Account become negative, Seller will continue to owe Buyer accrued
interest as provided herein.


 


(e)                                  Security Interest.  Any funds of Seller at any time deposited or
held in the Over/Under Account, whether such funds are required to be deposited
and held in the Over/Under Account pursuant to this Section 3.5 or otherwise,
are hereby pledged by Seller as security for its obligations under this
Agreement, and Seller hereby grants a security interest in such funds to Buyer.


 


3.6                                 Payment
of Purchase Price.


 


(a)                                  Payment of Purchase Price.  On the Purchase Date for each Transaction,
ownership of the Purchased Mortgage Loans shall be transferred to Buyer against
the simultaneous transfer of the Purchase Price to Seller simultaneously with
the delivery to Buyer of the Purchased Mortgage Loans relating to each
Transaction. With respect to the Purchased Mortgage Loans being sold by Seller
on the Purchase Date, Seller hereby sells, transfers, conveys and assigns to
Buyer or its designee without recourse, but subject to the terms of this
Agreement, all the right, title and interest of Seller in and to the Purchased
Mortgage Loans together with all right, title and interest in and to the
proceeds of any related Purchased Assets.


 


6

















 


(b)                                 Methods of Payment.  On the Purchase Date for each Transaction:


 


(i)                                     Buyer may pay
the Purchase Price (A) by wire transfer in accordance with Seller’s wire
instructions in Exhibit J, (B) if Seller is
approved to receive the Purchase Price via cashiers check and has requested to
receive the Purchase Price via cashiers check, by cashiers check or (C) if
Seller is approved to present funding drafts to Buyer and Seller has requested
to receive the Purchase Price via funding draft, by funding draft, subject to
the requirements of Section 3.8. Unless Seller is approved to
receive the Purchase Price via cashiers check or funding draft and Seller has
requested that payment be made using one of these methods for a particular
Transaction, Buyer shall pay the Purchase Price for all Transactions by wire
transfer. Buyer shall have no obligation to pay the Purchase Price by cashiers
check or funding draft unless and until Seller has requested to receive payment
in such manner and Seller has otherwise complied with all applicable policies
and procedures regarding such methods of payment. Notwithstanding the
foregoing, Buyer shall not be obligated to pay the Purchase Price under any
method of payment to any Closing Agent or warehouse lender that is not an
Approved Payee. Further, the payment of the Purchase Price by Buyer to any
Closing Agent or warehouse lender that is not an Approved Payee shall not make
such Closing Agent or warehouse lender an Approved Payee. Any funds disbursed
by Buyer to Seller or its Approved Payee shall be subject to all applicable
federal, state and local laws, including, without limitation, regulations and
policies of the Board of Governors of the Federal Reserve System on Reduction
of Payments System Risk. Seller acknowledges that as a result of such
applicable laws, regulations and policies, equipment malfunction, Buyer’s
approval procedures or circumstances beyond the reasonable control of Buyer,
the payment of a Purchase Price using one or more of the methods described
above may be delayed. Further, Seller acknowledges that a funding draft may not
constitute “good funds” under certain state laws and funds will not be released
to the payee until Buyer, in its sole and good faith discretion, has reviewed
and accepted the funding draft following presentment of the draft to the payor
bank. Buyer shall not be liable to Seller for any costs, losses or damages
arising from or relating to any such delays; or


 


(ii)                                  Notwithstanding the
foregoing, where a Purchased Mortgage Loan is the subject of third party
financing, Buyer may pay all or any portion of the Purchase Price directly to
the warehouse or other lender that has a security interest in the Purchased
Mortgage Loan to satisfy the related indebtedness and obtain a release of such
security interest.


 


(c)                                  Transaction Limitations and Other
Restrictions Relating to Closing Agents.  Notwithstanding
that a particular Transaction request will not exceed the Aggregate Transaction
Limit or applicable Type Sublimit, if the payment of the Purchase Price for
such Transaction to the related Closing Agent will violate Buyer’s applicable
policies and procedures (as contained in the Handbook or otherwise) regarding
payments to Closing Agents, Buyer may refuse to pay the Purchase Price to such
Closing Agent.


 


(d)                                 Return of Purchase Price.  If a Wet Mortgage Loan subject to a
Transaction is not closed within three (3) Business Days following the
payment of the Purchase Price, Seller shall immediately return, or cause to be
immediately returned, the Purchase Price to Buyer. If the Purchase Price was
paid by cashiers check or funding draft, Seller shall immediately void, or
cause to be immediately voided (i.e. direct the Closing Agent to immediately
void) the cashiers check or funding draft, as applicable. Further, Seller shall
pay Buyer all fees and any price differential thereon immediately upon
notification from Buyer; provided, however, that price differential shall continue
to accrue until the Purchase Price is returned to Buyer or the voided cashiers
check is received and cancelled by Buyer, as


 


7

















 


applicable.
If a cashier’s check has been issued with respect to any Transaction, Buyer
shall not be obligated to wire funds or issue another cashiers check to fund
such Transaction until the original voided cashiers check has been received and
cancelled by Buyer.


 


3.7                                 Approved
Payees.


 


(a)                                  Closing Agents.  In order for a Closing Agent to be designated
an Approved Payee with respect to any Purchase Price, Seller shall submit to
Buyer the following documents:


 


(i)                                     if the title
company issuing the title policy that covers the applicable Purchased Mortgage
Loan has not issued to Buyer a blanket Closing Protection Letter, which covers
closings conducted by this Closing Agent in the jurisdiction where this closing
will take place:


 


(1)                                  a valid blanket
Closing Protection Letter, in a form acceptable to Buyer, issued to Seller or
Buyer by the title company, which is issuing the title insurance policy that
covers the related Purchased Mortgage Loan, that covers closings conducted by
the Closing Agent in the jurisdiction where this closing will take place and if
applicable, an assignment to Buyer of such Closing Protection Letter,
substantially in the form of Exhibit F hereto; or


 


(2)                                  a valid Closing
Protection Letter, in a form acceptable to Buyer, issued to Seller or Buyer by
the title company, which is issuing the title insurance policy that covers the
related Purchased Mortgage Loans, that covers the closing of this specific
Purchased Mortgage Loan and if applicable, an assignment to Buyer of such
Closing Protection Letter, substantially in the form of Exhibit F hereto; or


 


(3)                                  if Closing
Protection Letters are not available or are limited in their applicability in
the jurisdiction where the closing takes place, any other documents Buyer may
reasonably require, including without limitation an assignment to Buyer of
Seller’s rights under its fidelity bond and errors and omissions policy,
substantially in the form of Exhibit F hereto; and


 


(ii)                                  evidence that the Irrevocable
Closing Instructions, in the applicable form and signed by Seller and Buyer,
have been delivered to such Closing Agent.


 


(b)                                 Warehouse Lenders.  In order for a warehouse lender to be
designated an Approved Payee with respect to any Purchase Price, Seller shall
submit to Buyer a written request, including the name and address of the
warehouse lender, demonstrating a need for such designation. Notwithstanding
the foregoing, Buyer reserves the right to refuse to designate any warehouse
lender as an Approved Payee, or, alternatively, to require additional terms and
conditions in order for Buyer to pay a Purchase Price to the warehouse lender.


 


(c)                                  Approval Process.  Buyer shall review the applicable documents
and notify Seller within two (2) Business Days as to whether such Closing
Agent or warehouse lender has been designated by Buyer, in its sole and good
faith discretion, to be an Approved Payee with respect to such Purchase Price.
Buyer may withdraw its approval of any Closing Agent or warehouse lender as an
Approved Payee if Buyer becomes aware of any facts or circumstances at any time
related to such Closing Agent or warehouse lender which Buyer determines, in
its sole and good faith discretion, materially and adversely affects


 


8

















 


the
Closing Agent or warehouse lender or otherwise makes the Closing Agent or
warehouse lender unacceptable as an Approved Payee upon notification to Seller.


 


3.8                                 Funding
Drafts.


 


(a)                                  Blank Funding Drafts.  If Seller is approved by Buyer to receive
Purchase Prices by funding draft, Buyer, at its discretion, shall provide
Seller with a limited number of blank drafts. Seller shall store such blank
drafts in a secure location and employ sufficient security procedures to ensure
that each funding draft issued by Seller is authorized, authentic and complete.
As requested by Buyer, Seller shall submit to Buyer an accounting of all blank
drafts provided to Seller, certified by Seller’s president or chief financial
officer. Seller shall notify Buyer immediately if it discovers that any blank
drafts are missing or otherwise not accounted for.


 


(b)                                 Completion of Funding Drafts.  With respect to any Purchase Price to be paid
by funding draft, Seller shall not complete a funding draft until after it has
submitted a Asset Data Record for the related Transaction to Buyer that
includes the number of the draft that is to be used for the Purchase Price.
Seller is responsible for completing each funding draft clearly and accurately.
Buyer shall not be obligated to accept any funding draft that contains
incorrect information, is illegible or is not signed by at least two (2) authorized
officers of Seller. If Seller makes an error in completing a funding draft,
Seller shall void the draft and return the voided draft to Buyer with its
accounting of blank drafts. Further, Seller shall notify Buyer immediately in
order to confirm a new draft number with respect to the Purchase Price. Buyer
shall not have an obligation to accept any funding draft if the draft number
does not match that approved by Buyer in connection with a specific
Transaction.


 


(c)                                  Acceptance of Funding Drafts.  The payment of the Purchase Price by funding
draft is subject to Buyer’s acceptance of the funding draft following
presentment to the payor bank. Buyer will accept a funding draft upon
confirmation of Seller’s compliance with the terms of this Agreement,
including, without limitation, receipt by Buyer of the Asset Data Record prior
to the date the funding draft was written, information contained on the funding
draft is consistent with that previously provided to Buyer and the payee is an
Approved Payee, as applicable. If Buyer rejects a funding draft for any reason,
the Purchase Price for such Transaction may be paid by a new funding draft,
provided all applicable procedures are followed, or by an alternate payment
method.


 


(d)                                 Condition Precedent.  As a condition precedent to Seller issuing a
funding draft, Seller shall have delivered to Buyer:


 


(i)                                     a completed
signature card, in form and substance satisfactory to the bank on which the
funding drafts are drawn; and


 


(ii)                                  a certificate of Seller’s
corporate secretary, dated as of the current date, as to the incumbency and
authenticity of the signatures of the officers of Seller authorized to sign
funding drafts and the resolutions of the board of directors authorizing such
officers to sign funding drafts on behalf of Seller.


 


ARTICLE 4

REPURCHASE


 


4.1                                 Repurchase
Price.


 


(a)                                  Payment of Repurchase Price.  The Repurchase Price for each Purchased
Mortgage Loan shall be payable in full and by wire transfer in accordance with
Buyer’s wire


 


9

















 


instructions
in Exhibit J upon the
earliest to occur of (i) the Repurchase Date of the Purchased Mortgage
Loan, (ii) the occurrence of any Repurchase Acceleration Event with
respect to such Transaction or (iii) the expiration or termination of this
Agreement. Such obligation to repurchase exists without regard to any prior or
intervening liquidation or foreclosure with respect to any Purchased Mortgage
Loan. While it is anticipated that Seller will repurchase each Purchased Mortgage
Loan on its related Repurchase Date, Seller shall repurchase any Purchased
Mortgage Loan hereunder on demand without any pre-payment penalty or premium.


 


(b)                                 Effect of Payment of Repurchase Price.  On the Repurchase Date (or such other date on which
the Repurchase Price is paid by Seller), termination of the related Transaction
will be effected by the repurchase by Seller or its designee of the Purchased
Mortgage Loans and the simultaneous transfer of the Repurchase Price to an
account of Buyer, or transfer of additional Mortgage Loan(s) (in each case
as further described at Section 6.5), and all of Buyer’s rights,
title and interests therein shall then be conveyed to Seller or its designee.
Seller is obligated to obtain the Mortgage Loan Documents from Custodian at
Seller’s expense on the Repurchase Date.


 


4.2                                 Repurchase
Acceleration Events.  The occurrence of any of the following events
shall be a Repurchase Acceleration Event with respect to a Transaction:


 


(a)                                  Buyer in its
sole and good faith discretion has determined that the Purchased Mortgage Loan
is a Defective Mortgage Loan;


 


(b)                                 thirty (30)
calendar days elapse from the date the Mortgage Loan Documents relating to the
Purchased Mortgage Loan were delivered to an Approved Investor and such
Approved Investor has not returned the Mortgage Loan Documents or purchased the
Purchased Mortgage Loan, unless an extension is granted by Buyer, in its sole
and good faith discretion;


 


(c)                                  ten (10) Business
Days elapse from the date a Mortgage Loan Document relating to the Purchased
Mortgage Loan was delivered to Seller for correction or completion, without
being returned to Buyer or its designee;


 


(d)                                 Seller fails to
deliver to Buyer the related Mortgage Loan Documents within the Wet Mortgage
Loans Maximum Dwell Time or any Mortgage Loan Document delivered to Buyer, upon
examination by Buyer, is found not to be in compliance with the requirements of
this Agreement or the related Purchase Commitment and is not corrected within
the Wet Mortgage Loans Maximum Dwell Time;


 


(e)                                  Regardless of
whether a Purchased Mortgage Loan is a Defective Mortgage Loan, a foreclosure
or similar type of proceeding is initiated with respect to the Purchased
Mortgage Loan; or


 


(f)                                    the further sale
of the Purchased Mortgage Loan by Seller.


 


4.3                                 Reduction
of Asset Value as Alternative Remedy.  In Buyer’s sole and good faith discretion, in lieu
of requiring full repayment of the Repurchase Price upon the occurrence of a
Repurchase Acceleration Event, Buyer may elect to reduce the Asset Value of the
related Purchased Mortgage Loan (to as low as zero) and accordingly require a
full or partial repayment of such Repurchase Price or the delivery of other
funds or collateral, which additional assets shall be “margin payments” or “settlement
payments” as such terms are defined in Bankruptcy Code Section 741(5) and
(8), respectively.


 


10

















 


4.4                                 Designation
as Noncompliant Mortgage Loan as Alternative Remedy.  In Buyer’s sole and good faith
discretion, in lieu of requiring full repayment of the Repurchase Price upon
the occurrence of a Repurchase Acceleration Event, Buyer may elect to deem the
related Purchased Mortgage Loan a Noncompliant Mortgage Loan, provided that (a) after
such Purchased Mortgage Loan is deemed to be a Noncompliant Mortgage Loan, the
aggregate original Asset Value of all Noncompliant Mortgage Loans does not
exceed the Type Sublimit for Noncompliant Mortgage Loans; (b) the Asset
Value of the Noncompliant Mortgage Loan is greater than the Repurchase Price or
Seller provides additional Purchased Assets or repays part of the Repurchase
Price as provided in Section 6.3 in each case as a “margin payment”
as such term is defined in Bankruptcy Code Section 741(5); and (c) Seller
delivers to Buyer all documentation relating to the Purchased Mortgage Loan
reasonably requested by Buyer.


 


4.5                                 Illegality
or Impracticability.  Notwithstanding anything to the contrary in
this Agreement, if Buyer determines in its sole and good faith discretion that
any law, regulation, treaty or directive or any change therein or in the
interpretation or application thereof, or any circumstance materially and
adversely affecting the London interbank market, the repurchase market for
mortgage loans or mortgage-backed securities or the source or cost of Buyer’s
funds, shall make it unlawful, impractical, or commercially unreasonable for
Buyer to enter into or maintain Transactions as contemplated by this Agreement (a) the
commitment of Buyer hereunder to enter into or to continue to maintain
Transactions shall be cancelled and (b) the Repurchase Price for each
Transaction then outstanding shall be immediately due and payable upon the
earlier to occur of (i) the related scheduled Repurchase Date, (ii) within
five (5) Business Days after the date required by any financial
institution providing funds to Buyer, (iii) sale of the Purchased Mortgage
Loan in accordance with the terms of this Agreement, (iv) the date as of
which Buyer determines that such Transactions are unlawful or (v) within
five (5) Business Days after the date Buyer determines that the payment of
the Repurchase Price on its scheduled Repurchase Date will be impractical or
commercially unreasonable because of the severe nature of the material and
adverse change affecting the London interbank market, the repurchase market for
mortgage loans or mortgage-backed securities or the source or cost of Buyer’s
funds. For the avoidance of doubt, it is understood and agreed that a material
and adverse change affecting the London interbank market, the repurchase market
for mortgage loans or mortgage-backed securities or the source or cost of Buyer’s
funds shall not automatically require Seller to pay the Repurchase Price for
any Transaction then outstanding before its related scheduled Repurchase Date
unless Buyer has made an additional determination that such change is severe,
in which case, Seller shall have the time specified in subsection (v) in
which to pay the Repurchase Price for each such Transaction. Buyer shall not be
liable to Seller for any costs, losses or damages arising from or relating from
any actions taken by Buyer pursuant to this Section 4.5.


 


4.6                                 Payments
Pursuant to Sale to Approved Investors.  Seller shall direct each Approved Investor purchasing
a Purchased Mortgage Loan to pay directly to Buyer, by wire transfer of
immediately available funds, the full purchase price, without set-off, as set
forth in the applicable Purchase Commitment. In addition, Seller shall provide
Buyer with a Purchase Advice relating to such payment. Seller shall not direct
the Approved Investor to pay to Buyer an amount less than the full purchase
price set forth in the applicable Purchase Commitment or modify or otherwise
change the wire instructions for payment of the purchase price provided to
Approved Investor by Buyer. Buyer shall apply all amounts received for the
account of Seller in accordance with Section 4.7 below and credit
all amounts due Seller to the Over/Under Account in accordance with Section 3.5(b)(ii) above.
Buyer may reject any amount received from an Approved Investor and not release
the related Purchased Mortgage Loan if (a) Buyer does not receive a
Purchase Advice in respect of any wire transfer, or (b) Buyer does not
receive the full purchase price, without set-off, as set forth in the
applicable Purchase Commitment or (c) the amount received is not
sufficient to pay the Repurchase Price. Alternatively, in lieu of rejecting an
amount received by Buyer from an Approved Investor, at Buyer’s sole option and
discretion, if the amount received from the Approved Investor does not equal or
exceed the Repurchase Price, Buyer may accept the amount received from the
Approved Investor and deduct the remaining amounts owed by Seller from the
Over/Under Account or demand payment of such remaining amount from Seller.


 


11

















 


If
Seller receives any funds intended for Buyer, Seller shall segregate and hold
such funds in trust for Buyer and immediately pay to Buyer all such amounts by
wire transfer of immediately available funds together with providing Buyer with
a settlement statement for the transaction.


 


4.7                                 Application
of Payments from Seller or Approved Investors.  Unless Buyer determines otherwise
in its sole and good faith discretion, payments made directly by Seller or an
Approved Investor to Buyer shall be applied in the following order of priority:


 


(a)                                  first, in the
exercise of Buyer’s rights under Section 6.3(d) or Buyer’ or
its Affiliates’ rights under Section 11.8.


 


(b)                                 second, to all costs,
expenses and fees incurred or charged by Buyer under this Agreement that are
not related to a specific Transaction;


 


(c)                                  third, to any amounts
due and owing to Buyer pursuant to Section 6.3;


 


(d)                                 fourth, to all costs,
expenses and fees incurred or charged by Buyer under this Agreement that are
related to the Transaction in connection with which the payment is made;


 


(e)                                  fifth, to the price
differential due and owing on the Purchase Price in connection with which the
payment is made;


 


(f)                                    sixth, to the price
differentials on any Purchase Prices related to any other Transactions that are
outstanding, due and owing, applied first to the Transaction with the earliest
date;


 


(g)                                 seventh, to the amount
of the Repurchase Price for the Transaction in connection with which the
payment is made; and


 


(h)                                 eighth, to the amount
of any Repurchase Prices related to any other Transactions that are
outstanding, due and owing, applied first to the Transaction with the earliest
date.


 


Buyer
and Seller intend and agree that all such payments shall be “settlement
payments” as such term is defined in Bankruptcy Code Section 741(8). After
the settlement payments have been applied as set forth above, Buyer shall
deposit in the Over/Under Account any amounts that remain.


 


4.8                                 Method
of Payment.  Except as otherwise specifically provided
herein, all payments hereunder must be received by Buyer on the date when due
and shall be made in United States dollars by wire transfer of immediately
available funds to such account designated by Buyer from time to time. Whenever
any payment to be made hereunder shall be stated to be due on a day that is not
a Business Day, the due date thereof shall be extended to the next succeeding
Business Day, and with respect to payments of the Purchase Price, the price
differential thereon shall be payable at the Applicable Pricing Rate during
such extension. All payments made by or on behalf of Seller with respect to any
Transaction shall be applied to Seller’s account in accordance with Section 3.5(b)(ii) and
Section 4.7 above and shall be made in such amounts as may be
necessary in order that all such payments after withholding for or on account
of any present or future taxes, levies, imports, duties or other similar
charges of whatsoever nature imposed by any government or any political
subdivision or taxing authority hereof, other than any taxes on or measured by
the net income of Buyer pursuant to the state, federal and local tax laws of
the jurisdiction where Buyer’s principal office or offices or lending office or
offices are located, compensate Buyer for any additional cost or reduced amount
receivable of making or maintaining Transactions as a result of such taxes,
imports, duties or other charges. All payments to be made by or on behalf of Seller
with respect to any Transaction shall be made without set-off, counterclaim or
other defense.


 


12

















 


4.9                                 Notification
of Payment.  Seller shall provide Buyer not fewer than one (1) Business
Day prior written notice if Seller or an Approved Investor intends to remit a
payment to Buyer equal to or greater than ten million ($10,000,000) dollars.


 


4.10                           Authorization
to Debit.  In addition to any other authorizations to and
rights of Buyer hereunder, Seller hereby expressly authorizes Buyer to debit
any account maintained by Seller with any depository institution into which any
funds related to the Purchased Mortgage Loans or related Purchased Assets have
been deposited, including without limitation, any operating, settlement or
custodial account, for the deposited amounts related to the Purchased Mortgage
Loans due Buyer hereunder. For the avoidance of doubt, the foregoing debit
rights of Buyer shall not apply to Purchased Mortgage Loans which have been
repurchased by Seller pursuant to Section 6.5.


 


4.11                           Book Account.  Buyer and Seller shall maintain
an account on their respective books of all Transactions entered into between
Buyer and Seller and for which the Repurchase Price has not yet been paid. As a
courtesy to Seller, Buyer shall provide such information to Seller via the
Internet or by telephone or facsimile, if Seller is unable to access the
information via the Internet. Notwithstanding the foregoing, Seller shall be
responsible for maintaining its own book account and records of Transactions
entered into with Buyer, amounts due to Buyer in connection with such
Transactions and for paying such amounts when due. Failure of Buyer to provide
Seller with information regarding any Transaction shall not excuse Seller’s
timely performance of all obligations under this Agreement, including, without
limitation, payment obligations under this Agreement.


 


4.12                           Full
Recourse.  The obligations of Seller from time to time to
pay the Repurchase Price, Margin Deficit payments, settlement payments and all
other amounts due under this Agreement shall be full recourse obligations of
Seller.


 


ARTICLE 5

FEES


 


5.1                                 Payment
of Fees.  Seller shall pay to Buyer those fees set forth
in this Agreement or the Transactions Terms Letter when they become due and
owing. Without limiting the generality of the foregoing, the initial Facility
Fee shall be paid on or before the Effective Date and if this Agreement is
renewed, thereafter on or before the anniversary of the Effective Date. Further,
the Unused Facility Fee shall be paid quarterly in arrears, on the first day of
the months of January, April, July and October, for each preceding
calendar quarter. Buyer shall be entitled to withdraw from the Over/Under
Account or retain from payments made by Seller or an Approved Investor, subject
to Section 4.6, any fees permitted under this Agreement that are
due and owing. If such amounts on deposit in the Over/Under Account or payments
received in connection with a Transaction are not sufficient to pay Buyer all
fees owed, Buyer shall notify Seller and Seller shall pay to Buyer, within one (1) Business
Day, all unpaid fees.


 


ARTICLE 6

SECURITY; SERVICING; MARGIN ACCOUNT MAINTENANCE; CUSTODY OF MORTGAGE LOAN

DOCUMENTS AND REPURCHASE TRANSACTIONS


 


6.1                                 Precautionary
Grant of Security Interest.  Although the parties intend that all
Transactions hereunder be sales and purchases (other than for accounting and
tax purposes) and not loans, and without prejudice to the provisions of Section 6.6
and the expressed intent of the parties, if any Transactions are deemed to be
loans, as security for the performance of all of Seller’s obligations
hereunder, Seller hereby pledges, assigns and grants to Buyer a continuing
first priority security interest in and lien upon the Purchased Assets, and
Seller shall have all the rights and remedies of a “secured party” under the
Uniform Commercial Code. Possession of any promissory notes, instruments or
documents by the Custodian shall constitute possession on behalf of Buyer. At
any time and from time to time, upon the written request of Buyer, and at the
sole expense of Seller, Seller will promptly and duly execute and deliver, or
will promptly cause to


 


13

















 


be
executed and delivered, such further instruments and documents and take such
further action as Buyer may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the Purchased Assets and the liens created hereby.
Seller also hereby authorizes Buyer to file any such financing or continuation
statement in a manner consistent with this Agreement to the extent permitted by
applicable law. A carbon, photographic or other reproduction of this Agreement
shall be sufficient as a financing statement for filing in any jurisdiction. This
Agreement shall constitute a security agreement.


 


6.2                                 Servicing.


 


(a)                                  Servicer.  Other than as set forth in Section 6.2(m),
Seller shall service, or shall cause the Servicer to service, the Purchased
Mortgage Loans on behalf of Buyer as agent for Buyer for the period between the
Purchase Date and the Repurchase Date of the Purchased Mortgage Loans.


 


(b)                                 Servicing
Agreement.  If there is
a Servicer of the Purchased Mortgage Loans, Seller shall enter into a Servicing
Agreement with the Servicer on behalf of Buyer, which such Servicing Agreement
shall be on terms agreed to by Buyer, and which shall include, at a minimum, (i) a
recognition by the Servicer of Buyer’s interests and rights to the Purchased
Mortgage Loans as provided under this Agreement; (ii) an obligation for
the Servicer to service the Purchased Mortgage Loans consistent with the degree
of skill and care that the Servicer customarily requires with respect to
similar Mortgage Loans owned or managed by it but in no event no less than in
accordance with Accepted Servicing Practices; (iii) an obligation to
comply with all applicable federal, state and local laws and regulations; (iv) an
obligation to maintain all state and federal licenses necessary for it to
perform its servicing responsibilities; (v) an obligation not to impair
the rights of Buyer in any Purchased Mortgage Loans or any payment thereto and (vi) an
obligation to collect all sums payable in respect of the Purchased Mortgage
Loans on behalf of Buyer, in trust, in segregated custodial accounts. Further,
such Servicing Agreement shall contain express reporting requirements and other
rights to allow Buyer to inspect the records of the Servicer with respect to
the Purchased Mortgage Loans. Buyer may terminate the servicing of any
Purchased Mortgage Loan with the then existing Servicer in accordance with
either Section 6.2(f) or Section 6.2(m).


 


(c)                                  Servicing
Obligations of Seller.  To
the extent Seller shall service any Purchased Mortgage Loan, Seller shall:


 


(i)            Service and
administer the Purchased Mortgage Loans on behalf of Buyer in accordance with
prudent mortgage loan servicing standards and procedures generally accepted in
the mortgage banking industry and in accordance with the degree of care and
servicing standards generally prevailing in the industry, including all
applicable requirements of any Agency, and the requirements of any applicable
Purchase Commitment and the Approved Investor, so that the eligibility of the
Purchased Mortgage Loan for purchase under such Purchase Commitment is not
voided or reduced by such servicing and administration;


 


(ii)           Subject to Subsection
6.2(f), and to the extent not otherwise held by the Custodian, Seller shall
at all times maintain and safeguard the Mortgage Loan File for the Purchased
Mortgage Loan, and in any event shall maintain and safeguard photocopies of the
documents delivered to Buyer pursuant to Section 3.3, and accurate
and complete records of its servicing of the Purchased Mortgage Loan; Seller’s
possession of such Mortgage Loan File is for the sole


 


14

















 


purpose
of servicing such Purchased Mortgage Loan and such retention and possession by
Seller is in a custodial capacity only;


 


(iii)          Buyer may, at
any time during Seller’s business hours on reasonable notice, examine and make
copies of such documents and records, or require delivery of the originals of
such documents and records to Buyer or its designee;


 


(iv)          At Buyer’s
request, Seller shall promptly deliver to Buyer reports regarding the status of
any Purchased Mortgage Loan being serviced by it, which reports shall include,
but shall not be limited to, a description of any default thereunder for more
than thirty (30) days or such other circumstances that could cause a Material
Adverse Change on such Purchased Mortgage Loan, Buyer’s title to such Purchased
Mortgage Loan or the collateral securing such Purchased Mortgage Loan; Seller
is required to deliver such reports until the repurchase of the Purchased
Mortgage Loan by Seller; and


 


(v)           Seller shall
immediately notify Buyer if Seller becomes aware of any payment default that
occurs under a Purchased Mortgage Loan.


 


(d)           Sale or Transfer of Servicing Rights.  Seller shall not sell or transfer any rights
to service a Purchased Mortgage Loan without the prior written consent of
Buyer.


 


(e)           Release of Mortgage Loan Files.  Seller shall release its custody of the
contents of any Mortgage Loan File only in accordance with the written
instructions of Buyer, except when such release is required as incidental to
Seller’s servicing of the Purchased Mortgage Loan, is required to complete the
Purchase Commitment, or as required by law.


 


(f)            Right to Appoint Successor Servicer.  Buyer reserves the right, upon the occurrence
of an Event of Default, to appoint a successor servicer to service any
Purchased Mortgage Loan (each a “Successor Servicer”). In the event of
such an appointment, Seller shall perform all acts and take all action so that
any part of the Mortgage Loan File and related servicing records held by
Seller, together with all funds in the Custodial Account and other receipts
relating to such Purchased Mortgage Loan, are promptly delivered to the
Successor Servicer. Seller shall have no claim for lost Servicing Fees, lost
profits or other damages if Buyer appoints a Successor Servicer hereunder.


 


(g)           Reserved.


 


(h)           Reserved.


 


(i)            Reserved.


 


(j)            Servicer Notice.  Seller shall provide promptly to Buyer (i) a
Servicer Notice addressed to and agreed to by the Servicer, advising the
Servicer of such matters as Buyer may reasonably request, including, without
limitation, recognition by the Servicer of Buyer’s interest in such Purchased
Mortgage Loans and the Servicer’s agreement that upon receipt of notice of an
Event of Default from Buyer, it will follow the instructions of Buyer with
respect to the servicing of the Purchased Mortgage Loans.


 


(k)           Notification of Servicer Defaults.  If Seller should
discover that, for any reason whatsoever, any entity responsible to Seller by
contract for managing or servicing any such Purchased Mortgage Loan has failed
to perform fully Seller’s obligations under this Agreement or any of the
obligations of such entities with respect to the Purchased Mortgage Loans,
Seller shall promptly notify Buyer.


 


15














 


(l)            Termination.  Upon the occurrence of any Event of Default or
Potential Default or a material default by Servicer under the Servicing
Agreement, Buyer shall have the right to immediately terminate the Servicer’s
right to service the Purchased Mortgage Loans without payment of any penalty or
termination fee. Seller shall cooperate, or cause the Servicer to cooperate, in
transferring the servicing of the Purchased Mortgage Loans to a successor
servicer appointed by Buyer in its sole and good faith discretion.


 


(m)          Buyer’s Right to Service.
Buyer or its designee, at the Buyer’s discretion, shall be entitled to service
some or all of the Purchased Mortgage Loans following the occurrence of an
Event of Default or Potential Default, and thus receive and collect all sums
payable in respect of same. Upon Buyer’s exercising of a valid right to service
under this Agreement, and written notice to Seller that Buyer desires to
service some or all of the Purchased Mortgage Loans, Seller shall promptly
cooperate, or shall cause the Servicer to promptly cooperate, with all
instructions of Buyer and do or accomplish all acts or things necessary to
effect the transfer of the servicing to Buyer, at Seller’s sole expense. Upon
Buyer’s servicing of the Purchased Mortgage Loans, (i) Buyer may, in its
own name or in the name of Seller or otherwise, demand, sue for, collect or
receive any money or property at any time payable or receivable on account of
or in exchange for the Purchased Mortgage Loan(s), but shall be under no obligation
to do so; (ii) Seller shall, if Buyer so requests, pay to Buyer all
amounts received by Seller upon or in respect of the Purchased Mortgage Loan(s) or
other Purchased Assets, advising Buyer as to the source of such funds; and (iii) all
amounts so received and collected by Buyer shall be held by it as part of the
Purchased Assets or applied against any outstanding Repurchase Price owed
Buyer.


 


6.3           Margin Account Maintenance.


 


(a)           Asset Value. Buyer shall have the
right to determine the Asset Value of each Purchased Mortgage Loan on a daily
basis.


 


(b)           Margin Deficit and Margin Call.
If Buyer shall determine at any time that (A) the Asset Value of a
Purchased Mortgage Loan subject to a Transaction is less than the related
Repurchase Price or (B) the aggregate Asset Value of all Purchased
Mortgage Loans for all such Transactions is less than the aggregate Repurchase
Price (in either case, a “Margin Deficit”),  then Buyer may, at its sole option and by
notice to Seller (as such notice is more particularly set forth below, a “Margin Call”),  require Seller to either:


 


(i)            transfer
to Buyer or its designee cash or eligible Mortgage Loans approved by Buyer in
its sole and good faith discretion (“Additional
Purchased Mortgage Loans”)  so
that the individual Asset Value of the Purchased Mortgage Loan or the aggregate
Asset Value of the Purchased Mortgage Loans, including any such cash or
Additional Purchased Mortgage Loans, will not be less than the individual
Repurchase Price for the Transaction or the aggregate Repurchase Price for all
Transactions by more than fifty thousand ($50,000) dollars; or


 


(ii)           pay
one or more Repurchase Prices in an amount sufficient to reduce the outstanding
Repurchase Prices to an amount at least fifty thousand ($50,000) dollars
greater than the Asset Value of the Purchased Mortgage Loan(s).


 


If Buyer delivers a Margin Call to Seller on or prior to 12:00 p.m..
(Pacific time) on any Business Day, then Seller shall transfer cash or
Additional Purchased Mortgage Loans to Buyer no later than 5:00 p.m.
(Pacific time) the next Business Day. If Buyer delivers a Margin Call to Seller
after 12:00 p.m. (Pacific time) on any Business Day, Seller shall be
required to transfer cash or Additional Purchased Mortgage Loans no later than
12:00 p.m. (Pacific time) on the 2nd subsequent Business Day. Notice of a
Margin Call may be


 


16

















 


provided by Buyer to Seller electronically or in writing, such as via
electronic mail or posting such notice on Buyer’s customer website(s).


 


(c)           Buyer’s Discretion. Buyer’s election not to make a Margin Call
at any time there is a Margin Deficit shall not in any way limit or impair its
right to make a Margin Call at any time a Margin Deficit exists.


 


(d)           Over/Under Account. Buyer may, in its sole and good faith
discretion, withdraw from the Over/Under Account amounts equal to any Margin
Deficit which is not otherwise satisfied by Seller within the time frames
provided in this Section 6.3.


 


(e)           Credit to Repurchase Price. Any cash transferred to Buyer pursuant to
this Section 6.3 shall be credited to the Repurchase Price of the
related Transaction(s).


 


6.4           Custody of Mortgage Loan
Documents.


 


(a)           Custodial
Arrangements. Buyer may appoint any Person to act as the Custodian to hold
possession of the Mortgage Loan Documents (or a portion thereof) and to take
actions at the direction of Buyer. Seller hereby consents to any and all such
appointments and agrees to deliver the Mortgage Loan Documents to the Custodian
upon the direction of Buyer. Seller further agrees that (i) the Custodian
shall be exclusively the agent, bailee and/or custodian of Buyer; (ii) receipt
of the Mortgage Loan Documents by the Custodian shall be constructive receipt
by Buyer of the Mortgage Loan Documents; (iii) Seller shall not have and
shall not attempt to exercise any degree of control over the Custodian or any
Mortgage Loan Document held by the Custodian.


 


(b)           Temporary Withdrawal
of Mortgage Loan Documents for Correction. Buyer may, in its sole and good
faith discretion, permit Seller to withdraw, for a period not to exceed ten (10) Business
Days, specified Mortgage Loan Documents for the purpose of correcting or
completing such documents; provided, however, that unless otherwise agreed to
by Buyer in writing, in no event shall the outstanding balance of the
Transactions related to such Mortgage Loan Documents exceed five percent (5%)
of the Aggregate Transaction Limit. Notwithstanding the foregoing, Buyer shall
be deemed to be in possession of any Mortgage Loan Documents released pursuant
to this Section 6.4(b), and the interest of Buyer in the related
Purchased Mortgage Loan shall continued unimpaired until the Mortgage Loan
Documents are returned to, or the proceeds thereof are received by, Buyer.


 


(c)           Delivery of Mortgage
Loan Documents to Approved Investors. Provided that no Event of Default has
occurred and is continuing, upon the written request of Seller, Buyer may, at
its option and in its sole and good faith discretion, deliver to an Approved
Investor set forth in the related Purchase Commitment, or its custodian, the
Mortgage Loan Documents relating to a specified Purchased Mortgage Loan. All
such Purchased Mortgage Loans and the related Mortgage Loan Documents shall at
all times be covered by one or more Bailee Agreements, and Buyer or its
designee will not release Mortgage Loan Documents to an Approved Investor
unless Buyer or its Custodian has received a signed Bailee Agreement from the
Approved Investor. Notwithstanding the foregoing, Buyer shall be deemed to be
in possession of any Mortgage Loan Documents released pursuant to this Section 6.4(c),
and the interest of Buyer in the related Purchased Mortgage Loan shall continue
unimpaired until the Mortgage Loan Documents are returned to, or proceeds thereof
are received by, Buyer. If the Approved Investor does not purchase a Purchased
Mortgage Loan as contemplated by the related Purchase Commitment, Seller shall,
upon the request of Buyer, assist Buyer in the recovery of any Mortgage Loan
Documents not returned by the Approved Investor to Buyer.


 


17

















 


(d)           Delivery of Mortgage Loan Documents Relating to Mortgage-Backed Securities.
Upon the written request of Seller, Buyer may, at its option and in its sole and
good faith discretion, deliver to the certifying custodian the Mortgage Loan
Documents relating to those Purchased Mortgage Loans that will be pooled to
support a Mortgage-Backed Security. All such Purchased Mortgage Loans and the
related Mortgage Loan Documents shall at all times be covered by a Bailee
Agreement, and Buyer or its designee will not release Mortgage Loan Documents
to a certifying custodian unless Buyer or its designee has received a signed
tri-party custodial agreement from such custodian, in a form acceptable to
Buyer. Buyer shall have no obligation to release any Mortgage Loan Documents to
any certifying custodian that will not sign a custodial agreement acceptable to
Buyer. Notwithstanding the foregoing, Buyer shall be deemed to be in possession
of any Mortgage Loan Documents released pursuant to this Section 6.4(d),
and the interest of Buyer in the related Purchased Mortgage Loan shall continue
unimpaired until the Mortgage Loan Documents are returned to, or proceeds
thereof are received by, Buyer. Seller shall pay for all costs of the
certifying custodian and use its best efforts to ensure that the issuer
delivers the Mortgage-Backed Securities to the certifying custodian.


 


6.5           Release of Mortgage Loan
Documents. Provided that no Event of
Default has occurred and is continuing, Seller may repurchase a Purchased
Mortgage Loan by either:


 


(a)          paying, or causing an Approved Investor to
pay, to Buyer, subject to Sections
4.6 and 4.7 above, the Repurchase Price; or


 


(b)          transferring to Buyer additional Mortgage Loan(s) satisfactory
to Buyer and/or cash, in aggregate amounts sufficient to cover the amount by
which the aggregate amount of Transactions then outstanding hereunder (plus
accrued interest and accrued fees with respect thereto) exceeds the Asset Value
of the existing Purchased Mortgage Loan(s), excluding the Purchased Mortgage
Loan(s) to be released.


 


Upon receipt of the applicable amount, as set forth above, Buyer shall
deliver or shall cause the Custodian to deliver the related Mortgage Loan
Documents to Seller or Seller’s designee, if such documents have not already
been delivered pursuant to a Bailee Agreement. If such release gives rise to or
perpetuates a Margin Deficit, Buyer shall notify Seller of the amount thereof
and Seller shall thereupon satisfy the Margin Call in the manner specified in Section 6.3(b).
Buyer shall have no obligation to release a repurchased Purchased Mortgage Loan
or terminate its security interest in such Purchased Mortgage Loan until such
Margin Call is satisfied.


 


6.6           Sales Transactions;
Repurchase Transactions. For
the avoidance of doubt, Buyer and Seller confirm that the Transactions
contemplated by this Agreement are intended to be sales transactions and
absolute assignments of the Purchased Mortgage Loans by Seller to Buyer, and
not borrowings secured by the Purchased Mortgage Loans. Title to all Purchased
Mortgage Loans and related Purchased Assets shall pass to Buyer upon payment of
the Purchase Price. Accordingly, beginning on the Purchase Date and prior to
the Repurchase Date, Buyer may in its sole discretion and without notice to
Seller engage in repurchase transactions with respect to any or all of the
Purchased Mortgage Loans or otherwise pledge, hypothecate, assign, transfer or
convey any or all of the Purchased Mortgage Loans (such transactions, “Repurchase Transactions”),  provided, however, that to the extent Buyer engages in any Repurchase
Transactions, it shall have reacquired title to the Purchased Mortgage Loans
prior to the Repurchase Date. Seller shall not be responsible for any
additional obligations, costs or fees in connection with such Repurchase
Transactions. Seller shall not take any action inconsistent with Buyer’s
ownership of a Purchased Mortgage Loan and shall not claim any legal,
beneficial or other interest in such a Purchased Mortgage Loan other than the
limited right and obligations to provide servicing of such Purchased Mortgage
Loans where Buyer designates Seller as servicer as provided in Section 6.2.


 


18

















 


ARTICLE 7


CONDITIONS PRECEDENT


 


7.1           Initial Transaction. As conditions precedent to Buyer’s obligation
to enter into the initial Transaction hereunder:


 


(a)           Seller shall have delivered to Buyer, in form and substance satisfactory
to Buyer:


 


(i)            this
Agreement signed by Seller;


 


(ii)           the
Transactions Terms Letter signed by Seller;


 


(iii)          an Electronic Tracking Agreement signed by
Seller;


 


(iv)          if
required in the Transactions Terms Letter, a Guarantee(s) signed by each
Guarantor(s);


 


(v)           a
Power of Attorney signed by Seller;


 


(vi)          a
certified copy of Seller’s articles or certificate of incorporation and bylaws
(or corresponding organizational documents if Seller is not a corporation) and,
if required by Buyer, a certificate of good standing issued by the appropriate
official in Seller’s jurisdiction of organization, dated no less recently than
one (1) month prior to the date hereof;


 


(vii)         a certificate of Seller’s corporate secretary,
substantially in the form of Exhibit C  hereto, dated as of the Effective Date, as to
the incumbency and authenticity of the signatures of the officers of Seller
executing the Principal Agreements and the resolutions of the board of
directors of Seller (or its equivalent governing body or Person), substantially
in the form of Exhibit D hereto;


 


(viii)        independently audited financial statements of
Seller (and its Subsidiaries, on a consolidated basis) for each of the two (2) fiscal
years most recently ended (if available), containing a balance sheet and
related statements of income, stockholders’ equity and cash flows, all prepared
in accordance with GAAP, applied on a basis consistent with prior periods, and
otherwise acceptable to Buyer, together with an auditor’s opinion that is
unqualified or otherwise is consented to in writing by Buyer;


 


(ix)          if
more than one (1) year has passed since the close of the most recently
ended fiscal year, interim financial statements of Seller covering the period
from the first day of the current fiscal year to the last day of the most
recently ended month;


 


(x)           financial
statements of each of the Guarantors, if any, signed by them, dated no less
recently than three (3) months prior to the date of the initial
Transaction;


 


(xi)          Reserved. (there is no
section 9.11)


 


(xii)         if
required by Buyer, a subordination agreement, in form and substance
satisfactory to Buyer, executed by any Person which is, as of the Effective
Date, a creditor of Seller, including each Guarantor (if required by the
Transaction Terms Letter) and each Affiliate of Seller that is a creditor of
Seller;


 


(xiii)        an Acknowledgement of
Confidentiality of Password Agreement;


 


19

















 


(xiv)        the initial Facility Fee,
if applicable;


 


(xv)         a Servicer Notice, if
applicable;


 


(xvi)        if so requested by Buyer,
the Control Agreement in a form reasonably satisfactory to Buyer;


 


(xvii)       if required, a Servicing
Agreement signed by the Servicer and Seller;


 


(xviii)     a copy of Seller’s
underwriting guidelines for Mortgage Loans:


 


(xix)        that
certain letter agreement regarding Acquisition of Home Loan Center, Inc.
by LendingTree, LLC, dated as of January 25, 2008 by and between Buyer,
Seller and LendingTree, LLC; and


 


(xx)         such other documents as
Buyer or its counsel may reasonably request.


 


(b)           Buyer shall have determined that it has
received satisfactory evidence that the appropriate
Uniform Commercial Code Financial Statements (UCC-1) and/or such other
instruments as may be necessary in order to create in favor of Buyer, a
perfected first-priority security interest in the Purchased Mortgage Loans and
related Purchased Assets should any of the Transactions be deemed to be loans,
and same shall have been duly executed and appropriately filed or recorded in
each office of each jurisdiction in which such filings and recordations are
required to perfect such first-priority security interest.


 


7.2           All Transactions. As conditions precedent to Buyer considering
whether to enter into any Transaction hereunder, including the initial
Transaction:


 


(a)           Seller shall have delivered to Buyer, in form and substance satisfactory
to Buyer and not later than the Transaction Request Deadline:


 


(i)            a
Asset Data Record for the Purchased Mortgage Loan, which Asset Data Record may
be an individual record or part of a group report and shall be authenticated by
Seller with the PIN or the handwritten signature of an authorized officer of
Seller;


 


(ii)           the
Mortgage Loan Documents relating to the Purchased Mortgage Loan, unless such
Purchased Mortgage Loan is a Wet Mortgage Loan;


 


(iii)          a copy of a Purchase Commitment for the
related Purchased Mortgage Loan, unless the Transactions Terms Letter states
otherwise;


 


(iv)          written
evidence that all Transaction Requirements have been satisfied; and


 


(v)           such
other documents pertaining to the Transaction as Buyer may reasonably request,
from time to time.


 


(b)           an amount equal to the Haircut plus the minimum required balance, as set
forth in Section 3.5(a), shall be on deposit in the Over/Under
Account;


 


(c)           Seller shall have paid all Facility Fees and Unused Facility Fees that
are due;


 


(d)           Seller shall have designated an Approved Payee, if applicable, to whom
such funds shall be delivered;


 


20

















 


(e)           the representations and warranties of Seller set forth in Article 8 hereof shall be true and correct in all
material respects as if made on and as of the date of each Transaction. At the
request of Buyer, Buyer shall have received an officer’s certificate signed by
a responsible officer of Seller certifying as to the truth and accuracy of
same;


 


(f)            if required by Buyer, Seller and each
Guarantor (if required by the Transactions Terms Letter) shall have performed
all agreements to be performed by them hereunder and under the Guarantee,
respectively, and after giving effect to the requested Transaction, there shall
exist no Event of Default or Potential Default hereunder;


 


(g)           no Potential Default, Event of Default or a Material and Adverse Change
shall have occurred and be continuing; and


 


(h)           Seller shall have deposited all amounts required under Section 6.2(g) into the Custodial Account.


 


7.3           Intercreditor Agreements. If required by Buyer, within sixty (60)
calendar days following the Effective Date, Seller shall deliver to Buyer an lntercreditor
Agreement signed by each creditor that provides warehouse lines of credit,
repurchase facilities or similar mortgage finance arrangements to Seller. By
way of example but not limitation, if Seller has a mortgage financing agreement
with a syndication of creditors or if an Affiliate of Seller is providing
Seller a warehouse line of credit or mortgage financing, Buyer may require that
such creditors execute an lntercreditor Agreement. If Seller fails to provide
Buyer with any required Intercreditor Agreement within the time frame stated
herein, Buyer may, in its sole and good faith discretion, determine that such
failure adversely affects the creditworthiness of Seller and may modify the
terms and conditions under which it will continue to enter into Transactions
with Seller. Buyer shall not be liable to Seller for any costs, losses or
damages arising from or relating to any changes made by Buyer to the terms and
conditions under which it will continue to enter into Transactions with Seller.
Further, Buyer agrees that it shall deliver to Seller a signed Intercreditor
Agreement substantially in a form similar to Exhibit L, as requested by
Seller if required by any other creditor that provides Seller warehouse lines
of credit, repurchase facilities or similar mortgage finance arrangements.


 


7.4           Satisfaction of Conditions. The entering into of any Transaction prior to
or without the fulfillment by Seller of all the conditions precedent thereto,
whether or not known to Buyer, shall not constitute a waiver by Buyer of the
requirements that all conditions, including the non-performed conditions, shall
be required to be satisfied with respect to all Transactions. All conditions
precedent hereunder are imposed solely and exclusively for the benefit of Buyer
and may be freely waived or modified in whole or in part by Buyer. Any waiver
or modification asserted by Seller to have been agreed by Buyer must be in
writing. Buyer shall not be liable to Seller for any costs, losses or damages
arising from Buyer’s determination that Seller has not satisfactorily complied
with any applicable condition precedent.


 


ARTICLE 8


REPRESENTATIONS AND WARRANTIES


 


8.1           Representations and
Warranties Concerning Seller.
Seller represents and warrants to and covenants with Buyer that the following
are true and correct as of the Effective Date through and until the date on
which all obligations of Seller under this Agreement are fully satisfied:


 


(a)           Due Formation and Good Standing.
Seller is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, has the full legal power and authority
to own its property and to carry on its business as currently conducted and is
duly qualified to do business and is in good standing in each jurisdiction in
which the transaction of its business makes such qualification necessary.


 


21

















 


(b)           Authorization.
The execution, delivery and performance by Seller of the Principal Agreements
and all other documents and transactions contemplated thereby, are within
Seller’s corporate powers, have been duly authorized by all necessary corporate
action and do not constitute or will not result in (i) a breach of any of
the terms, conditions or provisions of Seller’s articles or certificate of
incorporation or bylaws (or corresponding organizational documents if Seller is
not a corporation); (ii) a material breach of any legal restriction or any
agreement or instrument to which Seller is now a party or by which it
is bound; (iii) a material default or an acceleration under any of the
foregoing; or (iv) the violation of any law, rule, regulation, order,
judgment or decree to which Seller or its property is subject.


 


(c)           Enforceable Obligation.
The Principal Agreements and all other documents contemplated thereby
constitute legal, binding and valid obligations of Seller, enforceable in
accordance with their respective terms, except as limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditor’s rights.


 


(d)           Approvals. The execution and
delivery of the Principal Agreements and all other documents contemplated
thereby and the performance of Seller’s obligations thereunder do not require
any license, consent, approval, authorization or other action of any Person,
including any state, federal, governmental or regulatory authority, or if
required, such license, consent, approval, authorization or other action has
been obtained prior to the Effective Date.


 


(e)           Compliance with Laws.
Seller is not in violation of any provision of any applicable law, or of any
judgment, award, rule, regulation, order, decree, writ or injunction of any
court or public regulatory body or authority that will have a material adverse
effect on the business, operations, assets or financial condition of
Seller.


 


(f)            Financial Condition.
All financial statements of Seller and each Guarantor (if indicated in the
Transactions Terms Letter) delivered to Buyer fairly and accurately present the
financial condition of the parties for whom such statements are submitted. The
financial statements of Seller have been prepared in accordance with GAAP
consistently applied throughout the periods involved, and there are no
contingent liabilities not disclosed thereby that would adversely affect the
financial condition of Seller. Since the close of the period covered by the
latest financial statement delivered to Buyer with respect to Seller, there has
been no material adverse change in the assets, liabilities or financial
condition of Seller nor is Seller aware of any facts that, with or without
notice or lapse of time or both, would or could result in any such material
adverse change. No event has occurred, including, without limitation, any
litigation or administrative proceedings, and no condition exists or, to the
knowledge of Seller, is threatened, that (i) might render Seller unable to
perform its obligations under the Principal Agreements and all other documents
contemplated thereby; (ii) would constitute an Event of Default; or (iii) might
adversely affect the financial condition of Seller or the validity, priority or
enforceability of the Principal Agreements or any other documents contemplated thereby.


 


(g)           Credit Facilities.
The only credit facilities, including repurchase agreements for mortgage loans
and mortgage-backed securities, of Seller that are presently in effect and are
secured by mortgage loans or provide for the purchase, repurchase or early
funding of mortgage loan sales, are with Persons disclosed to Buyer at the time
of application, or thereafter disclosed to and approved by Buyer, and, if
required by Buyer, such Persons have executed and delivered an
Intercreditor Agreement (or will execute and deliver an lntercreditor Agreement
within sixty (60) days following the Effective Date in accordance with Section 7.3)
or warehouse lenders that are Approved Payees.


 


(h)           Title to Assets.
Seller has good, valid, insurable (in the case of real property) and marketable
title to all of its properties and other assets, whether real or personal,
tangible


 


22

















 


or intangible, reflected on the financial statements delivered to Buyer
with respect to Seller, except for such properties and other assets that have
been disposed of in the ordinary course of business of Seller’s mortgage
banking business, and all such properties and other assets are free and clear
of all liens except as disclosed in such financial statements.


 


(i)            Litigation. There are no actions,
claims, suits, investigations, or proceedings pending, or to the knowledge of
Seller, threatened or reasonably anticipated against or affecting Seller in any
court or before or by any arbitrator, government commission, board, bureau or
other administrative agency that, if adversely determined, may reasonably be
expected to result in any material and adverse change in the business,
operations, assets, licenses, qualifications or financial condition of Seller.


 


(j)            Payment of Taxes.
To the best of its knowledge, Seller has filed all tax returns and reports
required to be filed and has paid all taxes, assessments, fees and other
governmental charges levied upon it or its property or income that are due and
payable, including interest and penalties, or has provided adequate reserves
for the payment thereof.


 


(k)           No Defaults. Seller is not in
default under any indenture, mortgage, deed of trust, agreement or other
instrument or contractual or legal obligation to which it is a party or by
which it is bound.


 


(i)            ERISA. If applicable, Seller
is in compliance in all material respects with the requirements of ERISA, and
no Reportable Event has occurred under any Plan maintained by Seller.


 


(m)          Approved Mortgagee. If represented in Buyer’s
Credit Application or otherwise indicated by Seller to Buyer, Seller is an
approved FHA, VA, Ginnie Mae, Fannie Mae and/or Freddie Mac seller, mortgagee
and/or servicer and is in good standing with these agencies.


 


(n)           True and Complete Disclosure. Seller shall make full disclosure to Buyer of all information that could
materially adversely affect the execution, delivery and performance by Seller
of its obligations under the Principal Agreements. All information furnished to
Buyer by or on behalf of Seller in connection with the Principal Agreements or
any transaction contemplated thereby, including, without limitation, all
information set forth in the Application, is true, accurate and complete in all
material respects on the date furnished, and there has been no material adverse
change in the condition, financial or otherwise, of Seller from the time such
information was provided to Buyer.


 


(o)           Ownership; Priority of Liens.  Seller owns all Mortgage Loans
identified in the Transactions Terms Letter that are to become Purchased
Mortgage Loans, and any Transaction shall convey all of Seller’s right, title
and interest in and to such Purchased Mortgage Loans and other Purchased Assets
to Buyer. This Agreement shall also create in favor of Buyer, a valid,
enforceable, perfected first priority lien and security interest in the Purchased
Mortgage Loans and other Purchased Assets, prior to the rights of all third
Persons and subject to no other liens.


 


(p)           Investment Company Act.
Seller is not an “investment company” or a company controlled by an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.


 


(q)           Filing Jurisdictions; Relevant States. Schedule 1 sets forth all of the
jurisdictions and filing offices in which a financing statement should be filed
in order for Buyer to perfect its


 


23

















 


security interest in the Purchased Assets. Schedule 1 sets forth all of
the states or other jurisdictions in which Seller originates Mortgage Loans in
its own name or through brokers on the date of this Agreement.


 


(r)            Seller Solvent; Fraudulent Conveyance. As of the date hereof and immediately after
giving effect to each Transaction, the fair value of the assets of Seller is
greater than the fair value of the liabilities (including, without limitation,
contingent liabilities if and to the extent required to be recorded as a
liability on the financial statements of Seller in accordance with GAAP) of
Seller and Seller is and will be solvent, is and will be able to pay its debts
as they mature and does not and will not have an unreasonably small capital to
engage in the business in which it is engaged and proposes to engage. Seller
does not intend to incur, or believe that it has incurred, debts beyond its
ability to pay such debts as they mature. Seller is not contemplating the
commencement of insolvency, bankruptcy, liquidation or consolidation
proceedings or the appointment of a receiver, liquidator, conservator, trustee
or similar official in respect of Seller or any of its assets. Seller is not
transferring any Mortgage Loans with any intent to hinder, delay or defraud any
of its creditors.


 


(s)           Custodial Account. All funds required to be segregated and
deposited into the Custodial Account have been so segregated and deposited.


 


(t)            Chief Executive Office. Seller’s principal place of business is
located at 163 Technology Drive, Irvine, CA 92618.


 


8.2           Representations and
Warranties Concerning Purchased Assets.
Seller represents and warrants to and covenants with Buyer that the following
are true and correct with respect to each Purchased Mortgage Loan as of the
related Purchase Date through and until the date on which such Purchased
Mortgage Loan is repurchased by Seller:


 


(a)           Eligible Loan. The Mortgage Loan is a Conventional
Conforming Mortgage Loan, Government Mortgage Loan, Jumbo Mortgage Loan, Super
Jumbo Mortgage Loan, Expanded Criteria Mortgage Loan, Subprime Mortgage Loan,
Closed-End Second Lien Mortgage Loan, HELOC Mortgage Loan or
Nonperforming/Subperforming Mortgage Loan, as applicable. The Mortgage Loan is
a legal, valid and binding obligation of the Mortgagor thereunder, enforceable
in accordance with its terms and subject to no offset, defense or counterclaim,
obligating Mortgagor to make the payments specified therein.


 


(b)           Purchase Commitment. Unless otherwise stated in the Transactions
Terms Letter, the Mortgage Loan is covered by a Purchase Commitment that
permits assignment thereof to Buyer, does not exceed the availability under
such Purchase Commitment, conforms to the requirements and specifications set forth
in such Purchase Commitment and the related regulations, rules, requirements
and/or handbooks of the applicable Approved Investor and is eligible for sale
to and insurance or guaranty by, respectively, the applicable Approved Investor
and any applicable Insurer.


 


(c)           Asset Data Record. The information contained in the Asset Data
Record is true, correct and complete in all material respects.


 


(d)           Origination and Servicing. The Mortgage Loan has been originated and
serviced in material compliance with all industry standards, applicable
Approved Investor and Insurer requirements and all applicable federal, state
and local statutes, regulations and rules, including, without limitation, the
Federal Truth-in-Lending Act of 1968, as amended, and Regulation Z thereunder,
the Federal Fair Credit Reporting Act, the Federal Equal Credit Opportunity
Act, the Federal Real Estate Settlement Procedures Act of 1974, as amended, and
Regulation X thereunder, and all applicable usury, licensing, real property,
consumer protection and other laws.


 


24

















 


(e)           Mortgage Loan Documents.
The Mortgage Loan is evidenced by instruments acceptable to FHA, VA, Fannie
Mae, Freddie Mac or the Approved Investor, as applicable, given the type of
Mortgage Loan. The Mortgage Loan Documents and other mortgage loan documents
have been duly executed and delivered by the Mortgagor and create valid and
legally binding obligations of the Mortgagor, enforceable in accordance with
their terms, except as may be limited by bankruptcy or other laws affecting the
enforcement of creditor’s rights generally, and there are no valid
rights of rescission, set-offs, counterclaims or other defenses with respect
thereto.


 


(f)            Lien Position.
The Mortgage Loan is secured by a valid first priority lien on the Mortgaged
Property under the laws of the state where the related mortgaged property in
located; provided, however, that if the Mortgage Loan is a Closed-End Second
Lien Mortgage Loan or HELOC Mortgage Loan, it is secured by a
valid second lien on the Mortgaged Property.


 


(g)           No Future Advances.
Except in the case of a HELOC Mortgage Loan where there may be future
disbursements, the full original principal amount of each Mortgage Loan, net of any
discounts, has been fully advanced or disbursed to the Mortgagor named therein,
unless otherwise expressly agreed by the parties in writing. Seller shall
retain the ability to enter into a Transaction in circumstances where funds
shall be held in escrow after the Transaction date pending the completion of
on-site improvements.


 


(h)           No Default. There is no default,
breach, violation or event of acceleration existing under the Mortgage or the
related Mortgage Note, and no event has occurred that, 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. Seller has not waived
any default, breach, violation or event of acceleration.


 


(i)            No Waiver. The terms of the Mortgage Loan have not been waived, impaired, changed or
modified, except to the extent such amendment or modification has been
disclosed to Buyer in writing and does not affect the salability of the
Mortgage Loan pursuant to the applicable Purchase Commitment.


 


(j)            Taxes and Insurance.
All taxes, governmental assessments, insurance premiums, water, sewer and
similar municipal charges (if included in the applicable property tax billing
statement), leasehold payments or ground rents that previously became due and
owing have been paid or a escrow of funds has been established in an amount
sufficient to pay for every such item that remains unpaid.


 


(k)           Private Mortgage Insurance.
Each Conventional Conforming Mortgage Loan is insured by a policy of private
mortgage insurance in the amount required by Fannie Mae or Freddie Mac, as
applicable, and by an Insurer and all provisions of such private mortgage
insurance policy have been and are being complied with, such policy is in full
force and effect and all premiums due thereunder have been paid. There are no
defenses, counterclaims or rights of setoff affecting the Conventional
Conforming Mortgage Loan or affecting the validity or enforceability of any
private mortgage insurance applicable to such Mortgage Loan.


 


(l)            Government Mortgage Loans.
If the Mortgage Loan is represented by Seller to have, or to be eligible for,
FHA insurance, such Mortgage Loan is insured, or eligible to be insured,
pursuant to the National Housing Act. If the Mortgage Loan is represented by
Seller to be guaranteed, or to be eligible for guarantee, by the VA, such
Mortgage Loan is guaranteed, or eligible to be guaranteed, under the provisions
of Chapter 37 of Title 38 of the United States Code. As to each FHA insurance
certificate or each VA guaranty certificate, Seller has complied with
applicable provisions of the insurance for guaranty contract and federal
statutes and regulations, all premiums or other charges due in


 


25

















 


connection with such insurance or guarantee have been paid, there has
been no act or omission that would or may invalidate any such insurance or
guaranty, and the insurance or guaranty is, or when issued, will be in full
force and effect with respect to such Government Mortgage Loan. There are no
defenses, counterclaims or rights of setoff affecting the Government Mortgage
Loan or affecting the validity or enforceability of the FHA insurance or VA
guaranty applicable to such Mortgage Loan.


 


(m)          Hazard Insurance.
The Mortgage Loan is covered by a policy of hazard insurance, flood insurance
and insurance against other insurable risks and hazards as required by the
applicable Approved Investor and the agreements applicable to such Mortgage
Loan, in amounts not less than the outstanding principal balance of the
Mortgage Loan or such maximum lesser amount as permitted by the applicable
Approved Investor and applicable law, all in a form usual and customary in the
industry and that is in full force and effect, and all amounts required to have
been paid under any such policy have been paid.


 


(n)           Title Insurance.
A valid and enforceable title insurance policy has been issued or a commitment
to issue such title insurance policy has been obtained for the Mortgage Loan in
an amount not less than the original principal amount of such Mortgage Loan,
which title insurance policy insures that the Mortgage relating thereto is a
valid first lien or second lien, as applicable, on the property therein
described and that the mortgaged property is free and clear of all encumbrances
and liens having priority over the first lien of the Mortgage (unless the
Mortgage Loan is a Closed-End Second Lien Mortgage Loan or HELOC Mortgage Loan)
and otherwise in compliance with the requirements of the applicable Approved
Investor. The title insurance company that issued the applicable Closing
Protection Letter has also issued or has committed to issue the title insurance
policy.


 


(o)           Assignment. The Assignment (i) has
been duly authorized by all necessary corporate action by Seller, duly executed
and delivered by Seller and is the legal, valid and binding obligation of
Seller enforceable in accordance with its terms, and (ii) complies with
all applicable laws including all applicable recording, filing and registration
laws and regulations and is adequate and legally sufficient for the purpose
intended to be accomplished thereby, including, without limitation, the
assignment of all of the rights, powers and benefits of Seller as mortgagee.


 


(p)           No Fraud. No error, omission,
misrepresentation, negligence, fraud or similar occurrence has taken place in
any material respect with respect to the Mortgage Loan on the part of any
Person, including, without limitation, the Mortgagor, any appraiser, any
builder or developer or any other party involved in the origination of the
Mortgage Loan or in the application of any insurance in relation to such
Mortgage Loan.


 


8.3           Continuing Representations  and Warranties. By submitting a Asset Data Record hereunder, Seller
shall be deemed to have represented and warranted the truthfulness and
completeness of the statements set forth in Sections 8.1 and 8.2.


 


26






 










 


ARTICLE 9

AFFIRMATIVE COVENANTS


 


Seller
hereby covenants and agrees with Buyer that during the term of this Agreement
and for so long as there remain any obligations of Seller to be paid or
performed under the Principal Agreements:


 


9.1                                      Financial Statements and
Other Reports.


 


(a)                                  Interim Statements.
Seller shall deliver to Buyer financial statements of Seller, including
statements of income and changes in shareholders’ equity for the period from
the beginning of such fiscal year to the end of such month or quarter, within
the time frame required in the Transactions Terms Letter, and the related
balance sheet as of the end of such month or quarter, within the time frame
required in the Transactions Terms Letter, all in reasonable detail and
certified by an officer of the Seller, subject, however, to year-end audit
adjustments;


 


(b)                                 Annual Statements.
Seller shall deliver to Buyer, within the time frame required in the
Transactions Terms Letter, audited financial statements of Seller, including
statements of income and changes in shareholders’ equity for such fiscal year
and the related balance sheet as at the end of such fiscal year, all in
reasonable detail and accompanied by an opinion of a certified public
accounting firm reasonably satisfactory to Buyer including a management
representation letter signed by the chief financial officer of Seller stating
that the financial statements fairly present the financial condition and
results of operations of Seller as of the end of, and for, such year;


 


(c)                                  Officer’s Certificate.
Together with the financial statements required to be delivered pursuant to Sections 9.1(a) and (b), Seller shall deliver to Buyer an officer’s
certificate substantially in the form of Exhibit E
hereto;


 


(d)                                 Annual Statements of Guarantor.
If required by Buyer, Seller shall deliver to Buyer updated financial
statements of each Guarantor (if required and indentified in the Transaction
Terms Letter), signed by each of them, within the time frame required in the
Transactions Terms Letter, and, if no time frame is specified, within ninety
(90) days following the end of each calendar year;


 


(e)                                  Hedging Reports.
Upon request, Seller shall deliver to Buyer, or caused to be delivered to
Buyer, a reconciliation report, in a form reasonably satisfactory to Buyer,
including, without limitation, a report of all outstanding Transactions and
their related Purchase Commitments, availability under unused Purchase
Commitments and all amounts outstanding and available under other warehouse
lines of credit, repurchase agreements and similar credit facilities; and


 


(f)                                    Reports and Information Regarding Purchased
Mortgage Loans. Seller shall deliver to Buyer, with
reasonable promptness, copies of any reports related to the Purchased Mortgage
Loans and any other information in Seller’s possession related to the Purchased
Mortgage Loans as Buyer, in its sole and good faith discretion, may reasonably
request.


 


(g)                                 Other Reports.
As may be reasonably requested by Buyer from time to time, Seller shall deliver
to Buyer, within thirty (30) days of filing or receipt (i) copies of all
regular or periodic financial or other reports, if any, that Seller files with
any governmental, regulatory or other agency and (ii) copies of all
audits, examinations and reports concerning the operations of Seller from any
Approved Investor, Insurer or licensing authority. Seller shall also deliver to
Buyer, with reasonable promptness, such further information reasonably related
to the business, operations, properties or financial


 


27

















 


condition
of Seller, in such detail and at such times as Buyer, in its sole and good
faith discretion, may request. Seller understands and agrees that all reports
and information provided to Buyer by or relating to Seller may be disclosed to
Buyer’s Affiliates.


 


9.2                                      Inspection of Properties and
Books. As required by applicable
law and prudent mortgage banking practices, Seller shall keep accurate and
complete records of the Purchased Mortgage Loans. At no cost to Buyer (except
in the case where Buyer desires information from third parties), Seller shall
permit authorized representatives of Buyer to discuss the business, operations,
assets and financial condition of Seller with its officers and employees and to
examine its books of account and make copies and/or extracts thereof, upon
reasonable notice to Seller at Seller’s place of business during normal
business hours. Further, Seller will provide its accountants with a copy of
this Agreement promptly after the execution hereof and will instruct its
accountants to answer, at no cost to Buyer, any and all questions that any
authorized representative of Buyer may address to them in reference to the
financial condition or affairs of Seller. Seller may have its representatives
in attendance at any meetings between the officers or other representatives of
Buyer and Seller’s accountants held in accordance with this authorization.


 


9.3                                      Notice. Seller shall give Buyer prompt written
notice, in reasonable detail, of:


 


(a)                                  any and all material changes to the
information set forth in the Application;


 


(b)                                 any action, suit or proceeding instituted by
or against Seller in any federal or state court or before any commission or
other regulatory body (federal, state or local, foreign or domestic and if
permitted by such body), or any such action, suit or proceeding threatened in
writing against Seller, in any case, if such action, suit or proceeding, or any
such action, suit or proceeding threatened against Seller, involves a potential
liability, on an individual or aggregate basis, that, if adversely determined,
may reasonably be expected to result in any material and adverse change in the
business, operations, assets, licenses, qualifications or financial condition
of Seller.


 


(c)                                  the filing, recording or assessment of any
valid federal, state or local tax lien against it, or any of its assets;


 


(d)                                 the occurrence of any Event of Default;


 


(e)                                  the actual or threatened suspension,
revocation or termination of Seller’s licensing or eligibility, in any respect,
as an approved, licensed lender, seller, mortgagee or servicer that, if
adversely determined, may reasonably be expected to result in any material and
adverse change in the business, operations, assets, licenses, qualifications or
financial condition of Seller.


 


(f)                                    the suspension, revocation or termination of
any existing and material credit or investor relationship to facilitate the
sale and/or origination of residential mortgage loans if such suspension
revocation or termination is made by any party other than Seller;


 


(g)                                 any demand(s), whether on an individual or
aggregate basis, by an Approved Investor or Insurer for (i) the repurchase
of a mortgage loan(s) that, if adversely determined, may reasonably be
expected to result in any material and adverse change in the business,
operations, assets, licenses, qualifications or financial condition of Seller.


 


(h)                                 any potential or existing Purchased Mortgage
Loan where a director, officer, shareholder, member, partner or owner of Seller
is the Mortgagor or guarantor or where the related Mortgaged Property is being
sold by a director, officer, shareholder, member, partner or owner of Seller;


 


28

















 


(i)                                     any Purchased Mortgage Loan ceases to be an
eligible Purchased Asset for the security of the Transactions;


 


(j)                                     any Approved Investor that threatens to
set-off amounts owed by Seller to such Approved Investor against the purchase
proceeds owed by the Approved Investor to Seller for the Purchased Mortgage
Loans (excluding amounts owed by Seller to the Approved Investor which are
directly related to the Purchase Mortgage Loans and which are allowed to be
set-off by the Approved Investor pursuant to the Bailee Agreement);


 


(k)                                  any change in the Executive Management of
Seller;


 


(l)                                     any
other action, event or condition of any nature that could be reasonably
expected to lead to or result in a
material adverse effect on the business, operations, assets or financial
condition of Seller or that, without notice or lapse of time or both, would
constitute a default under any agreement, instrument or indenture to which
Seller is a party or to which Seller, its properties or assets may be subject;
and


 


(m)                               any (i) change to the location of its
principal place of business from that specified in  Section 8.1(t),
(ii) change in the name, identity or corporate structure (or the
equivalent) or change in the location where Seller maintains its records with
respect to the Purchased Assets, or (iii) reincorporation or reorganization
of Seller under the laws of another jurisdiction.


 


9.4                                      Additional Financing. If Seller intends to enter into any financing
or lending arrangements such as or similar to warehouse lines of credit or
repurchase arrangements, Seller shall notify Buyer not fewer than fifteen (15)
Business Days prior to the execution of such arrangement.


 


9.5                                      Servicing of Mortgage Loans. Subject to Section 6.2
above, Seller shall service all Purchased Mortgage Loans at Seller’s expense,
but in consideration of the Servicing Fee, and without charge of any kind to
Buyer. Seller may delegate its obligations hereunder to service the Purchased
Mortgage Loans (subject to Section 6.2)
to an independent servicer provided that such independent servicer and the
related Servicing Agreement has been approved by Buyer and such independent
servicer has executed a Servicing Agreement with Buyer. The failure of Seller
to obtain the prior approval of Buyer regarding the delegation of its servicing
obligations to an independent servicer and/or the failure of the independent
servicer to execute and return to Buyer a Servicing Agreement shall be
considered an Event of Default hereunder. In any event, Seller or its delegate
shall service such Purchased Mortgage Loans with the degree of care and in
accordance with the servicing standards generally prevailing in the industry,
including those required by Fannie Mae, Freddie Mac and Ginnie Mae.


 


9.6                                      Evidence of Purchased Assets. Seller shall indicate on its computer records
that each Purchased Mortgage Loan has been included in the Purchased Assets
and, at the request of Buyer, place on each of its written records pertaining
to the Purchased Mortgage Loans a legend, in form and content satisfactory to
Buyer, indicating that such Purchased Mortgage Loan has been sold to Buyer.


 


9.7                                      Protection of Purchased
Mortgage Loans. Seller shall allow Buyer (a) to
inspect any Mortgaged Property relating to a Purchased Mortgage Loan; (b) to
appear in or intervene in any proceeding or matter affecting any Purchased
Mortgage Loan or other Purchased Assets or the value thereof; (c) to
initiate, commence, appear in and defend any foreclosure, action, bankruptcy or
proceeding which could adversely affect Buyer’s ownership or security of the
Purchased Assets or the value thereof, or the rights and powers of Buyer; (d) to
contest by litigation or otherwise any lien asserted against the Purchased
Mortgage Loans or other Purchased Assets or against the related Mortgaged
Property, the improvements, or the personal property identified therein; and/or
(e) to make payments on account of such encumbrances, charges, or liens
and to service any Purchased Mortgage Loan and take any action it may deem
appropriate to collect


 


29

















 


(d)                                 the aggregate original Asset Value of those
Purchased Mortgage Loans that are deemed to be Defective Mortgage Loans is
greater than or equal to ten percent (10%) of the outstanding Transactions for
more than two (2) consecutive Business Days;


 


(e)                                  any of Seller’s representations or warranties
made in Section 8.1 or in any statement or certificate at any
time given by Seller in writing pursuant hereto or in connection herewith shall
be false in any material respect on the date as of which made and such occurrence
shall not have been remedied within three (3) Business Days after receipt
of notice from Buyer of such occurrence;


 


(f)                                    the failure of Seller to perform, comply with
or observe any material term, covenant or agreement applicable to Seller as
contained in Articles 9 and
10 of this Agreement;


 


(g)                                 the failure of Seller to perform, comply with
or observe any other material term, covenant or agreement applicable to Seller
as contained in this Agreement and such occurrence shall not have been remedied
within thirty (30) days after receipt of notice from Buyer of such occurrence;


 


(h)                                 an Insolvency Event shall have occurred with
respect to Seller or any Guarantor; provided, however, that if there are two or
more Guarantors (if required by the Transaction Terms Letter) and an Insolvency
Event occurs with respect to one or more of them, Buyer shall reasonably
consider the aggregate net worth of those Guarantor(s) for which an
Insolvency Event has not occurred and reasonably determine whether such
aggregate net worth is sufficient for Buyer to continue to enter into
Transactions with Seller hereunder, and in the event Buyer makes such a
determination, the Insolvency Event with respect to the Guarantor(s) shall
not be considered an Event of Default under this subsection;


 


(i)                                     one
or more judgments or decrees shall be entered against Seller involving a
liability of five hundred thousand
($500,000) dollars or more, and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within sixty (60)
days after entry thereof; 


 


(j)                                     any Plan maintained by Seller or any
subsidiary of Seller shall be terminated within the meaning of Title IV of
ERISA or a trustee shall be appointed by an appropriate United States District
Court to administer any Plan, or the Pension Benefit Guaranty Corporation (or
any successor thereto) shall institute proceedings to terminate any Plan or to
appoint a trustee to administer any Plan if as of the date thereof Seller’s
liability or any such subsidiary’s liability (after giving effect to the tax
consequences thereof) to the Pension Benefit Guaranty Corporation (or any
successor thereto) for unfunded guaranteed vested benefits under the Plan
exceeds the then current value of assets accumulated in such Plan by more than
fifty thousand ($50,000) dollars (or in the case of a termination involving
Seller as a “substantial employer” (as defined in Section 4001(a)(2) of
ERISA) the withdrawing employer’s proportionate share of such excess shall
exceed such amount);


 


(k)                                  Seller as employer under a Plan that is a
multiemployer plan shall have made a complete or partial withdrawal from such
Plan and the plan sponsor of such Plan shall have notified such withdrawing
employer that such employer has incurred a withdrawal liability in an annual
amount exceeding fifty thousand ($50,000) dollars;


 


(l)                                     Seller shall purport to disavow its
obligations hereunder or shall contest the validity or enforceability of the
Principal Agreements or Buyer’s interest in any Purchased Mortgage Loan or
other Purchased Assets;


 


30

















 


(m)                          if applicable, the death of any Guarantor(s) who
is an individual shall occur;


 


(n)                            a Material and Adverse Change shall occur;


 


(o)                            a change in any Key Personnel as set forth in
the Transactions Terms Letter shall occur, if applicable;


 


(p)                            any Principal Agreement shall for whatever
reason (including an event of default thereunder) be terminated, without the
consent of Buyer (other than, with respect to the Custodial Agreement, due to
the resignation of the Custodian for reasons other than a breach by Seller of
the Custodial Agreement), or this Agreement shall for any reason cease to
create a valid, first priority security interest or ownership interest upon
transfer in any of the Purchased Assets;


 


(q)                            a breach of any of Seller’s or Servicer’s
servicing obligations, including, but not limited to, its failure to deposit
any funds required to be deposited under Section 6.2(g) into the Custodial Account; or


 


(r)                               if Seller is a member of MERS, Seller’s
membership in MERS is terminated for any reason.


 


With
respect to any Event of Default which requires a determination to be made as to
whether such Event of Default has occurred, such determination shall be made in
Buyer’s sole and good faith discretion and Seller hereby agrees to be bound by
and comply with any such determination by Buyer.


 


11.2                                Remedies. Subject to Section 11.2(f) below, upon the occurrence of an Event of
Default, Buyer may, by notice to Seller, declare all or any portion of the
Repurchase Prices related to the outstanding Transactions to be due and payable
whereupon the same shall become due and payable, and the obligation of Buyer to
enter into Transactions shall thereupon terminate. Further, it is understood
and agreed that upon the occurrence of an Event of Default, Seller shall
strictly comply with the negative covenants contained in Article 10 hereunder and in no event shall Seller
declare and pay any dividends, incur additional Debt or Subordinated Debt, make
payments on existing Debt or Subordinated Debt or otherwise distribute or
transfer any of Seller’s property and assets to any Person without the prior
written consent of Buyer; provided, however, that for as long as such Event of
Default is occurring, Seller may incur and pay trade Debt that is, or was,
incurred in the ordinary course of business of Seller’s mortgage banking
business. Upon the occurrence of any Event of Default, Buyer may also:


 


(a)                                  enter the office(s) of Seller and take
possession of any of the Purchased Assets including any records that pertain to
the Purchased Assets;


 


(b)                                 communicate with and notify Mortgagors of the
Purchased Mortgage Loans and obligors under other Purchased Assets or on any
portion thereof, whether such communications and notifications are in verbal,
written or electronic form, including, without limitation, communications and
notifications that the Purchased Assets have been assigned to Buyer and that
all payments thereon are to be made directly to Buyer or its designee; settle
compromise, or release, in whole or in part, any amounts owing on the Purchased
Mortgage Loans or other Purchased Assets or any portion of the Purchased
Assets, on terms acceptable to Buyer; enforce payment and prosecute any action
or proceeding with respect to any and all Purchased Assets; and where any
Purchased Mortgage Loans or other Purchased Assets is in default, foreclose
upon and enforce security interests in, such Purchased Assets
by any available judicial procedure or without judicial process and sell
property acquired as a result of any such foreclosure;


 


31

















 


(c)                                  collect payments from Mortgagors and/or
assume servicing of, or contract with a third party to service, any or all
Purchased Mortgage Loans requiring servicing and/or perform any obligations
required in connection with Purchase Commitments, such third party’s fees to be
paid by Seller. In connection with collecting payments from Mortgagors and/or
assuming servicing of any or all Purchased Mortgage Loans, Buyer may take
possession of and open any mail addressed to Seller, remove, collect and apply
all payments for Seller, sign Seller’s name to any receipts, checks, notes,
agreements or other instruments or letters or appoint an agent to exercise and
perform any of these rights. If Buyer so requests, Seller shall promptly
forward to Buyer or its designee, all further mail and all “trailing”
documents, such as title insurance policies, deeds of trust, and other
documents, and all loan payment histories, both in paper and electronic format,
in each case, as same relate to the Purchased Mortgage Loans;


 


(d)                                 proceed against Seller under this Agreement
or against any Guarantor(s) under their respective Guaranty (if
contemplated by the Transaction Terms Letter), or both; and/or


 


(e)                                  pursue any rights and/or remedies available
at law or in equity against Seller or any Guarantor(s) (if contemplated by
the Transaction Terms Letter), or both.


 


(f)                                    if the Event of Default is the occurrence of
a Material and Adverse Change with respect to general market circumstances or
conditions, including, without limitation, if any law, regulation, treaty or
directive or any change therein or in the interpretation or application
thereof, or any circumstance affecting the London interbank market or the
repurchase market for mortgage loans or mortgage-backed securities, the
Repurchase Prices related to the then outstanding Transactions shall be due and
payable on their respective scheduled Repurchase Date unless Buyer has made an
additional determination that such change is severe, in which case, Buyer may
declare all or any portion of the Repurchase Prices related to the then
outstanding Transactions to be immediately due and payable.


 


11.3                               Treatment of Custodial
Account. During the existence of
an Event of Default, notwithstanding any other provision of this Agreement,
Seller shall have no right to withdraw or release any funds in the Custodial
Account to itself or for its benefit to which it is not entitled under this
Agreement, nor shall it have any right to set-off any amount owed to it by
Buyer against funds held by it for Buyer in the Custodial Account. During the
existence of an Event of Default, Seller shall promptly remit to or at the
direction of Buyer all funds related to the Purchased Mortgage Loans in the
Custodial Account.


 


11.4                               Sale of Purchased Assets. Following an Event of Default, and after
giving Seller five (5) business days in which to purchase for itself the
Purchased Assets, Buyer may securitize or otherwise sell the Purchased Assets
with no obligation to reacquire title as provided in Section  6.6
and Buyer shall incur no liability as a result of such transaction. For the
avoidance of doubt, Buyer may sell the Purchased Assets as part of a pool
comprised of, all or part of, the Purchased Assets and other mortgage loans
owned by Buyer; in such instance, the value of the Purchased Assets shall be
determined on a pro rata basis. Seller hereby waives any claims it may have
against Buyer arising by reason of the fact that the price at which the
Purchased Assets may have been sold at such private sale was less than the
price which might have been obtained at a public sale or was less than the
aggregate Repurchase Price amount of the outstanding Transactions, even if
Buyer accepts the first offer received and does not offer the Purchased Assets,
or any part thereof, to more than one offeree.


 


11.5                               No Obligation to Pursue
Remedy. Seller waives any right
to require Buyer to (a) proceed against any Person, (b) proceed
against or exhaust all or any of the Purchased Assets or pursue its rights and
remedies as against the Purchased Assets in any particular order, or (c) pursue
any other remedy in its power. Buyer shall not be required to take any steps
necessary to preserve any rights of Seller against holders of mortgages prior
in lien to the lien of any Purchased


 


32

















 


Mortgage
Loan included in the Purchased Assets or to preserve rights against prior
parties. No failure on the part of Buyer to exercise, and no delay in
exercising, any right, power or remedy provided hereunder, at law or in equity
shall operate as a waiver thereof; nor shall any single or partial exercise by
Buyer of any right, power or remedy provided hereunder, at law or in equity
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies herein provided are cumulative and are not
exclusive of any remedies provided at law or in equity.


 


11.6                                Reimbursement of Costs and
Expenses. Buyer may, but shall not
be obligated to, advance any sums or do any act or thing necessary to uphold
and enforce the lien and priority of, or the security intended to be afforded
by, any Purchased Mortgage Loan, including, without limitation, payment of
delinquent taxes or assessments and insurance premiums. All advances, charges,
reasonable costs and expenses, including reasonable attorneys’ fees and
disbursements, incurred or paid by Buyer in exercising any right, power or
remedy conferred by this Agreement, or in the enforcement hereof, together with
interest thereon, at the Default Rate, from the time of payment until repaid,
shall become a part of the Repurchase Price.


 


11.7                                Application of Proceeds. The proceeds of any sale or other enforcement
of Buyer’s interest in all or any part of the Purchased Assets shall be applied
by Buyer:


 


(a)                                  first, to the payment of the
costs and expenses of such sale or enforcement, including reasonable
compensation to Buyer’s agents and counsel, and all expenses, liabilities and
advances made or incurred by or on behalf of Buyer in connection therewith;


 


(b)                                 second, to the payment of any
other amounts due under this Agreement other than the aggregate Repurchase
Price;


 


(c)                                  third, to the payment of the
aggregate Repurchase Price;


 


(d)                                 fourth, to the payment to Seller, or to its successors or assigns, or as a
court of competent jurisdiction may direct, of any surplus then remaining from
such proceeds. If the proceeds of any such sale are insufficient to cover the
costs and expenses of such sale, as aforesaid, and the payment in full of the
aggregate Repurchase Price and all other amounts due hereunder, Seller shall
remain liable for any deficiency.


 


11.8                                Rights of Set-Off. Buyer shall have the following rights of
set-off:


 


(a)                                       If Seller shall default in the payment or
performance of any of its obligations under this Agreement, Buyer shall have
the right, at any time, and from time to time, without notice, to set-off
claims and to appropriate or apply any and all deposits of money or property or
any other indebtedness at any time held or owing by Buyer to or for the credit
of the account of Seller against and on account of the obligations and
liabilities of Seller under this Agreement, irrespective of whether or not
Buyer shall have made any demand hereunder and whether or not said obligations
and liabilities shall have become due; provided, however, that the aforesaid
right to set-off shall not apply to any deposits of escrow monies being held on
behalf of the Mortgagors related to the Purchased Mortgage Loans or other third
parties. Without limiting the generality of the foregoing, Buyer shall be
entitled to set-off claims and apply property held by Buyer with respect to any
Transaction against obligations and liabilities owed by Seller to Buyer with
respect to any other Transaction.


 


(b)                                      In addition to the rights in subsection (a),
Buyer and its Affiliates, including, without limitation, Balboa Insurance Group, Inc.,
Countrywide Home Loans, Inc., Countrywide Securities Corporation,
Countrywide Bank, FSB and LandSafe, Inc. (collectively, “Countrywide Related Entities”), shall have the right to set-off and
to appropriate or  


 


33

















 


apply
any and all deposits of money or property or any other indebtedness at any time
held or owing by the Countrywide Related Entity to or for the credit of the
account of Seller and its Affiliates against and on account of the obligations
of Seller under any agreement(s) between Seller and or its Affiliates, on
the one hand, and the Countrywide Related Entity, on the other hand,
irrespective of whether or not the Countrywide Related Entity shall have made
any demand hereunder and whether or not said obligations shall have matured. In
exercising the foregoing right to set-off, any Countrywide Related Entity shall
be entitled to withdraw funds in the Over/Under Account which are being held
for or owing to Seller to set-off against any amounts due and owing by Seller
to the Countrywide Related Entity. If a Countrywide Related Entity other than
Buyer intends to exercise its right to set-off in this subsection (b), such
Countrywide Related Entity shall provide Seller prior notice thereof, and upon
Seller’s receipt of such notice, if the basis for such right to set-off is
Seller’s breach or default of its obligations to the Countrywide Related
Entity, Seller shall have three (3) Business Days to cure any such breach
or default in order to avoid such set-off.


 


11 .9                             Reasonable Assurances. If, at any time during the term of the
Agreement, Buyer has reason to believe that Seller is not conducting its
business in accordance with, or otherwise is not satisfying: (i) all
applicable statutes, regulations, rules, and notices of federal, state, or
local governmental agencies or instrumentalities, all applicable requirements
of Approved Investors and Insurers and prudent industry standards or (ii) all
applicable requirements of Buyer, as set forth in this Agreement, then, Buyer
shall have the right to demand, pursuant to notice from Buyer to Seller
specifying with particularity the alleged act, error or omission in question,
reasonable assurances from Seller that such a belief is in fact unfounded, and
any failure of Seller to provide to Buyer such reasonable assurances in form
and substance reasonably satisfactory to Buyer, within the time frame specified
in such notice, shall itself constitute an Event of Default hereunder, without
a further cure period. Seller hereby authorizes Buyer to take such actions as
may be necessary or appropriate to confirm the continued eligibility of Seller
for Transactions hereunder, including without limitation (i) ordering
credit reports and (ii) contacting Mortgagors, licensing authorities and
Approved Investors or Insurers.


 


ARTICLE 12

INDEMNIFICATION


 


12.1                                Indemnification. Seller shall indemnify and hold harmless
Buyer, its Affiliates and any of their respective officers, directors,
employees and agents from and against any and all liabilities, obligations, losses,
damages, penalties, judgments, suits, costs, expenses and disbursements of any
kind whatsoever that may be imposed upon, incurred by or asserted against
Buyer, its Affiliates and their respective officers, directors, employees and
agents in any way relating to or arising out of the Principal Agreements or any
other document referred to therein or any of the transactions contemplated
thereby, except for liabilities, losses and damages solely resulting from the
gross negligence or willful misconduct of Buyer and its Affiliates.


 


12.2                                Payment of Taxes. Seller shall pay and hold Buyer harmless from
and against any and all present and future stamp, documentary and other similar
taxes with respect to the Purchased Assets, the Principal Agreements and other
documents related thereto and hold Buyer harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to pay such
taxes.


 


ARTICLE 13

TERM AND TERMINATION


 


13.1                                Term. Provided that no Event of Default has occurred
and is continuing, and except as otherwise provided for herein, this Agreement shall commence on the Effective Date
and continue until the Expiration Date set forth in the Transactions Terms
Letter. Following expiration or termination of this Agreement, all indebtedness
due Buyer under the Principal Agreements shall be immediately  


 


34

















 


due
and payable without notice to Seller and without presentment, demand, protest,
notice of protest or dishonor, or other notice of default, and without formally
placing Seller in default, all of which are hereby expressly waived by Seller.


 


13.2                                Termination.


 


(a)                                  Buyer may, with or without cause, terminate
this Agreement at any time on not less than sixty (60) days prior notice to
Seller. During such prior notice time period and until the expiration thereof,
Buyer shall continue to make Transactions to Seller pursuant to the terms and
conditions of this Agreement, provided, however, within forty-five (45) days
after the expiration of such time period, Seller shall pay the Repurchase Price
for all outstanding Transactions.


 


(b)                                 In addition to the remedies afforded Buyer
upon the occurrence of an Event of Default, including, without limitation,
those remedies afforded Buyer under this Agreement, Buyer may immediately
terminate this Agreement by providing notice to Seller if such Event of Default
is not cured within any applicable cure period expressly provided for in this
Agreement.


 


(c)                                  Buyer may immediately terminate this Agreement
by providing notice to Seller if Buyer determines that there has been fraud,
misrepresentation or any similar intentional conduct on behalf of Seller, its
officers, directors, employees, agents and/or its representatives with respect
to any of Seller’s obligations, responsibilities or actions undertaken in
connection with this Agreement.


 


(d)                                 Buyer may immediately terminate this Agreement
if (i) this Agreement or any Transaction is deemed by a court or by
statute to not constitute a “repurchase agreement,” a “securities contract,” or
a “master netting agreement,” as each such term is defined in the Bankruptcy
Code, (ii) payments or security offered hereunder are deemed by a court or
by statute not to constitute “settlement payments” or “margin payments” as each
such term is defined in the Bankruptcy Code or (iii) this Agreement or any
Transaction is deemed by a court or by statute not to constitute an agreement
to provide financial accommodations as described in Bankruptcy Code Section 365(c)(1);
provided, however, that unless Buyer’s cost of funds are materially and
adversely affected by such determination and/or Buyer’s source of funds
requires Buyer to make immediate repayment of any funds provided to Buyer as a
result thereof, Seller shall have forty-five (45) days after termination of the
Agreement to pay the Repurchase Prices related to the then outstanding
Transactions.


 


(e)                                  Upon termination of this Agreement for any
reason, and except as expressly provided for in subsections (a) and (d) above
with respect to the Repurchase Prices for outstanding Transactions, all
outstanding amounts due Seller under the Principal Agreements shall be
immediately due and payable without notice to Seller and without presentment,
demand, protest, notice of protest or dishonor, or other notice of default, and
without formally placing Seller in default, all of which are hereby expressly
waived by Seller. Further, any termination of this Agreement shall not affect
the outstanding obligations of Seller under this Agreement and all such
outstanding obligations and the rights and remedies afforded Buyer in
connection therewith, including, without limitation, those rights and remedies
afforded Buyer under this Agreement, shall survive any termination of this
Agreement. Buyer shall not be liable to Seller for any costs, loss or damages
arising from or relating to a termination by Buyer in accordance with any
subsection of this Section 13.2.


 


13.3                                Extension of Term. Upon mutual agreement of Seller and Buyer,
the term of this Agreement may be
extended. Such extension may be made subject to the terms and conditions
hereunder and to any other terms and conditions as Buyer, in its sole and good
faith discretion, may deem 


 


35

















 


necessary
or advisable. Under no circumstances shall such an extension by Buyer be
interpreted or construed as a forfeiture by Buyer of any of its rights,
entitlements or interest created hereunder. Seller acknowledges and understands
that Buyer is under no obligation whatsoever to extend the term of this
Agreement beyond the initial term.


 


ARTICLE 14

GENERAL


 


14.1                                Integration. This Agreement, together with the other
Principal Agreements, and all other documents executed pursuant to the terms
hereof and thereof, constitute the entire agreement between the parties with
respect to the subject matter hereof and supercedes any and all prior or
contemporaneous oral or written communications with respect to the subject
matter hereof, all of which such communications are merged herein. All
Transactions hereunder constitute a single business and contractual
relationship and each Transaction has been entered into in consideration of the
other Transactions.


 


14.2                                Amendments. No modification, waiver, amendment, discharge
or change of this Agreement shall be valid unless the same is in writing and
signed by the party against whom the enforcement of such modification, waiver,
amendment, discharge or change is sought.


 


14.3                                No Waiver. No failure or delay on the part of Seller or
Buyer in exercising any right, power or privilege hereunder and no course of
dealing between Seller and Buyer shall operate as a waiver thereof nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.


 


14.4                                Remedies Cumulative. The rights and remedies herein expressly
provided are cumulative and not exclusive of any rights or remedies that Seller
or Buyer would otherwise have. No notice or demand on Seller in any case shall
entitle Seller to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of Buyer to any other or
further action in any circumstances without notice or demand.


 


14.5                                Assignment. The Principal Agreements may not be assigned
by Seller. The Principal Agreements, along with Buyer’s right, title and
interest, including its security interest, in any or all of the Purchased
Assets, may, at any time, be transferred or assigned, in whole or in part, by
Buyer, and upon providing notice to Seller of such transfer or assignment, any
transferee or assignee thereof may enforce the Principal Agreements and such
security interest directly against Seller; provided, however, that if Buyer
transfers or assigns the Principal Agreements for the purpose of a transferee
or assignee assuming the obligations of Buyer hereunder with respect to
entering into Transactions with Seller, any such transferee or assignee must be
capable of complying with such obligations.


 


14.6                                Successors and Assigns. The terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.


 


14.7                                Participations. Buyer may from time to time sell or otherwise
grant participations in this Agreement, and the holder of any such
participation, if the participation agreement so provides, (i) shall, with
respect to its participation, be entitled to all of the rights of Buyer and (ii) may
exercise any and all rights of set-off or banker’s lien with respect thereto,
in each case as fully as though Seller were directly obligated to the holder of
such participation in the amount of such participation; provided, however, that
Seller shall not be required to send or deliver to any of the participants
other than Buyer any of the materials or notices required to be sent or
delivered by it under the terms of this Agreement, nor shall it have to act
except in compliance with the instructions of Buyer.


 


36














 


 


14.8                        Invalidity. In case any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions hereof, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had not been included.


 


14.9                        Additional
Instruments. Seller shall
execute and deliver such further instruments and shall do and perform all
matters and things necessary or expedient to be done or observed for the
purpose of effectively creating, maintaining and preserving the security and
benefits intended to be afforded by this Agreement.


 


14.10                  Survival. All representations, warranties, covenants and agreements herein
contained on the part of Seller shall survive any Transaction and shall be
effective so long as this Agreement is in effect or there remains any
obligation of Seller hereunder to be performed.


 


14.11                  Notices.


 


(a)                               All notices,
demands, consents, requests and other communications required or permitted to
be given or made hereunder in writing shall be mailed (first class, return
receipt requested and postage prepaid) or delivered in person or by overnight
delivery service or by facsimile, addressed to the respective parties hereto at
their respective addresses set forth below or, as to any such party, at such
other address as may be designated by it in a notice to the other:


 


	
  If
  to Seller:

  	
   

  	
  That
  address set forth in the Transactions Terms Letter

  
	
   

  	
   

  	
   

  
	
  If
  to Buyer:

  	
   

  	
  Countrywide
  Bank, FSB

  
	
   

  	
   

  	
  8511
  Fallbrook Avenue Mail Stop: WH-51F

  
	
   

  	
   

  	
  West
  Hills, CA 91304

  
	
   

  	
   

  	
  Facsimile
  No:    (818) 316-8841

  



 


All
written notices shall be conclusively deemed to have been properly given or
made when duly delivered, if delivered in person or by overnight delivery
service, or on the third (3rd) Business Day after being deposited in
the mail, if mailed in accordance herewith, or upon transmission by the
receiving party of a facsimile confirming receipt, if delivered by facsimile.
Notwithstanding the foregoing, any notice of termination shall be deemed
effective upon mailing, transmission, or delivery, as the case may be.


 


(b)                              All notices,
demands, consents, requests and other communications required or permitted to
be given or made hereunder which are not required to be in writing may also be
provided electronically either (i) as an electronic mail sent and
addressed to the respective parties hereto at their respective electronic mail
addresses set forth below, or as to any such party, at such other electronic
mail address as may be designated by it in a notice to the other or (ii) with
respect to Buyer, via a posting of such notice on Buyer’s customer website(s).


 


	
  If
  to Seller:

  	
   

  	
  That
  email address(es) specified in the Transactions Terms Letter, if any.

  
	
   

  	
   

  	
   

  
	
  If
  to Buyer:

  	
   

  	
  Dan_Baruch@countrywide.com

  



 


14.12                  Personal
Identification Number. Seller shall
adopt a Personal Identification Number or PIN to be entered into the computer
system in connection with all documents transmitted from Seller to Buyer
electronically. Further, any document required to be signed by Seller may be
signed by handwritten signature or transmitted electronically in conjunction
with the PIN, except any written notification designating or changing the PIN and
those documents required to be delivered


 


37

















 


pursuant to Section 7.1(a) above,
which must be signed by hand. Seller shall provide Buyer with written
notification of its PIN and any changes thereto; provided, however, that any
change to the PIN may not become effective for twenty four (24) hours following
Buyer’s confirmation of receipt of such notice by Seller. Seller and Buyer
agree that transmitting a document in conjunction with the PIN shall have the
same force and effect as a handwritten signature and shall be sufficient to
verify that Seller originated such document. Seller shall employ security
procedures to ensure that all transmissions of documents accompanied by the PIN
are authorized, authentic, reliable and complete and shall promptly notify
Buyer if Seller discovers the PIN has been improperly disclosed to any Person.
Notwithstanding the foregoing or any other breach of security, Buyer shall be
entitled to rely upon the PIN of Seller until such time as (a) Seller
provides Buyer with written instructions to the contrary and (b) Buyer has
sufficient time to notify the appropriate employees and modify its computerized
systems.


 


14.13                  Governing
Law. This Agreement and the rights and obligations of the
parties under the Principal Agreements shall be construed in accordance with
and governed by the laws of the State of California, without regard to
principles of conflicts of laws. All legal actions between or among the parties
regarding this Agreement, including, without limitation, legal actions to
enforce this Agreement or because of a dispute, breach or default of this
Agreement, shall be brought in the federal or state courts located in Los
Angeles County, California, which courts shall have sole and exclusive in
personam, subject matter and other jurisdiction in connection with such legal
actions and the parties acknowledged and agree that venue in such courts shall
be convenient and appropriate for all purposes.


 


14.14                  Counterparts. This Agreement
may be executed in any number of counterparts by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement.


 


14.15                  Headings. The headings
in this Agreement are for purposes of reference only and shall not limit or
otherwise affect the meaning or interpretation of any provisions hereof.


 


14.16                  Joint and
Several Liability of Each Seller. To the extent there is more than one
Person which is named as a Seller under this Agreement, each such Person shall
be jointly and severally liable for the rights, covenants, obligations and
warranties and representations of “Seller” as contained herein and the actions
of any Person (including another Seller) or third party shall in no way affect
such joint and several liability.


 


14.17                  Confidential
Information. To effectuate this Agreement, Buyer and
Seller may disclose to each other certain confidential information relating to
the parties’ operations, computer systems, technical data, business methods,
and other information designated by the disclosing party or its agent to be
confidential, or that should be considered confidential in nature by a
reasonable person given the nature of the information and the circumstances of
its disclosure (collectively the “Confidential
Information”).  Confidential Information can consist of information
that is either oral or written or both, and may include, without limitation,
any of the following: (i) any reports, information or material concerning
or pertaining to businesses, methods, plans, finances, accounting statements,
and/or projects of either party or their affiliated or related entities; (ii) any
of the foregoing related to the parties or their related or affiliated entities
and/or their present or future activities and/or (iii) any term or
condition of any agreement (including this Agreement) between either party and
any individual or entity relating to any of their business operations. With respect
to Confidential Information, the parties hereby agree:


 


	
  (a)

  	
   

  	
  not to use the
  Confidential Information except in furtherance of this Agreement;

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  to use reasonable
  efforts to safeguard the Confidential Information against disclosure to any
  unauthorized third party with the same degree of care as they exercise with
  their own information of similar nature; and

  



 


38

















 


(c)           not to disclose
Confidential Information to anyone other than employees, agents or contractors
with a need to have access to the Confidential Information and who are bound to
the parties by like obligations of confidentiality, except that the parties
shall not be prevented from using or disclosing any of the Confidential
Information which: (i) is already known to the receiving party at the time
it is obtained from the disclosing party; (ii) is now, or becomes in the
future, public knowledge other than through wrongful acts or omissions of the
party receiving the Confidential Information; (iii) is lawfully obtained
by the party from sources independent of the party disclosing the Confidential
Information and without confidentiality and/or non-use restrictions; or (iv) is
independently developed by the receiving party without any use of the
Confidential Information of the disclosing party. Notwithstanding anything
contained herein to the contrary, Buyer may share any Confidential Information
of Seller with an Affiliate of Buyer for any valid business purpose, such as,
but not limited to, to assist an Affiliate in evaluating a current or potential
business relationship with Seller.


 


(d)           If any party or
any of its successors, subsidiaries, officers, directors, employees, agents
and/or representatives, including, without limitation, its insurers, sureties
and/or attorneys, breaches its respective duty of confidentiality under this
Agreement, the nonbreaching party(ies) shall be entitled to all remedies
available at law and/or in equity, including, without limitation, injunctive
relief.


 


14.18                  Intent.   Seller and Buyer recognize
and intend that:


 


(a)           this Agreement
and each Transaction hereunder constitutes a “repurchase agreement” as that
term is defined in Section 101(47) of the Bankruptcy Code, a “securities
contract” as that term is defined in Section 741(7) of the Bankruptcy
Code and a “master netting agreement” as that term is defined in Section 101(38A)
of the Bankruptcy Code. Seller and Buyer further recognize and intend that this
Agreement is an agreement to provide financial accommodations and is not
subject to assumption pursuant to Bankruptcy Code Section 365(a);


 


(b)           Buyer’s right to
liquidate the Purchased Mortgage Loans delivered to it in connection with the
Transactions hereunder or to accelerate or terminate this Agreement or otherwise
exercise any other remedies herein is a contractual right to liquidate,
accelerate or terminate such Transaction as described in Bankruptcy Code
Sections 555, 559 and 561; any payments or transfers of property made with
respect to this Agreement or any Transaction to: (i) satisfy a Margin
Deficit, (ii) comply with a Margin Call, or (iii) satisfy the
provision of Guarantees an/or additional security agreements to provide
enhancements to satisfy a deficiency in the Over/Under Account, shall in each
case be considered a “margin payment” as such term is defined in Bankruptcy
Code Section 741(5); and


 


(c)           any payments or
transfers of property by Seller (i) on account of a Haircut, (ii) in
partial or full satisfaction of a repurchase obligation, or (iii) fees and
costs under this Agreement or under any Transaction shall in each case
constitute “settlement payments” as such term is defined in Bankruptcy Code Section 741(8).


 


14.19                  Right
to Liquidate. It is
understood that either party’s right to liquidate Purchased Mortgage Loans
delivered to it in connection with Transactions hereunder or to terminate or
accelerate obligations under this Agreement or any individual Transaction, are
contractual rights for same as described in Sections 555 and 559 of the
Bankruptcy Code.


 


14.20                  Insured
Depository Institution. If a party
hereto is an “insured depository institution” as such term is defined in the
Federal Deposit Insurance Act (as amended, the “FDIA”),  then each Transaction hereunder is
a “qualified financial contract” as that term is defined in the FDIA and any
rules, orders or policy statements thereunder except insofar as the type of
assets subject to such Transaction would render such definition inapplicable.


 


39

















 


14.21                  Netting
Contract. This Agreement constitutes a “netting
contract” as defined in and subject to Title IV of the Federal Deposit
Insurance Corporation Improvement Act of 1991 (“FDICIA”) and each
payment entitlement and payment obligation under any Transaction hereunder
shall constitute a “covered contractual payment entitlement” or “covered
contractual payment obligation”, respectively, as defined in and subject to the
FDICIA except insofar as one or more of the parties hereto is not a “financial
institution” as that term is defined in the FDICIA.


 


14.22                  Reimbursement
of Expenses. If any claim, legal action or any
arbitration or other proceeding is brought for the enforcement of this
Agreement or because of a dispute, breach, default or misrepresentation in
connection with any of the provisions of this Agreement, the prevailing party
shall be entitled to recover reasonable attorneys’ fees and other reasonable
costs in that claim, action, arbitration or proceeding, in addition to any
other relief to which such party may be entitled.


 


14.23                  Examination
and Oversight by Regulators. Seller agrees that the transactions with
Buyer under this Agreement may be subject to regulatory examination and
oversight, including, without limitation, examination and oversight by the
Office of Thrift Supervision (“OTS”). Seller shall comply with all regulatory
requirements of Buyer and Seller shall grant regulatory agencies, including,
but not limited to, the OTS, the right to audit the books and records of Seller
in order to monitor or verify Seller’s performance under and compliance with
the terms of this Agreement.


 


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


 


 


	
  BUYER:

  	
  COUNTRYWIDE
  BANK, FSB

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richie Walia

  	
   

  
	
   

  	
  Name:

  	
  RICHIE WALIA

  	
   

  
	
   

  	
  

  Title:

  	
  SENIOR VICE PRESIDENT

  COUNTRYWIDE BANK, FSB

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SELLER:

  	
  HOME
  LOAN CENTER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rian Furey

  	
   

  
	
   

  	
  Name:

  	
  Rian Furey

  	
   

  
	
   

  	
  Title:

  	
  SVP

  	
   

  



 


40

















 


EXHIBIT A




GLOSSARY OF DEFINED TERMS


 


Accepted Servicing Practices: With respect to any Purchased Mortgage Loan, those mortgage servicing
practices of prudent mortgage lending institutions which service mortgage loans
of the same type as such Purchased Mortgage Loan in the jurisdiction where the
related Mortgaged Property is located.


 


Acknowledgement of Confidentiality of Password Agreement: That certain Acknowledgement of Confidentiality of Password Agreement
attached hereto as Exhibit I.


 


Additional Purchased Mortgage Loans: Those additional Mortgage Loans or cash provided by Seller to Buyer
pursuant to Section 6.3 of this Agreement.


 


Affiliate: With respect to
any specified entity, any other entity controlling or controlled by or under
common control with such specified entity. For the purposes of this definition,
“control” when used with respect to a specified entity means the power to
direct the management and policies of such entity, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms “controlling” and “controlled” having meanings correlative to the
foregoing.


 


Agency: Fannie Mae or
Freddie Mac.


 


Aggregate Transaction Limit: The maximum aggregate principal amount of Transactions that may be
outstanding at any one time, as set forth in the Transactions Terms Letter.


 


Applicable Pricing Rate: With respect to
any date of determination, the daily rate per annum (rounded up to three (3) decimal
places) for one-month U.S. dollar denominated deposits as offered to prime
banks in the London interbank market (“One-Month LIBOR”)  as published on Bloomberg or in the
Wall Street Journal. It is understood that the Applicable Pricing Rate shall be
initially set to the then current One-Month LIBOR in effect on the date the
Purchase Price is paid and shall thereafter be adjusted on a daily basis to the
then current One-Month LIBOR.


 


Application: The application
or “Buyer Application Profile,” including all supporting documentation,
submitted by Seller to Buyer with respect to this Agreement.


 


Approved Investor: Fannie Mae,
Freddie Mac, Ginnie Mae or a third party which is deemed acceptable by Buyer in
its sole and good faith discretion, purchasing Purchased Mortgage Loans from
Seller pursuant to a Purchase Commitment.


 


Approved Payee: A Closing Agent
or warehouse lender approved by Buyer in accordance with Section 3.7.


 


Asset Data Record: A document, in
the form required by Buyer and as may from time to time be amended by Buyer, as
such form may be set forth in the Handbook, completed by Seller and submitted
to Buyer with respect to each Purchased Mortgage Loan.


 


Asset Value: With respect to
each Purchased Mortgage Loan for any date of determination, an amount equal to
the following, as applicable, as same may be reduced in accordance with Section 4.3:


 


(a)                                  if the Purchased
Mortgage Loan has Standard Status, the product of the Mortgage Loan Value and
the Type Purchase Price Percentage for the type of Purchased Mortgage Loan.


 


(b)                                 if the Purchased
Mortgage Loan is a Noncompliant Mortgage Loan, the product of the Mortgage Loan
Value and the Type Purchase Price Percentage for a Noncompliant Mortgage Loan;
or


 


A-1

















 


(c)                                  if the
Purchased Mortgage Loan is a Defective Mortgage Loan, zero.


 


For
purposes of the foregoing, “Mortgage Loan Value” shall mean the
lesser of (i) the outstanding principal balance of the Purchased Mortgage
Loan; (ii) the committed purchase price of the Purchased Mortgage Loan, as
evidenced by the related Purchase Commitment; and (iii) the fair market
value of the Purchased Mortgage Loan, as determined by Buyer in its sole and
good faith discretion.


 


Assignment: A duly executed
assignment to Buyer in recordable form of a Purchased Mortgage Loan, of the
indebtedness secured thereby and of all documents and rights related to such
Purchased Mortgage Loan.


 


Assignment of Closing Protection Letter: An assignment assigning and subrogating Buyer to all of Seller’s rights
in a Closing Protection Letter, substantially in the form of Exhibit F
hereto.


 


Assignment of Fidelity Bond and Errors and Omission Policy: An assignment assigning and subrogating Buyer to all of Seller’s rights
in a Fidelity Bond and Errors and Omissions Policy, substantially in the form
of Exhibit G hereto.


 


Bailee Agreement: A bailee
agreement substantially in the form acceptable to Buyer.


 


Bankruptcy Code: Title 11 of the
United States Code, now or hereafter in effect, as amended, or any successor
thereto.


 


Bond Loans – 1st Liens: Unless defined
otherwise in the Transactions Terms Letter, a first lien mortgage loan, other
than a Nonperforming/Subperforming Mortgage Loan, that is eligible for
sponsorship, facilitated or insured by a qualifying local or state home
governmental homeownership program.


 


Bond Loans – 2nd Liens: Unless defined
otherwise in the Transactions Terms Letter, a second lien mortgage loan for a
fixed amount drawn at closing, that is eligible for sponsorship, facilitated or
insured by a qualifying local or state governmental home homeownership program.


 


Breakage Fee: That fee, if
set forth in the Transactions Terms Letter or otherwise indicated on Buyer’s
then-current schedule of fees, payable by Seller to Buyer if Seller fails to
consummate a Transaction after Seller has submitted a Asset Data Record in
connection with such requested Transaction.


 


Business Day: Any day,
excluding Saturday, Sunday and any day that is a legal holiday under the laws
of the State of California.


 


Cash Equivalents: Any (a) securities
with maturities of ninety (90) days or less from the date of acquisition issued
or fully guaranteed or insured by the United States Government or any agency
thereof, (b) certificates of deposit and Eurodollar time deposits with
maturities of ninety (90) days or less from the date of acquisition and
overnight bank deposits of any commercial bank having capital, surplus and
retained earnings in excess of $70,000,000, (c) repurchase obligations of
any commercial bank satisfying the requirements of clause (b) of this
definition, having a term of more than seven days with respect to securities
issued or fully guaranteed or insured by the United States Government, (d) commercial
paper of a domestic issuer rated at least A-1 or the equivalent thereof by
S&P or p-1 or the equivalent thereof by Moody’s and in either case maturing
within ninety (90) days after the day of acquisition, (e) securities with
maturities of ninety (90) days or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States,
by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which
state, commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or A by
Moody’s, (f) securities with maturities of ninety (90) days or less from
the date of acquisition backed by standby letters of credit issued by any
commercial bank satisfying the


 


A-2

















 


requirements
of clause (b) of this definition, or (g) shares of money market,
mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.


 


Cashiers Check Fee: That fee, as
set forth in the Transactions Terms Letter or otherwise indicated on Buyer’s
then-current schedule of fees, payable by Seller for each disbursement made by
a cashiers check issued to Seller or its Approved Payee.


 


Change of Control: Change of
Control shall mean any of the following:


 


(a)                                  if Seller is a
corporation, any “person” (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other
than a trustee or other fiduciary holding securities of Seller under an
employee benefit plan of Seller, becomes the “beneficial owner” (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
Seller representing 50% or more of (A) the outstanding shares of common
stock of Seller or (B) the combined voting power of Seller’s
then-outstanding securities;


 


(b)                                 if Seller is a
legal entity other than a corporation, the majority voting control of Seller,
or its equivalent, under Seller’s governing documents is transferred to any
Person;


 


(c)                                  Seller is party
to a merger or consolidation, or series of related transactions, which results
in the voting securities or majority voting control interest of Seller
outstanding immediately prior thereto failing to continue to represent (either
by remaining outstanding or by being converted into voting securities or a
majority voting controlling interest of the surviving or another entity) at
least fifty (50%) percent of the combined voting power of the voting securities
or majority voting control interest of Seller or such surviving or other entity
outstanding immediately after such merger or consolidation;


 


(d)                                 the sale or
disposition of all or substantially all of Seller’s assets (or consummation of
any transaction, or series of related transactions, having similar effect);


 


(e)                                  there occurs a
change in the composition of the Board of Directors or governing body of Seller
within a one (1) year period, as a result of which fewer than a majority
of the directors or governing body members are incumbent;


 


(f)                                    the dissolution
or liquidation of Seller; or


 


(g)                                 any transaction
or series of related transactions that has the substantial effect of any one or
more of the foregoing.


 


Closed-End Second Lien Mortgage Loan: Unless defined otherwise in the Transactions Terms Letter, a second
lien mortgage loan for a fixed amount drawn at closing and underwritten in
accordance with Seller’s underwriting guidelines for second lien mortgages, as
same have been approved by Buyer.


 


Closing Agent: The Person
designated by Seller and approved by Buyer in accordance with Section 3.7
to receive Purchase Prices from Buyer, for the account of Seller, for the
purpose of funding a Purchased Mortgage Loan.


 


Closing Protection Letter: A document
issued by a title insurance company to Seller and/or Buyer and relied upon by
Buyer to provide closing protection for one or more mortgage loan closings and
to insure Seller and/or Buyer, without limitation, against embezzlement by the
Closing Agent and loss or damage resulting from the failure of the Closing
Agent to comply with all applicable closing instructions.


 


A-3

















 


Contingent Obligations: Any obligation
of Seller arising from an existing condition or situation that involves
uncertainty as to outcome and that will be resolved by the occurrence or
nonoccurrence of some future event, including, without limitation, any
obligation guaranteeing or intended to guarantee any Debt, leases, dividends or
other obligations of any other Person in any manner, whether directly or
indirectly; provided; however, that endorsements of instruments for deposit or
collection in the ordinary course of business shall not be included. With
respect to guarantees, the amount of the Contingent Obligation shall be equal
to the stated or determinable amount of the primary obligation in respect of
the guarantee or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof, as determined by Buyer.


 


Control Agreement: the agreement
to perfect Buyer’s security interest in the Custodial Account as described at Section 6.2(g) of
this Agreement.


 


Conventional Conforming Mortgage Loan: Unless defined otherwise in the Transactions Terms Letter, a first lien
mortgage loan that fully conforms to all underwriting standards, loan amount
limitations and other requirements of that standard Agency mortgage loan
purchase program accepting only the highest quality mortgage loans underwritten
without dependence on expanded criteria provisions, or that is approved by
Desktop Underwriter or Loan Prospector.


 


Countrywide CLD: The
Correspondent Lending Division of Countrywide Home Loans, Inc.


 


Current Assets: Those assets
set forth in the consolidated balance sheet of Seller, prepared in accordance
with GAAP, as current assets, defined as those assets that are now cash or will
by their terms or disposition be converted to cash within one (1) year of
the date of the determination.


 


Current Liabilities: Those
liabilities set forth in the consolidated balance sheet of Seller, prepared in
accordance with GAAP, as current liabilities, defined as those liabilities due
upon demand or within one (1) year of the date of determination.


 


Custodial Account: The account
described at Section 6.2(g) of this Agreement.


 


Custodian: Countrywide
Home Loans, Inc., Countrywide Bank, FSB or such other custodian selected
by Buyer in its sole and good faith discretion.


 


Date of Disbursement: The date of
disbursement shall mean (i) with respect to a wire transfer, the date such
funds are wired, (ii) with respect to a cashiers check, the date such
check is issued by the bank and (iii) with respect to a funding draft, the
date that the draft is posted by the bank on which the draft is drawn.


 


Debt: The debt of
Seller consisting of, without duplication: (a) indebtedness for borrowed
money, including principal, interest, fees and other charges; (b) obligations
evidenced by bonds, debentures, notes or other similar instruments; (c) obligations
to pay the deferred purchase price of property or services; (d) obligations
as lessee under leases that shall have been or should be in accordance with
GAAP, recorded as capital leases; (e) obligations secured by any lien upon
property or assets owned by Seller, even though Seller has not assumed or
become liable for payment of such obligations; (f) obligations in
connection with any letter of credit issued for the account of Seller; (g) obligations
under direct or indirect guarantees in respect of and obligations, contingent
or otherwise, to purchase or otherwise acquire, or otherwise assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
referred to above; and (h) all Contingent Obligations. Notwithstanding the
foregoing, the term “Debt” shall not include any obligations of Seller under
that certain Early Purchase Program Addendum to Loan Purchase Agreement by and
between Seller and Countrywide Home Loans, Inc.


 


Default Rate: The maximum
nonusurious interest rate, if any, that at any time, or from time to time, may
be contracted for, taken, reserved, charged or received under the laws of the
United States and the State of California, not to exceed the sum of five
percent (5%) plus the Applicable Rate.


 


A-4

















 


Defective Loan Fee: A fee equal to
five hundred dollars ($500) payable by Seller for each Purchased Mortgage Loan
that is or becomes a Defective Mortgage Loan.


 


Defective Mortgage Loan: A Purchased
Mortgage Loan:


 


(a)                                  that has not
been repurchased within the Maximum Dwell Time for a Noncompliant Mortgage Loan
or is ineligible to be a Noncompliant Mortgage Loan because the aggregate
original Asset Value of other Purchased Mortgage Loans that are deemed to be
Noncompliant Mortgage Loans is equal to or greater than the Type Sublimit for
Noncompliant Mortgage Loans;


 


(b)                                 that is the
subject of fraud by any Person involved in the origination of such Mortgage
Loan and such fraud shall not have been remedied within three (3) Business
Days after receipt of notice from Buyer to do so;


 


(c)                                  where the
related Mortgaged Property is the subject of material damage or waste and such
damage or waste shall not have been remedied within three (3) Business
Days after receipt of notice from Buyer to do so;


 


(d)                                 in connection
with which any other breach of a warranty or representation set forth in Section 8.2
occurs and remains uncured for a period of ten (10) calendar days;


 


(e)                                  in connection
with which a default occurs under the Purchased Mortgage Loan and remains
uncured for a period of ten (10) calendar days; or


 


(f)                                    where the
related Mortgagor fails to make the first payment due under the Mortgage Note
on or before the applicable due date, including any days of grace, and such
default shall not have been remedied within three (3) Business Days after
receipt of notice from Buyer to do so; provided, however, that with respect to
any Nonperforming/Subperforming Mortgage Loan where specific payment conditions
have been set forth in the Transactions Terms Letter, such
Nonperforming/Subperforming Mortgage Loan shall only be deemed a Defective
Mortgage Loan for failure of the Mortgagor to make payment if such failure
constitutes a breach of the such specific payment conditions.


 


Document Deposit Fee: That fee, as
set forth in the Transactions Terms Letter or otherwise indicated on Buyer’s
then-current schedule of fees, payable by Seller for each Mortgage Loan
Document delivered to Buyer after the initial delivery date of the related
Mortgage Loan File.


 


Dry Mortgage Loan: A Mortgage Loan
for which Buyer or its Custodian has possession of the related Mortgage Loan
Documents, in a form and condition acceptable to Buyer, prior to the payment of
the Purchase Price.


 


Effective Date: That effective
date set forth in the Transactions Terms Letter.


 


Electronic Tracking Agreement: An Electronic Tracking Agreement in a form acceptable to Buyer.


 


Eligible Bank: A bank selected
by Seller and approved by Buyer in writing and authorized to conduct trust and
other banking business in any state in which Seller conducts operations.


 


ERISA: The Employee
Retirement Income Security Act of 1974, as amended from time to time and any
successor statute.


 


ERISA Affiliate: Any person (as
defined in section 3(9) of ERISA) that together with Seller or any of its
subsidiaries would be a member of the same “controlled group” within the
meaning of Section 414(b), (m), (c) and (o) of the Internal
Review Code of 1986, as amended.


 


A-5

















 


Executive Management: Chairman of the
board of directors, chief executive officer, president, and chief financial
officer.


 


Expanded Criteria Mortgage Loan: Unless defined otherwise in the Transactions Terms Letter, a first lien
mortgage loan underwritten to the same high credit standards as a Conventional
Conforming Mortgage Loan except with respect to loan programs and parameters
that may have broader specifications of eligibility.


 


Event of Default: Any of the
conditions or events set forth in Section 11.1.


 


Expiration Date: The Expiration
Date set forth in the Transactions Terms Letter for the expiration of this
Agreement.


 


Facility Fee: The
non-refundable, annual commitment fee, as set forth in the Transactions Terms
Letter.


 


Fannie Mae: The Federal
National Mortgage Association and any successor thereto.


 


FHA: The Federal
Housing Administration of the United States Department of Housing and Urban
Development and any successor thereto.


 


File Fee: That fee, as
set forth in the Transactions Terms Letter or otherwise indicated on Buyer’s
then current schedule of fees, payable by Seller upon submission of the related
Asset Data Record whether or not the Transaction is actually made.


 


Freddie Mac: The Federal
Home Loan Mortgage Corporation and any successor thereto.


 


Funding Draft Fee: That fee, as
set forth in the Transactions Terms Letter or otherwise indicated on Buyer’s
then-current schedule of fees, payable by Seller for each payment of the
Purchase Price by funding draft.


 


GAAP: Generally
accepted accounting principles set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants and the statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession and that are
applicable to the circumstances as of the date of determination.


 


Ginnie Mae: Government
National Mortgage Association or any successor thereto.


 


Government Mortgage Loan: Unless defined
otherwise in the Transactions Terms Letter, a first lien mortgage loan, other
than a Nonperforming/Subperforming Mortgage Loan, that is (a) eligible for
insurance by FHA and is so insured or is subject to a current binding and
enforceable commitment for such insurance pursuant to the provisions of the
National Housing Act, as amended, and is otherwise eligible for inclusion in a
Ginnie Mae mortgage-backed security pool; or (b) eligible to be guaranteed
by the VA and is so guaranteed or is subject to a current binding and
enforceable commitment for such guarantee pursuant to the provisions of the
Servicemen’s Readjustment Act, as amended, and is otherwise eligible for
inclusion in a Ginnie Mae mortgage-backed security pool.


 


Guarantee: A guarantee
signed by a Guarantor, if set forth in the Transactions Terms letter, in a form
acceptable to Buyer.


 


Guarantors: Those
guarantors if set forth in the Transactions Terms Letter.


 


Handbook: The guide
prepared by Buyer containing additional policies and procedures, as same may be
amended from time to time.


 


A-6

















 


Haircut: With respect to
each Transaction, an amount equal to the difference between the Purchase Price
and the Asset Value of the Purchased Mortgage Loan, which shall be considered a
“settlement payment” as defined in Bankruptcy Code Section 741(8).


 


HELOC 1st Mortgages: Unless defined
otherwise in the Transactions Terms Letter, a first lien mortgage loan that is
a home equity line of credit underwritten in accordance with Seller’s
underwriting guidelines for HELOCs, as same have been approved by Buyer.


 


HELOC Mortgage Loan: Unless defined
otherwise in the Transactions Terms Letter, a home equity line of credit
underwritten in accordance with Seller’s underwriting guidelines for HELOCs, as
same have been approved by Buyer.


 


HUD: The United
States Department of Housing and Urban Development or any successor thereto.


 


Insolvency Event: The occurrence
of any of the following events:


 


(a)                                  such Person
shall become insolvent or generally fail to pay, or admit in writing its
inability to pay, its debts as they become due, or shall voluntarily commence
any proceeding or file any petition under any bankruptcy, insolvency or similar
law or seeking dissolution, liquidation or reorganization or the appointment of
a receiver, trustee, custodian, conservator or liquidator for itself or a
substantial portion of its property, assets or business or to effect a plan or
other arrangement with its creditors, or shall file any answer admitting the
jurisdiction of the court and the material allegations of an involuntary
petition filed against it in any bankruptcy, insolvency or similar proceeding,
or shall be adjudicated bankrupt, or shall make a general assignment for the
benefit of creditors, or such Person, or a substantial part of its property,
assets or business, shall be subject to, consent to or acquiesce in the
appointment of a receiver, trustee, custodian, conservator or liquidator for
itself or a substantial property, assets or business;


 


(b)                                 corporate action
shall be taken by such Person for the purpose of effectuating any of the
foregoing;


 


(c)                                  an order for
relief shall be entered in a case under the Bankruptcy Code in which such
Person is a debtor; or


 


(d)                                 involuntary
proceedings or an involuntary petition shall be commenced or filed against such
Person under any bankruptcy, insolvency or similar law or seeking the
dissolution, liquidation or reorganization of such Person or the appointment of
a receiver, trustee, custodian, conservator or liquidator for such Person or of
a substantial part of the property, assets or business of such Person, or any
writ, order, judgment, warrant of attachment, execution or similar process
shall be issued or levied against a substantial part of the property, assets or
business of such Person, and such proceeding or petition shall not be
dismissed, or such execution or similar process shall not be released, vacated
or fully bonded, within sixty (60) days after commencement, filing or levy, as
the case may be.


 


Insurer: A private
mortgage insurer, which is acceptable to Buyer in its sole and good faith
discretion.


 


Intercreditor Agreement: An agreement
substantially in the form acceptable to Buyer.


 


Irrevocable Closing Instructions: Closing instructions, including wire instructions, in the form of Exhibit B
issued in connection with funds disbursed for the funding of a Wet Mortgage
Loan.


 


Jumbo Mortgage Loan: Unless defined
otherwise in the Transactions Terms Letter, a first lien mortgage loan
underwritten to the same standards as a Conventional Conforming Mortgage Loan
except with respect to the original principal balance, which is greater than
that permitted by the Agencies but less than one million ($1,000,000) dollars.


 


A-7














 


Key Personnel:
Any employee, officer, director, agent or representative of Seller if
identified in the Transactions Terms Letter as a Key Person.


 


Liquidity: If
applicable, the Cash Equivalents liquidity requirement of Seller as set forth
in the Transactions Terms Letter.


 


Margin:
With respect to each Transaction, the pricing rate set forth in the
Transactions Terms Letter that shall be added to the Applicable Pricing Rate to
determine the pricing rate for the Purchase Price.


 


Margin Call:
A margin call, as defined and described in Section 6.3.


 


Margin Deficit:
A margin deficit, as defined and described in Section 6.3.


 


Material and Adverse Change: A material and adverse change with respect to
(i) the business, operations, properties or financial condition of Seller
or (ii) general market circumstances or conditions, including, without
limitation, if any law, regulation, treaty or directive or any change therein
or in the interpretation or application thereof, or any circumstance affecting
the London interbank market or the repurchase market for mortgage loans or
mortgage-backed securities, in either case of (i) or (ii), as such
material and adverse change is determined by Buyer in its sole and good faith
discretion.


 


Maximum Dwell Time: The maximum number of days a Purchased
Mortgage Loan can be not repurchased by Seller before such Purchased Mortgage
Loan may be deemed to be a Noncompliant Mortgage Loan and with respect to a
Noncompliant Mortgage Loan, the maximum number of days that a Purchased
Mortgage Loan can be deemed to be a Noncompliant Mortgage Loan before such
Noncompliant Mortgage Loan may be deemed to be a Defect Mortgage Loan, all as
set forth in the Transactions Terms Letter.


 


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


 


Mortgage: A first-lien or second-lien mortgage, deed
of trust, security deed or similar instrument on improved real property.


 


Mortgage-Backed Securities: Any security, including, without limitation,
a participation certificate, that is (a) guaranteed by Ginnie Mae that
represents an interest in a pool of mortgages, deeds of trusts or other
instruments creating a lien on real property; (b) issued by Fannie Mae or
Freddie Mac that represents interests in such a pool; or (c) privately
placed and represents undivided interests in or otherwise supported by such a
pool.


 


Mortgage Loan:
A Conventional Conforming Mortgage Loan, Government Mortgage Loan, Jumbo
Mortgage Loan, Super Jumbo Mortgage Loan, Expanded Criteria Mortgage Loan,
Subprime Mortgage Loan, Closed-End Second Lien Mortgage Loan, HELOC Mortgage
Loan or Nonperforming/Subperforming Mortgage Loan, which Mortgage Loan may be
either a Dry Mortgage Loan or a Wet Mortgage Loan.


 


Mortgage Loan Documents: With respect to each Purchased Mortgage Loan:


 


(a)                                  the original Mortgage Note evidencing the
Mortgage Loan, endorsed by Seller in blank, with a complete chain from the
originator to Seller;


 


(b)                                 an original assignment in blank, executed by
Seller, for the Mortgage securing the Mortgage Note, in recordable form but
unrecorded, with a complete chain of intervening assignments from the
originator to Seller;


 


(c)                                  a certified or true copy of the Mortgage
securing the Mortgage Note bearing evidence of the recordation of such Mortgage
with the appropriate governmental authority, or if such recording


 


A-8

















 


information
is unavailable because the document has not yet come back from the recording
office, then a copy of evidence that such original Mortgage was sent out for
recording by a Closing Agent; and


 


(d)                                 an original or copy of the title insurance
policy insuring the first lien or second lien position of the Mortgage, as
applicable, in at least the original principal amount of the related Mortgage
Note and containing only those exceptions permitted by the Purchase Commitment
or an unconditional commitment to issue such a title insurance policy.


 


Mortgage Loan File: With respect to each Mortgage Loan, that file
that contains the Mortgage Loan Documents and is delivered to Buyer or its
Custodian.


 


Mortgage Note:
A promissory note secured by a Mortgage and evidencing a Mortgage Loan.


 


Mortgaged Property: The real property securing repayment of the
debt evidenced by a Mortgage Note.


 


Mortgagor:
The obligor of a Mortgage Loan.


 


Noncompliant Mortgage Loan: As of any date of determination, a Purchased
Mortgage Loan that has been:


 


(a)                                  not repurchased within the Maximum Dwell Time
permitted, given the type of Purchased Mortgage Loan, but less than the Maximum
Dwell Time for Noncompliant Mortgage Loans;


 


(b)                                 rejected by the Approved Investor set forth in
the related Purchase Commitment; or


 


(c)                                  determined to be ineligible for sale as a
Purchased Mortgage Loan of the type originally stipulated.


 


Noncompliant Mortgage Loan Fee: A one-time fee, as set forth in the
Transactions Terms Letter or otherwise indicated on Buyer’s then current
schedule of fees, payable by Seller for each Purchased Mortgage Loan that is
deemed to be a Noncompliant Mortgage Loan.


 


Nonperforming/Subperforming Mortgage Loan: Unless defined otherwise in the Transactions
Terms Letter, a first or second lien Mortgage Loan that when originated
qualified as a Conventional Conforming Mortgage Loan, Government Mortgage Loan,
Expanded Criteria Mortgage Loan, Subprime Mortgage Loan, Closed-End Second Lien
Mortgage Loan or HELOC Mortgage Loan, however, such Mortgage Loan has a history
of late payments during the past twelve months (the exact number permitted late
payment to be determined by Buyer in its sole and good faith discretion) or is
currently past due more than thirty (30) days.


 


One Time Close Loan: Unless defined otherwise in the Transactions
Terms Letter, a first lien mortgage loan underwritten to the same credit
standards as a Conventional Conforming Mortgage Loan, Expanded Criteria
Mortgage Loan, Jumbo Mortgage Loans or Super Jumbo Mortgage Loan and has the
additional feature of combining a construction loan advance with a conversation
provision to permanent financing in a single loan transaction.


 


Other Mortgage Loan Documents: In addition to the Mortgage Loan Documents,
the following: (i) the original recorded Mortgage, if not included in the
Mortgage Loan Documents; (ii) the original policy of mortgagee’s title
insurance or unexpired commitment for a policy of mortgagee’s title insurance,
if not included in the Mortgage Loan Documents; (iii) the original Closing
Protection Letter; (iv) the original Purchase Commitment; (v) the
original FHA certificate of insurance or commitment to insure, the VA
certificate of guaranty or commitment to guaranty and the private mortgage
insurer’s certificate or commitment to insure, as applicable; (vi) the
survey, flood certificate, hazard insurance policy and flood insurance policy,
as applicable; (vii) the original of any assumption, modification, written
assurance or substitution of liability agreement, if any; (viii) copy of
each instrument necessary to complete


 


A-9

















 


identification
of any exception set forth in the exception schedule in the title policy; (ix) the
loan application; (x) verification of employment and income, if
applicable; (xi) verification of source and amount of downpayment; (xii) credit
report on Mortgagor; (xiii) appraisal of Mortgaged Property; (xiv) the original
executed disclosure statement; (xv) Tax receipts, insurance premium receipts,
ledger sheets, payment records, insurance claim files and correspondence,
current and historical computerized data files, underwriting standards used for
origination and all other related papers and records; and (xvi) all other
documents relating to the Purchased Mortgage Loan.


 


Over/Under Account: That account maintained by Buyer, as
described in Section 3.5.


 


Payment Date: The fifth (5th) day of each month,
or if such date is not a Business Day, the Business Day immediately preceding
the last day of the month; provided, however, Buyer may change the Payment Date
from time to time upon thirty (30) days prior notice to Seller.


 


Person:
Includes natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.


 


Personal Identification Number or PIN: An electronic identification number, unique
to Seller, consisting of any combination of symbols, codes, letters or
numerals.


 


Plan:  Any multiemployer plan or single-employer plan
as defined in section 4001 of ERISA, that is maintained and contributed to by
(or to which there is an obligation to contribute of), or at any time during
the five (5) calendar years preceding the date of this Agreement was
maintained or contributed to by (or to which there is an obligation to
contribute of), Seller or by a subsidiary of Seller or an ERISA Affiliate.


 


Potential Default: The occurrence of any event or existence of
any condition that, but for the giving of notice, the lapse of time, or both,
would constitute an Event of Default.


 


Power of Attorney: That certain power of attorney attached
hereto as Exhibit H.


 


Principal Agreements: This Agreement, the Transactions Terms
Letter, the Electronic Tracking Agreement, any Servicing Agreement, the
Guarantee(s), if applicable, and all other documents and instruments evidencing
the Transactions, as same may from time to time be supplemented, modified or
amended, and any other agreement entered into between Buyer and Seller in
connection herewith or therewith.


 


Proceeds:
Whatever is receivable or received when Purchased Assets or proceeds is sold,
collected, exchanged or otherwise disposed of, whether such disposition is
voluntary or involuntary, and includes, without limitation, all rights to
payment, including return premiums, with respect to any insurance relating
thereto.


 


Property Charges:
All taxes, fees, assessments, water, sewer and municipal charges (general or
special) and all insurance premiums, leasehold payments or ground rents.


 


Purchase Advice:
In connection with each wire transfer to be made to Buyer by Seller or an
Approved Investor, a written or electronic notification setting forth (a) the
loan number assigned by Buyer or last name of the Mortgagor for each Mortgage
Loan that is related to the Transaction in connection with which a payment is
being made; (b) the amount of the wire transfer to be applied in the
Transaction; and (c) the total amount of the wire.


 


Purchase Commitment: A trade ticket or other written commitment,
in form and substance satisfactory to Buyer, issued in favor of Seller by an
Approved Investor pursuant to which that Approved Investor commits to purchase
one or more Purchased Mortgage Loans, along with the related correspondent or


 


A-10

















 


whole
loan purchase agreement by and between Seller and the Approved Investor, in
form and substance satisfactory to Buyer, governing the terms and conditions of
any such purchases.


 


Purchase Date:
The date on which Buyer purchases a Purchased Mortgage Loan from Seller. If the
Purchase Price is made by wire transfer, the Purchase Date shall be the date
such funds are wired. If the Purchase Price is made by a cashiers check, the
Purchase Date shall be the date such check is issued by the bank. If the
Purchase Price is paid by a funding draft, the Purchase Date shall be the date
that the draft is posted by the bank on which the draft is drawn.


 


Purchase Price:
The price at which each Purchased Mortgage Loan is sold by Seller to Buyer
which shall be equal to the lesser of (A) the unpaid principal balance of
the Purchased Mortgage Loan multiplied by the lesser of (i) the applicable
Type Purchase Price Percentage (ii) par, (iii) the purchase price
percentage set forth in the related Purchase Commitment(s), if applicable or (iv) the
Market Value purchase price percentage of such Mortgage Loan on the Purchase
Date or (B) ninety eight percent (98%) multiplied by the lesser of (i) the
purchase price committed by the related Approved Investor, if applicable or (ii) the
Market Value of such Mortgage Loan.


 


Purchased Assets:
All now existing and hereafter arising right, title and interest of Seller in,
under and to the following:


 


(a)                                  all Mortgage Loans, now owned and hereafter
acquired, including all Mortgage Notes and Mortgages evidencing such Mortgage
Loans and the related Mortgage Loan Documents, for which a Transaction has been
entered into between Buyer and Seller hereunder and for with the Repurchase
Price has not been paid in full and all Mortgage Loans, including all Mortgage
Notes and Mortgages evidencing such Mortgage Loans and the related Mortgage
Loan Documents, which, from time to time, are delivered, or caused to be
delivered, to Buyer (including delivery to a custodian or other third party on
behalf of Buyer) as additional security for the performance of Seller’s
obligations hereunder;


 


(b)                                 all Mortgage-Backed Securities, now owned or
hereafter acquired by Seller, that are supported by any Mortgage Loan
constituting Purchased Assets hereunder, all right to the payment of monies in
non-cash distributions on account thereof and all new, substituted and
additional securities at any time issued with respect thereto;


 


(c)                                  all rights of Seller under all Purchase
Commitments, now existing and hereafter arising, covering any part of the
Purchased Assets, all rights to deliver such Mortgage Loans and Mortgage-Backed
Securities to permanent investors and other purchasers pursuant thereto and all
proceeds resulting from the disposition of such Purchased Assets thereto;


 


(d)                                 all now existing and hereafter established
accounts maintained with broker-dealers by Seller for the purpose of carrying
out transactions under Purchase Commitments relating to any part of the
Purchased Assets;


 


(e)                                  all now existing and hereafter arising rights
of Seller to service, administer and/or collect on the Mortgage Loans included
as Purchased Assets hereunder and any and all rights to the payment of monies
on account thereof;


 


(f)                                    all now existing and hereafter arising
accounts, contract rights and general intangibles constituting or relating to
any of the Purchased Assets;


 


(g)                                 all mortgage insurance and all commitments
issued by Insurers to insure or guaranty any Mortgage Loans included as
Purchased Assets, including, without limitation, the right to receive all
insurance proceeds and condemnation awards that may be payable in respect of
the premises encumbered by any Mortgage; and all other documents or instruments
delivered to Buyer in respect of the Mortgage Loans included as Purchased
Assets;


 


A-11

















 


(h)                                 All documents, files, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards, accounting
records and other information and data of Seller relating to Mortgage Loans
included as Purchased Assets;


 


(i)                                     All rights, but not any obligations or
liabilities, of Seller with respect to the Approved Investors;


 


(j)                                     All property of Seller, in any form or
capacity now or at any time hereafter in the possession or control of Buyer,
including, without limitation, all deposit accounts and any funds at any time
held therein, into which Proceeds of the foregoing Purchased Assets are at any
time deposited;


 


(k)                                  All products and Proceeds of the foregoing
Purchased Assets; and


 


(l)                                     Any funds of Seller at any time deposited or
held in the Over/Under Account.


 


Purchased Mortgage Loan: A Mortgage Loan that has been purchased by
Buyer from Seller in connection with a Transaction and which has not been
repurchased by Seller hereunder.


 


Reportable Event:
An event described in Section 4043(b) of ERISA with respect to a Plan
as to which the thirty (30) days notice requirement has not been waived by the
Pension Benefit Guaranty Corporation.


 


Repurchase Acceleration Event: Any of the conditions or events set forth in Section 4.2.


 


Repurchase Date:
The date on which Seller is to repurchase a Purchased Mortgage Loan subject to
a Transaction from Buyer, as specified in the related Transaction and/or Asset
Data Record, or if not so specified, the date identified to Buyer by Seller as
the date that the related Purchased Mortgage Loan is to be sold pursuant to a
Purchase Commitment; provided, however, that if the Repurchase Date is not a
date within the Maximum Dwell Time, Buyer may, at its discretion, deem such
Purchased Mortgage Loan a Noncompliant Mortgage Loan and Buyer may pursue any
rights and remedies accorded Buyer hereunder as a result thereof, including,
without limitation, charging Seller any applicable fees as a result thereof.
The Repurchase Date for each Purchased Mortgage Loan shall in no event occur
later than one year after the Purchase Date of such Purchased Mortgage Loan.


 


Repurchase Price:
The price at which a Purchased Mortgage Loan is to be transferred from Buyer or
its designee to Seller upon termination of a Transaction, which shall be
determined as the sum of (i) the Purchase Price, (ii) any applicable
fees owed by Seller in connection with the Purchased Mortgage Loan and (iii) the
price differential due on such Purchase Price pursuant to Section 2.6
as of the date of such determination.


 


Repurchase Transaction: A repurchase transaction, as defined and
described in Section 6.6.


 


Servicer:
Countrywide Home Loans Servicing LP, or such other entity responsible for
servicing of the Purchased Mortgage Loans, which is acceptable to Buyer and
approved by Buyer in writing, or any successor or permitted assigns.


 


Servicer Notice:
The notice acknowledged by the Servicer substantially in the form of Exhibit L
hereto.


 


Servicing Agreement: If the Purchased Mortgage Loans are serviced
by any third party servicer, the agreement with that third party in form and
substance acceptable to Buyer.


 


Servicing Fee:
With respect to a Purchased Mortgage Loan, the sum of all amounts deposited in
the Custodial Account between the Purchase Date and the Repurchase Date, other
than escrow payments for Property Charges.


 


A-12

















 


Shipping Fee:
That fee, as set forth in the Transactions Terms Letter or otherwise indicated
on Buyer’s then current schedule of fees, payable by Seller to Buyer for each
Mortgage Loan File, or portion thereof, Buyer delivers to Seller, an Approved
Investor or other designee.


 


Specialty ARM’s:
Unless defined otherwise in the Transactions Terms Letter, Non-conforming
PayOption ARM’s or one or six month interest only ARM’s for loan amounts up to
one million five hundred thousand ($1,500,000) dollars meeting the guidelines
of Countrywide CLD.


 


Specialty ARM’s Plus: Unless defined otherwise in the Transactions
Terms Letter, Non-conforming Payment Advantage ARM’s for loan amounts up to one
million five hundred thousand ($1,500,000) dollars meeting the guidelines of
Countrywide CLD.


 


Standard Status:
As of any date of determination, the Purchased Mortgage Loan has been subject
to a Transaction for less than the Maximum Dwell Time and is not a Noncompliant
Mortgage Loan or a Defective Mortgage Loan.


 


Subordinated Debt: Debt of Seller that has been subordinated to
Buyer as provided in this Agreement or as otherwise approved by Buyer.


 


Subprime 2nd Lien: Unless defined otherwise in the Transactions
Terms Letter, a second lien mortgage loan for a fixed amount drawn at closing
and underwritten in accordance with Seller’s underwriting guidelines for second
lien mortgages, as same have been approved by Buyer, and the credit
characteristics of such loan would generally not meet the credit underwriting
guidelines of Fannie Mae, Freddie Mac, FHA, VA or major non-conforming
purchasers.


 


Subprime Mortgage Loan: Unless defined otherwise in the Transactions
Terms Letter, a first lien mortgage loan underwritten in accordance with Seller’s
underwriting guidelines for subprime mortgage loans, as same have been approved
by Buyer.


 


Successor Servicer: The servicer of the Purchased Mortgage Loans
appointed by Buyer as described in Section 6.2(e) of this
Agreement.


 


Super Jumbo Mortgage Loan: Unless defined otherwise in the Transactions
Terms Letter, a first lien mortgage loan underwritten to the same standards as
a Conventional Conforming Mortgage Loan except with respect to the original
principal balance, which is greater than one million ($1,000,000) dollars but
less than the one million five hundred thousand ($1,500,000) dollars.


 


Super Jumbo Plus:
Unless defined otherwise in the Transactions Terms Letter, a first lien
mortgage loan underwritten to the same standards as a Conventional Conforming
Mortgage Loan except with respect to the original principal balance, which is
greater that one million five hundred thousand ($1,500,000) dollars.


 


Tangible Net Worth: With respect to any Person at any date, the
excess of the total assets over total liabilities of such Person on such date,
each to be determined in accordance with GAAP consistent with those applied in
the preparation of Seller’s financial statements less the sum of the following
(without duplication): (a) the book value of all investments in
non-consolidated subsidiaries, and (b) any other assets of Seller and
consolidated subsidiaries that would be treated as intangibles under GAAP
including, without limitation, good will, research and development costs,
trademarks, trade names, copyrights, patents, rights to refunds and
indemnification and unamortized debt discount and expenses; provided further
that, to the extent not already excluded, there shall be excluded from Tangible
Net Worth, those assets of any Person which, if such Person were a HUD
mortgagee, would be deemed by HUD to be non-acceptable in calculating adjusted
net worth in accordance with its requirements in effect as of such date, as
such requirements appear in the “Audit Guide for Use by Independent Public
Accountants in Audits of HUD-Approved Nonsupervised Mortgagees, Loan Correspondents
and Coinsuring Mortgagees”


 


A-13

















 


or
any successor or replacement audit guide published by HUD. Notwithstanding the
foregoing, servicing rights shall be included in the calculation of total
assets.


 


Total Liabilities: The sum of (a) the total liabilities of
Seller on any given date of determination, to be determined in accordance with
GAAP consistent with those applied in the preparation of Seller’s financial
statements, plus (b) to the extent not already included under GAAP, the
total aggregate outstanding amount owed by Seller under any repurchase,
refinance or other similar credit arrangements, plus (c) to the extent not
already included under GAAP, any “off balance sheet” repurchase, refinance or other
similar credit arrangements, less (d) the amount of the “Credit Off
Feature,” if any, as set forth in the Transactions Terms Letter less (e) if
applicable, the aggregate unpaid principal balance of the outstanding Loans
sold by Seller to Countrywide CLD under the Early Purchase Program Addendum
(the “EPP Addendum”) to Loan Purchase Agreement by and between Seller and
Countrywide CLD for which the Review Period (as defined in the EPP Addendum)
has not been completed.


 


Transaction:
A transaction between Buyer and Seller as contemplated under this Agreement.


 


Transaction Request Deadline: That time, as set forth in the Transactions
Terms Letter, by which Seller must submit to Buyer certain documents in order
to initiate a Transaction.


 


Transaction Requirements: Those terms and conditions, as set forth in
the Transactions Terms Letter, applicable to a specific type of Purchased
Mortgage Loan.


 


Transactions Terms Letter: The document executed by Buyer and Seller,
referencing this Agreement and setting forth certain specific terms, and any
additional terms, with respect to this Agreement.


 


Type Purchase Price Percentage: With respect to each type of Purchased
Mortgage Loan that corresponds to the Type, the corresponding purchase price
percentage, as set forth in the Transactions Terms Letter.


 


Type Margin:
With respect to each type of Purchased Mortgage Loan that corresponds to the
Type, the corresponding annual rate of interest that shall be added to the
Applicable Pricing Rate to determine the annual rate of interest for the
related Purchase Price, as set forth in the Transactions Terms Letter.


 


Type Sublimit: Any
of the applicable Type Sublimits, as set forth in the Transactions Terms
Letter.


 


Underwriter Approval: Written evidence, in form and substance acceptable
to Buyer, that a Purchased Mortgage Loan has been underwritten to the
satisfaction of the Approved Investor issuing the applicable Purchase
Commitment.


 


Unused Facility Fee: A fee, as set forth in the Transactions Terms
Letter or otherwise indicated on Buyer’s then current schedule of fees, payable
by Seller quarterly in arrears based upon the unused portion of the Aggregate
Transaction Limit; provided, however, that no fee shall be due if the average
difference between the Aggregate Transaction Limit and actual outstanding
principal amount of all Transactions, calculated on a daily basis, during such
quarter is less than that percent of the Aggregate Transaction Limit set forth
in the Transactions Terms Letter.


 


VA: The
Department of Veterans Affairs and any successor thereto.


 


Warehouse Credit:
The aggregate amount of credit, committed and uncommitted, available to Seller
through warehouse lines of credit, repurchase facilities or similar mortgage
finance arrangements.


 


Wet Deficiency Fee: That fee, as set forth in the Transactions
Terms Letter or otherwise indicated on Buyer’s then current schedule of fees,
payable by Seller for each calendar day that Seller fails to deliver to Buyer
or its Custodian the Mortgage Loan Documents relating to any Wet Mortgage Loan
purchased by Buyer following expiration of the Wet Mortgage Loans Maximum Dwell
Time.


 


A-14

















 


Wet Mortgage Loan: A Mortgage Loan as to which Buyer purchases
from Seller by delivering funds to the applicable Closing Agent prior to
receipt by Buyer or its Custodian of the related Mortgage Loan Documents,
subject to Seller’s obligation to deliver the related Mortgage Loan Documents
within the Wet Mortgage Loans Maximum Dwell Time.


 


Wet Mortgage Loans Maximum Dwell Time: That period of time, as set forth in the
Transactions Terms Letter, by which Seller must deliver to Buyer or its
designee the Mortgage Loan Documents for a Wet Mortgage Loan.


 


Wet Mortgage Loans Sublimit: The maximum aggregate principal amount of
Purchased Mortgage Loans that may be Wet Mortgage Loans at any time, as set
forth in the Transactions Terms Letter.


 


Wire Transfer Fee: That fee, as set forth in the Transactions
Terms Letter or otherwise indicated on Buyer’s then current schedule of fees,
payable by Seller for each payment of the Purchase Price by wire transfer or
for any payment (including the Repurchase Price) received by Buyer from Seller
or its Approved Investor.


 


A-15

















 


EXHIBIT B


 


IRREVOCABLE CLOSING INSTRUCTIONS


 


January 25,
2008


 


	
   

  	
  (“Closing Agent”)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dear

  	
   

  	
   

  
				



 


Re:                        Irrevocable Closing
Instructions


 


	
  Closing Protection Letter Issued By, if applicable:

  	
   

  	
   

  



 


 


Ladies
and Gentlemen:


 


This
letter is being sent in accordance with that Master Repurchase Agreement dated
as of January 25, 2008 (the “Agreement”) between Home Loan Center, Inc.
(“Seller”) and Countrywide Bank, FSB (“Buyer”), the terms of which do not
affect Closing Agent except as set forth herein.


 


Pursuant
to the Agreement, you have been identified as either:


 


·                    the title insurer to close and provide title
insurance on certain mortgage loans made by Seller; or


·                    the closing agent to close and fund certain
mortgage loans made by Seller and covered
by the above referenced closing
protection letter (the “Mortgage Loans”).


 


From
time to time, Buyer will wire to you, for the account of Seller, funds
requested by Seller under the terms of the Agreement to be used by you for the
purpose of funding such Mortgage Loan(s) and for no
other purpose. Notwithstanding anything to the contrary contained herein, you are  not
to distribute any of such funds to Seller. You must immediately return the
funds representing to Buyer at the
following account if one of the
following conditions occurs:


 


·                  You do not close any Mortgage Loan within forty-eight (48)  hours of the time you receive the
applicable funds; or


·                  You receive funds for a Mortgage Loan for
which you have not been instructed by Seller to (a) obtain title insurance
from the title insurance company specified in the above referenced closing
protection letter or (b) underwrite the title insurance.


 


	
   

  	
  Bank:

  	
  Bank
  of New York

  
	
   

  	
  ABA No.:

  	
  021-000018

  
	
   

  	
  Account No.:

  	
  8900404337

  
	
   

  	
  Credit:

  	
  Countrywide
  Bank, FSB – Payoff Account

  
	
   

  	
  Reference:

  	
  Home
  Loan Center, Inc.

  



 


If
the Mortgage Loan Documents (as
described below) have not been
delivered to Seller prior to the funding of the Transaction, within 48 (forty
eight) hours of closing any Mortgage Loan, unless otherwise
instructed by Buyer, you must deliver to Seller, the following Mortgage Loan
Documents:


 


(a)                          the original mortgage note evidencing the Mortgage Loan,
endorsed by Seller in blank, with a complete chain from the
originator to Seller;


 


B-2

















 


(b)                         if in your possession, an original assignment
in blank executed by Seller for the mortgage or deed of trust securing the
mortgage note, in recordable form but unrecorded, with a complete chain of
intervening assignments from the originator to Seller;


 


(c)                          a certified copy of the executed mortgage or
deed of trust securing the mortgage note; and


 


(d)                         an original or copy of the title insurance
policy insuring the first lien or second lien position of the mortgage or deed
of trust, as applicable, in at least the original principal amount of the
related mortgage note and containing only those exceptions permitted
by the purchase commitment, as set forth in the final closing instructions referred to below, or an unconditional commitment to issue such a title
insurance policy, or a preliminary report and instructions received from Seller relating to the issuance of such a title insurance policy,


 


With
respect to each Mortgage Loan for which you act as Closing Agent, Seller will deliver to you final closing instructions specific to such Mortgage Loan. In the
event that the terms of the final
closing instructions contradict
the terms of these irrevocable closing instructions, the terms of these
irrevocable closing instructions shall govern. Permission to change the
scheduled closing date for any Mortgage Loan beyond the time permitted herein
or permission to otherwise deviate from these irrevocable closing instructions must be furnished to you in a writing signed by Buyer and Seller.


 


By
your participation in the closing and funding of a Mortgage
Loan as Closing Agent, you agree to act as Buyer’s bailee with respect to such
Mortgage Loan and the Mortgage Loan Documents referenced above and you thereby
acknowledge your responsibility to Buyer as holder of an interest in such
Mortgage Loan and to care for and protect Buyer’s interest in such Mortgage Loan. Facsimile signatures on these instructions shall be
deemed valid and binding to the same extent as the original.


 


	
  Sincerely,

  	
   

  
	
   

  	
   

  
	
  Countrywide
  Bank, FSB

  	
  Home
  Loan Center, Inc.

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Richie Walia

  	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Printed
  Name: 

  	
  RICHIE WALIA

  	
   

  	
  Printed
  Name: 

  	
   

  
	
   

  	
  SENIOR VICE PRESIDENT

  	
   

  	
   

  	
   

  
	
  Title:

  	
  COUNTRYWIDE BANK, FSB

  	
   

  	
  Title:

  	
   

  



 


B-3

















 


EXHIBIT F




ASSIGNMENT OF CLOSING PROTECTION LETTER


 


Home
Loan Center, Inc. (“Assignor”) declares that for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, it
does hereby convey, transfer, assign, deliver and give to Assignee, and hereby
expressly subrogates Countrywide Bank, FSB (“Assignee”) unto, all of Assignor’s
claims, demands, rights and causes of action, past, present or future, that
Assignor has for loss or damage covered by the closing protection letter issued
by                        (Title
Company) attached hereto (“Closing Protection Letter”), Such rights being
assigned by Assignor hereunder include, without limitation, the right to
demand, sue, collect, receive, protect, preserve and enforce performance under
the Closing Protection Letter. Assignee shall succeed to all rights of recovery
of Assignor under the Closing Protection Letter and Assignor shall execute such
instruments and documents necessary and proper to further secure such rights to
Assignee and shall not act in any manner hereafter to prejudice or impair the
rights of Assignee. Assignor hereby grants Assignee an irrevocable mandate and
power of attorney coupled with an interest with full power of substitution to
transact this act of assignment and subrogation.


 


IN
WITNESS WHEREOF, the Assignor has caused this assignment to be duly executed as
of January 25, 2008.


 


Home
Loan Center, Inc.


 


 


	
  By.

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
  Name.

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


F-1

















 


EXHIBIT G




ASSIGNMENT OF FIDELITY BOND AND ERRORS AND OMISSION POLICY


 


Home
Loan Center, Inc. (“Assignor”) declares that for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, it
does hereby convey, transfer, assign, deliver and give to Assignee, and hereby
expressly subrogates Countrywide Bank, FSB (“Assignee”) unto, all of Assignor’s
claims, demands, rights and causes of action, past, present or future, that
Assignor has for loss or damage covered by Assignor’s fidelity
bond and errors and omission policy (collectively, the “Policy”), Such rights
being assigned by Assignor hereunder include, without limitation, the right to demand, sue, collect, receive, protect, preserve and enforce performance under
the Policy. Assignee shall succeed to all rights of recovery of Assignor under
the Policy and Assignor shall execute such instruments and documents necessary
and proper to further secure such rights to Assignee and shall not act
in any manner hereafter to prejudice or impair the
rights of Assignee. Assignor hereby grants Assignee an irrevocable mandate and
power of attorney coupled with an interest with full power of substitution to
transact this act of assignment and subrogation.


 


IN
WITNESS WHEREOF, the Assignor has caused this assignment to be duly executed as
of January 25, 2008.


 


Home
Loan Center, Inc.


 


 


	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
  Name:

  	
  [ILLEGIBLE]

  	
   

  
	
  Title:

  	
  President

  	
   

  



 


G-1

















 


EXHIBIT H


 


FORM OF POWER
OF ATTORNEY


 


KNOW ALL
MEN BY THESE PRESENTS:


 


WHEREAS,
Countrywide Bank, FSB (“Buyer”) and Home Loan Center, Inc. (“Seller”) have
entered into the Master Repurchase Agreement, dated as of January 25, 2008
(the “Agreement), pursuant to which Buyer has agreed to purchase from Seller
certain mortgage loans from time to time. subject to the terms and conditions
set forth therein;


 


WHEREAS,
Seller has agreed to give to Buyer a power of attorney on the terms and
conditions contained herein in order for Buyer to take any action that Buyer may deem necessary or advisable to accomplish the purposes of the Agreement;


 


NOW,
THEREFORE, Seller hereby irrevocably constitutes and appoints Buyer its true
and lawful Attorney-in-Fact, with full power and authority hereby conferred in
its name, place and stead and for its use and benefit, to do and perform the
following in connection with mortgage loan purchased by Buyer from Seller under
the Agreement (the “Purchased Assets”) or as otherwise provided below;


 


(1)                                 to receive, endorse and collect all checks
made payable to the order of Seller representing any payment on account of the
Purchased Assets;


 


(2)                                 to assign or endorse any mortgage, deed of
trust, promissory note or other instrument relating to the Purchased Assets;


 


(3)                                 to correct any assignment, mortgage, deed of
trust or promissory note or other instrument relating to the Purchased Assets,
including, without limitation, unendorsing and re-endorsing a promissory note
to another investor;


 


(4)                                 to complete and execute lost note affidavits
or other lost document affidavits relating to the Purchased Assets;


 


(5)                                 to issue title requests and instructions
relating to the Purchased Assets;


 


(6)                                 to give notice to any individual or entity of
its interest in the Purchased Assets under the Agreement; and


 


(7)                                 to service and administer the Purchased
Assets, including, without limitation,
the receipt and collection of all
sums payable in respect of the Purchased Assets.


 


Seller
hereby ratifies and confirms all that said Attorney-in-Fact shall
lawfully do or cause to be done by authority hereof.


 


Third
parties without actual notice may rely upon the power granted under this Power
of Attorney upon the exercise of such power by the Attorney-in-Fact.


 


Home
Loan Center Inc.


 


	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  
	
  Name:

  	
  [ILLEGIBLE]

  	
   

  	
  [SEAL]

  
	
  Title:

  	
  President

  	
   

  	
   

  



 


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WITNESS
my hand this 31 day of January, 2008.


 


 


STATE
OF CALIFORNIA                                     
}


                                                  }                 SS.


County
of Orange                                                     }




This
instrument was acknowledged, subscribed and
sworn to before me this 31 day of January 2008 , by                           ,
[ILLEGIBLE].


 


 


	
  [SEAL]

  	
   

  	
   /s/ Robert J. Kaiber

  
	
   

  	
   

  	
  Notary Public

  



 


	
  My
  Commission Expires:

  	
   

  	
   

  



 


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